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.
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.
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.
On December 23, 2019, New York Governor Andrew M. Cuomo gave conditional approval to a state ban on firefighting foams containing per- and polyfluoroalkyl substances (known as “PFAS”). PFAS, commonly referred to as “forever chemicals” due to their ongoing persistence in the environment, are a family of man-made chemicals commonly found in a variety of products, including food packaging, cookware, stain-resistant clothing, and, in the case of perfluorooctane sulfonic acid (PFOS), many types of firefighting foams. According to the U.S. EPA, PFAS chemicals are not only “extremely persistent in the environment,” but have also been linked to numerous health conditions including cancer in humans.
The legislation (“A445A”) requires the New York Office of Fire Prevention and Control to promulgate regulations that will provide guidance for state agencies and local government to avoid the purchase of firefighting foams containing PFAS compounds and outright prohibits the manufacture of PFAS containing firefighting foams within two years of the effective date of the bill. As a condition to his approval, Governor Cuomo noted that an amendment to the current legislation was needed to allow discretionary use of firefighting agents containing PFAS where no other viable options exist. On the basis of an agreement with the New York legislature to implement these amendments, the Governor conditionally approved the bill.
With the enactment of the legislation, New York becomes the third U.S. state to ban PFAS chemicals behind Washington and New Hampshire. In addition, six other states have enacted some form of partial prohibitions on the use of foams containing PFAS chemicals. In response to the recent state legislation, the FluoroCouncil has affirmed that use of firefighting foam containing PFAS “is credited with saving lives and property” and that use of such foams may be essential for extinguishing fires caused by flammable liquids.
Regulation of PFAS chemicals is also being considered at the federal level. As noted in a prior blog by the Corporate Environmental Lawyer, a federal bill is currently being considered that would require the U.S. EPA to promulgate drinking water standards for PFOS as well as perfluorooctanoic acid (PFOA), another common chemical in the PFAS family. According to the Congressional Budget Office (CBO), the estimated cost of implementing these federal standards across the country are likely to exceed “several billion dollars.” The Corporate Environmental Lawyer will continue to update on forthcoming or pending state and federal legislation regarding PFAS chemicals.
In recent years, the global maritime shipping industry has faced pressure to reduce the large quantity of greenhouse gas (“GHG”) emissions associated with international shipping. About 90 percent of the world’s trade goods are transported by ship, and, according to one 2014 study, the shipment of these good via maritime vessels emits approximately 1.9 billion tonnes of GHG annually, or approximately 4% of human-made emissions worldwide. The annual GHG output of the shipping industry has been projected to rise by as much as 250% by 2050 if direct actions are not taken to modify industry practices.
Because of its international nature, global shipping is extremely difficult to regulate on a national basis, and therefore is often addressed through international agreements. To this end, in 2018, the International Maritime Organization (“IMO”), a branch of the United Nations, approved the world’s first broad agreement designed to reduce GHG from worldwide ocean shipping. The agreement reached by the IMO member provides the following target metrics:
(1) Reduce CO2 emissions per “transport work” (product of cargo transmitted and distance sailed) by at least 40% by 2030 and 70% by 2050; and
(2) Reduce total CO2 emissions from shipping by at least 50% by 2050.
The targets were designated to fall in line with the GHG reductions goals set out in the 2015 Paris Climate Accords (the "2015 Paris Agreement"). Though the 2015 Paris Agreement does not include an agreement to reduce GHGs in international shipping, the IMO has stated that it is committed to reducing GHGs in the industry to match the commitment put forward in the agreement.
On December 18, 2019, ship owner associations representing over 90% of the world’s merchant fleets formally presented to IMO their proposed strategy for meeting the international body’s 2018 GHG reduction goals. The industry’s plan proposed the creation of a $5 Billion USD research fund that will be used to research and develop more environmentally friendly fuels and ship propulsion systems. The fund would be fully funded from a $2 per ton tax on marine fuel purchased by shippers over a 10-year period. The associations argued that the fund would be critical to the development of alternative fuels—such as synthetic fuels created by renewable energy sources—which had the potential to drastically reduce the industry’s carbon footprint.
IMO’s environmental goals expand to areas beyond just GHG reduction. For example, in January 2020, the IMO’s new cap on the amount of Sulphur permitted fuel oil will take effect. The effort is aimed at reducing maritime vessel’s emissions of Sulphur oxides (SOx), which are known to be harmful to human health and can lead to acid rain and ocean acidification. on December 10, 2019, the United States Environmental Protection Agency (“USEPA”) enacted a new Final Rule to help refiners comply with the IMO’s new global sulfur standard. As provided by the USEPA, the Final Rule was designed to “ensure that U.S. refiners can permissibly distribute distillate marine fuel up to the 5,000 ppm sulfur limit, which will facilitate smooth implementation of the 2020 global marine fuel standard.”
The Senate in a 70-15 vote confirmed Dan Brouillette this week as the new Secretary of Energy to succeed Secretary Rick Perry. All 47 Republicans who were present for the vote backed confirmation, as did 22 Democrats, including Joe Manchin III of West Virginia, Tom Udall of New Mexico, and Richard J. Durbin of Illinois, and one Independent, Angus King of Maine.
At his confirmation hearing, Mr. Brouillette stressed the role of the DOE in advancing research, including focusing his tenure on pushing direct air capture, carbon capture and sequestration (CCS), nuclear reactors, and the DOE commercialization work that fosters novel technologies in the private sector. He stated he would “absolutely” devote more DOE resources to researching DAC, and praised ongoing work on CCS and demonstrations of the technology in Wyoming in particular, nothing that he is “very excited about the work I see being done in Wyoming and within DOE writ large.”
Wyoming has become a focal point of the tension as to the future of coal under climate change policies or other environmental laws and the potential opportunity for CCS to resolve this tension. (Wyoming supplies 40% of the United States’ coal to 29 states.) The Wyoming Public Service Commission Chair has recently spoke about the need for a hard look at the benefits of CCS before shuttering coal plants. Also this week, the University of Wyoming announced a partnership with DOE to accelerate research on carbon capture technology at two of the state’s coal-fired power plants. In light of Mr. Brouillette’s extensive comments in support of Wyoming and CCS, we can anticipate much more on this front.
As noted by the New York Times, before becoming deputy energy secretary, Mr. Brouillette was chief of staff to the House Energy and Commerce Committee and was assistant secretary of energy for congressional and intergovernmental affairs in the George W. Bush administration. He also worked as an executive at the United Services Automobile Association, a financial services provider to members of the military, and Ford Motor Company. He once was a member of Louisiana’s State Mineral and Energy Board.
On November 22, 2019, the D.C. Circuit rejected a bid by the Trump Administration to fast-track litigation over the United States Environmental Protection Agency’s (“USEPA”) Affordable Clean Energy Rule governing greenhouse gas emissions from power plants. The Order similarly rejected an opposing bid by environmental groups and twenty U.S. States which sought to stall the litigation.
The litigation revolves around the Trump Administration’s implementation of the Affordable Clean Energy Plan, a replacement for the Clean Power Plan enacted by the Obama Administration. The Obama-era Clean Power Plan—which itself was stalled by legal challenges—sought to impose carbon emissions caps on power plants and reduce the United States’ greenhouse gas emissions by 32% from 2005 levels by the year 2030. In contrast, the Trump-era Affordable Clean Energy Plan seeks a more modest reduction of greenhouse gas emissions and provides further latitude for individual U.S. States to design their own plans for paring carbon dioxide emissions at power plants. The challengers to Trump’s rule assert that the Affordable Clean Energy Plan does not meaningfully reduce greenhouse gas emissions and is a violation of USEPA’s duty to address pollution from power plants under the Clean Air Act.
In its response to the challenges, the USEPA asserted that an “[e]xpeditious resolution of the petitions … would provide certain over EPA’s authority under the Clean Air Act, and the validity of the Affordable Clean Energy Rule promulgated under the Act.” The Trump Administration’s attempt to quickly resolve challenges to the Affordable Clean Energy Plan stems from the Administration’s goal to fully implement its final rule prior to any potential administration changes from the 2020 elections. A swift ruling in the Trump Administration’s favor would secure the validity of final rule and limit any future administration’s options for imposing additional regulations of greenhouse gas emissions under Clean Air Act. However, as a result of the D.C. Circuit’s ruling, it is estimated that the court will not hear oral arguments on the case until summer or fall of 2020, likely placing a final ruling after the results of the 2020 presidential election.
Available Company Defenses to Climate Change Shareholder Activism: Trends in Climate Change Litigation, Part 5
As noted in Jenner & Block’s prior blog post, Shareholder Activism: Trends in Climate Change Litigation, Part 4, an emerging issue for public companies in high greenhouse gas (“GHG”) emitting industries is increased pressure from environmentally focused “activist shareholders.” These shareholders often seek to leverage their ownership shares to influence companies into taking action to decrease GHG emissions and/or increase public disclosure of such emissions. These efforts may be undertaken through negotiations with company management or through the introduction of specific shareholder proposals and proxy materials to be presented and voted on at annual shareholder meetings.
Several recent actions taken by the SEC may now help shield public companies from certain attempts by shareholders to introduce climate change related proposals for consideration at shareholder meetings. Under SEC rule 14a-8(i)(7), public companies may exclude from shareholders’ voting ballots any proposals which seek to “micromanage” the company’s ordinary business operations. In recent months, the SEC has asserted that rule 14a-8(i)(7) may be utilized by companies to block certain types of climate change related proposals. The agency has articulated this position by issuing “no-action” letters to public companies seeking to block climate-change proposals from their shareholders. In effect, these letters act as an assurance that the SEC will not recommend enforcement action against the companies for blocking the respective proposals because the agency agrees that the proposal falls under the purview of rule 14a-8(i)(7). However, the SEC has, in a few instances, refused to issue “no-action” letters to companies seeking to block shareholder climate change proposals.
Whether a shareholder’s climate change proposal is excludable under rule 14a-8(i)(7) therefore appears to be a case-by-case determination which depends on the specific demands of a proposal. As a general rule, the SEC has found that proposals which only seek greater disclosure of a company’s GHG emissions cannot be excluded under rule 14a-8(i)(7), but proposals which impose GHG emission reduction targets on the company or require specific methods for reporting or calculating GHGs may be excluded under rule 14a-8(i)(7). A few instructive examples of these general conclusions are provided below:
- On February 14, 2019, the SEC issued a no-action letter to J.B. Hunt Transport Services, Inc. approving the company’s request to block a shareholder proposal that, if implemented, would require the company to adopt quantitative targets for reducing GHG emissions and issue a report demonstrating its progress towards achieving these targets. The SEC found that the proposal sought to micromanage the business by probing into complex matters that were better left to the informed judgment of management.
- On March 4, 2019, the SEC refused to issue a no-action letter to Anadarko Petroleum Corporation after the company sought to block a proposal requesting that the company describe if, and how, it planned to reduce its total contribution to climate change to fall in line with the global temperature objectives of Paris Agreement.
- On April 2, 2019, the SEC issued a no-action letter to ExxonMobil which affirmed that the company could exclude a shareholder proposal which would require the company to adopt and disclose certain GHG emission reduction targets. The SEC noted that the proposal sought to replace the ongoing judgments of the company’s management with “specific methods” for implementing complex policies.
Of course, the threat of potential governmental enforcement actions is only one reason why a company may hesitate to block shareholder proposals. Beyond the business considerations of such a decision, public companies may also need to consider whether adopting certain types of shareholder proposals—particularly those calling for increased disclosure and transparency of GHG emissions—may be beneficial to protect the company from the risk of future lawsuits by the company’s shareholders.
On August 28, 2019, EPA issued a proposed rule titled Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review (the “Proposed Rule”). The Proposed Rule, if adopted, would rescind certain parts of the New Source Performance Standards (“NSPS”) related to methane and volatile organic compounds (“VOCs”) in the oil and gas industry.
First, EPA is proposing to redefine the operations included in the NSPS source category for the oil and gas industry. The original source category listing for the oil and gas industry, issued in 1979, included the production and processing segments of the industry. In 2012 and 2016, EPA expanded the oil and gas industry source category to include the transmission and storage segment of that industry. The Proposed Rule would remove sources in the transmission and storage segment from the oil and natural gas source category and would rescind the methane and VOC emission limits, adopted in 2012 and 2016, which currently apply to those sources.
Second, EPA is proposing to rescind emissions limits for methane (but keep limits for VOCs) in the production and processing segments of the oil and gas industry.
Exploring the E-Suite with Jonah Greenberger, Co-founder and President, Bright, Inc. (San Francisco, CA, and Mexico City, Mexico)
Exploring the E-Suite with Jonah Greenberger, Co-founder and President, Bright, Inc. (San Francisco, CA, and Mexico City, Mexico)
- Tell us about Bright, including what the organization does and your role.
Bright is the leading rooftop solar company in Mexico. We provide the financing and software that enable thousands of ambassadors to offer cheaper electricity to millions of homes, at no upfront cost, and we work with our network of hundreds of local installers and distributors to satisfy the resulting demand. Our first market is Mexico, which has more sun, higher electricity rates, and lower labor costs than the US. Bright's investors include First Round Capital, Y Combinator, and other top Silicon Valley firms.
- What is your professional background that led you to become involved in the clean energy and international fields?
I studied thermodynamics at Stanford and found energy fascinating - it felt like magic that a fuel could be converted into the motion of a car. I wanted to learn more and see how I could advance such a fascinating (and important) field.
- What do you think are the emerging issues in the energy field, especially clean energy and/or in the international context?
The largest topic is around how projects are allowed to use the existing grid, or the utility wires that move electricity from one place to another. It makes sense to only have one set of grids (vs telecom where you have many), but this means innovation is stifled unless there’s an easy way to access and use this grid.
- What aspects of working in the energy field have you enjoyed most?
I love how international energy is - everyone needs energy and it’s a national priority in almost every country to become more sustainable. Energy is an amazing way to see how the world works across borders.
- What do you find are some of the most challenging aspects of your work in the energy field?
Similar to what I mentioned earlier about connecting to the grid, innovation is largely at the whim of what the utilities will or have to allow in terms of connecting to the grid. Figuring out how to navigate these nuances is tricky but incredibly important.
- How did you make the transition from working for one of the world’s largest energy firms (Chevron) to becoming a clean energy startup founder?
Chevron taught me how the world consumes and produces energy and how to run a large international business. However, given how slow decisions were and career advancement as well, starting a company allowed me to release all of this pent up energy that I had to move fast and build.
- As a startup founder that operates in the clean energy and international spaces, what can policymakers learn from your challenges and successes?
One of the largest learnings we’ve had is that the platform has to be opened to create real innovation and impact. The internet, for instance, is a place anyone can build a webpage, create a company etc. But the grid in many countries is still the equivalent of if the internet required a DMV in person visit if you wanted to connect. Policy to free up the ability to connect to this platform could enable incredible value.
- What and/or who have helped you succeed as a clean energy startup founder?
YCombinator’s network has been incredibly helpful as has First Rounds to connect me to any expert I could need on any topic.
- What advice would you give a young person today who is considering starting out in the energy field?
I would advise to think about scalability from the start. Many energy projects are highly customized and so take forever and a vast amount of capital to have an impact. Solutions that will transform the way we use energy will be those that are far more standardized and can be repeated over and over again.
Mr. Greenberger was interviewed by Alexander J. Bandza, Associate, Energy and Environmental and Workplace Health and Safety Law Practices, Jenner & Block LLP
Climate Change Lawsuits Brought by Coastal Municipalities and States Against the Fossil Fuel Industry: Trends in Climate Change Litigation, Part 3
In the third installment of Jenner & Block’s Corporate Environmental Lawyer's discussion of emerging trends in Climate Change Litigation, we are discussing a quickly proliferating form of litigation—lawsuits filed by U.S. states and municipalities against companies that operate in industry sectors which have historically had high levels of greenhouse gas emissions.
At present, the most common target for this litigation in the United States has been the oil and gas industry. In these cases, plaintiff cities or states will often bring suit against a large number of oil and gas companies as members of the collective industry. These claims are usually brought in state court, where the plaintiffs can take advantage of potentially favorable state common law. Using this strategy, plaintiffs have asserted claims against the fossil-fuel industry under state law theories such as nuisance, failure to warn of the known impacts of climate change, and unjust enrichment. Of course, as a counter to this strategy and in hopes of demonstrating preemption under the Clean Air Act, defendants will often look to remove climate change cases to federal court.
In order to satisfy Article III Standing requirements, Plaintiffs in these cases have generally been coastal communities which allege that they have suffered harm or are uniquely at risk of suffering harm from rising sea levels as a result of climate change.
Several examples of this ongoing litigation includes:
- County of San Mateo v. Chevron Corp. et al. (2018): claims brought by six California municipalities and counties against 37 fossil-fuel companies in California state court. The plaintiffs, alleging they will be damaged by the effects of climate change, brought a variety of claims under state common law including nuisance, negligence, failure to warn, and trespass. Following defendants’ removal of the case to federal court, plaintiffs successfully remanded back to state court on the grounds that their claims did not implicate a federal question or raise preemption issues. Defendants have filed an interlocutory appeal in the Ninth Circuit which is currently being briefed by the parties.
- City of Oakland v. BP p.l.c. et al. (2018): claims brought by the City of Oakland and San Francisco against fossil-fuel companies under California common and statutory law. Plaintiffs asserted that the industry’s GHG emissions amounted to a “public nuisance” under California law. However, unlike San Mateo, the defendants in City of Oakland were able to successfully remove and ultimately retain the matter in federal court. The Northern District of California court denied plaintiff’s motion to remand the case back to state court based on its finding that federal common law necessarily governed the nuisance claims. The district court subsequently dismissed the suits on the grounds that the plaintiffs’ claims raised a “Political Question” best addressed by the legislature as opposed to judicial branch. This dismissal has also been appealed to the Ninth Circuit.
- Rhode Island v. Chevron Corp. et al. (2018): The first such case to be brought by a U.S. State, Rhode Island asserted claims for nuisance, strict liability, failure to warn, design defect, trespass, impairment of public trust resources, and violations of the Environmental Rights Act against 21 fossil-fuel companies. Rhode Island’s lawsuit asserts that the state’s extensive coastline will be damaged through rising sea levels, increased frequency and severity of flooding, extreme precipitation events, and ocean warming and acidification. Defendants have removed the case to federal court, and the parties are currently briefing Rhode Island’s attempt to remand the case back to state court.
In the second installation of Jenner & Block’s Corporate Environmental Lawyer's discussion of emerging trends in Climate Change Litigation, we are highlighting recent investigations brought by US state attorneys general against private companies for allegedly misleading the public and/or company shareholders regarding the potential climate impacts of their operations.
In recent years, several major state investigations were launched following investigative journalism reports of private companies’ failures to disclose the causes and effects of climate change. One such example is the Los Angeles Times 2015 exposé into Exxon Mobil Corp.’s historic in-house research on climate change.
Approximately one month after the publication of the Los Angeles Times’ article, the New York Attorney General subpoenaed Exxon, seeking documents related to the company’s research on the causes and effects of climate change; the integration of its research findings into business decisions; and the company's disclosures of this information to shareholders and the Securities and Exchange Commission. The attorney general’s investigation was grounded in New York's shareholder-protection statute, the Martin Act, as well as New York’s consumer protection and general business laws.
In 2016, New York’s investigation was publically supported by a coalition of top state enforcement officials from Vermont, Virginia, Massachusetts, Maryland, Connecticut, and the Virgin Islands, all of which agreed to share information and strategies in similar climate change investigations and future litigation. Exxon responded by filing its own lawsuit seeking to block New York and Massachusetts’ investigations.
After a three-year contentious investigation, the New York Attorney General's office sued Exxon on October 24, 2018, alleging that Exxon engaged in “a longstanding fraudulent scheme” to deceive investors by providing false and misleading information about the financial risks the company faced from its contributions to climate change.
Jenner & Block’s Corporate Environmental Lawyer will continue to update on this matter, as well as other important climate change litigation cases, as they unfold.
The term “climate change litigation” has become a shorthand for a wide range of different legal proceedings associated with addressing the environmental impacts of climate change. Plaintiffs in climate change lawsuits may include individuals, non-governmental organizations, private companies, state or local level governments, and even company shareholders who, through various legal theories, allege that they have been harmed or will suffer future harm as a direct result of the world’s changing climate. The targets of climate change litigation have included individual public and private companies, government bodies, and even entire industry groups. While there appears to be no shortage of plaintiffs, defendants, or legal theories emerging in climate change litigation, one clear trend is that the number of these lawsuits has grown dramatically in recent years. By one count, more than fifty climate change suits have been filed in the United States every year since 2009, with over one hundred suits being filed in both 2016 and 2017.
In light of the growing trend of climate change litigation, Jenner & Block’s Corporate Environmental Lawyer blog is starting a periodic blog update which will discuss the emerging trends and key cases in this litigation arena. In each update, our blog will focus on a sub-set of climate change cases and discuss recent decisions on the topic. In Part 1 of this series, we will be discussing Citizen-Initiated Litigation Against National Governments.
On Thursday, November 29th, Jenner & Block Associate Matthew Lawson will be giving a CLE presentation on the “Environmental Impact of Blockchain” at the Chicago Bar Association’s Young Lawyers Environmental Law Committee Meeting. Matthew Lawson’s presentation will discuss both the negative environmental impacts caused by the growth in popularity of cryptocurrency mining, and the potential positive impacts on the environment from emerging and future applications of the Blockchain technology.
The presentation is on November 29, 2018, from 12:15 PM - 1:30 PM at the Chicago Bar Association, 321 S. Plymouth Ct. Chicago, IL 60604.
For more information on the event click here.
The Trump Administration has released its Fall 2018 Unified Agenda of Regulatory and Deregulatory Actions. This regulatory agenda “reports on the actions administrative agencies plan to issue in the near and long term [and] demonstrates this Administration’s ongoing commitment to fundamental regulatory reform and a reorientation toward reducing unnecessary regulatory burdens on the American people.”
According to the Trump Administration, the regulatory agenda reflects the following broad regulatory reform priorities:
- Advancing Regulatory Reform
- Public Notice of Regulatory Development
- Consistent Practice across the Federal Government
The EPA-specific regulatory agenda lists 148 regulatory actions in either the proposed rule stage or final rule stage, and provides information about the planned regulatory actions and the timing of those actions. Notable regulatory actions under consideration by EPA include:
- Revised Definition of “Waters of the United State”
- Notice of proposed rulemaking planned for October 2019; final rule planned for September 2019
- Definition of “Waters of the United States”–Recodification of Preexisting Rule
- Final rule planned for March 2019
- Clean Water Act Section 404(c) Regulatory Revision
- Notice of proposed rulemaking planned for June 2019
- National Primary Drinking Water Regulations for Lead and Copper: Regulatory Revisions
- Notice of proposed rulemaking planned for February 2019
- National Primary Drinking Water Regulations: Regulation of Perchlorate
- Notice of proposed rulemaking planned for October 2019; final rule planned for December 2019
- Emission Guidelines for Greenhouse Gas Emissions From Existing Electric Utility Generating Units; Revisions to Emission Guideline Implementing Regulations; Revisions to New Source Review Program (a/k/a The Affordable Clean Energy (ACE) rule to replace the Clean Power Plan)
- Final rule planned for March 2019
- TSCA Chemical Data Reporting Revisions and Small Manufacturer Definition Update for Reporting and Recordkeeping Requirements Under TSCA Section 8(a)
- Notice of proposed rulemaking planned for December 2018; final rule planned for October 2019
More information, and EPA's Statement of Priorities, can be found here.
On September 13, 2018, the United States Environmental Protection Agency (“EPA”) took the final, unprecedented step of adding a contaminated site to the Superfund National Priorities List (“NPL”) based solely on the risk to human health posed by indoor air vapor intrusion at the site. The newly designated site, which consists of the former Rockwell International Wheel & Trim facility and its surrounding 76 acres (the “Site”), is located in Grenada, Mississippi. The Site has an extensive history. Beginning in 1966, the Rockwell facility operated as a wheel cover manufacturing and chrome plating plant. After chrome plating operations ceased in 2001, the facility was used for metal stamping until approximately 2007. According to EPA, the Site’s historic operations resulted in multiple releases of trichloroethene, toluene, and hexavalent chromium into the surrounding soil and adjacent wetland. However, EPA’s primary concern—and reason for listing the site—is the potential for airborne volatile organic compounds (“VOCs”) to enter the facility through cracks, joints, and other openings, resulting in contaminated indoor air. The potential for indoor air contamination appears to be of particular concern to EPA, given that nearly 400 individuals currently work within the facility.
The Site will now join a list of approximately 160 contaminated sites that have been federally designated as NPL sites. The NPL includes the nation’s most contaminated and/or dangerous hazardous waste sites. A contaminated site must be added to the NPL to become eligible for federal funding for permanent cleanup under the Comprehensive Environmental Response, Compensation, and Liability Act. While EPA’s decision to list the Site based on risks from indoor air contamination is unprecedented, the move is not all together surprising, given EPA’s recent rulemaking actions. In May 2017, EPA passed a final rule expanding the list of factors the agency is allowed to consider when designating NPL sites to specifically include risks to human health from impacted indoor air. In the preamble to the rule, EPA noted that it needed the authority to list sites on the basis of significant risk to human health from vapor intrusion contamination.
In contrast to EPA’s position, environmental consultants operating at the Site have strongly opposed the NPL designation. Several of the firms submitted comments on the final listing, asserting that EPA’s risk evaluation failed to take into account the Sub Slab Depressurization System (“SSDS”) installed at the facility in 2017, which subsequently reduced levels of VOCs in the indoor air to safe levels. However, EPA rejected these arguments, noting that even though the SSDS may protect workers from immediate threats, “it is not intended to address possible long-term remedial goals such as addressing the sources of the contamination below the building.”
EPA’s designation of the Site should alert potentially responsible parties that vapor intrusion issues may result in an increased chance of a site becoming listed on the NPL. In addition, parties relying on engineering controls to maintain compliant indoor air vapor levels should note the potential for EPA to deem such actions insufficient as long-term site remedies.
United Airlines became the first U.S. airline to publicly commit to reducing its greenhouse gas emissions (GHG) by 50% by 2050. In a press release issued on September 13, 2018, United Airlines explained that it would achieve that reduction by expanding its use of more sustainable biofuels and by relying on more fuel-efficient aircraft and implementing other operational changes to better conserve fuel. United Airlines' commitment to reduce GHG emissions by 50% by 2020 is consistent with reduction targets established by the International Air Transport Association in May 2018.
U.S. EPA has yet to regulate GHG emissions from aircraft in the United States, notwithstanding U.S. EPA’s July 25, 2016 endangerment finding for GHG emissions from aircraft and U.S. EPA’s Advanced Notice of Proposed Rulemaking contemplating adoption of the International Civil Aviation Organization’s (ICAO) aviation carbon emission design standards.
The decision by United Airlines is likely to be followed by other U.S. carriers that have international routes because those carriers will be subject to the ICAO standards when flying internationally.
On May 18, 2018, the Federal Energy Regulatory Commission (FERC) issued an order denying a rehearing request on FERC’s prior issuance of a certificate of public convenience and necessity for a natural gas pipeline project for Dominion Transmission. An environmental group had challenged that certificate, arguing in part that FERC failed to adequately consider the upstream and downstream impacts of the project. These upstream and downstream impacts, according to the environmental group, included greenhouse gas (GHG) emissions. FERC, on a party-line vote, concluded that the upstream and downstream GHG impacts of this particular project were not sufficiently causally connected to and/or the reasonable foreseeable effect of the project and therefore fell outside of the scope of the required NEPA analysis. FERC distinguished its holding with the decision in Sierra Club v. FERC, 867 F.3d 1357 (D.C. Cir. 2017) by noting that in that case, the pipeline project was delivering natural gas to identifiable gas-fired electric generating plants and therefore the downstream use of the gas was foreseeable.
The Delaware Riverkeeper Network sent a letter to FERC asking it to formally rescind its May 18 order, claiming that FERC’s decision was contrary to the requirements of NEPA. This letter, along with similar letters from other environmental groups, are likely precursors to legal challenges to FERC’s interpretation of its obligations under NEPA. Notwithstanding the positions being advanced by these environmental groups, FERC continues to review and approve pipeline projects without requiring a detailed analysis of GHG emissions as evidenced by FERC’s May 31 approval of the Okeechobee Lateral Project.
White House Cites National Security Concerns as Administration Moves to Save Coal and Nuclear Power Plants
A combination of stagnant power consumption growth and the rise of natural gas and renewable power sources has resulted in the displacement and potential closure of many older coal and nuclear power plants in the United States. According to the U.S. Energy Information Administration, since 2008, coal and nuclear energy have seen a continuous decline in their percentage of the nation’s total energy generation market. And in 2015, the closure of coal fueled power plants accounted for more than 80% of the nation’s retired energy generating capacity.
In an attempt to reverse these trends, President Donald Trump has ordered Energy Secretary Rick Perry to take “immediate action” to stem the closure of nuclear and coal power plants. In an official White House statement issued on June 1, 2018, the Trump Administration stated that “keeping America's energy grid and infrastructure strong and secure protects our national security… Unfortunately, impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation's energy mix, and impacting the resilience of our power grid.”
The statement is not the first time the Administration has asserted that coal and nuclear plants are critical to national security. In January of this year, Mr. Perry presented a sweeping proposal to the Federal Energy Regulatory Commission (“FERC”), which requested subsidies for struggling coal and nuclear plants that were no longer able to operate profitably in the current energy markets. In presenting the proposal, Mr. Perry argued that coal and nuclear plants’ unique ability to store at least 90 days of fuel on-site made the energy sources critical to the reliability and stability of the United States’ energy markets. In a 5-0 decision, FERC rejected the Energy Secretary’s proposal, and casted doubt on Mr. Perry’s claims that energy markets would become vulnerable and unreliable without contributions from coal and nuclear power.
It appears the Trump Administration may now be seeking a more direct route to provide assistance to coal and nuclear power plants. According to Bloomberg, a draft memo from the Department of Energy (“DOE”) reveals that the agency is considering using its authority under Section 202(c) of the Federal Power Act and the Defense Production Act of 1950 to force regional grid operators to buy electricity from a list of coal and nuclear plants the department deems crucial to national security. The plan would require suppliers to purchase power from the plants for 24 months in order to starve off closures as the Administration works to provide a long-term solution. If the DOE plan is implemented, it is likely to face legal challenges from both utilities and environmental groups. Regardless of whether the DOE elects to pursue this strategy, it appears that the Trump Administration is focused on working to protect aging coal and nuclear plants.
In 2016, the world underwent its largest ever annual increase in renewable power by adding an estimated 161 gigawatts of capacity in renewable power generation. The increase stemmed from a world-wide investment of USD $240 billion in renewable energy, marking the seventh straight year that the world’s investment in renewable power sources topped $200 billion dollars. Despite the world’s growing investment in renewable power, an estimated 1.2 billion people still live without access to electricity. Individuals without electricity must supplement their energy needs through fuel based lighting and heating. Burning these sources is not only more expensive relative to many forms of renewable power, but also results in the release of toxic fumes and black carbon, which are major contributors to local air pollution and climate change.
In the Absence of Any Federal Movement, States Continue to Attempt to Legislate Carbon Rules or Taxes
As reported in Salon and Law360 (sub. req.), states, the “laboratories of democracy,” continue to attempt to experiment with legislation carbon rules or taxes. Washington and Oregon are the latest examples, although such efforts have so far failed. Washington’s proposal would have taxed carbon emissions, whereas Oregon’s proposal would have established a cap-and-trade program.
After the Washington tax bill failed, a coalition of environmental, community and labor groups filed a proposed citizens’ initiative that would put a price on carbon emissions. The proposal would charge $15 per metric ton of carbon content of fossil fuels and electricity sold or used in the state starting in 2020. It would increase by $2 a year in 2021 until the state meets its carbon emissions reduction goal for 2035.
As of February of this year, as reported in Law360 (sub. req.), 10 states have released bills to combat climate change and raise revenue by using the tax system, with some 30 different bills in play. According to this report, the range of carbon taxes are from $5-35/ton (bills in Vermont set the base rate at $5 per ton of carbon while bills in New York set it at $35 per ton).
These state-level efforts underscore the challenge of convincing the public and a broad base of stakeholders to act on a problem that Congress first tried to address over a decade ago, most famously through the McCain-Lieberman Climate Stewardship Act of 2003 and the Waxman-Markey American Clean Energy and Security Act of 2009. Interestingly, it may be this patchwork of state-level action that induces Congress to act sometime in the future.
On July 25, 2017, Environmental Protection Agency (“EPA”) administrator Scott Pruitt’s “Superfund Task Force” issued a final report revealing the Task Force’s recommendations for streamlining the remediation process of over 1,300 Superfund sites currently overseen by the EPA. The Task Force’s recommendations included a strong emphasis on facilitating the redevelopment of Superfund sites by encouraging private sector investment into future use of contaminated sites. The recommendations were subsequently adopted by Mr. Pruitt, who has repeatedly affirmed that a top priority of the administration is revamping the Superfund program. In the recent months, it appears EPA and the Trump administration have taken new steps to further the objective of pushing private redevelopment for Superfund Sites.
On January 17, 2018, EPA posted a “Superfund Redevelopment Focus List” consisting of thirty-one Superfund sites that the agency believes “pose the greatest expected redevelopment and commercial potential.” EPA claims that the identified sites have significant redevelopment potential based on previous outside interest, access to transportation corridors, high land values, and other development drivers. “EPA is more than a collaborative partner to remediate the nation’s most contaminated sites, we’re also working to successfully integrate Superfund sites back into communities across the country,” said EPA Administrator Scott Pruitt. “[The] redevelopment list incorporates Superfund sites ready to become catalysts for economic growth and revitalization.”
Along the same lines, President Donald Trump’s sweeping infrastructure proposal, released February 12, 2018, proposed an amendment to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) that would allow Superfund sites to access funding from the EPA’s Brownfield Program, which the administration believes could help stimulate redevelopment of the sites. The proposal further requests Congress pass an amendment to CERCLA that would allow EPA to enter into settlement agreements with potentially responsible parties to clean up and reuse Superfund sites without filing a consent decree or receiving approval from the Attorney General. The proposal claims that CERCLA’s limitations “hinder the cleanup and reuse of Superfund sites and contribute to delays in cleanups due to negotiations.”
Time will tell whether the administration’s strategy will be enough to entice new development into the Superfund sites. To follow the progress of EPA’s Superfund redevelopment efforts, visit EPA’s Superfund Redevelopment Initiative website here.
On Monday, March 5, 2018, EPA issued a report titled EPA Year in Review 2017-2018. The report contains an introductory letter from Administrator Pruitt, who states that he has been “hard at work enacting President Donald Trump’s agenda during [his] first year as EPA Administrator.” The report highlights accomplishments at EPA over the past year, with a focus on the roll back of regulations from the Obama Administration, such as the Clean Power Plan and the Waters of the United States Rule. Administrator Pruitt stated that “[i]n year one, EPA finalized 22 deregulatory actions, saving Americans more than $1 billion in regulatory costs.”
According to the report, Administrator Scott Pruitt set forth a “back-to-basics agenda” with three objectives:
- Refocusing the Agency back to its core mission
- Restoring power to the states through cooperative federalism
- Adhering to the rule of law and improving Agency processes
The report also identifies EPA’s “core mission” as “clean air, land, and water,” and argues that in recent years, “central responsibilities of the Agency took a backseat to ideological crusades, allowing some environmental threats – like cleaning up toxic land – to go unaddressed.” In light of these alleged lapses, EPA states that:
By Andi Kenney
On January 19, 2018, OSHA issued a citation to Spirit Aerosystems, Inc., alleging one willful and five serious violations of the OSHA hexavalent chromium standard (29 CFR 1910.1026) and assessing $194,006 in penalties.
In the citation, OSHA alleges that the manufacturer of aerostructures (including portions of fuselages) willfully failed to prevent employee exposures to levels above the permissible exposure limit (PEL) of 5.0 ug/m3 8 hour time weighted average (TWA) and to implement feasible engineering and work practice controls “to reduce employee exposure to the lowest achievable level.” The citation notes an employee who was sanding and grinding was exposed to hexavalent chromium at 9.0 ug/m3 on a time weighted average, 1.8 times the PEL.
The citation further alleges that Spirit Aerosystems did not perform periodic monitoring every three months, did not perform monitoring when process changed, did not demarcate a regulated area for hex chrome, allowed employees to leave the hex chrome work area without removing contaminated clothing and equipment, and did not adequately train employees regarding the OSHA hex chrome standard.
The citation is notable for several reasons. First, it is an indication that OSHA is still actively enforcing the hex chrome standard. Second, it underscores OSHA’s position that an increased scheduled work load is a process change that would require additional exposure monitoring. Third, it affirms that the aircraft painting exception, which establishes a 25 ug/m3 exposure limit, does not apply to grinding and sanding operations. Finally, it raises questions about how far an employer has to go to reduce exposures—does the employer’s obligation to implement controls require it to reduce exposure “to the lowest achievable level” as alleged in the citation or does the employer meet its obligation if it reduces exposure to the PEL?