Barnes & Thornburg Environmental Law Bloghttps://btlaw.com/en/The environmental law attorneys at Barnes & Thornburg provide insights and commentary on developments in environmental law, including environmental law’s frequent overlap with utility and renewable energy areas.en{C83D9D52-01B0-4965-B8EE-FEF3EA7CE962}https://btlaw.com//en/insights/blogs/environmental/2024/getting-the-lead-out-epa-issues-updated-residential-soil-lead-guidance-for-hazardous-waste-sitesGetting the Lead Out – EPA Issues Updated Residential Soil Lead Guidance for Hazardous Waste Sites<p>On Jan. 17, the Environmental Protection Agency (EPA) issued guidance that, for the first time in 30 years, lowers recommended screening levels and strengthens guidance for investigating and cleaning up lead-contaminated soil in residential areas. The EPA’s <a rel="noopener noreferrer" href="https://www.epa.gov/superfund/updated-soil-lead-guidance-cercla-sites-and-rcra-corrective-action-facilities" target="_blank">Updated Soil Lead Guidance for CERCLA Sites and RCRA Corrective Action Facilities</a> was developed as part of the EPA’s 2022 <a rel="noopener noreferrer" href="https://www.epa.gov/lead/final-strategy-reduce-lead-exposures-and-disparities-us-communities" target="_blank">Strategy to Reduce Lead Exposures and Disparities in U.S. Communities</a>.</p> <p>The guidance goes into effect immediately, and the new residential lead standards apply to both open and closed Resource Conservation and Recovery Act (RCRA) and Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) sites.</p> <p>The new residential screening levels (RSLs) reduce the levels of lead from 400 parts per million (ppm) by at least half and, in some instances, 75 percent. The EPA guidance says:</p> <ul> <li>EPA regions should use a residential soil lead RSL of 200 ppm</li> <li>EPA regions should use a RSL of 100 ppm if an additional source of lead is identified, such as lead water service lines, lead-based paint, and non-attainment areas where the air lead concentrations exceed National Ambient Air Quality Standards (NAAQS). The recommended RSL of 100 ppm considers aggregate lead exposure and increased risk to children living in communities with multiple sources of lead contamination. In making site-specific decisions on when to use an RSL of 100 ppm, EPA regions may use national data sets identified by OLEM for this purpose. EPA regions may also use site-specific sources of information (e.g., data from the local health department or local public water system), alone or in combination with national data sets, to select an appropriate RSL of either 100 ppm or 200 ppm. EPA regions should document the site-specific rationale for the selected RSL.</li> <li>Federal-led RCRA corrective action residential soil lead cleanups should use an RSL of 200 ppm or 100 ppm, depending on the facts of the situation. The EPA strongly encourages states that are authorized for RCRA Corrective Action to use these RSLs in their state-led residential soil lead cleanups.</li> </ul> <p>The agency notes that RCRA and CERCLA cleanup levels for final remediation of lead contaminated soils will be based on site-specific factors, including risk factors and community input that can vary from site to site. However, where removal actions are required under the authority of either statute to address imminent and substantial endangerment to human health or the environment, the guidance establishes a regional removal management level (RML) of 200 ppm – again, half the current 400 ppm default standard for lead in residential areas.</p> <p>While the goal of protecting children from lead exposure is rightfully one of the EPA’s top priorities, the agency’s decision to apply the new guidance retroactively is problematic. It states, “This guidance should be considered for all residential lead sites subject to CERCLA response and RCRA Corrective Action authorities, <em>including those previously addressed and/or deleted from the National Priorities List (NPL)</em>.” (Emphasis added.)</p> <p>In short, closed RCRA and CERCLA sites are subject to being reopened for evaluation and further cleanup. The guidance suggests that under CERCLA, these evaluations can be done as part of the five-year review process, and under RCRA, post-remedy review authority allows the agency to reopen permits based on new information.</p> <p>For those who have already been down this road for emerging contaminants (e.g., 1,4 dioxane and PFAS), reopening closed sites has been a practical and financial nightmare. There is little more unsettling in the environmental arena than having to contact a group of potentially responsible parties (PRPs) who understood they had resolved their CERCLA liability at a site (and who may have settled with their insurers based on that belief) and telling them they may be facing substantial additional response costs to conduct further investigation and remediation.</p> <p>Some of the PRPs may be gone; those that are still around could have to reopen closed books and make new disclosures, and the PRP group’s original decades-old allocation may not apply to the contaminant giving rise to the reopening (and some of the PRPs may assert that they have no nexus to that contaminant). There also is a very real risk the agency will seek reopening for yet another contaminant in the future.</p> <p>The prospect is equally daunting for a party that had received confirmation from the EPA that it had completed RCRA corrective action and now is served with notice that the perceived finality was fleeting.</p> <p>These potential risks highlight the renewed importance of reopener provisions in administrative orders and consent decrees. While parties do not have the luxury of reforming reopener provisions in existing agreements with the EPA to conform to the evolving landscape, they do have the opportunity to take a fresh look at reopener provisions in new agreements going forward. Given the growing uncertainty about finality at CERCLA and RCRA sites, parties need to consider options for narrowing the scope of agency reopeners, particularly for the period immediately after the agency approves closure, for new information and unknown conditions.</p>Mon, 22 Jan 2024 00:00:00 -0500{788CB47B-3326-4483-969E-33F2CF014BD4}https://btlaw.com//en/insights/blogs/environmental/2024/michigan-agency-amends-guidance-on-air-hazards-at-underground-storage-tank-sitesMichigan Agency Amends Guidance on Air Hazards at Underground Storage Tank Sites<p>Demonstrating compliance with the vapor intrusion pathway for acute vapor hazards at leaking underground storage sites in Michigan may now be less work. The Michigan Department of Environment, Great Lakes, and Energy (EGLE) <a rel="noopener noreferrer" href="https://content.govdelivery.com/accounts/MIDEQ/bulletins/37b3de8" target="_blank">recently determined</a> that potential risks from acute petroleum hydrocarbons at leaking underground storage tank sites can be evaluated the same as other hydrocarbons at those sites.</p> <p>In 2021, EGLE released an addendum to its 2013 Vapor Intrusion Guidance Document for acute vapor hazards associated with petroleum releases. That addendum was intended to assist liable parties in demonstrating compliance with Section 21307 of Michigan’s Natural Resources and Environmental Protection Act.</p> <p>Section 21307 requires acute vapor hazards associated with a release from an underground storage tank system to be evaluated. Based on EGLE’s evaluation of data from over 90 petroleum-contaminated sites, EGLE concluded that the likelihood of an acute indoor air exposure from a petroleum hydrocarbon is extremely low. And based on that evaluation, EGLE has determined the sampling plan outlined in the 2021 addendum is unnecessary.</p> <p>Rescinding the 2021 addendum should allow for a more consistent and uniform approach to addressing the vapor intrusion pathway at leaking underground storage tank sites in Michigan. Going forward, the potential risks from acute petroleum hydrocarbons can be treated the same as other hydrocarbons, which should eliminate the need for the rigorous sampling plans that were called for under the addendum.</p>Thu, 04 Jan 2024 00:00:00 -0500{F386CF70-501E-40FC-A327-9786DDBC232D}https://btlaw.com//en/insights/blogs/environmental/2023/house-passes-massive-cuts-in-epa-budget-in-response-to-senate-holding-the-lineHouse Passes Massive Cuts in EPA Budget in Response to Senate Holding the Line<p>Over <a rel="noopener noreferrer" href="https://www.whitehouse.gov/wp-content/uploads/2023/10/H.R.-4821-Department-of-the-Interior-Environment-and-Related-Agencies-Appropriations-Act-2024-FINAL.pdf" target="_blank">strong opposition and a veto threat</a> from the White House, on Nov. 3 the U.S. House of Representatives approved a 2024 appropriations package for the Environmental Protection Agency (EPA) that would reduce 2023 funding by nearly 40 percent, from just over $10 billion to $6.17 billion. This package would return EPA funding to levels last seen in 1991. Republican amendments that would have reduced the appropriation even further (another 16 percent) and cut agency officials’ salaries drastically (in some cases to $1) were fended off.</p> <p>The <a rel="noopener noreferrer" href="https://appropriations.house.gov/news/blog/house-republicans-pass-measure-reins-epa-promotes-domestic-energy#:~:text=Passed%20in%20the%20House%20today,EPA%20funding%20by%20nearly%2040%25" target="_blank">House measure</a> also includes rescission of more than $9.4 billion of the funding provided by the Inflation Reduction Act (IRA), including $7.8 billion in funding for the <a href="/en/insights/alerts/2023/green-house-gas-reduction-fund-competitions-for-$27-billion-finally-ready-for-prime-time" target="_blank">Greenhouse Gas Reduction Fund</a>. According to the White House’s statement, this “would eliminate funds designed to mobilize private capital into pollution-reducing clean energy technology projects, especially in low-income and disadvantaged communities, that would strengthen local economies, create good-paying jobs, reduce harmful pollution, and protect people’s health while tackling the climate crisis.”</p> <p>The bill would also rescind $1.4 billion from the IRA’s <a rel="noopener noreferrer" href="https://www.epa.gov/inflation-reduction-act/inflation-reduction-act-environmental-and-climate-justice-program" target="_blank">Environmental and Climate Justice Program</a> that provides funding for financial and technical assistance to reduce pollution and carry out environmental and climate justice activities in low-income, underserved, overburdened and disadvantaged communities.</p> <p>In addition, the legislation would repeal the administration’s waters of the United States (WOTUS) regulation, and the administration's Phase 1 and 2 rules for the National Environmental Policy Act. It rescinds or prohibits funding for a number of EPA rules on greenhouse gas emissions from power plants and light, medium, and heavy-duty vehicles. It also prohibits agencies from using the social cost of carbon in cost-benefit analyses.</p> <p>This House bill is the polar opposite of the Senate’s EPA funding proposal for 2024. In July 2023, the Senate Appropriations Committee unanimously <a rel="noopener noreferrer" href="https://www.appropriations.senate.gov/news/majority/bill-summary-interior-environment-and-related-agencies-fiscal-year-2024-appropriations-bill" target="_blank">approved a bill</a> that provides nearly $10 billion for the EPA, consistent with 2023 funding. The Senate bill maintains all of the EPA’s core funding and increases funding for clean air and climate programs, both of which were cut substantially in the House bill. </p> <p>The Senate bill also maintains EPA administrative and technical support for IRA programs the House bill defunds, including programs to reduce pollution, mitigate climate change, facilitate energy efficiency, and to transition to net-zero and advance environmental justice.</p> <p>The gloves are off. This sharp partisan divide on spending by the EPA, and on just that one agency’s policies and priorities, does not bode well for the prospect of agreement on an overall budget or even a continuing resolution by the looming Nov. 17 deadline to avoid a government shutdown.</p>Mon, 06 Nov 2023 00:00:00 -0500{D0E2813F-C2B8-4000-BAA0-814952DCA626}https://btlaw.com//en/insights/blogs/environmental/2023/epa-to-kick-off-new-community-equity-and-resiliency-initiative-with-november-virtual-open-houseEPA to Kick Off New Community, Equity and Resiliency Initiative With November Virtual Open House<p>The Environmental Protection Agency (EPA) <a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/epa-launches-new-community-based-initiative-help-people-access-unprecedented-resources" target="_blank">launched a new community-based initiative</a> Nov. 1 “to help communities across the nation navigate EPA’s Inflation Reduction Act investments and other new funding opportunities made possible by President Biden’s Investing in America agenda.”</p> <p>The initiative is a collaboration of the EPA’s Office of Air and Radiation and Office of Environmental Justice and External Civil Rights focused on assisting low-income and disadvantaged communities navigate financing and resources available to mitigate climate change and crisis and reduce pollution. This new initiative, the EPA says, “will facilitate community-driven partnerships and provide a space for communities to learn, connect, and cultivate ideas on how to access the historic resources.”</p> <p>Information on multiple funding opportunities and resources available from the EPA's Investing in America programs can be found on the <a rel="noopener noreferrer" href="https://www.epa.gov/community-equity-resiliency" target="_blank">new Community, Equity and Resiliency webpage</a> to facilitate community-driven partnerships to inspire meaningful change, help communities reduce greenhouse gas emissions, and implement climate action and pollution reduction plans.</p> <p>Registration is open for a <a rel="noopener noreferrer" href="https://www.epa.gov/community-equity-resiliency/virtual-open-house" target="_blank">National Virtual Open House</a> to kick off the new initiative, with sessions planned for Nov. 6-14. The EPA noted the event “will include a series of virtual panels and fireside chats featuring prominent environmental leaders and peers discussing their ideas to overcome environmental pollution and climate change challenges.”</p> <p>The panels include: Rural Communities; Technical Assistance; Community-driven Change; Electric Vehicles; Inflation Reduction Act and Youth; Green Jobs; Voyage to Justice; Unincorporated Communities, Indigenous Communities, and Community Engagement.</p> <p>The two scheduled fireside chats are Hot, Crowded and Unhealthy: Effects of Heat on Black and Brown Communities, and Fresh Air, Fresh Start: Redefining Health and Equity.</p> <p>In addition, the EPA plans to hold a series of regional roadshows this winter. These will be local in-person events “designed to provide opportunities for potential grant applicants and community leaders to explore appropriate Inflation Reduction Act and other new Investing in America funding opportunities and develop or leverage existing community-based partnerships.” These roadshows will provide opportunities to account for each community’s unique context and its financial needs to take on climate change and advance environmental and climate justice.</p>Thu, 02 Nov 2023 00:00:00 -0400{BB837897-44F2-4524-8804-F57CF27B7C45}https://btlaw.com//en/insights/blogs/environmental/2023/doj-environmental-justice-enforcement-policy-gives-teeth-to-biden-pledgeDOJ Environmental Justice Enforcement Policy Gives Teeth to Biden Pledge<p>On President Biden’s inauguration day and in several subsequent policy statements, the Biden administration has made clear that enhanced environmental enforcement in “overburdened communities” would be key part of its environmental justice policy. Executive Order 13985 directed all federal agencies to advance racial equity and support for overburdened communities and Executive Order 14008 directed the Environmental Protection Agency (EPA) to strengthen enforcement in communities disproportionately affected by pollution.</p> <p>In April 2023, the Biden Administration announced a further Executive Order to <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/21/fact-sheet-president-biden-signs-executive-order-to-revitalize-our-nations-commitment-to-environmental-justice-for-all/" target="_blank">revitalize the nation’s commitment to environmental justice for all</a>, which <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/presidential-actions/2023/04/21/executive-order-on-revitalizing-our-nations-commitment-to-environmental-justice-for-all/#:~:text=As%20our%20Nation%20reaffirms%20our,government%20approach%20to%20environmental%20justice" target="_blank">reaffirmed </a>that: “It is the policy of my Administration to pursue a whole-of-government approach to environmental justice.”</p> <p>The EPA, the traditional vanguard for environmental justice, has used recent funding increases to hire staff for civil and criminal enforcement, improve mapping tools to identify disadvantaged communities, and substantially expand inspections of regulated entities in overburdened communities. The EPA’s recently finalized <a href="/en/insights/blogs/environmental/2023/epa-selects-final-national-enforcement-and-compliance-initiatives" target="_blank">National Enforcement and Compliance Initiatives</a> also confirm that “environmental justice concerns have been built into every initiative to protect vulnerable and overburdened communities.”</p> <p>In May 2022, the U.S. Department of Justice established its own program to support environmental justice enforcement policy, which it dubbed the “<a rel="noopener noreferrer" href="https://www.justice.gov/asg/page/file/1499286/download" target="_blank">Comprehensive Environmental Justice Enforcement Strategy</a>.” The strategy was created in coordination with the EPA to provide a roadmap for using the Justice Department’s civil and criminal enforcement authorities to “advance environmental justice through timely and effective remedies for systemic environmental violations … and for injury to natural resources in underserved communities that have been historically marginalized and overburdened.”</p> <p>This strategy applies four principles to guide environmental justice enforcement: prioritize cases that will reduce public health and environmental harms to overburdened and underserved communities; make strategic use of all available legal tools to address environmental justice concerns; ensure meaningful engagement with impacted communities; and promote transparency in environmental justice enforcement.</p> <p>On Oct. 13, the DOJ released its <a rel="noopener noreferrer" href="https://www.justice.gov/d9/2023-10/comprehensive-environmental-justice-enforcement-strategy-annual-report.pdf" target="_blank">first annual report</a> on progress made implementing its environmental justice enforcement strategy. In remarks to the American Bar Association Section of Environment, Energy, and Resources announcing the release of that report, Assistant Attorney General Todd Kim <a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/assistant-attorney-general-todd-kim-delivers-keynote-address-american-bar-association" target="_blank">affirmed DOJ’s central role</a> in the pursuit of the administration’s ambitious environmental justice goals. This past year, the DOJ has appointed an environmental justice coordinator in each of the 94 U.S. Attorneys’ offices, has increased “capacity-building” and training, and has extensively engaged with Tribal and other communities to help effectuate the strategy.</p> <p>The DOJ report also chronicles several enforcement successes, including 1) a lawsuit to address the drinking water crisis in Jackson, Mississippi, 2) a lawsuit to curb harmful air pollution from a plastics plant in Louisiana, 3) an agreement with New York City to clean up radioactive materials on city-owned property, and 4) an “interim resolution agreement” for its “first-ever” Title VI environmental justice investigation. The report also lists several civil and criminal cases concluded by U.S. Attorney’s offices across the country, ranging from illegal dumping in overburdened communities to falsification by a coal mine of respirable coal dust samples to avoid enforcement by OSHA.</p> <p>As a key partner of the EPA and other agencies with roles in protecting the environment, the effort represented by DOJ’s adoption and vigorous pursuit of its environmental justice enforcement strategy is noteworthy and promises continued advancement of the administration’s environmental justice goals. </p>Mon, 23 Oct 2023 00:00:00 -0400{E2F78B11-8B72-461D-802F-B6E130A49E69}https://btlaw.com//en/insights/blogs/environmental/2023/flipping-the-script-in-parallel-white-collar-criminal-proceedingsFlipping the Script in Parallel White Collar Criminal Proceedings<p>Parallel proceedings are a boon for prosecutors in criminal investigations. When parallel civil enforcement investigations or third-party lawsuits occur concurrently with criminal cases, the government will take full advantage of the information-sharing opportunities they provide.</p> <p>The U.S. Department of Justice encourages parallel proceedings, as reflected in Chapter 27 of its Organizations and Functions Manual, which advises:</p> <p style="margin-left: 40px;">“Department policy is that criminal prosecutors and civil trial counsel should timely communicate, coordinate, and cooperate with one another and agency attorneys to the fullest extent appropriate to the case and permissible by law, whenever an alleged offense or violation of federal law gives rise to the potential for criminal, civil, regulatory, and/or agency administrative parallel (simultaneous or successive) proceedings.”</p> <p>The manual warns of only one limit on civil-criminal information sharing: that criminal prosecutors may not direct how civil investigators collect evidence to benefit the criminal investigation.</p> <p>Parallel proceedings multiply the risks for targets. The government will use evidence gathered in concurrent civil proceedings and from the record of civil court proceedings, including trials. Targets in parallel civil lawsuits must decide whether to invoke Fifth Amendment protections in depositions and at trial and risk losing the ability to speak in their own defense. Invoking the Fifth Amendment endows plaintiffs with favorable “adverse inferences” for use at trial.</p> <p>To avoiding parallel third-party lawsuits during criminal proceedings, defendants will typically seek a stay of civil proceedings until criminal matters are finished. The government will often concur, especially when it has already reaped the benefits of the civil investigation. Plaintiffs typically object to such stays to avoid delaying recovery, to lessen the risk that recoverable assets will be depleted by criminal convictions and to lose the advantages of the aforementioned adverse inferences against targets who are civil defendants.</p> <h2>Defense Opportunities for Expanded Discovery</h2> <p>In a criminal investigation, access to discovery for a target is limited. Targets must stand by until charges are filed to obtain discovery while the government pursues evidence with agents, subpoenas and search warrants, and harvests evidence from parallel proceedings. Though parallel proceedings are daunting for the defense, there are opportunities to accelerate the discovery timeline for a criminal case by accessing information from concurrent civil investigations.</p> <p>Targets who are defendants in civil suits may depose witnesses who might have relevant knowledge, issue subpoenas for documents, and serve written discovery. (Note that for federal agencies, a <a rel="noopener noreferrer" href="https://www.ecfr.gov/current/title-40/chapter-I/subchapter-A/part-2/subpart-C" target="_blank">Touhy request</a> is needed to obtain testimony when the agency is not a party and the request may very well be denied.)</p> <p>Evidence from agency civil enforcement may also be useful. Targets can review agency documents sent to them and to related parties, such as inspection reports, notices of violation, and information requests. Relevant information from agencies also can be obtained informally from cooperative agency personnel or formally using the federal Freedom of Information Act and state open records laws. If a parallel civil administrative or judicial civil case is headed for a hearing, formal discovery that defendants can use is likely to be required and opportunities to examine government witnesses may arise.</p> <p>Targets of criminal investigations need to use all possible tools to level the playing field with the government. Information gleaned from parallel proceedings can be one of these tools.</p>Wed, 11 Oct 2023 00:00:00 -0400{AF88556B-3FFD-410F-BE7A-4A39C8FE6E53}https://btlaw.com//en/insights/blogs/environmental/2023/epas-climate-enforcement-and-compliance-strategy-will-have-far-reaching-effectsEPA’s Climate Enforcement and Compliance Strategy Will Have Far-Reaching Effects<p>Every now and then, we call your attention to publications from the federal government that are must-reads. The U.S. Environmental Protection Agency (EPA) Office of Enforcement and Compliance Assurance’s (OECA) memorandum on Climate Enforcement and Compliance Strategy is one of those.</p> <p>This memorandum from David Uhlmann, assistant administrator of OECA, <a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/new-epa-strategy-directs-all-epa-enforcement-and-compliance-programs-help-tackle" target="_blank">announced on Sept. 28</a>, is the most recent and potentially far-reaching of the administrations’ climate initiatives. The administration’s climate campaign began the first week in office with issuance of <a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/FR-2021-02-01/pdf/2021-02177.pdf" target="_blank">Executive Order 14008</a> on Jan. 27, 2021, directing all federal agencies to tackle the climate crisis and historical environmental injustice using a whole of government approach. In March 2022, the EPA established, as the No. 1 goal of its <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2022-03/fy-2022-2026-epa-strategic-plan.pdf" target="_blank">five-year strategic plan</a>, aggressive action to take on the climate crisis by reducing greenhouse gas (GHG) emissions and anticipating, preparing for, and adapting to or recovering from the impacts of climate change.</p> <p>On Aug 17, the OECA announced it will focus enforcement and compliance resources on mitigating climate change as one of its <a href="/en/insights/blogs/environmental/2023/epa-selects-final-national-enforcement-and-compliance-initiatives" target="_blank">National Enforcement and Compliance Initiatives</a> by noting, “OECA selected Mitigating Climate Change as a new NECI because tackling the climate crisis is EPA’s top priority, and enforcement and compliance efforts that reduce greenhouse gas emissions will help limit the worst effects of climate change.”</p> <p>Just a month later, OECA built on – and went further than – the targets set in its climate enforcement initiative with the climate strategy memo:</p> <p style="margin-left: 40px;">“The strategy announced today goes further and requires EPA’s enforcement and compliance program to fairly and vigorously enforce the full array of EPA’s climate rules, including, but not limited to, greenhouse gas (GHG) reporting requirements and limits on other climate pollutants such as carbon dioxide and nitrous oxide. As new climate rules are developed, they will be prioritized as well.”</p> <p>To meet the urgency of this moment, the OECA set the following three requirements that will apply across all EPA enforcement and compliance activities, including criminal, civil, federal facilities, and cleanup enforcement:</p> <ol> <li>Prioritize enforcement and compliance actions to reduce greenhouse gas emissions </li> <li>Include climate adaptation and resilience in into all enforcement and compliance and activities and case conclusions whenever appropriate</li> <li>Provide technical assistance to achieve climate-related solutions and build climate change capacity among EPA staff and state and local partners</li> </ol> <h2>Keen Eye on Climate During Case Development Process</h2> <p>Of particular importance for environmental practitioners and the regulated community, the OECA directed, “Enforcement staff should ensure consistent consideration of climate change during the case development process and incorporate relevant climate mitigation considerations in administrative actions, civil referrals, consent decree approval requests, and referrals for criminal prosecution sent to the Department of Justice.” This includes anticipating and accounting for future extreme weather events when resolving regulatory enforcement cases by including relief that will be resilient to the projected impacts of climate change.</p> <p>The memorandum also encourages enforcement teams to incorporate “greener cleanup provisions” in CERCLA and RCRA settlements and green infrastructure provisions in Clean Water Act settlements.</p> <p>One of the more positive aspects of the memorandum is the express provision for consideration of clean renewable energy solutions, green infrastructure cleanup responses, and other climate mitigation remedies as Supplemental Environmental Projects (SEPs) in civil cases and Community Service Projects in criminal cases. Clean and renewable energy projects that may be considered as mitigation or SEPs include wind, solar, and vehicle electrification.</p> <p>The administration and the EPA’s efforts to apply the whole of government approach to environmental justice have been ongoing for some time with <a rel="noopener noreferrer" href="https://apnews.com/article/biden-environmental-justice-pollution-white-house-0e7be502f530b2eed4f45d6bd28b19fa" target="_blank">mixed results</a>. However, the elevated priority being given to fighting climate change by all federal agencies, together with the specific directions for aggressive enforcement set forth in the Climate Strategy Memo, are likely to have immediate and far-reaching effects on the regulated community.</p>Tue, 10 Oct 2023 00:00:00 -0400{31595AFF-A4EF-4B16-A3A0-03A4EBBCE0F2}https://btlaw.com//en/insights/blogs/environmental/2023/tnfd-releases-final-recommendations-on-nature-related-risk-management-and-disclosuresTNFD Releases Final Recommendations on Nature-Related Risk Management and Disclosures<p>One of the more highly anticipated announcements that drew substantial attention during <a rel="noopener noreferrer" href="https://www.climateweeknyc.org/about-us" target="_blank">Climate Week NYC</a> was the Taskforce on Nature-related Financial Disclosures’ (TNFD) release of its <a rel="noopener noreferrer" href="https://tnfd.global/final-tnfd-recommendations-on-nature-related-issues-published-andcorporates-and-financial-institutions-begin-adopting/" target="_blank">final recommendations for a nature-related risk management and disclosure framework</a> on Sept. 18. The recommendations are intended to facilitate worldwide achievement of the nature-related disclosure targets set forth in the December 2022 <a rel="noopener noreferrer" href="https://www.unep.org/resources/kunming-montreal-global-biodiversity-framework" target="_blank">Kunming-Montreal Global Biodiversity Framework</a>, which was approved by nearly 200 countries. They are modeled after and build on the work of the <a rel="noopener noreferrer" href="https://www.fsb-tcfd.org/" target="_blank">Task Force on Climate-Related Financial Disclosures</a> (TCFD).</p> <p>According to the press release, “The TNFD Recommendations are a key milestone in the relationship between nature, business and financial capital, positioning nature risk alongside financial, operational and climate risk and helping to shift capital flows to nature-positive outcomes.” The TNFD, based in London, is a market-led and government-supported global initiative.</p> <p>The recommendations are science-based and voluntary, and are consistent with the GRI reporting standards and the final disclosure standards for investor focused sustainability standards that were recently<a href="/en/insights/blogs/environmental/2023/uniform-global-sustainability-disclosures-ioscos-endorsement-of-issb-standards-ups-the-ante" target="_blank"> released by the International Sustainability Standards Board (ISSB)</a> and endorsed by the International Organization of Securities Commissions (IOSCO). Most recently, the <a rel="noopener noreferrer" href="https://www.ifrs.org/news-and-events/news/2023/09/issb-congratulates-tnfd-on-finalised-recommendations/" target="_blank">ISSB announced</a> that the TNFD recommendations will inform its future standard setting and related work.</p> <p>The United Nations Environment Program-Finance Initiative, which was instrumental in developing this tool, lauded the release of the final recommendations as a <a rel="noopener noreferrer" href="https://www.unepfi.org/themes/ecosystems/tnfd-final-recommendations/" target="_blank">historic moment</a>:</p> <p style="margin-left: 40px;">The groundbreaking framework enables companies to assess, disclose and manage nature-related risks and impacts which will lead to consistent and comparable reporting on nature-related risks and impacts by businesses and financial institutions worldwide.</p> <p>The TNFD recommends 14 disclosures “to promote the provision of clear, comparable and consistent information by companies to investors and other providers of capital.” The disclosures are organized based on the same four pillars used by the TCFD: governance, strategy, risk and impact management, and metrics and targets.</p> <p>The recommendations also include a proposed set of metrics to support the disclosures, along with draft sector metrics, and plans to develop additional priority sector metrics in 2024. In addition, TNFD provided “getting started” guidance and several business sector-specific guidance documents. It has also developed guidance on particular subject matters, including biomes, nature scenarios, and engagement with Indigenous Peoples and local communities, and has produced a discussion paper on a proposed approach to upstream and downstream value chains.</p> <p>With the release of these recommendations, the TNFD is shifting its focus to “encouraging market adoption, supporting knowledge and capacity building efforts across the market, and working with standard-setting partners as they look to develop nature related disclosure standards that draw from the TNFD recommendations.”</p> <p>Alongside the TNFD release, a group of 190 institutional investors representing $23.6 trillion in assets under management, recently launched the <a rel="noopener noreferrer" href="https://www.natureaction100.org/nature-action-100-announces-companies-start-of-investor-engagement-process-to-catalyze-greater-action-on-nature-loss/" target="_blank">Nature Action 100 to catalyze greater action on nature loss</a>. On Sept. 26, that group announced an investor engagement initiative urging 100 companies worth more than $9 trillion to take “timely and necessary corporate actions that will protect and restore nature and ecosystems.” It is anticipated that the TNFD final recommendations will provide the framework to measure progress.</p>Tue, 26 Sep 2023 00:00:00 -0400{EC808431-88FB-4221-AC46-C620D496B8BF}https://btlaw.com//en/insights/blogs/environmental/2023/the-move-to-renewable-energy-balancing-reliability-sustainability-and-customer-satisfactionThe Move to Renewable Energy: Balancing Reliability, Sustainability and Customer Satisfaction<p>In recent years, the global shift toward renewable energy has gained significant momentum. This transition has not only been driven by consumer and private industry’s desire to be more environmentally conscious, but also by federal policies, most recently the Inflation Reduction Act (IRA). Federal and state governments, utilities, and independent power producers all play a role in shaping this transition. The most important challenge is to balance the need for reliability, resilience, stability, affordability, and environmental sustainability. In Indiana, this has come to be known as the five pillars. This article explores the current state of renewable energy adoption, challenges, and strategies to navigate this intricate dance between the old and the new.</p> <h2>The Federal Layer and Its Impact</h2> <p>The passage of the IRA exemplifies how federal policies can push for increased investment in renewable energy by offering attractive tax credits to developers and power producers. However, despite this incentive, the transition to renewable energy is not without hurdles. The approval and vetting process through the Federal Energy Regulatory Commission (FERC), the Independent System Operator (ISO) or Regional Transmission Organization (RTO), and any statutory regulatory agency may take years, creating a burdensome time gap between a utility deciding to undertake a project, seek approval, and have the project meet commercial operation. </p> <p>Utilities need to identify projects to meet electricity demand and despite an overflowing amount of projects in ISO/RTO queues, some utilities believe the market is still extremely competitive. These pressures further burden ISOs and RTOs like Midcontinent Independent System Operator (MISO), PJM, and the California Independent System Operator to maintain reliability and ensure the lights stay on. Some of the ISO/RTOs have petitioned FERC for approval on updated generation queue processes in order to streamline and fast track project approvals.</p> <h2>It’s All About Balance</h2> <p>While the call for 100 percent renewable energy is strong, achieving this goal is not as straightforward as flipping a switch. Solar and wind power, while cleaner, are weather-dependent and pose challenges when it comes to balancing energy supply and demand. To bridge this gap, utilities have turned to designing diverse portfolios that include both renewable and other energy sources, such as natural gas. New natural gas turbines have quicker ramp-up times which allow for reliable load following generation. </p> <p>Additionally, not only do these newer turbine technologies offer promising avenues in striking that balance, they can also use new and emerging renewable fuel sources. For example, some turbines even have the capability to switch to hydrogen, giving utilities the flexibility to add this renewable source in the future without having to reinvest in infrastructure. There is also renewed interest in nuclear energy, which is clean burning. The Department of Energy and some individual states such as Indiana have begun exploring the potential benefits and deployment of advanced small modular reactors (SMRs) as a key part of bringing additional safe, clean, and affordable nuclear power options to the market.</p> <h2>State and Federal Regulations</h2> <p>Navigating the energy transition requires cooperation between state and federal regulators. Each state has its own regulatory system, and utility companies must understand and work within this framework to propose effective solutions. For utilities, being able to clearly communicate to regulatory commissions how these solutions overcome day-to-day and long-term challenges and how they preserve and enhance the way families and communities live is key. </p> <p>Balancing renewable energy goals with the need for grid reliability and protection from threats like domestic terrorism is also crucial for long-term success. All of these changes and enhancements to utility service come at a cost, so appropriate rate recovery must also be top of mind.</p> <h2>Strategies for Success</h2> <p>Success in the renewable energy transition involves a methodical approach rather than rushing headlong. Rather than relying too heavily on renewables, states such as Indiana have concluded that a measured approach is best suited to balance the five pillars. Utilizing bridge technologies, exploring different rate recovery mechanisms, such as securitization, and gradually retiring coal technology can ensure an even smoother transition. Finding opportunities to repurpose or refuel existing infrastructure and equipment has also proven successful. Reusing infrastructure and interconnections rights can not only streamline the approval process, but also maintain the strength and vitality of energy communities who rely so much on the energy industry for their well-being.</p> <p>The move to renewable energy is both an opportunity and a challenge for utilities and independent power producers. As the world transitions towards cleaner energy sources, finding the right balance is critical. A one-size-fits-all approach is impracticable. Different ISO/RTOs, states and utilities have approached transitioning with differing strategies and varying successes. By understanding the complexities of regulations, fostering cooperation between stakeholders, and embracing innovative solutions, utilities can navigate this transition successfully. With thoughtful planning and collaboration, we can build a more sustainable and resilient energy future for all.</p>Mon, 25 Sep 2023 00:00:00 -0400{53A8D826-1FCE-40B0-994C-9C8D71ABB93F}https://btlaw.com//en/insights/blogs/environmental/2023/funding-clean-energy-and-climate-mitigation-projects-white-house-infrastructure-opportunitiesFunding Community Clean Energy and Climate Mitigation Projects: White House Technical Assistance Guide to Infrastructure Opportunities a Must-Read<p>On Sept. 13, the White House announced the <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/09/13/fact-sheet-white-house-releases-new-technical-assistance-resources-to-help-communities-unlock-opportunities-from-president-bidens-investing-in-america-agenda/" target="_blank">release of new technical assistance resources</a> to help communities unlock opportunities from President Biden’s Investing in America plan. The focus of those resources is on providing access to funding made available by the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA).</p> <p>The resources include a new <a rel="noopener noreferrer" href="https://www.whitehouse.gov/build/resources/technical-assistance-guide/" target="_blank">Technical Assistance Guide (TAG)</a>, a reference tool that provides comprehensive information about more than 100 federal assistance and capacity-building programs that have more than $1 billion available to provide technical support for efforts by communities to apply for secure and dispense federal funding. Among other programs, the updated guide includes numerous programs to help state, local, and tribal governments and nonprofits deliver infrastructure, clean energy, and climate mitigation and resilience projects.</p> <p>The updated TAG is required reading and should be<a rel="noopener noreferrer" href="https://www.whitehouse.gov/wp-content/uploads/2023/09/IIA-Technical-Assistance-Guide-September-2023-v091223.pdf" target="_blank"> bookmarked</a> by any non-federal governmental or private entity looking for federal assistance to navigate and access what the guide calls “programs, processes, and resources that provide targeted support to a community, region, organization, or other beneficiary to help them access and deploy federal funding to deliver results.”</p> <p>The breadth of the technical assistance resources offered, as summarized in the TAG, is stunning:</p> <p style="margin-left: 40px;">Different technical assistance programs can help communities with planning, project development, project finance, grant writing, project management and compliance. There is a wide range of technical assistance available under these programs. Some communities will get what they need from webinars, websites or other educational information provided by Federal departments and agencies. Others will want and need more specific support and advice. Sometimes that can be provided directly by Federal subject matter experts and other times it can be provided by higher education institutions, non-profit organizations and for-profit consultants under agreement with Federal departments and agencies. Technical assistance can focus on different parts of the project lifecycle. For instance, some of the initiatives listed in the guide are focused on helping communities apply for and access federal funding, while others are more focused on helping communities plan, design, and build projects after funding has been secured. Finally, some Federal technical assistance programs provide funding directly to communities to bring on technical assistance support.</p> <p>Among the resources included in the TAG, the federal interagency <a rel="noopener noreferrer" href="https://www.transportation.gov/federal-interagency-thriving-communities-network" target="_blank">Thriving Communities Network</a> (TCN) is a central hub for making technical assistance and capacity-building available to urban, rural, and Tribal communities. The TCN has funded <a href="/en/insights/blogs/environmental/2023/epa-announces-177-million-for-17-new-technical-assistance-centers-to-help-communities" target="_blank">17 Environmental Justice Technical Assistance Centers</a> to deliver technical assistance to underserved and overburdened communities across the country.</p> <p>Through the Department of Transportation (DOT), the TCN has formed four capacity-builder teams that are providing technical assistance to 64 under-resourced and disadvantaged communities to help them pursue transportation funding opportunities. On Sept 12, 2023, the DOT supplemented these efforts, issuing a <a rel="noopener noreferrer" href="https://www.transportation.gov/briefing-room/biden-harris-administration-announces-next-phase-thriving-communities-grant-program" target="_blank">Notice of Funding Opportunity</a> and a call for letters of interest directly from communities seeking support for technical assistance to access BIL and IRA funding.</p> <p>The TCN has also sponsored a <a rel="noopener noreferrer" href="https://www.rural.gov/" target="_blank">Rural Partners Network</a> that embeds federal staff in rural communities to provide technical assistance to facilitate preparation of successful grant applications and a number of programs, along with an Interagency Working Group on Coal and Power Plant Communities that provides technical assistance to pursue funding from programs that support energy workers in coal, oil and gas, and power plant communities across the country.</p> <p>In addition to the opportunities offered through the TCN, the TAG includes dozens of technical assistance programs offered by individual agencies, including the Federal Emergency Management Administration, Environmental Protection Agency, and the Departments of Transportation, Energy, Interior, Health and Human Services, Housing and Urban Development, Labor, Commerce, and Treasury.</p> <p>Although not included in the TAG, the White House release also identifies opportunities available from 11 states and numerous philanthropic, labor and nonprofit organizations that are providing technical assistance for communities to secure and deploy infrastructure funding. One of these initiatives to watch is the formation of several pooled funds by major philanthropic organizations that have committed over $1.6 billion to support the implementation of the clean energy and climate provisions of the IRA, including “more direct access to critical technical assistance for underserved communities so that they can realize the full benefits of the law.”</p>Tue, 19 Sep 2023 00:00:00 -0400{D682A125-4BE5-441C-8228-2CF4C5C043DD}https://btlaw.com//en/insights/blogs/environmental/2023/epa-selects-final-national-enforcement-and-compliance-initiativesEPA Selects Final National Enforcement and Compliance Initiatives<p>After proposing new National Enforcement and Compliance Initiatives (NECI) in January and considering comments from states, tribes, NGOs and other parties, <a rel="noopener noreferrer" href="https://michigan.law.umich.edu/news/professor-david-uhlmann-confirmed-epa-enforcement-and-compliance-chief" target="_blank">newly confirmed</a> Environmental Protection Agency (EPA) enforcement chief David Uhlmann <a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/epa-announces-federal-enforcement-priorities-protect-communities-pollution" target="_blank">announced Thursday</a> the adoption of three new NECIs and one modified NECI for the 2023-2027 cycle.</p> <p>The EPA selects NECIs to guide the EPA and <a href="/en/insights/blogs/environmental/2023/states-weigh-in-on-epas-most-serious-environmental-problems-and-enforcement-compliance" target="_blank">delegated states’ deployment</a> of criminal and civil enforcement resources. The <a href="/en/insights/blogs/environmental/2023/another-oig-fly-in-epas-ointment" target="_blank">initiatives are selected</a> based on the need to address serious and widespread environmental issues and significant violations impacting human health and the environment, particularly in overburdened and vulnerable communities. The agency also considers where federal enforcement authorities, resources, and expertise are needed and ensures the initiatives are consistent with the EPA’s strategic plan. </p> <p>The new NECIs are 1) mitigating climate change, 2) addressing exposure to PFAS, and 3) protecting communities from coal ash contamination. To address the EPA’s “top-priority” – the climate crisis – it noted that it will address methane emissions from oil and gas facilities; methane emissions from landfills; and the use, importation, and production of hydrofluorocarbons (HFCs).</p> <p>The agency’s Office of Enforcement and Compliance Assurance, which Uhlmann heads, will focus on existing New Source Performance Standards at oil and gas facilities and landfills and enforce any new rules that may be promulgated to reduce methane emissions in the future.</p> <p>The Uhlmann memorandum points out that the EPA has already taken a number of PFAS-related enforcement actions to ensure compliance with existing statutes and, if the EPA also designates PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the agency intends to hold responsible those who contribute to the release of PFAS into the environment, such as major manufacturers and users of PFAS. </p> <p>Regarding coal ash contamination, the EPA said that, because noncompliance with the coal combustion residual requirements under the Resource Conservation and Recovery Act appears to be widespread and since coal ash facilities are often located near communities with environmental justice concerns, this NECI will focus enforcement efforts on conducting investigations at coal ash facilities affecting vulnerable communities.</p> <p>The existing initiative called “Creating Cleaner Air for Communities” has been renamed “Reducing Air Toxics in Overburdened Communities” and has been modified to focus on communities selected by each EPA Region based on levels of toxic hazardous air pollutants (HAPs) in the communities. The regional selections will be made in partnership with states based on fence line and other air monitoring tools.</p> <p>Two initiatives that will be continued from the prior cycle are increasing compliance with drinking water standards and chemical accident risk reduction.</p> <p>In past years, EPA enforcement initiatives have been accurate harbingers of the agency’s deployment of enforcement resources and there is no reason to believe things will be different under Uhlmann’s leadership, especially given the agency’s abundant new funding.</p>Fri, 18 Aug 2023 00:00:00 -0400{83D6EC37-9420-4B9F-9C5F-755473EFF01E}https://btlaw.com//en/insights/blogs/environmental/2023/congress-turns-up-the-heat-on-esg-and-climate-related-disclosuresCongress Turns Up The Heat On ESG And Climate-Related Disclosures<p>Political divisiveness has perpetuated dueling realities in Congress over ESG and climate related disclosures. While the rest of the world is moving forward to require such disclosures, this politicization has slowed parallel efforts in the U.S. If Congress cannot find common ground to support climate-related disclosures that align with those already approved by others, the U.S.’ global leadership position in capital markets may be undermined. <a href="/en/insights/alerts/2023/issbs-inaugural-sustainability-disclosure-standards-put-the-spotlight-on-scope-3-emissions-in-the-us" target="_blank">The U.S. needs to move quickly and act decisively to maintain</a> its place on the world stage.</p> <h2>House Republicans and Democrats’ Polarization Continues</h2> <p>Republicans on the U.S. House Financial Services Committee recently wrapped up their “ESG Month” that included a series of hearings on environmental, social, and governance (ESG) issues in July. The committee had more than a half-dozen hearings and advanced four pieces of legislation in opposition to ESG practices, policies and proposed rules. According to reports quoting the committee’s GOP ESG working group, the bills are designed, in part, to prevent the Securities and Exchange Commission (SEC) from issuing regulations outside of the agency’s scope.</p> <p>One of the bills sent to the full House, <a rel="noopener noreferrer" href="https://www.congress.gov/bill/118th-congress/house-bill/4790/text/ih?overview=closed&format=xml" target="_blank">H.R. 4790</a>, the Guiding Uniform and Responsible Disclosure Requirements and Information Limits (GUARDRAIL) Act, would displace the Securities and Exchange Commission’s (SEC) proposed climate-related disclosure rules and limit the type of disclosures the SEC can compel. The bill would amend both the Securities Act of 1933 and the Securities Exchange Act of 1934 by inserting statutory language directly into both acts saying an “issuer is only required to disclose information in response to disclosure obligation adopted by the Commission to the extent the issuer has determined that such information is material with respect to a voting or investment decision regarding the securities of such issuer.”</p> <p>In response to ESG Month, House Democrats’ message was that attacks on ESG are attacks on capitalism and free markets. They emphasized the importance of access to ESG data in planning for long-term challenges and making prudent investment decisions. They also pointed to the record breaking July temperatures to highlight the need to hold corporations accountable for their climate impacts.</p> <p>Most recently, on Aug. 7, 2023, 77 House Democrats responded, albeit indirectly, to the proposed GUARDRAIL Bill, with a letter to SEC Chair Gary Gensler urging the agency to quickly <a rel="noopener noreferrer" href="https://castor.house.gov/news/documentsingle.aspx?DocumentID=404268" target="_blank">finalize a strong and durable climate rule</a>. The letter includes a reminder that the proposed rule is “grounded in financial materiality” (the standard proposed in H.R. 4790). The letter also briefly addresses the SEC scope and authority issues that were a major focus of ESG Month and H.R. 4790:</p> <p style="margin-left: 40px;">“The proposed rule is squarely within the Commission’s authority and mission to protect investors; maintain fair, orderly, and efficient markets; and facilitate the formation of capital. The SEC has ‘longstanding and indisputable authority to regulate the disclosure practices of public traded companies’ to protect markets and market participants. It ‘has exercised its disclosure authority consistently—and without legislative override’ for over ninety years, and ‘has now done so once more with the Proposal on climate-related disclosure.’”</p> <p>The letter asks the SEC to move forward with the rule without further delay, notwithstanding the partisan discord that resurfaced during ESG Month:</p> <p style="margin-left: 40px;">“We are not naive to the environment that has unfortunately injected politics into requirements that should not be controversial and will better enable investors to analyze investment risk and return, allocate capital efficiently, and prioritize investment stewardship and engagement. However, this should not be a reason for continued delay.”</p> <h2>What’s Next for the SEC’s Proposed Climate-Related Disclosure Rule?</h2> <p>Now that both parties in the House have staked out their positions on these issues (again), what is the status of the SEC’s proposed climate related disclosure rule? In the SEC’s most recent rulemaking agenda, the final climate disclosure rules target date was pushed from spring 2023 to October 2023. On July 28, 2023, in <a rel="noopener noreferrer" href="https://www.sec.gov/news/speech/gensler-remarks-fsoc-climate-072823" target="_blank">remarks before the Financial Stability Oversight Council on climate risk disclosure</a>, Gensler made clear that the agency has a ways to go before issuing the final rule:</p> <p style="margin-left: 40px;">“We are considering carefully the more than 15,000 comments we’ve received on the proposal. We greatly benefit from public input and, given the economics and the law, will consider adjustments to the proposed rule that the staff, and ultimately the Commission, think are appropriate in light of those comments.”</p> <p>In the meantime, the International Sustainability Standards Board (ISSB) <a href="/en/insights/alerts/2023/issb-takes-the-lead-on-global-sustainability-disclosure-standards" target="_blank">finalized its sustainability disclosure standards</a>, IFRS SI and S2 and they were endorsed on July 25 by the International Organization of Securities Commissions (IOSCO). <a href="/en/insights/blogs/environmental/2023/uniform-global-sustainability-disclosures-ioscos-endorsement-of-issb-standards-ups-the-ante" target="_blank">This endorsement is expected to be a strong inducement</a> for adoption of or adaptation to the ISSB standards by jurisdictions worldwide. These standards will available for use voluntarily starting in 2024 for 2025 reporting, and will become requirements at times specified by jurisdictions that formally adopt them.</p> <p>On July 31, the European Commission (EC) issued its long awaited European Sustainability Reporting Standards (ESRS) required by the EU Corporate Sustainability Reporting Directive (CSRD). These standards, like those from the ISSB, come into effect in 2024, but are mandatory for companies doing business in the EU that meet specified revenue parameters.</p> <p>The EC and ISSB have been working closely and recently <a rel="noopener noreferrer" href="https://www.ifrs.org/news-and-events/news/2023/07/european-comission-efrag-issb-confirm-high-degree-of-climate-disclosure-alignment/" target="_blank">confirmed a high degree of climate-disclosure alignment and interoperability</a>. Subject to some provisions for flexibility, both sets of standards require disclosure of Scope 3 greenhouse gas (GHG) emissions by value chains. It is anticipated that thousands of U.S. companies operating in the EU will be required to comply with the ESRS, and will be subject to ISSB standards in jurisdictions where they are adopted.</p> <p>Additionally, on Aug. 1, the United Kingdom Department for Business and Trade announced it will conduct a <a rel="noopener noreferrer" href="https://www.gov.uk/guidance/uk-sustainability-disclosure-standards" target="_blank">consultation on sustainability disclosure standards in Q1 2024</a> that “will only divert from the global baseline ISSB standards if absolutely necessary for UK specific matters.” The UK is aiming to endorse, by July 2024, corporate disclosures standards that will track IFRS SI and S2.</p> <p>In the face of this global trend, the U.S. is falling behind. As nations around the world push for climate-related transparency, Congress remains hamstrung by political differences. This disparity could endanger the U.S.' standing in global capital markets unless it can quickly align with international norms. The House Democrats captured that predicament when they stated in their letter to Gensler “Enhanced climate-related disclosure is the direction of travel for capital markets around the world” and “…the SEC should lead, not follow, in implementing a strong climate-related disclosure rule…” Prompt issuance of the final SEC climate-related disclosure rule is of paramount importance for the U.S. to maintain its international financial stature.</p>Tue, 15 Aug 2023 00:00:00 -0400{6084024B-0041-48F3-9D3A-CF757E9E95A7}https://btlaw.com//en/insights/blogs/environmental/2023/states-weigh-in-on-epas-most-serious-environmental-problems-and-enforcement-complianceStates Weigh In on EPA’s ‘Most Serious Environmental Problems’ and Enforcement, Compliance<p>For years, the U.S. Environmental Protection Agency (EPA) has published a list of environmental issues it is focusing on for enforcement. Since 2010, this priority list has been named the National Enforcement Initiatives or NEIs. In December 2022, the EPA announced in its Updated Policy for EPA’s Enforcement and Compliance Initiatives that the list had been renamed “National Enforcement and Compliance Initiatives” (NECI), explaining that “while criminal … and civil enforcement … remain the key tools to address serious noncompliance, hold polluters accountable and create general deterrence, the EPA also uses informal enforcement and compliance tools to advance the national initiatives . . .”</p> <p>For the EPA and its delegated states, <a href="/en/insights/blogs/environmental/2023/another-oig-fly-in-epas-ointment" target="_blank">the NECIs</a> guide “allocation of enforcement and compliance resources based on the need to address serious and widespread environmental issues particularly in overburdened and vulnerable communities.” The goal, according to the EPA, is to “help ensure national consistency, promote a level playing field, and achieve compliance” with the goals of the EPA’s <a rel="noopener noreferrer" href="https://www.epa.gov/planandbudget/strategicplan" target="_blank">Strategic Plan to Enforce Environmental Laws and Ensure Compliance</a>. </p> <p>The EPA has issued NECIs for 2020-23 and has proposed the next round of NECIs for 2024-27.</p> <p>The <a rel="noopener noreferrer" href="https://www.epa.gov/enforcement/national-enforcement-and-compliance-initiatives" target="_blank">NECIs for 2020-23</a> are:</p> <ul> <li>Creating cleaner air for communities by reducing excess emissions of harmful pollutants</li> <li>Stopping after-market defeat devices for vehicles and engines</li> <li>Reducing hazardous air emissions from hazardous waste facilities</li> <li>Reducing risks of accidental releases at industrial and chemical facilities</li> <li>Reducing significant non-compliance with national pollutant discharge elimination system (NPDES) permits </li> <li>Reducing non-compliance with drinking water standards at community water systems</li> </ul> <p>The <a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/epa-proposes-add-environmental-justice-climate-change-and-pfas-national-enforcement" target="_blank">draft NECIs for 2024-2027 carry over four current initiatives and add two new ones</a>. New initiatives include a climate change NECI, which will address greenhouse gas emissions, air pollution, and water quality effects, and an NECI to address per- and polyfluoroalkyl substances (PFAS). The public comment period ended in March.</p> <p>Although none of the NECIs expressly addresses environmental justice concerns, the EPA stressed that when enforcing all NECIs, environmental justice concerns will be addressed and have “been built into every initiative to protect vulnerable and overburdened communities.” This is consistent with the Biden administration’s previously expressed pledge to focus much of the agency’s environmental enforcement in disadvantaged communities.</p> <p>The EPA has received comments on the new NECIs that point out potential roadblocks to implementation, especially for those whose implementation depends on actions by states to which the EPA has delegated enforcement roles and on which EPA depends for a large part of its enforcement efforts. <a rel="noopener noreferrer" href="https://www.ecos.org/documents/ecos-comments-on-epa-national-enforcement-compliance-initiatives/" target="_blank">Public comments by the Environmental Council of the States</a> (ECOS) warn that for “state agencies already experiencing heavy workload, limited resources, and competing regional priorities… [the] long list of NECIs creates a potentially larger workload burden and dilutes the impact of a focused effort.” For the PFAS-related proposed NECI, the ECOS noted that states are wondering “how EPA will promote compliance and enforcement efforts in these areas in the absence of national or state standards” and suggest that “proposed measures related to the NECI should be quantified and clearly tied to a regulation.”</p> <p>For entities regulated by the EPA and state environmental agencies, the NECI list serves as notice of what aspects of business operations are more likely to be subject to regulatory attention, either because of the environmental media involved or where they are located, or both. As the saying goes, “praemonitus, praemunitus” – or “forewarned is forearmed.”</p>Mon, 14 Aug 2023 00:00:00 -0400{EA36EA62-E818-4ED5-9072-3F635DDBDA52}https://btlaw.com//en/insights/blogs/environmental/2023/uniform-global-sustainability-disclosures-ioscos-endorsement-of-issb-standards-ups-the-anteUniform Global Sustainability Disclosures: IOSCO's Endorsement of ISSB Standards Ups the Ante<p>On June 26, 2023, the International Sustainability Standards Board (ISSB) <a href="/en/insights/alerts/2023/issb-takes-the-lead-on-global-sustainability-disclosure-standards" target="_blank">finalized its sustainability disclosure standards</a>: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate Related Disclosures. Before the ink had time to dry, on July 25 the International Organization of Securities Commissions (IOSCO) issued its <a rel="noopener noreferrer" href="https://www.iosco.org/library/pubdocs/pdf/IOSCOPD741-Endorsement-Decision.pdf" target="_blank">endorsement </a>of the ISSB standards for investor‑focused sustainability reporting:</p> <p style="margin-left: 40px;">“IOSCO has concluded that the ISSB Standards serve as an effective and proportionate global framework of investor-focused disclosures in relation to climate-related matters, specifically (IFRS S2) and, more generally, sustainability-related information (IFRS S1). IOSCO has concluded that the ISSB Standards are appropriate for the purpose of helping globally integrated financial markets accurately assess relevant sustainability risks and opportunities. It has also concluded that they form an appropriate basis for the development of a robust assurance framework to apply to such disclosures.”</p> <p>This strong statement of support was accompanied by a call for <a rel="noopener noreferrer" href="https://www.iosco.org/news/pdf/IOSCONEWS703.pdf" target="_blank">adoption, adaptation, and implementation of ISSB’s Sustainability-related Financial Disclosures Standards</a> by IOSCO’s members:</p> <p style="margin-left: 40px;">“IOSCO now calls on its 130 member jurisdictions, regulating more than 95% of the world's financial markets, to consider ways in which they might adopt, apply or otherwise be informed by the ISSB Standards within the context of their jurisdictional arrangements, in a way that promotes consistent and comparable climate-related and other sustainability-related disclosures for investors”</p> <p>According to Jean-Paul Servais, chair of IOSCO, between 100,000 and 130,000 companies globally are likely to apply the ISSB standards.</p> <p>On the same day the IOSCO endorsement was released, the ISSB’s parent, the IFRS Foundation, published a “high-level” <a rel="noopener noreferrer" href="https://www.ifrs.org/supporting-implementation/supporting-materials-for-ifrs-sustainability-disclosure-standards/cover-note-adoption-guide-overview/" target="_blank">Adoption Guide overview</a> that outlines the mechanisms being developed “to support regulatory implementation, as well as steps that have already been taken such as building proportionality mechanisms and transition reliefs into the Standards.” According to the ISSB:</p> <p style="margin-left: 40px;">“Our strategy to support jurisdictions in their journeys towards adoption focuses on four strategic pillars: proportionality, transitional reliefs, consistency in approaches on the phasing-in and scaling of requirements, and capacity building that supports implementation.</p> <p style="margin-left: 40px;">This strategy balances addressing initial implementation challenges faced by preparers and the differing starting points and level of preparedness of jurisdictions with the need to deliver the consistency and comparability required by capital markets.”</p> <p>The Adoption Guide itself, which is scheduled for completion later this year, “will balance jurisdictional considerations about the phasing in of requirements with the need to deliver the comparability, consistency and reliability required by capital markets.”  Toward that end, the ISSB is working with IOSCO on capacity building to phase and scale the requirements of the ISSB standards to the size and sophistication of jurisdictions considering adoption and companies that will use them. The ISSB is also in the process of establishing a Transition Implementation Group that “will provide a public forum for stakeholders to follow the discussion of questions that arise on implementation.” </p> <p>The Adoption Guide overview gives special attention to Scope 3 greenhouse gas (GHG) emission disclosures from value chains that were a focal point for ISSB’s consultations, and are currently a controversial issue in the U.S. The overview notes that: “… information on Scope 3 GHG emissions is critically important to investors as they assess the transition risks and opportunities in the move towards a lower carbon economy.” </p> <p>However, the overview goes on to summarize the care ISSB has taken to allow additional time, account for potential undue cost and effort, and provide for flexibility on estimating measurements of Scope 3 emissions. In short, the ISSB has taken stock of the challenges posed by Scope 3, and has adopted practical and reasonable measures to phase in the disclosure requirements.</p> <p>With IOSCO’s support, the ISSB is pulling out all the stops to facilitate and expedite adoption and implementation of IFRS S1 and S2 as the global baseline for sustainability disclosures, both financial and climate related. IOSCO’s endorsement is expected to be a powerful inducement for its member jurisdictions to use the ISSB standards or align their own to be consistent with them. As the IFRS states in its cover note to the Adoption Guide overview: “The positive outcome from IOSCO’s comprehensive review of the Standards sends a strong signal to jurisdictions around the world that the ISSB Standards are fit for purpose for capital market use.”</p>Wed, 26 Jul 2023 00:00:00 -0400{FAB31FA5-EABC-4715-85BA-40762EA9BD02}https://btlaw.com//en/insights/blogs/environmental/2023/elephants-in-mouseholes-criminal-law-concerns-supreme-courts-clean-water-act-sackett-v-epa‘Elephants in Mouseholes’: Criminal Law Concerns Driving Supreme Court’s Clean Water Act Decision in Sackett v. EPA<p>As those who follow environmental matters have heard, the U.S. Supreme Court’s recent <a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/22pdf/21-454_4g15.pdf" target="_blank">decision in <em>Sackett v. EPA</em></a> held EPA’s interpretation of the phrase “waters of the United States” (WOTUS) was applied too broadly to a parcel of residential property owned and filled with dirt by Michael and Chantel Sackett in Idaho. The Environmental Protection Agency (EPA) classified the property as WOTUS because it was a wetland located near a ditch that fed into a creek – which in turn fed into Priest Lake, a navigable intrastate lake. In the EPA’s view, the proximity of the wetland to the lake satisfied the definition of WOTUS because it was near enough to be deemed adjacent. </p> <p>The Supreme Court ultimately disagreed, holding that the wetland was not a WOTUS. In a typically extensive opinion, the court said the EPA’s broad interpretation of WOTUS as applied to the wetlands in this matter was not warranted by the language of the Clean Water Act (CWA), which requires permits to discharge into “navigable waters.” The court criticized the EPA’s broad application of adjacency, arguing that “Congress does not ‘hide elephants in mouseholes’ by ‘alter[ing] the fundamental details of a regulatory scheme in vague terms or ancillary provisions.” </p> <p>A concern the Supreme Court expressed a number of times was that an unclear WOTUS definition could unjustly support criminal prosecution under the expanded regulatory CWA for innocent conduct. According to the court, the meaning of WOTUS as interpreted by the EPA was “hopelessly indeterminate” and “the EPA’s interpretation of the phrase gives rise to serious penalties” with “crushing” consequences “even for inadvertent violations.” The court argued that because due process requires Congress to define the CWA’s criminal statutes “‘with sufficient definiteness that ordinary people can understand what conduct is prohibited’ and ‘in a manner that does not encourage arbitrary and discriminatory enforcement,’” the EPA’s expansion of WOTUS is a manner that encompassed the Sackett property was improper. </p> <p>The court further noted that if “the CWA can sweep broadly enough to criminalize mundane activities like moving dirt, this unchecked definition of [WOTUS] means that a staggering array of landowners are at risk of criminal prosecution…” The specter of possible criminal jeopardy is raised several other places in the opinion – a total 14 times – and is one of the court’s primary pillars supporting its ruling. </p> <p>At first blush, the Supreme Court’s invocation of criminal jeopardy appears justified because, as a result of the lenient scienter standard for most CWA crimes, the same conduct that supports the many CWA civil enforcement actions can also be prosecuted criminally. Here, because the Sacketts apparently <a href="/en/insights/blogs/environmental/2023/knowing-is-what-makes-an-environmental-crime" target="_blank">knew they were filling the property the EPA had classified</a> as wetlands, the conduct might, in theory, support criminal charges.</p> <p>What the court neglected to acknowledge, however, is that the EPA has a policy that limits criminal enforcement to the most egregious violations. Under the EPA’s Exercise of Investigative Discretion policy, a one-time CWA violation with limited impact would be very unlikely to be deemed serious enough to be prosecuted criminally by the EPA. Similarly, the discretion of the Department of Justice is governed by its principles of federal prosecution, which require the evaluation of a number of factors before bringing criminal charges, including whether there is an “adequate non-criminal alternative to prosecution.”</p> <p>The hand-wringing of the <em>Sackett </em>court about the risk of criminal enforcement for wetlands violations therefore seems excessive. Nevertheless, for those accused of an environmental crime that involves “elephants in mouseholes,” vague or overbroad laws, or is otherwise disproportionate to the “crushing consequences” of the charged violation, <em>Sackett </em>may provide a useful new tool for the defense.</p>Thu, 13 Jul 2023 00:00:00 -0400{4A03331E-1B56-4AE9-9D55-83E5841E05E0}https://btlaw.com//en/insights/blogs/environmental/2023/knowing-is-what-makes-an-environmental-crimeKnowing [is] What Makes an Environmental Crime<p>The EPA’s bloated budgets have armed the agency with the ability to not only add new programs, but also enhance its core programs, including enforcement. With more money to hire, train and deploy inspectors and agents to find environmental infractions, more enforcement cases are inevitable. The gold standard of enforcement cases (from the EPA’s perspective) is the criminal case. Criminal cases give the EPA and state environmental agencies the media exposure they crave to spotlight its programs and promote deterrence (and thus compliance) and thereby to enhance environmental protection.</p> <p>While a criminal environmental case may be a boon to the EPA, it can spell disaster for those targeted for criminal conduct. Violations of the primary EPA statutes – the Clean Water Act, the Clean Air Act and the Resource Conservation and Recovery Act (regulating management of hazardous wastes) – normally are charged as felonies and can carry substantial prison time and monetary penalties. A conviction can also trigger automatic debarment from federal contracting and grants. Defending an environmental crimes case is a costly and time-consuming endeavor, requiring specialized counsel and technical experts, and can spell the end for a company that is not well-funded.</p> <p>From a legal standpoint, virtually any environment violation can be a crime because all that the government must prove, in addition to the violation, is that it was done “knowingly,” which is not difficult to prove. For example, permit excursions commonly result in civil enforcement actions under the Clean Water Act, the Clean Air Act, and other statutes. A civil violation occurs when a permittee discharges pollutants from its facility in violation of permit limits whether or not facility operators were aware of or intended the excessive discharge. When operators are aware of conditions that may cause an excursion, such excursions become “knowing discharges” and can be felony violations of the applicable statute and punishable by prison.</p> <p>Thus, if an operational malfunction in a plant occurs and causes an excursion, the first occurrence may be a civil violation, but the next one, if “known,” is a felony. (It should be noted as that most permits state that being required to shut down operations to avoid an excursion is not an excuse.)</p> <p>Business owners can take some comfort that the vast majority of knowing permit violations are treated as civil infractions and may not be enforced at all. Both the EPA and the Department of Justice have policies that require some degree of egregious conduct or environmental harm before they will be treated as crimes; once a company becomes aware of its inability to comply, it may be just a matter of time before it faces scrutiny for continuing to allow “knowing” violations to occur – and failure to rectify such a condition can lead to criminal prosecution. </p>Wed, 21 Jun 2023 00:00:00 -0400{367D1D17-4A38-484D-9517-B063D5D268A4}https://btlaw.com//en/insights/blogs/environmental/2023/supreme-court-sustains-high-bar-to-diligent-prosecution-defense-for-clean-water-act-citizen-suitsSupreme Court Sustains High Bar to Diligent Prosecution Defense for Clean Water Act Citizen Suits<p>On May 15, 2023, the Supreme Court declined a certiorari petition that left in place a U.S. Court of Appeals for the Fourth Circuit opinion that limits how settlements with environmental agencies can trigger the “diligent prosecution” bar to a Clean Water Act citizen suit. In <em>Naturaland Trust v. Dakota Finance LLC</em>, the appeals court held that Section 505(b)(1)(B) of the Clean Water Act will not bar a citizen suit if the enforcement process does not allow for meaningful public participation.<br /> <br /> <em>Naturaland Trust</em> involved Dakota Finance LLC, the owner of Arabella Farms, which had received a notice of violation from the South Carolina Department of Health and Environmental Control (DHEC) after clearing land to build a wedding venue without complying with storm water permitting requirements. Shortly after receiving the notice, in February 2022, Dakota Finance settled the matter by entering into an administrative consent order with DHEC and paying a $6,000 fine. However, in January 2022, <em>Naturaland Trust</em> filed a citizen suit against Dakota Finance under CWA Section 505 after sending the requisite 60-day notice of intent to sue.<br />  <br /> The District Court subsequently dismissed the suit, holding that the DHEC enforcement action had triggered the diligent prosecution bar. On appeal, a three-judge panel reinstated the case, holding that the administrative settlement did not constitute diligent prosecution under Section 505.  <br /> <br /> The Appeals Court agreed with the plaintiffs that the public participation required for the settlement was not comparable to an action brought for violations of the Clean Water Act as described in the enforcement provisions of the act, namely Section 309, which “provides for certain rights of interested persons,” including rights to public notice and judicial review. The DHEC proceeding was settled after the agency invited Dakota Finance to discuss the alleged violations in an “informal, voluntary private conference” without public notice or participation, and was therefore not a “comparable state action.” By not meeting this comparable enforcement test, the enforcement action could not be considered to be “diligent prosecution.”<br /> <br /> By denying certiorari in this case, the Supreme Court missed the opportunity to resolve a circuit split and provide clarity for what constitutes a comparable enforcement action that will trigger the diligent prosecution bar. While this issue remains unresolved, defendants in citizen suits should carefully consider how settlement of an agency enforcement case will affect the posture of pending citizen suits.</p>Thu, 08 Jun 2023 00:00:00 -0400{0788D15D-CA80-47F1-9155-FA6EED941318}https://btlaw.com//en/insights/blogs/environmental/2023/is-g7-support-for-issb-climate-reporting-standards-sign-that-scope-3-disclosures-soon-required-in-usIs G7 Support for ISSB Climate Reporting Standards a Sign That Scope 3 Emission Disclosures Will Soon Be Required in U.S.?<p>At their meeting in Japan this past weekend, the Group of Seven (G7) – the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom – committed to working toward net zero circular economies and voiced their support for the International Sustainability Standards Board’s (ISSB) sustainability and climate-related corporate reporting standards.  </p> <p>In the <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/20/g7-hiroshima-leaders-communique/" target="_blank">G7 Hiroshima Leaders’ Communique</a> issued at the close of the meeting on May 20, G7 leadership stated: “We commit to realizing the transformation of the economic and social system towards net-zero, circular, climate-resilient, pollution-free and nature-positive economies and to halting and reversing biodiversity loss by 2030, in an integrated manner, while ensuring sustainable and inclusive economic growth and development and enhancing the resilience of our economies.”</p> <p>The communique also endorsed the ISSB’s sustainability and climate-related disclosures without reservation, saying: </p> <p style="margin-left: 40px;">“We support the International Sustainability Standards Board (ISSB) finalizing the standards for general reporting on sustainability and for climate-related disclosures and working toward achieving globally interoperable sustainability disclosure frameworks. We also look forward to the ISSB’s future work on disclosure on biodiversity and human capital, in line with its work plan consultation.”</p> <p>When approved by the ISSB in February 2023, these standards, which are expected to be issued in June 2023 and become effective in 2024, <a href="/en/insights/alerts/2023/issbs-inaugural-sustainability-disclosure-standards-put-the-spotlight-on-scope-3-emissions-in-the-us" target="_blank">put the spotlight on Scope 3 emissions disclosures in the U.S. </a>The final version of ISSB’s inaugural standards includes disclosure of Scope 3 greenhouse gas emissions (indirect emissions that occur within a company's value chain, when material), in addition to Scope 1 (direct emissions from a company) and Scope 2 (indirect emissions from electricity purchased and used).  </p> <p>For the past year, potential requirements for disclosure of Scope 3 emissions in the U.S. have become one of the most hotly disputed aspects of the <a href="/en/insights/alerts/2022/sec-proposes-new-rules-to-standardize-climate-related-disclosures" target="_blank">SEC’s proposed climate-related disclosure rule</a>. Initially projected to be finalized in April 2023, the final SEC rule is not expected to be issued until this fall.   </p> <p>The ISSB’s action to incorporate Scope 3 emission disclosure requirements, <a rel="noopener noreferrer" href="https://www.ifrs.org/groups/international-sustainability-standards-board/issb-frequently-asked-questions/" target="_blank">backed by</a> the G20, International Organization of Securities Commissions (IOSCO), the Financial Stability Board, African Finance Ministers, and Finance Ministers and Central Bank Governors from over 40 jurisdiction, had already ratcheted up the global pressure on the U.S. to follow suit. This most recent communique from G7 leadership – including that of the U.S. – leaves little doubt that Scope 3 disclosure requirements in the U.S. are moving from the realm of “if” toward “when.” </p>Tue, 23 May 2023 00:00:00 -0400{6DE27D3F-C788-469F-AA79-064868A149EA}https://btlaw.com//en/insights/blogs/environmental/2023/white-house-issues-executive-order-revitalizing-commitment-to-environmental-justiceWhite House Issues Executive Order Revitalizing Commitment to Environmental Justice<p>On April 21, the eve of Earth Day, President Biden signed a new <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/presidential-actions/2023/04/21/executive-order-on-revitalizing-our-nations-commitment-to-environmental-justice-for-all/" target="_blank">Executive Order on Revitalizing Our Nation’s Commitment to Environmental Justice for All</a>. This comes nearly three decades after the issuance of Executive Order 12898 by President Bill Clinton, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, on Feb. 11, 1994, which aimed to build upon and strengthen the commitment of the federal government to deliver environmental justice to all communities across America.</p> <p>The Biden executive order is intended to deepen the administration’s policy to pursue a whole-of-government approach to environmental justice and directs that the pursuit of environmental justice “is a duty of all executive branch agencies and should be incorporated into their missions.” The scope includes the following:</p> <p style="margin-left: 40px;">“Our Nation needs an ambitious approach to environmental justice that is informed by scientific research, high-quality data, and meaningful Federal engagement with communities with environmental justice concerns and that uses the tools available to the Federal Government, including enforcement of civil rights and environmental laws. Our Nation must also take further steps to dismantle racial discrimination and institutional bias that disproportionately affect the health, environment, safety, and resiliency of communities with environmental justice concerns.”</p> <p>According to the <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/21/fact-sheet-president-biden-signs-executive-order-to-revitalize-our-nations-commitment-to-environmental-justice-for-all/" target="_blank">fact sheet</a> issued by the White House, the new executive order will:</p> <ul> <li>Better protect overburdened communities from pollution and environmental harms</li> <li>Strengthen engagement with communities and mobilize federal agencies to confront existing and legacy barriers and injustices</li> <li>Promote the latest science, data, and research, including on cumulative impacts</li> <li>Expand interagency coordination and launch a new Office of Environmental Justice within the White House Council on Environmental Quality (CEQ)</li> <li>Increase accountability and transparency in federal environmental justice policy </li> <li>Honor and build on the foundation of ongoing environmental justice work</li> </ul> <p>The new executive order also is intended to facilitate and build on federal efforts to advance environmental justice over the past two years that include:</p> <ul> <li>Delivering on the Justice40 Initiative:  Providing 40 percent of the overall benefits of federal climate, clean energy, affordable and sustainable housing, clean water, and other investments to disadvantaged communities</li> <li>Making historic investments in environmental justice: The $27 billion Greenhouse Gas Reduction Fund (GGRF) will leverage public investment with private capital to finance clean energy projects that reduce pollution and energy costs, increase energy security, and create jobs, with priority to low-income and disadvantaged communities. Most recently, the EPA proposed an <a href="/en/insights/alerts/2023/epas-plans-for-greenhouse-gas-reduction-fund-are-firming-up-comments-on-implementation" target="_blank">Implementation Framework for the GGRF</a>, with comments due May 12. 2023, and plans to begin formally soliciting applications for three GGRF grant competitions in June 2023. The <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/16/the-bipartisan-infrastructure-law-advances-environmental-justice/" target="_blank">Bipartisan Infrastructure Law</a> and the <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/17/fact-sheet-inflation-reduction-act-advances-environmental-justice/" target="_blank">Inflation Reduction Act</a> also provide for substantial investments to reduce air and water pollution and cleanup Superfund and Brownfield sites in burdened communities.</li> <li>Strengthening enforcement of environmental laws to implement environmental justice: Including <a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-launches-comprehensive-environmental-justice-strategy" target="_blank">a comprehensive environmental justice enforcement strategy</a> that the U.S. Department of Justice (DOJ) is implementing via a new Office of Environmental Justice to accelerate and prioritize civil and criminal enforcement of environmental violations in overburdened communities. The DOJ has also issued an <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2022/05/10/2022-10036/guidelines-and-limitations-for-settlement-agreements-involving-payments-to-non-governmental-third" target="_blank">Interim Final Rule</a> that will restore the use of supplemental environmental projects in appropriate circumstances and prioritizes their use as tools for advancing environmental justice.</li> <li>Increasing technical assistance and capacity building: Including <a href="/en/insights/blogs/environmental/2023/epa-announces-177-million-for-17-new-technical-assistance-centers-to-help-communities" target="_blank">investment of $177 million for 17 new technical assistance centers</a> to help communities access grant funding to advance environmental justice</li> <li>Respecting and elevating indigenous knowledge: Including development, with the assistance of individuals, organizations, and tribal nations, <a rel="noopener noreferrer" href="https://www.whitehouse.gov/ceq/news-updates/2022/12/01/white-house-releases-first-of-a-kind-indigenous-knowledge-guidance-for-federal-agencies/" target="_blank">guidance on elevating indigenous knowledge</a> in federal research, policy, and decision-making</li> </ul> <p>At the same time that the new order was signed, the White House also launched its Campaign for Environmental Justice to ensure that people nationwide are seeing and experiencing the effects of the president’s environmental justice agenda in their communities. The CEQ, working with other agencies, has already published <a rel="noopener noreferrer" href="https://ejscorecard.geoplatform.gov/scorecard/" target="_blank">Phase One of the Environmental Justice Scorecard</a>, the first government-wide assessment of federal agencies’ efforts to advance environmental justice; and will continue to monitor progress on a regular basis.</p> <p>This latest move has garnered <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/22/what-they-are-saying-president-biden-takes-action-to-build-healthy-communities-and-advance-environmental-justice/#:~:text=Yesterday%20President%20Biden%20signed%20an,environmental%20burdens%20like%20climate%20change.#:~:text=Yesterday%20President%20Biden%20signed%20an,environmental%20burdens%20like%20climate%20change." target="_blank">praise from governmental leaders and environmental justice advocates</a> across the country. The <a rel="noopener noreferrer" href="https://www.americanchemistry.com/chemistry-in-america/news-trends/press-release/2023/acc-statement-on-president-biden-s-environmental-justice-executive-order" target="_blank">reservations expressed thus far</a> have focused on the use of cumulative risk analysis for purposes of environmental justice screening, and requests by industry and other regulated parties to have an opportunity to engage with the government and other stakeholders as the policies are implemented. </p>Tue, 25 Apr 2023 00:00:00 -0400{EC0D1A0A-905D-4DF4-B60E-10AB15E8C712}https://btlaw.com//en/insights/blogs/environmental/2023/epa-announces-177-million-for-17-new-technical-assistance-centers-to-help-communitiesEPA Announces $177 Million for 17 New Technical Assistance Centers to Help Communities Access Grant Funding to Advance Environmental Justice<p>On April 13, 2023, the U.S. Environmental Protection Agency (EPA) <a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/biden-harris-administration-announces-177-million-17-new-technical-assistance-centers" target="_blank">announced the selection of 17 Environmental Justice Thriving Communities Technical Assistance Centers</a> (EJ TCTACs) that will receive $177 million to help underserved and overburdened communities across the country access funds from President Biden’s Investing in America agenda, including historic investments to advance environmental justice.  </p> <p>The EJ TCTAC program is part of the <a rel="noopener noreferrer" href="https://www.transportation.gov/federal-interagency-thriving-communities-network" target="_blank">Federal Interagency Thriving Communities Network</a>. These centers are being developed in direct response to feedback from communities and environmental justice leaders asking for readily accessible technical assistance to help with their long-term environmental justice goals and to help build their capacity to access federal and other resources. As Administrator Michael Regan explained when he announced the funding: “For far too long, overburdened, underserved, and rural communities have lacked the resources and technical assistance they need from the federal government to overcome barriers critical to their energy needs and create new, long-lasting economic opportunities.” </p> <p>These resources will be delivered by the EPA in collaboration with the U.S. Department of Energy, which allows the EJ TCTACs to provide support for identifying community opportunities for clean energy transition and financing options, including public-private partnerships supporting clean energy demonstration, deployment, workforce development and outreach opportunities that advance energy justice objectives, strengthen energy security, and help meet climate goals. </p> <p>Under this program, each of the EJ TCTACs will be funded at least $10 million incrementally over a five-year project period, to remove barriers and improve accessibility to federal grant funding for communities with environmental justice concerns. These centers will provide training, translation and interpretation services for limited English-speaking participants, and other assistance to build capacity for navigating federal grant application systems, writing strong grant proposals, and effectively managing grant funding. These investments are separate from and in addition to the Environmental Justice Thriving Communities Grantmaking Program, for which <a href="/en/insights/alerts/2023/epa-announces-availability-of-environmental-justice-thriving-communities-grants" target="_blank">applications are due</a> May 31, 2023. </p> <p>The 17 centers <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2023-04/EJ TCTAC Selection Fact Sheet.pdf" target="_blank">will provide comprehensive coverage</a> for the entire United States through a network of over 160 partners including community-based organizations, additional academic institutions, and other stakeholders, so that more communities can access federal funding opportunities made available through the Inflation Reduction Act. The EPA has selected three national EJ TCTACs that will provide assistance across the country, with particular capacity to assist Indian tribes, and which will coordinate with the regional TCTACs, develop national databases/clearinghouses, host TCTAC summits, and provide other overarching services:</p> <ul> <li>International City/County Management Association, which will partner with the Institute for Tribal Environmental Professionals (academic, tribal), the National League of Cities (elected officials, local government), the National Forum for Black Public Administrators (local government), and the Urban Sustainability Directors Network (local government, community organizations.</li> <li>Institute for Sustainable Communities, which will partner with Atma Connect, a non-profit technology organization, and the American Society for Adaptation Professionals, a non-profit association.</li> <li>National Indian Health Board, which will partner with tribal communities nationwide.</li> </ul> <p>The EPA has selected the following 14 organizations to serve as regional EJ TCTACs, along with their partners:</p> <ul> <li>Region 1: University of Connecticut</li> <li>Region 2: West Harlem Environmental Action, Inc., and Inter-American University of Puerto Rico-Metro Campus</li> <li>Region 3: National Wildlife Federation</li> <li>Region 4: Deep South Center for Environmental Justice, and Research Triangle Institute</li> <li>Region 5: Blacks in Green, and University of Minnesota</li> <li>Region 6: New Mexico State University, and Deep South Center for Environmental Justice</li> <li>Region 7: Wichita State University</li> <li>Region 9: University of Arizona, and San Diego State University</li> <li>Region 10: Willamette Partnership, and University of Washington</li> </ul> <p>The centers are currently scheduled to operate from June 2023 to June 2028. The EPA has <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2023-04/Project Summaries 2022-23 ENVIRONMENTAL JUSTICE THRIVING COMMUNITIES TECHNICAL ASSISTANCE CENTERS PROGRAM %28EJ TCTAC%29_0.pdf" target="_blank">provided a summary of the goals, project description and partners of each selectee</a>. According to the EPA, additional award information for each selectee will be announced this summer. </p>Tue, 18 Apr 2023 00:00:00 -0400{C3101AD3-9B70-4853-8DEF-D993F1203DB4}https://btlaw.com//en/insights/blogs/environmental/2023/white-house-reviewing-proposed-regulations-on-reinstated-superfund-excise-taxesWhite House Reviewing Proposed Regulations on Reinstated Superfund Excise Taxes<p>The U.S. Department of Treasury has sent <a rel="noopener noreferrer" href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202210&RIN=1545-BQ40" target="_blank">proposed regulations</a> to the Office of Management and Budget’s Office of Information and Regulatory Affairs for review regarding Superfund excise taxes on certain chemicals and the hazardous substances that were reinstated in late 2021 by the Infrastructure Investment and Jobs Act. The Treasury Department and the White House have not released information on the specific matters addressed by these proposed regulations.</p> <p>The original Superfund excise taxes expired in 1995. They were reinstated effective July 1, 2022, and are set to expire Dec. 31, 2032. The reinstatement of the Superfund excise taxes has created a challenging and confusing landscape that puts taxpayers at risk of falling short of their obligations, triggering unnecessary penalties, and facing legal enforcement.</p> <p>Two separate Superfund chemical excise taxes were resurrected in 2021: a tax on the sale or use of "taxable chemicals" under Section 4661 of the Internal Revenue Code and a tax on the sale or use of imported "taxable substances" under Section 4671.</p> <p><strong>Taxable Chemicals:</strong> This tax is imposed on any manufacturer, producer, or importer of taxable chemicals in the United States at rates ranging from $0.48 to $9.74 per ton. The list of 42 Taxable Chemicals and corresponding rates <a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/USCODE-2002-title26/html/USCODE-2002-title26-chap38-dup1-subchapB.htm" target="_blank">can be found under IRC Section 4661(b)</a>. There are some exceptions set forth in Section 4661. Additionally, there are specific considerations for butane and methane that may require tax payments by users further down on the supply chain than for other chemicals. While most chemicals on the list are taxable upon the first sale or use by a manufacturer or importer, butane and methane become taxable upon the first use other than as a fuel, which may be lower in the supply chain.</p> <p><strong>Taxable Substances:</strong> This tax is imposed on any importer selling or using Taxable Substances in the United States. The list of <a rel="noopener noreferrer" href="https://www.irs.gov/newsroom/irs-issues-superfund-chemical-excise-tax-rates" target="_blank">151 Taxable Substances</a> includes the original list of 50 chemicals found under IRC Section 4672(a)(3) and an additional 101 chemicals published by the IRS in Internal Revenue Notice 2021-66 and included as part of <a rel="noopener noreferrer" href="https://www.irs.gov/irb/2021-52_IRB#NOT-2021-66" target="_blank">Internal Revenue Bulletin: 2021-52</a>. The IRS has the authority to update the list of taxable substances and petitions were recently submitted to the IRS regarding <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2022/12/28/2022-28276/superfund-chemical-substance-tax-request-to-modify-list-of-taxable-substances-filing-of-petition-for" target="_blank">polyoxymethylene</a> and <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2022/12/30/2022-28407/superfund-chemical-substance-tax-request-to-modify-list-of-taxable-substances-filing-of-petition-for" target="_blank">polyphenylene sulfide</a>. </p> <p>On Aug. 16, 2022, the Inflation Reduction Act (IRA) reinstated a third excise tax, the Hazardous Substance Superfund Financing Tax Rate on Crude Oil and Petroleum Products. The specified tax rate is 16.4 cents per barrel, almost twice the earlier rate of 9.7 cents. The tax on crude oil received at a U.S. refinery is to be paid by the refinery operator, and the tax on petroleum products imported into the U.S. for consumption, use, or warehousing is to be paid by the importer. This tax became effective (again) on Jan. 1, 2023, and will be adjusted for inflation starting in 2024.</p> <p>Superfund excise taxes are reported on a quarterly basis on IRS Form 720, Quarterly Federal Excise Tax. Additionally, Form 6627, Environmental Taxes, which was used to report the Superfund excise taxes when the taxes were last in effect, is being used again to report the taxes owed. Form 720 and its associated instructions have been updated effective March 2023 to account for reinstatement of the Petroleum Superfund Tax by the IRA. Form 6627, which was last updated in July 2022 to account for the reinstated Superfund excise tax on chemicals and hazardous substances, must be filed alongside Form 720 on a quarterly basis. Taxpayers with a quarterly Superfund excise tax liability greater than $2,500 are also required to make semi-monthly tax deposits.</p> <p>Temporary relief from penalties for failure to deposit Superfund chemical taxes for the third and fourth calendar quarters 2022 and the first calendar quarter of 2023 is provided for in Internal Revenue Bulletin 2022-15.</p> <p>Taxpayers and tax advisers have been clamoring for further guidance since the Superfund excise taxes were reinstated in 2021. Some areas of concern and topics on which further detail and specificity is needed include:</p> <ul> <li>Clarification of some key definitional issues regarding manufacturers, producers and importers</li> <li>Additional explanation of which uses, derivations, mixtures and by-products of chemicals and hazardous substances are taxable, nontaxable, or qualify for specific exemptions</li> <li>More in-depth analysis and explanation of the default tax values assigned to 121 of the 151 designated taxable substances, and better guidance on calculating the tax rates for the 30 of the 151 hazardous substances for which there are no default values</li> <li>Better understanding of when different components of supply chains will have the primary tax liability</li> <li>Further guidance on how to treat taxable chemicals and hazardous substances that are also taxable petroleum products</li> </ul> <p>Overall, the Treasury Department and the IRS need to refine and simplify the interpretations, procedures and methodology applied to the Superfund excise taxes to provide clear and concise guidance and assure that taxpayers are treated fairly and consistently. Hopefully, these long-awaited regulations will be a meaningful step in that direction.</p>Wed, 01 Mar 2023 00:00:00 -0500{B89E6C70-E87A-495B-9403-F0DC3BB765FB}https://btlaw.com//en/insights/blogs/environmental/2023/soft-opening-for-epas-green-bank-funding-to-reduce-emissionsSoft Opening for EPA’s Green Bank Funding to Reduce Emissions<p>On Valentine’s Day, the <a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/epa-announces-initial-program-design-greenhouse-gas-reduction-fund" target="_blank">EPA issued its initial guidance</a> on the design of the Greenhouse Gas Reduction Fund (GGRF) program created by President Biden’s Inflation Reduction Act (IRA). This guidance provides direction for “eligible recipients” to apply for $27 billion in funding from the long-awaited “green bank” that that will provide “financial and technical assistance for projects that reduce or avoid greenhouse gas emissions and other forms of air pollution, with a particular emphasis on projects in low-income and disadvantaged communities.”</p> <p>The IRA added Section 134 to the Clean Air Act to establish the GGRF. In the guidance, the EPA said it has posted Federal Assistance Listings announcing it will hold two competitions to distribute grant funding to meet the GGRF objectives, which are to: “(1) reduce emissions of greenhouse gases and other air pollutants; (2) deliver benefits to low-income and disadvantaged communities; and (3) mobilize financing and private capital to stimulate additional deployment of greenhouse gas and air pollution reducing projects.”</p> <p>The two competitions to distribute grant funding are:</p> <ul> <li><a rel="noopener noreferrer" href="https://sam.gov/fal/66e5da03968848f4a844f01598dd01d3/view" target="_blank">$20 billion General and Low-Income Assistance Competition</a> that will award competitive grants to implement Clean Air Act Section 134(a)(2) and Section 134(a)(3). The EPA must obligate the $20 billion for grants under this program to states, nonprofits and other eligible recipients by Sept. 30, 2024. This part of the GGRF funding will prioritize investment in residential and community solar projects, as well as storage technologies and upgrades related to these projects, and will support the creation of high-paying jobs. According to the EPA’s assistance listing, a minimum of $8 billion will be “for the purposes of providing financial and technical assistance in low-income and disadvantaged communities as required by Section 134(a)(3) of the Clean Air Act and in alignment with the Biden-Harris Administration’s Justice40 Initiative.” The EPA says that it expects to award between two and 15 grants through this program.</li> <li><a rel="noopener noreferrer" href="https://sam.gov/fal/cffd228dd8a34254b68d497672a5235e/view" target="_blank">$7 billion Zero-Emissions Technology Fund Competition</a> that will prioritize residential and community solar projects, as well as storage technologies and upgrades related to these projects. Pursuant to Section 134(a)(1) of the Clean Air Act, the EPA must obligate the $7 billion for grants to states, municipalities, tribal governments, and other “eligible recipients” under this program by Sept. 30, 2024. The EPA reports it is still developing this program and will determine the range and average of financial assistance as part of the Notices of Funding Opportunities (NOFO) development process.</li> </ul> <p>The EPA says it anticipates opening the competitions for the funding in summer 2023. The evaluation and selection criteria for competitive awards under these assistance listings and deadlines for application submission will be included in the NOFOs. The NOFOs also will clarify the timeline of the grant competition and funding obligations. When finalized, the NOFOs for both listings will be posted on <a rel="noopener noreferrer" href="https://www.grants.gov/" target="_blank">grants.gov</a>. </p> <p>Along with the listings, the EPA announced a national Community Roundtable program focused on introducing the GGRF to communities across the country and learning about community-level projects the fund can support.</p> <p>Welcome as this EPA action may be, it is more of a ”soft opening” for the Green Bank than a grand one, considering that the EPA was supposed to begin distributing dollars from the GGRF in February 2023, and that the agency has a statutory obligation to complete the distributions from the fund by Sept. 30 2024. The Environmental Financial Advisory Board (EFAB) <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2023-01/efab-greenhouse-gas-reduction-fund.pdf" target="_blank">guidance and considerations</a> delivered to the EPA on Jan 3, 2023, highlighted the complexity of the EPA’s task and the <a rel="noopener noreferrer" href="https://btlaw.com/en/insights/alerts/time-to-double-down-on-the-greenhouse-gas-reduction-fund" target="_blank">difficulties the agency faces in designing and implementing</a> a GGRF program that can meet the competing goals and policies, and navigate the political minefield. </p> <p>As always, the devil will be in the details; and notwithstanding the enormity of the task, the EPA needs to honor the commitment made in its announcement to keep “moving expeditiously to develop these two grant competitions, utilizing the established technical expertise of agency officials in EPA and across the US government, to invest public funding transparently and inclusively and deliver significant investments in the American people.”</p>Fri, 17 Feb 2023 00:00:00 -0500{A2D25683-98E7-42A0-8E9B-AD64FC500F41}https://btlaw.com//en/insights/blogs/environmental/2023/adapting-trade-to-mitigate-climate-change-gets-major-international-supportAdapting Trade to Mitigate Climate Change Gets Major International Support<p>On Jan 19, 2023, during the World Economic Forum (WEF) Annual Meeting in Davos, Switzerland, the Coalition of Trade Ministers on Climate was launched. The Climate Coalition is open to all interested countries, and is comprised of ministerial level officials from the European Commission, EU member states, and 26 partner countries -- equaling more than 50 ministers from 27 jurisdictions, including the U.S. </p> <p>The coalition concept was broached during informal discussions on how trade and trade policies can support the Paris climate goals at a breakfast meeting of a diverse group of trade ministers in June 2022 in Geneva. The joint commitment that grew out of that casual gathering is reflected by the emphasis in the <a rel="noopener noreferrer" href="https://ec.europa.eu/commission/presscorner/detail/en/IP_23_248" target="_blank">coalition’s launch statement</a> on the need for climate change mitigation and adaptation in line with United Nations Framework Convention on Climate Change (UNFCCC), the Paris Agreement, and the Sustainable Development Goals, while supporting ongoing efforts in this area by the World Trade Organization (WTO). </p> <p>The<a rel="noopener noreferrer" href="https://www.tradeministersonclimate.org/" target="_blank"> coalition is dedicated to trade, climate</a> and sustainable development issues, building partnerships between trade and climate communities, and promoting trade and investment in goods, services and technologies that help mitigate and adapt to climate change.<a rel="noopener noreferrer" href="https://www.weforum.org/agenda/2023/01/trade-address-climate-change-trade-ministers-davos-wef23" target="_blank"> According to the four ministers</a> from Ecuador, the EU, Kenya, and New Zealand that are leading the coalition:</p> <p style="margin-left: 40px;">“The Coalition aims to drive inclusive cooperation among trade ministers in the global response to climate change, including by engaging nationally and internationally with fellow ministers working on climate, environment, finance and development, among others. Connecting the dots is vital to find coherent global solutions.” </p> <p>The next formal coalition meeting is scheduled for early 2024 during the next WTO Ministerial Conference.</p> <p>These international efforts to adapt trade to mitigate climate change and further sustainability will proceed in parallel with two new international initiatives by U.N. Secretary-General António Guterres. The first was his call for a Climate Solidarity Pact at COP27 in November 2022 “in which all big emitters make an extra effort to reduce emissions this decade in line with the 1.5-degree goal and ensure support for those who need it.” </p> <p>The second was a<a rel="noopener noreferrer" href="https://news.un.org/en/story/2022/12/1131842" target="_blank"> plan Guterres announced in December 2022</a> for a “no-nonsense” Climate Ambition Summit in September 2023 to develop “non-negotiable credible, serious and new climate action and nature-based solutions that will move the needle forward and respond to the urgency of the climate crisis.” That summit will coincide with a planned U.N. summit at the halfway point of the <a rel="noopener noreferrer" href="https://www.un.org/sustainabledevelopment/sustainable-development-goals/" target="_blank">Sustainable Development Goals</a> (SDG).</p> <div> </div>Wed, 01 Feb 2023 00:00:00 -0500{F2EE8959-0D2C-468E-9E3E-BAD0698A8EC7}https://btlaw.com//en/insights/blogs/environmental/2023/another-oig-fly-in-epas-ointmentAnother OIG Fly in EPA's Ointment<p>Less than two weeks after the EPA published and asked the public to comment on its proposal to <a href="/en/insights/alerts/2023/epa-proposes-to-add-climate-change-pfas-as-new-compliance-initiatives" target="_blank">add mitigating climate change and addressing PFAS contamination</a> as National Enforcement and Compliance Initiatives (NECI), EPA’s Office of Inspector General (OIG) has once again become a fly in the agency’s ointment.  </p> <p>In its <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2023/01/12/2023-00500/public-comment-on-epas-national-enforcement-and-compliance-initiatives-for-fiscal-years-2024-2027" target="_blank">NECI proposal</a>, the EPA concluded that significant progress had been made on two of the six ongoing initiatives – reducing toxic air emissions from hazardous waste facilities and stopping aftermarket defeat devices for vehicles and engines. The EPA proposed returning both to their core programs and replacing them with the new climate change and PFAS NECIs. With respect to the NECI for stopping aftermarket defeat devices for vehicles and engines, the EPA explained:</p> <p style="margin-left: 40px;">“Since the inception of the NCI in FY 2020, EPA has resolved approximately 130 cases, addressing over 460,000 violations. In FY 2022 alone, EPA concluded 41 cases with over $19 million in civil penalties. The Agency has made significant progress on this initiative, addressed serious violations through enforcement actions reducing pollution and improving air quality, and raised awareness of the concerns. Accordingly, the Agency proposes to return work in this area to the core program in at the end of FY 2023.”</p> <p>On Jan. 25, the EPA’s OIG weighed in with its own report titled “<a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2023-01/_epaoig_20230125-23-E-0006_Redacted for Public Release.pdf" target="_blank">The EPA Is Not on Track to Reach Its National 23-E-0006 Compliance Initiative Goals to Stop Aftermarket Defeat Devices and Tampered Vehicles</a>." After an investigation from July 2021 to August 2022, the OIG found that the EPA has not achieved the vast majority of the 40 measures and deliverables it included in its original compliance initiatives. The OIG concluded, “Aftermarket defeat devices and tampered vehicles will continue to allow the release of excess emissions unless additional steps are taken to promote voluntary state efforts to complement the EPA’s NCI work.”</p> <p>And now, the EPA is faced with the following five recommendations in the OIG’s final report: </p> <p style="margin-left: 40px;">1. Develop guidance for the regions that outlines how to interpret, track, and report metrics and that defines vague terms used in the EPA’s Stopping Aftermarket Defeat Devices for Vehicles and Engines National Compliance Initiative strategic plan </p> <p style="margin-left: 40px;">2. Update the EPA’s Stopping Aftermarket Defeat Devices for Vehicles and Engines National Compliance Initiative strategic plan so that the NCI goals can be achieved in the event of a pandemic or other challenge</p> <p style="margin-left: 40px;">3. In collaboration with EPA regions, revise and reissue the strategic plan for the Stopping Aftermarket Defeat Devices for Vehicles and Engines National Compliance Initiative. In addition, ensure the strategic plan includes quantifiable deliverables that are linked to known compliance-rate baselines that promote the success of the initiative, as well as a mechanism to acquire and implement post-training feedback from regions and states.</p> <p style="margin-left: 40px;">4. Work with the Office of General Counsel to provide training for headquarters and regional enforcement staff and to release enforcement data, as appropriate and consistent with applicable legal requirements, that states can use to target and deter the installation and use of aftermarket defeat devices within their jurisdictions</p> <p style="margin-left: 40px;">5. Use the OIG’s state questionnaire results, as well as feedback from regions and states, to identify and implement a strategy to overcome barriers and incentivize voluntary complementary work by the states to stop aftermarket defeat devices and tampering.</p> <p>The EPA had responded on Oct. 21, 2022, to earlier versions of these OIG recommendations, disagreeing with all but the first. The OIG’s final report relates that none of the recommendations have been resolved.</p> <p>It will be interesting, to say the least, to watch how this family squabble plays out and what the public has to say about it during the comment period.</p>Fri, 27 Jan 2023 00:00:00 -0500{E5AC6B90-D207-47E2-AD26-4F910B25CFD7}https://btlaw.com//en/insights/blogs/environmental/2023/will-new-us-strategy-to-develop-statistics-for-environmental-economic-decisions-face-headwindsWill New U.S. Strategy to Develop Statistics for Environmental-Economic Decisions Face Headwinds?<p>On Jan. 19, 2023, at the World Economic Forum in Davos, Switzerland, John Kerry, President Biden’s special envoy for climate, announced that the administration has <a rel="noopener noreferrer" href="https://www.whitehouse.gov/ostp/news-updates/2023/01/19/fact-sheet-biden-harris-administration-releases-national-strategy-to-put-nature-on-the-nations-balance-sheet/" target="_blank">finalized a new initiative</a> to track the value of land, air, water and other natural assets to develop statistics that can be used to help companies and governments make environmentally sound economic decisions.</p> <p>The final <a rel="noopener noreferrer" href="https://www.whitehouse.gov/wp-content/uploads/2023/01/Natural-Capital-Accounting-Strategy-final.pdf" target="_blank">National Strategy to Develop Statistics for Environmental-Economic Decisions</a> was released the same day. The White House summarized the purpose of the strategic plan as “using and building on existing authorities to organize the information needed to make informed decisions to enhance economic prosperity in the present, while securing future nature-dependent economic opportunities.” </p> <p>The working group that developed the strategic plan explained the underlying rationale for doing so, and natural economic accounts, as follows:</p> <p style="margin-left: 40px;">“Measuring natural assets and maintaining related environmental-economic statistical series – repeated measurements over time that relate the environment to the economy – are critical planning tools for a robust economy and financial stability. Economic decision-makers, from Federal leaders to businesses, are looking for information that puts nature in the language of economics and business. Many central bankers and financial regulators understand that “[b]iodiversity loss could have significant macroeconomic implications. Failure to account for, mitigate, and adapt to these implications is a source of risks relevant for financial stability.” Many business leaders know that it is critical to understand how natural assets are changing to help manage business risks, so called “de-risking.” They are looking to the Federal Government to model leadership in accounting for natural capital on balance sheets. </p> <p style="margin-left: 40px;">The Federal Government can provide this leadership by including natural capital in the national economic accounts. The national economic accounts provide foundational economic accounting and balance sheet information. Currently, national economic accounts are disconnected from environmental data, and natural assets are omitted from the balance sheet. The existing national economic accounts data for the United States provide an incomplete view of the Nation’s economic opportunities and economic dependencies on natural assets. The United States has not regularly reported official statistics on changes in the quantity, condition, or value of natural assets or aggregated them into measures that connect with the existing national economic accounts or complement common economic headline statistics such as Gross Domestic Product (GDP).” </p> <p>The first of five recommendations in the strategic plan – and the core of the initiative – is to develop natural capital accounts and collect environmental-economic statistics that provide pragmatic information to:</p> <p style="margin-left: 40px;">“a) Guide sustainable development and macroeconomic decision making; </p> <p style="margin-left: 40px;">b) Support Federal decision making in programmatic, policy, and regulatory settings; </p> <p style="margin-left: 40px;">c) Provide structure and data that promote the competitiveness of U.S. businesses; </p> <p style="margin-left: 40px;">d) Support resilient state, territorial, Indigenous, and local communities; and </p> <p style="margin-left: 40px;">e) Facilitate conservation and environmental policy.”</p> <p>The strategic plan acknowledges that natural capital accounting – which connects nature to the measurement of the economy - is not new: </p> <p style="margin-left: 40px;">“American economist Irving Fisher first proposed doing so over 100 years ago, and academic researchers, multiple Nobel laureate economists, Federal scientists, economists, and statisticians have been researching and prototyping this idea since the 1970s. The National Academy of Sciences has produced multiple reports and the U.K. Treasury released the high-profile Dasgupta Review in 2021 supporting the idea. The international statistical community adopted the United Nations-developed System of Environmental Economic Accounting standards, and over 80 countries, including many U.S. allies, are formalizing natural capital accounting in their nations’ economic statistical systems.” </p> <p>Until this initiative, first launched by President Biden on Earth Day 2022, the U.S. had lagged other nations in developing and utilizing natural capital accounting, mainly for political reasons – some states were concerned that data collected could lead to more stringent regulation of fossil fuel and other natural resource extraction industries.</p> <p>The other four recommendations for implementation largely expand on the mechanics of how the natural capital accounts and associated environmental-economic statistics will be developed, what they should provide, and how they will used “to connect information on nature and the economy to help America prosper as the country overcomes 21st century economic challenges, including those linked to climate change, biodiversity loss, air and water pollution, and environmental injustice.”</p> <p>Overall plan implementation is expected to take 15 years, with the recommendations proposing a phased approach to allow for use of new information as received. It is anticipated that pilot natural capital accounts will be developed starting in 2023.</p> <p>Over the same six-month period this initiative was developed, a number of right-leaning Congress members and states have <a href="/en/insights/alerts/2023/a-handful-of-hot-button-esg-issues-to-watch-in-2023" target="_blank">ramped up challenges</a> to any governmental prioritization of ESG, particularly for investment of public funds or to the perceived detriment of the oil and mining industries. On Jan. 17, 2023, attorneys general from 21 states fanned the anti-ESG flames by <a rel="noopener noreferrer" href="https://ago.mo.gov/docs/default-source/press-releases/2023-01-17-utah-texas-letter-to-glass-lewis-iss.pdf?sfvrsn=d3030948_2" target="_blank">issuing a letter to two influential proxy advisers</a> that have substantial business with those states asserting that the advisers have violated their legal and contractual obligations “as they relate to your climate and diversity, equity, and inclusion priorities,” and asking for “written assurance that you will cease such violations … .” </p> <p>Given the current tension between pro and anti ESG forces on much the same grounds natural capital accounting was opposed in the U.S. in the past, in the near term there is considerable risk that implementation of the National Strategy to Develop Statistics for Environmental-Economic Decisions could be plagued by and potentially mired in political potholes. While this is an unfortunate byproduct of the current political climate, as the strategic plan aptly warns: “If the United States does not re-establish itself as a leader in this area, it is likely to see its sway over developing and finalizing international rules and standards for natural capital accounting diminish ….”</p>Wed, 25 Jan 2023 00:00:00 -0500{75BB787E-56B5-4C8A-A174-7D7CED505ADA}https://btlaw.com//en/insights/blogs/environmental/2023/what-can-the-us-learn-from-the-eu-about-esgWhat Can The U.S. Learn From The EU About ESG?<p>Environmental, social, and governance (ESG) refers to three central factors in measuring the sustainability and societal impact of a company or business. ESG criteria often guide investors in making informed decisions about whether to invest in a company based on its environmental impact, social responsibility, and corporate governance practices.</p> <p>The European Union (EU) has been at the forefront of implementing and promoting ESG standards and practices. One key lesson the United States could learn from the EU is the importance of taking a comprehensive approach to addressing ESG issues. The EU has recognized these issues are interconnected and cannot be effectively addressed in isolation. This has led to the development of a range of policies and initiatives that address ESG issues in a holistic and integrated way with a long-term perspective, such as the EU's Sustainable Development Goals (SDGs) and the EU's Action Plan on financing sustainable growth.</p> <p>Most recently, the EU approved the <a href="/en/insights/blogs/environmental/2022/new-eu-directive-requires-mandatory-esg-reporting" target="_blank">Corporate Sustainability Reporting Directive</a> (CSRD) that expands the scope of the Non-Financial Reporting Directive (NFRD) by imposing requirements on a much larger pool of EU companies to report on environmental, human rights, and social impacts. The CSRD also requires non-EU companies with “significant activity” in the EU to report as well, resulting in more in depth ESG reporting by more companies than any prior EU directive.</p> <p>From a more granular perspective, here are a few things that the U.S. could learn from the EU:</p> <p><strong>Stronger regulations and policies:</strong> The EU has implemented a number of regulations and policies that encourage companies to adopt ESG practices, like the NFRD. This has helped to create a level playing field for companies and encourages them to adopt more sustainable practices.</p> <p><strong>Encouraging corporate social responsibility:</strong> The EU has encouraged companies to adopt corporate social responsibility practices that go beyond legal requirements and address the social and environmental impacts of their operations.</p> <p><strong>Investment and ESG:</strong> The EU has also promoted the integration of ESG considerations into investment decision-making, including through the EU Sustainable Finance Disclosure Regulation, which requires financial market participants to disclose the sustainability risks and effects of their products and services. As a result, there is growing demand for ESG investments in the EU, with many investors looking for companies that have a strong focus on sustainability; this has led to an increase in the number of ESG-focused investment options available in the EU.</p> <p><strong>More comprehensive reporting:</strong> The EU requires companies to report on a wider range of ESG indicators than the U.S. This includes not only environmental indicators like greenhouse gas emissions and water usage, but also indicators related to social and governance issues like employee diversity and board diversity. </p> <p><strong>The value of corporate transparency:</strong> The EU has also implemented measures to increase corporate transparency, such as the CSRD, and the EU Taxonomy, which provides a common language for classifying sustainable economic activities. This helps investors and other stakeholders make informed decisions about the companies they invest in or do business with.</p> <p><strong>Greater focus on sustainability:</strong> The EU has a strong focus on sustainability and has implemented a number of initiatives to promote sustainable development and businesses. For example, the EU has set ambitious targets for reducing greenhouse gas emissions and increasing the use of renewable energy. The EU has also invested heavily in sustainable infrastructure that involve renewable energy and green transportation. In addition, the EU has implemented policies and initiatives to support businesses that are committed to sustainability, such as the European Green Deal, which aims to make the EU carbon neutral by 2050.</p> <p><strong>Encouraging innovation:</strong> The EU has also supported the development of innovative technologies and practices to promote sustainable development and ESG practices. This can involve investing in research and development, supporting the commercialization of new technologies, and providing incentives for innovation.</p> <p><strong>Benefits of public-private collaboration:</strong> The EU has encouraged collaboration between the public and private sectors to promote sustainable development and ESG practices. This can involve the development of joint initiatives, the sharing of resources and expertise, and the alignment of policies and regulations. This can help to leverage the strengths of both sectors, leading to more efficient and effective outcomes. It can also lead to new ideas and approaches that may not have been considered otherwise, resulting in more innovative and creative solutions. Such collaboration can also increase transparency and accountability in decision-making, helping to build trust and credibility with the public.</p> <p><strong>Benefits of stakeholder engagement and collaboration:</strong> The EU has also emphasized the importance of engaging and collaborating with a wide range of stakeholders, including employees, customers, suppliers, and local communities, to promote sustainable development and ESG practices. This helps to ensure that companies consider the impact of their decisions on a range of groups and can help to build trust and confidence in the company.</p> <p>The EU’s actions have provided opportunities for countries to learn from one another and share best practices, and has shown that such pooling of resources and expertise to tackle global challenges can lead to a greater impact on sustainability than going it alone.</p> <p>Overall, the U.S. could learn from the EU's experience in order to improve its own ESG practices. By adopting similar comprehensive and collaborative approaches, and addressing environmental, social, and governance challenges and opportunities in an integrated way, the U.S. would be positioned to promote sustainable development more efficiently and effectively.</p>Tue, 03 Jan 2023 00:00:00 -0500{86D3306A-E7C7-4314-9BF3-2ED25C901107}https://btlaw.com//en/insights/blogs/environmental/2022/new-eu-directive-requires-mandatory-esg-reportingNew EU Directive Requires Mandatory ESG Reporting<p>Recently, the members of the European Council of the European Union unanimously approved the EU Corporate Sustainability Reporting Directive (CSRD). In short, the CSRD will require more in depth sustainability and environmental, social and governance (ESG) reporting by more companies than any prior EU directive. As stated in the <a rel="noopener noreferrer" href="https://www.consilium.europa.eu/en/press/press-releases/2022/11/28/council-gives-final-green-light-to-corporate-sustainability-reporting-directive/" target="_blank">council’s press release</a>:</p> <p style="margin-left: 40px;">“This means that companies will soon be required to publish detailed information on sustainability matters. This will increase a company’s accountability, prevent divergent sustainability standards, and ease the transition to a sustainable economy.”</p> <p style="margin-left: 40px;">“In practical terms, companies will have to report on how their business model affects their sustainability, and on how external sustainability factors (such as climate change or human right issues) influence their activities. This will equip investors and other stakeholders better for taking informed decisions on sustainability issues.”</p> <p>From a timing and implementation perspective, the release further reports, “After being signed by the President of the European Parliament and the President of the Council, it will be published in the Official Journal of the European Union and will enter into force 20 days afterwards. The new rules will need to be implemented by member states 18 months later.” Reporting will be phased in starting in 2024.</p> <p>However, this is all about the EU, isn’t it? What difference does it make to U.S. companies? Potentially a lot, it turns out. U.S. companies with just one subsidiary or branch in the EU may be required to produce ESG reports in compliance with EU rules if they have more than EUR 150 million of turnover in the EU. Lower thresholds apply to businesses in certain “high impact” (i.e. higher risk) sectors, including those related to textiles, agriculture, food, metals and mineral extraction. Smaller private businesses may be affected if they operate within the “value chains” of companies that are in the scope. Notably, the final directive incorporates the proposed requirement that the reporting is to be certified by an accredited independent auditor or certifier.</p>Fri, 09 Dec 2022 00:00:00 -0500{A545D827-5481-4C56-A8E4-3273EEF5D72C}https://btlaw.com//en/insights/blogs/environmental/2022/vacaville-and-rcra-updateVacaville and RCRA Update<p>The U.S. Court of Appeals for the Ninth Circuit reversed its prior decision in a case involving liability under the Resource Conservation and Recovery Act (RCRA) by the city of Vacaville, California, for transporting and discarding hexavalent chromium while providing drinking water to residents. It appeared to be a novel expansion of RCRA liability to the act of supplying drinking water that met all applicable drinking water standards. </p> <p>The original case was <em>California River Watch v. City of Vacaville</em> (14 F.4th 1076 9th Cir. 2021), (<em>Vacaville I</em>) and, on July 1, the same Ninth Circuit panel that <a href="/en/insights/blogs/environmental/2021/are-drinking-water-providers-liable-under-rcra-for-contaminants-they-didnt-introduce" target="_blank">rendered the initial decision</a> withdrew the prior majority and dissents opinions and decided to uphold the District Court’s grant of a summary judgment to the City of Vacaville. Thus, <em><a rel="noopener noreferrer" href="https://cdn.ca9.uscourts.gov/datastore/opinions/2022/07/01/20-16605.pdf" target="_blank">California River Watch v City of Vacaville</a></em>, __ F.4th __ (9th Cir. 2022) (Case No. 20-16695), (<em>Vacaville II</em>), rendered the petition for a rehearing en banc as moot. The judge who dissented in the prior decision of the panel filed a separate opinion concurring only on the result.</p> <p><em>Vacaville I</em> reversed the District Court’s summary judgement grant to the city of Vacaville dismissing California River Watch’s case. Initially, the Ninth Circuit ruled that the city could be liable under RCRA’s citizen suit provision for transporting and discarding hexavalent chromium in drinking water. This was even though the drinking water met both the federal and more stringent California drinking water standard for total chromium (neither drinking water standard has a separate standard for hexavalent chromium). California River Watch alleged the city was liable under RCRA for the distribution of drinking water from a groundwater well that may have had chromium present due to the disposal of chromium wood treating chemicals. <em>Vacaville I</em> found it to be a triable issue as to whether the provision of drinking water with a chemical contaminant could be the transportation of a solid waste under RCRA.</p> <p>Upon reconsideration, the panel focused on one of the issues the city raised, which was whether the provision of chromium containing drinking water constituted “transportation” under RCRA. The panel first considered the dictionary definition of “transportation” but then decided to evaluate how the term “transportation” was addressed in RCRA. In <em>Vacaville </em>I, the court did not look as deeply at the meaning of “transportation.” The majority in a footnote in <em>Vacaville II</em> quoted from Justice Robert H. Jackson’s dissent in a 1948 U.S. Supreme Court case, <em>Massachusetts v. United States</em>, that the court did not have to be “consciously wrong today, because [we were] unconsciously wrong yesterday.” </p> <p>The majority concluded that when considering the meaning of “transportation” in the whole scheme of RCRA, delivery of water was not connected to the waste disposal process that is subject to RCRA liability. The majority did think whether the chromium was a waste was a triable fact.</p> <p>The majority also referenced <em>Hinds Invs., L.P, v. Angioli</em>, but disagreed with the concurring opinion that the <em>Hinds</em> case was controlling. The concurring opinion expressed the view that <em>Hinds</em> requires the defendant to be actively involved in or have some degree of control over the waste disposal process, in order to be liable under RCRA. Since it was conceded that the city had no involvement or control over the presence of the hexavalent chromium in the drinking water then there could be no RCRA liability.</p>Fri, 15 Jul 2022 00:00:00 -0400{643D4B0E-46CA-41FA-B3FA-CF32A20B6B88}https://btlaw.com//en/insights/blogs/environmental/2022/waters-of-the-us-definition-clean-water-act-updateWaters of the U.S. Definition: Clean Water Act Update<p>Two recent events related to the Clean Water Act have piqued the interest of many who watch the goings on at the Environmental Protection Agency (EPA).</p> <p>One involves the Spring Unified Regulatory Update published the week of June 20 which reports that the EPA plans to issue an interim final rule <a rel="noopener noreferrer" href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202204&RIN=2040-AG19" target="_blank">defining the Waters of the United States</a> (WOTUS) in August. This is a month or two in advance of the scheduled U.S. Supreme Court oral argument in the current <em>Sackett v. Environmental Protection Agency </em>case on October 3, 2022. The regulatory agenda also proposes that a final WOTUS rule be published in March 2023.</p> <p>It is certainly possible, if not probable, the government will seek to supplement its briefing in <em>Sackett v Environmental Protection Agency</em>, which the <a href="/en/insights/blogs/environmental/2022/impending-sackett-decision-reach-of-wetlands-jurisdiction-continues-to-be-notoriously-unclear" target="_blank">U.S. Supreme Court will take up in the fall</a>, after issuing an interim final WOTUS definition. The case deals with a challenge to EPA authority and whether a wetland is covered under the Clean Water Act. Based on the government’s characterization of the impact of <em>Sackett’s</em> proposed WOTUS definition, it is unlikely that the EPA will issue a definition of WOTUS that would cause the Sacketts to agree their appeal is moot.</p> <p>The other involves a complaint filed on June 22 in the U.S. District Court for the Southern District of Georgia by Twin Pines Minerals, LLC against the U.S. Army Corps of Engineers alleges that on June 3, 2022, the Corps rescinded two approved jurisdictional determinations (AJD), one issued in 2020 and another in 2021, on the basis that the AJDs are not valid “because government-to-government consultations” were not conducted as requested by local Indian tribes. The proposed project is close to the Okefenokee National Wildlife Refuge.</p> <p>The Corps’ rescission memorandum notes that if the company seeks new AJDs, they will be issued under the terms of the WOTUS rules in effect at the time.</p> <p>The mining company pleads that the Corps consultation policy in effect at the time of the granting of both AJDs did not provide for third-party input (i.e. tribes) on the technical information about the soil, vegetation and hydrology that guides the definition of a wetland. The same Corps memorandum rescinded the AJDs for the Rosemont mine in Arizona. The Corps also has said that it will not issue a Clean Water Act 404 permit without first completing an environmental impact statement, which would not have been required if the two AJDs were in effect.</p>Fri, 08 Jul 2022 00:00:00 -0400{68AB913C-138E-4B2E-BA4F-FCC518E42E06}https://btlaw.com//en/insights/blogs/environmental/2022/impending-sackett-decision-reach-of-wetlands-jurisdiction-continues-to-be-notoriously-unclearImpending Sackett Decision: Reach of Wetlands Jurisdiction Continues to Be ‘Notoriously Unclear’ But Perhaps Not for Long<p>The U.S. Supreme Court recently announced that its next term beginning Oct. 3, 2022, will begin by hearing oral argument in the second Supreme Court case involving <a href="/en/insights/alerts/2022/scotus-cert-recap-indian-law-affirmative-action-federal-court-jurisdiction-and-the-clean-water-act" target="_blank">the ongoing saga</a> of the Sacketts’ development of their property in Idaho and their challenge to the Environmental Protection Agency’s authority. The EPA recently filed a brief in reply to the Sacketts’ brief, warning that their proposed test for identifying whether a wetland is covered under the Clean Water Act would “turn on arbitrary and shifting distinctions.” In the Supreme Court’s initial <em>Sackett</em> opinion, Justice Samuel Alito wrote in a concurring 2012 opinion that the reach of the Clean Water Act is “notoriously unclear” in the wetlands context and he thought Congress should provide a “reasonably clear rule regarding the reach of the Clean Water Act.”</p> <p>No matter what decision the Supreme Court renders in <em><a rel="noopener noreferrer" href="https://www.scotusblog.com/case-files/cases/sackett-v-environmental-protection-agency/" target="_blank">Sackett v. Environmental Protection Agency</a></em>, recent actions of the administrative agencies that administer the wetlands permitting program are a reminder that the agencies have to interpret the court’s rulings to implement the permitting program. Based on recent actions regarding approved jurisdictional determinations (AJD), the waters may continue to be muddy even after the Supreme Court’s upcoming decision. </p> <p>The U.S. Army Corps of Engineers, in implementing the wetland permitting program together with the EPA, issues approved jurisdictional determinations (AJDs) to property owners and developers about the presence and location or absence of jurisdictional waters on a particular parcel of property. AJDs provide landowners and developers a determination that can be relied upon for planning for the use of the property, including determining the need and scope of a permit application to discharge dredged or fill material in wetlands determined to be jurisdiction waters of the United States (WOTUS). Typically, an AJD is valid for five years.</p> <p>The definition of what constitutes a jurisdictional wetland requiring a dredge and fill permit has changed considerably over the course of the last three administrations. The Obama administration issued a rule in 2015 defining what a jurisdictional wetland is that subjects work in the wetland to permitting. This rule was challenged and stayed in various district courts and the Supreme Court. The 2015 rule was repealed in September 2019 and replaced by the Navigable Waters Protection Rule (NWPR) in April 2020. A federal district court in New Mexico in August 2021 remanded and vacated the NWPR. </p> <p>The EPA and the Corps gave the New Mexico district court’s ruling national effect and consider the NWPR repealed and vacated. The EPA and the Corps on Nov. 18, 2021, announced a proposed rule (published Dec. 7, 2021) to define WOTUS. Further, in the interim before the proposed 2021 rule was finalized, the agencies said they would use the pre-2015 definition of WOTUS. Reports are that EPA is moving forward to finalize its proposed rule. </p> <p>The Corps’ <a rel="noopener noreferrer" href="https://www.usace.army.mil/Media/Announcements/Article/2888988/5-january-2022-navigable-waters-protection-rule-vacatur/" target="_blank">January 2022 press release</a> created a new type of uncertainty for property owners and developers who had received an AJD during the narrow window of time that the NWPR was in effect from April 2020 until it was vacated in August 2021. The Corps’ statement that creates this latest uncertainty is as follows: “The Corps will not rely on an AJD issued under the Navigable Waters Protection Rule (a ‘NWPR AJD’) in making a new permit decision.”</p> <p>In the same press release, the Corps said it would not revisit permits issued prior to the New Mexico district court’s ruling. In contrast, permitting decisions made after the court’s Aug. 30, 2021, ruling may be modified, suspended, or revoked if the decision relied on a NWPR approved jurisdictional determination. Further, the Corps stated that all pending permit applications will be evaluated under the pre-2015 regime. </p> <p>The pre-2015 regime is a reference to the time following the 2012 Supreme Court <em>Rapanos</em> decision, in which the Court split 4-1- 4. The late Justice Kennedy’s concurring opinion (it was the one in the split) used a “significant nexus” test to determine whether a land feature had a “significant nexus” to a water body that comports with the more traditional understand of a “navigable water.” It appears likely that the pre-2015 regime will end soon following the Supreme Court’s second Sackett decision.</p> <p>The Small Business Administration (SBA) is also concerned with this uncertainty. It wrote a letter dated April 14, 2022, to the Corps identifying two situations in which entities were threatened with enforcement actions for undertaking work without a wetlands permit, even though the entities had received negative AJD determinations under the NWPR, finding that the proposed projects did not affect jurisdictional wetlands. The SBA letter recommends that the Corps do more to communicate its position beyond relying on the January press release; modify its January announcement to be clear it will not take enforcement actions in situations where a negative AJD was issued and relied upon; and determine and then communicate the impact its position will have on small businesses. </p> <p>The SBA’s uneasiness with the Corps’ actions with respect to AJD holders appears to square with the Supreme Court’s decision in <em>U.S. Army Corps Eng’rs v. Hawkes Co.</em> 578 U.S. 590 (2016) in which all nine justices held that AJDs regarding the definition of “waters of the United States” are final agency actions. Further, the Supreme Court found in Hawkes that “A negative JD thus binds the two agencies authorized to bring civil enforcement proceedings under the Clean Water Act, see 33 U. S. C. §1319, creating a five-year safe harbor from such proceedings for a property owner.” The court noted that the property owner during this five-year safe harbor period, when not being required to have a permit following a negative AJD, would not be immune from a citizen suit. </p> <p>Justice Kennedy’s concurring opinion in <em>Hawkes</em> quoted Justice Alito’s “notoriously unclear” statement from the <em>Sackett </em>concurrence and went on to say, “An approved Jurisdictional Determination (JD) gives a landowner at least some measure of predictability, so long as the agency’s declaration can be relied upon.” Justice Kennedy’s concurring opinion went further and stated that the Clean Water Act “…especially without the JD procedure where the Government permitted to foreclose it, continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.” </p> <p>Property owners and developers have a bit more a wait before a Supreme Court decision addressing the definition of the reach of wetlands jurisdiction under the Clean Water Act, but will have to wait further and see how the Corps and EPA interpret and implement that decision.</p> <div> </div>Tue, 21 Jun 2022 00:00:00 -0400{D715A32F-E4A5-40BF-A338-68A6491514DA}https://btlaw.com//en/insights/blogs/environmental/2022/brownfields-infrastructure-investment-jobs-act-boosts-funding-are-changes-aheadBrownfields Infrastructure Investment, Jobs Act Boosts Funding: Are Changes Ahead That Should Mind Chesterton’s Fence?<p>The EPA’s popular <a rel="noopener noreferrer" href="https://www.epa.gov/brownfields" target="_blank">Brownfields program</a> received a substantial funding increase in the Infrastructure Investment and Jobs Act. More specifically, the Brownfields program was funded with $300 million per year for five years ($1.5 billion), which is over the former statutory cap of $200 million per year. Congress has never appropriated to EPA the full statutory cap.</p> <p>The $1.5 billion is broken down into $1.2 billion for Brownfield Competitive Grants and $300 million for Brownfield Categorical Grants. In addition to the increased annual funding, the act provides that the EPA can provide larger grants than it could in the past and not require state matching contributions as otherwise required. </p> <p>Most of the grant programs require a proposal to be submitted by July 2022 and awards will be issued in November. The Revolving Loan Fund applications were due to the EPA in April and will be awarded in August. The Technical Assistance, Target Brownfield Assessment grants are awarded on a rolling basis with the first round awarded last month. </p> <p>The following is the breakdown of the $1.5 billion in Brownfield funding to be awarded over the next five years. </p> <ul> <li>Multipurpose Grants - $150 million <ul> <li>Communities, states, tribes and nonprofits to plan, assess and cleanup sites</li> <li>Up to $10 million per grant</li> </ul> </li> <li>Assessment Grants - $600 million <ul> <li>Communities, states, tribes and nonprofits to assess sites</li> <li>Up to $10 million per grant</li> </ul> </li> <li>Cleanup Grants - $160 million <ul> <li>Communities, states, tribes and nonprofits to cleanup sites</li> <li>Up to $5 million grants</li> </ul> </li> <li>Revolving Loan Fund (RLF) Grants - $150 million <ul> <li>For communities, states, tribes and nonprofits to provide loans and subgrants for cleanup of contamination and revitalization of Brownfield sites</li> <li>Up to $10 million grant</li> </ul> </li> <li>Job Training Grants - $30 million <ul> <li>Supports nonprofits, local governments, and other organizations to recruit, train, and place unemployed and under-employed residents of areas affected by the presence of Brownfield sites</li> <li>Up to $1 million per grant</li> </ul> </li> <li>Cooperative Agreements to State and Tribal Programs - $300 million <ul> <li>For states and tribes to build response program capacity, oversee Brownfield cleanups and conduct limited site assessment and cleanup activitie</li> <li>Up to $60 million per year (shared among states, tribes and territories)</li> <li>Awarded on an annual basis</li> </ul> </li> <li>Technical Assistance, Targeted Brownfield Assessments - $110 million <ul> <li>Goes to communities in direct contracts and cooperative agreements to provide communities with technical assistance to adapt to changing climate and remove barriers to safe and sustainable property reuse</li> <li>Awarded on a rolling basis</li> </ul> </li> </ul> <p>Brownfields is a comparatively small program with an outsized performance record and reputation. The EPA reports there is currently a return of $20.13 for every dollar expended in support of Brownfield projects. The significant funding increase, while not quite double prior authorizations, may present a management challenge to the EPA, at least in the short term, to be able to scale up to award the significantly increased amount of funds and then oversee potentially larger and more grants.</p> <h3><span style="font-size: 16px;">Grant Proposal Support</span></h3> <p>In the past, the amount of Congressional funding has meant that less than half of grant proposals submitted to the EPA received funds.  The EPA’s Brownfields program uses well-run grant competition process. In the past, the competition for the limited amount of fund pushed grant seekers to propose better projects and seek strong state, local and private support for their projects. The EPA provides a considerable amount of guidance, as well as funding, for grant preparation technical support to grant seekers. </p> <p>With this funding boost, the EPA will be able to increase the level of technical support for communities’ grant proposals. It will be interesting to see in November, and in the future, how more funding, the increased grant limits, and the removal of cost-sharing changes the number and types of grants the EPA issues in comparison with prior years. Over time, it will be possible to see the impact more grants and larger grants have had on communities and overall performance of the Brownfields program. </p> <p>Recently, it has been reported that some are advocating for significant changes in the Brownfields program beyond the funding increase. During a December 21, 2021, webinar sponsored by the National Brownfields Coalition, U.S. Rep. Dan Kildee of Michigan said he thought Brownfield funding should be directed toward “cleanup without the immediate prospect of redevelopment…” and he favored funding the “most distressed and least likely to be developed places…” which he acknowledged represents a change. Another speaker recommended the creation of a new Brownfield funding program to address those sites. Another speaker encouraged Congress to go back to the previously existing Brownfield tool and to restore the Brownfield tax incentive that expired in December 2011 that allowed environmental cleanup costs to be deducted in the year the costs were incurred rather than being capitalized over time. </p> <h3><span style="font-size: 16px;">Chesterton’s Fence</span></h3> <p>This call for a change in direction merits consideration of what affect the changes would have on the Brownfields program. One way to consider the impact is to consider the principle of Chesterton’s Fence. G.K. Chesterton in his 1929 book, The Thing, describes how a reformer notices something like a fence across a road and fails to see the reason for its existence, so proposes to have the fence removed. A more thoughtful reformer might employ second-order thinking, the contemplation of the consequences of the consequences. It is wise to determine why the fence was placed where it was before removing it. Failing to understand the purpose of the fence’s placement risks doing more harm than good. </p> <p>Another approach to changing the focus of the Brownfields program or creating a new program in order to address the “most distressed and least likely to be developed properties” would be to look to the existing Superfund program. The Superfund program remediates contaminated property based on risk. Under the Infrastructure Act, the EPA was provided with more than 10 times the federal funding (i.e. $3.5 billion) that the Brownfields program received and the Superfund tax was reinstated. In addition, the EPA has the ability to compel and recover remediation costs for parties legally responsible for contamination.</p> <p>Redevelopment does occur on Superfund sites. Redevelopment plans for a site can help in a number of ways to focus the cleanup activities and the parties to achieving the desired end. Redevelopment and return of Superfund sites to a wide range of uses have been encouraged as part of the EPA’s long-standing Superfund Redevelopment Initiative. Yet the Superfund program does not require redevelopment at any stage of the program. There is no fence.</p>Thu, 12 May 2022 00:00:00 -0400{76CAB4EA-D86C-4DF2-97BA-7666DC122C00}https://btlaw.com//en/insights/blogs/environmental/2022/will-sec-become-the-securities-and-environment-commissionWill SEC Become the ‘Securities and Environment Commission?’<p>The Securities and Exchange Commission (SEC) has issued a proposed rule that one of its commissioners, Hester Peirce, fears will turn the agency into the “Securities and Environmental Commission.” In this <a rel="noopener noreferrer" href="https://www.sec.gov/rules/proposed/2022/33-11042.pdf" target="_blank">comprehensive proposal</a>, the SEC has recommended far-reaching new requirements for publicly traded companies to disclose the impacts of climate change on business operations and governance.</p> <p>The long-awaited proposed rule, for which Peirce was the lone <a rel="noopener noreferrer" href="https://www.sec.gov/news/statement/peirce-climate-disclosure-20220321" target="_blank">and vocal dissenter</a>, would amend SEC Regulations S-K and SX to require detailed new disclosure requirements for “climate-related risks” that have had or are likely to have a material impact on a company’s business and finances over the short, medium and long terms. The risks to be disclosed would include:</p> <ul> <li>How climate-related risk will affect the registrant’s “strategy, business model and outlook” </li> <li>The company’s processes for identifying, assessing, and managing climate-related risks </li> <li>Board and management oversight of climate-related issues </li> <li>The impacts of climate-related events and risks on line items of a registrant’s consolidated financial statements. </li> </ul> <p>The comment period for the rule will be open until May 20, 2022. Given the deadlines that require reporting as early as 2024 (for fiscal year 2023), all companies would be well advised to begin the time-consuming process of identifying and reviewing their climate-related risks, impacts, and representations to be ready for the looming deadlines.</p> <p>In a major departure from its current materiality-based requirements, the SEC’s proposal would, for many registrants, require disclosure of up to three “scopes” of GHG emissions by 2026:</p> <ul> <li>Scope 1 emissions are “direct” GHG emissions from company sources, such as company facilities and vehicles </li> <li>Scope 2 emissions are “indirect” emissions from purchased electricity or other energy sources </li> <li>Scope 3 emissions are emissions from “upstream” and “downstream” activities in a company’s value chain. Although qualifying registrants must disclose Scope 3 emissions only if they are “material” or if the company has set emissions targets that include Scope 3 emissions, there is no apparent materiality requirement that limits the disclosures of Scopes 1 and 2.</li> </ul> <p>All companies will be required to report Scope 1 and 2 emissions and there is no apparent materiality requirement that limits the disclosures of Scopes 1 and 2. Perhaps the most challenging emissions to calculate are Scope 3 emissions, which require companies to capture emissions generated by sources such as employee commuting, leased assets and the use of and disposal of products sold to customers.  This burden would be attenuated somewhat by exempting “smaller reporting companies” from this requirement, as is defined in SEC regulations.</p> <h3><span style="font-size: 16px;">Climate-related goals</span></h3> <p>In addition to disclosures of current GHG levels, the proposal would require accountability for a company’s climate-related targets or goals, a commitment many companies are beginning to publicize to stakeholders with varying degrees of substantiation. Companies would be required to make climate target disclosures more transparent by reporting, in addition to the targets, verifiable information on how the company will attain its targets.</p> <p>The proposal also would require an accounting of the company’s progress toward the attainment of emissions targets, including “certain climate-related financial statement metrics and related disclosures to be included in a note to a registrant’s audited financial statements.”</p> <p>Peirce’s lengthy critique argues the requirements would be too costly and are a misguided attempt “to direct capital to favored businesses to advance political and social goals.” Peirce also notes they are unnecessary because existing regulations already require disclosure of material climate risks. </p> <p>Additionally, Peirce stated that the proposal exceeds the SEC’s authority because it would require the disclosure of non-material risks and could even mandate disclosures of information protected by the First Amendment. Peirce, who other critics will echo, objects to the proposed disclosure requirements as a departure from the SEC’s commitment to materiality as the lodestar for disclosures.</p> <p>The SEC disclosure requirements are said to be based “in large part” on the <a rel="noopener noreferrer" href="https://www.fsb-tcfd.org/" target="_blank">Task Force on Climate-Related Financial Disclosures</a> (TCFD) framework and the <a rel="noopener noreferrer" href="https://ghgprotocol.org/" target="_blank">Greenhouse Gas Protocol</a>, and companies who have been using these metrics would have a head start on complying with the rule.</p> <p>The new requirements would also impact regulated companies’ suppliers whose emissions must be factored into the companies’ GHG calculations. Thus, suppliers also should begin preparing to collect the information to share with their customers.</p> <p>The many companies who are already voluntarily disclosing climate-related information should be mindful their reports may face greater scrutiny when the rules become mandatory. These firms should consider consulting with counsel to ensure the transition does not create greenwashing risks for previous disclosures.</p> <p>Given the numerous comments the SEC received on its March 2021 <a rel="noopener noreferrer" href="https://www.sec.gov/news/public-statement/lee-climate-change-disclosures" target="_blank">request for public input on climate change disclosures</a> and the controversial nature of this new proposal, it is expected that the agency will receive a mountain of comments. If the rule is approved, Peirce’s fears may be realized when the SEC becomes your favorite new environmental agency.</p>Wed, 30 Mar 2022 00:00:00 -0400{E2B78152-6569-46AA-806C-B7D102887BD5}https://btlaw.com//en/insights/blogs/environmental/2022/epa-issues-determinations-on-coal-ash-facility-closure-extension-requestsEPA Issues Determinations on Coal Ash Facility Closure Extension Requests<p>EPA recently began releasing <a rel="noopener noreferrer" href="https://www.epa.gov/coalash/coal-combustion-residuals-ccr-part-implementation" target="_blank">determinations on 57 facilities that manage coal ash</a>, and is taking comments on the date by which the facilities must cease receipt of coal ash. EPA published the first set of determinations at Regulations.gov on Jan. 25, 2022, with a 30-day comment period ending Feb. 23.</p> <p>Coal ash management units that do not meet the 2015 technical standards for coal combustion residuals (CCR) have to cease receiving coal ash and initiate closure. These 57 facilities are a small subset of the nearly 500 coal ash management units that have had to close because they do not meet the technical standards. </p> <p>These 57 facilities sought an extension from the deadline of April 11, 2021, by which they had to cease receipt of coal ash in particular units. Facilities that could not meet the deadline had to submit an application to EPA by Nov. 30, 2020, seeking an extension. The extension application could be due to either the facility being technically unable to meet the April date or the facilities’ coal fired boilers being scheduled to shut down by a certain date.</p> <h3><span style="font-size: 16px;">Findings From The First Round of Extension Determinations</span></h3> <p>EPA considered 52 of the 57 extension requests complete. Four applications were considered incomplete and one was determined to be ineligible for an extension. An incomplete finding by EPA means the extension request is being denied.</p> <p>EPA issued proposed decisions on four of the complete extension requests. Of the four requests, EPA denied three and conditionally approved the fourth if the facility addresses a compliance issue with respect to groundwater monitoring.</p> <p>EPA will continue to release extension determinations on the remaining 48 facilities that submitted complete extension requests. EPA’s default position is that the units will have to cease receipt of waste 135 days from the date of EPA’s final determination.</p> <p>Facilities waiting to hear about EPA’s determination may be able to review the four determinations proposed so far, and assess whether it is likely EPA will grant or deny their own extension request based on its similarity to the four proposed determinations.</p> <p>EPA said its determinations on the completeness and adequacy of extension applications are final and not subject to comment. Those facilities for which EPA found the extension requests incomplete, or complete but denied, will have to cease receiving waste within 135 days from EPA’s final determination.</p> <p>In the draft notices, EPA offers the possibility of an extension if the date by which the facility must cease receipt of waste will cause a shutdown that creates an electric grid reliability problem. The utilities are part of grid operating systems and as such have obligations to inform the grid operator about the potential impact if ceasing receipt of coal ash would require the facility to cease operations. If the grid operator believed the shutdown would create a reliability problem or interruption and that information was provided to EPA, it could be possible to extend the time for the unit to cease the receipt of waste in order to prevent an electric reliability issue.</p> <h3><span style="font-size: 16px;">Determinations Also Hold Compliance Insight</span></h3> <p>In the same January press release, EPA indicated it had sent a number of compliance letters to companies operating coal ash management units. While the determinations that EPA made with respect to extension applications are not focused on compliance, these determinations do provide insight into EPA’s analysis of some compliance matters.</p> <p>For example, EPA extension determinations include detailed discussions about EPA’s analysis of deficiencies in the facilities’ groundwater water monitoring programs and closure plans. Review of these detailed discussions may be useful for companies that have received letters identifying compliance issues and for companies that want to evaluate their own compliance with EPA’s interpretations of the CCR standards. It is interesting to note that part of EPA’s analysis of extension applications included using Google Maps to review images of the facilities seeking extensions and the surrounding areas. </p> <p>The 30 day comment period of EPA’s determinations began on Jan. 25, 2022. All pertinent information about the determinations, including a list of the 57 facilities, is recorded on EPA’s <a rel="noopener noreferrer" href="https://www.epa.gov/coalash/coal-combustion-residuals-ccr-part-implementation" target="_blank">Coal Combustion Residuals</a> page.</p>Thu, 10 Feb 2022 00:00:00 -0500{F61E2C9D-9576-405E-B51F-D314C9BDE6A3}https://btlaw.com//en/insights/blogs/environmental/2022/the-enforcement-climate-is-changing-for-esg-disclosuresThe Enforcement Climate is Changing for ESG Disclosures<p>Businesses and investment firms worldwide are rushing to embrace the use of Environmental, Social, and Corporate Governance (ESG) factors to educate investors, customers, and vendors about their commitment to addressing climate change and other significant societal harms. But recent actions by regulators and other law enforcement authorities in the United States and Europe demonstrate that companies choosing to make such statements must act with the same rigor and care as with their financial disclosures, lest they find themselves the target of a “first of its kind” enforcement action.</p> <p>One recent example of regulators’ views on ESG disclosure shows that authorities are using enforcement proceedings unrelated to ESG to set the stage for how companies should view the ESG metrics they report to investors and customers. Yet without clear ESG guidance from regulators across the globe, companies face uncertain requirements for these burgeoning disclosures.</p> <h3><span style="font-size: 16px;">Prior Missteps</span></h3> <p>Late last year, the Wall Street Journal reported that the U.S. Department of Justice (DOJ) notified <a rel="noopener noreferrer" href="https://www.wsj.com/articles/justice-department-told-deutsche-bank-lender-may-have-violated-criminal-settlement-11638993595" target="_blank">Deutsche Bank of a potential breach of its Deferred Prosecution Agreement</a> (DPA) with the government, which had been finalized only a few months earlier. The justification for invoking the breach provision had nothing to do with the crimes at issue in the DPA – international bribery and manipulation of commodities markets – but with the failure of Deutsche Bank to inform the DOJ of allegations of erroneous public ESG disclosures at its asset-management subsidiary, DWS Group.</p> <p>According to the Wall Street Journal report, Deutsche Bank allegedly attempted to cover up claims by its former chief sustainability officer that DWS tried to prop up its ESG scores by misstating the value of its sustainable investments. DOJ is now probing whether Deutsche Bank should have notified DOJ of these allegations by a high-ranking officer, who now looks more like a “whistleblower” than a disgruntled former employee. If DOJ concludes that Deutsche Bank should have disclosed the concerns about its ESG reporting – regardless of the eventual outcome of those allegations – the bank could face criminal prosecution for the corruption and market manipulation offenses it had thought were settled. This threat stands alongside inquiries by securities regulators in the United States and Germany into the ESG claims themselves.</p> <p>For companies that enter into settlement arrangements with government agencies, the Deutsche Bank matter should serve as a stark reminder that prior misconduct is not truly resolved if the company fails to fulfill the obligations contained in the agreements. The federal government – as well as regulators in the 50 states – resolve allegations of corporate misconduct using a variety of settlement mechanisms, many of which impose obligations on the company in areas far afield from the alleged misconduct.</p> <p>Breaches of these agreements can trigger enforcement proceedings that afford companies only minimal legal process, because the burden of reopening a prior enforcement action is generally lower than bringing new charges for subsequent misconduct. While such agreements typically provide the company with an opportunity to respond to the allegations of a breach, they also provide the government with nearly absolute enforcement discretion. Moreover, as the Deutsche Bank matter highlights, these agreements usually impose a truncated enforcement process that gives the government much greater latitude to punish ESG misrepresentations.</p> <h3><span style="font-size: 16px;">What Does ESG Disclosure Even Mean?</span></h3> <p>News that U.S. and German regulators are scrutinizing Deutsche Bank’s ESG disclosures has rightly led investment firms and other companies to <a rel="noopener noreferrer" href="https://www.bloomberg.com/news/articles/2021-09-02/deutsche-bank-s-esg-probe-triggers-review-across-asset-managers" target="_blank">scrub their own public statements related to ESG</a>. In contrast to the government’s expressed desire to punish companies for making misleading ESG claims, however, securities regulators have not acted with the same zeal in promoting clarity around ESG reporting. Thus, even though companies have a powerful incentive to accurately evaluate and report their ESG factors, there remains ambiguity and uncertainty regarding how exactly to do so.</p> <p>Many companies in the U.S. are issuing ESG-related disclosures using a corporate sustainability report (CSR) and minimizing the use of reports regulated by the U.S. Securities and Exchange Commission (SEC), such as the annual Form 10-K and other reports that must comply with Regulations S-K and S-X (Reg. S-K). Avoiding SEC scrutiny may be a key motivation for taking this route, as many companies report only the bare minimum about their ESG efforts in their 10-Ks, but publish expansive CSRs that paint glowing pictures of their efforts across the spectrum of applicable ESG issues. However, a recent surge in ESG-related enforcement by SEC and other agencies, as well as increasing civil litigation by securities plaintiffs, suggests that companies may have used less stringent review processes for CSRs than for SEC filings.</p> <p>Though SEC has a robust enforcement tool box for securities-related wrongdoing, these tools are not particularly well suited for regulating ESG disclosures. The agency appears to view the disclosure mandates of Reg. S-K as perhaps its most relevant ESG-related enforcement regulation, as reflected in its 2010 Guidance Regarding Disclosure Related to Climate Change – much of which is devoted to explaining how Reg. S-K requires climate-related disclosures that may be material to a company’s value.</p> <p>For example, the guidance reminds companies that the S-K Item 303 (“Management's Discussion and Analysis of Financial Condition and Results of Operations,” or MD&A), requires assessment of whether “trends and uncertainties will have, or are reasonably likely to have, a material impact on the registrant's liquidity, capital resources or results of operations.”</p> <p>One problem with Reg. S-K is that its requirements typically focus on a company’s financial information, and ESG-related concerns do not always translate neatly into numbers. While the SEC may believe a company should disclose information that shows how climate change will impact future revenues, if the impacts are difficult to predict or quantify – even if very real – they may not turn up in the company’s current financials. Companies face the same challenge for other hard-to-quantify ESG issues, such as insufficient diversity efforts and deficiencies in corporate governance.</p> <p>Of course, even if Regulation S-K and other SEC regulations do not apply to companies’ CSRs, the SEC and DOJ can pursue securities fraud actions involving ESG-related misrepresentations that impact investors’ investment decisions, whether or not they result in shareholder losses. The government may also use administrative enforcement tools to rein in companies, executives, and auditors that stray too far from established disclosure rules.</p> <p>But because most of these tools were crafted to address overtly fraudulent conduct, their utility for pursuing more nuanced ESG disclosure issues is necessarily limited. This is reflected to some degree in the largely precatory climate change guidance, which does little more than put companies on notice about how climate change may affect a company’s market value in the future and that SEC regulations (primarily Reg. S-K) may require disclosure of these impacts if they are material.</p> <p>The SEC has recognized that its power to enforce ESG disclosure deficiencies is lacking, and has responded to the administration’s call for a <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/27/fact-sheet-president-biden-takes-executive-actions-to-tackle-the-climate-crisis-at-home-and-abroad-create-jobs-and-restore-scientific-integrity-across-federal-government/" target="_blank">“whole of government approach”</a> to address these issues by vowing to shore up its enforcement authority. In April 2021, the agency announced its creation of a “Climate and ESG Task Force” in the Division of Enforcement, and has repeatedly vowed to issue climate change regulations that will enhance its enforcement powers in this space. </p> <p>In what appears to be a warning about the future of the SEC’s regulatory efforts in this area, the agency’s Division of Corporation Finance issued a <a rel="noopener noreferrer" href="https://www.sec.gov/corpfin/sample-letter-climate-change-disclosures" target="_blank">sample comment letter</a> in September 2021, which it intends to issue to companies with Form 10-Ks that do not match the climate-related claims published in their CSRs. The letter explains how the SEC’s 2010 climate guidance should encourage companies to disclose how climate impacts may materially affect a company’s value, as required by Reg. S-K and other applicable SEC rules. </p> <p>The lesson here is that the federal government is looking for ways to exercise its limited ESG enforcement authority, using creative approaches such as invoking breach provisions in a prior DPA or commenting on a company’s disparate discussion of ESG factors in different documents. Given this reality, companies already facing scrutiny should carefully evaluate proposed settlements, knowing that what might have seemed like a good deal to resolve prior misconduct could be used in the future to impose even greater obligations.</p>Wed, 26 Jan 2022 00:00:00 -0500{D8A4C98B-DD6C-4ED9-AF16-27228D153FF3}https://btlaw.com//en/insights/blogs/environmental/2021/eliminating-use-of-pfas-at-airports-may-be-harder-than-congress-thoughtEliminating Use of PFAS at Airports May Be Harder Than Congress Thought<p>Per- and polyfluoroalkyl substances (PFAS) are emerging contaminants that are subject to increasing environmental regulation and legislation, including legislation to outright ban their use in certain products. Congress directed the Federal Aviation Administration (FAA) to stop requiring <a href="/en/insights/alerts/2019/afff-at-commercial-airports-the-blessings-and-the-curse-of-pfas" target="_blank">PFAS in the foams used to fight certain fires at commercial airports</a>, and to do so by Oct. 4, 2021. In complying with this order, FAA shows the difficult tightrope it has to walk to meet the “intent” of Congress’ directive, while not really meeting the goal Congress had hoped for. </p> <p>The FAA issued Certification Alert (CertAlert) 21-05, “Part 139 Extinguishing Agent Requirements,” addressing the continued use of aqueous film-forming foam (AFFF) in order to meet the Oct. 4 deadline. In Section 332 of the FAA Reauthorization Act of 2018, Congress directed that after this date, FAA “…shall not require the use of fluorinated chemicals to meet the performance standards referenced in chapter 6 of AC No: 150/5210–6D and acceptable under 139.319(l) of title 14, Code of Federal Regulations.”</p> <p>The CertAlert directs airports to continue using AFFF with PFAS unless they can demonstrate another means of compliance with the performance standards stablished by the Department of Defense (DoD) for extinguishing fires at commercial airports. The FAA alert also reminds airports about the need to <a href="/en/insights/blogs/environmental/2019/pfas-firefighting-foam-legislation-proposed-in-georgia" target="_blank">test their firefighting equipment</a>. Airports can perform the required testing by using a device that has been available since 2019 which does not require the discharge of any foam. Finally, the FAA also reminded airports to comply with state and local requirements for management of foam after it has been discharged.</p> <p>The FAA reported in its communication that it began constructing a research facility in 2014 that was completed in 2019 and that it has been collaborating with DoD in the search for fluorine-free alternatives for AFFF. The FAA reported that it has tested 15 fluorine-free foams and found that none of them meet the strict DoD performance specifications that also are imposed on commercial airports. More specifically, FAA said the tested alternative foams had the following failings:</p> <ul> <li>Increased time to extinguish fires</li> <li>Not as effective at preventing a fire from reigniting</li> <li>Not compatible with the existing firefighting equipment at airports</li> </ul> <p>AFFF was developed to fight fuel fires on aircraft carriers where the ability to suppress fires as rapidly as possible and keep them suppressed is vital to the health and safety of pilots, crews, firefighters and the ship. The military specification (commonly known as MilSpec) for effective firefighting foams for fuel fires is in place for both military and civilian airports.  For many years, the consequences of the use of AFFF to fight aircraft fuel fires – most specifically, the adverse impact on groundwater and surface water – was not fully appreciated. Only recently has this threat been understood and only even more recently has the management of firefighting debris been directly addressed.</p> <p>Congress may have thought it was eliminating a threat with the legislation directing the FAA to no longer require airports to use AFFF. But FAA’s latest messaging on AFFF highlights just how difficult it is to find suitable replacements, especially when they also have to meet the DoD’s stringent performance standards. The FAA did invite any airport, if they identify a replacement foam that meets the performance standards, to share that discovery with the FAA. However, it is unclear what that would accomplish when it is the DoD and not the FAA that certifies a particular foam’s performance. </p> <p>In essence, FAA could not solve the challenge that Congress gave it (approve a fluorine-free foam) and instead used the CertAlert to approve airports to use such foams if they can find them on their own. The bottom line is that inadequate progress has been made to fulfill congressional intent to stop using AFFF at commercial airports, and airports are left with no choice but to use PFAS containing foams.</p> <p>There is legislative activity in many states to ban products with PFAS and at the federal level there have been legislative actions targeting the same – like removing them from MREs. The FAA’s removal of its mandate to use AFFF without offering a PFAS-free alternative is a particularly visible example of the challenge in transitioning away from reliance on PFAS chemicals.</p>Fri, 22 Oct 2021 00:00:00 -0400{9F43675D-952D-4A91-A5BD-0C1CFE0D8F2D}https://btlaw.com//en/insights/blogs/environmental/2021/are-drinking-water-providers-liable-under-rcra-for-contaminants-they-didnt-introduceAre Drinking Water Providers Liable Under RCRA for Contaminants They Didn’t Introduce?<p>The U.S. Court of Appeals for the Ninth Circuit recently vacated a summary judgment previously granted to the city of Vacaville, California, in a citizen suit brought under the Resource Conservation and Recovery Act (RCRA). <em><a href="/-/media/files/blog/vacaville-case.ashx" target="_blank">California River Watch v. City of Vacaville</a></em> questioned whether a drinking water provider could have RCRA liability as a transporter of waste due to the presence of a contaminant in the drinking water which was not introduced by the provider and which did not cause the drinking water to fail applicable federal and state drinking water standards.</p> <p>River Watch claims that the presence of hexavalent chromium in Vacaville’s drinking water amounts to the transportation or disposal of a solid waste creating an “imminent and substantial danger.” The district court granted summary judgment to the City of Vacaville on the grounds that the presence of the hexavalent chromium in the drinking water was not covered by RCRA, because River Watch had not demonstrated it was “discarded” under RCRA. By vacating that judgement, the Ninth Circuit determined that it was a triable issue.</p> <p>In its appeal of the district court decision, River Watch claimed that the source of the hexavalent chromium was excess wood preservative used by a wood treatment company (located somewhere between 1 and 3 miles from the wells) that may have contaminated the city’s drinking water source. The Ninth Circuit’s 2-1 opinion reveals a dispute between the majority and the dissent about whether the identity of the source was properly raised in the district court. The majority of the panel determined that River Watch had presented two triable facts sufficient to survive summary judgment: whether the hexavalent chromium was a “discarded material,” and whether the city was a “transporter” of that material. </p> <p>The majority distinguished the facts in this case from those in the 2013 case <em><a rel="noopener noreferrer" href="https://scholar.google.com/scholar_case?case=16329872166426534667&q=713+F.3d+502,+515+(9th+Cir.+2013)&hl=en&as_sdt=800006" target="_blank">Ecological Rights Foundation v. Pacific Gas and Electric Co.</a></em>, in which the Ninth Circuit rejected a RCRA claim by another environmental NGO over wood preservative chemicals washing off utility poles and being released into the environment. The <em>Vacaville</em> majority concluded that the chemicals in <em>Ecological Rights</em> were not being discarded but were serving their intended purpose and only escaping through normal “wear and tear.”  The majority also rejected the dissent’s reliance on a 2011 decision in <em>Hinds Investments, L.P. v. Angioli</em>, in which the Ninth Circuit determined that designers of dry cleaning equipment could not be responsible for toxic releases from the equipment they designed, because the release of waste required a measure of control that was too attenuated from the act of designing the equipment. The dissent read the <em>Hinds</em> case to allow RCRA liability only where the defendant has some involvement in the waste disposal process. The dissent concluded that Congress intended those who cause contamination of groundwater to be liable under RCRA, rather than parties like Vacaville, which the dissent believed to be merely “victims of such contamination.” The majority also rejected the dissent’s claim that the case should be dismissed on the basis of the “absurdity doctrine.”</p> <p>It does not appear that Vacaville sought summary judgment on the lack of “an imminent and substantial danger” associated with the presence of hexavalent chromium in the drinking water. The majority apparently presumed for purposes of summary judgment that the mere presence of hexavalent chromium satisfied that element of a RCRA claim. However, no drinking water standard has been adopted for hexavalent chromium, and the Vacaville drinking water meets both the federal and state standards for total chromium. As a result, the dissent suggests that the case represents an improper procedural attack on the federal and state drinking water standards for the failure to separately regulate hexavalent chromium.</p> <p>This decision could have significant implications if its rationale is adopted in other jurisdictions. The court’s approach allows RCRA citizen suits against water providers to survive summary judgment simply by alleging that the contamination resulted from waste disposal, even if the provider itself took no part in the disposal – and even if the water meets all applicable standards. Could the same kind of suit could be brought against wastewater utilities or stormwater management authorities over any non-naturally occurring contaminant in water discharges? Conventional RCRA cases are brought against the party or parties alleged to have improperly disposed of waste or caused spills that are alleged to have contaminated groundwater. Is this opinion part of an increasing trend toward use of RCRA citizen suits to address water contamination? We’ll be watching this issue as it develops.</p>Fri, 15 Oct 2021 00:00:00 -0400{971743F2-4406-4726-B6EC-025E78E45983}https://btlaw.com//en/insights/blogs/environmental/2021/after-review-epa-keeps-three-ccr-closure-regulations-in-placeAfter Review, EPA Keeps Three CCR Closure Regulations in Place<p>In June 2021, EPA posted its decision to uphold three <a rel="noopener noreferrer" href="https://www.epa.gov/coalash/coal-ash-rule" target="_blank">coal combustion residue (CCR) rules</a> from 2018 and 2020, following a review under President Biden’s executive order 13990 requiring an evaluation of whether rules are harmful to the public or the environment. Utility owners who have relied on these regulations will be relieved that these rules will continue in effect. It has been reported that environmental NGOs challenging these rules are disappointed by EPA’s decision. EPA and the environmental organizations that have brought legal challenges to these regulations filed a joint motion for a continued stay of proceedings in the litigation on July 20, 2021.</p> <p>These related rules focus on the technical criteria and timing for coal ash storage units to continue to operate or to close. The overwhelming majority of coal ash surface impoundments and landfills were constructed before the existence of any EPA regulatory criteria and are unlined based on the regulatory definition of lining. Most historic coal ash impoundments and landfills are in the process of closing either for business reasons – related to changes in the power generation industry – or because the units do not meet EPA’s regulatory criteria that first went into effect in October 2015. The core regulations adopted in 2015 required CCR facilities to begin monitoring groundwater in October 2017 to detect, assess and remediate impacts to groundwater. These regulations have not been challenged and remain in effect.</p> <p>The <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/08/28/2020-16872/hazardous-and-solid-waste-management-system-disposal-of-coal-combustion-residuals-from-electric" target="_blank">CCR Part A rules</a> (published Aug. 28, 2020) provided an extension to the prior closure commencement deadline from Oct. 31, 2020, to April 11, 2021, and provided some ability to seek additional extensions. This closure deadline applies to CCR surface impoundments and landfills that fail to meet the original aquifer location standard and for all unlined units. In the Part A rules, EPA modified the definition of “unlined” to include units that are only lined with clay, even if those units have demonstrated through groundwater monitoring to have no impact on groundwater. This change was made to be consistent with the <a rel="noopener noreferrer" href="https://www.cadc.uscourts.gov/internet/opinions.nsf/5A6D02C8038BA2CA852582F0004E0D37/$file/15-1219-1746578.pdf" target="_blank">2018 <em>USWAG</em> decision</a>. Finally, this rule allows facilities to apply for an extension to the closure deadline if the facilities require additional time to develop alternative capacity to manage their waste streams (primarily non-CCR wastewater) or if they are ceasing to burn coal. EPA’s website reports that as of the Nov. 30, 2020, deadline, only 35 facilities have submitted applications for extension of the closure period for alternative capacity and 25 for permanent cessation of the use of coal. EPA’s website reports all of these applications are being reviewed for completeness. </p> <p>The <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/11/12/2020-23327/hazardous-and-solid-waste-management-system-disposal-of-ccr-a-holistic-approach-to-closure-part-b" target="_blank">CCR Part B rule</a> (published Nov. 12, 2020) allows a very small subset of the newly defined unlined impoundments and landfills to demonstrate that while those units do not meet the lining requirements, they have in place an alternative liner or conditions are such that the protection of the aquifer is equal or greater than the regulatory standards for a liner. These units also have to demonstrate through groundwater monitoring that the units have had no impact on groundwater. EPA’s website reports that as of the Dec. 14, 2020, (the effective date of the final rule) only nine facilities submitted an alternative liner demonstration package and that the submissions are undergoing a completeness review. </p> <p>Finally, EPA has left in place the <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2018/07/30/2018-16262/hazardous-and-solid-waste-management-system-disposal-of-coal-combustion-residuals-from-electric" target="_blank">2018 revisions of the National Minimum Criteria</a> (published July 30, 2018), which allow EPA or states approved to implement the CCR program to suspend groundwater monitoring requirements if there is proof that hazardous constituents cannot migrate to the upper aquifer. The regulation also revised groundwater protection standards for four constituents and extended a closure deadline. </p> <p>These rulemaking challenges were the result of EPA’s experience with the implementation of the original 2015 rule and the necessary response to legal challenges brought by environmental groups and utilities. Utility comments submitted in connection with the Part A and Part B rules were very detailed and well supported with documentation that allowed the agency staff to make determinations based on a strong factual record. Presumably, the current administration decided not to seek to pull back these rules because they have a solid grounding. EPA determined that the most environmental protective course is to implement the rules. This should support the administration in defending these rules if there are further substantive proceedings in the environmental group challenges. </p> <p>It appears likely that the utilities that submitted applications and the environmental groups that have brought challenges to rules allowing closure extensions will closely scrutinize EPA’s decision making with respect to submissions for extensions and the alternative liner demonstrations. It is also likely that environmental NGOs will continue to play close attention to facility operations and related CCR reporting. NGOs may exercise their ability to bring citizen suits against facilities that are not in compliance with the CCR rules. </p> <p>It’s worth noting that in EPA’s budget request, the Office of Enforcement and Compliance Assurance (OECA) is seeking additional funding for CCR compliance enforcement. EPA has also signaled that it plans to reevaluate the 2020 Steam Electric Limitation Guidelines (ELGs), issued Oct. 13, 2020, that apply to coal fired power plant operations. EPA sought to coordinate the CCR rules, including the requirements related to closure or retrofit deadlines, with the ELGs. </p> <p>Where EPA is the permitting authority, which includes tribal land and those states not authorized to implement the CCR program, EPA will be issuing CCR permits. EPA will have to stand up a permitting program to address the need to issue CCR permits. In addition, EPA will have to continue conducting CCR rulemaking to address issues arising from the original 2015 regulations. This includes plans to address legacy CCR units, the rules for beneficial use of coal ash and other CCR related matters, and state requests to assume implementation of the CCR permitting program.</p>Thu, 12 Aug 2021 00:00:00 -0400{688A18F7-DF27-480B-B157-17D26C87AB06}https://btlaw.com//en/insights/blogs/environmental/2021/epa-emphasizes-climate-change-considerations-in-superfund-remediesEPA Emphasizes Climate Change Considerations in Superfund Remedies<p>EPA’s new Superfund director issued a memorandum to all EPA regions on June 30, 2021, addressing the consideration of the impacts of climate change on Superfund remedial decisions at non-Federal National Priorities List (NPL) sites. The memo reiterates existing guidance on how the agency and others involved in the Superfund remedial process should design for the potential that climate change may produce conditions that could adversely impact Superfund remedies. The memo references <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/" target="_blank">President Biden’s Executive Order 14008</a> that addresses climate change and environmental justice.</p> <p>The June 30 memo presents itself as supplementing the existing guidance, which includes guidance that was issued in the last five years under the Obama and Trump administrations, and states that it is consistent with recommendations from a Nov. 18, 2019, <a rel="noopener noreferrer" href="https://www.gao.gov/products/gao-20-73" target="_blank">Government Accountability Office report</a>. The memo makes clear that the <a rel="noopener noreferrer" href="https://www.epa.gov/emergency-response/national-oil-and-hazardous-substances-pollution-contingency-plan-ncp-overview" target="_blank">National Contingency Plan</a> is the controlling set of regulations to be used in making remedy decisions. Climate resilience is not a new criteria, but resilience can be a consideration in five of the nine criteria used to evaluate remedial action alternatives prior to issuing a proposed plan for a site.</p> <p>The memo also explains that climate impacts should be considered for both remedial actions under active construction and as part of five-year reviews for constructed remedies. Regions are directed to conduct a site-specific analysis of a remedial action in light of current, forward-looking information on local or regional climate and weather regimes, evaluate adaptive measures to address potential identified vulnerabilities, and implement measures that maximize the return on resources to ensure long-term integrity of the remedy. The memo references as resources the agency’s <a rel="noopener noreferrer" href="https://www.epa.gov/arc-x" target="_blank">Climate Change Adaptation Resource Center</a> which houses the agency’s 2014 U.S. Environmental Protection Agency Climate Adaptation Plan (including guidance on remediation) as well as the three updated <a rel="noopener noreferrer" href="https://www.epa.gov/arc-x/library-climate-change-adaptation#waste" target="_blank">climate resilience technical fact sheets</a> issued in 2019 that address groundwater remediation systems, sediment sites and waste containment systems.</p> <p>During the last administration, there were a considerable number of significant hurricane and flooding events in parts of the country where Superfund sites are located, including sites with remedies under construction and with constructed remedies. Following a major disaster, EPA emergency management personnel thoroughly assess the effect of the severe weather on Superfund sites in the impacted area. For instance, EPA prepared a 37-page report titled <a rel="noopener noreferrer" href="https://www.epa.gov/sites/default/files/2019-02/documents/evaluation-of-remedy-resilience-at-superfund-npl-and-saa-sites.pdf" target="_blank">Evaluation of Remedy Resilience at Superfund NPL and SAA Sites</a> after the very active hurricane season of 2017. Emergency management personnel found that remedies were largely intact and damage was mostly limited to surface structures like fences, signs, and pumps. Some remedies that were ongoing required more work to recover material and repair damage.</p> <p>This experience demonstrates the importance of considering and addressing potential impacts of severe weather conditions in remedial design and construction. It is in no one’s interest to have to repair or redo a remedy because of the failure to design and plan for the impact of severe weather caused by climate change. While protective remedial design may be especially challenging in some Superfund sites that are particularly vulnerable to extreme weather events, these sites are not the norm. More typical Superfund sites have contamination that has migrated beneath the ground surface into soil and groundwater due to historic waste management practices and have existed through cycles of natural disasters before being addressed under the Superfund program.</p> <p>Companies with responsibilities for Superfund sites and consulting firms working on Superfund sites should expect additional emphasis on addressing climate change in communications from EPA and an expectation for more documentation on the topic in plans submitted to the agency.</p>Tue, 10 Aug 2021 00:00:00 -0400{BC77E445-4C76-4EE1-99DE-9D55F62BB5DD}https://btlaw.com//en/insights/blogs/environmental/2021/how-will-the-sec-drive-esg-progress-first-we-measureHow Will the SEC Drive ESG Progress? First, We Measure<p>Remarks by U.S. Securities and Exchange Commission Chair Gary Gensler indicate that the SEC may soon respond to increasing demand from investors for information on how to better <a href="/en/insights/blogs/government-relations/2021/esg-investing-guidance-from-the-us-securities-and-exchange-commission" target="_blank">evaluate a firm’s environmental, social, and governance (ESG) risks</a>. The SEC is considering a number of changes in how such risks are measured, as a first step toward driving progress.</p> <p>Gensler provided a broad outline of the rule revisions he has asked SEC staff to consider in his remarks before the Principles for Responsible Investment “<a rel="noopener noreferrer" href="https://www.unpri.org/all-events-and-webinars/climate-and-global-financial-markets-discussion-with-sec-chair-gary-gensler/8019.article" target="_blank">Climate and Global Financial Markets</a>” webinar on July 28, and before the Asset Management Advisory Committee on July 7.</p> <p>First, Gensler emphasized widespread investor support for increased transparency, indicating that the SEC would respond with a proposed mandatory climate risk disclosure rule by the end of 2021. Such a rule might require consistent and comparable climate risk disclosures, add ESG disclosure requirements to Form 10-K, and use or adapt available third-party metrics such as those included in the <a rel="noopener noreferrer" href="https://www.fsb-tcfd.org/" target="_blank">Task Force on Climate-related Financial Disclosures</a> framework and the industry-specific <a rel="noopener noreferrer" href="https://www.sasb.org/about/sasb-and-other-esg-frameworks/" target="_blank">SASB standards</a> of the newly named Value Reporting Foundation.</p> <p>A new mandatory climate risk disclosure rule may also require more qualitative and quantitative information to ensure that disclosures support informed investment decisions, such as: </p> <ul> <li>How ESG issues are managed and incorporated into a company’s strategy</li> <li>Greenhouse gas  emissions from operations, energy use, and downstream value chain</li> <li>Financial impacts of climate change on the company</li> <li>Progress toward climate-related company goals, such as “net zero” or other emission reduction goals</li> <li>Industry-specific metrics, such as for the banking, insurance, or transportation industries</li> <li>Strategies for likely future ESG-related requirements, such as those arising from the Paris Agreement or federal regulatory action</li> </ul> <p>The SEC chair also has asked his staff to consider revisions to the Names Rule, which might require disclosure of specific criteria and data underlying claims that a particular fund is “sustainable,” “green,” or “low-carbon,” for example.</p> <p>Gensler has asked SEC staff to consider increasing transparency around diversity and inclusion in the asset management industry, as well. These efforts could, for example, require disclosure of employee and owner demographics, as well as diversity and inclusion practices. The SEC chair clearly views such enhanced measurement efforts as a driver for change, particularly when considering “how the workforce in the asset management industry can better represent the great diversity of our nation.”</p> <p>Still, there are a number of questions Gensler left unanswered for the moment.</p> <ul> <li>When will the measurement and disclosure requirements become effective, and will there be sufficient time to prepare for the new obligations?</li> <li>Must future disclosures be filed in annual and quarterly reports, provided in separate reports to the SEC, or published outside of the SEC reporting framework?</li> <li>Will the content be confined to objectively verifiable quantitative information such as stage 1, 2, and 3 carbon emissions data, or also include subjective, or “qualitative,” conclusions about company operations?</li> </ul> <p>Regulated companies will undoubtedly have disparate views on these and other issues, and should consider taking full advantage of opportunities to comment on upcoming rules that might change how ESG risks are measured.</p>Mon, 02 Aug 2021 00:00:00 -0400{3BFDD30F-8BE2-46D4-825F-8759D3B997B5}https://btlaw.com//en/insights/blogs/environmental/2021/big-changes-to-indianas-state-regulated-isolated-wetlands-programBig Changes to Indiana's State-Regulated Isolated Wetlands Program<p>Last week, Governor Holcomb signed into law SEA 389, a controversial set of changes to Indiana’s Isolated Wetlands law. Although the original version of SEA 389 virtually eliminated Indiana’s Isolated Wetlands program altogether, amendments to the act in the final version Holcomb signed into law ultimately preserved the program with some major modifications.</p> <p>A wetland is an area of land that is permanently, seasonally, or intermittently flooded by water. The term generally includes swamps, marshes, bogs, and similar areas. Isolated wetlands in Indiana are Waters of the State and are subject to Indiana's Isolated Wetlands law.</p> <p>In certain instances, a permit is needed for activities occurring in a wetland. Applicants for a permit demonstrate to the Indiana Department of Environmental Management how they will avoid impacts to the wetland. If an applicant is unable to completely avoid impacts, they must demonstrate how their proposed project has minimized unavoidable impacts to isolated wetlands. Applicants provide compensatory mitigation – restoration or creation of wetlands to offset loss of wetlands during wetland activity – for any remaining adverse impacts to isolated wetlands. </p> <p>The 2021 Indiana Legislative Session included <a rel="noopener noreferrer" href="http://iga.in.gov/legislative/2021/bills/senate/389#document-f33557a9" target="_blank">Senate Enrolled Act No. 389</a> which made extensive changes to Indiana’s wetlands law. Governor Holcomb signed the bill into law on April 29, 2021. These changes are retroactive and effective Jan. 1, 2021. </p> <h2><strong>Impact of the Changes on Class III Wetlands</strong></h2> <p>Indiana’s isolated wetlands are defined as being a Class I, Class II, or Class III wetland. This determination is made as part of a technical assessment by a wetland or environmental consultant. Class III wetlands are those that have been largely undisturbed by human activity or development, support more than minimal habitat or hydrologic functions, or are rare and ecologically important. The 2021 changes to the wetlands law have very little impact on Class III wetlands</p> <h2><strong>Impact of the Changes on Class II and Class I Wetlands and Ephemeral Streams</strong></h2> <p>Class II wetlands are now defined as those that support moderate habitat or hydrological functions but are generally without threatened or endangered species or their habitats. Class II wetlands used to be exempt from permitting if they were smaller than one-quarter of an acre. The 2021 law exempts Class II wetlands from permitting if they are smaller than three-eighths of an acre.</p> <p>The definition of Class I wetlands was not changed in the 2021 law. Class I wetlands are still defined as those where at least 50 percent of the wetland has been disturbed by human activity, the wetland supports minimal habitat or hydrologic function, and does not provide habitat for threatened or endangered species. This entire class of wetlands is now exempt from permitting. Previously, Class I wetlands were only exempt if they were smaller than half an acre. In addition, compensatory mitigation is no longer required for activities that impact Class I Wetlands. </p> <p>The 2021 law also provides that a permit is not required for dredge and fill activities in “ephemeral streams,” which are defined in the new law as surface water flowing or pooling only in direct response to rain or snowfall.</p> <p>These changes are only a small selection of modifications to the wetlands law in SEA 389. <a href="/en/work/practices/environmental/wetlands-and-flood-plains-development" target="_blank">Barnes & Thornburg’s wetlands attorneys</a> can assist with your questions related to these and other changes to the Indiana Isolated Wetlands Program.</p>Thu, 06 May 2021 00:00:00 -0400{D07EC79A-0ED9-47B4-BD11-A36E12829262}https://btlaw.com//en/insights/blogs/environmental/2021/georgia-defeats-florida-water-claims-in-supreme-court-original-jurisdiction-caseGeorgia Defeats Florida Water Claims in Supreme Court Original Jurisdiction Case<p>“The case of the disappearing water,” as subtitled by Georgia-born Justice Clarence Thomas, was resolved by the U.S. Supreme Court on April Fools’ Day 2021. </p> <p>Apalachicola Bay, along the Florida panhandle in the Gulf of Mexico, originates from the joinder of the Flint and Chattahoochee Rivers in Georgia, which form the Apalachicola River at the Florida line. Florida’s lawsuit, filed in 2013, claimed that Georgia’s consumption of water for irrigation, agriculture and Atlanta development is unreasonable. It sought an equitable apportionment order to control Georgia’s use of that water to protect Florida’s natural resources, ecology and economy, including oyster fisheries. Georgia objected to any cap on use of these waters because of the economic detriment to its agriculture industry and the millions of water users in the Atlanta metropolitan area.</p> <p>The unanimous Supreme Court opinion, authored by Justice Amy Coney Barrett, ruled that Florida had failed to prove its case: “Considering the record as a whole, Florida has not shown that it is ‘highly probable’ that Georgia’s alleged overconsumption played more than a trivial role in the collapse of Florida’s oyster fisheries.” </p> <p>The case is interesting and important for its interstate water rights principles and rulings, but also from an appellate procedure standpoint. The federal Judiciary Act of 1789 provided that the Supreme Court has exclusive original jurisdiction in suits between two or more states. Long before Florida initiated this water war, the State of Georgia influenced the scope of the Supreme Court’s original jurisdiction in the 1793 decision of <em>Chisholm v. Georgia</em>, where the Supreme Court ruled that the Supreme Court had original jurisdiction when a state was sued by a citizen of another state. That controversial decision resulted in adoption of the 11th Amendment to the Constitution, which prohibited federal court jurisdiction over suits against states by out-of-state citizens in the federal courts. </p> <p>The Supreme Court’s use of Special Masters, and their rulings, is also an interesting aspect of this important <em>Florida vs. Georgia</em> case. After two years of discovery, dozens of depositions and expert witnesses testifying, and a five-week trial, in 2017, the first Special Master recommended that Florida’s request for relief be denied because the U.S. Army Corps of Engineers was not a party, and therefore Florida had not proven “by clear and convincing evidence” that the Court could grant the requested relief of equitable apportionment restricting water use in Georgia. The second Special Master ruling in 2019 also recommended denial of Florida’s requested relief, concluding very similarly to the ultimate Supreme Court opinion that “the evidence has not shown harm to Florida caused by Georgia; the evidence has shown that Georgia’s water use is reasonable…” Addressing equitable apportionment, the 2019 Special Master recommendation also observed that “the evidence has not shown that the benefits of apportionment would substantially outweigh the potential harms.”</p> <p>Of course, these rulings on issues of reasonable use, equitable apportionment, proximate causation, and so forth, are much more typical of trial court judges and juries weighing the preponderance of the evidence to determine if a plaintiff has carried its burden of proof than an opinion of the Supreme Court. While the Supreme Court’s history reflects few cases of original jurisdiction of disputes between states, the effects of climate change may engender more frequent water wars and land use disputes for the Court to resolve. </p>Tue, 06 Apr 2021 00:00:00 -0400{A59BE898-9F35-4C27-AA46-737737BE749A}https://btlaw.com//en/insights/blogs/environmental/2021/could-your-transaction-be-impacted-by-pfas-three-questions-to-askCould Your Transaction Be Impacted By PFAS? Three Questions To Ask<p>Emerging environmental risks that are uncertain and evolving require special considerations during corporate transactions. One good example of this in today’s world is dealing with risks associated with PFAS, a shorthand way of referring to per- and polyfluoroalkyl substances. This family of thousands of compounds is subjected to uneven and inconsistent regulation across the country and further regulation is still evolving. This makes quantifying and evaluating potential risks difficult, but important. </p> <p>Here are three questions to evaluate whether – and if so, how – you need to address risks associated with PFAS in a property or facility transaction.</p> <ol> <li>Is your client buying or selling a <a rel="noopener noreferrer" href="https://btlaw.com/en/insights/blogs/environmental/2021/could-your-manufacturing-business-be-impacted-by-pfas" target="_blank">manufacturing business that could be impacted by PFAS</a>?</li> <br /> <li><span></span>If your client is pursuing a target for which PFAS may be a concern, do the deal documents properly account for PFAS concerns? <ul> <li>Are there environmental representations that will account for potential (and perhaps hidden) PFAS risks?</li> <li>Does the definition of “Hazardous Substances” in the deal documents include PFAS?</li> <li>Do environmental representations account for likely future regulation of PFAS (with retroactive liability) in jurisdictions where it may not currently regulated?</li> </ul> </li> <li>If your client is pursuing a target for which PFAS may be a concern, is the environmental consultant who is tasked with due diligence responsibilities experienced and familiar with assessing PFAS risks in Phase I and Phase II environmental site assessments?</li> </ol> <p>Of course, how risks are evaluated and allocated are different for every transaction, but reviewing these questions will help make sure this uncertain and evolving potential liability is properly understood and considered. </p>Tue, 23 Mar 2021 00:00:00 -0400{AE388E38-7D00-4BFB-96D9-D8EE86BC1CB6}https://btlaw.com//en/insights/blogs/environmental/2021/could-your-manufacturing-business-be-impacted-by-pfasCould Your Manufacturing Business Be Impacted By PFAS?<p>PFAS is the environmental issue manufacturers across many sectors need to pay attention to now. <a href="/en/insights/blogs/environmental/2019/fast-facts-what-is-pfas" target="_blank">PFAS</a> is an acronym for per- and polyfluoroalkyl substances. It is a family of chemicals used in many applications, but they are getting a lot of attention now because of potential negative environmental impacts. That attention is in the form of regulation, remediation obligations, and potential lawsuits, which means potential increased risk and liability that manufacturers need to proactively assess.</p> <p>To know if your manufacturing business could be impacted, here are three questions to ask.</p> <h2>Do you now or have you in the past used PFAS compounds in your process?</h2> <p>The<a rel="noopener noreferrer" href="https://pfas-1.itrcweb.org/2-5-pfas-uses/" target="_blank"> Interstate Technology & Regulatory Council</a>, or ITRC, lists 18 industries and applications of PFAS compound use including: aviation and aerospace; automotive; biocides; building and construction; cable and wiring; cosmetics and personal care products; electronics; energy; firefighting and safety; food processing; household products; medical products; metal plating and metal finishing; oil production; mining; paper and packaging; photolithography; and textiles. PFAS compounds also have been associated with car wash operations, paper or cardboard recycling operations, and properties on or near former military bases. If your business is in one of these industries, then you should check if you currently or in the past have used PFAS compounds or investigate if PFAS compounds may have been used on the property.</p> <p>If your operations include tank farms that store petroleum products or if you have ever had a fire, there may be PFAS compounds on your property as part of fire suppression systems. Central heating plants also may have internal fire suppression systems that use PFAS compounds and may have been activated inadvertently or because of an emergency situation.</p> <p>In 2020, EPA added 172 PFAS compounds to its <a rel="noopener noreferrer" href="https://www.epa.gov/toxics-release-inventory-tri-program/list-pfas-added-tri-ndaa" target="_blank">Toxics Release Inventory</a> (TRI), which means industries that have to conduct annual TRI reporting will have already had to assess whether they have PFAS compounds in the operations. </p> <h2>Do you already participate in the remediation of federal Superfund remediation projects?</h2> <p>If your current portfolio of environmental liabilities includes remediation at one of more Superfund sites, then this remediation may be impacted by PFAS. There are no PFAS compounds currently listed as a hazardous substance under Superfund, but this has been a stated focus in the new <a rel="noopener noreferrer" href="https://www.epa.gov/pfas/epa-actions-address-pfas" target="_blank">Biden administration</a>. In the meantime, EPA has set<a rel="noopener noreferrer" href="https://www.epa.gov/pfas/interim-recommendations-addressing-groundwater-contaminated-pfoa-and-pfos" target="_blank"> interim remediation goals</a> for two of the PFAS compounds, PFOA and PFOS, and Superfund sites have been asked to look for these new contaminants. If found, there will likely need to be more funds allocated to these remediation projects.</p> <h2>Do you have a well that uses groundwater as a source for either process or drinking water? </h2> <p>The primary health concern with PFAS compounds is ingestion through drinking water. Some states – including Michigan, Illinois, Ohio, and many others – have implemented statewide drinking water sampling programs to test public water supplies. This sampling has also included non-community systems that may service industrial facilities. If your facility uses an onsite groundwater well, that may be included as part of a testing program. </p> <p>This is, of course, not an exhaustive of list of what a manufacturer could review, but these questions can serve as an initial screening tool. If your manufacturing business could have potential impacts from use of PFAS, consider working with an attorney to assess what your risks may be. These risks could be in the form of greater water or air permitting obligations, new or increased remediation work, worker exposure or citizen suit lawsuits, current and past waste disposal questions, and increased focus on these issues during transaction diligence – to name a few.</p>Mon, 22 Mar 2021 00:00:00 -0400{B2AC1B78-1420-4A63-B550-E0143E19280D}https://btlaw.com//en/insights/blogs/environmental/2021/democrats-may-invoke-congressional-review-act-to-reverse-recent-epa-rulesDemocrats May Invoke Congressional Review Act to Reverse Recent EPA Rules<p>President Biden has pledged to review and reverse many Trump-era environmental policies, including numerous environmental rules. With Democratic majorities in the House and Senate, Congress and the President have the ability to invoke the <a rel="noopener noreferrer" href="https://www.epa.gov/laws-regulations/summary-congressional-review-act" target="_blank">Congressional Review Act </a>(CRA) to reverse certain of these Trump-era rules. </p> <p>The CRA is a 1996 statute that establishes a process by which Congress can overturn “major” rules issued by federal agencies. The CRA defines major rules as those that have an annual $100 million or greater effect on the economy. Under the CRA, the newly convened 117th Congress will have a “lookback” period of 60 legislative days from the date a rule was published in the Federal Register to review the rule and vote on a joint resolution of disapproval. A simple majority in both houses of Congress is required for the measure to pass and be sent to the President. If the President then signs the joint resolution of disapproval, the rule cannot take effect, and the issuing agency would need express authority from Congress to promulgate any future rule that is “<a rel="noopener noreferrer" href="https://uscode.house.gov/view.xhtml?req=(title:5%20section:801%20edition:prelim)%20OR%20(granuleid:USC-prelim-title5-section801)&f=treesort&edition=prelim&num=0&jumpTo=true" target="_blank">substantially the same</a>.” Notably, no action taken pursuant to the CRA is <a rel="noopener noreferrer" href="https://uscode.house.gov/view.xhtml?req=(title:5%20section:805%20edition:prelim)%20OR%20(granuleid:USC-prelim-title5-section805)&f=treesort&edition=prelim&num=0&jumpTo=true" target="_blank">subject to judicial review</a>. </p> <p>Some progressives and environmental non-governmental organizations (NGOs) have been critical of the CRA in the past and are reluctant to invoke the CRA to overturn rules promulgated during the Trump administration. Criticisms of the CRA include its procedural shortcuts and an expedited process, which leave little opportunity for congressional deliberation. </p> <p>According to the George Washington University Regulatory Studies Center, the Environmental Protection Agency (EPA) published over 150 rules in the Federal Register during the last 60 legislative days of the 116th Congress. An <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-protecting-public-health-and-environment-and-restoring-science-to-tackle-climate-crisis/" target="_blank">executive order</a> released on Jan. 20, 2021, identifies environmental regulations immediately targeted for repeal, suspension, or revision. The following environmental rules identified in the executive order were issued during the last 60 legislative days of the previous Congress: </p> <ul> <li>EPA: “<a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/09/15/2020-18115/oil-and-natural-gas-sector-emission-standards-for-new-reconstructed-and-modified-sources" target="_blank">Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Reconsideration</a>,” 85 Fed. Reg. 57398 (Sept. 15, 2020)<br /> This rule finalizes amendments to the new source performance standards for the oil and natural gas sector, which lifts regulations limiting methane and VOC emissions from the transportation and storage sectors of the oil and gas industry and withdraws regulations limiting methane emissions across the source category. The Biden administration appears to be targeting this rule because of its impacts on the new administration’s climate change mitigation strategy.</li> <li>EPA: “Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking Process,” 85 Fed. Reg. 84130 (Dec. 23, 2020)<br /> According to EPA, this procedural rule improves the rulemaking process under the Clean Air Act by establishing requirements to ensure consistent, high-quality analyses of benefits and costs are provided to the public for significant rules. </li> </ul> <p>The list below includes other environmental rules, issued during the last 60 legislative days of the previous Congress, which have generated interest and controversy:</p> <ul> <li>EPA: “<a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/08/21/2020-16257/streamlining-procedures-for-permit-appeals" target="_blank">Streamlining Procedures for Permit Appeals</a>,” 85 Fed. Reg. 51650 (Aug. 21, 2020)<br /> EPA promulgated this procedural rule to streamline and modernize EPA’s permit appeal process for permits issued under the Clean Air Act, Clean Water Act, Safe Drinking Water Act, and Resource Conservation and Recovery Act.</li> <li>EPA: “<a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/09/14/2020-18114/oil-and-natural-gas-sector-emission-standards-for-new-reconstructed-and-modified-sources-review" target="_blank">Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review</a>,” 85 Fed. Reg. 57018 (Sept. 14, 2020)<br /> This rule finalizes amendments to the oil and natural gas new source performance standards promulgated in 2012 and 2016.</li> <li>EPA: “<a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/10/13/2020-19542/steam-electric-reconsideration-rule" target="_blank">Steam Electric Reconsideration Rule</a>,” 85 Fed. Reg. 64650 (Oct. 13, 2020)<br /> This rule revises requirements for two specific waste streams produced by steam electric power plants: flue gas desulfurization wastewater and bottom ash transport water.</li> <li>EPA: “<a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/10/19/2020-20665/environmental-protection-agency-acquisition-regulation-epaar-scientific-integrity" target="_blank">Environmental Protection Agency Acquisition Regulation (EPAAR); Scientific Integrity</a>,” 85 Fed. Reg. 66266 (Oct. 19, 2020)<br /> This final rule addresses scientific integrity requirements by creating a contract clause for inclusion in solicitations and contracts when the contractor may be required to perform, communicate, or supervise scientific activities or use scientific information to perform advisory and assistance services.</li> <li>EPA: “<a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/11/19/2020-22044/reclassification-of-major-sources-as-area-sources-under-section-112-of-the-clean-air-act" target="_blank">Reclassification of Major Sources as Area Sources under Section 112 of the Clean Air Act</a>,” 85 Fed. Reg. 73854 (Nov. 19, 2020)<br /> This rule allows a “major source” of hazardous air pollutants to be reclassified as an “area source” after acting to limit emissions.</li> <li>EPA: “<a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/12/31/2020-28871/review-of-the-ozone-national-ambient-air-quality-standards" target="_blank">Review of the Ozone National Ambient Air Quality Standards</a>,” 85 Fed. Reg. 87256 (Dec. 31, 2020)<br /> This rule retains the current national ambient air quality standards, without revision, for photochemical oxidants including ozone.</li> <li>EPA: “<a rel="noopener noreferrer" href="http://https://www.epa.gov/regulations-emissions-vehicles-and-engines/control-air-pollution-airplanes-and-airplane-engines-ghg" target="_blank">Control of Air Pollution from Airplanes and Airplane Engines: GHG Emission Standards and Test Procedures</a>,” 86 Fed. Reg. 2136 (Jan. 11, 2021)<br /> This final rule establishes greenhouse gas emission standards that apply to certain new commercial airplanes.</li> <li>Army Corps of Engineers: “<a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2021/01/13/2021-00102/reissuance-and-modification-of-nationwide-permits" target="_blank">Reissuance and Modification of Nationwide Permits</a>,” 86 FR 2744 (Jan. 13, 2021)<br /> This final rule reissues 12 existing Clean Water Act Nationwide Permits (NWPs) and creates four new NWPs.</li> </ul>Fri, 05 Feb 2021 00:00:00 -0500{27318199-C5B7-45BA-8E9D-42171D02C69F}https://btlaw.com//en/insights/blogs/environmental/2020/much-still-unknown-about-pfas-destruction-and-disposalMuch Still Unknown about PFAS Destruction and Disposal<p>EPA has released for public comment <a rel="noopener noreferrer" href="https://www.regulations.gov/document?D=EPA-HQ-OLEM-2020-0527-0002" target="_blank">guidance on destruction and disposal of certain PFAS and PFAS-Containing Materials</a>. This guidance, published Dec. 18, 2020, highlights how much is still unknown about how to effectively remove these materials from the environment. As characterized by EPA, “This interim guidance serves as a baseline of destruction and disposal capabilities and uncertainties.” </p> <p>EPA was required to publish the guidance under the National Defense Authorization Act for Fiscal Year 2020 (NDAA). The guidance is not a rule or a statement of EPA policy. It is intended to provide a manager of PFAS-containing materials with information on commercially available technologies that may be feasible and effective in meeting the goals of PFAS destruction or control of PFAS mitigation into the environment. The guidance also takes into account the possible impact of PFAS disposal on potentially vulnerable populations living near disposal facilities.</p> <p>This is interim guidance, as <a rel="noopener noreferrer" href="https://www.epa.gov/chemical-research/status-epa-research-and-development-pfas" target="_blank">ongoing research is being conducted to address the data gaps regarding PFAS destruction and disposal technologies</a>. The NDAA requires that EPA revise the guidance as the EPA determines to be appropriate, but not less frequently than once every three years. <a rel="noopener noreferrer" href="https://www.regulations.gov/docket?D=EPA-HQ-OLEM-2020-0527" target="_blank">The deadline to submit comments on the interim guidance is February 22, 2021.</a></p> <p>The guidance applies to the following six types of PFAS-containing materials:</p> <ul style="margin-left: 40px;"> <li>Aqueous film-forming foam</li> <li>Soil and biosolids</li> <li>Textiles (other than consumer goods)</li> <li>Spent filters, membranes, resins, granular carbon, and other waste</li> <li>Landfill leachate</li> <li>Solid, liquid, or gas waste streams</li> </ul> <p>Three destruction and disposal technologies are discussed: thermal treatment, landfilling, and permitted deep well underground injections. EPA identified these three because they are commercially available and could destroy or manage the migration of PFAS in the environment. </p> <h2>Thermal Treatment</h2> <p>Thermal treatment could include commercial incinerators, cement kilns, aggregate kilns, carbon reactivation units, sewage sludge incinerators, municipal waste combustors, and thermal oxidizers. EPA currently has no emission characterizations from these sources when they burn PFAS and is working to develop measurement methodologies. </p> <p>EPA does not provide firm guidance on this treatment option, but acknowledges that additional research is needed to minimize data gaps related to potential products of incomplete combustion. It expects to make more informed recommendations when the guidance is next updated. </p> <h2>Landfilling</h2> <p>EPA considers both hazardous waste and municipal solid waste landfills to be feasible and effective disposal options for PFAS. The guidance states, “Care must be taken to apply the leachate control technologies that are effective at containing . . . or destroying PFAS.” EPA acknowledges that there is a “high level of uncertainty associated with PFAS behavior in landfills” and that research is needed into the effects of PFAS on liner integrity, gaseous emissions, and the effectiveness of leachate treatment.</p> <h2>Permitted Deep Well Underground Injections</h2> <p>This disposal method is only applicable to liquids with a low concentration of suspended solids. In addition, the practicability of this technology may be limited due to the small number of wells currently receiving PFAS.</p> <p>Because of the limitations on knowledge about these three main technologies, EPA also highlights that interim storage “may be an option if the immediate destruction or disposal or disposal of PFAS and PFAS-containing materials is not imperative.” It estimates that interim period to be from two to five years until further research reduces uncertainties for other disposal or destruction options. </p> <p>EPA has identified three broad areas of research needed address these uncertainties:</p> <ul style="margin-left: 40px;"> <li>better characterize the multi-media PFAS-containing materials targeted for destruction or disposal</li> <li>measure and assess the effectiveness of existing methods for PFAS destruction, improve existing methods, and develop new methods for PFAS destruction</li> <li>measure and assess the effectiveness of existing methods for PFAS disposal, improve existing methods, and develop new methods for PFAS disposal</li> </ul> <p>While this research is still very much ongoing and will be for some time, affected entities are faced with a need to make disposal decisions today. The increasing regulation and establishment of remediation and drinking water criteria by states means that more and more entities – public and private – have to answer these tough questions now. Whether it is PFAS-impacted investigation-derived waste, spent carbon from water treatment, or even impacted construction debris and dirt, generators and disposal companies alike must evaluate options and make risk-based decisions based on the imperfect knowledge of today.</p> <p>If you have questions regarding PFAS in general or PFAS disposal, please contact our PFAS team members: <a rel="noopener noreferrer" href="https://btlaw.com/en/people/jennifer-baker" target="_blank">Jennifer Baker</a>, <a rel="noopener noreferrer" href="https://btlaw.com/en/people/tammy-helminski" target="_blank">Tammy Helminski</a>, <a rel="noopener noreferrer" href="https://btlaw.com/en/people/jeffrey-longsworth" target="_blank">Jeff Longsworth.</a></p>Thu, 31 Dec 2020 00:00:00 -0500{DFC00F70-76BD-401B-8891-E43E095BD07F}https://btlaw.com//en/insights/blogs/environmental/2020/epa-issues-draft-guidance-on-npdes-permitting-for-groundwaterEPA Issues Draft Guidance on NPDES Permitting For Groundwater<p>The United States Environmental Protection Agency<a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/epa-issues-draft-guidance-clarifying-wastewater-permit-requirements-under-maui-decision" target="_blank"> (EPA) issued draft guidance</a> on Dec. 8, interpreting the Supreme Court’s April 23, 2020, ruling in <em><a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/19pdf/18-260_i4dk.pdf" target="_blank">Maui v. Hawai’i Wildlife Fund</a></em>. In Maui County, the Court ruled that pollutants that are discharged from a point source into groundwater, and end up reaching downgradient surface waters, may be treated as the “functional equivalent” of a direct discharge into that surface water body. We offered our interpretations of various aspects of the <em>Maui County</em> decision on this blog, shortly after the decision was issued.</p> <p>Read more: </p> <ul> <li><a href="/en/insights/blogs/environmental/2020/muddy-waters-the-supreme-court-sets-new-standard-for-when-the-cwa-applies" target="_blank">Muddy Waters: The Supreme Court Sets New Standard For When The CWA Applies</a></li> <li><a href="/en/insights/blogs/environmental/2020/early-tea-leaves-for-interpreting-the-supreme-courts-maui-decision" target="_blank">Early Tea Leaves for Interpreting the Supreme Court’s Maui Decision?</a></li> </ul> <p>Now, EPA has issued its draft interpretation to provide guidance to the regulated community and permit writers for incorporating the <em>Maui County</em> holding into existing Clean Water Act National Pollutant Discharge Elimination System (NPDES) permit programs. The guidance applies only to situations in which EPA is issuing the NPDES permits, but it is expected to be applied to state permit programs as well. </p> <p>The draft guidance provides a fairly narrow interpretation of the <em>Maui County</em> decision, in the interest of providing as much clarity as possible. EPA states that it expects that the number of permits issued based on the “functional equivalent” test will continue to be a small percentage of all permits issued. </p> <p>The draft guidance sets forth the key foundational elements of NPDES permitting; permits are required for the <em>discharge </em>of a <em>pollutant</em>, through a <em>point source</em>, to a <em>water of the U.S.</em> (WOTUS). Each italicized term reflects specifically defined terms that have been subject to significant historic regulatory and judicial interpretation. <em>Maui County</em> reinforced those concepts, but the Supreme Court determined that certain discharges initially into groundwater can be recognized as the “functional equivalent” of direct surface water discharges of pollutants through point sources. The Supreme Court set forth seven non-exclusive factors to consider to determine if the functional equivalent standard applies to a specific discharge. In its draft guidance, EPA adds another factor for consideration by permittees and regulators. EPA asserts that the design and performance of the system or facility from which the pollutant is released is relevant to consideration of the factors laid out by the Supreme Court. </p> <p>EPA’s narrow focus on the core elements of NPDES permitting is accompanied in the draft guidance with certain statements limiting the scope of application of<em> Maui County</em>. For example, regulators should not assume that a discharge to groundwater that occurs in the vicinity of a surface water is the “functional equivalent” of a direct discharge. It may be prudent for site operators or regulators to conduct a technical analysis in situations where, for example, there is a discharge of “highly mobile” pollutants to sandy soils, or in an area where there is shallow groundwater in close proximity to a WOTUS. In that type of case, it may be useful to evaluate hydraulic conductivity, depth to groundwater, groundwater flowpath, or pollutant-specific dynamics along that flowpath to determine if there is an actual discharge to surface waters and whether that discharge is the functional equivalent of a direct discharge to the WOTUS. </p> <p>In particular, if a system is designed and operated to treat or attenuate pollutants, or it “uses the surface or subsurface to treat, provide uptake of, or retain water or pollutants,” then those facts may make it less likely that the situation will be considered to be the “functional equivalent” of a direct discharge. A mere allegation in comments on a draft permit, without supporting evidence, would not trigger a requirement for regulators to investigate the issue. </p> <p>It is also relevant whether there are changes in the discharge before it meets the WOTUS; if the chemical composition or concentration are different than they were when initially discharged, then the discharge may not be the “functional equivalent” of a direct discharge.</p> <p>Finally, EPA attempts to use its “system design and function” factor to discourage possible NPDES permit coverage for certain more traditional injection processes and needs, providing that the system components in fact prevent or abate discharges of pollutants to a WOTUS. These systems include: </p> <ul> <li>septic systems</li> <li>cesspools or settling ponds</li> <li>runoff management systems, such as with stormwater controls, infiltration or evaporation system</li> <li>other green infrastructure</li> <li>facilities that operate water reuse, recycling or groundwater recharge facilities</li> </ul> <p>Looking forward, NGOs have already expressed concern about EPA’s draft guidance, and it remains to be seen whether the incoming Biden administration will seek to review and possibly change this agency interpretation.  </p>Tue, 15 Dec 2020 00:00:00 -0500{0767F48F-DCE0-4A0A-97A9-4ADE2691491B}https://btlaw.com//en/insights/blogs/environmental/2020/pfas-emerging-contaminant-response-could-learn-some-lessons-from-pcbsPFAS Emerging Contaminant Response Could Learn Some Lessons From PCBs<p>PFAS compounds are not the first <a href="/en/insights/blogs/policyholder-protection/2020/insurance-coverage-for-emerging-contaminants" target="_blank">emerging contaminants</a> to be addressed by environmental agencies, scientists, regulated entities, engineering consultants and lawyers. Chlorinated solvents, polychlorinated biphenyls (PCBs), mercury, and other organic and inorganic substances have at one point or another been considered “emerging” from scientific and regulatory perspectives. </p> <p>As a general matter, all of these substances were at the time of their development very effective for their designed uses. Overall, there were not concerns about these substances being potentially harmful contaminants in the environment until well after their manufacture, distribution and use for many years. While each of these potentially hazardous contaminants evolved differently, and have certain unique characteristics, there are nevertheless some lessons to be learned from this historical perspective as we address PFAS compounds as the latest emerging contaminants. </p> <p>PCBs, for example, were widely used as a fire preventive and insulator in the manufacture of electrical equipment because of their ability to withstand exceptionally high temperatures. PCBs were manufactured in the United States for about 50 years until they were banned by EPA because of evidence of environmental persistence, bioaccumulation/biomagnification, and adverse health effects in humans and wildlife. </p> <p><img height="683" alt="PCB Chronology" width="1210" src="/-/media/images/btlaw/content/pcb-chronology.ashx?h=683&w=1210&hash=10C2400675A2554B1078117E548D61A6" style="height: 514px; width: 1124px;" /></p> <p>As depicted in the above graphic from <a rel="noopener noreferrer" rel="noopener noreferrer" href="https://ehs-support.com/" target="_blank">EHS Support</a>, regulations governing PCBs were established years before toxicity assessments were completed and decades before the development of effective, risk-based remedial options. It has taken roughly 30 to 50 years to sort out what a reasonable remedy might be; and while remediation of PCB contaminated sites is ongoing, the regulated community is still learning. </p> <p>Similar to the PCB chronology, but with a much-compressed timeframe, regulations addressing PFAS and state-specific sampling requirements are outpacing the science. As a result, our experience is that these regulatory actions have increased uncertainty at the site level, which in turn leads to risk communication and risk perception issues that are difficult to navigate. Learning from our experience with the formulation to remedy of PCBs and other environmental contaminants, it is important for site owners with potential PFAS issues to:</p> <ul> <li>Strategize early</li> <li>Understand your site’s challenges (e.g., sources, supply chain) and potential risk drivers</li> <li>Be aware of regional land use and your state’s regulatory climate</li> <li>Balance response with current scientific understanding and regulation </li> </ul> <p>Site owners cannot ignore potential PFAS concerns, but also should not panic. Site owners need to be aware of the regulatory and scientific uncertainty surrounding these contaminants, and apply lessons learned from the history of analogous contaminants. Well thought out, forward looking, site-specific strategies, focused on actual risk-based pathways, should be guided by good data-driven decisions and this historical perspective. </p> <p>On Oct. 28, <a href="mailto:mailto:Charles.Denton@btlaw.com">Charlie Denton</a> presented a webinar on PFAS along with William Frez and Dana McCue of EHS Support: <a rel="noopener noreferrer" rel="noopener noreferrer" href="https://ehs-support.com/webinars/understanding-the-environmental-liabilities-for-facility-owners-developers/" target="_blank">Understanding the Environmental Liabilities for Facility Owners & Developers</a>. The discussion focused on the known environmental risks and related liabilities for businesses related to PFAS contamination. This PCB analogy was part of that program.</p> <div> </div>Mon, 23 Nov 2020 00:00:00 -0500{2462FCBE-3D72-45F3-BC47-927C1E079471}https://btlaw.com//en/insights/blogs/environmental/2020/massachusetts-adopts-summing-approach-in-final-drinking-water-standards-for-pfasMassachusetts Adopts Summing Approach in Final Drinking Water Standards for PFAS<p>The Massachusetts Department of Environmental Protection (MassDEP) is preparing to publish final Maximum Contaminant Levels (MCL) for the sum of six per- and polyfluoroalkyl substances (PFAS). The final rule, set to publish Oct. 2, 2020, will apply to all public water systems and require sampling, reporting, and corrective action when sampling detects PFAS exceedances.</p> <p>The MCL is 20 parts per trillion (ppt) for the sum of six PFAS compounds: </p> <ul> <li>perfluorooctanesulfonic acid (PFOS)</li> <li>perfluorooctanoic acid (PFOA)</li> <li>perfluorohexane sulfonic acid (PFHxS)</li> <li>perfluorononanoic acid (PFNA)</li> <li>perfluoroheptanoic acid (PFHpA)</li> <li>perfluorodecanoic acid (PFDA)</li> </ul> <p>MassDEP initiated the rulemaking<a rel="noopener noreferrer" href="https://www.mass.gov/lists/development-of-a-pfas-drinking-water-standard-mcl" target="_blank"> process to develop a state drinking water standard</a> in January 2019. On Dec. 27, 2019, Massachusetts published revisions to the drinking water regulations in the Massachusetts Register and accepted comments on the proposal.  The proposed regulation, like the final regulation, contained a drinking water standard of 20 ppt for the sum of six specific PFAS. </p> <p>Notably, Massachusetts’ MCL – 20 ppt for the sum of six individual PFAS compounds – differs significantly from<a href="/en/insights/blogs/environmental/2019/epa-releases-pfas-screening-levels-and-remediation-goals-for-public-comment" target="_blank"> U.S. EPA’s Lifetime Drinking Water Health Advisory level</a> of 70 ppt for PFOS and PFOA combined. MassDEP received public comments questioning the scientific justification for the departure from U.S. EPA’s Health Advisory Levels. MassDEP also received public comments questioning the scientific justification for using a “summing approach” for regulating the six individual PFAS compounds, which treats the toxicity or human health impacts of the six different PFAS compounds as if they were interchangeable. Despite the concerns raised in public comments, MassDEP finalized the 20 ppt MCL, as proposed.</p> <p>The new rules will require large public water suppliers, serving greater than 50,000 individuals, to begin initial monitoring by Jan. 1, 2021. Medium public water suppliers, serving between 10,000 and 50,000 individuals, must begin initial monitoring by April 1, 2021. Small public water suppliers and non-transient, non-community public water suppliers serving fewer than 10,000 individuals must begin initial sampling by Oct. 1, 2021. Transient, non-community public water systems are not subject to MassDEP’s MCL requirements, but they will be required to collect one sample for the six PFAS compounds by Sept. 30, 2022.</p> <p>The regulations also detail the responsive actions that public water suppliers must take when MCLs are exceeded, which include public notice, increased monitoring frequency, and corrective action. Corrective action may entail submission of a corrective action plan detailing the specific interim and long-term action measures the public water supplier intends to take to reduce contaminant concentrations to safe levels. </p>Wed, 30 Sep 2020 00:00:00 -0400{C3F40E4A-A1CE-4FF5-9321-1442239080C9}https://btlaw.com//en/insights/blogs/environmental/2020/be-prepared-for-imminent-termination-of-epa-enforcement-discretion-policyBe Prepared for Imminent Termination of EPA Enforcement Discretion Policy<p>Entities regulated by EPA that have availed themselves of the relief granted by <a rel="noopener noreferrer" href="https://btlaw.com/en/insights/blogs/us-epas-covid-19-enforcement-discretion-policy-is-in-effect" target="_blank">EPA’s March 26 Enforcement Discretion Policy</a> are reminded that the policy will expire August 31, as announced in the <a rel="noopener noreferrer" href="https://www.epa.gov/sites/production/files/2020-06/documents/covid19addendumontermination.pdf" target="_blank">June 29 memorandum</a> by Susan Parker Bodine, assistant administrator for enforcement and compliance assurance at the EPA.</p> <p>As discussed in our previous blog post, EPA issued the policy to <a rel="noopener noreferrer" href="https://btlaw.com/en/insights/blogs/notice-of-enforcement-discretion-termination-offers-housekeeping-opportunity" target="_blank">provide relief to regulated entities</a> for compliance with permitting and regulatory requirements during the pandemic. It granted broad temporary relief to entities “for violations of routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification obligations in situations where the EPA agrees that COVID-19 was the cause of the noncompliance and the entity provides supporting documentation to the EPA upon request.” </p> <p>As the end of this relief period draws near, it is time for entities that have availed themselves of the policy and not fully complied with permit or other regulatory requirements to make sure they have taken steps to comply with the discretion policy’s conditions and documentation requirements. As pointed out in earlier blog posts and a Barnes & Thornburg webinar on the <a rel="noopener noreferrer" href="https://event.on24.com/wcc/r/2347429/F948A68BCD0AE32B524F561C0E13D6C6" target="_blank">Impact of COVID-19 on Clean Water Act Compliance and Administration</a>, completing documentation and other housekeeping tasks not only can help ensure compliance with the policy, but also can help establish protection from potential state and local inquiries into these practices and provide a measure of protection from citizen suits. </p> <p>To ensure compliance with the enforcement discretion policy, regulated entities should have undertaken by the expiration date the following “housekeeping” tasks, as applicable: </p> <ul style="margin-left: 40px;"> <li>Identify reports required to have been submitted during the shutdown. Were they submitted and by what means (electronic versus hard-copy)? </li> <li>Provide agencies all required reports and data that have been deferred</li> <li>Evaluate agency enforcement discretion polices that may apply in addition to the EPA policy and be prepared to comply with any additional requirements they impose</li> <li>Review specifically applicable agency policies that may apply and comply with the requirements of the policies. See EPA’s <a rel="noopener noreferrer" href="https://netdmr.zendesk.com/hc/en-us/articles/360041746231-Temporary-Advisory-for-National-Pollutant-Discharge-Elimination-System-NPDES-Reporting-in-Response-to-COVID-19-Pandemic" target="_blank">“Temporary Advisory for National Pollutant Discharge Elimination System (NPDES) Reporting in Response to COVID-19 Pandemic”</a></li> <li>If required reports were submitted late or not submitted at all, document reasons why reports were delayed or not submitted and any actions taken to remedy such delays or omissions</li> <li>Communicate with state and local agencies as soon as possible with information required by their enforcement discretion policies</li> <li>Note that many states have followed EPA’s lead and may now be tightening enforcement approaches, but may still be willing to compromise on a case-by-case basis</li> <li>If an entity is still unable to comply, they should reach out to applicable state and federal contacts to explain the reason for non-compliance and be prepared to discuss the reasons for noncompliance and alternatives to full compliance. It will also be advisable to fully document the issue or issues</li> </ul> <p>These measures will not only prepare the regulated entity for subsequent enforcement actions, but also help ensure a smoother return to pre-pandemic compliance. If compliance issues persist as agencies return to pre-COVID enforcement postures, entities should not hesitate to involve legal counsel.</p>Mon, 31 Aug 2020 00:00:00 -0400{40734DEE-B1AD-4979-BC2F-FF38DED860F5}https://btlaw.com//en/insights/blogs/environmental/2020/michigan-adopts-drinking-water-criteria-for-7-pfas-compoundsMichigan Adopts Drinking Water Criteria for 7 PFAS Compounds<p>Michigan adopted <a rel="noopener noreferrer" rel="noopener noreferrer" href="https://www.michigan.gov/pfasresponse/0,9038,7-365-86513_96296-534663--,00.html" target="_blank">drinking water maximum contaminant levels</a> (MCLs) for certain <a href="/en/insights/blogs/environmental/2019/fast-facts-what-is-pfas" target="_blank">PFAS compounds</a> this week, applicable to drinking water providers and groundwater cleanups. Compared to other states that have chosen to set their own drinking water standards, Michigan's are some of the lowest levels and cover the greatest number of PFAS compounds. They are also much more stringent and involve more PFAS compounds than the <a href="/en/insights/blogs/environmental/2020/federal-pfas-legislation-the-ndaa-and-beyond" target="_blank">EPA’s health advisory levels</a>. </p> <p>The adopted MCLs for Michigan drinking water are:</p> <div style="overflow-x:auto;"> <table class="telerik-reTable-4"> <tbody> <tr class="telerik-reTableHeaderRow-4"> <td class="telerik-reTableHeaderFirstCol-4">Specific PFAS</td> <td class="telerik-reTableHeaderLastCol-4">Drinking Water MCL<br /> Parts per Trillion (ppt)</td> </tr> <tr class="telerik-reTableOddRow-4"> <td class="telerik-reTableFirstCol-4">PFNA</td> <td class="telerik-reTableLastCol-4">6 ppt</td> </tr> <tr class="telerik-reTableEvenRow-4"> <td class="telerik-reTableFirstCol-4">PFOA</td> <td class="telerik-reTableLastCol-4">8 ppt</td> </tr> <tr class="telerik-reTableOddRow-4"> <td class="telerik-reTableFirstCol-4">PFHxA</td> <td class="telerik-reTableLastCol-4">400,000 ppt</td> </tr> <tr class="telerik-reTableEvenRow-4"> <td class="telerik-reTableFirstCol-4">PFOS</td> <td class="telerik-reTableLastCol-4">16 ppt</td> </tr> <tr class="telerik-reTableOddRow-4"> <td class="telerik-reTableFirstCol-4">PFHxS</td> <td class="telerik-reTableLastCol-4">51 ppt</td> </tr> <tr class="telerik-reTableEvenRow-4"> <td class="telerik-reTableFirstCol-4">PFBS</td> <td class="telerik-reTableLastCol-4">420 ppt</td> </tr> <tr class="telerik-reTableOddRow-4"> <td class="telerik-reTableFirstCol-4">HFPO-DA</td> <td class="telerik-reTableLastCol-4">370 ppt</td> </tr> </tbody> </table> </div> <style type="text/css" id="telerik-reTable-4"> .telerik-reTable-4 { border-collapse: collapse; border: solid 0px; font-family: Tahoma; } .telerik-reTable-4 tr.telerik-reTableHeaderRow-4 { border-width: 1.0pt 1.0pt 3.0pt 1.0pt; margin-top: 0in; margin-right: 0in; margin-bottom: 10.0pt; margin-left: 0in; line-height: 115%; font-size: 11.0pt; font-family: "Calibri", "sans-serif"; width: 119.7pt; background: #3FCFD5; padding: 0in 5.4pt 0in 5.4pt; color: #FFFFFF; } .telerik-reTable-4 td.telerik-reTableHeaderFirstCol-4 { padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 td.telerik-reTableHeaderLastCol-4 { padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 td.telerik-reTableHeaderOddCol-4 { padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 td.telerik-reTableHeaderEvenCol-4 { padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 tr.telerik-reTableOddRow-4 { border-width: 1pt; color: #666666; font-size: 10pt; vertical-align: top; border-bottom-style: solid; border-bottom-color: #4F81BD; } .telerik-reTable-4 tr.telerik-reTableEvenRow-4 { color: #666666; font-size: 10pt; vertical-align: top; } .telerik-reTable-4 td.telerik-reTableFirstCol-4 { border-width: 1pt; border-color: #3FCFD5; padding: 0in 5.4pt 0in 5.4pt; border-bottom-style: solid; border-left-style: solid; } .telerik-reTable-4 td.telerik-reTableLastCol-4 { border-width: 1pt; border-color: #3FCFD5; border-bottom-style: solid; border-right-style: solid; padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 td.telerik-reTableOddCol-4 { border-width: 1pt; border-color: #3FCFD5; padding: 0in 5.4pt 0in 5.4pt; border-bottom-style: solid; } .telerik-reTable-4 td.telerik-reTableEvenCol-4 { border-width: 1pt; border-color: #3FCFD5; padding: 0in 5.4pt 0in 5.4pt; border-bottom-style: solid; } .telerik-reTable-4 tr.telerik-reTableFooterRow-4 { color: #3FCFD5; background-color: #FFFFFF; font-size: 10pt; vertical-align: top; padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 td.telerik-reTableFooterFirstCol-4 { border-width: 1pt; border-color: #3FCFD5; border-bottom-style: solid; border-left-style: solid; padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 td.telerik-reTableFooterLastCol-4 { border-width: 1pt; border-color: #3FCFD5; border-bottom-style: solid; border-right-style: solid; padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 td.telerik-reTableFooterOddCol-4 { border-width: 1pt; border-color: #3FCFD5; border-bottom-style: solid; padding: 0in 5.4pt 0in 5.4pt; } .telerik-reTable-4 td.telerik-reTableFooterEvenCol-4 { border-width: 1pt; border-color: #3FCFD5; border-bottom-style: solid; padding: 0in 5.4pt 0in 5.4pt; } </style> <p>In comparison, EPA is working towards setting MCLs for two compounds, PFOA and PFOS, and currently has lifetime health advisory levels of 70 ppt, combined, for those two compounds.</p> <p>Michigan began its process of setting MCLs in early 2019 by convening a three-person science advisory work group in response to a <a href="/en/insights/blogs/environmental/2019/michigan-gets-to-work-on-pfas-safe-drinking-water-mcl" target="_blank">March 26, 2019, directive from Governor Whitmer</a> that the Department of Environment, Great Lakes and Energy (EGLE) propose MCLs by October 1, 2019. This work group<a href="/en/insights/blogs/environmental/2019/michigan-identifies-health-based-values-for-seven-pfas-compounds" target="_blank"> recommended health-based values</a> on June 27, 2019. The draft values were made available for public comment in December 2019, with the comment period ending on<a rel="noopener noreferrer" rel="noopener noreferrer" href="https://www.michigan.gov/egle/0,9429,7-135-3313_3675_3691-9647--,00.html" target="_blank"> Jan. 31, 2020</a>. </p> <p>Despite many<a rel="noopener noreferrer" rel="noopener noreferrer" href="https://ars.apps.lara.state.mi.us/Transaction/RFRTransaction?TransactionID=29" target="_blank"> public comments</a> raising questions about how the recommended MCLs were derived (including from the PFAS Regulatory Coalition that we advise), a final rule was sent to the state legislature, without any substantive changes, on March 16, 2020. The legislative Joint Committee on Administrative Rulemaking had 15 congressional session days on which to act on the MCLs, and since it did not take any action, the MCLs are deemed “adopted.” These rules were expected to be adopted this past spring, but with COVID-19 the legislature limited its number of in-person meetings and thus there was delay in these rules being adopted. </p> <p>The rules takes effect seven days after filing with the secretary of state and are expected to become official Aug. 3, 2020. </p> <p>Drinking water suppliers will have to take samples at least annually to determine compliance with the new PFAS MCLs. Analyses must be conducted by an EGLE or EPA-certified laboratory, and results will determine whether more frequent follow-up sampling is required. Following the statewide sampling program of community and non-community water systems the Michigan PFAS Action Response Team (MPART) began in 2018, EGLE estimates there are about 30 systems with some level of PFAS that will likely have to sample more frequently, at least initially, even if below the MCLs.</p> <p>The biggest impact of these new MCLs may not be on drinking water suppliers but rather on groundwater remediation projects under Michigan’s Part 201 program. Michigan has existing groundwater cleanup criteria of 70 ppt for PFOS and PFOA each or total and these criteria will now be same as the MCLs (16 ppt for PFOS and 8 ppt for PFOA). There are currently no groundwater criteria for the other five PFAS compounds for which MCLs have now been set; there would need to be a separate Part 201 rulemaking process to establish groundwater clean criteria for PFNA, PFHxA, PFHxS, PFBS, and HFPO-DA (also known as GenX). Regardless, cleanup projects need to keep these values in mind as they plan. </p> <p>Even without the cleanup criteria for these five compounds, MPART says there will be 42 new sites that be need to be considered for PFAS investigations based on the lower criteria for PFOA and PFOS. Moreover, it should be expected that EPA will refer to these groundwater criteria as “applicable or relevant and appropriate requirements (ARARs)” for federal “Superfund” sites.</p> <p>Drinking water providers in Michigan and remediation projects with known PFAS impacts in the state have been watching this issue as it has developed.<a href="/en/insights/blogs/environmental/2020/trends-emerge-in-states-approaches-to-pfas-emerging-contaminants" target="_blank"> Other states</a> have also been watching as they may consider what actions they want to take on PFAS. In the meantime, EPA has recently wrapped up its comment process on its <a rel="noopener noreferrer" rel="noopener noreferrer" href="https://www.epa.gov/ccl/regulatory-determination-4" target="_blank">determination to regulate</a> PFOA and PFOS in drinking water. <a href="/en/work/practices/environmental/pfas-and-emerging-contaminants" target="_blank">Barnes & Thornburg’s Environmental Law </a>group administers a PFAS Regulatory Coalition comprised of a broad range of regulated entities, public and private, to follow and engage on these issues across the country.</p>Thu, 23 Jul 2020 00:00:00 -0400