The Nickel Report

Facing growing criticism that they impede sustainable development goals, investment protections afforded by traditional international investment agreements (IIAs) are steadily eroding. Increasingly, the trend is toward provisions allowing host states greater flexibility to regulate environmental, transparency, human rights and other social impacts. At the same time, enhanced corporate social responsibility (CSR) obligations have become more common in recent IIAs.

Commentary regarding the US Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance (OECA) memorandum articulating a temporary policy applying enforcement discretion in light of the COVID-19 pandemic has been significant this week. Proponents and critics alike have misinterpreted the scope of the policy as reaching far beyond what OECA’s memorandum actually stated. As we stated in Deciphering EPA’s Temporary Enforcement Discretion Policy for COVID-19 and as the EPA has now confirmed, the “temporary policy” of exercising enforcement discretion for noncompliance “resulting from the COVID-19 pandemic” is not a free pass to pollute, despite opponent’s musings to the contrary.

Joining a growing chorus of states, several Northeastern states, including Massachusetts, Maine and Rhode Island, have recently announced their intentions to impose a ban on the use of hydrofluorocarbons (HFCs). The looming regulatory actions by these states are generally anticipated to follow an HFC ban rulemaking model established by the members of the US Climate Alliance.[1] It remains to be seen, however, whether the states will look to additional regulatory options, as it was a worldwide product ban in the late 1980s that inadvertently set the stage to now limit alternatives containing HFCs due to their climate forcing potential as a greenhouse gas (GHG).

Regulated industry has been expressing significant concern about disruption as a result of the COVID-19 pandemic and seeking assurance from the US Environmental Protection Agency (EPA) that the extraordinary circumstances across the United States would be taken into account in the event of any unanticipated noncompliance. Yesterday, March 26, 2020, EPA’s (EPA) Office of Enforcement and Compliance Assurance (OECA) Assistant Administrator Susan Parker Bodine responded to these concerns with the issuance of a memorandum addressing the impact of the current global COVID-19 pandemic on EPA’s enforcement program. In it, OECA commits EPA to a “temporary policy” of exercising enforcement discretion for noncompliance “resulting from the COVID-19 pandemic,” provided that regulated entities follow the steps required in the policy.

As the country responds and adapts to unprecedented change as a result of the COVID-19 pandemic, companies are, understandably, attempting to sort out what these shifts mean for operations now and in the near future. One operational aspect that companies must address is management of environmental compliance programs and responsibilities. Although it can be challenging to maintain compliance with environmental requirements during periods of uncertain or disrupted operations, doing so remains necessary as environmental regulatory requirements remain in force, despite disruptions to government functions. The current operational and regulatory climate is fluid and changing daily (at least), making it incumbent upon companies to remain vigilant in monitoring for updates and understanding the status of rules and requirements at any given moment. The keys to successfully navigating compliance challenges during the pandemic are preparedness, situational awareness, and early and frequent communication with regulatory agencies as appropriate, with the assistance of counsel as needed.

Even as COVID-19 is altering daily routines and operations within the federal agencies, all indications are that natural resource agencies continue to work on agency priorities and to advance the regulatory agenda.  Agencies including the Environmental Protection Agency (EPA), US Army Corps of Engineers (Corps), US Fish & Wildlife Service (FWS), Natural Marine Fisheries Service (NMFS), and Council on Environmental Quality (CEQ) have not indicated any plans, at this point, to delay their efforts on the Administration’s key initiatives. Public interest groups and organizations representing state and local officials have asked the White House to freeze rulemakings that are not directly related to the COVID-19 response effort.  EPA has responded to these requests by noting that it continues to be open for business and is fully functioning.

Following Governor Abbott’s recent proclamation of a state of disaster in Texas due to the COVID-19 pandemic, both the Texas Commission on Environmental Quality (TCEQ) and the Railroad Commission of Texas (RRC) have issued guidance for regulated entities relating to environmental compliance concerns as well as other useful information relative to agency operations during these uncertain times.

Key Questions Answered on the Bay Area “Shelter-in-Place” and California-Wide “Stay-at-Home” Orders for Energy Industry and Manufacturing Facilities

On the morning of March 16, 2020, we first caught wind of impending Shelter-in-Place orders in Northern California, which began taking effect in several counties, encompassing much of the San Francisco Bay Area, on Tuesday.  Next, California Governor Gavin Newsom issued his March 19, 2020 “stay-at-home” order to try to slow COVID-19’s spread throughout the state.

The California State Water Resources Control Board (State Board) and the nine Regional Water Quality Control Boards (the Regional Water Boards) recently published guidance on complying with regulatory requirements during the COVID-19 shelter-in-place orders.^[1]

California Governor Gavin Newsom’s “stay-at-home” order was issued on March 19, 2020, just a few days after similar “shelter-in-place” orders were issued by seven counties in the San Francisco Bay Area.  The state-wide order and the county orders require residents to “shelter at their place of residence” but provide an exemption for individuals performing “Essential Activities,” “Essential Government Functions,” or to operate “Essential Businesses.”

A previous post, EPA Makes Room for State Flexibility in Addressing “Interstate Transport” Under the Clean Air Act, discussed the evolving policy of the US Environmental Protection Agency (EPA) regarding approval of state plans—required under the “Good Neighbor Provision” of the federal Clean Air Act—addressing “interstate transport” of air pollution. That article reviewed a series of guidance documents EPA issued in 2018 to allow states flexibility in addressing wind-borne emissions that can contribute to ground-level ozone pollution in other states located downwind. At stake are not only downwind states’ air quality objectives but the prospect of expensive additional emission controls on upwind states’ manufacturing facilities and power plants.

One of EPA’s 2018 guidance documents addresses the seemingly technical question of what “contribution threshold” to apply. That term refers to the quantity—measured in parts per billion (ppb) of ozone in the air at ground level—below which an upwind state’s impact on a downwind state’s ozone concentrations is small enough that any contribution would be considered essentially de minimis. Generally, a state will want its emission contributions to be deemed low enough that it would be clear that its emission sources would not need new control requirements.