Audit, Compliance and Risk Blog

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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Several national laws empower the US Environmental Protection Agency (EPA) to set standards for the cleanup of contamination that resulted from accidental or deliberate releases of chemicals and other materials onto land or into water. EPA’s actions include direct requirements for cleanup by responsible parties, and also inform other parties’ evaluations of if and how to prepare contaminated areas for reuse – often referred to as “brownfields” since they’re assumed to be dirtier than never-used “greenfields.” The remainder of this note discusses EPA’s 73 page “Climate Smart Brownfields Manual,” issued by the agency in 2021

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Environment and Climate Change Canada (ECCC) is developing a Federal Plastics Registry, in support of the government’s goal of zero plastic waste by 2030. The proposed Registry will create a consistent national framework of reporting requirements. On April 23, 2023, ECCC published a Technical Paper with “technical details and reporting requirements” for the Registry, reflecting several years of development –a discussion paper published in October 2020, a “What We Heard” summary of comments received on that paper, a Consultation Paper published in July 2022, and comments received on that document. ECCC intends to formally propose requirements for the Registry by the end of 2023, and to require reporting beginning in 2025.

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For over a decade, the US Environmental Protection Agency (EPA) has required thousands of facilities and organizations to report annual emissions of greenhouse gases (GHGs), in what it refers to as its Greenhouse Gas Reporting Program (GHGRP) (40 CFR part 98). On May 22, 2023, EPA published an extensive set of proposals to update and expand existing requirements. These proposals supplement and supersede proposals published in June 2022 but not acted on by the agency. The remainder of this note summarizes these proposals, focusing not on the many technical revisions to existing requirements but on proposals to target additional activities with reporting requirements. (I’ve written about EPA’s mandatory GHG reporting program several times, including HERE).

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On January 18, 2023, the US Environmental Protection Agency (EPA) and US Army Corps of Engineers (Corps) adopted revised definitions of “waters of the United States.” The Clean Water Act (CWA) empowers federal agencies to regulate activities that may affect “waters of the United States”—sometimes called “navigable waters.” These activities include water quality planning and discharge regulation by EPA and delegated states, and regulation of projects that may lead to “dredge and fill” of waters, requiring permits from the Corps. The remainder of this note offers a brief summary of the last 20 years of judicial reinterpretations and regulatory responses, and discusses the latest revisions.

 

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On November 10, the Biden Administration announced a proposal to amend the Federal Acquisition Regulation (FAR) to require “major federal suppliers” and “significant federal suppliers” to disclose their greenhouse gas (GHG) emissions and assessments of climate-related risks, and to set targets for GHG emission reductions. The rest of this note summarizes this proposal.

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On September 17, 2022 the United States Senate voted 69-27 to ratify the 2016 Kigali Amendment to the United Nations-sponsored Montreal Protocol on Substances that Deplete the Ozone Layer (which I wrote about here), establishing international agreement to phase down production and consumption of specified hydrochlorofluorocarbons (HFCs). Aye votes vote included all the Democratic Senators present, and 29 Republicans. These HFCs are used in refrigeration and air conditioning and fire suppression, and as foam blowing agents and solvents. Although the US Environmental Protection Agency (EPA) already administers rules with the same requirements, the ratification will return the US to the international table.

The US had been a major player in the drafting and enactment of the Kigali Amendment (during President Obama’s administration), but then withdrew its support (during President Trump’s administration). However, the US enacted Kigali-like requirements in the December 2020 coronavirus relief bill (American Innovation and Manufacturing Act of 2020 (AIM Act)), among the many provisions buried within its 5,593 pages; EPA finalized its rules in September 2021 (I wrote about these rules here).

The remainder of this note summarizes the situation.

Why are HFCs being phased down, and how?

HFCs were developed primarily as substitutes for chlorofluorocarbons (CFCs), which are the principal ozone depleting substances (ODSs) targeted by the Montreal Protocol. HFCs have lower but non-zero ozone depleting potential, and are greenhouse gases that contribute to climate change. Accordingly, nearly 30 years after the initial 1987 approval of the Montreal Protocol roughly 200 national and international parties negotiated HFC phase-downs. As adopted in Kigali, Rwanda these amendments divide countries into three groups with different schedules and targets:

• developed nations including the United States – cut consumption to 90% of 2011-2013 baseline of most HFCs (plus 15% of those already covered by the Protocol) by 2019, declining to 15% by 2036
• most developing nations, including China and over 100 others - consumption to peak in 2024 at 100% of 2011-2013 baseline of most HFCs (plus 25% of those already covered by the Protocol), declining to 20% by 2045
• 10 hot-climate developing countries (where air conditioning is particularly important), including India, Pakistan and some Gulf states - consumption to peak in 2028 at 100% of 2011-2013 baseline of most HFCs (plus 25% of those already covered by the Protocol), declining to 15% by 2047

After the Trump administration replaced the Obama administration, the US took no action on this agreement. During this period, however, other countries have moved forward to ratify and work to meet their commitments.

What HFC-related provisions did the AIM Act enact?

The massive coronavirus relief bill includes Division S (“Innovation for the Environment”), with section 103 (“American Innovation and Manufacturing Act of 2020”). Without mentioning the Kigali Amendment, section 103 incorporates its requirements into US law:

• the legislation lists 18 specific HFCs, and authorizes EPA to designate additional formulations
• EPA was to calculate 2011-2013 production and consumption baselines for each, and to use these to calculate future phase-down levels ranging from 90% in 2020 to 15% in 2036 and thereafter
• EPA was to issue regulations with 270 days (by 9/23/21) to set phase-down requirements, with associated procedural requirements including allowances associated with each baseline amount, and reclamation and destruction methods

EPA’s rules are designed to meet these requirements. In addition, EPA has initiated or re-invigorated other programs to support the phase-down of HFCs and their replacement by refrigerants that are less harmful to global climate and the stratospheric ozone layer.

What now?

Ratification will become official once the US submits formal notification to the United Nations. The new rules took effect on November 4, 2021 and are progressing; EPA proposed 2024-reduction formulas on October 20, 2022.. While domestic requirements will not change from those enacted through the AIM Act, ratification returns the US to the center of international HFC-reduction efforts, and reinforces national commitments to the environment.

IImplementation Checklist

• Does the organization manufacture, import or use any ozone depleting substance (ODS) subject to the Montreal Protocol and/or CAA Title VI?
• If the phase-out date for any ODS has passed, do any of the organization’s activities qualify with applicable exceptions or essential uses?
• Does the organization manufacture, import or use any HFCs?
• Has the organization reviewed any such activity to identify alternatives for any HFC that is or may become subject to phase-down under US and international law?

Where do I go for more information?

Information available via the Internet includes:

● US legislation

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No, the title is not a stutter; I’ve written it that way to emphasize that the new Environmental Protection Agency (EPA) proposal to revise its Accidental Release Prevention (ARP) program rules under the Clean Air Act (CAA) represents only the latest step in nearly-decade-long changes to these requirements across the last three Presidential administrations. ARP was enacted after the 1990 Clean Air Act (CAA) Amendments, and its often known by its core requirement that targeted facilities prepare Risk Management Programs (RMPs) to prevent and respond to potential catastrophic releases of chemicals.

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When must organizations evaluate and disclose how climate change will affect their operations?

The Canadian Securities Administrators (CSA) provides a cooperative forum for Canada’s provincial and territorial securities regulators, including the development of model regulations and associated guidance. Last October, CSA took its latest step toward climate-related disclosure requirements, by proposing “National Instrument 51-107 – Disclosure of Climate-related Matters;” public comments were due by January 17, 2022. Assuming CSA moves ahead and finalizes this National instrument (NI), then securities regulators throughout Canada will enact equivalent requirements and establish compliance deadlines for companies they regulate.

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On June 30, 2022, California governor Gavin Newsom signed state Senate Bill (SB) 54, enacting the “Plastic Pollution Prevention and Packaging Producer Responsibility Act.” The Act phases in a ban on non-recyclable single-use plastics by 2032, and requires that threshold proportions of single-use items sold as “recyclable” will actually be recycled. Its implementation will make use of “extended producer responsibility” mechanism similar to those used in California and elsewhere for other enhanced recycling programs (I’ve written about these before, most recently HERE and HERE). The new Act will be overseen by the California Department of Resources Recycling and Recovery (CalRecycle). The new Act complements a variety of other state programs, many also overseen by CalRecycle. The remainder of this note discusses SB 54’s provisions.

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