Lawyer's Guide to Emergency Response in the Energy & Natural Resources Industry

This post was written by Rebecca Archer, Caroline Brader-Smith, Carol M. Burke, Richard M. Gunn, Nicholas Rock

Emergencies, whether they be high profile public events or small and relatively self-contained issues, are unfortunately a fact of business life. Preparing for emergencies demonstrates a company’s ability to accept and deal with challenges and its commitment to maintaining the continuity of normal business operations instead of becoming caught up in the surrounding chaos. Drawing on our experience of dealing with a wide range of energy and natural resources sector emergency situations, this Reed Smith Client Alert suggests certain "best practice" approaches from the perspective of an external or in-house lawyer when facing an emergency situation by looking at the ways in which a company should prepare for an emergency before it happens, the steps that should be taken while the situation is ongoing, and how the aftermath of an emergency should be used as an opportunity for development.

The Impact of Present and Future UK Green Initiatives

This post was written by Nav Sahota, Siobhan Hayes, Maricela Robles Garza and Daniel Kyriakides.

There have been so many green initiatives from the UK government that it can be hard for companies owning or occupying property to work out what is really going to affect them and their bottom line. We are of the view that UK property owners and many occupiers are gradually going to implement more energy efficiency measures in their buildings. Some of the highest profile corporate occupiers have on-going programmes for reducing power consumption and improving their impact on the environment but others may be persuaded by the costs savings or required by some of these new laws and regulations to turn green (or at least pale green).

EPC Ratings - Investors of buildings which are let to multiple occupiers or have a long term tenant in them may not think of carrying out works to improve the energy efficiency of the building unless these are recoverable under their service charge provisions. Not all service charge clauses allow for the costs of improvements to be recovered.

However carrying out energy efficient improvements may help owners avoid the looming issue of buildings no longer being lettable where they have a low EPC rating. We posted on this topic back in April 2012 and it remains the case that from April 2018, it will be unlawful to rent out a residential or business property that does not reach a minimum energy efficiency standard (expected to be EPC rating 'E'). It now appears that even pre-existing lettings might become unlawful in April 2018 but we await draft Regulations to be sure.

To read the full Real Estate blog entry, please click here.

D.C. District Court Upholds SEC's Conflict Mineral Rule in the Face of APA, Constitutional Challenges

This post was written by David Wagner and Brian Willett (Summer Associate)

The Securities and Exchange Commission's conflict minerals rule (the Rule) withstood a multi-pronged legal attack Tuesday, as the United States District Court for the District of Columbia granted the SEC's motion for summary judgment in a suit challenging the validity of the rule. The National Association of Manufacturers (NAM) alleged the SEC's Rule was arbitrary and capricious under the Administrative Procedure Act (APA) and that the disclosures the Rule required violated the First Amendment. However, District Judge Robert L. Wilkins concluded the Rule, codified in Section 1502 of the Dodd-Frank Act, violated neither the APA nor the Constitution and supported Congress' intent to promote stability in the war-torn Democratic Republic of the Congo (DRC).

According to the NAM, the SEC's alleged failure to properly analyze the costs and benefits of the Rule amounted to an arbitrary and capricious action. Specifically, the NAM claimed the Rule would place an unnecessary burden on business and that the SEC was required to assess whether the rule was actually needed to decrease conflict in the DRC. Judge Wilkins disagreed, noting that the relevant statutory language required the SEC only to consider effects on competition and progress toward humanitarian objectives in its rulemaking rather than undertake an in-depth investigation into the economic and social benefits Congress aimed to achieve. The court also rejected NAM's arguments that the SEC was obligated to create a de minimis threshold and that the SEC arbitrarily underestimated compliance costs associated with the Rule. With respect to the First Amendment challenge, Judge Wilkins rejected the argument that the Rule's disclosure requirements improperly compelled "burdensome and stigmatizing speech." Applying a standard of intermediate scrutiny, Judge Wilkins found the Rule's requirement that companies sourcing from the DRC disclose mineral origins on their websites (1) supported a substantial government interest; (2) directly advanced that interest; and (3) the means were a reasonable way to accomplish the desired ends.

 

New Effort to Accelerate the Construction of Green Buildings in Emerging Markets

This post was written by Brian Willett (Summer Associate)

In the United States, sustainable building initiatives and resource-efficient engineering and construction practices help businesses large and small minimize adverse environmental impacts and save money. For example, LEED-certified buildings, such as the Reed Smith Centre in Pittsburgh, tend to have lower operating costs than other facilities; utility bills may be up to 40 percent lower, according to the U.S. Green Building Council.[i] But in developing areas where resource conservation and sustainability would make the biggest impact, LEED and other initiatives do not exist. To support resource efficiency in emerging markets, the International Finance Corporation (IFC) and the World Green Building Council have collaborated to create Excellence in Design for Greater Efficiencies (EDGE), a green building certification system.

EDGE aims to encourage sustainable development to help preserve increasingly scarce resources in developing countries. The certification system will also assist investors in identifying cost-efficient development projects; improve community health by reducing emissions; and help generate jobs by spurring innovation and freeing up financial resources for workforce expansion. Sustainable building may also promote improved marketability and resilience against extreme weather, enhancing prospects for real estate developers.

 

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Federal Government Approves New Solar Projects in Solar Energy Zones

This post was written by Phillip H. Babich

The U.S. Department of Interior (DOI) has approved three major renewable energy projects. Two have been sited in California, and another is sited in Nevada. The two California projects are solar energy facilities. The McCoy Solar Energy Project is a 750-megawatt photovoltaic solar facility that would be one of the largest solar projects in the world. A 12.5-mile generation transmission line would connect the project to Southern California Edison’s Colorado River Substation. The Desert Harvest Solar Farm is a 150-megawatt photovoltaic facility. The project also includes an on-site substation and 230-kilovolt line to the Red Bluff Substation, which will connect the project to the Southern California Edison regional transmission grid. Both projects will be located in California’s Riverside East Solar Energy Zone (SEZ), one of 18 such zones on land held by the Bureau of Land Management (BLM), a division of the DOI. The Nevada-based project is the Searchlight Wind Energy Project, a 200-megawatt project that will be located on BLM land about 60 miles southeast of Las Vegas.

The two California solar projects, approved on March 13, 2013, add to the DOI’s progress in furthering the Obama Administration’s goals on solar energy which were articulated in the Department’s Solar Programmatic Environmental Impact Statement (Solar PEIS).

In January, the BLM approved a new SEZ in Arizona. Known as the Agua Caliente SEZ, this area opens up 2,550 more acres of BLM land to be used for utility-scale solar energy development under the Solar PEIS, which was approved and adopted as amended by a Record of Decision (ROD) on October 12, 2012.

The Agua Caliente SEZ is located approximately 120 miles south east of Phoenix and is part of the Yuma Resources Management Plan (RMP). The BLM chose this location for its proximity to transmission lines or systems, roads and infrastructure. The SEZ also has known environmental or cultural constraints that have been deemed acceptable for purposes of solar development.

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Without Any Night Light, Will France Save Energy or Fall Asleep?

This post was written by Stéphane Illouz and Diane Le Chevallier

As of 12 July 2013, and applicable to all buildings that are used for professional activities, the lights will need to be switched off after working hours.

On 25 January 2013 the French government enacted a new decree (the Decree) that implements new restrictions as to night lighting of non-residential buildings. The Decree follows the French Regulation n°2012-118 - dated 30 January 2012 - implementing the law on illuminated-billboard advertising (the Regulation). Both pieces of legislation have been adopted as part of the government's objective to regulate energy consumption: the implementation of the Decree should enable the early saving of 2 TWh, corresponding to the energy consumption of 750,000 households.

The Decree will enter into force on 12 July 2013; but its approximate wording could raise some issues:

  • the Decree provides that shop-window lighting must not be turned on prior to 7 a.m. or for more than one hour prior to opening; and will have to be turned off by 1 a.m. or within one hour following the end of the occupation of the premises; the question of how to control the occupation of the premises remains opened;
  • the Decree also provides that lighting of building facades must not be turned on before sunset and shall need to be turned off by 1 a.m. As the time of sunset changes daily, the enforceability of this provision seems uncertain;
  • the interior lighting of "premises used for professional activities" will need to be switched off within one hour following the end of the occupation of the premises. This wording is not likely to achieve what the Government intended since the appropriate criteria for determining whether there are "professional activities" has been strictly defined by French Case Law by reference to intellectual activities – quite different from the commercial activities of, say, a bank!

Non-compliance with the Decree will be sanctioned by a fine, the amount of which is still under discussion. The French government is also working on the nature and extent of the control over compliance with the Decree and will have to find the right balance between control of energy consumption and freedom for businesses to operate.
 

Legal Issues Assocated with Building "Green"

This post was written by Charles Seaman and Jim Doerfler

State and local governments have enacted a variety of incentives to encourage energy efficient “green” design and construction practices. Projects owned or leased by government authorities are often subject to mandatory green requirements. Private development is often encouraged to go “green” through contractual or tax-related incentives. Promoters of green building features often tout the cost savings associated with energy-saving features or the increased marketability of a property if it is able to achieve a certain green building certification standard.

But, as Kermit the Frog once remarked, it isn’t easy being green. Well-intentioned efforts to promote green building projects can often go astray in a number of different ways, with adverse legal consequences for the project participants. This Reed Smith Client Alert summarizes in a high-level fashion, some of the more common legal issues affecting green building participants that have emerged in recent case law in this developing field. These issues are divided into a few broadly-defined categories, based upon the position of the project participant involved.
 

Global Carbon Market Total Reaches Record US $176 Billion

This post was written by Peter Zaman

The total value of the carbon market grew by 11 percent in 2011, to US $176 billion, and transaction volumes reached a new high of 10.3 billion tons of carbon dioxide equivalent (CO2e) according to a new report from the World Bank. According to the State and Trends of the Carbon Market 2012 this growth took place in the face of economic turbulence, growing long-term oversupply in the EU Emissions Trading Scheme (EU ETS) and plummeting carbon prices. Despite these challenges, legislation with both domestic and regional market mechanisms to mitigate climate change has been passed in Australia, California, Quebec, Mexico and South Korea.

The World Bank’s report, released at this week’s the CarbonExpo in Cologne, Germany, describes how even as prices declined, the value of the global carbon market increased in 2011, driven predominantly by a significant growth in financially motivated transactions. By far, the largest segment of the carbon market was that of EU Allowances (EUAs), valued at $148 billion. There was also a substantial increase in the volume of secondary Kyoto Protocol offsets (which grew by 43 percent, to 1.8 billion tons of CO2e, valued at US $23 billion) fueled by increased liquidity in the Certified Emission Reduction market and in the secondary Emission Reduction Unit market. Following the same pattern observed in previous years, the global carbon market in 2011 was primarily driven by the EU ETS.

It is also noteworthy that the market is starting to look beyond 2012 as the post-2012 primary Clean Development Mechanism market increased by 63 percent, to US $2 billion, despite depressed prices and limited long-term-visibility.

The World Bank’s report also features an article I wrote entitled "Trading around the risk of receiving stolen allowances" (see page 27 in the report) at the World Bank's request summarising the issues faced by market participants during the last two years from cyber thefts in the EU ETS. The article also reflects some thoughts on the effectiveness of the solutions proposed by the EU Commission.

Opportunities for Renewable Energy Projects in Saudi Arabia

This post was written by Stefan Schmitz, Hayley Steel, and Vincent Gordon

While traditionally regarded solely as the world's premier producer of oil, Saudi Arabia has recently started to look at alternative sources for its energy consumption, and, maybe not surprisingly, renewable energy ranks high on the list: the country has very high levels of solar irradiance and huge areas of desert, which make it an ideal location for solar projects, along with other renewable energy projects. The Saudi plans are very ambitious and many investors believe this is a good opportunity to get involved in this market.

To expand its renewable energy generation, Saudi Arabia plans to create a solar sector capable of providing 30 percent of its electricity by 2032. It wants to build very large amounts of solar projects in the near future - plans that will require about $109 billion of investment - with specific rules to be finalized soon. Along with plans to increase solar energy generation, Saudi Arabia is also planning to place more emphasis on renewable energy generation generally, with intentions to include wind, geothermal, waste-to-energy and nuclear energy generation plans in its strategy.

Saudi Arabia's plan, known as the King Abdullah City for Atomic and Renewable Energy (K.A.CARE), was set up in 2010 to provide the framework for developing an alternative energy capacity for the Kingdom. And this month, K.A.CARE introduced a proposal for a new renewable energy policy. Key elements of the proposal include:

  • Feed-in tariffs to build out the program
  • No maximum project size
  • Minimum project size is 5 MW
  • Term for the power purchase agreement is 20 years
  • Evaluation criteria include price and non-price factors

In this Reed Smith client alert, we discuss K.A.CARE's proposals as it relates to solar energy, nuclear energy and the opportunities for investment. As discussed in the alert, the investment required to implement the aims of the K.A.CARE plan is vast and may be worthwhile for potential investors, developers and manufacturers to examine these opportunities.

Act Now to Ensure Compliance with New EU RoHS Regime from January 2013

This post was written by Nicholas Rock and Maricela Robles Garza

The RoHS Directive (Directive 2002/95/EC on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment) prohibits “producers” of Electronic and Electrical Equipment (EEE) from marketing new EEE in the EU that contains more than the prescribed levels of six hazardous substances after 1 July 2006. Breach of RoHS is a criminal offence that may be committed by both the offending company and implicated directors & officers.

The RoHS Directive is closely associated with the WEEE Directive (Directive 2002/96/EC on waste electrical and electronic equipment (WEEE)), which requires producers of EEE to finance the collection, recovery and disposal of WEEE. The restricted hazardous substances under ROHS are as follows: Lead; Mercury; Cadmium; Hexavalent chromium; Polybrominated biphenyls (PBB), which is a flame retardant and Polybrominated diphenyl ethers (PBDE), which is also a flame retardant. Under RoHS, the maximum concentration levels of these substances are 0.1% by weight in homogeneous materials, with the exception of cadmium, which is 0.01%.

The new RoHS Directive 2011 (Directive 2011/65/EU) entered into force on 21 July 2011. As we’ve discussed, member states have until 2 January 2013 to implement the RoHS Directive 2011 into national laws. It has a broader scope and places additional obligations on producers and others, including distributors, compared to the existing regime. Here is a summary of some of the key features of the new regime:

  • Repeals and replaces the RoHS Directive 2002 from 3 January 2013;
  • Same six restricted hazardous substances and maxium concentrations, but subject to review in July 2014;
  • Extends the categories of EEE subject to the ban on use of certain hazardous substances to all EEE, subject to transitional provisions, including medical devices, monitoring and control equipment, cables and a range of products not normally considered to be EEE because they don’t need electrical currents or electromagnetic fields to fulfil their primary function (for example a non-electronic product containing a clock or a light);
  • New requirement to self-certify conformity by preparing an “EU declaration of conformity”, apply the European “CE” and other marking of compliant products;
  • New requirements on manufacturers, importers and distributors in respect of non-compliant EEE placed on the market to take corrective measures and inform the market surveillance authority;
  • New requirement on manufacturers and importers to keep a register or non-conforming EEE and product recalls;
  • New obligation on distributors to verify that EEE bears the CE marking and is accompanied by required documentation;
  • New conformity assessment procedures;
  • Simplified procedure for granting, renewing and revoking exemptions

Although some of the changes described above will be phased in over time, other requirements, such as CE marking, requirements for declarations of conformity and the new obligations placed on the supply chain, will apply immediately from 2 January 2013 and even EEE already placed on the market is subject to some of the obligations of the new RoHS Directive 2011 (such as product still in the distribution chain).

The Commission is currently consulting stakeholders as they produce their own impact assessment and this could lead to further legislative proposals to make further changes to the scope of the Directive. There is therefore still a potential opportunity to lobby to exclude some products currently scheduled to be transitioned into the regime.

Reed Smith’s London-based Environmental team has advised numerous companies on RoHS compliance since inception of the scheme from 2006 and is closely monitoring implementation of the RoHS Directive 2011. If you have any questions, please contact one of the authors of this post.

Second AEITF Renewable Energy Industry Day Announced

This post was written by Amy Koch and Lorraine Campos.

The Army Energy Initiatives Task Force (AEITF) has announced its second renewable energy industry day to be held on June 12, 2012, at the Crystal City Marriot in Crystal City, Virginia. The AEITF’s first industry day was held in early 2012, before it released its draft request for proposals, which set out the processes by which it intends to procure up to $7 billion in renewable energy. The second industry day may prove to be even more useful than the first because it is being held jointly with the U.S. Air Force. Both the Army and Air Force have 1 gigawatt (GW) renewable energy goals and need to rely on private sector investment to meet those targets. The upcoming industry day is intended to provide specific direction on each Service’s renewable energy goals, as well as the processes through which they are seeking to establish partnerships with the private sector.

Participation will be limited to 800 people and this link will lead you to the AEITF’s website for the June 12th industry day and a registration form.

For those interested in renewable energy development with the Army and Air Force, attendance at this event should be present a good opportunity to learn about how each Service intends to meet its renewable energy target and to meet senior Army and Air Force officials leading those efforts.

If you have any questions about the AEITF renewable energy industry day or Department of Defense renewable opportunities in general, please contact Amy Koch or Lorraine Campos.

 

Record Highs and Lows in New Jersey's Uncertain Solar Market

This post was written by Jim McGuire, Henry King, Ferd Convery, and Marshall McLean

The New Jersey solar SREC market is significantly over-supplied. The renewable portfolio standards (“RPS”) for Energy Year (“EY”) 2012 (June 1, 2011-May 31, 2012) requires that a total of 368 MWs in solar generation capacity be installed by May 31, 2012. That requirement was satisfied in June 2011, only one month into EY 2012. BPU staff estimates that installed solar capacity will exceed the solar RPS through at least energy year 2014 and, depending on the near-term installation rate; the solar capacity may exceed New Jersey solar RPS through EY 2016. As noted by BPU staff in its solar transition straw proposal the pace of construction, installation and operations in the New Jersey solar market is not sustainable within the current solar RPS.

This week legislation (S-1925) was introduced by Senators Smith and Sweeney which proposes long awaited relief to the New Jersey solar market. The bill, which is not yet publicly available, is expected to be scheduled for hearings before the Senate Energy and Environment Committee chaired by Senator Smith on an expedited basis. S-1925 will likely seek to regain lost momentum in New Jersey’s solar market by focusing on: revised RPS and solar alternative compliance payment ("SACPs") schedules, preference for location of solar facilities on brownfields and landfills rather than on farmland, grid connected projects, net metering requirements including clarification of what it means to be connected to the distribution system, and an aggregated net metering program for local government and school districts.

In this client alert, we discuss the proposed legislative remedy as well as regulatory remedies. For additional information please contact one of the authors listed above.

Slides and Audio from Reed Smith's Teleseminar on Shale Gas

This post was written by David Wagner

With all of the recent attention given to shale gas, we featured the issue in our quarterly Environmental and Energy Teleseminar. Here are the slides and audio from yesterday’s event. In particular, we discussed:

  • Recent developments related to aggregation and U.S. Environmental Protection Agency’s new air emission rules for the oil and gas industry
  • Hydraulic fracturing and chemical disclosure requirements, especially in state jurisdictions
  • Overview of fracking regulations and developments on federal level
  • Pending shale gas legislation in California
  • Overview of international shale plays

Look for our next quarterly teleseminar this summer.
 

Great Lakes Offshore Wind Power MOU to Facilitate Evaluation of Proposed Projects and Expedite Permitting

This post was written by Robert Vilter, Amy Koch, Stefan Schmitz, and Patrick Elder

On March 30, 2012, ten federal agencies and the governors of Illinois, Michigan, Minnesota, New York and Pennsylvania signed a new memorandum of understanding (MOU) to develop a roadmap within 15 months that would describe the regulatory review process and data needed to “inform efficient review” of proposed offshore facilities in the Great Lakes. The MOU is designed to speed review of proposed offshore wind projects by increasing collaboration between federal and state agencies.

According to the U.S. Department of Energy, the Great Lakes' region is home to the largest offshore wind potential of any U.S. waters – 742.5 GW, or one-fifth of all potential wind energy in the United States. Each gigawatt of offshore wind power installed could produce electricity for 300,000 homes.

The MOU will not eliminate any of the myriad federal and state approvals needed to construct and operate an offshore wind project in the Great Lakes, but may ultimately result in one or more roadmaps that could be of real assistance to developers. In this client alert, we discuss some of the interest and opposition to offshore wind development in the region.

 

Next Steps in New Jersey's Solar Transition

This post was written by Jim McGuire, Henry King, Ferd Convery and Marshall McLean

The New Jersey Board of Public Utilities (BPU) will hold a Public Hearing on March 22, 2012 starting at 9:30 am at its Trenton Office, 44 South Clinton Avenue. The purpose of the Public Hearing is to provide an opportunity for further public comment on a BPU Staff Straw Proposal on the next steps in the transition of NJ's Solar Program including: extension of the solar renewable energy credit (SREC) financing program administered by the four electric distribution companies (EDCs) located in the state; and related changes to the Solar Renewable Portfolio Standards (RPS). Initial Comments are due, in writing, by close of business on Friday, March 16 with final comments due at the close of the Public Hearing on March 22.

The BPU directed its staff to develop options and recommendations for next steps in response to rapid expansion of its Solar Program. The Solar Program expanded from an initial goal of 90 MW of installed solar during the five year period from 2003- 2008 to installation of more than 80 MWs in a single month during January 2012. As a result of this rapid expansion, New Jersey is projected to have an excess supply of installed solar capacity through at least energy year (EY) 2014 and perhaps through EY 2016. This excess supply has resulted in a dramatic drop in SREC prices from more than $600 per SREC in the spot market during the Summer of 2011, to about $200, and with the most recent EDC Auction in February 2012 yielding a price of $170. 
 

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U.S. Army Looking for $7 Billion in Renewable Energy Over the Next 10 Years

This post was written by Amy Koch and Lorraine Campos

The U.S. Army began its long-awaited process for signing up to $7 billion in renewable energy power purchase agreements (PPAs) over the next ten years. On February 24, 2012, the Army Energy Initiatives Task Force (AEITF) issued a notice seeking comment on a draft request for proposals (Draft RFP). The Draft RFP sets out the AEITF’s proposed process for signing 30-year power PPA or "equivalent contracts" for projects located at Army installations and on non-installation property. This program could present an excellent opportunity for renewable energy developers -- provided they can meet the Department of Defense's government contracting rules. That's where we come in. Reed Smith has both the energy development and government contracts expertise to assist potential renewable energy bidders in the AEITF process.

You can find more details in our client alert and feel free to contact us for additional information.

Does It FiT? UK Government Consults on "Improvements" to the Feed in Tariff Scheme

This post was written by Richard Ceeney, Stefan Schmitz and Christopher Parrott.

If you're involved in energy generation in the UK (e.g., energy companies, investors, financiers, or suppliers of fuels, plant or infrastructure), take notice: earlier this month, the UK government published its second consultation on the Feed in Tariff regime for solar PV installations, and it proposes further cuts to the subsidy provided for solar power. This Energy and Natural Resources Client Alert from Reed Smith's London office considers the implications of the consultation, including the positive commitment the government have made to the expansion of the solar industry.

Upcoming in 2012: 10 Environmental and Energy Issues to Watch in the United States

This post was written by Lawrence Demase, Douglas Everette, Robert Frank, Arnold Grant, Todd Maiden, Jennifer Smokelin, Robert Vilter and David Wagner.

As we look forward to 2012, the environmental and energy attorneys at Reed Smith will be on top of a range of issues, and offer the following analysis of what we view, in no particular order, to be 10 key issues likely to affect you and your business in 2012. This post is based on input and analysis from Reed Smith attorneys across the United States. The 10 issues to watch are:

  1. Offshore wind power generation
  2. Renewable energy incentive programs
  3. Hydraulic fracturing regulation
  4. Aggregation
  5. Greenhouse gas litigation
  6. California's cap-and-trade program
  7. California's Green Chemistry program
  8. New mercury standards for coal and oil-burning power plants
  9. Fallout from CERCLA decision in Burlington Northern and Santa Fe Railway Co. v. U.S.
  10. Conflict minerals and disclosure requirements

Please return to blog regularly and participate in our quarterly teleseminar to get updates and analysis on these and many other environmental and energy issues.

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Slides and Audio from Reed Smith's January 25 Environmental and Energy Law Resource Teleseminar

On Wednesday, Reed Smith held its quarterly environmental and energy law resource teleseminar and the slides and audio are available for download. We were ambitious and discussed 10 key issues likely to affect you and your business in 2012. Our high level discussion was on the following:

  1. Offshore wind power generation
  2. Renewable energy incentive programs
  3. Hydraulic fracturing regulation
  4. Aggregation
  5. Greenhouse gas litigation
  6. California's cap-and-trade program
  7. California's Green Chemistry program
  8. New mercury standards for coal and oil-burning power plants
  9. Fallout from CERCLA decision in Burlington Northern and Santa Fe Railway Co. v. U.S.
  10. Conflict minerals and disclosure requirements

Be sure that we will monitor and analyze these issues and many other environmental and energy issues through the year on our blog and in future teleseminars.

New Federal Interim Rule Requires Changes To Bring About More Green Contracting

This post was written by Lorraine Campos and Amy Koch.

Coming soon: Most of the U.S. government's future acquisitions will have to be green and environmentally sustainable. In this Reed Smith alert, we discuss a recently issued interim rule (PDF) that would require federal agencies to conduct their environmental, transportation, and energy-related activities in an environmentally, economically, integrated, efficient, and sustainable manner. The interim rule would seek to lower greenhouse gas emissions from sources owned or controlled by federal agencies and otherwise promote the creation of a "clean energy economy." In addition, the interim rule would require federal agencies to leverage agency acquisitions to foster markets for sustainable technologies, materials, products, and services by ensuring that 95 percent of new contract actions, including task and delivery orders, for products and services are energy-efficient, water-efficient, biobased, environmentally preferable, non-ozone depleting, contain recycled content, or are non-toxic or less-toxic alternatives. Federal agencies are also required to implement high-performance sustainable building design, construction, renovation, repair, commissioning, operation and maintenance, management, and deconstruction practices. On May 31, 2011, the U.S. Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration issued this interim rule amending the Federal Acquisition Regulation (FAR) by implementing Executive Orders 13514 and 13423.

The interim rule (PDF) should further open up opportunities for contractors with sustainable technologies, materials, products, and services to sell to federal agencies. Contractors with strong views on these FAR changes should prepare comments and submit them prior to August 1, 2011, to ensure that their views are considered. Reed Smith attorneys, including the authors of this post and more detailed alert, are tracking changes to the FAR as they evolve.

In Amending RoHS, the European Union Restricts Hazardous Substances in Medical Devices, Electronic Toys and Other Products

This post was written by David Wagner.

On May 27, the European Council, which represents the governments of EU Member States, revised the Directive on the Restriction of Hazardous Substances in Electrical and Electronic Equipment (RoHS Directive), and extended a ban on certain hazardous substances to a wider range of products, including medical devices, electronic toys, electrical appliances, cables, and spare parts. First adopted in 2003, the RoHS Directive bans six hazardous substances in electrical and electronic equipment, including lead, mercury and cadmium. With the amendment, the ban will now in principle apply to all electrical and electronic equipment as well as to cables and spare parts. Certain transitional periods are provided for, e.g., monitoring and control devices and medical devices will be covered in three years, in vitro medical devices in five years and industrial control appliances in six years. There are also a few exceptions such as photovoltaic panels that produce energy from solar light and energy-saving light bulbs. EU countries are required to adopt the revised RoHS legislation into their national legal codes within 18 months.

 

Cadmium in Jewelry and Plastics Banned in Europe in December 2011

This post was written by David Wagner.

On May 20, the European Commission adopted an amendment under its REACH law to ban the use of cadmium in jewelry, plastics, and brazing sticks (which are used to join metals) and create new restrictions on its use. The amendment will enter into force on December 20, 2011. The European Commission stated that high levels of cadmium have been found in some jewelry articles, especially in imported imitation jewelry. It also found that consumers including children risked being exposed to cadmium through skin contact or through licking. The new legislation prohibits the use of cadmium in all types of jewelry products, except for antiques

The legislation also prohibits cadmium in all plastic products while encouraging the recovery of PVC waste for use in a number of construction products. Because PVC can be recovered a number of times, the REACH amendment allows the re-use of recovered PVC containing low levels of cadmium in a limited number of construction products. In order to fully inform buyers, construction products that will be made of this recovered PVC will be marketed with a specific logo.

Cadmium is also present in brazing sticks, which is an alloy used to join dissimilar materials, and it is used for specific applications such as amateur railroad modeling. The European Commission found that fumes released during the brazing process are highly dangerous if inhaled. The legislation prohibits the use of brazing materials except for very specific professional uses.

The use of cadmium in the European Union is already restricted under REACH in paints and consumer goods (see Annex XVII of REACH). In addition, cadmium is banned from electrical and electronic products under the EU's Restriction of Hazardous Substances (RoHS) Directive.

It's Official: the Environmental Law Resource is a Top 50 Environmental Law Blog

This post was written by David Wagner.

We’re in – LexisNexis has selected Reed Smith's Environmental Law Resource blog as one of the Top 50 Environmental Law & Climate Change Blogs for 2011. We were recognized as "preeminent thought leaders in the blogosphere" who "offer some of the best writing out there." LexisNexis found that our blog contains "a wealth of information for all segments of the environmental law and climate change industry, and includes timely news items, expert analysis, practice tips, frequent postings and helpful links to other sites and sources."

The 50 honorees were grouped into 10 categories and our blog was one of just 4 blogs honored under the "Litigation" category.

We’re thrilled and certainly appreciate the recognition. Even more importantly, we appreciate your interest in our blog.

The Environmental Law Resource Nominated for LexisNexis Top 50 Environmental Law Blogs

This post was written by David Wagner.

It's really nice to be recognized. In fact, we're thrilled that LexisNexis has nominated Reed Smith's Environmental Law Resource as one of the Top 50 Environmental Law & Climate Change Blogs for 2011. Even better, they grouped the 50 nominees into 11 categories and our blog was one of just 7 blogs nominated under the "Litigation" category. LexisNexis selected the nominees based on "timely topics, quality writing, frequent posts and that certain something 'extra' that keeps a web audience coming back for more."

We certainly appreciate your interest in our blog and, if you want to support our nomination, LexisNexis is inviting comments.

 

New ASTM Standard for Measuring Energy Performance in Commercial Buildings

This post was written by Lou Naugle and David Wagner.

With an increasing number of local and state governments adopting regulations that require reporting on building energy usage, ASTM International just made things easier by releasing a standard for collecting, compiling, and analyzing energy use in commercial buildings. The standard, which is a set of guidelines called the Standard Practice for Building Energy Performance Assessment for a Building Involved in a Real Estate Transaction (E2797-11), has a variety of uses. It can be used to develop data to assess building energy performance as part of a commercial real estate transaction, comply with regulatory reporting requirements, or develop plans for improving a commercial building’s energy efficiency improvements. You can purchase this new standard from ASTM here.

How Buyers, Owners and Lenders May Use the ASTM Standard

Keep in mind that, although it is not a certification or benchmarking tool, the standard is designed to be used in connection with programs such as LEED and Energy Star. The data collected under the standard offers more detail than an Energy Star rating and, unlike LEED certification, can be used to assess energy use within the time constraints of a real estate transaction.

With commercial building buyers and tenants using energy efficiency and related green building criteria as a key element of determining a site to purchase or lease, look for building owners to use the standard to reduce energy usage, and, in turn, improve a building’s score in required reports, increase its value, make it more attractive to potential buyers or tenants, or receive an energy efficiency loan. Lenders also may analyze the data to identify where a building could improve its energy efficiency before offering loans for retrofits.

U.S. Government Announces Funding of $184 M for Next Generation of Cars and Trucks

This post was written by Christopher Rissetto, Henry King and Robert Helland.

The U.S. Department of Energy (DOE) announced the availability of $184 million "to accelerate the development and deployment of new efficient vehicle technologies." DOE will award cooperative agreements to businesses, universities and nonprofits to promote research and development of technologies supporting energy-efficient and environmentally friendly highway vehicles (i.e., cars and trucks). This funding is provided through the Vehicle Technologies Program, whose mission is to reduce consumption of gasoline and diesel fuels by cars and trucks, which account for 55 percent of total U.S. oil use. In this Reed Smith client alert, we discuss specifics of the eight funding categories that range from the development of performance-enhancing fuels and lubricants to the development of fuel-efficient tires and the creation of greater driver feedback technologies. The client alert also details other project and award information. You should know that the authors of this post have worked with a number of clients in crafting competitive applications for grant funding and complementary strategies to achieve funding, including obtaining support and assistance from members of Congress. Please let us know if we can assist with the preliminary notice and development of a competitive application for these funds.

 

Reed Smith and the Association of National Advertisers Discuss the Green Guides

This post was written by Adam Snukal.

On October 6, the Federal Trade Commission (FTC) issued its long awaited proposed revisions to its Green Guides. The revisions seek to clarify an array of existing and new environmental marketing terms, like "renewable energy" and proposes ways in which consumers reasonably understand terms, seals, and certifications. The FTC is seeking public feedback through December 10, 2010 and there will be many areas that will impact any marketer who engages in "green" marketing. Yesterday, John Feldman of Reed Smith and Keith Scarborough, Senior Vice President of Government Relations at the Association of National Advertisers, addressed key issues on the proposed revisions to the Green Guides. You can access the teleseminar materials here. If you have questions regarding the Green Guides or wish to explore how the revisions may impact your business, please contact either John Feldman or Adam Snukal.

The Green Guides' Proposed Revisions Have Arrived

This post was written by Adam Snukal.

In what was the next of the Federal Trade Commission’s (“FTC”) pillar documents to undergo an overhaul, the FTC yesterday disclosed its proposed revisions to its Guides for the Use of Environmental Marketing Claims (the “Green Guides”). The Green Guides (16 C.F.R. Part 260) set forth the FTC’s position on permissible environmental claims in advertising. The Green Guides were first issued in 1992 and then revised in 1996 and 1998. The proposed revisions have been released for public comments through December 10, 2010, at which time the FTC will decide on those changes that make the final cut. 

The FTC has communicated that its goal in releasing the Green Guides’ revisions is to provide marketers with guidance in helping them avoid making misleading environmental claims, and also to update the guides and make them easier for companies to understand and use. According to FTC Chairman, Jon Leibowitz: "In recent years, businesses have increasingly used 'green' marketing to capture consumers' attention and move Americans toward a more environmentally friendly future. But what companies think green claims mean and what consumers really understand are sometimes two different things. The proposed updates to the Green Guides will help businesses better align their product claims with consumer expectations." Let’s see…

Adhering to many of the same trends and areas of focus upon which the FTC undertook its revision of the endorsement and testimonial guidelines last year, the FTC has sought to curb unqualified general environmental benefits that are nearly impossible to substantiate, to limit claims as much as possible to those benefits actually realized by consumers, and to ensure advertisers make their disclosures clearly and prominently.

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Progress Made In the Development of California's Green Chemistry Regulations

This post was written by Eric McLaughlin.

Since the enactment of California’s two landmark green chemistry laws in September 2008 (AB 1879 and SB 509), significant effort has been made to develop their implementing regulations. This process has proven to be difficult and controversial, because a compromise must be reached between numerous competing concerns, most notably the legislative mandate to protect human health and the environment, and the significant costs to be imposed on companies manufacturing and selling consumer products in California. The process has also come under intense nationwide scrutiny, because California's Green Chemistry Initiative is considered a possible model for national chemical policy reform.

State regulators at the Department of Toxic Substances Control (DTSC) have until January 1, 2011 to enact the final version of the green chemistry regulations, known as the Safer Consumer Products Alternatives (SCPA) regulations. An informal rulemaking process has been used to shape the regulatory framework and extensive public comment has been received from stakeholders, including the scientific community, industry and environmentalists. The most recent draft of the SCPA regulations was released on June 23, 2010 and public comments were accepted through July 15, 2010.

California’s green chemistry laws are intended to completely refocus the regulation of chemicals in consumer products on the beginning of the product life cycle – the design phase. This approach will enable determinations to be made about which chemicals should be used in which products, and weighing the potential effects of those products on human health and the environment before they occur. Drafting the regulations to accomplish this goal, however, has prompted much debate throughout the informal rulemaking process, which has intensified as the SCPA regulations have taken shape, and has focused on six main issues: (1) scope of the regulations; (2) prioritizing chemicals of concern; (3) alternatives analysis; (4) confidential business information; (5) conflicting and duplicative regulations; and (6) the cost of implementation. This post summarizes the status of these issues.

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New York State Enacts Electronic Waste Law

This post was written by David Wagner.

On May 28, the State of New York enacted the Electronic Equipment Recycling and Reuse Act, a law requiring all manufacturers that sell electronic equipment in the state to have in place a free, convenient electronic waste or recycling program by April 1, 2011. Under the new law, each manufacturer will have to recycle or reuse its market share of electronic waste by weight, based on its three-year average of annual sales in the state. They will also have to submit annual reports to the state documenting that they have met goals for collection and recycling. All electronics manufacturers must register with the state by January 1, 2011, and pay a $5,000 registration fee.

The new law, which preempts a New York City e-waste recycling law, covers televisions, VCRs, DVD and MP3 players, game consoles, fax machines, and computers and their peripherals such as monitors, keyboards, mice, scanners and printers.

U.S. Department of Energy Announces Grants for Solar, Marine and Hydrokinetic Technologies

This post was written by Christopher Risetto, Henry King and Robert Helland.

In May, the U.S. Department of Energy (DOE) announced the availability of more than $171 million in grants, cooperative agreements, and technology-investment agreements "to expand and accelerate the development, commercialization, and use of solar and water power technologies throughout the United States". This funding continues a strong emphasis in the DOE, since the passage of the Recovery Act, on projects that promote alternative energy development, sustainability, and green jobs. The goal is to further the development of "evolving technologies," i.e., those that are not existing commercial technologies. In this Client Alert, Reed Smith provides key details behind the two major initiatives included within these announcements, particularly what information is necessary to complete a competitive application.

Estidama: It's Arabic for Sustainability

This post was written by Arash Amai.

As discussed in this client alert, "Estidama" is the first sustainability program implemented in the Emirate of Abu Dhabi. The program focuses on the sustainable construction and operation of buildings and is a key aspect of the "Plan Abu Dhabi 2030", an effort to positively influence the design, development, and construction of every project in Abu Dhabi. Although still in development, one aspect of Estidama is a voluntary green building rating system called the Pearl Rating System. Additional elements of the Pearl Rating System are expected to be released in April 2010.

Finnair's Eco Ad Has Its Wings Clipped

This post was written by Alun Jones and John Feldman. The original post can be found on Adlaw by Request.

On January 6, 2010, the UK's advertising watchdog, the Advertising Standards Authority (the ASA), issued a decision upholding complaints it received against a poster that promoted the Finnish airline, Finnair. The poster featured an image of an Airbus flying above Finland's coastline and stated, "Be eco-smart. Choose Finnair's brand new fleet."

Finnair supported its statement on the basis that it had a new fleet of planes and it structured its flight routes with an eye toward increasing fuel efficiency. The ASA did not find that support very compelling. ASA decided that readers were likely to interpret "eco-smart" as analogous to "environmentally friendly," implying that flying Finnair would have little or no detrimental effect on the environment. Furthermore, the ASA required robust substantiation for the fuel efficiency claims beyond Finnair's emissions data. ASA even questioned whether the ad was clear enough in defining the nature of the comparison: Was Finnair comparing its old fleet with its new fleet, or its new fleet with other airlines?
 

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In the U.S., the Federal Trade Commission Takes on Environmental Marketing Claims

This post was written by Brian Goldberg.

On June 9, 2009, the U.S. Federal Trade Commission (“FTC”) testified regarding its efforts to ensure truthfulness of environmental or “green” marketing claims before the U.S. House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce.  Through its testimony and latest enforcement actions, the FTC has clearly demonstrated that it will continue to ensure that green advertisements are “truthful, substantiated, and not confusing to consumers.”

In order to protect consumers from unfair or deceptive practices, the FTC explained its multi-tiered approach of (1) issuing rules and guides for businesses, (2) challenging fraudulent and deceptive ads through enforcement actions, and (3) publishing materials to help consumers make informed purchasing decisions. 

 

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New York Governor Approves Two Green Building Laws For Residential And State Structures

This post was written by Eric M. McLaughlin and Keisha M. Williams.

In late September, New York became the latest state to give the green light to “green building,” after Gov. David Paterson signed two bills introducing green building performance standards for construction and renovation of New York state government buildings, and a Grants Program for green residential builds. The new laws aim to encourage and incentivize the construction of energy-efficient, sustainable buildings, using recyclable and environmentally friendly materials, and are in line with the governor’s “15 x 15” plan to reduce energy use by 15 percent of expected levels by 2015. New York’s new laws highlight the fact that buildings account for nearly 40 percent of the nation’s greenhouse gas emissions and more than 70 percent of its electricity consumption, and that these impacts can be reduced by regulations governing design and construction.

The State Green Building Construction Act (A. 2005) (State Building Act) will require all new state-owned buildings, and substantial renovations of existing state-owned buildings, to comply with green construction principles set forth in standards to be developed by the Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Authority (NYSERDA). State agencies will also be required to prepare annual building performance reports containing information on their green credentials, including energy consumption, waste reduction, and how indoor air quality compares with set benchmarks. The State Building Act takes effect 180 days after signature, on or about March 25, 2009.

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Congress Enacts Five-Year Extension of Tax Incentives for Green Buildings

This post was written by Ruth N. Holzman, James R. Eskilson, Todd O. Maiden, Eric M. McLaughlin, and Jennifer Smokelin.

There’s good news for commercial building owners who have wanted to “go green,” but have been waiting to see whether the tax incentives for green buildings, set to expire at the end of 2008, would be extended. The historic financial rescue bill (H.R. 1424), signed by President Bush on Friday, Oct. 3, 2008, also included the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (“TEAMTRA”). Among the tax-extenders in TEAMTRA was a five-year extension of the tax incentives for “green” commercial buildings.

Internal Revenue Code Section 179D gives owners of commercial real property a tax break by allowing them to deduct the cost of certain energy-efficient property. It applies to both new construction and to retrofits of existing construction. Prior to TEAMTRA, this tax break only applied to property placed in service on or prior to Dec. 31, 2008. With the extension of this provision to Dec. 31, 2013, property owners now have sufficient time to design, construct and complete projects that will qualify for this tax break. Although numerous bills had been introduced in Congress that would have raised the amount deductible under Section 179D, TEAMTRA did not contain any increase in this amount. The deduction is still limited to the product of $1.80 multiplied by the square footage of the building.

For a brief overview of the Section 179D deduction for “green” buildings, see “New Tax Incentives for ‘Green’ Buildings Have Owners Seeing Green,” in The Critical Path, Fall 2006; for a more detailed discussion, see "New Tax Incentives for 'Green' Buildings Have Owners Seeing Green," in the ABA's The Construction Lawyer, Summer 2007.

California Enacts Groundbreaking Green Chemistry Law

This post was written by Todd O. Maiden and Eric M. McLaughlin.

On Sept. 29, 2008, California Gov. Arnold Schwarzenegger signed two green chemistry bills—AB 1879 and SB 509—into law. This new green chemistry law totally refocuses chemical regulation in California, from reacting to chemicals after they have already been used in manufacturing or industrial processes, to assessing and regulating the use of chemicals in the design stage. The regulatory system created by the law will evaluate chemical risks and impose tailored restrictions based on science and the real-life impacts of chemical usage, rather than instituting an abstract chemical ban. California’s green chemistry law will take effect Jan. 1, 2009, which means the rulemaking process for the numerous regulations needed to implement the system will begin in earnest.

To achieve the goal of a regulatory system based on science and the real-life impacts of chemical usage and exposure, the green chemistry law was drafted using a comprehensive and collaborative approach. Implementation of the regulations will involve an interagency consultative process, incorporating chemical-related research done by other government agencies, and comments from stakeholders and the public. This approach, combined with the notice and comment requirements of the California Administrative Procedure Act, is intended to eliminate the ad hoc rulemaking seen with other environmental laws, such as California’s Proposition 65. Additionally, the scope of the law includes all chemicals used in consumer products, unlike the current patchwork of California laws that address only select product categories, such as lead in jewelry and on lunchboxes, chemicals in food containers, and household products such as light bulbs and batteries.

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California Adopts New Green Building Code Impacting Developers, Lenders and Tenants

This post was written by James R. Eskilson, Ruth N. Holzman, Todd O. Maiden, and Simon Adams.
 

On July 17, 2008, California adopted a new California Green Building Standards Code that will change future construction standards and costs, and affect all new construction. The code, adopted by the California Building Standards Commission, is the first of its kind on a national level and has been marketed as setting an international precedent for resource preservation and combating global warming. 

The California Green Building Standards Code will affect planning and design of new construction projects; energy efficiency of new construction projects; water efficiency and conservation; material conservation and resource efficiency; and environmental air quality. The goal of the new standards is to reduce energy use by at least 15 percent. They will also reduce the use of toxic substances in new construction projects. These new standards will further California’s goals of reducing greenhouse gases, by 2020, to a level that will be 20 percent below those measured in 2005. Another beneficial result of the new standards is a 50 percent reduction in waste streams from construction sites. 

Beyond water and energy efficiency, compliance with the code will require developers to meet new standards regarding the use of eco-friendly flooring, carpeting, ceiling panels and insulation, among other things. The code also sets new standards for dual plumbing systems, for potable and recyclable water, and for the diversion of construction waste to landfills. While initial construction costs may be higher, supporters of the new code argue that the long-term operation and use of buildings meeting this new standard will result in cost savings. This will require additional due diligence on the part of investors and lenders regarding understanding cost-benefit analysis and predicting returns on investments.

Developers are already lobbying to receive greenhouse gas emission reduction credits for their investment in buildings with lower carbon footprints. How such emission reductions will be calculated and how associated emission reduction credits may be allocated, if at all, may dramatically impact the cost benefit analyses of all parties associated with the construction, lending, and long-term use of affected properties.

Compliance with the new building code is currently voluntary, but will become mandatory in 2010. To encourage developers to follow the new green standards during this period of voluntary compliance, California is looking at potential incentive programs, including tax breaks. 

Some of the federal income tax incentives for installing energy-efficient improvements in buildings expired at the end of 2007, and many more will expire after 2008 if Congress does not act to extend them. Although the House passed a bill this spring that would have extended these tax breaks for as long as five years, the Senate failed to vote on any “tax extender” bill before it recessed July 31. Senate Majority Leader Harry Reid has pledged that the Senate will work to pass an energy and “tax extenders” bill in September. We will continue to follow this issue and keep you updated.

From assistance with basic licensing and registration requirements, to contract negotiations and mechanics' lien matters, to resolution of disputes in virtually any forum, Reed Smith represents clients in all aspects of the construction process.