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October 2014

US EPA Finalizes Hydrochlorofluorocarbon Consumption and Production Allowances for 2015 to 2019

Bandza_Alexander_COLORBy Alexander J. Bandza


On Tuesday, October 28, 2014, the US EPA published its final rule that adjusts the allowance system for the consumption and production of hydrochlorofluorocarbons (HCFCs) for years 2015 to 2019.  The rule was promulgated pursuant to the Clean Air Act, certain sections of which ensure that the United States meets its obligations under the Montreal Protocol on Substances that Deplete the Ozone Layer (Protocol).  Under the Protocol and its amendments, all developed countries are subject to caps on their consumption and production of HCFCs.  These countries must achieve a certain percentage of progress towards the total phaseout of production and consumption of HCFCs by certain dates.

Under yesterday's rule, the US EPA issued allowances for four HCFCs and implemented a  de minimis exemption for use of existing inventory of HCFC-225ca/cb and HCFC-124.  Allowances for each of the four HCFCs are as follows:

  • HCFC-22.  For consumption, the US EPA allocated about 10,000 MT in 2015 with an annual decrease of about 2,000 MT per year until its phase-out in 2020. For production, EPA allocated about 28,000 MT each year.  Under existing regulations, HCFC-22 production and consumption are zero in 2020.
  • HCFC-123.  For consumption, EPA allocated about 2,000 MT per year through 2019.  EPA also allowed for continued use of HCFC-123 in nonresidential streaming fire suppression applications.
  • HCFC-124.  For consumption and production, EPA allocated 200 MT per year through 2019.
  • HCFC-142b.  For consumption an production, EPA allocated 35 MT in 2015 with an annual decrease of 5 MT per year.  Under existing regulations, HCFC-142b allowances for production and consumption are zero in 2020.

For HCFC-225ca/cb, the US EPA allocated zero percent of the baseline for production and consumption.  However, the US EPA finalized a de minimis exemption to allow any person with HCFC-225ca/cb in inventory prior to January 1, 2015, to use that material as a solvent.  The US EPA also finalized a de minimis exemption to allow any person with HCFC-124 in inventory prior to January 1, 2015, to use that material as a sterilant for biological indicators.

The rule becomes effective on January 1, 2015.  The full rule can be found here.

DOD Finalizes Amendments to DFARS Regarding the Storage, Treatment, and Disposal of Non-DOD Toxic and Hazardous Materials on DOD Sites

Bandza_Alexander_COLORBy Alexander J. Bandza


On September 30, 2014, the Department of Defense (DOD) published a final rule that amends Defense Federal Acquisition Regulation Supplement (DFARS) subpart 223.71 to better align the DFARS with the current provisions set forth in 10 U.S.C. 2692 concerning storage, treatment, and disposal of nondefense toxic and hazardous materials.  This rule affects contractors and subcontractors performing contracts that involve the storage, treatment, or disposal of toxic or hazardous materials not owned by DOD on a DOD installation.  The proposed rule was issued earlier this year and received no public comments. 

Some of the larger changes are as follows:

  • Under section 223.7102 (“Policy”), subsection (b) was added, which states that when storage of toxic or hazardous materials is authorized based on imminent danger, the storage provided is required to be temporary and must cease once the imminent danger no longer exists.
  • Several new exemptions under section 223.7104 (“Exceptions”) were added, including:
    • (a)(1), which added an exception to the prohibition for the storage, treatment, or disposal of materials used in connection with an  activity of DOD or in connection with a service performed on a DOD installation for the benefit of DOD;
    • (a)(9), which expanded the exception for the storage of toxic or hazardous materials not owned by DOD but is required or generated in connection with the authorized and compatible use of a facility of DOD, including the use of such a facility for testing material or training personnel; and
    • (a)(11), which added an exception for the storage of material not owned by DOD when the Secretary of the military department concerned determines the material is required or generated in connection with the use of a space launch facility on a DOD installation or other land controlled by the United States.
  • Section 223.7105 (“Reimbursement”) was added, which provides that the Secretary of Defense may assess a charge for any storage or disposal provided under the subpart.
  • Under section 223.7106 (“Contract clause”), subsection (a) was revised to broaden the clause application to include solicitations and contracts that may require access to a DOD installation.

The final rule can be found here.

DOD Report Confirms Climate Change A Threat To National Security


By E. Lynn Grayson


This week the Pentagon released Department of Defense 2014 Climate Change Adaptation Roadmap confirming that climate change poses an immediate threat to national security. The Department of Defense (DOD) views climate change as a "threat multiplier" because it has the potential to exacerbate many of today's existing challenges from infectious disease to terrorism. Rising global temperatures, changing precipitation patterns, climbing sea levels and more extreme weather events will intensify the challenges of global instability, hunger, poverty and conflict.

According to the report, the Strategic Sustainability Performance Plan articulates the DOD's sustainability vision to maintain the ability to operate into the future without decline in the mission or the supporting natural and man-made systems. DOD has established three broad adaptation goals:

1. Goal 1: Identify and assess the effects of climate change on DOD

2. Goal 2: Integrate climate change considerations across DOD and manage associated risks

3. Goal 3: Collaborate with internal and external stakeholders on climate change challenges

For DOD, these goals are supported by four lines of effort: plans and operations; training and testing; built and natural infrastructure; and, acquisition and supply chain.

What is important to note with DOD's issuance of this new report is the shifting view of climate change and how it might impact national security. Traditionally, DOD's focus was on ensuring that U.S. military installations were adapting to climate change impacts such as coastal naval bases and concerns over rising sea levels. This new report makes clear that DOD is considering climate change in a more strategic manner in terms of how such impacts may cause greater problems in regions where conflicts already exist including for example political unrest related to drought or food shortages.

Many commentators believe that the increased priority by DOD on climate change may signal the Administration's plans for more cooperation and support of international climate change negotiations on a proposed new United Nations climate change agreement to be addressed next year in Paris. Others have been critical of the Administration's interest in climate change issues when they believe there are many more important challenges that DOD should focus on like how to manage ISIS.

EPA Eliminates the Uncertainty Over Which ATSM Standard to Use for Prospective Property Purchasers

Bandza_Alexander_COLORBy Alexander J. Bandza

As previously reported, the US EPA initially issued its direct final rule confirming that the new ASTM E1527-13 standard, in addition to the older ASTM E1527-05 standard, would be acceptable for prospective purchasers of real property to conduct “All Appropriate Inquiries” (AAI) under CERCLA.   On June 17, 2014, EPA published a proposed rule that proposed to amend the AAI Rule to remove the  reference to the older ASTM E1527-05 standard.

According to the US EPA, the Agency took this route “to reduce any confusion associated with the regulatory reference  to a historical standard that is no longer recognized by its originating organization as meeting its standards for good customary business practice.”  Furthermore, the US EPA believed that eliminating the reference to the older ASTM E1527-05 standard would promote the use of a “consensus-based, good customary business standard.”

The clarifications and improvements of the new ASTM E1527-13 standard are as follows:

  • an updated definition of “Recognized Environmental Condition (REC)”;
  • an updated definition of “Historical Recognized Environmental Condition (HREC)”;
  • a new term, “Controlled Recognized Environmental Condition (CREC)”;
  • a clarification to the definition of “de minimis condition”;
  • a revised definition of “migrate/migration’’ to specifically include vapor migration;
  • a revised definition of “release’’ to clarify that the definition has the same meaning as the definition of release in CERCLA; and
  • additional guidance related to the regulatory agency file and records review requirement to provide a standardized framework for verifying agency information obtained from key databases.

The US EPA delayed the effective date of this rule for one year, until October 6, 2015, recognizing that some parties may still be using the older ASTM 1527-05 standard.  The rule will not impact “parties who acquired properties between November 1, 2005 and the effective date of this final rule and used the 2005 ASTM standard (ASTM E1527–05) to comply with the AAI Rule.”

To ensure a smooth transition, practitioners are encouraged to begin using ASTM E1527-13 as soon as practicable.  The final rule is available here.

Companies Leading the Charge on Carbon Pricing

Siros_Steven_COLORBy Steven M. Siros


While it is unlikely that the 113th Congress will take any action on climate change (especially not in advance of the November 2014 elections), many major public companies aren't waiting for Congressional action and are instead proactively beginning to factor internal carbon pricing into their business decisions. According to a new report issued by the CDP, 29 major companies in the United States already incorporate a carbon price into their business planning and risk management strategies. Of the 2,100 companies surveyed throughout the world, 638 companies have disclosed that regulations related to carbon pricing (cap-and-trade & carbon taxes) present opportunities for their businesses (although companies in heavy emitting countries and industries continue to report that they feel competitively disadvantaged by carbon pricing). Moreover, 500 of these surveyed companies reported that they are already regulated and price carbon through global carbon markets. Nearly a fifth of these are U.S.-based companies.

Another interesting observation that can be gleaned from the CDP report is the significant variability in the price that companies are setting per ton of carbon. For example, in North America, the price per ton ranges from $8-$80; in Europe, the price per ton ranges between $15-$324. The variability can be explained, at least in part, on the regulatory regime where those companies are operating. For example, companies operating in California are estimating carbon prices on the basis of California's cap and trade program which prices carbon at between $14-$15 per metric ton. Companies that primarily operate in Europe rely more upon Europe's Emissions Trading Scheme, although the current price per metric ton under the EU ETS (£6 per metric ton) is significantly lower than the above-referenced range so these companies are obviously projecting a higher price per ton in the future.

During last week's United Nations Climate Summit, many governments and companies also expressed support for establishing a price for carbon emissions. The World Bank identified many countries, states, provinces and cities, as well as over 1,000 businesses and investors that were in favor of carbon pricing. The CDP report noted that "[c]ompanies in the US and worldwide are already advanced in their use of carbon pricing. They are ahead of their governments in planning for climate change risks, costs and opportunities. These companies want, and are calling for, clear pricing and regulatory certainty to help them plan their climate-related investments, and they want to see more certain, internationally linked carbon markets."

Regardless of what side of the climate change debate one embraces, what is clear is that the business community has already made a decision to incorporate climate change related risks into its business strategy decision making. For those of us that represent the business community, it probably would be a good idea to get on the train or be left at the station.

Hiring Temps in California Just Got Riskier for Employers

By Anne S. Kenney

California employers can now be liable for state labor and wage violations, including violations of wage and hour, workers' compensation and safety laws. Signed by Governor Jerry Brown on September 28, 2014, AB 1897 adds Section 2810.3 to the California Labor Code. The bill requires a client employer to share all civil legal responsibility and liability with the labor contractor and allows the temporary employees to sue the employer directly (with 30 days notice). Notably, the bill prohibits a client employer from shifting worker safety requirements to the labor contractor. This appears to pose a problem for employers who have arrangements with temporary services agencies in which the agency provides basic safety and health training and/or PPE while the employer provides site-specific training and/or PPE.

The bill exempts from the definition of labor contractor certain nonprofit, community-based organizations; labor organizations, apprenticeship or hiring hall programs; motion picture payroll service companies, and certain third-parties to leasing arrangements.

As a result of this change, employers who utilize the services of temporary workers should, at a minimum, reevaluate their labor contractors' compliance with wage and hour, workers' compensation and health and safety laws and review the indemnity provisions of their contracts to ensure that they are covered in the event the labor contractor fails to comply.