In our latest installment of our video series on important regulatory and legislative events in the first 100 days of the Biden Administration, Baker Botts Senior Associate Joyce Adetutu discusses an interim final rule that the Biden Administration intends to allow. This rule would authorize the Commerce Department to prohibit or restrict U.S. transactions involving information and Communications Technology and Services (ICTS), and "foreign adversaries" to go into effect as scheduled on March 22. 

Baker Botts Partner Paulina Williams provides an update on the Waters of the United States Rules.

Partner George Fibbe discusses the Biden Administration's Interagency Working Group on the Social Cost of Greenhouse Gasses (IWG) which issued a Technical Support Document presenting interim estimates of the social cost of greenhouse gasses - Carbon Dioxide, Methane and Nitrous Oxide. 

We will continue to provide weekly updates on relevant administrative and legislative actions through the first 100 days.

Press reports indicate that the Biden Administration intends to allow an interim final rule authorizing the Commerce Department to prohibit or restrict U.S. transactions involving Information and Communications Technology and Services, or ICTS, and “foreign adversaries” to go into effect as scheduled on March 22. The rule, published in January, was issued pursuant to Executive Order 13873, issued by former-President Trump in May 2019.

Under the interim rule, ICTS transactions that are pending, initiated, or completed on or after January 19, 2021 may be reviewed and potentially restricted by Commerce if they satisfy three criteria:

First, the transaction involves certain categories of ICTS, including critical or network infrastructure, sensitive personal data, surveillance technology, communication software, or other emerging technologies;

Second, the ICTS at issue is designed, developed, manufactured, or supplied by persons owned or controlled by, or subject to the jurisdiction of, a “foreign adversary,” which includes China, Russia, Iran, North Korea, Cuba, and the Maduro Regime; and

Third, the transaction poses an “undue or unacceptable risk” to U.S. national security, as determined by Commerce.

Commerce intends to implement and publish procedures for entities to seek pre-approval of their ICTS Transactions, akin to the CFIUS process for investments in U.S. businesses, by May 19. 

Now for the “latest on the Waters of the US rules.”  The 10^th Circuit ruled this week that a Colorado district court erred by blocking the Trump Administration’s 2020  WOTUS Rule from going into effect, meaning that the 2020 rule is set to go back in effect in Colorado.

The 2020 rule is currently in effect in the other 49 states. Commenting on the importance of the 2020 rule, the Tenth Circuit stated :“Although it’s unclear precisely how many miles of waterways and acres of wetlands the NWPR puts outside the reach of the Clean Water Act, the rule undisputedly represents a significant reduction in the scope of jurisdiction the Agencies have asserted in the past.” 

The court also recognized that the term “waters of the US” has been “the subject of ongoing debate for nearly five decades” and “[y]et the meaning of the phrase, which the [CWA] does not define, remains elusive and unpredictable.“ And that court further noted that obtaining a Section 404 permit “is a costly and lengthy process.” IN reversing the district court injunction, the Tenth Circuit found that the district court failed to properly evaluate whether Colorado would be irreparably harmed by the 2020 rule.

Looking ahead, the Biden administration has stated an intent to reconsider the 2020 rule, although it is assumed that the reconsideration and ultimate replacement effort would take months, if not a year or more. Meanwhile, the EPA Administrator-nominee, Michael Regan, said last week that he is open to a middle-ground approach – a rule that is somewhere between the Trump Rule in 2020 and the Obama Rule in 2015.  

On Feb 26, 2021, the Biden Administration’s Interagency Working Group on the Social Cost of Greenhouse Gasses (IWG) issued a Technical Support Document presenting interim estimates of the social cost of greenhouse gasses – Carbon Dioxide, Methane, and Nitrous Oxide. 

The social cost of greenhouse gasses assesses a monetary value of the net harm to society associated with the addition of greenhouse gasses to the atmosphere each year. 

Assessment of the social cost of carbon began in the Bush Administration and was later standardized across agencies in the Obama Administration, when the Interagency Working Group published estimates for the social cost of greenhouse gasses in 2010.

President Trump Disbanded the IWG in 2017 and directed agencies to follow an alternative valuation method for greenhouse gasses, and his administration’s approach reflected a social cost of carbon dioxide in the range of $1 - $7 per ton. The Biden Administration reconvened the interagency working group, which has now published estimates for the social cost of each of Co2, Methane, and Nitrous Oxide at various discount rates, in 5-year increments between 2020 and 2050. In particular, the IWG’s estimates would suggest a social cost of carbon dioxide, at least for the time being, similar to that Obama Administration which calculated it at around $50 per ton.

The IWG will develop final estimates of the social cost of greenhouse gasses for publication in 2022.  The overall effect will be that the cost-benefit analysis of potential climate-related regulations will be substantially more favorable for regulatory action.

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