US EPA Finalizes Oil and Gas New Source Performance Standards With Potentially Broader New Source Review Impact

With US EPA’s regulation of greenhouse gas emissions from fossil fuel–fired electric generation still hotly contested in the D.C. Circuit, US EPA is proceeding with the next step in its implementation of the White House’s Climate Action Plan by moving forward with additional greenhouse gas regulations, this time of the nation’s oil and gas infrastructure.  On May 12, 2016, the Administrator signed a suite of four rules covering new and modified sources, modifying its approach to new source review determinations for the sector, finalizing regulations covering New Source Review permitting for sources on Indian lands, and setting the stage for further regulation of existing sources under Section 111(d) of the Clean Air Act. Continue Reading

Preparing for the 2016 TSCA Chemical Data Reporting

The clock will soon begin running for companies that are required to report data under US EPA’s Chemical Data Reporting (CDR) rule on the chemical substances they manufacture and import pursuant to the Toxic Substances Control Act (TSCA). Under the rule, the reports must be submitted to US EPA between June 1 and September 30, 2016.  Entities subject to the rule must submit all data required for the current reporting cycle (which covers calendar years 2012-2015) during this four-month window or face an enforcement action by the agency.

Entities Covered

The CDR applies to a wide array of chemical manufacturers and importers, including:

  • Organic and inorganic chemical manufacturers and importers;
  • Petrochemical manufacturers, petroleum refineries;
  • Paint and coatings manufacturers;
  • Pigment and dye manufacturers;
  • Alkalies and chlorine manufacturers;
  • Ink manufacturers;
  • Fertilizer manufacturers;
  • Paper and cardboard manufacturers;
  • Iron and steel mills;
  • Nonferrous metals smelters;
  • Foundries;
  • Electronic component and semiconductor manufacturers;
  • Printed circuit manufacturers;
  • Utilities and electric power generators, and
  • Many other users, manufacturers, importers and processors of chemical substances.

Continue Reading

Colorado’s State Water Plan Reflects Changing Attitudes Towards Western Water Management

The completion of the state of Colorado’s Water Plan on November 19, 2015 reflects a growing trend in western water management away from conflict and towards collaborative discussion. Increasingly, western water managers are opting to pursue more creative, coordinated solutions to complex water issues, built on broad-based stakeholder participation.

Historically, water discussions have been confrontational, divisive, and often exclusive affairs. The 1922 Colorado River Compact, for example, which divided the Colorado River into an Upper and Lower Basin and provided for the allocation of water among seven U.S. basin states, was conducted without the participation of a number of important interests, including Mexico and Indian Tribes, and did not include consideration of environmental values. The subsequent failure of the Lower Basin states of Arizona, California, and Nevada to reach an interstate agreement dividing the share of water allocated to the Lower Basin under the 1922 Compact led to protracted conflict, which was resolved by the U.S. Supreme Court in its 1963 decision in Arizona v. California, apportioning the lower half of the Colorado River among California, Arizona, and Nevada after no interstate agreement could be reached.

In the past few decades, however, water management in western watersheds has shifted focus toward opportunities for cooperation and inclusiveness. Former Assistant Secretary of Water and Science at the U.S. Department of Interior, Anne Castle, confirmed this emerging trend, stating, “[t]here’s a recognition that litigation is a failure, that we need to come together and make things work.” Continue Reading

UK Fracking – Picking Up Energy or Still on Go Slow?

On 11 April 2016, the Environment Agency granted the necessary environmental permits to allow the UK-based company Third Energy UK Limited to carry out hydraulic fracturing, or “fracking” as it has become known, for shale gas at the so-called KM8 Well, an existing borehole in North Yorkshire.  Despite opposition, the Environment Agency maintains that the decision followed a rigorous assessment of Third Energy’s proposal as well as two public consultations. It states that it feels confident that the environmental permits have the right conditions to ensure that people and the environment are protected.

On the face of it, this would seem like another step forward for fracking.  However, obtaining environmental permits is, as those involved know, only a small part of the process in carrying out a successful fracking operation.  Third Energy still needs other permissions, including the appropriate planning permission, before it can go ahead.

Despite strong UK Government backing in relation to fracking, there remains a long list of permits and licences required by any company wishing to carry out a fracking operation in the UK.  To make matters more difficult, these permits and licences are issued by a number of different regulators.  Required consents may include a Petroleum Exploration and Development Licence issued by the Department of Energy and Climate Change (DECC), a coal licence from the Coal Authority, borehole consents from the Department of Health, planning permissions from the Local Authority, groundwater investigation licences, abstraction licences and environmental permits from the Environment Agency, and a Protected Species Licence from Natural England.  This is often in addition to struggling to obtain the necessary access rights from landowners in the vicinity of the wells.

There is no doubt that the Government is trying to help the process where possible.  For example, the Government has removed hurdles to obtaining access rights from stubborn landowners by introducing a statutory right of underground access to enable shale gas exploration and exploitation.  Under the Infrastructure Act 2015, a statutory right to use deep level land for the purpose of exploiting petroleum (which includes shale gas) was introduced in England and Wales from 13 April 2015.  This Act prevents landowners who have not agreed to allow drilling access to operators from claiming there was a trespass.  The statutory right to access deep level land provides that it must be at a depth of at least 300m below the surface, measured vertically above the point where works take place and within the landward area.  Regulations requiring companies to make payments in return for the right of the use to owners or those with interests in land were also provided for.

So once all the permits, access rights and planning permissions have been obtained, what will an operator like Third Energy find? The answer is we don’t know.

Although fracking fever has swept through many European nations, in particular Poland, which has seen more shale exploration than any other country in Europe, there has been limited success so far in achieving any real output.  Despite several years of exploratory drilling, there are currently no commercial shale gas wells in Europe.  Tests of shale potential across Europe to date have led to slightly disappointing results for operators.  Taking Poland as an example, of the 72 wells drilled by the end of 2015, 25 were successfully fracked to release gas.  However, these wells yielded only about one-third to one-tenth of the flow that would be required to turn a profit, the Polish University of Science and Technology commented.

In the UK, there is a similar lack of information as to how exploitable any shale gas resources actually are.  Some commentators are still hopeful the UK will see a fracking boom like that in the US.  Others are more pessimistic; one commentator from Total stated that, given the current cost for shale wells, they were “very, very far in Europe from profitability”.  However, the UK is home to some recent attempts to tap shale gas and Third Energy’s success in getting necessary permits may put some vigour back into the shale gas movement.  Any new permissions to drill will help to reveal whether the UK shale deposits will yield any shale gas goldmines, but to figure out whether there is potential, companies must potentially drill as many as 50-100 wells which requires significant input. Given some of the predictions of large resources under the Bowland Shale there is still promise in the UK, but currently, fracking in the UK is clearly not moving forward at the pace that the Government and many operators would like.

EU CLP Regulation Implementation – what has happened since June 2015?

The latest edition of the British Safety Council’s magazine, Safety Management, features an update article by Anita Lloyd on the implementation of the EU Classification, Labelling and Packaging (CLP) regime for chemicals.

June 2015 was the deadline for implementation of EU Regulation 1272/2008 on the Classification, Labelling and Packaging of Substances and Mixtures (CLP). Companies in the chemical supply chain had to make changes to the way their products are classified and labelled, and CLP also made wider reaching changes to the hazardous waste and COMAH (Control of Major Accident Hazards) regimes.

“CLP – where have we got to?” can be accessed here.

US EPA Issues Significant New Use Rule for TCE in Consumer Products

On April 8, 2016, US EPA issued a final significant new use rule (“SNUR”) for trichloroethylene (“TCE”). The TCE SNUR requires anyone manufacturing, importing or processing TCE for use in a consumer product to notify EPA at least 90 days before commencing any such manufacturing, importation or processing. The SNUR expressly exempts the use of TCE in cleaners and solvent degreasers, film cleaners, hoof polishes, lubricants, mirror edge sealants, and pepper spray, however, since EPA determined that these are current ongoing uses and by definition cannot be subject to a SNUR.

TCE is a volatile organic compound (“VOC”) that is classified as a human carcinogen. EPA estimates that 250 million pounds of TCE are either produced or imported into the US annually.  According to EPA, the vast majority of TCE (approximately 84%) is used in closed systems as an intermediate chemical for manufacturing refrigerant chemicals, with most of the remainder (15%) used as a solvent for metals degreasing. Only a very small percentage of TCE actually ends up in consumer products. EPA’s Work Plan Chemical Risk Assessment for TCE identified degreasers found in some household cleaning products and arts and crafts aerosol sprays as consumer products that contain TCE.

The Toxic Substances Control Act (“TSCA”) authorizes EPA to determine whether the use of a chemical substance is a “significant new use” trigging notification is required. 15 U.S.C. § 2604(a)(2).  If EPA determines that the use of a chemical qualifies as a “significant new use” and issues a SNUR, anyone manufacturing, importing or processing the chemical for a commercial purpose must submit a significant new use notice (“SNUN”) to EPA 90 days before they manufacture, import or process the chemical substance for that use. 15 U.S.C. § 2604(a)(1)(B). Comparable to the Pre-Manufacture Notice (“PMN”) requirement under TSCA for new chemicals, the SNUN process gives EPA the opportunity to evaluate a significant new use of an existing chemical (as designated in the SNUR) on a case-by-case basis before the manufacturing, importing or processing of the chemical for the new use begins.

The TCE SNUR is designed to ensure that consumer products with TCE  do not enter the marketplace before EPA has an opportunity to review them (except for those uses exempted in the SNUR).  The term “consumer product” is defined as “a chemical substance that is directly, or as part of a mixture, sold or made available to consumers for their use in or around a permanent or temporary household or residence, in or around a school, or in recreation.” 40 C.F.R. 721.3. Therefore, except for the uses of TCE expressly excluded from the definition of “significant new use” in the SNUR, all persons involved with the manufacture, importation or processing of consumer products containing TCE must comply with the 90-day notice requirement before commencing any manufacturing, importation or processing.

As a result of the SNUR, except for the uses exempted in the SNUR, persons who import consumer products containing TCE must also comply with TSCA’s certification requirements, which mandate that importers certify that the chemical substance complies with TSCA — including the new TCE SNUR requirements. Likewise, exporters of TCE are now subject to TSCA’s export notification requirements.

The final TCE SNUR will become effective 60 days after the date of publication in the Federal Register.  However, the significant new uses of TCE covered by the SNUR are designated as of the date of publication of the proposed rule (August 7, 2015), rather than as of the effective date of the final rule. Consequently, anyone who began commercial manufacture, importation or processing of TCE after August 7, 2015 must cease such activity before the effective date of the final SNUR. To resume their activities, these persons would have to comply with the SNUN requirement. EPA considers any uses that began after the publication of the proposed rule to be new uses. Additionally, EPA has stated that it is initiating rulemakings under TSCA section 6 focused on the current ongoing use of TCE in aerosol degreasers and as a spotting agent at dry cleaning facilities, as well as in vapor degreasing operations. Under TSCA section 6, EPA can take a range of actions if it determines that the use of a chemical substance presents an unreasonable risk to human health and the environment, including significantly restricting or banning it.  EPA has not issued a TSCA section 6 rule since the decision 25 years ago by the Fifth Circuit Court of Appeals in Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir. 1991) that overturned EPA’s TSCA section 6 rule banning most uses of asbestos.

After Flint: New Ohio Bill Seeks Change Regarding Contaminated Drinking Water

jumbo_shot58626225The crisis in Flint, Michigan sparked a national inquiry into lead contamination in drinking water.  Subsequently, events in Sebring, Ohio raised questions locally and the Ohio General Assembly introduced a multifaceted piece of legislation, Ohio House Bill 512, that proposes significant new requirements for Ohio public water systems to respond to lead in drinking water.

The key provisions of H.B. 512 are highlighted in the full alert:  New Ohio Bill Proposes Changes to State Law Regarding Lead Contamination in Drinking Water.

Citing Climate Change, US Regulations Expand Protection for the Critical Habitats of ESA-Listed Species

On March 14, 2016, two new federal rules went into effect that could change the way in which the Endangered Species Act (ESA) is implemented throughout the United States. The U.S. Fish & Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) finalized these rules to update the regulatory provisions on which the agencies rely when fulfilling their duties to carry out the ESA.

In general, the ESA aims to conserve endangered and threatened species and the ecosystems upon which those species depend. Section 4 of the ESA directs the FWS and the NMFS to identify and list endangered and threatened species along with a designated critical habitat for each listed species. Once a species has been listed as endangered or threatened, it is protected under various provisions of the ESA. Specifically, Section 7 requires all federal agencies to consult with FWS and NMFS before taking any action to ensure that such action, funding, or authorization “is not likely to jeopardize the continued existence of any endangered species or threatened species”. These Section 7 consultations are designed to identify and limit adverse effects of federal action on listed species or their habitat. Section 9 prohibits any public or private entity from “taking” an endangered species or undertaking a wide range of other activities that could harm the species. The U.S. Supreme Court has declared that Section 9 can apply very broadly, prohibiting the modification of critical habitat that might have any adverse effect on the listed species.

The first of the new ESA rules that FWS and NMFS promulgated, the Definition of Destruction or Adverse Modification of Critical Habitat Rule, relates to the Section 7 requirement that federal agencies consult with FWS and NMFS before carrying out actions. The ESA specifies that such federal agency consultation must ensure that the contemplated federal action is unlikely to result in “the destruction or adverse modification” of the critical habitat of the species. The ESA does not provide a statutory definition for “destruction or adverse modification.” However, in fulfilling their consultation role, the FWS and NMFS have applied a 1986 regulatory definition for the term and included examination as to whether the survival and recovery of a listed species would be effected by an agency’s alteration of critical habitat. The legality of this approach is questionable because U.S. Courts of Appeals for both the Fifth Circuit and the Ninth Circuit have held that Section 7 of the ESA requires a more stringent standard.

To comply with the more stringent standard provided by the Fifth and Ninth Circuit rulings, the new regulation finalizes the following definition for Section 7 consultations: 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 or a species or that preclude or significantly delay development of such features. 81 Fed. Reg. 7214, 7216. FWS and NMFS indicate that this rule will not have an impact on Section 7 consultations because the definition change largely formalizes existing processes in effect since 2004 or 2005. However, some commenters, such as the Independent Petroleum Association of America, have expressed worry about the burden of this rule, especially regarding activities conducted on federal land. Others, such as the Michigan Farm Bureau, worry about the costs the rule will impose on small entities. Moreover, the new definition remains ambiguous because the term “value” is neither defined nor does the rule explain how it will be measured. The new definition also fails to identify what “conservation value” includes—whether existing “value” or potential future value?

While Section 7 prescribes requirements that are directly applicable to federal agencies, the effects can carry over into the private sector. For example, in carrying out pesticide registration activities, a settlement agreement requires EPA to consult with the NMFS to determine the impact of registered pesticides on Pacific salmon. As the Washington State Department of Agriculture has pointed out, Section 7 has already affected portions of the US agricultural industry. Monitoring future federal agency consultations with FWS and NMFS may be important to determine whether the rule change will further expand the scope and effect of ESA consultations in the future.

The second of the new ESA rules that FWS and NMFS promulgated, the Implementing Changes to the Regulations for Designating Critical Habitat Rule, concerns the procedures and criteria for designating and revising critical habitat. Section 3 of the ESA defines the critical habitat of a listed species as both “the specific areas within the geographical area occupied by the species, at the time it is listed ” and “specific areas outside the geographical area occupied by the species at the time it is listed [that are] essential for the conservation of the species.” Among the changes made by the new rule is the addition of a regulatory definition for “geographical area occupied by the species,” which expands habitat designation beyond the statutory framework to include areas used at any time in the life cycle of a listed species, even if not used regularly by the species. In another significant change, the new regulations, at 50 C.F.R. § 424.12(b)(2), now mandate that “specific areas outside the geographical area occupied by the species that are essential for its conservation” be identified for critical habitat designations at the time a species is listed. In supporting this change, the FWS and NMFS explain that as a result of climate change, areas previously unoccupied by a listed species may prove critical to support the species: As 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. 81 Fed. Reg. 7414, 7435.

In their final rule, FWS and NMFS state that the revisions made by this rule “merely codify or explain” the current guidelines. Nevertheless, industry groups, such as the National, Stone, Sand & Gravel Association, are raising concerns that this rule may increase the geographic extent of critical habitats, requiring landowners to take mitigation measures on previously unaffected land. In the past, critical habitats generally have been geographically limited to areas where the species is found. For example, when FWS recently proposed protection for the Kentucky arrow darter, the proposed critical habitat was limited to 246 miles of streams where it is found. Squire Patton Boggs will continue to monitor the implementation of the rule to determine whether these new rules will result in an expansion of the critical habitat designations for listed species.

The net effect of both of these new rules is an increase in the liklihood that FWS and NMFS will make more adverse modification findings and require more and geographically expanded critical habitat designations. In addition to agriculture, all resource development—e.g., hard rock mining, coal, oil and gas (hydraulic fracturing was identified as a cause of the endangerment when FWS proposed listing the Diamond Darter), logging (to which the Kentucky Arrow Darter listing was linked), and energy infrastructure (including wind and solar installations and electric grid expansions)—are likely to feel the constraints and increased costs of these two new rules.

Introduction of Australia’s Emissions Reduction Fund Safeguard Mechanism

Australia’s goal to decrease its carbon dioxide (CO2) emissions by 26-28% by 2030 is a direct result of the Paris Climate Conference in 2015. This commitment will be partially executed through the existing Emissions Reduction Fund (ERF). The ERF is a voluntary scheme introduced by the Australian Government (Government) that incentivises individuals and businesses to adopt practices that reduce CO2 emissions. There are three aspects to the ERF, namely, crediting, purchasing and safeguarding the decrease of emissions. Continue Reading

A Short History of Clean Power Plan Litigation as of March 2016

The Clean Power Plan and its surrounding litigation has quickly become one of the hottest topics both inside and outside the legal world. News that the U.S. Supreme Court had granted a stay of the Clean Power Plan on February 9, 2016 spread like wildfire, but many recent followers are unaware of just how long and polemic the history of litigation over the Clean Power Plan has been.

Given the considerably strong interest, this article provides a short history of the litigation surrounding the Clean Power Plan, along with links to motions, briefs, and orders, dating back to when Murray Energy Corporation filed the first challenge to the proposed rule. The history is actually anything but short and is also far from being over. Continue Reading