The Nickel Report

Recent developments could impact implementation timing and compliance obligations under California’s landmark climate emissions disclosure and financial risk reporting laws that were enacted last year.

The European Commission (EC)–the executive branch of the European Union (EU)–recently proposed a comprehensive regulatory framework for batteries (the proposal). The finalized proposal would replace the existing Battery Directive, which currently covers only the end-of-life stage of batteries. The proposal is the first action taken by the EC under its new Circular Economy Plan and is viewed as a necessary step towards meeting the European Green Deal’s goal of zero net greenhouse gas (GHG) emissions by 2050. The proposal will have significant implications for companies manufacturing and importing batteries (or products with batteries) in the EU and may influence the future policies of the incoming Biden administration.

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).

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On June 26, 2019, the Council on Environmental Quality (CEQ) released draft guidance instructing federal agencies on how to consider and document greenhouse gas (GHG) emissions and the effects of climate change when evaluating proposed federal actions, including rulemakings and permitting decisions, under the National Environmental Policy Act (NEPA). The guidance, if finalized, would replace a now-revoked Obama Administration 2016 guidance, which advanced broad positions on how agencies should evaluate GHG emissions and the effects of climate change when undertaking NEPA reviews for proposed federal actions.

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.

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.

Federal agencies that authorize or permit large infrastructure projects, like interstate natural gas pipelines, are often subject to the requirements of the National Environmental Policy Act (NEPA), and environmental organizations frequently rely on NEPA to challenge a project. The D.C. Circuit recently struck down a decision by the Federal Energy Regulatory Commission (FERC) to approve the construction and operation of three interstate natural gas pipelines because the Court found defects in FERC’s NEPA analysis. The court’s decision to vacate FERC’s authorization now threatens to shut down the pipelines, including the Sabal Trail pipeline currently supplying natural gas to newly constructed power plants in Florida.

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?

Throughout the Obama administration, federal officials from the President on down touted an “all of the above” approach to energy policy.  At the same time, they pressed forward with environmental regulations—climate change rules in particular—that would have made a seismic shift in the role fossil fuels play in the nation’s energy mix.

We all know the Trump administration is poised to make major changes.  A shakeup for the EPA was a consistent theme of the Trump campaign. The President made things official in March when he signed an executive order that, among other things, called for a “review” of the Clean Power Plan (CPP), the EPA’s program to regulate greenhouse gas emissions from existing power plants, and a proposed rule regarding the CPP is now under review at the White House Office of Management and Budget. The administration has also announced plans to cut the EPA’s budget, to take a new “red team-blue team” approach to climate change science, and to pull the U.S. out of the Paris climate accord. That’s quite a lot of activity for an administration that is often accused of moving too slowly.

In a surprising turn of events, the Board of the Bay Area Air Quality Management District (BAAQMD) voted to delay adoption of first-of-its-kind caps on refinery greenhouse gas (GHG) emissions. As we reported just three weeks ago, the Board was slated to adopt Regulation 12, Rule 16: Petroleum Refining Facility-Wide Emissions Limits (Rule 12-16), a regulation that would establish refinery-specific, facility-wide caps on GHG emissions from the five Bay Area refineries and three support facilities.  At a public hearing last week, in what initially looked to be a sure thing, the Board pivoted.  Signaling unease about legal vulnerabilities surrounding procedure, the Board voted to delay adoption of the regulation until at least September 2017.

Just before President Trump announced his decision to withdraw from the Paris Agreement on Climate Change, California is moving ahead with new greenhouse gas (GHG) regulations, making good on its commitment to continue its path regardless of what goes on in Washington, DC. This week, the Board of the Bay Area Air Quality Management District (BAAQMD) held a special meeting to consider a controversial new regulation targeting oil refineries. If adopted, as planned at the June 21, 2017, Board public hearing, Regulation 12, Rule 16:  Petroleum Refining Facility-Wide Emissions Limits (Rule 12-16) would establish first-of-its-kind, refinery-specific, facility-wide caps on emissions of greenhouse gases (GHG). The proposed caps limit refinery emissions to seven percent above recent operating levels.

[caption id="attachment_154" align="alignnone" width="300"] Photo by Alfonso Cuchi[/caption]

From the look of things, California is gearing up for a fight.

During the campaign, President-Elect Trump promised to redirect EPA’s focus away from climate change, with a greater emphasis on clean air and clean water. As part of this pledge, he vowed to dismantle the Obama Administration’s Clean Power Plan (CPP) and roll back EPA regulations, which he sees as hampering U.S. competitiveness.

California sees things differently. On January 4, California’s Legislature announced it had hired Eric H. Holder Jr., President Obama’s former U.S. Attorney General, as outside counsel to lead the state’s legal challenges to the incoming administration on a number of fronts, including the environment. In a joint statement, the Legislature explained, “With the upcoming change in administrations, we expect that there will be extraordinary challenges for California in the uncertain times ahead. . . . This is a critical moment in the history of our nation. We have an obligation to defend the people who elected us and the policies and diversity that make California an example of what truly makes our nation great.”

Should environmental groups or citizens be able to file lawsuits against their governments to force them to step up action to fight climate change? Some climate activists have claimed that resorting to judicial remedies is necessary because, in their opinion, the political system focuses on short-term economic interests to the detriment of long-term environmental concerns. Attempts to involve the courts in climate policy decision making have had very limited success, but a recent decision in The Netherlands may reinvigorate those efforts.