Inside Track: Planning, Environment & Sustainability - In the media, In practice and courts, Cases and Legislation - Real Estate and Construction

New Administration, New Focus on Environmental Policy

As the Biden administration (“Administration”) gets to
work, many companies will be keeping a close eye on shifting policy
at the federal level. However, activity at the state attorney
general level may prove just as, if not more, impactful to
businesses in the coming months and years. The recent election left
the state attorney general landscape relatively
unaltered—there were only ten state attorney general races in
November 2020, all of which involved victories for incumbents or
successors within the same party—but state attorney general
action will likely shift considerably in reaction to the new
Administration and its policy goals. This shift will affect
multiple sectors, but, given the Administration’s focus on
climate change, may be felt most significantly by companies in the
energy industry and others whose businesses and operations directly
intersect with environmental issues.

Within hours of taking office, and as expected, President Biden
signed several executive orders on environmental issues, as well as
a letter confirming the United States’ intention to rejoin the
Paris Agreement. This early flurry of action signals more of what
is to come, as the orders largely focused on energy and climate
issues: revoking the Keystone XL permit, instituting a moratorium
on oil and gas leases in the Arctic National Wildlife Refuge,
reversing Trump-era rollbacks on vehicle emissions, and reinstating
a working group on the social costs of global warming. The
Administration acted through executive order to achieve these early
environmental objectives, but acknowledged that much of what is to
come will need to be accomplished through regulatory and
legislative action. Indeed, with Democratic majorities now in both
chambers, the new Administration has less need to rely on executive
orders than its predecessor and will likely seek legislative change
wherever possible to avoid the legal challenges that often
accompany executive action.

State Attorney General Response to Expected Policy Change

As the Administration continues rolling out its environmental
policy initiatives, much of the reaction from state attorneys
general is expected to track along party lines. Republican
attorneys general are likely to respond to anticipated policy
shifts on multiple fronts, including through coordinated
involvement in legislative and proposed rulemaking processes. As
with the Democratic state attorneys general under the prior
administration, Republican attorneys general are also likely to
aggressively pursue legal challenges to policy changes, acting
unilaterally or in coordinated, multistate coalitions where
practicable.

Depending on the issues, some Democratic attorneys general, by
contrast, will look for opportunities to bolster the Biden
administration’s environmental policy agenda, both by
continuing to pursue any currently pending challenges and through
new actions, particularly related to last minute policy changes
from the Trump administration—again working through
multistate coalitions wherever possible. Connecticut Attorney
General William Tong, for example, recently announced participation in several
multistate coalitions pursuing lawsuits related to Trump-era
policies on air quality standards, greenhouse gas emissions,
scientific transparency, migratory birds (and endangered species),
and energy efficiency of consumer appliances. In order to leverage
their collective strength, Democratic attorneys general will also
look for ways to defend and enforce the new Administration’s
policy initiatives, by, for example, filing amicus briefs or
intervening to support newly enacted regulations or policies, and
exercising their enforcement authorities to fill the void while the
Administration’s policies are being developed.

While much of the response to legislative developments will
track party lines, companies should also expect that attorneys
general will look for opportunities to use bipartisan collaboration
to impact policy, particularly where energy and environmental
policies overlap with investor and consumer protection. In 2018,
for example, an 18-state bipartisan coalition wrote to the Federal
Energy Regulatory Commission (“FERC”)
to encourage a
rate adjustment that would require utility companies to pass along
corporate tax savings under the Tax Cuts and Jobs Act to consumers.
Thus, even though party affiliation may predict much of the state
attorney general policy reaction, companies should not treat
political leanings as determinative of an attorney general’s
potential impact to their industry.

In general, companies should expect that state attorneys general
will be very active on environmental issues in the coming years and
should keep a close eye on the pronouncements from attorney general
offices in the states in which they operate. Staying well-informed
of publicized priorities and legal and investigative activities
will help companies understand where attorney general action has
the most potential to impact their business. Companies should also
consider how best to proactively engage with attorneys general in
states in which they operate so they can create and maintain an
open dialogue regarding issues facing their business and
industry.

Renewed Focus on Environmental Enforcement

While the expected legislative activity on environmental issues
will take time to translate into enforceable law, it is unlikely
state attorneys general will stand idle before moving into a new
wave of enforcement. Galvanized by the new Administration’s
emphasis on the environment and seeking to offset a perceived
relaxing of environmental enforcement under the prior
administration, state attorneys general may immediately start
ramping up environmental enforcement actions, even before new, more
stringent environmental regulations are enacted.

Recent challenges to Trump-era environmental policies indicate
that environmental enforcement remains a priority for states
despite the slowdown in prosecutorial activity over the last few
years. In May 2020, for example, nine state attorneys general filed
a lawsuit against the U.S. Environmental Protection Agency
(“EPA”) challenging a temporary policy that allowed the
agency some enforcement discretion for noncompliance resulting from
complications of the COVID-19 pandemic. Though the complaint
focused on alleged procedural flaws in the policy’s enactment,
in announcing the lawsuit, California Attorney
General Xavier Becerra described the policy as an attempt to use
the pandemic as an excuse to ignore environmental violations. This
suit demonstrates that certain states are closely scrutinizing
potential environmental noncompliance during the pandemic, are
unlikely to apply leniency to such violations, and expect companies
to continue to advance their sustainability efforts and green
initiatives. Other challenges that may foreshadow areas of
increased enforcement include a 21-state suit challenging eased restrictions
for coal-fired power plants (which led the D.C. Circuit to vacate the policy at issue), a
21-state suit calling for review of the
EPA’s rescission of emissions regulations for methane and other
volatile organic compounds from new sources in the energy sector,
and a 20-state joint letter to Congress urging that
the 2021 National Defense Authorization Act include provisions
regulating per- and polyfluoroalkyl substances (“PFAS”),
which was sent within days of the North Carolina Attorney General
filing a PFAS contamination suit against
several companies. Relatedly, as companies face pressure to
minimize environmental impact, state attorneys general will also
focus on investor protection through disclosure enforcement. In
this regard, even companies with strong environmental compliance
and sustainability metrics may face prosecutorial activity from
state attorneys general probing their financial disclosures, public
statements, and sustainability reports.

Emphasis on the environment is also evident in the emerging trend of state attorneys general creating
dedicated environmental justice units
. Such offices lend
support and resources to nonprofit and community driven
environmental challenges, in addition to independently initiating
litigation. Many states are also touting such offices as dedicated
to representing low-income or otherwise marginalized populations in
environmental challenges. Creation of these units should signal to
companies that state attorneys general are expanding the resources
dedicated to environmental issues, particularly among so-called
fence line communities, turning increased attention to community
impact, and potentially arming citizen suits with the clout of the
attorney general office. Given the Administration’s announced
focus on environmental justice and climate, these state units are
more likely to continue to grow in importance and may work hand in
glove with the Administration going forward.

The Complexity of State Attorney General Enforcement
Activity

Companies should keep in mind that, as a general rule, state
attorneys general have broad authority to investigate and pursue
civil and criminal enforcement actions, and that such power is not
limited to enforcing state laws. In many states, the attorney
general also has broad discretion regarding whether to pursue an
investigation, and such discretion is generally not reviewable by
the courts. Moreover, the investigative tools available to
attorneys general are often derived from state statutes that lack
certain protections commonly available in private litigation, a
factor that is further aggravated when multiple state attorneys
general collaborate in investigative actions. As these nuances
illustrate, it is important at the onset of any such investigation
or enforcement action that counsel representing the target entity
carefully consider appropriate mechanisms for challenging or
quashing the action, while also working to avoid unnecessary
escalation of minor issues and keeping efficient resolution as the
ultimate goal.

Companies should also keep in mind that state attorney general
action in the environmental space will not necessarily track party
lines. Enforcement may take a more bipartisan shape, even when it
involves policies that were championed by the left at the
legislative stage. In some instances, investigations related to
environmental issues have involved near nationwide participation
from state attorneys general. There is also the potential for
collaboration between federal agencies and the states. These large
scale collaborations are attractive to state attorneys general
because they drastically expand the reach, and therefore potential
impact, of their regulatory authority while at the same time
conserving the limited resources of their offices. For the same
reasons, such collaboration also poses heightened risks to
companies facing such actions.

Conclusion

Environmental issues are certain to be a priority for many state
attorneys general in the coming years, especially given increased
focus under the new Administration. In the face of these shifting
priorities, companies should take stock of their objectives, assess
vulnerabilities, and stay vigilant with respect to compliance. The
power of state attorneys general is both significant and complex,
and will likely have a considerable role in shaping environmental
policy shifts and the resulting impact on business in the coming
years.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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