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Corporate Environmental Lawyer Blog

April 8, 2021 Does Novel “Greenwashing” Enforcement Action Portend a New Trend?

 

By: Todd C. Toral and PJ M. Novack

GreenLawsuits 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.

Resources:

https://www.bloomberg.com/news/articles/2021-03-16/chevron-greenwashing-targeted-in-complaint-filed-with-u-s-ftc

https://www.law360.com/articles/1365529

https://www.earthworks.org/media-releases/accountability-groups-file-first-of-its-kind-ftc-complaint-against-chevron-for-misleading-consumers-on-climate-action/#:~:text=March%2016%2C%202021%20%E2%80%94%20Earthworks%2C,to%20reducing%20fossil%20fuel%20pollution.

https://www.popsci.com/story/environment/chevron-greenwashing-ftc-complaint/

https://www.chevron.com/-/media/chevron/sustainability/documents/climate-change-resilience-report.pdf

https://www.ftc.gov/news-events/media-resources/truth-advertising/green-guides

https://apnews.com/article/why-is-biden-halting-federal-oil-and-gas-sales-b8f03552c2c2fa7ec0dfc5debeb3f882

https://www.ftc.gov/system/files/documents/cases/160329volkswagen_cmpt.pdf

https://www.ftc.gov/system/files/documents/cases/truly_organic_complaint.pdf

CATEGORIES: Climate Change, Consumer Law and Environment, Sustainability

PEOPLE: Steven R. Englund

April 7, 2021 Environmental Organizations Petition EPA to Expand Enforcement of Clean Air Act’s General Duty Clause

LawsonBy Matthew G. Lawson

Air pollutionVarious environmental organizations, led by the Environmental Integrity Project (“EIP”), are urging the United States Environmental Protection Agency (“EPA”) to expand enforcement of Section 112(r)(1) of the Clean Air Act (CAA)—commonly known as the General Duty Clause (“GDC”)—in order to more closely regulate the handling of hazardous substances at industrial facilities permitted under the CAA. EIP’s ongoing efforts include petitioning EPA to require that the obligations of the GDC be incorporated in state-issued Title V air emission permits, such that these obligations may be enforced against permit holders by state regulators or through citizen suits. As explained below, efforts to expand enforcement of the GDC were for the most part blocked under the Trump Administration’s EPA, but it remains to be seen whether these efforts may achieve renewed success under the Biden Administration.

The GDC, which was first enacted as part of the 1990 amendments to the CAA, requires that owners and operators of regulated facilities that handle, process, or store “extremely hazardous substances” take certain actions to “prevent the accidental release and … minimize the consequences of any [] release” of such substances. Specifically, the GDC requires facility owners and operators to: (i) conduct a hazardous risk assessment to identify potential risks from extremely hazardous substances at their facilities; (ii) design and maintain safe facilities that protect against releases; and (iii) develop and implement protocols to minimize the consequences from any accidental releases. While “extremely hazardous substances” is not defined by the GDC, the Senate Report from the 1990 CAA amendments provides that “extremely hazardous substance” includes any agent “which may as the result of short-term exposures associated with releases to the air cause death, injury or property damage due to its toxicity, reactivity, flammability, volatility, or corrosivity.” Although not necessarily exhaustive, EPA has created a list of extremely hazardous substances in 40 CFR part 68. Jurisdiction for enforcement of the GDC remains an issue of contention between EPA and environmental organizations. While enforcement of the GDC has traditionally been left to the exclusive purview of EPA, environmental groups are increasingly arguing that state air authorities can and should request delegation authority from the EPA to enforce the GDC at permitted facilities within their jurisdiction. 

A key example of EIP’s efforts to increase enforcement of the GDC is provided in the organization’s April 14, 2020 Petition Objecting to a Title V Permit issued to Hazlehurst Wood Pellets LLC (“Hazlehurst”), a wood pellet mill operating in the State of Georgia. At the time of the petition, Hazlehurst’s Title V permit had been approved by state authorities, but remained subject to final review by EPA. EIP’s Petition asked EPA to deny Hazlehurst’s air emissions permit on the grounds that the permit failed to recognize or incorporate the requirements of the GDC. According to the Petition, ensuring compliance with the GDC was critical due to the fact that Hazlehurst regularly handles hazardous products, including “copious amount of wood dust,” which had previously caused flash fires at the facility. The Trump Administration EPA’s subsequent Order Denying the Petition rejected EIP’s request, finding that the GDC is not an “applicable requirement” for the purposes of Title V, and as such, “Title V permits need not—and should not—include terms to assure compliance with the [GDC] as it is an independent requirement…” EPA reasoned that if the requirements of the GDC were integrated into a Title V permit, the obligations would ostensibly be enforceable through citizen suits. Concluding that “neither citizens nor state and local air agencies may enforce the [GDC] under the CAA,” EPA rejected the Petition. At the same time, EPA clarified that because the GDC is “self-implementing,” it is independently enforceable by EPA and applies even when it is not expressed as part of a facility’s air permit.

While EPA’s Order denied the environmental organization’s request to expressly require GDC compliance in Title V permits, the Order did make clear that facilities holding Title V permits are still subject to the GDC’s requirements which may be enforced by EPA. According to recently issued EPA Guidance on the GDC, owners and operators who maintain extremely hazardous substances must adhere, at a minimum, to recognized industry standards and any applicable government regulations for handling such substances. While it remains to be seen whether the Biden Administration EPA will continue to resist expressly incorporating the GDC in Title V permits, the Biden Administration’s emphasis on regulatory compliance and environmental justice indicates that future enforcement of the GDC is likely to increase. For this reason, facilities holding air emission permits should review their existing protocols for handling and storing hazardous substances and ensure these protocols are consistent with prevailing industry standards and the requirements of the GDC.

CATEGORIES: Air, Hazmat, Sustainability

PEOPLE: Matthew G. Lawson

April 5, 2021 Oil Industry Scores Big Win in Second Circuit Greenhouse Gas Litigation

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BSteven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice

Oil and gasBreaking 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. 

CATEGORIES: Air, Climate Change, Consumer Law and Environment, Greenhouse Gas, Sustainability

PEOPLE: Steven R. Englund, Steven M. Siros

March 26, 2021 Congressional Review Act Resolution Introduced to Revoke EPA Methane Rule—Does this Open the CRA Floodgates?

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BSteven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice

PipelineOn 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

CATEGORIES: Climate Change, Sustainability

PEOPLE: Steven R. Englund, Steven M. Siros

March 19, 2021 EPA Finalizes Revised Cross-State Air Pollution Rule Update: Emissions Reductions Required at Certain Power Plants Beginning in May

Torrence_jpgBy Allison A. Torrence

Pexels-pixabay-257775On March 15, 2021, EPA finalized the Revised Cross-State Air Pollution Rule (“CSAPR”) Update for the 2008 ozone National Ambient Air Quality Standards (“NAAQS”). This final rule is issued pursuant to the “good neighbor provision” of the Clean Air Act and in response to  the D.C. Circuit’s remand of the previous version of the CSAPR Update in Wisconsin v. EPA on September 13, 2019. The previous version of the CSAPR Update was issued in October 2016, and was found to be unlawful because it allowed certain states to continue their significant contributions to downwind ozone problems beyond the statutory dates by which the downwind states were required to be in compliance with the NAAQS. The Revised CSAPR Update attempts to address the deficiencies identified by the D.C. Circuit.

Beginning in the 2021 ozone season (the ozone season is May 1 through September 30), the Revised CSAPR Update will require additional emissions reductions of nitrogen oxides (“NOX”) from power plants in 12 states: Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia. EPA determined that additional emissions reductions were necessary in these 12 states because projected 2021 ozone season NOX emissions from these states were found to significantly contribute to downwind states’ nonattainment and/or maintenance problems for the 2008 ozone NAAQS. NOX is an ozone precursor, which can react with other ozone precursors in the atmosphere to create ground-level ozone pollution (a/k/a smog). These pollutants can travel great distances, often crossing state lines and making it difficult for downwind states to meet or maintain the ozone NAAQS.

As part of the Revised CSAPR Update, EPA is issuing new or amended Federal Implementation Plans (“FIPs”) for these 12 states that will replace those states’ existing CSAPR emissions budgets for power plants. The revised emission budgets will take effect with the 2021 ozone season and will adjust through 2024. The 2021 emission budgets will require power plants in these states to take advantage of existing, already-installed selective catalytic reduction (“SCR”) and selective non-catalytic reduction (“SNCR”) controls. Emissions reductions in the 2022 budgets will require installation or upgrade of state-of-the-art NOX combustion controls at power plants. Emission budgets will continue to be adjusted, through 2024, until air quality projections demonstrate that the upwind states are no longer significantly contributing to downwind states’ nonattainment of the 2008 ozone NAAQS.

EPA projects that the Revised CSAPR Update will provide significant public health benefits. According to EPA:

Due to this rule and other changes already underway in the power sector, ozone season  NOx emissions will be nearly 25,000 tons lower in 2021 than in 2019, a reduction of 19 percent. The reduction in emissions is estimated to prevent about 290,000 asthma events, 560 hospital and emergency room visits, 110,000 days of missed work and school, and up to 230 premature deaths in 2025. The public health and climate benefits are valued, on average, at up to $2.8 billion each year over the period 2021 to 2040.

This is compared to the annualized costs of the rule, which EPA estimates to be, on average, $25 million each year over the same period from 2021 to 2040.

The Revised CSAPR Update will be effective 60 days after it is published in the Federal Register, which should happen in the next week or two. More information about the CSAPR Update can be found on EPA’s Website.

CATEGORIES: Air, Sustainability

PEOPLE: Allison A. Torrence

March 4, 2021 10th Circuit Lifts Injunction in Colorado Challenge of Trump Waters of the United States Rule

Torrence_jpgBy Allison A. Torrence

Pexels-omer-havivi-4084714On March 2, 2021, the Tenth Circuit Court of Appeals reversed a ruling from the United States District Court for the District of Colorado in the case of Colorado v. EPA, et al., Nos. 20-1238, 20-1262, and 20-1263, that had issued a preliminary injunction blocking implementation of the Trump Administration’s Navigable Waters Protection Rule (“NWPR”) in the State of Colorado. Under the Tenth Circuit ruling, the NWPR was put back into force, and the State of Colorado’s case was remanded back to district court for further proceedings challenging the rule.

The NWPR is the latest attempt by EPA and the Army Corps of Engineers to define “Waters of the United States” and thereby define the jurisdiction of the Clean Water Act. The agencies have been grappling with this definition for nearly 50 years, and have faced nearly constant legal challenges along the way. In 2017, the Trump Administration rescinded the definition that had been promulgated under the Obama Administration, and in 2020, offered up its own definition in the NWPR. The NWPR narrows the definition of “Waters of the United States” from past definitions–notably by excluding certain wetlands and ephemeral streams from the definition and thus excluding them from the jurisdiction of the Clean Water Act.

A number of lawsuits were filed challenging the NWPR, including Colorado v.  EPA. The Colorado case was significant because Colorado sought, and was granted, a preliminary injunction blocking implementation of the NWPR in the State of Colorado. The State had argued that by reducing the reach of the Clean Water Act, the NWPR caused irreparable injury to the State because Colorado would be forced to undertake additional enforcement actions in place of the federal government to protect the quality of its waterways. While the district court had found this to be sufficient injury to support the State’s preliminary injunction, the Tenth Circuit found that it was too speculative and uncertain. Thus, the preliminary injunction was rejected and reversed because the State of Colorado could not show irreparable injury. Notably, the Tenth Circuit did not address the merits of the State’s challenge to the NWPR.

Additionally, prior to the Tenth Circuit’s ruling, EPA and the Army Corps of Engineers had requested the court hold the appeal in abeyance for 60 days in light of the new leadership at the agencies following the election of President Biden. The court denied the request and issued its ruling lifting the preliminary injunction the following day. The Biden Administration has indicated it is reviewing the NWPR and may want to make changes to broaden the definition of “Waters of the United States” once again. If that is the case, the agencies may look to settle the Colorado case and other similar litigation with a promise of changes to come. The Corporate Environmental Lawyer Blog will monitor and report on these matters as they develop.

CATEGORIES: Sustainability, Water

PEOPLE: Allison A. Torrence

February 24, 2021 Biden Administration Takes New Action to Ensure Increased Consideration of Climate Change Impacts by the Federal Government

HeadshotBy Matthew G. Lawson CEQ


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.

Background

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.  

CATEGORIES: Climate Change, NEPA, Sustainability

PEOPLE: Matthew G. Lawson

February 16, 2021 Biden Administration Confirms COVID-19 Liability Protections for Federal Contractors, Employees and Volunteers

Sigel

By Gabrielle Sigel, Co-Chair, Environmental and Workplace Health and Safety Law Practice

Covid-19

On February 16, 2021, Acting Secretary of the U.S. Department of Health & Human Services (“HHS”) Norris Cochran, published in the Federal Register the Sixth Amendment to the Declaration Under the Public Readiness and Emergency Act [“PREP Act”].  86 Fed. Reg. 9516-9520 (Feb. 16, 2021).  This is the second amendment to the Declaration issued since President Biden took office and continues the Trump Administration’s practice of providing broad liability protection for those responding to COVID‑19.

The Declaration originally was issued on January 31, 2020, by former HHS Secretary Azar.  Pursuant to the PREP Act, the Declaration allows the Secretary to extend liability immunity to “covered persons” for taking allowed actions with respect to “covered countermeasures,” in prescribed circumstances, all as declared by the Secretary.  A “covered person” is “immune from suit and liability under Federal and State law for all claims of loss caused by, arising out of, relating to, or resulting from the administration or use of a covered countermeasure,” which includes FDA-authorized COVID‑19 vaccines and tests.  See 42 U.S.C. § 247d‑6d(a)(1).  Under the PREP Act, “covered persons” include “manufacturers,” distributors,” “program planners,” “qualified persons,” and their “officials, agents and employees.”  42 U.S.C. § 247d-6d(i)(2). 

In the Sixth Amendment to the Declaration, the Acting Secretary augmented the “covered persons” protected from liability with an additional category of “qualified persons.”  Although the Unites States is, by statute, a “covered person,” the structure of the statutory provision defining “covered person” does not make clear that direct contractors and employees of the United States are similarly covered.  See 42 U.S.C. § 247d-6d(i)(2).  To clear up that ambiguity, the Sixth Amendment provides that a “qualified person” includes “any Federal government employee, contractor or volunteer who prescribes, administers, delivers, distributes or dispenses a Covered Countermeasure,” if the federal department or agency “has authorized or could authorize” that person “even if those authorized duties or responsibilities ordinarily would not extend to members of the public or otherwise would be more limited in scope than the activities such employees, contractors or volunteers are authorized to carry out under this declaration.”  86 Fed. Reg. at 9519 (Feb. 16, 2021).

This expanded liability protection is fully consistent with and will support President Biden’s National Strategy for the COVID‑19 Response and Pandemic Preparedness, which envisions federal vaccination sites and “deploy[ing] thousands of federal staff, contractors and volunteers to support state and local vaccination efforts.”  See National Strategy, pp. 9, 52.

CATEGORIES: COVID-19, Sustainability

PEOPLE: Gabrielle Sigel

February 10, 2021 OSHA Issues Proposed Update to Hazard Communication Standard

HeadshotBy Matthew G. Lawson Osha

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.

CATEGORIES: Climate Change, Contamination, Emerging Contaminants, Hazmat, OSHA, Sustainability

PEOPLE: Matthew G. Lawson

February 5, 2021 DOJ Rescinds Nine Trump Environmental Policies

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US Department of Justice

 

BSteven 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:

  1. “Enforcement Principles and Priorities,” January 14, 2021;
  2. “Additional Recommendations on Enforcement Discretion,” January 14, 2021;
  3. “Guidance Regarding Newly Promulgated Rule Restricting Third-Party Payments, 28 C.F.R. § 50.28,” January 13, 2021;
  4. “Equitable Mitigation in Civil Environmental Enforcement Cases,” January 12, 2021;
  5. “Civil Enforcement Discretion in Certain Clean Water Act Matters Involving Prior State Proceedings,” July 27, 2020;
  6. “Supplemental Environmental Projects (“SEPs”) in Civil Settlements with Private Defendants,” March 12, 2020;
  7. “Using Supplemental Environmental Projects (“SEPs”) in Settlements with State and Local Governments,” August 21, 2019;
  8. “Enforcement Principles and Priorities,” March 12, 2018; and
  9. “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

CATEGORIES: Climate Change, Sustainability, Water

PEOPLE: Steven R. Englund, Steven M. Siros

January 20, 2021 U.S. EPA Issues Final Guidance on PFAS SNUR

Linkedin_Steven_Siros_3130 EpaBy 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.

CATEGORIES: Air, Cercla, Climate Change, Emerging Contaminants, Sustainability, Water

PEOPLE: Steven R. Englund, Steven M. Siros

December 4, 2020 DOE Final Rule Seeks to Streamline NEPA Review of LNG Projects

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By Steven M. Siros, Co-Chair, Environmental and Workplace Health and Safety Law Practice

LNG_tanker_ship ela.govThe Trump administration continues its efforts to issue new regulations in advance of January 20, 2021, with the Department of Energy (DOE) issuing a final rule that will exempt certain liquefied natural gas (LNG) projects from National Environmental Protection Act (NEPA) review.  The final rule, published in the Federal Register on December 4, updates DOE’s NEPA implementing procedures with respect to authorizations issued under the Natural Gas Act in accordance with the recent revisions to the NEPA regulations as further described below.

According to DOE, the focus of the new rule is to clarify the scope of DOE’s NEPA obligations with respect to LNG projects and more specifically, to eliminate from the scope of DOE’s NEPA review potential environmental effects that the agency has no authority to prevent.  Because DOE’s discretionary authority under Section 3 of the Natural Gas Act is limited to the authorization of exports of natural gas to non-free trade agreement countries, the rule limits the scope of environmental impacts that DOE must consider to the impacts associated with the marine transport of the LNG commencing at the point of export.    

To that end, the final rule revises DOE’s existing Categorical Exclusions (CATEX) to reflect that the only elements of LNG projects subject to NEPA review is the following:

B5.7 Export of natural gas and associated transportation by marine vessel.

Approvals or disapprovals of new authorizations or amendments of existing authorizations to export natural gas under section 3 of the Natural Gas Act and any associated transportation of natural gas by marine vessel.

Based on prior NEPA reviews and technical reports, DOE has determined that the transport of natural gas by marine vessel normally does not pose the potential for significant environmental impacts and therefore qualifies for a CATEX.  As such, the only reason that DOE would be obligated to engage in a NEPA review of a LNG project would be if “extraordinary circumstances” were deemed to be present that could not be mitigated and therefore would preclude DOE's reliance on this CATEX.

The revised CATEX also removes the reference to import authorizations from CATEX B5.7 because DOE has no discretion with respect to such approvals.  Finally, the final rule also removes and reserves CATEX B5.8 and classes of actions C13, D8, D9 because these actions are outside of the scope of DOE’s authority or are covered by the revised CATEX B5.7.

Interestingly, although the Federal Energy Regulatory Commission (FERC) has responsibility for approving the construction of LNG export terminals, it has previously declined to analyze the greenhouse emissions associated with such projects, noting that DOE is the appropriate agency to consider such impacts.  However, with DOE now concluding that these projects are categorically excluded from such reviews, it remains to be seen if FERC will reconsider its approach to these operations.

The final rule is scheduled to take effect on January 4, 2021 and it remains to be seen what if any action a new Biden administration might take in response to this rule.  Assuming that the Republicans retain control of the Congress, DOE would be required to go through the formal withdrawal process.  Alternatively, if the Democrats take control of the Senate, the regulation could be repealed pursuant to the Congressional Review Act. 

We will continue to track the Trump administration’s ongoing effort to finalize regulations in advance of January 20th as well as efforts by any new administration to rollback these regulations on the Corporate Environmental Lawyer.

CATEGORIES: Air, Climate Change, Contamination, Hazmat, NEPA, Sustainability, Water

PEOPLE: Steven R. Englund, Steven M. Siros

November 19, 2020 EPA Extends CDR Reporting Deadline

Linkedin_Steven_Siros_3130By Steven M. Siros Feds plan new guidelines on toxic algae in lakes, rivers | wgvu

The chemical industry has received some relief from a November 30th deadline to submit information to U.S. EPA pursuant to the Chemical Data Reporting Rule (“CDR”).  Section 8(a) of the Toxic Substances Control Act (“TSCA”) authorizes U.S. EPA to promulgate rules pursuant to which manufacturers and processors of chemical substances must maintain records and submit information to U.S. EPA.  To that end, U.S. EPA promulgated the CDR that requires entities that manufacture certain chemicals listed on the TSCA inventory in excess of 25,000 pounds annually (lower thresholds apply for certain listed chemicals) to report basic production information to U.S. EPA every four years.  The 2020 reporting deadline had been November 30, 2020.

U.S. EPA recently revised the CDR to comply with the 2016 TSCA amendments.  These revisions were intended to improve the reliability and usefulness of the data collected and reduce the overall reporting burden on regulated entities.  For example, the revised rule allows for the use of data and processing codes based on those already in use by the Organization for Economic Cooperation and Development.  The rule also incorporates exemptions for certain byproducts and amends the requirements to claim that the submitted data constitutes confidential business information (“CBI”) (requiring the upfront substantiation of all CBI claims).    

On October 26th, the American Chemical Council requested a 60-day extension from the November 30th deadline, noting significant technical issues with the electronic CDR submission platform.  Notwithstanding objections from a variety of environmental groups, U.S. EPA has extended the CDR reporting deadline to January 29, 2021.  The extension is good news for the regulated community as it works to compile the substantial information necessary to comply with the CDR requirements. 

We will continue to track and provide updates on the CDR and other reporting obligations for chemical manufacturer on Jenner & Block’s Corporate Environmental Lawyer blog.          

CATEGORIES: Contamination, Emerging Contaminants, Sustainability, TSCA

PEOPLE: Steven R. Englund, Steven M. Siros

October 11, 2020 Lawsuit Filed Challenging DOJ’s Policy on Supplemental Environmental Projects

Linkedin_Steven_Siros_3130By Steven M. Siros

On October 8, 2020, the Conservation Law Foundation filed a lawsuit challenging a DOJ policy that barred the use of supplemental environmental projects (SEPs) in federal enforcement settlements with private parties.  SEPs have been used since the 1980s and typically involve a project intended to provide some tangible environmental or public health benefit that could not necessarily be compelled by U.S. EPA. 

DOJ, in a March 12, 2020 memorandum, announced that it was terminating its policy of allowing companies to agree to perform SEPs in exchange for reductions in civil penalties in environmental enforcement settlements.  According to DOJ, the practice of using SEPs in lieu of civil penalties violates the Miscellaneous Receipts Act, a statute that prevents cash from legal settlements being diverted from the Treasury to third parties.  As further described in the March 2020 DOJ memorandum, DOJ claims that the SEPs basically substitute payments to third parties for payments to the Treasury, circumventing Congress’ Constitutional power of the purse. 

The lawsuit claims that DOJ’s conclusion that the use of SEPs violates the Miscellaneous Receipts Act is arbitrary and capricious and otherwise lacks reasoned decision-making.  The lawsuit highlights U.S. EPA’s history of using SEPs and its various guidance documents encouraging the use of SEPs in environmental enforcement matters.  The lawsuit asks that the Court declare that DOJ’s March 2020 memo violates the Administrative Procedures Act, vacate the memo, and enjoin DOJ from implementing or relying on the memo in the future. . 

We will continue to provide updates on this lawsuit as well as other important environmental, health and safety issues on Jenner & Block’s Corporate Environmental Lawyer Blog.

CATEGORIES: Climate Change, Consumer Law and Environment, Sustainability

PEOPLE: Steven R. Englund, Steven M. Siros

October 2, 2020 Supreme Court Grants Review on Key Climate Change Case

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By Matthew G. Lawson

US Supreme CourtOn Friday, October 2, 2020, the United States Supreme Court granted a writ of certiorari to review of a decision by the Fourth Circuit Court of Appeals holding that climate change litigation brought against various fossil fuel were not subject to federal court subject matter jurisdiction.  While the Supreme Court’s review is limited to a somewhat narrow, jurisdictional question regarding the ability of an appellate court to review a district court’s order remanding a case to state court, the decision will likely have far reaching impacts on whether the growing number of climate changes cases in the United States will be litigated in state or federal courts. 

As previously discussed by the Corporate Environmental Lawyer, 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, the fossil fuel companies sought to remove the action to federal court.  However, the district court remanded the case back to state court after finding that it lacked subject matter jurisdiction over the asserted claims following the lead of several other district courts that have decided similar issues.  On March 6, 2020, the Fourth Circuit affirmed the district court’s remand order.  Importantly, the Fourth Circuit found that its appellate jurisdiction was limited to reviewing the district court’s conclusion that it lacked subject matter jurisdiction under the Federal-Officer Removal Statute pursuant to 28 U.S.C. § 1447(d) and 28 U.S.C. § 1442 notwithstanding that the fossil fuel companies had raised and the district court ruled on additional arguments in support of the removal petition.  The Fourth Circuit found that it lacked jurisdiction to consider whether the district court should have granted removal to federal court on these alternative grounds. 

With respect to the Federal Officer Removal Statute, the Fourth Circuit rejected the companies’ arguments that the case belonged in federal court because the companies had entered into fuel supply and strategic petroleum reserve agreements with the federal government.  The court concluded that these contractual agreements failed to establish that the companies were “acting under” the direction of a federal officer and were “insufficiently related” to Baltimore’s claims.  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.

While the Supreme Court’s review of the case will be limited to the appellate jurisdictional question, the decision will undoubtedly influence the growing trend of climate change litigation.  At present, twenty-one U.S. States and numerous municipalities have brought lawsuits in state court against the fossil fuel industry for damages related to climate change.  In nearly all such cases, the industry has sought to remove the case to federal court where it is believed the companies have a better chance of successfully securing dismissals on the grounds that such claims are preempted by the Clean Air Act and/or addresses a “political question” which is better left to the discretion of Congress.  Thus, the Supreme Court’s decision will likely impact the ability of the fossil fuel industry to seek appellate review of unfavorable district court remand orders.  

CATEGORIES: Air, Climate Change, Sustainability

PEOPLE: Matthew G. Lawson