The Nickel Report

Carbon markets are tools that aim to cost-effectively reduce the emission of carbon dioxide (CO₂) and other greenhouse gases (GHG). The Paris Agreement sets a goal to keep the global average temperature from rising by 1.5°C (2.7°F) above preindustrial levels and, failing that, prevent it from rising 2°C (3.6°F). Carbon markets are viewed as the primary market-based vehicle to drive reduction in GHG emissions to meet the ambitious Paris Agreement goal.

As a top priority for the Biden Administration and a key component of energy transition plans, offshore wind energy development is front and center and receiving a lot of attention.  The Biden Administration has announced a commitment to create 30 gigawatts of electricity via US offshore wind by 2030. Congress provided a boost to offshore wind development late last year via a 30% investment tax credit to projects that start construction before 2026.  And just last week, Interior Secretary Deb Haaland announced plans to spur that development by offering a slate of offshore wind lease sales by 2025 in federal waters off the East, Gulf, and West Coasts.

On October 4, 2021, the US Fish and Wildlife Service (FWS or the Service) published a final rule revoking its January 7, 2021, Migratory Bird Treaty Act (MBTA or Act) rule. 86 Fed. Reg. 54,642  (Oct. 4, 2021) (Rule or Revocation Rule). The January 7 rule was issued at the end of the Trump administration and established that the MBTA does not prohibit incidental (unintentional) take of migratory birds.  86 Fed. Reg. 1134 (Jan. 7, 2021). In the preamble to the Rule, which lists an effective date of December 3, 2021, the Service explained that “[t]he immediate effect of this final rule is to return to implementing the MBTA as prohibiting incidental take and applying enforcement discretion, consistent with judicial precedent and longstanding agency practice prior to 2017.” 86 Fed. Reg. at 54,642.  On the same day it published the Revocation Rule, FWS also published an Advanced Notice of Proposed Rulemaking (ANPR), requesting public input that will be used to develop proposed regulations to authorize the incidental take of migratory birds under prescribed conditions, 86 Fed. Reg. 54,667 (Oct. 4, 2021), and issued a Director’s Order clarifying the Service’s current enforcement position.

In a dramatic announcement last week, EPA suggested that if companies import, manufacture, or process a finished good for commercial sale, and that product is not a pesticide, not a firearm, not a tobacco product, and not a food, food additive, drug, cosmetic, or device, they will need to know all chemicals contained in those products. We explain more about this below.

EPA has traditionally declined to extend most of its chemical regulations to finished goods, which are known as “articles” under the Toxic Substances Control Act (TSCA), on the grounds it would be enormously difficult for importers of complex consumer products to determine the chemical identity of each chemical substance in these products. Industry stakeholders have generally supported this approach and have long taken the position that supply chains are too complex to expect finished product manufacturers to be aware of all chemicals in those products.

On September 22, 2021, the Division of Corporation Finance (Division) of the Securities and Exchange Commission (SEC) issued a sample comment letter to highlight its increased focus on climate change-related disclosures or the absence of such disclosures in issuer filings under the Securities Act and the Exchange Act. This sample comment letter follows a recent increase in climate-related comments the Division has issued during the disclosure review process, and many of the sample comments appear to be derived from actual comment letters issued in 2021. The sample is consistent with the SEC’s 2010 Guidance Regarding Disclosure Related to Climate Change, which does not mandate specific, line item climate change-related disclosures, but instead takes a principles-based approach.

The American Bar Association published an article, You’ve Come a Long Way Baby, or Have You?, which highlights the results of a new study by Hunton Andrews Kurth LLP attorneys Shannon S. Broome, Lauren Bachtel, and Jennifer MikoLevine, and environmental litigation specialist Richard M. Pavlak, shedding light on whether the environmental bar is achieving gender equality. The authors acknowledge and appreciate the important contributions of the late Richard Pavlak (who passed away unexpectedly shortly before the online version became available) for his graphical presentation of the results of the study.

Recent federal court decisions continue to show that Article III standing can be a formidable defense to environmental citizen suits, particularly following the Supreme Court’s decision Spokeo v. Robins, 578 U.S. 330 (2016) (vacating decision below and emphasizing that an alleged injury in fact must be “concrete and particularized”).  Just last week, for example, a North Carolina federal court dismissed on standing grounds almost all of the plaintiffs’ Clean Air Act citizen suit claims asserted against the University of North Carolina at Chapel Hill (UNC).  Center for Biological Diversity v. University of North Carolina, No. 1:19-CV-1179, 2021 U.S. Dist. LEXIS 163459 (M.D.N.C. Aug. 30, 2021).  In their complaint, the plaintiffs asserted nine claims, including seven for alleged failures to maintain records, inspect equipment, report permit deviations to government authorities, and monitor pollution controls, as required by UNC’s Title V permit.  On summary judgment, the plaintiff citizen groups offered declarations from two members who alleged “health, aesthetic, and recreational interests in air quality in Chapel Hill and the areas around UNC’s campus.”

As we have reported previously in this blog, in March 2021, the Massachusetts Governor signed historic climate legislation designed to effectuate the Commonwealth’s goal of net-zero emissions by 2050 (Chapter 8 of the Acts of 2021 or the “Act”). Some of the more controversial items in the Act were the provisions to incorporate requirements into the state’s building code to advance construction and/or retrofitting of buildings with energy systems designed to reduce emissions. In general, the efforts to facilitate a transition away from fossil-fuel energy systems in buildings continue to prove difficult as existing programs and policies are not necessarily designed to prompt the shift away from traditional energy systems at the pace that some argue is required to meet the aggressive emission targets of the state goals.

On August 30th, EPA granted the 2007 Petition from the Pesticide Action Network North America (PANNA) and the Natural Resources Defense Council (NRDC) requesting that EPA revoke all chlorpyrifos tolerances. This followed the Ninth Circuit order earlier this year for EPA to: “(1) grant the 2007 Petition; (2) issue a final regulation within 60 days following issuance of the mandate that either (a) revokes all chlorpyrifos tolerances or (b) modifies chlorpyrifos tolerances and simultaneously certifies that, with the tolerances so modified, the EPA "has determined that there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information," including for "infants and children"; and (3) modify or cancel related FIFRA registrations for food use in a timely fashion consistent with the requirements of 21 U.S.C. § 346a(a)(1).”

8.18.2021 EPA Finalizes Hazard Assessments for Two Fuel Additives (ETBE and tert-Butanol):

On August 18^th, EPA finalized the long-awaited hazard assessments for both Ethyl Tertiary Butyl Ether (ETBE) and tert-Butyl Alcohol (tert-Butanol).  ETBE was previously added to gasoline to increase its octane levels. It is still registered with EPA for use as a fuel additive, but it is not used currently in the United States.  tert-Butanol is one of the primary metabolites of ETBE and has also been used as a fuel oxygenate. It is also used for other purposes including as a solvent and as a dehydrating agent.