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A Tale of Two Policies: Emerging Differences between Federal and Virginia Environmental Policies Saturday, July 20 2019 | The Omni Homestead Resort | Hot Springs, VA

CONTINUING Written Materials LEGAL EDUCATION

A presentation of The Virginia Bar Association’s Environment, Natural Resources and Energy Law Section A Tale of Two Policies: Emerging Differences between Federal and

PRESENTERS Virginia Environmental Policies

Henry R. “Speaker” Pollard, V

With more than two decades of experience in , Henry “Speaker” Pollard can help clients sort through the vast range of environmental and regulatory issues, including those related to water quality, wastewater, sewage, stormwater management, wetlands, water rights, solid and hazardous waste, Superfund, petroleum and chemical storage, air , cultural resources, and species protection at federal, state and local levels.

Speaker has assisted his clients with a broad range of representations, including enforcement defense (administrative, civil, criminal), permitting, real estate and corporate transactions, due diligence investigations, financing risk management, litigated matters, and regulatory and legislative affairs. In particular, Speaker has responded to the mounting concerns associated with greater frequency and severity of flooding in coastal communities and has increased his focus on coastal flooding and resiliency planning issues.

His clients have ranged from financial institutions to power plants, from the government to the private sector, as well as trade groups and individuals. He also has experience working for the Virginia Department of Waste Management/Environmental Quality as an enforcement specialist, where he led and coordinated statewide hazardous waste enforcement actions, developed administrative cases and conducted administrative enforcement proceedings, prepared enforcement policy and assisted with civil litigation and criminal enforcement and prosecution of environmental cases.

Speaker has been recognized as a leading environmental attorney in the U.S. by Chambers USA (2016-present), and he is listed in The Best Lawyers in America© for Environmental Law (2018- present).

Speaker earned an M.B.A. and J.D. from the University of Richmond. He also participated in a summer studies program in marine policy at the Duke University Marine Lab. In addition, he has a B.S. in Chemistry from Hampden-Sydney College.

The biographical information is provided by the speakers or collected from their websites. Jeffery A. Steers

No biographical information provided.

The biographical information is provided by the speakers or collected from their websites. VIRGINIA BAR ASSOCIATION SUMMER 2019 MEETING

ENVIRONMENTAL, NATURAL RESOURCES & ENERGY SECTION CLE JULY 20, 2019

A TALE OF TWO POLICIES: EMERGING DIFFERENCES BETWEEN FEDERAL AND VIRGINIA ENVIRONMENTAL PROGRAMS –

KEY FEDERAL POLICY SHIFTS

Prepared by:

Henry R. (“Speaker”) Pollard, V Williams Mullen 200 South 10th Street, Suite 1600 Richmond, VA 23219 [email protected] (804) 420-6537 VIRGINIA BAR ASSOCIATION SUMMER 2019 MEETING ENVIRONMENTAL, NATURAL RESOURCES & ENERGY SECTION CLE JULY 20, 2019 A Tale of Two Policies: Emerging Differences between Federal and Virginia Environmental Programs – Key Federal Policy Shifts

I. INTRODUCTION

Shifts of environmental regulatory policy between different presidential administrations of different political parties is hardly a new phenomenon: ever since the modern era of environmental protection statutes and regulations began in the Nixon presidency, this environmental policy pendulum has swung to various degrees. The relationship between federal and state environmental program policy direction and administration has likewise changed over time, with the respective roles of the federal government and the states evolving as swings in policy direction and allocation of resources vary over time. This outline explores the rather recent changes in direction of key federal environmental policies and how the Commonwealth of Virginia is staking out its own ground in response to these changes.

II. KEY FEDERAL POLICY DIRECTIONS

When viewed from a broader perspective, the Trump Administration’s overarching environmental policy direction points to a general, or at least partial, unwinding of key regulations and guidance issued during the Obama Administration.1 In certain respects, the recent federal initiatives indicate a course addressing key judicial decisions and long-standing efforts to rebalance the relationship between federal and state roles in administering environmental programs and a retrenchment to narrower perspectives on environmental statutory authority.2

A. FEDERAL. The Trump Administration has established its own tone and direction for many environmental policy and enforcement objectives, typically through its own executive powers expressed through executive orders and proclamations, rather than relying on Congressional action to enact such changes into law. These efforts have also set a general course for environmental policy, either substantively or procedurally, that seem to lay groundwork for or complement more specific initiatives involving litigation or rulemaking. The following actions are some of the more salient executive actions taken in this regard since 2017 that are also particularly significant for Virginia.

1. Regulatory Reform Generally. Almost immediately upon taking office, President Trump initiated several actions to reform the regulatory process generally.

1 By one newspaper’s recent accounting, some 83 actions have been taken by the Trump Administration to reverse or change the course of preexisting environmental regulatory policy. Adja Popovich, Livia Albeck-Ripka, and Kendra Pierre-Louis, “83 Environmental Rules Being Rolled Back Under Trump,” The New York Times (June 7, 2019), available at https://www.nytimes.com/interactive/2019/climate/trump-environment-rollbacks.html. 2 This review in this outline is, for practical purposes, limited to select federal policy changes. A more complete survey of all recent federal environmental policy directions is beyond the scope of this outline. a. Executive Order No. 13,771 - Reducing Regulation and Controlling Regulatory Costs (January 30, 2017).3 President Trump issued this order to curb and control agency regulatory activity in several ways. Perhaps most notable was the requirement that, for every new rule promulgated in fiscal year 2017, two existing rules must be identified for repeal, unless otherwise required by law.4

b. Executive Order No. 13,777 - Enforcing the Regulatory Reform Agenda (February 24, 2017).5 This executive order established regulatory reform officer positions and required formation of regulatory reform task forces within agencies. The task forces were charged with evaluating regulations for recommended repeal, replacement or modification based on a number of factors, such as whether the regulations negatively impact jobs; are “outdated, unnecessary, or ineffective;” result in costs exceeding benefits; “create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies;” “rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard for reproducibility;” or are based on or implement subsequently rescinded or substantially modified executive orders or other Presidential directives.6 Each of these task forces must “seek input and other assistance, as permitted by law, from entities significantly affected by Federal regulations, including State, local, and tribal governments, small businesses, consumers, non-governmental organizations, and trade associations.”7 Many environmental regulations will receive a hard look and will be considered for repeal or modification unless they are in their present form required by law or don’t trigger any of the factors listed above. The interplay of this executive order with Executive Order No. 13,771 is notable. The negative factor associated with science that is not available or insufficiently transparent is also significant given EPA’s proposed rule on this subject discussed below.

2. Environmental Science as Part of the Rulemaking Process. In early 2018, EPA proposed a new approach to the public availability of the science used to support its rule- makings.8 While acknowledging and confirming that the best available science should be used for its rule-makings,

[e]nhancing the transparency and validity of the scientific information relied upon by EPA strengthens the integrity of EPA’s regulatory actions and its obligation to ensure the Agency is not arbitrary in its conclusions. By better informing the public, the Agency in enhancing the public’s ability to understand and meaningfully participate in the regulatory process.9

It may seem that gathering and use of the best available science would have been largely transparent as a matter of course, but the proposed regulation notes that EPA’s efforts in

3 Exec. Order No. 13,771 (Jan. 30, 2017), 82 Fed. Reg. 9,339 (Feb. 3, 2017). 4 Id. at § 2(a), 82 Fed. Reg. 9,339. 5 Exec. Order No. 13,777 (Feb. 24, 2017), 82 Fed. Reg. 12,285 (Mar. 1, 2017). 6 Id. at §§ 3(c) & 3(d), 82 Fed. Reg. 12,285-12,286. 7 Id. at § 3(e), 82 Fed. Reg. 12,286. 8 Strengthening Transparency in Regulatory Science, 83 Fed. Reg. 18,768 (Apr. 30, 2018). 9 Id. at 18769.

2 this regard have been lacking or inconsistent.10 Therefore, the proposed regulation “is designed to change agency culture and practices regarding data access so that the scientific justification for regulatory actions is truly available for validation and analysis.”11 The scope of this new transparency for scientific data and information is tailored to “the dose response data and models” used for “pivotal regulatory science.”12 According to EPA, “pivotal regulatory science’’ includes those

studies, models, and analyses that drive the magnitude of the benefit-cost calculation, the level of a standard, or point-of-departure from which a reference value is calculated. In other words, they are critical to the calculation of a final regulatory standard or level, or to the quantified costs, benefits, risks and other impacts on which a final regulation is based. the kind of scientific data and information previously withheld from public access will now generally be made available, subject to certain exclusions.

In the proposed regulation, EPA noted that it seeks to make such information “available to the public for validation in a manner that honors legal and ethical obligations to reduce the risks of unauthorized disclosure and re-identification,” recognizing that certain data needs to be maintained as confidential to protect test subjects and other personal data and confidential business information.13 EPA should rely on available “peer-reviewed information, standardized test methods, consistent data evaluation procedures, and good laboratory practices to ensure transparent, understandable, and reproducible scientific assessments.”14 EPA intends to use these new data and information transparency standards to new or ongoing significant regulatory actions, even where the research underlying such actions “has already been generated, solicited, or obtained.”15

Comments on this proposed rule were received until mid-August 2018, resulting in 590,000 comments filed, many comments in support and many expressing concerns about the potential for overly strict limitations on data and methods and about disclosure of sensitive personal or population group information used to establish and evaluate dosage information. A final rule has yet to be promulgated. Whether a final rule setting these new protocols for validation and transparency for dosage and modeling will affect any other pending rulemakings by EPA is unclear. However, in the fall of 2018, EPA placed this rulemaking on a longer-term track for final action, and it remains on that track in the latest EPA Unified Regulatory Agenda, indicating the earliest this may be released in final form would be the end of 2019.16

10 Id. at 18769-18770. 11 Id. at 18770. 12 Id. 13 Id. at 18770-18771. 14 Id. at 18770. 15 Id. at 18771. 16 See EPA, Unified Regulatory Agenda and Regulatory Plan, Agency Rule List - Spring 2019, available at https://www.reginfo.gov/public/do/eAgendaMain?operation=OPERATION_GET_AGENCY_RULE_LIST¤t Pub=true&agencyCode=&showStage=active&agencyCd=2000. See also https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201904&RIN=2080-AA14.

3 3. Infrastructure.

a. Executive Order No. 13,766 – Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects (January 24, 2017).17 This executive order sets policy for streamlined infrastructure environmental reviews for “high priority infrastructure projects,” including those for “U.S. electric grid and telecommunications systems and repairing and upgrading critical port facilities, airports, pipelines, bridges, and highways.” The underlying grievance forming the motivation for this policy set the tone:18

Too often, infrastructure projects in the United States have been routinely and excessively delayed by agency processes and procedures. These delays have increased project costs and blocked the American people from the full benefits of increased infrastructure investments, which are important to allowing Americans to compete and win on the world economic stage. Federal infrastructure decisions should be accomplished with maximum efficiency and effectiveness, while also respecting property rights and protecting public safety and the environment.19

The order uses rather firm terms to establish a sense of urgency and provides significant leeway to hurry these projects along. Specifically, “the Chairman of the [Council on Environmental Quality] shall coordinate with the head of the relevant agency to establish, in a manner consistent with law, expedited procedures and deadlines for completion of environmental reviews and approvals for such projects. All agencies shall give highest priority to completing such reviews and approvals by the established deadlines using all necessary and appropriate means.”20

b. Executive Order No. 13,807 - Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects (August 15, 2017).21 As the name suggests, this executive order sets forth new policy to manage and streamline federal environmental review and permitting for infrastructure projects. The order affirms the notions that the federal government must “safeguard our communities and maintain a healthy environment” and “develop infrastructure in an environmentally sensitive manner.”22 These duties are complemented, however, with the objectives that there should be “transparency and accountability to the public regarding environmental review and authorization decisions,” avoidance of “duplicative and wasteful processes,” and that such reviews and project approvals should be performed in “a coordinated, consistent, predictable, and timely manner in order to give public and private investors the confidence necessary to make funding decisions for new infrastructure projects.”23 The order also sets a target for environmental review process for major projects to be completed within two years.24

17 Exec. Order No. 13,766 (Jan. 24, 2017), 82 Fed. Reg. 8657 (Jan. 30, 2017). 18 Id. at § 1, 82 Fed. Reg. 8657. 19 Id. 20 Id. at § 3, 82 Fed. Reg. 8657. 21 Exec. Order No. 13,807 (Aug. 15, 2017), 82 Fed. Reg. 40463 (Aug. 24, 2017). 22 Id. at §§ 2(a) & 2(c), 82 Fed. Reg. 40463. 23 Id. at §§ 2(d)-2(f), 82 Fed. Reg. 40463. 24 Id. at § 2(h), 82 Fed. Reg. 40463.

4 Various protocols are to be established for setting review and permitting milestones and timelines for “major infrastructure projects” and for accountability in meeting them.25 Executive Order No. 13,807 also requires implementation of a “One Federal Decision” process, whereby a lead federal agency coordinates the reviews and approvals needed from relevant federal agencies.26 Review and approvals required pursuant to the National Environmental Policy Act of 1969 (“NEPA”)27 are to be coordinated by the federal lead agency and documented through a single record of decision document (“ROD”), and federal authorizations for construction of major infrastructure projects should be issued within 90 days of issuance of the ROD.28 This executive order also interplays with Executive Order No. 13,766 addressing high priority infrastructure projects.29

Finally, this order revokes Executive Order No. 13,690 (Jan. 30, 2015) entitled “Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input.”30

4. Air Quality, Energy, and Climate Change.

a. Executive Order No. 13,783 - Promoting Energy Independence and Economic Growth (Mar. 28, 2017).31 As part of the Trump Administration’s emphasis on the nation’s energy security and supplies, Executive Order No. 13,783 sets out the broad policy objective “to promote clean and safe development of our Nation’s vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation.”32 This order notes that the nation’s energy supplies vary across “coal, natural gas, nuclear material, flowing water, and other domestic sources, including renewable sources,” and protection and development of these supplies is a matter of national security.33 The order also acknowledges that environmental protection and regulation are part of this purpose, though it also takes the view that the authority for such regulation is limited and that such regulations must be cost-effective and be based on reliable science. To this end, “agencies should take appropriate actions to promote clean air and clean water for the American people, while also respecting the proper roles of the Congress and the States concerning these matters in our constitutional republic.”34 Also, “necessary and appropriate environmental regulations comply with the law, are of greater benefit than cost, when permissible, achieve environmental improvements for the American people, and are developed through transparent processes that employ the best available peer-reviewed science and economics.”35

25 Id. at §§ 4 & 5, 82 Fed. Reg. 40464-40466. 26 Id. at §§ 5(a) & 5(b), 82 Fed. Reg. 40466. 27 42 U.S.C. §§ 4321 et seq. 28 Id. at §§ 5(b)(ii) & 5(b)(iii), 82 Fed. Reg. 40466. 29 Id. at § 5(d), 82 Fed. Reg. 40467. 30 Id. at § 6, 82 Fed. Reg. 40469. 31 Exec Order No. 13,783 (Mar. 28, 2017), 82 Fed. Reg. 16093 (Mar. 31, 2017). 32 Id. at § 1(a), 82 Fed. Reg. 16093. 33 Id. at §§ 1(a) & 1(b), 82 Fed. Reg. 16093. 34 Id. at § 1(d), 82 Fed. Reg. 16093. 35 Id. at § 1(e), 82 Fed. Reg. 16093.

5 To achieve these policy goals, federal agencies are called to review existing rules, guidance and policies that “potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law.”36 Furthermore, Executive Order No. 13,783 revokes or rescinds certain previously issued executive orders, directives and reports addressing energy and climate change policy, namely:

 Executive Order No. 13653 – Preparing the United States for the Impacts of Climate Change (November 1, 2013);

 Presidential Memorandum – Power Sector Carbon Pollution Standards (June 25, 2013);

 The Presidential Memorandum – Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment (November 3, 2015);

 Presidential Memorandum – Climate Change and National Security (September 21, 2016);

 Report of the Executive Office of the President – The President’s Climate Action Plan (June 2013); and

 The Report of the Executive Office of the President – Climate Action Plan Strategy to Reduce Methane Emissions (March 2014).37

In addition, this executive order requires the Council of Environmental Quality (“CEQ”) to rescind its “Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews (“CEQ Final GHG/NEPA Guidance”).38 Agencies are then called to suspend, revoke or rescind any actions derived from or prompted by these executive orders, directives, reports and the CEQ Final GHG/NEPA Guidance.

Other policy mandates set forth in Executive Order No. 13,783 include reevaluation by the EPA of the Obama Administration’s Clean Power Plan and related rules and agency actions for consistency with the order’s policy goals and statements and, as needed, unwind them through administrative or regulatory action.39 The affected final and proposed regulations include: (i) “Carbon Pollution Emission Guidelines for Existing Stationary Sources:

36 Id. at § 1(c), 82 Fed. Reg. 16093. See also id. at § 2, 82 Fed. Reg. 16093-16094 (specific steps to be performed as part of this review). 37 Id. at §§ 3(a) & 3(b), 82 Fed. Reg. 16094. 38 Id. at § 3(c), 82 Fed. Reg. 16094. The final guidance was published at 81 Fed. Reg. 51866 (August 5, 2016). 39 Id. at §§ 4(a)-4(c), 82 Fed. Reg. 16095.

6 Electric Utility Generating Units,” 80 Fed. Reg. 64661 (October 23, 2015) (Clean Power Plan final rule); (ii) “Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units,” 80 Fed. Reg. 64509 (October 23, 2015) (final rule); (iii) “Federal Plan Requirements for Greenhouse Gas Emissions From Electric Utility Generating Units Constructed on or Before January 8, 2014; Model Trading Rules; Amendments to Framework Regulations; Proposed Rule,” 80 Fed. Reg. 64966 (October 23, 2015) (proposed rule); and (iv) “Legal Memorandum Accompanying Clean Power Plan for Certain Issues,” which was prepared as guidance for implementation of the Clean Power Plan (available at https://www.epa.gov/sites/production/files/2015-11/documents/cpp-legal- memo.pdf). EPA must notify the Attorney General of any such actions affecting these regulations or guidance so that any litigation based on them may be stayed or delayed or otherwise adjusted accordingly.40

Additionally, Executive Order No. 13,783 states that, “[i]n order to ensure sound regulatory decision making, it is essential that agencies use estimates of costs and benefits in their regulatory analyses that are based on the best available science and economics.” Accordingly, when determining the dollar value of differences in greenhouse gas emissions caused by federal regulation, agencies should ensure consistency with certain existing regulatory cost-benefit analysis established pursuant to OMB Circular A-4 (September 17, 2003).41 In tandem with this directive, the Interagency Working Group on Social Cost of Greenhouse Gases (“IWG”) was disbanded and certain documents issued by the IWG were “withdrawn as no longer representative of governmental policy.”42

Other directives are given to the Secretary of the Interior to address federal land coal leasing activities and reevaluate, and revised as needed, certain rules and guidance related thereto.43 Finally, the EPA administrator to reevaluate, and revise as needed, existing emission standards for oil and gas exploration to be consistent with this executive order’s policy objectives.44

b. The Affordable Clean Energy (“ACE”) Rule. As a key part of the Obama Administration’s policy of curtailing climate change impacts from greenhouse gas emissions, in 2015, the Obama Administration issued in late 2015 its Clean Power Plan (“CPP”) rule establishing guidelines for reduction of greenhouse gas emissions, namely those of carbon dioxide (“CO2”) from existing fossil-fueled electric utility generating units and some existing

40 Id. at §§ 4(d), 82 Fed. Reg. 16095. 41 Id. at §§ 5(a) & 5(c), 82 Fed. Reg. 16095-16096. 42 Id. at §§ 5(b), 82 Fed. Reg. 16095. The withdrawn IWG documents were: (i) Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (February 2010); (ii) Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis (May 2013); (iii) Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis (November 2013); (iv) Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis (July 2015); (v) Addendum to the Technical Support Document for Social Cost of Carbon: Application of the Methodology to Estimate the Social Cost of Methane and the Social Cost of Nitrous Oxide (August 2016); and (vi) Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis (August 2016). 43 Id. at §§ 6 & 7(b), 82 Fed. Reg. 16096. 44 Id. at §§ 7(a), 82 Fed. Reg. 16096.

7 fossil-fueled industrial units generating power.45 In connection with the issuance of the CPP rule, the Obama Administration also issued at a companion regulation for new, modified and reconstructed fossil fuel-fired electric utility steam generating units imposing new source performance standards for CO2 emissions.46

While states had flexibility under the CPP rule in crafting state implementation plans (“SIPs”) to achieve these reductions, the CPP rule assumes that reductions would be achieved by a combination of efforts at the facility – including heat rate (efficiency) improvements at each plant, conversion from coal to natural gas, and greater reliance on renewable energy – as well as other energy efficiency improvements, conservation easements and emission trading.47 Therefore, the CPP rule guidelines were based in part on the potential for power plants to achieve emission reductions beyond the facility fence-line. The CPP rule imposed significant reductions of CO2, to be phased in from 2022 through 2030, for existing power plants.48 While the rulemaking states that care was taken to avoid disruption to the electric power grid reliability,49 power production industry and many business groups raised concerns that this approach exceeded EPA’s statutory authority, was far too aggressive and risky, and, as a result, could lead to – or at least accelerate – the shutdown of virtually all coal-fired power plants in the nation due to the lack of time and technology to comply with the new CO2 limits.50 Challenges in the courts by power industry members and some states ultimately resulting in a delay of implementation of the CPP.51

As indicated in President Trump’s Executive Order No. 13,783 (as discussed above), EPA reversed course and announced its intent to reevaluate the CPP rule and later issued its proposal to repeal and replace the CPP with the Affordable Clean Energy rule in 2017.52 The stated intent to repeal the CPP rule and the issuance of the proposal to do so were major reasons for the courts to delay implementation of the CPP rule.53 EPA very recently promulgated the ACE Rule in final form, effective September 6, 2019, repealing the CPP rule and replacing it with a very different CO2 emission guideline framework for certain existing

45 Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 80 Fed. Reg. 64662 (Oct. 23, 2015), codified at scattered sections of 40 C.F.R. Part 60. 46 Standards of Performance for Greenhouse Gas Emissions From New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units, 80 Fed. Reg. 64510 (October 23, 2015). 47 See 80 Fed. Reg. 64664-64679, 64707-64710. 48 See 80 Fed. Reg. 64663 & 64666. 49 See 80 Fed. Reg. 64663, 64671 & 64676. 50 See, e.g., Zack Coleman, “Industry to EPA: ‘We Want rule fixed, not just gone,’” E&E News (August 1, 2017), available at https://www.eenews.net/stories/1060058186; https://www.countoncoal.org/2015/12/five-major- problems-with-the-clean-power-plan/ 51 See West Virginia v. EPA, No. 15–1363 (and consolidated cases) (D.C. Cir. October 23, 2015). The U.S. Supreme Court, in an extremely rare move, stayed implementation of the CPP pending further review of the merits of the case by the lower court. West Virginia v. EPA, 136 S. Ct. 1000 (2016) (staying EPA’s "Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units," 80 Fed. Reg. 64,662 (October 23, 2015) pending disposition of the applicants’ petitions for review in the United States Court of Appeals for the District of Columbia Circuit and disposition of any petition by applicant for a writ of certiorari). Following that, and given EPA’s notice that it was planning to repeal the CPP and replace it with the ACE rule, the United States Court of Appeals for the D.C. Circuit continued to stay the CPP through early June 2019. See State of West Virginia v. Environmental Protection Agency, No. 15-1363 (D.C. Cir. April 5, 2019) (order continuing stay of litigation). 52 82 Fed. Reg. 16329 (April 4, 2017); 82 Fed. Reg. 48035 (Oct. 16, 2017). 53 See note 50 above.

8 coal-fired electric utility steam generating units.54 The ACE rule relies more heavily on states to assess feasible potential emission reductions through improved efficiencies using heat rate improvement and operation and maintenance practices over the expected remaining life for each 55 individual power plant and develop facility-specific CO2 reductions for each plant. EPA takes the position in the ACE rule that the CPP rule exceeded statutory authority and that the new approach in the ACE rule is better aligned with such authority.56 Means to assure compliance do allow for carbon-sequestration and co-firing natural gas with coal, but do not include emissions averaging or trading.57 Contrary to the proposed ACE Rule, the final ACE Rule does not include, and defers to a later date, new source review reforms for upgrades to existing power plants to achieve required increased efficiencies.58 Expected legal challenges to the ACE Rule will likely keep its implementation in limbo for some time.

5. Scope of Regulated Waters under the . Federal policy shifts related to regulated waters under the Clean Water Act (“CWA”)59 have been substantial over the past decade. At the heart of the issue is the definition of “waters of the United States,” a term obliquely created by the CWA and used as the basis for establishing the scope of regulated waters for federal protection of waters in a variety of contexts, including permitting and controls related to wastewater and stormwater discharges, wetland protection, and oil spill releases.60

After wrangling with various U.S. Supreme Court cases and other federal court decisions61 addressing the scope of “waters of United States, in 2015, the EPA and the U.S. Army Corps of Engineers (“Corps”) issued the Clean Water Rule in an attempt to resolve lingering uncertainty over the scope of the definition of “waters of the United States” under the CWA.62 However, this rulemaking was challenged based on various concerns that it exceeded or understated statutory authority or otherwise misinterpreted the lawful limits of the scope of such waters as determined in these federal cases. The Clean Water Rule was stayed in thirteen states

54 Repeal of the Clean Power Plan; Emission Guidelines for Greenhouse Gas Emissions From Existing Electric Utility Generating Units; Revisions to Emission Guidelines Implementing Regulations, 84 Fed. Reg. 32520 (July 8, 2019). 55 See 84 Fed. Reg. 32521, 32534-32561. 56 84 Fed. Reg. 32521. 57 84 Fed. Reg. 32544-32549, 32556-32557. 58 84 Fed. Reg. 32521. 59 33 U.S.C. §§ 1251 et seq. 60 The CWA prohibits the discharge of pollutants into navigable waters unless otherwise authorized or permitted by other provisions of the CWA. CWA § 301(a), 40 U.S.C. § 1311(a). “Navigable waters is defined merely as “waters of the United States and the territorial seas.” CWA § 502, 33 U.S.C. § 1362, definition of “navigable waters.” CWA § 402, 33 U.S.C. § 1342, establishes the National Pollutant Discharge Elimination System (“NPDES”) to permit discharges of pollutants via point sources into navigable waters. CWA § 404, 33 U.S.C. § 1344, establishes a permit regime for discharge of dredge or fill material into navigable waters. The Oil Pollution Act of 1990 (“OPA”) addresses liability and requires contingency planning for oil storage and releases that may enter navigable waters. 33 U.S.C. §§ 2701-2762. EPA administers the NPDES and OPA programs and defines “waters of the United States” for purposes of that program. 40 C.F.R. § 122.2. EPA and the U.S. Army Corps of Engineers jointly administer the program for permitting of discharges of dredge or fill material and define “waters of the United States” similarly as used for the NPDES program. 33 C.F.R. Part 328. EPA administers the oil spill regulatory and contingency programs and defines “waters of the United States” similarly as well. 40 C.F.R. §§ 110.1 & 112.2. 61 See United States v. Riverside Bayview Homes, 474 U.S. 121 (1985); Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001); and Rapanos v. United States, 547 U.S. 715 (2006). 62 Clean Water Rule: Definition of “Waters of the United States,” 80 Fed. Reg. 37054 (June 29, 2015).

9 by the U.S. District Court for the District of North Dakota63 and then stayed nationwide by the Sixth Circuit Court of Appeals. However, the Sixth Circuit’s stay was upended by the U.S. Supreme Court in an early 2018 ruling that the Courts of Appeals do not have original jurisdiction to hear challenges to the Clean Water Rule.64 This prompted the Sixth Circuit to lift the stay it had issued.65 Other stays issued by the United States District Court for the Southern District of Georgia and the United States District Court for the Southern District of Texas pertains to a number of other states.66 In early 2018, EPA and the Corps issued a rule setting the date by which the Clean Water Rule would become applicable in February 20, 2020.67 However, the applicability date rulemaking has since been enjoined and vacated by the U.S. District Courts for the District of South Carolina and the Southern District of Washington.68 This has left the Clean Water Rule in effect in 23 states but not in others, such that the pre-Clean Water Rule definition is effective in 26 states, with New Mexico in complete limbo.69 The net result is that the Clean Water Rule is stayed or enjoined in 28 states and remains in effect in 22 states – including Virginia.

a. Executive Order No. 13,778 - Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the “Waters of the United States” Rule (February 28, 2017).70 This Trump Administration executive order compels the EPA Administrator and the Assistant Secretary of the Army for Civil Works to reevaluate and rescind or revise the Clean Water Rule.71 The policy objective if this reevaluation is to determine if the Clean Water Rule operates “to ensure[s] that the Nation’s navigable waters are kept free from pollution, while at the same time promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles of the Congress and the States under the Constitution.”72 Any agency actions or guidance promulgated in connection with the Clean Water Rule are to be similarly reevaluated and rescinded or revised.73 Moreover, in any further rulemakings addressing the definition of the term “navigable waters” as used in the Clean Water Act – the source of the term “waters of the United States” – such rulemakings should be “consistent with the opinion of Justice Antonin Scalia in Rapanos v. United States, 547 U.S. 715 (2006).”74

b. EPA and Corps Subsequent Regulatory Actions. Meanwhile, as noted above, President Trump’s Executive Order No. 13778 required an overhaul of the Clean Water

63 North Dakota v. EPA, 127 F. Supp. 3d 1047, 1051 (D.N.D. 2015); In re EPA & Dep’t of Def. Final Rule, 803 F.3d 804 (6th Cir. 2015). 64 Nat’l Ass’n of Mfrs. v. Dep’t of Def., 138 S. Ct. 617, 624 (Jan. 22, 2018). 65 In re Dep’t of Def. & EPA Final Rule, 713 Fed. Appx. 489 (6th Cir. 2018). 66 See Georgia v. Pruitt, No. 15–cv–79 (S.D. Ga.); Texas v. EPA, No. 3:15–cv–162, 2018 U.S. Dist. LEXIS 160443, at *4 (S.D. Tex. Sept. 12, 2018). 67 Definition of “Waters of the United States’’—Addition of an Applicability Date to 2015 Clean Water Rule,” 83 Fed. Reg. 5200 (Feb. 6, 2018). 68 South Carolina Coastal Conservation League, et al., v. Pruitt, No. 2–18–cv–330–DCN, 2018 U.S. Dist. LEXIS 138595 (D.S.C. Aug. 16, 2018); Puget Soundkeeper Alliance, et al. v. Andrew Wheeler, et al., No. C15–1342– JCC (W.D. Wash. November 26, 2018). 69 For a more complete summary of the litigation and status of the Clean Water Rule, see https://www.epa.gov/wotus-rule/about-waters-united-states. 70 Exec. Order No. 13,778 (Feb. 28, 2017), 82 Fed. Reg. 12,497 (Mar. 3, 2017). 71 Id. at § 2(a), 82 Fed. Reg. 12,497. 72 Id. at § 1, 82 Fed. Reg. 12,497. 73 Id. at § 2(b), 82 Fed. Reg. 12,497. 74 Id. at § 3, 82 Fed. Reg. 12,497.

10 Rule. In turn, these agencies ultimately developed and published in early 2019 a further revised definition of “waters of the United States” reflecting a much closer adherence to Justice Scalia’s interpretation of that term in his Rapanos plurality opinion.75 Accordingly, the agencies are altering their interpretation of the term to include “[t]raditional navigable waters, including the territorial seas; tributaries that contribute perennial or intermittent flow to such waters; certain ditches; certain lakes and ponds; impoundments of otherwise jurisdictional waters; and wetlands adjacent to other jurisdictional waters.”76 Relying on this theme, the proposed rule categorizes in fair detail which waters are included and which are excluded from the definition, noting “that not all waters are ‘‘waters of the United States.”77 It also provides great detail as to what constitutes a “tributary” and an “adjacent wetland,” hoping to resolve remining issues associated with these terms within the existing definition.78

III VIRGINIA’S POLICY RESPONSE TO RECENT FEDERAL POLICY CHANGES

The Commonwealth has over many years developed a mature suite of environmental programs, some based on federal programs and some more unique to Virginia. Pursuant to authorization from the EPA, and through various state agencies, the Commonwealth administers within its borders on a day-to-day basis the major federal environmental statutory programs. However, it has its own solid waste, groundwater withdrawal, and other programs independent of federal programs or oversight. Also quite significantly, Virginia has a broader perspective of regulated surface waters than is set forth in the CWA.79

Virginia has traditionally taken a moderate and relatively steady stance on environmental policy and regulatory program administration and has typically been noted for its business- friendly regulatory climate, winning top accolades in this category again this year.80 At the same time, Virginia has been ranked better than average for the state of its natural resources and environment.81 This balance between business-friendly regulatory approach and protection and the environment has served Virginia well. Whether evolution of Virginia’s legislature make-up and the Northam administration’s environmental policy directives in response to the Trump Administration’s policy initiative, as discussed further below, may alter this balance in a material way has yet to be seen.

75 “Revised Definition of ‘‘Waters of the United States,” 84 Fed. Reg. 4154 (Feb. 14, 2019). 76 84 Fed. Reg. 4154. 77 Id. 78 Id. 79 For example, compare the definition of “state waters” found at Va. Code § 62.1-44.3 to the definition of “waters of the United States” found at 40 C.F.R. § 122.2. 80 By example, last year, Virginia was ranked by Forbes as fourth overall for business, but had number 1 rankings for regulatory climate and quality of life. Forbes, “Best States for Business – the List (2018 Ranking),” available at https://www.forbes.com/best-states-for-business/list/#tab:overall. More recently, CNBC just restored its ranking of Virginia as number 1 for business, its fourth such ranking in the past thirteen years but first win since 2011 and earning a third place for business friendliness. Cohn, Scott, CNBC, “Amazon had it right: Virginia is America’s Top State for Business in 2019” (July 10, 2019), available at https://www.cnbc.com/2019/07/09/virginia-is- americas-top-state-for-business-in-2019.html. 81 See, e.g., U.S. News and World Report, Best States 2019 - Virginia, available at https://www.usnews.com/news/best-states/virginia (Virginia ranked 18th overall among other states, but 9th for air and water quality).

11 Perhaps the earliest major general environmental policy directive by Governor Northam was to initiate a comprehensive review of state environmental regulation through his Executive Order No. 6, issued April 3, 2018, entitled “Executive Order Supporting the Critical Role of the Virginia Department of Environmental Quality in Protection of Virginia’s Air, Water, and Public Health.” (“Northam E.O. #6”)82 The Northam E.O. #6 provides the following policy and regulatory direction aimed largely in response to the changes at the federal level:

B. Evaluate every proposed federal regulatory or guidance modification released after January 20, 2017, regarding air, water, and solid waste to determine the impact on public health, drinking water supplies, and land and water protection. This ongoing review shall include:

a. Determining whether implementation of any proposed federal changes would lead to reduced effectiveness or efficiency in state programs to protect public health and the environment, which should be avoided;

b. Ensuring that any potential rollback in federal protections does not alter DEQ’s existing authority to protect public health, drinking water supplies, and the environment;

c. Assessing any gaps in DEQ resources or authorities necessary to address challenges identified under this review; and

d. Reporting initially to the Secretary of Natural Resources within 180 days on the reviews required under this section and every 90 days thereafter.

These policy directives clearly indicate that the Commonwealth is, at least under the Northam Administration, scrutinizing the federal agency policy directions very carefully.

IV. CONCLUSION

Even this outline’s very partial sampling of federal policy direction taken in the past few years indicates major shifts in environmental regulatory policy that unwind substantially many of the Obama era environmental regulatory initiatives and even take on new ground. Given the close watch of these changes by Virginia’s leadership pursuant to the Northam E.O. #6, it seems clear that divergences in federal and state environmental policies are growing, particularly regarding energy and , climate change, and regulated waters. As the regulatory policy pendulum swings along in the future, the degree of divergence may become even greater or may contract.

82 Governor Ralph Northam, Executive Order No. 6, Executive Order Supporting the Critical Role of the Virginia Department of Environmental Quality in Protection of Virginia’s Air, Water, and Public Health (April 2, 2018), available at available at https://www.governor.virginia.gov/media/governorvirginiagov/executive-actions/eo-6- executive-order-supporting-the-critical-role-of-the-virginia-department-of-environmental-quality-in-protection-of- virginia-s-air-water-and-public-health.pdf.

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The Federal & State Relationship Virginia’s Review of EPA Rollbacks

Jeffery Steers Director of Central Operations/Acting Enforcement Director Virginia Department of Environmental Quality July 20, 2019 Executive Order 6- DEQ Director, in consultation with Secretary of Natural Resources, is directed to report on three primary areas:

• DEQ to perform a comprehensive review of the agency’s permitting, monitoring and enforcement activities across all program areas. • Ensure that any proposed federal actions do not affect DEQ’s existing authority to protect public health, drinking water supplies and the environment. • Work with stakeholders to improve communication with the public and the regulated community and provide more opportunities for proactive education. Virginia Executive Order 6 (EO6)

Evaluate every proposed federal regulatory or guidance modification released after January 20, 2017……..

• a. Would proposed changes lead to reduced effectiveness or efficiency of programs to protect public health and the environment • b. Ensure any potential rollback does not alter DEQ’s existing authority to protect public health and the environment

4 EPA’S AFFORDABLE CLEAN ENERGY RULE

• The Environmental Protection Agency recently finalized the Affordable Clean Energy (ACE) rule which replaces the previous Clean Power Plan • This rule is a step back for power sector CO2 reductions: • Scaled back “fenceline” approach with less emission reductions • Relies mainly on heat rate improvement measures • Prohibits trading or averaging which may not allow for compliance through other more stringent state programs (VA trading rule) • Fails to establish a national baseline which will lead to regulatory uncertainty • Will likely be a significant permitting and administrative burden

5 VIRGINIA CARBON TRADING RULE

• Trading ready carbon cap rule that can be linked to other existing programs such as the Regional Greenhouse Gas Initiative (RGGI) • Would reduce CO2 emissions from Virginia power plants up to 30% by 2030 • Final rule was approved by the State Air Pollution Control Board on April 19th • Rule was published in the VA register on May 27th and became effective on June 26th • Program would begin in calendar year 2020

6 VIRGINIA CARBON TRADING RULE

• Language inserted in the state budget to prohibit participation in a regional trading program and specifically RGGI “Notwithstanding any other provision of the Code of Virginia, no expenditures from the general, special, or other nongeneral fund sources from any appropriation by the General Assembly shall be used to support membership or participation in the Regional Greenhouse Gas Initiative (RGGI)…” • Governor declined to line item veto the budget language in order to avoid a potential protracted legal challenge and directed DEQ to identify other implementation options “First, this budget restricts the Commonwealth’s ability to participate in the Regional Greenhouse Gas Initiative (RGGI) — a critical avenue for reducing carbon emissions in the Commonwealth and addressing the negative effects of climate change, which is impacting the health and safety of people who live, work, and vacation in our great state. The Department of Environmental Quality recently finalized a regulation to reduce carbon pollution from fossil fuel fired power plants by 30 percent over the next decade. While the General Assembly has restricted the Commonwealth from participating in RGGI, I am directing the Department of Environmental Quality to identify ways to implement the regulation and achieve our pollution reduction goals.”

7 EPA Memo/Rulemaking – Once In, Always In

• “Once In, Always In” Policy Rescission • January 25, 2018 Memo Rescinding 1995 Policy • Allows Sources who were major for Hazardous Air Pollutants (HAPs) and applicable to a major Maximum Achievable Control Technology (MACT) standard and who have reduced HAP emissions to below major source thresholds (10/25 tpy) to opt out of the Title V permit program as well as the MACT standard • DEQ estimates approximately 20 sources may potentially ask for this consideration • EPA proposed rule released – publication in the Federal Register is pending • Virginia anticipates submitting comments on proposed rule

8 EPA Memo/Rulemaking – “Emissions Accounting”

• March 13, 2018 - “Project Emissions Accounting under the New Source Review Preconstruction Permitting Program” • Project Netting • Source can take credit for decreases in step 1 • Decreases are not required to be enforceable • Sources are responsible for defining the scope of the project • Easier to avoid PSD • At this time, DEQ is not implementing this memo and continues to apply the 2 step process for MNSR applicability

9 EPA Memo – Reactivation & Aggregation

• April 5, 2018 – Letter on Limetree Bay Terminals – St. Croix Virgin Islands • Addresses reactivation of emission units • New or Existing? • Aggregation of projects • Case Specific • New equipment at source is a modification or new • Case Specific • At this time, DEQ continues to look at projects on a case-by- case basis (e.g. how long shut down, BACT changed?)

10 EPA Memo – “Common Control”

• April 30, 2018 – Letter on Meadowbrook Energy LLC and Keystone Sanitary Landfill, Inc. (Pennsylvania) • Common Control (fewer things defined as common control, therefore less permitting) • How much control one company has over another company • Site Specific Example • Currently, DEQ continues to assess common control on a case- by-case basis

11 EPA Memo – “Adjacent”

• Draft Proposal on the term “Adjacent” in NSR and Title V permitting • Adjacent only refers to proximity ( road or field in between breaking facility apart, or Company A can turn on/off controls at Company B then considered proximate otherwise separate sources) • Adjacent does not consider functional relationship or functional interrelatedness • Goes back to 1980 concept of “plant” • DEQ continues to evaluate on a case-by-case basis

12 EPA Rulemaking – Mercury and Air Toxics Standard (MATS)

• February 7, 2019 – EPA proposal to rescind determination under §112(n)(1)(A) of the Clean Air Act that regulating air toxics from coal- and oil- fired electric generating units (EGU) is “appropriate and necessary” • Also addresses using co-benefits in the cost benefit calculation • DEQ submitted comments strongly opposing the proposal

13 Clean Water Act – Waters of the United States (WOTUS)

• New Definition of Waters • Some ditches, but not all • Introduces “typical year” and procedures to establish what that is • New Exclusions • Groundwater • Prior Converted Cropland • Ephemeral Streams • Wetlands must “abut” or have “a direct hydrological connection” • Result is overall reduction in the number of waterbodies considered as WOTUS

14 Clean Water Act – §401 Water Quality Certifications

• Defines specific review timeframes • No pause for additional information • Defines the scope of issues to be considered • Can only consider issues enumerated in CWA • Compliance/Enforcement based on CWA issues only • Defines the scope of information considered in §401 review • Can only use what the federal agency requires, nothing more • Can’t wait for NEPA to be completed • EPA to revise guidance, communications, training

15 Clean Water Act – 2008 Federal Mitigation Rule

EPA/Corps Seeking Input (comments due 08/09/2019) Regarding:

• Elimination or modification of Interagency Review Team (IRT) process; • Changes needed to improve mitigation bank and in-lieu fee (ILF) program review process; • Changes to address the federal Miscellaneous Receipts Statute; • Changes needed to ILF program accounts; • Changes to facilitate multipurpose compensation projects (mit. credits vs. habitat credits); • Changes to accommodate State/Tribal assumption of the Section 404 program; and • Approaches to quantify stream mitigation credits that better reflect the total amount of stream ecosystem restored, enhanced, or preserved in rivers and larger streams, and stream-wetland complexes, while maximizing available credits and opportunities for larger compensatory mitigation projects within a given watershed. 16 Coal Combustion Residuals

• EPA Rule-making • • EPA finalized certain proposals (effective Aug. 29, 2018) . Provide states with approved CCR permit programs under the Water Infrastructure Improvements for the Nation (also known as WIIN) Act, or EPA where EPA is the permitting authority the ability to use alternate performance standards; . Revise the groundwater protection standard for constituents which do not have an established drinking water standard (known as a maximum contaminant level or MCL); and . Provide facilities that are triggered into closure by the regulations additional time to cease receiving waste and initiate closure • The Waste Board has not incorporated these less stringent provisions. • EPA is planning two additional phases of rulemaking over the next year to address court rulings, WINN Act, and other provisions

17 April 3, 2018 Coal Combustion Residuals

• SB 1398; 2017 Acts of Assembly Ch. 817 • Moratorium in place until May 1, 2018, on closure of Coal Combustion Residuals (CCR) Surface Impoundments in the Chesapeake Bay Watershed • SB 807; 2018 Acts of Assembly Ch. 632 • Moratorium extended until July 1, 2019, on CCR units closing place in Chesapeake Bay Watershed • Dominion Request for Proposals for recycling options sent out July 15, 2018 • Business plan submitted November 13, 2018 • Bremo Power Station permit issued for two impoundments allowed by SB 807

18 Coal Combustion Residuals

• HB 2786/SB 1355; 2019 Acts of Assembly Ch. 650 & 651 • Require closure by removal at four sites (Bremo, Chesapeake Energy Center, Chesterfield Power Station and Possum Point) • CCR must either be disposed in landfill or beneficially reused • Closure must be completed within 15 years • Provides minimum of 6.8 million cubic yards must be recycled from at least two sites • Provide connection to water or testing for residences within .5 miles

19 Coal Combustion Residuals

• Transportation plan required for off-site transport • Continued acceptance and review of bids for recycling • Options for use of local labor • Rate recovery provisions • Effective July 1, 2019

20 Federally Recognized Virginia Tribes

• Pamunkey (King William) • Chickahominy (Providence Forge) • Eastern Chickahominy (Providence Forge) • Upper Mattaponi (King William) • Rappahannock (King and Queen) • Monacan (Madison Heights) • Nansemond (Suffolk) Response to Vacatur of Certain Provisions of the Definition of Solid Waste (DSW) Rule

• Published 83 FR 24664, 05/30/2018

• EPA revised the 2015 DSW final rule in response to a court order that vacated a few provisions and reinstated certain other prior regulatory requirements from the 2008 rulemaking. EPA is not requiring states to adopt these changes. DEQ is recommending that the 2018 DSW final rule changes not be adopted as DEQ believes the regulations already in place are more protective.

22 Guidance for State Agencies

• The tribes are sovereign nations. • Federal recognition brings with it a variety of federal grant opportunities. • Pamunkey Tribe received General Assistance Program (GAP) grant from EPA • If a tribe’s land becomes “Indian country,” a legal term, then questions about the preemption of certain state laws could arise. Working with EPA Region 3

• Performance Partnership Agreement project • Initiated when Pamunkey was the only federally recognized tribe • Virginia tribes are the only ones in Region 3 • Goal of project is to establish an effective working relationship for EPA, DEQ and the tribes • SOP document signed in September. • Agreed to monthly calls between DEQ and EPA • Annual face-to-face meeting • With federal recognition comes “tribal consultation”

* There is state level consultation for all state/federally recognized tribes, but mostly related to cultural/historic resources Site Suitability – Virginia Air Pollution Control Law §10.1-1307 E

• The Board in making regulations and in approving variances, control programs, or permits, and the courts in granting injunctive relief under the provisions of this chapter, shall consider facts and circumstances relevant to the reasonableness of the activity involved and the regulations proposed to control it, including:

25 Site Suitability – Virginia Air Pollution Control Law §10.1-1307 E – Four Factors

• 1. The character and degree of injury to, or interference with, safety, health or the reasonable use of property which is caused or threatened to be caused; • 2. The social and economic value of the activity involved; • 3. The suitability of the activity to the area in which it is located; and • 4. The scientific and economic practicality of reducing or eliminating the discharge resulting from such activity.

26 Questions & Discussion

Jeffery A. Steers Virginia Dept. of Environmental Quality 804.698.4079 [email protected]

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