The Nickel Report

On October 7, 2023 California Governor Gavin Newsom signed two landmark climate disclosure laws aimed at making major companies publicly disclose their greenhouse gas emissions and report on their climate-related financial risks. The first, the Climate Corporate Data Accountability Act (SB 253), will require all business entities with an annual revenue exceeding $1 billion to disclose their greenhouse gas emissions in a format accessible to the public. The second, SB 261, will require all business entities with annual revenue exceeding $500 million to publish a report on their “climate-related financial risks” on their websites. These first-in-the-nation laws are broader than the proposed SEC climate disclosure rule and reach more than just California-based entities.

On July 10, 2023, California Governor Gavin Newsom signed into law a suite of bills intended to facilitate the permitting and approval processes for clean energy and other infrastructure projects in California.

Enactment of these measures in conjunction with the state’s budget bill marked the culmination of negotiations between the governor and state legislators that began on May 19, 2023, when the governor’s office announced a number of legislative proposals to streamline approval and permitting processes for clean infrastructure projects in California. On the same day, Governor Newsom issued Executive Order N-8-23, creating an Infrastructure Strike Team to work across state agencies to maximize federal and state funding opportunities for California innovation and infrastructure projects. The governor’s legislative proposals and executive order reflect the administration’s commitment to infrastructure development in California.

On December 7, 2021, the California Air Resources Board (CARB) held a public workshop to preview potential changes to the groundbreaking California Low Carbon Fuel Standard (LCFS) program, which has served as a model for other low carbon fuel programs across the country.  CARB is accepting written public comments on the concepts presented in the workshop through January 7, 2022.

Last week, among many actions taken by the Biden-Harris Administration on Earth Day 2021, one may have flown under the proverbial radar, though it does have significant legal implications for greenhouse gas regulation and the whole-of-government(s) approach:  the U.S. Department of Transportation’s (DOT) National Highway Traffic Safety Administration (NHTSA) notice proposing to repeal the preemption portions of NHTSA’s 2019 rule entitled “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program,” 84 Fed. Reg. 51,310 (Sept. 27, 2019) (SAFE I Rule).  NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking (signed Apr. 24, 2021) (Proposed Rule).

Barack Obama was seven months into his first term as President of the United States, the World Health Organization had declared a H1N1 flu pandemic, and the California State Water Resources Control Board (State Board) adopted the current Construction General Permit for Stormwater Discharges (Permit or CGP).  It was September 2009.  Now, having administratively extended the Permit since 2014 when, by its terms, the Permit expired, the State Board may, under a schedule released late last year, soon release a new draft CGP for public comment, with a goal of adopting it late this summer.

Late last year, New Jersey became the first state to require via legislation that its environmental state agency evaluate the contributions of certain facilities to existing environmental and public health stressors in overburdened communities when reviewing certain permit applications. California, never to be outdone, has begun its own legislative process to further incorporate environmental justice into state decision-making.

On September 6, Assistant Secretary of Energy for Electricity Bruce Walker issued an order under Section 202(c) of the Federal Power Act declaring an emergency shortage of electric generation and directing the California Independent System Operator (CAISO) to require the dispatch of electrical output from specified electric generating units, if the CAISO determines the generation is necessary to meet demand.  The order applies during afternoon and evening hours from September 6 through September 13, 2020.

The implementation of California’s ambitious Assembly Bill 617 (AB 617) is well under way, but it is still very uncertain whether it can or will achieve its intended outcome. Despite the long process to select the initial list of communities to be included in the in the first year of CARB’s Community Air Protection Program (CAPP) (CARB’s AB 617 implementation program), the hard work to ensure AB 617 is a success remains—namely the development and implementation of the emissions monitoring/reduction plans in the selected disadvantaged communities. In the end, the biggest impediment to AB 617’s successful implementation might be the law’s own requirements, specifically its accelerated implementation schedule, which may not provide California’s air quality management districts (air districts) with enough time to achieve the law’s goals.

When California Assembly Bill 617 (AB 617) was signed into law, California ambitiously announced a new “community focused” strategy to improve air quality in California. AB 617’s stated goal is to improve air quality in environmental justice communities through local, community-specific strategies focused on the individual needs and issues particular to each community. The development and implementation of this “community focused” strategy is largely the responsibility of California’s local air quality management districts (AQMDs) because AB 617 places new, explicit responsibilities on AQMDs so that they take the lead in improving the air quality in their environmental justice communities.

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.

The regulated community in California may soon have additional reasons to implement supplemental environmental projects (SEPs) when settling an administrative environmental enforcement action. Under a 2009 State Water Resources Control Board (Water Board) policy, settling parties may voluntarily undertake an environmentally beneficial project in return for an offset of a portion of any civil penalty, provided that the project meets certain criteria. The Water Board has now released sweeping proposed amendments to its Policy on Supplemental Environmental Projects (draft SEP Policy) that will incentivize more projects. Most notably, the draft SEP Policy:

Will consider projects that address climate change, such as greenhouse gas emissions reductions or those that build resilience to climate change impacts on ecosystems or infrastructure.

Will allow—subject to approval—greater than 50% of any monetary assessment in administrative enforcement cases to be allocated towards SEPs that are located in or benefit disadvantaged or environmental justice communities, or communities suffering from a financial hardship, or that further the Water Board’s priority of ensuring a human right to water. Under the original policy adopted in 2009, the maximum civil penalty reduction available via performance of a SEP is capped at 50%.

Will allow up to 10% of oversight costs to be included as part of the total SEP amount for the same reasons above. Otherwise, oversight costs are paid in addition to the total SEP amount.

Establishes a new category of SEPs called “Other Projects” to allow educational outreach and other “non-traditional” water quality or drinking water-related projects to be considered for approval.

Expands the applicability of SEPs to enforcement actions prosecuted by the Division of Drinking Water and its Districts and the Division of Water Rights.

It is no secret that California has had appliance efficiency standards in place for some time now. And it is no secret that the California Energy Commission (“CEC”) has been responsible for crafting those standards. According to the CEC and the California State Legislature, however, compliance with those standards has been hit-or-miss. In 2011, the Legislature found that “significant quantities of appliances are sold and offered for sale in California that do not meet the state’s energy efficiency standards,” and the CEC itself has stated that nearly half of all regulated appliances are non-compliant, and that certain product categories are entirely non-compliant. The broad range of products covered by the CEC’s efficiency standards may be partly to blame for the lack of compliance, as manufacturers may not even realize their product must comply. For example, the efficiency standards encompass nearly every device with a rechargeable battery and that rechargeable battery system, meaning everything from cell phones to laptops to tablets to golf carts must be tested, certified and listed in the CEC’s database before being offered for sale in California.

You’ve likely heard that just hours after the inauguration, White House Chief of Staff Reince Priebus issued a Memorandum for the Heads of Executive Departments and Agencies captioned “Regulatory Freeze Pending Review.” The so-called Regulatory Freeze Memo sought to freeze midnight actions by the Obama administration. In response to President Trump’s freeze actions and expected regulatory reforms, California lawmakers are seeking to issue their own “freeze” to ensure regulations in place just before the transition remain effective in California. On top of that, California legislators have been introducing a series of bills designed to “insulate the state from dangerous rollbacks in federal environmental regulations and public health protections,” including:

• SB 49, entitled The California Environmental, Public Health, and Workers Defense Act of 2017, related to retaining all pre-Trump environmental regulations.
• AB 1646, related to website posting of petroleum refinery risk management plans (RMP) on public agency websites and establishment of emergency notification equipment.
• AB 1647, related to air monitoring for petroleum refineries.
• AB 1648, related to increasing CalOSHA’s refinery inspection resources.
• AB 1649, related to codification of Governor Brown’s Refinery Task Force.
• SB 584, related to speeding up the RPS 50 percent renewable goal by five years and setting a new 100 percent renewable goal at 2045.

The Safe Drinking Water and Toxic Enforcement Act of 1986, a.k.a Proposition 65, requires warning California consumers prior to exposing them to even minute amounts of any of the 900+ chemicals listed as causing cancer or reproductive harm. The law has been on the books for 30 years. 2016 saw noteworthy amendments to the “safe harbor” warning provisions.