As 2017 draws to an end, we wanted to thank everyone that follows our Corporate Environmental Lawyer blog. 2017 has been an interesting year and we have enjoyed providing information on critical environmental, health and safety issues for the regulated community. As part of the year in review, we thought it might be interesting to highlight the most popular posts from each of the four quarters in 2017.
- Trump Administration: 2017 Insights
- New State 1,4-Dioxane Drinking Water Standard-New York Threatens to Take Action if U.S. EPA Doesn’t
- World Water Day: Wednesday, March 22, 2017--Jenner & Block Announces Special Water Series
- Trump Administration Issues Freeze on New and Pending Rules – Halting Dozens of Recent EPA Rules
- Great Lakes Compact Council Holds Hearing on Cities Initiative Challenge to Waukesha Diversion of Lake Michigan Water
- Federal Judge Orders Dakota Access Pipeline to Revise Environmental Analysis; Leaves Status of Pipeline Construction Undecided
- Litigation in D.C. Circuit Court Put on Hold While EPA Reconsiders 2015 Ozone Air Quality Standards
- Attorney-Client Privilege Does Not Protect Communications with Environmental Consultants
- News of OECA’s Demise May be Greatly Overstated
- EPA Announces Proposed Rule to Rescind ‘Waters of the United States’ Rule
- Court Decision Remanding FERC’s Evaluation of GHG Emissions May Derail $3.5B Pipeline
- Hurricane Harvey and Act of God Defense—Viable Defense or Futile Prayer
- Who is in Charge of Protecting the Environment—The Role of U.S. EPA and State Environmental Agencies During a Hurricane
- Shell Latest Target of CWA Climate Change Citizen Suit
- New Climate Change Lawsuit: Publicity Stunt or Reasonable Effort to Protect California Property Owners?
- Cities Risk Ratings Downgrade for Failure to Address Climate Change Risks
- Dumpster Diving Results in $9.5M Penalty Recovery for California
- Following Keystone Pipeline Oil Spill, Judge Orders Parties to Prepare Oil Spill Response Plan for Dakota Access Pipeline
- EPA Publishes Proposed Rule on Reporting Requirements for the TSCA Mercury Inventory
- Imagine a Day Without Water
We look forward to continuing to blog on breaking environmental, health and safety issues and we are sure that we will have plenty to blog about in 2018. Warmest wishes for a wonderful holiday season.
Steve Siros and Allison Torrence
Following Keystone Pipeline Oil Spill, Judge Orders Parties to Prepare Oil Spill Response Plan for Dakota Access Pipeline
As we previously reported on this blog, in June, Federal District Court Judge James Boasberg found that the U.S. Army Corps of Engineers (the Corps) did not fully comply with the National Environmental Policy Act (NEPA) when it granted easements to the Dakota Access Pipeline (DAPL) to cross Lake Oahe, a federally regulated water in North Dakota. Standing Rock Sioux Tribe v. U.S. Army Corps of Engineers, 16-cv-01534 (June 14, 2017). In light of that ruling, Plaintiffs, the Standing Rock Sioux Tribe and the Cheyenne River Sioux Tribe (the Tribes) asked the court to vacate the DAPL’s permits and easements and enjoin further operations until the Corps fully complies with NEPA. In October, Judge Boasberg denied the Tribes’ request and allowed DAPL to continue operations while the Corps completes its supplementary NEPA analysis.
Following the October ruling allowing operations to continue, in November, the TransCanada Keystone Pipeline leaked an estimated 210,000 gallons of crude oil in South Dakota. Following this widely report pipeline oil spill, on December 4, 2017, Jude Boasberg ordered DAPL owner, Dakota Access, LLC, the Corps and the Tribes to “coordinate to finalize an oil-spill response plan affecting Tribal resources and lands at Lake Oahe.” Judge Boasberg also ordered Dakota Access, with input from the Tribes, to hire an independent third-party engineering expert to conduct a compliance audit of the DAPL. Both the oil spill response plan and the compliance audit report must be submitted to the court by April 1, 2018.
In addition, Dakota Access was ordered to submit bi-monthly reports to the court providing detailed information with respect to the segment of the pipeline crossing Lake Oahe. These bi-monthly reports will include:
- Inline-inspection run results or direct-assessment results performed on the pipeline during the reporting period;
- The results of all internal-corrosion management programs and any actions taken in response to findings of internal corrosion;
- Any new encroachment on the right‐of‐way during the reporting period;
- Any new integrity threats identified during the reporting period;
- Any reportable incidents that occurred during the reporting period;
- Any leaks or ruptures that occurred during the reporting period;
- A list of all repairs on the segment made during the reporting period;
- Ongoing damage-prevention initiatives on the pipeline and an evaluation of their success or failure;
- Any changes in procedures used to assess and monitor the segment; and
- Any company mergers, acquisitions, transfers of assets, or other events affecting the management of the segment.
Judge Boasberg explained the reasoning behind his decision as follows:
Recent events have made clear, moreover, that there is a pressing need for such ongoing monitoring. Earlier this month, the Keystone Pipeline leaked 210,000 gallons of oil in Marshall County, South Dakota.…The spill occurred near the boundaries of the Lake Traverse Reservation, home of the Sisseton Wahpeton Oyate Tribe, thus highlighting the potential impact of pipeline incidents on tribal lands.
Dakota Access must file these detailed reports beginning December 31, 2017, and every 60 days thereafter until the remand is complete. The Corps anticipates completing its supplemental NEPA analysis by April 2018, at which point the court will determine whether the Corps has fully complied with NEPA.
On December 4, 2017, I wrote a blog regarding Moody’s Investors Service’s threat to downgrade state and municipal credit ratings if they failed to adequately plan for and attempt to mitigate climate change risks. A day later, in conjunction with the North American Climate Summit, Chicago’s mayor and dozens of other mayors signed the “Chicago Climate Charter,” which calls on mayors to work to achieve a reduction in greenhouse gas emissions that’s equal to or more than that required by the 2015 Paris Agreement. The charter would require participating cities to track and publicly report greenhouse gas emissions and take action to plan for climate change related impacts in local infrastructure and energy planning. While these actions may not have been in direct reaction to Moody’s threat, such forward thinking may minimize the risk for participating cities in future rating downgrades relating to climate change impacts.
In a November 28, 2017 report, Moody’s Investors Service warned cities and states that they faced the risk of a credit rating downgrade if they were not proactive in planning to mitigate the risks of climate change. The Moody’s report listed six indicators that it used to assess the exposure and overall susceptibility of states and municipalities to the physical effects of climate change, including share of economic activity derived from coastal areas, hurricane and weather damage as a share of the economy, and the share of homes in a flood plain. Based on these indicators, Florida, Georgia, Mississippi, and Texas were the states most at risk from climate change. Although Moody’s couldn’t point to a specific state or municipality whose rating was (or might be) downgraded as a result of a failure to plan for climate change, the Moody’s report clearly sets the stage for such downgrades in the future.
DirecTV recently agreed to pay $9.5 million to settle claims by the State of California that it had illegally shipped hazardous wastes such as batteries and aerosol cans to local landfills across the state. California accused DirecTV of violating California’s Hazardous Waste Control Law and Unfair Competition Law after an investigation of DirecTV dumpsters at 25 facilities throughout the state identified violations at each location. DirecTV agreed to pay $8.9 million in civil penalties, costs, and supplemental environmental projects, and another $580,000 on measures aimed at ensuring future compliance with California’s hazardous waste regulations. The company also agreed to injunctive relief prohibiting future violations.
U.S. EPA’s Office of Superfund Remediation and Technology Innovation (“OSRTI”) recently indicated that it may be looking to the Great Lakes National Program Office’s (“GLNPO”) sediment cleanup program for best practices that might be applicable to Superfund cleanups. OSRTI’s evaluation of GLNPO’s sediment program is consistent with comments submitted by responsible parties and cleanup contractors that U.S. EPA should give more consideration to leveraging public and private funds in Superfund cleanups. The Great Lakes Legacy Act established the GLNPO, which has been working closely with states, local government entities and other stakeholders to address sediment issues at 31 areas of concern in the Great Lakes area. U.S. EPA’s website notes that the Great Lakes Legacy Act program has invested approximately $338 million to address these sediment impacted sites while leveraging an additional $227 million from non-federal parties. Whether this approach can achieve similar results at other Superfund sites remains to be seen, but such flexibility would appear to be consistent with Administrator Pruitt’s priority to more quickly and economically address CERCLA sites.
A new GAO Report finds that DOD failed to report drinking water-related violations for 16 of its installations and that overall compliance rates were lower for DOD-treated drinking water systems. The Report also noted DOD has made some progress in addressing emerging contaminants in its drinking water, specifically including perfluorooctane sulfonate (PFOS), perfluorooctanoic acid (PFOA), and perchlorate.
The Report identified different compliance rates between DOD-treated water systems and non-DOD-treated water systems. Just one percent of individuals who received non-DOD-treated water from military installation systems were served by systems with EPA or local health violations. However, 11 percent of individuals who received DOD-treated drinking water were served by systems with such violations. DOD has taken steps to limit individuals’ exposure to some chemicals, including providing alternative water supplies and installing water treatment systems.
The Report recommends the following key actions to improve DOD’s data, reporting, and oversight of drinking water requirements:
- Identify and implement any necessary changes to DOD’s environmental compliance policy to clarify DOD’s reporting requirements for violations of health-based drinking water standards;
- Identify and implement actions to increase understanding at Army, Navy and Air Force installations and commands about DOD’s reporting requirements for violations of health-based drinking water regulations; and
- Review reported compliance data to identify the reasons for any differences in the number of violations of health-based drinking water regulations between DOD’s two types of public water supplies and take action to address the causes of any differences.
DOD concurred with each of these recommendations.
On November 1, 2017, the United States District Court of Appeals for the D.C. Circuit rejected the Sierra Club's National Environmental Policy Act (“NEPA”) challenges to the Department of Energy’s (“DOE”) authorization of export of liquefied natural gas from three facilities in Louisiana, Maryland, and Texas. The court noted that its decision in Sierra Club v. U.S. Department of Energy (Freeport), 867 F.3d 189 (D.C. Cir. 2017) was largely determinative of the Sierra Club’s challenges to the LNG exports from these three facilities. In the Freeport decision, the court agreed that DOE had provided a reasoned explanation as to why DOE believed the indirect effects pertaining to increased gas production were not reasonably foreseeable. The court also found that DOE did not violate NEPA when declining to make specific projections regarding the environmental impacts associated with the increased production. The Freeport court also acknowledged that DOE had adequately considered the downstream greenhouse gas emissions resulting from the indirect effects of the LNG exports.
Notwithstanding the Freeport decision, the Sierra Club continued to challenge DOE’s authorizations for LNG exports for these three facilities, arguing that DOE’s reliance on an Environmental Assessment that found no significant impact (as opposed to an Environmental Impact Statement) is contradicted by evidence in the record. The court rejected this argument, noting that an agency’s finding of no significant impact will only be reversed if the decision was arbitrary, capricious, or an abuse of discretion which the court concluded was not supported by the record evidence. The Sierra Club also argued that DOE failed to consider the distributional impacts when evaluating “public interest” under the Natural Gas Act. However, the court noted that DOE had in fact considered the distributional impacts of the LNG exports.
Following this judgment, the Sierra Club will have lost all four petitions it filed against the DOE relating to NEPA assessments for LNG exports. The Sierra Club also lost all four of its petitions challenging FERC’s approval of these LNG exports. Please click here for a copy of the court’s November 1st decision.
By Andi Kenney
On October 26, 2017, EPA published a proposed rule requiring manufacturers and importers of mercury and mercury-added products or any other person who intentionally uses mercury in a manufacturing process to provide EPA with both quantitative and qualitative information about the elemental mercury and mercury compounds involved in their activities. 82 FR 49564 (October 26, 2017).
Under Section 8(b)(10)(B) of the Toxic Substances Control Act (TSCA), EPA must publish an inventory of mercury supply, use, and trade in the United States” in 2017 and every year thereafter. This reporting rule is authorized by Section 8(b)(10)(D) of TSCA which requires covered persons to provide EPA with the information the Agency needs to prepare that inventory.
The list of potentially affected industries is wide ranging and includes, among many others, mining, chemical manufacturing, plastics and resin manufacturing, medicinal and pharmaceutical manufacturing, coating and adhesive manufacturing, tire and rubber product manufacturing, fabricated metal products (including ammunition) manufacturing, circuit board and semiconductor manufacturing, office and industrial equipment manufacturing, watch and measuring equipment manufacturing, lighting and household appliance manufacturing, battery and electrical equipment manufacturing, boat and RV manufacturing, toy and jewelry manufacturing, and hazardous and non-hazardous waste facilities.
The reporting requirements focus on those who first manufacture mercury or mercury-added products or otherwise intentionally use mercury in a manufacturing process. The proposed rule would not apply to persons generating, handling or managing mercury-containing waste, unless that person manufactures or recovers mercury and uses it or stores it for use. Nor would it apply to those merely engaged in the trade of mercury, those importing mercury-added products for personal use and not for commercial purposes, those manufacturing mercury incidentally (such as by burning coal) or those importing a product that contains mercury solely as a component in a mercury-added product (such as a toy with a mercury-added battery). It would, however, apply to mercury or mercury-containing by-products manufactured for commercial purposes and to the storage of mercury and mercury-added products after manufacture.
EPA is proposing an initial reporting deadline of July 1, 2019, with subsequent reports due every three years thereafter. Each report would cover only the preceding calendar year.
EPA is accepting comments on the proposed rule until December 26, 2017.
Today recognizes the third annual Imagine a Day Without Water event to raise awareness and educate America about the value of water. Over 500 organizations, cities, water authorities, and corporations have joined together once again to focus attention on the importance of this valuable resource and the critical need to upgrade and improve water infrastructure throughout the U.S.
No water to drink, or even to make coffee with. No water to shower, flush the toilet, or do laundry. Hospitals would close without water. Firefighters couldn't put out fires, and farmers couldn't water their crops. Some communities in America already know how impossible it is to try to go a day without our most precious resource: water.
The 2017 Infrastructure Report Card published by the American Society of Civil Engineers provided an overall grade of a D+ for the status and condition of U.S. infrastructure. Particularly as to drinking water, the Report Card noted the following:
- One million miles of pipes deliver drinking water and most date from the early 20th century with a 75-100 year lifespan
- Over 240,000 water main breaks occur annually
- Over $1 trillion dollars is the estimate needed to maintain/upgrade/expand service to meet water demands over the next 25 years.
Can you imagine a day without water? In the context of your business and its operations, please consider the resources available from these two organizations that address the following water-related considerations, including conditions and capacity, funding, public safety, future needs, and resilience and innovation.
On September 26, 2017, EPA announced its new Smart Sectors program, a program aimed at easing the regulatory burden on industry. The official notice for this program was published in the Federal Register on September 26th (82 FR 44783), with a correction published on September 29th (82 FR 45586). EPA explained the purpose behind the Smart Sectors program in the notice:
EPA’s Smart Sectors program will re-examine how EPA engages with industry in order to reduce unnecessary regulatory burden, create certainty and predictability, and improve the ability of both EPA and industry to conduct long-term regulatory planning while also protecting the environment and public health.
EPA has initially identified 13 sectors of industry to work with under this program, based on each sector’s potential to improve the environment and public health:
Jenner & Block is pleased to report that Sam Hirsch, former Acting Assistant Attorney General and Principal Deputy at the U.S. Department of Justice’s Environment and Natural Resources Division (ENRD), has returned to the Firm as a Partner in our Washington, DC office. Sam was formerly an attorney with Jenner & Block until 2009 when he moved to the U.S. Department of Justice, where he served as Deputy Associate Attorney General before taking on his most recent role. During his time at ENRD, Sam was primarily responsible for litigation and policy work relating to the prevention and cleanup of pollution, environmental challenges to federal programs, stewardship of public lands and natural resources, property acquisition, wildlife protection, and Indian rights and claims. As Acting Assistant Attorney General and Principal Deputy, he oversaw the drafting of more than 200 briefs, including more than 40 U.S. Supreme Court cert-stage, merits, and amicus briefs, as well as more than 150 appeal-recommendation memos to the Solicitor General. These briefs and memos dealt with cases in all 13 federal circuits and covered nearly the entire range of federal environmental and natural resources statutes, including the Clean Air Act, the Clean Water Act, the National Environmental Policy Act (NEPA), the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, or Superfund), the Oil Pollution Act, the Resource Conservation and Recovery Act (RCRA), the Safe Drinking Water Act, the Endangered Species Act, the Migratory Bird Treaty Act, the Marine Mammal Protection Act, and the Lacey Act.
Sam was involved in all phases of the Deepwater Horizon litigation, including helping structure the global settlement, which directed more than $8.1 billion toward restoring damaged natural resources in the Gulf of Mexico. He also drafted portions of the criminal plea agreements that created the National Academy of Sciences' $500 million Gulf Research Program, which funds and conducts studies and projects to enhance oil-system safety, human health, and environmental resources in the Gulf of Mexico and other U.S. outer-continental-shelf regions that support oil and gas production.
Sam may be reached at (202) 637-6335 or firstname.lastname@example.org. Welcome back Sam!
Unless one has been living under a log (and even that might not be an excuse), we all know that Scott Pruitt was confirmed as U.S. EPA Administrator on February 17, 2017. However, the status of President Trump’s other U.S. EPA nominations may not be as front and center. As such, here is a quick cheat sheet for those watching at home (current as of 9/21/2017):
- General Counsel: Matthew Leopold. Mr. Leopold was nominated as General Counsel to U.S EPA in September 2017. Mr. Leopold was an attorney with the Environment and Natural Resources Division of DOJ for approximately six years and then became general counsel for Florida Department of Protection. Upon leaving FDEP in 2015, he joined the Florida-based law firm Carlton Fields. Mr. Leopold’s nomination has been referred to the Senate Environmental and Public Works committee and his nomination (along with the nominations of Dourson, Wehrum and Ross) were to have been considered by the committee yesterday (Sept. 20th) but the hearings were cancelled when the Senate decided it had worked enough and adjourned early for the week.
- Enforcement and Compliance Assurance: Susan Parker Bodine. Ms. Bodine was nominated as Assistant Administrator for the Office of Enforcement and Compliance Assurance in May 2017. Since 2015, Ms. Bodine has been serving as chief counsel on the Senate Environment and Public Works Committee and previously served as the Assistant Administrator of the Office of Land and Emergency Management. Ms. Bodine’s nomination was approved by the Senate Environmental and Public Works committee on July 12th and she is awaiting full Senate confirmation. Ms. Bodine has over 29 years of environmental law experience, including having worked at two law firms and being the staff director and counsel for the House Transportation & Infrastructure Committee’s water panel.
- Chemical Safety and Pollution Prevention: Michael Dourson. Mr. Dourson was nominated in July 2017 to become the Assistant Administrator for the Office of Chemical Safety and Pollution Prevention. Mr. Dourson is a toxicologist who had formerly worked at U.S. EPA. After leaving U.S EPA in the 1990s, Mr. Dourson founded the non-profit group Toxicology Excellence for Risk Assessment which opponents have criticized for being at least partially funded by industry. Mr. Dourson is currently a professor at the University of Cincinnati. His nomination has been referred to the Senate Environmental and Public Works committee but his nomination hearing has been delayed.
- Office of Water: David Ross. Mr. Ross was nominated in September 2017 to become the Assistant Administrator of the Office of Water. Mr. Ross currently serves as Wisconsin’s assistance attorney general and Director of the Environmental Protection Unit for the Wisconsin Department of Justice. Mr. Ross previously served in the Wyoming Attorney General’s Office. Mr. Ross seems generally to have bi-partisan support and his nomination has been referred to the Senate Environmental and Public Works committee but his nomination hearing has been delayed.
- Air and Radiation: William Wehrum. Mr. Wehrum was nominated in September 2017 to become the Assistant Administrator of the Office of Air and Radiation. Mr. Wehrum had previously served as U.S. EPA’s acting assistant administrator for the Office of Air and Radiation from 2005 to 2007. He is currently with the law firm of Hunton & Williams and has over 31 years of experience working in the environmental field. Mr. Wehrum also seems to have some limited bi-partisan support but he was also nominated for this same position by President Bush in 2005 but his nomination was pulled after Democrats accused Mr. Wehrum of working with polluters. This same charge is currently being levied by environmental organizations. Interestingly, Mr. Wehrum is scheduled to argue before the D.C. Circuit on September 26th in a lawsuit challenging OSHA's silica rules pertaining to the construction industry. His nomination has been referred to the Senate Environmental and Public Works committee but his nomination hearing has been delayed.
President Trump has yet to nominate someone for the Deputy Administrator. Potential nominees that had been floated were Jeff Holmsted and Andrew Wheeler, but for now, the position is held by Mike Flynn who had previously been U.S. EPA’s Associate Deputy Administrator.
On Thursday, September 14th, from 5 pm to 7 pm, environmental attorneys and professionals will come together for a networking reception at Jenner & Block's offices in Chicago. Complimentary food and drinks will be provided thanks to the event’s sponsors. This is the third year Jenner & Block has hosted this event, which continues to grow every year. Jenner & Block will be joined by a number of bar associations and organizations:
- CBA Environmental Law Committee
- CBA Young Lawyers Section Environmental Law Committee
- ISBA Environmental Law Section
- ABA Section of Environment, Energy, and Resources
- Air & Waste Management Association Lake Michigan States Section
- DRI Toxic Tort and Environmental Law Committee
Jenner & Block partner Allison Torrence is a former Chair of the CBA Environmental Law Committee and will be giving brief welcome remarks.
Details for this event are below. If you would like to join us at this reception, please RSVP here.
Environmental Attorney Reception
September 14, 2017 | 5:00 pm to 7:00 pm
Jenner & Block Conference Center | 45th Floor | 353 N. Clark St. | Chicago, IL 60654
Who is in Charge of Protecting the Environment--The Role of U.S. EPA and State Environmental Agencies During a Hurricane
Following Hurricane Harvey, and with the pending landfall of Hurricane Irma, the manner and degree to which federal and state agencies coordinate environmental protection duties may seem chaotic and disorganized. However, there is a specific protocol that guides these federal agencies in taking steps to protect the environmental in anticipation of and following a hurricane.
As brief background, in 1988, the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Stafford Act”) was promulgated in an effort to establish an orderly process pursuant to which the Federal Government provides disaster and emergency assistance to State and local governments. At the request of the Governor of an affected State, the President may declare a major disaster or emergency. For example, on September 4, 2017, Florida Governor Rick Scott declared a state of emergency in anticipation of Hurricane Irma. Shortly thereafter, President Trump declared a major emergency. Upon declaration of such a major disaster or emergency, the President appoints a Federal Coordinating Officer (“FCO”), a FEMA official who is charged with coordination of Federal assistance to the affected State and local governments.
FEMA’s primary focus is protection of human life and the majority of federal resources are obviously directed towards that goal. However, FEMA also works closely with other agencies such as U.S. EPA and state environmental agencies to implement emergency response activities focused on protecting the environment. FEMA has established numerous Emergency Support Functions (ESFs), which provide the structure for coordinating interagency support for a Federal response to declared disasters and emergencies. U.S. EPA has been designated as the ESF Coordinator for Emergency Response # 10—Oil and Hazardous Materials Response.
Here are some key environmental issues that federal and state agencies focus on during a natural disaster such as a hurricane:
As the cleanup, rebuilding, and recovery continues in the aftermath of Hurricane Harvey, there has been increasing news coverage about the environmental consequences resulting from impacts of this devastating storm in Texas. We have all seen the coverage on the Arkema SA chemical plant explosion and fire in Crosby, Texas, as well as this weekend’s news that 13 Superfund sites in the Houston area have been flooded and are experiencing possible damage. What we have not heard much about is action on the part of the Texas Commission on Environmental Quality (TCEQ) to do its part to allow residents and their commercial and industrial businesses to recover.
Last week, TCEQ issued a Request for Suspension of TCEQ Rules that may prevent, hinder, or delay necessary action in coping with Hurricane Harvey. The rules suspended in order to manage Hurricane Harvey impacts address regulatory obligations related to air, water, storage tank, fuel and waste management. In addition, TCEQ has developed a Hurricane Response webpage and made clear the Agency's priority is the recovery efforts helping to restore water and wastewater services as well as to assess damage, manage debris, and bring other critical services back online.
Most substantive federal environmental laws and their implementing regulations also provide emergency exemptions that can be triggered following any natural or manmade disaster to ensure laws do not interfere with rescue and recovery efforts. Most emergency exemptions require a declaration or finding on the part of the United States Environmental Protection Agency (EPA) or of another high-ranking government official. We will address EPA's Hurricane response actions in future blogs.
At a time when the residents of Texas need the best of their government, TCEQ is providing an excellent example of support, help, and a willingness to do what is right under the circumstances. Kudos to TCEQ!
State Street Global Advisors (SSGA), managing $2.6 trillion in assets, recently took action to motivate companies to treat climate change as a significant risk and to encourage businesses to ensure that assets and long-term business strategies are resilient to climate change impacts. SSGA published “Perspectives on Effective Climate Change Disclosure” to provide guidance to companies on best practices for climate-related scenario-planning disclosure.
The new guidance provides insight into four (4) areas:
- Governance and board oversight of climate change;
- Establishing and disclosing long-term greenhouse gas emission goals;
- Disclosing the average and range of carbon price assumptions; and
- Discussing impacts of scenario planning on long-term capital allocation decisions.
The guidance is intended to identify current disclosure practices that are useful to investors in evaluating the robustness of climate-related scenario-planning exercises and climate-related strategic reports by companies in high impact sectors, such as oil and gas and mining.
SSGA drew upon its work with over 240 climate-related engagements with 168 companies that their Asset Stewardship Team had conducted over the past four (4) years.
This guidance document provides good insight to measure and evaluate existing climate change-related disclosures and may offer additional incentive to companies considering new or additional disclosures.
Following the disaster that has unfolded in Texas as a result of the unprecedented flooding caused by Hurricane Harvey, affected businesses might be asking whether they might be able to avail themselves of the “Act of God” defense that is embodied in several federal environmental laws and the Texas Health and Safety Code. If ever an event qualified as an “Act of God,” many would likely agree that Hurricane Harvey falls into that category. However, if the experience of Hurricane Katrina provides any guidance, regulated entities are likely to face substantial hurdles triggering the “Act of God” defense for releases attributable to Hurricane Harvey.
Although not defined in the Texas Health and Safety Code, CERCLA defines an “Act of God” as the “unanticipated grave natural disaster or other natural phenomenon of an exceptional, inevitable, and irresistible character, the effects of which could not have been prevented, or avoided by the exercise of due care or foresight.” 42 U.S.C. §9601(1). The Oil Pollution Act of 1990 contains a verbatim definition of “Act of God.” 33 U.S.C. §2701(1).
One might ask how many times the “Act of God” defense has been successfully asserted, and the answer is that there is not a single reported case where that defense has been successful.
On August 28, 2017, Shell Oil Company became the latest target of a Clean Water Act citizen suit lawsuit filed by the Conservation Law Foundation (“CLF”). Coming on the heels of the unfolding disaster in Texas caused by Hurricane Harvey, this most recent lawsuit alleges that Shell’s stormwater pollution prevention plan for its Providence, Rhode Island Terminal is inadequate in that it fails to account for sea level rise, increased precipitation generally, and the increased frequency of storms that CLF alleges will occur due to climate change. This latest lawsuit follows a previously filed citizen suit by CLF against Exxon under both the Clean Water Act and Resource Conservation and Recovery Act relating to Exxon’s Everett Terminal located in Everett, Massachusetts. A hearing on Exxon’s pending motion to dismiss is currently set for September 12, 2017.
Events like Hurricane Harvey will provide continuing fodder for what is likely to be sharp increase in citizen suits being filed by environmental organizations seeking to advance their agendas in light of the current regulatory climate.
On August 22, 2017, a divided D.C. Circuit panel sided with the Sierra Club and other environmental groups by concluding that the Federal Energy Regulatory Commission ("FERC") didn't adequately analyze the impacts of greenhouse gas ("GHGs") emissions that may result from a $3.5 billion natural gas pipeline to be constructed through Florida. The project in question is an approximately 500-mile long natural gas pipeline scheduled to be completed in 2021 and which is projected to carry over one billion cubic feet of natural gas per day.
Section 7 of the Natural Gas Act vests jurisdiction to approve such a pipeline with FERC. Before such a pipeline can be approved, FERC must grant the developer a certificate of public convenience and necessity (often referred to as a Section 7 certificate). Prior to issuing the Section 7 certificate for this project, FERC prepared an environmental impact statement ("EIS") as required by the National Environmental Policy Act ("NEPA"). Sierra Club and other environmental groups challenged FERC's EIS and subsequent Section 7 certificate on the grounds that it failed to adequately consider the pipeline's contribution to GHG emissions and its impact on low-income and minority communities.
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.”
On August 8, 2017, the United States District Court for the District of Columbia issued a decision concluding that the U.S. Environmental Protection Agency (U.S. EPA) did not have statutory authority to issue a 2015 rule that restricted the use of hydrofluorocarbons (HFCs) in a variety of products, including aerosols, motor vehicle air conditioners, commercial refrigerators and foams.
Section 612(a) of the Clean Air Act required manufacturers to replace ozone-depleting substances (ODS) with "safe" product substitutes. To that end, U.S. EPA was required to develop lists of "safe" and "prohibited" ODS substitutes. Pursuant to this directive, U.S. EPA placed HFCs on the list of "safe" substitutes and manufacturers began to replace ODS with HFCs.
However, over time, U.S. EPA began to learn that although not an ODS, HFCs were in fact greenhouse gases. As such, in 2015, U.S. EPA promulgated a final rule that moved HFCs off of the "safe" list and onto the "prohibited" list. See 80 Fed. Reg. 42,870 (July 20, 2015). As part of the 2015 final rule, U.S. EPA also then prohibited the use of HFCs in aerosols, motor vehicle air conditioners, commercial refrigerators and foams even if the manufacturers of these products had previously elected to replace the ODS in these products with the previously "safe" HFCs. A lawsuit was subsequently filed by manufacturers of certain HFCs.
The parties to the lawsuit both acknowledged that U.S. EPA had the ability to ban the use of ODS and that U.S. EPA could change or modify the lists of "safe" and "prohibited" ODS substitutes based on U.S. EPA’s assessment of the risks that those substances posed to human and the environment. However, the key dispute was whether U.S. EPA had the authority under Section 612 of the Clean Air Act to prohibit manufacturers from making products that contain HFCs if those manufacturers had previously replaced an ODS with a HFC that at the time was listed as a "safe" substitute.
The D.C. Circuit concluded that U.S.EPA did not have that authority. The court rejected U.S. EPA’s argument that the term “replace” as used in the statute was intended to apply each time a manufacturer uses a substitute substance as opposed to when the manufacturer originally “replaced” the ODS with the HFC finding U.S. EPA's proposed interpretation to “border on the absurd.” As such, the D.C. Circuit vacated the 2015 rule to the extent the rule required manufacturers to replace HFCs with a substitute substance on the "safe" list.
The Department of Homeland Security (DHS) announced yesterday its plans to waive numerous environmental laws to allow more expedient construction of barriers and roads in the vicinity of the international border near San Diego. The decision was signed by then DHS Secretary John Kelly and applies to a 15-mile border segment in San Diego where the Agency plans to upgrade fencing and build border wall prototypes.
DHS issued the waiver pursuant to its authority in Section 102 of the 2005 Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA). This law grants the DHS Secretary a number of authorities necessary to carry out DHS’s border security mission. Citing this authority, the DHS notice makes clear that these infrastructure projects will be exempt from complying with critically important environmental laws such as the National Environmental Policy Act, the Endangered Species Act, the Clean Water Act and other laws related to wildlife, conservation, cultural and historic artifacts, and the environment.
This action has been under consideration by DHS and the subject of much discussion among environmental activists. The Center for Biological Diversity already sued DHS earlier this year seeking an updated environmental review of the southern border infrastructure projects.
According to yesterday’s notice, “…while the waiver eliminates DHS’s obligation to comply with various laws with respect to the covered projects, the Department remains committed to environmental stewardship with respect to these projects. DHS has been coordinating and consulting—and intends to continues to do so—with other federal and state agencies to ensure impacts to the environment, wildlife, and cultural and historic artifacts are analyzed and minimized, to the extent possible.”
Even in the wake of everything ongoing in D.C with the new Administration, this action is extraordinary and inconsistent with typical federal government practices, except in the case of an emergency or other exigent circumstances. The final decision will appear in the Federal Register soon.
The Trump Administration signaled its plans to renegotiate the 1994 North American Free Trade Agreement (NAFTA) by issuing the Summary of Objectives for the NAFTA Renegotiation this month. President Trump committed to renegotiate NAFTA in order to obtain more open, equitable, secure, and reciprocal market access with our two largest export markets in Canada and Mexico.
Environmental considerations currently are managed in a side agreement to NAFTA, but one of the Administration’s priorities is to incorporate environmental provisions into the new NAFTA. The Summary outlines 13 environmental issues to be addressed as part of the renegotiation process:
- Bring the environmental provisions into the core of the agreement, rather than in a side agreement.
- Establish strong and enforceable environmental obligations that are subject to the same dispute settlement mechanism that applies to other enforceable obligations of the agreement.
- Establish rules that will ensure that NAFTA countries do not waive or derogate from the protections afforded in their environmental laws for the purpose of encouraging trade or investment.
- Establish rules that will ensure that NAFTA countries do not fail to effectively enforce their environmental laws through a sustained or recurring course of action or inaction, in a manner affecting trade or investment between the parties.
- Require NAFTA countries to adopt and maintain measures implementing their obligations under select Multilateral Environmental Agreements (MEAs) to which the NAFTA countries are full parties, including the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
- Establish a means for stakeholder participation, including commitments for public advisory committees, and a process for the public to raise concerns directly with its government if they believe it is not meeting its environmental commitments.
- Require NAFTA countries to ensure access to fair, equitable, and transparent administrative and judicial proceedings for enforcing their environmental laws, and provide appropriate sanctions or remedies for violations of their environmental laws.
- Provide for a framework for conducting, reviewing, and evaluating cooperative activities that support implementation of the environmental commitments, and for public participation in these activities.
- Establish or maintain a senior-level Environmental Committee, which will meet regularly to oversee implementation of environmental commitments, with opportunities for public participation in the process.
- Combat illegal, unreported, and unregulated (IUU) fishing, including by implementing port state measures and supporting increased monitoring and surveillance.
- Establish rules to prohibit harmful fisheries subsidies, such as those that contribute to overfishing and IUU fishing, and pursue transparency in fisheries subsidies programs.
- Promote sustainable fisheries management and long-term conservation of marine species, including sharks, sea turtles, seabirds, and marine mammals.
- Protect and conserve flora and fauna and ecosystems, including through actions by countries to combat wildlife and timber tracking.
Critics note that the above environmental considerations look much like the provisions in the now defunct Trans-Pacific Partnership that many environmental advocates opposed.
The first round of talks on the possible renegotiation of NAFTA is scheduled to take place in Washington August 16-20. The Summary confirms that “…the new NAFTA will be modernized to reflect 21st century standards and will reflect a fairer deal, addressing America’s persistent trade imbalances in North America.” While part of the agenda, it does not appear that environmental considerations will be a critical portion of these upcoming negotiations.
Jenner & Block's Corporate Environmental Lawyer is pleased to present a guest blog prepared by John Claypool, Director of Project Management at Brown and Caldwell. Brown and Caldwell is a national engineering consulting firm focused on the U.S. environmental sector. The degree to which and manner in which these ASTM standards are incorporated into regulatory standards is an important topic and we appreciate Brown and Caldwell's insight on this topic.
EPA recently issued a direct final rule to amend the requirements for conducting All Appropriate Inquires (AAI) to qualify for the Bona Fide Prospective Purchaser (BFPP) defense under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The direct final rule allows for the use of ASTM International E2247-16, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property. When the final rule becomes effective on September 18, 2017, ASTM E2247-16 can be used to satisfy the statutory requirements for conducting AAI.
Since 2008, the AAI rule at 40 CFR Part 312 has allowed the use of E2247-08 on transactions involving forestland or rural properties. As part of its 5-year review and reapproval cycle, ASTM International made significant changes to E2247-08 and reapproved/reissued it under the E2247-16 designation. A summary of the differences between E2247-08 and E2247-16 is available in the USEPA rulemaking docket (Docket EPA-HQ-OLEM-2016-0786).
The revisions to the AAI rule published in the Federal Register on June 20, 2017 allow the use of E2247-08 and E2247-16 for conducting AAI on forestland and rural property. Since E2247-08 is no longer considered an active standard by ASTM International, the practical implication is that AAI for forestland and rural properties will henceforth be conducted per E2247-16. The direct final rule did not make any changes to the AAI requirements for other types of properties, continuing to allow the use of ASTM E1527-13, Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.
This addition of E2247-16 to the AAI rule may impact both public and private parties intending to claim a limitation on CERCLA liability in relation to the purchase of large tracts of forested land or large rural property. It may also impact parties conducting site characterizations or assessments on large tracts of forested land or large rural properties, when the parties are intending to use a brownfields grant awarded under CERCLA Section 104(k)(2)(B)(ii), including state, local, and tribal governments receive brownfields site assessment grants.
Brown and Caldwell's John Claypool, Brent Callihan and Julie Byrd contributed to the development of the revised ASTM standard, submitting comments to ASTM that led to the development of a working group to revise the standard, ultimately leading to the revised AAI rule.