Insights

On April 19, 2024, EPA signed the highly anticipated final rule designating two types of PFAS as hazardous substances under section 102(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).  At the same time, David M. Uhlmann, Assistant Administrator for Enforcement and Compliance Assurance of the EPA, released an enforcement policy memorandum that provides “direction to all EPA enforcement and compliance staff about how EPA will exercise its enforcement discretion under CERCLA in matters involving PFAS, just as EPA exercises enforcement discretion regarding other hazardous substances.”  This alert summarizes key points from the enforcement policy and flags various uncertainties that lie ahead. 

The Environmental Protection Agency’s (EPA’s) Office of Enforcement and Compliance Assurance (OECA) just issued its new Strategic Civil-Criminal Enforcement Policy, setting the stage for the new manner in which the agency manages its pollution investigations. David M. Uhlmann, the head of OECA, signed the Policy memorandum on April 17, 2024, in order to ensure that EPA’s civil and criminal enforcement offices collaborate efficiently and consistently in cases across the nation. The Policy states, “EPA must exercise enforcement discretion reasonably when deciding whether a particular matter warrants criminal, civil, or administrative enforcement. Criminal enforcement should be reserved for the most egregious violations.” 

On March 6, 2024, the U.S. Securities and Exchange Commission (SEC) voted to finalize a rule that requires regulated issuers to disclose information regarding their greenhouse gas (GHG) emissions and other climate-related information. First proposed in 2022, the final rule has been scaled back in some significant ways from what was initially proposed. Notably, the final rule requires only large accelerated filers and non-exempted accelerated filers to disclose direct and energy-related (Scope 1 and 2)[1] GHGs—and only if such emissions are material to the business strategy, results of operations, or financial condition of a registrant—with no Scope 3 requirement to report on other indirect emissions (Scope 3). By comparison, the proposed rule would also have required Scope 1 and 2 emissions disclosures for all types of regulated entities regardless of materiality, and Scope 3 disclosures required of certain filers if material. The final rule reflects a heightened focus on materiality regarding disclosures of climate-related risks, and adjusts assurance requirements. It also extends the timing of GHG reporting, when required, to at least 2026 (for FY 2025 data) and phases in the assurance requirements. As soon as the SEC voted to finalize the rule, ten states (West Virginia, Georgia, Alabama, Alaska, Indiana, New Hampshire, Oklahoma, South Carolina, Virginia, and Wyoming) filed a petition for review in the Eleventh Circuit challenging the final rule.

For the RSL, EPA regions should now use an RSL of 200 parts per million (ppm). (Before this new guidance, the RSL was 400 ppm.) However, EPA regions should use an RSL of 100 ppm if an additional source of lead is identified (e.g., lead water service lines, lead-based paint, or non-attainment areas where the air lead concentrations exceed National Ambient Air Quality Standards [NAAQS]). The recommended RSL of 100 ppm considers aggregate lead exposure and increased risk to children living in communities with multiple sources of lead contamination.

On October 13, 2023, Todd S. Kim, the Assistant Attorney General of the Department of Justice’s Environment and Natural Resources Division (ENRD), delivered the keynote address at the American Bar Association’s 31st Fall conference in Washington, D.C., highlighting the Justice Department’s enforcement successes concerning environmental justice (EJ). Later that day, DOJ’s Office of Environmental Justice (OEJ) released its inaugural Comprehensive Environmental Justice Enforcement Strategy Annual Report (OEJ Report). The report highlights the Justice Department’s successes in pursuing cases involving EJ concerns and summarizes its efforts in “engaging with and delivering results to communities long overburdened by pollution.” (See DOJ Press Release). Kim’s remarks and the OEJ Report indicate that the Justice Department will continue to actively pursue environmental enforcement actions where there is an EJ aspect to the matter. Companies should be alert to the possibility, and be prepared to timely respond, to agency inquiries where there is arguably an EJ impact from their operations.

On May 16, 2023, the U.S. Senate Committee on the Judiciary, Subcommittee on Privacy, Technology, and the Law held a hearing titled “Oversight of A.I.: Rules for Artificial Intelligence.” This hearing is the first in a series intended to provide a forum for industry leaders to discuss and provide an understanding of the implications of A.I. with an eye toward facilitating the development of appropriate guidelines and regulations.

On May 26, 2022, the U.S. Environmental Protection Agency’s (EPA) Office of General Counsel released an updated survey of legal authorities that can be used to implement President Biden’s environmental justice agenda and address the disproportionate impact of pollution on underserved communities.

It has been just over a year since the Biden administration announced its commitment to environmental justice (EJ), and the regulated community can now examine whether the administration has been effective in achieving some of its EJ policy goals. Some are also comparing the administration’s actions with various states’ actions concerning EJ.

This month, pharmaceutical companies won significant victories in California and Oklahoma state courts in their ongoing battle with plaintiffs seeking to hold them responsible for the nation’s “opioid overdose epidemic” — an epidemic, as described by the Centers for Disease Control and Prevention (CDC), that has spawned thousands of lawsuits filed by states and localities across the country.

On Monday, March 15, 2021, the U.S. Senate confirmed Representative Debra Haaland (D-New Mexico) as Secretary of the Interior, making her the first Native American to be appointed to any presidential cabinet. Haaland’s confirmation serves as another example of Biden’s all-of-government approach to addressing climate change and environmental justice. Haaland, who previously chaired the House Natural Resources subcommittee, and her supporters have touted her history of championing climate and environmental justice issues, particularly in connection with indigenous populations. For example, throughout her most recent congressional campaign, Haaland advocated for, in her view, the interconnected nature of indigenous rights and “climate justice,” and pledged to fight to “keep fossil fuels in the ground.” Likewise, while in Congress, Haaland introduced environmental-justice legislation that sought to increase access to public lands for communities of color.

In line with increased investor demand for Environmental, Social, and Governance (ESG) and climate-related disclosures, on March 4, 2021, the Securities and Exchange Commission announced the creation of a Climate and ESG Task Force within the Division of Enforcement. The ESG Task Force’s goal is to “develop initiatives to proactively identify ESG-related misconduct.” Its initial focus will be on “material gaps and misstatements in issuers’ disclosures of climate risks under existing rules,” as well as “disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.” Working with other components of the SEC like the Office of the Whistleblower, the ESG Task Force will receive and evaluate tips, referrals, and whistleblower complaints, and will be an agency-advisor on ESG-related matters. The 22-member ESG Task Force will be headed by current Acting Deputy Director of Enforcement Kelly L. Gibson. 

On April 8, 2020, the Federal Trade Commission (FTC) published a blog post titled, “Using Artificial Intelligence and Algorithms,” that offers important lessons about the use of AI and algorithms in automated decision-making. The post begins by noting that headlines today tout rapid improvements in AI technology, and the use of more advanced AI has enormous potential to improve welfare and productivity. But more sophisticated AI also presents risks, such as the potential for unfair or discriminatory outcomes. This tension between benefits and risks is a particular concern in “Health AI,” and the tension will continue as AI technologies are deployed to tackle the current COVID-19 crisis.

On April 16, 2020, OSHA issued guidance entitled, “Discretion in Enforcement when Considering an Employer's Good Faith Efforts During the Coronavirus Disease 2019 (COVID-19) Pandemic” to announce that it will assess during an inspection an employer's efforts to comply with standards that require annual or recurring audits, reviews, training, or assessments in considering whether a citation should issue for non-compliance. The following were offered as examples:

The U.S. Occupational Safety and Health Administration (OSHA) has issued an Interim Enforcement Response Plan for COVID-19 to instruct its area offices, state plan designees, and compliance safety and health officers on how to prioritize and respond to workplace complaints related to the novel coronavirus. Although this enforcement response plan is directed to OSHA personnel, it provides useful additional guidance to employers on OSHA’s enforcement priorities and considerations, building on OSHA’s previously published guidance to employers for responding to and protecting employees from COVID-19 health and safety concerns in the workplace.

In July 2018, a New York State trial court in Burdick v. Tonoga, Inc., 60 Misc. 3d 1212(A) (N.Y. Sup. Ct. 2018), certified four classes of plaintiffs in a suit against Tonoga Inc. (d/b/a Taconic) for soil and groundwater contamination and medical monitoring involving perfluorooctanoic acid (PFOA). The case is the first lawsuit involving PFOA contamination in New York State in which a class has been certified, and may be a harbinger of similar toxic tort class actions in the future.

Since our prior alert, Tax Reform Impacts Governmental Environmental Enforcement, there have been a number of important developments regarding the TCJA and tax reform. In mid-May 2018, DOJ and EPA sent letters to the IRS in response to its request for comments on proposed regulations. And on May 25, taxpayers got the first look – via the apparent first consent decree entered into since the law’s enactment – at how DOJ and EPA are handling tax reform’s new identification requirement.

The 2017 Tax Cuts and Jobs Act (TCJA) has made it more difficult for companies facing environmental enforcement to deduct payments to the government. The TCJA narrowed the scope of deductible payments and, for certain eligible payments (e.g., property remediation expenses or compliance costs), requires that specific language be included in settlements and court orders for those payments to be deductible. Given that environmental attorneys regularly negotiate enforcement and compliance agreements for their clients with environmental agencies at all levels of government, these changes may have a significant impact on settlement negotiations at cleanup sites across the country.