States sue EPA over COVID-19 enforcement policy

Following on from our recent post regarding Environmental Protection Agency (EPA) policy and the controversy surrounding it , on May 13, 2020, seven states brought an action in the Southern District of New York against the EPA to challenge the agency policy under which the EPA has stated it “will not” enforce a wide range of monitoring and reporting requirements under federal environmental laws. As we previously blogged, the EPA justified the “Temporary Policy on COVID-19 Implications for EPA’s Enforcement and Compliance Assurance Program” (non-enforcement policy), as a necessary response to the COVID-19 pandemic. The states bringing the suit argue that the non-enforcement policy gives parties free rein to self-determine when compliance with federal environmental laws is not practical because of COVID-19. They also claim the non-enforcement policy makes it optional for parties to report that noncompliance to the EPA, and to state and local agencies. The states bringing suit argue that the policy’s effective waiver of these requirements exceeds the EPA’s authority. The May 13, 2020 suit was lodged by the attorneys general of California, Illinois, Maryland, Michigan, Minnesota, Oregon, Virginia, and Vermont, as well as New York. Stay tuned here for updates.

Despite COVID-19 concerns, CARB continues to revise air emissions rules for the shipping industry

The California Air Resources Board (CARB) continues its efforts to expand the state’s existing Ocean-Going Vessels At-Berth Regulation to further reduce air emissions from ships docked in California. (See here for prior alert). CARB recently released draft modifications to the At-Berth Rulemaking Documents. The modifications would include:

  • Allowing use of an Innovative Concepts (IC) provision as a compliance option. The IC provision would enable regulated entities to use potentially lower-cost options to achieve earlier or equivalent (or greater) emissions reductions in port communities versus reducing emissions directly at berth. The IC provision would also provide a pathway for regulated vessel fleets to continue using fleet averaging methods to comply with the proposed regulation.
  • Expanding use of Vessel and Terminal Incident Events to new and expanding fleets to encourage new business at California ports.
  • Providing additional operational flexibility: by extending the time a vessel has to connect to shore power or another CARB-approved emissions control strategy (CAECS) from one hour to two hours; by extending the timeframe for reporting deadlines; and by expanding the remediation fund to ports and third-party CAECS operators.
  • Broadening the scope of the interim evaluation to include a review of public information provided to CARB, including terminal-specific engineering evaluations, logistical considerations, public engagement, and independent studies, to help inform the evaluation and implementation timeline.
  • Accelerating implementation dates for roll-on / roll-off and tanker vessels to achieve earlier public health benefits.

The resolution and all other regulatory documents for this rulemaking are available online here.

CARB notes that the proposed modifications “provide additional operational flexibility to achieve the necessary emissions reductions in California’s impacted port communities, while encouraging continued cleaner economic growth.” However, stakeholders are certain to see higher costs related to infrastructure and capital improvements.

COVID-19 has also altered transportation practices, and many stakeholders fear that enacting a regulatory change could complicate economic recovery. Maritime and port stakeholders have requested a delay in approving the At-Berth regulatory package in order to afford ports and port workers time to manage the COVID-19 outbreak and navigate its economic impacts.

Not extending the time to allow for economic recovery from the pandemic will likely make compliance more costly (in relative terms) or, as some stakeholders argue, “infeasible.”

CARB is currently reviewing and preparing responses to comments received on the record during the comment periods. CARB’s responses will be published with its Final Statement of Reasons report upon submittal to the Office of Administrative Law, which CARB expects to occur during Fall 2020. How it will respond to stakeholder comments, including COVID-19 concerns, is currently unknown.

Post pandemic drafting with governmental authorities: Force Majeure clauses in consent agreements

On May 5, 2020, The New York Times (NYT) reported under the heading “Here come the busted deals,” that L Brands, majority owner of Victoria’s Secret, who had a seemingly airtight case for selling a majority stake in Victoria’s Secret, had agreed to let the buyer, Sycamore Partners, walk.

L Brands agreed to let Sycamore walk away, even though it had a strong argument to enforce the agreement made in February 2020. Sycamore had argued that the coronavirus outbreak led to irreparable damage to Victoria’s Secret, but the merger agreement actually anticipated the concept of a pandemic and excluded pandemics as a reason for walking away from the deal. Yes, the merger agreement allowed for the voiding of the deal due to an “act of God,” but in the acquisition agreement, the lawyers carved out specific exceptions to those acts of God, including a pandemic. That meant that even if a pandemic struck, Sycamore would be legally obligated to complete the deal.

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California Governor temporarily suspends requirements under CEQA

On April 22, 2020, California Governor Gavin Newsom issued an executive order that suspended for 60 days certain public filing, posting, notice, and public access requirements under the California Environmental Quality Act (CEQA). This order affects all projects in the state requiring a governmental approval that triggers environmental review. This could be anything from a commercial development project to a municipality’s general plan.

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Companies Beware: Will EPA ramp up mandated ‘clean up’ as part of perceived economic ‘stimulus’ package?

Post COVID-19 stay-at-home orders (SAHO) – and as we go back to “normal” – what is the likelihood of a sudden resurgence in new or deferred Superfund cleanups, and associated construction?

It is impossible to ignore that fact (and EPA must be aware of it) that construction jobs can and will be important to economic recovery. Construction work provides good, well-paying jobs, which will be critical to restarting the economy, and that is paramount. EPA, especially Office of Land and Emergency Management,  will recognize they have a key role to play in those efforts.

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The pandemic and EU-ETS, AB 32 carbon markets

We’ve all heard tales of bluer skies since the shelter-in-place orders took effect.   Cityscapes can be seen with remarkable clarity as lockdowns lead to noticeably cleaner air.  Yes, the pandemic is reducing greenhouse gas (and other) emissions.

What is the effect of all this on carbon markets?  The International Monetary Fund (IMF) has warned that the virus could shrink the world’s economy by at least 3 percent in 2020.  A recent Wall Street Journal front page reports that COVID-19 has already shrunk U.S. GDP by 4.8 percent.

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ICYMI: Major April U.S. Supreme Court Environmental Decisions

1) Superfund deals don’t block state-law claims

On April 20, 2020, the Supreme Court of the United States (SCOTUS) issued an opinion allowing Montana residents to maintain state-law claims against a company for a Superfund site that is already covered by a settlement agreement with the U.S. Environmental Protection Agency (EPA).

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CARB plans more consumer product regulations to reduce smog-forming emissions

The California Air Resources Board (CARB) continues its efforts to reduce air pollutants from consumer products through amendments to California’s Consumer Products Regulation. Proposed amendments would further lower current volatile organic compounds (VOC) limits for certain consumer products.

Background

The Consumer Product Regulation is an important part of CARB’s effort to reduce the amount of VOCs, toxic air contaminants (TACs), and greenhouse gases (GHGs) emitted when using chemically formulated consumer products. In this context, “consumer product” means a chemically formulated product used by household and institutional consumers including, but not limited to: detergents; cleaning compounds; polishes; floor finishes; cosmetics; personal care products; home, lawn, and garden products; disinfectants; sanitizers; aerosol paints; and automotive specialty products; but does not include other paint products, furniture coatings, or architectural coatings. Consumer product also refers to aerosol adhesives, including aerosol adhesives used for consumer, industrial, and commercial uses.

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Plastic-reduction efforts in California yield to COVID-19 pandemic

This year might have been the year for California to set sharp reductions in plastic packaging and single-use plastic food ware, among other plastic items. But the COVID-19 pandemic and an increased use of disposable products to avoid the risk of transmitting the virus through reused items appear to have halted this effort. A ballot initiative and bills in the senate and assembly, if enacted into law, would have slashed waste generated by single-use packaging and some single-use products by 75 percent by 2030. But now, the California Recycling and Plastic Pollution Reduction Act – which was headed to the November ballot – SB 54, and AB 1080 are likely on hold until at least 2021.

This may give manufacturers, distributors, and retailers more time to retool their products. California’s plastic-reduction efforts are part of a global effort to end the flow of plastics and microplastics into our environment. It’s also part of a “circular economy” movement, which seeks to design and produce products with materials that can be reused or recycled, rather than landfilled at the end of their useful lives.

So, while California voters and lawmakers may not take action this year, change is certainly on the way.

Returning to work safely

Previously shuttered businesses and offices are gearing up to reopen as many states are beginning to lift closure orders.  Each employer will need to determine when it is legally permitted to reopen based upon state and local mandates.  While plans to reopen will vary widely from state to state and company to company, all employers should take appropriate safety measures to reduce potential exposure to the virus that causes COVID-19, to ensure the health of their employees and visitors while reducing liability and business risks.  The recommendations below may change rapidly and we advise that you double check the information provided against the links provided to cross-check any changes that may have been made by the referenced agencies since this was posted.

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