The International Who’s Who of Environment Lawyers has brought together three of the world’s leading practitioners to discuss key issues facing environment lawyers today. They explore the implications of clean air and clean water advancements on the legal profession and the continued environmental controversy surrounding ’fracking’.
Washington DC, United States David Desforges
According to the lawyers we spoke to, clean air and clean water-related matters continue to be important issues this year. Are you still seeing a lot of work regarding these matters in your jurisdiction? Do you anticipate high levels of activity around these sectors in the future?
Robert Jamieson: In the Australian states of Victoria, New South Wales and Queensland in particular, enforcement of environmental laws relating to the pollution of water and the air has assumed a greater importance in the eyes of the regulators and we are seeing much more “enforcement activity”. This has manifested itself in more regulatory notices (clean up and abatement) and the like being issued; more detailed investigations being undertaken; and ultimately more prosecutions being commenced. This increased level of regulator activity is likely to continue for some time.
David Desforges: Clean air matters continue to be in high demand in France and should be increasingly so, as regulations are in the process of becoming more stringent, in particular in the area of indoor air quality. Indeed, new provisions are being implemented to ensure the safety of construction materials and furnishings likely to release harmful substances indoors. Air emissions provisions applicable in France essentially follow EU requirements, but continue to be an issue as stakeholder participation and demands are on the rise. As far clean water issues are concerned, these issues remain important but we do not witness significant changes in terms of activity in the immediate future.
James Rubin: In the US, issues arising under our federal and state clean water and clean air laws continue to dominate the field of environmental law and will likely do so for the foreseeable future. This is in due, in great part, to the growing emphasis on cleaning up older emission sources and developing new energy resources. For example, the EPA has released or proposed major air and water regulations that seek to reduce the health and environmental impacts from the power sector and major manufacturers. These include stricter regulations on conventional pollutants, air toxics, greenhouse gases, cooling water use and ash disposal. A major focus of these regulations – and a source of controversy – is the cost to industry and the public and to overall power reliability. Another major driver is the extraordinary growth of gas and oil development from unconventional sources, such as through hydraulic fracturing of shale. This growth has been transformative in the energy and environmental sectors, and has likely slowed the expected growth of renewable energy and nuclear power. But like any other extractive industry, unconventional drilling places significant demands on water sources and its emissions impact air and water, drawing the attention of both state and federal regulatory bodies. Hence, it is fair to predict that air and water issues arising from energy development will continue to be a major source of issues for US environmental practices.
Many of the lawyers we spoke to mentioned the environmental impact of “fracking” and energy-related topics at the moment. Are you seeing these trends in your jurisdiction? How have they impacted on your work and the work you do for your clients?
James Rubin: The growth of unconventional sources of oil and gas, and in particular, the development of abundant and inexpensive gas from hydraulic fracturing, have had a profound impact on environmental policy in the US and, hence, domestic environmental practice. As an immediate matter, the explosive growth in hydraulic fracturing and discovery of new shale plays has led to greater investments, acquisitions and related deals, and development of storage and pipeline facilities. Each of these areas requires legal work, whether through contracts, due diligence, permitting or litigation. Moreover, as states and the federal government seek to address health and environmental issues arising from increased drilling, there has been a growth in policy advocacy and participation in rulemaking by the private and public bars on behalf of energy companies, non-profits and the affected public. Indeed, governmental entities are striving to balance environmental protection and resource development, and the plaintiffs bar has been active on the class action front, alleging harms from drilling in communities. Finally, the availability of plentiful and inexpensive gas has greatly affected domestic energy policy, resulting in a shift from coal to gas and undercutting renewable and nuclear energy development. This has raised new issues for companies and the government as to coal and LNG exports, construction of major new pipelines, and the environmental impacts of increased gas production. Of significant note is the EPA’s recent proposal for new source performance standards (NSPS) for greenhouse gas emissions from new power plants. The EPA, seeing a general trend toward gas and away from coal, proposed a standard that could be met by combined-cycle natural gas but not by coal plants except those with carbon capture and sequestration technology. It is not likely the EPA would have set such a standard without the existence of cheap and widely available gas made possible by hydraulic fracturing. All these factors mentioned above have led to an increased focus by clients and firms on the intersection of energy policy and environmental law.
David Desforges: “Fracking” has been a prominent issue in France over the past 18 months, culminating in a ban on this technique instituted by a law of 13 July 2011. From a more general perspective, this and other oil exploitation issues overseas are prompting a somewhat imminent re-examination of the French Mining Code. This has given a mining/environmental angle to our work, a trend which we believe will be confirmed in the near future.
Robert Jamieson: Our Brisbane office is heavily involved in the energy and resources sector and as such is doing significant work for clients involved in projects dealing with coal seam gas production.
One of the physical impacts of the production of this gas is hydraulic fracturing of the rock lying over the gas source. There has been a lot of technical and legal debate about the appropriateness of “hydraulic fracking” around the gas source, especially where there is a proximate groundwater body. There is farmer concern (invariably the affected land is in rural and agricultural areas) and community concern around the potential for groundwater contamination where fracking occurs. Much of our work centres around assisting clients obtain workable environmental approvals to access the gas source and to document the projects from a legal perspective.
Apart from the issues mentioned above our firm is involved in a number of major coal projects, including the development of major coal-loading facilities to enable the export of coal to overseas markets. In addition, we are working on large and complex gold, copper and uranium projects.
Have there been any, or are you expecting any, regulatory or legislative changes which will impact on your work? Has enforcement of environment regulations in your jurisdiction got stronger in the past year? How has this affected your work and your clients?
Robert Jamieson: The Clean Air package of legislative reforms in Australia, placing a price on carbon, is the most significant legislative reform impacting Australian environmental law for some time. This has generated a significant amount of advisory work, particularly from our Energy and Resources clients and we expect to see a significant flow of transactional work arising out of carbon pricing in the near future.
The enforcement of environmental laws has increased significantly in most of the states and territories of Australia in the past two years. Regulators are far more active and are undertaking more detailed and aggressive investigations, and there is a much greater emphasis on the the use of regulatory notices, such as clean-up notices and pollution abatement notices. With increased surveillance and investigations we are seeing more prosecutions and other enforcement action .
Apart from the increased level of enforcement work we are undertaking for our corporate and government clients, we are more involved in training of senior officers and directors, particularly around environmental and health and safety due diligence.
James Rubin: In the US, there have been a notable lack of legislative developments on the environment front due to the increased politicisation of energy and environmental issues and general congressional gridlock. This has led to a greater reliance on federal regulatory measures to address perceived environmental issues. Moreover, courts have played a major role by striking down major programmes developed in the Bush administration and ordering federal agencies to develop new programmes over the last few years. Finally, the existing statutes for air and water pollution, among others, require continued agency review and issuance of new standards, often enforced by citizen suits when the agencies do not act in a timely manner. All these factors have combined to generate a significant number of major new air and water regulations, particularly impacting the power sector and major manufacturers, that have been issued or proposed in the last several years.
Thus, the EPA has recently issued final rules on greenhouse gas emissions, automobile efficiency, trans-boundary pollution toxic air releases and methane emissions from hydraulic fracturing. The EPA has also proposed strengthening national ambient air quality standards, addressing marine impacts from cooling water, tightening guidelines for effluent discharges from power plants, setting new greenhouse gas standards for new power plants and controlling coal ash disposal. These rules and proposals have generated controversy within the industries and in Congress, becoming in fact a major issue for the 2012 presidential campaign.
At the same time, federal agencies have sought to streamline their procedures to ensure more rapid development of renewable energy sources and transmission lines while addressing impacts to resources and wildlife. Many of these actions have been challenged in court.
Despite the heavy emphasis on rulemaking, there has not been a significant increase in civil and criminal enforcement of environmental laws. Indeed, some have expressed concern that the Obama administration has focused less in this area. In reality, US domestic environmental enforcement is less affected by political developments and more by fiscal realities. Armed with fewer resources, enforcement agencies are forced to focus on core areas and concerns, and lower priority matters may receive less focus. The EPA and other enforcement agencies must enforce “smarter” by bringing high-impact cases, particularly where results can be broad or where particular misconduct needs to be addressed. Actions against BP for the Macondo oil spill are a good example of this renewed focus.
But none of these developments has really lessened the vigilance with which companies must view their conduct. The risk of civil and criminal liability is no less significant than in years past, and indeed, companies have viewed how intentional acts and accidents by major players have harmed public perception and the bottom line. There does not appear to be a view among the regulated community that enforcement is any less strict now than before, and lawyers continue to work with their clients to ensure compliance and avoid liability.
David Desforges: Two major pieces of regulation were enacted in 2009 and 2010 purporting to increase and improve environmental protection (the so-called Grenelle 1 and 2 Laws). This resulted in a total of 25 codes being amended and 180 pieces of regulation expected to supplement this legislative endeavour. About one-third of such decrees only have been adopted thus far. The new government (following presidential election on 6 May) has scheduled yet another round of new environmental provisions to the so-called “ecological transition” of the economy. This will undoubtedly bring about new constraints and new issues that will impact our work on behalf of heavy and manufacturing industries.
The enforcement of regulations has not significantly gotten stronger in the past year. Strong administrative attention remains on site closure and remediation issues though.
Some lawyers we spoke to implied the legal marketplace for environment was shrinking in their jurisdiction. Is this the case in your area? Are environment lawyers having to diversify their work into other areas?
Robert Jamieson: We have not found this to be the case in Australia. The pricing of carbon, an increased focus on regulatory compliance and the buoyant energy and resources sector has seen us have a very busy period and we have had the confidence to make a number of partner appointments to the national environmental team.
With a hopeful improvement in the global economy and an increase in mergers and acquisitions activity, we see our practice remaining busy for the foreseeable future.
David Desforges: It’s more that environmental law is diversifying and finding its route into many other provisions. As indicated above, the French 2010 Grenelle 2 Law modified 25 codes, thus illustrating the fact that environmental provisions are permeating the law far beyond the sole perimeter of the Environmental Code. The marketplace is not shrinking, it is expanding (and also being diluted) to the benefit of a larger population of practitioners, it seems. As a consequence of the above, and in terms of diversification, the trend is certainly on. As far as France is concerned (the same goes in the EU), work is split between activities-related and product-related issues (whereas it used to be essentially activities-driven) while environmental issues increasingly make their way into the mining code, the construction code, the public health code and others. Yes, we do diversify our work into other areas – but as a result of the law being more diverse, rather than as a consequence of a shrinking marketplace.
James Rubin: In my opinion, the legal marketplace for environmental issues isn’t shrinking as much as being negatively impacted, like all practices, by the recent recession and drop in legal spend by client companies. The US environmental practice, in large part, has become a mature part of overall firm work, with fairly standard issues like due diligence, compliance and enforcement, and hazardous waste matters now a regularised part of corporate practice. But when firms outsource less work or engage in fewer transactions, the environmental practice, like other relevant practices, has less work to do. This in turn leads to greater competition among firms for existing work.
On the brighter side, the intersection between environmental and energy law has seen new and exciting growth. This has included new deals and acquisitions in conventional, unconventional and renewable energy sectors, new construction of infrastructure and permitting, new agency rules and plenty of litigation around those permits and rules. It is likely that energy-related issues, particularly regarding scarce water resources and fuel sources, will generate new and additional activity for the environmental bar. To a large extent, then, traditional environmental practices are indeed diversifying to include energy-related work, and drawing the two practices closer together.