Energy & Environment — Supreme Court to hear Clean Water Act case

by Rachel Frazin and Zack Budryk - 09/30/22 6:38 PM ET

The Supreme Court is set to review water regulations, the Federal Reserve will pilot an analysis of climate risks and California enacts a ban on “forever chemicals” in cosmetics.

This is Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. For The Hill, we’re Rachel Frazin and Zack Budryk. Not on the list? Subscribe here.

High-stakes case for water regulations

The Supreme Court on Monday will hear arguments of a case between Idaho landowners and the Environmental Protection Agency (EPA), a dispute that could redefine the scope of the country’s clean water regulations.

The first case of the justices’ new term, landing just ahead of the Clean Water Act’s 50th anniversary, will feature arguments about wetlands and when they can or cannot be regulated by the federal government.
Although technical in nature, the legal dispute could have broad implications for the country’s water quality if the 6-3 conservative majority court uses the case to narrow the EPA’s regulatory reach.

“If that’s what the Supreme Court should decide, we’re basically rolling back the clock 50 years,” said Rep. Peter DeFazio (D-Ore.), who chairs a House panel on water resources and the environment. “That would remove 50 percent of our critical wetlands, and 70 percent of our rivers and streams from federal protection.”

Background: The case began in 2007 when Michael and Chantell Sackett were told they needed a federal permit to build a home on land they owned because it contained wetlands, prompting the Sacketts to sue.

A federal court, siding with the U.S. government, ruled that the wetlands on the Sacketts’ property contained a “significant nexus” with other regulated waters, meaning the couple would need authorization to build there.
The Sacketts are now urging the Supreme Court to discard the “significant nexus” threshold. Instead, their petition favors a separate test from former Justice Antonin Scalia that called for the waters to have a “continuous surface water connection” — a higher threshold that would apply to fewer wetlands.

The stakes of this case, however, go far beyond one property dispute. It attracted briefs from environmental groups, who argue that it would hamper the government’s ability to keep people safe from pollution, as well as industries like farming, mining, construction and oil and gas, which support the deregulatory effort.

Read more on what experts say about the case at TheHill.com this weekend.

Fed to pilot climate risk program with major banks

The Federal Reserve Board will enlist six major U.S. banks in a pilot climate-risk analysis program, officials announced Thursday.

Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo will participate in the pilot as part of the Federal Reserve’s attempt to determine the financial risk associated with natural disasters and climate change.
The exercise will have no consequences to capital, and while data from its findings will be published, none of the banks will be identified by name.

The analysis, set to begin in 2023, will be distinct from the “stress tests” the central bank uses to determine whether financial institutions have sufficient capital to loan during major recessions, according to the announcement.

“The climate scenario analysis exercise, on the other hand, is exploratory in nature and does not have capital consequences. By considering a range of possible future climate pathways and associated economic and financial developments, scenario analysis can assist firms and supervisors in understanding how climate-related financial risks may manifest and differ from historical experience,” the Board said in its announcement.

Although international financial institutions are in broad agreement on the need for such analysis, it has caught the ire of congressional Republicans, who have accused the Fed of exceeding its mandate.

Russia is the prime suspect in pipeline sabotage

Russia is the prime suspect in the apparent sabotage of pipelines transporting natural gas to Europe, which has left foul methane gas spewing into the Baltic Sea.

Experts say damage to the Nord Stream 1 and 2 gas pipelines is a cynical use of a “gray zone” aggression that leaves few good options for retribution.

“We have war-gamed this for years, we’ve always been a bit afraid that this is something that the Russians could do if they wanted to,” said Jim Townsend, who served as deputy assistant secretary of Defense for Europe and NATO during the Obama administration.
“I think all of us have got to know that Putin has other cards that he can play besides conventional or nuclear, he’s got something in between — this critical infrastructure that can be a target.”

National security adviser Jake Sullivan spoke with NATO Secretary General Jens Stoltenberg on Friday about protecting critical infrastructure in the wake of the “apparent sabotage” of the pipelines.

Explosions on the pipelines, which were not in use, released the trapped gas, first discovered in Danish waters early Monday.

Top European and NATO officials are bluntly assigning sabotage, even as they stop short of directly blaming Putin ahead of an investigation.

“The sabotage of the Nordstream pipelines is of deep concern. NATO is committed to deter and defend against hybrid attacks,” Stoltenberg earlier tweeted.
“Any deliberate attack against Allies’ critical infrastructure would be met with a united and determined response.”

GRANHOLM, EXXON SPAR OVER FUEL EXPORTS

ExxonMobil and the Biden administration are feuding over fuel exports after Energy Secretary Jennifer Granholm asked industry to limit its shipments abroad.

This week, Exxon CEO Darren Woods wrote a letter to the administration, apparently disagreeing with its position that limiting exports would help consumers.

“Continuing current Gulf Coast exports is essential to efficiently rebalance markets—particularly with diverted Russian supplies,” said the letter, according to The Wall Street Journal. “Reducing global supply by limiting U.S. exports to build region-specific inventory will only aggravate the global supply shortfall.” ,

Granholm on Friday released a statement criticizing the company’s profits, and saying that it company “misreads” the current situation

“This week’s letter from a company that made nearly $200M in profit every single day last quarter, misreads the moment we are in. The fact is this: Energy companies are making record profits, with refiners and retailers also posting margins that are well above average — while passing the costs on to consumers,” she said.

“This is a time for American energy companies to take action to lower prices for consumers and to rebuild inventories of gasoline and diesel in this country that are below the five-year range,” she added.