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By Paul Singarella, Chris Garrett, Andrea Hogan, Daniel Brunton, John Heintz, Taiga Takahashi, and Lucas Quass

On October 9, 2015, the US Court of Appeals for the Sixth Circuit stayed the implementation of the Clean Water Rule (the Final Rule) nationwide. The Final Rule defines “waters of the United States” (WOTUS), a threshold term that determines the Clean Water Act’s (CWA) scope and application. The Final Rule was issued on May 27, 2015, by the US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (Corps), with an effective date of August 28, 2015.

The Sixth Circuit found that the coalition of states challenging the Final Rule “demonstrated a substantial possibility of success on the merits of their claims” and that a stay would “temporarily silence the whirlwind of confusion that springs from the uncertainty about the requirements of the new Rule and whether they will survive legal testing.”[i]

Subject Matter Jurisdiction Still Under Consideration By the Sixth Circuit

The case already has a complex procedural history. Challenges to the Final Rule were filed in courts in a number of circuits. There is parallel litigation in the District Courts, and about a month ago, the US District Court for the District of North Dakota issued a preliminary injunction against implementation of the Final Rule, but applied the injunction to only the 13 states that were party to the case before the court. The US Judicial Panel on Multidistrict Litigation consolidated the petitions before the Circuit Courts for review and randomly selected the Sixth Circuit to hear the consolidated petitions.

By Chris Garrett, Shivaun Cooney and Shannon Lankenau

On October 7, 2015, the California Supreme Court heard oral argument in California Building Industry Association v. Bay Area Air Quality Management District (Supreme Court Case No. S213478), a case which calls into question the “continued vitality” of a line of appellate cases holding that the “reverse application” of the California Environmental Quality Act (CEQA) is inconsistent with the statute’s language and intent. While the California Building Industry Association’s (CBIA) challenge to the Bay Area Air Quality Management District’s (BAAQMD) guidelines raised numerous legal issues, the Supreme Court’s order granting review in the matter expressly limited briefing and argument to the following issue: “Under what circumstances, if any, does the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) require an analysis of how existing environmental conditions will impact future residents or users (receptors) of a proposed project?” In other words, is CEQA review limited to an analysis of a project’s impact on the existing environment, or does it also require an analysis of the existing environment’s impact on the project and its future occupants and users?

CBIA’s Challenge to BAAQMD’s Thresholds of Significance

On November 29, 2010, CBIA filed a petition for writ of mandate challenging BAAQMD’s 2010 thresholds of significance for certain air contaminants (Thresholds), adopted pursuant to Section 15064.7 of the CEQA Guidelines. The trial court agreed with CBIA that BAAQMD should have conducted an environmental review under CEQA before issuing the Thresholds, but declined to address CBIA’s remaining arguments, including that the Thresholds were arbitrary and capricious to the extent they required an evaluation of the impacts the environment would have on a given project (referred to by some as CEQA in reverse).[i]

By Michael Green

HM Treasury recently launched a consultation to seek views on its proposals to reform the business energy efficiency tax landscape, following the announcement by the Chancellor in the Summer Budget that energy policies and regulations would be subject to review.

The government is seeking feedback on what data should be collected and made publicly available, and whether new regimes, rates and incentives should require board level sign-off.

By Paul Singarella, Maria Hoye, John Heintz, Lucas Quass & John Morris

California enacts basin adjudication statutes with the goal of reducing uncertainty, costs and time of water rights litigation.

On October 9, 2015, California Governor Jerry Brown signed AB 1390 (Alejo) and SB 226 (Pavley) to implement a comprehensive approach to groundwater basin adjudications throughout the state. Basin adjudications involve a judicial process in which a party initiates a lawsuit against all other users in a groundwater basin so that the court can determine the groundwater rights of all parties overlying the basin and whether others may export water from the basin. Through basin adjudications, courts can require the cooperation of users who otherwise might resist limits the on pumping of groundwater. Currently, 22 basins in California have been adjudicated. (There are over 500 such basins.)

Basin adjudications, however, have been costly and time consuming (in some cases taking over a decade to complete). In light of the time and expense associated with basin adjudications, the Legislature developed AB 1390 and SB 226 ostensibly to reduce the burden of groundwater adjudications on both the courts and claimants without modifying groundwater rights law. The new law will be effective January 1, 2016. A summary of these two companion bills follows.

By Paul Davies

Environmental issues are global issues. To navigate the environmental aspects of international business operations, companies must look at the entire lifecycle of a product – the global supply chain – and the legal issues and reputational risk associated with compliance.

For example, a business looking to acquire a target with operations in different jurisdictions could trigger the need for environmental investigations, and an acquirer will need to consider:

  • Which jurisdictions the assets or shares are in and how the business is structured.
  • Where component parts are sourced and whether those components are legal in all jurisdictions in which the business is located.
  • The scope of due diligence required for the transaction.
  • How to assess liabilities based on former, current and future operations by understanding product life-related issues, such as where materials in the manufacturing process are sourced from and how the business disposes of such materials.

By proactively identifying environmental issues and leveraging high quality environmental advice, an acquirer may be able to negotiate reps and warranties and determine whether there will be any indemnities or price chips.  Similarly, a business engaged in the financing of a large-scale project may also be impacted by environmental issues should the Equator Principles come into play (or other provisions such as OECD guidelines).

By Marc Campopiano, Andrea Hogan and Joshua Marnitz

On September 22, 2015, the White House, through the Office of Management and Budget (OMB) and the Council on Environmental Quality (CEQ), issued guidance to the heads of certain federal departments and agencies[1] (the Agencies) establishing metrics for the permitting and environmental review of infrastructure projects in the United States (the Guidance). The Guidance is intended to expand the use and reframe the purpose of the publicly accessible online Federal Infrastructure Permitting Dashboard (the Dashboard). To that end, the Guidance establishes a set of metrics to track permit and review timelines for certain infrastructure projects, and sets a schedule for collecting and posting that data to the Dashboard. It then outlines an approach for capturing and reporting the environmental and community impacts resulting from the federal permitting and review process.

The infrastructure projects covered by the Guidance include those projects in the following sectors: surface transportation (including all highway, rail, and transit projects); airport capital improvement projects; ports and waterways; water resource projects; renewable energy generation; electricity transmission; storm-water infrastructure; broadband internet; and pipelines (except those subject to Federal Energy Regulatory Commission oversight). The Guidance also provides that the Agencies can include other sectors, as appropriate.

By Marc T. Campopiano, Joshua T. Bledsoe, Douglas Porter, Danny Aleshire, Jennifer Roy and Andrew Yancey

The end of the California State Legislature’s regular session for the year culminated in a frenzy of action, with Assembly members scrambling to pass dozens of bills before midnight on September 12, 2015. The California Legislature voted on a package of 12 bills addressing environmental and health concerns, such as off-shore drilling, divestment of investment funding from coal companies, water quality, energy efficiency in disadvantaged communities, and increased public transportation. This post analyzes three of the more significant and controversial bills proposed this year, including last minute changes to each during the final week of the session: SB 350; SB 32; and AB 1288.

SB 350 (De León): The Clean Energy and Pollution Reduction Act of 2015

The most far-reaching climate change goals of the climate bill package were enshrined in SB 350. The proposed bill, authored by Senate President Pro Tempore Kevin de León and Senator Mark Leno, originally called for a 50 percent reduction in petroleum use in cars and trucks, a 50 percent increase in energy efficiency in buildings, and for 50 percent of the state’s utility power to be derived from renewable energy, all by 2030; termed the “50-50-50” formula.

These standards paralleled Governor Jerry Brown’s climate change agenda for the year, which was first announced during his inaugural address in January. Last Wednesday, following a failure to garner the necessary votes amid resistance from moderate Democrats, state legislative leaders amended SB 350 to drop requirements for a 50 percent reduction in petroleum use for cars and trucks. As modified, the bill passed on a 52-27 vote.

By Sara Orr and Jennifer Roy

On September 4, 2015, the US Court of Appeals for the Fifth Circuit issued a ruling in United States v. CITGO that a “taking” subject to prosecution under the Migratory Bird Treaty Act (MBTA) does not include the unintentional take of migratory birds. Reversing a district court decision and joining the position of the Eighth and Ninth Circuits, the appellate court held that the MBTA’s take prohibition is limited to “deliberate acts done directly and intentionally to migratory birds,” effectively exempting take that occurs incidental to otherwise lawful activities. While such incidental take may still be subject to prosecution under other federal laws protecting birds, such as the Bald and Golden Protection Act or the Endangered Species Act, the Fifth Circuit concluded that unintentional acts are not subject to the strict liability penalties of the MBTA. This ruling may provide additional assurances to a wide variety of industries with operations in the Fifth, Eighth and Ninth Circuits that have the potential to impact migratory birds, particularly oil and gas, wind, and solar energy. Given the divide among the courts and the importance of the issue, however, it is possible that the U.S. Supreme Court will take up the issue in the future.

The Migratory Bird Treaty Act

Congress enacted the MBTA in 1918 to implement a treaty between the United States and Great Britain. The general policy of the MBTA is to provide for the “preservation, distribution, introduction, and restoration of game birds and other wild birds.” The MBTA prohibits the take of all listed birds, and the take of any migratory bird’s parts, nest, or eggs without a permit. The regulations define “take” as “to pursue, hunt, shoot, wound, kill, trap, capture, or collect” or to attempt any of these acts.

By Michael J. Gergen, Joshua T. Bledsoe, David E. Pettit and Tara L. Rice

President Obama recently announced that the Department of Energy (DOE) Loan Program Office (LPO) is expanding support for innovative “distributed energy projects” by adding $1 billion in available loan guarantees to support the deployment of these projects through the existing solicitations for Renewable Energy and Efficient Energy Projects and Advanced Fossil Energy Projects.  Eligible projects could include energy storage, smart grid technologies, cogeneration and methane capture for oil and natural gas wells, as well as roof-top solar and energy efficiency technologies that meet certain “innovation” requirements. For example, roof-top solar projects that are combined with storage may be eligible.

The LPO also is targeting distributed energy developers with special supplements to these two pending solicitations that make clear that existing program authority under Title XVII of the Energy Policy Act of 2005 and resources may be used to accelerate the deployment of distributed energy projects. The credit enhancement available through DOE’s LPO traditionally has been used to support utility-scale energy projects. In recognition of the important role of distributed energy in the future of US energy markets, the LPO is making a concerted effort to marshal program resources to support innovation in this growing segment.

By Paul Singarella, Chris Garrett, Andrea Hogan, Daniel Brunton, Garrett Jansma, John Heintz, Danny Aleshire and Lucas Quass

On August 27, 2015, the US District Court for the District of North Dakota issued a preliminary injunction against implementation of the Clean Water Rule (the Final Rule). The Final Rule defines Waters of the United States (WOTUS), a threshold term that determines the Clean Water Act’s (CWA) scope and application. The Final Rule was issued on May 27, 2015, by the US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (Corps), with an effective date of August 28, 2015.

The Final Rule represented the first comprehensive effort since the 1980s to clarify through regulations the definition of WOTUS. In the Final Rule, EPA and the Corps expanded the definition of WOTUS in a manner that appears to assert jurisdiction over not only almost all waters and wetlands across the country, but also dry lands located between water bodies. Given the expansive scope of the Final Rule, it has been the subject of considerable controversy throughout the rulemaking and has been challenged in court by both states and industry.