In Latin America, encouragement of renewable energy use is a growing trend. Several countries have called for public bids for electricity supply generated from renewable sources, including biomass, hydraulic, geothermal, solar, and tidal. Concessions for the construction and operation of renewable energy projects have been granted. So far in 2019, Chile, Colombia, and Ecuador have called for public bids, and Brazil and Argentina will do so in the second half of the year. This GT Mexico City alert provides an overview of the general terms of the agreements, public bidding process, participation requirements, and execution of agreements between private parties.
A recent state appellate court decision sharply limited the bases on which Clean Water Act permittees may challenge permitting requirements imposed to comply with a federal Chesapeake Bay “Total Maximum Daily Load” (“TMDL”), often described as a watershed-wide “pollution diet.” The decision directly impacts municipalities with separate stormwater sewer (“MS4”) permits, as well as certain agricultural and other industrial concerns with stormwater requirements.
The Maryland Court of Appeals opinion affirmed water pollution (“NPDES”) permits issued to authorize discharges from two municipal separate storm sewer systems (“MS4s”) to the Chesapeake Bay watershed. Md. Dep’t of the Envt. v. County Comm’rs of Carroll County, Nos. 5 & 7, Sept. Term 2018 (Md. Aug. 6, 2019). The court held that state permits issued by the Maryland Department of the Environment (MDE) are required to conform to the Chesapeake Bay Total Maximum Daily Load (TMDL) issued by the federal Environmental Protection Agency and the Maryland Watershed Implementation Plan (WIP) promulgated by MDE and approved by EPA. The permittee may not challenge permit conditions necessary to meet the requirements of the TMDL or the WIP through judicial review of the permit, but instead must have already sought review in federal court of the TMDL. Moreover, EPA’s interpretation of the TMDL is entitled to Chevron deference.
The dispute addressed here provided occasion for Maryland’s highest court to opine (for 99 pages) about the Clean Water Act permitting scheme and “cooperative federalism” generally. Therefore, one can expect this opinion to provide guidance across a wide range of permitting issues. The specific issues, however, arose from the regulation of stormwater discharges.
When the Clean Water Act requires control of stormwater discharges, the discharger typically must implement control practices and technologies. NPDES permits for MS4s in particular do not rely primarily on numerical effluent limitations. They would be impractical for stormwater. In general, MS4s must control pollutants in stormwater “to the maximum extent practicable.” 33 U.S.C. § 1342(p)(3)(B)(iii) (the “MEP” standard). That control, however, may not suffice – and EPA and the Chesapeake Bay states have concluded will not suffice – to achieve water quality standards in the Bay. Accordingly, the permits here required Carroll and Frederick Counties to “restore” 20% of the impervious surfaces in each county not already “restored” under prior permits calling for control to the MEP standard. Impervious surface is “restored” if it is made pervious or otherwise managed to reduce rapid runoff without infiltration.
Frederick County had submitted a report showing that restoration of that proportion of the impervious surface in the county was not practicable. The court held that MDE had properly imposed the condition nevertheless because it was in the nature of a water-quality-based effluent limitation imposed over and above the technology-based MEP standard.
The counties also complained that MDE had improperly imposed the restoration obligation on 20% of all the impervious surface in each county, not just the impervious surface that drained to the MS4. Again, the requirement was necessary in order to meet the TMDL and therefore upheld.
The court considered certain further objections to the permits. Of interest, it held that MDE did not have to allow pollutant trading in these permits because Maryland has not adopted comprehensive pollutant trading regulations.
Looking beyond Maryland, one may wish to note that on August 27, Pennsylvania issued its Phase 3 Watershed Implementation Plan for the Chesapeake Bay TMDL.
The legalization of industrial hemp production in the 2018 Farm Bill is a likely boon for farmers grappling with the changing agricultural landscape. Given the strong economic forecasts for hemp production, pesticide registrants are intensifying their interest in gaining approvals for use of their products on hemp. Hemp farmers are also pressing for expanded crop protection tools needed to help them grow the valuable crop.
On Aug. 23, 2019, the EPA announced the receipt of 10 pesticide applications to expand their use to hemp: four from Agro Logistic Systems, Inc., two from Marrone Bio Innovations, and four from Hawthorne Hydroponics LLC, all located in California. The applications ask EPA to add hemp as a new pesticide application site to the labeling of currently-registered pesticide products.
Currently, there are only six federally-registered pesticide products that list hemp as a pesticide application site on the label. However, these products do not contain food tolerances for residue levels because they were registered before the legalization of hemp in the 2018 Farm Bill. The EPA previously established food tolerance exemptions for all 10 pesticides in the Aug. 23, 2019, announcement. This exemption means the EPA determined, after review of the science, that the residues in the listed pesticides are safe under any reasonably foreseeable circumstances when used as directed.
An exemption from food tolerance requirements is critical for any company seeking to incorporate hemp or hemp-derivatives, like cannabidiol (CBD), into food or medicines. CBD has been in the news frequently due to its alleged pain-relieving and other therapeutic properties. Absent a food tolerance or an exemption from food tolerance requirements, companies cannot legally incorporate pesticide-treated agricultural products into foods or medicines. The EPA’s decision regarding these 10 pesticide applications will have a profound effect on any business seeking to incorporate hemp products into its production line – food or otherwise, along with hemp farmers and pesticide manufacturers.
The deadline for submission of comments is Monday, Sept. 23, 2019. They may be submitted electronically via the Federal eRulemaking Portal, using the docket ID EPA-HQ-OPP-2019-0369-0001, or via mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.
With the recent passage of New York’s Climate Leadership and Community Protection Act, which calls for a carbon free electricity market by 2040, New York became the sixth state to pass legislation calling for a carbon free electricity market. Just one year earlier, California passed similar legislation, SB100, adopting a state policy to achieve a zero-carbon electricity market by 2045. These goals will have to be pursued notwithstanding the fact demand for electricity is projected to increase as other sectors pursue beneficial electrification to comply with ambitious emission reduction goals they face. Whether these goals can be achieved, and at what cost, will depend on technology advancements and how these laws are interpreted and implemented by regulators.
Click here to read the full article by Thomas R. Brill and Steven C. Russo, “An uncertain path to a cleaner future: Zero carbon electricity legislation in New York and California,” published by Utility Dive on Aug. 23.
New York City recently enacted the most ambitious large-scale greenhouse gas emissions reduction plan in the country, requiring a 40 percent drop in GHG emissions by 2030 and an 80 percent drop by 2050. The package of bills, entitled the Climate Mobilization Act (or CMA), includes an overhaul of building emissions requirements affecting around 50,000 existing commercial and residential buildings called Local Law 97 (or LL97). The new law targets the disproportionately high share of GHG emissions – around 70 percent – originating from buildings in the city. LL97 should encourage building owners to assess current energy usage in anticipation of enforcement, and prospective buyers of buildings covered by this new law should make sure they include as part of any diligence an audit of a building’s energy performance and future mitigations required under the new law.
LL97 regulates GHG emissions (not limited to carbon dioxide) from “covered buildings,” generally defined as buildings over 25,000 gross square feet. Covered buildings must meet and report GHG benchmarks based on Building Code occupancy groups set in five-year increments. Buildings with one or more rent-controlled or rent-stabilized units, low income housing, and real property owned by religious corporations that would otherwise be covered buildings are subject to alternate, prescriptive requirements. LL97 also creates more stringent emissions reductions for “city government operations” (defined as “operations, facilities, and other assets that are owned or leased by the city for which the city pays all or part of the annual energy bills”) – 40 percent by 2025 and 50 percent by 2030.
The enforcement period for LL97 is set to begin in 2024. Limits from 2024 to 2029 will require approximately 20 percent of existing covered buildings to reduce emissions, whereas the limits from 2030 to 2034 will require approximately 75 percent of existing covered buildings to reduce emissions. Requirements from 2035 through 2050 will be determined by the Department of Buildings in keeping with the stated goal of 80 percent citywide reduction of GHG emissions by 2050. The key point is that substantial costs related to emissions reductions are going to be required in a relatively short window.
To monitor compliance and effectuate further rulemaking, LL97 creates the Office of Building Energy and Emissions Performance (the Office) to be run out of the Department of Buildings. Covered buildings must file a report with the Office annually beginning May 1, 2025. The Office will issue penalties to covered buildings that exceed emissions limits in any year of “an amount equal to the difference between the building emissions limit for such year and the reported building emissions for such year, multiplied by $268.”
LL97 provides several alternative methods for meeting GHG reduction requirements. Owners of covered buildings may purchase renewable energy credits representing energy deliverable to the city, and generated in the same year as the purchase of the credit, to offset excessive GHG emissions in any one year. Additionally, a deduction of up to 10 percent of a covered building’s yearly emissions limit is authorized through the purchase of a carbon offset. The new law also authorizes a study of the effectiveness of a carbon trading program in the city, for which an initial report is due Jan. 1, 2021.
Though only the biggest GHG emitters will be required to reduce emissions by the first enforcement period in 2024, all covered building owners are advised to begin exploring methods by which they can (i) begin regularly reporting emissions to the Office by May 1, 2025, (ii) make operational changes to building functions in furtherance of more energy efficient practices, and (iii) engage energy consultants and retrofitting experts to determine the most effective approach to adopting greener energy solutions (including alternative compliance pathways) by 2030, when a majority of covered buildings will be affected by LL97. Should major capital improvements be required, the CMA authorizes Property Assessed Clean Energy (PACE) funding that will offer low upfront costs, low interest rates, long terms, and payments tied to a covered building’s property tax bill, not to any single owner.
LL97 is a sea change with regard to building energy use and emissions in New York City that will invariably impact property acquisitions. Prospective buyers must familiarize themselves with these requirements and should incorporate a thorough review of a covered building’s anticipated compliance strategy with LL97 as part of the diligence process, ideally engaging a consultant for an energy audit. Buyers should determine the estimated cost to comply with LL97, as well as identify potential alternative compliance where such alternatives promise a more reasonable cost.
For more on laws and regulations related to greenhouse gas emissions, click here.
Each year, businesses in every sector are impacted by a variety of extreme weather events including hurricanes, forest fires, blizzards, and heatwaves. Earlier this year, Jillian Kirn was interviewed by the Urban Land Institute for their publication, Scorched: Extreme Heat and Real Estate. The report examines ways in which land use, real estate, and design sectors can mitigate the impacts of urban heat islands. You can read her input on regulatory trends, as well as insights from more than fifty developers, designers, land use policymakers, and climate scientists, by clicking here.
On July 29, the Pennsylvania Commonwealth Court returned to Pennsylvania Environmental Defense Foundation v. Commonwealth, a leading case on the Environmental Rights Amendment to the Pennsylvania Constitution. The court appears to have decided that the commonwealth is free to allow use of Pennsylvania’s pubic natural resources and to apply the income however it chooses. Only proceeds from the sale of public natural resources must be returned to the public trust corpus.
The commonwealth had received bonus payments upon entry into the primary term of leases, rents, fees and royalties. Of those, the Commonwealth Court had to determine which were payments for the sale of a trust asset, and which were not. The July 29 decision from the Commonwealth Court addresses that question.
Read more from my article in this week’s edition of Pa. Law Weekly in The Legal Intelligencer, 42 Pa. L. Weekly 33 (August 13, 2019), by clicking here.
We Didn’t Start the Fire . . . . But Your Employees Might Breathe the Smoke
Last year was the most destructive fire season in California’s history. Over 7,600 wildfires burned nearly two million acres. As a result, on July 18, the California Department of Industrial Relations (DIR) Occupational Safety Health Standards Board adopted an emergency regulation to protect workers from hazards associated with wildfire smoke. The regulation is now in effect, following its approval on July 29, 2019, by the Office of Administrative Law.
The emergency regulation will be effective for one year, and applies where the current Air Quality Index (AQI) for airborne particulate matter (PM) 2.5 is 151 or greater (the AQI scale is from 0 to 500, and a 151 AQI is considered “unhealthy”), or where employers should reasonably anticipate that employees could be exposed to wildfire smoke.
To read the full GT Alert, click here.
For more on OSHA, click here.
On July 12, 2019, the 2019-2024 National Development Plan (Plan Nacional de Desarrollo, “PND”) was published in the Federal Official Gazette (Diario Oficial de la Federación, “DOF”). The PND’s purpose is to specify the national objectives, strategy, and priorities for Mexico’s comprehensive, equitable, inclusive, and sustainable development.
The principal regional projects that will be implemented during this six-year period are described below:
|•||The Mayan Train. This infrastructure project will have a route spanning 1,525 km and will be built through the states of Chiapas, Tabasco, Campeche, Yucatan and Quintana Roo. It will connect the main cities and tourism sites of the Yucatan Peninsula, have 15 stations, and require an investment MX$120-150 billion from public, private, and social sources.|
|•||Felipe Angeles Airport in Santa Lucia. This project will add to the airport infrastructure of the country’s central region, and a third terminal to Mexico City’s Benito Juárez International Airport will be built. The environmental impact authorization procedure of the project was favorably resolved by the Ministry of the Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales) on July 17, 2019. However, it is important to mention that several Amparos have been filed, for which (in some cases) federal judges have ordered the definitive suspension of the works, since the project still does not have all of the environmental authorizations required in addition to the environmental impact authorization.|
|•||Program for the Development of the Tehuantepec Isthmus. This project aims to modernize the Tehuantepec Isthmus railway, and the ports of Coatzacoalcos in Veracruz, and Salina Cruz in Oaxaca; and to offer cargo, transport, storage, and packaging services, promoting the growth of the regional economy while respecting the history, culture, and traditions of the Isthmus of Oaxaca and Veracruz.|
|•||Several programs focused on achieving food self-sufficiency and rescuing Mexico’s agricultural activity, i.e., farming.|
To read to full GT Alert on Mexico’s 2019-2024 National Development Plan, click here.
If you are currently disposing of pharmaceuticals, including dietary supplements, into the dumpster or down the drain, you may want to reconsider that practice. New regulations promulgated by the Environmental Protection Agency (EPA) under the Resource Conservation and Recovery Act (RCRA) impact how health care facilities must dispose of unused pharmaceuticals. The new regulations treat some dietary supplements as pharmaceuticals and therefore regulate them as hazardous waste. Additionally, as of Aug. 21, 2019, health care facilities may be prohibited from disposing of pharmaceuticals and dietary supplements into the sewer, etc. This is in addition to RCRA already prohibiting disposal into the garbage or in some instances by recycling. Noncompliance comes with hefty fines.
- Does your company qualify as a health care facility?
- Do your products qualify as pharmaceuticals?
- Is your product a hazardous waste pharmaceutical?
- Penalties and implementation
Click here for the full GT Alert.