In the Absence of Any Federal Movement, States Continue to Attempt to Legislate Carbon Rules or Taxes
As reported in Salon and Law360 (sub. req.), states, the “laboratories of democracy,” continue to attempt to experiment with legislation carbon rules or taxes. Washington and Oregon are the latest examples, although such efforts have so far failed. Washington’s proposal would have taxed carbon emissions, whereas Oregon’s proposal would have established a cap-and-trade program.
After the Washington tax bill failed, a coalition of environmental, community and labor groups filed a proposed citizens’ initiative that would put a price on carbon emissions. The proposal would charge $15 per metric ton of carbon content of fossil fuels and electricity sold or used in the state starting in 2020. It would increase by $2 a year in 2021 until the state meets its carbon emissions reduction goal for 2035.
As of February of this year, as reported in Law360 (sub. req.), 10 states have released bills to combat climate change and raise revenue by using the tax system, with some 30 different bills in play. According to this report, the range of carbon taxes are from $5-35/ton (bills in Vermont set the base rate at $5 per ton of carbon while bills in New York set it at $35 per ton).
These state-level efforts underscore the challenge of convincing the public and a broad base of stakeholders to act on a problem that Congress first tried to address over a decade ago, most famously through the McCain-Lieberman Climate Stewardship Act of 2003 and the Waxman-Markey American Clean Energy and Security Act of 2009. Interestingly, it may be this patchwork of state-level action that induces Congress to act sometime in the future.
Pro-Policyholder Talc-Related Asbestos Exposure Case Endorses Favorable Allocation Rule and Rejects Pollution Exclusion
A recent opinion from the Connecticut Appellate Court, R.T. Vanderbilt Co. v. Hartford Accident & Indemnity Co., 156 A.3d 539 (Conn. App. Ct. 2017), aides policyholders seeking coverage for asbestos-related long-tail liability claims under Commercial General Liability policies when responding to certain coverage defenses, including the allocation of risk for uninsured policy periods and the application of the pollution exclusion. In Vanderbilt, the court ruled on two significant issues—first, it endorsed the “unavailability of insurance” exception to the pro rata allocation method to allocate uninsured policy periods to the insurer, and second, it rejected the application of the pollution exclusion to talc-related asbestos exposure. As to the first, the court confronted a novel question under Connecticut law regarding whether the policyholder or the insurer should bear the risk for periods during which insurance coverage was commercial unavailable—commonly known as the “unavailability of insurance” exception to the pro rata allocation method. The court affirmed the existence of the exception, holding that the insurer should bear this risk. As to the second, the court rejected that the pollution exclusion applied, reasoning that the exclusions at issue barred coverage only when the exposure arose from “traditional environmental pollution” migrating through property or into the environment, but did not extend to “inhalation or ingestion of asbestos dust released in small quantities in an indoor environment during everyday activities.”
Exelon and Jenner & Block partnered today with the Alliance for the Great Lakes to cleanup 12th Street Beach, near the Adler Planetarium. Team members worked together to police the beach front picking up and disposing of waste and other discarded materials. The litter was identified, logged, recorded and weighed to aid in understanding the short term and long term impacts we are having on the Great Lakes and the many ecosystems that rely upon them.
The Alliance for the Great Lakes Adopt-a-Beach program promotes working together to protect the Great Lakes through beach cleanups and other community projects. For more than 25 years the Adopt-a-Beach program has worked to keep Great Lakes shorelines healthy, safe, and beautiful. The program is largest of its kind in the region. Adopt-a-Beach touches all five Great Lakes with volunteers from all eight Great Lakes states.
Thanks to our friends at Exelon for including us in this special environmental outreach!
As we begin the New Year, we wanted to take a moment to look back at some of the major EHS developments in 2016 and think about what we can expect in 2017.
2016 was a busy year for the Corporate Environmental Lawyer blog, which is now in its sixth year with over 760 posts. In 2016, we had nearly 100 blog posts from 10 different authors and over 6,700 visits to the site.
Our five most popular blogs from 2016 were:
Navigating Hawkes, the Newest Wetlands Ruling from the Supreme Court, by Matt Ampleman
As always, we are monitoring a variety of issues that are important to you and your business, including, for example, RCRA regulatory changes, the future of climate change regulation, implementation of the TSCA Reform Act, and new developments in environmental litigation. You can find current information about these developments and more on the Corporate Environmental Lawyer blog. If you don’t find what you are looking for on our blog, we welcome your suggestions on topics that we should be covering. In addition, keep abreast of new developments in the EHS area through our Twitter @JennerBlockEHS.
We also look forward to the opportunity to share our thoughts and insights with respect to current EHS issues with you at an upcoming program:
- March 7, 2017, 12:00 pm CT: Environmental, Health, and Safety Issues in 2017—What to Expect From the Trump Administration, by Gabrielle Sigel, Steven M. Siros and Allison A. Torrence
The program will take place at Jenner & Block’s Chicago office and also will be available as a webinar. We will post a formal invitation to the program in a few weeks.
We also invite you to visit our newly redesigned Environmental and Workplace Health & Safety Law Practice website for more information about our practice. We look forward to another exciting year and to connecting with you soon.
EPA Proposes Notice of Intent to Proceed with Rulemaking for CERCLA Financial Responsibility Requirements for the Chemical Manufacturing, Petroleum and Coal Products Manufacturing, and Electric Power Industries
Yesterday, on January 11, 2017, the EPA issued a notice of intent to proceed with rulemaking regarding whether and to what extent financial responsibility requirements under CERCLA section 108(b) should apply to the Chemical Manufacturing, Petroleum and Coal Products Manufacturing, and Electric Power Industries.
The rulemaking will have an interesting path forward in light of its history and the upcoming administration change. On January 6, 2010, the Environmental Protection Agency (EPA) published an Advance Notice of Proposed Rulemaking (ANPRM) that identified additional classes of facilities within three industry sectors that could warrant developing financial responsibility requirements under CERCLA section 108(b): (1) the Chemical Manufacturing industry (NAICS 325); (2) the Petroleum and Coal Products Manufacturing industry (NAICS 324); and (3) the Electric Power Generation, Transmission, and Distribution industry (NAICS 2211). In August 2014, environmental groups filed a lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit, for a writ of mandamus requiring issuance of CERCLA section 108(b) financial responsibility rules for the three additional industries identified by EPA in the ANPRM. EPA and the petitioners submitted and the court approved an Order on Consent, which included a schedule for further administrative proceedings under CERCLA section 108(b). Critically, in granting the motion to enter the Order, the D.C. Circuit recognized that “the content of [the rulemaking required under the Order] is not in any way dictated by the [Order].” Therefore, the upcoming administration may be bound to entertain the process of rulemaking, it appears free to disregard producing any rule as a result of this process.
Trade Associations Obtain Nationwide Injunction Against Portions of the “Fair Pay and Safe Workplaces” Regulatory Scheme, and Agencies Stand Down (For Now)
Portions of the Fair Pay and Safe Workplaces regulations, specifically those related to reporting violations of labor laws and restricting mandatory arbitration, have been enjoined on a nationwide basis by the District Court for the Eastern District of Texas (“District Court”). The paycheck transparency provisions were upheld by the District Court and remain enforceable. Following the District Court’s Order, on October 25, 2016, federal executive agencies issued guidance to their senior procurement officials to halt implementation of the Fair Pay and Safe Workplaces regulations enjoined by the Court, and confirmed that the paycheck transparency provisions (FAR 52.2005, 22.2007(d) and clause 52.222-60) remain in effect.
As reported, the government is still weighing whether to appeal the injunction. Although it seems likely that the government will appeal the District Court’s order and argue that the District Court does not have the authority to issue the injunction on a nationwide basis, it remains uncertain whether the government could actually obtain this relief. When faced with a similar TX federal district court nationwide injunction of executive action and regulation in the context of immigration, the U.S. Court of Appeals for the Fifth Circuit upheld the district court’s authority to issue that nationwide injunction. On review, the Supreme Court split 4-4, leaving the Fifth Circuit’s decision in place. Effectively, this means that TX federal district courts and the Fifth Circuit can stall the administration’s desired policies on a nationwide basis until the Supreme Court acquires another Justice. Because we are in an election year and do not know the identity of the next Supreme Court Justice or when that Justice would be confirmed, the ultimate outcome of this injunction remains elusive at this time. However, even with some legal uncertainty, we anticipate that most government contractors would prefer to forego all but the paycheck transparency requirements until there is a greater likelihood that the enjoined regulations will be upheld than exist at this time. Indeed, even beyond the strength of the substantive arguments, the District Court briefing and oral argument made clear that had the regulations had gone into effect, the government was not yet ready to accept any reports of purported “violations” because the electronic portal to receive such data was not yet complete.
Trade Associations File Suit Challenging the “Fair Pay and Safe Workplaces” Regulatory Scheme as Unlawful and Unconstitutional
As we previously reported here, the Department of Labor (DOL) and the Federal Acquisition Regulatory Council (FAR Council) issued the Final Rule and Final Guidance implementing President Obama’s Fair Pay and Safe Workplaces Executive Order (E.O. 13673), signed on July 31, 2014. Despite strenuous objections, including from groups representing defense contractors, on August 25, 2016, DOL and FAR Council finalized the rules (the “Fair Pay Regulations”) by which those who seek to contract with the government (contracts over $500,000) must disclose alleged and final wage and labor law “violations,” including non-final agency allegations of labor law violations and determinations subject to appeal. Certain portions of the Fair Pay Regulations take effect as early as October 25, 2016.
In Associated Builders and Contractors of Southeast Texas v. Fed. Acquisition Regulatory Council, Case No. 1:16-cv-00425, E.D. Tex. (filed Oct. 7, 2016), Associated Builders and Contractors of Southeast Texas (“ABC-Texas”), Associated Builders and Contractors, Inc. (“ABC”), and the National Association of Security Companies (”NASCO”) filed suit in federal district court against members of the DOL and FAR Council challenging E.O. 13673 and the Fair Pay Regulations. ABC and ABC-Texas represent nearly 21,000 member construction contractors and related firms in Texas and throughout the country. NASCO represents companies that employ more than 400,000 trained security officers.
DOL, FAR Council Finalize “Fair Pay and Safe Workplaces” Regulations, Forcing Government Contractors to Disclose Non-Final Labor Law Alleged Violations in the Contracting Process
On August 25, 2016, the Department of Labor (DOL) and the Federal Acquisition Regulatory Council (FAR Council) issued the Final Rule and Final Guidance implementing President Obama’s Fair Pay and Safe Workplaces Executive Order (E.O. 13673), signed on July 31, 2014. Under this new regime, those who seek to contract with the government (contracts over $500,000) must disclose alleged and final wage and labor law “violations,” including non-final agency allegations of labor law violations and agency determinations still subject to appeal, rendered against the contractor within the last three years. The government, through newly established agency labor compliance advisors (ALCAs), will then review each of those alleged and final “violations” and determine whether to award or extend the government contract. The Rule and Guidance will take effect in phases starting on October 25, 2016.
As previously reported by my colleague Lynn Grayson, ExxonMobil has faced a recent onslaught of scrutiny over allegations that fossil fuel companies had committed fraud by downplaying the effect of climate change on their businesses. These matters include a subpoena issued by the U.S. Virgin Islands’ Attorney General’s office related to allegations of violating two state laws by obtaining money under false pretenses and conspiring to do so; and New York Attorney General Schneiderman’s investigation where documents have been subpoenaed to determine whether the company misled investors about the dangers climate change posed to its operations.
Two events last week suggest that this fight will not end anytime soon.
- ExxonMobil filed suit in the Northern District of Texas, seeking an injunction barring the enforcement of a civil investigative demand issued by the Massachusetts Attorney General to ExxonMobil, and a declaration that this demand violates ExxonMobil’s rights under state and federal law, including the First and Fourteenth Amendments to the Constitution, as well as the Dormant Commerce Clause.
- The Attorneys General of 13 states wrote a sharply-worded letter to their colleagues, noting that “this effort by our colleagues to police the global warming debate through the power of the subpoena is a grave mistake” and “not a question for the courts.” The letter outlines how this investigation is in fact “far from routine” because of its following three characteristics: “1) the investigation targets a particular type of market participant; 2) the Attorneys General identify themselves with the competitors of their investigative targets; and 3) the investigation implicates an ongoing public policy debate.”
We will continue to monitor developments on this heated situation.
On Thursday, April 7, 2016, Young Professionals in Energy (Chicago) is hosting an event titled “Hydraulic Fracturing in Illinois: What Has The National Frenzy Meant For Our State?” at Jenner & Block’s Chicago office. The event will be moderated by Jenner & Block attorney and YPE Board Member, Alexander Bandza, and will feature presentations from Jenny Cassel, Staff Attorney at Environmental Law and Policy Center, and Nancy Loeb, Director of the Environmental Advocacy Center, Northwestern University School of Law.
For more information and to RSVP click here.
Two recent New York Times op-ed contributors shed light on the magnitude of the challenges that we face domestically with respect to water, its infrastructure, and our ability to measure it, and offer possible policy prescriptions.
Not only are countless businesses publicly supporting a global climate agreement from COP21 as we previously reported, several businesses and business coalitions are pledging to take operational and strategic actions in advance of such an agreement. As reported by Ceres, set out below here are a few of the business coalitions and their pledges:
OSHA Penalty Limits to Increase Almost 80% in the Next Year, With Annual Inflation Adjustments Authorized Thereafter
Buried in the landmark Bipartisan Budget Act of 2015 (H.R. 1314) (“2015 Budget Act”) signed by the President on Monday, November 2, 2015, Section 701 requires the Occupational Safety and Health Administration (OSHA) to begin indexing its penalty limits to inflation, much like the US EPA and other federal agencies do now. This section, called the “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015” (“2015 Penalties Act”), also has “catch-up” provisions, which mean that the existing $7,000 penalty limit (for other-than-serious and serious violations under OSHA, originally set in 1990) can be increased to approximately $12,477 per violation, and the existing $70,000 penalty limit (for willful and repeat violations) can be increased to approximately $124,765 per violation. OSHA must adjust these penalties through an interim final rulemaking no later than August 1, 2016.
IARC’s Classification of Red Meat and Processed Meats as Carcinogenic Exposes Food Manufacturers, Distributers, and Retailers to Proposition 65 Liability
The Internet was buzzing yesterday with news that the International Agency for Research on Cancer (IARC) of the World Health Organization (WHO) has classified red meat as a Group 2A carcinogen (“probably carcinogenic to humans”) and processed meat as a Group 1 carcinogen (“carcinogenic to humans”). In general, IARC evaluates the environmental causes of cancer in humans, including chemicals (e.g., formaldehyde), complex mixtures (e.g., air pollution), physical agents (e.g., solar radiation), biological agents (e.g., hepatitis B virus), and personal habits (e.g., tobacco smoking). IARC has long played a role as a source of scientific information that carries weight in federal and state regulation of potentially harmful substances and toxic tort lawsuits involving such substances.
A Jenner & Block team including Partner Gabrielle Sigel and Associate Alexander Bandza of the Firm’s Environmental and Workplace Health & Safety group, supported by Partner Jessica Ring Amunson and Associate Amir Ali of the Firm’s Washington, D.C. office, won a significant victory in federal court environmental and pipeline litigation on behalf of clients Apex Oil Co., Inc. and Petroleum Fuel & Terminal Co. (PF&T). Apex and PF&T are defendants in a cost recovery and injunction action brought against them by Chevron U.S.A. Inc. in the U.S. District Court for Maryland. Chevron’s lawsuit concerns a pipeline that PF&T purchased from Chevron in 1994. Chevron has claimed more than $30mm in damages for costs of remediating pollution allegedly caused by discharges from the pipeline over the course of approximately 20 years.
On September 15, 2015, US EPA’s Office of Enforcement and Compliance Assurance published a proposed list of national enforcement initiatives (NEIs) for fiscal years 2017–19. This latest NEI list includes NEIs from the last round (FY2014–16) as well as three new potential NEIs that US EPA is considering.
U.S. EPA Releases One-Week Internal Review on the Colorado Mine Blowout, Concludes the Incident Was “Inevitable”
Earlier this week, the U.S. EPA released its “Internal Review of the A
ugust 5, 2015 Gold King Mine Blowout,” which provides the EPA Internal Review Team’s “one week rapid assessment” of the events and potential factors contributing to the Colorado mine adit blowout earlier this month. The Review sets out a series of conclusions and recommendations, many of which lay the foundation for absolving the U.S. EPA of any wrongdoing here while proposing extensive recommendations for the future.
Last week, on July 15, 2015, the US EPA revised the 1988 underground storage tank (UST) regulation and the 1988 state program approval (SPA) regulation. Some of these changes had their roots in the Energy Policy Act of 2005, which set out additional requirements in states that received federal RCRA Subtitle I money from EPA. Part of the impetus for this regulation was to apply these changes to Indian country and all states. Other changes relate to revising the regulations in light of technological changes and challenges that have surfaced over the years. The effective date of the regulations is October 13, 2015. Some of the key changes are set out below.
Alexander J. Bandza To Moderate Teleconference on This Year’s Environmental, Energy Supreme Court Cases
Next month, on July 9, 2015, Associate Alexander J. Bandza will moderate a lunchtime ABA teleconference titled “Supreme Court Year in Review: The Environmental Cases.” The event will feature a discussion of the following four Supreme Court cases from this past term that will affect environmental and energy lawyers: (1) Kansas v. Nebraska and Colorado; (2) Michigan v. EPA; (3) Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund; and (4) Oneok Inc. v. Learjet, Inc.
A distinguished panel of speakers will discuss these cases:
- Shannon S. Broome, Katten Muchin Rosenman LLP, Oakland, CA
- Anne M. Carpenter, Katten Muchin Rosenman LLP, Washington, DC
- Stephen R. McAllister, E.S. & Tom W. Hampton Distinguished Professor of Law, The University of Kansas School of Law and Solicitor General of Kansas, Lawrence, KS
- A. Dan Tarlock, Distinguished Professor of Law and Director of the Program in Environmental and Energy Law, Chicago-Kent College of Law, Chicago, IL
A question-and-answer session to follow. Registration and additional information is available here.
D.C. Circuit Rejects Enviro and Industry Challenges to EPA’s Nonhazardous Secondary Materials Rule; Implications for Combustion Standards Remain
Last week, the D.C. Circuit issued an unpublished per curiam decision in Solvay USA Inc. v. U.S. EPA, No. 11-1189 (D.C. Cir.), rejecting all arguments from both environmentalists and industry against EPA’s non-hazardous secondary material (NHSM) regulations under the Resource Conservation and Recovery Act (RCRA). By way of background, the characterization of non-hazardous secondary materials pursuant to the NHSM has implications under the Clean Air Act (CAA) for the standards by which those materials can be incinerated in combustion units.
In honor of the fifth anniversary of our entry into the blogosphere, we are excited to announce a major revamp of the Corporate Environmental Lawyer’s design. In addition to the blog’s sophisticated new look, our readers will enjoy:
- Mobile and tablet responsive technology
- A trending-categories cloud list
- Easy-to-use social sharing buttons
Streamlined navigation menus
- Access to all five years of posts
In the five years since our Environmental and Workplace Health & Safety (EHS) practice created the Corporate Environmental Lawyer, we have written more than 500 posts, provided critical updates and insights on issues across the EHS legal sectors, and been ranked among LexisNexis’s top 50 blogs. As we wish to continue to grow the blog and provide our readers with the information they want to know, Corporate Environmental Lawyer editors, Steven M. Siros and Genevieve J. Essig, encourage you to participate by suggesting new topics. We look forward to continuing to provide content covering the issues that are driving changes in environmental law.
Back to the Future: EIA’s Analysis of EPA’s Clean Power Plan Concludes that Power Sector CO2 Emissions May Drop to 1980s Levels
In June 2014, EPA issued its proposed Clean Power Plan to regulate CO2 emissions from existing power plants under section 111(d) of the Clean Air Act. The Clean Power Plan proposes to limit carbon emissions from existing fossil fuel-fired electric generating units, including steam generating, integrated gasification combined cycle, or stationary combustion turbines operating or under construction by January 8, 2014. In August 2014, Representative Lamar Smith requested that the U.S. Energy Information Administration (EIA) analyze the effects of the Clean Power Plan on, among other things, greenhouse gas emissions, electric markets, and coal plants retired.
Last week, the EPA-specific listing on the website of the Office of Information and Regulatory Affairs was updated with timelines on the EPA’s regulatory efforts. Of potential interest, in chronological order of expected release, are the following rules:
- May 2015 (Final Rule). Clean Water Rule: Definition of “Waters of the United States”. The U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers proposed a rule for determining whether a water is protected by the Clean Water Act.
- June 2015 (ANPRM and NRPM). Proposed Greenhouse Gas Endangerment and Cause or Contribute Findings Under CAA Section 231 for Aircraft, and ANPRM on the International Process for Reducing Aircraft GHGs and Future Standards. In this action, EPA will determine whether greenhouse gas emissions from aircraft cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. Concurrent with these proposed findings, EPA will release an Advanced Notice of Proposed Rulemaking (ANPRM) to provide an overview of the International Civil Aviation Organization's (ICAO) efforts to reduce greenhouse gas emissions.
- June 2015 (NPRM). Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles--Phase 2. These second sets of standards would further reduce greenhouse gas emissions and fuel consumption from a wide range of on-road vehicles from semi-trucks to the largest pickup trucks and vans, and all types and sizes of work trucks and buses.
- July 2015 (NPRM). Non-Hazardous Secondary Materials--Additions to List of Categorical Non-Waste Fuels; Other Treated Woods. The Treated Wood Council has submitted a petition for various types of treated wood to be added as categorical non-waste fuels. Materials classed as NHSM can be burned for fuel in lightly regulated boilers rather than more strictly regulated incinerators.
New Jersey Assembly Unanimously Passes Bill Broadly Allocating Liability and Damages for Hazardous Substance Discharges from Offshore Drilling Platforms
Last week, the New Jersey Assembly unanimously passed a bill, A4258, which is notably broad in its language on allocating liability and damages for releases of hazardous substances from offshore drilling platforms. The bill would supplement N.J.S.A. 58:10-23.11, the New Jersey Spill Compensation and Control Act, which defines hazardous substances to include petroleum and petroleum products. The bill sets out that potentially liable parties include “[a]ny person who discharges a hazardous substance from a drilling platform” or “is in any way responsible for a hazardous substance that is discharged from a drilling platform.” (Emphasis added.) This discharge need not occur within the jurisdiction of New Jersey so long as the hazardous substance eventually “enters the waters of the State.” Persons that meet the above two conditions are “strictly, jointly and severally [liable], without regard to fault,” for:
Minnesota House and Senate Each Pass Bills Banning The Sale and Manufacture of Products Containing Plastic Microbeads
"Microbeads" are synthetic microspheres widely used in cosmetics, skin care and personal care products, which are added as exfoliating agents. Public interest groups have expressed concern that, because wastewater systems may be unable to filter microbeads from effluent released into public waterways, microbeads are entering the marine food chain. This week, the Minnesota House and Senate each passed bills that would ban the manufacture and sale of products containing plastic microbeads.
Both bills contain the same phased timeline:
- Effective December 31, 2018, no one can sell personal care products containing synthetic plastic microbeads, but persons can continue selling over-the-counter drugs containing synthetic plastic microbeads. However, that same day, no one can manufacture for sale over-the-counter drugs that contains synthetic plastic microbeads.
- Effective December 31, 2019, no one can sell over-the-counter drugs containing synthetic plastic microbeads.