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Environmental Law and Sustainability for Business

The Most Consequential Day of Environmental Deregulation in American History

By Stuart Kaplow on Posted in Climate Change, Codes and Regulations, Federal

EPA Administrator, Lee Zeldin, announced last Thursday, “Yesterday was the most consequential day of deregulation in American history. Alongside President Trump, we announced that the Environmental Protection Agency will take 31 actions to advance his day-one executive orders and power the Great American Comeback.”

I am not sure there is much more to say in this blog post.

Okay, the announcement continues, “We are driving a dagger straight into the heart of the climate change religion to drive down cost of living for American families, unleash American energy, bring auto jobs back to the U.S. and more ..”

Likely most important among the actions announced is the reconsideration of the endangerment finding, when in 2009 without any legislation from Congress, the Obama EPA declared greenhouse gases are a pollutant it can regulate under the Clean Air Act, providing justification for federal, state, and local global warming regulation that many believe is far from protecting Americans from anything environmental; and, that is the action the popular media has focused on.

The whole list of actions announced by Lee Zeldin is worthy of your perusal:

UNLEASHING AMERICAN ENERGY
• Reconsideration of regulations on power plants (Clean Power Plan 2.0)
• Reconsideration of regulations throttling the oil and gas industry (OOOO b/c)
• Reconsideration of Mercury and Air Toxics Standards that improperly targeted coal fired power plants (MATS)
• Reconsideration of mandatory Greenhouse Gas Reporting Program that imposed significant costs on the American energy supply (GHG Reporting Program)
• Reconsideration of limitations, guidelines and standards (ELG) for the Steam Electric Power Generating Industry to ensure low cost electricity while protecting water resources (Steam Electric ELG)
• Reconsideration of wastewater regulations for oil and gas development to help unleash American energy (Oil and Gas ELG)
• Reconsideration of Biden Harris Administration Risk Management Program rule that made America’s oil and natural gas refineries and chemical facilities less safe (Risk Management Program Rule)

LOWERING THE COST OF LIVING FOR AMERICAN FAMILIES
• Reconsideration of light-duty, medium duty, and heavy duty vehicle regulations that provided the foundation for the Biden Harris electric vehicle mandate (Car GHG Rules)
• Reconsideration of the 2009 Endangerment Finding and regulations and actions that rely on that Finding (Endangerment Finding)
• Reconsideration of technology transition rule that forces companies to use certain technologies that increased costs on food at grocery stores and semiconductor manufacturing (Technology Transition Rule)
• Reconsideration of Particulate Matter National Ambient Air Quality Standards that shut down opportunities for American manufacturing and small businesses (PM 2.5 NAAQS)
• Reconsideration of multiple National Emission Standards for Hazardous Air Pollutants for American energy and manufacturing sectors (NESHAPs)
• Restructuring the Regional Haze Program that threatened the supply of affordable energy for American families (Regional Haze)
• Overhauling Biden Harris Administration’s “Social Cost of Carbon”
• Redirecting enforcement resources to EPA’s core mission to relieve the economy of unnecessary bureaucratic burdens that drive up costs for American consumers (Enforcement Discretion)
• Terminating Biden’s Environmental Justice and DEI arms of the agency (EJ/DEI)

ADVANCING COOPERATIVE FEDERALISM
• Ending so called “Good Neighbor Plan” which the Biden Harris Administration used to expand federal rules to more states and sectors beyond the program’s traditional focus and led to the rejection of nearly all State Implementation Plans
• Working with states and tribes to resolve massive backlog with State Implementation Plans and Tribal Implementation Plans that the Biden Harris Administration refused to resolve (SIPs/TIPs)
• Reconsideration of exceptional events rulemaking to work with states to prioritize the allowance of prescribed fires within State and Tribal Implementation Plans (Exceptional Events)
• Reconstituting Science Advisory Board and Clean Air Scientific Advisory Committee (SAB/CASAC)
• Prioritizing coal ash program to expedite state permit reviews and update coal ash regulations (CCR Rule)
• Utilizing enforcement discretion to further North Carolina’s recovery from Hurricane Helene

And there is much more that did not make the announced list including the quietly suggested plan to sell Energy Star and whispers about tactics to dismantle the electric vehicle mandates. All of this fits within the public statements from the White House that through a combination of workforce and spending costs the EPA budget will see a more than 65% reduction next year.

Activists have already claimed that these changes signal a retreat from environmental protection. But we are certain, nothing could be further from the truth. The EPA’s core mission of safeguarding human health and the environment remains. What will be gone are the non Congressionally authorized frolics and detours, as the agency gets back to protecting the environment.

As this blog is being written, it has only been 57 days since the Trump administration took office, and beginning with the Executive Orders signed on day one, there has been much change in environmental matters and the pace of pursuing opportunities in that change is only accelerating.

We are environmental attorneys and entrepreneurs, not partisans. We prioritize innovation in environmental change for those who chase being the fastest adapters and quickest disrupters and we will continue to blog about that here.
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Join us for the next in our ‘carbon based life form’ webinar series, “Ask an Environmental Lawyer Anything” this Tuesday, March 18 from 9 – 9:30 am. The webinar is complimentary, but you must register.

States Challenge Validity of New York’s Climate Change Superfund Act

By Stuart Kaplow on Posted in Climate Change, Codes and Regulations, GHG

The recent enactment of the Climate Change Superfund Act in New York has set the stage for a significant legal battle over the scope of state authority to impose financial responsibility for purported climate related damages. The outcome of this litigation could have far reaching effects, influencing not only New York but the entire energy sector, worldwide.

The breadth and scope of this matter is clear from the first averment in the lawsuit:

“The State of New York believes it can seize control over the makeup of America’s energy industry. In an unprecedented effort, New York has set out to impose tens of billions of dollars of liability on traditional energy producers disfavored by certain New York politicians. These energy producers needn’t operate in New York before becoming a target. And New York consumers won’t bear the brunt of these crushing new costs once they’re imposed. Rather, New York intends to wring funds from producers and consumers in other States to subsidize certain New-York-based ‘infrastructure’ projects, such as a new sewer system in New York City.”

Signed into law by Governor Kathy Hochul on December 26, 2024, the Act seeks to hold major fossil fuel companies chargeable for their contributions to greenhouse gas emissions, establishing a retroactive and strict liability scheme reminiscent of the federal Comprehensive Environmental Response, Compensation, and Liability Act (the Superfund law). However, the Act’s implementation has been met with immediate legal opposition, with a coalition of state attorneys general and industry groups challenging its constitutionality.

Background of the Climate Change Superfund Act

The Act aims to generate $3 billion annually over 25 years, totaling $75 billion, to fund infrastructure projects related to climate change adaptation and mitigation. Funding would be derived from assessments levied against fossil fuel companies deemed responsible for more than one billion tons of greenhouse gas emissions between 2000 and 2018.

While this case was pending, on February 28, 2025, Governor Hochul signed Senate Bill 824, an amendment expanding the liability period to include emissions through 2024, thereby increasing potential financial exposure for targeted entities.

To appreciate what is at risk, Aramco of Saudi Arabia, alone, could be charged with the largest annual assessment of any company under the Act, $640 million a year, for emitting 31,269 million tons of greenhouse gas emission from 2000 to 2023. It is not conceivable that the Saudi royal family will ever pay those sums to the state of New York.

Legal Challenge: Federal and State Law Claims

On February 6, 2025, opponents of the Act, including 22 state attorneys general and industry representatives, filed suit in the District Court for the Northern District of New York, arguing, “.. unfortunately for New York, the U.S. Constitution has something to say about the State’s retroactive and extraterritorial shakedown.”

Among the claims in the Complaint are that the Act unlawfully burdens out of state (.. and international) entities and violates multiple constitutional provisions:

Federal Constitutional Claims

1. Equal Protection Clause (14th Amendment): The lawsuit contends that the Act disproportionately imposes liability on out of state fossil fuel companies while benefiting New York residents, creating an unconstitutional disparity.

2. Commerce Clause: Plaintiffs argue that the Act discriminates against out of state businesses by targeting fossil fuel producers regardless of their presence in New York, thereby improperly regulating interstate commerce.

3. Preemption by the Clean Air Act: The federal Clean Air Act establishes a comprehensive regulatory framework for air emissions. The lawsuit asserts that the New York law intrudes into this federal domain, violating the Supremacy Clause.

4. Due Process Clause (5th and 14th Amendments): The Act retroactively imposes liability on companies that engaged in lawful activities at the time, without affording sufficient procedural due process protections.

5. Excessive Fines Clause (8th Amendment): Plaintiffs argue that the Act levies through strict liability exorbitant financial penalties against a select group of companies, constituting unconstitutional excessive fines.

New York State Constitutional Claims

1. Takings Clause (Article 1, Section 7): By compelling fossil fuel companies to pay assessments for public infrastructure projects without just compensation, the Act allegedly violates New York’s Takings Clause.

2. Due Process (Article 1, Section 6): The state based claim parallels the federal argument, asserting that the Act allows for arbitrary enforcement without sufficient procedural due process safeguards.

Implications of the Lawsuit

This lawsuit raises critical questions about the balance of state and federal authority in environmental and energy public policy, as well as the extent to which states can impose financial responsibility on specific industries for historic greenhouse gas emissions. The outcome of this litigation could have far reaching effects, influencing not only New York’s climate initiatives but also American national energy policy.

The litigation reflects the broader pushback against progressive states attempting to set national energy policy. Opponents argue that New York is overstepping its authority, effectively dictating climate policy beyond its borders by targeting out of state fossil fuel companies. The challenge to the Act underscores tensions between the few state governments that prioritize aggressive climate action in a society that relies heavily on traditional energy industries. The outcome of this case could determine whether individual states have the power to impose significant financial penalties on corporations for historical emissions or if such authority remains primarily within the federal government’s purview, if at all.

Given that Vermont enacted substantially the same law in May 2024, also currently facing legal challenges, the decisions in these cases may establish significant precedents regarding state level climate liability.

A Highway to Nowhere

Neither the Act nor this litigation take into account that EPA Administrator Lee Zeldin has reportedly in recent days recommended to the White House that his agency should rescind the finding that greenhouse gas emissions endanger human health and the environment. A reversal of the 16 year old endangerment finding would have broad implications for the underpinnings of these disputes and differences that one can hardly fathom.

The Road Ahead

In response to the February 28, 2025, amendment to the Act, another lawsuit was promptly filed in the Southern District of New York by a coalition including the U.S. Chamber of Commerce, the Business Council of New York State, the American Petroleum Institute, and the National Mining Association. This legal battle is likely to continue evolving, with high stakes implications for both national energy public policy and corporate liability.

“The Climate Change Superfund Act is an ugly example of the chaos that can result when States overreach.” We will continue to monitor developments and provide further insights into the legal and policy ramifications of the New York Climate Change Superfund Act.
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Join us for the next in our ‘carbon based life form’ webinar series, “Ask an Environmental Lawyer Anything” on Tuesday, March 18 from 9 – 9:30 am. The webinar is complimentary, but you must register here.

House Votes to Protect the Gas Water Heater in Your House

By Stuart Kaplow on Posted in Climate Change, Codes and Regulations, Federal

On the day after Christmas, in its last days, the Biden administration published a final rule that was effectively a ban on most fossil fueled residential hot water heaters. Last Thursday, the U.S. House of Representatives passed a resolution nullifying the rule.

House Joint Resolution 20 passed 221-198. No Republicans opposed the disapproval, and 11 Democrats voted for the House action.

Implications for Homeowners

Just days before the vote President Trump issued a statement of administration policy that explained he, “strongly supports passage of H.J. Res. 20, a joint resolution to disapprove the rule submitted by the Department of Energy (DOE) relating to Energy Conservation Program: Energy Conservation Standards for Consumer Gas-fired Instantaneous Water Heaters.” .. “This rule’s impact on the water heater market could set a dangerous precedent for further restrictions on natural gas appliances, making it harder for American homeowners to maintain affordable living standards. The rule promotes more expensive condensing gas water heaters and creates hurdles for remodeling and replacement projects.”

Pendent to the issuance of that statement and consistent with the Presidential Memorandum of January 20, 2025, temporarily postponing all pending rules, DOE announced that it is postponing the effective date of these standards until March 2, 2025.

Broader Legislative and Regulatory Context

The House action is part of the broader Trump administration and Republican Congress efforts to dismantle the “green New Deal” including what are seen as environmental policies overreaching into people’s lives wrongly justified in the name of apocalyptic global warming. In this instance, the federal government was not coming for your gas stove, but it certainly was coming for your non-condensing natural gas powered hot water heater, which comprises approximately 40% of the market.

In a perverse only in Washington DC turnabout, the loudest opponents to this repeal are not Democrats, but manufacturers of ‘electric’ hot water heaters, who are not subject to this rule.

In the name of a climate emergency, the Biden administration issued regulations to force households to implement its agenda: Last year, the executive branch introduced a final rule imposing stricter energy standards for residential clothes washing machines; Finalized a rule, set to go into effect in 2025, to transition to more advanced refrigeration and cooling technologies that don’t use hydrofluorocarbons; Only after facing pushback, issued its final regulations, which will impact 3% of gas stove models, rather than the initially proposed 50%; Doubled efficiency standards for light bulbs, requiring manufacturers to raise the levels for common light bulbs from 45 lumens per watt to more than 120 lumens per watt, such that only LED bulbs will be able to comply with the standards, not compact fluorescent bulbs; and, Amended the energy conservation standards for ceiling fans, putting into effect far stricter energy standards that forced small and medium size manufacturers out of the market.

The Role of the Congressional Review Act

This resolution was introduced under the Congressional Review Act, a tool Congress can use to overturn certain federal agency actions. If a CRA joint resolution of disapproval is approved by both houses of Congress and signed by the President, the rule at issue cannot go into effect or continue in effect.

While over 400 joint resolutions of disapproval for more than 250 rules have been introduced since the CRA’s enactment, the method has only successfully been used to overturn a handful of rules. It was utilized in the 117th Congress to repeal three rules promulgated by the Trump administration, similarly. During the 118th Congress, when over 200 joint resolutions of disapproval were introduced, the most to date during a given Congress, no rules were successfully overturned. Today in the 119th Congress, there are more than 30 CRA joint resolutions already pending and there will be more.

Next Steps

The office of Senator Cruz, who cross filed Senate Joint Resolution 4 for gas fired instantaneous water heaters, announced on Thursday they had gathered the required number of signatures to bring the resolution to the Senate floor, and a vote will likely come within the next two weeks.

If the Senate passes the resolution and it receives presidential assent, and both are expected to happen before the end of March 2025, the rule on gas fired instantaneous water heaters will be nullified, preserving current consumer options and averting drastically increased costs associated with the purported transition to electric models responding to the U.S. public’s number one concern of lower cost of living.

This Congressional development highlights the significant shift in political views on apocalyptic climate change as well as skepticism of Executive branch regulatory efforts.

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Join us for the next in our “carbon based life form” webinar series, “Ask an Environmental Lawyer Anything” on Tuesday, March 18 from 9 – 9:30 am. The webinar is complimentary, but you must register here.

EPA Moves to Overturn California’s Motor Vehicle Emission Standards

By Stuart Kaplow on Posted in Climate Change, Codes and Regulations

On February 14, 2025, newly appointed U.S. Environmental Protection Agency Administrator Lee Zeldin announced in the Oval Office, alongside President Donald Trump, that the EPA would transmit to Congress requests to repeal of the Biden Administration’s electric vehicle mandates that granted waivers to California. These waivers enabled California to enforce air emission standards stricter than federal regulations for cars and trucks, effectively requiring new passenger car sales for model year 2026 to be 35% zero emission and eliminating the sale of gasoline vehicles by 2035.

The transmission of the requests to repeal these waivers granted to California marks a significant step in what could be a major nationwide regulatory rollback under the new administration; that is, this will impact the motor vehicles sold in all 50 states.

The Electric Vehicle Mandate

The EPA rules in question granted California waivers to preempt federal laws, encompassing the Advanced Clean Cars II, Advanced Clean Trucks, and Omnibus NOx rules. The totality of these three agency waivers not only targeted passenger vehicles but also commercial trucks, increasing vehicle costs and potentially affecting the broader economy through higher transportation costs.

Critics argue that such policies lead to increased costs for goods transported by truck and an overall higher cost of living for American families. The California standards have unintended consequences including halting the sale of many recreational vehicles including motorhomes.

President Trump campaigned against what he labeled the “electric vehicle mandate,” and the repeal became the subject of one of his administration’s day one executive orders. The transmission of the request to repeal these waivers to Congress is expected to have been only the first step in a broader effort to step back from greenhouse gas emissions regulations nationwide.

The Waiver Process Under the Clean Air Act

The 1970s amendments to the Clean Air Act grant California the ability to seek waivers from federal preemption, allowing the state to impose its own stricter air pollution emissions standards in response to 1970s smog. However, the EPA must approve the waiver request and did so in the final month of the Biden administration despite that smog is no longer a significant issue in California and for that matter, greenhouse gases are not a major contributor to smog formation.

Under Section 177 of the CAA, other states can adopt California’s emission standards if they are identical to those granted a waiver. Currently, 11 states, including Maryland and Washington, D.C., have adopted California’s vehicle emissions rules, accounting for nearly 30% of all cars sold in the United States, but affecting the marketplace nationwide with what critics term the Californication of the U.S. market (for example, without the repeal you will not be able to buy a motorhome in Maryland).

Related but different, the U.S. Department of Transportation has halted new funds to the National Electric Vehicle Infrastructure program and is seeking to claw back money from the states for EV chargers, again a target of Candidate Trump.

Separately but also significantly, Transportation is moving to undo fuel economy rules adopted by the Biden administration.

Congressional Review Act: A Path to Repeal

The Congressional Review Act, enacted in 1996, allows Congress to overturn federal agency rules. Agencies must report rulemaking activities to Congress, which then has a specified deadline to review and potentially nullify them. If a joint resolution of disapproval is introduced, passed by Congress, and signed by the President, the rule is retroactively negated as if it never existed.

One of the key provisions of the CRA is that if a rule is repealed, an agency cannot issue a substantially similar rule in the future unless explicitly authorized by Congress. This provision could prevent future administrations from reinstating California’s stricter emissions standards; such could be dramatic.

Despite its potential power, the CRA has historically been used sparingly, overturning only 20 rules since its enactment. However, given not only the new administration’s priorities but also the pendulum swing in sentiment for greenhouse gas regulation, most agree there is a strong likelihood of the successful challenge to California’s waivers.

No Judicial Review but Supreme Court Involvement

The issue of California’s emissions waivers has already sparked legal battles. The U.S. Supreme Court recently denied the federal government’s request to delay litigation brought by oil and gas companies seeking to overturn the EPA waiver on the Advanced Clean Cars rule, which applies to model years through 2025.

Opponents have already suggested a gray area exists regarding whether this waiver granted under the Clean Air Act constitutes a “rule” (versus a waiver) that can be overturned via the CRA. But significantly and dispositively the CRA bars judicial review of resolutions. Not to mention a Congressional resolution is quicker than administratively reversing the rule.

What Happens Next?

All Biden administration rules published in the Federal Register after August 15, 2024, are eligible for congressional review and potential repeal under the CRA. Given that Congress has 60 working days to act on an agency rule, the deadline extends into early May 2025. There were 49 repeal resolutions pending, 14 of which target EPA rules. And as of last Wednesday, three additional resolutions specifically seek to revoke California’s federal car and truck standards waivers.

When Congress overturns these vehicle emission waivers the impact will be far greater than only motor vehicles sold in the future in California and even in the 11 other states that have coopted these regulations. This move by Congress would mark a significant course correction in U.S. environmental and energy policy and will profoundly impact the nation.

We have already been working with businesses who are the fastest adapters to assist them with innovative solutions to the opportunities presented, not just in California but even in places like Maryland, where at the same time as these announced federal changes, the Governor is this week pursuing legislation to ration electricity for residences and businesses to have enough electricity in the grid for all electric buildings and electric vehicles.

There will likely be much media attention on this subject in the coming days, however, there is little doubt California will not be permitted to pull the nation around by the nose, and the waiver to exceed Congressionally approved national environmental standards will be quashed

SEC Climate Disclosure Rule: A Dramatic Reversal Under Trump

By Stuart Kaplow on Posted in Climate Change, Codes and Regulations, Federal

The U.S. Securities and Exchange Commission has taken a major step toward reversing course on The Enhancement and Standardization of Climate-Related Disclosures for Investors rule (the “Greenhouse Gas Rule”) currently pending in the courts.

The Greenhouse Gas Rule adopted by the SEC on March 6, 2024, is currently being challenged in litigation consolidated in the Eighth Circuit, and the Commission previously stayed the effective date pending completion of that litigation.

In a move that was anticipated and maybe only surprising by its timing before a new Trump SEC Chair had been confirmed by the Senate, on February 11, 2025, SEC Acting Chair Mark Uyeda issued a statement saying the Greenhouse Gas Rule “.. is deeply flawed and could inflict significant harm on the capital markets and our economy.” He then “.. directed the Commission staff to notify the Court of the changed circumstances and request that the Court not schedule the case for argument to provide time for the Commission to deliberate and determine the appropriate next steps in these cases.” While this policy reversal was expected of a Trump Administration, it is nonetheless a dramatic change from what had been the signature policy of Gary Gensler in the Biden SEC.

It has been suggested that withdrawing its defense of the Greenhouse Gas Rule will allow the courts to promptly rule in favor of the plaintiffs which will not require the SEC to go through formal rulemaking to rescind the Rule, something that could take two years.

In his statement, the Acting Chair made clear that both he and fellow Republican Commissioner Hester Peirce had voted against the Greenhouse Gas Rule’s adoption. She argued at the time that “only a mandate from Congress should put us in the business of facilitating the disclosure of information not clearly related to financial returns.” And he had argued the Commission was “without statutory authority or expertise” to address climate change issues.

His public statement goes on to describe that “the Commission’s briefs previously submitted in the cases consolidated in the Eighth Circuit do not reflect my views. The briefs defend the Commission’s adoption of the Rule, but I continue to question the statutory authority of the Commission to adopt the Rule, ..” with the recent change in the composition of the Commission, now the majority view. However, that view is not unanimous, and Democratic SEC Commissioner Caroline Crenshaw released a statement criticizing the directive to the staff as unilateral and “without the input of the full Commission.”

But beyond those views, there is no doubt the January 20, 2025, Presidential Executive Order regarding a Regulatory Freeze that will prevail on the conduct of the litigation.

For how this ends, President Trump’s nominee to chair the SEC, Paul S. Atkins has publicly opposed the Greenhouse Gas Rule and you can read his views in his letter jointly penned with other former SEC Commissioners. Lest there be any question about his perspective, the Greenhouse Gas Rule “.. represents an unprecedented and unjustified effort beyond financial materiality and engages the Commission in matters beyond its statutory remit.”

Loath to let the law intrude, we must note that after the Supreme Court ruling in West Virginia v. EPA, many legal scholars agree that the Greenhouse Gas Rule would not withstand “major question doctrine” and would be struck down by the U.S. Supreme Court.

We would be remiss if we did not note that the SEC Longstanding Disclosure Related to Climate Change Remains and we continue to do that work annually for public companies and their counsel.

While climate change disclosure is no longer the cause de célèbres, it should be lost on no organization, including all who do business in California, even if located elsewhere, that there is pending a judicial challenge to the Delay in Corporate Greenhouse Gas Reporting in California that has Implications for All of Us. And despite that in the most burdensome state net zero greenhouse gas reduction law in the country, Citizens and Businesses Join Suing Maryland to Halt BEPS, in the face of longstanding U.S. national energy policy, with additional legislation now pending the Maryland Governor Proposes to Ration Electricity to reduce greenhouse gas emissions.

Even under the Trump Administration businesses must remain vigilant of evolving climate change policies. We will continue reporting changing environmental policy in future blog posts and you may always reach out to Stuart Kaplow.

Reliance Letters: An Essential Part of Phase 1 Environmental Site Assessments

By Stuart Kaplow on Posted in Environmental, Legal

In the realm of commercial real estate transactions, due diligence is a critical step in assessing and mitigating risks. One essential component of this process is the Phase 1 Environmental Site Assessment, which evaluates the environmental contamination on a property. A key document that facilitates the broader applicability of these assessments is the reliance letter.

What is a Reliance Letter?

At its core, a reliance letter is a legal document that allows a third party to rely on the findings of an existing report or work product. This is particularly significant in environmental site assessments, where the original report may have been prepared for a specific client, but other interested parties such as lenders or subsequent purchasers, desire to depend on its accuracy.

In recent years we have seen a great expansion in the request for reliance letters, by way of example recently our law firm was asked to provide a reliance letter for a sub legal opinion related to the issuance of green financing bonds that carried with them government incentives, and we have had requests for reliance letters on opinions of counsel we have provided for greenhouse gas emission compliance with laws.

The Role of Reliance Letters in Environmental Site Assessments

That noted, reliance letters most often serve a crucial function in allowing third parties to depend on the findings of an environmental consultant’s report. This is important for mitigating associated risks. Without a reliance letter, only the original client who commissioned the Phase 1 assessment could enforce any rights under the report, leaving other stakeholders without legal rights to rely on its conclusions.

Legal Considerations: Privity of Contract

The legal principle of “privity of contract” generally limits enforceability to the direct parties involved in a contract. In the context of environmental site assessments, this means that only the party who commissioned the report could hold the consultant accountable. However, a reliance letter can extend this right to additional parties, ensuring they can rely on the consultant’s findings while also placing additional liability on the consultant should the work be found deficient.

Who Can Request a Reliance Letter?

A variety of parties commonly request reliance letters in the context of environmental assessments, including:

• Lenders – To assess contamination risks before financing a property.
• Purchasers – To ensure they are not acquiring a contaminated property, and to obtain one of the CERCLA defenses.
• The United States Small Business Administration – As part of their loan approval process.
• The Original Client – To allow third parties to use the report as part of a transaction.

What Does a Reliance Letter Include?

A well drafted reliance letter typically contains several key elements:

1. Scope of Reliance – Clearly defines who can rely on the report and under what circumstances.
2. Limitation Language – Manages the consultant’s liability by defining the extent of their responsibility.
3. Evidence of Insurance – May include assurance that the environmental professional carries adequate insurance to cover potential claims.

Cost of a Reliance Letter

The cost of obtaining a reliance letter generally depends on the price of the original environmental assessment. Environmental consultants typically charge between 10% and 20% of the original cost of work to issue a reliance letter. Attorneys, who may have broader risk, often charge as much as 35% of the cost of the underlying work.

Template for an Environmental Reliance Letter

One of the most widely accepted templates for an environmental reliance letter is provided by the U.S. Small Business Administration. Use of that template can avoid protracted negotiation. A typical environmental reliance letter includes the following sections:

1. Introduction – Explanation of the purpose of the letter and the relationship between the consultant and the relying party.
2. Scope of Work – Detailed description of the environmental assessment conducted, including investigations and methodologies used.
3. Findings – Summary of the consultant’s findings related to potential environmental concerns, contamination, and hazardous materials.
4. Assumptions and Limitations – Clarification of any constraints affecting the findings, such as limitations in data or scope of work.
5. Dates – Specification of the dates of the assessment, initial report, any updates, and the duration for which reliance is granted (.. that can be significant because a Phase I report can only be relied on for 180 days).
6. Certifications – Inclusion of relevant professional certifications or licenses held by the consultant.
7. Conclusions and Recommendations – Summary of key conclusions and any recommended actions based on the findings.

Conclusion

Reliance letters, despite being little understood, play a pivotal role in ensuring the credibility and applicability of Phase 1 Environmental Site Assessments. By allowing lenders, purchasers, and other stakeholders to depend on the findings of an existing report, reliance letters facilitate smoother transactions, mitigate risks, and enhance environmental due diligence. As environmental liability continues to be a significant factor in real estate transactions and financing, reliance letters will remain an indispensable tool in the due diligence process.

Reverse Greenwashing: The Battle Over ExxonMobil’s Recycling

By Stuart Kaplow on Posted in Climate Change, Green Washing, greenwashing

In the devolving discourse on the role of businesses in climate change responsibility, we are witnessing an unusual, but likely positive phenomenon, “reverse greenwashing.” Traditionally, greenwashing refers to businesses exaggerating or fabricating their environmental initiatives to appear more sustainable. Reverse greenwashing, however, occurs when environmental groups and public officials unjustly discredit legitimate business sustainability efforts, potentially for political or competitive reasons.

A high profile example of this is the recent lawsuit filed by ExxonMobil against California Attorney General Rob Bonta and several environmental organizations, including the Sierra Club, Surfrider Foundation, Heal the Bay Baykeeper, and the Intergenerational Environment Justice Fund Ltd. ExxonMobil alleges that these parties engaged in a deliberate campaign to discredit its advanced plastic recycling initiatives, spreading misinformation and defamation to undermine the company’s sustainability efforts.

The crux of the 40 page complaint is the averment, “with apparently no appreciation for the irony of their claim, Mr. Bonta and his cohorts are now engaging in reverse greenwashing; while posing under the banner of environmentalism, they do damage to genuine recycling programs and to meaningful innovation.”

Background of the Lawsuit

ExxonMobil, one of the world’s largest producers of plastic, has been investing heavily including in advanced recycling technologies aimed at converting hard to recycle plastics into reusable materials. This technology, if successful, could revolutionize plastic waste management by reducing landfill contributions and creating circular economies in the many industries that use plastic.

However, according to ExxonMobil’s complaint, Attorney General Bonta and various environmental groups have labeled these initiatives, including in a lawsuit brought last September by Mr. Bonta against ExxonMobil, as a “sham” and “myth,” casting doubt on the legitimacy of ExxonMobil’s recycling efforts including by disparaging this one business by blaming it for “the fact that the U.S. recycling rate has never exceeded 9%.” The company argues that this is not just criticism but an orchestrated attempt to harm its reputation and business interests.

Allegations of Reverse Greenwashing

ExxonMobil’s lawsuit highlights three core allegations:

1. Defamation and False Statements. The lawsuit claims that the defendants have knowingly spread falsehoods about ExxonMobil’s recycling efforts, accusing the company of misleading the public when, in fact, it has made substantial investments in legitimate sustainability solutions.

2. Coordinated Smear Campaign. The complaint alleges that Bonta and the environmental organizations have strategically reversed their stance on recycling, choosing to attack ExxonMobil’s initiatives despite previously advocating for similar technologies. This alleged shift was a “deliberate smear campaign” in Bonta’s “personal capacity to drive up donations and publicity for his political campaign.”

3. Foreign Influence. ExxonMobil further claims that IEJF, an Australian charity with financial ties to competing businesses, including through its relationship with ExxonMobil business competitor Fortescue Metals Group Ltd, has influenced U.S. based organizations to engage in this campaign. The company asserts that foreign actors may be attempting to manipulate the U.S. regulatory landscape to hinder ExxonMobil’s competitive edge in the global energy sector.

The Legal Battle and Its Implications

Filed in federal court in Beaumont, Texas, ExxonMobil’s lawsuit seeks compensatory and punitive damages, as well as injunctive relief to prevent further dissemination of false and defamatory claims. The outcome of this ‘turnabout is fair play’ case could set a significant precedent in how corporate sustainability efforts are assessed and challenged in the public sphere.

It should be lost on no one that late last year, in a first of its kind victory for a business, a New York state judge ordered the Greenwashing Lawsuit Alleging Plastic Pollution by PepsiCo is Dismissed. In your face responses by businesses are a positive change.

The Bigger Picture: When Environmental Advocacy Becomes Political

At a time when many in the environmental industrial complex are focused on the Executive Orders of the new Trump organization, there is also important action in the judicial branch. This case raises key questions about the intersection of environmental activism, politics, and corporate responsibility. Are companies genuinely attempting to improve sustainability being unfairly vilified for political or financial gain? And how should business respond?

While skepticism toward environmental claims by businesses and governments is at times warranted, we are now in a time when ‘fatalism is out and localism is in’, so dismissing legitimate innovations without due diligence may not only hinder progress in addressing global environmental and sustainability challenges but expose one to jeopardy. The ExxonMobil case underscores the need for a balanced approach, one that encourages both good practices by a business and a fair discourse on sustainability initiatives.

As this legal battle unfolds in what is a very different political time from when the defendants originally disparaged ExxonMobil, it will be crucial for businesses large and small to watch how courts navigate the complexities of reverse greenwashing, corporate responsibility, and the influence of political and foreign interests, in shaping environmental narratives.

The complaint should be required reading. It is at ExxonMobil_v_Bonta.pdf

Anatomy of an Executive Order: Stopping the Wind

By Stuart Kaplow on Posted in Climate Change, Federal, Paris Accord, wind turbine

Executive Orders are a vital mechanism for the President of the United States to manage the operations of the federal government. Since George Washington issued the first eight Executive Orders, more than 1,400 have been recorded. Every American President has issued at least one. Codified under Title 3 of the Code of Federal Regulations, Executive Orders carry the force of law, providing a direct and impactful way for the President to address key issues.

President Donald Trump’s Executive Order, issued on January 20, 2025, titled “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects,” exemplifies how such orders can reflect a leader’s vision while addressing critical national concerns. This directive not only honors a campaign promise but also underscores the administration’s commitment to re-evaluating energy policies with a focus on innovation, security, and sustainability.

Understanding Executive Orders

An Executive Order is a signed, written, and published directive from the President. Unlike legislation, Executive Orders do not require Congressional approval, making them a powerful tool for immediate action. However, Congress retains the ability to influence their implementation through legislation or funding adjustments. Only a sitting President can revoke or amend an existing Executive Order by issuing a new one.

Key Provisions of the Executive Order

President Trump’s Executive Order on offshore wind leasing includes several critical provisions designed to ensure a thorough evaluation of current practices and their impacts:

Withdrawal from Offshore Wind Leasing

  • Effective January 21, 2025, all areas within the Outer Continental Shelf are withdrawn from consideration for wind energy leasing. (Note, the ocean between 3 and 200 miles off the Atlantic coast is actually not the Outer Continental Shelf, but rather is the Exclusive Economic Zone.)
  • This withdrawal will remain in effect until explicitly revoked by a future Executive Order.
  • Existing leases are not immediately affected, but the Secretary of the Interior is tasked with reviewing those leases to assess their ecological, economic, and environmental implications. This review could lead to amendments or terminations where necessary.

Review of Federal Wind Leasing and Permitting Practices

  • A temporary halt is placed on issuing new or renewed approvals, rights of way, permits, leases, or loans for both onshore and offshore wind projects.
  • The Secretary of the Interior, in collaboration with other federal agencies, will conduct a comprehensive assessment of current wind leasing and permitting practices. This evaluation will address: Environmental impacts on wildlife, including birds and marine mammals; Navigational safety and transportation concerns; and, Effects on national security and commercial interests.

More than Just a “Day One” Campaign Promise

It should be no surprise that this Executive Order was issued on day one. Candidate Trump said at a rally in New Jersey last May that he intended to sign an Executive Order on day one that would halt “horrible” offshore windmill projects. We counted at least 10 times he repeated that pledge. In recent weeks the media widely reported then President Elect Trump asked New Jersey Congressman Jeff Van Drew to draft an order after the Congressman lobbied to have the campaign promise fulfilled.

President Trump’s Executive Order reflects a thoughtful approach to energy policy, prioritizing a comprehensive review of current practices to ensure they align with broader national interests. His opposition to offshore wind projects, often criticized for their reliance on subsidies (.. Federal tax credits cover 50% of the cost of building offshore wind) and potential environmental and aesthetic impacts, has been consistent and well documented. By pausing new leasing and permitting, this directive creates an opportunity to:

  • Reassess the economic viability of wind energy projects in the context of federal subsidies.
  • Address potential environmental concerns, particularly the impact on marine ecosystems and wildlife.
  • Consider the broader implications for national security and navigational safety.

Positive Impacts on Energy Policy

This Executive Order aligns with the administration’s broader energy “drill, baby, drill” (.. curiously, which slogan was first used by Maryland Lieutenant Governor Michael Steel in 2008) strategy, which emphasizes energy independence, economic efficiency, and the reduction of regulatory burdens. By encouraging a more balanced and sustainable approach to energy development, this policy provides a pathway to:

  • Strengthen the role of natural gas and maybe even nuclear and hydrogen energy sources.
  • Minimize reliance on taxpayer funded subsidies for renewable energy projects.
  • Protect critical ecosystems and maintain navigational and national security priorities.

Industry Impacts and Future Opportunities

The environmental industrial complex, while facing immediate challenges due to this policy change, now has an opportunity to innovate and adapt.

This is much more than a pause in new off shore wind leasing. By way of example, the single surviving planned Maryland offshore wind project was described last week by a regulator as, “at best a Zombie enterprise,” when state public officials have not yet admitted publicly “.. it only exists as a living dead” attempt to catch the wind. With appeals of the federal Bureau of Energy Management permits pending that a Trump Administration will now be called upon to defend, the permitting cannot end well. And the Delaware rejection of that wind project’s substation building permit application further damns the Maryland project. That offshore wind had been key to the Maryland Governor’s climate plan. The fastest adapters and quickest disrupters are already prioritizing innovation in technological and environmental change in Maryland.

Denmark’s Ørsted, the world’s largest off shore wind turbine business, whose stock dropped 13% on January 20 and on that day said it would take an impairment charge of approximately $1.68 Billion for projects off the coasts of Maryland, Delaware, and New Jersey, for instance, may lead the way in rethinking project designs and locations to align with evolving U.S. policies.

On a different but related environmental matter, the President signed an Executive Order triggering the United States’ withdrawal from the Paris Agreement under the United Nations Framework Convention on Climate Change.

Conclusion

President Trump’s Executive Order “Stopping the Wind” is a decisive step toward reshaping America’s energy landscape. By pausing offshore wind leasing and permitting, the administration has created an opportunity to reassess and refine energy policies in a way that prioritizes innovation, sustainability, and national interests. This move not only fulfills a campaign promise but also reflects a commitment to responsible governance and forward thinking energy strategies.

As stakeholders across industries and government collaborate to navigate these changes, the potential for innovation and progress is strong. We would be pleased to talk with you about it.

For a comprehensive list of Executive Orders issued by the Trump Administration, visit The White House Presidential Actions.

Maryland Governor Proposes to Ration Electricity

By Stuart Kaplow on Posted in Climate Change, Codes and Regulations, Energy, GHG, greenhouse gas

The hearing on HB 49 in the House is on February 12 at 1:00 pm and the cross filed SB 256 in the Senate on February 13 at 1:00 pm.

In an unprecedented move, the Governor of Maryland has proposed legislation that would make Maryland the first state in the U.S. to ration energy use in existing buildings. House Bill 49, titled Environment – Building Energy Performance Standards – Compliance and Reporting, seeks to reduce greenhouse gas emissions by imposing caps on energy consumption for buildings based on their Energy Use Intensity (EUI).

While the proposal’s goal aligns with the Governor’s efforts to combat global warming, it has sparked significant controversy due to its impact on residents, businesses, and the broader State economy.

Understanding EUI

EUI measures how much energy (e.g., from grid electricity, natural gas consumption, and even solar panels on site) a building uses per unit of area. It’s calculated by dividing the total energy used by a building, over a year, by its total floor area, resulting in a unit like “kBtu/ft²/year” (thousand British thermal units per square foot per year), expressed as a number.

It is actually not that hard. By way of example, the U.S. EPA advises a bank branch has a median EUI of “88.3,” a pre K thru 12 school 48.5, and a hospital 234.3.

By way of interpretation, a lower EUI value indicates a more energy efficient building. The concept of EUI is attributed to the Lawrence Livermore Lab which developed the metric to compare the energy performance of GSA buildings.

However Maryland proposes to misuse the federal government diagnostic tool to establish numeric caps, setting a maximum EUI for particular uses from multifamily residential to hospitals and more, in an attempt to force a reduction in energy consumption in buildings, rationing power used by each building and penalizing those who fail.

The Controversy Around Energy Rationing

Despite its ostensibly innocuous name, HB 49 has faced criticism for introducing energy rationing, a term that conjures images of scarcity during wartime and odd and even day gasoline purchases during the 1973 Arab oil embargo. While the bill avoids using the word “rationing,” it proposes restricting energy use in existing and new buildings over 35,000 square feet.

Understand, rationing allows each person to have only a fixed amount of a particular commodity, like power, usually during times of scarcity, such as during a war, and we know of no instance rationing has been used by a state government as proposed in Maryland.

A Legislative Workaround?

The bill also does not mention that similar efforts last year to put caps on EUI were halted by the Maryland General Assembly’s Joint Committee on Administrative, Executive, and Legislative Review (AELR). Lawmakers expressed concerns that the EUI provisions of the then proposed Maryland’s Building Energy Performance Standards (BEPS) regulations overstepped the authority granted by the legislature in the 2002 Climate Solutions Now Act.

Additionally, funding for EUI target development was frozen in the 2024 state budget pending detailed reports from the Maryland Department of the Environment. Some legislators argue that HB 49 is an “end around” these legislative actions, pushing through a controversial policy without addressing prior concerns.

Economic and Environmental Implications

HB 49 fails to address what one legislator has described as “that this proposal may ration power for as many as 40% of the State’s residents, from low and moderate income families in apartment buildings in Baltimore City to senior citizens residing in condominium buildings in Montgomery County.” Moreover, “.. a multi family building landlord telling a resident they must turn off their stove or their heat to have the building comply with this law is a nonstarter.” And a western Maryland legislator said, “while MDE is keeping the EUI values a secret [they are not in the bill], there is no one number for multifamily residential that makes sense in an Ocean City condo and a Frostburg garden apartment building.” Additionally, a business group has estimated that more than 70% of Maryland’s businesses are tenants in covered buildings and will be subject to rationing.

But be clear, this new law will not apply to energy used in the vast majority of government buildings that will be exempt from EUI rationing.

Why would the Maryland Governor propose Maryland be the first state to ration energy use and why now with the shift in national sentiment and new U.S. Presidential and Congress? Those in the know explain the driver for this bill is not global warming but because Maryland consumes about 40% more electricity than it generates, and that amount is increasing. Maryland needs to produce more electricity to meet its needs but there is no meaningful plan to do that (.. the Don Quixote dream of power from windmills in the ocean off the coast of Ocean City, Maryland is certain to fail).

Last year all of the new solar and other renewable energy sources that came online in Maryland did not even equal the State’s electricity load growth; so the State will need to import a larger percentage of its energy this year than last and into the future. Or, with this bill the Governor can legislate that less electricity can be used in the future; really?

Maybe too much inside baseball for a blog post, but of great import, the Governor’s bill to regulate “site” EUI as opposed to “source” EUI is simply wrong if, the goal is truly reducing GHG emissions because Maryland is and will remain a net importer of electricity (.. but, as proposed, this new EUI law will burden Maryland covered building owners but does nothing about the emissions from an electric generating plants in Tennessee that supply Maryland buildings?).

The government agency that is supposed to do energy planning, the Maryland Energy Administration has been coopted from being “the chief energy authority in the State” when that energy office in Maryland government was created in 1973 to, under the current Governor appointed Director, being the climate change office seeking to improve the environment, “power plants, transmission lines, substations, pipelines for natural gas and petroleum, and storage facilities” be damned.

State Budget Deficit

While some public officials claim none of this has anything to do with filling the State budget deficit, there are purportedly outsized penalties for failure to comply, termed an “alternative compliance fee” for “the building’s failure to meet energy use intensity targets.” The penalty will be later announced by the Maryland Department of the Environment after the bill is law.

In addition, the bill provides all covered buildings will be assessed a new yearly fee (i.e., a new real property tax) to fund the program including the annual reporting by building owners; also in an amount to be announced later. So, building owners will have to pay for the sword of Damocles over their heads.

The Bigger Picture

Proponents argue that the Maryland Governor’s bold initiative is necessary to combat global warming. However, others warn that rationing is wrong and will lead to unintended consequences, including economic inequities and a backlash against government overreach.

With all of that observed, it is difficult to conceive of any scenario where a court will not find this regulation of EUI is preempted by federal law and as such void and unenforceable.

Balancing the need for sustainable practices with the realities of Maryland’s energy infrastructure and economy is a complex challenge. As the Maryland General Assembly debates this controversial bill, a broader question remains: Can the state achieve its ambitious greenhouse gas reduction goals (.. and should it?) without unfairly burdening its residents and businesses?

Only time, and perhaps the legislature, will tell.

In any event, reading HB 49 is a good education in legislating.

Citizens and Businesses Join Suing Maryland to Halt BEPS

By Stuart Kaplow on Posted in Climate Change, Codes and Regulations, GHG, greenhouse gas

Earlier today citizen groups representing the interests of thousands of residents and business associations with thousands of members filed suit in the U.S. District Court against the Secretary of the Maryland Department of the Environment challenging the Maryland Building Energy Performance Standards (BEPS) program as preempted by Federal statute and unenforceable as a matter of law.

The BEPS regulations, which program’s goal is for buildings to ​achieve zero net direct greenhouse gas emissions by 2040, are in effect as of December 23, 2024, requiring building owners to report GHG emission benchmarking data in 2025; hence this lawsuit was filed within 30 days of that effective date.

The BEPS regulations purport to implement the Climate Solutions Now Act of 2022, but the Maryland Department of the Environment has gone far beyond that statute with the now effective September 6, 2024 version of the revised second BEPS regulations.

The diverse plaintiffs in case no. 1:25-cv-00113-JRR range from the Maryland Building Industry Association, Inc., The Building Owners and Managers Association of Greater Baltimore, Inc., NAIOP Maryland, Inc., NAIOP DC | MD, Inc., and Maryland Multi-Housing Association, Inc., to Washington Gas Light Company, and includes the Leisure World Community Corporation,  The Elizabeth Condominium Association, Inc. the Promenade Towers Mutual Housing Corporation and The Willoughby of Chevy Chase Condominium Council of Unit Owners, Inc.  That the biggest real estate trade association and largest residential condominium are aligned as plaintiffs in and of itself makes clear the great harm and damage that Maryland BEPS will do.

Specifically, the lawsuit seeks “a permanent injunction enjoining Defendant from enforcing or attempting to enforce the Maryland BEPS” and for “a declaratory judgment, ..  that the Maryland BEPS are preempted by federal law because they concern the energy use of appliances covered by the federal Energy Policy and Conservation Act (EPCA) and are therefore void and unenforceable.”

The 26 page Complaint describes that the federal “EPCA regulates the energy use and efficiency of many gas appliances and expressly and broadly preempts state and local laws on that subject.” The Maryland BEPS regulations “fall within the heartland of EPCA’s express preemption provision because they too purport to regulate and restrict the energy use and efficiency of these appliances. As such, the Maryland BEPS are preempted by EPCA and unenforceable as a matter of law.”

This is not a matter of party politics. The federal EPCA was proposed by President Nixon and ultimately enacted by Congress and signed by President Ford. But be assured frolic and detours exceeding federal energy policy (.. while encouraged under the Biden administration) will all but certainly not be tolerated under a Trump administration.

The Complaint is substantially similar as the litigation commenced to have two Colorado BEPS laws determined to be preempted by the federal EPCA.

And the Complaint explains “the Ninth Circuit’s recent invalidation of the City of Berkeley’s prohibition on gas piping in new buildings illustrates how EPCA preemption operates to prohibit attempts to regulate the energy use or efficiency of gas appliances.”

Some have suggested a BEPS program could exist pendent to EPCA, but not only is Maryland BEPS not such a standard, but it is far more burdensome than any other similar enactment in the country and clearly made void and unenforceable by the Supremacy Clause of the U.S. Constitution.

Those who see this Maryland case as a “not my chicken” moment are not correct; this is not someone else’s problem. This lawsuit is part of a groundswell from Berkeley, California to Denver, Colorado to Washington, D.C., and now Maryland, in dramatic legal confrontations over wrongheaded environmental regulation and illegal energy policy by governments behaving badly in the name of climate change.

The lawsuits aver that these bans on fossil fuel are more than just poorly executed public policy; they are part of a broader trend that plaintiffs allege is an overreach of state and local governmental power. With similar lawsuits pending in Montgomery County, Maryland, and Washington, DC, and nationwide people are rallying around what they see as a pattern of unconstitutional and unlawful environmental local government action that violates the longstanding precept of a single federal national energy policy.

While the attorneys we have consulted, to the one, suggest the outcome of this Maryland lawsuit is all but certain, the breadth of any final judicial redress may well have lasting impacts across the country on state and local governments’ abilities to establish regulatory schemes to further with climate goals, especially as some still push for all electric buildings.

Supporters of government net zero mandates argue that direct action, now, is justified to reduce carbon emissions and combat climate change while opponents are concerned over denigrating the current way of doing things before there is a replacement.

Some Marylanders would support the aims of the Climate Solutions Now Act of 2022 but believe these BEPS regulations are the wrong way to go about it. It is clear that the Maryland BEPS regulations “are preempted by federal law because they concern the energy use of appliances covered by the federal Energy Policy and Conservation Act and are therefore void and unenforceable.”

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