The Nickel Report

On May 28, the Biden Administration released a joint policy statement and a set of principles for voluntary carbon markets.  The statement provides an additional signal of the Administration’s support for voluntary carbon markets as a means of encouraging decarbonization efforts, while the principles put the weight of the Administration behind specific concepts underpinning the credibility of voluntary carbon credits and voluntary credit markets.

On May 1, the Council on Environmental Quality (CEQ) published the final Phase 2 rule overhauling the National Environmental Policy Act (NEPA) implementing regulations. The final rule, titled the “Bipartisan Permitting Reform Implementation Rule” (Phase 2 Rule), will apply to all actions starting the NEPA processes beginning after July 1, 2024, and the agencies have discretion to apply to NEPA reviews that are currently underway.

Last week marked the conclusion of the 28th Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCC) in Dubai, United Arab Emirates (UAE). As we previously discussed, the expectations were COP28 would tackle a range of critical issues toward achieving the climate goals set out in the Paris Agreement. Below is an overview of the most significant developments coming out of Dubai, as reflected in the COP28 agreement, and the expectations for future climate action.

On June 3, 2023, President Biden signed the bipartisan Fiscal Responsibility Act of 2023 (FRA) to suspend the United States’ debt limit until January 2025. The legislation also imposes changes to the environmental review process for infrastructure projects. Most notably, the FRA amends key provisions of the National Environmental Policy Act (NEPA), a touchstone environmental statute that imposes procedural requirements for the approval of major federal actions. The amendments to NEPA are the first major changes to the statute in almost 40 years. These changes signal Congress’s intent to streamline the environmental review of projects and improve the federal permitting process for energy projects. The amendments to NEPA will likely influence (and may delay) the Council on Environmental Quality’s (CEQ) Phase 2 revisions to NEPA’s implementing regulations which are currently undergoing interagency review. The FRA also expedites the approval process for all permits for the Mountain Valley natural gas pipeline project in West Virginia.

On January 12, 2023, the US Environmental Protection Agency (“EPA”) published its proposed National Enforcement and Compliance Initiatives ("NECIs”), soliciting public comment on the Agency’s potential Initiatives for fiscal years 2024 through 2027. These NECIs will guide EPA’s Office of Enforcement and Compliance Assurance (“OECA”) in its enforcement efforts over the next four years by focusing resources on “serious and widespread environmental problems where federal enforcement can make a difference.” Unsurprisingly, the identified NECIs build off EPA’s FY2022 Enforcement Results (on which we recently reported) and reflect OECA’s overarching goal: “to protect human health and the environment by holding polluters accountable and compelling regulated entities to return to compliance.”

The US Environmental Protection Agency (“EPA”) announced its enforcement and compliance results for Fiscal Year 2022 (“FY2022”) in late December. In the Annual Results report prepared by EPA’s Office of Enforcement and Compliance Assurance (“OECA”), OECA highlights EPA’s efforts to target the most serious violations of the country’s core environmental statutes and civil rights laws—effectuating the mission and principles set forth in its FY2022 to 2026 EPA Strategic Plan. According to OECA, EPA’s enforcement and compliance program used “a range of tools and best practices” to specifically target water, air, land and chemical violations that impacted communities the most. In so doing, EPA reportedly reduced, treated or eliminated approximately 95 million pounds of pollutants and compelled violators to pay over $300 million in fines, restitution or penalties. The enforcement and compliance trends highlighted below continue an overall decline seen in the last decade, yet provide evidence that EPA is succeeding in its enforcement and compliance efforts in areas that are the biggest priority for the Biden administration.

After over two weeks of conferencing, the 26th Conference of the Parties to the United Nations Framework on Climate Change (COP26) concluded with the finalization of the Glasgow Climate Pact (the “Glasgow Pact”) listing the accomplishments of the summit. The Glasgow Pact reaffirms the long-term global goals (including those in the Paris Agreement) to hold the increase in the global average temperature to “well below 2°C” above pre-industrial levels and to pursue efforts to limit temperature increase to 1.5°C above pre-industrial levels. It also states that limiting global warming to 1.5°C requires “rapid, deep, and sustained reductions in global greenhouse gas (GHG) emissions, including reducing global carbon dioxide emissions by 45 per cent by 2030 relative to the 2010 level and to net zero around mid-century, as well as deep reductions in other greenhouse gases.”

Carbon markets are tools that aim to cost-effectively reduce the emission of carbon dioxide (CO₂) and other greenhouse gases (GHG). The Paris Agreement sets a goal to keep the global average temperature from rising by 1.5°C (2.7°F) above preindustrial levels and, failing that, prevent it from rising 2°C (3.6°F). Carbon markets are viewed as the primary market-based vehicle to drive reduction in GHG emissions to meet the ambitious Paris Agreement goal.

On September 22, 2021, the Division of Corporation Finance (Division) of the Securities and Exchange Commission (SEC) issued a sample comment letter to highlight its increased focus on climate change-related disclosures or the absence of such disclosures in issuer filings under the Securities Act and the Exchange Act. This sample comment letter follows a recent increase in climate-related comments the Division has issued during the disclosure review process, and many of the sample comments appear to be derived from actual comment letters issued in 2021. The sample is consistent with the SEC’s 2010 Guidance Regarding Disclosure Related to Climate Change, which does not mandate specific, line item climate change-related disclosures, but instead takes a principles-based approach.

As we have reported previously in this blog, in March 2021, the Massachusetts Governor signed historic climate legislation designed to effectuate the Commonwealth’s goal of net-zero emissions by 2050 (Chapter 8 of the Acts of 2021 or the “Act”). Some of the more controversial items in the Act were the provisions to incorporate requirements into the state’s building code to advance construction and/or retrofitting of buildings with energy systems designed to reduce emissions. In general, the efforts to facilitate a transition away from fossil-fuel energy systems in buildings continue to prove difficult as existing programs and policies are not necessarily designed to prompt the shift away from traditional energy systems at the pace that some argue is required to meet the aggressive emission targets of the state goals.

Waterfront development in Massachusetts has a new problem.  In particular, projects that rely on a municipality’s approved municipal harbor plan and a corresponding building height exemption from what the Massachusetts waterfront development law otherwise requires will likely be blocked, at least for now.  The impact is not limited to Boston, as municipal harbor plans reach deep into waterfront zoning and development statewide.

On Earth Day, as expected, the Biden-Harris Administration continued its efforts to fulfill campaign commitments on climate change.  The big announcement came on what is called the “Nationally Determined Contribution” or NDC.  The Administration announced that the United States will aim to cut its greenhouse gas emissions from 2005 levels by 50% by 2030.  This reflects an increased commitment from the United States’ prior commitment of cutting emissions by 25% from 2005 levels by 2025.

On March 18, 2021, the Massachusetts House joined the Senate in passing a revised, historic climate legislation that appears to finally have enough support from the Governor’s office to be signed into law.  As we have highlighted in this blog previously, complete agreement between the Commonwealth’s executive and legislative branches on the Next-Generation Roadmap for Massachusetts Climate Policy S.9 (the “Bill”) has proven elusive.  When we last left this topic, the Governor of Massachusetts was faced with a decision to: (1) sign the Bill; (2) veto it for a second time; or (3) return the Bill to the Legislature with recommended amendments.  On February 7, 2021, the Governor did the latter, returning the Bill to the Legislature with approximately 50 recommended changes to various sections within the Bill.  On March 15, the Senate adopted certain further amendments to the original Bill, which the House then likewise adopted on March 18^th, and again laid the Bill before the Governor. This leaves the Governor another ten days to either sign the Bill or veto it for the third time and face the possibility of a Legislative override.

The Commonwealth of Massachusetts is poised to outline its planned steps to achieve the goals of its climate change-focused policies.  On December 7, 2020, the Massachusetts Executive Office for Energy and  Environmental Affairs (“EOEEA”) hosted a webinar to discuss the development and pending release of the Massachusetts Decarbonization Roadmap to 2050 (the “Roadmap”), which EOEEA indicates it will publish this month. The Roadmap constitutes the plan of the Commonwealth to identify cost-effective and equitable pathways and strategies for Massachusetts to reach Net Zero emissions by 2050, and the priorities to achieve an on-pace interim goal by 2030. In addition to the development of the Roadmap, the Commonwealth is in the process of preparing the 2020 update to the Clean Energy and Climate Plan (“CECP”), which is mandated to receive updates every five years under the Global Warming Solutions Act (“GWSA”).

One of the most frequent terms heard in conjunction with President-Elect Biden’s energy and environmental agenda is “environmental justice,” which is often described as an overarching objective as well as a key component of the incoming administration’s climate agenda.  This post looks at how the Biden Administration may translate environmental justice principles into concrete executive actions, and how project proponents can prepare for increased focus on environmental justice in their permitting.

While the election results are not yet final, this article will proceed from the assumption that former Vice President Biden will become President in January and that Republicans will win at least one of the two U.S. Senate seats in Georgia to be decided by runoff, and thus will have a majority in the U.S. Senate.

As we have previously reported, in July 2020, the Council on Environmental Quality (CEQ) published its highly anticipated final rule to improve its National Environmental Policy Act (NEPA) regulations, the first comprehensive revision of the NEPA implementing regulations in over forty years.  The final rule, which has generated much controversy and spurred numerous lawsuits, goes into effect today.  This post provides a brief update on the pending litigation and implementation of the new rule.

On July 16, 2020, the Council on Environmental Quality (CEQ) published its highly anticipated final rule to improve its National Environmental Policy Act (NEPA) regulations.  The update, which largely mirrors the proposed rule, is the first comprehensive amendment to the regulations since their original publication in 1978.  The final rule is designed to streamline the NEPA review process, clarify important NEPA concepts, and codify key guidance and case law. 

On June 30, 2020, Democratic members of the House Select Committee on the Climate Crisis unveiled a 538-page report that calls for reaching net-zero greenhouse gas (GHG) emissions economy-wide by 2050. The report, titled “Solving the Climate Crisis: The Congressional Action Plan for a Clean Energy Economy and a Healthy and Just America,” includes over a hundred policy recommendations to meet the 2050 goal.

On December 20, 2019, the Supreme Court of The Netherlands ruled in a climate case brought against the state by Urgenda, a non-governmental organization for “a fast transition towards a sustainable society.” The Court of Appeal and the Court of The Hague had previously ruled on Urgenda's claims. In both instances, the courts granted Urgenda's claim that the Dutch state should reduce emissions of CO2 from its territory by at least 25% by the end of 2020. The Supreme Court rejected the state’s appeal and confirmed the ruling.

On January 9, 2020, the Council on Environmental Quality (CEQ) released its highly anticipated proposed rule to improve its National Environmental Policy Act (NEPA) regulations. The proposed changes would be the first comprehensive amendment of the NEPA regulations since their original publication in 1978. CEQ’s proposed changes are designed to streamline and speed the NEPA review process, clarify important NEPA concepts, and codify key guidance and case law. CEQ’s Proposal is informed by comments it received on last year’s Advanced Notice of Proposed Rulemaking.

NEPA requires that federal agencies analyze the environmental effects of their proposed federal actions. This means that virtually any project that requires a federal permit or authorization could be required to undergo a NEPA review. Development of broadband infrastructure, roads, bridges, oil and gas pipelines, and renewable energy facilities are just a few examples of the types of activities that could trigger NEPA. A NEPA review can take significant agency and applicant resources, can substantially delay permits and can provide a basis for a federal court challenge to the project.

On January 9, 2020, WildEarth Guardians and Physicians for Social Responsibility filed suit in the DC District Court challenging the Bureau of Land Management’s (BLM) approval of over 2,000 oil and gas leases. The leases were sold through 23 different lease sales, spanning from December 8, 2016, to March 20, 2019, and they cover over two million acres of public lands across five western states—Colorado, Montana, New Mexico, Utah and Wyoming. The conservation groups contend that BLM continually fails to fully account for climate change impacts associated with oil and gas leasing.

In the wake of the April 19 ruling by Judge Morris of the US District Court of the District of Montana that required the Department of the Interior (DOI) to conduct an environmental review on its decision to lift the coal leasing moratorium, the parties disagree on the necessary remedy and the next steps. While DOI is requesting additional time to finalize its environmental review for its decision to lift the moratorium, environmental groups and states are requesting the court vacate then-Secretary Zinke’s Secretarial Order that lifted the moratorium altogether.

Twenty Democratic candidates took the stage in Miami on June 26-27, with the hopes of winning over voters in the first 2020 Democratic presidential debate. During the four-hour event, top Democratic candidates contentiously debated hot button issues, such as immigration, gun control and healthcare. When it came to the topic of climate change, however, the debate left some viewers wanting more.

Although climate change has been deemed one of the most important issues for Democratic voters ahead of the 2020 presidential election, only about 15 minutes in total between the two nights were dedicated to the issue. Given the sheer number of participants and the debate format, it was difficult for the candidates, including those with fully formulated climate change platforms, to articulate any detailed substantive policy. Nevertheless, there were still some key takeaways from the first debate’s limited discussion on climate change.

Since retaking control of the House following the 2018 midterm elections, Democrats have introduced a flurry of climate change-related legislation. While the ambitious Green New Deal resolution grabbed much of the headlines earlier this year, Democrats have continued to roll out various other measures aimed at addressing climate change.

The Bureau of Land Management (BLM) released a draft environmental assessment (EA) evaluating the potential environmental impacts of lifting the federal coal leasing moratorium. Publication of the draft EA opens a 15-day comment period that ends on June 6, 2019. This review was necessitated by the April 19 decision of the US District Court for Montana in Citizens for Clean Energy, et al v. Department of the Interior, et al. The court held that BLM’s actions in lifting the moratorium via a March 2017 secretarial order (Zinke Order) were arbitrary and capricious and in violation of National Environmental Policy Act (NEPA) because it was a major federal action for which there was no such review. The court did not immediately reinstate the coal leasing moratorium or require a specific environmental review, but instead stated that BLM had an obligation to study the environmental impacts of lifting the coal leasing moratorium and required the parties to submit additional briefing on the remedy.

One of the first orders of business for Speaker of the House Nancy Pelosi (D-CA) was to reinstate the Select Committee on the Climate Crisis. This committee previously existed from 2007-2011 as the House Select Committee on Energy Independence and Global Warming but was not renewed by Republicans when they gained control of the House in the 112th Congress. The new Select Committee will be chaired by Congresswoman Kathy Castor (D-FL).

The Corps Struggles to Balance Competing Constitutional and Statutory Duties

Federal agencies must often balance competing policy concerns and legal requirements. This process may be difficult and fraught with intense public feedback, and frequently results in litigation. The U.S. Army Corps of Engineers (the Corps) has found itself in the hot seat over how it manages the nation’s rivers, pitting its obligations under the Endangered Species Act (ESA) against private property rights. Litigation in the federal courts may soon determine whether, and if so how, responsible the federal government is for unintentional or incidental flooding when the government manages rivers for the benefit of listed species. These cases also bring to the fore a burning question: When can government agencies be held responsible for natural events? With the increase in climate change-related litigation nationwide, this issue will likely only rise in prominence.

Over the past year, several cities and counties have brought common law actions for activity they claim causes climate change, targeting both in-state and out-of-state sources. Does state common law reach this far?

Several presidential administrations have sought to shorten the lengthy process for obtaining federal authorizations and permits, with particular attention on infrastructure projects that usually require multiple federal permits with accompanying environmental reviews. Despite consistent interest in improving this process, delays persist, in part because of how courts have interpreted the level of analysis required during these environmental reviews. This past Tuesday, President Trump issued a new Executive Order (EO) 13807: “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects.” As this EO is implemented, the big question is: How much relief can this or any other executive action provide?

In recent years, plaintiffs’ attorneys and public-interest groups have brought common law actions seeking injunctive relief or damages for air emissions they claim cause climate change. Because climate change is a global phenomenon, these actions have targeted both in-state and out-of-state sources. Does state common law reach this far?

A state’s common law is founded in its police powers, which are among the powers that the Constitution generally reserved to the states. By contrast, the Constitution specifically delegates to Congress the power to regulate interstate commerce. A state’s police powers therefore do not extend beyond its borders. For this reason, the Supreme Court in the last century discovered a limited “federal” common law to address interstate pollution at a time when there were no federal laws regulating such interstate concerns. Missouri v. Illinois, 180 U.S. 208, 241 (1901). As the Court observed, “[i]f state law can be applied, there is no need for federal common law; if federal common law exists, it is because state law cannot be used.” City of Milwaukee v. Illinois, 451 U.S. 304, 314 n.7 (1981) (Milwaukee II).

[caption id="attachment_417" align="aligncenter" width="300"] 2017 Chambers USA Awards[/caption]

Last week at the 2017 Chambers USA Awards, Hunton & Williams’ environmental team was recognized as the team of the year in the environment practice area.  Chambers USA evaluated our practice as “preeminent” in the environmental area and “highly esteemed.”  Chambers USA also noted our “fine track record” for our utility and energy work and our “noteworthy expertise across air, water, waste and climate change matters.”