Category: Environmental

New SEC Climate-Related Disclosure Rule

Margaret Anne Hill and Holli B. Packer ●

On March 6, 2024, the Securities and Exchange Commission (“SEC”) adopted amendments to the disclosure rules under the Securities Act of 1933 and the Securities Exchange Act of 1934. Although the final rule is a scaled-back version of the proposal published on March 21, 2022, the new rule will require many publicly traded companies to disclose both their direct and indirect emissions, also known as “Scope 1” and “Scope 2” emissions, provided the emissions are material. Companies must also disclose to investors their climate-related risks, including information about financial harm caused by severe weather events and other natural events. The new rule will be phased in beginning with the filing of annual reports for the year ending December 31, 2025.

Of significance to the business community is the SEC’s decision to exclude the requirement to report Scope 3 emissions which would have required businesses to disclose all indirect greenhouse gas (“GHG”) emissions not otherwise included in a registrant’s Scope 2 emissions that occur in the upstream and downstream activities of the registrant’s value chain. In deciding to eliminate the requirement to report Scope 3 emissions, the SEC observed that “Scope 3 emissions typically result from the activities of third parties in a registrant’s value chain and, thus, collecting the appropriate data and calculating these emissions would potentially be more difficult than for Scopes 1 and 2 emissions.”

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Climate Change Litigation—State Tort Cases Move Ahead

Margaret Anne Hill and Stephen C. Zumbrun ●

Climate change-related litigation has been increasing in the United States for the past several years. Not only have the actual number of these types of cases increased, but the claims raised in these cases have been expanding—from state tort claims (nuisance, trespass, and negligence) to federal and state constitutional claims. These cases have been slowly working their way through the legal system, with a major consideration being: Should these cases be in state court, involving state tort claims, or federal court, involving federal statutes or federal common law, because of the major national policy implication of climate change that these cases have the potential to affect?

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EPA Issues Supplemental Notice of Proposed Ruling to Implement the Vessel Incidental Discharge Act, Finally!

Jeanne M. Grasso and Dana S. Merkel

The U.S. Environmental Protection Agency (“EPA”) published a Supplemental Notice of Proposed Rulemaking (“SNPR”) on October 18, 2023, modifying its initial proposed rule from three years ago on performance standards for vessel incidental discharges. 2023-22879.pdf (govinfo.gov) The SNPR addressed only three limited areas—ballast water, hulls and associated niche areas, and graywater—and did not make any sweeping changes to the prior proposal of October 26, 2020. 2020-22385.pdf (govinfo.gov)

Background

In December 2018, the Vessel Incidental Discharge Act (“VIDA”) was signed into law, which amended the Clean Water Act (“CWA”) and was intended to replace the EPA’s 2013 Vessel General Permit (“VGP”) to bring uniformity, consistency, and certainty to the regulation of incidental discharges from U.S. and foreign-flag vessels. VIDA required EPA to finalize uniform performance standards for each type of incidental discharge by December 2020, a deadline that is nearly three years past, and requires the United States Coast Guard (“USCG”) to implement EPA’s final standards within two years thereafter.

In October 2020, EPA published a proposed rule titled Vessel Incidental Discharge National Standards of Performance to implement VIDA, but the proposal languished with the change from the Trump Administration to the Biden Administration. EPA’s delay in finalizing its performance standards prompted the Center for Biological Diversity and Friends of the Earth to file a lawsuit in February 2023 to force EPA to finalize its performance standards. Center for Biological Diversity, et al., v. Regan, et al., No. 3:23-cv-535 (N.D. Cal. 2023). The premise of the environmental groups’ complaint was that EPA’s inaction harmed aquatic ecosystems, with the principal allegations focused on ballast water discharges. The parties thereafter negotiated a Consent Decree that requires EPA to finalize its performance standards by September 23, 2024. To keep EPA accountable, EPA is also required to provide updates to the court every three months on the status of the rulemaking.

To read the full client alert, please visit our website. 

Sackett v. EPA: SCOTUS Clarifies “the Waters of the United States” and Narrows the Reach of the Clean Waters Act

Michael C. Lupton ●

On May 25, 2023, the Supreme Court of the United States (“SCOTUS”) issued a decision, Sackett v. EPA, which dramatically curtailed the Environmental Protection Agency’s (“EPA”) authority to regulate certain wetlands under the Clean Waters Act (“CWA” or the “Act”).

The CWA, enacted in 1972, has been the primary federal law regulating water pollution in the United States for over half a century. The Act is generally enforced by the EPA and the Army Corps of Engineers and has indisputably been effective in regulating water pollution in the United States.

The Act prohibits the discharge of pollutants into “navigable waters,” which it defines as “the waters of the United States, including the territorial seas.” 33 U.S.C. §§ 1311(a), 1362(7), (12)(A) (2018 ed.). However, since the Act’s inception, the meaning of this definition has been ambiguous and constantly evolving. Moreover, the Act broadly defines “pollutants” to include not only traditional notions of pollutants, but also more mundane materials like rock, sand, and dirt. 33 U.S.C. § 1362(6). The penalties for violating the CWA, negligently or knowingly, are often very severe, and include criminal charges or civil fines of over $60,000 per day for each violation.

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The Hydrogen Color Wheel: A Primer

Frederick M. Lowther ●

The international dialogue about climate change and the “net zero” world now includes a focus on hydrogen as an abundant source of energy useful in myriad ways (refining, fertilizer production, motive power, etc.) with potentially zero climate-harmful emissions. For those of us who took Chemistry 101 in high school, we know that hydrogen is by far the most abundant element in the Universe, representing an estimated 70 to 75 percent of all known matter. While that is an awesome number (giving rise to the common student question “How do we know that?”), the fact is that, here on Earth, hydrogen does not exist as a “free” gas—it is present here only in combination with other elements, notably oxygen, carbon, and nitrogen. Thus, to capture hydrogen for use in multiple applications, it must be separated from the paired substances (most commonly water (H2O) and natural gas (CH4)).

In the discourse around capturing hydrogen as a free gas, a color-coding terminology has emerged that rivals a paint store. I call it the “hydrogen color wheel” and it is the source of much confusion. While each of the color “codes” involves a somewhat detailed explanation, my goal in this post is to keep the detail short and within understandable limits.

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The Beginning of the End of the Internal Combustion Engine? California to Phase Out Gas-Powered Vehicles by 2035

Robert C. Levicoff ●

Robert C. Levicoff headshot image

A leader in stringent auto emission regulations, the State of California recently took additional steps in its effort to further protect the environment. On August 25, 2022, the California Air Resources Board (“CARB”) voted to require all new cars and light trucks sold in the state to be “zero-emission” by 2035.[1] The plan, officially known as the CARB Advanced Clean Cars II rule, was originally introduced via executive order by Gov. Gavin Newsom nearly two years ago.[2]

The plan mandates that “[i]t shall be a goal of the State that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035. It shall be a further goal of the State that 100 percent of medium- and heavy-duty vehicles in the State be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. It shall be further a goal of the State to transition to 100 percent zero-emission off-road vehicles and equipment by 2035 where feasible.”[3]

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Supreme Court Limits EPA’s Authority under the Clean Air Act

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


After seven years, three presidential administrations, and two appearances before the Supreme Court, the Obama Administration’s “Clean Power Plan” (“CPP”)—a Clean Air Act regulation designed to limit carbon emissions from existing coal-fired power plants (and later revised by the Trump-era “Affordable Clean Energy” (“ACE”) rule)—was struck down by the Supreme Court on June 30, 2022. See West Virginia et al. v. Environmental Protection Agency et al., No. 20-1530.

Relying on Section 111(d) of the Clean Air Act (“CAA”), the Environmental Protection Agency’s (“EPA’s”) CPP set a carbon emission limit that was essentially unattainable for existing coal-fired power plants. Consequently, EPA determined that the “best system of emission reduction” for carbon from these plants was to cause a “generation shift” from higher carbon emitting coal-fired sources to lower-emitting sources, such as natural gas plants or wind or solar energy facilities. Compliance with the CPP would have required a plant operator to: (1) reduce the amount of electricity the plant generated to reduce the plant’s carbon emissions; (2) build a new natural gas plant, wind farm, or solar installation, or invest in someone else’s existing facility and increase generation there; or (3) purchase emission allowances as part of a cap-and-trade regime. See West Virginia at 8.

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DOE Kicks Off Supplemental Environmental Review of the Alaska LNG

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

On July 2, 2021, the Department of Energy’s Office of Fossil Energy (“DOE/FE”) issued a Notice of Intent (“Notice”) to Prepare a Supplemental Environmental Impact Statement (“SEIS”) for the Alaska LNG Project (“Project”). DOE/FE will evaluate potential environmental impacts of upstream natural gas production on the North Slope of Alaska, and will conduct a life cycle analysis to calculate greenhouse gas (“GHG”) emissions for liquefied natural gas (“LNG”) exported from the Project.

The $38.7 billion Project includes a proposed gas treatment plant on the North Slope of Alaska, 800-mile pipeline, and a liquefaction facility with a planned liquefaction capacity of 20 million metric tons per year. The Federal Energy Regulatory Commission (“FERC”) has issued an order approving the construction and operation of the Project. On August 20, 2020, DOE/FE authorized Alaska LNG Project LLC’s (“Alaska LNG”) request to export LNG to any country with which the United States has not entered into a free trade agreement (“FTA”) requiring national treatment for trade in natural gas (“Non-FTA countries”) in a volume equal to the Project’s planned liquefaction capacity (equivalent to roughly 929 Bcf per year or 2.55 Bcf per day).

To read the full client alert, please visit our website. 

December 1, 2020: Live CLE Webinar “The Energy Industry after the Election: What to Expect in 2021 and Beyond”

The energy industry has been at the forefront of the 2020 election, and energy development is an issue that polarizes Americans and our businesses and political leaders in choosing the path for the future. Energy developments are inextricably linked to our economy and national security, and the decisions and policies that will be implemented over the next four years are critical to the nation and our participation and role in world affairs. 

Please join us for the webinar, The Energy Industry after the Election: What to Expect in 2021 and Beyond, on Tuesday, December 1, 2020, from 12:00 p.m. to 1:30 p.m. EST, where thought leaders from Blank Rome LLP and Blank Rome Government Relations LLC will provide their perspectives and insights on the following post-election topics:

  • The energy agenda of 117th Congress
    • Tax incentives
    • Hydraulic fracturing
    • Renewables
    • Climate change
  • The energy priorities of the next presidential administration
    • Energy policy
    • Regulatory developments impacting energy development and growth
    • Impacts of climate litigation and the ESG movement
  • Transactions and energy development: Impact of the election on the markets
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Energy Infrastructure Today: Permitting & FERC Case Law Updates

Margaret Anne Hill, Brett A. Snyder, Lamiya N. Rahman, Frank L. Tamulonis III, and Stephen C. Zumbrun

Stakeholders in the U.S. infrastructure industry should note that ongoing litigation and new court decisions issued in the first half of 2020 are reshaping the development of energy projects.

Energy developers should carefully review the impact of new rulings that have interpreted environmental analyses required for Clean Water Act (“CWA”) permitting as greenhouse gas emissions (“GHG”) on the complex regulation of infrastructure projects. At the same time, several other recent proceedings have raised questions about practices and procedures of the Federal Energy Regulatory Commission (“FERC” or “Commission”) regarding natural gas infrastructure.

In our recent webinar, Today’s Energy Industry: The Impact of Case Law on Energy Infrastructure Projects, we highlighted what you should know about recent legal developments related to energy infrastructure:

Permitting Update

  • Status of Nationwide Permit 12. In Northern Plans Resource Council v. U.S. Army Corps of Engineers, the Montana District Court vacated the U.S. Army Corps of Engineers’ Nationwide (“Corps”) Permit 12 disrupting permitting and enforcement under the CWA. The court later clarified that the ruling applies to new projects and not existing pipeline projects and the Ninth Circuit recently denied a request to stay the implementation of the order pending appeal.
  • Navigable Waters Protection Rule. Significant litigation is expected to challenge a new restrictive rule of what constitutes “waters of the United States” under the CWA. Infrastructure projects will also be impacted by the Supreme Court’s recent decision in County of Maui v. Hawaii Wildlife Fund.
  • National Environmental Policy Act GHG Review. The District of Montana ruled in Wildearth Guardians et al. v. U.S. Bureau of Land Management, that the Bureau of Land Management must consider cumulative GHG impacts of oil and gas lease sales. Litigation is expected to challenge whether the Corps has adequately considered GHG for Section 404 permits.
  • Climate Change Litigation. Many state and local governments continue to file common law lawsuits against oil and gas companies seeking damages for climate change mitigation measures. The 9th and 4th Circuits have rejected arguments that federal law applies to these disputes and similar cases are pending in the 1st, 2nd, and 10th Circuits. Also, in v. Exxon, the District of Massachusetts ruled that a suit alleging Exxon violated state fraud statutes should be litigated in state court.

FERC Update

  • Precedent Agreements as Evidence of Market Need. In a 2019 case, City of Oberlin v. FERC, the D.C. Circuit held that FERC failed to adequately explain why it is lawful to consider a proposed pipeline’s precedent agreements with foreign shippers serving foreign customers as evidence of market need for the pipeline. FERC recently addressed City of Oberlin and explained why precedent agreements between a proposed pipeline and LNG terminal were lawfully credited as evidence of market need for the pipeline.
  • FERC’s Tolling Order Practice. In Allegheny Defense Project v. FERC, the D.C. Circuit granted en banc rehearing over whether FERC violated the Natural Gas Act (“NGA”) and landowners’ due process by issuing tolling orders to extend the time to consider rehearing requests of FERC’s pipeline approval, while allowing a pipeline to begin construction and exercise eminent domain. On June 9, FERC issued a final rule to preclude natural gas projects under sections 3 and 7 of the NGA from proceeding with construction until FERC issues a decision on the merits of any request for rehearing.
  • Pipeline Right-of-Ways (“ROWs”) through the Appalachian Trail. In February, the U.S. Supreme Court heard oral argument over a 4th Circuit ruling that the U.S. Forest Service lacks authority to grant a pipeline ROW across the Appalachian Trail. On June 15, the Supreme Court ruled 7-2 that the Forest Service had authority to issue the pipeline ROW through the Appalachian Trail.
  • FERC Authority over Pipeline Transportation Service Agreements (“TSAs”) in Bankruptcy. Several pipelines recently have filed petitions for declaratory orders, requesting FERC to declare it has concurrent jurisdiction with bankruptcy courts over natural gas pipeline TSAs and that FERC approval is required to in order to modify or reject such contracts in bankruptcy. We are continuing to follow this area for developments.

We invite you to read, watch, and share the below resources from our recent webinar for further details. Contact any of us if you have questions about the impact of recent cases, decisions, and regulations on your energy project(s).

Please click here for the presentation materials and here to listen to the recording.