Cal/OSHA moves forward with development of permanent COVID-19 standard while legislature considers bill to increase enforcement

California continues to move forward with new proposals for regulation and enforcement of workplace hazards associated with COVID-19.  As the Division of Occupational Safety and Health (“Cal/OSHA”) continues to develop a draft permanent standard to address COVID-19 hazards in cooperation with an advisory committee of various stakeholder groups, state legislators have proposed a senate bill to increase enforcement of “willful” violations on a per-employee basis.

Emergency temporary standard and permanent rule

Earlier this month, Cal/OSHA convened an advisory committee to provide input on possible changes to the COVID-19 Emergency Temporary Standard (“ETS”).  Over the course of three days of public meetings, the advisory committee discussed and debated potential clarifications as well as broadening or narrowing the scope of certain requirements.  Although no decisions were made during the meetings, the following were areas of focus where we can expect to see some changes to the ETS:

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Upcoming public hearing announced regarding California modifications to use of “Short-Form” Proposition 65 warnings

As we reported, the California Office of Environmental Health Hazard Assessment (OEHHA) seeks to significantly amend the regulations under the Safe Drinking Water and Toxic Enforcement Act of 1986 (aka “Proposition 65”) to revise the method of transmission and content of State-approved “safe harbor” short-form warnings for consumer products. If passed as proposed, manufacturers, distributors and downstream retailers would need to identify “at least one” regulated chemical in each “exposure category” (i.e., carcinogens and / or reproductive toxicants) in their short form warning.  This would require significant restructuring for thousands of regulated companies, including increased need for testing, etc.

After initiating the 60-day comment period, OEHHA received a request from a stakeholder company to hold a public hearing on the proposed amendments.  OEHHA has now scheduled a public remote hearing on March 11, 2021 at 10:00 a.m. Information concerning how to participate in the hearing will be posted on OEHHA’s website prior to the hearing. The public comment period for this regulatory action is also being extended to March 29, 2021, to accommodate the hearing.

If your company is using (or relying upon) current “short form” safe harbor warnings which do not list any specific chemicals, you will want to track this regulatory process and its outcome.

Environmental, Social & Governance (ESG) Update: Towards new European laws and guidance on Sustainable Corporate Governance

In our “What to expect in 2021” blog, one cross-sectoral EU initiative we flagged was forthcoming Commission proposals for far-reaching new EU-wide Sustainable Corporate Governance requirements.

Here are some more details of what that might entail.

Background

Recent studies have suggested that companies performing well on ESG factors outperform their peers and that those with better social and environmental performance have proved to be more resilient to the COVID-19 crisis.

Against this explicit backdrop, the Commission’s initiative on sustainable corporate governance aims to foster long-term sustainable and responsible corporate behaviour across the Union to support and drive many of the EU’s other flagship ESG policies including the Green Deal, the climate neutrality by 2050 commitment, the Action Plan on the Circular Economy, the Farm to Fork strategy and others, as well as delivering on the EU’s commitments to meet the UN’s Sustainable Development Goals.

To that end, the Commission has promised to introduce legislative proposals this year relating to a range of environmental, social and governance (ESG) issues including the protection of essential human rights, environmental supply chain due diligence, enhanced directors’ duties and sustainable corporate governance.

The initiative is also complementary to the ongoing review of the EU’s Non-Financial Reporting Directive, according to which large public-interest companies need to disclose non-financial (such as environmental/climate change) information. The Commission considers that the reporting obligation in the NFRD needs to be more firmly underpinned by a corporate obligation to actually carry out due diligence on such matters.

The initiative seeks to beef up the EU regulatory framework on company law and corporate governance with the goal of pushing companies to focus more on long-term sustainable value creation instead of short-term benefits and better manage sustainability-related matters as part of their own operations and value chains concerning social and human rights, climate change and the environment. A key aim is to re-balance what the Commission sees as a current imbalance between short-term shareholder profit and longer-term, sustainable growth and investment.

The initiative builds on two market studies the Commission undertook last year, which sought to identify obstacles to businesses’ transition to an environmentally and socially sustainable economy.

One of the studies considered directors’ duties and sustainable corporate governance. The study concluded that sustainability was more often than not disregarded, making EU intervention necessary to strengthen the role of directors in combining long-term company profitability and sustainability.

The second study focussed on the role due diligence has to play in tackling adverse sustainability impacts, including human rights issues and climate change. According to the study, merely a third of EU businesses currently undertake adequate due diligence on human rights and environmental impacts.

Specifics

ESG legislation of various kinds already exists in some EU countries (NL, FR, IT for instance) and is under development in many others.  However, the Commission sees it as vital to create a pan-European “level playing field” on such issues rather than allow fragmented national intervention, and that is an objective likely to be shared by most multi-national companies.

The Commission is due to publish a formal proposal in furtherance of this initiative in Q2, although a first glimpse of where the new initiative is heading may already become visible in the Commission’s Renewed Sustainable Finance Strategy, expected to be published in the coming months.

Specific proposals may take the form of revisions to the EU’s company law directive (2017/1132) and the directive on shareholder rights (2007/36) and/or completely new legislation/guidance and are likely to include some combination of the following:

  • A possible new corporate due diligence duty requiring companies to establish and implement adequate processes for preventing, mitigating, and accounting for human rights, health, and environmental impacts in companies’ operations and supply chains (building on established definitions developed by the UN and OECD which we already see reflected for example in the EU Timber Regulation and the EU Conflict Minerals Regulation and expanding such requirements into a much wider range of products/sectors);
  • Options to enhance sustainability expertise in the board;
  • methods of integrating sustainability into corporate strategy and decision-making by, for example:
    • changing the basis for remuneration of directors and tying it to more closely to non-financial performance (such as by measurable and time-bound sustainability metrics); and
    • strengthening the role of civil society stakeholders groups (e.g. those representing employee or environmental concerns) in the enforcement of directors’ duty of care; and
  • introducing appropriate enforcement measures accompanying these new duties, including the possibility for required remediation in the event of non-compliance.

This initiative symbolises a significant further step in the EU’s sustainability/ESG policy programme.

Please do not hesitate to contact any member of the Reed Smith EHS team if you would like more detailed information on this topic.

EU Green Deal: European Commission proposes changes to the EU Industrial Emissions Directive and a Zero Pollution Action Plan

In accordance with its initiatives under the European Green Deal, the Commission is currently seeking public feedback on both its proposed update to the EU Industrial Emissions Directive (‘IED’) and for the proposed implementation of the EU Zero Pollution Action Plan.

Introduced in 2019, the European Green Deal sets out the Commission’s ambitious strategy to addressing climate-related and environmental challenges across various industry sectors. Amongst other things, it commits the EU to revising existing measures to address pollution from large industrial installations, to ensure EU permitting laws are consistent with EU policies on climate, energy and circular economy. The EU is also committing to adopt a zero pollution action plan to meet the Commission’s zero pollution ambition.

Alongside the Zero Pollution Action Plan and the revision of measures to address pollution from large industrial installations, the third headline action on zero pollution is the chemical strategy for sustainability (published in October 2020). The publication of the chemical strategy was the first step towards achieving what the EU terms a ‘toxic-free environment’. The EU strategies on biodiversity, climate neutrality, and Farm to Fork are also key in achieving the zero pollution ambitions under the European Green Deal.

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The fall of Trump’s Affordable Clean Energy Rule and the strengthened EPA authority to regulate greenhouse gases

On January 19, 2021, in a 2-1 decision, the D.C. Circuit Court vacated the Trump administration’s 2019 Affordable Clean Energy (ACE) Rule and remanded it to the U.S. Environmental Protection Agency (EPA). The decision offers a strong statement about EPA’s breadth of authority to regulate greenhouse gases (GHGs) under the Clean Air Act (CAA) and, if its position is upheld, clears the way for the Biden administration to regulate power plants.

The Affordable Clean Energy Rule

The EPA promulgated the ACE Rule in 2019 under the CAA, replacing the Obama administration’s 2015 Clean Power Plan (CPP). Both rules sought to reduce GHG emissions from the power sector; but where the CPP implemented broader industry-wide mechanisms, the ACE Rule limited reduction efforts to the actual source power plants.

The 2015 CPP offered “beyond the fenceline” tools for states to reduce emissions by replacing fossil fuels with renewable energy sources and participating in emissions credit-trading programs; however, in February 2016 the U.S. Supreme Court stayed the implementation of the CPP pending litigation in the D.C. Circuit. During the stay and subsequent freeze of litigation, the Trump administration rescinded the CPP and promulgated the ACE Rule.

In promulgating the ACE Rule, the Trump EPA took an alternative view of the CAA than the Obama EPA and reasoned that the CAA expressly limited the EPA’s power to only “at the source” emissions reduction options, such as heat rate improvement technologies. As a result, the Trump administration removed all of the CPP’s “beyond the fenceline” options and limited emissions restrictions to those applied directly to power plants.

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The EU Commission’s proposed new batteries laws “at a glance”

The European Commission is proposing a radical and wide-ranging overhaul of the roughly 15 years’ old existing batteries and waste batteries laws in the Union.

For those who have not yet found the time to read the nearly 127-page draft regulation and annexures put out for public consultation in December 2020, here is a summary of some of the key proposals at a glance:

   

Battery type

Proposed new measure[1] Date[2] Portable[3] Rechargeable industrial Electric vehicle Automotive
Substance restrictions
New restrictions for mercury (0.1%) and cadmium (0.01%) in EV batteries

x x

x

Carbon footprint
Independently verified, battery “carbon footprint” declaration

1-1-24

x

x

Public “carbon footprint” performance classification

1-1-26

x

x

Compliance with maximum life-cycle “carbon footprint” values

1-7-27

x

x

Recycled content
Recycled content declaration for cobalt, lead, lithium and nickel (CLLN) as active materials

1-1-27

x

Minimum recycled CLLN content requirements[4]

1-1-30

x

Increased minimum recycled CLLN content[5]

1-1-35

x

Performance & durability
Meet minimum performance & durability parameters[6]

1-1-27

x x

x

Possible start of phase out of non-re-chargeable portable batteries

Early 2030s

x x

x

Declare performance & durability values

1-1-23

x

x

Meet minimum performance & durability parameters[7]

1-1-26

x

x

x

Removability & replaceability
Removability & replaceability (by end-users or independent operators) of batteries incorporated in appliances[8]

1-1-22

x x

x

Labelling & other information requirements
Wheelie bin symbol & Cd and/or Pb symbol where Cd/Pb limits exceeded

1-7-23

Identification & contents[9] labels

1-1-27

Capacity labelling

1-1-27

x x

Minimum average duration labelling

1-1-27

x x

x

QR Codes

1-1-23 to
1-1-27[10]

Disclosure of extensive producer/battery information[11] to public Electronic information exchange

1-1-26

x

x

Battery passports

1-1-26

x

x

Battery health & lifetime information
Mandatory accessible “battery management system” incorporated into design

1-1-22

x

x

Supply chain due diligence
Supply chain due diligence procedures mandatory for entity placing battery on market (and required to be verified and policy and findings published)

1-1-23

x

x

Extended producer responsibility
Expanded definition of “Producer”[12]

1-1-22

EPR scheme costs modulated according to rechargeability and recycled content

1-1-23

Publication of producer EPR costs paid

1-1-23

Increased waste portable battery collection targets

By end 2023 (45%)/
2025 (65%)/
2030 (70%)

x x

x

Interested parties will wish to follow and contribute to the negotiation process as these proposals (and, in due course, relevant delegated acts introducing much of the key additional detail) work their way through the EU legislative process over the coming 12 months or so. Whilst many of these requirements apply primarily to battery manufacturers, EU-established importers and distributors must ensure they are familiar with all requirements and their dates of application to avoid responsibility for placing on the market non-compliant batteries.

As currently drafted, prior to negotiation, the proposal envisages that the new regulation will apply from 1-1-22.  Provisions that are expressed to apply immediately without phase in have been assigned that date in the table above.  However, any slippage in the entry into force date following negotiation of the draft proposal with the EU Parliament and Council will likely cause these and other dates to slip commensurately.

This high-level summary does not purport to capture every element of this detailed proposal, and those listed above are in some cases subject to limitations, exceptions and qualifications in the full text.

If you would like further information about any aspect of this important proposal, please contact any one of the authors.

 

[1] Based on Commission’s 10 December 2020 draft

[2] Estimated, based on consultation draft.

[3] Defined as any sealed battery weighing less than 5 kg that is not an industrial, EV or automotive battery (includes AA, AAA, PP3 etc.).

[4] 12% cobalt, 85% lead, 4% lithium, 4% nickel

[5] 20% cobalt, 85% lead, 10% lithium, 12% nickel

[6] Requirements (still to be specified) will cover minimum capacity, charge, duration, shelf-life, recharging endurance and resistance to leakage.

[7] Requirements (still to be specified) will cover minimum capacity, power, resistance, energy efficiency and life-time.

[8] Essentially, any equipment within scope of the WEEE directive

[9] Including hazardous substances other than CLLN, and critical raw materials

[10] Precise QR code contents phased in by type and content over 4 year period

[11] Covering identification, composition, carbon footprint, recycled content, performance & durability etc.

[12] To align more closely with existing new legislative framework product laws

 

New EU legislation on reducing methane emissions in the energy sector is set for 2021

The European Commission is moving forward with its legislative agenda to reduce methane emissions in the energy industry, specifically the oil, gas and coal sectors. Following the Commission’s October 2020 Communication (COM 2020/663 final) on an EU strategy to reduce methane emissions as part of the EU Green Deal programme, the Commission has set out the policy options under consideration as part of a public consultation. The consultation should be followed later in 2021 by a legislative proposal, which is scheduled for publication during the fourth quarter of 2021.

Background

Methane emissions are considered to be the second largest contributor to climate change, after carbon dioxide. Reducing methane emissions is therefore a key part of the EU’s strategy to meet its goal of being climate neutral by 2050. The impact assessment of the 2030 climate target plan (SWD(2020) 176 final) states that methane will continue to be the EU’s dominant non-carbon greenhouse gas and so – to achieve the more ambitious target of reducing emissions by 55% by 2030 as compared to 1990 levels – a stronger effort to reduce methane emissions is required.

The main areas where methane emissions are detected are (a) methane leakages from fossil fuel production sites, (b) transmission systems, (c) transportation (ships) and (d) the distribution sector. Methane is also commonly released through incomplete combustion from flaring.

EU legislative measures on methane under consultation

The Commission’s consultation discusses and seeks views on the following legislative measures:

Binding rules on monitoring, reporting, verification (‘MRV’)

As outlined in the Commission’s methane communication, it is considering the possibility of adopting compulsory MRV rules for all energy-related emissions at a company level, whilst seeking to improve information gathering, particularly as to its availability and accuracy, in relation to emissions of methane within the EU.

The Commission is proposing to do this by building on and extending the Oil and Gas Methane Partnership (‘OGMP’) framework, a global voluntary initiative currently covering the upstream oil and gas sector. The framework would be expanded to companies in upstream, midstream and downstream gas (via OGMP 2.0), as well as to the coal sector and closed or abandoned sites. The Commission’s options as outlined in the consultation’s Inception Impact Assessment vary from a ‘no policy change’ scenario, where OGMP would continue operating as a voluntary scheme, up to transforming the OGMP framework into EU legislation applicable to the full supply chain of the energy sector.

Rules on improving leak detection and repair

The Commission’s methane communication discussed the need to improve leak detection and repair on all fossil gas infrastructures, as well as any other production, transport or use of fossil gas. It also talked about actions that could be taken to eliminate routine venting and flaring in the energy sector, covering the full supply chain up to the point of production. The Commission is therefore proposing to impose legal obligations on companies to mitigate methane emissions across different segments of the energy supply chain.

Further EU measures to address methane

Beyond what is addressed in the current consultation, the Commission is also advocating the establishment of an international methane emissions observatory, which will be responsible for the collection and verification of data on emissions of methane. The observatory would, in the first place, cover methane emissions from oil and fossil fuel sectors, and its scope would be gradually extended to cover coal, waste and the agriculture sectors, once comparable monitoring and reporting obligations similar to the OGMP 2.0 are established for these sectors.

The Commission is also considering strengthening satellite-based detection and monitoring of methane emissions through the EU’s Copernicus programme, aimed at monitoring and detecting methane-heavy emitters.

Besides energy, the Commission’s strategy discusses measures in agriculture and waste and water management that are scheduled to be further addressed in the coming years.

In agriculture, the Commission will:

  • seek to develop an inventory of best practices and available technologies to promote mitigating actions for methane emissions in the agriculture sector, during 2021;
  • provide a digital carbon navigator template and guidelines on common pathways for the quantitative calculation of GHG so as to promote carbon-balance calculations at farm level, by 2022;
  • promote opportunities to reduce emissions with support from the Common Agricultural Policy (‘CAP’) as well as incentivise the collection of non-recyclable organic human and agricultural waste.

Concerning waste and water management, the Commission plans:

  • to review the Landfill Directive (1999/31/EC) within 2024, in order to consider further actions for improvement in the managing of landfill gas;
  • to reduce GHG emissions from sewage sludge as part of the evaluation of the Sewage Sludge Directive (86/278/EEC) and review of the Urban Waste Water Treatment Directive (91/271/EEC).

Review of existing EU legislation on methane emissions

A number of existing EU laws contribute to providing information on methane emissions. The Commission is also planning to review relevant climate change legislation as part of the EU Green Deal, which address methane emissions. These include:

  • a review of the Effort Sharing Regulation ((EU) 2018/842) which covers methane emissions in the EU next to all other greenhouse gases not covered by the EU ETS. A public consultation is currently open until 5 February 2021. The Commission’s adoption is planned for the second quarter of 2021;
  • a potential expansion in scope of the Industrial Emissions Directive (2010/75/EU) in order to enhance its role in controlling and preventing methane emissions and cover methane-emitting sectors, which are not currently accounted for. A public consultation is open until 23 March 2021. The Commission’s adoption is planned for the fourth quarter of 2021; and
  • a review of the European parliament’s Release and Transfer Register (under Regulation 2006/166) in order to expand its sectoral scope for reporting on emissions of methane.

 

EU EHS and Product Compliance laws: what to look out for in 2021

2021 is shaping up to be a very busy year for those who are affected by EU laws relating to Environment, Health & Safety, ESG and product compliance matters.

Important developments are expected this year across a number of the EU’s flagship Green Deal policy initiatives, but there are many other significant initiatives to watch out for.

Reed Smith’s EMEA EHS & Product Compliance team will be keeping a close eye on them all for you and writing more detailed pieces on developments as they occur throughout the year.

In the meantime, in this short blog we provide just a snapshot of what you can expect to see during 2021:

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California seeks to significantly restrict optional use of Proposition 65 “short-form” warnings on consumer products

The California Office of Environmental Health Hazard Assessment (OEHHA) has proposed to significantly amend the Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as Proposition 65, to revise the method of transmission and content of State-approved “safe harbor” short-form warnings for consumer products.

OEHHA believes implementation of the warning regulations has revealed the need for express limits on the use of the short-form warning for consumer products. The regulation did not expressly limit application of the short-form warning to a maximum label surface area. OEHHA intended for this warning option to only be used for small products or containers with insufficient space for the longer warning, but businesses have used the short form warning on a wide range of consumer products that have enough label space for the longer warning. OEHHA also is concerned that the short-form warning is allowing companies to place a short-form warning as a means to avoid a Proposition 65 claim even when a business has no knowledge of an exposure to a listed chemical requiring a Proposition 65 warning.

The rulemaking would expressly modify the existing short-form warning provisions as follows:

  • Only allow use of the short-form warning on products with 5 square inches or less of label space.
  • Eliminate use of short-form warnings for internet and catalog warnings.
  • Clarify how short-form warnings can be used for food products.
  • Require that the name of at least one chemical be included in the short-form warning.

Should this proposed change be approved, it will result in significant changes to thousands of consumer products – not only changes to product packaging but on all related websites for products as well. Significant time and resources will be required to identify / confirm specific chemicals of concern in all products to determine what chemical(s) need to be specifically named in the new warnings, and then to make changes to packaging, etc.

Any written comments concerning this proposed regulatory action, regardless of the form or method of transmission, must be received by OEHHA no later than March 8, 2021, the designated close of the written comment period. For more information, please see our client alert recently published here.

U.S. Army Corps of Engineers revamps Clean Water Act Nationwide Permit 12

On January 5, 2021, the U.S. Army Corps of Engineers (the Corps) released the final version of a rule revamping certain nationwide permits (NWPs) under the Clean Water Act (CWA). The CWA authorizes the Corps to issue general permits authorizing categories of activities that have minimal individual and cumulative adverse environmental effects. These permits remain in effect for no more than five years, at which point the Corps must renew the permits.

This rule reissues and modifies 12 nationwide permits (NWPs) and issues four new NWPs. Of these 16 NWPs, the most impactful changes are to NWP 12.

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