Environmental Regulation

The outcome of the review may signal what climate-related laws and policies to expect in the UK in the coming years.

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

On 8 September 2022, newly appointed UK Prime Minister Liz Truss announced that Chris Skidmore MP, a Member of Parliament and former minister of energy and clean growth, would lead a review into the UK’s net zero commitment.

The previous administration established a UK target in 2019 to bring all greenhouse gas (GHG) emissions to a net zero level by 2050, in response to a recommendation from the Committee on Climate Change (the UK’s independent climate advisory body). The new Prime Minister, who during her leadership campaign had stated that she will “double down” on the UK’s attempts to meet its 2050 target, appointed Skidmore with the mandate to find the “fastest and most efficient way” to reach the target.

Skidmore, who as energy and clean growth minister signed the UK’s net zero target into law in 2019, has been given until the end of 2022 to report back with his findings.

Mobile device manufacturers may be subject to regulations that aim to mitigate the environmental impact of such devices.

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

On 31 August 2022, the European Commission published draft “ecodesign” regulations covering various components of smartphones and tablets, seeking to improve the environmental performance of these products.

Proposed Ecodesign Requirements

Under the Ecodesign Directive, a framework established in 2009 by the EU for the purposes of setting eco-design requirements for energy-related products, the Commission is empowered to develop regulations that lay down requirements as to the design of certain products that have significant environmental impact. These ecodesign requirements aim to harmonise resource efficiency requirements for impactful products throughout the EU to improve their environmental performance.

The Commission indicated that it chose to introduce regulation on smartphones and tablets (similar regulations have previously been introduced for products including dishwashers, domestic ovens and vacuum cleaners) due to the steep increase in demand for the products in the EU over the past decade resulting in an increase in demand for energy and materials to manufacture the devices. The Commission also noted that smartphones and tablets are often replaced prematurely by users and are, at the end of their useful life, not sufficiently reused or recycled, leading to a waste of resources.

Under the draft regulations, 15 components of smartphones and tablets, including batteries and charging ports, would be made available for at least five years from the date the device is placed on the European market. Additional requirements would also be imposed in relation to the capacity of batteries, and for smartphones and tablets to be tested for resistance to being scratched, exposed to water, and dropped (with the requirement that phones can be dropped 100 times without losing functionality).

The guidance sends a signal that carbon capture and sequestration remains a focus of the current administration’s decarbonization efforts.

By Janice Schneider, Nikki Buffa, Josh Bledsoe, Nathaniel Glynn, and Kevin Homrighausen

On June 8, 2022, the US Department of the Interior’s (Interior) Bureau of Land Management (BLM) issued new guidance[1] that outlines the use of federal public lands for geologic sequestration of carbon dioxide (CO2). This widely anticipated guidance updates previous interim guidance on exploration and site characterization for CO2 sequestration that BLM issued in 2012.

Public agencies prevailed in 71% of CEQA cases analyzed.

By James L. Arnone, Daniel P. Brunton, Nikki Buffa, Marc T. Campopiano, Peter J. Gutierrez, John C. Heintz, Lauren E. Paull, Aron Potash, Lucas I. Quass, Natalie C. Rogers, Jennifer K. Roy, and Winston P. Stromberg

Latham & Watkins is pleased to present its fifth annual CEQA Case Report. Throughout 2021 Latham lawyers reviewed each of the 51 California Environmental Quality Act (CEQA) appellate cases, whether published or unpublished. Below is a compilation of the information distilled from that annual review and a discussion of the patterns that emerged.

In 2021, the California Courts of Appeal issued 51 opinions that substantially considered CEQA while the US District Court for the Northern District of California issued one opinion. Notably, 2021 saw an increased focus on CEQA wildfire analysis. In cases like Sierra Watch v. County of Placer, the Court of Appeal ruled that the County of Placer failed to adequately analyze wildfire risks by wrongly assuming first responders would provide traffic control in the event of an emergency. And in Newtown Preservation Society v. County of El Dorado, the Court upheld a mitigated negative declaration in the face of public concerns that a bridge reconstruction project would result in significant impacts on resident safety and emergency evacuation in case of a wildfire.

Also notable in 2021 was the rare occurrence of a Court of Appeal partially affirming the denial of an anti-SLAPP motion following a CEQA lawsuit. In Dunning v. Johnson, the Court found that a project developer had established a probability of demonstrating lack of probable cause for the underlying CEQA petition, as well as a probability of demonstrating that the petitioners pursued the CEQA litigation with malice.

The agency will use the information to take further steps to address climate risks in the commodity derivatives markets.

By Jean-Philippe Brisson, Yvette Valdez, Douglas Yatter, Joshua Bledsoe, Michael Dreibelbis, Qingyi Pan, and Deric Behar

On June 2, 2022, the Commodity Futures Trading Commission (CFTC) issued a Request for Information (RFI) to inform its understanding and oversight of climate-related financial risk relevant to the derivatives markets and underlying commodities market. The CFTC is seeking public feedback on all aspects of climate-related financial risk that “may pertain to the derivatives markets, underlying commodities markets, registered entities, registrants, and other related market participants.”

According to the RFI, public response may be used to inform new or amended guidance, interpretations, policy statements, regulations, or other potential CFTC action. The information will also inform CFTC’s response to the recommendations of the Financial Stability Oversight Council 2021 Report on Climate Related Financial Risk (see Latham’s blog post on the FSOC Report) and inform the work of the CFTC’s Climate Risk Unit (CRU) (see Latham’s blog post on the CRU). Comments on the RFI were originally due by August 8, 2022. On July 18, 2022, the CFTC extended the deadline by an additional 60 days; comments are therefore due by October 7, 2022. 

CCUS and clean hydrogen will play a significant role in the Administration’s efforts to address hard-to-decarbonize industries to promote clean US manufacturing.

By Janice Schneider, Nikki Buffa, and Kevin Homrighausen

On February 15, 2022, the White House announced important actions in furtherance of the Biden Administration’s broader decarbonization goals — this time with an eye toward clean domestic manufacturing. Framing the rollout, the White House released a fact sheet highlighting the Administration’s efforts for a “Cleaner Industrial Sector to Reduce Emissions and Reinvigorate American Manufacturing,” including “Buy Clean,” hydrogen, and carbon capture, utilization, and storage (CCUS) announcements.

These efforts include kicking off multibillion-dollar hydrogen funding opportunities provided by the Infrastructure Investment and Jobs Act (IIJA, also known as the Bipartisan Infrastructure Law) and new draft guidance from the White House Council on Environmental Quality (CEQ) titled Carbon Capture, Utilization, and Sequestration Guidance to assist federal agencies with the regulation and permitting of CCUS projects.

As more companies jockey for position and federal funding on both clean hydrogen and CCUS, the announcements are timed to provide critical guidance on these emerging areas of opportunity.

A revised standard highlights the need for parties to consider non-scope considerations when conducting environmental assessments for transactions.

By Kegan A. Brown, David S. Langer, Thomas C. Pearce, and G. Jack Mathews

The American Society for Testing and Materials (ASTM) Committee on Environmental Assessment, Risk Management and Corrective Action recently released an updated standard for conducting Phase I Environmental Site Assessments (ESAs). The newly revised standard, known as the ASTM E1527-21 standard, includes specific directions for how emerging contaminants, including per- and polyfluoroalkyl substances (PFAS), may be addressed in ESAs. Parties conducting due diligence or involved in transactions for which an ESA will likely be used to assess more than just the “all appropriate inquiry” component of a CERCLA defense should be aware of what the new standard requires for PFAS, especially as regulatory standards evolve or are adopted on a state and federal level. Parties should be aware that the new standard does not create any requirements that Phase I ESAs address any PFAS until EPA acts to list the specific PFAS at issue as a CERCLA hazardous substance, so there is a risk that a Phase I ESA will not cover a significant potential area of environmental concern.

The proposal, which aims to clarify when short-form warnings should be used, would also create new requirements for information about harmful chemicals.

By Michael G. Romey, Lucas I. Quass, and Kevin Homrighausen

This article has been updated to reflect OEHHA’s decision to extend the public comment period on the Proposed Amendments from January 14, 2022 to January 21, 2022.

On December 13, 2021, the California Office of Environmental Health Hazard Assessment (OEHHA) published a notice of modified text to its proposed short-form warning regulations of California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65 or Prop 65). As Latham previously reported, OEHHA had initially proposed amendments to its short-form warning regulations on January 8, 2021, which initiated a public comment period that ran through March 29, 2021. The December 13, 2021 proposed regulatory text (Proposed Amendments) respond to public comments received during the public comment period. A new public comment period for the Proposed Amendments will run from December 17, 2021 to January 21, 2022.