U.S. EPA Adopts Expanded Definition of PFAS on Its Drinking Water Contaminants List

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

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

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

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

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

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


         


New OEHHA Proposition 65 Acrylamide Warning Label Does Little to Resolve Pending First Amendment Challenges

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


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

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

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

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

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

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

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

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

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

Proposed Fugitive Emissions Amendments Bring Clarity to Major Source Permitting Requirements

Robertson  Daniel

By:  Daniel Robertson

 

 

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

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

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

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

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

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

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

 


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

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By Arie Feltman-Frank

 

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

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

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

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

            Cosmetic Products

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

            Textile Articles

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

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

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

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

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

 

A Risky Dance: When Emerging Contaminants Comingle With CERCLA Hazardous Substances

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By Arie Feltman-Frank EPA Image

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

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

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

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

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

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

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

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

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

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

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

Let us consider three different scenarios.

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

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

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

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

New OEHHA Proposition 65 Acrylamide Warning Label Does Little to Resolve Pending First Amendment Challenges

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EHS

U.S. EPA Offers Roadmap for Environmental Justice-Based Permit Denials

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

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

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

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

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

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


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

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

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

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

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

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

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

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By
Allison A. Torrence 


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

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

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

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

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

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

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

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By
Allison A. Torrence and Tatjana Vujic

 

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

Major Questions Doctrine Has its Day in the Sun

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

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

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

Clean Power Plan is Out But Regulating GHGs Still OK

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

Best System of Emission Reduction

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

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

What’s Next?

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

U.S. EPA Updates Regional Screening Levels to Add Five New PFAS Chemicals

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


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

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

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

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

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

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

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

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

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

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

Summary of the SEC’s Allegations in Complaint against Vale

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

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

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

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

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

Potential Implications and Lesson Learned

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

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

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

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

Conclusion

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

***

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

Vermont Joins Growing Number of States Allowing Medical Monitoring for Alleged Exposure to Chemicals

Linkedin_Steven_Siros_3130

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

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

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

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

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

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

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

Embracing the Winds of Change Through Investments in the United States’ Energy Future

Lawson


By 
Matthew G. Lawson

 

Earth Week
“When the wind of change blows, some people build walls, others build windmills.” While this ancient Chinese proverb most likely did not envision the construction of large-scale, offshore wind farms, its wisdom remains strikingly applicable to the United States’ energy and infrastructure policies in the 21st Century.  At a time of growing concern over fossil fuel availability, climate change and energy grid security, the Corporate Environmental Lawyer is taking a moment during Earth Day 2022 to look towards our nation’s investment into improved infrastructure and clean, self-sustaining energy sources.

Undoubtably one of the largest recent, public investments in the United States’ infrastructure and energy future occurred on November 15, 2021, when President Biden signed into law the bipartisan and highly anticipated $1.2 trillion Infrastructure Investment and Jobs Act.  According to the bill’s Summary, over the next five years, the legislation will provide significant infrastructure investments, including an additional $110 Billion in funding towards bridge and roadway repairs, along with approximately $30 Billion in public transportation.  In addition, the bill allocates approximately $65 Billion to the Country’s power infrastructure, with nearly $29 billion dedicated solely to bolstering and protecting the electric grid.  Finally, the bill includes $7.5 billion to deploy a national network of electric vehicle chargers across highway corridors throughout the United States.

Perhaps even more critical than the legislation’s investment is infrastructure spending, is its investment in future clean energy sources.  Funds allocated through 2025 for clean energy projects include $84,000,000 for enhanced geothermal systems, $100,000,000 for wind energy, and $80,000,000 for solar energy. Moreover, the Biden Administration is betting big on “Clean hydrogen”—an emerging form of clean energy that utilizes surplus from other renewable sources to create additional power by splitting water molecules—by earmarking approximately $8 million in funding for investment in the technology.

Looking beyond the United States’ public infrastructure investments, private investment into clean-energy assets also skyrocketed in 2021, reaching a record $105 billion.  This investment represents an 11% jump from 2020 and a 70% surge during the past five years, according to the Business Council for Sustainable Energy. Private backing into U.S. assets such as wind farms and solar plants represents about 14% of the $755 billion in global private investment made last year, including investment in the United States’ first commercial-scale offshore windfarm, the 30 MW Block Island Wind Farm, which is set to supply power to the energy grid by 2023.  The project is the first of what the Department of Energy (DOE) anticipates being a major rollout of privately-funded offshore wind, including an estimated addition of more than 30 gigawatts of offshore wind power by the year 2030.

At a time when Americans are increasingly feeling pessimistic about the future of our Country, it is important to embrace the opportunity for bilateral agreement presented through future investments in the nation’s infrastructure and clean energy.  Safe roads, reliable energy grids, clean air and new jobs are an area of common agreement between Americans at a time when such agreements appear to be increasingly rare.  As a nation, we would do well to embrace our changing world and new challenges by investing in ourselves and our future.

An Uncertain Future: Legal Challenges and the Forthcoming Climate Refugee Crisis

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By Connor S.W. Rubin 

Earth Week
The Russian invasion of Ukraine has led to over 11 million people fleeing their homes, and 5 million who have reportedly left Ukraine – a staggering number for a conflict that began in late February. However, while the war in Ukraine is one of the latest events causing a surge of refugees, those fleeing Russian aggression are by no means alone. As of the most recent data from the United Nations High Commissioner on Refugees (“UNHCR”), which counts until mid-2021, there were 20,835,367 people qualified as refugees under the UNHCR’s mandate – an uptick from the 20,661,855 recorded in 2020. Additionally, the UNHCR tracked 50,872,901 “internally displaced persons of concern” during the same period in 2021.

These numbers reflect the staggering impact of human conflict and economic instability; however, they do not show the full impact of human activity. The term “refugee” has a specific definition, laid out in the 1951 Convention Relating to the Status of Refugees and its 1967 Protocol (together “the Convention”). The definition includes any person who crosses a border “owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion.” That definition, written 24 years before Wallace Broecker first put the term “global warming” into the public domain, does not include those fleeing climate disasters in its definition. While recent legal guidance from the UNHCR notes that communities impacted by climate change “may be exposed to a risk of human rights violations that amount to persecution within the meaning of the 1951 Convention” due to limitations on “access to and control over land, natural resources, livelihoods, individual rights, freedoms and lives”, impacts of climate change alone do not qualify someone fleeing their homeland as a refugee. This is because fleeing formerly arable land that no longer sustains crops due to gradual desertification or fleeing cities that have become unlivable due to flooding, fires, or other extreme events do not inherently create “a well-founded fear of being persecuted.”

Is it time for an update to the definition? Some commenters believe so. According to the World Bank, by 2050 over 143,000,000 people could be intra- or internationally displaced from Sub-Saharan Africa, South Asia, and Latin America by climate change. This is roughly equivalent to the populations of California, Texas, Florida, New York, Pennsylvania, Illinois, and Tennessee combined. Without changes to how we view refugees, many of these people may be forced from the areas they’ve lived for generations without any legal status or protections. Advocates who support such changes argue that the current definition of “refugee” under international law fails to include many people forced to flee their home for reasons that fit the spirit of refugee law, but not the strict limitations imposed by the 1951 Convention. The (aptly named) advocacy group “Climate Refugees” gives examples of hypothetical cases, including “the Bangladeshi family displaced across borders by a disaster, the subsistence farmer in Chad with no option but to leave his country because he lacks water for farming, or a mother forced to flee her country because of a climate change-induced resource war.” Such displaced people fall into the goals as stated in the preamble of the 1951 Convention that all people should be able to “enjoy fundamental rights and freedoms without discrimination.” As further articulated by Andrew Schoenholtz in the Chicago Journal of International Law, while “some individuals displaced by natural disasters and climate change may be ‘persecuted’ in connection with a characteristic protected by the Refugee Convention, the vast majority of these newest forced migrants will need new norms developed to address their unique situation.”

Other (though less ubiquitous) compacts or treaties such as the 1969 Convention Governing the Specific Aspects of Refugee Problems in Africa, by the Organisation for African Unity – subsequently adopted by the African Union (“the OAU Convention”) and the 1984 Cartagena Declaration have expanded the definitions of “refugee”, but these may also be inadequate for what advocates seek. The 1969 OAU Convention was organized as many African states were either newly freed from colonialism, or else still fighting for freedom. As such, the definition of refugee was expanded to include “every person who, owing to external aggression, occupation, foreign domination or events seriously disturbing public order in either part or whole of his country of origin or nationality.” The “events seriously disturbing public order” could likely be found to include natural disasters but may still not be fully inclusive of climate change’s pernicious, but slower-acting changes. Further, the requirement of “serious” disturbance of the public order may require large-scale disorder, which may not be present in each circumstance. The Cartagena Convention is a non-binding regional instrument signed by 10 Latin American nations. The definition of refugee is like that found in the OAU Convention’s and includes “persons who have fled their country because their lives, security or freedom have been threatened by generalized violence, foreign aggression, internal conflicts, massive violation of human rights or other circumstances which have seriously disturbed public order.” These two instruments are uniquely broad in their definition, and even they may not include the full sum of those advocates seek to include in a new definition of “climate refugee.”

However, that may not be the case for long. On February 4, 2021, President Biden signed Executive Order 14013 entitled Rebuilding and Enhancing Programs to Resettle Refugees and Planning for the Impact of Climate Change on Migration. This order required the National Security Advisor and Secretaries of State, Defense, Homeland Security, the Director of USAID, and the Director of National Intelligence to “prepare and submit … a report on climate change and its impact on migration, including forced migration, internal displacement, and planned relocation.” That report, released in October of 2021, advocates for an interagency working group to address growing climate migration and its effects, and an expansion of the use of Temporary Protected Status to help resettle those impacted most severely by climate disasters. While stopping short of what some advocates hoped for in terms of seeking to declare climate refugees protected, the report at least shows a willingness to substantively engage in the effects of climate change and its role in global movement.

As the world grapples with how to prevent climate change, and increasingly turns to how to adapt to the effects of climate change, climate refugees will continue to be a growing problem around the world. Addressing their legal status is just one step in a complex and quickly evolving landscape.


“Silent Spring” and the Life Cycle of Emerging Contaminants

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

Earth Week 2022

On the 60th anniversary of the publication of Rachel Carlson’s groundbreaking book “Silent Spring”, the world continues to struggle to manage the human health and environmental risks associated with newly discovered emerging contaminants.  Silent Spring focused on the challenges associated with managing the risks associated with pesticides (and more specifically DDT), and even today, many of the largest personal injury verdicts are associated with alleged exposure to pesticides. 

Over the many years since Silent Spring, numerous contaminants have moved through the emerging contaminant life cycle, including asbestos, dioxins, PCBs, MTBE, BPA, 1,4-dioxane, and most recently, per- and polyfluoroalkyl substances (PFAS) (although PFAS seems stuck in the middle of the life cycle).      

The life cycle journey of emerging contaminants has been influenced significantly by our improved ability to understand the potential impacts of these emerging contaminants on human health and the environment.  As new contaminants are identified, resources are devoted to better understanding the potential environmental and health risks associated with these contaminants and regulations generally evolve to mitigate identified risks.  In response to increased regulatory pressure, industry’s use of chemicals evolves and the risks are mitigated.  Of course, industry’s use of these chemicals also evolves and is influenced by lawsuits when the regulations and/or the enforcement of the regulations lags.  

In addition to improved understanding of the risks posed by some of these emerging contaminants, the fact that we are able to measure smaller and smaller quantities of these contaminants also impacts the life-cycle journey of these emerging contaminants.  When I started practicing environmental law in the dark ages, contaminants in soil and groundwater were measured in parts per thousand.  As science evolved to detect lower and lower levels, regulatory levels moved from parts per million to parts per billion, and then parts per trillion, and PCBs are now regulated in parts per quadrillion.   As detection levels drop, the number of new emerging contaminants will increase and the life-cycle journey for each of these contaminants begins.  

A lot can be said for the progress that has been made since the summer of 1962.  Although some will argue it should still be faster, the time from discovery of the contaminant to identification of risks and regulation of these identified risks has greatly improved since the 1960s.  This is due in part to the fact society has a much lower tolerance for risks posed by emerging contaminants and is much quicker to demand a response from the regulators now than was the case in the 1960s when environmental laws in the United States were in their infancy. A reformed TSCA is better situated to address both environmental and health and safety impacts of chemicals (both newly manufactured chemicals and new chemical uses).   U.S. EPA, working in collaboration with manufacturers, implemented a global stewardship program to eliminate the manufacture and import of long-chain PFAS compounds.  In October 2021, U.S. EPA announced its PFAS Strategic Roadmap intended to implement a whole-of-agency approach to addressing PFAS.

As our understanding of risks evolves and our detection levels drop, it is inevitable that we will continue to identify new emerging contaminants that need to be regulated.  However, I think Rachel Carlson would be proud of the progress we have made and continue to make to ensure that the world is a safer place for everyone. 

Earth Week Series: The Future of Environmental Regulation

Torrence_jpgBy Allison A. Torrence

Earth Week
As we near Earth Day 2022, the United States may be headed toward a profound change in the way EPA and similar administrative agencies regulate the complex areas of environmental law. EPA began operating more than 50 years ago in 1970, and has been tasked with promulgating and enforcing some of the most complex regulations on the books. From the Clean Air Act to the Clean Water Act; to CERCLA and RCRA and TSCA; and everything in between.

EPA has penned voluminous regulations over the past 50 years to implement vital environmental policies handed down from Congress—to remarkable effect. While there is certainly progress left to be done, improvements in air and water quality in the United States, along with hazardous waste management, has been impressive. For example, according to EPA data, from 1970 to 2020, a period in which gross domestic product rose 272% and US population rose 61%, aggregate emissions of the six criteria pollutants decreased by 78%.

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(source: epa.gov)

For the past 50 years the environmental administrative law process has worked mostly the same way: First, Congress passes a law covering a certain environmental subject matter (e.g., water quality), which provides policy objectives and a framework of restrictions, prohibitions and affirmative obligations. Second, EPA, the administrative agency tasked with implementing the environmental law, promulgates detailed regulations defining terms used in the law and explaining in a more comprehensive fashion how to comply with the obligations outlined in the statute. Depending on the subject matter being addressed, Congress may leave more details up to EPA, as the subject matter expert, to fill in via regulation. In some instances, there is a third step, where additional authority is delegated to the states and tribes to implement environmental regulations at the state-level based on the framework established by Congress and EPA. Occasionally someone thinks EPA overstepped its authority under a given statute, or failed to act when it was supposed to, and litigation follows to correct the over or under action.

Currently, this system of administrative law is facing challenges from parties that believe administrative agencies like EPA have moved from implementing Congress’s policy to setting their own. The most significant such challenge has come in the consolidated Clean Air Act (“CAA”) cases pending before the U.S. Supreme Court, West Virginia v. EPA, Nos. 20-1530, 20-1531, 20-1778, 20-1780.[1] In West Virginia v. EPA, challengers object to the Obama-EPA’s Clean Power Plan (“CPP”), which used a provision in the New Source Performance Standards (“NSPS”) section of the CAA to set greenhouse gas emission standards for existing power plants. The biggest issue with the CPP, according to challengers, is that the new standards would require many operators to shut down older coal-fired units and shift generation to lower-emitting natural gas or renewable units. Challengers, which include several states, power companies and coal companies, argue the CPP implicates the “major questions doctrine” or “non-delegation doctrine”. These doctrines provide that large-scale initiatives that have broad impacts can't be based on vague, minor, or obscure provisions of law. Challengers argue that the NSPS provision used as the basis for the CPP is a minor provision of law that is being used by EPA to create a large-scale shift in energy policy. EPA argues that, although it is currently revising its greenhouse gas regulations, the actions taken in the CPP were authorized by Congress in the CAA, are consistent with with the text of the CAA as written, and do not raise the specter of the major questions or non-delegations doctrines.

While this case will certainly dictate how EPA is permitted to regulate greenhouse gases under the CAA, it will likely have broader impacts on administrative law. On the one hand, the Court may issue a narrow opinion that evaluates the CPP based on the regulations being inconsistent with the text or intent of the CAA. On the other hand, the Supreme Court may issue a broader opinion that invokes the major questions or non-delegation doctrines to hold that based on the significant-impacts of the regulation, it is an area that should be governed by Congress, not an administrative agency. If the Supreme Court takes the latter route, it could set more limits on Congress’s ability to delegate regulatory authority to administrative agencies like EPA.

Indeed, in the Supreme Court’s recent decision on the OSHA emergency temporary standard on employer vaccine or test mandate (“the OSHA ETS”), Ohio v. Dept. of Labor, et al., 595 U.S. ____ (2022), the Court struck down an administrative regulation in a preview of what might be coming in the EPA CAA case. As everyone knows by now, the Supreme Court struck down the OSHA ETS, holding it was an overstep of the agency’s authority to regulate safety issues in the workplace. The Court’s opinion focused on the impact of the OSHA ETS—that it will impact 84 million employees and it went beyond the workplace—instead of the statutory language. The Court stated, “[i]t is telling that OSHA, in its half century of existence, has never before adopted a broad public health regulation of this kind—addressing a threat that is untethered, in any causal sense, from the workplace.” Slip op. at 8.  

Justices Thomas, Alito and Gorsuch invoked the major questions doctrine in their concurring opinion, stating that Congress must speak clearly if it wishes to delegate to an administrative agency decisions of vast economic and political import. In the case of OSHA and COVID-19, the Justices maintained that Congress did not clearly assign to OSHA the power to deal with COVID-19 because it had not done so over the past two years of the pandemic. Notably, the fact that when Congress passed the Occupational Safety and Health Act, it authorized OSHA to issue emergency regulations upon determining that “employees are exposed to grave danger from exposure to substances or agents determined to be toxic or physically harmful” and “that such emergency standard[s] [are] necessary to protect employees from such danger[s]”, was not a sufficient basis for the Court or the three consenting Justices. In their view, in order to authorize OSHA to issue this vaccine or test mandate, Congress had to do more than delegate to OSHA general emergency powers 50 years ago, but instead would have had to delegate authority specific to the current pandemic.

Applying this logic to EPA and the currently-pending CAA case, Justices Thomas, Alito and Gorsuch may conclude that provisions of the CAA written 50 or 30 years ago, before climate change was fully on Congress’s radar, should not be used to as the basis for regulations that impact important climate and energy policy. Of course, many questions remain: Will a majority of the court adopt this view, and how far they will take it? If Congress can’t delegate climate change and energy policy, what else is off the table—water rights? Hazardous waste? Chemical management? If Congress can’t delegate to EPA and other administrative agencies at the same frequency as in the past, how will Congress manage passing laws dealing with complex and technical areas of law?

All of these questions and more may arise, depending on how the Supreme Court rules in West Virginia v. EPA. For now, we are waiting to see what will happen, in anticipation of some potentially significant changes on the horizon.

 

[1] Jenner & Block filed an Amicus Curiae brief in this case on behalf of Former Power Industry Executives in support of EPA.

Earth Week Series: Imagine a Day Without Environmental Lawyers

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By Gabrielle Sigel, Co-Chair, Environmental and Workplace Health and Safety Law Practice

Earth Week
On this 52nd anniversary of Earth Day, I am not writing yet another, typically not very funny, riff on one of Shakespeare’s most famous lines.[1] Instead, I am inspired by one of the most popular of our blogs, written in 2017 by our talented former partner, E. Lynn Grayson, “Imagine a Day Without Water.” To start our Earth Week series of daily blogs by our firm’s EHS department, I offer words of hope and gratitude for the vast amount of work that has been done to improve and protect the environment – work done by lawyers, scientists, policy makers, and members of the public, to name a few.

Imagine what lawyers and scientists faced in 1970, the year of the first Earth Day. There was oppressive soot and polluted air throughout urban and industrial areas in the United States. The Cuyahoga River was so blighted it had caught fire. Although there was a new federal Environmental Protection Agency and two new environmental statutes – the National Environmental Policy Act and the Clean Air Act, one of the most highly complex and technical statutes ever written – both needed an entire regulatory structure to be created in order to be operationalized and enforced. This foundational work had to be done when there was not even an accepted method for determining, much less regulating, environmental and public health risk. Then two years later, in 1972, a comprehensively overhauled Clean Water Act was enacted, followed within the next decade by TSCA, RCRA, and CERCLA, to address the consequences of past waste and chemical use, and to control their future more prudently. Other laws were also passed in that time period, including the Safe Drinking Water Act and the Endangered Species Act.

Although Earth Day was created in the U.S. – the idea of Senator Gaylord Nelson (WI-D) and supported by Representative Pete McCloskey (CA-R) (both lawyers) and grass roots organizers – environmental consciousness also was growing worldwide. The 1972 Stockholm Declaration, from the first UN Conference of the Human Environment, recognized the importance of environmental protection amid the challenge of economic disparities. That work, including of the United Nations Environment Programme, led to the 1992 “Earth Summit” issuing the Rio Declaration on Environment and Development, which adopted a focus on sustainable development and the precautionary approach to protecting the environment in the face of scientific uncertainty, and creating the United Nations Framework Convention on Climate Change, which itself led to the 1997 Kyoto Protocol and the 2015 Paris Agreement, as well as other global efforts focusing on climate change and resource conservation.

Thus, within a split-second on our earth’s timeline, humans were able to tangibly improve and focus attention on the environment, through laws, agreements, governmental and private commitments, and public support. I note these developments, which were stimulated by lawyers on all sides, not to naively suggest that the global climate change, water accessibility, toxic exposure, and other environmental challenges that we face today can easily be solved, nor do I suggest that only lawyers can provide the solution. Instead, let’s take hope from the fact that in fewer years than the average for human life expectancy, there have been significant environmental improvements in our air, land, and water, and our collective focus on preserving the planet has been ignited.

These past efforts have improved the environment – not perfectly, but demonstrably. The legal structure that helped make these improvements happen has worked – not perfectly, but demonstrably. Hopefully, we will continue to work on these issues, despite their seeming intractability, under a system of national laws and global agreements. The alternative is too painful to contemplate.

Closing on a personal note, our firm’s Environmental Law Practice lost one of the best environmental lawyers in the profession, when Stephen H. Armstrong passed away last week. Steve was one of the first in-house environmental counsel I had the opportunity to work with when I began my focus on environmental law in the 1980s. He demonstrated how to respect the science, embrace the legal challenges, fight hard for your client, and always act with integrity. Although I was a young woman in a relatively new field, he consistently valued my opinions, supported my professional development, and with his deep, melodious laugh and sparkle in his eye, made working together feel like we shared a mission. And a ”mission” it was for him; I have never met any lawyer who cared more or wrestled harder about their clients’ position, while always undergirded by a deep reverence for doing the right thing. Once he joined our firm more than a decade ago, he continued being a role model for all of us. Our firm’s Environmental Law Practice, and all those who worked with him, will miss having him as a devoted colleague, friend, and mentor. Our earth has been made better for his life on it.

 

[1]“The first thing we do, let’s kill all the lawyers.” William Shakespeare, Henry VI, Part 2, Act Iv, Scene 2 (circa 1591).

U.S. EPA’s Addition of 1-BP to CERCLA Hazardous Substance List Likely Precursor to Similar Actions on PFAS

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

Epa

On April 8, 2022, U.S. EPA added the industrial solvent 1-bromopropane (1-BP) to its list of CERCLA hazardous substances; this listing was triggered by U.S. EPA’s decision to add 1-BP to the Clean Air Act’s list of hazardous air pollutants in January 2022. The addition of 1-BP to the Clean Air Act’s list of hazardous air pollutants may have come as a bit of a surprise since U.S. EPA hasn’t added a new pollutant to the hazardous air pollutant list since the list was originally promulgated in 1990. However, once on the Clean Air Act list of hazardous air pollutants, the pollutant automatically falls with the CERCLA definition of “hazardous substances”. In addition to adding 1-BP to the list of hazardous substances in Table 302.4 in the Code of Federal Regulations, U.S. EPA set a CERCLA reportable quantity for 1-BP at one pound (the CERCLA statutory default).

The manner in which U.S. EPA treats 1-BP at CERCLA sites may be illustrative as to how U.S. EPA will treat PFOS and PFOA, two PFAS compounds that are currently under consideration for listing as CERCLA hazardous substances. Will U.S. EPA add 1-BP to the CERCLA required analyte list at all Superfund sites or will U.S. EPA adopt a more selective approach by relying on Toxics Release Inventory (TRI) data to identify nearby sites or manufacturing facilities that may have used the industrial solvent? The more likely scenario is that U.S. EPA will utilize some screening criteria to determine whether to sample for 1-BP but how wide of a  1-BP net that U.S. EPA decides to cast remains to be seen.

1-BP is also a volatile substance so U.S. EPA could also rely on the new listing to reopen and investigate sites for potential vapor intrusion concerns. However, it is unlikely that a site would be reopened solely on the basis of 1-BP vapor intrusion risks.

We will continue to track how U.S. EPA elects to address 1-BP at Superfund sites in an effort to gain insight as to how U.S. EPA may approach future hazardous substance designations at the Corporate Environmental Lawyer.

The SEC’s Proposed Climate-Related Disclosure Rules: Are They the “Core Bargain,” a “Watershed Moment,” or “Undermin[ing] the Existing Regulatory Framework”?

May Riely Sigel Greubel Kim

By Alexander J. MayCharles D. RielyGabrielle SigelMichael R. Greubel, and TaeHyung Kim

Earlier this week, the Securities and Exchange Commission (“SEC”) approved the issuance of proposed new disclosure rules [cited as “PR, p. __”], titled The Enhancement and Standardization of Climate-Related Disclosures for Investors, that would require both domestic and foreign public companies to provide certain climate-related information in their registration statements and annual reports and certain ongoing updates in their quarterly reports. The long-awaited proposed rules are the SEC’s most direct move yet to transform disclosure requirements related to Climate and ESG issues and passed only after what appears to have been significant internal debate. The SEC’s lone Republican Commissioner, Hester M. Peirce, dissented from the proposed rule, and the Chair and the other two Democratic commissioners released statements in support of the proposed rules. Their accompanying statements previewed the wide range of debate—in the courts, political sphere, and public discussion—destined to accompany these rules through the likely lengthy administrative process before (or if) they become final. 

This Client Alert previews the disclosure obligations for public companies if the proposed rules are ultimately adopted, summarizes the ongoing debate about the wisdom of the proposed changes and previews the potential legal challenges to the proposed rule. For additional details regarding the proposed amendments, the SEC has posted a press release summarizing the proposal and public comment period, a fact sheet, and the text of the proposed amendments.

I. Summary of Proposed Disclosure Requirements

The SEC emphasized that its goal in proposing the rules was to enhance and standardize climate-related disclosures for investors. To do so, the SEC would impose a number of new and enhanced disclosure requirements for public companies. These new proposed disclosure requirements include information about a company’s climate-related risks (and opportunities) that are reasonably likely to have a material impact on its business or consolidated financial statements, as well as disclosure of the company’s Scopes 1 and 2 (direct and indirect) greenhouse gas (“GHG”) emissions, regardless of their materiality, and Scope 3 GHG emissions if material or relied upon by the company. The SEC also proposed new rules that would require companies to disclose certain climate-related financial metrics in their audited financial statements and information about the company’s internal governance with respect to climate-related issues. 

A. Climate-Related Disclosures

The proposed new Item 1500 of Regulation S-K would require registrants to disclose certain climate-related information ranging from governance, business strategy impact and risk management of climate-related risks, to GHG emissions and climate-related goals and targets. “Climate-related risks” are defined as “the actual or potential negative impacts of climate-related conditions and events on a registrant’s consolidated financial statements, business operations, or value chains, as a whole.”  PR, p. 61. Those risks include both acute and chronic “physical risks,” such as extreme weather events and longer-term decreased availability of water supply, as well as “transition risks,” defined as “risks related to a potential transition to a lower carbon economy.” PR, pp. 61-62. The disclosure required by Item 1500 of Regulation S-K must be included in the domestic company’s registration statements and annual report on Form 10-K, and material updates are required to be provided in Form 10-Q. Broadly, the categories of required information include:

Governance and oversight: Board of directors’ oversight of climate-related risks and, if applicable, opportunities; management’s role in assessing and managing climate-related risks and if applicable, opportunities.[1]

Strategy, business model, and outlook: 

- Climate-related risks (and opportunities) reasonably likely to have a material impact, including on the company’s business or consolidated financial statements and business activities, which may manifest over the short, medium, and long term, with each registrant defining how many years are encompassed within each of those terms.

- Actual and potential impacts of any climate-related risks on the company’s strategy, business model, and outlook, including the time horizon of such impact.

- Whether and how any such impacts are considered as part of the company’s business strategy, financial planning, and capital allocation.

- Whether and how any identified climate-related risks have affected, or are reasonably likely to affect, the company’s consolidated financial statements.

- Information on the company’s internal carbon price, if available, but the use of a carbon price is not required.

- Resilience of the company’s business strategy considering potential future changes in climate-related risks. If the registrant utilizes a scenario analysis to assess the impact of climate-related risks on its business and financial statements, and to support the resilience of its strategy and business model, companies must disclose the scenarios considered, providing both qualitative and quantitative information.

Risk management: 

- The company’s processes for identifying, assessing, and managing climate-related risks (and opportunities).

- Whether and how any such processes are integrated into the company’s overall risk management system or processes.

- The company’s transition plan as part of its climate-related risk management strategy, if applicable.

Targets and goals: If the company has set any targets or goals related to GHG emissions reduction, or any other climate-related target or goal, it must provide information on the scope of activities and emissions included in the target, unit of measurement, time horizon, baseline targets, interim targets, and strategy for meeting the target or goal. 

- If carbon offsets or renewable energy credits (“RECs”) have been used as part of the company’s plan to achieve climate-related targets or goals, the company must disclose certain information including carbon reduction from such offsets or RECs and related costs.

Continue reading "The SEC’s Proposed Climate-Related Disclosure Rules: Are They the “Core Bargain,” a “Watershed Moment,” or “Undermin[ing] the Existing Regulatory Framework”?" »

U.S. EPA Releases “ECHO Notify” to Increase Public Awareness of Enforcement Related Information

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

Echo

On March 22, 2022, U.S. EPA released a new web tool designed to ensure that information regarding environmental violations and enforcement actions is more readily available to the public. The new tool, called ECHO Notify, allows users to sign up for weekly emails when new information is available with respect to violations of environmental statutes or enforcement actions in a specific geographic area or with respect to a particular facility. 

ECHO Notify provides information on both state and federal enforcement and compliance activities under the following programs: Clean Air Act (stationary sources), Clean Water Act (point sources), Resource Conservation and Recovery Act (hazardous waste handlers), and Safe Drinking Water Act (public water system). The tool provides U.S. EPA-specific enforcement-related information with respect to other environmental statutes. 

In a press release that accompanied the release of the new tool, U.S. EPA Administrator Michael Regan stated that “EPA is committed to empowering communities with the information they need to understand and make informed decisions about their health and environment.” Administrator Regan went on to state “EPA has developed ECHO Notify so that finding updates on environmental enforcement and compliance activities is as easy as checking your email.” 

This new tool is another example of U.S. EPA’s continued focus on environmental justice communities and its desire to ensure that information regarding environmental compliance and enforcement activities is readily available to those communities. We will continue to provide updates regarding U.S. EPA initiatives at the Corporate Environmental Lawyer.

Ninth Circuit Decision Foreshadows Major Blow to Prop 65 Acrylamide Claims

Lawson

By Matthew G. Lawson

California Prop 65 Labels - Full Generic Warning, 2 3/8 x 1 1/2" S-23443 -  Uline

On Thursday, March 17, 2022, the Ninth Circuit issued a critical decision in California Chamber of Commerce v. CERT, No. 21-15745 (9th Cir. 2022), reinstating a preliminary injunction against the filing or prosecuting of any new lawsuits to enforce Proposition 65’s warning requirements as applied to acrylamide in food and beverage products. The decision reinstalls a roadblock against future lawsuits and may offer a light at the end of the tunnel for the regulated community by signaling the existence of a valid defense against Proposition 65 claims where the health risks of a chemical remain subject to ongoing debate and disagreement from scientific experts. The decision is a blow against Proposition 65 plaintiffs who had recently succeeded in petitioning the court to grant an emergency stay of the district court’s preliminary injunction pending appeal.

Proposition 65 provides that “[n]o person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer . . . without first giving clear and reasonable warning to such individual…” A chemical is deemed to be “known to the state to cause cancer” if it meets one of three statutory criteria: (1) the state’s qualified experts believe “it has been clearly shown through scientifically valid testing according to generally accepted principals to cause cancer”; (2) “a body considered to be authoritative by such experts has formally identified it as causing cancer”; or (3) “an agency of the state or federal government has formally required it to be labeled or identified as causing cancer.” See Cal. Health & Safety Code § 25249.8(b). Where a consumer product contains such a chemical, the manufacturer or distributor of the product must provide a warning to consumers, unless they can affirmatively show that quantities of the chemical within the product are below certain “safe harbor” levels. Manufacturers that fail to provide a warning notice may be subject to significant civil penalties, often pursuant to claims brought by private plaintiff enforcers.

A particularly controversial chemical on Proposition 65’s list is acrylamide. Unlike many Proposition 65 chemicals, which are often additives or ingredients within a consumer product or food, acrylamide is a substance that forms through a natural chemical reaction between sugars and asparagine, an amino acid, in plant-based foods—including potato and certain grain-based foods. Acrylamide often forms during high-temperature cooking, such as frying, roasting and baking. Acrylamide was added to the Proposition 65 list in 1990 “because studies showed it produced cancer in laboratory rats and mice.” However, this conclusion is not shared by other experts—including the American Cancer Society and National Cancer Institute—who stated that “a large number of epidemiologic studies . . . have found no consistent evidence that dietary acrylamide exposure is associated with the risk of any type of cancer.” Between 2015 and October 2020, the State of California reported that it received almost 1,000 notices of alleged acrylamide violations sent by private enforcers to businesses selling food products in California.

In an effort to strike back against enforcement of Proposition 65’s warning requirements, CalChamber—a nonprofit business association with over 13,000 members, many of whom sell or produce food products that contain acrylamide—filed litigation in California federal district court seeking to vindicate its members’ First Amendment right to not be compelled to place false and misleading acrylamide warnings on their food products. CalChamber’s preliminary injunction motion sought to prohibit parties from “filing and/or prosecuting new lawsuits to enforce the Proposition 65 warning requirement for cancer as applied to acrylamide in food and beverage products.” The Council for Education and Research on Toxics (“CERT”) intervened as a defendant and argued that, as a private enforcer of Proposition 65, an injunction would impose an unconstitutional prior restraint on its First Amendment rights. In Cal. Chamber of Com. v. Becerra, 529 F. Supp. 3d 1099, 1123 (E.D. Cal. 2021), the district court granted CalChamber’s request for preliminary injunction finding that CalChamber was likely to succeed on the merits of its First Amendment Claim. Citing Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), the district court held that to pass constitutional  muster, the warnings compelled by Proposition 65 must “(1) require the disclosure of purely factual and uncontroversial information only, (2) [be] justified and not unduly burdensome, and (3) [be] reasonably related to a substantial government interest.” Because the Attorney General and CERT did not meet their burden to show the warning requirement was lawful under Zauderer, the district court concluded that CalChamber was likely to succeed on the merits of its First Amendment claim and granted the preliminary injunction against new Proposition 65 lawsuits regarding acrylamide. While CERT appealed the preliminary injunction order, the Attorney General did not, and a divided motions panel of the Ninth Circuit granted in part CERT’s motion for an emergency stay of the preliminary injunction pending appeal.

On Thursday, the Ninth Circuit issued its final decision on the merits of the preliminary injunction, and affirmed the district court’s original decision. Citing to the existence of “robust disagreement by reputable scientific sources,” the Ninth Circuit held that the district court did not abuse its discretion by concluding that the acrylamide warning was “controversial.” Similarly, the Ninth Circuit agreed with the district court’s conclusions that a Proposition 65 warning for acrylamide would mislead consumers because “[a] reasonable person might think that they would consume a product that California knows will increase their risk for cancer … Such a consumer would be misled by the warning because the State of California does not know if acrylamide causes cancer in humans.” Finally, the appellate court found that the record supported the conclusion that Proposition 65’s “enforcement regime creates a heavy litigation burden on manufacturers who use alternative warnings.” Specifically, the appellate court reasoned that upon receipt of a Proposition 65 notice of violation, “a business must communicate to consumers a disparaging health warning about food containing acrylamide that is unsupported by science, or face the significant risk of an enforcement action under Proposition 65.” For these reasons, the Ninth Circuit found that the preliminary injunction was warranted and removed the emergency stay against its enforcement.

While the immediate impact of the Ninth Circuit’s decision is limited to new lawsuits regarding Proposition 65 warning requirements for acrylamide, the Ninth Circuit’s holding could be viewed as its own warning sign to plaintiffs who seek to enforce Proposition 65 requirements where the science supporting the harmful effects of a chemical remains in dispute. It remains to be seen whether the Ninth Circuit’s holding will spur the CalChamber or other similarly situated groups to raise similar defenses in future cases.

SEC’s Upcoming Proposed Rule for Climate Disclosures: Will It Be as “Decision-Useful” as the Ingredients Label for “Fat-Free Milk”?

Sigel RielyBy Gabrielle Sigel, Partner and Co-Chair, Climate and Clean Technology Practice, and Charles D. Riely, Partner, Investigations, Compliance, and Defense Practice

The Securities and Exchange Commission (“SEC”) is meeting this Monday, March 21, to determine whether to propose amendments to existing law to “enhance and standardize registrants’ climate-related disclosures.” The SEC’s expected proposed rule is more than a decade in the making and would be the SEC’s most visible step yet to pursue disclosure improvements related to Climate and ESG issues. While speculation on what the SEC will announce runs rampant, the SEC itself has given a few clues as to what to expect. This article traces the history of the SEC’s focus on climate related disclosures and highlights the most important recent developments that could highlight a possible approach. As detailed below, the SEC’s goal is to making disclosures “consistent,” “comparable” and “decision-useful.” 

The 2010 Guidance

In early 2010, the SEC issued “Guidance Regarding Disclosure Related to Climate Change.” This interpretive release advised companies of the “existing disclosure requirements” with respect to climate change. The guidance noted that while there were increasing legislative and executive actions with respect to climate, a registrant would be required to file would be governed existing rules and law. With respect to climate-related impacts, companies would be required to disclose “such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.” The SEC recommended that companies consider the positive and negative impacts of US and international legislation, regulation, and accords and other legal, technological, political and scientific developments, as well as the physical impacts of climate change, such as severe weather events. The guidance concluded by referring further evaluation of this issue to the SEC’s Investor Advisory Committee.

Democratic Commissioners Call for Climate-Related Disclosure in 2019

The issue of mandated climate-related disclosures remained primarily on the sidelines until the two democratic commissioners, Robert J. Jackson Jr. and Allison Herren Lee, raised the issue in 2019. When the Commission as a whole proposed revisions to Regulation S-K (which requires disclosure of specific material, qualitative material) without addressing climate change, Jackson and Lee issued a statement making their views clear. The statement decried the revised amendment’s “absence of [guidance] on the topic of climate risk.” They concluded that “what is clear is that investors of all kinds view [climate] risk as an important factor in their decision-making process, and that “research shows that we are long past the point of being unable to meaningfully measure a company’s sustainability profile.” 

The SEC’s Early 2021 Emphasis on Climate and ESG Issues

After becoming Acting Chair in January 2021, Lee continued to proactively seek additional climate-related disclosures. In February 2021, she directed the SEC staff to review climate-related disclosures, and then in March 2021, she announced a Climate and ESG Task Force as part of the Division of Enforcement to focus on material misstatements or omissions relating to climate risk disclosures, and “beyond climate,” on the “the broader array of ESG disclosure issues.” On March 15, 2021, Acting SEC Chair Lee issued a formal request for public comment on a potential rule, with fifteen “Questions for Consideration,” and soliciting comments on how the SEC can “best regulate climate change disclosure.”  

Recent Developments Highlighting Possible Approach

The SEC’s request for comments generated over 6,000 comments (including many form letters that were re-submitted). In  initial response to the public input, SEC Chair Gary Gensler stressed, in July 2021 and again in September 2021 and December 2021, that climate risk disclosures must be “consistent,” “comparable,” and “decision-useful,” including providing sufficient detail that the investor understands the bases for a company’s disclosure and for investment funds describing themselves as “sustainable” or “green.”

In September 2021, SEC staff in its Division of Corporation Finance published a sample letter that companies may receive based on existing rules and the 2010 Climate Change guidance. This letter would ask the receiving company to explain the lack of climate-related disclosure issues, such as:

  1. An explanation as to why the company provided a “more expansive disclosure in its corporate responsibility report” than in its SEC filings.
  2. The material effects of transition risks related to climate change.
  3. The effects of significant developments in international accords and federal and state legislation and regulation on the business.
  4. To the extent material, the indirect consequences of climate-related regulation or business trends.
  5. The material effect of physical effects of climate change, including severe weather and fires and water availability.
  6. The material effect of purchase or sale of carbon credits or offsets.

Most recently and perhaps most tellingly, Chairman Gensler’s March 3, 2022 appearance on his “Office Hours” YouTube video, explained that he wants investors to understand and be able to compare ESG disclosures as easily as a consumer in a grocery store can understand and compare the ingredients in different brands of fat-free milk. While over-simplifying the issues, the Office Hours video demonstrates that the Chairman is committed to his basic goal of “consistent,” “comparable,” and “decision-useful” disclosures regarding climate impacts. The March 21, 2022 meeting will demonstrate how close he came to these high aspirations.