By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice and Arie Feltman-Frank

Hiding in plain sight in the Fiscal Responsibility Act of 2023 (FRA)--which is intended to extend the nation’s debt limit into 2025 in order to avoid a federal default--are provisions that seek to amend the National Environmental Policy Act (NEPA) for the first time in over 40 years.  Although the FRA’s provisions greenlighting the federal permitting process for the Mountain Valley Pipeline have garnered the most attention, the FRA contains a number of other provisions meant to streamline environmental reviews of major federal actions. While many laud streamlining the NEPA process as a necessary step to bolster efficiency, several environmental groups and democratic legislators caution that these amendments significantly roll back NEPA’s regulatory reach. 

The FRA incorporates many of the provisions that were previously in Representative Garret Graves’ “Building United States Infrastructure through Limited Delays and Efficient Reviews (BUILDER) Act of 2023” that was included in its entirety in the House Republicans’ original debt ceiling bill passed in April 2023. 

Specifically, the FRA proposes the following amendments to NEPA:

• Substantial Federal Control and Responsibility. Defines “Major Federal Action” as “an action that the agency carrying out said action determines is subject to substantial Federal control and responsibility.” By adding “substantial,” the FRA emphasizes that for federal actions to trigger NEPA review, the actions don’t just need to be subject to Federal control and responsibility; the control and responsibility must be “substantial.”

• No Extraterritorial Activities or Decisions. Excludes from the definition of “Major Federal Action” extraterritorial activities or decisions, which means agency activities or decisions with effects located entirely outside of the jurisdiction of the United States. This is a more restrictive standard than has been adopted by some courts that have been called upon to evaluate the scope of NEPA. 

• Categorical Exclusions. Expands the use of categorical exclusions by allowing agencies to rely on other agencies’ categorical exclusions to avoid the preparation of a NEPA environmental assessment (EA) or environmental impact statement (EIS). 

• Reasonably Foreseeable Effects. Narrows agency considerations by only requiring review of “reasonably foreseeable” environmental effects. 

• Streamlining.  Seeks to streamline the NEPA process by requiring the designation of a “lead Federal agency” for projects that involve two or more participating Federal agencies. Imposes page limits of 75 pages for EAs and 150 pages for the majority of EISs. Imposes specific deadlines for the completion of environmental reviews, with a two-year limit on the completion of an EIS and a one-year limit on the completion of an EA, as well as a mechanism to seek judicial review for alleged failures to comply with these deadlines.

• Division of Responsibilities. Requires lead agencies to prescribe procedures to allow project sponsors to prepare EAs or EISs under the supervision of the agency. The lead agency is still required to independently evaluate the environmental document and must take responsibility for its contents.   

• Narrows Alternatives, Negative Impacts of No Action. Narrows agency considerations of the alternatives to a “reasonable range . . . that are technically and economically feasible and meet the purpose and need of the proposal,” and requires “an analysis of any negative environmental impacts of not implementing the proposed agency action in the case of a no action alternative.”

Although these amendments will likely result in fewer projects requiring an EIS and should streamline the NEPA review process, it is important to consider what the FRA does not change. For example, the BUILDER Act sought to significantly limit an agency’s consideration of cumulative impacts and those modifications did not carry through into the FRA. The FRA also does not explicitly limit or otherwise address an agency’s obligation to consider climate change impacts of federal projects. 

If these NEPA revisions survive in the final FRA, they are likely to require the White House’s Council on Environmental Quality (CEQ) to recalibrate its ongoing efforts to revise NEPA’s implementing regulations.  CEQ had sent a draft of its Phase 2 NEPA revisions to the Office of Management and Budget (OMB) for review and the draft Phase 2 revisions had been expected to be published for comment in June 2023. The statutory changes to NEPA will need to be incorporated into the Phase 2 rules, which will certainly derail CEQ’s proposed June release date. 

We will continue to provide updates on the final language in the FRA and CEQ’s ongoing NEPA rulemaking activities at the Corporate Environmental Lawyer. 

       By    Steven M. Siros, Tatjana Vujic, Daniel L. Robertson and Arie Feltman-Frank

Earth Week 2023 brought with it two significant environmental justice developments. The week began with New Jersey Governor Phil Murphy announcing the adoption of regulations aimed at reducing pollution in historically overburdened communities and those disproportionately impacted by health and environmental stressors. President Biden then capped the week off by issuing an Executive Order on Revitalizing Our Nation’s Commitment to Environmental Justice for All which further embeds environmental justice initiatives throughout the federal government (read our analysis of that order here). These actions display the heightened emphasis on environmental justice that has led to these and other significant developments at the federal and state levels.

The United States Environmental Protection Agency (USEPA) defines environmental justice as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” With increased funding provided by the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and the American Rescue Plan Act, federal agencies are investing at unprecedented levels to advance environmental justice.

The Biden administration also developed the Justice40 Initiative, with a goal of ensuring that 40% of the overall benefits of certain federal investments flow to “disadvantaged communities that are marginalized, underserved, and overburdened by pollution.” The Climate and Economic Justice Screening Tool geospatially identifies such disadvantaged communities, which include federally recognized Tribes and Alaska Native villages.

As companies face increased scrutiny all along the supply chain, including from regulators, customers, investors, and the public, one thing is clear: failure to consider environmental justice implications of corporate activities can significantly hinder the advancement of corporate objectives, including the achievement of climate targets, the effects of which are quite significant. By way of example, in September 2022, a company’s air permits to build a $9.4 billion plastics manufacturing complex were vacated in part because the state Department of Environmental Quality’s environmental justice analysis was found to be arbitrary and capricious, and therefore failed to uphold the “public trust doctrine” of Louisiana’s constitution.

The increased scrutiny and risks associated with failing to consider environmental justice issues is causing some companies to reevaluate corporate policies and develop business practices that embrace environmental justice and community stakeholder initiatives. In this client alert, our team explains how embracing environmental justice and community stakeholder concerns can advance corporate objectives.

A Recent History of Environmental Justice Developments

While the concept of environmental justice has long had its roots in American civil rights history, President Biden brought the topic to the forefront of federal governance as part of the administration’s “whole-of-government” approach to addressing health and environmental impacts on disproportionately affected communities. Through various executive orders, the Biden administration has put its policy of prioritizing environmental justice initiatives and directing federal agencies to make achieving environmental justice a part of their missions into practice. Federal developments thus far have taken the form of plans, new offices and positions, grant programs, mapping tools, reviews of existing legal authority, permitting guidance, and enforcement policies.

Federal, state, and local developments that are particularly relevant to the regulated community are reviewed below.

USEPA’s Legal Authorities to Advance Environmental Justice

USEPA published a May 2022 report, followed by a January 2023 addendum, that reviewed the agency’s legal authority to advance environmental justice and take steps to mitigate the cumulative impacts of federal actions taken under its various programs. The takeaway is that USEPA has existing legal authority to advance and address these topics in decision-making. This authority encompasses the full breadth of the agency’s activities, including its oversight of state programs.

USEPA also has the authority to advance environmental justice through civil rights laws. Title VI of the Civil Rights Act of 1964, for instance, prohibits recipients of federal financial assistance from intentionally discriminating on the basis of race, color, or national origin (including limited English proficiency) in their programs or activities.

USEPA’s implementing regulations also prohibit recipients of federal financial assistance from taking actions that have a discriminatory effect. The regulations offer a mechanism for a person who believes they have been discriminated against to file a complaint with any USEPA office, as well as authorize USEPA’s Office of Civil Rights to periodically conduct compliance reviews. If a recipient is found to be noncompliant, the recipient may elect to take corrective actions to mitigate the risk of losing financial assistance.

Permitting Guidance

USEPA recently issued interim guidance for addressing environmental justice and civil rights during permitting, as well as specific guidance for addressing environmental justice concerns specific to air permitting. The guidance emphasizes that compliance with federal environmental laws does not necessarily provide a shield against allegations of non-compliance with federal civil rights laws.   

For example, in Chicago, the city allegedly agreed to permit a scrap metal recycling facility’s relocation from a predominantly White neighborhood into a predominantly Black and Hispanic neighborhood. After a two year investigation, the US Department of Housing and Urban Development found the city in violation of the Civil Rights Act and the Housing and Community Development Act, stating that the city’s involvement in the relocation of the facility, approval of the new site, and methods used to achieve these objectives were shaped by the race and national origin of the residents of each neighborhood.

Therefore, even beyond what is legally required by the applicable permitting statute and regulations, companies should consider taking steps throughout the permitting process to ensure that environmental justice and civil rights concerns are being sufficiently analyzed and adequately addressed, as well as ensuring sufficient community engagement.   

Enforcement Policies

As outlined in USEPA’s Fiscal Year 2022-2026 Strategic Plan, new environmental justice-focused enforcement policies emphasize increased inspections in communities with environmental justice concerns, prioritizing enforcement in overburdened communities, and identifying remedies for noncompliance that offer tangible benefits to those communities. USEPA also emphasized acting through emergency orders to secure early relief where possible. Enforcement remedies include increased or additional fence-line monitoring, public availability of monitoring data, and encouraging supplemental environmental projects that are tied to addressing adverse environmental impacts on local communities. 

State and Local Developments

In addition to various states that have enacted or are in the process of enacting environmental justice-related legislation, New York recently joined Montana and Pennsylvania by explicitly including a “right to clean air and water, and a healthy environment” in the New York Bill of Rights. Several other states have proposed ballot initiatives to incorporate environmental rights into their constitutions.

At the local level, the focus on environmental justice has propelled some municipalities to address the topic in similar as well as different ways. As a 2019 report prepared by the Tishman Environment and Design Center indicates, municipalities have addressed environmental injustice through various land use measures, including bans on polluting facilities; policies that incorporate environmental justice goals and considerations into municipal activities; environmental review processes; and proactive planning, zoning, and public health codes.

For example, in 2020, Washington, DC amended its comprehensive plan to incorporate environmental justice objectives. Among other things, the plan states that environmental justice principles should inform public policy decisions on the siting of municipal and industrial facilities.

Embracing Environmental Justice as Part of a Company’s Corporate Culture

Considering the heightened focus on environmental justice outcomes, companies would be well served to ensure that their environmental, health, and safety programs adequately consider potential environmental justice issues and concerns and are designed in ways that strengthen community and stakeholder relationships, such as by incorporating environmental justice commitments into a company’s environmental, social, and governance (ESG) goals. Below, we outline some recommendations and best practices. 

Keep Abreast of Environmental Justice Developments that May Affect Your Operations

Track environmental justice issues. Not all environmental justice issues will apply to a specific business. However, being aware of national and local developments will allow a company to minimize regulatory, permitting, and community concerns and challenges that may otherwise catch it off-guard, including potential risks of objections to permits and litigation.

Understand your geographical area. By taking steps to better understand the communities in the areas where a company operates or may operate, a company can evaluate risks and make better informed business decisions. For example, companies can take advantage of resources such as USEPA’s EJScreen Mapping Tool, which provides demographic, socioeconomic, and environmental information for chosen geographic areas. Other mapping tools, such as the Council on Environmental Quality’s Climate and Economic Justice Screening Tool and state-specific tools are also available.

Companies with current or future operations in areas with higher percentiles of socioeconomic or environmental quality factors should prepare for the potential legal risks this may pose, including increased government and public scrutiny, and consider how to mitigate potential issues ahead of time. The tools can also be used to aid a company in analyzing health, social, and economic effects of a specific project.

Build a Proactive Environmental Plan

Create an environmental policy or revise an existing one. The rise of corporate accountability has resulted in companies revising their business plans to incorporate ESG criteria into their decision-making. A way to ensure that environmental justice is included in a company’s ESG plan is to make environmental justice part of a company’s social objectives.

In particular, as we discussed in a prior client alert, a company may wish to organize its social criteria objectives so that environmental justice commitments are treated as under the company’s direct control, much like scope 1 greenhouse gas emissions are under the direct control of the company. Companies should also consider developing a public involvement plan as part of their social criteria. Environmental justice can be measured by the amount and quality of direct community engagement and community service. In this way, companies that develop robust engagement plans that further environmental justice objectives of the local community can fold those plans into the social criteria aspects of a greater ESG policy.

Perhaps the most important takeaway is that companies should be cognizant of the interconnectedness of their environmental goals to environmental justice and social/stakeholder concerns. A good environmental justice policy means a good social policy which means a more robust and effective environmental policy and greater chance of meeting environmental objectives.

Develop a robust compliance plan. Enforcement and litigation risk will be higher for companies with operations in communities with environmental justice concerns. Therefore, it is especially important that these companies have robust compliance programs in place. As we previously discussed here, companies can benefit from consistently monitoring their operations and considering the availability of advanced monitoring technologies and methodologies (such as monitoring by aircraft and satellite) that may catch violations and prevent ongoing ones.

Companies should also strictly comply with all applicable monitoring, recordkeeping, and reporting requirements, and consider voluntary disclosure policies. USEPA’s Audit Policy provides several major incentives, including reduction of 100% of gravity-based penalties, for regulated entities to voluntarily discover and fix federal environmental violations. Moreover, the US Department of Justice, Environmental Crimes Section’s Voluntary Self-Disclosure Policy offers beneficial treatment to companies that disclose potentially criminal environmental violations.

Review suppliers and other entities with which the company contracts. In a prior client alert, and as mentioned above, we discussed how a company can define the social aspect of its ESG plan to assist in developing a baseline standard against which a company can measure itself. This includes a company taking steps to establish a standard by which it expects those with which it contracts to behave, reviewing its supply chains to identify any potential areas of inequity against such a standard, and subsequently holding suppliers and other entities with which it transacts accountable, while being particularly mindful of actions that could be tied back to the company.

Use Existing Tools and Resources to Assist in Siting and Permitting Decisions

Be aware of evolving siting and permitting requirements. As discussed above, companies making siting or permitting decisions should consider that projects in or near communities disproportionately burdened by pollution will receive scrutinized attention. Therefore, companies should ensure that environmental justice and civil rights concerns are being proactively evaluated and sufficiently addressed under environmental, civil rights, and environmental justice laws and seek out any available guidance to rectify such concerns. Failure to do so may result in unforeseen project hurdles, wasted resources, and an eventual siting or permit denial. We previously discussed how USEPA incorporates these concerns into the permitting process. Considering recent USEPA guidance on this topic, companies should develop their own best practices for permitting oversight, which should include the following: 

• Use available screening tools to assess the existence of environmental justice or civil rights concerns early in the permitting process.
• Perform an appropriately scoped environmental justice analysis or disparate impact analysis (which should consider cumulative impacts) where concerns exist.
• Know what questions to ask, such as who is being affected by the action? How, and by how much? Compared to whom? Can we mitigate the effects and, if so, how?
• Develop a public involvement plan and engage communities and tribes to ensure that their views are accounted for (discussed further below).

Failure to take these measures as part of the project scoping process may result in significant hurdles to project development. This includes the possibility of pressure being exerted on state and local regulators to change their course of action with respect to a proposed project. In the Chicago example discussed earlier, the city denied a scrap metal recycling facility’s permit to begin operating an $80 million facility after USEPA issued a letter raising health impact concerns in the surrounding community. The city’s decision, which is currently the subject of a lengthy and ongoing appeal, followed an alleged agreement between the facility operator and city that would have allowed the operator to move to the site.

This also includes active opposition to a project, which may turn into litigation. For example, developer Air Products recently sued Livingston Parish after the parish attempted to restrict the company’s proposed hydrogen/carbon capture and storage project through a moratorium. Ultimately, the parties came to a resolution, whereby the parish agreed that the moratorium was invalid and unenforceable, and the parties agreed that each would bear its own fees and costs related to the litigation.

Review existing permit conditions. Companies with existing facilities that will be applying for permit renewals should be prepared for the possibility of new and more stringent permit obligations being imposed by regulators at the time of their permit renewal. The recently enacted New Jersey environmental justice regulations, for example, set forth a step-by-step process for reviewing future permit applications, including specifically stating that existing permit holders may be subject to additional permit conditions to reduce health and environmental impacts.

More stringent requirements of which companies should be mindful may include, among other obligations: additional monitoring, recordkeeping, and reporting requirements; additional pollution controls and/or more stringent limits; and the inclusion of enforceable work practices, operating plans, and/or best practices for minimizing emissions and/or discharges.

Companies should address environmental justice-related concerns sooner than later, by taking advantage of the existing tools discussed above, to avoid unforeseen complications arising during the permit renewal process. For example, if particulate emissions are a specific concern in your area (e.g., EJScreen shows a particularly high EJ Index percentile for particulate matter 2.5), taking proactive measures to mitigate any increased particulate emissions may streamline the permit renewal process.

Engage the Local Community

Be proactive in engaging the community. Governmental environmental justice policies typically entail expectations of robust engagement with the local community and opportunities for community actors to provide input into company decisions that will affect their communities. Companies may want to similarly engage with the local community prior to taking steps to expand or modify existing operations. This is particularly true for the permitting process; however, companies are well served by engaging with communities and local tribes as a vehicle for making more informed business decisions generally.

This can include learning from a community about a company’s impact, creating strategic partnerships within the community, and collaborating with the community to advance shared goals and establish outcomes that will benefit the community overall. For example, a company can help communities finance environmental justice initiatives or help eligible applicants apply for available grants and help formulate how these community-driven initiatives will take shape.

Being proactive will better prepare a company for what issues, if any, a governmental agency may uncover during its own public engagement process. Ultimately, by strengthening its bond with the local community, companies are better situated to identify community concerns early and take appropriate action that will satisfy both company and community needs while building trust into the future.

Review existing community relationships. The community engagement discussed above should include a review of existing community relationships, specifically where potential environmental justice concerns may not have previously been addressed. To stay on track with such engagement and to ensure the maintenance of strong relationships, making periodic reviews and assessments of existing community relationships could be incorporated into a company’s ESG criteria.

Engage internal stakeholders. Community engagement goes beyond external forces at a specific facility. A company should also cultivate internal discussions with workers, unions, and other stakeholders affected by the company’s actions. Initiatives to consider include informational meetings, listening sessions, and trainings. Environmental health and safety managers should also engage upper management to ensure leadership buy-in for environmental justice initiatives. This guarantees that all levels of the company are aware of and striving towards the same goals.

Conclusion

By embracing environmental justice, companies minimize environmental oversight risks, are likely to achieve environmental goals more quickly, build community relationships, help reduce inequity and ultimately, create a solid foundation for long-term strength, all of which are accretive to an improved bottom line. As federal, state, and local governments continue embedding environmental justice and related initiatives in their regulations, policies, and programs, companies would be well served to do the same. 

Jenner & Block’s Environmental and Workplace Health and Safety and Transitions in Energy and Climate Solutions practice teams are made up of former federal regulatory commissioners, state regulators, regulatory compliance attorneys, and internal counsel and project developers, and are able to help companies achieve environmental justice objectives. Please reach out to a member of one or both of our teams with any questions.

  By Steven M. Siros and Arie Feltman-Frank

PFAS are being detected in drinking water systems across the United States. Moreover, evolving regulatory developments already require or soon will 
require that public water systems sample for and remediate these chemicals (see, e.g., here). When public water systems find PFAS, which is a
significant possibility, public water systems are likely to look to upstream industrial facilities to recoup their remediation costs. And, once PFOA and PFOS becomes CERCLA hazardous substances (likely Summer 2023), public water systems will have a federal cause of action to do so: CERCLA cost recovery.

Among other potential defendants, public water systems may target upstream industrial facilities that have PFOA or PFOS in their wastewater discharges. Indeed, recent U.S. EPA guidance explains that the Clean Water Act’s National Pollutant Discharge Elimination System (NPDES) program, which regulates wastewater discharges, “interfaces with many pathways by which [PFAS] travel and are released into the environment, and ultimately impact water quality and the health of people and ecosystems.”

Industry categories known or suspected to discharge PFAS include: organic chemicals, plastics & synthetic fibers (OCPSF); metal finishing; electroplating; electric and electronic components; landfills; pulp, paper & paperboard; leather tanning & finishing; plastics molding & forming; textile mills; paint formulating; and airports. Of course, this is not an exhaustive list.

While U.S. EPA’s Office of Water is working to revise Effluent Limitation Guidelines and develop water quality criteria to support technology-based and water quality-based effluent limits for PFAS in NPDES permits, there are currently no enforceable limits at the federal level. As an interim measure, recent U.S. EPA guidance describes steps that NPDES permit writers can implement under existing authorities to reduce PFAS discharges, including incorporating monitoring requirements, best management practices, and site-specific limits developed on a best professional judgment basis into permits.

An important question will be whether upstream industrial facilities that have PFAS in their wastewater discharges will be able to rely on the federally permitted release exemption as an affirmative defense to CERCLA liability. This exemption provides that parties are not liable under CERCLA for federally permitted releases. See 42 U.S.C. § 9607(j). The exemption also extends to state permitted releases under federally approved programs. Blankenship v. Consolidation Coal Co., 850 F.3d 630, 638 (4th Cir. 2017).

In the NPDES context, the exemption most notably covers “discharges in compliance with a permit.” See 42 U.S.C. § 9601(10)(A). The limited case law on this issue sheds light on two points. First, the exemption can only cover what a NPDES permit can regulate – the discharge of pollutants into navigable waters from a point source. Second, the exemption does not apply with respect to releases that (1) were not expressly permitted, (2) exceeded the limitations of the permit, or (3) occurred at a time when there was no permit. 

In 1995, U.S. EPA offered some guidance as to its interpretation of the scope of this exemption. Specifically, the Agency stated that the exemption would apply if: (1) the source, nature, and amount of the potential release had been identified and made part of the public record during the permitting process, and (2) the permit contains a condition requiring that the treatment system be capable of eliminating or abating the potential release.

Going back further in time, in a 1988 proposed rule that never took effect, U.S. EPA explained that the exemption covers discharges that are in compliance with a permit limit that specifically addresses the discharge in question. To qualify, the permit must either address the discharge directly through specific effluent limitations or through the use of indicator pollutants. In the case of the latter, the administrative record prepared during permit development must identify specifically the discharge of the pollutant as one of those pollutants the indicator is intended to represent.

Industrial facilities that have PFOA or PFOS in their wastewater discharges should evaluate whether their permits have any provisions that address these chemicals. Assuming they do not, which is the most likely scenario at this early stage, it is unlikely that the federally permitted release exemption will apply. However, if there are provisions that address these chemicals, or if the applicable permitting agency seeks to add such provisions through original permit issuance, modification, or renewal, businesses should consider the extent to which this will influence whether the federally permitted release exemption may apply.

Specifically, when negotiating permit conditions, businesses should keep in mind that U.S. EPA guidance suggests that for the exemption to apply, the source, nature, and amount of the potential PFOA or PFOS release must be identified and made part of the public record during the permitting process, and the resulting permit must contain a condition requiring that the treatment system be capable of eliminating or abating the potential release.

Considering this guidance, it is unlikely that the incorporation of mere monitoring requirements and/or best management practices that do not eliminate or abate the potential release of PFOA or PFOS will be sufficient for a discharger to rely on the federally permitted release exemption. However, the incorporation of site-specific limits developed on a best professional judgment basis likely will.

Indeed, it may be in the best interest of businesses to advocate for provisions in their permits that address PFOA and PFOS to minimize their risk or extent of future CERCLA liability. An important consideration will be the cost of eliminating or abating the potential release of PFOA or PFOS now versus the likelihood and associated cost of being sued for CERCLA cost recovery and ultimately having to pay the costs associated with remediating the unpermitted discharges of PFOA or PFOS later.

We will continue to provide timely updates on U.S. EPA’s ongoing efforts to regulate PFAS under the various environmental statutes at the Corporate Environmental Lawyer.

By  Arie Feltman-Frank

The regulated community should be considering how Earth-observing satellites may enhance regulators’ and non-governmental organizations’ (NGOs’) ability to detect, measure, and monitor pollution. According to the Land Remote Sensing Satellites Online Compendium, a resource developed by the U.S. Geological Survey, there are 295 Earth-observing satellites that are operational, and 59 are under development.

At a basic level, Earth-observing satellites acquire information about the Earth. The data derived can differ in resolution and application depending on a satellite’s sensor and orbit. For example, satellites with a geostationary orbit maintain their position directly over the same place on Earth’s surface, permitting almost continuous coverage of that one area. These satellites may be most useful for targeting facilities with repeated or ongoing environmental violations. Once data derived from Earth-observing satellites are processed, they can be used in a variety of applications.

Notable Earth-observing satellites are set to launch this year. For example, TEMPO (Tropospheric Emissions: Monitoring Pollution) is a geostationary satellite scheduled to launch in April 2023 that will monitor daily variations in ozone, nitrogen dioxide, and other key elements of air pollution during daylight hours across North America. According to the U.S. Environmental Protection Agency (U.S. EPA), one of the anticipated benefits of TEMPO data will be an improved understanding of pollution sources and how their emissions vary throughout the day. Also, in late 2023, a subsidiary of the Environmental Defense Fund is expected to be ready to launch MethaneSAT, a satellite that will find and measure methane emissions with “unparalleled precision.” According to its website, MethaneSAT will, among other things, identify and quantify emissions from large sources and quantify aggregate emissions from smaller sources, as well as large intermittent sources.

Data derived from Earth-observing satellites may also impact businesses at the front-end through the imposition of more stringent pollution-reduction requirements. For example, a 2018 research study illustrates that satellite data can supplement ground-based air quality monitors to improve National Ambient Air Quality Standard compliance designations. This could result in businesses in newly designated areas having to comply with more stringent emission limitations and control measures.

Earth-observing satellite-derived data can be used outside of the air pollution context, too. For example, a 2022 research study illustrates that satellite data can be used to identify Concentrated Animal Feeding Operations engaging in unlawful winter land application. The land application detection system developed by this research was used in partnership with the Environmental Law and Policy Center to investigate several possible instances of unlawful application.

The takeaway is that businesses should ensure that they have robust environmental compliance programs in place that consider advancing Earth-observing satellite capabilities. They should especially consider that regulators and NGOs may be able to quickly and accurately detect, measure, and publicize discharges, leaks, spills, and other activity from even remote facilities.

For example, under U.S. EPA’s proposed methane rules, regulatory authorities and “qualified third parties” will be able to use satellites to identify and notify owners and operators in the oil and natural gas sector of “super-emitter” emissions events, which would require owners and operators to investigate and take appropriate mitigation actions.

And, if regulators and NGOs are detecting environmental violations before businesses, in addition to ensuing public relations issues, businesses will not be eligible for penalty mitigation under U.S. EPA’s Audit Policy. This may also reduce businesses’ ability to take advantage of more favorable resolutions of criminal cases under the U.S. Department of Justice, Environmental Crimes Section’s Voluntary Self-Disclosure Policy.

The impact that advancing Earth-observing satellite capabilities may have on environmental enforcement and litigation should not be overlooked. If you have any questions on how advanced monitoring technologies may impact your business operations and liabilities and how you can get ahead of this, reach out to one of the attorneys in Jenner & Block’s Environmental and Workplace Health and Safety practice.

By Steven Siros, Daniel L. Robertson and Arie Feltman-Frank

Developing a Proactive and Strategic Game Plan

Per- and polyfluoroalkyl substances (PFAS) in consumer products continue to be in the regulatory and litigation spotlight in 2023. Manufacturers and downstream businesses should be actively preparing to comply with the continually evolving patchwork of federal and state PFAS laws, as well as taking steps to minimize litigation risks. Below, our team of attorneys offers strategic advice for manufacturers and downstream businesses with respect to how regulatory and litigation PFAS developments may apply to them and best practices for minimizing regulatory and litigation risk with respect to same.

I.     State Consumer Product PFAS Laws

Consumer products that are currently the subject of state PFAS laws include carpets, rugs, and fabric treatments, children’s products, cookware, cosmetics, food packaging, furniture, oil and gas products, ski wax, and textiles and apparel, but this is a continually evolving list. Businesses that manufacture and sell these and similar products should be carefully evaluating whether these products contain PFAS, in which states the products are or will be manufactured, distributed, or sold, and what the PFAS laws and regulations are in those states. State PFAS laws can be categorized by the PFAS they regulate, the requirements they impose, and other notable nuances.

1. Regulated PFAS

Thousands of PFAS have been identified by the U.S. Environmental Protection Agency (EPA),[1] but PFAS laws may not apply to all. Thus, when reviewing their applicability, businesses should consider how PFAS laws define PFAS and whether they apply broadly to all PFAS or only a specific subset of PFAS. Businesses should also consider whether there are specific threshold concentrations or whether the regulations are triggered by the presence of any PFAS in the product. Lastly, businesses should consider whether the laws only apply to “intentionally” added or introduced PFAS that serve an intended function. Each of these are discussed, in turn, below.

            A.    PFAS Defined and Specific Subsets

State PFAS laws generally broadly define PFAS as a class of fluorinated organic chemicals containing at least one fully fluorinated carbon atom.[2] Some laws apply to PFAS generally. For example, California’s Chemicals of Concern in Food Packaging, Juvenile Products, and Textile Articles laws prohibit “regulated” PFAS, and their definitions of “regulated” do not narrow their prohibitions’ coverage to a specific PFAS subset.

In contrast, other laws only apply to a specific subset of PFAS. These narrower laws may identify the regulated PFAS themselves or refer to chemicals designated or listed by a state regulatory agency. For example, Maryland’s Cosmetic Products law specifically lists thirteen specific PFAS that fall within its regulatory purview. Similarly, Maine’s Toxic Chemicals in Children’s Products law applies to “priority chemicals,” and perfluorooctanesulfonic acid (PFOS) is the only PFAS that the Maine Department of Environmental Protection has currently designated as such. Importantly, PFAS chemicals that are not subject to prohibitions now may fall victim in the future. Thus, businesses that choose to continue using unregulated PFAS in their products may find themselves forced to adjust their ingredient lists down the road.

            B.    Threshold Concentrations

In addition to identifying the regulated PFAS, businesses should consider whether state PFAS laws specify threshold concentrations that trigger their requirements as these may influence compliance obligations.

For example, Oregon’s Toxic-Free Kids Act imposes disclosure requirements on manufacturers of children’s products that contain a high priority chemical.

but only if the chemical is “in an amount at or above a de minimis level.” For an intentionally added chemical, the de minimis level is the “practical quantification limit” (PQL), which means the lowest concentration of a chemical that can be reliably measured within specified limits during routine laboratory operating conditions. The Oregon Health Authority has defined the PQL for intentionally added PFOS as 0.001 parts per million. For a chemical that is a “contaminant,” which is defined as trace amounts of chemicals that are incidental to manufacturing and that serve no intended function in the product component, the de minimis level is 100 parts per million (see more on unintentional PFAS below).

In a similar fashion, Maine’s An Act to Stop PFAS Pollution imposes disclosure requirements on manufacturers of products with intentionally added PFAS. However, the Maine Department of Environmental Protection has suggested in its FAQs[3] that notification is only required if intentionally added PFAS are detectable when analyzing the product using a commercially available analytical method (above the PQL). The Department understands “commercially available analytical method” to mean any test methodology used by a laboratory that performs analyses or tests for third parties to determine the concentration of PFAS present. 

Finally, California’s Chemicals of Concern in Food Packaging and Juvenile Products laws, which prohibit “regulated” PFAS, specify that PFAS may be considered “regulated” if their presence is at or above 100 parts per million, as measured in total organic fluorine. California’s Textile Articles law provides a similar threshold concentration requirement, as does Vermont’s Chemicals of High Concern to Children law.

Thus, compliance with state PFAS laws may require that businesses be able to reliably measure the concentration of PFAS (or total organic fluorine) in their final products, which will depend on the availability of commercially available testing methods. While EPA has developed approved methods for measuring PFAS concentrations in environmental matrices such as air, water, waste, and pesticides, these methods may not be specifically applicable for consumer products. Notably, the American Society for Testing and Materials (ASTM) has announced that it created a new subcommittee that will develop standards for measuring PFAS in consumer products. ASTM’s efforts are ongoing.

Importantly, limitations in measuring capabilities may pose unique compliance challenges.[4] The traditional PFAS testing methods are liquid chromatography-tandem mass spectrometry (LC/MS/MS) or gas chromatography-mass spectrometry (GC-MS), but these methods target only a specific subset of PFAS—presently approximately 42 unique PFAS.

To address these limitations, there are numerous emerging technologies and methodologies. For example, to evaluate the presence of precursor molecules that can break down or transform into PFAS, total oxidizable precursors (TOPs) assay can be utilized as it was in a recent study to measure the presence of PFAS in a range of household items.[5] Other methodologies such as combustion ion chromatography (CIC), particle-induced gamma ray emission (PIGE), neutron activation analysis (INAA), and X-ray photoelectron spectroscopy (XPS), can be used to quantify total organic fluorine that some state regulators have elected to rely upon as a proxy for PFAS.[6] There are, however, significant risks in relying on total organic fluorine as a proxy for PFAS as numerous studies have documented limitations in this methodology.[7]

Businesses should be reviewing commercially available methods to measure the concentration of PFAS in their products, as well as be cognizant as to how these methods are evolving. Businesses may also want to consider seeking clarification from regulatory agencies on which methods are appropriate for specific consumer products. 

            C.    Intentionality and Functionality

Many state PFAS laws only apply when PFAS are “intentionally” added or introduced to covered products for a specific purpose.[8] Notably, the introduction or addition of PFAS does not need to be direct. Intentionally adding or introducing product ingredients that are not regulated PFAS but break down or transform into PFAS in final products may render state PFAS laws applicable, too. Therefore, businesses should assess whether PFAS (or other chemicals that may serve as precursor molecules of regulated PFAS) are being used in their manufacturing process and for what purpose. Businesses that use PFAS or PFAS precursor product ingredients in their manufacturing process for a specific purpose should evaluate the extent to which they can phase out these ingredients and find substitutes.   

Some laws specifically exempt unintentional PFAS from regulation. For example, Connecticut’s Cosmetic Products law clarifies that a person is not in violation of the law’s PFAS prohibition if the product was manufactured through a process to comply with the law and contains a technically unavoidable trace quantity of regulated PFAS due to an impurity of a natural or synthetic ingredient, the manufacturing process, storage, or packaging.

However, other laws may not let manufacturers off the hook if the unintentional PFAS is above identified threshold concentrations. As discussed above, California’s Chemicals of Concern in Food Packaging, Juvenile Products, and Textile Articles laws and Vermont’s Chemicals of High Concern to Children law establish threshold concentration requirements.

Even if PFAS are not being used to manufacture the product itself, they may still end up in the final product. One way this may happen is through leaching from the product packaging. For example, EPA studies have revealed that PFAS from fluorinated high-density polyethylene (HDPE) container walls of pesticide products can leach into the contents of the containers. In fact, EPA has recently initiated enforcement action against a company that utilized fluorine gas in the manufacture of plastic containers from which EPA claims PFAS are leaching into the products stored in these containers. 

In sum, even if businesses do not use PFAS in their manufacturing process, they would be wise to carefully audit their supply chains to minimize the risk of PFAS winding up in their final products. Moreover, as explained further below, businesses with PFAS in their products, even if their presence is unintentional and not in violation of any specific federal or state regulation, may still be subject to private party litigation.

Finally, although not the primary focus of this client alert, businesses should consider the downstream pathways of their products and other equipment that may contain PFAS because releases into the environment may trigger Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) reporting requirements and liability once perfluorooctanoic acid (PFOA) and PFOS (and other PFAS down the road) become designated as CERCLA hazardous substances (see more on remediation demands below).[9]

2. Requirements

Requirements fall into two categories: disclosures and prohibitions. While some state PFAS laws directly impose requirements, others give regulatory agencies the authority to. Below is a collection of consumer product categories and state PFAS laws, including the types of requirements imposed and their effective dates.

While some laws are already in effect, others will take effect later this year. For example, Vermont’s prohibitions on intentionally added PFAS in carpets and rugs, food packaging, and ski wax, and California’s prohibition on regulated PFAS in children’s products, will take effect on July 1 of this year. Connecticut’s and New York’s prohibition on intentionally added PFAS in food packaging and apparel, respectively, will take effect on December 31. Other laws won’t take effect until 2024 or beyond.

State PFAS Laws/Regulations Targeting Consumer Products

3. Other Notable Nuances

Finally, state PFAS laws can be characterized by other notable nuances. For example, some laws provide defenses for sellers and distributors that rely in good faith on manufacturer certificates of compliance. Others provide exemptions for certain products or parties or provide a vehicle for regulatory agencies to extend deadlines. Businesses should carefully consider these nuances when evaluating their options.

II.     Federal Consumer Product PFAS Regulations, Bills, and Liability

In addition to preparing to comply with the patchwork of state PFAS laws, businesses should be following and preparing to comply with evolving PFAS obligations at the federal level and seeking to understand and address potential liabilities. These include:

• Reporting obligations under Section 313 of the Emergency Planning and Community Right-to-Know Act for facilities that manufacture, process, or otherwise use certain PFAS that have been added to the Toxic Release Inventory. Notably, if EPA’s December 5, 2022, proposed rule[10] takes effect, covered facilities will no longer be able to avoid PFAS reporting obligations under the “de minimis exemption,” which allows facilities to evade reporting requirements with respect to mixtures or other trade name products containing PFOS concentrations below 0.1% and other covered PFAS concentrations below 1%. Covered facilities will also no longer be able to take advantage of other burden-reduction reporting options. Businesses should consider submitting comments on the proposed rule, which must be received on or before February 3, 2023.

• Notification requirements associated with importing articles and carpets containing certain PFAS. Specifically, EPA’s Significant New Use Rule,[11] promulgated under the Section 5(a) of the Toxic Substances Control Act (TSCA), became effective on September 25, 2020, and requires persons to notify EPA at least 90 days before commencing the import of a subset of PFAS chemicals as part of a surface coating on articles and PFOS as part of carpets. The rule provides that examples of articles could include apparel, outdoor equipment, automotive parts, carpets, furniture, and electronic components.

• Potential future reporting and recordkeeping requirements for manufacturers and importers of PFAS for PFAS manufactured in any year since January 1, 2011. Under EPA’s proposed rule,[12] proposed pursuant to Section 8(a)(7) of TSCA, articles containing PFAS, including imported articles containing PFAS (such as articles containing PFAS as part of surface coatings), are included in the scope of reportable chemical substances.

• Potential future testing and reporting obligations for manufacturers or processors of certain PFAS that may be on the receiving end of TSCA Section 4(a) testing orders. Under TSCA, the term “processor” includes persons who prepare chemical substances for distribution in commerce as part of articles.[13] These orders require recipients to test identified chemical substances to determine whether they have adverse health or environmental effects.

• Keep Food Containers Safe from PFAS Act of 2021 (3169): This bill was introduced in the U.S. Senate on November 4, 2021, and would amend the Federal Food, Drug, and Cosmetic Act to, effective January 1, 2024, prohibit the introduction or delivery for introduction into interstate commerce of food packaging containing intentionally added PFAS, and for other purposes. The bill’s sponsor is U.S. Senator Margaret Wood Hassan of New Hampshire.

• No PFAS in Cosmetics Act (2047): This bill was introduced in the U.S. Senate on June 14, 2021, and would require the Secretary of Health and Human Services to issue a proposed rule to ban the use of intentionally added PFAS in cosmetics no later than 270 days after the bill’s enactment and finalize such rule not later than 90 days after issuing the proposed rule. The bill’s sponsor is U.S. Senator Susan M. Collins of Maine.

• Safe Drinking Water Act (and state) regulatory developments and remediation demands: EPA is developing a National Primary Drinking Water Regulation (NPDWR) for PFOA and PFOS, which will lead to the establishment of Maximum Contaminant Levels (MCLs) for these PFAS.[14] In the interim, EPA has developed[15] non-regulatory health advisory levels for PFOA and PFOS, as well as final health advisory levels for other PFAS. EPA is also evaluating additional PFAS and considering regulatory actions to address groups of PFAS. For example, EPA’s Fifth Contaminant Candidate List[16] includes a group of PFAS, which may lead to a NPDWR for these PFAS down the road. Also, the Fifth Unregulated Contaminant Monitoring Rule[17] requires certain public water systems to collect samples of 29 PFAS between 2023 and 2025. Notably, in addition to these federal developments, several states have established MCLs and notification requirements for certain PFAS. To comply with these regulatory developments, public water systems may detect and remediate PFAS in drinking water and target nearby consumer product manufacturers or downstream businesses with PFAS in their products to try to force them to pay remediation costs.

III.    Litigation

Finally, businesses should proactively stay ahead of new PFAS litigation trends in the consumer product context.

1. Current Litigation

As consumer interest in PFAS increases, there is a corresponding increased focus on reporting of PFAS in consumer products. Perhaps not surprisingly, this reporting has spawned litigation.

For example, after a 2022 Consumer Reports review discussed PFAS in packaging products from restaurants and grocery chains, companies named in the report, including Burger King, were sued. In a similar fashion, after Toxic-Free Future published a report on the use of PFAS in water or stain-resistant textiles, one of the companies in the report, Recreational Equipment, Inc. (REI), was sued in California in April 2022, with a second lawsuit filed in Washington in October 2022. Personal care brands and cosmetic manufacturers such as L’Oreal and Cover Girl are facing similar lawsuits, the L’Oreal lawsuit citing a June 2021 Notre Dame research study that investigated the use of PFAS in 231 cosmetic products.

The lawsuits generally allege breaches of express or implied warranties, fraudulent concealment, unjust enrichment, and consumer protection act violations and track similar themes, targeting a business for touting its product as “sustainable,” “safe,” or “green” when the product allegedly contains PFAS known to be harmful. Statements of “transparency” in product ingredients have also been targeted where the use of PFAS was not clearly stated. Unjust enrichment claims tend to allege a company saved money by using PFAS-coated products instead of more expensive, but safer, alternatives. Injury claims, such as in the REI cases, allege that a consumer was led to believe they were spending money on a premium, environmentally friendly brand versus lower-cost competitors.

At least one lawsuit has already been defeated. For example, on November 30, 2022, a district court in Pennsylvania dismissed a lawsuit against Artsana USA, Inc., commonly known as Chicco, that alleged a failure by Chicco to disclose the use of PFAS in its KeyFit 30 children’s car seat in either its packaging, labelling, or ingredients list. The plaintiff, who did not allege any health impacts, instead alleged that she overpaid for the product thinking it was PFAS-free based on Chicco’s omissions and misrepresentations. The plaintiff also pointed to a Chemical Policy on Chicco’s website that claimed the KeyFit 30 to be PFAS-free.

On a motion to dismiss, the court held that the plaintiff did allege an injury-in-fact by paying a price premium for a product the plaintiff believed to be PFAS-free. However, the court also held that the plaintiff failed to state a claim for which relief could be granted because Chicco is not required to disclose the chemicals it uses to treat its car seats and because the plaintiff did not rely on the Chemical Policy when purchasing the car seat. The court further held that the plaintiff failed to follow statutory requirements to notify the defendant of a breach of express or implied warranty.

Other consumer product company defendants have similarly pushed to dismiss litigationThe disposition of these and related lawsuits will bring needed clarity to businesses with respect to how they advertise their products.

2. Future Outlook

It is likely that plaintiff’s firms will continue to aggressively pursue lawsuits in this area. With most lawsuits focusing on product representations, businesses should pay special attention to how they address PFAS in their consumer-facing descriptions.

Retailers can also expect increased pressure from consumers to remove PFAS-containing products from their catalogs. This, in turn, will put pressure on manufacturers and upstream suppliers to ensure products reaching retail are PFAS-free, as well as increase retailer and consumer demands directed at manufacturers and suppliers for product ingredient information.

IV.    Conclusion

Manufacturers and downstream businesses should be dedicating resources to comply with regulatory developments and minimize litigation risk. Our team of attorneys can help businesses examine how PFAS developments apply to them, as well as help businesses develop a proactive and strategic game plan.

[1] See PFAS Master List of PFAS Substances, EPA (Aug. 10, 2021), https://comptox.epa.gov/dashboard/chemical-lists/pfasmaster.

[2] Sometimes state PFAS laws use the language “all” or “any” members.

[3] While the disclosure requirements took effect January 1, 2023, the Maine Department of Environmental Protection is currently in the process of developing regulations. The Department’s website notes that the answers in its FAQs are subject to change in response to feedback and changes in regulation.

[4] Cf. Kelsey L. Rodriguez et al., Recent Developments of PFAS-Detecting Sensors and Future Direction: A Review, Micromachines (Basel). 2020 Jul; 11(7): 667, at 2 (noting the limitations in the practical applications of traditional technologies used to measure PFAS in environmental matrices). For one example of regulatory-detection  mismatch in the drinking water context, EPA’s interim health advisory levels for perfluorooctanoic acid (PFOA) and PFOS, 0.004 and 0.02 parts per trillion, respectively, are below the level of both detection and quantitation for these chemicals.

[5] Kathryn M. Rodgers et al., How Well Do Product Labels Indicate the Presence of PFAS in Consumer Items Used by Children and Adolescents?, Environ Sci Technol. 2022 May 17; 56(10): 6294–6304.

[6] Lara Schultes et al., Total Fluorine Measurements in Food Packaging: How Do Current Methods Perform?, Environ. Sci. Technol. Lett. 2019, 6, 2, at 73–78.

[7] See, e.g., Anna Brinch et al., Risk Assessment of Fluorinated Substances in Cosmetic Products, Ministry of Environment and Food of Denmark. 2018 Oct, at 31.

[8] PFAS are generally added to consumer products to impart water and stain resistance.

[9] See 87 Fed. Reg. 54,415 (Sept. 6, 2022).

[10] 87 Fed. Reg. 74,379.

[11] 85 Fed. Reg. 45,109 (July 27, 2020).

[12] 86 Fed. Reg. 33,926 (June 28, 2021).

[13] See 15 U.S.C. §2602(13), (14).

[14] In March 2021, EPA published Regulatory Determinations for Contaminants on the Fourth Contaminant Candidate List, which included a final determination to regulate PFOA and PFOS in drinking water. 86 Fed Reg. 12,272 (Mar. 3, 2021) (Regulatory Determinations); 81 Fed. Reg. 81,099 (Nov. 17, 2016) (Fourth Contaminant Candidate List).

[15] 87 Fed. Reg. 36,848 (June 21, 2022).

[16] 87 Fed Reg. 68,060 (Nov. 14, 2022).

[17] 86 Fed. Reg. 73,131 (Dec. 27, 2021).

By Steven Siros, Tatjana Vujic and Arie Feltman-Frank

As businesses continue to optimize their environmental, social, and governance (ESG) strategies, an important arrow in the ESG quiver may be carbon di oxide (CO₂) capture and storage (CCS). CCS involves capturing, compressing, transporting, and then injecting CO₂ into deep underground porous rock formations for long-term storage, known as geological sequestration (GS). These formations are often a mile or more beneath the surface and overlaid by impermeable, non-porous layers of rock that trap the CO₂ and prevent it from migrating upward.

The effectiveness of carbon capture,[1] coupled with the robust storage capacity available in the United States,[2] make CCS a promising method to minimize the climate-forcing effects of CO₂ emissions. Indeed, the Security and Exchange Commission’s (SEC’s) proposed climate-disclosure rule refers to investing in CCS technologies as one way by which companies can “take advantage of climate-related opportunities.” CCS may also be a viable compliance option for “major” federal contractors which, according to a recently proposed Federal Acquisition Regulatory Council rule, will be required to set “science-based targets” to reduce their greenhouse gas (GHG) emissions in order to do business with the federal government.

Injecting CO₂ underground is not new. For decades, the oil and gas industry has been utilizing enhanced oil recovery (EOR), a process that involves injecting CO₂ into oil-bearing formations to increase the amount of oil and gas produced from oil and gas reservoirs. What is relatively new, however, is the increased focus on GS as a vital, if not indispensable,[3] part of meeting CO₂-reduction goals. This client alert will predominantly focus on the GS component of CCS and the permitting requirements associated with GS of CO₂ for the purpose of meeting GHG reduction targets.

I    The Safe Drinking Water Act and Geological Sequestration of CO₂

The primary federal program governing GS of CO₂ is the Safe Drinking Water Act’s (SDWA’s) Underground Injection Control (UIC) program. According to EPA, the “chief goal” of the UIC program is the “protection” of underground sources of drinking water (USDWs).[4] Under the SDWA, EPA must publish regulations for state UIC programs that “contain minimum requirements for effective programs to prevent underground injection which endangers drinking water sources.”[5] Interested states can then apply for primary enforcement responsibility of the UIC program, known as “primacy.”[6]

The statutory vehicle for primacy applicable to GS of CO₂ is section 1422, whereby states must demonstrate that, among other requirements, they have adopted and will implement a UIC program that meets the “minimum requirements” established by the federal regulations.[7] While the federal regulations establish a floor, they do not preclude states from adopting or enforcing “more stringent or [] extensive” requirements or “[o]perating a program with a greater scope of coverage.”[8] If EPA approves a state’s UIC program, the state achieves primacy; if EPA disapproves the program (or parts thereof), or if a state fails to apply, the federal UIC program applies.[9]

There are six classes of underground injection wells that are regulated under the SDWA.[10]  Of these classes, Class VI and Class II wells are most relevant to GS of CO₂.

Class VI wells are used for non-experimental GS of CO₂.[11] EPA promulgated regulations governing minimum federal requirements for Class VI wells by final rule on December 10, 2010.  The regulations are generally set forth at 40 C.F.R. Parts 124, 144, 145, and 146 and required EPA to establish a Federal UIC Class VI program in each state that did not submit a complete primacy application by September 6, 2011. Because no state applied by the deadline, on September 6, 2011, the federal Class VI program became effective nationwide.

Since then, only North Dakota and Wyoming have achieved Class VI primacy. In all other states, the federal program applies. Only two Class VI permits have been issued under the federal UIC program, both by EPA Region 5 to Archer Daniels Midland in Decatur, Illinois, which took EPA approximately three years to issue (measured from the date the applications were submitted to issuance). Another 28 Class VI permit applications are pending in California, Illinois, Indiana, Louisiana, Ohio, and Texas. It is anticipated that over time, the permitting process will become both faster and more efficient, especially in light of increased funding provided by the Infrastructure Investment and Jobs Act (IIJA), which appropriates $5 billion annually to EPA over the next five years for the permitting of Class VI wells as a way to facilitate more CCS.[12]

Class II wells, which include wells that inject fluids into oil and gas reservoirs for EOR,[13] are also relevant to GS of CO₂ because long-term storage of CO₂ in these wells can be incidental to the injection process. Notably, most states have achieved Class II primacy.[14] When EOR results in some “incidental storage” of CO₂ in a Class II well, the owner or operator is likely not required to seek a Class VI permit. However, if the owner or operator elects to use a Class II well originally used for EOR to inject CO₂ for the “primary purpose of long-term storage,” the regulations require that the owner or operator obtain a Class VI permit “when there is an increased risk to USDWs compared to Class II operations.”[15]

We are not aware of any instances where EPA has required an owner or operator to obtain a Class VI permit for a previously permitted Class II well. As such, one attractive option for owners or operators of Class II wells used for EOR may be to utilize these wells for long-term GS of CO₂, given that the Class II requirements are less stringent. Because Class VI wells are the primary wells used for long-term CO₂ storage, the remainder of this client alert will predominantly focus on Class VI wells.

    A.    Geological Sequestration Projects in States Where the Federal UIC Class VI Program Applies.

In states in which the federal UIC Class VI program applies, to receive a Class VI permit that would allow for GS of CO₂, businesses need to submit a Class VI permit application to the appropriate EPA regional office within “a reasonable time before construction is expected to begin.”

Because the primary requirement of the UIC program is to ensure that GS of CO₂ will not threaten any USDWs, businesses need to carefully choose where to locate their wells. In particular, wells need to be placed at sites of “suitable” geology.  Of suitable geology means that the injection zone can receive the total anticipated volume of the CO₂ stream, while the confining zone, i.e., the area in which the CO₂ will be stored, must be free of transmissive faults or fractures and sufficient to contain the injected CO₂ stream. The confining zone also must be able to withstand injection without initiating or propagating fractures that would allow the CO₂ to migrate outside its bounds.[16] GS of CO₂ must also be beneath the lowermost formation containing a USDW unless a waiver of the injection depth requirements has been granted.^[17]

In their applications, Class VI permit applicants must include information regarding the proposed injection well, its construction, the proposed operations, and geologic, hydrologic, and other information regarding the area around the project where USDWs may be endangered, which is known as the “area of review.” The area of review is “delineated using computational modeling.”[18] Applications must also include plans related to the area of review and the types of corrective action, testing and monitoring, injection well plugging, post-injection site care and site closure, and emergency and remedial response that will be provided. Lastly, applications must provide proof that the applicants meet financial responsibility requirements.[19]

Throughout the application process, applicants should consider whether the information submitted to EPA can be claimed as confidential business information. If so, they should be sure to make a confidential business information assertion in their applications or else risk the possibility that their applications could be subject to public disclosure.[20]

Once cessation of injection occurs, owners and operators must continue to monitor the site for “at least 50 years” or until EPA decides that the GS project no longer poses an endangerment to USDWs. Owners and operators also must report any evidence that the injected CO₂ stream or associated pressure front may cause endangerment to a USDW.[21]

If any indication of movement of any contaminant into an USDW exists, the permittee will be subject to “additional requirements . . . as are necessary to prevent such movement,” which are imposed by modifying the permit or terminating the permit if “cause” exists. In addition, in the absence of “appropriate” state or local action, EPA may take “emergency action” when “a contaminant which is present in or likely to enter a public water system or [USDW] may present an imminent and substantial endangerment to the health of persons.”[22]

    B.    Geological Sequestration Projects in States That Have Achieved Class VI Primacy

As noted previously, only North Dakota and Wyoming have achieved Class VI primacy.[23] Thus, businesses interested in pursuing GS in these states will have to do so in accordance with the states’ respective Class VI regulations. North Dakota’s Class VI program is administered by the North Dakota Oil & Gas Division. To date, North Dakota’s Oil & Gas Division has issued two Class VI permits and has one permit application under review. Wyoming’s Class VI program, on the other hand, is administered by the Wyoming Department of Environmental Quality. To date, Wyoming has received two Class VI permit applications, each of which are still under review.

In contrast to the three-year permitting time for the two Class VI permits issued by EPA Region 5, the time to review and approve the two permits issued by the North Dakota Oil & Gas Division was approximately eight months. It is expected, however, that the annual $50 billion in grant funding made available through the IIJA over the next five years[24] will drive more states to seek Class VI primacy. The likely result will be that more projects may be able to get permitted faster.

II    Obstacles, New Developments, and Other Considerations

Despite the significant funding and attention given to CCS as a climate mitigation tool, businesses interested in pursuing CCS should be aware of potential obstacles they may encounter and be required to navigate. These obstacles include high project costs, public opposition, and uncertainties associated with subsurface pore space ownership and long-term liability. While other project specific requirements are likely to arise, such as compliance with additional federal, state, and local laws,[25] a review of these additional requirements is beyond the scope of this client alert. 

    A.    High Project Costs.

High project costs are a key challenge to CCS development. Whether a project’s costs are high or not will depend on several factors, including the type of facility, the facility’s proximity to the injection site, the availability of CO₂ transportation infrastructure, and tax credits and grants.

Taking each of these factors in turn, certain facilities will be at an advantage when it comes to cost thanks to characteristics like the concentration of the CO₂ stream. In particular, CO₂ capture is most cost-effective for facilities that generate highly concentrated CO₂ streams.[26]

With respect to transportation, the closer the CO₂-producing facility is to the injection site, the lower the overall costs will be. Also, CCS is likely to be most cost-effective in areas with a history of oil and gas extraction and EOR, such as California, Illinois, Kansas, Oklahoma, and Texas, where the approximately 5,000 miles of CO₂ pipelines established in the United States are largely located.[27] While the expansion of CO₂ pipeline infrastructure will be necessary for large-scale CCS development, the need for additional pipeline to deliver the CO₂ to the injection site creates not only more infrastructure costs but also more requirements with which more costs, such as permit and land acquisition and related compliance with pipeline safety regulations, are likely associated.[28]

Importantly, the cost equation may be changing owing to the expanded 45Q tax credits established by the 2022 Inflation Reduction Act (IRA), which are available in addition to funding provided by the IIJA. Although a detailed overview of these statutes’ provisions is beyond the purview of this client alert, at a high level, the IRA increased the 45Q tax credits for certain facilities or equipment placed in service after December 31, 2022, to $85 per ton of CO₂ disposed of in secure geologic storage and $60 per ton of CO₂ used for EOR and disposed of in secure geologic storage or otherwise utilized in a qualified manner.[29] As mentioned above, in addition to the IRA-driven tax credits, the IIJA provided significant funding for CCS, some of which was allocated to the U.S. Department of Energy, which recently released three funding opportunity announcements and established a new finance program that may help CCS developers reduce costs further.

    B.    Public Opposition.

Despite its upsides, it is possible that CCS projects may draw opposition from the public, which can present serious developmental challenges. To address potential opposition, businesses would be wise to consider how to authentically engage with community stakeholders at the outset of project development to try to avoid contentious permitting processes to the extent possible.

However, should public opposition escalate into formal attempts to prohibit or restrict GS of CO₂, businesses should consider whether these efforts may be preempted.[30] Although the SDWA contains a savings clause that provides that “[n]othing in this subchapter shall diminish any authority of a State or political subdivision to adopt or enforce any law or regulation respecting underground injection,”[31] some courts have found local actions to be preempted, as best exemplified in EQT Prod. Co. v. Wender.[32]

In the case, the U.S. Court of Appeals for the Fourth Circuit affirmed a district court’s determination that the West Virginia UIC program established under the West Virginia Water Pollution Control Act (WPCA) preempted a county ordinance that imposed a blanket ban on the disposal of wastewater anywhere within the county.[33]

The Fourth Circuit explained that municipal ordinances that are inconsistent or in conflict with state law are preempted and further concluded that the ordinance’s prohibition was inconsistent with West Virginia’s UIC program because the permanent disposal of wastewater in Class II wells “is licensed and regulated by the state pursuant to a comprehensive and complex permit program.” The court also rejected the county’s argument that the WPCA’s savings clause, which preserves the power of local entities to “suppress nuisances,” permitted the county to broadly designate UIC wells as nuisances and then categorically ban them. The court refused to give the savings clause this broad and less logical reading absent express language and instead interpreted the clause as allowing local regulation that “touch[ed] on the licensed activity.” This had the effect of preserving the county’s right to bring a common law public nuisance action against a state permitted UIC well on a case-by-case basis.

This case suggests that local actions, at least those that have the effect of banning or prohibiting otherwise permitted GS projects, may be preempted by state or federal law.

    C.    Subsurface Pore Space Ownership and Long-Term Liability.

Finally, businesses interested in pursuing GS should consider uncertainties associated with subsurface pore space ownership and long-term liability. Ways to circumvent pore space ownership and liability issues are described below.

First, to effectuate GS of CO₂, businesses will need to acquire ownership or control of the pore space in which the CO₂ will be stored. This step, in turn, will require determinations as to subsurface ownership rights, which are influenced by whether the pore space is located under federal or non-federal land. For projects located under non-federal land, who owns subsurface pore space will ultimately depend on the language employed in legal instruments related to the property rights at issue and state law. The “majority rule,” however, appears to be that the surface rights owner has the relevant property interest and holders of mineral rights do not, merely by virtue of these rights, have ownership or control of subsurface pore space.[34] States like Wyoming and North Dakota have enacted laws to address uncertainties associated with subsurface pore space ownership by specifying that surface rights owners own the underlying pore space.[35]

With respect to long-term liability, as explained previously, owners and operators must continue to conduct monitoring post-injection for at least 50 years or until the GS project no longer poses an endangerment to USDWs before site closure. In addition to post injection site care and site closure, owners and operators must maintain financial responsibility over emergency and remedial response.[36] Some states like Indiana, Texas, and Louisiana have established processes for transferring long-term liability to the state to alleviate the chilling effect that concerns over long-term liability might have on GS development.[37]

III.    Conclusion

As businesses explore ways to execute their GHG emissions reduction targets, CCS looms large.  Jenner & Block’s Environmental and Workplace Health & Safety, and Transitions in Energy and Climate Solutions Practices not only can help businesses assess whether CCS is a viable option for them, but also can strategically and efficiently navigate each stage of the CCS process to accelerate desired outcomes in a cost-effective manner.

[1] For example, one type of CO₂ capture, post-combustion capture, typically captures 85% to 95% of the CO₂. Angela C. Jones & Ashley J. Lawson, Cong. Rsch. Serv., R44902, Carbon Capture and Sequestration (CCS) in the United States 4 (2022), https://sgp.fas.org/crs/misc/R44902.pdf [hereinafter Oct. 2022 CRS Report].

[2] The United States Department of Energy estimates there to be a total storage capacity of between about 2.6 trillion and 22 trillion metric tons of CO₂. Id. at 9. Theoretically, the United States contains enough storage capacity to store all CO₂ emissions from large stationary sources, at the current rate of emissions, for centuries. Cong. Rsch. Serv., Injection and Geological Sequestration of Carbon Dioxide: Federal Role and Issues for Congress 3 (2022), https://crsreports.congress.gov/product/pdf/R/R46192[hereinafter Sept. 2022 CRS Report].

[3] For example, according to the Council on Environmental Quality (CEQ), GS of CO₂ will “likely [be] needed to deliver on the Paris Agreement goals to hold warming well below 2 degrees Celsius and pursuing efforts to hold warming to 1.5 degrees Celsius, which is necessary to prevent the worst impacts of climate change.” CEQ, Report to Congress on Carbon Capture, Utilization, and Sequestration 6 (2021), https://www.whitehouse.gov/wp-content/uploads/2021/06/CEQ-CCUS-Permitting-Report.pdf [hereinafter CEQ Report].

[4] 75 Fed. Reg. 77,230, 77,235 (Class VI Rule); see also 42 U.S.C. §300h(b)(1)(B); 40 C.F.R. §144.12.

[5] 42 U.S.C. §§300h(a)-(b); 40 C.F.R. Part 145, Subpart B (imposing minimum requirements for permitting, compliance evaluation programs, enforcement authority, and sharing of information).

[6] 42 U.S.C. §300h-1(b)(1); 40 C.F.R. §144.1(f)(2). Indian tribes may, too. 42 U.S.C. §§300h-1(e); 40 C.F.R. Part 145, Subpart E.

[7] See 42 U.S.C. §300h-1; Class VI Rule at 77,241 (explaining that states must demonstrate that their “regulations are at least as stringent as those promulgated by EPA”).

[8] 40 C.F.R. §145.1(g). Though where an approved state program has a greater scope of coverage, the additional coverage is not part of the federally approved program. Id. §145.1(g)(2).

[9] 42 U.S.C. §§300h-1(b)(3), (c).

[10] 40 C.F.R. §144.6.

[11] Notably, Class V wells are used for experimental injection of CO₂ (e.g., Department of Energy-supported research wells). See id. §144.81(14). “The construction, operation, or maintenance of any non-experimental Class V GS well is prohibited.” Id. §144.15. By December 10, 2011, owners or operators of experimental technology wells no longer being used for experimental purposes were required to apply for a Class VI permit. Id. §146.81(c). EPA has noted that it “anticipates that few, if any Class V experimental technology well permits will be issued under SDWA for future GS projects.” 76 Fed. Reg. 56,982, 56,983.

[12] 42 U.S.C. §300h-9.

[13] 40 C.F.R. §144.6(b)(2).

[14] Sept. 2022 CRS Report, supra note 2, at 15.

[15] See 40 C.F.R. §144.19(a).

[16] 40 C.F.R. §146.83(a). According to the United States Geological Survey, areas with the most storage potential are the Coastal Plains region, which includes coastal basins from Texas to Georgia, Alaska, and the Rocky Mountains – Northern Great Plains. Which area is the best for geologic carbon sequestration?, USGS, https://www.usgs.gov/faqs/which-area-best-geologic-carbon-sequestration (last visited Dec. 12, 2022).

[17] 40 C.F.R. §§144.6(f), 146.95

[18] See id. §§146.82(a), 146.81.

[19] Id.; id. §146.85(a)(2). Applicants will likely need to hire environmental consultants to provide support at every phase of the GS project.

[20] See id. §144.5.

[21] Id. §§146.93(b), 146.91(c)(1).

[22] Id. §144.12; 42 U.S.C. §300i.

[23] Other states are also moving towards primacy; Texas, Arizona, and West Virginia are in the “pre-application” phase, while Louisiana’s primacy application is being evaluated.

[24] Id. §300h-9.

[25] See CEQ Report, supra note 3, at 30.

[26] Adam Baylin-Stern & Niels Berghout, Is Carbon Capture Too Expensive?, IEA (Feb. 17, 2021), https://www.iea.org/commentaries/is-carbon-capture-too-expensive.

[27] Oct. 2022 CRS Report, supra note 1, at 8, 23.

[28] See CEQ Report, supra note 3, at 25-31. Using marine vessels may also be a feasible option for CO₂ transport. Oct. 2022 CRS Report, supra note 1, at 8.

[29] According to CEQ, “[c]arbon utilization is a broad term used to describe the many different ways that captured . . .  CO₂ . . . can be used [] to produce economically valuable products or services.” CEQ Report, supra note 3, at 13. The IRA-driven tax credits are an increase from the previous tax credits of $50 and $35, respectively. To qualify for the tax credits, qualified facilities must begin construction by December 31, 2032.

[30] For example, in a recent lawsuit filed against Livingston Parish in the United States District Court for the Middle District of Louisiana, developer Air Products is arguing that the parish’s attempts to restrict its proposed GS project are preempted by state and federal law.

[31] 42 U.S.C. §300h-2(d).

[32] 870 F.3d 322, 332 (2017).

[33] The court refused to decide the question of federal preemption on constitutional avoidance grounds. The court clarified that the question posed by the ordinance’s prohibition was whether the county could effectively “nullify” the Class II permit issued by DEP pursuant to the WPCA. The case did not require the court to consider “the authority of a county to regulate matters that are only related to or associated with a state-permitted activity.”

[34] Cong. Rsch. Serv., RL34307, Legal Issues Associated with the Development of Carbon Dioxide Sequestration Technology (2011), https://www.everycrsreport.com/reports/RL34307.html. Though the mineral rights owner could have priority over uses of the land, including the ability of the surface rights owner to make use of the pore space, that would interfere with the mineral rights holder’s ability to remove minerals.

[35] Wyo. Stat. §§34 -1-152, 34-1-153 (2009); N.D. Cent. Code §47-31-02 et seq. (2009).

[36]  40 C.F.R. §146.85(a).

[37] See CEQ Report, supra note 3, at 43.

     By Daniel L. Robertson and Arie Feltman-Frank, Associate Attorneys

On December 15, 2022, the California Occupational Safety & Health Standards Board (Board) adopted COVID-19 prevention non-emergency  workplace standards in a 6-1 vote. The standards will be in Title 8, Division 1, Chapter 4, Subchapter 7, of California’s regulations and, if approved by the Office of Administrative Law, will take effect in January 2023. The standards will sunset two years following their effective date, except for certain recordkeeping requirements that will remain in effect for three years.

Subchapter 7, titled “General Industry Safety Orders,” establishes minimum occupational safety and health standards that generally apply to all places of employment in California. In response to the COVID-19 outbreak, the Board previously approved emergency temporary standards (ETS) on COVID-19 prevention starting in November 2020, which were revised in June 2017, January 2022, and May 2022. However, the May 2022 ETS is set to expire on December 31, 2022.

Notable portions of the adopted non-emergency standards are summarized below.

• Prevention Program: Employers are no longer required to maintain a standalone COVID-19 Prevention Plan but must still address COVID-19 in their written Injury and Illness Prevention Programs or other standalone documents that include measures to address COVID-19 transmission in the workplace. Further, employers are required to review applicable state and local health department guidance when determining measures to prevent and address COVID-19 transmission.
  
  
• Screening and Exclusion: Employers will no longer have to perform daily screenings of employees, whether through questionnaires or otherwise. Employees instead are encouraged to report their own symptoms and stay home if ill. Time periods for exclusion have been shortened, and employees who are deemed close contacts do not necessarily have to be excluded if they test negative and meet certain other requirements.
  
  
• Employee Accommodations: In perhaps the most contested development, employers will no longer have to provide paid time off to infected employees or close contacts ordered to stay home. Instead, those employees must rely on other existing benefits if they are unable to work due to COVID-19 infection or isolation. Employers must continue to provide respirators to employees upon requests, and employees must still wear masks at work for at least 5 days if exposed. Companies experiencing outbreaks, defined as three or more cases in a 14-day period, must make testing available to exposed employees immediately and provide tests twice a week.
  
  
• Notice and Timing: Notice rules now only require notice to close contacts “as soon as possible” while simplifying the notice contents. However, employers should remain mindful of similar applicable rules that currently still require that the notice be given within one business day. Outbreaks no longer require “no new cases” to conclude and instead only require “one or fewer” new cases over a two-week period. A major outbreak, defined as 20 cases in a 30-day period, must be reported to the California Division of Occupational Safety and Health. While there will no longer be a requirement to report outbreaks to local public health agencies, employers should still be mindful of other local standards for reporting.
  
  
• Close Contacts and Testing: The “close contact” definition continues to follow that used by the California Department of Public Health (CDPH), which defines a close contact depending on the size of the workspace and regardless of the use of face coverings.
  
  
  • A close contact occurs in an indoor workspace with floor space of 400,000 cubic feet or less when someone shares the same indoor airspace as an infected person for a cumulative total of 15 minutes or more over a 24-hour period during the infectious period.
  • A close contact occurs for larger indoor workspaces when someone is within 6 feet of the infected person for a cumulative total of 15 minutes or more during a 24-hour period during the infectious period.

Notably, this standard affirmatively states that any future amendments to the CDPH definition will take precedent over the Board’s adopted definition. Employers must also follow applicable CDPH guidance to improve ventilation and filtration. Further, employers will now only have to make testing available at no cost to employees who are considered close contacts of an infected coworker, versus previous requirements that testing be made available to all symptomatic employees.

• Infectious Period: This definition also tracks that of CDPH and states that a person is considered infectious for two days prior to symptoms and 10 days after unless they test negative from the fifth day onward. For an asymptomatic person, these same timeframes apply based on the date of the first positive test.

The Board’s news release can be read here and the text of the adopted standards is available here. We will continue to monitor COVID-19 and other workplace health and safety developments in the Corporate Environmental Lawyer.