Why Are We Still Talking About California Prop 65?

For readers who have been following us, you have likely seen our posts tracking California’s consumer right to know law, Prop 65, along with its new amendments and significant litigation. You may think, what more is there to write about a law that is only effective in one state?

As it turns out, quite a bit, especially now that Prop 65’s influence seems to have spread to other states. We have written previously about Prop 65’s far-reaching impact on companies, nationwide and internationally, doing business in California. Now, New York has proposed and Washington State has passed laws similar to Prop 65. These other laws could also have far-reaching effects for companies.

Washington’s state legislature passed Senate Bill 5135 in April 2019, called the “Pollution Prevention for Our Future Act,” which gives state agencies the “authority to ban chemicals and require disclosure of harmful chemicals in a wide range of products from carpets and personal care products to electronics and building materials.” Signed into law on May 8, 2019 by Governor Jay Inslee, the new legislation has been dubbed the nation’s strongest policy regarding toxic chemical products. Washington’s law goes a step farther than Prop 65 because it gives agencies the authority to ban chemicals in addition to requiring disclosure. While the state agencies in Washington have not yet developed the vast database that California’s Office of Environmental Health Hazard Assessment (OEHHA) has with over 900 listed chemicals, the Washington law prioritizes five chemical classes for action: (1) PFAS, (2) organohalogen flame retardants, (3) phthalates, (4) alkylphenol ethoxylates and bisphenols, and (5) PCBs. In addition, the law focuses on protecting sensitive populations, such as pregnant women and children, but also listed species including orcas and the Chinook salmon. While detailed regulations under the Washington law have not yet been promulgated, the disclosure portion of the law may require labeling products with these priority chemicals, like California’s Prop 65.

Prop 65’s influence seems to have reached the east coast, too. In January 2019, New York’s Governor Andrew Cuomo proposed the “Consumer Right to Know Act” as part of the executive budget legislation. The proposal sought to expand the state’s existing cleaning product ingredient disclosure law (6 NYCRR Part 659) to develop labeling requirements for personal care products with known carcinogens and other chemicals. Governor Cuomo’s press release indicated that agencies, including the New York Department of Environmental Conservation (NYSDEC), would develop “a list of more than 1,000 carcinogens and other chemicals that will trigger labeling” and “increase transparency” for consumers. As proposed, the law sounds similar to California’s Prop 65, but one key difference is that rather than the state Attorney General being charged with enforcement, the state agencies would have enforcement responsibilities. Currently, the status of the proposal is stagnant. However, while state legislators subsequently removed the Governor’s proposal from the budget with lobbyists calling it “dangerously vague and ultimately unworkable,” there appears to be strong support in New York to pass a consumer product program similar to what the governor proposed, just with more detail.

In fact, in May 2019, legislators proposed amendments to New York’s main consumer protection statute, Gen. Bus. Law § 349, referred to as Senate Bill S2407C. Most of the changes appear to make the law more plaintiff-friendly (i.e., guaranteed statutory damages, expands category of plaintiffs with standing to sue, etc.). These amendments closely mirror some of the provisions under California’s Prop 65 that spawned its “cottage industry” of citizen-lawyer team bounty-hunters. While the labeling proposals Governor Cuomo set out in January 2019 have yet to be included, creating requirements similar to Prop 65 may not be too far off for New York.

Even though California’s Prop 65 has already affected most national and international companies doing business in California, its impact has not stopped there. With more states passing laws similar to Prop 65, especially in key markets like New York, it is likely that companies doing business in any state may need to comply with some sort of labeling law for consumers in the future.

Squire Patton Boggs attorneys will continue to keep you posted on the latest developments in this area and can assist with any questions regarding the amended Prop 65 requirements or the subsequent state laws similar to Prop 65 that emerge.

US Supreme Court Schedules Oral Argument Regarding Clean Water Act Liability for Indirect Groundwater Discharges

Earlier this month, the US Supreme Court scheduled oral argument for November 6th in its review of the Ninth Circuit’s decision in County of Maui v. Hawai‘i Wildlife Fund, et al. The case has significant implications for the scope of the Clean Water Act (CWA), with the Ninth Circuit having ruled that the eventual migration of pollutants from permitted underground injection wells through groundwater into surface waters violates the CWA:

We hold the County liable under the CWA because (1) the County discharged pollutants from a point source, (2) the pollutants are fairly traceable from the point source to a navigable water such that the discharge is the functional equivalent of a discharge into the navigable water, and (3) the pollutant levels reaching navigable water are more than de minimis.

886 F.3d 737, 749 (9th Cir. 2018).

The Ninth Circuit’s decision parallels that of the Fourth Circuit in Upstate Forever v. Kinder Morgan, which held that a leak from petroleum pipeline to groundwater that migrates to creeks or wetlands violates the CWA.  In contrast, the Sixth Circuit in a pair of 2018 decisions (see here and here) rejected this theory of CWA liability on the basis that groundwater is a non-point source not covered by the CWA. The issue has significant implications for a whole host of activities that potentially could be subject to CWA permitting requirements if the rationale of the Ninth and Fourth Circuits is affirmed.

Subsequent to the court of appeals’ decisions, the US EPA issued an April 12, 2019 Interpretative Statement, which reviewed public comments, past agency statements and the legislative history of the CWA to conclude that: “releases of pollutants to groundwater are categorically excluded from the [CWA’s] permitting requirements because Congress explicitly left regulation of discharges to groundwater to the states and to EPA under other statutory authorities.” The Agency’s new policy statement is a marked departure from its argument before the Ninth Circuit in Maui, in which US EPA contended that CWA liability attached where there is a “direct hydrological connection” between the groundwater and a jurisdictional surface water.

Meanwhile, several recently-elected members of the Maui County Council have been pushing for settlement with the environmental groups that brought the lawsuit in order to avoid a potential Supreme Court ruling in favor of the County. See Finnerty, R., “Maui Lawmakers Defer Resolution to Settle Clean Water Act Lawsuit,” Hawai‘I Public Radio (May 20, 2019).  These council members fear that the case could result in a ruling from the high court supporting a more narrow interpretation of the CWA as outlined in US EPA’s recent Interpretive Statement. However, a resolution that would have allowed the County Council to enter into a potential settlement agreement was tabled in May and has yet to be acted on.

Regardless, the scope of CWA liability for indirect groundwater discharges is a significant issue with many regulatory and cost implications that is unlikely to go away any time soon. Squire Patton Boggs will continue to monitor this litigation and provide further updates regarding its potential policy implications.

July Update: Key Developments in UK and EU Environment, Safety and Health Law, Procedure and Policy

Electronic NewsWe are pleased to share with you the latest edition of “frESH Law Horizons – Key Developments in UK & EU Environment, Safety and Health Law, Procedure and Policy”.  In our July edition, we summarise 35 developments in the environmental, safety and health sector.  Some of the top stories this month include:

  • Rail company faces £1 million fine after the death of a passenger on the Gatwick Express
  • Government publishes its response to the final report on the Modern Slavery Act review
  • Environment Agency to use drones to tackle illegal water abstraction
  • Environmental Audit Committee launches an inquiry on electronic waste and the circular economy
  • Utility company faces fine of £700,000 for pollution offences
  • US lawmakers to propose plastics bill

For more detailed information on these developments, as well as access to the remaining summaries, make sure you download a copy from our website.  You can also subscribe to ensure you receive our most recent edition every month.

DC Circuit Upholds US EPA Decision Not to Issue New Financial Assurance Requirements for the Hardrock Mining Industry

JusticeOn July 19, 2019, the D.C. Circuit issued its decision in Idaho Conservation League v. Wheeler, upholding US EPA’s decision not to issue financial responsibility requirements for the hardrock mining industry under Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).  The requirements, if adopted, would have cost the hardrock mining industry an estimated $111 to 171 million per year. Continue Reading

US EPA Announces Policy To Enhance State Partnerships in Civil Enforcement and Compliance Assurance Work

Business Growth

On July 11, 2019, US EPA announced its new policy on Enhancing Effective Partnerships Between the EPA and the States in Civil Enforcement and Compliance Assurance Work (the Policy). The Policy was communicated as a memorandum from Assistant Administrator Susan Parker Bodine to the regional administrators. To date, the Policy is US EPA’s most comprehensive statement on the Trump administration’s proposed transfer of responsibility for compliance and enforcement matters from the federal agency to authorized states.

US EPA has been signaling that it will move to a more state-led enforcement and compliance policy. In January 2018, for example, US EPA issued interim guidance to enhance planning and communication between US EPA regions and the states. Later, in October 2018, Administrator Wheeler issued a memorandum outlining four key principles relevant to the enforcement of federal environmental laws. The principles rely heavily on state-led enforcement. Namely, the principles request: (1) general deference to states in state-implemented programs, (2) effective communication between the EPA and the states, (3) clear standards of review and predictable processes, and (4) a clear process for elevating issues.

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US Supreme Court Affirms Tweaked Auer Deference, But Is It Now a “Paper Tiger”?

In our prior coverage of Kisor v. Wilkie, we predicted that the Court would impose “greater scrutiny” on “administrative agencies’ . . . interpretation of their regulations.”  And the Court did.  The Court’s decision will affect every aspect of the federal government’s regulation of environmental, safety, and health.

At the end of its term, the US Supreme Court issued its opinion in Kisor v. Wilkie—upholding but limiting Auer deference.  Auer instructs that courts must defer to an agency’s construction of its own regulation unless that interpretation is “plainly erroneous or inconsistent with the regulation.”  (Indeed, under Auer (before Kisor), the US Supreme Court upheld regulations even when the interpretation was not “the best one.”) Auer deference, however, will work much differently going forward.

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Ohio Appeals Dismissal of the State’s Complaint Against Rover Pipeline LLC Due to Ohio EPA’s Failure to Timely Respond to Request for CWA Section 401 Certification

Pipe LayingOn March 12, 2019, Judge Kristin G. Farmer for the Stark County Court of Common Pleas dismissed the State of Ohio’s Third Amended Complaint against Rover Pipeline. The State alleged that Rover had committed widespread environmental violations during the construction of its 713-mile interstate natural gas pipeline. The court dismissed the complaint on the grounds that it lacked jurisdiction to hear the case because the State had waited over a year to “act” on Rover’s Clean Water Act §401 Certification request. On April 10, 2019, the State appealed that decision to the Court of Appeals for the Fifth District of Ohio.  Continue Reading

US EPA Formally Proposes Repeal of “Once In, Always In” Policy

On June 25, 2019, US EPA issued a proposed rule that would reverse the “once in, always in” policy for sources of hazardous air pollutants (HAP) that has been in place for more than 20 years. The rulemaking formalizes a January 2018 US EPA memorandum repealing the policy, an action that was challenged by environmental groups and is currently before the D.C. Circuit Court of Appeals. The petitioners claim that the memorandum conflicts with the structure and purpose of Section 112 of the Clean Air Act (CAA). The court heard oral arguments on April 1, 2019, but has not yet ruled. To the extent that petitioners claim the memorandum should have been subject to notice and comment, US EPA’s proposed rule may answer that challenge. However, the petition raises substantive issues related to whether the policy repeal is consistent with the CAA and the court’s ruling on these issues will likely affect the outcome of this rulemaking.

In the “once in, always in” policy, originally published in a 1995 memorandum, US EPA took the position that facilities that are major sources of HAP on the first compliance date of an applicable MACT standard must comply permanently with that standard, even if the source were to subsequently become an area source by limiting its potential to emit. In that memorandum, US EPA stated that the policy was the most natural reading of the language and structure of the Clean Air Act and a contrary reading would allow a source installing MACT to “backslide” from MACT control levels by operating only enough to reduce emissions below the major source threshold, thereby transitioning to area-source status and eliminating the MACT obligation.

The 2018 memorandum and the new proposed rule read the CAA to allow a source that does not meet the major source threshold to be treated as a minor source regardless of whether it had previously been classified as “major.”  This means that a major source that takes an enforceable limit on its potential to emit or otherwise takes measures to bring its HAP emissions below the applicable threshold can be reclassified as an area source no matter when the source may choose to limit its potential to emit. US EPA justifies this reading as consistent with the plain language of the Clean Air Act by relying on the statutory definitions of “major source” and “area source,” which do not contain any language that “fixes” a source’s status at any particular point in time, nor do they preclude a source from changing its status.

Parties opposed to US EPA’s approach have argued that reclassification will allow major sources that reclassify to area sources to increase their emissions above what they could emit if they continued to be major sources.  In the proposed rule, US EPA acknowledges that there are possible scenarios in which emissions could increase upon reclassification but finds that, in analyzing the 34 sources that have reclassified or are in the process of reclassifying since the issuance of the 2018 memorandum none will increase their emissions as a result of reclassification. Further, if US EPA determines that emissions are inadequately controlled following reclassification, the Agency can impose emission limits on area sources.

In addition to codifying the reclassification policy, the proposed rule would amend the definition of “potential to emit” to recognize the availability of non-federally enforceable limits (e.g., state only enforceable limits) for purposes of Section 112 applicability. The rule also proposes adding provisions to address the situation in which a source reclassifies from major to area source status and then reverts back to major source status. In that case, a major source that reclassifies to an area source will become subject to applicable area source requirements immediately upon becoming an area source if the first compliance date of the area source requirements has passed. If the area source then reverts back to its previous major source status, the source must meet major source requirements immediately upon reclassifying back to major source status. In certain circumstances, such as where the major source requirements have changed in the interim such that the source must undergo a physical change to comply, the source would be allowed extra time to achieve compliance.  The proposed rule also specifies that status reclassification would not affect a source’s liability or any enforcement actions for a source’s past violations of major source requirements that occurred prior to the source’s reclassification.

If finalized, the new policy could reduce testing, reporting, and recordkeeping requirements imposed on facilities, as well as provide the industry with increased regulatory certainty borne from subjecting the policy to formal rulemaking procedures. US EPA is soliciting comment on numerous aspects of the proposed rule, and there will be a public comment period of 60 days from the date the rule is officially published in the Federal Register.

Squire Patton Boggs will continue to monitor developments and provide updates on this issue.

How Thoroughly do UK Businesses Need to Investigate What Happens to Their Waste After They Have Transferred It?

A recent prosecution by the Environment Agency, where a company was ordered to pay £327,000, has highlighted potentially difficult issues for businesses in complying with the statutory waste duty of care.

What is the Statutory Waste Duty of Care?

All businesses generate waste of some description: from paper and kitchen waste in offices, to hazardous waste in manufacturing facilities. Section 34 of the Environmental Protection Act 1990 provides, amongst other things, that it is the duty of any business that produces, carries, or disposes of waste to take all steps that are reasonable in the circumstances:

  1. to prevent any other person from unlawfully depositing waste or treating, keeping or disposing of waste in a manner likely to cause pollution of the environment or harm to human health;
  2. to prevent any other person from operating a waste facility without, or in breach of, an environmental permit (or, where an exemption applies, otherwise than in accordance with that exemption);
  3. to prevent the escape of the waste from its control or the control of any other person; and
  4. on the transfer of waste, to ensure that the person who takes the waste has the proper authorisation to do so, and that the waste is accompanied by a written description to help properly identify it.

It is an offence not to comply with this duty of care for which the maximum penalty is an unlimited fine. Although prosecutions for breach of the duty of care have declined from around 90 per annum in 2000, to around 10 per annum now, average fines have substantially increased in the intervening period.

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June 2019 Update: Key Developments in UK and EU Environment, Safety and Health Law, Procedure and Policy

Online NewsWe are pleased to share with you the latest edition of “frESH Law Horizons – Key Developments in UK & EU Environment, Safety and Health Law, Procedure and Policy”.  In our June edition, we summarise 34 developments in the environmental, safety and health sector.  Some of the top stories this month include:

  • A food grain storage company has received a fine of £180,000 following the death of a worker struck by a lorry onsite
  • The Construction industry announces plans for mandatory licensing scheme for UK construction companies
  • UK government confirms ban on plastic straws, stirrers and cotton buds
  • UK commits to net zero carbon target by 2050
  • EU publishes the Single-use Plastics Directive
  • Waste company Biffa convicted of breaching EU transfrontier shipment of waste regulation
  • Waste incineration “best available techniques” conclusions approved
  • ClientEarth appeals EU court ruling on DEHP
  • We recently hosted our annual ESH conference

For more detailed information on these developments, as well as access to the remaining summaries, make sure you download a copy from our website.  You can also subscribe to ensure you receive our most recent edition every month.