Environmental Law Archives - Page 13 of 44

EPA Launches Their New Office: What Does the Office of Environmental Justice and External Civil Rights Mean for Companies and ESG in the United States?

On September 24, 2022, the Environmental Protection Agency (EPA) announced the creation of a new national office dedicated to advancing environmental justice (EJ) and civil rights. Known as the Office of Environmental Justice and External Civil Rights, the creation of the new office delivers on a noteworthy campaign promise of President Joe Biden, who committed to elevating these issues during his presidency and ensuring justice and equality for overburdened, underserved communities.

“From day one, President Biden and EPA have been committed to delivering progress on environmental justice and civil rights and ensuring that underserved and overburdened communities are at the forefront of our work,” said EPA Administrator Michael S. Regan. “With the launch of a new national program office, we are embedding environmental justice and civil rights into the DNA of EPA and ensuring that people who’ve struggled to have their concerns addressed see action to solve the problems they’ve been facing for generations.”

“Since the beginning of the Biden Administration, its appointees have consistently stressed the idea of environmental justice,” said Jacob Hupart, Member at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. “Specifically, in this context, the invocation of environmental justice has focused on the principle that addressing the various environmental issues confronting society—including the challenge of climate change—must also take into consideration that underserved communities frequently are disproportionately impacted by environmental issues, and so these communities should receive particular attention. That the Biden Administration is establishing an EPA office dedicated specifically to this issue is congruent with their prior rhetoric and action (such as the appointment of Michael Regan as the EPA Administrator), and emphasizes this aspect of their environmental program.

What is the Intent and Significance of the EPA’s New Office?

With more than 200 EPA staff members across ten regions dedicated to the project, the office will put substantial resources into environmental justice efforts across the United States. This includes, but is not limited to, working with state, local, and Tribal partners to understand their EJ needs, disbursing grants and technical assistance, cooperating with other EPA offices to incorporate EJ initiatives in all areas, and ensuring funding recipients are complying with relevant civil rights laws.

This new focus by the EPA is extremely meaningful not only for environmental justice in the US, but for the direction of major regulatory and administrative bodies. “The EPA and the White House have enunciated policy, established guidance, and issued Executive Orders, but these tools do not have enforceable legal requirements,” explained Richard Glaze, environmental litigator and Partner at Barnes & Thornburg LLP. “Combining the existing Office of Environmental Justice with the External Civil Rights Compliance Office to form the Office of Environmental Justice and Civil Rights sends a signal that the EPA is willing to use enforcement tools with teeth to advance the administration’s Environmental Justice goals.”

Stacey Halliday, environmental lawyer and Principal at Beveridge & Diamond PC, noted how this is a substantial shift from the status quo. “In the past two years, we’ve seen momentum in fits and spurts from a variety of executive branch agencies following the January 27 issuance of EO 14008– including notable action from CEQ, DOE, DOJ, DOT and EPA,” she says. “However, this most recent action by EPA is only likely to accelerate this momentum and have impacts that will extend beyond the Biden Administration. We can expect to see more alignment between EPA program offices […] and a ‘from-the-top’ imperative to incorporate EJ in overall agency decision-making. This is a big change from past practice when EJ and civil rights enforcement were separately housed within other program offices and lacked this level of authority and agency-wide reach.”

“The Department of Justice is fully on board with the EPA in this effort,” added Mr. Glaze. “It recognizes that “Environmental justice and Title VI are both rooted in the same basic principle that no person should bear an unfair share of harm on account of their race, color or national origin” and warns that Title VI of the Civil Rights Act is a powerful for the coordination of Title VI and Environmental Justice.”

What Does the New EPA Office Mean for Companies?

The EPA’s new office comes at a time when companies are turning their focus to the upcoming recession, reminding them that climate and social justice must remain a top priority even as companies prepare for economic instability. This should send a message to corporations who have already been facing mounting pressure to incorporate climate justice considerations into their missions and operations. By creating a political culture of increased environmental and social scrutiny, the Biden administration is slowly changing “ESG” from a greenwashing buzzword to a corporate obligation.

“Companies seeking to gain the benefit of competitive federal funding,” said Ms. Halliday, “especially following the flush of resources coming from the IIJA and IRA – are more frequently asked to provide a detailed accounting of how they will assess and address EJ impacts, as well as how projects may contribute to the Justice 40 Initiative (directing 40% of benefits from federal climate investments to disadvantaged communities).”

“Although the ultimate impact of this new office is uncertain, as the actual initiatives and enforcement actions brought will have to be assessed and evaluated, at minimum, the creation of this office indicates that policy and enforcement actions centered around environmental justice are more likely to appear over the coming months and years,” added Mr. Hupart. “It should also be noted, however, that other environmental actions undertaken by the Biden Administration—such as the mandatory climate disclosures proposed by the SEC, which would be applicable to all public companies—are more likely to be an immediate focus for corporate America rather than potential EPA enforcement actions focused on specific instances implicating environmental justice concerns.”

What Does the New EPA Office Mean for ESG Considerations?

The environmental, social, and governance movement (ESG) has been undeniably energized by the EPA’s new office, particularly at a time when ESG movements are under scrutiny. If Biden’s plan to make environmental justice a more common business priority succeeds, centering sustainability issues will no longer be enough for firms to differentiate themselves to investors. Corporations targeting ethically-minded shareholders will need to develop more detailed, creative ESG approaches.

“Environmental justice combines elements of the “E” and the “S” of ESG and companies that have embraced ESG are well-advised to consider whether their operations implicate environmental justice and, if they do, give these issues the attention they deserve,” said Mr. Glaze. “Combined with the recent SEC climate disclosure rule, these ESG issues that companies have considered ‘optional’ will now have more force behind them [and companies] can no longer ignore them.”

“Even before the creation of this office, the renewed federal and state prioritization of EJ has had an impact on corporate behavior – driven broadly by federal guidance and tools, new state permitting requirements, targeted environmental enforcement, and investor demand,” said Ms. Halliday. “In the last year or so, we have seen an increase in shareholder proposals related to climate disclosures, racial equity audits and environmental justice audits, with investors seeking to understand how company activities impact disadvantaged communities and implications for long-term value for the company.”

Article By Chandler Ford, Crissonna Tennison, Shelby Garrett, and Casey Karthaus of The National Law Review / The National Law Forum LLC

For more environmental law legal news, click here to visit the National Law Review.

Supreme Court Questions Whether Highly Compensated Oil Rig Worker Is Overtime Exempt

On October 12, 2022, the Supreme Court of the United States heard oral arguments in a case regarding whether an oil rig worker who performed supervisory duties and was paid more than $200,000 per year on a day rate basis is exempt from the overtime requirements of the Fair Labor Standards Act (FLSA).

The case is especially significant for employers that pay exempt employees on a day rate. It could have a major impact on the oil and gas industry in the way that it recruits, staffs, and compensates employees who work on offshore oil rigs and at remote oil and gas work sites. In addition, depending on how the Supreme Court rules, its decision could have much broader implications.

During the arguments in Helix Energy Solutions Group, Inc. v. Hewitt, the justices questioned whether, despite the employee’s high earnings, he was eligible for overtime compensation because he was paid by the day and not on a weekly salary basis. There is no express statutory requirement that an employee be paid on a “salary basis” to be exempt from overtime requirements, but such a requirement has long been included in the regulations issued by the U.S. Department of Labor (DOL) applicable to the FLSA’s white-collar exemptions. Notably, Justice Brett Kavanaugh suggested during the arguments that the regulations may be in conflict with the text of FLSA, although Helix did not raise this issue in its petition for certiorari.

Background

The case involves an oil rig “toolpusher,” an oilfield term for a rig or worksite supervisor, who managed twelve to fourteen other employees, was paid a daily rate of $963, and earned more than $200,000 annually. Between December 2014 and August 2017, when Michael Hewitt was discharged for performance reasons, he worked twenty-eight-day “hitches” on an offshore oil rig where he would work twelve-hour shifts each day, sometimes working eighty-four hours in a week. After his discharge, Hewitt filed suit alleging that he was improperly classified as exempt and therefore was entitled to overtime pay. The district court ruled in favor of Helix.

In September 2021, a divided (12-6) en banc panel of the U.S. Court of Appeals for the Fifth Circuit held that Hewitt was not exempt from the FLSA because his payment on a day-rate basis did “not constitute payment on a salary basis” for purposes of the highly compensated employee (HCE) exemption that is found in the FLSA regulations.

The Fifth Circuit further concluded that the employer’s day-rate pay plan did not qualify as the equivalent of payment on a salary basis under another FLSA regulation because the guaranteed pay for any workweek did not have “a reasonable relationship” to the total income earned. In other words, the court found that the employee was not exempt because the $963 he earned per day was not reasonably related to the $3,846 the employee earned on average each week.

Oral Arguments

Oral arguments at the Supreme Court focused on the interplay between the DOL’s HCE regulation, 29 C.F.R. § 541.601, and another DOL regulation, 29 C.F.R. § 541.604(b), which states that an employer will not violate the salary basis requirement under certain limited circumstances even if the employee’s earnings are computed on an hourly, daily, or shift basis.

At the time of Hewitt’s employment, the HCE exemption required an employee to be paid at least $455 per week on a “salary or fee basis” and to earn at least $100,000 in total annual compensation. Those threshold amounts have since been increased to $684 per week and $107,432 per year.

The other regulation, 29 C.F.R. § 541.604(b), states that an employee whose earnings are “computed on an hourly, a daily or a shift basis” may still be classified as exempt if the “employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned. The reasonable relationship test will be met if the weekly guarantee is roughly equivalent to the employee’s usual earnings at the assigned hourly, daily, or shift rate for the employee’s normal scheduled workweek.”

Hewitt earned double the minimum total compensation level for the HCE exemption. Since the minimum salary level for the exemption was only $455 per week, and Hewitt was guaranteed that he would be paid at least $963 per week for each week he worked at least one day, Helix argued that he was exempt from the FLSA’s overtime requirements because the HCE exemption was completely self-contained and to be applied without regard to other regulations, including the “salary basis” test and the minimum guarantee regulation. Hewitt argued that the HCE exemption required compliance with either the “salary basis” test or the minimum guarantee regulation since he was admittedly paid on a day rate basis.

However, Justice Ketanji Brown Jackson suggested that it was not that simple. Justice Jackson said the question of salary basis is more about the “predictability and regularity of the payment” for each workweek. “What he has to know is how much is coming in at a regular clip so that he can get a babysitter, so that he can hire a nanny, so that he can pay his mortgage,” Justice Jackson stated. Justice Jackson echoed the language of the salary basis test requiring that an exempt employee be paid a predetermined amount for any week in which she performed any work.

Similarly, Justice Sonia Sotomayor asked Helix, “so what you’re asking us to do is take an hourly wage earner and take them out of 604, which is the only provision that deals with someone who’s not paid on a salary basis.” Justice Sotomayor additionally raised the FLSA’s goal of “preventing overwork and the dangers of overwork.”

In contrast, Justice Clarence Thomas suggested that Hewitt’s high annual compensation relative to the average worker is a strong indication that he was paid on a salary basis and should be exempt. “The difficulty is just, for the average person looking at it, when someone makes over $200,000 a year, they normally think of that as an indication that it’s a salary,” Justice Thomas stated.

Justice Kavanaugh asked if the issue of whether the DOL regulations conflict with the FLSA is being litigated in the courts. He said, “it seems a pretty easy argument to say, oh, by the way, or maybe, oh, let’s start with the fact that the regs [sic] are inconsistent with the statute and the regs [sic] are, therefore, just invalid across the board to the extent they refer to salary.” He further stated, “if the statutory argument is not here, I’m sure someone’s going to raise it because it’s strong.”

Key Takeaways

It is difficult to predict how the Supreme Court will rule in this case. A decision that requires strict adherence to the regulation’s reasonable relationship test, even when the minimum daily pay far exceeds the minimum weekly salary threshold, would have a significant negative impact on the manner in which certain industries compensate their workers. It also could lead to even more litigation by highly compensated employees, many of whom make more money without receiving overtime pay than what many people who currently are paid overtime compensation make.

Depending upon its breadth, a decision that the regulations are in conflict with the statutory text of the FLSA could provide a roadmap for additional challenges to other parts of the regulations. This could have a wide-ranging impact, as the DOL currently is in the process of preparing a proposal to revise its FLSA regulations. Then again, if a future litigant takes up Justice Kavanaugh’s invitation to challenge whether the salary regulations are overbroad compared to the language of the FLSA, the current effort to revise the regulations regarding exemptions for executive, administrative, and professional employees may be moot.

Article By Andrew P. Burnside, Steven F. Pockrass, and Zachary V. Zagger of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

For more supreme court and litigation legal news, click here to visit the National Law Review.

California PFAS Legislation Will Dramatically Impact Businesses

We previously reported on three significant pieces of California PFAS legislation that were before California’s Governor Newsom for ratification. Two of the bills were passed, which means that several categories of products will have applicable PFAS bans. The third bill was not signed by the Governor, which would have required companies to report certain data to the state for goods sold in or otherwise brought into California that contain PFAS.

With increasing attention being given to PFAS in consumer goods in the media, scientific community, and in state legislatures, the California PFAS bills underscore the importance of companies anywhere in the manufacturing or supply chain for consumer goods to immediately assess the impact of the proposed PFAS legislation on corporate practices, and make decisions regarding continued use of PFAS in products, as opposed to substituting for other substances. At the same time, companies impacted by the PFAS legislation must be aware that the new laws pose risks to the companies involvement in PFAS litigation in both the short and long term.

California PFAS Bills

One of our prior reports was on the first significant PFAS bill that Governor Newsom was expected to sign into law – AB 2771 – and which was indeed passed into law. The bill prohibits the manufacture, sale, delivery, hold, or offer for sale any cosmetics product that contains any intentionally added PFAS. The law would go into effect on January 1, 2025. The bill defines a cosmetics products as “an article for retail sale or professional use intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance.”

The second bill signed into law by the Governor is AB 1817, which bans the use of PFAS in textiles manufactured and sold in California. More specifically, the bill prohibits, beginning January 1, 2025, any person from “manufacturing, distributing, selling, or offering for sale in the state any new, not previously owned, textile articles that contain regulated PFAS” and requires a manufacturer to use the least toxic alternative when removing PFAS in textile articles to comply with these provisions. The bill requires a manufacturer of a textile article to provide persons that offer the product for sale or distribution in the state with a certificate of compliance stating that the textile article is in compliance with these provisions and does not contain any regulated PFAS. The bill specifically regulates three categories of textiles:

(1) “Textile articles” means textile goods of a type customarily and ordinarily used in households and businesses, and include, but are not limited to, apparel, accessories, handbags, backpacks, draperies, shower curtains, furnishings, upholstery, beddings, towels, napkins, and tablecloths;

(2) “Outdoor apparel” means clothing items intended primarily for outdoor activities, including, but not limited to, hiking, camping, skiing, climbing, bicycling, and fishing; and

(3) “Apparel”, defined as “clothing items intended for regular wear or formal occasions, including, but not limited to, undergarments, shirts, pants, skirts, dresses, overalls, bodysuits, costumes, vests, dancewear, suits, saris, scarves, tops, leggings, school uniforms, leisurewear, athletic wear, sports uniforms, everyday swimwear, formal wear, onesies, bibs, diapers, footwear, and everyday uniforms for workwear…outdoor apparel and outdoor apparel for severe wet conditions.

The bill that California’s Governor vetoed was AB 2247, which would have established reporting requirements for companies that utilize products or substances that contain PFAS and which are used in California in the stream of commerce. “The bill would [have] require[d], on or before July 1, 2026, and annually thereafter, a manufacturer, as defined, of PFAS or a product or a product component containing intentionally added PFAS that, during the prior calendar year, is sold, offered for sale, distributed, or offered for promotional purposes in, or imported into, the state to register the PFAS or the product or product component containing intentionally added PFAS, and specified other information, on the publicly accessible data collection interface.”

Impact of California PFAS Legislation On Businesses

California PFAS legislation places some of the most significant and widely used consumer products in the crosshairs with respect to PFAS. While other states have banned or otherwise regulated PFAS in certain specific consumer goods, California’s bills are noteworthy given the economic impact that it will have, considering that California is the fifth largest economy in the world.

It is of the utmost importance for businesses along the whole cosmetics supply chain to evaluate their PFAS risk. Public health and environmental groups urge legislators to regulate these compounds. One major point of contention among members of various industries is whether to regulate PFAS as a class or as individual compounds. While each PFAS compound has a unique chemical makeup and impacts the environment and the human body in different ways, some groups argue PFAS should be regulated together as a class because they interact with each other in the body, thereby resulting in a collective impact. Other groups argue that the individual compounds are too diverse and that regulating them as a class would be over restrictive for some chemicals and not restrictive enough for others.

Companies should remain informed so they do not get caught off guard. States are increasingly passing PFAS product bills that differ in scope. For any manufacturers, especially those who sell goods interstate, it is important to understand how those various standards will impact them, whether PFAS is regulated as individual compounds or as a class. Conducting regular self-audits for possible exposure to PFAS risk and potential regulatory violations can result in long term savings for companies and should be commonplace in their own risk assessment.

Article By John Gardella of CMBG3 Law

For more environmental legal news, click here to visit the National Law Review.

Federal Agencies Announce Investments and Resources to Advance National Biotechnology and Biomanufacturing Initiative

As reported in our September 13, 2022, blog item, on September 12, 2022, President Joseph Biden signed an Executive Order (EO) creating a National Biotechnology and Biomanufacturing Initiative “that will ensure we can make in the United States all that we invent in the United States.” The White House hosted a Summit on Biotechnology and Biomanufacturing on September 14, 2022. According to the White House fact sheet on the summit, federal departments and agencies, with funding of more than $2 billion, will take the following actions:

Leverage biotechnology for strengthened supply chains: The Department of Health and Human Services (DHHS) will invest $40 million to expand the role of biomanufacturing for active pharmaceutical ingredients (API), antibiotics, and the key starting materials needed to produce essential medications and respond to pandemics. The Department of Defense (DOD) is launching the Tri-Service Biotechnology for a Resilient Supply Chain program with a more than $270 million investment over five years to turn research into products more quickly and to support the advanced development of biobased materials for defense supply chains, such as fuels, fire-resistant composites, polymers and resins, and protective materials. Through the Sustainable Aviation Fuel Grand Challenge, the Department of Energy (DOE) will work with the Department of Transportation and the U.S. Department of Agriculture (USDA) to leverage the estimated one billion tons of sustainable biomass and waste resources in the United States to provide domestic supply chains for fuels, chemicals, and materials.
Expand domestic biomanufacturing: DOD will invest $1 billion in bioindustrial domestic manufacturing infrastructure over five years to catalyze the establishment of the domestic bioindustrial manufacturing base that is accessible to U.S. innovators. According to the fact sheet, this support will provide incentives for private- and public-sector partners to expand manufacturing capacity for products important to both commercial and defense supply chains, such as critical chemicals.
Foster innovation across the United States: The National Science Foundation (NSF) recently announced a competition to fund Regional Innovation Engines that will support key areas of national interest and economic promise, including biotechnology and biomanufacturing topics such as manufacturing life-saving medicines, reducing waste, and mitigating climate change. In May 2022, USDA announced $32 million for wood innovation and community wood grants, leveraging an additional $93 million in partner funds to develop new wood products and enable effective use of U.S. forest resources. DOE also plans to announce new awards of approximately $178 million to advance innovative research efforts in biotechnology, bioproducts, and biomaterials. In addition, the U.S. Economic Development Administration’s $1 billion Build Back Better Regional Challenge will invest more than $200 million to strengthen America’s bioeconomy by advancing regional biotechnology and biomanufacturing programs.
Bring bioproducts to market: DOE will provide up to $100 million for research and development (R&D) for conversion of biomass to fuels and chemicals, including R&D for improved production and recycling of biobased plastics. DOE will also double efforts, adding an additional $60 million, to de-risk the scale-up of biotechnology and biomanufacturing that will lead to commercialization of biorefineries that produce renewable chemicals and fuels that significantly reduce greenhouse gas emissions from transportation, industry, and agriculture. The new $10 million Bioproduct Pilot Program will support scale-up activities and studies on the benefits of biobased products. Manufacturing USA institutes BioFabUSA and BioMADE (launched by DOD) and the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL) (launched by the Department of Commerce (DOC)) will expand their industry partnerships to enable commercialization across regenerative medicine, industrial biomanufacturing, and biopharmaceuticals.
Train the next generation of biotechnologists: The National Institutes of Health (NIH) is expanding the Innovation Corps (I-Corps™), a biotech entrepreneurship bootcamp. NIIMBL will continue to offer a summer immersion program, the NIIMBL eXperience, in partnership with the National Society for Black Engineers, which connects underrepresented students with biopharmaceutical companies, and support pathways to careers in biotechnology. In March 2022, USDA announced $68 million through the Agriculture and Food Research Initiative to train the next generation of research and education professionals.
Drive regulatory innovation to increase access to products of biotechnology: The Food and Drug Administration (FDA) is spearheading efforts to support advanced manufacturing through regulatory science, technical guidance, and increased engagement with industry seeking to leverage these emerging technologies. For agricultural biotechnologies, USDA is building new regulatory processes to promote safe innovation in agriculture and alternative foods, allowing USDA to review more diverse products.
Advance measurements and standards for the bioeconomy: DOC plans to invest an additional $14 million next year at the National Institute of Standards and Technology for biotechnology research programs to develop measurement technologies, standards, and data for the U.S. bioeconomy.
Reduce risk through investing in biosecurity innovations: DOE’s National Nuclear Security Administration plans to initiate a new $20 million bioassurance program that will advance U.S. capabilities to anticipate, assess, detect, and mitigate biotechnology and biomanufacturing risks, and will integrate biosecurity into biotechnology development.
Facilitate data sharing to advance the bioeconomy: Through the Cancer Moonshot, NIH is expanding the Cancer Research Data Ecosystem, a national data infrastructure that encourages data sharing to support cancer care for individual patients and enables discovery of new treatments. USDA is working with NIH to ensure that data on persistent poverty can be integrated with cancer surveillance. NSF recently announced a competition for a new $20 million biosciences data center to increase our understanding of living systems at small scales, which will produce new biotechnology designs to make products in agriculture, medicine and health, and materials.

A recording of the White House summit is available online.

Article By Lynn L. Bergeson and Carla N. Hutton of Bergeson & Campbell, P.C.

For more environmental, energy, and resources legal news, click here to visit the National Law Review.

Tax Credits in the Inflation Reduction Act Aim to Build a More Equitable EV Market

In February of this year, it was high time for me to buy a new car. I had driven the same car since 2008, and getting this-or-that replaced was costing more and more every year. As a first-time car buyer, I had two criteria: I wanted to go fast, and I wanted the car to plug in.

Like many prospective purchasers, I started my search online and by speaking with friends and who drove electric vehicles, or EVs for short. I settled on a plug-in hybrid sedan, reasoning that a plug-in hybrid electric vehicle (PHEV) was the best of both worlds: the 20-mile electric range was perfect for my short commute and getting around Houston’s inner loop, and the 10-gallon gas tank offered freedom to roam. In the eight months since I’ve had the car, I’ve bought less than ten tanks of gas. As the price of a gallon in Texas soared to $4.69 in June, the timing of my purchase seemed miraculous.

When it was time to transact, the dealer made vague mention of rebates and tax credits, but didn’t have a comprehensive understanding of the details. Enter Texas’s Light-Duty Motor Vehicle Purchase or Lease Incentive Program (LDPLIP). Administered by the Texas Commission on Environmental Quality (TCEQ), the program grants rebates of up to $5,000 for consumers, businesses, and government entities who buy or lease new vehicles powered by compressed natural gas or liquefied petroleum gas (propane), and up to $2,500 for those who buy or lease new EVs or vehicles powered by hydrogen fuel cells.

Rebates are only available to purchasers who buy or lease from dealerships (so some of the most popular EVs in the U.S. don’t qualify). There is no vehicle price cap, nor is there an income limit for purchasers. In June of 2022, the average price for a new electric vehicle was over $66,000, according to Kelley Blue Book estimates. But the median Texan household income (in 2020 dollars) for 2016-2020 was $63,826.

According to the grant specialist to whom I initially sent my application, the TCEQ has received “a vigorous response” from applicants, however, the TCEQ is limited in the number of rebate grants that it can award: 2,000 grants for EVs or vehicles powered by hydrogen fuel cells, and 1,000 grants for vehicles powered by compressed natural gas or liquefied petroleum gas (propane).

The grant period in Texas ends on January 7, 2023, but on July 5, 2022, the TCEQ suspended acceptance of applications for EVs or vehicles powered by hydrogen fuel cells. As of the writing of this post, the total number of applications received and reservations pending on the program’s website is 2,480.

In comparison with Texas’s rebate program, the EV tax credits in the Inflation Reduction Act of 2022 demonstrate a commitment to building a more equitable EV market. While EVs may be cheaper to own than gas-powered vehicles—especially when gas prices are high—a lot of lower and middle-income families have historically been priced out of the EV market. The IRA takes several meaningful steps towards accessibility and sustainability for a more diverse swath of consumers:

Allows point-of-sale incentives starting in 2024. Purchasers will be able to apply the credit (up to $7,500) at the dealership, and because sticker price is such an important factor for so many purchasers, this incentive will make buying an EV more attractive up front.
Removes 200,000 vehicle-per-manufacturer cap. Some American manufacturers are already past the maximum. Eliminating the cap means bringing back the tax credit for many popular and affordable EVs, which should attract new buyers.
Creates income and purchase price limits. SUVs, vans, and pickup trucks under $80,000, and all other vehicles (e.g. sedans) under $55,000, will qualify for the EV tax credit. For new vehicles, purchaser income will be subject to an AGI cap: $150,000 for individuals and $300,000 for a joint filers.
Extends the tax credit to pre-owned EVs. As long as the purchase price does not exceed $25,000, purchasers of pre-owned EVs (EVs whose model year is at least two years earlier than the calendar year in which the purchase occurs) will receive a tax credit for 30% of the sale price up to $4,000. The income cap for pre-owned EVs is $75,000 for individuals and $150,000 for a joint filers.

A purchaser who qualifies under both programs can get both incentives. Comparing Texas’s state government-level incentives and those soon to be offered at the federal level reveals a few telling differences—new vs. used, income caps, purchase price caps, post-purchase rebates vs. up-front point-of-sale incentives—but the differences all fall under the same umbrella: equity. The IRA’s tax credits are designed, among other things, to make purchasing an EV more attractive to a wider audience.

Of course, the EV incentive landscape has greatly changed since the Energy Improvement and Extension Act of 2008 first granted tax credits for new, qualified EVs. The LDPLIP wasn’t approved by the TCEQ until late 2013, so the U.S. government has arguably had more time to get it right. Some might say that the fact that Texas’s program offers the purchaser of the $150,000+ PHEV the same opportunity to access grant funds as the purchaser of the $30,000 EV means that the LDPLIP is even more “equal.”

It is worth noting that the IRA also sets a handful of production and assembly requirements. For instance, to qualify for the credit, a vehicle’s final assembly must occur in North America. Further, at least 40% the value of the critical minerals contained in the vehicle’s battery must be “extracted or processed in any country with which the United States has a free trade agreement in effect” or be “recycled in North America”—and this percentage increases each year, topping out at 80% in 2027. There is also a rising requirement that 50% of the vehicle’s battery components be manufactured or assembled in North America, with the requirement set to hit 100% in 2029. It is unclear whether automotive manufacturers and the U.S. critical mineral supply chains will be able to meet these targets—and that uncertainty may cause a potential limiting effect on the options a purchaser would have for EVs that qualify for the tax credit.

Time will tell whether the intentions behind the EV tax credits in the IRA have the effect that this particular blogger and PHEV owner is hoping for. While we wait to see whether this bid at creating an equitable EV market bears fruit, we can at least admire this attempt at, as the saying goes, “giving everyone a pair of shoes that fits.”

Article By Dania Abbasi of Foley & Lardner LLP

For more energy and environment legal news, click here to visit the National Law Review.

Ethylene Oxide Verdict First of Its Kind, and It’s Eye Opening!

Our prior reports discussed when an ethylene oxide case would go to verdict, and what the ensuing result would look like. We no longer need to speculate. On September 19, 2022, a Cook County (Illinois) jury awarded $363 million to a plaintiff who alleged that she developed breast cancer as a result of ethylene oxide emissions from the Sterigenics Willowbrook plant. This was the first ethylene oxide personal injury case to go to trial, but there are hundreds of cases behind it waiting their turn.

Trial

After a five week trial in the Circuit Court of Cook County, Illinois, Law Division (Sue Kamuda v. Sterigenics et al, case number 2018-L-010475), the jury returned a verdict in the amount of $363 million. Plaintiff had requested $21 million in compensatory damages and $325 million in punitive damages.

Plaintiff Kamuda argued that the ethylene oxide utilized at the Willowbrook plant, opened in 1984 and used primarily to sterilize medical equipment, caused serious cancer and reproductive health risks. Kamuda alleged that the company failed to analyze how long the chemical would stay in the air in the Willowbrook community or the distance it would travel. Further, Kamuda argued that Sterigenics recklessly failed to install emission controls decades earlier to reduce releases of the chemical.

For its part, Sterigenics argued that plaintiff Kamuda’s reliance on risk assessment and regulatory studies inaccurately led to her assertion that her breast cancer resulted in part from the plant’s ethylene oxide emissions.

Notably, the facility was closed a few years ago after the state of Illinois issued a seal order in February 2019 directing that ethylene oxide emissions had to be reduced significantly. Ultimately, the company decided to keep the facility closed.

Analysis

With this very large jury verdict, plaintiff firms will surely be pushing to get their ethylene oxide cases to trial, or, at a minimum, leverage steep pre-trial settlements. Further, plaintiff firms will surely recruit new plaintiffs who allege some type of cancer as a result of residing in the vicinity of an ethylene oxide plant.

The next ethylene oxide case to go trial is scheduled for two weeks from now in the same court, though with different plaintiff counsel and judge, as well as a different alleged disease (leukemia).

We note that it remains to be seen whether the Kamuda verdict will be appealed. It also remains to be seen whether this verdict is aberrational or is a bellwether for future trials. Will juries return verdicts based on one type of cancer but not for another? We will continue to report as these ethylene oxide trials go to verdict and analyze the ramifications.

Article By David A. Goldman of CMBG3 Law

For more environmental, energy, and resources legal news, click here to visit the National Law Review.

Reinventing the American Road Trip: What the Inflation Reduction Act Means for Electric Vehicle Infrastructure

The Inflation Reduction Act of 2022 (“IRA”) signifies a turning point in domestic efforts to tackle climate change. Within the multibillion-dollar package are robust investments in climate mitigation initiatives, such as production tax credits, investment tax credits for battery and solar cell manufacturers, tax credits for new and used electric vehicles (“EV”)¹, automaker facility transition grants, and additional financing for the construction of new electric vehicle manufacturing facilities.² One thing is abundantly clear, the IRA’s focus on stimulating domestic production of electric vehicles means that the marketplace for electric vehicles will see a dramatic change. The Biden Administration has set an ambitious target of 50% of EV sale shares in the U.S. by 2030. However, if electric vehicles are going to achieve mass market adoption, a central question remains — where is the infrastructure to support them?

Addressing gaps in EV Supply and EV Infrastructure

As it stands, the shortage of charging infrastructure is a substantial barrier in the push for mass consumer adoption of EVs.³ Experts estimate that in order to meet the Biden Administration’s EV sale target by 2030, America would require 1.2 million public EV chargers and 28 million private EV chargers by that year.⁴ Department of Energy data shows that approximately 50,000 EV public charging sites are currently operational in the United States.⁵ In comparison, gasoline fueling stations total more than 145,000.⁶ However, federal legislation such as the Bipartisan Infrastructure Law (“BIL”) passed earlier this year signifies a clear commitment to remedying this disparity. The BIL establishes a National Electric Vehicle Infrastructure Formula Program (“NEVI”) to provide funding to States and private entities to deploy EV-charging infrastructure and to establish an interconnected network to facilitate “data collection, access and reliability.”⁷ The Federal Highway Administration, the federal agency charged with implementing NEVI, proposed minimum standards and requirements that states must meet to spend NEVI funds:

Installation, operation and maintenance by qualified technicians of EV infrastructure
Interoperability of EV charging infrastructure
Network connectivity of EV charging infrastructure
Data collection pertaining to pricing, real-time availability and accessibility⁸

The goal of the proposed rule is to secure EV charging infrastructure that works seamlessly for industrial, commercial and consumer drivers. Combining the historic investments in clean energy and climate infrastructure in the BIL and IRA, the federal government has jumpstarted what will be a fundamental shift in how consumers use transportation. Earlier this week, the Biden Administration announced more than two-thirds of EV Infrastructure Deployment Plans from States, the District of Columbia and Puerto Rico have been approved ahead of schedule under NEVI.⁹ With this early approval, these states can now unlock more than $900 million in NEVI funding from FY22 and FY23 to help build EV chargers across highways throughout the country.¹⁰

Section 13404’s Alternative Fuel Refueling Property Credit

Building up the U.S. capacity to build EVs, and then ensuring people can use said vehicles more easily by shoring up EV infrastructure is a crucial facet of the Inflation Reduction Act. Section 13404 of the IRA provides an Alternative Fuel Refueling Property Credit that targets the accelerated installation of EV charging infrastructure and assets.¹¹ Section 13404 extends existing alternative fuel vehicle refueling property credit through 2032, and significantly restructures the credit by allowing taxpayers to claim a base credit of 6% for expenses up to $100,000 (for each piece refueling property located at a given facility) so long as the property is placed in service before Jan. 1, 2033.¹² However, the alternative fuel property must be manufactured for use on public streets, roads and highways, but only if they are (1) intended for general public use, or (2) intended for exclusive use by government or commercial vehicles and (3) must be located in a qualifying census tract (i.e., low-income communities or non-urban areas).¹³ From a job creation standpoint, the IRA also provides an alternative bonus credit for taxpayers that meet certain wage requirements during the construction phase.¹⁴

The Future of EV Infrastructure

EV stations in city streets, parking garages and gas stations will become a prominent part of the nation’s infrastructure as it moves towards a green future. The effort will require coordination among municipal, state and federal policymakers. Even more, electric utilities must ensure that local infrastructure can support the additional strain on the grid. Utilities also have a direct interest in a cleaner, efficient, and less overburdened grid. Federal tax incentives, like the IRA, and subsides from states and local ordinances are integral to the implementation and construction of these networks. The private sector has already taken steps to do its part. In a recent study conducted by consulting company AlixPartners, as of June 2022, automakers and suppliers expect to invest at least $526 billion to fund the transition from gasoline powered vehicles to EVs through 2026.¹⁵ This is double the five-year EV investment forecast of $234 billion from 2020-2024.¹⁶ Even more, according to Bloomberg, not including deals that have disclosed financials, more than $4.8 billion has already been invested in the EV charging industry this year in the form of debt financing and acquisitions.¹⁷Driven by fast growth and robust availability of government funds, financiers and large companies seeking to acquire EV charging companies, sense immense opportunity.¹⁸

FOOTNOTES

¹“Electric Vehicle” is used interchangeably with the acronym “EV” throughout this article.

²Isaacs-Thomas, I. (2022, August 11). What the Inflation Reduction act does for green energy. PBS. https://www.pbs.org/newshour/science/what-the-inflation-reduction-act-do…

³ Consumer Reports (2022, April). Breakthrough Energy: A Nationally Representative Multi-Mode Survey. https://article.images.consumerreports.org/prod/content/dam/surveys/Cons…

⁴ Kampshoff, P., Kumar, A., Peloquin, S., & Sahdev, S. (2022, August 31). Building the electric-vehicle charging infrastructure America needs. McKinsey & Company. https://www.mckinsey.com/industries/public-and-social-sector/our-insight…

⁵ U.S Department of Energy. (2022). Alternative Fueling Station Locator. Alternative Fuels Data Center: Alternative Fueling Station Locator. https://afdc.energy.gov/stations/#/find/nearest?fuel=ELEC&ev_levels=all&…

⁶ American Petroleum Institute. (n.d.). Service station FAQs. Energy API. https://www.api.org/oil-and-natural-gas/consumer-information/consumer-re…

⁷ U.S. Department of Transportation/Federal Highway Administration. (n.d.). Bipartisan Infrastructure Law – National Electric Vehicle Infrastructure (NEVI) formula program fact sheet: Federal Highway Administration. U.S. Department of Transportation/Federal Highway Administration. https://www.fhwa.dot.gov/bipartisan-infrastructure-law/nevi_formula_prog…

⁸ The Office of the Federal Register of the National Archives and Records Administration and the U.S. Government Publishing Office. (2022, June 22). National Electric Vehicle Infrastructure Formula Program. Federal Register. https://www.federalregister.gov/documents/2022/06/22/2022-12704/national…

⁹United States Department of Transportation. (2022, September 14). Biden-Harris Administration announces approval of First 35 state plans to build out EV charging infrastructure across 53,000 miles of Highways. United States Department of Transportation. https://highways.dot.gov/newsroom/biden-harris-administration-announces-…

¹⁰ See Id.

¹¹ As a note, “refueling property” is property used for the storage or dispensing of clean-burning fuel or electricity into the vehicle fuel tank or battery. Clean-burning fuels include CNG, LNG, electricity, and hydrogen.

¹² Inflation Reduction Act of 2022, H.R. 5376, 117th Cong. § 13404 (2022); See also Wells Hall III, C., Holloway, M. D., Wagner, T., & Baldwin, E. (2022, August 10). Nelson Mullins tax report–Senate passes Inflation Reduction Act. Nelson Mullins Riley & Scarborough LLP. https://www.nelsonmullins.com/idea_exchange/alerts/additional_nelson_mul…

¹³ Id.

¹⁴ Id.

¹⁵ AlixPartners, LLP. (2022, June 22). 2022 Alixpartners global automotive outlook. AlixPartners. https://www.alixpartners.com/media-center/press-releases/2022-alixpartne… See also Lienert, P. (2022, June 22). Electric vehicles could take 33% of global sales by 2028. Reuters. https://www.reuters.com/business/autos-transportation/electric-vehicles-…

¹⁶ Id.

¹⁷Fisher, R. (2022, August 16). Electric car-charging investment soars driven by EV Growth, government funds. Bloomberg. https://www.bloomberg.com/news/articles/2022-08-16/car-charging-investme…

¹⁸ Id.

Article By Lawrence L. Ostema and Jeffrey E. Joseph of Nelson Mullins

For more utilities and transportation legal news, click here to visit the National Law Review.

Draft SEC Five-Year Strategic Plan Emphasizes Importance of Climate Disclosures

Recently, the SEC issued its five-year strategic plan for public comment. This strategic plan covers a wide variety of topics, ranging from adapting to new technology to plans for increasing internal SEC workforce diversity. Significantly, this draft strategic plan stated that “the SEC must update its disclosure framework,” and highlighted three areas in which it should do so: “issuers’ climate risks, cybersecurity hygiene policies, and their most important asset: their people.”

The SEC has already undertaken steps to enact these proposed updates to its disclosure requirements for public companies. Notably, this past March it proposed draft climate disclosure rules, which provoked a significant response from the public–including widespread criticism from many companies (as well as praise from environmental organizations). The fact that the SEC chose to highlight these rules in its (draft) five-year strategic plan indicates the depth of the commitment it has made to these draft climate disclosures, and further suggests that the final form of the climate disclosures is unlikely to be significantly altered in substance from what the SEC has already proposed. This statement reinforces the commitment of Chairman Gensler’s SEC and the Biden Administration to financial disclosures as a method to combat climate change.

“The markets have begun to embrace the necessity of providing a greater level of disclosure to investors. From time to time, the SEC must update its disclosure framework to reflect investor demand. Today, investors increasingly seek information related to, among other things, issuers’ climate risks, cybersecurity hygiene policies, and their most important asset: their people. In order to catch up to that reality, the agency should continue to update the disclosure framework to address these areas of investor demand, as well as continue to take concrete steps to modernize the systems that support the disclosure framework, to make public disclosures easier to access and analyze and thus more decision-useful to investors. . . . Across the agency, the SEC must continually reassess its risks, including in new areas such as climate risk, and document necessary controls.”

Article By Jacob H. Hupart of Mintz

For more environmental legal news, click here to visit the National Law Review.

The Inflation Reduction Act: How Do Tribal Communities Benefit?

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”), ushering in substantial changes for tax law, climate resilience, healthcare, and more in the United States. According to the Biden administration’s press release, the new $750 billion legislation aims to lower everyday costs for families, insist that corporations pay their fair share, and combat the climate crisis. During the signing ceremony, President Biden stated, “With this law, the American people won and the special interests lost […] For a while people doubted whether any of that was going to happen, but we are in a season of substance.”

Notably, the legislation provides significant provisions for tribal communities and the Bureau of Indian Affairs. Once the funding is appropriated by Congress, it will be directed toward drought mitigation programs, fish hatcheries, modernization of electric systems, and more for Native communities, including ones in Alaska and Hawaii.

How the Inflation Reduction Act of 2022 Supports the Environment and Tribal Communities

The Inflation Reduction Act of 2022 contains an array of provisions, including the reduction of drug prices, the lowering of energy costs, and, notably, federal infrastructure investments that benefit Native communities. Andrew M. VanderJack and Laura Jones, Co-Coordinators of Van Ness Feldman’s Native Affairs Practice, highlight the most significant facets of the bill: “This legislation provides some opportunities specifically for tribes and tribal entities, including programs related to climate resiliency and adaptation, electrification, and drought relief. For example, the Emergency Drought Relief program for Tribes extends direct financial assistance to tribal governments to address drinking water shortages and to mitigate the loss of tribal trust resources.”

Pilar Thomas, Partner in Quarles & Brady’s Energy, Environment & Natural Resources Practice Group, expanded on the most significant inclusions for Tribes: “[…] the creation of a Direct Pay tax credit payment program that allows Tribes to receive a payment equal to the clean energy technology tax credits – especially for solar, wind, storage, geothermal and EV charging stations; […] direct funding for electrification and climate resiliency through DOI and USDA; […] access to the greenhouse gas reduction fund, environmental and climate justice grants; and expanded energy efficiency tax benefits and rebates for tribes and tribal members.”

“Tribal governments are also eligible to apply for other programs such as the Clean Vehicle Credit program, the Energy Efficient Commercial Buildings Deduction, and the State and Private Forestry Conservation Programs,” noted Mr. VanderJack and Ms. Jones.

How the 2022 Inflation Reduction Act Has Been Received by Tribal Communities

The 2022 Inflation Reduction Act has received a warm reception from groups such as the National Indian Health Board and Native Organizers Alliance, who laud the bill’s potential to improve environmental, medical, and economic conditions for tribal communities, some of whom still lack access to electricity or clean water. The increase in funding will allow tribes to use green energy technology to increase climate resilience and decrease individual energy costs, while reducing the effects of environmental racism with risk assessments for drinking water and climate hazards. These infrastructural changes will stimulate economic development by creating new jobs. “With critical investments in the Inflation Reduction Act, we’re making sure the federal government steps up to support Native-driven climate resilience, advance tribal energy development, and fulfill its trust responsibility to Native communities,” said Senator and Senate Committee on Indian Affairs Chairman Brian Schatz.

“This legislation will result in hundreds of millions of funding available for Tribes, and non-profits that work with tribes and tribal communities to support the clean energy transition for tribal communities, reduce energy costs for tribal members, and create jobs,” said Ms. Thomas of Quarles & Brady. “The IRA will provide a substantial down payment for every tribe to take advantage of clean energy technologies, energy efficiency and energy savings, and climate resilient solutions for their communities and tribal members individually. The new projects, technology implementation and economic development opportunities are substantial and will create long term community and economic development sustainable improvements in tribal communities.”

Some groups feel that the new legislation does not go far enough. In an open letter to President Biden, Senate Majority Leader Chuck Schumer, and House Speaker Nancy Pelosi, Indigenous-led advocacy organization NDN Collective argued that Congress’ hesitance to fully reject fossil fuels undermines the stated goals of addressing climate change, a misstep that could disproportionately affect tribal communities at the frontlines of the environmental crisis. “We believe that moving away from investments in the fossil fuel and other extractive industries and reallocating the funding to further research and development will help us find the solutions we need for true decarbonization and large-scale equitable carbon emissions reductions,” the collective stated. “We are already aware of innovative, Indigenous-led solutions that just need the proper funding and support to be scaled and replicated.”

Challenges in Getting the 2022 Inflation Reduction Act Passed

Up to this point, the Inflation Reduction Act has faced significant challenges in Congress. The legislation is the product of extensive compromise over the Build Back Better Act within the Democratic party. The Build Back Better Bill was initially estimated to cost over $3 trillion, and ultimately, the Inflation Reduction Act was passed with a budget of $750 billion. Senator Joe Manchin of West Virginia held back his support of the bill until late July, and Republicans successfully blocked an aspect of the bill that would have capped the price of insulin for Americans with private health insurance. When presented to Congress, the vote was split by party lines with every Republican voting against the bill. Biden has criticized Republicans for this decision, saying at the signing of the Inflation Reduction Act, “every single Republican in the Congress sided with the special interests in this vote — every single one.”

Challenges for tribal governments remain as well, specifically concerning the IRA’s implementation. “Despite the incredible opportunity for tribes, major barriers remain including tribal internal capacity and capabilities, [and] federal regulatory hurdles (such as BIA leasing and easement approvals),” said Ms. Thomas.

“[…] Navigating the complexities of each program and actually obtaining funding is always the challenge,” said Mr. VanderJack and Ms. Jones of Van Ness Feldman. “Tribes and tribal entities should engage directly, whenever possible, with the grant funding agencies to make sure proposals are tailored to fit both program requirements and community needs.”

Early Assessment of How the IRA will Impact Tribal Communities

The Inflation Reduction Act, ultimately, provides meaningful resources and investments for tribal communities in a variety of ways. While the provisions are not as significant as COVID-19 relief and infrastructure funding that tribal governments have received in previous years, the new legislation is nonetheless beneficial. “While the federal grant funding is relatively small, the potential major impact is the ability to access funding through tax credit payments and rebates,” said Ms. Thomas. “This mechanism is critical as it is simplifies tribes’ access to funding (rather than, for example, seeking to obtain funding through the competitive grant programs).”

Article By Chandler Ford, Casey Karthaus, Crissonna Tennison, and Shelby Garrett of The National Law Review / The National Law Forum LLC.

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CERCLA PFAS Designation Major Step Forward

On January 10, 2022, the EPA submitted a plan for a PFAS Superfund designation to the White House Office of Management and Budget (OMB) when it indicated an intent to designate two legacy PFAS – PFOA and PFOS – as “hazardous substances” under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA, also known as the Superfund law). The EPA previously stated its intent to make the proposed designation by March 2022 when it introduced its PFAS Roadmap in October 2021. Under the Roadmap, the EPA planned to issue its proposed CERCLA designation in the spring of 2022. On Friday, a CERCLA PFAS designation took a significant step forward when the OMB approved the EPA’s plan for PFOA and PFOS designation. This step opens the door for the EPA to put forth its proposed designation of PFOA and PFOS under CERCLA and engage in the required public comment period.

Any PFAS designation will have enormous financial impacts on companies with any sort of legacy or current PFOA and PFOS pollution concerns. Corporations, insurers, investment firms, and private equity alike must pay attention to this change in law when considering risk issues.

Opposition to CERCLA Designation

Since the EPA’s submission of its intent to designate PFOA and PFOS as hazardous substance to the OMB, the EPA has been met with industry pushback on the proposal. Three industries met with the OMB earlier in 2022 to explain the enormity of regulatory and cleanup costs that the industries would face with a CERCLA designation of PFOA and PFOS – water utilities, waste management companies, and the International Liquid Terminals Association. These industries in particular are concerned about bearing the burden of enormous cleanup costs for pollution that third parties are responsible for. Industries are urging the OMB and EPA to consider other ways to achieve regulatory and remediation goals aside from a CERCLA designation.

During an April 5, 2022 meeting of the Environmental Council of the States (ECOS), several states also expressed concerns regarding the impact that a CERCLA designation for PFAS types would have in their states and on their constituent companies. The state environmental leaders discussed with EPA representatives how the EPA would view companies in their states that fall into categories such as waste management and water utilities, who are already facing uphill battles in disposing of waste or sludge that contains PFAS.

Realizing that the EPA is likely set on its path to designate at least two PFAS as “hazardous substances”, though, industries are asking the EPA to consider PFAS CERCLA exemptions for certain industries, which would exempt certain industry types from liability under CERCLA. Industries are also pushing the EPA, OMB and the U.S. Chamber of Commerce to conduct a robust risk analysis to fully vet the impact that the designation will have on companies financially. The EPA is statutorily required to conduct a risk analysis as part of its CERCLA designation process, so it is likely that the EPA’s delay in issuing a proposed hazardous substance designation until it feels that adequate time has passed for its designation to survive the likely legal challenges that will likely follow the designation.

CERCLA PFAS Designation: Impact On Businesses

Once a substance is classified as a “hazardous substance” under CERCLA, the EPA can force parties that it deems to be polluters to either cleanup the polluted site or reimburse the EPA for the full remediation of the contaminated site. Without a PFAS Superfund designation, the EPA can merely attribute blame to parties that it feels contributed to the pollution, but it has no authority to force the parties to remediate or pay costs. The designation also triggers considerable reporting requirements for companies. Currently, those reporting requirements with respect to PFAS do not exist, but they would apply to industries well beyond just PFAS manufacturers.

The downstream effects of a PFOA and PFOS designation would be massive. Companies that utilized PFOA and PFOS in their industrial or manufacturing processes and sent the PFOA/PFOS waste to landfills or otherwise discharged the chemicals into the environment will be at immediate risk for enforcement action by the EPA given the EPA’s stated intent to hold all PFAS polluters of any kind accountable. Waste management companies should be especially concerned given the large swaths of land that are utilized for landfills and the likely PFAS pollution that can be found in most landfills due to the chemicals’ prevalence in consumer goods. These site owners may be the first targeted when the PFOA/PFOS designation is made, which will lead to lawsuits filed against any company that sent waste to the landfills for contribution to the cost of cleanup that the waste management company or its insured will bear.

Also of concern to companies are the re-opener possibilities that a CERCLA designation would result in. Sites that are or were previously designated as Superfund sites will be subject to additional review for PFOA/PFOS concerns. Sites found to have PFOA/PFOS pollution can be re-opened by the EPA for investigation and remediation cost attribution to parties that the EPA finds to be responsible parties for the pollution. Whether through direct enforcement action, re-opener remediation actions, or lawsuits for contribution, the costs for site cleanup could amount to tens of millions of dollars, of course depending on the scope of pollution.

Conclusion

Now more than ever, the EPA is clearly on a path to regulate PFAS contamination in the country’s water, land and air. The EPA has also for the first time publicly stated when they expect such regulations to be enacted. These regulations will require states to act, as well (and some states may still enact stronger regulations than the EPA). Both the federal and the state level regulations will impact businesses and industries of many kinds, even if their contribution to drinking water contamination issues may seem on the surface to be de minimus. In states that already have PFAS drinking water standards enacted, businesses and property owners have already seen local environmental agencies scrutinize possible sources of PFAS pollution much more closely than ever before, which has resulted in unexpected costs. Beyond drinking water, though, the EPA PFAS plan shows the EPA’s desire to take regulatory action well beyond just drinking water, and companies absolutely must begin preparing now for regulatory actions that will have significant financial impacts down the road.

Article By John Gardella of CMBG3 Law

For more energy and environmental legal news, click here to visit the National Law Review.

Category: Environmental Law