Winston’s Environmental Law Update

On October 7, 2023, California Governor Gavin Newsom signed SB 261, the Climate-Related Financial Risk Act, and SB 253, the Climate Corporate Data Accountability Act, into law. These first-in-the-nation greenhouse gas (GHG) emissions disclosure and climate-related financial risk reporting laws apply to large companies “doing business” in California.

The Environmental Protection Agency (EPA) announced that climate change and PFAS will be a focus of investigation and enforcement in coming years. The oil and gas, chemical, and waste-related industries should take note. EPA’s national enforcement and compliance initiatives (NECIs) for fiscal years 2024-2027,^[1]announced on August 17, 2023, include climate change, PFAS, and coal ash contamination among six priority areas for enforcement. EPA will also continue to prioritize reducing air toxics in overburdened communities, increasing compliance with drinking water standards, and chemical accident risk reduction.

The Environmental Protection Agency (EPA) has announced its proposed National Enforcement and Compliance Initiatives (NECIs) for fiscal years 2024–2027. EPA is proposing to add two new areas of enforcement focus: mitigating climate change and addressing per- and polyfluoroalkyl substances (PFAS) contamination. Those operating in the oil and gas industry, and those involved with refrigerants, should take note. Interested parties have until March 13, 2023 to submit comments to EPA on the proposed changes.

The Federal Energy Regulatory Commission (FERC) has changed the standards it applies when approving a natural gas project. Going forward, FERC’s approval framework will consider downstream environmental effects from the use of transported natural gas—including putative impacts on climate change and environmental justice communities. There are, however, legal questions regarding FERC’s expanded view of its authority.

The global shipping industry produces 3% of global annual carbon emissions and is now beginning to feel the heat as pressure mounts for it to reduce greenhouse gas emissions to a net-zero goal by 2050.

Government regulators around the world are increasing scrutiny of climate-related and other environmental, social, and governance (ESG) claims. Many companies are issuing “sustainability” reports, and voluntarily making ESG claims about social issues such as environmental justice in response to investor demands. But regulators are raising questions about their accuracy and support. We look at recent actions by United States and international regulators.  

President Biden’s Executive Order on Tackling the Climate Crisis at Home and Abroad commits executive agencies to incorporating environmental justice concerns into their actions and directs agencies to take concrete actions to improve conditions in afflicted communities.

On January 27, 2021, President Biden issued two Executive Orders and a Presidential Memorandum on climate change. 

On October 1, 2020, the fourth version of the Equator Principles (EP4) came into effect. The Equator Principles are global, cross-industry risk management guidelines applicable to project finance advisory services, project-related corporate loans, and bridge loans. 

On September 23, 2020, California Governor Gavin Newsom issued Executive Order N-19-19, outlining a number of actions the state will take to combat climate change.

On July 8, 2019, the U.S. Environmental Protection Agency (EPA) published a notice in the Federal Register finalizing three discrete rulemaking actions. First, EPA repealed the Clean Power Plan (CPP) promulgated by the Obama Administration on the grounds that the CPP exceeded EPA’s rulemaking authority.

On August 13, 2018, President Trump signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (P.L. 115-232). The $716 billion spending bill funds the military’s operations and includes provisions to assist the military in preparing for climate change.

On February 20, 2018, 236 mayors from 48 states and territories issued a letter to U.S. EPA Administrator Scott Pruitt opposing EPA’s proposed repeal of the Clean Power Plan.

On December 11, 2017, Exxon Mobil (Exxon) announced it would disclose more information regarding the potential impact of climate change on its business.

On June 1, 2017, President Trump announced his decision to withdraw the United States from the Paris climate accord, formally known as the “Paris Agreement.”

On November 4, 2016, the Paris Agreement entered into force with 97 countries ratifying it and agreeing to be bound by its terms.  

On July 12, 2016, the California Air Resources Board (ARB) released much-anticipated draft amendments to its Cap and Trade Regulation. ARB’s amendment package is ambitious: the 2,000-plus page Initial Statement of Reasons and draft amendments aim to address many controversial issues surrounding ARB’s Cap and Trade Program (Program), including extension of the Program beyond 2020, adaptation of the Program for compliance with the federal Clean Power Plan, linkage with the similar cap and trade regime administered by Ontario, Canada, re-writing the calculations that determine the number of free allowances allocated to certain industrial sectors, and modifying the standard for the invalidation of greenhouse gas (GHG) offsets.

On January 19, 2016, the Supreme Court of the United States rejected without comment a manufacturers group’s petition for review of the D.C. Circuit’s partial vacatur and remand of the Greenhouse Gas Tailoring Rule to EPA following the Supreme Court’s 2014 decision in Utility Air Regulatory Group v. EPA (UARG).