Defense Contractor Prohibition on Greenhouse Gas Emissions Disclosures

Department of Defense contractors are not permitted to “disclose a greenhouse gas inventory or any other report on greenhouse gas emissions.”

As governments across the United States are beginning to regulate greenhouse gas emissions, looking at the back story and teasing out the broad impact of this prohibition is worth our time.

We blogged, Government Proposes Federal Contractors and Their Suppliers Disclose GHG Emissions describing the November 14, 2022, proposed Federal Supplier Climate Risks and Resilience Rule that proposed to require greenhouse gas emission disclosures by contractors to the U.S. government, the world’s single largest buyer of goods and services. That proposed amendment to the Federal Acquisition Regulation garnered much controversy and remains under review.

Beginning at about the same time several states and a score of cities enacted building energy performance standards (BEPS) and other laws requiring not only disclosure of greenhouse gas emissions but in some instances also mandating reductions. And beyond what has been enacted, there are proposals from other federal government agencies to a host of blue states and local governments (.. yes, climate change is a partisan issue so the military mission is at risk of suffering for it).

On December 23, 2023, President Biden signed into law the National Defense Authorization Act for Fiscal Year 2024, which authorizes the Navy to purchase 13 nuclear powered attack submarines and authorizes the maximum number of active duty personnel for each of the armed forces: Army 452,000, Navy 347,000, Marine Corps 172,300, Air Force 324,700, and Space Force 9,400. Also reflecting one of the more contentious debates in Congress with the aim of a pragmatic slowing of climate change being addressed through the military mission, the Act expressly provides,

SEC. 318. PROHIBITION ON REQUIRED DISCLOSURE BY DEPARTMENT OF DEFENSE CONTRACTORS OF INFORMATION RELATING TO GREENHOUSE GAS EMISSIONS.

There are of course other prohibitions for purposes of secrecy, security oversight, and classified access in Department of Defense procurement that bar the release of utility data, personnel population, and the like (that are the component parts of greenhouse gas emission calculation), but this law expressly prohibits the disclosure of information relating to greenhouse gas emissions.

In government speak, the National Defense Authorization Act says in describing the prohibition on disclosure requirements, “The Secretary of Defense may not require that any nontraditional defense contractor (defined as those that did not have a contract in the last year), as a condition of being awarded a contract with the Secretary, disclose a greenhouse gas inventory or any other report on greenhouse gas emissions, ..” Then in a subsection below adds “other than nontraditional defense contractors” and broadens the scope. Advice from the Office of the General Counsel of the Department of Defense is that this section will be broadly interpreted.

The Secretary of Defense may issue a waiver of this prohibition on a contract by contract basis but only “provided that the information provided is directly related to the performance of the contract.” So, not a large number of waivers are anticipated.

While we are receiving inquiries about the application of the law, it is not yet possible to gauge its import in the regulation of greenhouse gas emissions.  These prohibitions apply to Defense contracts and for the life of this funding, fiscal year 2024 only, so the FAR amendment could move forward for other agencies or it might be halted entirely. There will be a great geographic disparity in application, with California and Maryland having among the greatest number of Defense contractors, those states also have greenhouse gas emission laws?

As little as two years ago greenhouse gas emission regulation by government was like the Wild West and today it is better characterized as a very crowded place, but this is still a new and emergent regulatory space where it is clear there will now be laws, and in this rare truly bipartisan action by Congress on greenhouse gas emissions, there will be businesses exempted from those laws. 

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A live webinar “With the Maryland BEPS regulations on “HOLD” what is a Building Owner to do?” 30 talking points in 30 minutes, this Tuesday, February 20 at 9 am ET presented by Stuart Kaplow and Nancy Hudes on behalf of ESG Legal Solutions, LLC. The webinar is complimentary, but you must register here.

Climate Scientist Michael Mann Awarded More than $1 Million in Defamation Case

Graph from the court pleadings

Last Thursday, in a case filed in 2012 in the Superior Court of the District of Columbia, a jury found that Rand Simberg and Mark Steyn defamed Michael Mann, awarding Mann $1 in compensatory damages from each and punitive damages of $1,000 from Simberg and $1 Million from Steyn.

Let us be clear, we have great respect for the jury system in the United States, as a key component of our democracy and our freedom, and we have even more respect for jurors who are average citizens who actively participate in deciding the outcome of legal disputes; so, we are confident this six person jury got it right. But, ..

Michael Mann is a well known climate scientist whose research in studying the “paleoclimate,” or ancient climate, has featured prominently in the politically charged debate about climate change. Professor Mann filed an action for defamation and intentional infliction of emotional distress against Rand Simberg then an adjunct scholar at the Competitive Enterprise Institute, and Mark Steyn, a contributor to the National Review, Inc., who referred to an article by Simberg article in his article. Mann’s complaint claimed that the articles criticized his conclusions about global warming from tree rings (i.e., warming conditions result in wider rings), and accused him of deception and academic and scientific misconduct contained false statements that injured his reputation and standing in the scientific and academic communities. The Competitive Enterprise Institute and National Review were dismissed from the lawsuit, but with this verdict, it is expected those dismissals will now be appealed.

By way of background, in 1998 and 1999, Mann coauthored two scientific papers about global warming. The 1999 paper included a graph depicting global temperatures in the Northern Hemisphere for a millennium, from approximately 1050 through 2000. The graphical pattern is roughly horizontal for 90% of the temperature axis, reflecting a slight, long term cooling period between 1050 and 1900, followed by a sharp increase in temperature in the twentieth century. Because of its shape resembling the long shaft and shorter diagonal blade of a hockey stick, this graph became known as the “hockey stick.” 

The hockey stick graph (.. as it appears in the court pleading is reproduced here) became the foundation for the conclusion that the sharp increase in temperature starting in the twentieth century was anthropogenic or caused by concentrations of CO2 in the atmosphere generated by human activity initiated by the industrial age. The hockey stick graph also became a rallying point, and a target, in the subsequent debate over the existence and cause of global warming and what, if anything, should and could be done about it.

We will not reprint Simberg and Steyn’s offensive words here, they were offensive .. when the articles compared Mann, then a professor at Penn State to convicted sex offender Jerry Sandusky, former assistant football coach at Penn State. But, ..

Some legal commentators suggest that Mann lost any moral high ground when throughout the case his attorneys characterized Simberg and Steyn as “climate deniers,” as if having opinions about the science of reporting temperatures a thousand years ago from tree rings, different from Mann was somehow a crime of moral turpitude. And then in his closing argument, Mann’s attorney John Williams compared the climate deniers in this case to election deniers, “Why do Trumpers continue to deny that he won the election?” he asked the jury. “Because they truly believe what they say or because they want to further their agenda?” 

Scientists attempting to silence those who disagree with their science is wrong (.. Mann sued at least one other climatologist, in 2011 when he sued scientist Tim Ball in a Canadian Court that dismissed the case after a protracted delay), as we now see in hindsight after some of the scientist oracles of the coronavirus pandemic appear wrong today.   

At a time when a recent Pew Research Center poll found just 13% of Americans have a great deal of confidence in scientists, this case will do far more harm than good. This is not the way modern science should be done by scientists. Attempting to suppress free speech about coronavirus or climate change is not consistent with the principles of the scientific method and is not a place that courts of law should go.

This case was about defamation and the jury was correct that Simberg and Steyn said offensive things about Mann analogizing his situation to that of a sex offender, defaming him. This court or a higher court may yet reduce the very large punitive damage award if not only because, as Steyn who has acted as his own counsel points out, questioning Mann’s injured reputation and standing, he has moved on from Penn State to be the Presidential Distinguished Professor of Earth & Environmental Science at the more highly regarded University of Pennsylvania.  

Unfortunately, this decade plus long case (.. that is not over because appeals are all but certain) will offer little if any precedent in defamation law but will be cited for years to come as stare decisis for using the courts to suppress a debate about scientists.  

A live webinar “With the Maryland BEPS regulations on “HOLD” what is a Building Owner to do?” 30 talking points in 30 minutes, Tuesday, February 20 at 9 am EST presented by Stuart Kaplow and Nancy Hudes on behalf of ESG Legal Solutions, LLC. The webinar is complimentary, but you must register here.

France is an Example of How Not to do Residential Greenhouse Gas Reduction

The country that is home to some of the most iconic buildings erected by humankind, from the Eiffel Tower to the Notre Dame Cathedral and the Palace of Versailles is failing its current inhabitants and decimating residential real estate with deeply flawed greenhouse gas emissions standards for rental properties.

France has more than 35 million dwellings and more than a quarter of those residences fall into the country’s worst greenhouse gas emission categories, with an Environmental Performance Certificate (EPC) rating of F or G. And that is not surprising because more than 36% of those dwellings were constructed before 1948.

Buildings that consume more than 450 kWh per m² fall into category G+ (.. worse than G). And that is significant because, since January 1, 2023, a residential building owner is not permitted to rent a property rated G+. 

This government policy, though commendable for its environmental aspirations, has negative implications for both tenants and building owners alike.

By way of background, all single family homes and flats offered for rent or sale in France must include an evaluation of their energy consumption, the Diagnostic de performance énergétique, energy performance diagnostic, or DPE.  In the finest example of French bureaucracy (.. possibly better than anything from the Ancien Régime, that was the social and political system in the Kingdom of France beginning in the 15th century), after 2020, the “real” power consumption of a building is no longer a consideration in DPE. Instead, DPE is an extraction based on factors including a structure’s building materials, orientation, mechanical systems, etc.

Under an updated schedule, the government has mandated that from January 1, 2025, forward, buildings that are rated below F or 420 kWh per m² will no longer be allowed to rent flats. That is 5.2 million dwellings rated F and G, or 17% of total housing stock, will become ineligible for rental.  Any buildings then rented may remain under current leases but will be considered “non-decent”.

France’s Loi climat et résilience includes a provision establishing the criteria for a residential space to be classed as “decent”. Of import, buildings carrying restricted DPE ratings are considered non-decent, which means that a residential tenant that is currently an occupant (.. of even a single flat in a multi tenanted building) can require the building owner to do the necessary energy related work to improve the units rating.

Increasing numbers of residential buildings will be impacted by these restrictions in the coming years.

Moreover, while a residential tenant in a non-decent building is required to continue to pay rent, today, the rental rate for buildings rated F and G cannot be increased; something that is intolerable as it exacerbates the decay of the affordable housing stock.

Not insignificantly, the DPE letter rating is required to be displayed in all estate agency advertisements, both for rent and sale. Advertisements for the sale of buildings rated F and G or G+ must include the line logement à consommation énergétique excessive, or ‘housing with excessive energy consumption’. Fortunately, buildings can still be sold even if they are rated G+, as may be the instance for historic flats in Paris and old stone farmhouses outside of Epernay, although many historic rental properties have suffered a more than 20% reduction in value in anticipation of the renovation costs associated with this law. 

France’s bold move to restrict the rental of buildings with high EPC ratings, driven by the National Low Carbon Strategy targets a 49% cut in greenhouse gas emissions from buildings by 2030 is a commendable step towards a more sustainable future. However, the unintended consequences for both tenants who are being priced out of the market and building owners in devastating the real estate market cannot be ignored.

Striking a balance between environmental goals and social equity is crucial to ensure that the transition to a greener society is not only done so on the backs of the people who are tenants or not done to further destroy the value of the buildings such that money cannot be borrowed to finance necessary improvements. Many believe changing hundreds of years of building in a few short months is too much too fast and may well bring a similar result as the gilets jaunes, the yellow jacket wearing demonstrators, who protested in France in 2018 over a proposed carbon tax on petroleum.

As the number of affected properties continues to rise, policymakers, landlords, and tenants must collaborate to find innovative solutions that promote environmental responsibility without further dramatically decreasing the value of the real estate market or disproportionately impacting vulnerable communities. Only through thoughtful and inclusive market driven strategies can France navigate the complexities of its public policy created housing crisis and successfully build a more sustainable and equitable future.

France is much farther down the rabbit hole of climate change mandates than the U.S. and should be an example to others, like Maryland as the state struggles to promulgate building energy performance standards, that apocalyptic environmentalism mandating a drastic reduction in consumption is not how to do residential building greenhouse gas emission reduction, but rather techno optimism based actions where ingenuity and science, properly applied, can produce our way out of our predicament. 

A live webinar “With the Maryland BEPS regulations on “HOLD” what is a Building Owner to do?” 30 talking points in 30 minutes, Tuesday, February 20 at 9 am EST presented by Stuart Kaplow and Nancy Hudes on behalf of ESG Legal Solutions, LLC. The webinar is complimentary, but you must register here.

BEPS on Hold in Maryland

On Monday, January 29, 2024, the Maryland legislature’s Joint Committee on Administrative, Executive, and Legislative Review (AELR) put a “hold” on the proposed regulations to create the Maryland Building Energy Performance Standards (BEPS) as required by the Climate Solutions Now Act of 2022.

A stated goal of the 2022 Act is to reduce net direct greenhouse gas emissions from Maryland’s building sector for buildings that are 35,000 square feet or larger to net zero before 2040. The now, on hold proposed regulations from the Maryland Department of the Environment require covered building owners to measure and report net direct GHG emissions (kg/CO2e/sq ft), beginning with data from 2024, to MDE. The regulations further require that covered building owners not only reduce net direct GHG emissions but conform to energy use intensity (EUI) standards (kBtu/sq ft), something that one multi family building owner has characterized as, criminalizing a tenant for turning their lights on or using their electric stove. The proposed regulation of EUI does not conform to the statute or the legislative intent of the Act and ignores that such a state regulation over energy is constitutionally barred as preempted by the federal Energy Policy and Conservation Act.

With the 2022 Act, the Maryland legislature enacted the most rigorous state law in the country reducing GHG emissions, which statute became law without the Governor’s signature. That more than 100 page statute, an amalgamation of several past bills, the passage of which was of the magnitude of the Great Compromise of 1877, was premised on the idea that “the State has the ingenuity to reduce the threat of global warming and make GHG reductions a part of the State’s future,” but critiques from residents to business suggest have articulated that these proposed regulations stray too far seeking to claw back many ideas that were not included in the enacted statute.

The regulations were published in the December 15, 2023 issue of the Maryland Register and we blogged a dozen specific comments about what we perceived as deficiencies in the proposed regulatory scheme in Maryland Building Energy Performance Standards Effective January 1.

As we described in another of our earlier blog posts, the regulations were characterized by a Maryland business owner as looking like a misguided kamikaze run.

In providing oversight of the regulatory activities of State agencies for the General Assembly, the primary function of AELR, composed of 10 Senators and 10 Delegates, is to review proposed regulations to determine whether they conform to the statutory authority of the unit and the legislative intent of the statute under which the regulations are proposed. At any time, the committee may formally vote to oppose the adoption of a proposed regulation. In this instance, notice of the opposition was sent to the Governor and MDE, and further negotiations ensue. The Governor may instruct MDE to withdraw or modify the regulations. However, once the committee has opposed the adoption of the regulation, it may not be adopted unless approved by the Governor.

In this instance, the AELR hold letter said, “The purpose of the requested delay is to provide the committee with an opportunity to examine more closely a number of issues relating to the economic impact of the regulations. The committee also wishes to ensure that concerns raised by stakeholders about the regulations are addressed. To this end, the committee encourages the department to work together with the stakeholders to resolve the issues they have raised concerning these regulations.

Among others, the legislature heard quite the hue and cry from residential condominium owners who will be burdened by the regulations.

The hold is effective for renewing 30 day periods until released by AELR.

The Climate Solutions Now Act of 2022 remains the law, and building owners should continue to track their GHG emissions. But there will no doubt be a revised regulatory scheme, ideally not regulating EUI and not banning gas stoves, but rather hopefully with regulations premised on the articulated by the legislature that idea of techno optimism creating opportunities where ingenuity and science, properly applied, can ensure a future that is inclusive, net zero, and nature positive.

We have been and are continuing to work with building owners including determining the best building specific strategies for calculating and reducing their GHG emissions. And we will blog when more information is available.

A live webinar “With the Maryland BEPS regulations on “HOLD” what is a Building Owner to do?” 30 talking points in 30 minutes, Tuesday, February 20 at 9 am EST presented by Stuart Kaplow and Nancy Hudes on behalf of ESG Legal Solutions, LLC. The webinar is complimentary, but you must register here.

National Definition for a Zero Emissions Building

You can provide feedback on the draft national definition for a Zero Emissions Building.

The White House Office of Domestic Climate Policy, through the U.S. Department of Energy, is seeking “to create a standardized, verifiable basis for defining a zero emissions building.” A broadly accepted common minimum definition for a zero greenhouse gas emissions building, as well as a pathway for verification, is foundational in efforts by public and private entities to transition the building sector to net zero emissions. 

We blogged about the importance of this step in greenhouse gas emission measurement and reduction when an earlier version was first announced last September, White House to Define Zero Emission Building.

Be aware there have been substantive changes from what was first publicly discussed to what now is proposed, including the initial text discussed was, “The building obtains at least 30% of the total energy it consumes (on a site basis) from renewable sources” .. and now this draft circulated for feedback says, “All the building’s energy is from carbon-free sources (which can include onsite generation and off-site sources).” Accordingly, the vast majority of buildings would not be able to satisfy this definition.

There are private sector pledges by building owners and mandates from governments that buildings be net zero by 2040 and the like, but there is little, if any guidance, as to what that net zero building is. This definition could respond to that query and drive a transition in the real estate market, but not if it is only aspirational.   

DOE has developed part 1 of a draft definition for zero emissions buildings, applicable to existing buildings and new construction.

It should not be lost on anyone that the Federal government does not have the statutory authority to enact a binding nationwide Zero Emissions Building standard and the divided Congress will all but certainly not grant it to the EPA. This definition is also not intended for federally owned buildings, which are governed as a portfolio through statutory and executive guidance. But Zero Emissions Building is the fulcrum of reducing greenhouse gas emissions across the country and the planet.

The minimum criteria included in this standard to define a zero operating emissions building is a building that is:

  • Highly energy efficient, 
  • Free of on-site emissions from energy use, and 
  • Powered solely from clean energy. 

The full draft definition with its supporting criteria is outlined in “National Definition of a Zero Emissions Building: Part 1 Operating Emissions (Version 1.00), Draft Criteria.”

And this draft will not be without controversy when it includes that, “Direct or Scope 1 greenhouse gas (GHG) emissions from energy use must equal zero, meaning that no fossil fuels may be combusted onsite.” The only exception is for backup generators when grid power is unavailable.

DOE released a request for information (RFI) to solicit comments, data, information, and other feedback from industry, academia, research laboratories, government agencies, and other stakeholders on the draft national definition for a Zero Emissions Building. 

This is not intended to be the end. Reducing the whole life cycle emissions of a building also requires minimizing the embodied carbon of the building, as well as minimizing the impacts of refrigerants. Such emissions are not within the scope of this Part 1 and may be considered in subsequent parts to this definition.

If you cannot wait for the White House’s final Zero Emissions Building definition, clues can be found at ENERGY STAR NextGen Certification for Commercial Buildings (.. some have suggested this may actually be a better zero emission building standard). Or if you are inpatient the draft LEED Zero Carbon is actually a zero carbon building emissions standard. And we would be happy to speak with you as we continue to advise and counsel building owners and other businesses in a long-term future that is inclusive, net zero and nature-positive.

Be assured a defined term is a good thing, although this draft needs some tweaking. With the fast evolving dynamic between science and law, today zero emission is ill defined, unregulated, and complex. Businesses making a net zero type claim like, “we will be a zero emissions building by 2040” risk a greenwashing charge that they are misleading consumers.

White House National Climate Adviser Ali Zaidi has made clear this will present “massive moonshot opportunities” in green building making the case that climate action is not about sacrifice but rather about building a healthy economy with new opportunities for everyone.

We recommend you provide feedback so that you and your business can make the most of the opportunity from a final Zero Emissions Building definition. DOE will accept comments on this request for information until 5 pm ET on February 5, 2024.

Does evian Water Greenwash?

Photographs from Court Pleadings

Last week United States District Court for the Southern District of New York Judge Nelson Roman ruled that Danone Waters of America, the French multinational that produces evian bottled water, must face trial over greenwashing claims that it wrongly says on the label that the water is carbon neutral.

Many observers are concerned that this is just one of the thousands of lawsuits filed against the food and beverage industry each year; this one is shrouded in the de regueur issue of greenwashing.

The larger worry should be television advertisements for mass litigation seeking clients who believe they have been misled by greenwashing (.. think the cable television and social media ads about contaminated water at Camp Lejeune, on steroids).

This putative class action was filed in 2022 “on behalf of all persons in the United States who purchased” evian water.

In this consideration of Danone’s motion to dismiss the complaint, some are troubled that the court began with this “factual background” saying that in its order, it is taken as true for the purposes of this motion,

“Human activities have increased the concentration of carbon dioxide, or CO2, in the atmosphere, driving climate change. As the Earth’s climate continues to change, Americans are experiencing increased wildfires, extreme heat and rain, rising sea levels and costal [sic] storms, disruptions to agriculture and  marine-based food production, and increased pollen production, causing them harm.”

Then the court went on to justify this lawsuit,

“As a result of widespread concerns about climate change, consumers increasingly seek out environmentally sustainable products and are willing to pay a higher price for such products. The increase in consumer demand of environmentally friendly products has led companies to engage in a marketing tactic called “greenwashing,” which is “the process of conveying a false impression or providing misleading information about how a company’s products are environmentally sound.” Plaintiffs allege Defendant has engaged in such “greenwashing” through its advertising and marketing of “evian Natural Spring Water” water bottles.”

The court then found, “All versions of Defendant’s Product include a representation that the Product is carbon neutral,” as depicted in the photos above (that were included in the pleadings).

The judge seemed unmoved that all Danone products sold in the U.S. are carbon neutrality third party certified in accordance with the international standard ‘PAS 2060’ by the Carbon Trust. Danone’s attorneys further argued it is unreasonable to assume that the product “magically arrived from the French Alps to their homes without the emission of even a molecule of carbon dioxide.”

Carbon neutrality, under PAS 2060, means not adding new greenhouse gas emissions to the atmosphere. Where emissions continue, they must be offset by absorbing an equivalent amount from the atmosphere, for example through carbon capture and reforestation that is supported by carbon credits.

The court was apparently also unphased by that fact or that the term “Carbon Neutral” appears on the label inside of the Carbon Trust logo. 

The court then decided that “carbon neutral is technically defined as having or resulting in no net addition of carbon dioxide to the atmosphere,” because the Merriam-Webster dictionary says so. And then said, “After careful consideration, the Court concludes that it cannot determine as a matter of law that “carbon neutral” does not have the capacity to mislead.” Really? So, the court is not applying a reasonable person standard, which is widely used in tort law, but is ruling that in this class action, “all persons in the United States who purchased” evian lack any intellectual acuity?

The court’s enumerated analysis is clear and unambiguous, but disappointing,

“First, a reasonable consumer could plausibly be misled by the “carbon neutral” representation on the Product’s label.” ..

“Second, the FTC Green Guides support this conclusion. Plaintiffs allege “‘carbon neutral’ is precisely the type of ‘unqualified general environmental benefit’ claim that the FTC cautions marketers not to make.”

“Third, the factual allegations in the Plaintiffs’ complaint are sufficient to support the conclusion that the average American consumer does not know the term’s technical definition. Consumers’ general confusion about “carbon neutral” demonstrates that the term has a reasonable likelihood to deceive.”

“Finally, “carbon neutral” is an ambiguous term, and evidence shows that consumers are confused by it. Defendant also expects too much from consumers to learn what it means when it places “carbon neutral” on the Product’s label. Accordingly, the Court concludes that at this stage it cannot determine as a matter of law that a reasonable consumer could not be confused or misled by the “carbon neutral” representation ..”

The judge concluded it was premature for the court to determine who was right and after dismissing three of the multiple counts, with leave to amend the complaint, these issues were better decided by a jury.

A print media report on this ruling observed that in an apparent act of green bleaching, now keeping secret sustainability efforts, including scrubbing any references on labels and public facing writings, references to carbon neutrality have been removed from evian products currently available for sale in the U.S. This case and actions like it are not good for sustainability.

The 30 page ruling is a good primer on greenwashing, but more than a little scary when you consider this may portend plaintiffs’ lawyer television advertisements recruiting mass litigation greenwashing clients.

A live webinar “Ask Me Anything” 30 questions in 30 minutes, Tuesday, January 23 at 9 am EST presented by Stuart Kaplow on behalf of ESG Legal Solutions, LLC. The webinar is complimentary, but you must register here.

Court Strikes Down Federal Dishwasher and Washing Machine Rules

Last week the U.S. Court of Appeals for the Fifth Circuit struck down the Department of Energy’s dishwasher and washing machine rules saying they did not hold water.

For the second time in as many weeks, we are writing about a court ruling new standards violate the Energy Policy and Conservation Act, an incredibly important federal statute enacted by Congress in response to the 1973 Arab oil embargo that created a comprehensive approach to national energy policy (.. for example, this is the federal act that created the Strategic Petroleum Reserve) and keeping bad actors from imposing the environmental fleeting notion of the day on the nation.

Substantively, the court ruled, “No part of that text indicates Congress gave DOE power to regulate water use for energy-using appliances (like dishwashers and washing machines).”

Procedurally, the court found the “Department’s actions were arbitrary and capricious.”

The backstory is that in response to a ‘petition for rulemaking’ claiming “the Department’s burdensome energy regulations made dishwashers incapable of, well, washing dishes ..” in October 2020, the DOE adopted a final rule defining a class of “standard residential dishwashers with a cycle time for the normal cycle of one hour or less from washing through drying.” The Department then decided to take analogous action on laundry machines when in December 2020 it released a final rule creating new classes of “top-loading consumer [i.e., residential] clothes washers and consumer clothes dryers” with a “normal cycle time of less than 30 minutes.” DOE also created a class of “front-loading” residential washers with a normal cycle under 45 minutes.

On the day of his inauguration, President Biden issued an Executive Order directing DOE and other agencies to repeal certain rules adopted during the prior four years, including the Trump Administration 2020 dishwasher rule and the 2020 laundry rule. A new final rule, which the court termed “the Repeal Rule,” was issued in January 2022. It revoked both the 2020 dishwasher and the 2020 laundry rules.

A group of States, led by Louisiana, petitioned the court for review of the Repeal Rule.

The federal appeals court reasoned, “in sum, it is unclear that DOE has any statutory authority to regulate water use in dishwashers and clothes washers. But even assuming the Department has that authority, the Repeal Rule is arbitrary and capricious for two principal reasons. (1) It failed to adequately consider appliance performance, substitution effects, and the ample record evidence that DOE’s conservation standards are causing Americans to use more energy and water rather than less. (2) It rested instead on DOE’s view that the 2020 Rules were legally “invalid” – but even if true, that does not excuse DOE from considering other remedies short of repealing the 2020 Rules in toto.”

“Instead, the Department amplified its capriciousness by throwing the baby out with the bath water.”

To be clear, we believe strongly in repairing the world (.. we are not sure 3.2 gallons per cycle versus 5 gallons is going to do that; maybe it will), but this is not how to adopt environmental public policy. Instead of more bad laws that gin up apocalyptic environmentalism (.. including illegal attempts to ban natural gas use from Berkeley [that we blogged about last week] to Maryland [that we blogged about in 2022]), we need properly enacted techno optimism rooted solutions advancing prosperity.

And just as we ended our blog post last week, .. read the decision and participate in this discussion about how to repair the world (.. without violating the U.S. Constitution).

A live webinar “Ask Me Anything” 30 questions in 30 minutes, Tuesday, January 23 at 9 am EST presented by Stuart Kaplow on behalf of ESG Legal Solutions, LLC. The webinar is complimentary, but you must register here.

Federal Appeals Court Delivers Coup De Grace in Berkeley Attempt to Ban Natural Gas

On January 2, 2024, the U.S. Court of Appeals for the Ninth Circuit delivered a death blow to the City of Berkeley, California law attempting to ban natural gas, which the Court had last year found was preempted by federal law, with the action last week denying a petition to rehear the case.

While the procedural complexities of this case are more than a little daunting, and instead of reading the more than 60 page amended opinion, nearly everything important can be gleaned from the first paragraph of the opinion,   

“By completely prohibiting the installation of natural gas piping within newly constructed buildings, the City of Berkeley has waded into a domain preempted by Congress. The Energy Policy and Conservation Act (“EPCA”), 42 U.S.C. § 6297(c), expressly preempts State and local regulations concerning the energy use of many natural gas appliances, including those used in household and restaurant kitchens. Instead of directly banning those appliances in new buildings, Berkeley took a more circuitous route to the same result. It enacted a building code that prohibits natural gas piping in those buildings from the point of delivery at a gas meter, rendering the gas appliances useless.”

You could also read our 600 word blog post from last year, after the original decision in this case, describing that attempts by state and local governments to ban natural gas in buildings cannot stand as preempted by federal law, Court Saves Gas Stoves from the Government.

Make no mistake, this case is of great import as is evidenced by the large numbers of interested parties including those that filed amicus curiae briefs supporting a rehearing of the case, from state attorneys general as far away as Maryland to the Biden Administration and from environmental groups of every flavor to university law clinics, and more ..

But none of that persuaded a majority of the appellate court’s non-recused active judges to grant a new hearing.

The new text in the now reissued court opinion includes, “that the Berkeley ordinance cut to the heart of what Congress sought to prevent – state and local manipulation of building codes for new construction to regulate the natural gas consumption ..”

To be clear, that amended opinion leaves no doubt, .. based on its text, structure, and context, that EPCA preempts building codes like Berkeley’s ordinance that ban natural gas piping within new buildings. This federal appeals court wrote that, in dismissing the suit, the (lower) federal district court incorrectly limited EPCA’s preemptive scope to ordinances that facially or directly regulate covered appliances, but such limits do not appear in EPCA’s text. EPCA’s preemption provision extends broadly including to regulations that address the products themselves and building codes that concern the use of natural gas. By enacting EPCA, Congress ensured that States and localities could not prevent consumers from using energy in their homes and businesses. In this instance, EPCA thus preempts Berkeley’s building code, which prohibits natural gas piping in new construction buildings from the point of delivery at the gas meter.

Moreover, it is beyond dispute from the opinion that EPCA’s preemptive scope extends beyond regulations of covered products or building codes, but also expressly includes “concerning the energy use” within buildings that contain such products, delivering a fatal blow to government attempts to regulate site Energy Use Intensity (EUI) in building energy performance standards and the like. Lest there be any doubt, to ascertain what Congress meant by “energy use,” we turn to the statutory definitions. EPCA defines “energy use” as “the quantity of energy directly consumed ..” and preempts states and local governments from regulating it, whether it is disguised as a building energy performance standard site EUI or otherwise.

As we concluded our earlier blog post, .. the only question may be how quickly extremist regulatory schemes like Maryland’s Climate Solutions Now Act of 2022 including its building energy performance standards with its ban of natural gas, even in existing buildings, and imposing penalties for EUI, will be vanquished.

Instead of more bad laws, the best responses to human degradation of the natural environment are marketplace solutions where business owners across the globe strive to make the world better off because their business is in it.

To be clear, we believe strongly in repairing the world but do not suffer fools gladly.

Read last week’s decision here and participate in this discussion about how to repair the world (.. without violating the U.S. Constitution).

A live webinar “Ask Me Anything” 30 questions in 30 minutes, Tuesday, January 23 at 9 am EST presented by Stuart Kaplow on behalf of ESG Legal Solutions, LLC. The webinar is complimentary, but you must register here.

Measuring and Reporting Greenhouse Gas Emissions will be “the” Environmental Issue of 2024

Governments across the United States are for the first time regulating greenhouse gas emissions. This entirely new and emergent body of law in response to climate change is bursting onto the scene in 2024 and businesses are beginning to monetize it as a new revenue stream.

If it is January 1, 2024, most commercial building owners not already measuring greenhouse gas emissions for reporting to the government under the Maryland Climate Solutions Now Act of 2022, may be in violation of law. In New York City Local Law 97 the mandatory reporting period of greenhouse gas emissions data for many commercial buildings also begins January 1, 2024. Other states, from Colorado to Washington and cities from Washington, DC to St. Louis, are all regulating greenhouse gas emissions through building energy performance standards.

Also, pending, and likely to be finalized in April 2024 are the SEC 2022 proposed rule requiring greenhouse gas emission disclosure by public companies, the DOD, GSA, and NASA proposed amendment to the Federal Acquisition Regulation requiring federal contractors to disclose greenhouse gas emissions, the Federal Tade Commission updated Green Guides, and a patchwork of other government GHG emission disclosure mandates.

Additionally, more than 1,000 public companies have publicly announced a net zero greenhouse gas emission goal. And over 9,000 private businesses have a publicly stated net zero target. This does not include the many companies that are green hushing and green bleaching, with greenhouse gas emission goals but are not publicly heralding them.

Moreover, at least 195 countries (.. there are only 197) have made public net zero greenhouse gas emission pledges as have more than 1,000 cities.

So, measuring and reporting greenhouse gas emissions is a thing.

Of course, the extrapolations from those numbers are exponentially larger when one considers if the owner of a commercial building is subject to a BEPS law, then all the tenants in that building are also measuring and reporting greenhouse gas emissions. As such the more than 90% of businesses in the U.S. that are a tenant in the building they occupy, and also the more than 34% of the U.S. population that lives in an apartment, will all have their greenhouse gas emission data reported to the government.

Concomitantly, at a time when the world’s most valuable resource is no longer oil, but data, greenhouse gas emission data, including underlying electric utility data, creates privacy and security implications as described in our blog post, Do You Own Your GHG Emission Data? (.. think Cambridge Analytica on steroids). We are working with increasing numbers of businesses in monetizing their data. Yes, there are literally Trillions of dollars involved, as described in Tenants Monetizing their Greenhouse Gas Emission Data

There is a dark side to this big, hairy, audacious goal of measuring and reducing greenhouse gas emissions; what if government gets it wrong in its mandates? There is trepidation that Maryland’s recently proposed BEPS regulations go too far and will wreck the state’s economy when it seeks to put an absolute cap on energy use across the state through sophomoric energy use intensity (EUI) regulation. In lieu of apocalyptic environmentalism policies, seeking to drastically reduce consumption in a quest to not overwhelm the planet’s ecosystems, like capping EUI, states like Maryland would be better served advancing techno optimism by offering government incentives for carbon capture, clean hydrogen facilities, bio energy, solar panel construction and more.

The best solutions in 2024 and beyond to the breadth and scope of the globe’s environmental issues will be found by businesses. Business owners in increasing numbers understand the need to mitigate climate risk and many companies with forethought are already seizing upon the multi Trillion dollar economic opportunity that accompanies the economy’s decarbonizing.

The certainty that greenhouse gas emission measurement and reduction is “the” environmental issue of 2024 is more than a Magic 8 Ball prediction, although we regularly consult one of the 1960s era plastic spheres I keep on my desk. In fourth quarter 2021 inquiries about greenhouse gas emissions were less than 5% of requests to our law firm versus in fourth quarter 2023 they were more than 50% of all inquiries! While we have been doing greenhouse gas emission work, both law and non law, for years, it is now our fastest growing area of effort. If we have not already calculated the greenhouse gas emissions for your building, it is your loss; quite likely, literally your loss in monetizing this as a new revenue stream. Reach out to us, now, and we can put you on a path to greenhouse gas emission calculation and reporting excellence.

The greenhouse gas issue just coming into focus in 2024 is reducing food waste. Not only is there all the energy and water it takes to grow, harvest, transport, and package food that is wasted, but food that goes to the landfill, the most common material in landfills, rots producing methane, a greenhouse gas 28 times more potent than carbon dioxide. Composting food waste will be de rigueur in 2024.

The pendant issue “with a bullet” in 2024 is working to eliminate modern slavery in business supply chains. While garnering nowhere near the attention of greenhouse gas emissions, this human rights issue is already of great import in the EU and is garnering increased attention in the US.

Despite some uncertainty ahead in 2024, last year’s cost inflation appears behind us. Decarbonization of the world’s economies is the biggest business opportunity in history, waiting to be unlocked.

We invite you to join us in undertaking this epic business venture, decarbonizing economies – to repair the planet and make your share of the Trillions along the way.

Sustainability Triumphs: A 2023 Year in Review with an Eye Toward Decarbonizing

As we sing Auld Lang Syne to 2023, a pivotal year for global sustainability efforts, it’s time to reflect on the strides made in reducing greenhouse gas emissions, particularly in the realm of the built environment, all as described in our top 10 most read blog posts of the year.

The past year has witnessed unprecedented innovation and a global commitment to addressing climate change. This year in review not only celebrates the progress made but more importantly looks ahead to the explosive growth in business opportunities in the promise of techno-optimism in steering us toward a decarbonized, more sustainable future.

Green Building Initiatives

In 2023, while popular media focused on the impact of Taylor Swift on U.S. GDP and the growth of AI across the globe, as well as the ramifications of wars in Ukraine and Gaza, and embracing Elon Musk, our clients and their stakeholders concentrated on the surge in post pandemic sustainable initiatives aimed at curbing carbon emissions and fostering eco friendly and healthy living and working spaces. Governments, corporations, and individuals alike embraced sustainable construction practices, energy efficient technologies, and renewable energy sources, as well as the broader green building pillars including fighting modern slavery.

One of the standout achievements of the year was, despite the slight uptick of greenhouse gas emissions economywide, the significant reduction in greenhouse gas emissions from buildings. Through the adoption of energy efficient designs, improved insulation, the growing integration of solar panels, and other renewable energy solutions, the built environment played a crucial role in mitigating climate change.

Technological Innovations Driving Change

Techno optimism took center stage as cutting edge technologies played a pivotal role in advancing sustainability goals while apocalyptic environmentalism is losing steam in the face of prosperity. The integration of smart building technologies, artificial intelligence, and the Internet of Things not only enhanced energy efficiency but also allowed for real time monitoring and optimization of resource consumption in increasing numbers of buildings, not just modern skyscrapers in coastal cities.

These largely market driven advancements not only reduce environmental impact but are also translating into significant cost savings for businesses and homeowners. One piece of bad news in the offing is sophomoric attempts by state and local governments to regulate building energy, including growing numbers of building energy performance standards that not only pervert the market but pick (.. often poorly) winners and losers, hurting disadvantaged communities.

Explosive Business Opportunities

The beginning of the shift towards decarbonization in 2023 was not just a moral imperative; it also presented, literally Trillions of dollars annually in business opportunities as economies across the globe move from fossil fuel economies dating from the Industrial Revolution. Companies that embraced eco friendly practices found themselves at the forefront of a rapidly expanding market. The demand for environmentally conscious products and services skyrocketed from renewable energy providers to sustainable construction firms. Consider that only days ago the Biden Administration invoked the wartime emergency powers based on climate change to utilize the Defense Production Act to increase domestic production of electric heat pumps.

Investors flocked to businesses with a strong commitment to sustainability, recognizing the long-term viability and profitability of green ventures. Against the backdrop of a global economy that has continued to grow, the explosive growth in sustainable industries marked a paradigm shift, with environmentally responsible practices proving to be not just a corporate responsibility but a lucrative business strategy.

The planet’s population keeps growing on track to pass 8,100,000,000 in 2024, a huge positive for prosperity.

Top 10 List

As we look for what will be the bleeding edge sustainability trends of 2024 “with one eye on the past, one eye on the future” here is a Top 10 List, with apologies to David Letterman, of our most read blog posts in 2023, which compilation provides a year in review that is an eclectic mix of environmental matters as self-selected for reading by readers of the blog. In descending order, these are the posts that had the most traffic:

  1. Greenhouse Gas Data Must be Collected Beginning January 1 in Maryland
  2. Tenants Monetizing their Greenhouse Gas Emission Data
  3. White House to Define Zero Emission Building
  4. Does Your Lease Need Greenhouse Gas Provisions?
  5. Guidance on Avoiding Greenwashing while Providing Input Down Under 
  6. Greenhouse Gas Emission Disclosures in Real Estate Contracts and Beyond
  7. The Evolution of Environmental Offsets: From Indulgences to Greenhouse Gas Emission Reductions
  8. The Positive Side of Green Hushing: Averting Backlash and Enhancing Corporate Sustainability
  9. Two China Based Companies Banned as a Result of Forced Labor
  10. We Need to Do Better to Reduce Food Waste

Looking Ahead to 2024 and Beyond

As we stand on the cusp of 2024, the momentum gained in 2023 positions us for even greater strides in the journey toward a sustainable future. The year ahead, despite possible frolics and detours occasioned by ugly domestic politics, promises to be characterized by continued innovation with a heightened sense of urgency in addressing climate change.

Techno optimism remains a guiding principle, with the belief that human ingenuity and scientific advancements can pave the way for transformative solutions. From breakthroughs in carbon capture technologies to the development of sustainable materials, the coming years hold the potential to revolutionize economies across the globe as we solve environmental challenges.

On a personal note, we foresee tremendous growth in 2024 in our nonlaw work assisting clients in uncovering opportunities for their businesses, greenhouse gas emissions and otherwise. 

In conclusion, this 2023 year in review showcases the remarkable progress made in sustainability, particularly in reducing greenhouse gas emissions from buildings. The fusion of technological innovation, business acumen, and a collective commitment to environmental stewardship sets the stage for an era of unprecedented multi Trillion dollar annual growth in greenhouse gas emission conscious businesses. As we enter 2024, the call to action is clear, to continue harnessing the power of ingenuity and science to produce our way out of the climate change predicament and build a bigger and better future that is both prosperous and sustainable.

Happy New Year!

LexBlog