The Nickel Report

One of the Supreme Court’s recurring environmental law topics is the scope of Clean Water Act (CWA) jurisdiction. Various aspects of CWA jurisdiction and implementation have been addressed over the years by the Court, including the meaning of “navigable waters” in U.S. v. Riverside Bayview Homes, Inc. (1985); Solid Waste Agency of N. Cook Cnty v. Army Corps of Eng’rs (2001); and Rapanos v. U.S. (2006), and judicial review of agency actions related to the applicability of the CWA dredge and fill permit program in Sackett v. EPA (2012) and U.S. Army Corps of Eng’rs v. Hawkes Co. (2016). Most recently, the Supreme Court heard oral argument on November 6 in County of Maui v. Hawai’i Wildlife Fund, et al., a case that addresses the applicability of the CWA’s prohibition on “point source” discharges to “navigable waters” to releases from point sources to groundwater. The Court granted certiorari to address whether releases from point sources that are carried to navigable waters by groundwater are regulated under the federal NPDES permit program or under state non-point source management programs.

Recent headlines underscore the security challenges faced by public-facing businesses. From physical threats to cyber attacks targeting a wide range of critical infrastructure, companies in diverse sectors, such as the financial, retail, entertainment, energy, transportation, real estate, communications and other areas, face a challenging landscape of risks and potential liabilities. Join us on October 28, 2019, at 12:00 p.m. EST, for a webinar to discuss these issues, including why companies should consider SAFETY Act protection and how to obtain it.

On August 27, 2019, the Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC) issued a White Paper proposing to disclose the names of entities that violate Critical Infrastructure Protection (CIP) standards, while continuing to withhold other details of those violations. This significant change in policy reflects broader issues in FERC’s handling of security information.

Energy industry: is your insurance sufficient to handle a major cyber event? Larry Bracken, Mike Levine and I, Andrea DeField, address this question and more in our recent article for Electric Light & Power, found here.  In the article, we identify three major gaps in cyber insurance that we routinely see when analyzing coverage for energy industry clients. The first major gap is coverage for bodily injury or property damage caused by a cyber event. Most cyber insurance policies exclude coverage for both bodily injury and property damage, even if caused by a cyber event. Meanwhile ...

The US Environmental Protection Agency (EPA) recently released its latest National Compliance Initiatives (NCIs), which aim to focus the Agency’s enforcement arm, the Office of Enforcement and Compliance Assurance (OECA), on areas of significant environmental violations and other opportunities for the greatest environmental benefit through increased compliance with environmental laws. In a memorandum issued June 7, 2019, enforcement chief Susan Parker Bodine advised the Agency’s regional offices of the NCIs for upcoming fiscal years 2020 through 2023.

In this installment of our Inside Look series, Hunton partners Paul Tiao and Fred Eames discuss the challenges to businesses operating in a constantly evolving cyber threat landscape and steps some companies have taken to protect from attacks. It's important for companies operating in this space to adjust to changes to international, federal and state regulations regarding critical infrastructure and information sharing, including seeking application for a US SAFETY Act certification.

Standing may seem like an arcane concept, but, as lawyers, we know that this term has special legal meaning—and that it affects whether our clients or our clients’ opponents can successfully bring a lawsuit. In the field of environmental law, understanding standing (a little alliteration) is no easy task. In a decision by the DC Circuit last week, the Sierra Club was reminded just how important standing can be when challenging, or more to the point attempting to challenge, environmental laws.

Last week, the Fifth Circuit found that Lloyd’s syndicates may not subrogate against an additional insured and may not force that additional insured to arbitration. Lloyd’s Syndicate 457 v. FloaTEC, LLC, No. 17-20550 (5th Cir. Apr. 17, 2019).

The case arose out of an oil platform in the Gulf of Mexico called Big Foot, owned and operated by Chevron. Chevron contracted with FloaTEC to engineer steel tendons to moor Big Foot to the ocean floor. The contract between Chevron and FloaTEC contained an arbitration provision.

For the full report, visit our sister site, Hunton Insurance ...

• Electric Transmission Incentives Policy (Docket No. PL19-4-000)
  • The Commission issued a Notice of Inquiry (NOI) seeking comments on the scope and implementation of its electric transmission incentives regulation and policy.
  • Section 219 of the Federal Power Act directs the Commission to use transmission incentives to help ensure reliability and reduce the cost of delivered power by reducing transmission congestion. The Commission issued Order No. 679 in 2006 to establish its approach to transmission incentives and set forth a series of potential incentives that it would consider. The Commission subsequently refined its approach in a 2012 policy statement.
  • The NOI seeks comments in response to questions addressing many matters, including several that have not previously been addressed by the Commission’s transmission incentive policy, including:

Reversing a Texas Court of Appeals decision that allowed Anadarko’s Lloyd’s of London excess insurers to escape coverage for more than $100 million in defense costs incurred in connection with claims from the Deepwater Horizon well blowout, the Supreme Court of Texas held that the insurers’ obligations to pay defense costs under an “energy package” liability policy are not capped by a joint venture coverage limit for “liability” insured.  Anadarko Petroleum Corp. et al. v. Houston Casualty Co. et al., No. 16-1013 (Tex. Jan. 25, 2019).

2018 was a big year for insurance coverage cases, especially those involving social engineering phishing, spoofing and other schemes of trickery and deception.

The insurance recovery lawyers at Hunton Andrews Kurth have compiled their list of the top insurance cases of 2018.  A copy of the Review can be found here.

Industrial hemp has officially returned as a legal agricultural commodity in the United States.  On December 20, President Trump signed into law the Agriculture Improvement Act of 2018, otherwise known as the 2018 Farm Bill. See PL 115-334, December 20, 2018, 132 Stat 4490. The 2018 Farm Bill re-legalizes the production of hemp after the crop was banned for more than eighty years under federal law.  Hemp is a “cousin” of marijuana; both are varieties of the Cannabis sativa L. plant, but hemp does not have the psychoactive properties of marijuana.  Hemp is one of the oldest cultivated industrial crops in the nation.  It was grown as early as the 1600s until the mid-1930s when state and federal laws effectively ended the legal production, sales and use of the cannabis plant.  The Controlled Substances Act of 1970 (CSA) officially categorized “marihuana” as a Schedule I controlled substance, which was defined to include “all parts of the plant Cannabis sativa L.,” such as hemp.

Depending upon the assets being acquired or project being developed, a well-designed due diligence plan can be a critical component in managing transaction risk both before and after closing or commercial operation. Adeptly managing the due diligence process requires careful thought to appropriate timing and scope at both the front and back ends.

Among the most critical items in ensuring a successful outcome are consulting decision-makers who are driving the transaction and engaging professionals to provide appropriate support well in advance. Too often, key risks are overlooked or not adequately allocated or managed as a result of a rushed or improperly focused due diligence effort. Particularly for assets or projects with an inherently higher environmental, health and safety, or social (EHSS) impact potential, attempting to manage risk through the purchase and sale or development agreements alone also may not suffice. For example, avoiding a risk by carving out particular assets, employing third-party risk management strategies such as insurance policies, and post-acquisition integration or stakeholder engagement plans can be among the more effective means of managing EHSS risk—but these each require careful strategic planning by a team of professionals with the skills and experience to navigate a transaction’s complexities, particularly in a cross-border context.

Each year, the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center puts out a forecast for the upcoming hurricane season, stressing the dangers posed by hurricanes and the need to prepare. About this time last year, Hurricane Harvey made landfall in South Texas as a Category 4 and resulted in historic flooding. The devastating aftermath of the hurricane still continues. Preparation for and responding to incidents, such as those caused by Hurricane Harvey, has become increasingly more complex and more important than ever.

Judicial review of state agency regulatory orders in California has long been seen as an exercise in futility as state courts typically give significant deference to agency determinations. However, two recent decisions by California Superior Courts have bucked that trend and may provide renewed hope that success at the trial court level is not out of reach.

Last October we saw the State of California implement its "PSM for Refineries" standard and now the State of Washington's Division of Occupational Safety and Health (DOSH) appears to be following suit, releasing draft language to adopt a rule of its own. This new chapter will only apply to Process Safety Management (PSM) for petrochemical refining facilities.

In an article published in Law360, Hunton & Williams LLP partners Walter Andrews, Malcolm Weiss, and I discuss two recent decisions in Tree Top Inc. v. Starr Indem. & Liab. Co., No. 1:15-CV-03155-SMJ, 2017 WL 5664718 (E.D. Wash. Nov. 21, 2017).  There, the Eastern District of Washington rejected an insurer's attempt to escape insurance coverage for a Proposition 65 lawsuit filed against juice-maker Tree Top Inc.