New Climate Change Lawsuit: Publicity Stunt or Reasonable Effort to Protect California Property Owners?
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.
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.
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.
Yesterday, the European Chemical Agency (ECHA) released new REACH guidance for companies that import goods containing hazardous substances above 0.1 percent by weight. While aimed at importer notifications, the guidance also addresses registration, notification and communication obligations under the REACH law related to substances in articles.
These REACH requirements apply to 173 “substances of very high concern” contained in goods imported into the EU. The new guidance replaces interim guidance on rules on hazardous substances in products issued by ECHA in December 2015. The guidance also takes into account a European Court of Justice ruling from September 2015 that the 0.1 percent notification threshold for hazardous substances in products should apply to individual components within products, and not only to the whole product.
The new guidance has applicability to an article producer, article importer and article supplier as those terms are defined under REACH. The guidance offers two user friendly tables to assist in interpreting the REACH requirements. These include:
- Table 1: A summary that details the regulatory obligations applicable to producers, importers and suppliers, the legal basis under REACH and possible exemptions that may apply; and
- Figure 1: A flowchart that provides an overview of the process regarding whether and how substances in articles may be regulated under REACH and if so, what obligations are applicable.
For U.S. companies, compliance with REACH presents ongoing challenges and this guidance makes clear that there will be renewed focus on regulatory obligations applicable to importers. According to ECHA, only 365 product notifications covering 39 of the 173 substances of very high concern have been submitted. There is a general belief that many companies are not fully complying with these requirements and that the obligations are not fully understood. The new guidance hopes to provide better direction and a clearer understanding of REACH registration, notification and communication obligations.
The EU REACH import obligations are very similar in nature to existing U.S. TSCA import/export obligations. These, too, have been the subject of confusion and misunderstanding over the years, particularly since these requirements often are managed by shipping and procurement personnel unfamiliar with environmental regulations. EPA’s new TSCA Import Certification Rule also is creating some challenges for U.S. companies particularly in connection with the electronic submissions and certifications now required.
EPA recently extended the effective date of the final reporting and recordkeeping requirements for certain chemical substances when they are manufactured or processed at the nanoscale. EPA has delayed the effective date of the January 12, 2017 final rule from May 12, 2017 to August 14, 2017.
Industry sought to repeal the rule, or at a minimum, obtain an extension of the effective until EPA adopts guidance explaining how to comply with the new two-fold requirements including: 1) companies that make, import or process a distinct or “discrete” form of a nanoscale chemical at some time in the future are to provide information to EPA (135 days before they make, import or process the chemical or within 30 days of deciding to manufacture or process the chemical); and 2) companies must comply with a one-time obligation to report information known or reasonably attainable regarding any nanoscale chemicals made or processed at any time during the past three years. Based upon the information EPA receives, the Agency could decide to require new toxicity, exposure or other data or it could decide to impose restrictions on commercial activity.
Nanomaterials—a diverse category of materials defined mainly by their small size—often exhibit unique properties that can allow for novel applications but also have the potential to negatively impact human health and the environment. Some nanomaterials: more easily penetrate biological barriers than do their bulk counterparts; exhibit toxic effects on the nervous, cardiovascular, pulmonary and reproductive systems; or have antibacterial properties that may negatively impact ecosystems.
Regulation of nanomaterial has created conflict between industry and environmental groups. The Nanomanufacturing Association suggests the rule is a de facto permitting program, while environmental groups believe the rule is long overdue and its impacts are limited by the authorities and procedures already existing under the Toxic Substances and Control Act (TSCA), the federal statute authorizing the new rule. Nanomaterials are used in a variety of commercial and industrial applications including paints, coatings, resins and a host of consumer products ranging from washing machine parts to lithium ion batteries.
A number of scientific organizations have called for the need for the kinds of information on nanomaterials EPA will now be able to collect including the National Academy of Science and the National Nanotechnology Initiative. At this time, it is unclear if the EPA draft guidance will be finalized before the effective date of the new rule.
Today we celebrate World Environment Day—a global celebration of nature and a day to reconnect with the places that matter most to you. Initiated in 1972, World Environment Day is the United Nations' most important day for promoting worldwide awareness and action for protection of the environment. Since it began in 1974, it has grown to become an international platform for public outreach that is widely celebrated in over 100 countries.
This year's host country is Canada where the official celebrations will take place and the 2017 theme is connecting people to nature encouraging all of us to get outdoors and into nature.
There is greater international awareness and attention focused on the protection and preservation of the environment than ever before. Everyone understands the critical environmental concerns ranging from the politics of the Paris Climate Agreement, the adverse impacts of plastic waste in our oceans, to the international focus on water quality and quantity. World Environment Day is a time to reflect upon and appreciate that the welfare of the planet, including the economic viability of its many nations, depends on the collective efforts we make to protect, preserve and conserve our natural resources and the environment.
Learn more about World Environment Day and efforts around the world to celebrate and improve the environment.
On Thursday, May 11th, from 12-1 pm, Jenner & Block will host a CLE presentation on Environmental Risk: Best Practices in Spotting, Evaluating, Quantifying and Reporting Risk. Business risk associated with environmental issues is an important topic that is often not fully understood by in-house counsel or outside attorneys and consultants. Effectively spotting, evaluating and managing environmental risk plays an important role in the success of a business and should be understood by all environmental attorneys and consultants advising businesses. This program will help you improve your ability to spot, evaluate, quantify and report on risk to provide value for your clients and their businesses.
Jenner & Block is pleased to be joined by members of the CBA Environmental Law Committee and the Air & Waste Management Association.
The presentation will be moderated by Christina Landgraf, Counsel, Environmental, Health & Safety, United Airlines, Inc. and Jenner Partner Allison Torrence. The panel of speakers will include Jenner Partner Lynn Grayson, Kristen Gale, Associate, Nijman Franzetti and Jim Powell, Director, Environmental Permitting, Mostardi Platt.
The CLE presentation will be held at Jenner & Block, 353 N. Clark St., Chicago, IL – 45th Floor, from 12-1 pm. Lunch will be provided starting at 11:45 am. If you are unable to attend in person, you can participate via webinar.
You can RSVP here.
Any questions can be directed to Pravesh Goyal: (312) 923-2643 or email@example.com
A recent case reminds us that not all communications between lawyers and environmental consultants are privileged despite best efforts to make them so. In Valley Forge Ins. V. Hartford Iron & Metal, Inc., the Northern District of Indiana ruled that the attorney-client privilege doesn’t protect a lawyer’s emails to environmental contractors when the communications concern remediation as opposed to litigation. This case provides a good overview of the protections afforded by the attorney-client privilege and the work-product doctrine in the environmental law context.
At issue are Hartford Iron’s communications with environmental contractors Keramida, Inc. and CH2M Hill, Inc. which were the subject of a motion to compel filed by Valley Forge. Following an in camera review of 185 emails, the court concluded that the evidence reflects that “….Hartford Iron retained Keramida and CH2M as environmental contractors for the primary purpose of providing environmental consulting advice and service to Hartford Iron in designing and constructing a new stormwater management system, not because Hartford Iron’s counsel needed them to “translate” information into a useable form so that counsel could render legal advice.”
The Court did find that certain of the emails were subject to the work-product doctrine as the communications were prepared for the purposes of litigation and that IDEM and EPA already had filed suit against Hartford Iron.
Despite the best efforts of lawyers, not all communications are privileged. The legal privileges are narrowly construed and generally do not protect communications with environmental consultants.
By and large, Americans are blessed with clean, safe, plentiful and mostly free drinking water sources. The Flint, Michigan contaminated drinking water scandal was a wakeup call for many that drinking water sources we depend upon may not be as reliable, stable, or even as affordable as we think.
On December 19, 2016, Reuters released a startling report about the quality of America’s drinking water. Reuters' investigation found that at least 3,000 water supplies in the U.S. were contaminated with lead at levels at least double the rates detected in Flint’s drinking water. In addition, 1,100 of these communities had rates of elevated lead in blood tests at least four times higher. Reuters concluded that Flint’s water crisis doesn’t even rank among the most dangerous lead hotspots in the U.S. Like Flint, however, many of the other localities are plagued by legacy lead: crumbling paint, plumbing, or industrial wastes left behind. Unlike Flint, many have received little attention or funding to combat poisoning.
Another critical issue looming on the horizon for many will be the affordability of water. A new Michigan State University (MSU) report recently concluded that a variety of compounding factors in the U.S. could easily push large portions of the population out of the financial range to even afford water in the future. The MSU report concludes:
A variety of pressures ranging from climate change, to sanitation and water quality, to infrastructure upgrades, are placing increasing strain on water prices. Estimates of the costs to replace aging infrastructure in the U.S. alone project over $1 trillion dollars are needed in the next 25 years to replace systems built circa World War II, which could triple the cost of household water bills…. Over the next few decades, water prices are anticipated to increase four times current levels. Prices could go higher if cities look to private providers for water services, who have a tendency to charge higher rates than public providers.
The MSU report concludes that 36% of households will be unable to afford water within five years. The highest risk areas in the U.S. are in the South, with the most at-risk communities in Mississippi. The MSU report noted that Ohio is 9th on the list, followed by Michigan at 12th.
Water risks come in many forms and include not only sufficient quantities and acceptable quality, but also affordability. The latter issue has not been addressed in a meaningful manner in the U.S. and will become a growing concern as water risks of all kinds increase in number and scope.
This week I published an article in the Chicago Daily Law Bulletin, Trump election puts environment into less than green state. In this article, I discuss my thoughts on environmental issues during the transition from the Obama Administration to the Trump Administration. I specifically address: 1) what authority President Trump has to implement environmental changes; 2) what environmental actions have been taken to date; 3) insights into future environmental changes we are likely to see; and 4) reaction from the environmental community.
If you would like to hear more about what’s happening on the environmental front in the Trump administration, please join us next Tuesday, March 7 at Noon for a program titled Environmental, Health & Safety Issues in 2017: What to Expect From the Trump Administration. My partners Gay Sigel, Steve Siros, and Allison Torrence will be providing the latest updates on what we know and what we can anticipate from the Trump administration in connection with environmental, health, and safety considerations.
If you would like to join us for this program or participate via webinar, please RSVP here.
Jenner & Block Partners Gay Sigel, Steve Siros, and Allison Torrence will speak at the upcoming program Environmental, Health, and Safety Issues in 2017: What to Expect From the Trump Administration, hosted by Jenner & Block’s Environmental, Workplace Health & Safety Practice Group on Tuesday, March 7 from 12:00 pm to 1:00 p.m. With the Trump Administration beginning to take shape, federal environmental, health, and safety (EHS) policy is certain to shift to the right. This CLE program will provide an overview of the Trump Administration’s actions impacting EHS matters to date and prognosticate on changes that may be forthcoming. You are invited to join us for this special program in person or via webinar. If you plan to participate, please RSVP as indicated below.
When: Tuesday, March 7, 12:00—1:00 p.m. with lunch starting at 11:45 a.m.
Where: Jenner & Block, 353 North Clark, Chicago, IL—45th Floor Conference Center
For more information about the program and to RSVP, please connect here.
Friday afternoon, Scott Pruitt was confirmed by the Senate to serve as the Administrator of the U.S. Environmental Protection Agency. 52 Senators voted for Mr. Pruitt’s confirmation, while 46 Senators voted against him. The vote was largely along party lines, with Democratic Senators Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia voting for Pruitt and Republican Susan Collins of Maine voting against him.
As we previously reported here, Mr. Pruitt has been the Attorney General of Oklahoma since his election to that post in 2011. As Oklahoma Attorney General, Mr. Pruitt has sued EPA numerous times to challenge EPA regulations, including current litigation over the Obama Administration’s Clean Power Plan. Oklahoma is part of the coalition of 28 states challenging EPA’s regulation of greenhouse gas emissions from existing power plants – a key component of the Clean Power Plan – in the case of West Virginia v. EPA, Case No. 15-1363. This case is currently pending in the U.S. Court of Appeals for the D.C. Circuit.
Jenner & Block partner Allison Torrence will be speaking at the Chicago Bar Association (CBA) Environmental Law Committee meeting on Tuesday, February 7, 2017. Allison, who is Chair of the CBA Environmental Law Committee, will be speaking about the new RCRA Hazardous Waste Generator Improvements Rule. The presentation will provide an overview of current hazardous waste generator requirements and insights into significant changes made by the new rule.
DATE: Tuesday, February 7, 2017, 12:15 p.m. to 1:30 p.m.
LOCATION: CBA Headquarters, 321 South Plymouth Court, Chicago, Illinois
TOPIC: RCRA Hazardous Waste Generator Improvements Rule
SPEAKER: Allison A. Torrence, Jenner & Block
The meeting will be webcast and Illinois MCLE credit will be provided for CBA members. For more information, please go to the CBA website.
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.
Last Friday, White House Chief of Staff Reince Priebus issued a memorandum directing all agencies, including EPA, to freeze new or pending regulations. The freeze effects regulations at a variety of stages of finality. Under the Administration’s direction, the following actions are being taken by EPA and other agencies:
- Regulations that have been finalized but not yet been sent for publication in the Federal Register will not be sent until reviewed by someone selected by the President.
- Regulations that have been sent to the Federal Register but not published will be withdrawn.
- Regulations that have been published in the Federal Register but have not reached their effective date will be delayed for at least 60 days for review (until March 21, 2017).
Following through on this direction, EPA released a notice that will be published in the Federal Register on January 26, 2017, delaying implementation of all published rules that have yet to take effect until at least March 21, 2017. The delayed rules include EPA’s Risk Management Program (RMP) facility safety rule, the 2017 Renewable Fuel Standard (RFS) targets, and the addition of vapor intrusion to Superfund NPL site scoring.
By E. Lynn Grayson:
The Department of Homeland Security (DHS) continues to implement recent changes to the Chemical Facility Anti-Terrorism Standards (CFATS) program. DHS updated its data platform and portal that will require regulated facilities to resubmit the Top-Screen information that originally was submitted in the 2008 time frame.
The DHS last year issued notice in the Federal Register (81 FR 47001, July 20, 2016) announcing revisions to its CFATS program, effective October 1, 2016. The main objective of the notice was to advise that the DHS was transitioning to revised versions of the applications for the Chemical Security Assessment Tool (CSAT), the CSAT Security Vulnerability Assessment (SVA) and the CSAT Site Security Plan (SSP). DHS implemented a three-step process to transition to these new versions: 1) temporarily suspended, effective July 20, 2106, the requirement for CFATS chemical facilities of interest to submit a Top-Screen and SVA; 2) replaced the current applications with CSAT 2.0 beginning in September 2016; and 3) reinstated the Top-Screen and SVA submission requirements effective October 1, 2016.
At this time, regulated facilities do not need to take any action unless notified by DHS. DHS began sending out notices to individual facilities every two weeks once the roll-out started in October 2016. Each batch of notifications will include sites from all risk-based tiers and also will include sites that have previously tiered out or are otherwise exempt from CFATS.
Other key highlights and insights include:
- While there is no requirement to do so, regulated facilities may choose to proactively resubmit a Top-Screen utilizing the new CFATS CSAT. Once notified, facilities will have 60 days to submit this updated and/or new Top-Screen.
- No changes have been made to the Appendix A identifying the chemicals of interest (COI) and the associated screening threshold quantity (STQ).
- CSAT 2.0 makes some changes in terms of how and when information is reported. For example, information previously collected through the SVA now may be collected through the Top-Screen. Other information collected in the past in the SVA now will be collected in the SSP.
- The new online SSP will come partially pre-populated from the new Top-Screen and the new SVA submissions as well as information from previous submissions.
In general, CFATS requires chemical facilities report COIs at or above the STQ through submission of a Top-Screen to DHS. Thereafter, DHS decides whether to impose security requirements upon the facility at issue. CFATS requirements apply to facility owners and operators that possess, consume, sell or create various chemicals that could be useful to conducting a terrorist event. There are over 300 COIs including commonly used chemicals such as ammonia, propane, hydrogen peroxide, flammables, bromine, aluminum, nitric oxide and vinyl chloride. Original compliance deadlines for submission of Top-Screen information was in 2008 time frame.
Facilities that previously submitted a Top-Screen survey, even those previously determined to be exempt from the CFATS requirements, will be required to resubmit the Top-Screen information using the new data CSAT 2.0 platform and portal. DHS will notify each facility about these new requirements and facilities will have 60 days to submit the new Top-Screen information. Facilities are welcome to be proactive and submit an updated Top-Screen prior to any DHS notification.
For further insight into these new requirements, please see the Federal Register notice at https://www.federalregister.gov/documents/2016/07/20/2016-16776/chemical-facility-anti-terrorism-standards or visit the CFATS program website at https://www.dhs.gov/chemical-facility-anti-terrorism-standards .
On Friday, January 13, 2017, notwithstanding its previous promises to take full responsibility for the Gold King Mine environmental spill, U.S. EPA, with guidance from the United States Department of Justice, concluded that it was not legally liable to pay compensation for administrative claims for the Gold King Mine disaster under the Federal Tort Claims Act. According to U.S. EPA, the Federal Tort Claims Act does not authorize damages for discretionary acts by federal agencies (i.e., actions which require the exercise of judgment on the part of the agency). Because U.S. EPA was conducting a site investigation of the gold mine pursuant to CERCLA, the agency’s actions are considered a discretionary function under the law (at least according to U.S. EPA).
Not surprisingly, this action by U.S. EPA was blasted by New Mexico lawmakers and the Navajo nation with lawmakers vowing to continue to press for legislation that would hold U.S. EPA fully accountable for the spill. Moreover, U.S. EPA’s conclusion that it has no responsibility for administrative claims is likely to be challenged as aggrieved parties have six months from the date of denial to challenge U.S. EPA’s decision.
Please click here to see U.S. EPA’s public statement concerning its liability conclusion with respect to the Gold King Mine spill.
The Occupational Safety and Health Administration (OSHA) published a final rule on Occupational Exposure to Beryllium in the Federal Register on January 9, 2017. The final rule reduces the permissible exposure limit (PEL) for beryllium to 0.2 μg/m3, averaged over 8-hours. The previous PEL for beryllium, established more than 40 years ago, was 2.0 μg/m3. The rule also establishes a new short term exposure limit for beryllium of 2.0 μg/m3, over a 15-minute sampling period.
As we discussed previously on this blog, OSHA proposed this rule on August 7, 2015 and took extensive public comment before issuing this final version. OSHA estimates that approximately 62,000 workers are exposed to beryllium in their workplaces and that the rule will save almost 100 lives from beryllium-related diseases and prevent 46 new cases of chronic beryllium disease each year, once the effects of the rule are fully realized.
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.
The California Department of Toxic Substances Control (DTSC) has issued draft guidance titled Alternatives Analysis Guide and is seeking comments through January 20, 2017. California’s Safer Consumer Products (SCP) Program challenges product designers and manufacturers to reduce toxic chemicals in their products. According to DTSC, the SCP regulations establish innovative approaches for responsible entities to identify, evaluate, and adopt better alternatives. The SCP approach requires an Alternatives Analysis (AA) that considers important impacts throughout the product’s life cycle and follows up with specific actions to make the product safer. DTSC prepared the Draft Alternatives Analysis Guide to help responsible entities conduct an AA to meet the regulatory requirements. Public comments are specifically requested to provide DTSC with insight on the clarity and usefulness of the Draft Alternatives Analysis Guide.
DTSC’s SCP Program regulations took effect October 1, 2013 and are being implemented based on the various regulatory requirements. The goals of the program are to: 1) reduce toxic chemicals in consumer products; 2) create new business opportunities in the emerging safer consumer products industry; and 3) help consumer and businesses identify what is in the products they buy for their families and customers.
The SCP program implements a four-step process to reduce toxic chemicals in the products that consumers buy and use. It identifies specific products that contain potentially harmful chemicals and asks manufacturers to answer two questions: 1) Is this chemical necessary? 2) Is there a safer alternative? The first step involved publication of a list of candidate chemicals that exhibit a hazard trait and/or an environmental toxicological endpoint. Regulators must then identify potential “priority products” containing chemicals that pose a significant risk to public health or the environment. Once a priority product is declared through a separate rulemaking, regulated entities must conduct an alternative analysis to determine if safer options are available. The final step in the lengthy process is for the department to determine if a regulatory response, such as banning the chemical-product combination, is required.
To learn more about the status of the SCP program and to obtain a copy of the new guidance, visit the DTSC SCP website at http://www.dtsc.ca.gov/SCP/index.cfm.
On December 7, 2016, EPA published a proposed rule to ban certain uses of trichloroethylene (TCE) under section 6(a) of the Toxic Substances Control Act (TSCA) due to risks to human health from those uses. The proposed rule would prohibit the manufacture (including import), processing, distribution in commerce and commercial use of TCE for aerosol degreasing and for spot cleaning in dry cleaning facilities.
As we previously reported on this blog, EPA recently included TCE on its list of the first 10 chemicals it will evaluate broadly for potential risks to human health and the environment pursuant to requirements of the 2016 TSCA Reform Act. In a 2014 risk assessment, EPA identified serious risks to workers and consumers associated with TCE uses, concluding that the chemical can cause a range of adverse health effects, including cancer, development and neurotoxicological effects, and toxicity to the liver.
On November 29, 2016, EPA announced the first 10 chemicals it will evaluate for potential risks to human health and the environment under the new Toxic Substances Control Act (TSCA) Reform Act, which was signed into law back in June. The TSCA Reform Act required EPA to publish this list of priority chemicals and begin the risk evaluation process on these chemicals by December 19, 2016. By the end of 2019, EPA will be required to have at least 20 chemical risk evaluations in process at any given time.
The first 10 chemicals to be evaluated by EPA are:
Cyclic Aliphatic Bromide Cluster
Pigment Violet 29
Tetrachloroethylene, also known as perchloroethylene
This list will be published in the Federal Register in the coming weeks, at which point it will trigger several statutory deadlines for these 10 chemicals:
- EPA must release a scoping document for each chemical within 6 months.
- EPA must complete risk evaluations for each chemical within three years.
- If the risk evaluation determines that a chemical presents an unreasonable risk to humans and the environment, EPA must mitigate that risk within two years.
More information on the TSCA Reform Act and EPA’s recent actions can be found on EPA’s website.
On October 28, 2016, EPA announced that EPA Administrator Gina McCarthy signed the final Hazardous Waste Generator Improvements Rule. The rule will be published in the Federal Register in the coming weeks, and will become effective six months after it is published.
According to EPA, the objectives of the Hazardous Waste Generator Improvements Rule are to:
- Reorganize existing regulations to make them more user-friendly and improve generator compliance.
- Provide greater flexibility in how hazardous waste is managed.
- Enhance the safety of facilities that create hazardous waste and the response capabilities of emergency responders by improving risk communication.
The new rule includes more than 60 changes to existing hazardous waste generator regulations and will impact between 424,099 – 676,890 industrial entities.
A few key changes in the Hazardous Waste Generator Improvements Rule include:
Mayor Rahm Emanuel and Cook County Board President Toni Preckwinkle recently launched an unprecedented effort to generate new industrial investment in Chicagoland neighborhoods. The Industrial Growth Zones program will accelerate neighborhood development in seven designated areas over the next three years by removing longstanding hurdles to development and providing a broad set of services to support property owners and industrial businesses. The purpose of the program to spur economic growth and generate real, sustainable jobs by promoting investment and industrial development in Chicago neighborhoods.
The importance of and how best to report on environmental, social and governance (ESG) issues remains uncertain, and what really matters appears to depend upon whether you are a corporate or an investor. The continuing difference of opinion on ESG matters is highlighted in a new survey from PricewaterhouseCoopers LLP titled Investors, Corporates and ESG: Bridging the Gap.
The survey finds that corporates view disclosing ESG data differently—corporates are focused on growth but investors are focused on risk. It is clear that sustainability reporting has become mainstream with 81% of S&P 500 companies publishing sustainability reports in 2015 compared to 20% in 2011.
Some key findings from the survey include:
- 65% of corporates say ESG issues are very important to the core business strategy
- 80% of corporates follow Global Reporting Initiative (GRI) standards for ESG disclosure reporting
- 31% of investors confirm that ESG data is very important to equity investment decisions
- 43% of investors would like to see ESG information reported using the Sustainability Accounting Standards Board (SASB) standards
A critical issue identified in the survey relates to trust and transparency of ESG disclosures. Corporates express 100% confidence in the quality of ESG information shared but only 29% of investors are confident in the quality of the ESG information received from companies.
The results of this new survey from PWC confirms that investors are increasingly interested in both financial and nonfinancial disclosures including information related to ESG matters. 36% of investors noted that having such information incorporated into SEC filings would ensure higher quality data. The SEC currently is considering corporate disclosures of ESG issues.