The Need to Be Green: Focus on Environmental Sustainability Can Inure to Bottom Line for Cannabis Industry
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
A recent article published in Politico highlights some of the potential impacts of cannabis production on the environment. As the production of cannabis accelerates across the United States, it is becoming increasingly likely that the environmental impacts of cannabis production will become more regulated especially in the areas of energy use and water reliance. Cannabis companies would be well served to ensure that they have effective environmental management strategies in place to not only ensure continued compliance but also to reduce the companies’ environmental footprint that could in turn result in significant cost savings.
For example, according to the article, a typical growing operation can consume up to 2,000 watts of electricity per square meter for indoor growing operations as compared to 50 watts of electricity for growing other leafy greens such as lettuce. According to a recent study, at least one expert estimates that cannabis production accounts for about one percent of electricity consumption in the United States. Depending on the source of electricity, greenhouse gas emissions may be generated in the course of energy production that could be attributable to the cannabis operation’s carbon footprint. President Biden is focused on reducing greenhouse gas emissions and one the key focus industries for President Biden is the agricultural industry. Implementing an energy efficiency program with a focus on renewable energy sources may allow cannabis companies to be better positioned to comply with future regulations while at the same time reducing overall energy costs.
Although not discussed in the article, cannabis production can be a fairly water intensive process with some studies estimating usage as high as six gallons per plant. A recent study concluded that by 2025, total water use in the legal cannabis market is expected to increase by 86%. As water scarcity issues become more prevalent especially in light of the changing climate, ensuring adequate sources of water will be critical to ensuring the ability to continue to grow cannabis plants. At the same time, adopting effective water conservation procedures will allow facilities to reduce their environmental footprint with resulting cost savings.
For more detailed insight on these issues, please click here for an article that was recently published in the Cannabis Law Journal.
EPA to Revise or Replace Trump-Era Clean Water Act Rules, But Will Leave Existing Rules In Place For Now
By Allison A. Torrence
The U.S. Environmental Protection Agency (“EPA”), under Administrator Michael Regan, has begun the process of reviewing and revising two key Clean Water Act (“CWA”) rules: The Navigable Waters Protection Rule and the CWA Section 401 Certification Rule. In recent court filings in cases where litigants have challenged both of these Trump-era rules, EPA has requested those cases be remanded because EPA has commenced new rulemaking processes that will revise or replace the challenged rules. However, if the courts grant EPA’s requests, EPA has requested that the existing rules remain in effect until EPA finalizes replacement rules through the formal notice and comment rulemaking process.
The first of the two key CWA rules at issue is the Navigable Waters Protection Rule, which defines “Waters of the United States”. This is a significant rule and definition because the jurisdiction of the CWA is limited to Waters of the United States. Thus, by setting the definition of Waters of the United States, EPA establishes the reach of the CWA. Due to the significance of this definition, it has been widely contested throughout the years and every attempt by EPA and the U.S. Army Corps of Engineers to promulgate a definition has faced legal challenges.
In 2019, the Trump Administration rescinded the Obama-era Waters of the United States rule and in 2020, issued the Navigable Waters Protection Rule, narrowing the definition of Waters of the United States. The most significant change in the Trump rule is that the new definition excludes ephemeral waters (those flowing only in direct response to precipitation) and many wetlands that are near other jurisdictional waters but lack a physical or surface connection to them.
In several court filings in June, EPA has stated its plans “to commence a new rulemaking to revise or replace the [Navigable Waters Protection] rule.” Notably, EPA is not requesting vacatur of the existing rule during the rulemaking process.
The second CWA rule facing a similar fate is the CWA Section 401 Certification Rule. Under the CWA, a federal agency may not issue a permit or license for an activity that may result in a discharge into a Water of the United States unless a Section 401 Certification has been issued verifying compliance with water quality requirements. States and authorized tribes are generally responsible for issuing Section 401 Certifications, and they are required to act on a Section 401 Certification request “within a reasonable period of time (which shall not to exceed one year) after receipt” of such a request. 33 U.S.C. § 1341(a)(1).
The Trump EPA issued the final CWA Section 401 Certification Rule on July 13, 2020, with the goal of expediting infrastructure permitting by making the 401 Certification process quicker. The biggest changes made by this rule were limiting the scope of state and tribal certification review and limiting the imposition of conditions in the certifications. Just as with the Navigable Waters Protection Rule, EPA has now indicated in court filings (and on its website) that the Section 401 Certification Rule is under review and will be revised or revoked, but also will not be vacated in the interim.
EPA has a lot of work ahead to propose new versions of these rules for public review and comment. Promulgation of final rules will therefore be many months, if not more than a year away. In the meantime, environmental groups and other challengers have indicated they will continue to challenge the Trump-era rules still in effect. The Corporate Environmental Lawyer blog will keep a close watch and report on all key developments.
Supreme Court Procedural Clarity Provides Win for Industry in Climate Case
By Leah Song
On May 17, 2021, the United States Supreme Court ruled 7-1 that the Fourth Circuit should have considered all of the fossil fuel companies’ grounds for removal to federal court in the BP PLC, et al. v. Mayor and City Council of Baltimore case.
As previously discussed by the Corporate Environmental Lawyer blog, the underlying litigation involves claims asserted in Maryland state court by the City of Baltimore against various fossil-fuel companies for damages associated with climate change. In its complaint, Baltimore asserted claims against the industry for public nuisance, private nuisance, strict liability failure to warn, strict liability design defect, negligent design defect, negligent failure to warn, trespass, and violations of Maryland’s Consumer Protection Act.
In response to Baltimore’s complaint, the fossil fuel companies sought to remove the action to federal court, as they have done in all of the state court actions filed by municipalities and states making similar claims. The fossil fuel companies’ removal petition was based on multiple grounds, including the “federal officer” removal provision, 28 U.S.C. §1442(a)(1), and multiple other federal statutes that industry believed justified federal court jurisdiction. The City sought remand to state court, and the federal district court, after having reviewed each of the removal arguments, found that industry had not asserted an appropriate basis for federal jurisdiction. Industry then appealed that district court remand decision to the U.S. Court of Appeals for the Fourth Circuit, pursuant to 28 U.S.C. §1447(d), which expressly authorizes appellate review for removals based on 28 U.S.C. §1443 (civil rights removal), as well as §1442.
On March 6, 2020, the Fourth Circuit affirmed the district court’s remand order, but did so only after reviewing the industry’s right to removal under the federal officer removal statute, 28 U.S.C. §1442(a)(1). The Fourth Circuit found that 28 U.S.C. §1447(d) limited its appellate review solely to that issue, and not any of the other bases that industry had asserted in support of its argument for federal removal jurisdiction. The Fourth Circuit’s decision regarding the scope of review under § 1447(d) was consistent with prior decisions from the First, Ninth and Tenth circuits but conflicted with a previous decision from the Seventh Circuit.
On March 31, 2020, the fossil-fuel companies filed a petition for a writ of certiorari in the United States Supreme Court, seeking review of the question of whether the statutory provision prescribing the scope of appellate review of remand orders “permits a court of appeals to review any issue encompassed in a district court’s order remanding a removed case to state court…” The companies argued that the Fourth Circuit had improperly ignored several alternative grounds justifying removal of the case to federal court, including that federal common law governs claims of interstate air pollution. The Supreme Court granted a writ of certiorari to review the case on October 2, 2020.
On May 17, 2021, the Supreme Court ruled that the Fourth Circuit erred in holding that it lacked jurisdiction to consider all of the defendants’ grounds for removal under §1447(d). BP PLC, et al. v. Mayor and City Council of Baltimore, 593 U.S. ____(2021). The Court held that, once the defendants removed the case in reliance on §1442 “and the district court ordered the case remanded to the state court, the whole of its order became reviewable on appeal.” Slip op., No. 19-1189, at 5. The Court based its decision on an interpretation of the language of §1447(d). The decision, authored by Justice Gorsuch, emphasized in the second sentence of its opinion that “the merits of [the City’s climate change] claim have nothing to do with this appeal. The only question before us is one of civil procedure[.]” Id. at 1. The Supreme Court also noted that it would not consider the merits of the defendants’ removal arguments, finding that “the wiser course is to leave these matters for the Fourth Circuit to resolve in the first instance.” Id. at 14.
Justice Sotomayor wrote the lone dissent, based on her view that the longstanding rule has been that remand orders are generally not subject to appellate review. Slip op. at 1 (Sotomayor, J., dissenting). Justice Sotomayor asserted that the majority’s interpretation “lets defendants sidestep §1447(d)’s bar on appellate review by shoehorning a §1442 or §1443 argument into their case for removal. In other words, it lets the exception swallow the rule.” Id. at 2 . “Unfortunately, I fear today’s decision will reward defendants for raising strained theories of removal under §1442 or §1443 by allowing them to circumvent the bar on appellate review entirely.” Id. at 7.
Justice Alito took no part in the consideration or decision of this case.
Although the case is now remanded for further consideration to the Fourth Circuit to consider the additional bases raised by defendants in support of their removal petition, parties across the country now have clarity as to which arguments the appellate court must consider when reviewing removal petitions.
Jenner & Block’s Corporate Environmental Lawyer will continue to update on climate change litigation cases as they unfold.
EPA Announces Plans to Require Additional Chemical Reporting under its Toxic Release Inventory
By Matthew G. Lawson
On Friday, April 30, 2021, the Biden Administration’s Environmental Protection Agency (EPA) announced significant steps the agency intends to take under the Toxics Release Inventory (TRI) Program to implement expanded reporting requirements for companies that store and utilize hazardous chemicals, including new obligations to report the storage, use and any releases of ethylene oxide, a commonly used industrial chemical and sterilant for medical equipment and supplies. The TRI Program, which was established under Section 313 of the Emergency Planning and Community Right-to-Know Act (EPCRA), serves as a resource for the public to learn about annual chemical releases, waste management, and pollution prevention activities reported by nearly 22,000 industrial and federal facilities. Under the TRI Program, U.S. facilities operating in various industry sectors must report annually the quantity of certain chemicals they release to the environment and/or manage through recycling, energy recovery and treatment. A “release” of a chemical in the context of the TRI Program means that the chemical is emitted to the air or water, or placed in some type of land disposal.
A major component of EPA’s announcement is the agency’s intent to regulate ethylene oxide. The use and release of ethylene oxide by medical device sterilization companies have prompted a number of recent high-profile lawsuits alleging that releases of the chemical into the environment have caused increased cancer rates in communities adjacent to the facilities. EPA’s announcement notes that many existing sterilization facilities “are located near areas with Environmental Justice concerns,” and that individuals living adjacent to these facilities may be at a heightened risk from exposure to ethylene oxide. “Every person in the United States has a right to know about what chemicals are released into their communities,” EPA Administrator Michael S. Regan stated. “By requiring new and more data on chemical releases from facilities, EPA and its partners will be better equipped to protect the health of every individual, including people of color and low-income communities that are often located near these facilities but have been left out of the conversation for too long.” In the coming months, EPA will provide further details regarding the specific actions the agency intends to take to require sterilization facilities that use ethylene oxide to report under the TRI Program.
In addition to implementing new reporting requirements for companies utilizing ethylene oxide, EPA announced several other steps the agency plans to take that will increase reporting and public access to information under the TRI Program, including:
- Finalizing a longstanding proposed rule that will add natural gas processing facilities to the industry sectors covered under the TRI Program thereby increasing the publicly available information on chemical releases and other waste management activities of TRI-listed chemicals from this sector;
- Continuing to add new per- and polyfluoroalkyl substances (“PFAS”) to the list of chemicals that require reporting under the TRI Program, including the addition of perfluorobutane sulfonic acid (PFBS) following EPA’s toxicity assessment of the substance;
- Proposing a new rule to add high-priority substances under the Toxic Substances Control Act (TSCA) and chemicals included in the TSCA workplan to the list of chemicals that require reporting under the TRI Program; and
- Increasing public access to TRI data through improved search functionality and improved website interface.
EPA’s announcement marks the most recent step by the agency to implement the Biden Administration’s focus on environmental justice as a top priority of its environmental agenda. On the same day that EPA announced the agency’s updated TRI policy, EPA circulated a memorandum to all EPA-staff, indicating the additional actions the agency intends to take to fulfill its environmental justice commitment. These actions include: (1) increasing inspections of facilities that pose the most serious threats to overburdened communities; (2) focusing on implementing remedies that benefit communities, including through the incorporation of supplemental environmental projects; (3) increasing communications with overburdened communities to develop improved cleanup and non-compliance solutions; and (4) identifying locations where state regulators are not adequately protecting local communities and taking increased enforcement actions to “pick up the slack” if state regulators have not taken appropriate or timely actions.
The Corporate Environmental Blog will continue to follow developments on this issue in the coming months as EPA provides additional details on the specific actions it intends to take to expand the TRI Program.
Earth Day 2021: CERCLA and RCRA in The Biden Administration: Elevating Climate Change and Environmental Justice in Addressing Hazardous Wastes
By Andi S. Kenney
We close out the Corporate Environmental Lawyer Blog's weeklong celebration of Earth Day with the two federal programs aimed at cleaning up existing toxic waste sites and preventing the creation of new ones: the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) and the Resource Conservation and Recovery Act (“RCRA”). The Trump Administration considered the remedial and regulatory roles of the CERCLA and RCRA programs as core EPA functions, so it did not target them for regulatory rollbacks like it did for many federal clean air (including climate change), clean water, and environmental review requirements. Nonetheless, the new occupant of the White House will change the focus of both these programs—in large part by elevating climate change and environmental justice considerations in decision-making.
Early in the Trump Administration, Scott Pruitt, then the EPA Administrator convened a Superfund Task Force that identified five priorities: (1) expediting cleanup and remediation, (2) invigorating responsible party cleanup and reuse, (3) encouraging private party investment, (4) promoting redevelopment and community revitalization, and (5) engaging partners and stakeholders. The Task Force set forth 42 recommendations to achieve those goals.
Following the Task Force recommendations, the Trump Administration prioritized 54 sites and completed remediation and delisted over 50 sites from the National Priorities List. The focus was often sites with redevelopment potential. At many of those sites, surprisingly aggressive settlements with potentially responsible parties funded the work. At the same time, however, the number of unfunded orphan sites (those with remediation plans but no funding source) grew as federal appropriations were limited. By January 2021, there were at least 34 unfunded orphan sites, many in at-risk areas.
The Biden Administration is expected to retain the goals and many of the recommendations from the Task Force, but it will redeploy resources to meet its priorities. Climate change (a phrase that literally had been removed from the Superfund Strategic Plan), and environmental justice (which seeks to address the disproportionately high health and environmental risks found among low-income and minority communities) will reemerge as key considerations in CERCLA decision-making, especially in site prioritization and remediation plans. A 2019 GAO report indicated that these issues are often linked. It identified roughly 2/3 (975/1570) of the NPL listed Superfund sites as vulnerable to climate-related risks—hurricanes, flooding, wildfires and/or rising sea levels. Many of these sites were also located near low-income and minority communities. Biden will seek to pair his climate change and environmental justice goals with his redevelopment and infrastructure plans through Brownfield grants and other incentives.
The Biden Administration has also signaled it will address emerging contaminants. As noted by Steve Siros in Wednesday's Corporate Environmental Lawyer Blog, EPA is likely to designate per- and polyfluoroalkyl substances (“PFAS”) as “hazardous substances” under CERCLA and may set a maximum contaminant level (“MCL”) for these compounds under the Safe Drinking Water Act (“SDWA”). These actions could have a significant impact on new and existing cleanups. First, designating PFAS a “hazardous substance” would require facilities to report PFAS releases, which could trigger more investigations and cleanups. Second, any PFAS limits under the SDWA or state regulations would become Applicable or Relevant and Appropriate Requirements (“ARARs”) that would have to be considered in CERCLA listing and remedy decisions. Finally, these changes would require PFAS contamination to be evaluated in EPA’s five year review at each site and potentially trigger reopeners in prior settlements. Tighter standards for other chemicals, such as 1,4-dioxane, could have similar results.
Resources are already being deployed to support these efforts and additional funding for Brownfield and Superfund projects is in the works. The American Rescue Plan Act of 2021 provides $100 million for EPA grants to address disproportionate environmental harms to at-risk populations and air quality monitoring. According to the American Jobs Plan Fact Sheet dated March 31, 2021, the Administration is proposing an additional $5 billion for Brownfield and Superfund sites and an additional $10 billion to monitor and remediate PFAS. The Administration is also proposing to restore the Superfund tax, which expired in 1995, to ensure that resources are available in the Superfund Trust to address unfunded site cleanups. Similarly, the Administration is considering reversing the financial responsibility exemption for chemical manufacturers, petroleum and coal products manufacturers and electric power generation, transmission and distribution facilities that was issued in the waning days of the previous Administration.
Like CERCLA, RCRA was not a focus of the Trump Administration’s regulatory rollbacks—though funding cutbacks affected rule development and enforcement. The Biden Administration has already signaled that it intends to reenergize enforcement, including criminal prosecutions, which may lead to an increase in federal overfiling in RCRA enforcement actions, especially in states with lax enforcement histories.
Trump’s most significant RCRA actions addressed coal ash, referred to as Coal Combustion Residuals (“CCR”). The Trump CCR rules, which were promulgated after the Obama-era CCR rule was vacated, are being reviewed for consistency with Biden’s Executive Order Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis. Likewise, the CCR Permit Program and the Beneficial Use Rules or Electric Utilities, which were pending on Inauguration Day, are subject to the Presidential memorandum freezing regulations pending review.
Biden’s focus on environmental justice and climate change will impact RCRA permit evaluations and enforcement, both in process and in substance. Procedurally, those seeking RCRA permits, and even RCRA permitted facilities, may be subject to additional notification requirements, more community involvement, and greater scrutiny. Substantively, the social cost of carbon and chemical exposure risks will become part of the evaluation.
Biden’s other climate change initiatives may have more significant RCRA impacts down the road. For example, the push toward electric vehicles will reduce the demand for gas stations at current levels. That change, combined with the fact that underground storage tanks installed or upgraded to comply with the 1988 underground storage tank standards are nearing the end of their useful lives, will trigger tank closures throughout the country. More broadly, the transition from a fossil fuel economy to a clean fuel economy will reveal many other environmental issues that will require substantial efforts and resources to address.
The Biden Administration is already changing the course of environmental law. With CERCLA and RCRA, the shifts will be more subtle than in other areas, but the focus on climate change and environmental justice will have profound impacts on whose voices are heard and where, and how, resources are deployed. The Corporate Environmental Lawyer Blog will continue to monitor and report on developments in these areas and others. In the meantime, thank you for sharing Earth Day (and Earth Week) with us!
Earth Day 2021: Heightened Chemical Regulation under the Biden Administration
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
A key platform of President Biden’s environmental agenda is increased regulatory scrutiny with respect to chemical substances under the Toxic Substances Control Act (TSCA). Regulating chemicals in order to minimize the threat to human health and the environment is clearly also critical to achieving the aims and goals of Earth Day, especially considering that the publication of Rachel Carson’s Silent Spring helped spark the global environmental movement that eventually culminated in the first Earth Day in 1970.
Turning now to the present, in the waning months of the Trump administration, there was a flurry of U.S. EPA activity under TSCA, including the issuance of risk evaluations for a number of high-priority chemical substances, including asbestos, 1,4-dioxane, and trichloroethylene. Notwithstanding that these risk evaluations concluded that at least some uses of each of the ten high priority chemicals posed an unreasonable risk, these risk evaluations were widely criticized for failing to take into consideration reasonably foreseeable uses or failing to adequately consider various scientific studies. There had been much speculation that President Biden would reject all of the Trump-era TSCA risk evaluations and in fact, one of President Biden’s first actions in the White House was to direct U.S. EPA to review the TSCA risk evaluation process as well as the methylene chloride risk evaluation specifically.
Rather than throwing the baby out with the bathwater, however, U.S. EPA is moving forward to develop risk mitigation plans for each of these high priority chemicals. At the same time, Michal Freedhoff, the acting assistant administrator for U.S. EPA’s Office of Chemical Safety and Pollution, noted that U.S. EPA would be taking a hard look at these risk evaluations. In a prepared statement, Ms. Freedhoff stated:
Our goal is to allow risk management actions on these first ten chemicals to move forward as much as possible, while looking back surgically at specific areas in some of the risk evaluations to supplement them as appropriate in order to ensure we are meeting our statutory obligations and using the best available science to truly protect human health and the environment.
As to the next 20 chemicals in the risk assessment pipeline, U.S. EPA has already announced that it will reassess its TSCA risk evaluation process, including refining its approach for selecting and reviewing scientific studies. U.S. EPA noted that it would not rely on U.S. EPA’s Application of Systematic Review in TSCA Risk Evaluations, a guidance document issued by U.S. EPA in 2018 that was much maligned by the National Academy of Scientists.
One can also expect an increased focus on environmental justice issues by U.S. EPA in connection with evaluating the risks posed by chemical substances. This will most likely play out in connection with an increased focus on chemical substance exposure for fence-line and front-line communities during the risk evaluation process.
Finally, there will also be increasing pressure on the Biden Administration to regulate new emerging contaminants such as per- and polyfluoroalkyl substances (PFAS) under both TSCA and the Safe Drinking Water Act. PFAS compounds have not yet been considered for prioritization under TSCA but are likely to be on a list of high priority chemicals in the future. In the meantime, U.S. EPA is likely to move forward with designating at least PFAS compounds as hazardous substances under CERCLA as well as evaluating whether to set an MCL for these compounds under the Safe Drinking Water Act.
Please check back on Jenner & Block’s Corporate Environmental Lawyer for more Earth Day content throughout the week.
Earth Day 2021: Climate Change under the Biden Administration
By Leah Song
President Biden has made climate change a main focus of his administration. At the beginning of his term, President Biden issued several executive orders addressing climate change: “Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” (January 20, 2021) and “Executive Order on Tackling the Climate Crisis at Home and Abroad” (January 27, 2021) (“Day 7 Environmental Executive Order”). This article will highlight the administration’s international focus, climate justice, climate litigation, and several priorities of the recent executive orders.
As President Biden promised prior to inauguration, he recommitted the U.S. to the Paris Climate Agreement, which is intended to limit the global temperature increase to 2 degrees Celsius above pre-industrial levels. Trump had announced his intent to terminate the U.S.’s involvement in the Paris Climate Agreement shortly after taking office, but due to the rules, was not able to formally withdraw until November 4, 2019, which became final a year later on November 4, 2020. The U.S. had originally committed to cut GHG emissions by at least 26% below 2005 levels by 2025. Countries were supposed to submit new targets for 2030 by the end of 2020. The Biden administration will likely submit its updated Nationally Determined Contribution (“NDC”) by the end of 2021 in time for the COP26 event scheduled at the end of the year. Given the rollbacks during the Trump administration and predicted increase in emissions as the world recovers from the COVID-19 pandemic, President Biden will need to carefully consider the new target NDCs.
Keeping with the international focus, the Biden administration committed to treating climate change as a national security threat and fully integrating climate change into foreign policy and national security strategies. President Biden selected former Secretary of State John Kerry as the Special Presidential Envoy for Climate and to sit on the National Security Council. Kerry’s role is complemented by Gina McCarthy, White House National Climate Advisor, and Ali Zaidi, Deputy White House National Climate Advisor, in the White House Office of Domestic Climate Policy. The Day 7 Environmental Executive Order also discusses the establishment of a National Climate Task Force, working across 21 federal agencies and departments to enable a “whole-of-government” approach to combatting the climate crisis. For summaries of the recent National Climate Task Force meetings, click here and here.
During his campaign and into his presidency, President Biden has made clear his focus on environmental and climate justice. The Day 7 Environmental Executive Order establishes the White House Environmental Justice Advisory Council and the White House Environmental Justice Interagency Council in order to prioritize environmental justice and ensure a “whole-of-government” approach to addressing current and historical environmental injustices. There will be a focus on environmental justice monitoring and enforcement through new or strengthened offices at the U.S. Environmental Protection Agency, Department of Justice, and Department of Health and Human Services.
In time for Earth Day, the administration invited 40 world leaders to the Leaders Summit on Climate that will be hosted on April 22 and 23. The virtual Leaders Summit will be live streamed for public viewing. For an initial overview of the Leaders Summit, click here.
Check back on Jenner & Block’s Corporate Environmental Lawyer for more Earth Day content throughout the week.
Reflections on Earth Day, 2021
By Gabrielle Sigel, Co-Chair, Environmental and Workplace Health and Safety Law Practice
This week, as we celebrate Earth Day on April 22, Jenner & Block’s Environmental and Workplace Health and Safety Law Practice will be focusing, each day, on a different aspect of the environment and how this year will affect our planet. I thought I would begin our week-long focus on Earth Day with a more personal reflection.
This past pandemic year on Earth gave me a chance to spend more time reading and lots more time thinking about our society and how we communicate with each other. Purely by coincidence, I had a chance to read two pieces of fiction that focus on both the environment and communication. In Richard Powers’s Pulitzer Prize winning, “The Overstory,” we learn about trees’ ability to communicate with each other as part of their survival network. The female scientist who makes this discovery in “The Overstory” calls to mind the work of Dr. Suzanne Simard, a professor of in the Department of Forest and Conservation Sciences at the University of British Columbia, who demonstrated how trees, even of different species, communicate and support each other through underground networks of fungi, known as mycorrhizal networks. The need to communicate, to support each other, to have deep, underground roots is central to all living things. Our ability to communicate as humans starts and ends with our planet.
A complementary novel to “The Overstory” is “A Children’s Bible” by Lydia Millet. Millet’s dystopian view of our planet’s future also has an understory about each generation’s inability to communicate their perspectives about their roles in taking care of each other and society. In my reading of “Children’s Bible,” the ultimate collapse occurs not just because of an environmental disaster, but because the generations stopped being able to communicate with and rely on each other.
Using one of our most useful forms of communication—humor, our first Earth Day cartoonist, Walt Kelly, tied together the need for both protection and connection in an elegant and powerful drawing:
We are all like trees in a giant forest called Earth. We have tentacles and roots touching each other in ways we cannot see, and we cannot continue living if we fail to acknowledge these connections. As we care for each other, we are also caring for our common home. As we communicate with each other, we must remember that we are connected to each other in ways that science is continuing to discover and that our personal experience is still learning.
As with many yearly events, Earth Day gives us an opportunity to reflect, discuss, and share. Thank you for letting me have the opportunity to connect with you.
Does Novel “Greenwashing” Enforcement Action Portend a New Trend?
Oil Industry Scores Big Win in Second Circuit Greenhouse Gas Litigation
By: Todd C. Toral and PJ M. Novack
Lawsuits over alleged misleading environmental marketing claims, or “greenwashing,” are nothing new. It has been nearly 30 years since the Federal Trade Commission (FTC) released its first version of the “Green Guides,” which are intended to help marketers avoid the practice. Since then, there have been many greenwashing actions before the FTC. More broadly, the FTC has pursued a number of suits in federal court, such as false advertising claims over the terms “clean diesel” and “100% organic.” But last month, in a first, several environmental groups petitioned the FTC to use its Green Guides offensively against a fossil fuel company for “misleading consumers on the climate and environmental impact of its operations.”
On March 16, 2021, Earthworks, Global Witness, and Greenpeace USA filed a complaint against Chevron for misleading consumers through advertisements that exaggerate the company’s investment in renewable energy and its commitment to reducing fossil fuel pollution. The action comes on the heels of Chevron’s new “Climate Change Resilience” report, where Chevron outlined its contributions against climate change. The environmental groups argue that Chevron misrepresents its image to appear climate-friendly and racial-justice oriented, while actually doing more harm than good. In support of their claims, the environmental groups point out that Chevron is the second most polluting company in the world and had spent only 0.2% of its capital expenditures on low-carbon energy sources between 2010-2018.
Considering the recent change in administrations, this action may represent a new trend where consumer and environmental groups are willing to take on major oil companies by petitioning a potentially more consumer-friendly FTC. President Biden currently has an opportunity to fill the vacant FTC seat and tip the balance of power toward Democrats. Moreover, President Biden has signaled his personal support for environmental causes by halting oil and gas sales and canceling the Keystone XL crude pipeline. Given the shifting sands, companies should be prepared for new and perhaps more creative enforcement actions.
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
Breaking from the pack and potentially creating a circuit split, the Second Circuit’s decision in City of New York v. Chevron, et al. dismissing New York’s City’s climate change lawsuit is a significant victory for the oil and gas industry. The unanimous ruling from the Second Circuit affirmed a district’s court decision dismissing New York’s common law claims, finding that issues such as global warming and greenhouse gas emissions invoked questions of federal law that are not well suited to the application of state law.
Taking a slightly different tact than state and local plaintiffs in other climate change lawsuits, the State of New York sued five oil producers in federal court asserting causes of action for (1) public nuisance, (2) private nuisance, and (3) trespass under New York law stemming from the defendants’ production, promotion and sale of fossil fuels. New York sought both compensatory damages as well as a possible injunction that would require defendants to abate the public nuisance and trespass. Defendants filed motions to dismiss that were granted. The district court determined that New York’s state-law claims were displaced by federal common law and that those federal common law claims were in turn displaced by the Clean Air Act. The district court also concluded that judicial caution counseled against permitting New York to bring federal common law claims against defendants for foreign greenhouse gas emissions.
The Second Circuit agreed with the district court, noting that the problems facing New York can’t be attributed solely to greenhouse gas emissions in the state nor the emissions of the five defendants. Rather, the greenhouse gas emissions that New York alleges required the City to launch a “$20 billion-plus multilayered investment program in climate resiliency across all five boroughs” are a byproduct of emissions around the world for the past several hundred years.
As the Second Circuit noted, “[t]he question before it is whether municipalities may utilize state tort law to hold multinational oil companies liable for the damages caused by greenhouse gas emissions. Given the nature of the harm and the existence of a complex web of federal and international environmental law regulating such emissions, we hold that the answer is ‘no.’”
Finding that New York’s state common law claims were displaced by federal common law, the Second Circuit then considered whether the Clean Air Act displaced these federal common law claims. The Second Circuit noted that the Supreme Court in Am. Elec. Power Co. v. Connecticut (AEP) (2011) had previously held that the “’Clean Air Act and the EPA actions it authorizes displace any federal common-law right to seek abatement’ of greenhouse gas emissions.” As to the State’s damage claims, the Second Circuit agreed with the Ninth Circuit’s reasoning in Native Vill. Of Kivalina v. Exxonmobil Corp. (9th Cir. 2012) that the “displacement of federal common law does not turn on the nature of the remedy but rather on the cause of action.” As such, the Second Circuit held that “whether styled as an action for injunctive relief against the Producers to stop them from producing fossil fuels, or an action for damages that would have the same practical effect, the City’s claims are clearly barred by the Clean Air Act.
The Second Circuit was careful to distinguish its holding from the holdings reached by the First, Fourth, Ninth and Tenth circuits in prior climate change cases, noting that in those other cases, the plaintiffs had brought state-law claims in state court and defendants then sought to remove the cases to federal courts. The single issue in those cases was whether defendants’ federal preemption defenses singlehandedly created federal question jurisdiction. Here, because New York elected to file in federal as opposed to state court, the Second Circuit was free to consider defendants’ preemption defense on its own terms and not under the heightened standard applicable to a removal inquiry.
Whether the Second Circuit’s decision has any impact on BP PLC, et al. v. Mayor and City Council of Baltimore, a case that has now been fully briefed and argued before the Supreme Court remains to be seen. The Baltimore case was one of the state court cases discussed above that was removed to federal court. The defendants had alleged a number of different grounds for removal, one of which is known as the “federal officer removal statute” that allows removal to federal court of any lawsuit filed against an officer or person acting under that office of the United States or an agency thereof. The limited issue before the Supreme Court was whether the appellate court could only consider the federal-officer removal ground or whether it could instead review any of the grounds relied upon in defendants’ removal petition.
Some commenters have noted that the Second Circuit’s decision creates a circuit split that may embolden the Supreme Court to address these climate change cases in one fell swoop. The more likely scenario, however, is that the Supreme Court limits its opinion to the narrow issue before it and leaves resolution of whether state law climate change nuisance actions are preempted by federal law for another day.
Congressional Review Act Resolution Introduced to Revoke EPA Methane Rule—Does this Open the CRA Floodgates?
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
On March 25, 2021, Democrats in the Senate and House of Representatives introduced joint resolutions pursuant to the Congressional Review Act (CRA) that if approved by Congress and signed by President Biden would rescind the Trump-era rollback of Obama-era regulations that (1) imposed methane-specific emission limits on “production and processing” segments of the oil and gas industry and (2) required that transmission lines and storage equipment be inspected for methane leaks and repaired in a timely manner in accordance with the New Source Performance Standards for the Oil and Natural Gas Industry. The CRA resolution, if approved by Congress and signed by President Biden, would reinstate these Obama-era regulations for the oil and gas industry.
The CRA, which was enacted in 1996, is a tool that allows Congress to disapprove a range of regulatory rules issued by federal agencies by first approving a joint resolution of disapproval that then goes to the President for signature. If signed by the President, the disapproved rule either does not take effect or does not continue. In addition, once a joint resolution of disapproval is enacted, the CRA provides that a new rule may not be issued in “substantially the same form” as the disapproved rule. Congress has a limited window to act—the CRA requires that a joint resolution of disapproval must be introduced within 60 legislative working days of the date that the rule was submitted to Congress.
The CRA had not been widely used prior to the Trump administration and the Democrats had widely criticized President Trump's prior use of the CRA to rescind Obama-era regulations. As such, there had been some uncertainty as to whether the Democrats would embrace this tool in light of their prior opposition and hostility to the use of the CRA by many environmental groups. However, with this joint resolution and another March 23rd CRA resolution to disapprove of the Equal Employment Opportunity Commission’s conciliation rule, the CRA floodgates may have opened. The resulting deluge will likely be of short duration, however, as the window for CRA disapprovals for Trump-era actions is expected to close on April 4th.
Biden Administration Takes New Action to Ensure Increased Consideration of Climate Change Impacts by the Federal Government
By Matthew G. Lawson
On Friday, February 19, 2021, the Council on Environmental Quality (“CEQ”) rescinded prior draft guidance issued under the Trump Administration in 2019 (the “2019 Draft CEQ Guidance”), which had limited the degree to which federal agencies needed to consider and quantify climate change impacts under the National Environmental Policy Act (NEPA). The rescission of the 2019 Draft CEQ Guidance is the latest step by the federal government to implement President Biden’s Executive Order 13990, which was signed on President Biden’s first day in office (the “Day 1 EO”). In addition to directing CEQ to rescind its prior guidance, President Biden’s Day 1 EO set forth numerous directives implementing the administration’s new climate change policy, including an order reinstating the Interagency Working Group (IWG) and directing the IWG to develop an updated “Social Cost of Carbon” (“SCC”) valuation to better quantify the economic harms associated with the emission of carbon dioxide and other greenhouse gasses (“GHGs”). Under the Day 1 EO, the IWG was directed to publish its new interim SCC value within 30 days of the Order and publish a final SCC value by January 2022. Together, the Day 1 EO’s rescission of the 2019 Draft CEQ Guidance and reinstatement of the IWG signal a clear intent from the Biden Administration to significantly increase the degree to which federal agencies must consider and account for climate change impacts when enacting future regulation or taking other agency actions.
The origins of the SCC metric can be traced back to President Clinton’s 1993 Executive Order 12866, which required that federal agencies, to the extent permitted by law, “assess both the costs and the benefits of [their] intended regulation and…propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” Compliance with Executive Order 12866 poses a unique challenge for federal agencies where a proposed regulation is expected to cause a significant increase or decrease of carbon dioxide or other GHG emissions, as the benefits or costs associated with these emissions cannot easily be quantified or compared to other metrics used in the agency’s cost-benefit analysis.
To assist federal agencies with this inherent challenge, the Obama Administration in 2010 convened the IWG with the goal of identifying a metric grounded in data that represents the long-term net economic damages associated with an incremental increase in carbon dioxide or other GHG emissions in a given year (typically measured in dollars per metric ton). The resulting metric created by the IWG (the “Social Cost of Carbon” or “SCC”), provides an estimated monetary value representing a wide range of anticipated climate impacts resulting from CO2 emissions, such as net changes in agricultural productivity and human health, property damage from increased flood risk, and changes in energy system costs. Although the IWG acknowledged a range of possible SCC values, the IWG set a mid-range SCC value of $21 per ton of CO2 emitted in 2010. The IWG subsequently revised and modified its SCC value on several occasions, and most recently in 2016 when IWG revised the value of SCC to $42 per ton of CO2 emitted in 2020.
In August 2016, the Obama-era CEQ sought to promote the use of SCC beyond its original application (i.e., cost-benefit analyses of proposed regulations) by recommending use of the metric in applicable NEPA analyses. To that end, the Obama CEQ issued final NEPA guidance (the “2016 CEQ Guidance”) recommending that federal agencies utilize the IWG’s SCC valuation to quantify the environmental impact of increased GHG emissions resulting from their proposed actions. As a result of the 2016 CEQ Guidance, federal agencies were advised for the first time to consider applying the SCC not only to weigh the costs and benefits of proposed regulations, but also to quantify the costs of increased GHG emissions associated with their proposed actions where such actions trigger the requirements of NEPA.
Following the 2016 election of President Trump, the use and impact of SCC as a decision-making tool significantly declined. In March 2017, pursuant to Executive Order 13783, the Trump Administration disbanded the IWG and withdrew its existing SCC valuation “as no longer representative of governmental policy.” As a result, federal agencies under the Trump Administration set their own SCC values, which resulted in an average value between $1 and $7 per ton of CO2 emitted in 2020. The Trump Administration also rescinded the 2016 CEQ Guidance and published its own draft guidance (the “2019 Draft CEQ Guidance”) rejecting the application of SCC to quantify the impacts GHG emissions in NEPA reviews. Finally, while not directly addressing SCC, the Trump Administration issued a regulatory overhaul to NEPA that aimed to reduce the type of environmental impacts that a federal agency must consider during a NEPA review.
Impact of the Biden Administration’s Recent Actions
The Day 1 EO and subsequent rescission of the 2019 Draft CEQ Guidance signal a strong intention by the Biden Administration to reverse the climate change policies enacted by the Trump Administration. Under the Day 1 EO, the IWG has been instructed to set a SCC value that “capture[s] the full cost of greenhouse gas emissions as accurately as possible, including by taking global damages into account.” Based on these instructions, experts have predicted that the IWG’s interim SCC value is likely to be set at $125 per ton or higher.
While federal agencies await the imminent release of IWG’s interim SCC value, federal agencies may—at least in the context of NEPA reviews—look to the most recent 2016 SCC value set by the IWG prior to its disbandment. In the published rescission of the 2019 Draft CEQ Guidance, CEQ advises that until new guidance is provided, federal agencies “should consider all available tools and resources in assessing GHG emissions and climate change effects of their proposed actions, including, as appropriate and relevant, the 2016 [CEQ] Guidance.” Of course, the 2016 CEQ Guidance itself recommends that federal agencies rely on the 2016 SCC valuation to quantify climate change impacts associated with agency actions.
The Biden Administration’s decision to resurrect the IWG and revoke the 2019 Draft CEQ Guidance is expected to have a significant impact on a wide scope of federal agency actions with the potential to increase or decrease GHG emissions. Upon the enactment of the new SCC value, federal agencies will be required to afford greater weight to potential climate change impacts during their decision-making process. As a result, industry may expect an increase in new regulations aimed at reducing GHG emissions, as well as greater challenges in securing federal approval to engage in GHG-intensive activities, such as oil, gas or coal mining.
OSHA Issues Proposed Update to Hazard Communication Standard
By Matthew G. Lawson
On February 5, 2021, the U.S. Occupational Safety and Health Administration (OSHA) issued a proposed rule updating its Hazard Communication (“Haz Com”) Standard to align its rules with those in the seventh version of the United Nation’s Globally Harmonized System of Classification and Labeling of Chemicals (GHS), published in 2017. OSHA’s proposed regulatory update is being issued as the United States’ major international trading partners, including Canada, Australia, New Zealand, and those in Europe, similarly prepare to align their own hazard communications rules with the seventh version of the GHS.
Originally established in 1983, OSHA’s Haz Com Standard provides a systematized approach to communicating workplace hazards associated with exposure to hazardous chemicals. Under the Haz Com Standard, chemical manufacturers and/or importers are required to classify the hazards of chemicals which they produce or import into the United States, and all employers are required to provide information to their employees about the hazardous chemicals to which they are exposed, by means of a hazard communication program, labels and other forms of warning, safety data sheets, and information and training. At an international level, the GHS provides a universally harmonized approach to classifying chemicals and communicating hazard information. Core tenants of the GHS include universal standards for hazard testing criteria, warning pictograms, and safety data sheets for hazardous chemicals.
In a pre-published version of the proposed rule, OSHA’s proposed modifications to the Haz Com Standard include codifying enforcement policies currently in OSHA’s compliance directive, clarifying requirements related to the transport of hazardous chemicals, adding alternative labeling provisions for small containers and adopting new requirements related to preparation of Safety Data Sheets. Key modifications included in the proposed rule, include:
- New flexibility for labeling bulk shipments of hazardous chemicals, including allowing labels to be placed on the immediate container or transmitted with shipping papers, bills of lading, or by other technological or electronic means that are immediately available to workers in printed form on the receiving end of the shipment;
- New alternative labeling options where a manufacturer or importer can demonstrate that it is not feasible to use traditional pull-out labels, fold-back labels, or tags containing the full label information normally required under the Haz Com Standard, including specific alternative requirements for containers less than or equal to 100ml capacity and for containers less than or equal to 3ml capacity; and
- New requirements to update the labels on individual containers that have been released for shipment but are awaiting future distribution where the manufacturer, importer or distributer becomes aware of new significant information regarding the hazards of the chemical.
OSHA last updated its Haz Com Standard in 2012, to align the standard with the then recently published third version of GHS. In its newly proposed rule, OSHA clarifies that it is “not proposing to change the fundamental structure” of its Haz Com Standard, but instead seeking to “address specific issues that have arisen since the 2012 rulemaking” and to provide better alignment with international trading partners. According to OSHA, its proposed modifications to the Haz Com Standard “will increase worker protections, and reduce the incidence of chemical-related occupational illnesses and injuries by further improving the information on the labels and Safety Data Sheets for hazardous chemicals.”
OSHA is currently accepting comments on its proposed rule until April 19, 2021. Comments may be submitted electronically to Docket No. OSHA-2019-0001at http://www.regulations.gov, which is the Federal e-Rulemaking Portal.
DOJ Rescinds Nine Trump Environmental Policies
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
On February 4, 2021, in accordance with President Biden’s Executive Order 13,990 (Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis), DOJ directed its ENRD Section and Deputy Section Chiefs to withdraw nine environmental policies that were put in place by the Trump Administration. The February 4th memorandum identifies the following nine withdrawn policies:
- “Enforcement Principles and Priorities,” January 14, 2021;
- “Additional Recommendations on Enforcement Discretion,” January 14, 2021;
- “Guidance Regarding Newly Promulgated Rule Restricting Third-Party Payments, 28 C.F.R. § 50.28,” January 13, 2021;
- “Equitable Mitigation in Civil Environmental Enforcement Cases,” January 12, 2021;
- “Civil Enforcement Discretion in Certain Clean Water Act Matters Involving Prior State Proceedings,” July 27, 2020;
- “Supplemental Environmental Projects (“SEPs”) in Civil Settlements with Private Defendants,” March 12, 2020;
- “Using Supplemental Environmental Projects (“SEPs”) in Settlements with State and Local Governments,” August 21, 2019;
- “Enforcement Principles and Priorities,” March 12, 2018; and
- “Settlement Payments to Third Parties in ENRD Cases,” January 9, 2018.
In support of rescission of these policies, DOJ’s Deputy Assistant Attorney General noted that these policies were inconsistent with longstanding DOJ policy and practice and inappropriately impeded DOJ’s exercise of its enforcement discretion. Two of the more controversial policies rescinded by DOJ’s February 4th memorandum related to the prohibition on the use of supplemental environmental projects (SEPs) in settlement agreements. Under the Trump Administration, DOJ had argued that the use of SEPS violated the Miscellaneous Receipts Act which requires that monies paid to the Government be deposited into the Treasury so that Congress could decide how the monies would be appropriated.
DOJ noted that it would continue to assess the matters addressed by the withdrawn policies and might elect to issue new guidance on these matters in the future. We will continue to track efforts by the Biden Administration the environmental policies of the Trump Administration at the Corporate Environmental Lawyer.
U.S. EPA Issues Final Guidance on PFAS SNUR
By Steven M. Siros, Co-Chair, Environmental and Workplace Health and Safety Law Practice
On January 19, 2021, four days after the close of the comment period, U.S. EPA issued its final guidance document to aid in implementation of its Significant New Use Rule (SNUR) for long-chain perfluoroalkyl carboxylate and perfluoroalkyl sulfonate chemical substances (PFAS). Not surprisingly, in light of the short time between the close of comments and issuance of the guidance, the final guidance remained largely unchanged from the draft version.
In July 2020, U.S. EPA finalized its PFAS SNUR that requires notice and U.S. EPA review before manufacturing and processing for use certain long-chain PFAS that have been phased out in the United States. In addition, articles containing these long-chain PFAS as part of a surface coating cannot be imported into the United States without submission of a Significant New Use Notice (SNUN).
The guidance provides examples of what would and would not be articles subject to the SNUR as well as clarification on what is meant as a “surface coatings.” Although U.S. EPA declined to provide a regulatory definition of “surface coating” in the PFAS SNUR, the guidance indicates that any long-chain PFAS meeting one of the following two criteria would be a surface coating covered by the SNUR:
- Coating on any surface of an article that is in direct contact with humans or the environment during the article’s normal use or reuse, whether the coating is oriented towards the interior or exterior of the article; or
- Coating on any internal component, even if facing the interior of the article, if that component is in contact with humans or the environment during the article’s normal use or reuse.
Many environmental groups noted that the “direct contact” standard and the refusal to consider potential exposures associated with the disposal and/or misuse of these articles was contrary to the provisions of the PFAS SNUR and these groups are urging the Biden Administration to revisit the guidance. Because the new guidance is not labeled as “significant”, it did not need to follow the formal notice-and-comment process but this would also arguably allow the incoming Biden administration to quickly rework and issue its own guidance for implementing the PFAS SNUR.
We will continue to provide updates on efforts by the Biden Administration to implement the PFAS SNUR on the Corporate Environmental Lawyer blog.