Waiting for OSHA: pending vaccine ETS and increased enforcement

Since President Joe Biden issued his “Path Out of the Pandemic” memorandum and Executive Order 14042 on September 9, 2021, employers have had to navigate piecemeal instructions on vaccine mandates.  For example, federal contractors and subcontractors received vaccine mandate guidance from the Safer Federal Workforce Task Force on September 24, 2021.  However, employers should not grow too comfortable with the current status of pandemic regulations, which continue to change in various jurisdictions and will again on a federal level soon.

OSHA’s Emergency Temporary Standard

In his “Path Out of the Pandemic” memorandum, President Biden specifically tasked the Occupational Safety and Health Administration (OSHA) with developing a rule to encourage vaccinations among the workforce – the Emergency Temporary Standard (ETS).  The ETS will require employers with over 100 employees to do the following:

  1. either (a) ensure all employees are fully vaccinated, or (b) require any employees who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work; and
  2. provide paid time off for any time to get vaccinated and/or to recover if they are ill post-vaccination.

State plans will be required to implement equally protective rules within 30 days.  Though not yet available for review, the status of the pending ETS remains under review by the White House Office of Management and Budget.

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COP26 – The benchmarks for its success or failure

The United Nations Framework Convention on Climate Change (UNFCCC) was established at the first Rio Earth Summit in 1992. More than 200 countries are “party” to the UNFCCC, and these countries meet every year (with the exception of 2020, due to COVID-19) at the Conference of the Parties (COP). The meeting of the UNFCCC in Glasgow in November 2021 will be COP26.

The 2015 COP in Paris (COP21) opened with the largest gathering of world leaders in history, and it closed with the adoption of the Paris Agreement: a new global accord on tackling climate change. The Paris Agreement, with measures that only took effect in 2020, is distinctly different from the Kyoto Protocol (KP), as it calls for action from all 195 signatory countries and not just the industrialized nations. In addition to mitigation (cutting greenhouse gas emissions), it also agrees action on adaptation (responding to the impacts of climate change) and loss and damage (response to climate catastrophe). It also agrees that wealthier nations should provide finance and technology to help poor and vulnerable countries to take action. Implementation of these actions will be addressed at COP26.

Among the issues that will be addressed at COP26 that have an impact on business and industry, and that Reed Smith will be watching, include:

  • Carbon market mechanisms. These would allow countries to purchase carbon credits (reductions) from other countries to allow the purchasing country to continue to emit within its borders. Carbon markets may also include trade in “negative” emissions such as carbon absorption through forestry.
  • Voluntary carbon market transactions. A hot topic and potential threat to the continued growth of the voluntary carbon market is how to deal with the double-counting question that has arisen in relation to carbon offset projects that fall within a country’s NDC activities; in particular, whether host countries must make corresponding adjustments for voluntary transactions to reflect that the offset is being “claimed” by the off-taker of the credits under the voluntary scheme.
  • Climate Finance. Discussions over the delivery of the US$100 billion finance target are likely, and again will be a critical factor for least developed countries (LDCs). Additionally, COP26 is likely to set the next target for climate finance to be achieved by 2025. Climate finance and carbon markets need to scale up in tandem to provide financial resources to developing countries, which are struggling to finance their climate action programs.

There are other aspects of the Paris Agreement that are expected to be discussed which, while not directly relevant to business and industry, could nonetheless influence the success of the agreement with regard to the above:

  • Funding for loss and damage. While loss and damage is a core part of the Paris Agreement, there is no mechanism as yet within the UNFCCC to fund responses when vulnerable countries (LDCs) experience loss and damage. This is viewed as a critical factor by LDCs to lock down in the negotiations, but it is resisted by many wealthy nations.
  • New nationally determined contributions (NDCs) and agreement on a common timeframe for countries’ NDCs. Agreement will be needed on whether the common timeframe should be five years or ten years. The shorter timeframe would mean more frequent revision of NDCs, potentially driving greater ambition than if they were only revised every decade.

How do carbon market mechanisms, voluntary carbon market transactions and climate finance affect business and industry?

  • Carbon Market Mechanism. Article 6 key outstanding issues:
    • Carryover of legacy credits from the KP Clean Development Mechanism and Joint Implementation projects
    • Accounting rules around double-counting of emissions
    • How the trading mechanisms would lead to a reduction in global emissions rather than simply shifting them around the globe

Resolution of the outstanding issues could see significant incentivization for private sector companies able to aid in the transition to net zero, and therefore commercial opportunity. Thus, Article 6 guidelines need to be completed because international markets are essential for businesses to reach net zero goals. Few companies can meet net zero alone and most will need to cooperate across sectors, regions, and international borders to access high integrity markets for natural climate solutions, geological storage, and other removals.

  • Voluntary carbon market transactions. Corporations across all industries are and will increasingly be turning to the voluntary carbon markets to acquire quality offsets that complement their carbon reduction and environmental, social, and governance programs, in many cases in order to ensure compliance with ever more stringent regulation in this area. It is key to the integrity of voluntary carbon offsets that they can be claimed as having offset value, that is, that the underlying carbon reduction giving rise to the carbon offset has not been claimed elsewhere. Anything less could reduce the effectiveness of the voluntary market as a tool to meet carbon reduction goals in the private sector, and mean that businesses have to rely more heavily on other, more costly means to reduce their carbon footprint. The major voluntary offset program operators are yet to reach a consensus on what the impact of the Paris Agreement NDC accounting and “Internationally Transferred Mitigation Outcomes” market mechanisms will be on offsets generated by projects that fall within a country’s NDC, but many are looking to the COP to resolve the question of whether a corresponding adjustment must be made to account for such offsets, thereby addressing the double-counting risk to the voluntary carbon market.
  • Climate Finance. Under the 2009 Copenhagen Accord, developed coun­tries committed to jointly mobilize US$100 billion a year by 2020, which target has yet to be met. This financing will come from public, private, bilateral, multilateral, and alternative sources of finance. The commitment was formalized in the out­come of the 2010 Cancún COP and reaffirmed as a key element of the 2015 Paris Agreement. Financing resources mean opportunities for business in the countries that receive support.

Where do the negotiations sit on these points coming into COP26?

  • Carbon Market Mechanism. Three weeks of virtual talks by the Subsidiary Body for Implementation and the Subsidiary Body for Scientific and Technological Advice occurred in advance of COP26 in June 2021. These talks were not fruitful and did not bode well for meaningful progress in advance of COP26. Article 6 removes the developed vs. developing countries differentiation that characterized market mechanisms under the KP, so negotiators have to strike the right balance and find a model that works for everyone. There are several reasons that an agreement has yet to be reached:
    • While the Parties have generally agreed on how market mechanisms should work under the framework of the Paris Agreement, there is some disagreement over guidelines on baselines and additionality under Article 6.4. The remaining differences are on the degree to which certain provisions should cover different parts of Article 6.
    • The KP’s market mechanisms create an important precedent, so negotiations frequently end up in the same kind of deadlocks that characterized KP negotiations.
    • Negotiations are highly politicized. This makes the negotiating process more difficult.
  • Voluntary carbon market transactions. As noted above, there are several important elements of the Paris Agreement market mechanisms on the table at COP26, and this is one of them. At the heart of the discussion is the principle that corresponding adjustments should be made where necessary to ensure the robustness of the Article 6 rules. However, it is not clear at this stage whether this will translate into a firm outcome on the specific question of double-counting in relation to voluntary carbon market transactions that fall within a country’s NDC. If agreement on this question cannot be reached at COP26, it may ultimately be left to the voluntary carbon offset program operators to legislate for this issue within the contractual framework of their respective schemes, which could result in a divergence of approach by the key players and create unwelcome uncertainty in that market.
  • Climate Finance. At COP16 in 2009, developed countries pledged to jointly mobilize US$100 billion per year by 2020 to address the needs of developing countries. At COP21, parties decided that, prior to 2025, the parties would set a new collective quantified goal from a floor of US$100 billion per year, taking into account the needs and priorities of developing countries. According to an Organization for Economic Co-operation and Development report, the initial US$100 billion target has not yet been met (let alone any new goal), and delivering greater financial support will be a central theme of COP26.

U.S. EPA releases Roadmap to address PFAS contamination

On October 18, 2021, the U.S. Environmental Protection Agency (EPA) announced a per- and polyfluoroalkyl substances (PFAS) Strategic Roadmap (the Roadmap) detailing steps that the EPA plans to take to address PFAS contamination. PFAS are largely unregulated, but studies linking certain PFAS to health issues and their persistence in the environment and human body are driving the push for increased regulation. Currently, the EPA has established only a non-enforceable health advisory level for two PFAS, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS). Additionally, some states have been moving forward at different speeds to establish state-specific PFAS regulations, including drinking water standards and cleanup levels for soil and groundwater remediation. However, the EPA’s Roadmap suggests increased federal regulation looms.

The EPA’s approach under the Roadmap considers the lifecycle of PFAS, focusing not only on remediating PFAS-contaminated sites and regulating PFAS discharges or emissions, but also regulating PFAS at the upstream level where they are produced and incorporated into products. Other areas of focus called out in the Roadmap include (1) an emphasis on enforcement actions at PFAS-contaminated sites and placing responsibilities for limiting exposure on manufacturers, processors, distributors, and similar users; (2) research into PFAS over health effects and remediation technologies; and (3) an environmental justice focus on prioritization of PFAS effects on disadvantaged communities.

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UK plan for Waste Shipments updated

The UK plan for shipments of waste (the Plan) has been amended, with the key update being to emphasise that interim disposal operations should be carried out in the UK wherever possible.

Earlier this year Defra consulted on various amendments to the Plan for shipments of waste and those amendments have now been adopted following a public consultation.

The government specified that they were proposing four main updates to the Plan:

  • align the UK Plan with the government’s NORM (naturally occurring radioactive material)waste strategy by allowing imports of NORM waste of UK origin for disposal, and restricting other shipments of NORM waste for disposal.
  • clarify that interim disposal operations should be carried out within the UK where possible.
  • remove the existing exception relating to export of contaminated river sediment waste for disposal.
  • insert a new exception relating to export of mercury and mercury-contaminated wastes for disposal.

Certain amendments were also made in the light of the UK’s withdrawal from the EU.

A key change is the amendments for interim disposal operations. Where someone proposes to export waste for biological or physico-chemical treatment operation (D8/D9) or interim disposal operations this will only be permissible if such treatment results in final compounds, (which are disposed on a manner that is in accordance with the exceptions set out in the Plan) and in the case of proposed exports from the UK there are no suitable UK facilities that can provide these interim disposal operations.

This second point has been added in the revision. The responses to the consultation were broadly positive on this point, although it was noted that the UK would need to have sufficient capacity to conduct such interim operations.

The EU opened a review and public consultation on the Waste Shipment Regulation 1013/2006 in 2020, intended to facilitate recycling within the EU and make it more difficult to export waste to third countries (those outside the EU and not part of the OECD Decisions). The outcome of this review has been delayed.

UK plans carbon border adjustment mechanism

Last month, the Environmental Audit Committee (‘EAC’) launched an inquiry into a potential future carbon border adjustment mechanism (‘CBAM’) for the UK. The objective of introducing a CBAM would primarily be to address the risk of carbon leakage in the UK industrial sectors caught by the nascent UK Emissions Trading Scheme (‘UK ETS’), i.e. switching to foreign production of those goods to avoid the additional costs associated of compliance with the UK ETS passed through by UK operators. The move would be consistent with the EU, which is in the process of introducing its own CBAM for the same purpose.

The inquiry follows recommendations made by the EAC as part of its ‘Growing Back Better: Putting Nature and Net Zero at the Heart of the Economic Recovery’ report, whereby it recommended that the Government investigates the merits of a CBAM. The inquiry will assess the role of a CBAM in addressing carbon leakage concerns and meeting wider environmental objectives, such as long-term UK decarbonisation. The inquiry will also consider the impacts, risks and opportunities of introducing a unilateral CBAM in the UK, i.e. separately from the EU. The EAC is inviting written submissions on a range of questions including; whether the UK should pursue a CBAM; the form it should take; how it should be implemented; the practical and administrative challenges; and the potential impact. Evidence must be submitted by 25 October 2021.

A CBAM is a border tax on imported products based on their embedded emissions, or carbon footprint. The tax is aimed at ensuring that imported goods in energy intensive industries (‘EIIs’) are subject to equivalent carbon costs as domestically produced EII goods. A CBAM can be used to address carbon leakage, i.e.  the risk that climate policies often lead to companies relocating to countries with lower climate ambitions. Whilst the UK partially addresses this risk in the UK ETS by permitting manufacturers at risk of carbon leakage free allowances for emissions, this may not be enough to incentivise long-term UK decarbonisation in line with the UK’s wider environmental objectives. It is worth noting that any CBAM would need to comply with the obligations under the Paris Agreement and WTO rules relating to discrimination between domestic and imported products.

The EU has proposed to introduce its own CBAM from 2023, under which importers would purchase CBAM certificates that mirror the EU ETS price, to bring the carbon price on imports to the EU in line with the carbon price paid by EU producers. Some form of CBAM has also been considered by other countries: the US considered the introduction of a CBAM within its 2021 Trade Policy, and Canada also recently explored the establishment of a CBAM, with the aim of opening a global dialogue on the mechanism. Whilst no country currently applies a CBAM, COP26 President Alok Sharma has stated that a CBAM has the potential to affect the overall context of the upcoming climate conference, despite not being a formal part of the programme.

Following a review of the evidence submitted in the inquiry, the EAC will make recommendations to the UK Government on the possibility of introducing a unilateral CBAM in the UK. The inquiry is available here.



EU proposal to amend the Radio Equipment Directive to require single mobile chargers

On 23 September, the European Commission took a step towards consumers’ convenience and minimising the environmental footprint associated with the production and disposal of chargers. A proposal to amend the Radio Equipment Directive 2014/54/EU (RED) aims to make a single charger for mobile devices mandatory. Although the number of mobile phone chargers had previously been reduced from 30 to 3 over the last couple of years, industry failed to come up with a single solution. The Commission is now seeking to put an end to this with a common charging solution for all relevant devices.

The revision of the RED is part the Commission’s broader action to address the sustainability of products, in particular electronics on the EU market, which will be the focus of a forthcoming proposal on sustainable products.

In summary, the current proposal is foreseeing:

  • A harmonised charging port for electronic devices: USB-C will be the common port allowing consumers to charge their devices with the same USB-C charger no matter the device brand.
  • Harmonised fast charging technology: to help prevent different producers unjustifiably limiting the charging speed and help ensure that the charging speed is the same across any compatible charger for a device.
  • Unbundling the sale of a charger from the sale of the electronic device: consumers will be able to purchase new electronic devices without a new charger. This will limit the number of unwanted chargers purchased or left unused. This is estimated to reduce the amount of e-waste by almost 1,000 tonnes per year.
  • Improved information for consumers: producers will also be required to provide relevant information about the charging performance, the power the device needs, and whether the charger supports fast charging. This will make it easier for consumers to see if their existing chargers meet the requirements of their new device with the hope of limiting the number of new chargers purchased. Consumers could save around €250 million a year on unnecessary charger purchases that way.

Next Steps

Following the Commission’s proposal, the European Parliament and the Council now need to adopt it by ordinary legislative procedure. A foreseen transition period of two years from the date of adoption ought to provide industry sufficient time to adapt to the incoming changes.

In order to eventually achieve the goal of a common charger, full interoperability is required on both sides of the cable: the electronic device and the external power supply. The RED proposal seeks to tackle the interoperability on the device end while the interoperability of the external power supply will be addressed by the review of the Ecodesign Regulation. This is to be launched later this year so that its entry into force can be aligned with the RED proposal.

American Bar Association article on U.S. Climate Litigation Trends – 2021 update

In an article by Casey J. Snyder, Associate at Reed Smith, published by the American Bar Association, we highlighted key U.S. climate litigation trends from 2015-2020.  This timeframe showed a general increase in overall climate litigation and an emphasis in state courts to advance novel climate litigation theories, among other trends.  New litigation in the United States involving climate change issues through 2021 appears, so far, to be on a pace similar to that observed over the past few years, according to recent climate change case data in the Sabin Center for Climate Change Law’s Database for 2021.  Since 2015, climate change litigation has raised or implicated an array of legal issues including federal and state constitutional issues, numerous tort theories including nuisance and trespass, state securities and consumer protection laws, administrative challenges, and economic issues related to climate adaptation, tourism, and historic preservation, among other issues.  As theories of liability and climate science evolve, and as precedent is set, new theories are likely to develop in the coming years.

Since 2020, there have been several noteworthy updates.

  • In Juliana et al. v. United States, 947 F.3d 1159 (9th Cir. 2020), the Ninth Circuit on February 20, 201 declined to rehear a public trust climate lawsuit in federal court which sought to establish a nationwide remedial plan to address climate change as well as to recognize a right to a stable climate under the Due Process Clause of the Fifth Amendment. The plaintiffs filed an amended complaint in March of 2021 and the case is continuing.
  • On April 1, 2021, in a climate tort case filed in federal court by the City of New York, the Second Circuit affirmed the lower court’s holding that federal common law preempted New York state tort law under which the City’s claims were brought. City of New York v. Chevron Corp., 993 F.3d 81 (2nd Cir. 2021).  Of the dozens of similar climate tort cases filed by states and municipalities, this was the only case filed originally in federal court—other cases had been filed in state court and subsequently removed to federal court, so arguments in these cases have largely raised procedural issues related to jurisdiction.
  • Related to jurisdiction of these climate tort cases, on May 17, 2021, the Supreme Court in BP P.L.C. v. Mayor and City Council of Baltimore, 141 S. Ct. 1532 (2021) addressed a circuit split on a procedural question and held that the Fourth Circuit erred in only reviewing the grounds of BP’s federal officer removal argument, and not all the grounds for removal that the district court rejected. The parties are now briefing the Fourth Circuit on the remaining removal grounds after remand by the Supreme Court.
  • Most recently, Vermont joined other governmental entities and filed a climate change lawsuit under the state’s consumer protection law, alleging several companies’ marketing of gasoline and other fossil fuel products in the state was deceptive and misleading with respect to those products’ effects on the climate. Vermont v. Exxon Mobil Corporation et al. (Vt. Super. Ct. 2021) (complaint filed September 14, 2021).

With more questions than answers on the significance of current U.S. climate change lawsuits, companies should closely track these lawsuits to anticipate and respond to the pending outcomes of these cases, including understanding the effect of climate lawsuits outside the courtroom.  For example, climate change liability disclosures in financial filings may be implicated by existing or pending climate litigation, and companies may consider refining marketing or promotion techniques based on outcomes of lawsuits alleging state consumer protection or securities claims.  A strong internal environmental, social, and governance (“ESG”) initiative, especially with a focus on environmental and governance aspects in these climate lawsuits, could enable a company to timely react to these issues and manage potential future liability.

Reed Smith is actively tracking climate change litigation in the U.S. and abroad as well as the rapid development of ESG initiatives, including the interrelation between the two issues.  Please contact our EHS team with any questions you may have.

Recent C-Suite analysis regarding ESG indicated genuine commitment overall, but “least” focus on environmental issues

A report published September 1, 2021  by analytics provider Intelligize (“Report”) revealed that companies were “all over the map” when it came to current disclosure practices on Environmental Social and Governance (“ESG”) issues and that their executives and other professionals showed a “troubling” lack of knowledge about ESG issues.

The survey responses came from hundreds of C-suite executives as well as professionals handling compliance, legal, accounting and other matters at public companies with varying asset sizes, across 14 industries and 15 job functions.

The Report tabulated these responses and concluded that commitment to ESG issues is high and is pushed by internal drivers.  For example, by a substantial margin, most survey respondents indicated that their companies undertook ESG initiatives primarily based on a pure desire to create positive outcomes. By contrast, only a quarter of respondents felt that their employers were driven by external factors like a desire to avoid negative publicity.

Interestingly, of the three topics covered by ESG—environmental, social and governance matters—responses suggest that companies are least focused on environmental issues. This suggests that if a company were interested in making gains in ESG, there may be some low hanging fruit in the environmental arena to capture and capitalize on, given this lack of historic focus.

European Commission publishes new initiatives concerning sustainable transportation

Last month, the European Commission published two new proposals for EU regulations to encourage the use of sustainable fuels in aviation and shipping – namely the ReFuelEU Aviation and FuelEU Maritime initiatives, respectively. Both proposals are subject to public feedback until 5 October.

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Court rejects attempt to scrutinize nonbinding state agency policy under Pennsylvania’s Environmental Rights Amendment

Litigation seeking to broaden the application of Pennsylvania’s Environmental Rights Amendment, Pa. Const. art. I, §27 (“ERA”) was rejected on August 6, 2021, when the Commonwealth Court of Pennsylvania dismissed an amended petition for review filed by the Pennsylvania Environmental Defense Foundation (“PEDF”) challenging the Pennsylvania Department of Conservation and Natural Resources’ (“DCNR”) State Forest Resource Management Plan (“SFRMP”).  Pennsylvania Environmental Defense Foundation (“PEDF”) v. Commonwealth, No. 609 M.D. 2019 (Pa. Cwmlth. 2021).

PEDF sought declaratory relief regarding DCNR’s SFRMP published in 2016.  Specifically, PEDF asked the Commonwealth Court to: (1) declare certain statements made by DCNR in the SFRMP in violation of the ERA, and (2) compel DCNR to amend the SFRMP to make it comport with DCNR’s responsibilities to manage the resources consistent with its duties as a trustee under the ERA.  According to PEDF, in 2016, DCNR amended its SFRMP to support management decisions based on economic principles.  PEDF also raised issues related to DCNR’s mission statement regarding extraction and sale of oil and gas for the benefit of DCNR and the Commonwealth.  Additionally, PEDF asked the Commonwealth Court to require DCNR to include an evaluation of the degradation of resources caused by past and present oil and gas development in the SFRMP, and to implement measures into the SFRMP that remedy the alleged degradation.

The Commonwealth Court granted DCNR’s preliminary objections and dismissed all counts.  With respect to the requests by PEDF to declare DCNR is in violation of the ERA based on specific statements in the SFRMP, the Commonwealth Court held that the SFRMP does not create legal requirements or regulations, meaning DCNR is not mandated to take any actions by the SFRMP.  Therefore, the Commonwealth Court found declaratory judgment would be inappropriate.  Similarly, the SFRMP lacked “concreteness” with respect to whether PEDF’s claims were ripe for review.  As such, PEDF’s claims would bring the court into “the realm of speculation and conjecture.”  Finally, the Commonwealth Court determined that the relief seeking general pronouncements of law with respect to DCNR’s statements runs against the proscription against advisory opinions, because there was no justiciable dispute or controversy within the meaning of the Declaratory Judgments Act.  42 Pa.C.S. §§7531-7541.

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