Audit, Compliance and Risk Blog

SEC adopts climate-related disclosure requirements for public companies

Posted by Jon Elliott on Tue, Mar 26, 2024

On March 6, 2024 the US Securities and Exchange Commission (SEC) announced new requirements that selected “public companies” (i.e, listed on national securities exchanges) provide “climate-related disclosures for investors” in their registration statements and annual reports. SEC is incorporating them into existing requirements to disclose “material information,” under the Securities Act of 1933 and the Securities Exchange Act of 1934. These new requirements are more limited than those proposed by SEC in March 2022 (which I wrote about HERE). The remainder of this note summarizes SEC’s new requirements.

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Tags: SEC, Environmental risks, Environmental, climate change, Environment, Climate

New Jersey will require electric vehicle battery recycling

Posted by Jon Elliott on Thu, Mar 21, 2024

On January 8, 2024, New Jersey Governor Phil Murphy signed the Electric and Hybrid Vehicle Battery Management Act (Senate Bill (SB) 3723, Smith et al.; referred to as “the Act” below)), to create a statewide system to ensure recycling of “propulsion batteries” used for electric vehicles (EVs). This is the first such program in the United States (the European Union includes EV batteries within broader battery management and recycling regulations adopted in June 2023). The Act applies the “producer responsibility” model increasingly used in state laws to require recycling of commercial products and materials (I’ve written about such programs several times, including a general discussion HERE, and discussion of Maine’s program for packaging HERE).

The Act takes effect on January 8, 2025, after which a series of planning, implementation, and compliance deadlines will apply. The remainder of this note discusses this new legislation, which is to be administered by the state Department of Environmental Protection (DEP).

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Tags: Environmental, Environment, Electric Vehicles, EV, DEP

EPA tightens national air standard for fine particulates

Posted by Jon Elliott on Fri, Mar 01, 2024

The Environmental Protection Agency (EPA) announced on February 7. 2024 its decision to tighten one the National Ambient Air Quality Standard (NAAQS) for particulate matter less than or equal to 2.5 microns; (PM-2.5; also call “fines” in contrast to larger particulates). This decision completes EPA’s reconsideration of a decision in 2020 not to adjust the PM-2.5 requirements (I wrote about that decision HERE); the change reflects in part the changed priorities between the Trump and Biden administrations. The rest of this note summarizes NAAQS issues as they apply to PM-2.5.

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Tags: Environmental risks, Environmental, EPA, clean air, Air Toxics, Environment, Clean Air Act, Environmental Policy

Canada: Federal Court rejects listing of Plastic Manufactured Items as “Toxic Substances” under Canadian Environmental Protection Act

Posted by Jon Elliott on Mon, Feb 19, 2024

Among its many provisions, the Canadian Environmental Protection Act (CEPA) creates several lists of “toxic substances,” and empowers Environment and Climate Change Canada (ECCC) to revise the list. In 2021, ECCC add “plastic manufactured items (PMI)” to one of these lists, but was sued by manufacturers seeking to void the addition.  Extensive CEPA amendments were enacted in April 2023 (“Strengthening Environmental Protection for a Healthier Canada Act” (Bill S-5)), including revisions to the toxic substance lists – including recodification of the listing of PMI – and left ECCC’s authority over toxic substances relatively unchanged, so the litigation continued. In November 2023, the Federal Court ruled that the CEPA amendments did not moot the issues in the litigation, and ruled that ECCC had exceeded its statutory and constitutional authority when listing PMI.

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Tags: Environmental risks, Environmental, Greenhouse Gas, climate change, Environment, Environmental Policy, Climate, ECCC, CEPA

Huge Clean Air Act settlement against truck emission cheater

Posted by Jon Elliott on Tue, Feb 13, 2024

On January 10, 2024, the U.S. Environmental Protection Agency (EPA), U.S. Department of Justice, and the California Air Resources Board (ARB) filed a settlement agreement with Cummins, Inc. covering nearly one million Ram vehicles for which Cummins supplied diesel engines with illegal software-based “defeat devices” that produced misleading emission certification results compared with significantly higher emissions while the vehicles are in actual use. Cummins will pay the largest CAA penalties ever ($1,675 million in federal and state penalties), will fund environmental mitigation projects to compensate for excess nitrogen oxides (NOx) emissions ($175 million), and will also recall 630,000 vehicles (model years 2013-2019) to remove the defeat devices (estimated costs $150 million, including warranty extensions). Cummins will also implement corporate governance, organizational, and technical process reforms to minimize the likelihood of future violations.

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Tags: Environmental risks, Environmental, EPA, clean air, Environment, Clean Air Act, Environmental Policy

California enacts two new climate-related reporting laws

Posted by Jon Elliott on Thu, Dec 14, 2023

On October 7, 2023, California’s governor Gavin Newsom signed two important bills expanding climate-related reporting requirements for targeted organizations doing business in the state – SB 253 (Wiener) (Climate Corporate Data Accountability Act) and SB 261 (Stern). These requirements will be administered by the California Air Resources Board (ARB), which already includes most state greenhouse gas (GHG) regulatory requirements within its extensive air quality and climate authority (centered on the Global Warming Solutions Act of 2006 (AB 32). The remainder of these note discusses these new requirements.

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Tags: Environmental, Greenhouse Gas, ghg, California, Environment, Environmental Policy

California begins to regulate carbon offset claims

Posted by Jon Elliott on Fri, Nov 24, 2023

Regulatory and market-based programs are steadily increasing opportunities for entities to contract with projects that reduce emissions of carbon dioxide and other greenhouse gases (GHGs), and to claim credit for those “carbon offsets.” Some such claims are used to satisfy formal air quality and GHG reduction requirements, while others are touted to enhance entities’ “green” credentials. Programs around the globe compile such claims, and some provide third party validations – but possible “greenwashing” of unjustified claims remains a significant concern. To address these concerns, California has just enacted legislation to regulate Voluntary Cabon Market Disclosures and penalize noncompliance (Assembly Bill (AB) 1305, Gabriel). These requirements synthesize the most thorough voluntary disclosure programs, and are intended not only to protect California consumers but to codify disclosure standards. The rest of this note summarizes carbon offsets, and AB 1305 requirements.

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Tags: Environmental, Greenhouse Gas, greenhouse, California, Environment, Environmental Policy, environmental protection

EPA tightens Toxics Release Inventory reporting requirements for PFAS “Forever chemicals”

Posted by Jon Elliott on Mon, Nov 20, 2023

On October 31, 2023 the US Environmental Protection Agency (EPA) tightened its reporting requirements for per- and polyfluoroalkyl substances (PFAS) – frequently called ‘forever chemicals” because they biodegrade very slowly – under its Toxic Release Inventory (TRI) program. These changes finalize a proposal issued in (which I wrote about HERE), and reflect EPA’s agency-wide efforts to tighten controls on PFASs proposed in December 2022 (I wrote about these efforts HERE). The new TRI revisions apply to reports beginning in calendar year 2024. The remainder of this note summarizes these changes.

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Tags: Environmental, EPA, Environment, Environmental Policy, TRI, PFAS

Pollution Prevention Plan requirements under Canadian Environmental Protection Act

Posted by Jon Elliott on Wed, Sep 27, 2023

The Canadian Environmental Protection Act of 1999 (CEPA) provides a variety of federal environmental protection provisions throughout Canada. The Minister of the Environment and Climate Change (the Minister; who oversees Environment and Climate Change Canada (ECCC), and to which I attribute CEPA authorizations in this note) prepares regulations (including lists of chemicals regulated in different circumstances), and conducts additional planning, regulatory and enforcement activities. In particular, CEPA authorizes the Minister to issue Pollution Prevention Notices (P2 Notices) directing targeted entities to prepare P2 Plans to improve management of any listed “Toxic Substance” in order to reduce environmental impacts. The rest of this note summarizes P2 requirements, which will be revised to conform with CEPA amendments adopted this summer by Bill S-5, the “Strengthening Environmental Protection for a Healthier Canada Act” (S-5), which received Royal Assent on June 13, 2023.

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Tags: Environmental, Environment, Environmental Policy, Pollution, CEPA, environmental protection

EPA announces enforcement priorities for 2024-2027

Posted by Jon Elliott on Fri, Sep 15, 2023

On August 17, the US Environmental Protection Agency (EPA) issued a memorandum announcing its National Enforcement and Compliance Initiatives and continuing enforcement priorities for the upcoming fiscal years 2024-2027 (NECI memo). This announcement specifies existing initiatives that EPA will extend, and additional new ones. The NECI memo explains that EPA selected its priorities based on the following three criteria:

  • the need to address serious and widespread environmental issues and significant violations impacting human health and the environment, particularly in overburdened and vulnerable communities
  • a focus on areas where federal enforcement authorities, resources, and/or expertise are needed to hold polluters accountable and promote a level playing field
  • alignment with EPA’s Strategic Plan.

The remainder of this note summarizes the enforcement priorities expressed in the NECI memo.

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Tags: Environmental, EPA, Environmental Policy, NECI