As of 1 September 2020, the PRC Law on the Prevention and Control of Environmental Pollution by Solid Wastes has been revised

In 1996, the PRC Law on the Prevention and Control of Environmental Pollution by Solid Wastes (“Current Solid Waste Law”) was established. In 2015, almost 20 years later, this PRC Law was first revised and has since worked to take proper precautions for the environment. However, on 29 April 2020 the Standing Committee of the National People’s Congress has once again extensively revised the Current Solid Waste Law (the new revision being the “2020 Revision”), which went into effect on 1 September 2020. These 2020 implications have stricter rules on environmental protection in regards to the import of solid waste. To read more about this newly revised law, please see our recently published client alert here.

EPA administrator signs final power plant wastewater rule

On August 31, 2020, the U.S. Environmental Protection Agency (EPA) Administrator, Andrew Wheeler, signed the final rule (referred to as the Steam Electric Reconsideration Rule) initially proposed last year to revise the technology-based effluent limitations guidelines and standards (ELGs) for common types of wastewater discharges from electric power generating facilities. This final rule rolls back the Obama-era effluent guidelines 2015 rule, which set the first federal limitations on toxic metal discharges from power plants. EPA touts that the new final rule will significantly reduce after tax compliance costs by $140 million per year.

New effluent standards

The Obama-era 2015 rule set requirements for wastewater streams associated with several processes and by-products of steam electric power generation: flue-gas desulfurization, fly ash, bottom ash, flue-gas mercury control and gasification of fuels such as coal and petroleum coke. However, EPA’s new final rule focuses on revisions to primarily two types: flue-gas desulfurization (FGD) wastewater and bottom ash (BA) transport water.

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New UKCA mark guidance brings welcomed clarity

The UK Government has published new guidance on the UKCA product-marking framework which replaces the current EU CE marking regime in Great Britain (i.e. England, Wales and Scotland), from 1 January 2021. The guidance is in line with expectations and brings helpful clarity for manufacturers and other affected stakeholders, albeit also bringing with it unavoidable administrative burden.

UKCA marking was introduced in 2019 under the Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019 (available here) by way of an amendment to retained EU Regulation 765/2008 (available here), which sets out requirements for accreditation and market surveillance relating to the marketing of products.

The new regime, which introduces the labelling, product safety and conformity assessment requirements for certain products on the UK’s departure from the EU, largely mirrors the current EU CE marking requirements for products placed on the EU market, and for which products must continue to comply with in the UK until “exit day” (i.e. 31 December 2020).

Under the UKCA marking framework, the essential requirements, the process for conformity assessment and the standards for conformity assessment are similar to the current CE marking regime, with new measures for economic operators subject to the regime being largely administrative in nature.

While the regime formally commences from 1 January 2021, there is a one year grace period, by which economic operators may continue to place CE marked products on the market until 1 January 2022 (to the extent the rules remain the same). Subject to the product type, certain transitional measures relating to the placement of the UKCA mark will apply.

Since there is no expectation that UK product standards will materially diverge from EU standards in the short term, the vast majority of cases it will be business as usual and there will be no need to apply a UKCA mark in 2021.

The key exception to this is for products that fall within the scope of legislation requiring UKCA marking, where mandatory third-party conformity assessment is required and where a UK conformity assessment body has undertaken conformity assessment and the relevant files have not been transferred to an EU recognised body, then such products are subject to UKCA marking requirements from 1 January 2021.

The product areas subject to the UKCA marking regime are largely the same as those under the EU CE marking regime and include for example:

  • toy safety;
  • recreational craft and personal watercraft;
  • simple pressure vessels;
  • electromagnetic compatibility;
  • non-automatic weighing instruments;
  • measuring instruments;
  • Lifts
  • ATEX
  • radio equipment;
  • pressure equipment;
  • PPE;
  • gas appliances;
  • machinery;
  • outdoor noise;
  • ecodesign
  • aerosols;
  • low voltage electrical equipment;
  • restriction of hazardous substances,

Certain product areas such as medical devices, rail interoperability, construction products and civil explosives are subject to special rules under the framework.

UKCA marking will not apply to products placed on the market prior to 1 January 2021 and existing stock.

For further information, please contact the author or your usual Reed Smith contact.

California sends bill to governor prohibiting PFAS in firefighting foam

The California legislature is sending a bill (SB 1044) to Governor Gavin Newsom that would significantly affect the use of per- and polyfluoroalkyl (“PFAS”) chemicals in firefighting foam.

Specifically, the bill prohibits the manufacture, sale and use of class B firefighting foam containing intentionally added PFAS chemicals.  Class B foams are used to suppress fires generated by flammable liquids (e.g., petroleum based products and fuels, paints, solvents, propane gas, etc.). Use of the foam in training classes is also banned, and anyone who sells firefighter personal protective equipment must disclose in writing if the gear contains PFAS chemicals.

If signed, the prohibition would take effect January 1, 2022. However, facilities with foam fire suppression and certain containment systems are exempt until 2024. Oil refineries and terminal operators may also apply for a waiver to extend the exemption beyond January 1, 2028. Finally, the prohibition does not apply to any manufacture, sale, distribution, or use of class B firefighting foam for which the inclusion of PFAS chemicals is required by federal law.

The bill is meant to prevent PFAS contamination from spreading, and to protect firefighters from exposure to such dangerous chemicals. Many firefighters support the bill, as it will reduce a leading cause of certain cancers, decreased vaccine response in children, changes in liver enzymes, amongst other harmful health effects. However, other stakeholders are worried the prohibition will hamper a key factor in fighting chemical fires due the unique character of such fires.

Violators of the bill would be subject to civil penalties of up to $5,000 for a first violation and $10,000 for each subsequent violation. Governor Newsom has until the end of September to act on the bill.

Quick cash in the times of COVID-19 – Section 363 sales of distressed assets and environmental liability

As we mentioned in a previous post, the COVID-19 pandemic has generated a wave of bankruptcies that we expect to continue into 2021. Companies entering 2020 in a strong financial position may now need to quickly shed distressed assets and generate cash. A Chapter 11 reorganization is likely to be too long and burdensome for companies in this position. Fortunately, the Section 363 sale process offers a speedier alternative for disposing of distressed assets and allows purchasers to acquire those assets free and clear of liens and encumbrances, ostensibly including environmental liabilities. But caveat emptor: not all environmental liabilities are extinguished. Stalking horse candidates (and other buyers of assets from a 363 sale) should consult experienced environmental transactional counsel to understand exactly what environmental liabilities remain and how to structure the purchase agreement and sale itself to maximize release from preexisting environmental liabilities.

The Section 363 Sale Process and Benefits

Section 363 of the Bankruptcy Code provides for the sale of assets through a competitive bidding process outside of a Chapter 11 reorganization. The process typically begins with a debtor marketing assets to potential purchasers. Due diligence occurs, and the potential purchasers submit bids for the assets. The debtor selects the best bid, and that party becomes the “stalking horse.” The debtor and stalking horse bidder then negotiate an asset purchase agreement. After the asset purchase agreement is negotiated, the debtor files a motion to approve bidding procedures with the bankruptcy court. Potential purchasers then submit their bids according to the court-approved procedures, and the debtor selects the winning (i.e. highest) bid. Once the debtor selects the winning bid, the court must approve the sale of the assets before they are transferred to the successful bidder.

Despite the competitive bidding process, Section 363 sales provide notable benefits to both debtors and prospective purchasers. First, the process is speedy. Debtors in need of quick cash can sell off distressed or illiquid assets through the Section 363 process without the approvals and voting needed for Chapter 11 reorganizations. Purchasers also like the process because they can often obtain assets at a discounted price. More importantly, however, Section 363 sales provide for the disposition of assets free and clear of liens and encumbrances. This benefits both debtors and prospective purchasers. Debtors may claim that the assets are being sold as is and therefore provide limited representations and warranties. At the same time, purchasers obtain the assets free and clear of liens and encumbrances and therefore acquire generally clean title supported by a bankruptcy order.

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EPA grants the first-ever COVID-19-related Section 18 Emergency Exemption under FIFRA

On August 24, 2020, EPA announced an emergency exemption in the state of Texas that permits American Airlines and Total Orthopedics Sports & Spine to use an antiviral that kills microbes like COVID-19 on surfaces for up to seven days.  This exemption request was submitted under Section 18 of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).

Under FIFRA, EPA regulates all pesticides distributed or sold in the United States.  FIFRA generally requires that pesticide products be registered (licensed) by EPA (read more about whether your product should be registered here).

A Section 18 Emergency Exemption authorizes EPA to exempt state and federal agencies from certain FIFRA provisions, thereby allowing unregistered uses of pesticides for emergency conditions.  Once EPA confirms that an “emergency condition” exists, the pesticide may be used in a limited geographic area for a limited time (i.e., one year).  During this time, the company can pursue full FIFRA registration.

States or federal agencies interested in pursuing a Section 18 Emergency Exemption for products that claim to be effective against viruses for up to seven days should be prepared to present efficacy data demonstrating that the product is durable and effective against viruses.  This means that a product should be assessed in ways that account for conditions expected to be encountered where the products will be used.

This is the first time EPA has granted a Section 18 Emergency Exemption for a request related to COVID-19.  The Section 18 request was submitted by the Texas Department of Agriculture for use at two Texas orthopedics clinics and American Airlines aircraft and airport facilities at specific locations in Texas.  We anticipate other states will follow suit and begin working with companies to submit Section 18 requests in an effort to combat COVID-19.

EPA rolls back methane regulations for oil and gas infrastructure

On August 13, 2020, the U.S. Environmental Protection Agency (EPA) issued two final rules—a Methane Policy Rule and an Inspection Rule —rolling back portions of its New Source Performance Standards (NSPS) for the oil and gas industry. In explaining these changes, EPA Administrator Andrew Wheeler stated that the EPA rescinded portions of the Methane Policy Rule because those portions were based on an impermissibly broad interpretation of the Clean Air Act (CAA).

Updated methane regulations rescind methane standards and ease emissions requirements

Under the new Methane Policy Rule, the EPA rescinded methane and volatile organic compound (VOC) emissions standards for new and modified oil and gas transmission and storage infrastructure, including methane limits for new and modified oil and gas production and processing equipment.

Under the Inspection Rule, the EPA relaxed requirements for oil and gas operators to monitor emissions leaks. This Rule excludes low production well sites (“where the total combined oil and natural gas production for the well site is at or below 15 barrels of oil equivalent per day”) from fugitive emissions monitoring, as long as operators maintain records to demonstrate well production remains at or below the requisite threshold. Additionally, all fugitive emissions monitoring may stop when all major production and processing equipment is removed from the well site.

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California proposes revisions to regulation of air emissions from “Ships at Berth;” upcoming public hearing scheduled for late August

The California Air Resources Board (“CARB”) has again proposed revisions to the State’s existing “Ocean-Going Vessels At-Berth Regulation” of air emissions from ships docked in California. As revised, further reductions in air emissions will be required, but some of the earlier implementation dates have been extended.

Most substantive changes were made in response to feedback received from CARB’s Board during the June 25, 2020 Board Meeting, public comments received during the formal comment period for the “15-Day Changes” that began March 26, 2020 and ended May 1, 2020, and internal feedback from CARB legal and enforcement staff.

A summary of the proposed Second 15-Day Changes and impact on costs follows:

Delayed implementation schedule

  • Emissions control requirements for container, reefer and cruise vessels will now begin January 1, 2023 instead of 2021. In 2023, the control requirements will include all container, reefer and cruise vessels that visit terminals in California that are above the low activity threshold.
  • Roll –on/roll-off (“ro-ro”) vessel requirements begin in 2025 instead of 2024 as proposed in the 15-Day Changes.

The result of these changes is fewer emissions reductions in earlier years as some visits are controlled later. This change results in lower costs for vessel and terminal operators from 2021 through 2032.  Such costs were a major stakeholder concern due to COVID-19 related economic impacts.

Updated Terminal Incident Event (“TIE|”) and Vessel Incident Event (“VIE”) provisions

  • There were no changes made to the percentage of TIEs and VIEs granted for each vessel fleet or terminal. However, TIEs and VIEs will begin in 2023 to align with the first year of implementation for the container, reefer and cruise vessels. TIEs are maintained from the 15-Day Changes at 15 percent in 2023 and 2024 and maintained at 5 percent in 2025 and later.
  • ro-ro vessel requirements begin January 1, 2025, with TIEs maintained at 5 percent. VIEs are maintained at 5 percent in 2023 and all years later, for all regulated vessel types.

Port and terminal plan submission dates

  • The due dates for the initial terminal and port plans for container, reefer, and cruise terminals have moved from July 1, 2021 to December 1, 2021 as a result of adjusting the implementation date.
  • The due dates for the revised ro-ro terminal plans were moved back one year to February 1, 2024, to provide the same shift as the implementation date to provide for consistency.

Vessel visit reporting

  • With the change in the first implementation date to 2023, CARB staff propose changing the date from 2021 to 2023 to submit vessel visit information by vessel and terminal operators.

Innovative Concept provision

  • An earlier iteration of the proposed revisions included an “Innovative Concept” provision, which would allow a regulated party to avoid reduction of emissions “at berth” if instead it used lower cost options to reduce an equal or greater amount of emissions in port communities.  CARB staff revised the Innovative Concept provision to be used by tanker terminals receiving less than 40 visits to less than 60 visits. This change increases the estimated number of terminals (by three) that could utilize a lower cost Innovative Concept as their compliance mechanism.

On August 27, 2020, CARB will hold a final public hearing to consider public comments on the above changes, the final regulation order, proposed resolution for the proposed control measure, and next steps in the regulatory process.  The remote Hearing is set to commence at 9:00 a.m., and may continue at 8:30 a.m., August 28, 2020.  More information about the Board Meeting and how to participate can be found here.

FIFRA’s treated articles exemption: Should your antimicrobial product be registered?

Products claiming to protect users against microbes, such as those that are currently being used to protect us from COVID-19, are flying off the shelves.  Manufacturers of these products must comply with regulations governing the use of such pesticides.  One of said regulations is the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).

Under FIFRA, EPA regulates all pesticides distributed or sold in the United States.  EPA defines a pesticide as a product that is intended for: (i) preventing, destroying, repelling or mitigating any pest; (ii) use as a plant regulator, defoliant, or desiccant; or (iii) use as a nitrogen stabilizer.  FIFRA generally requires that pesticide products be registered (licensed) by EPA.

However, there is an exemption to the requirement for FIFRA registration, known as the “Treated Articles Exemption.”  This exemption applies to qualifying treated articles that bear claims stating the article itself is protected.  To qualify for the exemption, the product being sold must be: (i) registered for such use in or on the article and (ii) the product label must only bear claims that the product itself is protected.

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Proposition 65 – Potential warning requirement exemption for exposures to listed chemicals in cooked or heat processed foods

California is inviting public comments on a proposed regulation that would exclude the need to place warnings on many cooked, baked or fried food items that may expose individuals to acrylamide, a chemical the State has deemed to be a carcinogen.

California’s Safe Drinking Water and Toxic Enforcement Act (aka “Proposition 65”) prohibits businesses from knowingly and intentionally exposing consumers to over 900 chemicals that have been listed as “known to the state to cause cancer or reproductive toxicity” (without first giving a clear and reasonable warning to the consumer).  Acrylamide is regulated under this law as a carcinogen.

Acrylamide can be formed by the cooking or heat processing of many foods, including French fries, potato chips, other fried and baked snack foods, roasted asparagus, canned sweet potatoes and pumpkin, canned black olives, roasted nuts, roasted grain-based coffee substitutes, prune juice, breakfast cereals, crackers, some cookies, bread crusts, and toast.

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