Category: Environmental Law

PFAS Water Cleanup…Have You Bought Yourself a Multi-Million Dollar Superfund Issue?

The last two years have seen an incredible uptick in activity with respect to PFAS regulations, and media coverage of PFAS continues to fuel the fires from the public, non-government organizations and environmental groups for additional action to be taken. The EPA continues its process of determining Maximum Contaminant Levels for PFAS. The FDA is examining the ways that it might regulate PFAS levels in both food and food packaging. Meanwhile, states, bombarded with constituent outcries and under pressure to take action to fill the gap until the EPA and FDA finish their regulatory review processes, quickly enact drinking water limits for PFAS and ban PFAS-containing products, such as children’s toys and food packaging.

As states continue setting drinking water limits for PFAS and in preparation for the EPA’s final determination of a Maximum Contaminant Level for PFAS in drinking water, many water utilities are beginning to evaluate the steps needed to come into compliance with existing or anticipated water regulations. Comprehensive compliance programs are being created and costly well testing sites are being built to determine PFAS content at various points along the waterways for drinking water sources. At water treatment facilities, expensive water filtration systems are being installed to remove as many PFAS as possible from drinking water sources. With water utilities coming under fire in the litigation world for PFAS issues, these steps may curtail the short-term issues and costs associated with PFAS litigation.

However, the long-term impact of the remediation steps that water treatment facilities ae taking may only be pushing litigation costs further down the road, not eliminating them. In addition, little considered Superfund laws may be triggered through PFAS water filtration that could end up costing water treatment facilities tens or hundreds of millions of dollars in cleanup costs.

CERCLA and PFAS

Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), once a substance is designated as “hazardous” by the EPA, the Act gives the EPA considerable power to designate sites containing such substances as Superfund sites and force parties responsible for the pollution to pay for the cleanup of the site. Without a designation of a substance as “hazardous” (and therefore a site as a Superfund site), the EPA may either pay for the cleanup of the site itself or attempt to pursue, through time-consuming and costly litigation, the property owner for the costs of cleanup.

One of the most closely watched developments in the PFAS world is whether the EPA will make the determination that PFAS are “hazardous” under CERCLA. Although the EPA has promised its determination soon and various lawmakers are pressuring the EPA to make a determination in the near future, it is still uncertain as to when the EPA will issue its final regulations.

In the meantime, however, water utilities are under increasing pressure to filter out PFAS from drinking water. These PFAS are typically deposited in landfills. Out of sight, out of mind? Not exactly, when it comes to PFAS. As the quantity of PFAS accumulate in landfills, if the EPA makes a determination that PFAS are “hazardous” substances under CERCLA, the EPA could immediately designate landfills full of PFAS as Superfund sites and take action to pursue parties to pay for the cleanup. Water utilities could therefore be at significant risk of having to pay for Superfund site cleanup.

Further, in some instances, water utilities may have previously been involved with Superfund site cleanup for other reasons and believed the site issues to be fully remediated.  However, since PFAS have not yet been classified as “hazardous”, Superfund sites were never tested for PFAS. Should the EPA determined that PFAS are “hazardous” under CERCLA, the EPA will have the right to reopen previously closed Superfund sites for further testing and remediation specific to PFAS, even if parties deemed responsible for the pollution already paid millions of dollars to clean up the site for other contaminants.

Water utilities in particular must pay special attention to PFAS developments under CERCLA. Proactive planning is needed to determine alternate means of disposing of or eliminating PFAS from water sources. Failure to enact forward-thinking strategies may very well end up costing water utility companies tens of millions in unexpected and unwanted costs if they fail to do so.

©2020 CMBG3 Law, LLC. All rights reserved.

ARTICLE BY John Gardella at CMBG3 Law.

EPA Issues Compliance Advisory Regarding Pesticide Devices Making Claims to Kill the Novel Coronavirus

In late May, the U.S. Environmental Protection Agency (EPA) issued a Compliance Advisory providing the public with information regarding the limits of governmental review of the efficacy of pesticide devices, especially pesticide devices that claim to kill the novel coronavirus that causes COVID-19 (coronavirus).  Per the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), chemical pesticides must be reviewed and approved by EPA for efficacy claims made by the pesticide registrant before marketing is permitted.  In contrast, FIFRA prohibits pesticide device sellers from making false or misleading claims about the safety or efficacy of their pesticide devices, but it does not require EPA approval before a pesticide device may be sold.  Thus, pesticide devices (an instrument or other machine) designed to kill a pest do not undergo pre-market review for efficacy.

Because there is no pre-market review of pesticide device efficacy, and since EPA “is receiving a steady stream of tips/complaints concerning potentially false or misleading claims” associated with pesticide devices being sold with claims of killing coronavirus, EPA’s Compliance Advisory  sets out some cautionary statements:

“Please note that ozone generators, UV lights and other pesticide devices may not be able to make claims against coronavirus where devices have not been tested for efficacy or safety for use against the virus causing COVID-19 or harder-to-kill viruses.  In addition, because EPA does not review these data as part of a registration review process, these claims are not supported by any government review.” [Emphasis in original].

The Advisory reviews EPA’s process for approving chemical pesticides, and specifically the process EPA uses to maintain its “List N”—a list of disinfectants that meet EPA’s criteria for use against coronavirus.  The Advisory notes that consumers’ success in killing viruses using List N pesticides depends on following all label directions including heeding the recommended contact time, which is the amount of time the pesticide product needs to remain wet on a surface.

The Advisory also describes the limits prescribed by FIFRA for pre-market review and approval of pesticidal devices and warns that EPA cannot confirm whether, or under what circumstances, such pesticide devices might be effective against the spread of coronavirus.  The Advisory specifically cautions that “consumers should be aware that pesticidal devices making such claims have NOT been reviewed and accepted by EPA”.

Pesticide device sellers are allowed to make certain efficacy claims, as long as they possess supporting data.  FIFRA does impose penalties for making false or misleading labeling claims about the safety or efficacy of a pesticidal device.

The Advisory concludes with ‘Compliance Concerns’ and warns sellers who attempt to profit from sales of pesticides or pesticide devices with unapproved or unsupported claims for use against coronavirus:

“EPA intends to pursue enforcement against products making false and misleading claims regarding coronavirus. EPA is working with e-commerce platforms to remove/prohibit these fraudulent and/or otherwise inefficacious products from the marketplace. EPA is also coordinating with the U.S. Department of Justice and other federal partners to bring the full force of the law against those selling or otherwise distributing violative products.”

© 2020 Van Ness Feldman LLP

For more EPA regulation, see the National Law Review Environmental, Energy & Resource law section.

President Trump Orders Expanded Use of Emergency Powers to Streamline Infrastructure

On Thursday, June 4, 2020, President Trump signed an Executive Order (EO) on “Accelerating the Nation’s Economic Recovery from the COVID-19 Emergency by Expediting Infrastructure Investments and Other Activities.” Relying on the COVID-19 declared national emergency, the EO directs federal agencies to invoke their existing emergency authorities under the National Environmental Policy Act (NEPA), Endangered Species Act (ESA), Clean Water Act (CWA), and other laws to expedite economic recovery, including taking “all reasonable measures” to speed infrastructure and public works projects. While consistent with prior administrative directives to expedite project permitting, this latest EO likely will have little practical effect on individual projects and generate increased litigation for projects that rely on it.

The EO aspires to expedite a variety of projects that fall under the jurisdiction of several specific federal agencies:

  • All authorized and appropriated highway and other infrastructure projects within the authority of the U.S. Department of Transportation;
  • All authorized and appropriated civil works projects under the purview of the U.S. Army Corps of Engineers; and
  • All authorized and appropriated infrastructure, energy, environmental, and natural resources projects on federal lands managed by the Department of Defense, the Department of the Interior, and the Department of Agriculture.

The EO’s main action item is periodic reporting by affected federal agencies to the White House. Agency heads must provide a summary report listing all projects expedited under their emergency authorities no later than July 4th (30 days after the EO’s issuance date), and provide status reports every 30 days thereafter. The EO specifies no end date for the national emergency or use of emergency authorities.

The EO principally relies on the government-wide NEPA regulation for emergency situations.  40 C.F.R. § 1506.11. It also invokes the ESA implementing regulation on Section 7 consultations in emergencies (50 C.F.R. § 402.05 2) and the CWA Section 404 regulations and nationwide permits addressing emergency circumstances. Lastly, the EO directs agencies to review “other authorities” potentially applicable to emergencies, including “all statutes, regulations, and guidance documents that may provide for emergency or expedited treatment (including waivers, exemptions, or other streamlining).”  Overall, the EO intends to allow critical infrastructure and public works projects to move forward more quickly, by abbreviating or waiving legally required environmental reviews, interagency consultation, and public comment.

While the goals of reducing time and paperwork are laudable, the EO will likely be less impactful than other recent efforts (such as One Federal Decision). The emergency exemptions available under NEPA, the ESA, the CWA, and other laws are quite limited pursuant to regulations and case law. They are meant for very narrow or discrete circumstances, not for indefinite national conditions. Moreover, they do not entirely or permanently waive environmental requirements, but rather allow for deferred or alternative procedures that achieve statutory aims. For example, the NEPA emergency regulation provides that when emergency circumstances make it necessary to take actions with significant environmental impacts without observing the typical NEPA process, agencies may consult with the Council on Environmental Quality to make “alternative arrangements” to take such actions. The effort and resources required to develop such “alternative arrangements” may not save time in the overall NEPA review. Nor can an EO legally displace regulations or case law.

Predictably, environmental organizations have already indicated a likely forthcoming challenge to the EO. Though a direct challenge may face jurisdictional obstacles, individual project approvals relying on the EO may be more vulnerable to lawsuits. And given the EO’s focus on timing, preliminary injunction motions at the commencement of lawsuits likely would be a centerpiece of those lawsuits, which likely would offset any advantage that may have been gained from relying on the EO.

© 2020 Beveridge & Diamond PC

EPA OIG Report States Further Efforts Needed to Uphold Scientific Integrity Policy at EPA

On May 20, 2020, the U.S. Environmental Protection Agency (EPA) Office of Inspector General (OIG) released a report entitled Further Efforts Needed to Uphold Scientific Integrity Policy at EPA.  OIG conducted an Agency-wide survey to determine whether EPA’s Scientific Integrity Policy is being implemented as intended to ensure scientific integrity throughout EPA.  OIG received 4,320 responses (a 23.5 percent response rate), showing that 3,987 respondents were aware of or had some familiarity with the Scientific Integrity Policy.  According to OIG, among those respondents with a basis to judge, the majority (56 percent; 1,025 of 1,842) were satisfied with the overall implementation of the Policy.  OIG states that the survey also revealed some concerns with specific aspects of scientific integrity at EPA, including dissatisfaction with EPA’s culture of scientific integrity (59 percent; 1,425 of 2,402) and the release of scientific information to the public (57 percent; 1,049 of 1,842).  OIG recommends that EPA’s deputy administrator lead an effort to examine the causes associated with the scientific integrity concerns identified in the survey and communicate the results to EPA employees, including planned actions to address the causes.  OIG also made 11 recommendations to the EPA science advisor, including developing procedures for addressing and resolving allegations of scientific integrity violations, communicating the outcomes of reports of scientific integrity violations, and improving the release of scientific information to the public.  OIG states that EPA agreed with its recommendations and provided acceptable corrective actions.  According to OIG, EPA has completed two recommendations, and the others are resolved with corrective actions pending.

©2020 Bergeson & Campbell, P.C.

Waters of the United States Litigation: Practical Considerations for the Regulated Community

A familiar list of states[1] are suing the Trump administration for revising the “waters of the United States” definition that is used to create the Clean Water Act (“CWA”) regulatory programs. The lawsuit is pending before the U.S. District Court for the Northern District of California.  California v. Andrew Wheeler, Civil Action No. 3:20-cv-03005.  There is also a predicable list of the other states[2] in the litigation supporting the “Navigable Waters Protection Rule:  Definition of the United States” promulgated on April 21, 2020.  85 Fed. Reg. 22,250. While we await the impact of litigation and ruling on the request for a stay, the rule becomes effective on June 22, 2020.

The complaint for declaratory and injunctive relief in this litigation provides a road map for the legal and regulatory challenges ahead for the regulated community and agencies implementing CWA programs that rely on the definition for “Waters of the United States” aka WOTUS.  The following provides insights as to how to support a strong CWA with the new WOTUS definition.

Upset of Existing Regulatory Programs.  Challenging states/cities express concern over regulation of discharges to WOTUS (NPDES), water quality standards (TMDLs), 401 certifications (NWPs), and control of oil spills (SPCC) as the result of the new WOTUS definition.  These are the programs that are relied upon by the regulated community to operate, maintain compliance, and develop new facilities.

Those seeking CWA permits/authorizations pursuant to the new WOTUS rule should consider enhancing their public submittals with documentation supporting policy decisions as protective of WOTUS uses.  Voluntary reports, studies and data demonstrating protections and regulatory successes, in addition to routine reporting and recordkeeping, would be constructive in building confidence in the program changes and in defending against regulatory and statutory challenges.

Too Narrow a Definition.  Challengers assert the new definition for WOTUS is narrow and excludes “waters long understood as within CWA’s protections.”  They assert that ephemeral streams and many wetlands are excluded.  The multi-step deliberative process that the former WOTUS regulatory program embraced resulted in the unfortunate inability to make timely decisions about regulatory authorizations.  The tangible impact of the clarity of the new definition is the ability to engage in thoughtful analysis and decide how best to manage WOTUS protections.

In support of the clarity found in the new WOTUS rule, there is a need to demonstrate that the definition promotes the Clean Water Act mission.  The regulated community needs to support the development of objective assessments that demonstrate this point to help educate about the effectiveness of the definition in meeting the CWS objective to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.”

Rapanos “Significant Nexus” Concurrence.   Challengers assert the U.S. Supreme Court Rapanos decision that sets forth Justice Kennedy’s “significant nexus” concurrence should have been maintained in the definition, rather than implement the plurality opinion as was done in the new WOTUS definition.

The WOTUS rule of 2020 notes that “Since Rapanos, litigation has continued to confuse the regulatory landscape. See, e.g., ECOS Memorandum at 2-23. The Supreme Court also has twice weighed in on topics related to the agencies’ implementation of their authorities under the CWA to help clarify federal authority in this area. In each case, members of the Court noted the longstanding confusion regarding the scope of federal jurisdiction under the CWA and the importance of providing clear guidance to the regulated community.” 85 Fed. Reg. 22,250, 22,257.

The CWA becomes a statute unable to move if its programs are not capable of implementation, as the “significant nexus” analysis demonstrated.  The regulated community can facilitate this issue by working with all stakeholders to develop in the near-term reports and analyses about the measurable successes of the WOTUS definition rule.

Neighbor Jurisdiction Impacts.  Challengers express concern about jurisdictions upstream that may not be as protective of water adversely impacting downstream jurisdictions.  They assert a need for a national floor for protecting water to avoid adverse impacts on downstream states.

The regulated community has a shared interest with the challengers in a CWA regulatory program that is dependable and has reliable outcomes.  The difference in perspective is the challengers do not have confidence in states’ abilities to protect their waters, although all states are required to demonstrate effective CWA programs to the federal agencies.  The regulated community needs to work in partnership with the state and federal agencies to support successful outcomes to refute the fear that downstream jurisdictions must be concerned.

Flow in a typical year.  A tributary, lake, pond, or impoundment must contribute flow in a “typical year” directly to traditional navigable waters (e.g., through other tributaries, lakes, ponds, impoundments or adjacent wetlands).  Tributaries must be either perennial (continuously flowing all year round) or intermittent (continuously flowing during certain times of the year and not just in response to precipitation).  The challengers assert the definition for typical year is not well articulated. “Typical year” is defined to mean “when precipitation and other climatic variables are within the normal periodic range (e.g., seasonally, annually) for the geographic area of the applicable aquatic resource based on a rolling thirty-year period.” The 2020 Rule does not identify which “other climatic variables” should be considered, or what is the “geographic area of the applicable aquatic resource.”

The challengers share with everyone a distaste for vague outcomes, a common human sentiment.  The previous WOTUS rule encompassed a myriad of steps embedded with complexities that defied any reliable or predictable outcome.  The need to define “typical year” to create a comprehensible result falls well within the acknowledged need for common sense policy.

Excluded Waters.  The challengers assert that the WOTUS definition excludes:  ephemeral waters (those flowing only in direct response to precipitation) and their adjacent wetlands, “interstate” waters as a separate category of the “waters of the United States,” and therefore excludes many waters that cross state borders;  and many wetlands that are near other jurisdictional waters but lack a physical or surface hydrological connection to them.

All stakeholders need an operable method to delineate a definition for WOTUS for the purpose of applying the CWA programs.  Objecting to a program that is unclear is a valid concern when working to promote a sustainable Clean Water Act.  Working against regulatory clarity seems misguided.  Leadership is welcomed in educating about sustainable regulation as opposed to stalled regulation.

[1] The following states have sued EPA and the Army Corps of Engineers over the recent definition for “waters of the United States.”  Plaintiffs are:  California, New York, Connecticut, Illinois, Maine, Maryland, Michigan, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, Wisconsin, Massachusetts, Virginia, the North Carolina Department of Environmental Quality, the District of Columbia, and the City of New York.

[2] Intervenors for the Defendant Federal Agencies include:  Pacific Legal Foundation, Georgia, Wyoming, Alabama, Texas, Indiana, Mississippi, Alaska, Idaho Department of Environmental Quality, Oklahoma, Arkansas, Idaho, Kansas, Kentucky, Louisiana, Missouri, Montana, North Dakota, South Carolina, South Dakota, Utah, and West Virginia.

© Steptoe & Johnson PLLC. All Rights Reserved.
For more on Waters of the United States, see the National Law Review Environmental Energy & Resources law section.

COVID-19 Government Enforcement And Investigation Priorities: Minimizing Your Business Risk

The 2019 novel coronavirus (COVID-19) pandemic has changed our day-to-day routines and forced us to navigate many unique challenges in our personal and business lives. One challenge many businesses are facing is how to operate within the confines of the pandemic while complying with federal rules and regulations, both those that are well-established and those that have been promulgated to address specific needs brought on by COVID-19. While the pandemic has also affected the U.S. Department of Justice (DOJ) and other agency enforcement offices, there is no sign that government investigations into wrongdoing will decline. In some cases, government authorities are increasing their efforts to protect the public.

In this environment, it is important that businesses ensure operations are in accordance with DOJ and agency guidance so their actions do not trigger a government investigation. While some steps businesses can take to minimize the likelihood of an investigation were commonplace prior to the pandemic, others require a better understanding of specific guidance promulgated by DOJ and other agencies in the wake of COVID-19.

DOJ PRIORITIZATION OF EXPLOITATION CASES

The DOJ has taken clear steps to establish prioritization of investigations during the pandemic and will be focusing on exploitation cases and other COVID-19-related fraud schemes.

In March 2020, Attorney General William Barr directed all U.S. Attorneys to prioritize the investigation of these fraud schemes. Common schemes include:

  1. Individuals and business selling fake COVID-19 cures
  2. Phishing emails from entities posing as being associated with the World Health Organization or the U.S. Centers for Disease Control and Prevention
  3. Malicious websites or apps appearing to share COVID-19-related information to gain and lock access to devices until payment is secured
  4. Illegitimate or non-existent charitable organizations seeking donations
  5. Fraudulent billing by medical providers obtaining patient information for COVID-19 testing and then billing for other tests and procedures

To further that directive, the Attorney General’s Office also instructed each U.S. Attorney to appoint a Coronavirus Fraud Coordinator (Coordinator) for his or her judicial district. This Coordinator is to serve as legal counsel for his or her district on COVID-19 matters, direct the prosecution of COVID-19-related crimes, and conduct outreach and awareness initiatives regarding common forms of fraudulent schemes that seek to wrongly take advantage of needs and conditions resulting from the pandemic. The Coordinators in the Eastern District of Wisconsin and Western District of Wisconsin are Assistant U.S. Attorneys Kelly Watzka and Chadwick Elgersma, respectively.

DOJ is actively investigating and prosecuting wrongdoing during pandemic

Watzka, Elgersma and their colleagues at the various U.S. Attorneys’ Offices across the nation are encouraging the public to report fraud and other schemes resulting from the pandemic. Many U.S. Attorneys are contacting health care facilities for leads on potential schemes involving hoarding personal protective equipment and warning and advising the public on scams related to COVID-19 Economic Impact Payments. Additional measures include teaming with the American Association of Retired Persons (AARP) and other organizations to disseminate information to the public.

Since late March 2020, enforcement actions have been filed against providers and nonmedical personnel for promoting fake COVID-19 treatment. Charges have also been filed against those attempting to sell fake personal protective equipment to the U.S. Department of Veterans Affairs, attempting to smuggle mislabeled drugs into the U.S. to treat COVID-19, making false statements regarding accumulation and sale of personal protective equipment, and soliciting investments in a company fraudulently claiming funds would be used to market COVID-19 treatments and cures. Further, the DOJ estimates federal authorities have disrupted hundreds of internet domains that were used to exploit the pandemic to commit fraud and other crimes.

REDUCE YOUR RISK OF ALLEGATIONS OF FRAUD OR MISUSE OF GOVERNMENT FUNDS

While the cases above involve particularly egregious cases of fraud, it is important to remember that we are in the early months of COVID-19 relief programs and pursuit of COVID-19-related investigations. As the government continues to provide various aid packages to individuals and businesses alike, it will be important for all businesses, and especially those receiving federal funds, to take action to ensure compliance with the law relating to those funds in order to prevent future investigations. It is likely future investigations would be for less flagrant corporate actions.

Initiatives such as the White House’s National Emergency Declaration, which devotes $50 billion to containing the pandemic, and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which includes a $2 trillion dollar stimulus package, will help relieve some of the financial stress impacting businesses. However, with these initiatives comes rules and regulations to ensure that the funds are used as intended.

The CARES Act also created a Special Inspector General for Pandemic Recovery (SIGPR) to “conduct, supervise, and coordinate audits and investigations” of the CARES Act’s financial assistance programs and any other U.S. Department of the Treasury programs established under the CARES Act. In so doing, the SIGPR will be meticulously monitoring those businesses that have received assistance under the CARES Act to prevent and detect fraud and abuse, and to facilitate the identification and prosecution of participants of fraud and abuse.

With these initiatives comes special concern for investigations, charges and enforcement actions under the False Claims Act (FCA).1 The FCA is the primary civil enforcement tool used by the DOJ to pursue those who fraudulently obtain relief money, and fraudulently bill under contracts with the government. The government’s employment of the FCA is likely to expand as small businesses and large corporations alike receive federal funds under the CARES Act, and enter contracts to meet the increased need for emergency goods and services.

Businesses of all sizes and operating in all industries should therefore take additional steps beyond their standard practices to limit the potential for allegations of fraud or misuse of government funds. These steps should not only reinforce pre-pandemic workplace compliance and internal governance standards, but should also involve a system for maintaining documentation and preservation of relief-related correspondence, documents and actions. Importantly, no business should ignore or loosen any of their internal governance procedures or any laws, rules or regulations in the name of expediency.

OTHER FEDERAL AND STATE AGENCY ENFORCEMENT POLICIES DURING COVID-19

Beyond DOJ, several federal and state government agencies have issued policy statements regarding their enforcement priorities and activities during the pandemic.

U.S. Securities and Exchange Commission

Unlike some agencies that have publicized their willingness to be flexible and considerate of the unique circumstances in exercising their enforcement authority, the Securities and Exchange Commission (SEC) has maintained that its enforcement division is fully operational and that it will be vigilant against threats targeting “Main Street” investors.

In its public statements, the SEC has emphasized the importance of maintaining market integrity and following corporate controls. Its recent enforcement activities have focused on fraud schemes and other illegal activity arising from the COVID-19 emergency. It has issued trading suspensions for a number of stocks, many for companies that purported to offer health products or services related to COVID-19. Additionally, the agency has cautioned about “fraudulent stock promotions, unregistered offerings, phony charitable investments, affinity fraud, and fake products offering high returns.”

Investment scams come in a variety of flavors suited to COVID-19. For example, investment in underfunded or fraudulent companies that supposedly make products or services related to COVID-19 prevention or treatment, alternative investments claiming to not be vulnerable to ongoing market risk, or investments purporting to offer unrealistic returns by taking advantage of the market volatility or low prices. In Wisconsin, the Department of Financial Institutions has specifically called out the threat of COVID-19-related charity scams.

In addition to investment scams, the SEC has warned about an increased potential for insider trading owing to a greater number of people who may have access to nonpublic information. The enforcement division has released a statement reminding directors, officers and employees of their obligations to keep nonpublic information confidential and to comply with insider trading laws. The statement likewise urged public companies to adhere to their established disclosure controls, codes of ethics and other regulatory obligations.

The SEC is also encouraging consultation with its staff to ensure that financial reporting standards are maintained, demonstrating enhanced focus on these issues, and may not be forgiving of regulatory lapses where consultation with the SEC was not undertaken. However, the SEC has stated that it is not looking to second-guess good faith attempts to provide investors and other market participants appropriately-framed, forward-looking information.

U.S. Department of Health and Human Services

In the wake of extraordinary efforts by health care providers to combat the COVID-19 pandemic, including through enhanced and novel collaborations among different entities, the U.S. Department of Health and Human Services (HHS) has issued blanket waivers with respect to the Stark Law, which generally prohibits providers from referring Medicaid or Medicare patients to entities with which they have a financial relationship. The blanket waivers permit such referrals for 18 specifically designated relationships, such as referrals by owners of physician-owned hospitals or owners of ambulatory surgery centers that temporarily convert to hospitals. The relationship must be related to the COVID-19 emergency (which is broadly defined) and must not raise concerns regarding fraud or abuse. The blanket waivers are retroactive to March 1, 2020.

Subsequently, in an April 3, 2020, policy statement, HHS’s Office of the Inspector General (OIG) announced that it will similarly relax enforcement of the Anti-Kickback Statute in relation to certain remuneration related to COVID-19. The Anti-Kickback Statute generally prohibits providing or receiving remuneration in exchange for patient referrals. The purpose of the OIG’s temporary policy is to afford flexibility to providers of health care services who may be unable to comply with technical aspects of the Anti-Kickback Statute. The policy permits providers to pursue certain financial relationships that would otherwise be prohibited, such as payments made by a facility or physician for space or equipment rental below fair market value, the purchase of items or services below fair market value, or payments to physicians that are above their normal contracted rate.

Importantly, while the Anti-Kickback Statute policy is based on the Stark Law blanket waivers, it is notably narrower than the blanket waivers, covering only certain of the 18 enumerated categories provided for in the blanket waivers. All other arrangements prohibited by the Anti-Kickback Statute are unaffected by this policy. Moreover, the Anti-Kickback Statute policy applies only prospectively to conduct occurring on April 3, 2020, and later. Like the blanket waivers, to qualify for the Anti-Kickback Statute policy conduct must be related to care provided in connection with COVID-19, must not create a risk of fraud or abuse, and must be adequately documented.

While these HHS policies show the agency’s willingness to accommodate the special needs of health care providers, the policies are complex and warrant careful review to determine how they may apply to your organization or practice.

U.S. Environmental Protection Agency

After early reports suggesting that the U.S. Environmental Protection Agency (EPA) was significantly curtailing enforcement efforts, the agency has since issued a more detailed temporary policy.

Under the Temporary COVID-19 Enforcement Policy, the EPA will not seek penalties for noncompliance with routine monitoring and reporting requirements, if, on a case-by-case basis, the EPA agrees that such noncompliance was caused by COVID-19. The same policy applies to administrative settlement agreements: the EPA will not seek penalties for noncompliance with basic reporting requirements provided such failure was occasioned by COVID-19. Businesses should continue to use notice provisions set forth in agreements to keep the EPA apprised of their compliance efforts.

Regulated parties must document the basis for a claim that the pandemic prevented it from conducting the routine monitoring and reporting. These case-by-case determinations will be made after the pandemic is over and the EPA reserves its right to disagree that any asserted noncompliance was caused by the pandemic.

The temporary policy does not excuse exceedances of pollutant limitations in permits, regulations or statues due to COVID-19. Regulated entities are expected to comply. The temporary policy does not affect businesses’ responsibility to prevent and respond to spills or releases, or to criminal violations. However, the temporary policy contemplates that the EPA’s response to compliance will be determined in light of the circumstances created by the public health emergency, provided that the facility contacts the EPA or their state agency as soon as possible.

Businesses that may encounter challenges complying with environmental laws and regulations as a result of COVID-19, due to workforce or resource issues, for example, should review the temporary policy carefully to determine whether it may apply.

As usual, states maintain parallel authority to enforce many environmental laws, and any exemptions allowed by the EPA may not be respected by state agencies. The Wisconsin Department of Natural Resources (DNR), in particular, has issued its own process for case-by-case determinations of flexibility from regulatory burdens. Regulated entities are encouraged to work with their DNR contact to discuss compliance assistance if COVID-19 justifies the assistance sought.

1Learn more about the FCA and COVID-19 through our recent article entitled Managing and mitigating the risk of qui tam actions in the wake of COVID-19.

Copyright © 2020 Godfrey & Kahn S.C.

For more on governmental actions on COVID-19, see the National Law Review Coronavirus News section.

Supreme Court Rules That Certain, But Not All, Discharges to Groundwater May Require Permitting Under the Clean Water Act

In a 6-3 decision on Thursday, the United States Supreme Court vacated and remanded the opinion of the Ninth Circuit Court of Appeals and found that the Clean Water Act (“CWA”) regulated discharges from point sources “if the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from the point source into navigable waters.” The Supreme Court distinguishes its opinion from the Ninth Circuit by determining that the “fairly traceable” test established by the lower courts was too broad to require a permit under the CWA.

The case concerned the city of Maui’s Lahaina Wastewater Reclamation Facility, which treats millions of gallons of sewage each day and injects the treated waste into wells deep underground. A study ordered by the United States Environmental Protection Agency demonstrated that the waste could be traced from the facility to the ocean.  As a result of the study, environmentalists argued that a permit under the CWA was required.

Prior to the Supreme Court ruling, both the federal district court and the court of appeals sided with environmental groups, and established a standard to require a permit under the CWA when pollutants are “fairly traceable” from the pipe to navigable waters, despite the fact that the discharge initially entered groundwater before entering a navigable water.

The Supreme Court found that the “fairly traceable” standard was too broad, citing the “power of modern science” to detect pollutants years after their release in minute quantities. Justice Stephen Breyer, writing for the majority, stated that a permit is required only when the indirect pollution in navigable waters via groundwater is the “functional equivalent of a direct discharge.”

“If the pipe ends 50 miles from navigable waters and the pipe emits pollutants that travel with groundwater, mix with much other material, and end up in navigable waters only many years later, the permitting requirements likely do not apply,” he wrote.

In dissenting opinions, Justices Thomas, Gorsuch and Alito stated that the CWA mandated a permit only for direct discharges of pollutants into navigable waters and that the majority opinion was unworkable and incomprehensible.

“Instead of concocting our own rule, I would interpret the words of the statute, and in my view, the better of the two possible interpretations is that a permit is required when a pollutant is discharged directly from a point source to navigable waters,” Alito wrote.

The case is County of Maui v. Hawaii Wildlife Fund, No. 18-260.

© Steptoe & Johnson PLLC. All Rights Reserved.

For more on SCOTUS’s Clean Water Act decision, see the National Law Review Environmental, Energy & Resources law page.

Forests Recognized as Contributors to Washington State’s Response to Climate Change

On March 25, 2020, Governor Jay Inslee signed HB 2528 into law which recognizes the contributions of the state’s forests and forest products sector as part of the state’s global climate response.

Relying on recent climate reports recognizing the importance and function of working forests, the law states that sustainable forest management and forest products could be used to increase carbon sequestration by expanding forestland base, or reducing emissions from land conversation to nonforest use. For example, the hundreds of trees on a working forest can store carbon dioxide, which can help mitigate the effects of climate change. However, if the working forest is converted into agricultural, residential, or industrial land—all nonforest uses—then there is no longer the ability to store carbon.

The law recognizes that one way to satisfy Washington State’s greenhouse gas emissions reduction goals articulated in RCW 70.235.020, can occur by supporting the economic vitality of the sustainable forest products sector and other business sectors capable of sequestering and storing carbon. Other sectors included in the law are working forests and the necessary manufacturing sectors that support the transformation of stored carbon into long-lived forest products.

The law then establishes a number of policies regarding the recognition of the forestry and forest products sectors as a climate solution:

  • It is the policy of the state to support the contributions of all working forests and the synergistic forest products sector to the state’s climate response. This includes, but is not limited to, landowners, mills, bioenergy, pulp and paper, and other sectors necessary for forestland owners to continue the rotational cycle of carbon capture and sequestration in growing trees.
  • It is the policy of the state to support the participation of working forests in current and future carbon markets, strengthening the state’s role as a valuable contributor to the global carbon response
  • The legislature intends to recognize and support industry sectors that can act as sequesterers of carbon, such as Washington’s working forests and associated forest products industry.

The enactment of this law provides an opportunity for the forestry and forest products sector to expand its services and contribute to the state’s climate goals. Specifically, it encourages the planting of trees, which supports carbon sequestration; it supports the entire supply chain of the forest products sector, which in turn supports rural communities; and it encourages healthy forest management, which can mitigate the risk of wildfires.

© 2020 Beveridge & Diamond PC

EPA Announces Additional Action to Assure Availability of Disinfectant Products for Use Against the Novel Coronavirus

On March 31, 2020, the U.S. Environmental Protection Agency (EPA) announced it is taking further action to help ease the production and availability of EPA-registered disinfectants by temporarily allowing manufacturers of certain already-registered EPA disinfectant products to obtain certain active ingredients from any source without prior approval from EPA.  This only applies to products on EPA’s List N: Disinfectants for Use Against SARS-CoV-2 (List N).  EPA announced on March 26, 2020, similar action on certain inert ingredients.

EPA typically requires disinfectant manufacturers to first apply for and receive EPA approval prior to making a change in the source of the active ingredient.  Under this temporary amendment, however, manufacturers can source certain active ingredients from alternate suppliers by informing EPA.  Once EPA has been notified, the registrant can immediately distribute or sell a product modified according to this temporary amendment, provided that the resulting formulation is chemically similar to the current formulation (i.e., the purity of resulting product from the alternate source falls within the certified limits of the currently registered formulation for which they are making the source change).  EPA states that by allowing manufacturers to obtain certain active ingredients from any source it will help alleviate reports of supply chain disruptions by pesticide registrants who manufacture disinfectant products on List N.

The eligible active ingredients are:

  • Citric Acid, Chemical Abstracts Service Registry Number (CASRN) 77-92-9;
  • Ethanol, CASRN 64-17-5;
  • Glycolic Acid, CASRN 79-14-1;
  • Hydrochloric Acid, CASRN 7647-01-0;
  • Hypochlorous Acid, CASRN 7790-92-3;
  • Hydrogen Peroxide, CASRN 7722-84-1;
  • L-Lactic Acid, CASRN 79-33-4; and
  • Sodium Hypochlorite, CASRN 7681-52-9.

EPA will assess the continued need for and scope of this temporary amendment on a regular basis and will update it if EPA determines modifications are necessary.  EPA will notify the public at least seven days prior to terminating this temporary amendment at www.epa.gov/pesticides.

After the termination date of the temporary amendment, registrants will not be able to release for shipment new registered product unless that product is produced using a source of active ingredient identified in the product’s approved Confidential Statement of Formula (CSF) or otherwise would have complied with relevant requirements in the absence of this temporary amendment.

EPA states in its temporary amendment to Pesticide Registration (PR) Notice 98-10, the following procedures to submit a notification for currently registered disinfectant products listed on EPA’s List N:

  • A cover letter with a subject line that clearly indicates that this is a “notification per TEMPORARY AMENDMENT TO PR NOTICE 98-10 (Insert date or other citation) for EPA Registration No. XXXXXX and [insert product name]”;
  • The active ingredient; and
  • The following statement:

[Name of Registrant] is notifying EPA of its intent to use one or more alternate, unregistered sources of active ingredient listed in the TEMPORARY AMENDMENT TO PESTICIDE REGISTRATION (PR) NOTICE 98-10 (Insert date or other citation) in the formulation of EPA Registration No. [xxx-xx].  Each source is chemically identical to (i.e., within the certified limits of) the active ingredients in the Confidential Statements of Formula previously accepted by EPA [insert CSF date(s)]. This self-certification is consistent with the provisions of PR Notice 98-10 and no other changes have been made to the Confidential Statement of Formula or labeling of this product.  Further, I confirm that the ingredients statement of this label remains truthful.  I understand that it is a violation of 18 U.S.C. Section 1001 to willfully make any false statement to EPA.  I further understand that if this self-certification is not consistent with the terms of PR Notice 98-10 and 40 C.F.R. 152.46, this product may be in violation of FIFRA and I may be subject to enforcement actions and penalties under section 12 and 14 of FIFRA.

Applications must be submitted via the CDX portal.  At this time, EPA is not accepting paper applications.  Once an application is submitted, EPA requests that an email is sent to disinfectantslist@epa.gov with the CDX tracking number (CDX _ 2020 _ XXXXXXX).  A registrant may distribute or sell a product modified according to this temporary amendment to PR Notice 98-10 once EPA receives the notification.

©2020 Bergeson & Campbell, P.C.

For more on COVID-19 hygiene and other concerns, see the National Law Review Coronavirus News page.

EPA Can Help You Keep It Clean in a World with COVID-19

Virus-killing myths, like gargling salt water, are floating around as fast as toilet paper has flown off the grocery store shelves.

When those shelves are restocked, what is effective for cleaning surfaces in residential, commercial, and industrial environments?  The U.S. Environmental Protection Agency (“EPA”) has released a list of EPA-registered disinfectant products that have qualified for use against SARS-CoV-2, the novel coronavirus that causes COVID-19.

Along with hand washing and social distancing, cleaning and disinfecting with effective products are an important part of slowing the spread of the virus.  The EPA published the list with other important information on disinfectant products and links to the Centers for Disease Control (CDC) to inform the public and help reduce the spread of COVID-19.  According to the EPA’s accompanying press release, coronaviruses are “enveloped viruses, meaning they are one of the easiest types of viruses to kill with the appropriate disinfectant product. Consumers using these disinfectants on an enveloped emerging virus should follow the directions for use on the product’s master label, paying close attention to the contact time for the product on the treated surface (i.e., how long the disinfectant should remain on the surface).”

How do we know the listed products are effective and not a scam?  The EPA developed its Emerging Viral Pathogen program in 2016 to allow manufacturers to voluntarily provide EPA with data to show their products are effective against viruses. The purpose of the program was to gather the information through a pre-approval process so that if an outbreak occurs, companies with pre-approved products can make off-label claims for the use of the products against the outbreak virus. That planning proved fruitful: the use of the program was triggered for the first time for SARS-CoV-2 on January 29, 2020.

The EPA’s list includes recognizable products such as Clorox Multi-Surface Cleaner + Bleach and Lysol Brand Bleach Mold and Mildew Remover but is not meant to serve as an agency endorsement of any particular product as there may be additional disinfectants it has not reviewed that do meet the program’s criteria.  The EPA recommends to consumers to check if the EPA registration number that is on the product’s label (“EPA Reg. No.”) is included on the program list of disinfectants for use against SARS-CoV-2 to ensure the product can be used effectively.  Products can be marketed and sold under different brand names, but if they have the same EPA registration number, they are the same underlying product and can be used.

© 2020 Ward and Smith, P.A. All Rights Reserved.