November 3, 2022 U.S. EPA Adopts Expanded Definition of PFAS on Its Drinking Water Contaminants List

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

                                                                                                                                                                                                                               
Drinking WaterOn November 2, 2022, U.S. EPA released the pre-publication version of the fifth contaminant candidate list (CCL 5) containing 66 chemicals, 12 microbes, and three chemical groups (per- and polyfluoroalkyl substances (PFAS), cyanotoxins, and disinfection byproducts).  Under the Safe Drinking Water Act (SDWA), every five years, U.S. EPA is obligated to publish a list of unregulated contaminants and contaminant groups that are known or anticipated to occur in public water systems and that may require regulation.  Once on the CCL, U.S. EPA will compile and evaluate additional data and then proceed to make regulatory determinations for those contaminants that U.S. EPA determines present the greatest public health concerns.  A regulatory determination is a formal decision by U.S. EPA that is the first step in developing a national primary drinking water regulation for a specific contaminant. For example, U.S. EPA recently made regulatory determinations for perfluorooctanesulfonic acid (PFOS) and perfluorooctanoic acid (PFOA) and is in the process of working on developing drinking water standards for these contaminants.

With respect to the PFAS chemical group included in CCL 5, U.S. EPA defined PFAS as a class of chemicals with the chemical structure R-(CF2)-C(F)(R’),R” where the CF2 and the CF moieties are saturated carbons and none of the R groups can be hydrogen.  The definition triggered opposition from both industry and environmental groups.  Industry groups opposed the class approach, noting that not all PFAS pose the same risks and that adopting a class approach can lead to the regulation of useful and necessary products.  Environmental group, on the other hand, sought a broader definition that would include any compound containing at least one fully fluorinated methyl or methylene carbon atom. 

U.S. EPA specifically acknowledged that this definition as limited to the CCL 5 and should not be reviewed as representing U.S. EPA’s definition of PFAS for all regulatory programs.  However, U.S. EPA does seem more sympathetic to the concerns raised by the environmental groups as evidenced by the following excerpt from the pre-publication notice: 

EPA is also aware there may be emerging contaminants such as fluorinated organic substances that may be used in or are a result of the PFAS manufacturing process (e.g., starting materials, intermediates, processing aids, by-products and/or degradates) that do not meet the structural definition. Those emerging PFAS contaminants or contaminant groups may be known to occur or are anticipated to occur in public water systems, and which may require regulation. If emerging PFAS contaminants or contaminant groups are identified, EPA may consider moving directly to the regulatory determination process or consider listing those contaminants for future CCL cycles. EPA will continue to be proactive in considering evolving occurrence and health effects data of these emerging contaminants.

We will continue to track U.S. EPA’s ongoing efforts to regulate PFAS in the various environmental media and provide timely updates on the Corporate Environmental Lawyer blog.


         

CATEGORIES: Contamination, Water

PEOPLE: Steven R. Englund, Steven M. Siros

November 1, 2022 New OEHHA Proposition 65 Acrylamide Warning Label Does Little to Resolve Pending First Amendment Challenges

Robertson  Daniel Robertson  DanielBy Daniel L. Robertson, Associate Attorney, and Steven M. Siros, Chair, Environmental and Workplace Health & Safety Law Practice


The California Office of Administrative Law (OAL) recently approved a revised Proposition 65 warning label requirement for the use of acrylamide in food and beverages. California’s Office of Environmental Health Hazard Assessment (OEHHA), the revision’s proponent, contends the language will resolve the First Amendment claims being asserted by the California Chamber of Commerce (CalChamber) in federal district court in California.  Following OAL’s approval, OEHHA’s “safe harbor warning” for acrylamide will become operative on January 1, 2023.

Under California’s Safe Drinking Water and Toxic Enforcement Act of 1986, commonly referred to as Proposition 65 (Prop. 65), businesses are required to provide warnings to consumers about significant exposures to chemicals that cause cancer, birth defects or other reproductive harm.  As of February 25, 2022, almost 1,000 chemicals are subject to this requirement and one of these chemicals is acrylamide.

Acrylamide can form through a natural chemical reaction in high-temperature cooking processes such as frying, roasting, and baking, and is commonly found in food products such as coffee, grain and potato products.  Studies indicate that it has likely always been present in foods cooked at high temperatures.

In 2019, CalChamber sued the California Attorney General for violating its members’ First Amendment rights against compelled speech by requiring food products containing acrylamide to include a Prop. 65 cancer warning.  In its complaint, CalChamber alleges that acrylamide was identified as a carcinogen solely on the basis of laboratory animal studies, and that its members will be required to convey “to consumers the false and misleading message that consuming the products will increase consumers’ risk of cancer, even though there is no reliable evidence that exposure to dietary acrylamide increases the risk of cancer in humans.”  The Council for Education and Research on Toxics (CERT) intervened in the matter to defend the Prop. 65 acrylamide warning.

In March 2021, the court issued a preliminary injunction that barred new Prop. 65 acrylamide lawsuits from being filed during the pendency of the litigation, noting that the Attorney General had not shown that the warning requirements were “purely factual and uncontroversial.”  CERT appealed the court’s ruling and on March 17, 2022, the Ninth Circuit Court of Appeals upheld the lower court’s ruling, thereby reinstating the district court’s preliminary injunction.  The Ninth Circuit specifically acknowledged statements by scientific bodies such as the Food and Drug Administration, American Cancer Society, the National Cancer Institute, and even the State of California to emphasize the “robust disagreement by reputable scientific sources” of whether acrylamide can be linked to cancer in humans. On October 26, 2022, the Ninth Circuit denied CERT’s petition for rehearing en banc.

In direct response to CalChamber’s First Amendment challenge, on September 17, 2021, OEHHA issued a Notice of Proposed Rulemaking that proposed the following “safe harbor warning” for acrylamide in food and beverages:

Consuming this product can expose you to acrylamide, a probable human carcinogen formed in some foods during cooking or processing at high temperatures. Many factors affect your cancer risk, including the frequency and amount of the chemical consumed. For more information including ways to reduce your exposure, see www.P65Warnings.ca.gov/acrylamide.  

Notwithstanding OEHHA’s efforts to respond to CalChamber’s First Amendment challenge, the new “safe harbor warning” will not stop the ongoing litigation in that CalChamber claims that this new warning language continues to violate its members’ First Amendment rights.  As such, the CalChamber lawsuit will continue to move forward and any subsequent ruling by the court will provide additional clarification on potential First Amendment limitations on Prop. 65 warnings. 

We will continue tracking Proposition 65 developments through the Corporate Environmental Lawyer.  

CATEGORIES: Contamination, Emerging Contaminants, Prop 65

PEOPLE: Steven R. Englund, Steven M. Siros

October 24, 2022 Proposed Fugitive Emissions Amendments Bring Clarity to Major Source Permitting Requirements

Robertson  Daniel

By:  Daniel Robertson

 

 

EPA Image

On October 14, 2022, the United States Environmental Protection Agency (USEPA) published proposed revisions to the Clean Air Act’s New Source Review (NSR) permitting regulations. The proposal seeks to repeal specific 2008 Clean Air Act (Act) amendments and require all existing major stationary sources to include fugitive emissions when determining whether a change at the source constitutes a major modification subject to NSR permitting requirements.

The USEPA’s NSR program requires certain stationary sources to obtain air pollution permits prior to construction. The goal of the program is to ensure that air quality does not worsen in areas where the air is considered unhealthy (known as “non-attainment areas”) or is not significantly degraded in areas where the air is considered clean (“attainment areas”).

A new source construction or modification of an existing source that increases emissions of regulated NSR pollutants above NSR regulation thresholds is subject to NSR “major source” requirements. How stringent these requirements are depends on whether the facility falls in an attainment or non-attainment area and what NSR permitting program applies. A major source in an attainment area is subject to the Prevention of Significant Deterioration (PSD) program and may be required to perform air quality and impact analysis, as well as install Best Available Control Technology. A major source in a non-attainment area is subject to the Nonattainment NSR program and may be required to perform emission offsets and meet Lowest Achievable Emission Rates. Both programs require opportunities for public involvement.

“Fugitive emissions” are emissions that cannot reasonably pass through a stack, chimney, vent, or similar opening (e.g. windblown dust from surface mines or volatile organic compounds emitting from leaking pipes). Whether a source must consider fugitive emissions for modification purposes has had an inconsistent history dating back to 1978, when the USEPA first established the foundations for the NSR program. Under the recent 2008 permitting amendments, only facilities in certain industrial source categories were required to include fugitive emissions when determining whether a change was a major modification. These source categories include petroleum refineries, large fossil fuel-fired steam electric plants, and Portland cement plants, among others. Sources in other industrial source categories, therefore, did not have to count fugitive emissions towards the major modification thresholds.

Section 111(a)(4) of the Act defines “modification” as “any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted.” The current USEPA proposal interprets Section 111(a)(4) of the Act “to require that all sources consider increases in all types of emissions (including fugitive emissions) in determining whether a proposed change would constitute a major modification.” The USEPA contends that its proposal will “affirm its longstanding position that all existing major sources (regardless of source category) must include fugitive emissions when determining if a modification is major.”

While the 2008 amendments only applied fugitive emission calculations to certain sources, a petition for reconsideration and multiple administrative stays of applicable provisions of those amendments mean the USEPA has effectively been instituting the current proposal since 2009. The proposed revisions will release the stay on specified 2008 provisions and then repeal them, a move that the USEPA states will “bring closure to the reconsideration proceeding” and “have a limited practical impact” on regulated entities given the ongoing stay.

The USEPA did not receive any requests for a public hearing prior to the October 19, 2022 request cutoff date. However, interested parties can still submit comments on the proposal through December 13, 2022. The USEPA specifically seeks “comments from stakeholders on the practical impact of the proposed action, including the scope of overall programmatic impacts (e.g. how many sources might be affected).” We will continue to monitor permitting developments on the Corporate Environmental Lawyer.

 

CATEGORIES: Air

PEOPLE: Steven R. Englund

October 17, 2022 A Risky Dance: When Emerging Contaminants Comingle With CERCLA Hazardous Substances

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By Arie Feltman-Frank EPA Image

Contaminants of Emerging Concern (CECs), chemicals that may be harmful to human health or the environment but that are not yet regulated, are capturing the public’s attention. For example, EPA just proposed to list perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS), two chemicals in the per- and polyfluoroalkyl substances (PFAS) group that are pervasive in the environment and may be harmful to human health, as Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) hazardous substances. EPA will be accepting comments on the proposed rule until November 7, 2022, and, according to the PFAS Strategic Roadmap, a final rule is expected in Summer 2023.

To fill the federal void, some states have been addressing PFAS in their own cleanup programs. For example, in 2016, the New York Department of Environmental Conservation added PFOA and PFOS to New York’s list of hazardous substances. More recently, Washington’s Department of Ecology concluded that PFAS are hazardous substances under Washington’s Model Toxics Control Act.

PFOA and PFOS may just be the beginning. According to the PFAS Strategic Roadmap, EPA is developing an Advance Notice of Proposed Rulemaking to seek input on whether to designate other PFAS as CERCLA hazardous substances. Ultimately, as our understanding of CECs advances, new chemicals may become designated as “hazardous” under CERCLA or state cleanup programs.

But before CECs become CERCLA hazardous substances, if they ever do, where do they fit into the CERCLA liability framework?

CERCLA uses the term “hazardous substance” and the term “pollutant or contaminant.” A chemical is a CERCLA “hazardous substance” if it falls within the purview of CERCLA §101(14), 42 U.S.C. §9601(14). That section provides that “hazardous substance” means, inter alia, any substance designated as hazardous under or pursuant to various identified federal environmental law provisions. See 42 U.S.C. §9601(14). The CERCLA list of hazardous substances can be found at 40 C.F.R. §302.4. The term “pollutant or contaminant” is broader. It includes, but is not limited to:

any substance . . . which, after release . . . and upon exposure, ingestion, inhalation, or assimilation into any organism, either directly . . . or indirectly . . . will or may reasonably be anticipated to cause death, disease, behavioral abnormalities, cancer, genetic mutation, physiological malfunctions (including malfunctions in reproduction) or physical deformations, in such organisms or their offspring.

See 42 U.S.C. §9601(33). CECs, if and until they become CERCLA hazardous substances, may become pollutants or contaminants. Indeed, in EPA’s PFAS Action Plan, the Agency noted that PFOA and PFOS are considered pollutants or contaminants, giving the Agency the authority to investigate releases or threats of releases of PFOA and/or PFOS at sites pursuant to CERCLA §104(e), 42 U.S.C. §9604(e).

The distinction between CERCLA hazardous substances and all else, including pollutants or contaminants, is important because CERCLA liability is triggered by the existence of a “hazardous substance” at a site, nothing else. See 42 U.S.C. §9607(a)(1)-(4); Colorado v. United States, 867 F. Supp. 948, 951 (D. Colo. 1994); Jastram v. Phillips Petroleum Co., 844 F. Supp. 1139, 1141 (E.D. La. 1994); United States v. United Nuclear Corp., 814 F. Supp. 1552, 1557 (D.N.M. 1992); Eagle-Picher Indus. v. United States, 759 F.2d 922, 932 (D.C. Cir. 1985).

Though once a hazardous substance is present, potentially responsible parties (PRPs) are liable for “all costs of removal or remedial action” incurred by the U.S. government, states, and Indian tribes not inconsistent with the national contingency plan (NCP) and “any other necessary costs of response” incurred by any other person consistent with the NCP. 42 U.S.C. §9607(a)(4)(A)-(B). Removal and remedial actions are meant to be directed at hazardous substances. See id. §§9601(23), (24); Colorado, 867 F. Supp. at 951-52 (explaining that “[t]he definitions clearly focus on actions taken in relation to hazardous substances”). However, their statutory definitions suggest that they may, in limited circumstances, include actions targeted at “associated” materials, including pollutants or contaminants, too. See id. at 952.

For example, “removal” is defined to include “such actions as may be necessary taken in the event of the threat of release of hazardous substances into the environment.” 42 U.S.C. §9601(23) (emphasis added). It is also defined to include “other actions as may be necessary to prevent, minimize, or mitigate damage to the public health or welfare or to the environment” from a release or threat of release of a hazardous substance. Id. (emphasis added). Moreover, “remedial action” is defined to include the “cleanup of released hazardous substances and associated contaminated materials” and the “offsite transport and offsite storage, treatment, destruction, or secure disposition of hazardous substances and associated contaminated materials.” Id. §9601(24) (emphasis added).

So, the question then becomes: When can “all costs of removal or remedial action” or “any other necessary costs of response” include within it the costs associated with addressing CECs at a site, thus making PRPs liable under CERCLA for their cleanup?

Let us consider three different scenarios.

First, there may be a site where only CECs (no CERCLA hazardous substances) are present. In this scenario, there is no CERCLA liability. In fact, a major implication of designating a chemical as a CERCLA hazardous substance is that the presence of the chemical, on its own, will trigger CERCLA liability. However, it is important to note that liability may be imposed by a state cleanup program if the CECs are hazardous substances under state law.  

Second, there may be a site where there are CECs and hazardous substances in geographically distinct areas. Here, there will be no CERCLA liability for the geographic area containing the CECs, but there will be CERCLA liability for the geographic area containing the hazardous substances. For example, in Colorado v. United States, Colorado sought to recover response costs incurred in connection with the Rocky Mountain Arsenal cleanup and litigation, including costs incurred in responding to the release of diisopropyl methylphosphonate (DIMP). 867 F. Supp. at 951. Colorado and the United States stipulated that DIMP is a pollutant or contaminant, not a hazardous substance. Id. Nonetheless, Colorado argued that it could recover its DIMP response costs because, as a PRP, the United States was liable for “all costs.” Id. The United States argued back that a PRP is not liable for response costs associated with “a discrete action that does not purposefully address hazardous substances . . . simply because it is part of a larger cleanup program” at a site. Id. The court agreed, concluding that the language in §9607(a)(4)(A), when interpreted in accordance with the definitions in §§9601(23) and (24), dictates that response costs are available only when the associated response actions are directed at hazardous substances. Id. at 952. But as mentioned above, for the geographic area containing the CECs, liability may be imposed by a state cleanup program if the CECs are hazardous substances under state law. 

Third, there may be a site where CECs and hazardous substances are comingled. Here, due to the comingling, response actions directed at the hazardous substances will necessarily require addressing the “associated” CECs and therefore be considered part of “all costs of removal or remedial action” or “any other necessary costs of response.” Thus, in this third scenario, PRPs will likely be liable for the cleanup of the CECs, too. Cf. United Nuclear Corp., 814 F. Supp. at 1558 (treating mine tailings that contained some hazardous substances in trace amounts as hazardous substances rather than pollutants or contaminants). If the CECs remain onsite, and if they are considered pollutants or contaminants, absent waiver, the CECs will have to be cleaned up pursuant to federal standards and more stringent promulgated state standards that are “legally applicable” to them or “relevant and appropriate under the circumstances” of their release or threatened release, known as ARARs. 42 U.S.C. §9621(d)(2)(A). If there are no ARARs, advisories, criteria, or guidance may be “considered” when selecting the remedy. 40 C.F.R. §300.400(g)(3).

 In summary, PRPs should pay close attention to the presence of CECs at sites and their spatial relationship with hazardous substances, if any, as this will affect their CERCLA liability and potential courses of action. We will continue tracking CEC and federal and state cleanup developments in the Corporate Environmental Law Blog

CATEGORIES: Cercla, Emerging Contaminants, Hazmat, Sustainability, TSCA

PEOPLE: Steven R. Englund

October 6, 2022 Governor Newsom Vetoes PFAS Reporting Bill But Signs Into Law Legislation Banning PFAS in Cosmetics and Textiles

Feltman-Frank_Arie


By Arie Feltman-Frank

 

On September 29, 2022, Governor Gavin Newsom vetoed Assembly Bill No. 2247. The bill would have required manufacturers of per- and polyfluoroalkyl substances (PFAS) or products or product components containing intentionally added PFAS to register the PFAS or products or product components on a publicly accessible data collection interface, along with other information. According to the bill’s findings and declarations, the registration requirement would, among other things, provide California with timely information that would help the state characterize the threats of further PFAS contamination and human exposure in California and develop best practices for addressing the threats in an expeditious manner.

“Manufacturer” was defined to include, in addition to manufacturers, importers of PFAS or products or product components containing intentionally added PFAS, persons or entities whose names appear on product labels, and persons or entities for whom the PFAS or products or product components are manufactured or distributed. Registration would have been required on or before July 1, 2026, and on or before July 1 of each year thereafter. The registration requirement would not have applied to certain products regulated by federal law, such as drugs, medical devices and equipment, dietary supplements, and certain products intended for animals.

In Governor Newsom’s veto message, he explained that the bill may be premature given that EPA is currently undergoing rulemaking to require reporting of PFAS and noted cost concerns.

On the same day as the veto, Governor Newsom approved both Assembly Bill No. 2771, which bans intentionally added PFAS in cosmetic products, and Assembly Bill No. 1817, which bans regulated PFAS in textile articles.

            Cosmetic Products

Assembly Bill No. 2771 will, beginning January 1, 2025, prohibit the “manufacture, sale, delivery, holding, or offering for sale in commerce any cosmetic product that contains intentionally added” PFAS. Cal. Health & Safety Code § 108981.5. “Cosmetic product” is defined as “an article for retail sale or professional use intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance.” Id. § 108982(a). “Intentionally added PFAS” means either “PFAS that a manufacturer has intentionally added to a product and that have a functional or technical effect on the product” or “PFAS that are intentional breakdown products of an added chemical.” Id. § 108982(c).

            Textile Articles

 Assembly Bill No. 1817 states that, “commencing January 1, 2025, no person shall manufacture, distribute, sell, or offer for sale in the state any new, not previously used, textile articles that contain regulated . . . PFAS.” Cal. Health & Safety Code § 108971(a)(1). “Textile” is defined as “any item made in whole or part from a natural, manmade, or synthetic fiber, yarn, or fabric,” but the definition does not include “single-use paper hygiene products.” Id. § 108970(h).

“Textile Articles” are defined as “textile goods of a type customarily and ordinarily used in households and businesses,” but there are various identified exemptions. Id. § 108970(i). Regulated PFAS means either “PFAS that a manufacturer has intentionally added to a product and that have a functional or technical effect in the product” or the presence of PFAS in a product or product component, measured in total organic fluorine, at or above 100 parts per million (commencing January 1, 2025) and 50 parts per million (commencing January 1, 2027). Id. § 108970(g).

The enacted bill further provides that manufacturers “shall use the least toxic alternative, including alternative design, when removing regulated . . . PFAS in textile articles.” Id. § 108971(b). Lastly, it requires manufacturers to provide persons that offer the product for sale or distribution in California a certificate of compliance and protects distributers or retailers (that are not also manufacturers) that rely in good faith on these certificates from being held in violation of the chapter. Id. § 108971(c), (d).

The prohibition against regulated PFAS in textile articles does not apply to outdoor apparel for severe wet conditions until January 1, 2028, but commencing January 1, 2025, such apparel must be accompanied by a disclosure statement “Made with PFAS chemicals,” including for online listings. Id. § 108971(a)(2).

These new laws now join other legal developments in California that aim to regulate PFAS in consumer products. For example, Assembly Bill No. 1200 and Assembly Bill No. 652, both approved on October 5, 2021, address PFAS in food packaging and cookware and children’s products, respectively. As states like California continue to move forward with legal developments aimed at addressing PFAS, so is the federal government. We will continue tracking PFAS developments in the Corporate Environmental Law Blog

 

CATEGORIES: Consumer Law and Environment, Contamination, Emerging Contaminants, Hazmat, RCRA, Real Estate and Environment, Toxic Tort, TSCA

PEOPLE: Steven R. Englund

October 1, 2022 New OEHHA Proposition 65 Acrylamide Warning Label Does Little to Resolve Pending First Amendment Challenges

P65 Warning LabelBy Daniel L. Robertson, Associate Attorney, and Steven M. Siros, Chair, Environmental and Workplace Health & Safety Law Practice

On September 16, 2022, California’s Office of Environmental Health Hazard Assessment (OEHHA) submitted to the California Office of Administrative Law (OAL) a revised Proposition 65 warning label requirement for the use of acrylamide in food and beverages that OEHHA claims will resolve the First Amendment claims being asserted by the California Chamber of Commerce (CalChamber) in federal district court in California.  OAL is expected to approve OEHHA’s “safe harbor warning” for acrylamide by the end of October 2022.     

Under California’s Safe Drinking Water and Toxic Enforcement Act of 1986, commonly referred to as Proposition 65 (Prop. 65), businesses are required to provide warnings to consumers about significant exposures to chemicals that cause cancer, birth defects or other reproductive harm.  As of February 25, 2022, almost 1,000 chemicals are subject to this requirement and one of these chemicals is acrylamide. 

Acrylamide can form through a natural chemical reaction in high-temperature cooking processes such as frying, roasting, and baking, and is commonly found in food products such as coffee, grain and potato products.  Studies indicate that it has likely always been present in foods cooked at high temperatures.

In 2019, CalChamber sued the California Attorney General for violating its members’ First Amendment rights against compelled speech by requiring food products containing acrylamide to include a Prop. 65 cancer warning.  In its complaint, CalChamber alleges that acrylamide was identified as a carcinogen solely on the basis of laboratory animal studies, and that its members will be required to convey “to consumers the false and misleading message that consuming the products will increase consumers’ risk of cancer, even though there is no reliable evidence that exposure to dietary acrylamide increases the risk of cancer in humans.”  The Council for Education and Research on Toxics (CERT) intervened in the matter to defend the Prop. 65 acrylamide warning.

In March 2021, the court issued a preliminary injunction that barred new Prop. 65 acrylamide lawsuits from being filed during the pendency of the litigation, noting that the Attorney General had not shown that the warning requirements were “purely factual and uncontroversial.”  CERT appealed the court’s ruling and in March 2022, the Ninth Circuit Court of Appeals upheld the lower court’s ruling, thereby reinstating the district court’s preliminary injunction.  The Ninth Circuit specifically acknowledged statements by scientific bodies such as the Food and Drug Administration, American Cancer Society, the National Cancer Institute, and even the State of California to emphasize the “robust disagreement by reputable scientific sources” of whether acrylamide can be linked to cancer in humans.

In direct response to CalChamber’s First Amendment challenge, on September 17, 2021, OEHHA issued a Notice of Proposed Rulemaking that proposed the following “safe harbor warning” for acrylamide in food and beverages:

Consuming this product can expose you to acrylamide, a probable human carcinogen formed in some foods during cooking or processing at high temperatures. Many factors affect your cancer risk, including the frequency and amount of the chemical consumed. For more information including ways to reduce your exposure, see www.P65Warnings.ca.gov/acrylamide.  

Notwithstanding OEHHA’s efforts to respond to CalChamber’s First Amendment challenge, the new “safe harbor warning” will not stop the ongoing litigation in that CalChamber claims that this new warning language continues to violate its members’ First Amendment rights.  As such, the CalChamber lawsuit will continue to move forward and any subsequent ruling by the court will provide additional clarification on potential First Amendment limitations on Prop. 65 warnings. 

We will continue tracking Proposition 65 developments through the Corporate Environmental Lawyer blog.  Regardless of OAL’s decision on the latest regulatory proposal, the current action and similar litigation relating to glyphosate establish a litigation roadmap for businesses that may otherwise be subject to Prop. 65 requirements based on disputed science.

CATEGORIES: Climate Change, Contamination, Emerging Contaminants, Prop 65, Sustainability

PEOPLE: Steven R. Englund, Steven M. Siros

September 7, 2022 Jenner & Block Wishes Bon Voyage to Gay Sigel as She Starts Her Next Adventure with the City of Chicago

G. Sigel SuperwomanAs Gay Sigel walked through the doors at One IBM Plaza in Chicago, fresh out of law school and ready to launch her career as an attorney at Jenner & Block, she could not have envisioned the tremendous impact she would have on her clients, her colleagues, and her community over the next 39 years. Gay started her legal career as a general litigator, but Gay and Bob Graham were quick to realize how the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) was creating a new and exciting area of the law that was increasingly important for the firm’s clients: Environmental Law. Gay and Bob saw an opportunity to specialize in that area and founded Jenner & Block’s Environmental Health and Safety Practice. Gay has been an ever-present force in the EHS community ever since.

Over her 39-year career at Jenner & Block, Gay has worked on some of the most significant environmental cases in the country for clients ranging from global Fortune 50 corporations to environmental organizations to individuals. For more than a decade, she taught environmental law at Northwestern University, helping shape the next generation of environmental lawyers. She has worked on issues of global impact, like those affecting climate change, issues of local impact like those related to combined sewer overflows to the Chicago River, and issues of individual impact like those involving employee safety and health. No matter the subject, Gay has always been a tireless advocate for her clients. We often describe her as the Energizer Bunny of environmental lawyers: she is the hardest working attorney we have ever met. 

Gay’s true passion is to make this world a better, more just place for others. So, throughout her career as an environmental, health, and safety lawyer, Gay has devoted her time, energy, and emotional resources to innumerable pro bono cases and charitable and advocacy organizations. Her pro bono work includes successfully protecting asylum applicants, defending criminal cases, asserting parental rights, and defending arts organizations in OSHA matters. Among her many civic endeavors, Gay was a founding member of the AIDS Legal Council of Chicago (n/k/a as the Legal Council for Health Justice); she was the Secretary and active member of the Board of Directors for the Chicago Foundation for Women; and she was on the Board of the New Israel Fund. Gay continues to promote justice wherever she sees injustice, including as an advocate for women’s rights, particularly for women’s reproductive rights.

In both her environmental, health, and safety practice as well as her pro bono and charitable work, Gay is a tremendous mentor to younger (and even older) attorneys. She is curious, committed, exacting, fearless, and demanding (though more of herself than of others). We all give Gay much credit for making us the lawyers we are today.

Gay is leaving Jenner & Block to embark on her next adventure. She is returning to public service as Corporate Environmental Counsel for the City of Chicago. The City and its residents will be well served as Gay will bring her vast experience and unparalleled energy to work tirelessly to protect the City and its environment. We will miss working with and learning from Gay on a daily basis, but we look forward to seeing the great things she will accomplish for the City of Chicago. We know we speak for the entire firm as we wish Gay bon voyage—we will miss you! 

Steven M. Siros, Allison A. Torrence, Andi S. Kenney

EHS

CATEGORIES: Air, Cercla, Climate Change, Consumer Law and Environment, Contamination, COVID-19, Emerging Contaminants, FIFRA, Greenhouse Gas, Groundwater, Hazmat, NEPA, OSHA, Prop 65, RCRA, Real Estate and Environment, Sustainability, Toxic Tort, TSCA, Water

PEOPLE: Steven R. Englund, Robert L. Byman, Anne Samuels Kenney (Andi), Allison A. Torrence, Steven M. Siros

September 1, 2022 U.S. EPA Offers Roadmap for Environmental Justice-Based Permit Denials

Linkedin_Steven_Siros_3130By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice

EPA logoOn August 16, 2022, U.S. EPA released its Interim Environmental Justice and Civil Rights in Permitting Frequently Asked Questions (FAQ) that provides guidance to federal, state, and local environmental permitting entities on integrating environmental justice (EJ) and civil rights into relevant environmental permitting decisions.  Lilian Dorka, director of U.S. EPA’s External Civil Rights Compliance Office (ECRCO), emphasized that the information in the FAQ isn’t new and that environmental permitting decisions are always supposed to consider the EJ and civil rights impacts of the permit.  Rather, according to Director Dorka, the FAQ is an effort by U.S. EPA to compile existing information on integrating EJ and civil rights into the permitting process into a single document. She also noted that this is an interim document and EPCRO is working on separate guidance document to provide further direction on how permitting entities should consider civil rights in permitting decisions, including Title VI’s disparate impact analysis. 

One of the more interesting parts of the FAQ is the following paragraph:

If there are no mitigation measures the permitting authority can take, whether within or outside the permitting program, that can address the disparate impacts, and there is no legally sufficient justification for the disparate impacts, denial of the permit may be the only way to avoid a Title VI violation. Whether denial of a permit is required to avoid a Title VI violation is a fact-specific determination that would take into account an array of circumstances, including whether the facility will have an unjustified racially disproportionate impact, as well as the less discriminatory alternatives available. 

This is one of the first times that U.S. EPA has clearly articulated its position that a permit can be denied solely because it may violate Title VI although the occasions when a permit has been denied on this basis have historically been far and few between. However, a recent example of how EJ and civil right issues can impact the permitting process is currently playing out in Chicago where the City of Chicago denied a permit for a metal recycling facility following receipt of a letter from U.S. EPA noting significant civil rights concerns associated with the facility’s operations.  Notwithstanding that the Illinois Environmental Protection Agency had already issued the facility an air permit allowing the facility to commence operations,  the City of Chicago denied the facility an operating permit based primarily on the purported disparate impact of the facility on disadvantaged communities.  The City’s permit denial is currently being challenged in an administrative proceeding. 

The FAQs are clearly consistent with U.S. EPA’s ongoing efforts to integrate President Biden’s Justice40 Initiative that sets a goal of ensuring that 40% of the overall benefits of certain federal investments flow to disadvantaged communities. We will continue to track U.S. EPA’s efforts to ensure that its permitting decisions are appropriately protective of disadvantaged communities at the Corporate Environmental Lawyer blog. 

CATEGORIES: Sustainability

PEOPLE: Steven R. Englund, Steven M. Siros

August 18, 2022 OMB Throws Potential Speed Bump in Front of U.S. EPA’s Efforts to Designate PFAS as CERCLA Hazardous Substances

Linkedin_Steven_Siros_3130By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice

PFASOn August 12, 2022, the Office of Management and Budget (OMB) completed its review of U.S. EPA’s proposed rule to designate perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) as CERCLA hazardous substances.  Designation as a CERLA hazardous substances would have significant ramifications, including requiring the reporting of releases of reportable quantities of these substances and potentially resulting in the reopening of previously closed CERCLA sites.  These ramifications are discussed in a previous Corporate Environmental Lawyer blog.

OMB had previously designated the proposed rule as “other significant” which would not have required U.S. EPA to issue a regulatory impact analysis (RIA).  “Other significant” designations are reserved for rules expected to have costs or benefits less than $100 million annually.  In response to a number of comments, including comments from the U.S. Chamber of Commerce that estimated annual costs in excess of $700 million, the OMB has changed its designation to “economically significant” which will require U.S. EPA to conduct an RIA. 

Although it is very unlikely that the requirement to conduct an RIA will deter U.S. EPA in proceeding with its plans to designate PFOA and PFOS as CERCLA hazardous substances, it will require U.S. EPA to analyze whether its proposed rule is necessary and justified to achieve U.S. EPA’s goals and to clarify how its rule is the least burdensome and most cost-effective and efficient mechanism to achieve that goal.  OMB will review and comment on U.S. EPA’s RIA and may require that changes be made to U.S. EPA’s analysis. 

Again, the requirement to conduct the RIA is unlikely to derail U.S. EPA’s efforts to designate these chemicals as CERLA hazardous substances but it could jeopardize U.S. EPA’s summer 2023 deadline for finalizing its rule.  We will continue to track and report on PFAS related issues at the Corporate Environmental Lawyer.

CATEGORIES: Cercla, Contamination, Emerging Contaminants, Sustainability, Toxic Tort

PEOPLE: Steven R. Englund, Steven M. Siros

August 11, 2022 Inflation Reduction Act: Is the U.S. Finally Poised to Tackle Climate Change?

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By
Allison A. Torrence 


CapitalIn a compromise move many months in the making, on August 7, 2022, the Senate passed a spending bill dubbed the Inflation Reduction Act of 2022, which contains provisions aimed at lowering drug prices and health care premiums, reducing inflation, and most notably for our readers, investing approximately $369 billion in energy security and climate change programs over the next ten years. The Inflation Reduction Act, which is the Fiscal Year 2022 Budget Reconciliation bill, passed on entirely partisan lines in the Senate, with all 50 Democratic senators voting in favor, all 50 Republicans voting against, and Vice President Harris breaking the tie in favor of the Democrats. The bill is currently pending before the House of Representatives, where it is expected to be hotly contested but ultimately pass.

According to Senate Democrats, the Inflation Reduction Act “would put the U.S. on a path to roughly 40% emissions reduction [below 2005 levels] by 2030, and would represent the single biggest climate investment in U.S. history, by far.” There are a wide variety of programs in this bill aimed at achieving these lofty goals, including:

  • Clean Building and Vehicle Incentives
    • Consumer home energy rebate programs and tax credits, to electrify home appliances, for energy efficient retrofits, and make homes more energy efficient.
    • Tax credits for purchasing new and used “clean” vehicles.
    • Grants to make affordable housing more energy efficient.
  • Clean Energy Investment
    • Tax credits to accelerate manufacturing and build new manufacturing plants for clean energy like electric vehicles, wind turbines, and solar panels.
    • Grants and loans to retool or build new vehicle manufacturing plants to manufacture clean vehicles.
    • Funding for EPA, DOE and NOAA to facilitate faster siting and permitting of new energy generation and transmission projects.
    • Investment in the National Labs to accelerate breakthrough energy research.
  • Reducing Carbon Emissions Throughout the Economy
    • Tax credits for states and electric utilities to accelerate the transition to clean electricity.
    • Grants and tax credits to reduce emissions from industrial manufacturing processes like chemical, steel and cement plants.
    • Funding for Federal procurement of American-made clean technologies to create a stable market for clean products—including purchasing zero-emission postal vehicles.
  • Environmental Justice
    • Investment in community led projects in disadvantaged communities, including projects aimed at affordable transportation access.
    • Grants to support the purchase of zero-emission equipment and technology at ports.
    • Grants for clean heavy-duty trucks, like busses and garbage trucks.
  • Farm and Rural Investment
    • Funding to support climate-smart agriculture practices and forest conservation.
    • Tax credits and grants to support the domestic production of biofuels.
    • Grants to conserve and restore coastal habitats.
    • Requires sale of 60 million acres to oil and gas industry for offshore wind lease issuance.

Drilling down on some of these many provisions, the clean vehicle consumer tax credit has already sparked controversy due to the requirement that certain manufacturing or components be sourced in North America. The Inflation Reduction Act would maintain the existing $7,500 consumer tax credit for the purchase of a qualified new clean vehicle. The Act would get rid of the previous limit that a single manufacturer could only offer up to 200,000 clean vehicle tax credits—a limit that many manufacturers were hitting. However, under the new bill, that tax credit is reduced or eliminated for electric vehicles if the vehicle is not assembled in North America or if the majority of battery components are sourced outside of North America and if a certain percentage of the critical minerals utilized in battery components are not extracted or processed in a Free Trade Agreement country or recycled in North America. Manufacturers have indicated these battery sourcing requirements are currently difficult to meet, and may result in many electric vehicles being ineligible for this tax credit in the near term.

Another controversial point in the Act is the handling of oil and gas rights vis-à-vis wind farm projects. The Act would allow the sale of tens of millions of acres of public waters to the oil and gas industry as part of an overall plan to require offshore oil and gas projects to allow installation of wind turbines. A group of 350 climate groups, including Senator Bernie Sanders, criticized this and other provisions they saw as favorable to the oil and gas industry in the Act. Despite his criticism of certain aspects of the Inflation Reduction Act, Senator Sanders ultimately voted for the bill.

The House is expect to vote on the Inflation Reduction Act very soon and if it is passed by the House, President Biden will sign it into law. We will continue to track the Act’s progress and its impact on the regulated community. You can follow the Corporate Environmental Lawyer Blog for all of the latest developments.

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

PEOPLE: Allison A. Torrence

July 1, 2022 West Virginia v. EPA: The Major Questions Doctrine Arrives to Rein in Administrative Powers

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By
Allison A. Torrence and Tatjana Vujic

 

On the final day of its 2022 term, the Supreme Court issued its highly-anticipated opinion in the case of West Virginia v. EPA, 579 U.S. __ (2022), addressing EPA’s authority to regulate greenhouse gases (“GHGs”) under the Clean Air Act (“CAA”), but having much broader implications for the authority of all administrative agencies. The opinion signals a significant shift in the standards used to review administrative actions. Chief Justice Roberts wrote the opinion for the Court, joined by Justices Thomas, Alito, Gorsuch, Kavanaugh and Barrett. Justice Gorsuch filed a concurring opinion, in which Justice Alito joined, and Justice Kagan filed a dissenting opinion, in which Justices Breyer and Sotomayor joined.

Major Questions Doctrine Has its Day in the Sun

In a significant yet long-predicted move, the six-to-three opinion rejected EPA’s approach to regulating GHG emissions under the Obama Administration’s Clean Power Plan (“CPP”), under which EPA intended to regulate existing coal-and natural-gas-fired power plants pursuant to Section 111(d) of the CAA.[1] Of greater significance, however, the Court took the opportunity to fully embrace the “major questions doctrine,” a standard several Justices had endorsed but which had not yet been fully unveiled by the Court. The doctrine now requires agencies, in instances in which a regulation will have major economic and political consequences, to point to clear statutory language showing congressional authorization for the power claimed by the agency. In particular, in “extraordinary cases” in which “the history and the breadth of the authority that the agency has asserted and the economic and political significance of that assertion” is significant or major, courts have “a reason to hesitate before concluding that Congress meant to confer such authority.” Slip op. at 17. In such extraordinary cases, the Court will not read into ambiguous statutory text authority that is not clearly spelled out. Instead, “something more than a merely plausible textual basis for the agency action is necessary”; specifically, “[t]he agency instead must point to clear congressional authorization for the power it claims.” Slip op. at 19.

As support for the adoption and application of the major questions doctrine, the Court cited numerous cases in which agency authority was curtailed because of extraordinary circumstances that it determined required a clear congressional directive. The cases included the FDA’s attempt to regulate tobacco (FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000), the CDC’s effort to issue an eviction moratorium during the COVID-19 pandemic (Alabama Assn. of Realtors v. Dept. of Health & Human Servs., 594 U.S. __ (2021)), EPA’s assertion of permitting authority over millions of small sources like hotels and office buildings (Utility Air Regulatory Group v. EPA, 573 U.S. 302 (2014)), and OSHA’s endeavor to require 84 million Americans either obtain a COVID-19 vaccine or undergo weekly testing (National Federation of Independent Business v. OSHA, 595 U.S. __ (2021)), all of which, according to the Court, involved an agency overstepping its authority to act in situations not dissimilar from the extraordinary circumstances presented in West Virginia v. EPA. The dissent, on the other hand, regarded the majority’s use of the major questions doctrine to be without precedent, observing that “[t]he Court has never even used the term ‘major questions doctrine’ before.” Dissent at 15.

As discussed below, when the Court determines that the major questions doctrine applies, even if the administrative action arguably fits within what may seem like a broad grant of statutory authority, it is not necessarily enough to authorize the agency to act. Rather, if the court finds that the administrative rule is an “extraordinary case”, i.e., will have a significant economic or political impact, the agency must base its action on very clear congressional authorization to justify the power it is attempting to assert.

Clean Power Plan is Out But Regulating GHGs Still OK

Turning back to the regulation at issue in West Virginia, the Court reviewed the Clean Power Plan, which dates back to the Obama Administration’s EPA. At that time, EPA promulgated the CPP pursuant to its authority under the New Source Performance Standards (“NSPS”) in Section 111(d) of the CAA. The Court’s review thus centered on Section 111(d), which gives EPA authority to select the “best system of emission reduction” for existing sources of pollution, like power plants. 42 U.S.C. § 7411(d). Under the CPP, the Obama Administration’s EPA used the NSPS to set GHG emission standards for existing power plants which would require many operators to shut down older coal-fired units and/or shift generation to lower-emitting natural gas units or renewable sources of electricity. The Court viewed EPA’s CPP, which would have required power producers to significantly change the generation mix, as an “extraordinary case” because it would have a major impact on the economy and was a “transformative expansion in [EPA’s] regulatory authority” based on “vague language” in the CAA. Slip op. at 20. In addition, the Court noted that EPA was using an “ancillary provision” in the CAA to regulate GHGs and stated that “the Agency’s discovery [of Section 111(d)]”—which the Court described as a “gap filler”—"allowed it to adopt a regulatory program that Congress had conspicuously and repeatedly declined to enact itself.” Slip op. at 20.

Best System of Emission Reduction

Notably, the Court acknowledged that “as a matter of definitional possibilities, generation shifting can be described as a system” (and thus a “best system of emission reduction”), but nevertheless determined that the CAA’s grant of authority was too vague. Slip op. at 28. According to the Court, almost anything could be described as a “system”, and therefore the CPP was based on a vague grant of authority and did not pass the major questions doctrine test. Slip op. at 28. The majority found such a broad grant of authority questionable, particularly because climate change legislation has been debated in Congress for years with no action, signaling that EPA could not exercise such broad authority when Congress had clearly declined to take such action itself.

By contrast and contrary to the majority’s narrow reading of “best system of emission reduction,” the dissent argued that the generation shifting prescribed by the CPP was precisely the type of “system” of emission reduction permitted under the CAA. In particular, the dissent contended that the term “system” is not vague (which Justice Kagan defined as unclear, ambiguous or hazy) but intentionally expansive to allow for such system-wide programs. Thus, the crux of the disagreement between the majority and dissent is that the dissent saw the CAA as having bestowed broad authority on EPA to regulate complex and important issues of air pollution—including and especially climate change, particularly considering the severity of the problem—in the manner that EPA determines is most appropriate, while the majority required further scrutiny for large-scale administrative endeavors like the CPP, which it held require very clear and specific authorization.

What’s Next?

In terms of the implications of West Virginia, what is clear is that the major questions doctrine is here to stay and EPA’s ability to regulate GHG’s under Section 111(d) of the CAA may be curtailed but has not been rejected. In fact, the Court specifically endorsed EPA’s authority to regulate GHGs. So, what does this mean, not only for GHG regulation but also for agency rulemaking in general?

First, while the ruling marks a significant setback for EPA, it does not shut the door on the agency’s ability to regulate GHGs. The CPP rules at issue raised the specter of the major questions doctrine because the regulation would have required generation shifting across the entire energy industry—an action viewed by the Court as having a significant impact on the national economy. The Court, however, declined to opine on “how far our opinion constrains EPA,” indicating that EPA’s authority had not been disallowed. Slip op. at 31, fn5. In fact, the opinion unequivocally states that it is within EPA’s purview to set a specific limit on GHG emissions. Slip op. at 6 (“Although the States set the actual rules governing existing power plants, EPA itself still retains the primary regulatory role in Section 111(d). The Agency, not the States, decides the amount of pollution reduction that must ultimately be achieved.”) Nothing in the opinion suggests that EPA cannot choose to regulate GHGs at power plants with more traditional technology-based requirements. Indeed, an inside-the-fence-line regulation that requires technology like carbon-capture would likely be within EPA’s traditional expertise and less likely to implicate large swaths of the economy like generation switching, and hence not be struck down.

Looking beyond EPA and GHG regulation, additional fallout from the Court’s embrace of the major questions doctrine is sure to occur. In addition to the Court’s explicit adoption of the major questions doctrine, Justice Gorsuch—a longstanding proponent of the doctrine—used his concurring opinion to lay out what he saw as the appropriate elements to consider when evaluating administrative rules under the doctrine. While Justice Gorsuch’s concurrence is not binding, future courts and administrative agencies likely will look to both the Court’s majority opinion and the Gorsuch concurrence for guidance. Administrative regulations will face increased challenges and heightened judicial scrutiny thanks to the major questions doctrine, and we can expect to see not only the number of challenges increase but also the number of successful challenges rise. Additionally, administrative agencies may proactively rein in regulatory actions they were planning to promulgate—keeping the rules more modest or tailored in an attempt to avoid challenges based on the major questions doctrine.

Undoubtedly, this will not be the last word on EPA regulation of GHGs or the use of the major questions doctrine. EPA will issue new GHG regulations, which certainly will invite future litigation. The decision will also certainly trigger many more challenges of agency authority under the newly minted major questions doctrine.

 

[1] Notably, the CPP was revoked by the Trump EPA, and the Biden EPA has stated that it intends to promulgate new GHG regulations different from the previous rules under past administrations. Nevertheless, the Court held that the parties had standing to proceed and the case was not moot. Slip op. at 14, 16.

CATEGORIES: Air, Climate Change, COVID-19, Greenhouse Gas, OSHA

PEOPLE: Allison A. Torrence

June 16, 2022 How Low Can You Go—U.S. EPA Attempts to Answer that Question With New PFAS Health Advisory Levels

Linkedin_Steven_Siros_3130BSteven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice

Glass of drinking water - municipal water use | U.S. Geological Survey

U.S. EPA issued its long anticipated interim updated drinking water health advisories for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS) that replace previous U.S. EPA health advisories for these per- and polyfluoroalkyl substances (PFAS) that had been set at 70 parts per trillion (ppt). The updated advisory levels, which U.S. EPA claims are based on new science and consider lifetime exposure, evidence that U.S. EPA believes that adverse health effects may occur with concentrations of PFOA or PFOS in water that are about as close to zero as you can get.  U.S. EPA notes that these interim health advisories will remain in place until EPA establishes a National Primary Drinking Water Regulation.

U.S. EPA has set a new health advisory level of 0.02 ppt for PFOS and 0.004 ppt for PFOA.  These new levels are dramatically lower than U.S. EPA's previous 70 ppt level that applied to both PFOA and PFOS.  U.S. EPA also set final advisories for hexafluoropropylene oxide dimer acid and its ammonium salts (also referred to as GenX) at 10 ppt and perfluorobutane sulfonic acid (PFBS) at 2,000 ppt.

Interestingly, U.S. EPA's health advisory levels for both PFOA and PFOS are set well below the current analytical detection limit of 4 ppt.   Responding to questions as to how the regulated community is supposed to demonstrate compliance with these health advisory levels, U.S. EPA acknowledged it was a "complicated matter" and U.S. EPA's advice was for water providers to test for PFAS using the currently analytical methodology that can test to 4 ppt.  

Environmental groups and the plaintiffs’ bar were quick to applaud the new health advisory levels, noting that any detectible levels of PFOA or PFOS represent unacceptable levels of these compounds in drinking water. The regulated community, on the other hand, blasted the new health advisory levels, claiming that the advisory levels ignored U.S. EPA’s commitment to embrace scientific integrity.

Regardless of which side of the fence that you find yourself, it is clear that U.S. EPA’s new PFAS health advisories will be relied upon by plaintiffs to file lawsuits in any instance where a detectible concentration of PFOA and/or PFOS is found in drinking water which in turn is likely to keep drinking water providers throughout the United States awake at night. 

We will continue to provide updates on U.S. EPA’s efforts to regulate PFAS at the Corporate Environmental Lawyer blog.

CATEGORIES: Climate Change, Emerging Contaminants, Groundwater, Water

PEOPLE: Steven R. Englund, Steven M. Siros

May 19, 2022 U.S. EPA Updates Regional Screening Levels to Add Five New PFAS Chemicals

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


EPA logoOn May 18, 2022, U.S. EPA updated its Regional Screening Level tables to include five new per- and polyfluoroalkyl substances (PFAS).  The five new PFAS compounds added to the RSL tables are hexafluoropropylene oxide dimer acid and its ammonium salt (HFPO-DA – sometimes referred to as GenX chemicals), perfluorooctanesulfonic acid (PFOS), perfluorooctanoic acid (PFOA), perfluorononanoic acid (PFNA), and perfluorohexanesulfonic acid (PFHxS). U.S. EPA added its first PFAS substance, PFBS or perfluorobutanesulfonic acid, to the RSL tables in 2014 and updated that listing in 2021 when U.S. EPA released its updated toxicity assessment for PFBS.

The RSLs are risk-based screening values for residential and industrial soils and tap water that U.S. EPA relies upon to help determine if remediation is necessary.  Although U.S. EPA is quick to point out that the RSLs are not cleanup standards, regulators at both the state and federal levels rely on these RSLs to drive decision-making at contaminated sites.  The regulators also rely on these RSLs notwithstanding that U.S. EPA has yet to officially designate any PFAS as a CERCLA hazardous substance or RCRA hazardous waste (although efforts are ongoing on both fronts--CERCLA hazardous substances /  RCRA hazardous wastes).

U.S. EPA set the screening levels for PFOA, PFOS, PFNA, and PFHxS based on the Minimal Risk Levels from the Agency for Toxic Substances and Disease Registry’s toxicological profiles.  The screening level for HFPO-DA was set based on a final, peer-reviewed toxicity value.  For example, the screening level for PFOS is set at 38 parts per trillion for tap water and 1.6 parts per million for industrial soils and the screening level for PFOA is set at 60 parts per trillion for tap water and 2.5 parts per million for industrial soils   

As we await further U.S. EPA action with respect to regulating PFAS under RCRA and CERCLA, it is interesting to note that U.S. EPA is currently engaged in a significant information gathering exercise related to historical PFAS use.  Relying on its authority under CERCLA Section 104(e), U.S. EPA has recently issued scores of information requests seeking information regarding facilities’ past PFAS uses and practices.  The use of these information requests is consistent with the statements in U.S. EPA’s 2021 PFAS Roadmap where U.S. EPA indicated that it intended to rely on its various enforcement tools to identify and address PFAS releases. 

We will continue to provide timely updates on PFAS-related issues at the Corporate Environmental Lawyer blog. 

CATEGORIES: Cercla, Climate Change, Contamination, Emerging Contaminants, Groundwater, RCRA, Sustainability, Water

PEOPLE: Steven R. Englund, Steven M. Siros

May 12, 2022 SEC Enforcement Division's ESG Task Force "Lifts the Vale" on Its Scrutiny of ESG Disclosures

May RielySigelBy Alexander J. May, Charles D. Riely, and Gabrielle Sigel

Since early 2021, the SEC has emphasized that ESG-related issues are important to investors and a key SEC disclosure and enforcement priority. Although the agency’s heightened focus on these issues led to the recent proposal for new climate disclosures, the SEC also has made clear that it would seek to bring cases under existing law and not wait for new rules to be passed.

The reality that the SEC Enforcement Division is on the ESG beat was reinforced late last month, when the Climate and ESG Task Force filed charges against a Brazilian mining company – Vale, SA. Vale describes itself as the world’s largest producer of iron ore, pellets, and nickel. The case stems from an investigation opened after one of the company’s dams collapsed, causing over 200 deaths and dramatic environmental damage. In its complaint, the SEC alleged that Vale made misstatements about its dam's safety and engaged in deceptive conduct that concealed it had committed misconduct in obtaining required certifications related to dam safety. After the SEC filed action, Vale indicated that it denied the allegations in complaint and intended to defend the action.

The SEC’s approach to the Vale litigation provides a roadmap for public companies to consider how ESG-related disclosures and statements will be scrutinized when the company is impacted by adverse events that are ESG-related. It illustrates that companies should be prepared for the SEC to closely scrutinize statements about risk in ESG disclosures such as sustainability reports or climate impact analyses. This alert discusses the SEC’s case against Vale and real-world “lessons learned” for all public companies when publishing materials about ESG, climate, and operational risks.

Summary of the SEC’s Allegations in Complaint against Vale

The SEC’s complaint alleges that Vale failed to make appropriate disclosures in the lead-up to an environmental disaster that had a direct impact on its investors’ bottom line. The January 25, 2019 collapse of Vale’s Brumadinho dam was described by the SEC as “one of the worst mining disasters in history,” releasing “nearly 12 million cubic tons of mining waste... – a toxic sludge of iron, manganese, aluminum, copper, and other rare earth minerals – in a deluge rushing downhill toward the Paraopeba River.” Compl. ¶2. The disaster killed 270 people “while also poisoning the Paraopeba River and its tributaries and causing immeasurable environmental, social, and economic devastation.” Id. As a result of the dam’s collapse, both the company’s financial performance and stock performance were impacted. In the earnings released the quarter after the dam’s collapse, Vale “reported quarterly loss and negative earnings (EBITDA) for the first time in its history.” Compl. ¶212. Vale’s corporate credit rating was also downgraded to junk status. In the aftermath of the dam’s collapse, the SEC also alleged that Vale’s American Depository Shares “fell by nearly 25%, wiping out approximately $4.4 billion in market capitalization.” Id.

The SEC alleged that “Vale and its executives knowingly or recklessly engaged in deceptive conduct and made materially false and misleading statements to investors about the safety and stability of its dams.” Compl. ¶¶277, 280, 283. As is typical, the SEC complaint details the key section of the defendant’s periodic statements that it alleged were false and misleading. Compl. at ¶284. In addition, the SEC included allegations that reflected its investigation had focused closely on the company’s ESG-related disclosures. The complaint includes false and misleading statements in Vale’s sustainability reports and “ESG Webinars” posted on the company’s public website. E.g., Compl. ¶¶ 23, 29, 245.

In alleging fraud, the SEC emphasized that Vale had committed misconduct in connection with obtaining dam stability declarations required by local law. Because of past disasters in Brazil, the company was required to obtain stability declarations from auditors to certify that auditor had approved the mine’s safety. Compl. ¶ 1. To obtain the required certifications, the SEC alleged that Vale “concealed material information from its dam safety auditors,” and “concealed material and “removed auditors and firms who threatened Vale’s ability to obtain [the required] dam stability declarations.” Id. The SEC also alleged that it “removed auditors and firms who threatened Vale’s ability to obtain dam stability declarations.” Id.

Although statements to auditors and local regulators are not typically themselves actionable under the federal securities laws, the SEC used this misconduct to support its argument that Vale defrauded investors. First, it alleged that Vale described the stability declarations that it had obtained without also disclosing the circumstances in why it procured these certifications. Second, in pursuing its case, the SEC also used this misconduct to prove the company’s executives acted in bad faith. Consistent with this, the SEC emphasized Vale’s “deceptive conduct” in connection with the audit through the complaint.

In framing this case as about ESG misstatements, the SEC was able to note that Vale itself had highlighted dam safety as an important ESG issue. Undoubtedly, Vale’s own ESG characterization of its publications addressing dam safety made them a target for an enforcement analysis with an ESG lens. For example, in 2017, in the last Sustainability Report issued before the Brumadinho dam collapse, Vale identified “priority topics” in its “materiality matrix,” which included commitments concerning “health and safety of the workforce and of the community” and “management of social, environmental and economic impacts,” as well as “management of mineral waste” and “management of business and operational risks.” Vale publicly considered “sustainability” to include many aspects of its operations, including dam safety. 2017 Sustainability Report, pp. 11-12. Indeed, in the 2019 Sustainability Report, issued in the year after the dam collapse, Vale described the consequences of the dam collapse using ESG-type language, “the rupture...cannot be understood only in light of the survey of its impacts on the population and the environment. For the company, these situations impacted the human rights of the people affected, residents and local workers.” 2019 Sustainability Report, p. 14. Thus, Vale’s emphasis on ESG issues in its framing of its operations and goals apparently gave the SEC an opportunity to focus on “ESG disclosures” as part of its Climate and ESG Task Force enforcement initiative.

Potential Implications and Lesson Learned

The SEC emphasized that the case against Vale was part of its focus on ESG-related issues. In the press release announcing the filing of the action against Vale, Gurbir Grewal, the Director of the Enforcement Division, emphasized the SEC’s consistent theme that ESG statements are material to investors. Grewal said, “Many investors rely on ESG disclosures like those contained in Vale’s annual Sustainability Reports and other public filings to make informed investment decisions,” and he stated that the company’s misstatements “undermined investors’ ability to evaluate the risks posed by Vale’s securities.”

The SEC’s focus on ESG and climate issues has increased the importance of ensuring the accuracy of disclosures (and omissions) on those issues. Although the Vale case represents a unique set of facts, it provides an important reminder on importance of carefully vetting ESG-related disclosures. Such ESG disclosures should be considered not just a marketing initiative but should be scrutinized carefully for accuracy and proper caveats. In practice, this means that companies should ensure that it has backup for each statement made. In addition, companies should be mindful of how “worst case” scenarios or “black swan” events could impact their disclosures.

The case also highlights that the SEC will investigate a potential defendant’s interactions with regulators in evaluating fraud charges. If it finds evidence of misconduct, the SEC could cite it to prove intent to deceive or to allege that the lies to investors were designed to conceal misconduct.

This reinforces the importance of making sure communications with such regulators are carefully vetted. In the US, for example, companies often disclose information about their workplace safety and environmental operations. A serious workplace or environmental accident resulting in a material impact could lead to an SEC enforcement action led by its Climate and ESG Task Force, in addition to any fines, penalties, or damages resulting from the accident itself.

Conclusion

The Enforcement Division’s focus on ESG-related issues is likely to continue. As detailed above, the SEC’s action against Vale provides a roadmap for how they will approach these issues and this framework can help companies better prepare for this scrutiny.

***

Law Clerk Claudia M. Diaz-Carpio is a contributing author to this client alert.

CATEGORIES: Climate Change, Sustainability

April 27, 2022 Vermont Joins Growing Number of States Allowing Medical Monitoring for Alleged Exposure to Chemicals

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

black, stethoscope, eyeglasses, white, surface, ecg, electrocardiogram, heartbeat, heart, frequency, curve, cardiology, check-up, heart diseases, healthcare, medical, pulse, live, pulsating, drug, pills, tablets, glasses, healthcare and medicine, medical exam, doctor, medical equipment, studio shot, examining, healthy lifestyle, white background, medical supplies, medical instrument, medicine, indoors, diagnostic medical tool, occupation, people, beauty, pill, equipment, still life, care, pulse trace, doctor's office, healthcare worker, 5K, CC0, public domain, royalty freeOn April 21st, Vermont Governor Phil Scott signed into law Senate Bill 113 that provides a cause of action for medical monitoring for individuals exposed to toxic chemicals.  The new law specifically provides persons without a present injury or disease with a cause of action for medical monitoring if the following conditions are demonstrated by a preponderance of the evidence:

  • Exposure to a toxic substance at a rate greater than the general population;
  • The exposure is a result of tortious conduct of the defendant;
  • As a result of the exposure, plaintiff has suffered an increased risk of contracting a serious disease;
  • The increased risk makes it medically necessary for plaintiff to undergo periodic medical examinations different from that prescribed for the general population; and
  • Monitoring procedures exist that are reasonable in cost and safe for use.

The bill also provides for an award of attorneys’ fees and other litigation costs. 

The new law comes on the heels of a Vermont federal court's approval of a $34 million dollar class action settlement relating to alleged PFAS exposures that included a $6 million dollar medical monitoring fund. 

With its new law, Vermont joins Arizona, California, the District of Columbia, Florida, Massachusetts, Missouri, New Jersey, Ohio, Pennsylvania, Utah and West Virginia as states that specifically allow lawsuits seeking reimbursement for medical monitoring costs in the absence of present injury or disease.   However, unlike these other states where the right to medical monitoring is a right recognized by the courts, Vermont is one of first states in the nation to provide that right via statute.  Other states may well follow Vermont’s lead and there have been ongoing albeit unsuccessful efforts to create a federal cause of action for medical monitoring for exposure to certain toxic chemicals at the federal level.

We will continue to provide updates on federal and state efforts to codify the ability to bring claims seeking medical monitoring relief at the Corporate Environmental Lawyer blog.   

CATEGORIES: Climate Change, Consumer Law and Environment, Contamination, Emerging Contaminants, Sustainability, Toxic Tort

PEOPLE: Steven R. Englund, Steven M. Siros