Insights

On Saturday, October 7, 2023, California Governor Gavin Newsom signed into law two landmark bills—SB 253, the Climate Corporate Data Accountability Act; and SB 261, the Climate-Related Financial Risk Act—that will require large public and privately-held entities doing business in California to comply with sweeping disclosure requirements regarding their direct and indirect greenhouse gas emissions and their climate-related financial risks.

Hardly a day passes without the newspapers reporting on an EPA action, lawsuit, or governmental proposal regarding PFAS, a diverse group of chemicals used in the manufacture of many consumer, industrial, and commercial products. In some circumstances, PFAS usage can result in soil and groundwater contamination. Addressing PFAS contamination is a clear priority for EPA and enforcement agencies right now and aligns with the Biden Administration’s focus on drinking water issues.[1] Companies need to be aware of what EPA has already done on PFAS—and what EPA has recently signaled is coming.

The Department of Transportation’s Federal Highway Administration has issued final standards for the installation, operation, and maintenance of electric vehicle (EV) charging stations paid for with federal funds pursuant to the Infrastructure Investment and Jobs Act (IIJA) and other federal authorities. The standards, which go into effect on March 30, 2023, regulate the types of chargers that may be installed, as well as payment processing, labor, cybersecurity, and data privacy practices for EV charging infrastructure on federal highways.

The United States convened world leaders and other senior officials on April 22 and 23 for a Virtual Leaders Summit on Climate, fulfilling a campaign pledge and aimed at elevating U.S. global leadership on climate issues.  At the outset of the Summit, the U.S. unveiled a new target to reduce greenhouse gas emissions by at least 50% from 2005 levels by 2030, which will serve as the country’s “Nationally Determined Contribution” (NDC) under the Paris Agreement.  Many details on how this will be implemented in the United States and through newly launched international initiatives remain to be announced. However, the U.S. NDC, the commitments made by other key countries, and several international initiatives announced during the Summit provide early but important guidance for companies on the direction for U.S. and global climate efforts in the coming years, potential regulatory and policy implications, and opportunities to engage constructively with governments.

On February 27, 2021, the Interagency Working Group on Social Cost of Greenhouse Gases (Working Group) published interim values for the Social Cost of Carbon (S-CO2), Social Cost of Nitrous Oxide (S-N2O) and Social Cost of Methane (S-CH4) (collectively referred to as the Social Costs of Greenhouse Gases (S-GHG)). As we predicted in our prior client alert, the Working Group reinstated the values that had been established for these parameters immediately before the Trump Administration disbanded the Working Group in 2017. To that end, for 2021 the Working Group set S-CO2 at $51 a ton, S-N2O at $18000 a ton and S-CH4 at $1500 based on a 3% discount rate. These rates will replace the Trump Administration’s calculation of the Social Cost of Carbon, which included values as low as $1 based on a 7% discount rate. The new figure will be used on an interim basis while a Working Group readies the final values, which are expected in early 2022.

Potentially the most consequential, yet least noticed, part of President Biden’s Day 1 Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle Climate Change (Jan. 20, 2021) (“EO 13990”) is the directive to re-establish the Interagency Working Group on the Social Cost of Greenhouse Gases (“Working Group”), which President Trump disbanded during his administration.  See E.O. 13990, Sec. 5.  One of the Working Group’s primary mandates is to calculate what is referred to as the “Social Cost of Carbon,” which measures the cost to society of emitting one additional ton of carbon dioxide into the atmosphere.  These include the costs associated with sea level rise and extreme weather events, and adverse effects on water and agricultural resources and human health.  Section 5 directs the Working Group to publish an interim Social Cost of Carbon within 30 days of the date of the Executive Order, and to publish a final value by January 2022.  (The Executive Order also directs the Working Group to publish Social Costs for two other global warming chemicals, i.e., nitrous oxide and methane.)  The Working Group has not yet published the interim value, but it doesn’t take a clairvoyant to predict at least interim reinstatement of the values used by the Obama Administration.  One signal is the Council on Environmental Quality’s decision to rescind the Trump Administration’s “Draft National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions” and directive that until a replacement is adopted “agencies should consider all available tools and resources in assessing GHG emissions and climate change effects of their proposed actions, including, as appropriate and relevant, the 2016 GHG Guidance.”  (86 Fed. Reg. 10252.)

Earlier today President Biden signed an executive order that established a White House Office of Domestic Climate Policy and outlined a framework for involving the entire federal government and engaging the international community in combatting climate change.

Beginning in 2021, the United States may take policy and regulatory actions that align more closely with efforts undertaken in the EU and at international institutions such as APEC on the nexus of finance, trade, and climate change. More coordinated and cooperative action may be taken to set high-level standards that will be applied commercially throughout the global economy regardless of jurisdiction. International institutions are also providing greater focus on the urgency to move the global economy towards a low-carbon trajectory and build climate resiliency.

Companies must be prepared to address climate change in 2021 or risk getting left behind by an accelerating global debate regardless of the outcome of the U.S. elections on November 3. Growing public awareness, proliferating policy proposals, and the opportunity for increased public investment in the wake of the COVID-19 crisis have elevated climate to the top of the economic policy and regulatory agenda globally. Climate is increasingly top-of-mind for corporate shareholders and investors. This momentum will translate into a growing array of policies, regulations and practices in all geographies and at all levels that could reshape the operating environment and investment landscape for industry. Public-private partnerships and initiatives across all sectors of the economy will be essential to devise workable policy models and commercial solutions. Companies have a unique opportunity to step up to constructively engage.

On July 16, 2020, the Trump administration’s Council on Environmental Quality (CEQ) published a final rule revising the regulations implementing the National Environmental Policy Act (NEPA) – the first substantial rewrite to the regulations guiding how the Executive Branch is to consider the environmental impacts of federal actions since the rules were first issued more than four decades ago. 

In a case that may be remembered more for its dicta than its holding, Communities for a Better Environment v. South Coast Air Quality Management District, ____ Cal. App. 5th ___ (April 7, 2020) (Second District), provides a helpful and practical guide on how lead agencies should affix the “baseline” in California Environmental Quality Act (CEQA) cases. 

As part of our continuing commitment to help our clients address the effects of COVID-19, we are providing the initial, anonymized, and aggregated results from our benchmarking questionnaire. We continue to gather information and update the responses, but given the rapidly changing environment, we wanted you to have this information sooner than later.

Many businesses face mounting disruption and, in some cases, temporary shutdown as a consequence of the ongoing coronavirus (COVID-19) pandemic. As owners and operators confront these challenges, they face the added challenge of continuing to satisfy applicable federal, state, and local environmental laws and regulations. Unprecedented obstacles to maintaining routine compliance include, for example, the lack of staff to collect water samples, the inability to obtain physical signatures of documents such as air permits and compliance reports, and difficulty constructing, repairing, upgrading, and maintaining emissions controls and monitoring systems because of disruptions to the supply chain or work force.

We thank our clients for your input on our effort to help trade associations benchmark what they are doing as part of COVID-19 contingency planning. Please use the survey link below to access the brief benchmarking questionnaire. Assuming we have a sufficient number of responses, we will aggregate and share responses (on an anonymous basis).

In this issue:

When the Supreme Court granted certiorari in Kisor v. Wilkie, many observers thought the Court was poised to overturn the longstanding Auer deference doctrine, under which courts defer to an agency’s reasonable interpretation of its own regulations. But on June 27, 2019, in what was probably the most eagerly anticipated administrative law decision of the past term, the Court declined to do so. In a victory of sorts for the actual petitioner, if not advocates deeply skeptical of Auer’s legal underpinnings, the Court remanded Mr. Kisor’s challenge to the Department of Veterans Affairs’ denial of disability benefits, directing the lower court to reconsider whether its original application of Auer deference was appropriate. The Court, however, left the Auer doctrine itself intact—albeit with limitations that seem likely to narrow the doctrine’s scope and application. How much the the doctrine has been narrowed probably depends on whom you ask: some say a lot; some say maybe not much.

On June 19, 2019, EPA signed the final Affordable Clean Energy (ACE) Rule, addressing the emission of carbon dioxide and other greenhouse gases (GHGs) from coal-fired power plants. The ACE Rule both repeals and replaces the Obama administration’s Clean Power Plan (CPP), which had also addressed GHG emissions from power plants, but went much further than the ACE Rule in several important ways. In the ACE Rule, EPA disavows many aspects of the CPP, finding them to be beyond EPA’s statutory authority under the Clean Air Act (CAA or “Act”). The ACE Rule sets forth a much more limited view of EPA’s authority to require emission reductions from existing sources in a regulated source category. If accepted by the courts, EPA’s arguments in support of the ACE Rule could have profound implications not only for power plant GHG regulation but also for other types of sources and pollutants.

On Friday, the U.S. Environmental Protection Agency (EPA or “the Agency”) released the pre-publication version of its final rule expanding summer use of E15 and implementing new—though significantly scaled back—provisions affecting Renewable Identification Numbers (RINs) reporting and disclosure. (RINs are used to demonstrate compliance with the Renewable Fuel Standard (RFS)). Both actions could have an impact on fuel and RIN markets in the near term given that E15 provisions are effective May 30th and RIN provisions are to be effective 30 days following Federal Register publication of the rule. New disclosure and reporting requirements kick in on January 1, 2020. Key aspects of the final rule can be summarized as follows:

Making good on Administrator Wheeler’s promises to Congress earlier this year, EPA published in today’s Federal Register its long-awaited proposal that could have the effect of expanding summer use of E15, and that could change regulations affecting Renewable Identification Numbers (RINs) used to comply with the annual Renewable Fuel Standard. 84 Fed. Reg. 10,584 (Mar. 21, 2019). Those proposals can be summarized as follows:

Over seven months ago, the Supreme Court asked the Solicitor General for the views of the United States in Gilead Sciences, Inc. v. United States ex rel. Campie, an important False Claims Act case. Last Friday evening, the Solicitor General responded by asking the Court to deny certiorari. But what appeared to be a major setback for the Petitioner, Gilead Sciences, Inc., actually offered an unexpected route to victory. The Solicitor General agreed with the relators’ (and the Ninth Circuit’s) position that the Government’s continued payment did not necessarily undermine the materiality of the alleged violations. But the Solicitor General told the Court that, were the case remanded to the district court, the United States would dismiss the case to avoid burdensome litigation costs and other litigation-related interference with government operations. That surprising announcement sheds further light on the DOJ’s FCA-enforcement priorities, consistent with its recent amendments to the Yates Memo. Those developments provide valuable insight for companies facing qui tam FCA actions.