New Climate Change Lawsuit: Publicity Stunt or Reasonable Effort to Protect California Property Owners?
By Steven M. Siros
Answering this question is likely to engender significant debate, depending on which side of the global warming conundrum one finds oneself. However, a recent lawsuit by two California counties and one California city is likely to prompt such a debate which will play out in California state court. On July 17, 2017, Marin County, San Mateo County, and the City of Imperial Beach filed separate but similar environmental lawsuits in California state court claiming that 37 oil, gas, and coal companies caused (or will cause) billions of dollars in climate-change related damages as a result of their extraction and sale of fossil fuels in California. The multi-count complaints allege a variety of state common law claims, including public nuisance, negligent failure to warn, and trespass. The complaints contend that as result of the activities of these defendants, sea levels will rise which will cause billions of dollars in losses to each of the plaintiffs.
These cases represent the latest in what has been to date a series of unsuccessful efforts to hold energy companies responsible for future speculative damages associated with alleged future environmental impacts associated with climate change. These cases will likely be subject to early dispositive motions seeking to have these cases thrown out of court at an early stage. We will continue to follow these cases and provide additional updates.
Using GRI Framework Improves ESG Disclosures
By E. Lynn Grayson
New research confirms that the quality of environmental, social and corporate governance (ESG) disclosures is greatly improved when companies use the Global Reporting Initiative (GRI) Sustainability Reporting Framework. The Governance & Accountability Institute, Inc. (G&A), the data partner for GRI, also confirms that more companies than ever before are developing and disclosing sustainability reports.
In the first year of its study in 2010, G&A found that 80% of leading U.S. large-cap companies did not publish sustainability reports. The trend has changed over time with 53% of the S&P 500 companies reporting in 2012; 72% reporting in 2013; 75% reporting in 2014; 81% reporting in 2015; and 82% reporting in 2016.
To explore the quality of sustainability reports, G&A worked with The CSR-Sustainability Monitor (CSR-S Monitor) research team at the Weissman Center for International Business, Baruch College/CUNY. The CSR-S Monitor evaluated sustainability reports using a scoring methodology that categorizes the content of each report into 11 components referred to as “contextual elements” including: Chair/Executive Message; Environment; Philanthropy & Community Involvement; External Stakeholder Engagement; Supply Chain; Labor Relations; Governance; Anti-Corruption; Human Rights; Codes of Conduct; and Integrity Assurance. Companies using the GRI framework consistently achieved average contextual element scores higher than the companies not using the GRI for their reporting meaning, in part, that the data provided was of a higher quality and overall more helpful to stakeholders.
Sustainability reporting and ESG disclosures are on the rise. The trend clearly is to encourage and promote more standardized sustainability reporting helping companies provide more reliable, consistent and material information to the public.
OSHA Proposes 5-Month Delay in Electronic Reporting Requirements
By Allison A. Torrence
On June 28, 2017, the Occupational Safety and Health Administration (OSHA) published a Proposed Rule (82 FR 29261) to delay compliance dates in the Obama Administration’s 2016 rule titled “Improve Tracking of Workplace Injuries and Illnesses”. As we previously reported on this blog, the Obama-era rule required employers to submit injury and illness logs electronically, and the original compliance deadline was July 1, 2017. OSHA is now stating that the electronic reporting system will not be operational until August 1, 2017.
OSHA explains its justification for the delay in its proposed rule:
This action proposes to extend the initial submission deadline for 2016 Form 300A data to December 1, 2017, to provide the new administration an opportunity to review the new electronic reporting requirements prior to their implementation and allow affected entities sufficient time to familiarize themselves with the electronic reporting system, which will not be available until August 1.
The proposed rule does not impact other parts of the Obama rule, such as the rules prohibiting retaliation against employees who report a work-related injury or illness to an employer, which went into effect on August 10, 2016, and OSHA began enforcing on December 1, 2016.
Comments on the proposed 5-month delay of the compliance deadline are due by July 13, 2017. Comments may be submitted by mail, fax or electronically on www.regulations.gov.
State of the Great Lakes 2017 Highlights Report
By E. Lynn Grayson
The Governments of Canada and the United States recently released the State of the Great Lakes 2017 Highlights Report. Overall, the Report characterizes the condition of the Great Lakes as Fair and Unchanging. While progress to restore and protect the Great Lakes has been made, including the reduction of toxic chemicals, challenges remain with issues such as invasive species and nutrients.
The “Fair and Unchanging” assessment is based upon an evaluation of nine Great Lakes Indicators of Ecosystem Health including:
Habitats and Species
Nutrients and Algae
Watershed Impacts and Climate Trends
Of particular note, the Report found that the status of protecting the Great Lakes against invasive species was Poor and the trend was that conditions would further deteriorate. To date, over 180 aquatic non-native species have become established in the Great Lakes Basin including the Sea Lamprey, Zebra Mussels, and Purple Loosestrife. Economic impacts from invasive species exceed more than $100 million annually in the U.S. alone.
The Report marks the 45th anniversary of the signing of the Great Lakes Quality Agreement committing Canada and the United States to work together to restore and protect the water quality and aquatic ecosystem health of the Great Lakes. The nine indicators of ecosystem health are supported by 44 sub-indicators, measuring such things as concentrations of contaminants in water and fish tissue, changes in quality and abundance of wetland habitat, and the introduction and spread of invasive species. More than 180 government and non-government Great Lakes scientists and other experts worked to assemble the available data supporting the Report and its findings. The Report identifies status for each indicator as good, fair, poor, or undetermined.
U.S. EPA’s Stay of Methane Rule May Have Hit a “Speed Bump”
By Steven M. Siros
On July 3, 2017, the U.S. Court of Appeals for the District of Columbia issued an opinion which vacated U.S. EPA’s stay of certain provisions of new source performance standards (“NSPS”) relating to fugitive emissions of methane and other pollutants by the oil and natural gas industries. After U.S. EPA originally published these NSPS rules in 2016, several industry groups sought reconsideration of these rules pursuant to Section 307(d)(7)(B) of the Clean Air Act (“CAA”). On April 18, 2017, U.S. EPA Administrator Scott Pruitt found that the petitions raised at least one objection to the rule that warranted reconsideration and on June 5, 2017, just two days prior to the deadline requiring regulated entities to conduct initial methane monitoring in order to identify potential equipment leaks, U.S. EPA agreed to stay the rule for 90 days while the rule was being reconsidered. Then, on June 16, 2017, U.S. EPA published a notice of proposed rulemaking seeking to extend the stay for an additional two years. Several environmental groups filed an emergency motion challenging U.S. EPA’s decision to stay the rules for 90 days.
In a split decision, the D.C. Circuit agreed that a stay pursuant to Section 307(d)(7)(B) of the CAA was only allowed if the following specific requirements of the rule are met: (1) it was impracticable to raise the objections now being raised during the notice and comment period and (2) the objection is of central relevance to the outcome of the rule. The Court found that both requirements were not met, noting that the “administrative record thus makes clear that the industry groups had ample opportunity to comment on all four issues for which EPA granted reconsideration, and indeed, that in several instances the agency incorporated those comments directly into the final rule.” The Court also addressed industries’ argument that U.S. EPA’s decision to reconsider the rule was not a final agency action. The Court agreed, over Judge Brown’s dissent, that although U.S. EPA’s decision to reconsider the rule was not a final agency action, U.S. EPA’s decision to stay the rule was tantamount to amending or revoking the rule and was in fact reviewable. It is important to note that notwithstanding the Court’s decision that U.S. EPA improperly stayed the NSPS rules pursuant to Section 307(d)(B)(7) of the CAA, the Court specifically stated that “nothing in this opinion in any way limits EPA’s authority to reconsider the final rule and to proceed with its June 16 [notice of proposed rulemaking]," which seeks to stay the effective date of the NSPS for two years.
This decision may provide some insight as to how the Court intends to deal with a separate pending lawsuit filed by environmental groups which seeks to challenge U.S. EPA’s decision to stay revisions to the CAA’s risk management program; U.S. EPA relied on Section 307(B)(7) to justify its decision to stay those rules as well.
D.C. Circuit Provides Additional Clarity on Federal and State Roles in Natural Gas Pipeline Permitting
On Friday, June 23, 2017, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision in a long-running dispute between the developer of an interstate natural gas pipeline project and New York State environmental regulators concerning a federal water quality permit that must be obtained before project construction may begin. Millennium Pipeline Company v. Basil Seggos, et al., D.C. Cir. No. 16-1415 (June 23, 2017). The decision provides additional clarity regarding the interplay of Federal and State permitting authorities with respect to interstate natural gas pipeline infrastructure, and the role of the courts in adjudicating disputes with State permitting agencies.
The pipeline project at issue is a proposed 7.8 mile extension of Millennium Pipeline’s existing interstate natural gas pipeline in southern New York. The extension will serve a new natural gas-fired power plant. To construct the project, Millennium must obtain a “certificate of public convenience and necessity” from the Federal Energy Regulatory Commission (“FERC”) pursuant to Section 7 of the Natural Gas Act (“NGA”), 15 U.S.C. § 717f(c). The NGA requires that FERC ensure that all proposed interstate natural gas pipeline projects comply with all applicable federal, state, and local regulations, including environmental regulations. 15 U.S.C. § 717b(d). FERC granted Millennium a certificate of public convenience and necessity, conditioned on Millennium obtaining a Clean Water Act (“CWA”) water-quality certificate pursuant to section 401 of the CWA, 33 U.S.C. § 1341(a)(1), since its project would cross several streams.
The CWA requires that state regulators act “within a reasonable period of time (which shall not exceed one year)” on applications for water-quality certificates; if no action is taken within one year, the water-quality certificate requirement is deemed waived. Id. Millennium first applied for a water-quality certificate from the New York Department of Environmental Conservation (“NYDEC”) (the state agency that administers New York’s CWA program) in November 2015. Over the next year, NYDEC sought additional information from Millennium on several occasions. In November 2016, NYDEC informed Millennium that it had “fully responded” to all requests. NYDEC nonetheless stated that it would “continue to review” the application and had until August 30, 2017 “at a minimum” to approve or deny Millennium’s request.
Seeking to force the NYDEC to act on its application, Millennium filed a petition for review in the D.C. Circuit pursuant section 19(d)(2) of the NGA, a unique provision added by the Energy Policy Act of 2005 that gives the circuit courts of appeal original and exclusive jurisdiction to review an alleged failure to act by a . . . State administrative agency acting pursuant to Federal law to issue, condition, or deny any permit required under Federal Law.” 15 U.S.C. § 717r(d)(2). Millennium asked the court to exercise its authority under this provision to remand the proceeding back to the NYDEC and “set a reasonable schedule and deadline for the agency to act on remand.” 15 U.S.C. § 717r(d)(3). NYDEC, in response, asserted that it is only required to act within one year of receiving a complete or valid application, which Millennium had failed to provide.
The court did not reach the merits of these arguments, however, because it concluded that Millennium lacked standing to seek relief under section 19(d)(2) of the NGA. Specifically, the court held that Millennium failed to demonstrate that it has suffered an “injury in fact” as a result of NYDEC’s alleged failure to act on its water-quality certificate application within the one-year deadline established in the CWA, since that statute also deems the water-quality certificate requirement waived if no action is taken within that year. Millennium, slip op. at 6. As a result, the court found that NYDEC’s failure to act does not stand in the way of Millennium’s project, since “Millennium ultimately needs one permit to begin construction on its pipeline: the certificate of public convenience from FERC.” Id.
The court did not, however, rule on whether NYDEC has in fact waived the water-quality certificate requirement by failing to act within one year. Instead, it placed that question before FERC, stating that Millennium “can go directly to FERC and present evidence of the Department’s waiver.” Id. at 8. Were FERC to agree that the requirement has been waived, the condition on Millennium’s certificate of public convenience and necessity would be satisfied, removing it as an impediment to moving forward with construction.
The court’s ruling provides additional clarity regarding the interplay of Federal and State permitting authorities with respect to the water-quality certification requirements of the CWA, making it clear that FERC is the primary decision-maker as to whether those requirements have been waived by State inaction. This clarity will give FERC greater certainty as it takes steps to enforce permitting schedules and move proposed natural gas pipeline infrastructure projects forward more quickly. While parties in the proceeding argued that finding a lack of standing here would eviscerate the authority of the court under section 19(d) of the NGA to force State permitting agencies to act, the court noted that not all federal statutes have waiver provisions similar to the CWA, and that its decision has “no effect on situation in which a State’s “sheer inactivity” could actually frustrate the federal permitting process.” Slip op. at 10, citing Dominion Transmission, Inc. v. Summers, 723 F.3d 238 (D.C. Cir. 2013) (granting a petition to review a State permitting agency’s refusal to act on a Clean Air Act permit and remanding with instructions to complete the permitting process within a reasonable timeframe).