On Friday, April 30, 2021, the Biden Administration’s Environmental Protection Agency (EPA) announced significant steps the agency intends to take under the Toxics Release Inventory (TRI) Program to implement expanded reporting requirements for companies that store and utilize hazardous chemicals, including new obligations to report the storage, use and any releases of ethylene oxide, a commonly used industrial chemical and sterilant for medical equipment and supplies. The TRI Program, which was established under Section 313 of the Emergency Planning and Community Right-to-Know Act (EPCRA), serves as a resource for the public to learn about annual chemical releases, waste management, and pollution prevention activities reported by nearly 22,000 industrial and federal facilities. Under the TRI Program, U.S. facilities operating in various industry sectors must report annually the quantity of certain chemicals they release to the environment and/or manage through recycling, energy recovery and treatment. A “release” of a chemical in the context of the TRI Program means that the chemical is emitted to the air or water, or placed in some type of land disposal.
A major component of EPA’s announcement is the agency’s intent to regulate ethylene oxide. The use and release of ethylene oxide by medical device sterilization companies have prompted a number of recent high-profile lawsuits alleging that releases of the chemical into the environment have caused increased cancer rates in communities adjacent to the facilities. EPA’s announcement notes that many existing sterilization facilities “are located near areas with Environmental Justice concerns,” and that individuals living adjacent to these facilities may be at a heightened risk from exposure to ethylene oxide. “Every person in the United States has a right to know about what chemicals are released into their communities,” EPA Administrator Michael S. Regan stated. “By requiring new and more data on chemical releases from facilities, EPA and its partners will be better equipped to protect the health of every individual, including people of color and low-income communities that are often located near these facilities but have been left out of the conversation for too long.” In the coming months, EPA will provide further details regarding the specific actions the agency intends to take to require sterilization facilities that use ethylene oxide to report under the TRI Program.
In addition to implementing new reporting requirements for companies utilizing ethylene oxide, EPA announced several other steps the agency plans to take that will increase reporting and public access to information under the TRI Program, including:
- Finalizing a longstanding proposed rule that will add natural gas processing facilities to the industry sectors covered under the TRI Program thereby increasing the publicly available information on chemical releases and other waste management activities of TRI-listed chemicals from this sector;
- Continuing to add new per- and polyfluoroalkyl substances (“PFAS”) to the list of chemicals that require reporting under the TRI Program, including the addition of perfluorobutane sulfonic acid (PFBS) following EPA’s toxicity assessment of the substance;
- Proposing a new rule to add high-priority substances under the Toxic Substances Control Act (TSCA) and chemicals included in the TSCA workplan to the list of chemicals that require reporting under the TRI Program; and
- Increasing public access to TRI data through improved search functionality and improved website interface.
EPA’s announcement marks the most recent step by the agency to implement the Biden Administration’s focus on environmental justice as a top priority of its environmental agenda. On the same day that EPA announced the agency’s updated TRI policy, EPA circulated a memorandum to all EPA-staff, indicating the additional actions the agency intends to take to fulfill its environmental justice commitment. These actions include: (1) increasing inspections of facilities that pose the most serious threats to overburdened communities; (2) focusing on implementing remedies that benefit communities, including through the incorporation of supplemental environmental projects; (3) increasing communications with overburdened communities to develop improved cleanup and non-compliance solutions; and (4) identifying locations where state regulators are not adequately protecting local communities and taking increased enforcement actions to “pick up the slack” if state regulators have not taken appropriate or timely actions.
The Corporate Environmental Blog will continue to follow developments on this issue in the coming months as EPA provides additional details on the specific actions it intends to take to expand the TRI Program.
EPA to Revise or Replace Trump-Era Clean Water Act Rules, But Will Leave Existing Rules In Place For Now
The U.S. Environmental Protection Agency (“EPA”), under Administrator Michael Regan, has begun the process of reviewing and revising two key Clean Water Act (“CWA”) rules: The Navigable Waters Protection Rule and the CWA Section 401 Certification Rule. In recent court filings in cases where litigants have challenged both of these Trump-era rules, EPA has requested those cases be remanded because EPA has commenced new rulemaking processes that will revise or replace the challenged rules. However, if the courts grant EPA’s requests, EPA has requested that the existing rules remain in effect until EPA finalizes replacement rules through the formal notice and comment rulemaking process.
The first of the two key CWA rules at issue is the Navigable Waters Protection Rule, which defines “Waters of the United States”. This is a significant rule and definition because the jurisdiction of the CWA is limited to Waters of the United States. Thus, by setting the definition of Waters of the United States, EPA establishes the reach of the CWA. Due to the significance of this definition, it has been widely contested throughout the years and every attempt by EPA and the U.S. Army Corps of Engineers to promulgate a definition has faced legal challenges.
In 2019, the Trump Administration rescinded the Obama-era Waters of the United States rule and in 2020, issued the Navigable Waters Protection Rule, narrowing the definition of Waters of the United States. The most significant change in the Trump rule is that the new definition excludes ephemeral waters (those flowing only in direct response to precipitation) and many wetlands that are near other jurisdictional waters but lack a physical or surface connection to them.
In several court filings in June, EPA has stated its plans “to commence a new rulemaking to revise or replace the [Navigable Waters Protection] rule.” Notably, EPA is not requesting vacatur of the existing rule during the rulemaking process.
The second CWA rule facing a similar fate is the CWA Section 401 Certification Rule. Under the CWA, a federal agency may not issue a permit or license for an activity that may result in a discharge into a Water of the United States unless a Section 401 Certification has been issued verifying compliance with water quality requirements. States and authorized tribes are generally responsible for issuing Section 401 Certifications, and they are required to act on a Section 401 Certification request “within a reasonable period of time (which shall not to exceed one year) after receipt” of such a request. 33 U.S.C. § 1341(a)(1).
The Trump EPA issued the final CWA Section 401 Certification Rule on July 13, 2020, with the goal of expediting infrastructure permitting by making the 401 Certification process quicker. The biggest changes made by this rule were limiting the scope of state and tribal certification review and limiting the imposition of conditions in the certifications. Just as with the Navigable Waters Protection Rule, EPA has now indicated in court filings (and on its website) that the Section 401 Certification Rule is under review and will be revised or revoked, but also will not be vacated in the interim.
EPA has a lot of work ahead to propose new versions of these rules for public review and comment. Promulgation of final rules will therefore be many months, if not more than a year away. In the meantime, environmental groups and other challengers have indicated they will continue to challenge the Trump-era rules still in effect. The Corporate Environmental Lawyer blog will keep a close watch and report on all key developments.
By Leah Song
On May 17, 2021, the United States Supreme Court ruled 7-1 that the Fourth Circuit should have considered all of the fossil fuel companies’ grounds for removal to federal court in the BP PLC, et al. v. Mayor and City Council of Baltimore case.
As previously discussed by the Corporate Environmental Lawyer blog, the underlying litigation involves claims asserted in Maryland state court by the City of Baltimore against various fossil-fuel companies for damages associated with climate change. In its complaint, Baltimore asserted claims against the industry for public nuisance, private nuisance, strict liability failure to warn, strict liability design defect, negligent design defect, negligent failure to warn, trespass, and violations of Maryland’s Consumer Protection Act.
In response to Baltimore’s complaint, the fossil fuel companies sought to remove the action to federal court, as they have done in all of the state court actions filed by municipalities and states making similar claims. The fossil fuel companies’ removal petition was based on multiple grounds, including the “federal officer” removal provision, 28 U.S.C. §1442(a)(1), and multiple other federal statutes that industry believed justified federal court jurisdiction. The City sought remand to state court, and the federal district court, after having reviewed each of the removal arguments, found that industry had not asserted an appropriate basis for federal jurisdiction. Industry then appealed that district court remand decision to the U.S. Court of Appeals for the Fourth Circuit, pursuant to 28 U.S.C. §1447(d), which expressly authorizes appellate review for removals based on 28 U.S.C. §1443 (civil rights removal), as well as §1442.
On March 6, 2020, the Fourth Circuit affirmed the district court’s remand order, but did so only after reviewing the industry’s right to removal under the federal officer removal statute, 28 U.S.C. §1442(a)(1). The Fourth Circuit found that 28 U.S.C. §1447(d) limited its appellate review solely to that issue, and not any of the other bases that industry had asserted in support of its argument for federal removal jurisdiction. The Fourth Circuit’s decision regarding the scope of review under § 1447(d) was consistent with prior decisions from the First, Ninth and Tenth circuits but conflicted with a previous decision from the Seventh Circuit.
On March 31, 2020, the fossil-fuel companies filed a petition for a writ of certiorari in the United States Supreme Court, seeking review of the question of whether the statutory provision prescribing the scope of appellate review of remand orders “permits a court of appeals to review any issue encompassed in a district court’s order remanding a removed case to state court…” The companies argued that the Fourth Circuit had improperly ignored several alternative grounds justifying removal of the case to federal court, including that federal common law governs claims of interstate air pollution. The Supreme Court granted a writ of certiorari to review the case on October 2, 2020.
On May 17, 2021, the Supreme Court ruled that the Fourth Circuit erred in holding that it lacked jurisdiction to consider all of the defendants’ grounds for removal under §1447(d). BP PLC, et al. v. Mayor and City Council of Baltimore, 593 U.S. ____(2021). The Court held that, once the defendants removed the case in reliance on §1442 “and the district court ordered the case remanded to the state court, the whole of its order became reviewable on appeal.” Slip op., No. 19-1189, at 5. The Court based its decision on an interpretation of the language of §1447(d). The decision, authored by Justice Gorsuch, emphasized in the second sentence of its opinion that “the merits of [the City’s climate change] claim have nothing to do with this appeal. The only question before us is one of civil procedure[.]” Id. at 1. The Supreme Court also noted that it would not consider the merits of the defendants’ removal arguments, finding that “the wiser course is to leave these matters for the Fourth Circuit to resolve in the first instance.” Id. at 14.
Justice Sotomayor wrote the lone dissent, based on her view that the longstanding rule has been that remand orders are generally not subject to appellate review. Slip op. at 1 (Sotomayor, J., dissenting). Justice Sotomayor asserted that the majority’s interpretation “lets defendants sidestep §1447(d)’s bar on appellate review by shoehorning a §1442 or §1443 argument into their case for removal. In other words, it lets the exception swallow the rule.” Id. at 2 . “Unfortunately, I fear today’s decision will reward defendants for raising strained theories of removal under §1442 or §1443 by allowing them to circumvent the bar on appellate review entirely.” Id. at 7.
Justice Alito took no part in the consideration or decision of this case.
Although the case is now remanded for further consideration to the Fourth Circuit to consider the additional bases raised by defendants in support of their removal petition, parties across the country now have clarity as to which arguments the appellate court must consider when reviewing removal petitions.
Jenner & Block’s Corporate Environmental Lawyer will continue to update on climate change litigation cases as they unfold.
Earth Day 2021: CERCLA and RCRA in The Biden Administration: Elevating Climate Change and Environmental Justice in Addressing Hazardous Wastes
We close out the Corporate Environmental Lawyer Blog's weeklong celebration of Earth Day with the two federal programs aimed at cleaning up existing toxic waste sites and preventing the creation of new ones: the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) and the Resource Conservation and Recovery Act (“RCRA”). The Trump Administration considered the remedial and regulatory roles of the CERCLA and RCRA programs as core EPA functions, so it did not target them for regulatory rollbacks like it did for many federal clean air (including climate change), clean water, and environmental review requirements. Nonetheless, the new occupant of the White House will change the focus of both these programs—in large part by elevating climate change and environmental justice considerations in decision-making.
Early in the Trump Administration, Scott Pruitt, then the EPA Administrator convened a Superfund Task Force that identified five priorities: (1) expediting cleanup and remediation, (2) invigorating responsible party cleanup and reuse, (3) encouraging private party investment, (4) promoting redevelopment and community revitalization, and (5) engaging partners and stakeholders. The Task Force set forth 42 recommendations to achieve those goals.
Following the Task Force recommendations, the Trump Administration prioritized 54 sites and completed remediation and delisted over 50 sites from the National Priorities List. The focus was often sites with redevelopment potential. At many of those sites, surprisingly aggressive settlements with potentially responsible parties funded the work. At the same time, however, the number of unfunded orphan sites (those with remediation plans but no funding source) grew as federal appropriations were limited. By January 2021, there were at least 34 unfunded orphan sites, many in at-risk areas.
The Biden Administration is expected to retain the goals and many of the recommendations from the Task Force, but it will redeploy resources to meet its priorities. Climate change (a phrase that literally had been removed from the Superfund Strategic Plan), and environmental justice (which seeks to address the disproportionately high health and environmental risks found among low-income and minority communities) will reemerge as key considerations in CERCLA decision-making, especially in site prioritization and remediation plans. A 2019 GAO report indicated that these issues are often linked. It identified roughly 2/3 (975/1570) of the NPL listed Superfund sites as vulnerable to climate-related risks—hurricanes, flooding, wildfires and/or rising sea levels. Many of these sites were also located near low-income and minority communities. Biden will seek to pair his climate change and environmental justice goals with his redevelopment and infrastructure plans through Brownfield grants and other incentives.
The Biden Administration has also signaled it will address emerging contaminants. As noted by Steve Siros in Wednesday's Corporate Environmental Lawyer Blog, EPA is likely to designate per- and polyfluoroalkyl substances (“PFAS”) as “hazardous substances” under CERCLA and may set a maximum contaminant level (“MCL”) for these compounds under the Safe Drinking Water Act (“SDWA”). These actions could have a significant impact on new and existing cleanups. First, designating PFAS a “hazardous substance” would require facilities to report PFAS releases, which could trigger more investigations and cleanups. Second, any PFAS limits under the SDWA or state regulations would become Applicable or Relevant and Appropriate Requirements (“ARARs”) that would have to be considered in CERCLA listing and remedy decisions. Finally, these changes would require PFAS contamination to be evaluated in EPA’s five year review at each site and potentially trigger reopeners in prior settlements. Tighter standards for other chemicals, such as 1,4-dioxane, could have similar results.
Resources are already being deployed to support these efforts and additional funding for Brownfield and Superfund projects is in the works. The American Rescue Plan Act of 2021 provides $100 million for EPA grants to address disproportionate environmental harms to at-risk populations and air quality monitoring. According to the American Jobs Plan Fact Sheet dated March 31, 2021, the Administration is proposing an additional $5 billion for Brownfield and Superfund sites and an additional $10 billion to monitor and remediate PFAS. The Administration is also proposing to restore the Superfund tax, which expired in 1995, to ensure that resources are available in the Superfund Trust to address unfunded site cleanups. Similarly, the Administration is considering reversing the financial responsibility exemption for chemical manufacturers, petroleum and coal products manufacturers and electric power generation, transmission and distribution facilities that was issued in the waning days of the previous Administration.
Like CERCLA, RCRA was not a focus of the Trump Administration’s regulatory rollbacks—though funding cutbacks affected rule development and enforcement. The Biden Administration has already signaled that it intends to reenergize enforcement, including criminal prosecutions, which may lead to an increase in federal overfiling in RCRA enforcement actions, especially in states with lax enforcement histories.
Trump’s most significant RCRA actions addressed coal ash, referred to as Coal Combustion Residuals (“CCR”). The Trump CCR rules, which were promulgated after the Obama-era CCR rule was vacated, are being reviewed for consistency with Biden’s Executive Order Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis. Likewise, the CCR Permit Program and the Beneficial Use Rules or Electric Utilities, which were pending on Inauguration Day, are subject to the Presidential memorandum freezing regulations pending review.
Biden’s focus on environmental justice and climate change will impact RCRA permit evaluations and enforcement, both in process and in substance. Procedurally, those seeking RCRA permits, and even RCRA permitted facilities, may be subject to additional notification requirements, more community involvement, and greater scrutiny. Substantively, the social cost of carbon and chemical exposure risks will become part of the evaluation.
Biden’s other climate change initiatives may have more significant RCRA impacts down the road. For example, the push toward electric vehicles will reduce the demand for gas stations at current levels. That change, combined with the fact that underground storage tanks installed or upgraded to comply with the 1988 underground storage tank standards are nearing the end of their useful lives, will trigger tank closures throughout the country. More broadly, the transition from a fossil fuel economy to a clean fuel economy will reveal many other environmental issues that will require substantial efforts and resources to address.
The Biden Administration is already changing the course of environmental law. With CERCLA and RCRA, the shifts will be more subtle than in other areas, but the focus on climate change and environmental justice will have profound impacts on whose voices are heard and where, and how, resources are deployed. The Corporate Environmental Lawyer Blog will continue to monitor and report on developments in these areas and others. In the meantime, thank you for sharing Earth Day (and Earth Week) with us!
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
A key platform of President Biden’s environmental agenda is increased regulatory scrutiny with respect to chemical substances under the Toxic Substances Control Act (TSCA). Regulating chemicals in order to minimize the threat to human health and the environment is clearly also critical to achieving the aims and goals of Earth Day, especially considering that the publication of Rachel Carson’s Silent Spring helped spark the global environmental movement that eventually culminated in the first Earth Day in 1970.
Turning now to the present, in the waning months of the Trump administration, there was a flurry of U.S. EPA activity under TSCA, including the issuance of risk evaluations for a number of high-priority chemical substances, including asbestos, 1,4-dioxane, and trichloroethylene. Notwithstanding that these risk evaluations concluded that at least some uses of each of the ten high priority chemicals posed an unreasonable risk, these risk evaluations were widely criticized for failing to take into consideration reasonably foreseeable uses or failing to adequately consider various scientific studies. There had been much speculation that President Biden would reject all of the Trump-era TSCA risk evaluations and in fact, one of President Biden’s first actions in the White House was to direct U.S. EPA to review the TSCA risk evaluation process as well as the methylene chloride risk evaluation specifically.
Rather than throwing the baby out with the bathwater, however, U.S. EPA is moving forward to develop risk mitigation plans for each of these high priority chemicals. At the same time, Michal Freedhoff, the acting assistant administrator for U.S. EPA’s Office of Chemical Safety and Pollution, noted that U.S. EPA would be taking a hard look at these risk evaluations. In a prepared statement, Ms. Freedhoff stated:
Our goal is to allow risk management actions on these first ten chemicals to move forward as much as possible, while looking back surgically at specific areas in some of the risk evaluations to supplement them as appropriate in order to ensure we are meeting our statutory obligations and using the best available science to truly protect human health and the environment.
As to the next 20 chemicals in the risk assessment pipeline, U.S. EPA has already announced that it will reassess its TSCA risk evaluation process, including refining its approach for selecting and reviewing scientific studies. U.S. EPA noted that it would not rely on U.S. EPA’s Application of Systematic Review in TSCA Risk Evaluations, a guidance document issued by U.S. EPA in 2018 that was much maligned by the National Academy of Scientists.
One can also expect an increased focus on environmental justice issues by U.S. EPA in connection with evaluating the risks posed by chemical substances. This will most likely play out in connection with an increased focus on chemical substance exposure for fence-line and front-line communities during the risk evaluation process.
Finally, there will also be increasing pressure on the Biden Administration to regulate new emerging contaminants such as per- and polyfluoroalkyl substances (PFAS) under both TSCA and the Safe Drinking Water Act. PFAS compounds have not yet been considered for prioritization under TSCA but are likely to be on a list of high priority chemicals in the future. In the meantime, U.S. EPA is likely to move forward with designating at least PFAS compounds as hazardous substances under CERCLA as well as evaluating whether to set an MCL for these compounds under the Safe Drinking Water Act.
Please check back on Jenner & Block’s Corporate Environmental Lawyer for more Earth Day content throughout the week.
By Leah Song
President Biden has made climate change a main focus of his administration. At the beginning of his term, President Biden issued several executive orders addressing climate change: “Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” (January 20, 2021) and “Executive Order on Tackling the Climate Crisis at Home and Abroad” (January 27, 2021) (“Day 7 Environmental Executive Order”). This article will highlight the administration’s international focus, climate justice, climate litigation, and several priorities of the recent executive orders.
As President Biden promised prior to inauguration, he recommitted the U.S. to the Paris Climate Agreement, which is intended to limit the global temperature increase to 2 degrees Celsius above pre-industrial levels. Trump had announced his intent to terminate the U.S.’s involvement in the Paris Climate Agreement shortly after taking office, but due to the rules, was not able to formally withdraw until November 4, 2019, which became final a year later on November 4, 2020. The U.S. had originally committed to cut GHG emissions by at least 26% below 2005 levels by 2025. Countries were supposed to submit new targets for 2030 by the end of 2020. The Biden administration will likely submit its updated Nationally Determined Contribution (“NDC”) by the end of 2021 in time for the COP26 event scheduled at the end of the year. Given the rollbacks during the Trump administration and predicted increase in emissions as the world recovers from the COVID-19 pandemic, President Biden will need to carefully consider the new target NDCs.
Keeping with the international focus, the Biden administration committed to treating climate change as a national security threat and fully integrating climate change into foreign policy and national security strategies. President Biden selected former Secretary of State John Kerry as the Special Presidential Envoy for Climate and to sit on the National Security Council. Kerry’s role is complemented by Gina McCarthy, White House National Climate Advisor, and Ali Zaidi, Deputy White House National Climate Advisor, in the White House Office of Domestic Climate Policy. The Day 7 Environmental Executive Order also discusses the establishment of a National Climate Task Force, working across 21 federal agencies and departments to enable a “whole-of-government” approach to combatting the climate crisis. For summaries of the recent National Climate Task Force meetings, click here and here.
During his campaign and into his presidency, President Biden has made clear his focus on environmental and climate justice. The Day 7 Environmental Executive Order establishes the White House Environmental Justice Advisory Council and the White House Environmental Justice Interagency Council in order to prioritize environmental justice and ensure a “whole-of-government” approach to addressing current and historical environmental injustices. There will be a focus on environmental justice monitoring and enforcement through new or strengthened offices at the U.S. Environmental Protection Agency, Department of Justice, and Department of Health and Human Services.
In time for Earth Day, the administration invited 40 world leaders to the Leaders Summit on Climate that will be hosted on April 22 and 23. The virtual Leaders Summit will be live streamed for public viewing. For an initial overview of the Leaders Summit, click here.
Check back on Jenner & Block’s Corporate Environmental Lawyer for more Earth Day content throughout the week.
By Gabrielle Sigel, Co-Chair, Environmental and Workplace Health and Safety Law Practice
This week, as we celebrate Earth Day on April 22, Jenner & Block’s Environmental and Workplace Health and Safety Law Practice will be focusing, each day, on a different aspect of the environment and how this year will affect our planet. I thought I would begin our week-long focus on Earth Day with a more personal reflection.
This past pandemic year on Earth gave me a chance to spend more time reading and lots more time thinking about our society and how we communicate with each other. Purely by coincidence, I had a chance to read two pieces of fiction that focus on both the environment and communication. In Richard Powers’s Pulitzer Prize winning, “The Overstory,” we learn about trees’ ability to communicate with each other as part of their survival network. The female scientist who makes this discovery in “The Overstory” calls to mind the work of Dr. Suzanne Simard, a professor of in the Department of Forest and Conservation Sciences at the University of British Columbia, who demonstrated how trees, even of different species, communicate and support each other through underground networks of fungi, known as mycorrhizal networks. The need to communicate, to support each other, to have deep, underground roots is central to all living things. Our ability to communicate as humans starts and ends with our planet.
A complementary novel to “The Overstory” is “A Children’s Bible” by Lydia Millet. Millet’s dystopian view of our planet’s future also has an understory about each generation’s inability to communicate their perspectives about their roles in taking care of each other and society. In my reading of “Children’s Bible,” the ultimate collapse occurs not just because of an environmental disaster, but because the generations stopped being able to communicate with and rely on each other.
Using one of our most useful forms of communication—humor, our first Earth Day cartoonist, Walt Kelly, tied together the need for both protection and connection in an elegant and powerful drawing:
We are all like trees in a giant forest called Earth. We have tentacles and roots touching each other in ways we cannot see, and we cannot continue living if we fail to acknowledge these connections. As we care for each other, we are also caring for our common home. As we communicate with each other, we must remember that we are connected to each other in ways that science is continuing to discover and that our personal experience is still learning.
As with many yearly events, Earth Day gives us an opportunity to reflect, discuss, and share. Thank you for letting me have the opportunity to connect with you.
By: Todd C. Toral and PJ M. Novack
Lawsuits over alleged misleading environmental marketing claims, or “greenwashing,” are nothing new. It has been nearly 30 years since the Federal Trade Commission (FTC) released its first version of the “Green Guides,” which are intended to help marketers avoid the practice. Since then, there have been many greenwashing actions before the FTC. More broadly, the FTC has pursued a number of suits in federal court, such as false advertising claims over the terms “clean diesel” and “100% organic.” But last month, in a first, several environmental groups petitioned the FTC to use its Green Guides offensively against a fossil fuel company for “misleading consumers on the climate and environmental impact of its operations.”
On March 16, 2021, Earthworks, Global Witness, and Greenpeace USA filed a complaint against Chevron for misleading consumers through advertisements that exaggerate the company’s investment in renewable energy and its commitment to reducing fossil fuel pollution. The action comes on the heels of Chevron’s new “Climate Change Resilience” report, where Chevron outlined its contributions against climate change. The environmental groups argue that Chevron misrepresents its image to appear climate-friendly and racial-justice oriented, while actually doing more harm than good. In support of their claims, the environmental groups point out that Chevron is the second most polluting company in the world and had spent only 0.2% of its capital expenditures on low-carbon energy sources between 2010-2018.
Considering the recent change in administrations, this action may represent a new trend where consumer and environmental groups are willing to take on major oil companies by petitioning a potentially more consumer-friendly FTC. President Biden currently has an opportunity to fill the vacant FTC seat and tip the balance of power toward Democrats. Moreover, President Biden has signaled his personal support for environmental causes by halting oil and gas sales and canceling the Keystone XL crude pipeline. Given the shifting sands, companies should be prepared for new and perhaps more creative enforcement actions.
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
Breaking from the pack and potentially creating a circuit split, the Second Circuit’s decision in City of New York v. Chevron, et al. dismissing New York’s City’s climate change lawsuit is a significant victory for the oil and gas industry. The unanimous ruling from the Second Circuit affirmed a district’s court decision dismissing New York’s common law claims, finding that issues such as global warming and greenhouse gas emissions invoked questions of federal law that are not well suited to the application of state law.
Taking a slightly different tact than state and local plaintiffs in other climate change lawsuits, the State of New York sued five oil producers in federal court asserting causes of action for (1) public nuisance, (2) private nuisance, and (3) trespass under New York law stemming from the defendants’ production, promotion and sale of fossil fuels. New York sought both compensatory damages as well as a possible injunction that would require defendants to abate the public nuisance and trespass. Defendants filed motions to dismiss that were granted. The district court determined that New York’s state-law claims were displaced by federal common law and that those federal common law claims were in turn displaced by the Clean Air Act. The district court also concluded that judicial caution counseled against permitting New York to bring federal common law claims against defendants for foreign greenhouse gas emissions.
The Second Circuit agreed with the district court, noting that the problems facing New York can’t be attributed solely to greenhouse gas emissions in the state nor the emissions of the five defendants. Rather, the greenhouse gas emissions that New York alleges required the City to launch a “$20 billion-plus multilayered investment program in climate resiliency across all five boroughs” are a byproduct of emissions around the world for the past several hundred years.
As the Second Circuit noted, “[t]he question before it is whether municipalities may utilize state tort law to hold multinational oil companies liable for the damages caused by greenhouse gas emissions. Given the nature of the harm and the existence of a complex web of federal and international environmental law regulating such emissions, we hold that the answer is ‘no.’”
Finding that New York’s state common law claims were displaced by federal common law, the Second Circuit then considered whether the Clean Air Act displaced these federal common law claims. The Second Circuit noted that the Supreme Court in Am. Elec. Power Co. v. Connecticut (AEP) (2011) had previously held that the “’Clean Air Act and the EPA actions it authorizes displace any federal common-law right to seek abatement’ of greenhouse gas emissions.” As to the State’s damage claims, the Second Circuit agreed with the Ninth Circuit’s reasoning in Native Vill. Of Kivalina v. Exxonmobil Corp. (9th Cir. 2012) that the “displacement of federal common law does not turn on the nature of the remedy but rather on the cause of action.” As such, the Second Circuit held that “whether styled as an action for injunctive relief against the Producers to stop them from producing fossil fuels, or an action for damages that would have the same practical effect, the City’s claims are clearly barred by the Clean Air Act.
The Second Circuit was careful to distinguish its holding from the holdings reached by the First, Fourth, Ninth and Tenth circuits in prior climate change cases, noting that in those other cases, the plaintiffs had brought state-law claims in state court and defendants then sought to remove the cases to federal courts. The single issue in those cases was whether defendants’ federal preemption defenses singlehandedly created federal question jurisdiction. Here, because New York elected to file in federal as opposed to state court, the Second Circuit was free to consider defendants’ preemption defense on its own terms and not under the heightened standard applicable to a removal inquiry.
Whether the Second Circuit’s decision has any impact on BP PLC, et al. v. Mayor and City Council of Baltimore, a case that has now been fully briefed and argued before the Supreme Court remains to be seen. The Baltimore case was one of the state court cases discussed above that was removed to federal court. The defendants had alleged a number of different grounds for removal, one of which is known as the “federal officer removal statute” that allows removal to federal court of any lawsuit filed against an officer or person acting under that office of the United States or an agency thereof. The limited issue before the Supreme Court was whether the appellate court could only consider the federal-officer removal ground or whether it could instead review any of the grounds relied upon in defendants’ removal petition.
Some commenters have noted that the Second Circuit’s decision creates a circuit split that may embolden the Supreme Court to address these climate change cases in one fell swoop. The more likely scenario, however, is that the Supreme Court limits its opinion to the narrow issue before it and leaves resolution of whether state law climate change nuisance actions are preempted by federal law for another day.
Congressional Review Act Resolution Introduced to Revoke EPA Methane Rule—Does this Open the CRA Floodgates?
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
On March 25, 2021, Democrats in the Senate and House of Representatives introduced joint resolutions pursuant to the Congressional Review Act (CRA) that if approved by Congress and signed by President Biden would rescind the Trump-era rollback of Obama-era regulations that (1) imposed methane-specific emission limits on “production and processing” segments of the oil and gas industry and (2) required that transmission lines and storage equipment be inspected for methane leaks and repaired in a timely manner in accordance with the New Source Performance Standards for the Oil and Natural Gas Industry. The CRA resolution, if approved by Congress and signed by President Biden, would reinstate these Obama-era regulations for the oil and gas industry.
The CRA, which was enacted in 1996, is a tool that allows Congress to disapprove a range of regulatory rules issued by federal agencies by first approving a joint resolution of disapproval that then goes to the President for signature. If signed by the President, the disapproved rule either does not take effect or does not continue. In addition, once a joint resolution of disapproval is enacted, the CRA provides that a new rule may not be issued in “substantially the same form” as the disapproved rule. Congress has a limited window to act—the CRA requires that a joint resolution of disapproval must be introduced within 60 legislative working days of the date that the rule was submitted to Congress.
The CRA had not been widely used prior to the Trump administration and the Democrats had widely criticized President Trump's prior use of the CRA to rescind Obama-era regulations. As such, there had been some uncertainty as to whether the Democrats would embrace this tool in light of their prior opposition and hostility to the use of the CRA by many environmental groups. However, with this joint resolution and another March 23rd CRA resolution to disapprove of the Equal Employment Opportunity Commission’s conciliation rule, the CRA floodgates may have opened. The resulting deluge will likely be of short duration, however, as the window for CRA disapprovals for Trump-era actions is expected to close on April 4th.
Biden Administration Takes New Action to Ensure Increased Consideration of Climate Change Impacts by the Federal Government
On Friday, February 19, 2021, the Council on Environmental Quality (“CEQ”) rescinded prior draft guidance issued under the Trump Administration in 2019 (the “2019 Draft CEQ Guidance”), which had limited the degree to which federal agencies needed to consider and quantify climate change impacts under the National Environmental Policy Act (NEPA). The rescission of the 2019 Draft CEQ Guidance is the latest step by the federal government to implement President Biden’s Executive Order 13990, which was signed on President Biden’s first day in office (the “Day 1 EO”). In addition to directing CEQ to rescind its prior guidance, President Biden’s Day 1 EO set forth numerous directives implementing the administration’s new climate change policy, including an order reinstating the Interagency Working Group (IWG) and directing the IWG to develop an updated “Social Cost of Carbon” (“SCC”) valuation to better quantify the economic harms associated with the emission of carbon dioxide and other greenhouse gasses (“GHGs”). Under the Day 1 EO, the IWG was directed to publish its new interim SCC value within 30 days of the Order and publish a final SCC value by January 2022. Together, the Day 1 EO’s rescission of the 2019 Draft CEQ Guidance and reinstatement of the IWG signal a clear intent from the Biden Administration to significantly increase the degree to which federal agencies must consider and account for climate change impacts when enacting future regulation or taking other agency actions.
The origins of the SCC metric can be traced back to President Clinton’s 1993 Executive Order 12866, which required that federal agencies, to the extent permitted by law, “assess both the costs and the benefits of [their] intended regulation and…propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” Compliance with Executive Order 12866 poses a unique challenge for federal agencies where a proposed regulation is expected to cause a significant increase or decrease of carbon dioxide or other GHG emissions, as the benefits or costs associated with these emissions cannot easily be quantified or compared to other metrics used in the agency’s cost-benefit analysis.
On February 5, 2021, the U.S. Occupational Safety and Health Administration (OSHA) issued a proposed rule updating its Hazard Communication (“Haz Com”) Standard to align its rules with those in the seventh version of the United Nation’s Globally Harmonized System of Classification and Labeling of Chemicals (GHS), published in 2017. OSHA’s proposed regulatory update is being issued as the United States’ major international trading partners, including Canada, Australia, New Zealand, and those in Europe, similarly prepare to align their own hazard communications rules with the seventh version of the GHS.
Originally established in 1983, OSHA’s Haz Com Standard provides a systematized approach to communicating workplace hazards associated with exposure to hazardous chemicals. Under the Haz Com Standard, chemical manufacturers and/or importers are required to classify the hazards of chemicals which they produce or import into the United States, and all employers are required to provide information to their employees about the hazardous chemicals to which they are exposed, by means of a hazard communication program, labels and other forms of warning, safety data sheets, and information and training. At an international level, the GHS provides a universally harmonized approach to classifying chemicals and communicating hazard information. Core tenants of the GHS include universal standards for hazard testing criteria, warning pictograms, and safety data sheets for hazardous chemicals.
In a pre-published version of the proposed rule, OSHA’s proposed modifications to the Haz Com Standard include codifying enforcement policies currently in OSHA’s compliance directive, clarifying requirements related to the transport of hazardous chemicals, adding alternative labeling provisions for small containers and adopting new requirements related to preparation of Safety Data Sheets. Key modifications included in the proposed rule, include:
- New flexibility for labeling bulk shipments of hazardous chemicals, including allowing labels to be placed on the immediate container or transmitted with shipping papers, bills of lading, or by other technological or electronic means that are immediately available to workers in printed form on the receiving end of the shipment;
- New alternative labeling options where a manufacturer or importer can demonstrate that it is not feasible to use traditional pull-out labels, fold-back labels, or tags containing the full label information normally required under the Haz Com Standard, including specific alternative requirements for containers less than or equal to 100ml capacity and for containers less than or equal to 3ml capacity; and
- New requirements to update the labels on individual containers that have been released for shipment but are awaiting future distribution where the manufacturer, importer or distributer becomes aware of new significant information regarding the hazards of the chemical.
OSHA last updated its Haz Com Standard in 2012, to align the standard with the then recently published third version of GHS. In its newly proposed rule, OSHA clarifies that it is “not proposing to change the fundamental structure” of its Haz Com Standard, but instead seeking to “address specific issues that have arisen since the 2012 rulemaking” and to provide better alignment with international trading partners. According to OSHA, its proposed modifications to the Haz Com Standard “will increase worker protections, and reduce the incidence of chemical-related occupational illnesses and injuries by further improving the information on the labels and Safety Data Sheets for hazardous chemicals.”
OSHA is currently accepting comments on its proposed rule until April 19, 2021. Comments may be submitted electronically to Docket No. OSHA-2019-0001at http://www.regulations.gov, which is the Federal e-Rulemaking Portal.
By Steven M. Siros, Co-Chair, Environmental and Workplace Health & Safety Law Practice
On February 4, 2021, in accordance with President Biden’s Executive Order 13,990 (Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis), DOJ directed its ENRD Section and Deputy Section Chiefs to withdraw nine environmental policies that were put in place by the Trump Administration. The February 4th memorandum identifies the following nine withdrawn policies:
- “Enforcement Principles and Priorities,” January 14, 2021;
- “Additional Recommendations on Enforcement Discretion,” January 14, 2021;
- “Guidance Regarding Newly Promulgated Rule Restricting Third-Party Payments, 28 C.F.R. § 50.28,” January 13, 2021;
- “Equitable Mitigation in Civil Environmental Enforcement Cases,” January 12, 2021;
- “Civil Enforcement Discretion in Certain Clean Water Act Matters Involving Prior State Proceedings,” July 27, 2020;
- “Supplemental Environmental Projects (“SEPs”) in Civil Settlements with Private Defendants,” March 12, 2020;
- “Using Supplemental Environmental Projects (“SEPs”) in Settlements with State and Local Governments,” August 21, 2019;
- “Enforcement Principles and Priorities,” March 12, 2018; and
- “Settlement Payments to Third Parties in ENRD Cases,” January 9, 2018.
In support of rescission of these policies, DOJ’s Deputy Assistant Attorney General noted that these policies were inconsistent with longstanding DOJ policy and practice and inappropriately impeded DOJ’s exercise of its enforcement discretion. Two of the more controversial policies rescinded by DOJ’s February 4th memorandum related to the prohibition on the use of supplemental environmental projects (SEPs) in settlement agreements. Under the Trump Administration, DOJ had argued that the use of SEPS violated the Miscellaneous Receipts Act which requires that monies paid to the Government be deposited into the Treasury so that Congress could decide how the monies would be appropriated.
DOJ noted that it would continue to assess the matters addressed by the withdrawn policies and might elect to issue new guidance on these matters in the future. We will continue to track efforts by the Biden Administration the environmental policies of the Trump Administration at the Corporate Environmental Lawyer.
By Steven M. Siros, Co-Chair, Environmental and Workplace Health and Safety Law Practice
On January 19, 2021, four days after the close of the comment period, U.S. EPA issued its final guidance document to aid in implementation of its Significant New Use Rule (SNUR) for long-chain perfluoroalkyl carboxylate and perfluoroalkyl sulfonate chemical substances (PFAS). Not surprisingly, in light of the short time between the close of comments and issuance of the guidance, the final guidance remained largely unchanged from the draft version.
In July 2020, U.S. EPA finalized its PFAS SNUR that requires notice and U.S. EPA review before manufacturing and processing for use certain long-chain PFAS that have been phased out in the United States. In addition, articles containing these long-chain PFAS as part of a surface coating cannot be imported into the United States without submission of a Significant New Use Notice (SNUN).
The guidance provides examples of what would and would not be articles subject to the SNUR as well as clarification on what is meant as a “surface coatings.” Although U.S. EPA declined to provide a regulatory definition of “surface coating” in the PFAS SNUR, the guidance indicates that any long-chain PFAS meeting one of the following two criteria would be a surface coating covered by the SNUR:
- Coating on any surface of an article that is in direct contact with humans or the environment during the article’s normal use or reuse, whether the coating is oriented towards the interior or exterior of the article; or
- Coating on any internal component, even if facing the interior of the article, if that component is in contact with humans or the environment during the article’s normal use or reuse.
Many environmental groups noted that the “direct contact” standard and the refusal to consider potential exposures associated with the disposal and/or misuse of these articles was contrary to the provisions of the PFAS SNUR and these groups are urging the Biden Administration to revisit the guidance. Because the new guidance is not labeled as “significant”, it did not need to follow the formal notice-and-comment process but this would also arguably allow the incoming Biden administration to quickly rework and issue its own guidance for implementing the PFAS SNUR.
We will continue to provide updates on efforts by the Biden Administration to implement the PFAS SNUR on the Corporate Environmental Lawyer blog.
By Steven M. Siros, Co-Chair, Environmental and Workplace Health and Safety Law Practice
The Trump administration continues its efforts to issue new regulations in advance of January 20, 2021, with the Department of Energy (DOE) issuing a final rule that will exempt certain liquefied natural gas (LNG) projects from National Environmental Protection Act (NEPA) review. The final rule, published in the Federal Register on December 4, updates DOE’s NEPA implementing procedures with respect to authorizations issued under the Natural Gas Act in accordance with the recent revisions to the NEPA regulations as further described below.
According to DOE, the focus of the new rule is to clarify the scope of DOE’s NEPA obligations with respect to LNG projects and more specifically, to eliminate from the scope of DOE’s NEPA review potential environmental effects that the agency has no authority to prevent. Because DOE’s discretionary authority under Section 3 of the Natural Gas Act is limited to the authorization of exports of natural gas to non-free trade agreement countries, the rule limits the scope of environmental impacts that DOE must consider to the impacts associated with the marine transport of the LNG commencing at the point of export.
To that end, the final rule revises DOE’s existing Categorical Exclusions (CATEX) to reflect that the only elements of LNG projects subject to NEPA review is the following:
B5.7 Export of natural gas and associated transportation by marine vessel.
Approvals or disapprovals of new authorizations or amendments of existing authorizations to export natural gas under section 3 of the Natural Gas Act and any associated transportation of natural gas by marine vessel.
Based on prior NEPA reviews and technical reports, DOE has determined that the transport of natural gas by marine vessel normally does not pose the potential for significant environmental impacts and therefore qualifies for a CATEX. As such, the only reason that DOE would be obligated to engage in a NEPA review of a LNG project would be if “extraordinary circumstances” were deemed to be present that could not be mitigated and therefore would preclude DOE's reliance on this CATEX.
The revised CATEX also removes the reference to import authorizations from CATEX B5.7 because DOE has no discretion with respect to such approvals. Finally, the final rule also removes and reserves CATEX B5.8 and classes of actions C13, D8, D9 because these actions are outside of the scope of DOE’s authority or are covered by the revised CATEX B5.7.
Interestingly, although the Federal Energy Regulatory Commission (FERC) has responsibility for approving the construction of LNG export terminals, it has previously declined to analyze the greenhouse emissions associated with such projects, noting that DOE is the appropriate agency to consider such impacts. However, with DOE now concluding that these projects are categorically excluded from such reviews, it remains to be seen if FERC will reconsider its approach to these operations.
The final rule is scheduled to take effect on January 4, 2021 and it remains to be seen what if any action a new Biden administration might take in response to this rule. Assuming that the Republicans retain control of the Congress, DOE would be required to go through the formal withdrawal process. Alternatively, if the Democrats take control of the Senate, the regulation could be repealed pursuant to the Congressional Review Act.
We will continue to track the Trump administration’s ongoing effort to finalize regulations in advance of January 20th as well as efforts by any new administration to rollback these regulations on the Corporate Environmental Lawyer.
On October 8, 2020, the Conservation Law Foundation filed a lawsuit challenging a DOJ policy that barred the use of supplemental environmental projects (SEPs) in federal enforcement settlements with private parties. SEPs have been used since the 1980s and typically involve a project intended to provide some tangible environmental or public health benefit that could not necessarily be compelled by U.S. EPA.
DOJ, in a March 12, 2020 memorandum, announced that it was terminating its policy of allowing companies to agree to perform SEPs in exchange for reductions in civil penalties in environmental enforcement settlements. According to DOJ, the practice of using SEPs in lieu of civil penalties violates the Miscellaneous Receipts Act, a statute that prevents cash from legal settlements being diverted from the Treasury to third parties. As further described in the March 2020 DOJ memorandum, DOJ claims that the SEPs basically substitute payments to third parties for payments to the Treasury, circumventing Congress’ Constitutional power of the purse.
The lawsuit claims that DOJ’s conclusion that the use of SEPs violates the Miscellaneous Receipts Act is arbitrary and capricious and otherwise lacks reasoned decision-making. The lawsuit highlights U.S. EPA’s history of using SEPs and its various guidance documents encouraging the use of SEPs in environmental enforcement matters. The lawsuit asks that the Court declare that DOJ’s March 2020 memo violates the Administrative Procedures Act, vacate the memo, and enjoin DOJ from implementing or relying on the memo in the future. .
We will continue to provide updates on this lawsuit as well as other important environmental, health and safety issues on Jenner & Block’s Corporate Environmental Lawyer Blog.
On Friday, October 2, 2020, the United States Supreme Court granted a writ of certiorari to review of a decision by the Fourth Circuit Court of Appeals holding that climate change litigation brought against various fossil fuel were not subject to federal court subject matter jurisdiction. While the Supreme Court’s review is limited to a somewhat narrow, jurisdictional question regarding the ability of an appellate court to review a district court’s order remanding a case to state court, the decision will likely have far reaching impacts on whether the growing number of climate changes cases in the United States will be litigated in state or federal courts.
As previously discussed by the Corporate Environmental Lawyer, the underlying litigation involves claims asserted in Maryland state court by the City of Baltimore against various fossil-fuel companies for damages associated with Climate Change. In its complaint, Baltimore asserted claims against the industry for public nuisance, private nuisance, strict liability failure to warn, strict liability design defect, negligent design defect, negligent failure to warn, trespass, and violations of Maryland’s Consumer Protection Act.
In response, the fossil fuel companies sought to remove the action to federal court. However, the district court remanded the case back to state court after finding that it lacked subject matter jurisdiction over the asserted claims following the lead of several other district courts that have decided similar issues. On March 6, 2020, the Fourth Circuit affirmed the district court’s remand order. Importantly, the Fourth Circuit found that its appellate jurisdiction was limited to reviewing the district court’s conclusion that it lacked subject matter jurisdiction under the Federal-Officer Removal Statute pursuant to 28 U.S.C. § 1447(d) and 28 U.S.C. § 1442 notwithstanding that the fossil fuel companies had raised and the district court ruled on additional arguments in support of the removal petition. The Fourth Circuit found that it lacked jurisdiction to consider whether the district court should have granted removal to federal court on these alternative grounds.
With respect to the Federal Officer Removal Statute, the Fourth Circuit rejected the companies’ arguments that the case belonged in federal court because the companies had entered into fuel supply and strategic petroleum reserve agreements with the federal government. The court concluded that these contractual agreements failed to establish that the companies were “acting under” the direction of a federal officer and were “insufficiently related” to Baltimore’s claims. On March 31, 2020, the fossil-fuel companies filed a petition for a writ of certiorari in the United States Supreme Court, seeking review of the question of whether the statutory provision prescribing the scope of appellate review of remand orders “permits a court of appeals to review any issue encompassed in a district court’s order remanding a removed case to state court…” The companies argued that the Fourth Circuit had improperly ignored several alternative grounds justifying removal of the case to federal court, including that federal common law governs claims of interstate air pollution.
While the Supreme Court’s review of the case will be limited to the appellate jurisdictional question, the decision will undoubtedly influence the growing trend of climate change litigation. At present, twenty-one U.S. States and numerous municipalities have brought lawsuits in state court against the fossil fuel industry for damages related to climate change. In nearly all such cases, the industry has sought to remove the case to federal court where it is believed the companies have a better chance of successfully securing dismissals on the grounds that such claims are preempted by the Clean Air Act and/or addresses a “political question” which is better left to the discretion of Congress. Thus, the Supreme Court’s decision will likely impact the ability of the fossil fuel industry to seek appellate review of unfavorable district court remand orders.
On August 13, 2020, EPA issued two final rules that will have a significant impact on methane emissions, a potent greenhouse gas. The final rules were issued under the Clean Air Act’s New Source Performance Standards (“NSPS”) for the oil and natural gas industry and rescind Obama-era rules issued in 2012 and 2016. EPA categorized the two new rules as (1) Policy Amendments and (2) Technical Amendments.
Key provisions from these two rules include the following:
- Policy Amendments:
- Removes the natural gas transmission and storage segment of the oil and natural gas industry from regulation.
- Rescinds methane and volatile organic compounds (“VOCs”) emissions standards for the natural gas transmission and storage segment of the oil and natural gas industry.
- Rescinds methane emissions standards for the production and processing segments of the oil and natural gas industry and finds that EPA is no longer required or authorized to issue emission guidelines for methane from existing sources in the industry’s production and processing segments.
- Finds that the Clean Air Act requires, or authorizes, EPA to make a “significant contribution finding” as a predicate to regulating any air pollutant that was not considered when EPA first listed or regulated an industry “source category.”
- Technical Amendments:
- Reduces the frequency of required fugitive emissions monitoring for gathering and boosting compressor stations from quarterly to twice a year and exempts low-production wells from fugitive monitoring requirements altogether.
- Reduces the recordkeeping and reporting requirements of the fugitive emissions program.
- Changes include allowing owners and operators to determine the best means to ensure all components are monitored, rather than having to include a site map and an observation path in the monitoring plan.
- Updates fugitive emissions repair requirements.
- Provides additional technical updates covering fugitive emissions monitoring and repairs, alternative means of emissions limitations, pneumatic pumps, engineer certifications for closed vent systems, and storage vessels.
As we discussed on this Blog previously, these rules were originally proposed on August 28, 2019. EPA held public hearings on the proposed amendments, and received nearly 300,000 written comments on the Policy Amendments and more than 500,000 written comments on the Technical Amendments.
According to EPA’s analysis:
The Regulatory Impact Analysis (RIA) for the two rules estimates that, combined, the two actions will yield $750 to $850 million in net benefits over the period from 2021-2030, (7 percent and 3 percent discount rates, respectively), the annualized equivalent of nearly $100 million in net benefits a year.
EPA also estimates that from 2021-2030, the combined rules will result in an increase in 850,000 short tons of Methane emissions and 140,000 tons of VOC emissions.
Environmental groups, liberal states and other interest groups are all but certain to sue to try to block implementation of the new rules, with Earthjustice staff attorney Tim Ballo recently making the following statement:
The Trump administration is once again putting industry interests over people and public health by gutting these common-sense emission standards. The rollback would only further exacerbate a climate crisis that is already near a point of no return. We cannot afford to go back. We’ve successfully sued the Trump administration in their attempt to dismantle methane emission standards in the past, and we’ll sue again to keep these standards in place.
More information about these rules is available at EPA’s website. The rules will take effect 60 days after they are published in the Federal Register.
On Wednesday, July 15, 2020, the Trump Administration announced the publication of comprehensive updates to federal regulations governing the implementation of the National Environmental Policy Act (NEPA). The updated regulations—issued by the Council on Environmental Quality (“CEQ”)—are provided in the agency’s final rule titled “Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act” (the “Final Rule”), which is expected to be published in a forthcoming Federal Register publication. The Final Rule significantly overhauls the responsibilities of federal agencies under NEPA, and represents the first major overhaul to NEPA’s regulations in over 30 years. During his announcement, President Trump promised that the overhaul would remove “mountains and mountains of bureaucratic red tape in Washington, D.C.” and speed up the approval and construction of major projects such as interstate highways and pipelines.
NEPA requires federal agencies to quantify and consider the environmental impacts of proposed actions “with effects that may be major and which are potentially subject to Federal control and responsibility.” The federal agency must conduct its NEPA review prior to “any irreversible and irretrievable commitments of resources” towards the proposed action. To fulfill its obligations under NEPA, federal agencies much first complete an “Environmental Assessment” (“EA”) that analyzes whether a proposed action will have a significant impact on the environment. If the EA concludes that an action could have significant environmental impacts, the agency is obligated to take the next step under NEPA and prepare a detailed “Environmental Impact Assessment” (“EIS”) that describes and quantifies the anticipated impacts. Federal agencies are required to undertake an EA and potentially an EIS before commencing public infrastructure projects such as roads, bridges and ports, or before issuing permits to certain private actions that require federal approval, such as the construction of pipelines or commencement of mining operations.
The Trump Administration has repeatedly voiced displeasure with the existing NEPA process, which the President has characterized as “increasingly complex and difficult to manage.” Legal challenges initiated under the existing NEPA regulations have also stalled a number of energy projects publicly supported by the administration, including the Keystone XL, the Dakota Access pipelines. The administration's new regulations are expected to reduce the obligations imposed on federal agencies under NEPA through a variety of measures, including reducing the types of environmental impacts that must be considered during a NEPA review; shortening the permitted time period for reviews; and exempting certain types of actions from the review requirements.
While the Final Rule provides numerous modifications to the language of the existing regulations, three changes expected to have substantial impact on the NEPA process include:
- Narrowing of “Effects” that Agencies Must Consider: The Final Rule seeks to narrow the scope of the environmental consequences that must be considered during an agency’s NEPA review by striking from NEPA’s definition of “effects” references to “direct”, “indirect”, and “cumulative” effects. Instead, the new definition provides that federal agencies must only consider environmental “effects” that “are reasonably foreseeable and have a reasonably close casual relational to the proposed action…” According to CEQ, NEPA’s existing definition of “effects” “had been interpreted so expansively as to undermine informed decision making, and led agencies to conduct analyses to include effects that are not reasonably foreseeable or do not have a reasonably close causal relationship to the proposed action or alternatives.” Under the Final Rule’s definition of “effects”, it is unclear whether agencies are ever required to consider a proposed project’s incremental contribution to “global” environment effects, such as Climate Change. Since global effects arguably do not have a “close causal relationship” with any single action, these impacts may now fall outside of NEPA’s purview.
By eliminating the reference to “indirect” emissions and requiring a “close causal relationship” between a project and its environmental effects, the Final Rule also appears to limit federal agencies’ obligation to consider indirect “upstream” and/or “downstream” impacts associated with a project. This issue is of particular significance to the ongoing legal debate regarding the scope of greenhouse gas (“GHG”) emissions that must be considered in NEPA reviews of interstate pipeline projects. Because the volume of GHG emissions caused by the burning of fossil fuels transported by a pipeline often far exceed the emissions directly associated with the pipeline’s construction, litigation can often arise as to whether these subsequent “downstream” emissions must be considered during the pipeline’s NEPA review. Under the Final Rule, it appears that upstream / downstream GHG emissions will often be excluded from NEPA’s requirements unless the emissions have a close relationship with the specific project. Ultimately, the manner in which federal agencies and courts interpret “close causal relationship” in the Final Rule has the potential to significantly reduce the scope of federal agencies’ evaluation of climate change impacts associated with federal projects.
- Limitations on Review Period and Report Length: The Final Rule seeks to expedite the NEPA review process by requiring federal agencies to limit all NEPA reviews to a maximum of two years. In addition, the final EIS issued by an agency may not exceed 150 pages of text or, for proposals of unusual scope of and complexity, 300 pages of text. Exceptions from the review period and/or EIS page limitations may only be granted through specific written approval from a senior agency official. The limitations imposed by the Final Rule appear to represent a significant departure from the existing NEPA process. According to a CEQ Report issued on June 12, 2020, the average final EIS is currently 661 pages in length and takes approximately 4.5 years to complete.
- Directive for Agencies to Expand Categorical Exclusions of NEPA Requirements for Certain Types of Projects: The Final Rule requires federal agencies to develop a list of actions that the agency does not expect to have a significant effect on the environment. Outside of “extraordinary circumstances,” agencies will not be required to conduct an EA for any projects falling within these categorical exclusions. Furthermore, the Final Rule clarifies that a NEPA review is not required where a proposed action would only have “minimal Federal funding or minimal Federal involvement,” such that the agency cannot control the outcome of the project.
The updated regulations are set to take effect 60 days after the publication of the Final Rule in the Federal Register. CEQ has further clarified that federal agencies may apply the updated regulations to any ongoing NEPA reviews, including environmental reviews started before the effective date of the regulations. However, environmental groups have already publicly stated that they intend to challenge the new rule, claiming at least in part that CEQ failed to respond to the more than one million comments that were submitted in response to the proposed new rules.
Lawsuits Challenging EPA’s Temporary Enforcement Discretion Policy for COVID‑19 Pandemic Hit Dead End
By Leah M. Song
As an update to our July 1st blog regarding EPA’s notice that its COVID-19 Temporary Enforcement Policy will end on August 31, 2020, there have been some new developments in the lawsuits filed challenging that policy.
On July 8, 2020, Judge McMahon of the United States District Court for the Southern District of New York ruled that the Natural Resources Defense Counsel and other environmental organizations (“Plaintiffs”) failed to show that they were injured by EPA’s purported “unreasonable delay” in responding to the petition. The Plaintiffs had petitioned EPA to publish an emergency rule requiring an entity to provide written notice if they were suspending monitoring and reporting because of COVID-19.
The court held that the Plaintiffs failed to establish the standing requirements. The Plaintiffs did not establish that they were “legally entitled to the information they seek” and lacked association standing as well. The Plaintiffs did not demonstrate that they “suffered a sufficiently concrete injury nor that that alleged injury is fairly traceable to EPA’s purported delay in responding to the Petition.”
The court said it was “perfectly obvious that, at the time Plaintiffs brought this lawsuit, the EPA had not ‘unreasonably’ delayed its response to the Petition.” Judge McMahon said that “the real litigation – over the legality of the [Enforcement Policy] itself – is presently being briefed in an action brought by nine State Attorneys General. That is where the action will – and should – take place.” Accordingly, the court granted summary judgment in favor of the EPA.
One day later on July 9, the State Attorneys General indicated that they will drop their lawsuit against EPA given the upcoming Enforcement Policy deadline. “EPA does not intend to extend the [Enforcement] Policy beyond August 31 and, should the policy terminate on (or before) August 31, Plaintiffs currently intend to voluntarily dismiss the Complaint without prejudice.” The parties prepared a “contingent, expedited briefing schedule” should EPA not terminate the Enforcement Policy by that date. This announcement is unlikely to cause Judge McMahon to revisit the summary judgment ruling since this decision doesn’t change that Plaintiffs lacked standing to bring the claims.
Jenner & Block’s Corporate Environmental Lawyer will continue to update on these matters, as well as other important COVID‑19 related guidance, as they unfold.
By Leah M. Song
As we have discussed in our previous blog posts, a growing form of climate change litigation in the United States consists of lawsuits filed by states or municipalities against private industry, and more specifically, the fossil-fuel industry. States, cities and other units of local government have filed lawsuits alleging state common law theories, including nuisance, trespass, failure to warn of the known impacts of climate change, and unjust enrichment.
The following cases are the primary cases that are currently ongoing: Rhode Island, Baltimore, Oakland, and San Mateo.
Defendants in these cases have universally tried to remove these cases to federal court where defendants presumably believe that they stand a much greater chance of getting the litigation dismissed. Generally, plaintiffs (including states, units of local government, and non-governmental organizations) asserting climate change claims against corporations prefer to be in state court where they can take advantage of perceived plaintiff-friendly common law or state statutes. On the other hand, defendants inevitably seek to remove such cases to federal court where they have had a higher level of success securing dismissals on the grounds that the issue is preempted by the Clean Air Act and/or addresses a “political question” which is better left to the discretion of Congress. See City of N.Y. v. BP P.L.C.. 325 F. Supp. 3d 466 (S.D.N.Y. 2018).
As further discussed below, in most of these cases, the district courts have remanded the cases back to state court and those decision have been appealed to the appellate courts. At the same time, defendants have sought to stay the court’s remand orders while the appeals proceed in federal court. These efforts to stay these remand orders have universally been unsuccessful, with the U.S. Supreme Court refusing to stay these orders, as seen here.
The following provides a brief overview and status update on each of these cases:
- In Mayor and City Council of Baltimore v. BP PLC, Baltimore brought action against various fossil-fuel companies for public nuisance, private nuisance, strict liability failure to warn, strict liability design defect, negligent design defect, negligent failure to warn, trespass, and violations of Maryland’s Consumer Protection Act. As noted above, defendants sought to remove the case to federal court but the district court remanded the case back to the state court.
On March 6, 2020, the Fourth Circuit Court of Appeals affirmed the district court’s order remanding the case back to state court. The district court rejected each of the fossil-fuel companies’ stated grounds for removal, but the Fourth Circuit held that its appellate jurisdiction was limited to a review of the district court’s conclusion that it lacked subject matter jurisdiction under the federal-officer removal statute pursuant to 28 U.S.C. § 1447(d) and 28 U.S.C. § 1442. The Fourth Circuit found none of the three contractual relationships on which the fossil-fuel companies based their claims for federal officer removal were sufficient to justify removal from state court, either because the relationships failed to satisfy the requirement that the fossil-fuel companies were “acting under” the direction of a federal officer or because the contractual relationships were “insufficiently related” to Baltimore’s claims for purposes of the nexus prong.
On March 31, 2020, the fossil-fuel companies filed a petition for a writ of certiorari in the Supreme Court, seeking review of the question of whether the statutory provision prescribing the scope of appellate review of remand orders “permits a court of appeals to review any issue encompassed in a district court’s order remanding a removed case to state court where the removing defendant premised removal in part on the federal officer removal statute… or the civil-rights removal statute.” Baltimore’s response was due by April 30, 2020, but has been extended to June 29, 2020 due to the COVID-19 pandemic.
- Rhode Island v. Chevron Corp. et al. was the first climate change damages case to be brought by a In this case, Rhode Island brought action against 21 different fossil-fuel companies for nuisance, strict liability, failure to warn, design defect, trespass, impairment of public trust resources, and violations of the Rhode Island Environmental Rights Act. Rhode Island’s lawsuit asserts that the state’s extensive coastline will be damaged through rising sea levels, increased frequency and severity of flooding and ocean acidification. The fossil-fuel companies had removed to federal court and Rhode Island tried to remand back to state court. On July 22, 2019, the federal court ordered the litigation to be remanded back to Rhode Island state court. While acknowledging that at least two federal courts had reached opposite conclusions, the court held that Rhode Island’s climate change claims were not preempted by the Clean Air Act and did not implicate a substantial federal question such that removal to federal court was appropriate. With respect to the Clean Air Act, the court found that the statute did not act to preempt all state-law causes of action for air pollution, including Rhode Island’s claims against defendants for releases of greenhouse gases. In addition, the court held that Rhode Island’s claims did not implicate a substantial federal question because “[t]he rights, duties, and rules of decision implicated by the complaint are all supplied by state law, without reference to anything federal.”
Rhode Island promptly notified the First Circuit of the Fourth Circuit’s decision in Baltimore, noting that that the Fourth Circuit’s decision “rejects the exact arguments raised … as to the proper scope of … appeal” as well as the fossil-fuel companies’ “tenuous justification for federal officer removal.” In response, Chevron filed a letter seeking to distinguish the Baltimore decision on the grounds that the Fourth Circuit “considered itself bound by [c]ircuit precedent” and had based its holding that federal officer removal was inapplicable on an incorrect characterization of plaintiffs’ claims in that case.
- On May 26, 2020, the Ninth Circuit joined the Fourth Circuit in Baltimore in concluding that these climate change cases alleging only state-common law claims (County of San Mateo v. Chevron Corp. et al. and City of Oakland v. BP p.l.c. et al.) belonged in state court. In County of San Mateo v. Chevron Corp. et al., six California municipalities and counties sued more than 30 fossil-fuel companies in California state court. The plaintiffs brought a variety of claims under state common law including nuisance, negligence, failure to warn, and trespass. In City of Oakland v. BP p.l.c. et al., the cities of Oakland and San Francisco sued five fossil-fuel companies in state court under a theory of nuisance. Defendants sought to remove both cases to federal court. The San Mateo district court remanded the case back to state court while the Oakland district court refused to remand its case, finding instead that plaintiffs’ public nuisance claims were governed by federal common law, but then proceeding to dismiss the lawsuit for failure to state a claim. Both cases were appealed to the Ninth Circuit.
The Ninth Circuit agreed with plaintiffs that two climate change lawsuits had been improperly removed to the federal courts, continuing courts’ recent trend of remanding these types of cases back to state court. These cases were recently analyzed on Jenner & Block’s Corporate Environmental Lawyer here.
Shortly after these rulings, both Rhode Island and Boulder filed letters informing the respective courts of the Ninth Circuit’s San Mateo and Oakland decisions.
Although San Mateo and Oakland did not address the merits of plaintiffs’ common-law claims, these cases will certainly pose challenges for defendants seeking to remove these types of cases to federal court, and will likely affect plaintiffs’ and defendants’ strategies in climate change litigation moving forward.
Jenner & Block’s Corporate Environmental Lawyer will continue to update on climate change litigation cases as they unfold.
By Leah M. Song
On May 26, 2020, the Ninth Circuit agreed with plaintiffs that two climate change lawsuits—County of San Mateo v. Chevron Corp. et al. and City of Oakland v. BP p.l.c. et al.—had been improperly removed to the federal courts, continuing courts’ recent trend of remanding these types of cases back to state court.
A growing form of climate change litigation in the United States consists of lawsuits filed by states or municipalities against private industry, and more specifically, the fossil-fuel industry. States, cities and other units of local government have filed lawsuits alleging state common law theories, including nuisance, trespass, failure to warn of the known impacts of climate change, and unjust enrichment. The outcome of these cases thus far has hinged on whether or not the fossil fuel companies are able to successfully remove the litigation to federal court where they stand a much greater chance of getting the litigation dismissed. Generally, plaintiffs (including states, units of local government, and non-governmental organizations) asserting climate change claims against corporations prefer to be in state court where they can take advantage of perceived plaintiff-friendly common law or state statutes. On the other hand, defendants inevitably seek to remove such cases to federal court where they have had a higher level of success securing dismissals on the grounds that the issue is preempted by the Clean Air Act and/or addresses a “political question” which is better left to the discretion of Congress. See City of N.Y. v. BP P.L.C.. 325 F. Supp. 3d 466 (S.D.N.Y. 2018).
In County of San Mateo v. Chevron Corp. et al., six California municipalities and counties sued more than 30 fossil-fuel companies in California state court. The plaintiffs brought a variety of claims under state common law including nuisance, negligence, failure to warn, and trespass. In City of Oakland v. BP p.l.c. et al., the Cities of Oakland and San Francisco sued five fossil-fuel companies in state court under a theory of nuisance. The fossil-fuel companies removed both cases to federal court. The San Mateo district court remanded the case back to state court while the Oakland district court refused to remand the case back to state court, finding that plaintiffs’ public nuisance claims were governed by federal common law, but then proceeding to dismiss the lawsuit. Both cases were appealed to the Ninth Circuit.
On May 26th, the Ninth Circuit joined the Fourth Circuit (Mayor and City Council of Baltimore v. BP P.L.C., et al., No. 19-1644 (4th Cir. Mar. 6, 2020)) in concluding that these climate change cases alleging only state-common law claim belonged in state court. In County of San Mateo v. Chevron Corp. et al., the Ninth Circuit emphasized its limited authority to review an order remanding a case back to state court under 28 U.S.C. § 1447(d). The Ninth Circuit therefore limited its review to determining whether the district court erred in holding that the federal court lacked subject matter jurisdiction under the federal-officer removal statute.
In order to determine whether the district court erred in holding that it did not have subject matter jurisdiction, the Ninth Circuit examined whether the companies were “acting under” a federal officer’s directions. The companies argued that they were “persons acting under” a federal officer based on several agreements with the government. However, the Ninth Circuit concluded that the companies’ activities under these agreements did not give rise to a relationship where they were “acting under” a federal officer. Accordingly, the Ninth Circuit court held that the fossil fuel companies failed to meet their burden for federal-officer removal and therefore affirmed the district court’s remand order.
In City of Oakland v. BP p.l.c. et al., the Ninth Circuit considered whether “the district court erred in determining that it had federal-question jurisdiction under 28 U.S.C. § 1331” and ultimately held that plaintiffs’ state common-law public nuisance claims did not arise under federal common law. The court acknowledged that there are exceptions to the well-pleaded complaint rule for claims that arise under federal law, but concluded that none of those exceptions applied here.
The court reasoned that “[t]he question whether the Energy Companies can be held liable for public nuisance based on production and promotion of the use of fossil fuels and be required to spend billions of dollars on abatement is no doubt an important policy question, but it does not raise a substantial question of federal law for the purpose of determining whether there is jurisdiction under § 1331.” Furthermore, evaluation of the public nuisance claim would require factual determinations which are “not the type of claim for which federal-question lies.” The fossil fuel companies argued that the plaintiffs’ public nuisance claim was completely preempted by the Clean Air Act, but the court was not persuaded.
In response to defendants’ argument that by amending their complaint to assert a federal common law claim, the district court properly had subject matter jurisdiction under 28 U.S.C. § 1331, the Ninth Circuit noted that plaintiffs only amended their complaint in response to the district court’s statements that plaintiffs’ claims were governed by federal common law. Moreover, the Ninth Circuit noted that since a party violates § 1441(a) “if it removes a cases that is not fit for federal adjudication, a district court must remand the case to state court, even if subsequent action conferred subject-matter jurisdiction on the district court.”
Notwithstanding these conclusions, the Ninth Circuit noted that the district court had not addressed alternative bases for removal raised by defendants and therefore remanded the case back to the district court. However, the Ninth Circuit specifically noted that if the district court concludes that there are no valid bases for federal jurisdiction, the case should be remanded back to state court.
Although these rulings did not address the merits of plaintiffs’ common-law claims, these cases will certainly pose challenges for defendants seeking to remove these types of cases to federal court, and will likely affect plaintiffs’ and defendants’ strategies in climate change litigation moving forward. Jenner & Block’s Corporate Environmental Lawyer will continue to update on those matters, as well as other important climate change litigation cases, as they unfold.
U.S. EPA Extends Comment Period on PFAS Safe Drinking Water Act Regulatory Determination to June 10, 2020
As discussed in more detail in a previous blog, on February 20, 2020, the U.S. Environmental Protection Agency (“U.S. EPA”) announced that it was seeking public comments on its preliminary regulatory determination that seeks to implement regulatory limits for Per- and Polyfluoroalkyl Substances (PFAS) in public drinking water across the United States. The regulatory determination is a key step in the creation of a Maximum Contamination Level (“MCL”) that will act to limit the quantity of PFAS permitted in public drinking water.
In its preliminary regulatory determination, U.S. EPA proposes setting MCL levels for two PFAS substances, perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS), which EPA has determined meet the statutory criteria to become regulated contaminants under the Safe Drinking Water Act. To meet this criteria, U.S. EPA had to find that: (1) the consumption of PFOS and PFOA may result in adverse health effects; (2) PFOS and PFOA have been identified in public water supplies at frequencies and levels sufficient to cause a public health concern; and (3) that new regulation presents a meaningful opportunity to reduce the health risks posed by PFOS and PFOA.
The Association of Metropolitan Water Agencies and the American Water Works Association (collectively “AMWA”) submitted comments that were supportive of setting an MCL for PFOS and PFOA. In addition to targeting PFOA and PFOS, the AMWA recommended that U. S. EPA also include four other long-chain PFAS compounds in its regulatory determination. AMWA also recommended that U.S. EPA “thoroughly consider state standards and guidelines with significantly lower PFAS levels that [U.S. EPA’s] Health Advisory Level (HAL) of 70 parts per trillion (ppt) for combined concentrations of PFOA and PFOS.”
The AMWA also requested that U.S. EPA extend the comment period an additional 30 days to allow the AMWA to more fully engage with its members and to provide more meaningful and comprehensive comments on the proposal. To that end, U.S. EPA has now agreed to extend the comment period an additional 30 days May 10th to June 10th.
Does Environmental Investigation and Remediation Continue Despite COVID-19 Business Restrictions and Social Distancing?
As the United States rapidly transitions to working from home (when possible) companies involved in environmental investigations or remediation work must determine whether such field or other work could, should, or must continue in the days, weeks, and months ahead. The world is pivoting to tackle COVID-19, a public health crisis, and many of the “essential services” exempted from stay-at-home/shelter-in-place orders (“Restriction Orders”) include work involving public health and safety, as well as critical infrastructure services. Therefore, any person with ongoing environmental investigation and remediation work (“environmental field work”) has to consider whether that work would be or should be included in the category of “essential services.”
From a policy standpoint, whether environmental field work should be considered “essential” requires an evaluation of the people and the environment potentially put at risk, the likelihood of that risk, and the resources the work uses. Continuation of environmental field work may benefit public health and the environment, but it also is occurring at some cost to public health and safety. For example, environmental projects use personal protective equipment (“PPE”) and laboratory equipment and personnel that may be able to be allocated to medical and other scientific research needs. Furthermore, some environmental field work requires close human contact and, at a minimum, will require travel to work and other activities that the Restriction Orders and federal and CDC guidelines are seeking to avoid. In addition, environmental contractors may not be able to perform work if key personnel are not available to work due to travel restrictions, health impacts, or family obligations. Thus, the consideration of whether environmental field work should continue during the COVID-19 crisis requires weighing complex public health and safety needs and risks.
To help those considering whether and how to continue environmental field work, evaluate the following:
(1) Am I allowed to do the environmental field work under a state or local COVID-19 Restriction Order?
(2) If I cannot continue under a Restriction Order or for other reasons, how do I protect my company’s interests to avoid penalties and other liabilities under the consent decrees, administrative orders, or various other agreements with or regulations imposed by state and federal environmental agencies; and
(3) If I am allowed to or required to continue the work, what regulations pertain to how to do the work safely?
1. AM I ALLOWED TO DO THE WORK UNDER A RESTRICTION ORDER?
As of the time of publication of this alert, there are no federal mandates or executive orders requiring business shutdowns or mandatory quarantines. However, many states, counties, and municipalities are issuing executive orders closing non-essential businesses and limiting gatherings of people.
a. State-Level COVID-19 Executive Orders
Each of these state and local mandates exempt “essential businesses” and the specific definition of an essential business varies from state to state. As a general rule, however, “essential businesses” are those that promote public safety, health, and welfare. Here are examples of several of the first state directives.
California: On March 19, 2020, Governor Newsom issued Executive Order N-33-20 requiring California residents to remain at home unless they are involved in 16 critical infrastructure sectors. These 16 critical infrastructure sectors were designated by the Department of Homeland Security and include the water and wastewater systems sector that is responsible for ensuring the supply of safe drinking water and wastewater treatment and service.
Illinois: On March 20, 2020, Governor Pritzker issued Executive Order 2020-10 requiring Illinois residents to remain in their homes to prevent the spread of COVID-19. The order specifically exempts “essential government functions”, “essential businesses and operations”, and “essential infrastructure activities.” Essential infrastructure activities include operation and maintenance of utilities, including water, sewer, and gas, and solid waste and recycling collection and removal and essential businesses and operations includes construction related activities.
New York: On March 20, 2020, Governor Cuomo issued an Executive Order (referred to as Pause, standing for Policies Assure Uniform Safety for Everyone), requiring that as of 8 p.m. on March 22, all non-essential businesses must ensure that their workforce works remotely. Exempt “Essential businesses” include essential infrastructure (including utilities and construction); essential services (including trash collection, mail, and shipping services; news media; banks and related financial institutions); sanitation and essential operations of residences or other essential businesses; and vendors that provide essential services or products (including services needed to ensure the continuing operation of government agencies and provide for the health, safety, and welfare of the public).
New Jersey: On March 21, 2020, Governor Murphy issued Executive Order 107 requiring that New Jersey residents remain in their homes and requiring that all “non-essential businesses” close. A previously issued executive order (Executive Order No. 104) defined “essential businesses” to include “grocery/food stores, pharmacies, medical supply stores, gas stations, healthcare facilities and ancillary stores within healthcare facilities.” All gatherings within the state are limited to 50 persons or fewer, except for “normal operations at airports, bus and train stations, medical facilities, office environments, factories, assemblages for the purpose of industrial or manufacturing work, construction sites, mass transit, or the purchase of groceries or consumer goods.”
In addition to these states, many other states have either implemented similar orders (including Connecticut, Delaware, and Louisiana) or likely will do so in the coming weeks. While expressly mentioning critical sectors such as health care, police and fire, and grocery stores, the orders do not squarely address whether environmental field work constitutes “essential businesses” subject to these exemptions. However, environmental field work logically could be included under the categories used to describe “essential business,” particularly because many of the environmental statutes requiring such work expressly state that the work is being ordered or conducted to protect human health and the environment.
b. Federal (U.S. EPA) Environmental Agency Guidance
The White House has issued Coronavirus Response Guidelines, “15 Days to Slow the Spread,” including a statement that if you work in one of the 16 “critical infrastructure industries” as defined by the Department of Homeland Security, you have a “special responsibility” to continue to work.
As of this publication, U.S. EPA has not released public guidance on whether ongoing or new site cleanups and/or site investigations would constitute “critical infrastructure industry.” At least to some degree, that determination is likely to be a site-specific, based on the unique circumstances of each site and, as further discussed below, the language of the agency orders or agreements which govern the environmental field work. It is likely that in the coming weeks, U.S. EPA will provide further guidance on assessing whether site cleanup activities constitute “critical infrastructure industry” exempt from the various Restriction Orders. One issue that may need to be resolved in the future relates to potential conflicts in federal and state guidance regarding what constitutes an “essential service.” Such issues could be addressed via federal and state cooperation agreements in the event of possible conflicts between federal and state directives.
c. State Environmental Agency Guidance
At least one state environmental regulatory agency has provided guidance directly on this issue. On March 20, 2020, the California State Resources Water Control Board, which generally has jurisdiction over impacted groundwater in California, published a Guidance Document that states:
Please be aware that timely compliance by the regulated community with all Water Board orders and other requirements (including regulations, permits, contractual obligations, primacy delegations, and funding conditions) is generally considered to be an essential function during the COVID-19 response. As a result, the Water Boards consider compliance with board-established orders and other requirements to be within the essential activities, essential governmental functions, or comparable exceptions to shelter-in-place directives provided by local public health officials.
It is likely that similar guidance will be issued in the coming weeks by other state regulatory agencies.
2. IF I CANNOT CONTINUE THE WORK UNDER A RESTRICTION ORDER OR OTHERWISE, HOW COULD I PROTECT MY COMPANY’S INTERESTS TO AVOID PENALTIES OR OTHER LIABILITIES?
Those responsible for ongoing environmental field work should carefully evaluate the governing consent decrees, administrative orders, or other agreements with state and federal environmental agencies, and private parties, under which they are performing environmental field work. The agreements may well have force majeure and other clauses addressing delays in the work.
For example, under the current federal model remedial design/remedial action (RD/RA) judicial consent decrees with potentially responsible parties (“PRPs”) under sections 106, 107 and 122 of CERCLA, PRPs have both covenanted not to sue the United States and agreed to indemnify the same for “claims on account of construction delays.” There are additional stipulated penalty provisions. Therefore, companies must act pursuant to the force majeure provisions to avoid these claims and stipulated penalties. Force majeure is defined as “any event arising from causes beyond the control of [PRPs], of any entity controlled by [PRPs], or of [PRPs]’ contractors that delays or prevents the performance of any obligation under this [consent decree] despite [PRPs]’ best efforts to fulfill the obligation.”
Relying on these provisions involves:
- Notifying “EPA’s Project Coordinator orally or, in his or her absence, EPA’s Alternate Project Coordinator or, in the event both of EPA’s designated representatives are unavailable, the Director of the Waste Management Division” in that specific U.S. EPA Region within a stipulated period of days (the period of days may vary under each consent decree).
- Providing in writing to U.S. EPA “an explanation and description of the reasons for the delay; the anticipated duration of the delay; all actions taken or to be taken to prevent or minimize the delay; a schedule for implementation of any measures to be taken to prevent or mitigate the delay or the effect of the delay; [the PRP’s] rationale for attributing such delay to a force majeure; and a statement as to whether, in the opinion of [the PRP], such event may cause or contribute to an endangerment to public health or welfare, or the environment” within a stipulated period of days (the period of days likely varies under each consent decree).
- Providing with the above writing “all available documentation supporting their claim that the delay was attributable to a force majeure.”
U.S. EPA is then to provide notice of its decision, which if U.S. EPA rejects the force majeure claim, the responsible parties must provide notice within 15 days of U.S. EPA’s decision to avail themselves of the model consent decree’s dispute resolution provision. The federal Model Administrative Settlement Agreement and Order on Consent for Removal Actions contains similar obligations and provisions.
It is thus plain that responsible parties conducting environmental field work should be prepared to contact U.S. EPA or state regulators orally as soon as practicable to determine their views on the necessity of the work and if there is disagreement about the same, begin to “paper the file” on the necessary force majeure documentation in the time frames provided in the governing consent decrees, administrative orders, or various other agreements with state and federal environmental agencies.
For sites that are in the early investigation stages, regulators may agree to a temporary pause in site investigations. For sites that are currently undergoing remedial measures, the determination on whether work should continue is again likely to be fact dependent. For example, a site with an ongoing groundwater treatment system that is being operated to protect a drinking water source is likely to be deemed an essential activity. For a site where the remedial measures involve excavating impacted soils that are not immediately affecting groundwater sources, it may be the case that the regulators determine that certain activities are not “essential” and can be temporarily paused or scaled back.
Even if the decision is made to proceed with the work, other circumstances may preclude or significantly impair the ability to do the work. For example, it may be difficult to obtain necessary supplies and/or vendors to perform these services. To the extent that wastes are generated in the course of doing this work, can these wastes be managed and disposed of in a timely manner? These are all issues that should be discussed with the regulators or private parties requiring the work.
3. IF I CONTINUE THE WORK, HOW CAN I DO IT SAFELY?
Once a decision is made that environmental field work is “essential” and must proceed to at least some degree, special care must be taken to ensure that the work is performed safely given additional risks imposed by COVID-19. On March 9, 2020, the federal Occupational Safety and Health Administration (“OSHA”) issued its Guidance on Preparing Workplaces for COVID-19 that was the subject of a previous client alert. This OSHA guidance outlines recommended steps that employers should take to protect workers, using OSHA’s “hierarchy of controls” framework for addressing workplace risks (i.e., engineering controls, followed by administrative controls, safe work practices, and PPE. It is also prudent for all entities at the site to consider what steps they will take if they learn that one of the workers has become exposed to the novel coronavirus or contracted COVID-19. On March 20, 2020, the CDC issued updated “Environmental Cleaning and Disinfection Recommendations.”
OSHA has long-standing regulations for work at hazardous waste sites under its Hazardous Waste Operations and Emergency Response (“HAZWOPER”) standard (in general industry 29 CFR 1910.120 and in construction 29 CFR 1926.65), which establishes health and safety requirements for work at sites, as well as responses to emergencies involving releases of hazardous substances. Many environmental investigation and remediation sites have rigorous site-specific health and safety plans, and many are required to have such plans by a consent decree or other regulatory or contractual obligation. Many environmental contractors have such plans as part of their standard operating procedures. However, given COVID-19, special care should be taken to ensure that PPE that would ordinarily be used to prevent exposure to hazardous substances is not contaminated prior to being utilized in the field. Moreover, ensuring feasible physical distancing, requiring diligent hygiene methods, and having appropriate cleaning equipment and chemicals in the field are also critical. All entities with employees at the site should regularly check both the OSHA and CDC website for updated guidance on workplace health and safety best practices. It also is important to ensure that the protocols are being appropriately communicated and followed by all entities (including regulators) at a site; the best protocols and procedures are only as good as their actual implementation by all.
OSHA has reminded the regulated community that if employees contract COVID-19 as a result of performing their work-related duties, the employees who become ill could constitute recordable cases of illness under OSHA’s Injury and Illness Recordkeeping Standard, 29 CFR Part 1904.
Companies and their counsel also should evaluate existing master services agreements that govern the work of their vendors and contractors with a particular eye towards: (i) how indemnification provisions might apply in the event that a vendor’s or contractor’s employee is later determined to be infected with COVID-19 and such a latency period could plausibly extend to such an employee’s work at the company’s site and its employees, and vice versa; and (ii) payment delay provisions should the company or its vendors or contractors become concerned about solvency issues.
We will continue to provide updates on the impacts of COVID-19 on environmental, health and safety issues affecting our clients. Jenner & Block has established a COVID-19 resource center that provides updates on a variety of issues affecting our clients and we would encourage you to visit this resource center for timely updates on COVID-19 related issues.
White House and Congress Use Liability Immunity to Address the Shortage of Respirators in Healthcare Settings
By Gabrielle Sigel, Co-Chair, Environmental and Workplace Health and Safety Law Practice
Due to COVID-19, the nation’s healthcare industry is facing a severe shortage of respiratory protection equipment for healthcare workers. Both Congress and the White House have recently taken steps to try to address that shortage by enacting liability immunity under the Families First Coronavirus Response law, signed late on March 18, 2020. These provisions protect manufacturers, distributors, and others of U.S. Food and Drug Administration (“FDA”)-designated industrial respirators from any claims of liability arising from their use during the response to COVID-19. The intent is that this would increase the supply of NIOSH-approved small-particular filtering respirators from those who manufacture or have on-hand respirators that previously had not been FDA-approved as medical devices.
As explained in OSHA’s Hospital Respiratory Protection Program Toolkit: Resources for Respirator Program Administrators (May 2015), respirators are different from facemasks, including surgical masks. Fluid-resistant facemasks are loose-fitting devices that can protect the healthcare worker from larger droplets of infectious bodily fluids from patients, and vice versa. Facemasks “are not considered respiratory protection— facemasks do NOT provide the wearer with a reliable level of protection from inhaling smaller particles, including those emitted into the room air by a patient who is exhaling or coughing, or generated during certain medical procedures.” Id. at 5. Respirators, on the other hand, protect the hospital worker from both large and small infectious particles in the air (smaller particles are known as “aerosols”). An N95 respirator is a half-mask air-purifying device with NIOSH-approved N95 filters or filtering material. The “95” refers to the NIOSH specification that the respirator filter at least 95% of airborne particles. N95 respirators can be designed for single-use or in a mask that allows re-use after replacement of N95 filter or cartridges, and, in contrast with facemasks, they are designed to form a tight seal on the user’s face. Another type of respirator that protects against inhalation of aerosols is an “air-supplying respirator,” which provides clean air from a source other than the immediate ambient air. Self-contained breathing apparatus, commonly known as “scuba equipment,” is an example of an air-supplying respirator.
Although N95 respirators are generally used in all workplaces where control of inhalation of smaller-sized particles is required to reduce hazards, in order to use such respirators in a hospital, in general, the manufacturer must have its devices approved by the Food and Drug Administration (FDA) as a medical device. Certain N95 respirators can be outfitted with the additional splash protection of a surgical mask, and are called a “surgical respirator,” “medical respirator,” or “surgical N95.” Those devices are deemed a medical device, which must be approved by both the FDA and by NIOSH for their particle-filtering ability Non-surgical N95s are not typically used in a hospital setting and a manufacturer and others may be reluctant to supply them for hospital use, particularly given the potential liability risks from their use in that setting.
Faced with a shortage of surgical N95 respirators, the White House turned to manufacturers and users of industrial N95s as an additional source. On March 2, 2020, the FDA issued an Emergency Use Authorization (EUA), pursuant to section 564 of the Food, Drug, and Cosmetic Act (FDCA), that allows the emergency, COVID-19 use of designated NIOSH-certified N95 respirators in the health care setting. The EUA also stated that certain NIOSH-approved respirators that had passed the manufacturer’s recommended shelf-life also could be used in certain circumstances.
The March 2, 2020 EUA did not address protection of industrial manufacturers from liability for use of respirators in medical settings. On March 11, 2020, the FDA clarified the EUA by stating that the FDA had deemed general use N95 respirators as medical devices within the meaning of 201(h) of the FDCA and eligible for liability protections under the Public Readiness and Emergency Preparedness Act of 2005, 42 U.S.C. § 247d-6d (“the Public Readiness Act”). Under the Public Readiness Act, certain devices, called “countermeasures,” are entitled to broad liability immunity during their use in response to a public health emergency. Specifically, a “covered person” is forever immune from liability for any type of “loss” associated with the use of a designated “countermeasure,” including death, physical, mental, or emotional injury, fear of such injury, including medical monitoring, and damage to property including business interruption. 42 U.S.C. § 247d-6d(a)(1)-(2). A “covered person” includes the United States, manufacturers and distributors of the countermeasure, and all employees of a manufacturer or distributor of a designated countermeasure. 42 U.S.C. § 247d-bd(i)(2). Liability protection is provided regardless of whether the countermeasure is sold, donated or otherwise provided and used for medical services.
On March 14, 2020, the U.S. House of Representatives passed H.R. 6201, the “Families First Coronavirus Response Act,” which in Division F, Section 6005, designated personal respiratory protective devices approved by NIOSH (42 CFR part 84) and designated by the FDA in the March 2, 2020 EUA, as a “covered countermeasure” subject to all liability immunities under the Public Readiness Act.” The U.S. Senate passed the bill, without amendment, on March 18, 2020, and later that day, the bill was signed into law by the President. Industrial respirators will remain a liability-protected countermeasure if they are used to address COVID-19 anytime between January 27, 2020 and October 1, 2024, in response to the public health emergency declared by the Secretary of Health and Human Services Alex M. Azar II on January 31, 2020.
In the meantime, as supplies continue to be short, the CDC has issued guidelines for how medical providers should triage their use of respiratory protective equipment. The guidelines issued as of March 19, 2020 are here.
White House Promises to Use “All Available Tools” to Implement Deep Cuts to EPA Funding in Fiscal Year 2021
On Monday, February 10, 2020, the Trump Administration released its proposed budget for Fiscal Year 2021. The proposal calls for sweeping cuts to a number of federal agencies and departments, including deep cuts to the United States Environmental Protection Agency (“USEPA”). If enacted, the proposed budget would grant $6.7 billion in funding to USEPA, a $2.4 billion or 26-percent reduction from the agency’s $9.1 billion budget in 2020. In the budget proposal’s preamble, the Administration promises to “call on the Government to reduce wasteful, unnecessary spending, and to fix mismanagement and redundancy across agencies.”
With respect to USEPA’s budget allocation, the proposal promises to “eliminate almost 50 wasteful programs that are outside of EPA’s core mission or duplicative of other efforts, saving taxpayers over $600 million.” Proposed major cuts include the reduction of nearly 50% of the agency’s research budget, including all funding for grants to independent universities and research institutes conducting air, water, and other environmental and health research. Another target for deep cuts is USEPA’s safe drinking water revolving funds. The revolving funds are used to help fund water infrastructure projects undertaken by state or municipal public water providers. Under the proposed budget, the available funds for such projects would be cut from approximately $2.77 billion down to $2 billion.
While the proposal primarily focuses on proposing cuts to USEPA’s fiscal budget, it does contain a few line item requests for additional funding. In particular, the proposal asks for an additional $6 million to carry out USEPA’s Per- and Polyfluoroalkyl Substances (PFAS) Action Plan. The additional funding is sought to continue research into the risk posed by PFAS compounds, address current contamination issues, and effectively communicate findings to the public. In addition, the budget requests $16 million into new research to help prevent and respond to the rising growth of harmful algal blooms.
The budget proposal is not the first time the Trump Administration has sought to implement deep cuts into USEPA’s budget. In fact, the Trump Administration has now proposed nearly identical cuts to the agency’s budget in each of the last three fiscal years. As previously discussed by the Corporate Environmental Lawyer, the Trump Administration first proposed a $2.7 billion budget reduction for USEPA in fiscal year 2018. However, the proposal was rebuffed by congress and the final spending bill ultimately signed by Trump held the agency’s budget at $8.1 billion, even with its 2017 level. The following year, the Trump Administration again proposed cutting the agency’s budget by more than $2 billion, but ultimately agreed to a spending deal that increased the agency’s budget to $8.8 billion. Finally, during fiscal year 2020, the Trump Administration proposed approximately $2.7 billion in cuts to USEPA’s budget. As before, Congress rejected the proposal and ultimately approved a nearly record high budget for USEPA of $9.1 Billion. Congress’ continued rejection of the spending cuts proposed by the Trump Administration is acknowledged in the Administration’s most recent 2021 budget proposal, which derides Congress for continuing “to reject any efforts to restrain spending” and “greatly contribut[ing] to the continued ballooning of Federal debt and deficits, putting the Nation’s fiscal future at risk.” The proposal promises that the Trump Administration will use “all available tools and levers” to ensure that the spending reductions outlined in the budget are finally implemented.