Category: Environmental Law

As Foretold, California’s New Forced Speech Laws Are Being Challenged

Last year, I commented on the likely unconstitutionality of two California laws compelling forced speech:

The California legislature has of late adopted the tactic of driving behavior by compelling speech. SB 253 (Wiener), for example, compels disclosure of greenhouse gas emissions and SB 261 (Stern) requires disclosure of climate-related financial risks. Both of these requirements clearly compel speech arguably in contravention of the First Amendment to the U.S. Constitution. Rumsfeld v. Forum for Academic and Institutional Rights, Inc., 547 U.S. 47, 61 (2006) (“Some of this Court’s leading First Amendment precedents have established the principle that freedom of speech prohibits the government from telling people what they must say.”).

I had previously noted that SB 253 was very similar to an earlier bill that did not make it into law.

Yesterday, the Chamber of Commerce of the United States of America and several others filed suit in the Central District Court challenging these laws. In its complaint, the plaintiffs allege that the “State’s plan for compelling speech to combat climate change is unconstitutional – twice over.” The plaintiffs urge the court to apply “strict scrutiny” to both laws because they compel speech about a controversial subject – climate change. If the court applies strict scrutiny, the bills would be presumptively unconstitutional and may be upheld only by proof that they are narrowly tailored to serve compelling state interests. That is an exceedingly high hill to climb.

Because both bills quite obviously violate basic free speech rights, the question arises whether the authors knew or were grossly negligent in not knowing of the constitutional infirmities of the legislation. In 2020, I wrote Senator Wiener, the author of SB 253, that SB 260, “abridges free speech rights guaranteed by the U.S. and California Constitutions”. At the time, I was distressed that the legislative analyses for SB 260 failed to mention the constitutional infirmities of the bill. See Legislators Again Kept In Dark About Constitutional Infirmities Of Climate Corporate Accountability Act and Legislators Again Kept In Dark About Constitutional Infirmities of Climate Corporate Accountability Act.

© 2010-2024 Allen Matkins Leck Gamble Mallory & Natsis LLP
by: Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP 
For more news on California Free Speech Laws regarding Climate Change, visit the NLR Environmental, Energy & Resources section.

CalRecycle Seeks Stakeholder Feedback on Single-Use Packaging EPR Program

Tomorrow, February 1, the California Department of Resources Recycling and Recovery (CalRecycle) will host a hybrid question and answer session to discuss the draft rulemaking on their extended producer responsibility (EPR) program, as discussed below. A 45-day public comment period will follow. Members of the regulated community who wish to attend can find in-person and virtual information on the session here.

Members of B&D’s Plastics and Packaging team will attend the public meeting and will be prepared to answer any questions clients and contacts may have. A more substantive update on what to expect from CalRecycle and the rulemaking process is forthcoming.

Background

In June 2022, the California legislature passed a transformational law creating an EPR program with ambitious goals to ensure 100% of single-use packaging and plastic food ware is recyclable or compostable by 2032. The law creates responsibility for producers, typically manufacturers that are brand owners (although it applies to others as well), to join a producer responsibility organization (PRO) that will develop a plan to implement the law, including raising $5 billion from industry members over 10 years. CalRecycle has selected the Circular Action Alliance (CAA) as the PRO and is developing regulations to implement the law.

Companies potentially impacted by the SB 54 regulations should monitor the rulemaking process and prepare to submit comments within the upcoming 45-day public comment period. To receive periodic updates on CalRecycle’s implementation of SB 54, subscribe to the Agency’s SB 54 listserv here.

© 2024 Beveridge & Diamond PC
For more news on California’s Recycling Program, visit the NLR Environmental, Energy & Resources section.

PFAS MDL Settlements: Red Herrings For Downstream Companies

Leading up to the aqueous film-forming foam (AFFF) MDL litigation bellwether trial in June 2023, questions circulated regularly about the end game for the water utilities that had filed lawsuits alleging PFAS contamination to drinking water. With several hundred utilities with pending lawsuits seeking the costs for technology needed to filter PFAS from drinking water, monitoring wells, testing equipment, disposal costs, etc., and potentially thousands of other water utilities with similar potential lawsuits, the damages seemed astronomical. So, too, did the amount of time it would take to litigate each case to get the water utilities monetary relief. These two competing forces, plus the pressure of an actual trial date looming, led Dupont and 3M to announce PFAS MDL settlements in June 2023. At $1.185 billion by Dupont and between $10.3 billion and $12.5 billion by 3M, with the intention of both settlement funds to resolve all pending and potential water utility claims in the United States, it seemed to many that a resolution had been achieved that would address PFAS in drinking water systems without burdening utility customers or the utilities themselves.

The issue, though, is that over 9,000 water utilities were estimated to be in need of treatment technology to meet the EPA’s newly proposed drinking water standards. The American Water Works Association (AMWA) reminded everyone that their own estimates of the costs of compliance to the EPA’s level would cost utilities over $3.2 billion annually. Even buying into the old joke that lawyers are horrible at math, it does not take long for one to realize the significant gap in the proposed settlement amounts and AMWA’s estimates. Water utilities accepting money under the Dupont and 3M settlement funds are not all going to receive 100% of the necessary funding for remediation. How then will this deficit be resolved?

Water utilities will be reluctant to pass on all of the costs to customers, although pricing increases could provide a stopgap measure for water utilities on top of the MDL settlement funds. State or even federal funding may be available under grant, loan or other programs that can also assist. However, when the dust settles, it is likely that water utilities are going to look to a particular group of parties to pursue damages from – companies that discharged PFAS into waterways that fed into the water utility facilities. Lawsuits already abound nationally filed by private citizens against such companies for property damage, bodily injury and medical monitoring. Why then would water utilities finding themselves in need of significant money to properly treat drinking water not take similar legal action? Couple this with pressure water utilities are starting to receive in the form of finding themselves sued in class action lawsuits by private citizens, and the legal notion of contribution begins to ring very true for water utilities looking to minimize their own damages in such lawsuits and find sources of funding for remediation technology.

Companies that have historically discharged effluent into waterways that feed drinking water supplies must therefore keep all of the above in mind and not be lulled into a false sense of complacency that the Dupont and 3M settlements in the MDL are going to mean the end of PFAS drinking water litigation. I predict quite the opposite.

It is of the utmost importance that businesses along the whole commerce chain that have or believe that they might have used PFAS in certain processes take steps now to understand their PFAS risk. Public health and environmental groups urge legislators to regulate PFAS at an ever-increasing pace. Similarly, state level EPA enforcement action is increasing at a several-fold rate every year. Companies that did not manufacture PFAS, but merely utilized PFAS in their manufacturing processes, are becoming targets of costly enforcement actions at rates that continue to multiply year over year. Lawsuits are also filed monthly by citizens or municipalities against companies that are increasingly not PFAS chemical manufacturers. The only way to manage future risk is to fully understand what that risk picture looks like, and companies would be well-advised to invest in proper diligence for the PFAS risk question.

©2024 CMBG3 Law, LLC. All rights reserved.
For more on PFAS, visit the NLR Environmental, Energy & Resources section.

Multistate Coalition Supports EPA’s Proposed Revisions to the Safer Choice Standard

As reported in our December 5, 2023, memorandum, the U.S. Environmental Protection Agency (EPA) proposed updates to the Safer Choice Standard on November 14, 2023, that include a name change to the Safer Choice and Design for the Environment (DfE) Standard (Standard), an update to the packaging criteria, the addition of a Safer Choice certification for cleaning service providers, a provision allowing for preterm partnership termination under exceptional circumstances, and the addition of several product and functional use class requirements. 88 Fed. Reg. 78017. On January 16, 2024, California Attorney General Rob Bonta announced that, alongside a coalition of 12 attorneys general, he submitted a comment letter that:

  • Supports EPA’s proposed revisions to its Safer Choice Standard;
  • Recommends that EPA not allow products with plastic primary packaging to use the Safer Choice label or DfE logo;
  • Recommends that if EPA does allow products with plastic primary packaging to use the label and logo, EPA should prohibit the use of chemical recycling in meeting the proposed standard’s plastic packaging recycled content requirements; and
  • Calls on EPA to exclude any products or packaging that contain any per- and polyfluoroalkyl substances (PFAS), “whether intentionally introduced or not.”
©2024 Bergeson & Campbell, P.C.
For more news on EPA’s Safer Choice Standard, visit the NLR Environmental, Energy & Resources section.

USDA Requesting Comments on New AFIDA Regulations that Could Impact Renewable Energy Developers

On December 18, 2023, the Farm Service Agency of the United States Department of Agriculture published Notice in the Federal Register that it is considering changes to its FSA-153 Form required to report foreign interests in agricultural land pursuant to the Agricultural Foreign Investment Disclosure Act (“AFIDA”), 7 U.S.C.A.§ 3501 et seq.

Interested stakeholders are invited to provide comments regarding the proposed changes no later than February 16, 2024. The Federal Register Notice is available in its entirety via the following link: https://www.federalregister.gov/documents/2023/12/18/2023-27683/request-for-information-on-agricultural-foreign-investment-disclosure-act-afida-fsa-153-form.

Many renewable developers are subject to AFIDA and regularly report long-term wind and solar leasehold interests to the USDA. The changes proposed by the USDA may directly impact the data required to be reported by renewable developers. In additional to comments requested on other AFIDA reporting matters, the USDA requests public input on the following:

(1) Are long-term leasehold filings—particularly those in the wind turbine and solar panel industries—“different enough” from land ownership purchase or sale filings that a separate version of the FSA–153 form should be created? Should a different “logic path” of questions be developed for long-term leasehold filings?

(2) Many foreign wind energy companies have long-term leaseholds on U.S. agricultural land farmed by U.S. producers that trigger the AFIDA reporting requirement. Currently, the entire acreage of the parcel is captured; this is because the number of wind turbines that will be established on the land (if any) is often an unknown at the time of AFIDA reporting. In addition, the existence of the leasehold generally precludes other energy company involvement on the acreage. Does this approach overstate foreign energy company activity on U.S. agricultural land? If so, how should the acreage associated with these leaseholds be captured?

(3) How should solar panels or photovoltaics—which are situated above the agricultural land—be treated for AFIDA reporting given that AFIDA uses an acreage basis for reporting?

(4) Some foreign owners are providing a very low estimate of the value of the lease (as the flat payment is low) on the FSA–153 form while others are providing the estimated value of the entire parcel. How should “interest in the value of the agricultural land” be defined for leases?

(5) In addition to the legal description of each leasehold parcel already required to be reported on Form FSA-153, is it an undue burden on foreign owners or their representatives to require one or more of the following: (a) the longitude and latitude for each parcel; (b) the property tax ID number assigned by the county; and (c) the FSA tract number and the FSA farm number?

As many renewable developers are aware, AFIDA imposes reporting requirements with respect to the acquisition or disposition of interests in agricultural property by a foreign-owned entity or an entity in which a “significant interest or substantial control” is held by a non-U.S. parent.

Sales and acquisitions in particular may be highly scrutinized by the USDA to ensure that a disposition is filed by the selling entity and an acquisition form is filed by the acquiring entity. If, for example, an entity sells a portfolio of wind or solar leases, that entity should file FSA-153 dispositions, and the purchaser should file FSA-153 acquisitions for the same property. In addition to acquisitions and dispositions, reporting of an amended FSA–153 is triggered when the land use changes, the tiers of ownership change, or the name of the foreign person changes.

Although AFIDA’s requirements have been in existence for many years, the USDA’s recent imposition of significant fines and penalties (up to 25% of the FMV of the property) to developers who fail to file (or are late to file) FSA-153 reports has engendered a new interest in AFIDA and made it more crucial to consider these reporting requirements in any diligence analysis.

Significant interest or substantial control is defined by Federal regulations as an ownership interest of ten percent or more. “Foreign owners” also includes long-term leaseholders in the wind and solar industries.

AFIDA generally defines “agricultural land” as ten acres or more of land that has been used for agricultural purposes (e.g. farming, cropland, ranching, grazing, timber production) within the last five years. These definitions apply even if the land has been planned and plotted or re-zoned for nonagricultural purposes.

Agricultural land is categorized as cropland, forestland, pastureland, other agriculture, and non-agricultural land (homesteads, farm roads).

7 C.F.R. §781.2(c) defines “any interest in real property” as all interest acquired, transferred or held in agricultural lands, except:
(1) Security interests;
(2) Leasehold interests of less than ten (10) years;
(3) Contingent future interests;
(4) Noncontingent future interests which do not become possessory upon the termination of the present possessory estate;
(5) Surface or subsurface easements and rights of way used for a purpose unrelated to agricultural production, and;
(6) An interest solely in mineral rights.

© Polsinelli PC, Polsinelli LLP in California
For more news on Agricultural Land and Renewable Energy Developers, visit the NLR Environmental, Energy & Resources section.

Key Developments in Environmental Law and Policy in 2023, and What’s Ahead in 2024 [PODCAST]

On this episode of the Bracewell Environmental Law Monitor, we look back at the significant developments in environmental and natural resources law and policy in 2023, as well as look ahead to what’s to come in 2024. Co-hosts Daniel Pope and Taylor Stuart talk with Ann Navaro and Tim Wilkins, partners in Bracewell’s environment, lands and resources practice, about a range of topics, such as climate and environmental justice, renewable energy advancements, regulatory developments and much more.

 

EPISODE HIGHLIGHTS

[01:44] Big Developments in 2023: The Biden administration’s top priorities have been climate and environmental justice. The big development of 2023 on the climate front has been on the methane side rather than the carbon dioxide side. Regarding environmental justice, the Biden administration and NGOs have been really pushing to apply justice factors in enforcement, in cleanups, new rulemaking, permitting, issuance of grants and loans, and the like.

[06:59] A Significant Year for Jurisdiction Under the Clean Water Act: Almost a year ago, the Biden administration issued its definition of “Waters of the United States.” Subsequently, the Supreme Court issued another decision interpreting Waters of the United States in the Sackett case and essentially eviscerated one of the bases for the Biden administration’s Waters of the US rulemaking. Litigation is ongoing.

[09:33] Congress Amended the National Environmental Policy Act and the Fiscal Responsibility Act: This was enormous, as core provisions had never seen substantive amendments. There are mixed reviews of what that amendment to NEPA accomplished.

[13:41] Renewable Energy: There’s been advancement in renewable energy projects and trying to permit those projects and an emphasis on promoting renewable energy. For example, for offshore wind, in this year and in prior years of the Biden administration, there’s been a lot of advancement on leasing.

[21:57] On the Horizon in Environmental Law in 2024: Ann shares that the US Army Corps of Engineers could revise Nationwide Permit 12. Tim shares that the White House is reviewing EPA’s CERCLA hazardous substance listing for two of the leading PFAS chemicals, and the listing will go final sometime early in 2024. In addition, the SEC’s semi-annual rulemaking agenda for April 2024 promises to include proposed climate disclosure rules for publicly traded companies.

© 2023 Bracewell LLP
For more news on Upcoming Environmental Law in 2024, visit the NLR Environmental, Energy & Resources section.

An Early Christmas Present from Three Fifth Circuit Judges Who Concluded a Louisiana Property Is Not Subject to Federal Clean Water Act Jurisdiction

Garry Lewis owns 2000 acres in Livingston Parish, Louisiana and he has been fighting with the Army Corps of Engineers over whether any of those 2000 acres are wetlands subject to Federal Clean Water Act jurisdiction for over a decade. On two separate occasions the Army Corps of Engineers has said the answer to that question is “yes”. The first time the Corps made this determination, a District Court Judge disagreed. The second time was before the Supreme Court’s definition of “Waters of the United States”, including jurisdictional wetlands, in Sackett v. EPA and it is that second determination that is the subject of a Fifth Circuit Court of Appeals decision earlier this week.

The Sacketts had been fighting with EPA and the Corps about whether their much smaller property was subject to Clean Water Act jurisdiction for twice as long as Mr. Lewis until the Supreme Court found in the Sacketts’ favor earlier this year. The day the Supreme Court decided Sackett I wrote that “[f]or my entire adult life, the Courts have deferred to EPA’s interpretation of statutes it has been charged by Congress to implement. That era is most certainly over . . .”

This week three Judges of the Fifth Circuit proved my point. Over the Corps’ objection, the Judges took it upon themselves to apply the Supreme Court’s Sackett holding to determine that “based on photographs of [Mr. Lewis’s] property” there is “no ‘continuous surface connection’ between any plausible wetlands on the Lewis tracts and a ‘relatively permanent body of water connected to traditional interstate navigable waters.’”

The Corps had argued unsuccessfully that it should be given the opportunity to apply Sackett for itself before Judges weighed in.

The Fifth Circuit Judges were probably right to conclude that, given the chance, the Corps “could create an ‘endless loop’ of financially onerous regulatory activity” for Mr. Lewis. But the Judges fail to mention that conclusion could be based on the fact that EPA’s and the Corps’ tenth, post Sackett, attempt to determine the reach of the Clean Water Act continues to extend Clean Water Act jurisdiction to “tributaries,” “impoundments,” and “wetlands” that have a “continuous surface connection” to waters that are not “traditional navigable waters, the territorial seas, [or] interstate waters.” That’s a different standard than the Justice Alito-supplied standard the three Fifth Circuit Judges applied in holding that the Lewis property was not subject to Clean Water Act jurisdiction even though a culvert on the Lewis property connects to a “relatively permanent water” which connects to another “relatively permanent water” which connects to a “traditional navigable water.”

Now EPA’s and the Corps’ most recent Waters of the United States regulation is currently being challenged in two Federal District Courts, including on the basis that the regulation is broader than allowed by the Supreme Court in Sackett. But that regulation hasn’t been struck down yet. That apparently didn’t matter at all to these three Judges of the Fifth Circuit. And it may be worth mentioning that one of those challenges to EPA’s and the Corps’ regulation is in Federal District Court in Texas which is in, you guessed it, the Fifth Circuit.

What does this all mean? Well, I think it means we’re going to continue to see some Judges applying the Supreme Court’s Sackett holding to determine the extent of Clean Water Act jurisdiction, ignoring EPA’s and the Corps’ subsequent regulation, unless and until Congress decides to get involved in the longest running controversy in environmental law.

©1994-2023 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more news on Clean Water Act jurisdiction, visit the NLR Environmental, Energy & Resources section.

CFTCs Increased Reach over Environmental Commodities

During 2023 the Commodity Futures Trading Commission (CFTC) engaged in several regulatory actions aimed at further clarifying its jurisdictional reach over environmental commodity markets generally and the voluntary carbon credit (VCC) markets in particular. First, on June 20, 2023, the CFTC issued an alert seeking whistleblower tips relating to carbon market misconduct. CFTC noted that many VCCs serve as the underlying commodity for futures contracts that are listed on CFTC designated contract markets (DCMs) over which the CFTC has full enforcement authority as well as the regulatory oversight. Importantly, the CFTC also noted that it has anti-fraud and anti-manipulation enforcement authority over the related spot markets for VCCs as well as carbon allowances and other environmental commodities products that are linked to futures contracts.1

Second, on July 19, 2023 the CFTC held its second convening where several market participants expressed the view that reliability, integrity and resilience of VCCs will be significantly improved with greater regulatory involvement.2

Third, in response to a growing demand to become more actively involved in environmental commodity markets on December 4, 2023, the CFTC issued proposed Guidance Regarding the Listing of Voluntary Carbon Credits Derivatives and Request for Comment (VCC Guidance).3 The VCC Guidance “outlines factors for a DCM to consider in connection with product design and listing [of futures contracts on VCCs] to advance the standardization of such products in a manner that promotes transparency and liquidity.”

The VCC Guidance is remarkable because: (i) it is non-binding (i.e., it is only guidance, not a regulation – stating that DCMs “should consider”); (ii) it notes several times that “for the avoidance of doubt, this proposal is not intended to modify or supersede the Appendix C Guidance” [to Part 38 of CFTC regulations];4 (iii) it addresses the already existing regulatory requirements for DCOs (i.e., Core Principle 3 – the requirement that all listed futures are not readily susceptible to manipulation);5 (iv) it attempts to reach over spot physically-settled VCC markets over which the CFTC does not have the regulatory jurisdiction and can only exercise its limited enforcement anti-fraud and anti-manipulation jurisdiction; (v) it requires DCMs to “consider” a number of VCC characteristics that are clearly outside of DCM’s control and probably competency, which include transparency, additionality, permanency and risk of reversal, robust quantification, governance and tracking mechanisms, and measures to prevent double-counting of VCCs; (vi) it requires DCMs to submit to the CFTC “explanation and analysis of the contract” it intends to list; (vii) it requires DCMs to actively monitor VCC contracts to ensure that they continue to meet these standards; and (viii) notes that the same standards should apply to swap execution facilities (SEFs) that may list swaps on VCCs. Finally, this VCC Guidance is followed by a number of questions and an open comment period ending on February 16, 2024.

The VCC Guidance is an important step forward to promoting transparency and integrity of VCC markets within the jurisdictional constraints of the CFTC. Even though the VCC Guidance does not (and cannot) impose any additional compliance requirements on DCMs and SEFs short of promulgating a rulemaking in compliance with the Administrative Procedure Act, it is clear that DCM’s compliance burden with respect to listed VCC contracts before the VCC Guidance was issued are clearly different than after the VCC Guidance would become effective. Further, unlike other physically-deliverable commodities that serve as underliers to futures contracts on DCMs, VCCs traded in spot and forward markets are treated differently and will probably be in the same category as virtual currencies.

https://icvcm.org/

1 https://www.cftc.gov/PressRoom/PressReleases/8723-23

2 https://www.cftc.gov/PressRoom/Events/opaeventvoluntarycarbonmarkets071923

3 https://www.cftc.gov/PressRoom/PressReleases/8829-23

4 https://www.ecfr.gov/current/title-17/chapter-I/part-38/appendix-Appendix%20C%20to%20Part%2038

5 https://www.law.cornell.edu/uscode/text/7/7

© Copyright 2023 Cadwalader, Wickersham & Taft LLP
For more news on CFTC Environmental Oversight, visit the NLR Financial Institutions & Banking section.