Environmental Law Archives - Page 29 of 43

EPA Proposal Acknowledges Areas With Dangerous Air Pollution, But Leaves Some Out and Has Failed to Step in When States Haven’t Protected Residents

EPA Two weeks ago, the Environmental Protection Agency published proposals to designate 12 areas of the country—including Alton and Marion, Illinois; Jefferson and Posey, Indiana; DeSoto Parish, Louisiana; Anne Arundel and Baltimore, Maryland; St. Clair, Michigan; Franklin, Missouri; Muskogee, Oklahoma; and Freestone, Rusk, and Titus, Texas—as “nonattainment” for the dangerous pollutant sulfur dioxide, or SO2. While EPA won’t finalize the designations until July, what needs to happen next is for the agency to recognize that there are far more than 12 areas across the United States that are in need of having their air cleaned up.

But to explain the importance of all this, we need to back up a bit. One of the most powerful tools under the Clean Air Act for protecting the air we breathe is something called an “ambient air quality standard.” The way it works is this: EPA follows the science and determines the level for certain pollutants above which it’s unsafe for human health, and then issues standards for those pollutants. For SO2 pollution, it’s 75 parts per billion. EPA then determines what parts of the country have safe air quality, and what parts have air quality worse than the standard. These latter areas are called “nonattainment,” and the Clean Air Act imposes strict requirements on states to fix their air quality problems, and directs EPA to step in and handle things if states don’t shoulder their responsibility.

Although EPA set the SO2 standard in 2010, since then, implementation has been stymied. EPA hasn’t designated many areas, and even with the areas it has already designated as nonattainment, states have almost universally failed to develop the required plans to reduce SO2 pollution and EPA has failed to step in solve the problem expeditiously–including in Detroit, Michigan. The consequence is that hundreds of thousands of residents are regularly breathing levels of pollution the agency knows causes severe public health impacts, particularly on children and the elderly.

SO2 is a nasty pollutant. Exposure to even low concentrations for even short durations (as little as five minutes) can trigger asthma attacks and respiratory distress. In fact, studies show correlations between short-term exposure and increased visits to emergency departments and hospital admissions for respiratory illnesses, particularly in at-risk populations including children, the elderly, and asthmatics. In places like Detroit, where everybody—EPA, Michigan Governor Rick Snyder, and the polluters themselves—know that the air is unsafe, the asthma rates are high, the public is suffering, but state and EPA action is both missing and overdue.

We know how to fix this problem. Almost all SO2 pollution comes from a tiny handful of sources: coal-fired power plants.

sierra20club That means that restoring clean air is as simple as modeling the pollution from the few hundred remaining coal plants in the country, and ensuring that they have emission limits in place that protect our air and our communities.

But why use modeling instead of air monitors to assess the safety of the air we breathe? Two reasons: First, when almost all the pollution comes from just a few large sources, modeling is actually much faster, cheaper, and more accurate than setting up a monitoring network and waiting years for the data to come in. EPA has carefully developed modeling software for this purpose, and has subjected it to more rigorous field testing than any other modeling tool it has ever created.

Second, the sad fact is that the nation’s air monitoring network for SO2 pollution is woefully inadequate. During the Reagan administration, the U.S. had roughly 1,500 SO2 pollution monitors, which sounds like a lot, until you realize just how big a country the U.S. is—there are more than 3,000 counties in the U.S. But since then, the number has dropped even further, to less than 450 (in a country spanning 3.8 million square miles!). And none of them are where they need to be to keep an eye on peak concentrations of SO2 pollution: they are often miles away from large polluting sources or are in places like offshore islands, where the air they measure is a lot cleaner than the air we actually breathe.

This is what is so critical about EPA’s proposals: the new designations would be based on modeling.

Of course, not everybody is likely to be happy about this. Plenty of states and industry submitted modeling to EPA (rather suspiciously, industry modeling rather universally shows impacts just below the limit), but oftentimes such analysis was skewed towards hiding the true impacts of the pollution. In some cases, states submitted modeling not of what power plants actually emitted, but what the state wished they had emitted. In others, states or industry modelers used unapproved software add-ons that cripple the model and unsurprisingly yield results purporting air quality to be much better than it actually is. This is a bit like calculating how much you’d have in your savings account if you’d been stashing away a lot more money than you actually had, and pretending the bank gave you a much better interest rate than it actually did. It might be a fun exercise, but it has little to do with reality.

Nor did EPA go as far as it should. While EPA in this round of proposed designations was looking at just 66 areas total, many more than the 12 it identified as having bad air should be considered as “nonattainment” for SO2 pollution. Places like Gibson County in Indiana, and additional parts of Illinois, Michigan, Louisiana, Ohio, and regions in Texas all have unsafe air quality because of coal plants, and EPA should designate them in nonattainment as well.

The first step in fixing a problem is recognizing that there is a problem, so EPA should not shy away from calling a spade a spade and finalizing nonattainment designations for these areas. And, where problems have already been identified–such as in Detroit–EPA should stop sitting on its hands and move expeditiously to protect the breathing public.

Article By Zack Fabish of Sierra Club

New Endangered Species Act (ESA) Critical Habitat Rules Expand Federal Authority and Add Uncertainty

On February 11, 2016, the United States Fish & Wildlife Service (“FWS”), together with the National Marine Fisheries Service (“MFS”) (collectively “Services”) published two final rules and a final policy that purport to clarify their procedures for listing species under the Endangered Species Act (“ESA”) and designating and revising critical habitat for listed species. Hundreds of comments were filed opposing the Services’ actions, with the IPAA and numerous other trade organizations expressing significant concerns about the content and scope of the rules. The rules and policy become effective as of March 14, 2016.

The new rules first revise the term “destruction or adverse modification.” This is a fundamentally important term in implementing the ESA. The new rule defines this term as follows:

Destruction or adverse modification means a direct or indirect alteration that appreciably diminishes the value of critical habitat for the conservation of a listed species. Such alterations may include, but are not limited to, those that alter the physical or biological features essential to the conservation of a species or that preclude or significantly delay development of such features.

50 C.F.R. 402.02, Definitions. This shifts the historic endpoint for this factor from “both the survival and recovery” of a species to simply conservation of a species. The Services have even changed the underlying significance of the term “conservation.” The existing Section 402.02 definitions include a definition for “conservation recommendations,” which are “suggestions of the Service regarding discretionary measures to minimize or avoid adverse effects of a proposed action on a listed species or critical habitat.” Under the new rule, Section 402.02’s definitions will include a definition for “conserve, conserving, and conservation”:

To use and the use of all methods and procedures that are necessary to bring any endangered or threatened species to the point at which the measures . . . are no longer necessary, i.e., the species is recovered in accordance with § 402.02 of this chapter.

50 C.F.R. 402.02, Definitions (Emphasis added). Thus at the outset the level of change that might be considered “destruction of modification” of critical habitat is arguably substantially different. Equally concerning, the remainder of the new definition appear to include current and future habitat features, and uses the newly defined and even broader term “physical or biological features.”

The new rules next change the FWS’ current rules found at 50 C.F.R. sections 424.12(b) and (e). The FWS and MFS plan to eliminate existing limitations on when they can designate unoccupied areas as critical habitat for listed species. Those limitations are generally set forth in Section 424.12(e) which currently states that FWS may include unoccupied area in designating critical habitat “only when a designation limited to its present range would be inadequate to ensure the conservation of the species.” (Emphasis added). Section 424.12(b)(2) of the new rule supersedes this provision, with the ability to designate unoccupied areas drafted as a mandate or general authority as opposed to a limitation. Section 424.12(b)(2) also relies on the new definition of “conservation” that leaves many concerned over whether “conservation” will now be equated with species recovery. The rule states as follows:

(b) Where designation of critical habitat is prudent and determinable, the Secretary will identify specific areas within the geographical area occupied by the species at the time of listing and any specific areas outside the geographical area occupied by the species to be considered for designation as critical habitat.

(2) The Secretary will identify, at a scale to be determined by the Secretary to be appropriate, specific areas outside the geographical area occupied by the species that are essential for its conservation, considering the life history, status, and conservation needs of the species based on the best available scientific data.

See 81 Fed. Reg. 7414 (February 11, 2016), at p. 7439 (Emphasis added). While the rule limits the Services’ reach to exclude foreign countries, 50 C.F.R. 424.12(g), their authorities to designate habitat for new or previously listed species, or to modify designated critical habitat where such habitat was previously designated, is otherwise broad. The Services are explicit in acknowledging their intent to increasingly exercise their discretion to include unoccupied areas outside of a species’ range where those areas “are essential for its conservation.” 50 C.F.R. 424.12(b)(2). New defined terms such as “physical and biological features,” “special management considerations” and “geographical area occupied” add to the uncertainty regarding critical habitat.

As rationale for the new rules, the Services cite past litigation, but also “anticipate that critical habitat designations in the future will likely increasingly use the authority to designate specific areas outside the geographical area occupied by the species at the time of listing.” 79 Fed. Reg. 27,066 (May 12. 2014), p. 27073. The Services go on to explain that “[a]s the effects of global climate change continue to influence distribution and migration patterns of species, the ability to designate areas that a species has not historically occupied is expected to become increasingly important.” For example, such areas may provide important connectivity between habitats, serve as movement corridors, or constitute emerging habitat for a species experiencing range shifts in latitude or altitude (such as to follow available prey or host plants). Where the best available scientific data suggest that specific unoccupied areas are, or it is reasonable to infer from the record that they will eventually become, necessary to support the species’ recovery, it may be appropriate to find that such areas are essential for the conservation of the species and thus meet the definition of “critical habitat.”” Id. The Services have relied on these generalized concepts of climate change to support sweeping new authority over the designation of unoccupied areas as critical habitat, and appear poised to regulate or prohibit changes to those unoccupied lands based on an inference that the lands may eventually become necessary to support the species’ recovery in the future.

The final policy published together with the two new rules addresses the Services’ discretionary authority to exclude areas from a designation of critical habitat pursuant to Section 4(b)(2) of the ESA. According to the Services, “[t]he final policy consists of six elements that the Services consider when determining whether to exclude any areas from critical habitat: (1) partnerships and conservation plans, (2) conservation plans permitted under section 10 of the ESA, (3) tribal lands, (4) national security and homeland security impacts, and military lands, (5) federal lands, and (6) economic impacts.” See http://www.fisheries.noaa.gov/pr/species/critical%20habitat%20files/4b2_faqs_final.pdf. The policy sets a high bar for when areas will be excluded as critical habitat based on private and non-federal conservation plans or agreements. Evaluations pursuant to 4(d)(2) involving non-permitted conservation plans or agreements will be considered using at least eight factors, one of which is the “degree to which the plan or agreement provides for the conservation of the essential physical or biological features for the species.” 81 Fed. Reg. 7226 (February 11, 2016), at p. 7247 (Emphasis added). The policy is also notable in its express intent to focus on non-federal lands, and its statement that “the benefits of designating Federal lands as critical habitat are typically greater than the benefits of excluding Federal lands or of designating non-federal lands. This part of the policy seems not to properly consider the approximately 700 million acres of federal mineral estate lands and the over-300 million acres of surface estate federal lands, many of which are leased for various mining, exploration or other activities. See http://www.blm.gov/public_land_statistics/pls10/pls10.pdf

Given the breadth of the Services’ new rules, and the ambiguity that appears in the new definitions and other rule changes, lawsuits are anticipated challenging the rules. The following is a link to dockets for each final action: http://www.regulations.gov/#!docketDetail;D=FWS-HQ-ES-2012-0096.

ARTICLE BY Allyn G. Turner of Steptoe & Johnson PLLC
© Steptoe & Johnson PLLC. All Rights Reserved.

EU Policy Update – February 2016 re: Dutch Presidency and Brexit, Digital Single Market Policy, Energy and Environment

Dutch Presidency and Brexit

In January, the Netherlands took over the Presidency of the Council of the European Union from Luxembourg. In line with the political intentions of the Juncker Commission to be ‘big on the big issues but small on the small issues’, the Netherlands promises to focus on the essentials during its Presidency. In particular, the Dutch Presidency would like to focus on migration and international security. Another priority is to strengthen the free movement of services and the free movement of workers, where the Presidency would like to strengthen the protection of workers posted abroad.

Additionally, on February 2, the President of the European Council, Donald Tusk, presented his proposals for a ‘new settlement of the United Kingdom within the European Union’. If accepted, they would allow David Cameron to campaign in the ‘Brexit’ referendum on the continuing membership of the UK in the bloc. The Heads of State and Government will discuss and adopt the text in a meeting on February 18. For Covington’s analysis of the proposals presented and the referendum, please see here.

Digital Single Market Policy

The formal adoption of the EU Network and Information Security (NIS) Directive is a step closer following a vote on January 14 by the European Parliament’s internal market and consumer protection (IMCO) committee. The committee confirmed that the minimum harmonisation requirements under the Directive do not apply to digital service providers. This means that Member States will not be able to impose any further security or notification requirements on digital service providers beyond those contained in the Directive, when transposing it into national law. The NIS Directive will now be put forward for a plenary vote in the European Parliament. Once it is published in the Official Journal of the European Union and enters into force later this year, Member States will have 21 months to transpose it into national law. Member States will then have a further 6 months to apply criteria laid down in the Directive to identify specific operators of essential services covered by national rules. These processes are likely to be complicated, and companies that may fall within scope should participate in consultations and monitor developments across the EU over the coming months.

On January 19, the European Parliament adopted a resolution on the Digital Single Market Strategy of the European Commission. The parliamentarians called for ambitious and targeted actions to complete Europe’s digital single market. Among other things, the MEPs support the end of geo-blocking practices across Europe, the setting of a single set of contract rules and consumer rights for online sales and for digital content, and the modernization of the copyright framework.

On February 2, the European Commission and U.S. Government reached a political agreement on the new framework for transatlantic data flows. The new framework – the EU-U.S. Privacy Shield – succeeds the EU-U.S. Safe Harbor framework. The EU’s College of Commissioners has also mandated Vice-President Ansip, in charge of the Digital Single Market, and Commissioner Jourová, Commissioner for Justice, Consumers and Gender Equality, to prepare the necessary steps to put in place the new arrangement. For Covington’s full analysis of the announcement of the EU-U.S. Privacy Shield, please see here.

Energy and Environment Policy

The European Commission published a proposal to update the approval requirements and market surveillance of new passenger cars and their respective systems and components. The Commission’s proposal aims at strengthening the credibility and enforcement of the applicable safety and environmental requirements for cars, following the controversy regarding Volkswagen last year.

In a significant departure from past EU legislation, the proposal would empower the Commission to impose administrative fines on economic operators who are found not to have complied with the approval requirements, of up to €30,000 per non-compliant vehicle.

The Commission’s proposal focuses on three elements. First, the European Commission proposes to reinforce the credibility of the type-approval assessment of new vehicles by ensuring that the technical services testing the new vehicles are fully independent from car manufacturers. For this purpose, the proposal would enhance the financial independence of such technical services and require Member States to create a national fee structure to cover the costs of type-approval testing and market surveillance activities for vehicles. Moreover, in order to prevent the use of ‘defeat devices’, as in the Volkswagen controversy, the proposal would grant approval authorities and technical services access to the software and algorithms of the vehicles tested.

Second, the proposal includes measures to strengthen the market surveillance of vehicles after they are type-approved and in circulation. Member State authorities and the Commission would be able to conduct tests and inspections on cars available on the market and would be empowered to adopt restrictive measures in case of non-compliance of vehicles. Among other proposed measures, the Commission would establish and chair a forum to coordinate the network of national authorities responsible for type-approval and market surveillance. Member States would also be able to inspect and take measures against vehicles type-approved in a different EU Member State.

Third, the Commission proposes measures to ensure that non-compliant manufacturers are penalized in case of non-compliance. Member States would be required to adopt penalties for non-compliant economic operators, including car manufacturers, importers and distributors, as well as technical services. This may be complemented by administrative fines, imposed by the Commission, of up to €30,000 per non-compliant vehicle, as referred to above.

Finally, the European Commission hopes to ensure a more uniform application of the legislation in the EU by proposing a Regulation as opposed to the current Framework Directive 2007/46/EC. If adopted, the Regulation would be directly applicable in national law with no requirement of transposition.

The Commission proposal is available here; it has been sent to the Council and European Parliament for consideration.

The European Commission is expected to propose a revision of the Fertilizers Regulation (EC) 2003/2003 in March 2016. This revision comes in parallel to the Circular Economy Package announced in December 2015, which aims to create a single market for the reuse of materials and resources.

Under the current EU Regulation 2003/2003, manufacturers and importers of fertilizers may choose to comply with the laws of the Member States where they market their products, or to get their products approved and CE-labeled under the Regulation. However, Regulation 2003/2003 only regulates a limited number of categories of fertilizer products.

According to Commission officials, the proposal aims to create a level playing field between existing, mostly inorganic categories of fertilizers, and innovative fertilizers, which often contain nutrients or organic matter recovered and recycled from biowaste or other secondary raw materials. Therefore, the proposal will make the approval process more flexible for new categories of CE-labeled fertilizers.

The draft legislative text is structured in four parts: (i) a list of materials that could be used for the production of CE-marketed fertilizing products under the conditions included in the annexes of the proposal; (ii) a list of product function categories for fertilizers, rules for blends of different product categories, and respective safety and quality requirements for each category included in the annexes; (iii) an annex with the labelling requirements by product function; and (iv) a section with the different conformity assessment procedures. Fertilizers that follow the harmonized EN standards will be presumed to conform with the requirements of the regulation.

Moreover, the proposal would continue to allow Member States to regulate national fertilizing products. Products that are not in compliance with the EU Fertilizers Regulation and do not carry the CE label would be able to marketed in a particular Member State if they comply with its national legislation.

Importantly, the revised Fertilizers Regulation is also likely to include an EU-wide limit on the presence of cadmium in fertilizers. In November 2015, the Scientific Committee on Health and Environmental Risks published an opinion concluding that new scientific information available justifies an update of the 2002 opinion on Member State Assessments of Risk to health and the Environment from Cadmium – see here.

The draft proposal is currently in inter-service consultation among the different Directorates General of the European Commission. Fertilizer manufacturers wishing to voice their opinion regarding the future Regulation on fertilizers should reach out now to the different services of the Commission.

Internal Market and Financial Services Policies

On January 15, the European Commission launched a public consultation on non-binding guidance for reporting non-financial information by certain large companies, following Article 2 of Directive 2014/95/EU – see here. Directive 2014/95/EU aims at improving the transparency of certain large companies related to Environmental matters, social and employee matters, human rights, and anticorruption and bribery matters. The feedback gathered during the consultation will be used to prepare the guidelines and facilitate the disclosure of non-financial information by undertakings. The public consultation will run until April 15, 2016.

On January 28, the European Commission presented its so-called Anti-tax Avoidance Package – see here. The initiative includes: (i) a new communication on tax avoidance in the EU; (ii) a proposal for an Anti-Tax Avoidance Directive; (iii) a proposal for a Directive implementing the G20/OECD Country by Country Reporting (CbC Reporting); (iv) a Recommendation to the Member States on Tax Treaties, and (v) a Communication on an External Strategy regarding tax avoidance.

The Anti-Tax Avoidance Directive includes six measures, which aim at limiting the abuse of six well-established practices used to avoid taxes in various jurisdictions in Europe. These include the mismatch in legal characterisation of financial instruments or legal entities between Member States, excessive inter-group interest charges, and a general anti-abuse rule against arrangements the essential purpose of which is to obtain a tax advantage.

The legislative proposal on CbC Reporting aims to strengthen the existing mandatory and automatic exchange of information between the Member States in the field of taxation. The proposal also requires the parent entity of a multinational group to report to the competent authorities the aggregated information on the revenue, profit (or loss) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash equivalents, in respect of each jurisdiction in which the group operates.

Finally, because tax avoidance has a strong global dimension, the EU will also cooperate better with third countries on tax issues. The Commission therefore proposes to adopt a common EU system to screen, list and put pressure on third countries that refuse to adopt policies to limit tax avoidance. In addition, before the end of 2016, the Commission and Member States will consider whether to put in place sanctions to incentivize third countries to improve their tax systems.

Life Sciences and Healthcare Policies

At the beginning of February 2016, the Dutch presidency will resume trilogues on the legislative proposals regarding the medical devices Regulation (“MD proposal”) and the in vitro diagnostic medical devices Regulation (“IVD proposal”). The European Commission presented this pair of proposals in September 2012, and recently called upon the Council of Ministers and the European Parliament to reach an agreement in the first half of 2016. The Dutch delegation therefore intends to ramp up the number of trilogues between the institutions to five political meetings and 10 to 15 technical meetings during its presidency. Nonetheless, important differences remain between the negotiators on the reprocessing of single use devices, liability insurance for manufactures, and the classification of devices in the framework of the IVD proposal. It is understood that the Dutch presidency hopes to achieve an agreement by the Employment, Social Policy, Health and Consumer Affairs Council of June 17, 2016.

Trade Policy and Sanctions

On January 1, the Deep and Comprehensive Free Trade Area (“DCFTA”) between the EU and Ukraine became operational. According to the Commission, the implementation of the DCFTA will improve the Gross Domestic Product of Ukraine by circa 6% and increase economic welfare for Ukrainians by 12% over the medium term.

On January 13, the European Commission held an initial orientation debate on Market Economy Status for China in anti-dumping proceedings. Under the current WTO rules, the EU can calculate potential anti-dumping duties on the basis of data from another market economy country rather than the domestic prices used in China, because there is a presumption that market economy conditions do not prevail in China. However, this provision, included under Article 15(a)(ii) of China’s Protocol of Accession to the WTO, will expire on December 12, 2016. The Commission is therefore considering its options for changing the methods used to calculate dumping margins in respect of China. It is important for the Commission to start the process on time, because any change in the anti-dumping rules are likely to require legislation to be adopted by the Council and the European Parliament. Given the delicate nature of such negotiations, the process is expected to take a year.

January 16, 2016, saw the Implementation Day of the Joint Comprehensive Plan of Action (“JCPOA”) – the historic deal reached among China, France, Germany, Russia, the UK, the U.S., the EU and Iran to ensure the exclusively peaceful nature of Iran’s nuclear program. As part of that agreement, the Council of the EU lifted all nuclear-related economic and financial EU sanctions on Iran. It did so by bringing into force the EU legislative package adopted on October 18, 2015, following the verification by the International Atomic Energy Agency (“IAEA”) that Iran had complied with the requirements laid down in the JCPOA. As of January 16, many sectors and activities have been reactivated, including, among others: financial, banking and insurance measures; oil, gas and petrochemical; shipping and transport; gold and other metals; software; and the un-freezing of the assets of certain persons and entities. Note that proliferation-related sanctions, including arms and missile technology sanctions, will remain in place until 2023 (subject to various conditions). For the Council press release, see here. For more details, see the Council Information Note here.

Article By Sebastian F.A. Vos of Covington & Burling LLP

The ‘Commoditization’ of Water in The West

The treatment of water as a commodity, rather than a utility service, is gaining momentum in the western U.S. A recent Pro Publica/The Atlantic (February 9, 2016) article addresses the acquisition of water by hedge fund investors as commodity investments, instead of water service.

A New York City hedge fund manager, Disque Dean Jr., has identified numerous financially distressed agricultural properties with valuable water rights. Mr. Dean has acquired a number of these properties through his Water Asset Management fund, with an eye toward bringing a market based approach to water allocation.

Historically, access to water in the West has been allocated on the principle of “prior appropriation”-a concept of “first in time, first in right” to the water. While numerous limitations on the use (“beneficial use” is required to retain water rights) and its transfer, Mr. Dean asserts that allowing the purchase and sale of water on a market basis is one solution to the issue of the growing scarcity of water west of the Mississippi.

The experience of Crowley County, Colorado however, is offered as a cautionary tale on the treatment of water as a commodity. One of Colorado’s most fertile agricultural areas has dried up in the face of the sale of water to metropolitan water districts located far from the area where the water rights were originally held. Farmers and ranchers in the area seized the opportunity to cash out on their valuable water holdings, leaving much of the county’s former farm land high and dry. While other western states have dealt with the water as commodity issue more successfully (California’s Palo Verde Valley is offered as a success story) the creation of “water markets” and their ultimate impact in the West, is still up for grabs.

Article By Mark A. Davidson of Lewis Roca Rothgerber LLP

Agriculture, Food, and Health Issues to Watch for 2016

Label Food Organic.jpg As the agriculture and food industries head into the new year, a number of important cases and regulatory issues that have the potential to dramatically affect the industry are front and center. Below, an overview of the status of several of the key cases and issues that related industries should keep an eye on during 2016.

Waters of the United States

On October 9, 2015, following an earlier ruling by the U.S. District Court for the District of North Dakota, the United States Circuit Court for the Sixth Circuit issued a nationwide stay of the so-called “Waters of the United States” or “WOTUS” rule. The stay halted implementation of the WOTUS rule, pending resolution of jurisdictional issues that were the subject of oral argument on December 8, 2015. Those jurisdictional issues are focused on whether the Sixth Circuit is the proper venue to hear challenges to the rule. A ruling is expected in 2016.

A number of district court cases across the country also remain pending, and the District of North Dakota’s earlier injunction against implementation of the WOTUS rule in 13 states, including Missouri, remains in place.

Vermont Act 120

On October 8, 2015, the U.S. Circuit Court of Appeals for the Second Circuit heard oral argument of an appeal filed by the Grocery Manufacturers Association and other plaintiffs seeking review of the U.S. District Court for the District of Vermont’s denial of their Motion for Preliminary Injunction on April 27, 2015. The motion sought a preliminary injunction enjoining implementation of Vermont Act 120, passed on May 8, 2014, with an effective date of July 1, 2016. Act 120 would, among numerous provisions, mandate new labeling requirements on the part of manufacturers and other food processors for any food that is “produced with genetic engineering,” “partially produced with genetic engineering,” or “may be produced with genetic engineering.” Violators of Act 120 are subject to civil penalties of up to $1,000 per day, per product.

A decision is expected in the first two quarters of 2016 in advance of the July 1, 2016, effective date of the law.

Federal Activity Regarding GMOs and the Safe and Accurate Food Labeling Act

The U.S. House of Representatives passed the Safe & Accurate Food Labeling Act (SAFL) on July 23, 2015. The SAFL Act would, among other things, serve to pre-empt any state laws governing labeling of GMO-containing food products, including Vermont’s Act 120 due to become effective on July 1, 2016. Despite pressure on the U.S. Senate to address the SAFL Act and pass a companion or similar bill before the end of 2015, efforts to include any such bill or related provisions in the year-end omnibus spending bill were unsuccessful. Senate Agricultural Committee Group leaders, including Sen. Debbie Stabenow, D-Mich., have pledged to make the issue a top priority in January 2016, and many expect Sen. John Hoeven, R-N.D., to play a role in trying to secure passage of a bipartisan bill.

Food Safety Modernization Act Roll-Out

The Food Safety Modernization Act (FSMA) was signed into law on January 4, 2011, and represents the most comprehensive overhaul of the U.S. food safety regulatory scheme since the passage of the Food, Drug and Cosmetic Act in 1938. For nearly five years, the U.S. Food and Drug Administration (FDA) has been developing the seven final rules that implement FSMA. Each final rule impacts a different fundamental area of the U.S. food system.

In September and November 2015, the FDA issued the first five of the seven final rules: (1) Preventive Controls for Human Food; (2) Preventive Controls for Animal Food; (3) Foreign Supplier Verification Program; (4) Standards for Produce Safety; and (5) Accredited Third-Party Certification. The issuance of these rules initiates the countdown for the relevant compliance deadlines for covered entities.

It is anticipated that the final two FSMA rules regarding Sanitary Transportation and Intentional Adulteration will be issued on March 31, 2016. The Sanitary Transportation final rule will establish criteria for the sanitary transportation of food, including criteria targeted at shipping conditions and practices, employee training, and record keeping. The Intentional Adulteration final rule will require domestic and foreign food processing facilities to address vulnerabilities in their operations to prevent acts on the food supply intended to cause large-scale public harm. In 2016, the FDA will also be working with certain alliance groups to further develop FSMA compliance and enforcement guidance.

FDA Menu Labeling Requirements

Section 4205 of the Affordable Care Act charges the FDA with establishing labeling requirements for certain retail food establishments and vending machines. On December 1, 2014, the FDA issued two rules requiring calorie information to be listed on menus and menu boards at retail food establishments if they are a part of a chain of twenty or more locations operating under the same name and offering for sale substantially the same restaurant-type food items.

In July 2015, the FDA announced that the compliance deadline for the menu labeling rule was being extended by one year. All covered establishments (e.g., restaurants, grocery stores, and gas station convenience stores) now have until December 1, 2016, to identify calorie count and other information on their menus and menu boards as required by the FDA menu labeling rules.

Article By Laura A. Bentele, Scott K.G. Kozak & Jonathan D. Valentino of Armstrong Teasdale

2016 TSCA Chemical Data Reporting – Are You Prepared?

The Toxic Substances Control Act (TSCA) Chemical Data Reporting (CDR) rule (40 C.F.R. Part 711) will require U.S. manufacturers and importers of certain chemical substances to report information on these substances to the U.S. Environmental Protection Agency (EPA) by September 30, 2016. Industry should be well aware of and theoretically has ample time to meet this deadline, but the 2016 CDR is more complicated, more onerous, and requires more information than the 2012 CDR. Particularly given the significant penalties for CDR noncompliance (up to $2-5,000 per chemical per site), companies should devote significant time and effort to ensuring full compliance with this requirement.

Companies should be preparing now for the CDR submission period in 2016.

CDR reports must be submitted between June 1 and September 30, 2016.
Companies must report if they manufactured in or imported into the U.S. at least 25,000 pounds (lbs.) of a TSCA Inventory listed substance at any one U.S. site during any one of the following calendar years – 2012, 2013, 2014, or 2015.
Certain regulated chemicals (e.g., chemicals subject to TSCA section 5 significant new use rules (SNUR)) are subject to a lower, 2,500 lbs./year, manufacture / import volume threshold for these calendar years. —
CDR reports must include detailed, chemical-specific and site-specific manufacture / import and processing / use information for calendar year 2015 (the “principal reporting year”), and production volume information for each calendar year from 2012 to 2015.
Information reported for the CDR can be claimed as TSCA confidential business information (CBI) only if “upfront” substantiation is provided.

EPA regulations governing CDR appear at 40 C.F.R. Part 711. For additional information, visit http://www.epa.gov/cdr.

The CDR Program

Since 1986, U.S. manufacturers and importers have been required to periodically submit under TSCA certain basic information on many of the now over 85,000 chemicals appearing on the TSCA Chemical Substance Inventory (Inventory). Information submitted to EPA under this reporting requirement has been used as a tool for regularly updating the Agency and the public as to potential human and environmental exposure to substances in U.S. commerce.

In 2011, EPA overhauled this reporting requirement, which was originally known as the TSCA Inventory Update Rule (IUR) rule. The new “CDR” rule ushered in significant changes to reporting requirements beginning with the first CDR submission period, which ended in August 2012. For the 2012 CDR, about 1,600 U.S. companies reported activities for about 7,700 chemicals at about 4,800 sites. The second CDR reporting period will occur between June 1 and September 30, 2016 (to recur at 4-year intervals thereafter). Given the broader time period beginning in 2016 during which chemical production can trigger CDR reporting, in the future even more companies will likely be subject to and have to report on more chemicals.

Basic Thresholds and Reporting Requirement

For the 2016 submission period, companies must report for the CDR if, at one or more U.S. sites, they manufactured in or imported into the U.S. at least 25,000 pounds (lbs.) of a reportable chemical substance during any one of the calendar years 2012, 2013, 2014, or 2015. The CDR reporting form is known as the “Form U.”

The Form U requires companies to provide a variety of information, including technical contact information, and a Chemical Abstracts (CA) Index Name and corresponding Chemical Abstracts Service (CAS) Registry Number (CASRN) (if available) for each reportable substance.

To the extent that it is known or reasonably ascertainable, the Form U requires reporting of the following information on manufacture / import activities for each reportable substance at each site:

Volume of the substance that is manufactured or imported;
Number of workers reasonably likely to be exposed to the substance at each site;
Physical form(s) of the substance as it leaves the submitter’s possession, along with the associated percent production volume; and
Maximum concentration of the substance as it leaves the submitter’s possession;
Volume of a substance used on site;
Volume of a substance that is directly exported and not domestically processed or used;
Whether an imported substance is physically at the reporting site; and
Whether a substance is being recycled, remanufactured, reprocessed, or reused.

For the 2016 submission period, companies must also report production volume, by substance and site, for each of the calendar years 2012, 2013, 2014, and 2015.

Processing and Use Information

As was the case under the 2012 CDR, companies are required under the 2016 CDR to report detailed “processing and use” information associated with downstream domestic customer facilities regardless of whether the facilities are controlled by the manufacturer or importer. For the 2012 submission period, information on processing and use activities was required only for substances manufactured or imported in quantities ≥ 100,000 lbs. in the principal reporting year. This higher threshold, however, has been eliminated such that, other than substances specifically exempted from this required as described and listed at section 711.6, this extensive processing and use information is now required for all CDR-reportable substances.

Required processing and use information includes the following:

Type of industrial processing or use operations at downstream sites;
Approximate number of sites and estimated number of industrial processing and use workers reasonably likely to be exposed to each substance for each combination of processing or use code and industrial function category;
Estimated percentages of the submitter’s production volume for each processing or use code and corresponding industrial function category;
Whether the products are intended for use by children; and
Maximum concentration of the reportable chemical substance in each commercial and consumer product category.

Processing and use information must be reported if it is “known to or reasonably ascertainable by” the manufacturer or importer. This is a considerably lower standard compared to the previous IUR requirement to report information that was “readily obtainable.”

Exemptions from CDR Reporting

Several categories of substances are exempt from CDR – certain polymers, microorganisms, and certain natural gas streams – so long as the specific substance is not subject to certain specified TSCA actions, such as proposed or final rules issued under section 4, 5(a)(2), 5(b)(4), or 6 of TSCA (e.g., test rules, significant new use rules), or to orders issued pursuant to section 5(e) or 5(f). Note that substances that are subject to an enforceable consent agreement (ECA) are similarly ineligible for these exemptions, even if the CDR reporter is not a signatory to the ECA. Also, otherwise polymeric substances resulting from hydrolysis, depolymerization, or chemical modification of polymers must be reported if the hydrolysis, depolymerization, or chemical modification occurs to such an extent that the resulting product is no longer totally polymeric in structure.

Exemptions also exist for substances that are produced or imported in small quantities for research and development, substances imported as part of an “article,” and substances manufactured or imported as an “impurity” or “non-isolated intermediate.” Other types of substances that are described at 40 C.F.R. § 720.30(h) are also excluded from CDR.

“Byproducts” are excluded from CDR if their only commercial purpose is to be burned as a fuel, disposed as a waste, or from which component chemical substances are extracted for a commercial purpose. Note, however, that any extracted component substances are potentially reportable for CDR.

Under section 711.6, certain petroleum process streams and other specifically listed “low interest” substances are exempt from the requirement to submit processing and use information. Manufacturers and importers of partially exempt substances, however, are still required to provide the traditional information required on the Form U if the general 25,000 / 2,500 lbs. production volume threshold is exceeded. EPA has established a process for revising these “partially exempt” substance lists.

Electronic Reporting

CDR reports must be submitted electronically using e-CDRweb, EPA’s free electronic reporting tool, to EPA’s Central Data Exchange (CDX).

CDR Violations, Penalties

EPA can assess substantial monetary penalties (up to $25,000 per chemical per site) for failure to comply with the CDR. Violations subject to penalties include seemingly minor CDR reporting violations such as late reporting, or reporting a slightly inaccurate manufacture or import volume. Companies would be well-advised to carefully review their production / import records and their prior CDR filing before preparing and submitting the 2016 report. If non-compliance occurs, companies may be able to rely on EPA’s “Audit Policy” (65 Fed. Reg. 19,618 (April 11, 2000)) to mitigate or eliminate penalties for past reporting errors or omissions, but companies should consult with legal counsel before examining past CDR compliance.

Confidentiality and Records Retention

To claim the chemical identity, site identity, or processing and use information as confidential business information (CBI), reporting companies must substantiate such CBI claims at the time of reporting. Submitters cannot claim information as CBI when it is identified as “not known to or reasonably ascertainable.” CDR records must be kept for 5 years.

Small Business Exemption

Certain small manufacturers are exempt from the CDR. A company may qualify for a small business exemption from reporting if it either: (1) produces less than 100,000 lbs. of the otherwise reportable substance and has total annual sales of less than $40 million (including those sales of the parent company); or (2) has annual sales of less than $4 million regardless of production / import volume.

This exemption does not apply for any substance that is the subject of a proposed or existing rule issued under sections 4, 5(b)(4), or 6; an order in effect under section 5(e); or relief that has been granted under a civil action under sections 5 or 7.

CDR Non-Compliance Issues

In our experience, many factors contribute to CDR non-compliance. These can include:

inaccurate manufacture and import volume tracking
failure to report / file all or some reportable substances
incorrect conclusions as to who is the “importer” of a substance
failure to report production volume to the required two significant figures of accuracy
nomenclature issues
“toll” manufacturing issues
misinterpretation of exemptions
failure to account for reportable “byproduct” and related stream manufacture
fractionation issues

As noted above, CDR violations are potentially eligible for EPA’s “Audit Policy,” and companies should strive to preserve their ability to use the Audit Policy to the extent possible and seek legal advice when necessary.

Article By Thomas C. Berger of Keller and Heckman LLP

Testing Waters: Supreme Court Agrees To Hear Army Corps’ Clean Water Act Determinations Challenge

On Friday, the U.S. Supreme Court agreed to hear a challenge to the Eighth Circuit’s April 2015 ruling that U.S. Army Corps of Engineers’ (“Army Corps”) jurisdictional determinations are final agency actions subject to judicial review. The Eighth Circuit’s decision is contrary to a July 2014 Fifth Circuit ruling and thus created a circuit split. The Supreme Court’s decision could resolve that split and settle the question of whether parties may challenge Army Corps’ jurisdictional determinations.

Many types of development projects may impact “waters of the U.S.” under the Clean Water Act (CWA). Such activities might therefore be subject to the Army Corps’ requirements for permitting and implementation of mitigation measures. Whether “waters of the U.S.” may be impacted by a project is often far from clear, so project developers and property owners frequently request jurisdictional determinations from the Army Corps before proceeding with a project. The Army Corps’ long-standing position is that its jurisdictional determinations are not judicially reviewable final decisions since a party is not required to act or refrain from acting based solely on the decision. Rather, the Army Corps has taken the position that a party’s rights are not affected until a party is either denied a permit or subject to enforcement proceedings for acting without a permit. Developers and property owners have long struggled with this position, since a party must either go through the time intensive and costly permitting process before being able to seek review of the underlying jurisdictional decision, or choose to act without a permit and then possibly be subject to enforcement proceedings.

The Fifth Circuit Decision

In Belle Co. LLC et al. v. U.S. Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), the Army Corps had issued a jurisdictional determination that a portion of the property in question was a “water of the U.S.”

On appeal to the Fifth Circuit, the Court decided that the Army Corps’ jurisdictional determinations are not final agency actions subject to judicial review, but are simply “notifications” regarding a property’s classification. The Fifth Circuit explained that for an agency action to be final it must: 1) be the “consummation of the agency’s decisionmaking”, and 2) the action must be a vehicle “by which rights or obligations have been determined, or from which legal consequences will flow.” The Fifth Circuit ruled that although jurisdictional determinations are the consummation of agency action, they do not determine legal rights or consequences, these decisions merely serve as a “notice.” Agreeing with the Army Corps’ position, the Court reasoned that the jurisdictional determination did not force the companies to refrain from acting on the property, and did not impose a penalty scheme for continuing with the project.

The Eighth Circuit Decision

The more recent Eighth Circuit decision, Hawkes Co., Inc., et al v. U.S. Army Corps of Engineers, 782 F.3d 994 (8th Cir. 2015), dealt with the Hawkes Company’s plan to mine peat. The Army Corps determined there were “waters of the U.S.” on the proposed mining site so the company would need a CWA permit before it could start mining. At the first stage of judicial review, the District Court denied Hawkes’ challenge, agreeing with the Fifth Circuit’s view that the determination was not a final agency action. The Eighth Circuit reversed, holding that Army Corps’ jurisdictional determinations are judicially reviewable final agency actions under the Administrative Procedure Act. The Eighth Circuit held that the Fifth Circuit had misapplied the law in ruling otherwise.

The Eighth Circuit noted that without judicial review the Hawkes Company had no choice other than “to incur substantial compliance costs (the permitting process), forego what they assert is lawful use of their property, or risk substantial enforcement penalties.” These options adversely affected the property and business interests of the company. The Court reasoned: “the prohibitive costs, risk, and delay of these alternatives to immediate judicial review evidence a transparently obvious litigation strategy: by leaving [property owners] with no immediate judicial review and no adequate alternative remedy, the Corps will achieve the result its local officers desire . . . without having to test whether its expansive assertion of jurisdiction” would ultimately be upheld in the courts. The Eighth Circuit found the jurisdictional determination process analogous to the administrative order process at issue in the 2012 Supreme Court decision in Sackett. There the Court ruled “[t]here is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into ‘voluntary compliance’ without the opportunity for judicial review – even judicial review of the question whether the regulated party is within the [federal agency’s] jurisdiction.” Sackett v. EPA, 132 S. Ct. 1367, 1374 (2012).

The Eighth Circuit found the Army Corps’ contention that Hawkes had adequate alternative remedies – either seeking a permit or acting without one and then challenging any compliance action that resulted – was untenable and failed to consider that Hawkes could never recover the time it lost or expense it incurred in taking either action.

Practical Implications of a Supreme Court Decision

The Supreme Court’s upcoming decision could have important practical implications for project developers and property owners. The Army Corps’ long-term position has left the regulated community with few pre-permitting or enforcement options. The Eighth Circuit decision, and the Supreme Court’s decision to review this issue, provide some hope to developers and property owners that they may soon be able to seek judicial review of jurisdictional determinations before going through the permitting process.

Article By Sarah A. Slack & Amanda K. Beggs of Foley & Lardner LLP

Before it Adjourns for 2015, Some in Congress Signal Discontentment with Iran and JCPOA

Washington Also Remains Focused on Combatting ISIL; President Obama Heralds the Conclusion of an International Climate Agreement

Congress reconvened last Monday to work on advancing several priority measures – such as an Omnibus spending measure to fund the federal government, a tax extenders package, and the customs bill, among others – in anticipation of adjourning later this week for the year.

San Bernardino Shooting

The Federal Bureau of Investigation continues to investigate the terrorist attack in San Bernardino, California. Republican presidential front-runner Donald Trump issued a call last week to ban Muslims from entering the country, a moved condemned by many in both parties as un-American. In his third address to the nation last Sunday, President Barack Obama sought to reassure Americans that proper security measures have been implemented to safeguard the homeland after the attack in California. In an attempt to broaden the discussion, the President outlined steps the Administration has taken to combat the threat of terrorism, including ISIL.

Combating ISIL

Testifying last week before the Senate Armed Services Committee (SASC) about the U.S. strategy to combat ISIL, Secretary of Defense Ashton Carter said that the United States is “building momentum against ISIL.” He also agreed with SASC Chairman John McCain’s (R-Arizona) assessment that the terrorist group had not been contained.

Pentagon officials have also reportedly said the Administration is likely to provide Apache helicopters to Iraqi forces looking to retake Ramadi from ISIL and that regional allies are considering deploying special forces to Iraq. Secretary Carter further suggested that U.S. military advisers could accompany Iraqi forces on the ground in the effort to regain control of Ramadi. On Friday, the White House released a supplemental consolidated report in accordance with the War Powers Resolution (Pub. L. 93-148), which provides some insight into the Administration’s global military objectives with respect to troop deployments, including countering terrorist groups such as ISIL.

Syrian opposition forces met in Saudi Arabia last week to discuss forming a unified front before proposed peace talks with Assad’s government in Vienna. Gulf leaders, who were meeting for the annual Gulf Cooperation Council (GCC) summit in Riyadh, also urged the Syrian opposition to find common ground. The GCC leaders said they “support a political settlement … that guarantees the territorial integrity and independence of Syria.” Last Thursday, the Syrian opposition groups reportedly agreed to set up a body to lead preparations for the talks with the Syrian government.

On the sidelines of the Paris Climate Conference (COP21) last Wednesday, Secretary of State John Kerry announced that he will travel to Moscow this week. Secretary Kerry is expected to meet with Russian President Vladimir Putin on 15 December to discuss a political settlement in Syria and the situation in Ukraine.

Russia/Ukraine Crisis

In a speech last Tuesday before the Rada in Kyiv, Vice President Joe Biden focused on the continuing economic reforms in the country and the need to address corruption. He also reiterated the United States will maintain sanctions on Russia until the Minsk agreements are fully implemented. The Vice President added, “If Russian aggression persists, the cost imposed on Moscow will continue to rise.” Meanwhile, the EU postponed a vote on extending EU sanctions to this week.

Iran and the JCPOA Scrutinized

Last Tuesday, Senator Robert Corker (R-Tennessee), Chairman of the Senate Foreign Relations Committee, criticized the lack of a U.S. response to repeated Iranian ballistic missile tests that violate existing U.N. Security Council Resolutions. Representative Ed Royce (R-California), Chairman of the House Foreign Affairs Committee, also responded to news reports last week that the P5+1 has delivered a draft resolution to the International Atomic Energy Agency (IAEA) Board of Governors to close the investigation into possible military dimensions of Iran’s nuclear program ahead of a vote early next week. He said the Obama Administration is attempting to “whitewash” Iran’s history of nuclear bomb research by pressuring the International Atomic Energy Agency (IAEA) to formally end its probe into the “possible military dimensions” of Iran’s nuclear activities.

On Thursday, 17 December, the Senate Foreign Relations Committee will hold a hearing titled, “The Status of JCPOA Implementation and Related Issues.”

Visa Waiver Program (VWP)

Lawmakers have also increased scrutiny on the VWP, a program that permits citizens from approved countries to enter the United States visa-free for 90 days. Last Tuesday, the House passed the Visa Waiver Program Improvement Act (H.R. 158), a measure aimed at tightening the program, by a vote of 407 to 19. The Senate has yet to act on H.R. 158, though it could be folded into the broader omnibus funding bill currently under negotiation. Meanwhile, at a roundtable discussion convened by the Senate Homeland Security and Governmental Affairs Committee, Senators examined data gaps and sought to determine how much information is being shared by 38 countries that currently participate in the VWP.

COP21 – Agreement Reached

In an attempt to bridge gaps for an international climate change deal, U.S. negotiators reportedly met last week with their Chinese and Indian counterparts in an attempt to find a compromise over remaining disagreements. A deal was reached on Saturday, with President Obama issuing a statement heralding the international achievement.

Customs Bill Update

Speaker of the House Paul Ryan (R-Wisconsin) issued a press release last Thursday in support of passing the customs bill conference report that was released earlier in the week. The National Retail Federation objected to the conference report over the inclusion of a provision to permanently extend prohibitions on taxing certain Internet-based activities. House Ways and Means Committee Ranking Member Sander Levin (D-Michigan) is also encouraging his fellow Democratic colleagues to vote no, in part due to the conferees’ decision to not include a Senate-approved provision on currency. The House passed the customs bill conference report on Friday afternoon by a vote of 256 to 158.

Senate Democrats, however, have reportedly expressed reservations over the inclusion of the Internet tax ban provision in the conference report. This may complicate any Senate action this week on passing the conference report.

TPP Developments

In an exclusive interview with The Washington Post, Senate Majority Leader Mitch McConnell (R-Kentucky) suggested the Obama Administration should not expect Congress to approve the Trans-Pacific Partnership (TPP) before the November 2016 elections. While Republicans strongly supported the Trade Promotion Act’s passage in June, Republican Leadership has offered little support since the Obama Administration announced the TPP deal had been reached in October. Majority Leader McConnell reminded in the interview that the trade authority provided by Congress provides the next president fast-track authority throughout the first term of that Administration.

Meanwhile many interest groups in the United States are remaining silent on their position toward the TPP agreement. The U.S. Council for International Business (USCIB) and the Emergency Committee for American Trade (ECAT) became the first U.S. business associations to formally express support for the TPP agreement last week, while also acknowledging the need for improvements before Congress can vote on the deal. The U.S. dairy industry is formally taking a neutral position on the deal; however, it has expressed discontentment with the market access outcome with Japan and Canada.

TTIP Developments

In London last week, U.S. Trade Representative Michael Froman called for accelerated progress in the Transatlantic Trade & Investment Partnership (TTIP) discussions, adding that the current focus is to work with the European Commission and key member states to advance the negotiations. In a statement issued last Friday, Ambassador Froman and European Union Trade Commissioner Cecilia Malmström said the two sides have made “considerable progress” over the last six months and pledged to work expeditiously to reach an “ambitious, comprehensive agreement.”

After news that the EU Parliament had been granted access by the European Commission to confidential TTIP documents, U.S. Representatives Rosa DeLauro (D-Connecticut), Lloyd Doggett (D-Texas), Dan Kildee (D-Michigan) and Louise Slaughter (D-New York) issued a statement condemning the lack of access by the Obama Administration to the same documents. The Members also criticized the “secret negotiations” that resulted in the TPP deal, calling for the Office of the U.S. Trade Representative to be more transparent with Congress on the TTIP negotiations and to provide access to the confidential documents.

Looking Ahead

Washington will also likely focus on the following upcoming matters:

Next week: Congress adjourns
15 December: Secretary Kerry’s Trip to Moscow
15-18 December: 10^th WTO Ministerial Conference to be held in Nairobi, Kenya
12 January 2016: State of the Union Address
8-9 July 2016: NATO Summit in Warsaw, Poland

Article By Stacy A. Swanson of Squire Patton Boggs (US) LLP

Substantial OSHA Penalty Increases Are Coming

OSHA penalties are going up. EPA’s penalties are going up, too. However, while EPA penalties have been going up modestly every four years to take inflation into account, OSHA penalties have not increased in 25 years. Maximum OSHA penalties may jump as much as about 78 percent next year. For a provision quietly tucked away in budget legislation, this packs quite a punch.

The Legislative Change

On November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015.^[1] Section 701 of that legislation is the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Adjustment Act). The 2015 Adjustment Act amends the Federal Civil Penalties Inflation Adjustment Act of 1990^[2] to remove the OSHA exemption to the requirement that civil monetary penalties be periodically increased to account for inflation. The amendment also changed the frequency of the inflation increases from “once every 4 years”^[3] to “every year.”

In addition, the new law entitles OSHA to a single “catch up” penalty increase to account for the lack of periodic penalty increases, which “shall take effect no later than August 1, 2016.” OSHA is authorized to calculate this initial increase based on the percentage difference between the Consumer Price Index (CPI) in October 2015 and the CPI in October of the calendar year that the civil penalty was last adjusted under any different law.^[4] In this instance, because OSHA penalties have not been adjusted since 1990, the catch-up penalty increase will be based on the October 1990 CPI as compared to the October 2015 CPI.

Based on the October 2015 CPI, the percentage difference is expected to be about 78 percent.^[5] In the catch-up adjustment, $7,000 OSHA penalties could increase to as much as approximately $12,471, and $70,000 OSHA penalties could increase to as much as approximately $124,710. If OSHA rounds those numbers, the likely maximums would be $120,000 and $12,000.

Past Efforts to Raise Maximum OSHA Penalties

Under section 17 of the Occupational Safety and Health Act of 1970 (OSH Act), OSHA penalties for “willful” or “repeat” violations have a maximum civil penalty of $70,000 but not less than $5,000 for each willful violation.^[6] Penalties for “serious” violations have a maximum of $7,000 per violation. Those figures have remained static since 1990 despite repeated efforts to increase them.

For example, in 2009, a Senate bill and a House bill,^[7] both entitled the Protecting America’s Workers Act, would have amended section 17 of the OSH Act with one-time maximum civil penalty increases. The $70,000 “willful” violation maximum would have been increased to $120,000 but not less than $8,000 (up from $5,000). The penalties for “serious” violations would have increased from a maximum of $7,000 to a maximum of $12,000, and penalties for “serious” violations that result in employee fatalities would have been increased to a maximum of $50,000 but not less than $20,000 for employers with more than 25 employees. The proposed legislation did not pass either House of Congress.^[8] This year, updated versions of the Protecting America’s Workers Act were introduced which would make the same adjustments in penalties.^[9]

After more than 25 years and extensive legislative effort, OSHA penalties are poised for a significant initial increase, due to a provision added to an appropriations bill without hearings or debate.

Implications for State OSHAs

About half the states have their own enforcement programs under OSHA-approved state plans, even though they generally enforce OSHA’s standards. Thus, the statutory increase in federal OSHA’s maximum penalties will not directly impact state OSHA programs, whose maximum penalties are set by state law. However, this federal increase is expected to lead to state increases as well. Under section 18 of the OSH Act, state plans must be “at least as effective” as those of federal OSHA.^[10] Lower state maximum penalties are not likely to be seen as being “as effective” as federal maximums.

EPA Penalties Are Going Up Too

Under the Federal Civil Penalties Inflation Adjustment Act of 1990, EPA penalties have increased every four years. Between 1996 and 2013, four adjustments of EPA’s statutory civil payment amounts were implemented.^[11] Annual inflation adjustments will now be required. In recent years inflation has been low, so the next increase will likely be relatively modest.

Article By Mark N. Duvall & Maryam F. Mujahid of Beveridge & Diamond PC

_{[1] Bipartisan Budget Act of 2015, Pub. L. 114-74.}

_{[2] Id at § 701. Prior to the amendment, Section 4(1) read: “by regulation adjust each civil monetary penalty provided by law within the jurisdiction of the Federal agency, except for any penalty (including any addition to tax and additional amount) under the Internal Revenue Code of 1986, the Tariff Act of 1930, the Occupational Safety and Health Act of 1970, or the Social Security Act, by the inflation adjustment described under section 5 of this Act[.]” H.R. 3019, 104^th Cong. (1996).}

_{[3] H.R. 3019, 104^th Cong. (1996) (“The head of each agency shall, not later than 180 days after the date of enactment of the Debt Collection Improvement Act of 1996 [Apr. 26, 1996], and at least once every 4 years thereafter[.]”) (emphasis added).}

_{[4] This initial catch-up adjustment may not exceed 150 percent of the amount of the civil monetary penalties as of the date that the 2015 Adjustment Act was enacted.}

_{[5] The October 1990 CPI is 133.5 and the October 2015 CPI is 237.838. For more information on CPI figures and calculations, click here.}

_{[6] 29 U.S.C. § 666.}

_{[7] S. 1580, 111^th Cong. (2009); H.R. 2067, 111^th Cong. (2009).}

_{[8] In addition, civil penalties for OSHA were subsequently included in proposed mine safety legislation, which was similarly unsuccessful. See H.R. 5663; Beveridge & Diamond, P.C., OSHA Legislation Gets Boost from Mine Safety Bill (Aug. 17, 2010).}

_{[9] S. 1112, 114^th Cong. (2014); H.R. 2090, 114^th Cong. (2014).}

_{[10] 29 U.S.C. § 666.}

_{[11] As described in the most recent (2013) EPA notice raising maximum penalties, “EPA’s initial adjustment to each statutory civil penalty amount was published in the Federal Register on December 31, 1996 (61 FR 69360), and became effective on January 30, 1997 (‘the 1996 Rule’). EPA’s second adjustment to civil penalty amounts was published in the Federal Register on February 13, 2004 (69 FR 7121), and became effective on March 15, 2004 (‘the 2004 Rule’). EPA’s third adjustment to civil penalty amounts was published in the Federal Register on December 11, 2008 (73 FR 75340), as corrected in the Federal Register on January 7, 2009 (74 FR 626), and became effective on January 12, 2009 (‘the 2008 Rule’)”; and the fourth adjustment was published in the Federal Register on November 6, 2013. 78 Fed. Reg. 66643 (Nov. 6, 2013)}

EPA Focuses on Methane Leaks as Climate Change Takes Center Stage

In the September 2015 edition of the US EPA’s Compliance Alert, EPA reported that it and state investigations had identified Clean Air Act compliance concerns regarding significant emissions from storage vessels, such as tanks or containers, at onshore oil and natural gas production facilities. This EPA alert is consistent with the administration’s attention on climate change and coincides with the papal visit, all of which set the stage for international attention on climate change in December at COP 21 in Paris.

The compliance concerns involve an evaluation of whether vapor control systems have been properly designed, sized and operated to control emissions consistent with the regulatory requirements. Storage vessels are regulated because they contain: 1) large quantities of volatile organic compound (VOC s) that contribute to the formation of ground-level ozone- (2) hazardous air pollutants (HAPs) such as benzene, a known carcinogen- and (3) methane, a powerful greenhouse gas.

This compliance alert comes while the oil and natural gas production industry is evaluating EPA’s proposed changes to the regulatory program for air emissions from the oil and gas industry (80 FR 56593 September 18, 2015) in an effort to further reduce methane emissions consistent with President Obama’s Climate Action Plan. During his state of the union address on January 20, 2015, President Obama proclaimed “No challenge poses a greater threat to the future generations than climate change.”

Pope Francis’ historic visit to the U.S. last month provided an opportunity to pontificate his view that the climate change is a global problem disproportionately impacting the poor. He echoed President Obama in proclaiming that climate change “represents one of the principal challenges facing humanity in our day.” Encyclical Letter Laudato Si of the Holy Father Francis: On Care for Our Common Home.

World attention will focus on climate change in December in Paris when the United Nations Framework Convention on Climate Change holds its 21^st Conference of the Parties (COP21) with the view that COP21 “will be a crucial conference, as it needs to achieve a new international agreement on the climate, applicable to all countries, with the aim of keeping global warming below 2°C.” http://www.cop21.gouv.fr/en.

As the oil and natural gas industry evaluates the regulatory changes proposed by EPA (comments are due on or before November 17, 2015), representatives of nations across the planet will be preparing to discuss views on an international climate agreement. It will be interesting to see if the parties can agree upon anything but given the fact that the Pope and the President of the leading world superpower agree that climate change poses one of the greatest threats to our planet, it is possible that COP21 will produce an agreement far more reaching than the Kyoto Protocol of COP3 in 1997.

Article By Stephen C Smith of Steptoe & Johnson PLLC

Share this:

Like this:

Share this:

Like this:

Dutch Presidency and Brexit

Digital Single Market Policy

Energy and Environment Policy

Internal Market and Financial Services Policies

Life Sciences and Healthcare Policies

Trade Policy and Sanctions

Share this:

Like this:

Share this:

Like this:

Waters of the United States

Vermont Act 120

Federal Activity Regarding GMOs and the Safe and Accurate Food Labeling Act

Food Safety Modernization Act Roll-Out

FDA Menu Labeling Requirements

Share this:

Like this:

Companies should be preparing now for the CDR submission period in 2016.

The CDR Program

Basic Thresholds and Reporting Requirement

Processing and Use Information

Exemptions from CDR Reporting

Electronic Reporting

CDR Violations, Penalties

Confidentiality and Records Retention

Small Business Exemption

CDR Non-Compliance Issues

Share this:

Like this:

The Fifth Circuit Decision

The Eighth Circuit Decision

Practical Implications of a Supreme Court Decision

Share this:

Like this:

San Bernardino Shooting

Combating ISIL

Russia/Ukraine Crisis

Iran and the JCPOA Scrutinized

Visa Waiver Program (VWP)

COP21 – Agreement Reached

Customs Bill Update

TPP Developments

TTIP Developments

Looking Ahead

Share this:

Like this:

The Legislative Change

Past Efforts to Raise Maximum OSHA Penalties

Implications for State OSHAs

EPA Penalties Are Going Up Too

Share this:

Like this:

Like this: