Legislative Update: Biden Releases FY2024 Budget Request

Following President Biden’s release of the White House’s FY2024 budget plan on March 9, administration officials will begin testifying on Capitol Hill this week to justify their agencies’ proposed budgets. The administration’s $6.9 trillion FY 2024 budget request, which is essentially a wish list and campaign document, includes $12 billion for Environmental Protection Agency’s (EPA) budget, amounting to a 19% increase over the current enacted level.

 

The FY2024 EPA budget would add 2,400 new staff members, increasing the agency’s total staffing to over 17,000 full-time equivalents (FTEs) and partially addressing recent calls by a major EPA staff union to expand the workforce and enhance retention.

 

The EPA’s FY24 budget summary highlights almost $5 billion allocated for climate change initiatives, $1.8 billion for various environmental justice programs, and $4 billion for water infrastructure. Additionally, the proposal seeks an increase of $1 billion over 2023 enacted levels for the removal of lead drinking water pipes. Other highlights include increased funding for the Superfund waste cleanup program, to address per- and polyfluoroalkyl substances (PFAS), and the implementation of the Toxic Substances Control Act (TSCA). A recent Government Accountability Office (GAO) report attributes missed chemical review deadlines to insufficient staffing under the reformed law.  The GAO audit, conducted between January 2022 and February 2023, found that the EPA missed deadlines for over 90% of new-chemical reviews under the Act.

 

President Biden also highlighted plans to cut the U.S. deficit by nearly $3 trillion over 10 years. He will do so primarily through hefty tax hikes targeting investors, billionaires, stock buybacks by companies, individuals earning over $400,000 per year, and joint filers earning over $450,000,as well as corporations. The proposal aims to partially undo the 2017 Trump tax cuts by increasing the corporate tax rate from 21% to 28% and raising the top marginal rate to 39.6%.  House Speaker Kevin McCarthy called the Biden budget proposal “completely unserious” and Senate Majority Leader Mitch McConnell said it “..will not see the light of day.”

 

 House Republicans Push Forward with Energy and Permitting Legislation to Curb EPA Powers

 House Republicans have introduced the “Lower Energy Costs Act,” a comprehensive energy and permitting reform package that aims to address long-standing Republican priorities. The legislation, designated as H.R. 1, reflects its importance to the new GOP majority. The package comprises bills advanced by the Energy and Commerce, Natural Resources, and Transportation and Infrastructure committees over the past few weeks. The proposed legislation is set to reach the House Rules Committee during the week of March 27, with the goal of passing it before the end of the month.

 

Republicans say the bill will boost domestic energy supply chains and reverse Inflation Reduction Act policies that were enacted without their support.  The energy package explicitly targets measures that would strengthen fossil fuel production, including facilitating the import and export of natural gas, mandating an increase in offshore oil and gas lease sales, preventing the president from imposing restrictions on fracking, and limiting states’ authority to reject pipelines and gas export facilities that could potentially affect their waterways. It also mandates that four onshore oil lease sales are held in each of at least nine eligible states each year.

 

It also aims to streamline permitting processes while still protecting the environment. Provisions from the Energy and Commerce Committee focus on promoting natural gas exports, easing some permitting related to critical minerals, and repealing the Democrats’ methane fee. The Transportation and Infrastructure Committee’s provisions would limit the ability of states to block projects using Section 401 of the Clean Water Act. Additionally, Natural Resources Committee member Rep. Garret Graves (R-LA) added the “BUILDER Act” to codify Trump-era rules that expedite environmental reviews under the National Environmental Policy Act (NEPA).

 

Despite the bipartisan goal of accelerating permitting, Democrats have opposed portions of the package as it moved through the markup process. They aim to bolster the Biden administration’s energy agenda and defend the Inflation Reduction Act. However, moderate Democrats are hopeful that the House passage will lead to negotiations on a compromise. Senate Energy and Natural Resources Chair Joe Manchin (D-WV) has expressed interest in examining what Republicans pass this month.  Manchin’s effort to pass a bill to speed up the permitting process failed in the previous Congress. Senate Majority Leader Schumer called the bill a “non-starter” but does seem open to working on some sort of permitting reform.

  

House passes WOTUS CRA as EPA defends itself in Texas Lawsuit

On March 9, the U.S. House of Representatives voted 227-198, mostly along party lines, to nullify the contentious Waters of the United States (WOTUS) rule introduced by the Biden administration, which defines which streams and wetlands receive federal protection. The resolution of disapproval (H.J. Res. 27) now proceeds to the Senate. Nine Democrats joined all but one Republican in voting for the Congressional Review Act (CRA) resolution to disapprove the rule.

 

Opponents argue that the Biden rule represents significant federal overreach and it was inappropriate to finalize the regulation while the Supreme Court is considering a case related to the Clean Water Act’s federal reach. The Senate is expected to address its resolution of disapproval this week, requiring a simple majority vote to pass under the CRA. However, President Joe Biden plans to veto the resolution if approved, and opponents are unlikely to obtain the two-thirds majority needed to override a veto.

 

Meanwhile, the EPA is fighting back against Texas and other states seeking to overturn the rule, arguing that the new rule is not significantly different from the current situation. The agency stated that the plaintiffs’ claims of harm are either based on ignoring the rule’s similarity to the status quo or exaggerating the differences between the current situation and the new rule. The EPA further contends that Texas, which claims to face regulatory uncertainty due to the rule, has not demonstrated standing to sue, as uncertainty alone is not sufficient for establishing standing.

 

In Texas v. EPA, Texas is requesting the U.S. District Court for the Southern District of Texas to issue a preliminary injunction against President Joe Biden’s WOTUS rule, scheduled to take effect on March 20.  States and industry groups involved in the lawsuit, including the American Petroleum Institute, claim they will suffer irreparable harm due to the anticipated costs of complying with the new rule. However, the EPA argues that plaintiffs have not demonstrated harm, as the compliance costs stem from existing regulations already in effect, not the new rule.

 

The lawsuits allege that the EPA is overreaching its authority and that the rule is overly vague and premature, as it was finalized in January ahead of the high court’s future ruling in Sackett v. EPA, expected by June. The EPA maintains that the Sackett case has no bearing on Texas’ alleged harms.