Tag: EPA

EPA Releases Late-Term “Secret Science” Rule

Regulated industries pay close attention to how regulators use scientific data, because the stakes are high. While scientific knowledge may evolve rapidly, regulatory processes — and the business decisions that rely on them — tend to proceed more deliberately. As a result, the regulated community has long pushed the U.S. Environmental Protection Agency (EPA) to base its decisions only on scientific information that is present in the public domain and thus subject to greater scrutiny.

On January 6, 2021, EPA finalized its long awaited anti-“secret science” rule, which requires EPA both to disclose the science on which significant regulatory actions are based and to assign weight to scientific evidence in part on whether underlying data is available. EPA frames this rule as an incremental, internal process-oriented step toward the transparency that is an essential part of the scientific method. Businesses in the regulated community should not expect to be able to point to this rule to control evidence coming into site-specific rulemaking, but may benefit from increased investor confidence that EPA actions with industry-wide impact will be based on data available for independent validation.

Scope of the Rule

The rule, entitled “Strengthening Transparency in Pivotal Science Underlying Significant Regulatory Actions and Influential Scientific Information”, applies to the two categories of EPA actions indicated in the title: the promulgation of significant rules, such as those that have nationwide impact, and the dissemination of scientific information likely to have nationwide policy- or decision-making impacts. Furthermore, the rule targets EPA’s analysis of only one type of scientific evidence, dose-response data, which are facts that characterize the relationship between the amount of an exposure to a substance and the observation of an effect.

How EPA Will Evaluate Dose-Response Data

The key provision of the rule is a three-step funneling process to winnow the universe of “convincing and well-substantiated evidence” relevant to making a decision about relationship between exposure to a substance and an effect:

  • First, EPA must identify a subset of the universe of evidence from which it could “characterize a quantitative relationship” between exposure and effect.
  • Second, EPA must designate as “pivotal science” the particular studies on which it could rely to reach its own conclusion about the quantitative relationship between exposure and effect.
  • Third, EPA must identify whether those particular studies allow for reanalysis of results (actual validation is not required). While EPA may consider all studies available to it, the rule requires it to give greater consideration to those studies that can be independently validated. For those studies at the end of the funnel whose data cannot be readily reanalyzed, the rule sets out factors EPA must consider when determining how much weight to assign their results.

The rule also requires EPA to identify the science that serves as the basis for significant regulatory action and to state the reasons for relying on any studies based on dose-response data that is not available for reanalysis.

A Lasting Move Toward Transparency?

Regulations issued in the waning hours of a presidential term often can be rescinded by executive action or under the Congressional Review Act (CRA). The CRA allows certain of these regulations to be vacated by a joint resolution of Congress. EPA has taken the position that the CRA does not apply here because this is an internal “housekeeping” regulation. Whether it applies or not is likely to among the potential challenges the “secret science” rule faces in court in rulemakings involving human health. We will keep you posted on how any court challenges progress.

© 2020 Schiff Hardin LLP

ARTICLE BY Matthew H. Griffin and J. Michael Showalter of Schiff Hardin LLP
For more, visit the NLR Environmental, Energy & Resources section.

EPA Revises Lead and Copper Rule for the First Time in Three Decades

On December 22, the U.S. Environmental Protection Agency (“EPA”) finalized long-anticipated revisions to the Lead and Copper Rule—the first major revision since the rule was promulgated in 1991. While the final rule maintains the current lead “action level” of 15 parts per billion (“ppb”) and “maximum contaminant level” goal of zero, it also includes a variety of other revisions that will significantly impact water systems across the nation.

Enhanced Focus on Identifying and Addressing Homes with Lead Service Lines

A major driver behind EPA’s effort to revise the Lead and Copper rule has been identifying and remediating high-risk homes, and in particular, those served with a lead service line (“LSL”). EPA’s final rule thus requires all water systems prepare, and update, LSL inventories. EPA also introduces a requirement to “find and fix” sources of lead in any individual home where a test demonstrates lead levels in excess of 15 ppb. When the “fix” is outside of the water system’s control, documentation must be provided to the state. The final rule further modifies tap sampling procedures and the criteria for selecting homes for sampling to prioritize homes served by LSLs.

Greater Transparency

The final rule also aims to increase transparency by requiring that systems serving greater than 50,000 people post LSL inventories on a publicly-accessible Internet site. In a departure from its initial proposal, EPA reduced the threshold required for water systems to publish their inventory online from 100,000 to 50,000 persons. In addition, the final rule mandates annual notices by water systems to homeowners with LSLs. Certain systems that fail to reach their LSL replacement requirements for a given year must conduct additional outreach in the following year, such as through a townhall meeting. And when any individual tap sample exceeds the lead action level of 15 ppb, systems are now required to notify consumers at the site within 24 hours of learning of the result (instead of the current 30 days).

New Lower “Trigger” for Corrosion Control and Lead Service Line Replacement Actions

The final rule makes changes to the requirements for corrosion control, most notably by establishing a new “trigger” level of 10 ppb. The trigger level is not a health-based standard. At this trigger level, systems that currently treat for corrosion are required to re-optimize their existing treatment, while systems that do not currently treat for corrosion must conduct a corrosion control study. Per EPA’s final rule, water systems must also now conduct outreach and initiate LSL replacement programs when lead levels are above the proposed trigger level of 10 ppb. The final rule requires systems that are above 10 ppb, but at or below 15 ppb, to work with their state to set an annual goal for LSL replacement. Systems that are above the action level of 15 ppb must replace a minimum of three percent of LSLs annually based upon a two-year rolling average.

Testing of Schools and Childcare Centers

EPA’s final rule requires that systems annually test drinking water in 20% of elementary schools and childcare centers in their service areas for a period of five years, and upon request in secondary schools (and elementary schools and childcare centers following the initial five year mandatory testing period). Water systems must provide the results of these tests and information about the actions the school or childcare facility can take to reduce lead in drinking water.

© 2020 Beveridge & Diamond PC
For more, visit the NLR Environmental, Energy & Resources section.

Amazon Ruling Impacts Prop 65 Issues

The 2020 Prop. 65 Clearinghouse conference marked another year of thought-provoking discussion on the current state of Proposition 65 regulations and litigation.  Although the Act is nearly 35 years old, trends in enforcement litigation and defenses are continuously evolving.  The Prop. 65 Clearinghouse does an excellent job of combining perspectives from the various stakeholders and litigants in the field.

Among the panels at this year’s conference, discussing topics from acrylamide litigation to warnings on marijuana products, was an excellent and lively discussion on the affirmative defense under the compelled speech doctrines of the First Amendment.  Briefly mentioned in that discussion was whether we may see an emergence of other protections from the Constitution invoked as defense to Prop. 65 actions.  Due Process and Commerce Clause were briefly mentioned among those other potential areas where we may see further constitutional defenses.

This discussion brought to mind other areas where federal law may preempt California’s Prop. 65.  In particular, and on the heals of the California Court of Appeal’s August 2020 decision in Bolger v. Amazon, the applicability of the federal Communications Decency Act of 1996.  To be clear, Bolger was not a Prop. 65 case.  However, the decision did briefly touch an area of federal preemption that can be used as a defense to Prop. 65 actions brought against Amazon and other online third-party seller platforms.

In Bolger, a woman was severely hurt following an explosion of a replacement laptop battery she purchased on Amazon from a third-party seller.  Amazon raised a number of defenses, including immunity from liability under title 47 U.S.C. section 230 – part of the Communications Decency Act (CDA).

The CDA is extremely important to the free flow of information on the internet as it shields online content platforms from being held liable as the speaker or publisher of third-party content.  Plaintiffs pursuing lawsuits based on state law “may hold liable the person who creates or develops unlawful [online] content, but not the interactive computer service provider who merely enables that content to be posted online.” (Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc. (4th Cir. 2009) 591 F.3d 250, 254; see also, HomeAway.com, Inc. v. City of Santa Monica (9th Cir. 2019) 918 F.3d 676, 681.)

The Bolger Court found that the CDA did not protect Amazon from strict liability for the battery purchased on its website because speech was not the issue.  Liability was not rooted in a failure to adequately warn, for example.  The Court stated that Amazon’s liability in the case did not turn whether Amazon was classified as a speaker/publisher of content on amazon.com that had been provided by the third-party seller.  Instead, Amazon was found liable in Bolger because of its role in the transaction itself that was more akin to that of a “conventional retailer” and the Court subjected Amazon to strict liability as it would have for any other “conventional retailer.”  (In a future CMBG3 post, we will be discussing the ramifications of that retailer label, as well as the split among courts around the country on the issue.)

From a Prop. 65 perspective, the take-away from seemingly unrelated cases like Bolger and HomeAway.com is that CDA immunity may extend to lawsuits where a plaintiff is seeking to pursue a state law cause of action (i.e., enforcement of California’s Prop. 65) against an online platform for content provided by another.  In other words, the CDA could shield a company like Amazon from content-based lawsuits stemming from the alleged absence or inadequacy of a Prop. 65 warning that the third-party seller either neglected to post on the product page, or failed to provide the proper warning under Prop. 65.

For the third-party seller, not only should this be a reminder to review your obligations under regulations like Prop. 65, but also to read your vendor agreements with Amazon, Etsy, Walmart, Shopify and the like.  To keep the theme on Amazon, the Amazon Business Solutions Agreement includes indemnity provisions and regulatory compliance provisions (that specifically call out Prop. 65 compliance) that every vendor should understand.

©2020 CMBG3 Law, LLC. All rights reserved.
ARTICLE BY Gilliam F. Stewart of CMBG3 Law
For more articles on Prop 65, visit the National Law Review Environmental, Energy & Resources section.

EPA’s Asbestos Problem: Pending Litigation and Draft Risk Evaluation

Multiple States’ Attorneys General and asbestos advocacy groups are suing EPA in the Federal District Court for the Northern District of California[1]. The plaintiffs are seeking judicial intervention concerning EPA “arbitrary and capricious” decision to deny states’ earlier petition that requested EPA collect more data on imported asbestos under the authority granted to EPA in the Toxic Substances Control Act (TSCA).[2]  Under the Arbitrary and Capricious standard, plaintiffs must prove that there was no rational connection between the facts found and the decision made by EPA.[3]  Normally, an agency action is “arbitrary and capricious” if the agency relied on factors that Congress did not intend it to consider, failed to consider an important aspect of the problem, offered an explanation not supported by the evidence, or the implausible decision cannot be explained as a differing viewpoint.[4]  The standard that EPA’s action will be evaluated is not as high as intermediate review and strict scrutiny.

At initial review, there is not a strong challenge EPA’s actions being outside Congress’ intent.  TSCA provides EPA with statutory authority to regulate the manufacturing, importing, processing, and commercial distribution of asbestos.[5]  EPA recently promulgated additional regulations regarding Restrictions on Discontinued Uses of Asbestos; Significant New Use Rule.[6]  Therefore, the States’ Attorneys General will have to develop factual evidence to show EPA’s action was unreasonable.  EPA argues, inter allia, that it did not act arbitrarily or capriciously with regard to its denial of the initial petition given it would not have collected any additional data on asbestos imports given its decision was based on review of data from multiple sources.[7]

For brief background on the mining and importing of asbestos, asbestos mining in the United States steadily declined after it peaked in the mid-1970’s, and mining in the United States completely stopped just after the turn of the millennia.[8]  Likewise, the rate of manufacturing/use of asbestos in the United States also steadily declined during this same period, but manufacturing/use of asbestos has never completely stopped.  Where does the United States get its asbestos now?  The answer is not Canada, which was once home to the largest asbestos mine in the world (i.e., Johns Manville’s Jeffrey Mine).  Currently, all the asbestos imported to the United States is chrysotile from Russia.[9]

As an overlay to the above, the EPA is also in the process to update its Risk Evaluation of asbestos, specifically chrysotile.  The EPA’s Draft Risk Evaluation of Asbestos (“DRE”) was released in March 2020.  Most notably, EPA’s draft findings call into question the long-standing conclusion of the medical and scientific communities that chrysotile asbestos is unequivocally less potent than amphibole asbestos minerals.[10]  EPA is currently evaluating the numerous comments it received from the medical and scientific communities that questioning the EPA’s data and findings in the DRE.[11]  EPA has seemingly created its own paradox by releasing the DRE that finds an increased risk from chrysotile after getting sued for allegedly loosening restrictions on imported asbestos that is all Russian chrysotile.  Notwithstanding and without triggering a political debate, there is always an elephant in the room when discussing the Federal government’s actions that implicate Russia given the current administration.  All these factors considered, should make for an active and interesting discovery period in the pending lawsuits against EPA.

©2020 CMBG3 Law, LLC. All rights reserved.

ARTICLE BY Clifford V. Pascarella II of CMBG3 Law.
For more articles on the EPA, visit the National Law Review Energy, Climate, and Environmental Law News section.

[1] States’ Attorneys General for California, Massachusetts, Connecticut, Hawaii, Maine, Maryland, Minnesota, New Kersey, Oregon, Washington, as well as  Washington DC are plaintiffs; and lead plaintiff for the asbestos advocacy groups is The Asbestos Disease Awareness Organization.  See Asbestos Disease Awareness Organization, et al. v. U.S. Environmental Protection Agency, et al., United States District Court for the Northern District of California, San Francisco Division, Case No. 3:19-CV-008871-EMC; and State of California, by and through Attorney General Xavier Becerra, et al. v. U.S. Environmental Protection Agency, et al., United States District Court for the Northern District of California, San Francisco Division, Case No. 3:19-CV-03807-EMC.

[2] 15 U.S.C. §2601

[3] Motor Vehicle Mfgrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 43 (1983) (cited by Michigan v. E.P.A., 576 U.S. 743, 750-751 (2015)

[4] Id.

[5] See 40 CFR 763 (July 12, 1989)

[6] See 84 FR 17345 (April 25, 2019)

[7] United States District Court for the Northern District of California, San Francisco Division, Case No. 3:19-CV-008871-EMC, ECF Document 52, pp. 11-12

[8] https://www.asbestos.com/occupations/mining/

[9] https://www.asbestos.com/news/2020/03/23/us-asbestos-imports-drop/

[10] https://www.epa.gov/sites/production/files/2020-3/documents/1_draft_risk…

[11] https://www.regulations.gov/document?D=EPA-HQ-OPPT-2019-0501-0113;and https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/draft-risk-evaluation-asbestos#docs

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.

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.

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.