EPA Announces New Policy Regarding Enforcement Discretion

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

 

 

 

OVERVIEW/APPLICABILITY/SCOPE

Due to the coronavirus COVID-19 pandemic, the U.S. Environmental Protection Agency (“EPA”) announced a Policy that will effectively relax civil enforcement in certain circumstances. The EPA recognizes that worker shortages and supply issues may exist due to the pandemic and has decided to exercise enforcement discretion with respect to compliance with environmental laws. The Policy is retroactive to March 13, 2020, and while EPA emphasizes that it is temporary, EPA did not provide a termination date. It is important to note that the Policy applies only to certain civil violations and the regulated community is required to make every effort to maintain compliance with environmental laws. We have outlined below important specifics that will guide you in relying upon the Policy. You should contact counsel if you are having compliance issues due to the COVID-19 situation or have questions regarding EPA’s new Policy. Continue reading “EPA Announces New Policy Regarding Enforcement Discretion”

FERC Issues Guidance and Regulatory Relief in Connection with Coronavirus Response

Mark R. Haskell, Brett A. Snyder, Lamiya N. Rahman, and Jane Thomas

On March 19, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) announced several regulatory responses to the coronavirus pandemic and FERC Chairman Neil Chatterjee held a press conference to discuss the agency’s initiatives. The Chairman emphasized the capabilities of the Commission and its staff to work in a timely manner throughout the pandemic response, while striving to provide necessary flexibility to regulated entities.

The Chairman named Caroline Wozniak, a Senior Policy Advisor in the Office of Energy Market Regulation, as the point of contact for all energy industry inquiries related to the impacts of COVID-19. Members of the regulated community may e-mail PandemicLiaison@FERC.gov with questions for Commission staff.

Chairman Chatterjee clarified that the Commission will provide regulated entities with flexibility when needed, but emphasized the Commission is fully functioning and will try not to delay decisions. Chairman Chatterjee also stated his goal is to issue certain rehearing orders involving pipeline certificate projects challenged by affected landowners within 30 days, consistent with guidance from the Chairman issued on January 31, 2020.

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DOJ Axes Supplemental Environmental Projects in Civil Settlements

Kevin R. Doherty and Margaret Anne Hill

Earlier this month, the Department of Justice (“DOJ”) officially eliminated the use of “Supplemental Environmental Projects” in civil settlements. The once-popular settlement tool, commonly known as SEPs, allowed alleged violators of environmental laws to complete Environmental Protection Agency (“EPA”)-approved projects in exchange for reduced penalties. These projects were considered by EPA and DOJ as providing tangible environmental and/or public health benefits to the environment and/or the affected community, and through their completion, settling parties were permitted to offset a portion of their civil penalties through cost effective and proactive environmental measures. Continue reading “DOJ Axes Supplemental Environmental Projects in Civil Settlements”

EHS Management During the Coronavirus Pandemic: Proactive Measures

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

The novel coronavirus (“COVID-19”) pandemic has caused significant personal and business disruptions to virtually every aspect of life. Businesses are being challenged by the financial markets, supply chain threats, cybersecurity threats, plus questions regarding future growth, sustainability, and expansion. Understandably, the immediate focus for the business community is on the safety and welfare of employees, as well as economic survival. Notwithstanding these well-founded concerns, companies, and in particular their environmental, health, and safety (“EHS”) staffs, need to be prepared to address employees’ concerns regarding issues related to the company’s COVID-19 response and management, as well as to respond to any environmental or safety incidents, which may involve state environmental agencies or the U.S. Environmental Protection Agency (“EPA”). Simply put, companies involved in environmentally sensitive operations such as refineries, mining, chemical facilities, oil and gas production, water treatment facilities, or plant manufacturing operations, etc., need to remember that EHS personnel must still ensure compliance with EHS laws and requirements during a period when they may find themselves inundated with new COVID-19 responsibilities, or with very little staff to support their company’s EHS regulatory obligations. Below are tips for companies and their EHS managers who might find themselves operating under a “trial by fire” and with limited capacity, or who may find that they have more time on their hands until the economy bounces back from the current disruption. Continue reading “EHS Management During the Coronavirus Pandemic: Proactive Measures”

Coronavirus: OSHA’s and EPA’s Response

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun

As the world’s attention turns increasingly (and almost exclusively) to the spread of COVID-19 (the coronavirus), we want to take this opportunity to highlight two important federal agency responses from the U.S. Occupational Safety and Health Administration (“OSHA”) and the U.S. Environmental Protection Agency (“EPA”). The responses from the Center for Disease Control (“CDC”) and World Health Organization (“WHO”) have received the bulk of public attention to date, and for good reason. Just this week, the WHO declared the outbreak a pandemic with nearly 125,000 cases reported across 118 countries and territories. WHO has shipped supplies and protective equipment to 57 countries and is preparing to ship to another 28 countries. WHO has published an R&D roadmap and comprehensive technical guidance. WHO has also pledged more than $440 million (U.S.) to WHO’s Strategic Preparedness and Response Plan.

Here at home, the CDC has likewise been operating in overdrive to reduce the spread and impact of the virus. The CDC has issued multiple clinical guidance documents for healthcare professionals in addition to travel guidance related to COVID-19. The CDC established a COVID-19 Incident Management System on January 7, 2020, and activated its Emergency Operations Center on January 21. Multidisciplinary teams have been deployed to support state and local health departments. CDC also developed diagnostic testing to track and confirm COVID-19 cases and testing kits from commercial labs are expected soon. The CDC has also issued well-publicized recommendations for the public to follow.

In addition to these sweeping responses from the WHO and CDC, OSHA and EPA have been busy preparing and executing their response to this pandemic. While some employers may be able to provide significant flexibility to employees, allowing them to work from home, other employers will need to keep employees onsite, and will need to ensure the safety of their workforce. Other employers, which may manage medical wastes, will need to exercise additional precautions in ensuring that infectious wastes potentially contaminated with COVID-19 are managed in accordance with relevant state and EPA medical waste requirements. Below are the highlights from each agency. Continue reading “Coronavirus: OSHA’s and EPA’s Response”

FERC Issues Penalty Assessment in Vitol CAISO Market Manipulation Proceeding

Mark R. Haskell, George D. Billinson, and Lamiya N. Rahman

The Federal Energy Regulatory Commission issued an Order Assessing Civil Penalties, imposing approximately $1.5 million in civil penalties on Vitol Inc. and one million dollars in penalties on a Vitol trader. In a departure from prior cases, the Commission assessed penalties well below Enforcement Staff’s recommended six-million-dollar penalty for the company, in light of the individual trader’s significant involvement in the alleged scheme. The next step for Respondents wishing to challenge the Order will be de novo review in federal district court.

On October 25, 2019, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued an Order Assessing Civil Penalties (“Order”), imposing civil penalties of $1,515,738 against Vitol Inc. (“Vitol”) and one million dollars against Federico Corteggiano, a Vitol trader, in connection with an alleged market manipulation scheme in the California Independent System Operator Corporation’s (“CAISO”) markets.[i] Additionally, the Commission ordered Vitol to disgorge unjust profits, plus interest, of $1,227,143.

As we have previously discussed, the Commission began this proceeding by issuing an Order to Show Cause and Notice of Proposed Penalty to Respondents on July 10, 2019. In that order, the Commission directed Vitol and Corteggiano to show cause why they should not be assessed civil penalties of six million dollars and $800,000, respectively, and why Vitol should not be required to disgorge unjust profits of $1,227,143, plus interest. Respondents elected to have the Commission assess an immediate penalty if it finds a violation and then proceed with de novo review before a federal district court.

In the instant Order, the Commission found that Vitol and Corteggiano (collectively, “Respondents”) violated the anti-manipulation prohibitions in the Federal Power Act (“FPA”) and FERC’s Anti-Manipulation Rule[ii] through a cross-market scheme in which Respondents sold power at a loss in the CAISO wholesale electric market to avoid greater losses in Vitol’s positions in a separate financial product—congestion revenue rights (“CRRs”).[iii]

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[i] Vitol Inc., Order Assessing Civil Penalties, 169 FERC ¶ 61,070 (2019).

[ii] FPA § 222 (2012); 18 C.F.R. § 1c.2 (2019).

[iii] Specifically, the Commission found Respondents intentionally engaged in fraudulent physical energy imports during the period October 28-November 1, 2013, at the Cascade intertie to relieve congestion at Cragview, which in turn lowered the Cragview locational marginal price (“LMP”) and economically benefitted Vitol’s CRRs sourced at that location. Order at P 34.

Pennsylvania Plans to Join the RGGI CO2 Cap-and-Trade Program

Margaret Anne Hill, Christopher A. Lewis, Frederick M. Lowther, Frank L. Tamulonis III, and Stephen C. Zumbrun

At the outset of 2019, Pennsylvania Governor Tom Wolf set a goal for Pennsylvania to significantly reduce greenhouse gas emissions. Now, Governor Wolf plans to achieve that goal by taking the bold step to establish a carbon dioxide cap-and-trade program through executive action. On October 3, 2019, Governor Wolf issued an Executive Order directing the Pennsylvania Department of Environmental Protection (“DEP”) to begin the process for Pennsylvania to join the Regional Greenhouse Gas Initiative (“RGGI”, pronounced “Reggie”). RGGI is a market-based cap-and-trade program implemented by several Northeast states to reduce power sector CO2 emissions. Governor Wolf’s Executive Order made national headlines because of the potential implications of Pennsylvania—a state known for its coal and natural gas reserves—joining RGGI. But this news is only the start of a long regulatory process, one that could realistically take years to become implemented. At this stage, Pennsylvania fossil-fuel power generators should familiarize themselves with RGGI’s requirements and procedures as well as the rulemaking process by which the Commonwealth might join RGGI.

The RGGI Program

RGGI is a collective effort by its member states to create a Northeast regional cap-and-trade program affecting fossil-fuel power plants greater than 25 megawatts. Member states—currently Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont, with New Jersey in the process of rejoining—each enact statutory or regulatory programs in their respective states that are RGGI compliant. CO2 emitting power plants then participate in RGGI regional auctions to purchase CO2 emission allowances for usage, or to sell on secondary markets. RGGI caps the total amount of CO2 emission allowances, measured in tons of carbon, with the most recent cap being 80.2 MM-tons. Beginning in 2021, the cap will be set at 75.1 MM-tons, which will then be reduced by 30 percent between 2020 and 2030. Proceeds from the auctions are distributed to the respective states for investment in programs to further reduce CO2 emissions, such as energy efficiency, renewable energy, or consumer benefit programs. Continue reading “Pennsylvania Plans to Join the RGGI CO2 Cap-and-Trade Program”