On August 29, 2023, the Environmental Protection Agency (EPA) announced its final Waters of the United States (WOTUS) rule. The new WOTUS rule makes major changes to clarify which wetlands are protected under the Clean Water Act (CWA). The new WOTUS rule is a direct response to the Supreme Court’s Sackett v. EPA decision, which
The U.S. Securities and Exchange Commission is requiring large business to report on their (indirect) Scope 3 emissions. This reporting obligation comes in addition to company reporting on the carbon impact of its own activities and the power it consumes.
A company’s reporting obligation would depend on a number of specific factors, which…
On Wednesday April 6, 2022, in a 5-4 vote, the U.S. Supreme Court justices stayed a California district court’s October 21, 2021 decision to vacate the Section 401 Water Quality Certification Rule (401 WQC Rule). The U.S. Environmental Protection Agency (EPA) had requested that the district court remand the rule, saying it was planning…
On March 21, 2022, the U.S. Securities Exchange Commission (“SEC”) approved and released a proposed rulemaking package (the “Proposed Rule”) that would enact sweeping changes to climate-related disclosures. One key component of the Proposed Rule is a reporting requirement for certain Scope 3 emissions.
What are Scope 3 Emissions
Scope 3 emissions are “all other indirect emissions not accounted for in Scope 2 emissions.” These emissions relate to emissions from sources outside a company’s control – for example, Scope 1 emissions are direct emissions from sources owned or controlled by a company, and Scope 2 emissions are emissions primarily resulting from the generation of electricity consumed by the company. While companies generally can calculate Scope 1 and 2 emissions without significant difficulty, estimating Scope 3 emissions presents additional challenges, as Scope 3 emissions occur from other entities not owned or controlled by the company that serve the company’s value chain.
Who Must Report
The Proposed Rule requires non-smaller-reporting-company (“SRC”) registrants to disclose Scope 3 emissions and intensity: (i) if material or (ii) if the registrant set a GHG emissions reduction target or goal that includes Scope 3 emissions. Thus, the Proposed Rule does not require reporting of all Scope 3 emissions, and a company’s obligation to report would depend on company-specific factors, discussed below.
First, the Proposed Rule exempts SRCs from disclosing Scope 3 emissions. The SEC defines SRCs as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: (1) had a public float of less than $250 million; or (2) had annual revenues of less than $100 million and either: (i) no public float; or (ii) a public float of less than $700 million.
Second, the Proposed Rule applies a materiality qualifier to Scope 3 emissions that companies must report. SEC regulations and Supreme Court precedent define “material” emission as emissions with a “substantial likelihood that a reasonable investor would consider them important when making an investment or voting decision.” The SEC provides several examples of material Scope 3 emissions. Generally, the SEC advises that Scope 3 emissions may be material where they assist investors to understand transaction risks. Companies with significant Scope 3 emissions could face disruptions in cash flow and business models to the extent new laws or policies encourage changes to products, suppliers, distributors, or other commercial providers in a company’s value chain. Moreover, consumer demand could influence a shift to less carbon-intensive products and services. Conversely, companies sourcing materials and products with lower emissions compared to competitors may see cost savings and higher demand from consumers. Thus, the SEC’s materiality approach is quite broad and requires companies to understand their company’s value, risks, and opportunities in deciding whether to report Scope 3 emissions.
Third, even if Scope 3 emissions do not represent material emissions, a company must report Scope 3 emissions if it adopted emissions targets. The Proposed Rule requires a company to disclose whether its emissions targets include Scope 3 emissions, and if they do, report such emissions. This requirement allows investors to track a company’s compliance with its emissions targets and gauge what potential additional investments a company might need to implement to meet its targets.Continue Reading Understanding the Scope of the SEC’s Proposed Scope 3 Emissions Reporting Mandate
During 2021, the U.S. Environmental Protection Agency (EPA) collected discharge data for PFAS as part of its Multi-Industry PFAS Study. The purpose behind the study was to identify facilities producing or using PFAS, look at their wastewater characteristics, estimate PFAS in their discharges, and identify control practices and treatment options. As part of the study, EPA collected data from various EPA data sets and obtained information from other federal agencies (the U.S. Department of Transportation, Federal Aviation Administration (FAA), U.S. Department of Health and Human Services, and the Food and Drug Administration), states and EPA regions, as well as information from industrial users. After EPA collected its data, it categorically broke down the results of its study into the following groups:
- Organic chemicals, plastics, and synthetic fibers (OCPSF)
- Metal finishing
- Pulp, paper, and paperboard
- Textile mills
- Commercial airports
The information collected by EPA during its study will be used to further identify companies and facilities that manufacture, import, or process PFAS.Continue Reading EPA PFAS testing targeted industry and will now look to public water systems
On November 4, 2021, the Army Corps of Engineers (ACOE) announced that it is pausing all requests for coverage under 12 nationwide permits (NWPs) issued earlier this year, including widely used permits for utility and oil and gas projects, among others. The announcement followed a California district court’s decision vacating the Section 401 Water Quality Certification Rule (2020 401 WQC Rule) adopted by the Trump Administration in 2020. Important questions remain about how ACOE intends to proceed while coverage is paused.
Section 404 of the Clean Water Act (CWA) authorizes the ACOE to regulate the discharge of dredged and/or fill material into waters of the U.S. The CWA also requires that any person applying for a Section 404 permit also obtain a Section 401 Water Quality Certification (401 WQC) from the state, confirming that the discharge of fill materials will be in compliance with applicable water quality standards. States must also issue 401 WQCs for all activities occurring in their state per a NWP.
On January 5, 2021 ACOE released the final version of a rule revamping certain NWPs issued pursuant to Section 404. NWP 12 (as it existed prior to January 2021) was a general permit covering a range of activities such as utility line installation, development projects, road crossings, etc. The January rule reissued and modified 12 NWPs and issued four new NWPs, following an April 2020 decision by the U.S. District Court for the District of Montana vacating a prior version of NWP 12. These permits include:Continue Reading The U.S. Army Corps of Engineers pauses certain Section 404 nationwide permits
On July 13, 2021, the Pennsylvania Environmental Quality Board approved a rulemaking to establish a program to limit the CO2 emissions from fossil fuel-fired electric generating units (EGU) located in the Commonwealth.
The stated purpose of the final-form rulemaking is “to reduce anthropogenic emissions of CO2, a greenhouse gas (GHG) and major contributor to climate…
Using his Presidential platform, Joe Biden announced his Build Back Better Plan, “a national effort aimed at creating the jobs we need to build a modern, sustainable infrastructure now and deliver an equitable clean energy future.” As part of this plan, Biden intends to make a $2 trillion accelerated investment to set the United States…
New Jersey’s Environmental Justice Bill (EJ Bill) applies to Facilities located in Overburdened Communities (OBC). N.J. Stat. § 13:1D-157 – 13:1D-161. A Facility includes any: 1. Major source of air pollution; 2. Resource recovery facility or incinerator; 3. Sludge processing facility, combustor, or incinerator; 4. Sewage treatment plant with a capacity of more than 50 million gallons per day; 5. Transfer station or other solid waste facility, or recycling facility intending to receive at least 100 tons of recyclable material per day; 6. Scrap metal facility; 7. Landfill; or 8. Medical waste incinerator. An OBC is one in which: 1. At least 35 percent of the households qualify as low-income households; 2. At least 40 percent of the residents identify as minority or as members of a State recognized tribal community; or 3. At least 40 percent of the households have limited English proficiency. The New Jersey Department of Environmental Protection (NJDEP) has compiled a list of overburdened communities.
If a Facility is located in an OBC, the EJ Bill requires that when the Facility submits an application for a permit for a new Facility, an expansion of an existing Facility, or an application for renewal of an existing Facility’s major source permit, the Facility must:
- Prepare an environmental justice impact statement (EJIS) to assess the potential environmental and public health stressors associated with the application;
- Transmit the EJIS at least 60 days in advance of the public hearing to the NJDEP, the governing body, and the clerk of the municipality in which the OBC is located; and
- Organize and conduct a public hearing in the OBC. The applicant must publish a notice of the public hearing in at least two newspapers circulating within the OBC (including one non-English language newspaper, if applicable), not less than 60 days prior to the public hearing. The permit applicant shall provide a copy of the notice to the NJDEP and the NJDEP will publish the notice on its website. The notice shall include the date, time, and location of the public hearing, a description of the proposed new or expanded Facility or existing major source, as applicable, a map indicating the location of the Facility, a brief summary of the EJIS, information on how an interested person may review a copy of the complete EJIS, an address for the submittal of written comments to the permit applicant, and any other information deemed appropriate by NJDEP. At least 60 days prior to the public hearing, the notice shall be sent to the NJDEP, the governing body, and the clerk of the municipality in which the OBC is located. At the public hearing, the permit applicant shall provide clear, accurate, and complete information about the proposed new or expanded facility, or existing major source, as applicable, and the potential environmental and public health stressors associated with the Facility. The permit applicant shall accept written and oral comments from any interested party, and provided an opportunity for meaningful public participation at the public hearing. The permit applicant shall transcribe the public hearing and, no later than 10 days after the public hearing, submit the transcript along with any written comments received, to NJDEP. Following the public hearing, NJDEP shall consider the testimony presented and any written comments received, and evaluate the issuance of, or conditions to, the permit, as necessary in order to avoid or reduce the adverse environmental or public health stressors affecting the OBC.
Reed Smith’s U.S. based environmental team recently held a CLE webinar on what US environmental, health and safety legal and regulatory changes we can expect in 2021. The webinar provided an insightful discussion on environmental policy and topics including:
- Environmental Policy With Biden Win: Anticipating new federal regulation and enforcement actions
- United States Supreme Court: