Environmental Regulation

Following the publication of the ISSB Standards, the IFRS Foundation will take over monitoring of companies’ climate progress from 2024.

By Paul A. Davies, Michael D. Green, and James Bee

On 10 July 2023, the International Sustainability Standards Board (ISSB) and Financial Stability Board (FSB) announced that the IFRS Foundation (the organisation that founded the ISSB) would take over the monitoring of the progress on companies’ climate-related disclosures relating to the Task Force on Climate-related Financial Disclosures (TCFD). This announcement follows the ISSB’s publication of its inaugural sustainability standards IFRS S1 and IFRS S2.

The transfer in monitoring activities marks the latest development in the ISSB’s ambition to consolidate the sustainability reporting landscape internationally, with the TCFD joining other standards (such as the SASB Standards) in the list of frameworks that were previously independently managed but are now under the consolidated auspices of the ISSB.

The regulation aims to minimise the EU’s contribution to deforestation and forest degradation.

By Paul A. Davies, Michael D. Green, and James Bee

The European Deforestation Regulation (EUDR) entered into force on 29 June 2023, following publication in the Official Journal of the European Union. However, the main requirements and prohibitions of the EUDR will apply from 30 December 2024, 18 months after the entry into force.

The regulation forms part of the European Green Deal (for more information on the Green Deal, refer to Latham’s blog post here), which includes a proposal to ensure EU consumption does not contribute to deforestation and forest degradation. The EUDR will repeal and broaden the scope of the existing EU Timber Regulation.[i]

The reform mainly focuses on streamlining and narrowing the scope of environmental review at the federal level.

By Janice Schneider, Nikki Buffa, Devin O’Connor, and Kevin Homrighausen

On June 3, 2023, President Biden signed legislation implementing the bipartisan debt ceiling and budget agreement as the “Fiscal Responsibility Act of 2023.” As part of this legislation, Congress agreed to several federal permitting reform measures, focused largely on amendments to the National Environmental Policy Act (NEPA).

NEPA requires federal agencies to consider the potential environmental impacts of discretionary major federal actions (e.g., including issuing permits and granting federal funding) before they are taken. As part of this analysis, agencies must evaluate alternatives to the proposed action and consider mitigation measures, and must provide an opportunity for public input. The scope and detail of NEPA review can affect the contours, timing, and ultimate outcome of federal decision-making and is frequently litigated by project opponents. The new amendments to NEPA in the Fiscal Responsibility Act draw substantially from other proposed legislation and regulatory amendments in recent years. These new provisions are designed to narrow the scope of federal actions that are subject to NEPA, consolidate NEPA review under a single “lead” agency, and impose time and page limits for environmental documents under NEPA, among other changes described below.

EPA’s long-awaited proposal would set aggressive emission reduction targets with many different approaches and timelines to achieve them.

By Stacey L. VanBelleghem and Jennifer Garlock

On May 11, 2023, the US Environmental Protection Agency (EPA) released its proposed rule[1] to regulate carbon dioxide (CO2) emissions from electric generating units (EGUs) at power plants under Section 111 of the Clean Air Act (CAA) (the Power Plant GHG Rule or the Proposed Rule).

The Power Plant GHG Rule consists of five proposed actions:

  1. determinations and updates to current CO2 standards of performance (promulgated in 2015) for new and reconstructed stationary combustion turbines (generally natural gas-fired) pursuant to Section 111(b) of the CAA;
  2. determinations and updates to current CO2 standards of performance (promulgated in 2015) for modified fossil fuel-fired steam-generating EGUs (generally coal-fired) pursuant to Section 111(b) of the CAA;
  3. determinations and CO2 emission guidelines for existing fossil fuel-fired steam-generating EGUs (generally coal-fired) pursuant to Section 111(d) of the CAA;
  4. determinations and CO2 emission guidelines for large, frequently used existing fossil fuel-fired stationary combustion turbines (generally natural gas-fired) pursuant to Section 111(d) of the CAA; and
  5. a repeal of the Trump-era Affordable Clean Energy (ACE) Rule.

EPA is also soliciting comment on a number of topics, including potential options and emission guidelines for existing fossil fuel-fired stationary combustion turbines not otherwise covered by the Proposed Rule (generally natural gas-fired units that are either smaller or less frequently used).

As part of the European Green Deal ambitions, the proposal encourages sustainable consumption through additional incentives to repair products to reduce waste and emissions.

By Paul A. Davies, Michael D. Green, and James Bee

On 22 March 2023, the European Commission (Commission) adopted a new proposal on common rules promoting the repair of goods (the Proposal). The Proposal seeks to deliver on the environmental targets outlined in the European Green Deal, specifically regarding sustainable consumption, by increasing consumer incentives to repair products rather than replace them, especially after a product’s legal guarantee under the EU’s Sale of Goods Directive has expired. The Proposal will therefore aim to create growth in the market for refurbished products, furthering the Green Deal ambition of promoting a circular economy.

A new proposal aims to streamline the process for permitting and developing offshore renewable energy projects and reduce costs to developers.

By Janice Schneider, Nikki Buffa, Nathaniel Glynn, and Brian McCall

On January 30, 2023, the Bureau of Ocean Energy Management (BOEM) published a new proposed rule to update the agency’s regulations governing renewable energy development on the Outer Continental Shelf (OCS).[1] The proposed rule is the first major overhaul of BOEM’s offshore renewable energy regulations since they were promulgated, and seeks to benefit from the agency’s and industry’s experience since 2009. Since then, BOEM has conducted 11 offshore wind energy lease sales and currently is managing 27 active commercial leases.

The proposed regulations would “modernize regulations, streamline overly complex and burdensome processes, clarify ambiguous provisions and enhance compliance provisions in order to decrease costs and uncertainty associated with the deployment of offshore wind facilities,” and would save developers an estimated $1 billion over a 20-year period.[2] Regulatory changes to decrease costs and increase certainty for developers are particularly critical when offshore wind energy developers are facing ever-increasing installation and materials costs. Some developers are even seeking to renegotiate power purchase agreements for their contracts that account for increased development costs. Comments on the proposed rule are due by March 31, 2023.

The Plan aims to “simplify, accelerate and align incentives to preserve the competitiveness and attractiveness of the EU as an investment location for the net-zero industry”[1].

By Paul A. DaviesMichael D. Green, and James Bee

On 1 February 2023, the European Commission (Commission) presented a proposal for a Green Deal Industrial Plan for the Net-Zero Age (the Plan). The Plan forms part of the European Green Deal adopted in 2019, which sets out the EU’s green transition ambitions and climate targets towards reaching net zero by 2050. The Plan sits alongside other Green Deal initiatives, including the “Fit for 55” package of policies (which seek to reduce greenhouse gas emissions by 55% from 1990 levels by 2030), as well as REPowerEU (introduced to reduce reliance on imported fossil fuels and provide clean and affordable energy).

The Plan is designed to support the scaling up of the EU’s net zero manufacturing capacities and installation of sustainable products and energy supplies, whilst also enhancing the competitiveness of Europe’s net zero industry. This Plan is particularly relevant in light of the US Inflation Reduction Act in the US, which aims to mobilise over $360 billion by 2032[2], and recent concerns in relation to energy security and energy prices in the EU.

The advanced notice of proposed rulemaking signals DOI’s interest in developing faster and more cost-effective methods to quantify natural resource damage claims.

By Kegan A. Brown, Gary P. Gengel, G. Jack Mathews, and Thomas C. Pearce

On January 18, 2023, the US Department of the Interior (DOI) Office of Restoration and Damage Assessment issued an Advance Notice of Proposed Rulemaking (the Notice) requesting feedback on possible amendments to the “simplified” natural resource damage assessment (NRDA) regulations for discharges of oil or hazardous substances (known as “Type A” NRDA regulations). DOI proposes to “modernize the Type A process and develop a more flexible and enduring rule” by, among other things, broadening the universe of natural resource damage (NRD) claims that may be subject to Type A procedures.[1] DOI has requested public comments on possible revisions to the Type A NRDA regulations by March 20, 2023.

The notice is another step in EPA’s PFAS Strategic Roadmap and emphasizes potential CERCLA enforcement.

By Kegan A. Brown, Gary P. Gengel, Thomas C. Pearce, and Taylor R. West

On January 12, 2023, the US Environmental Protection Agency (EPA) issued a notice to solicit public comments on its National Enforcement and Compliance Initiatives (NECI) for Fiscal Years 2024-2027. The notice proposes a new NECI to address per- and polyfluoroalkyl substances (PFAS) contamination, with a “focus on implementing the commitments to action made in EPA’s 2021-2024 [PFAS] Strategic Roadmap.”[1]

The proposed PFAS NECI emphasizes EPA’s intention to identify and pursue potentially responsible parties for PFAS contamination, including under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

EPA adopts final rule, effective February 13, 2023, establishing ASTM E1527-21 as the standard for satisfying AAI requirements and phasing out ASTM E1527-13.

By Aron Potash, Josh Marnitz, Phil Sandick, and Bruce Johnson

On December 15, 2022, the US Environmental Protection Agency (EPA) amended its rule for conducting “All Appropriate Inquiries” (AAI) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) to incorporate a new standard for conducting Phase I Environmental Site Assessments (Phase I). Satisfying AAI is a critical step when acquiring or leasing real property. AAI is a prerequisite to certain safe harbors under CERCLA (and state analogues), which otherwise subjects property owners and operators to liability for investigating and remediating contamination regardless of fault.

When EPA’s final rule for conducting AAI (AAI rule) takes effect on February 13, 2023, it will allow for the use of the updated standard for conducting Phase Is recently published by ASTM International (ASTM) (i.e., ASTM E1527-21) when conducting AAI. One year after the final rule goes into effect, the previous Phase I standard, ASTM E1527-13, will no longer be sufficient to satisfy AAI. ASTM E1527-21 incorporates several changes that distinguish it from E1527-13, including expanding requirements for using historical sources, updating guidance on emerging contaminants, and expanding reporting requirements.