On July 1, 2022, the U.S. Department of Commerce (“Commerce”) issued proposed rules implementing President Biden’s emergency declaration to provide temporary tariff relief on certain imports of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam.[1] Commerce has provided the public with a 30-day period to comment on the proposed rules.

If enacted in their current form, the proposed rules would provide meaningful relief and increased tariff certainty to U.S. importers of solar cells and modules from these four Southeast Asian countries.  Specifically, under the proposed rules, Commerce will not impose tariffs during the emergency period established by President Biden on imports of solar cells and modules from those countries even if the products are found to be circumventing an existing antidumping (“AD”) or countervailing duty (“CVD”) order.  The proposed rules do not affect tariffs on imports that are already within the scope of existing AD/CVD orders on solar cells and modules from mainland China or Taiwan, including in-scope modules that incorporate cells from mainland China or Taiwan but are assembled in a different country.

While the proposed rules would represent a positive development for foreign manufacturers, U.S. importers, and U.S. consumers, including the U.S. solar project development industry, if promulgated in their current form, changes to the rules are possible.  It is therefore important for parties with a stake in Commerce’s pending circumvention inquiries to file comments by the August 1, 2022 deadline. 

Continue Reading Commerce Invites Comments on Proposed Rules Implementing Presidential Emergency Declaration on Solar Tariffs 

The Environmental Protection Agency has issued three requests for information regarding recycling issues, a first step towards distributing funds and carrying out mandates contained in the last year’s Infrastructure Investment and Jobs Act, commonly known as the Bipartisan Infrastructure Law. The programs for which EPA is requesting information are primarily directed toward improving recycling of consumer waste:

The Environmental Protection Agency has issued three requests for information regarding recycling issues, a first step towards distributing funds and carrying out mandates contained in the last year’s Infrastructure Investment and Jobs Act, commonly known as the Bipartisan Infrastructure Law. The programs for which EPA is requesting information are primarily directed toward improving recycling of consumer waste:

Program TopicFundingInformation requested
(1) Develop best practices for collecting batteries for recycling in ways that are (i) technically and economically feasible for states and municipalities, (ii)environmentally sound and safe for waste management workers, and (iii) optimize the value and use of material derived from recycling of batteries. IIJA Sec. 70401(b).      





(2) Establish a program to promote battery recycling through the development of voluntary labeling guidelines for batteries and other forms of communication materials for battery producers and consumers about the reuse and recycling of critical materials from batteries. IIJA Sec. 70401(c).  
$10 million to EPA to develop battery collection best practices                          




$15 million to EPA to develop voluntary labeling program

EPA has identified key information categories on which stakeholder insights would be most helpful:
– Scope and prioritization of the battery collection best practices;
– Understanding the battery collection and recycling system;
– Information on labeling guidelines for batteries regarding reuse and recycling; and
– Information on battery reuse and recycling communication materials directed towards battery producers and consumers.    

Within each category, EPA lists a broad range of specific questions about the current recycling practices, including, for example:
– What battery types/chemistries are collected?        
– When do original equipment manufacturers take back or retain ownership of batteries at end-of-life?
– What should be the goals of developing voluntary labeling guidelines for batteries?  
EPA’s Solid Waste Infrastructure for Recycling (SWIFR) program, which supports post-consumer materials management and recycling efforts. See IIJA Division J.$275 million in grants to qualifying entities in increments of $55 million per year from fiscal years 2022-2026EPA is seeking comment on how to distribute funds under SWIFR and on current waste management systems more broadly. In particular, EPA seeks input, on the challenges facing communities with regard to post-consumer materials management, eligible uses for SWIFR funds, specific recommendations to improve post-consumer materials management.
(1) Establish grant program to fund improvements in residential and community recycling programs, including those that tackle waste prevention, through public education and outreach. IIJA Sec. 70402(b).

(2) EPA must also develop a Model Recycling Program Toolkit, intended for state, local, and tribal governments to use in carrying out their recycling programs. IIJA Sec. 70402(b)(7).
$15 million per year for five years    EPA requests comment on specific topics, including: Standardized Terminology; Residential Recycling; Consumer Education Materials; Measuring Effective Communication; and Current Stakeholder Education and Outreach Programs.

The current recycling rate in the United States—about 32 percent—is well below what it could be.  EPA has set a target of 50% by the end of the decade, and last year published the agency’s first ever national recycling strategy.  These requests for information focus on some of the most commonly cited reasons for the low rate, including consumer attitudes toward recycling and poor infrastructure in many parts of the country.

The RFIs should be of interest to a broad set of stakeholders.  EPA’s desire to better understand battery recycling practices is of particular note, given the prevalence of batteries in modern consumer products, and the importance of energy storage solutions to the Biden Administration’s climate goals.  The guidelines developed by EPA could ultimately become the basis for either federal or state mandatory requirements.  Manufacturer take-back programs are also specifically mentioned, suggesting that EPA may eventually consider extended producer responsibility for these products, a trend that is prevalent in a number of states. Written comments and information responding to these requests must be received on or before July 25, 2022.  EPA’s Office of Resource Conservation and Recovery (ORCR) will be hosting virtual meetings across the country this year.

On 30 May 2022, the European Union (“EU”) adopted the revised Regulation on guidelines for trans-European energy infrastructure (No. 2022/869) (the “TEN-E Regulation 2022”), which replaces the previous rules laid down in Regulation No. 347/2013 (the “TEN-E Regulation 2013”) that aimed to improve security of supply, market integration, competition and sustainability in the energy sector. The TEN-E Regulation 2022 seeks to better support the modernisation of Europe’s cross-border energy infrastructures and the EU Green Deal objectives.

The three most important things you need to know about the TEN-E Regulation 2022:

  • Projects may qualify as Projects of Common Interest (“PCI”) and be selected on an EU list if (i) they fall within the identified priority corridors and (ii) help achieve EU’s overall energy and climate policy objectives in terms of security of supply and decarbonisation. The TEN-E Regulation 2022 updates its priority corridors to address the EU Green Deal objectives, while extending their scope to include projects connecting the EU with third countries, namely Projects of Mutual Interest (“PMI”).
  • PCIs and PMIs on the EU list must be given priority status to ensure rapid administrative and judicial treatment.
  • PCIs and PMIs will be eligible for EU financial assistance. Member States will also be able to grant financial support subject to State aid rules.
Continue Reading The European Union Adopted New Rules for the Trans-European Networks for Energy

Presidential Action Triggered by Crisis in the U.S. Solar Industry

In recent months, the U.S. solar industry has been in the midst of an existential crisis, triggered by the threatened imposition of retroactive and future tariffs on a significant portion of U.S. imports. That crisis began on April 1, 2022, when the Department of Commerce (“Commerce”) initiated an inquiry to determine whether solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam are circumventing antidumping (“AD”) and countervailing duty (“CVD”) orders on solar cells from China. Solar cells from these countries generally accounted for approximately 80% of U.S. solar module imports in 2020.[1] If Commerce finds circumvention, solar cells and modules from the four target countries could not only be subject to combined AD/CVD tariffs approaching 250%, but Commerce’s regulations also allow for the agency to apply these tariffs retroactively to merchandise entering on or after April 1, 2022 (and potentially as far back as November 4, 2021). This threat of AD/CVD tariffs triggered a steep decrease in imports of solar cells and modules from Southeast Asia, and caused parts of the U.S. solar industry to come to a stand-still, furthering domestic reliance on coal.[2] Given this paralysis in the solar industry, lawmakers and others urged the President to provide relief from potential AD/CVD tariffs.[3]

Continue Reading President Acts to Prevent Import Tariffs on Solar Cells and Modules from Southeast Asia

Like many governments around the world, UK politics currently appear somewhat unstable. And the UK’s problems are a reflection of the world, where established views and beliefs are suddenly no longer the unassailable certainties they have seemed to be for decades.

Davos met this week for the first time in two years against this very unsettled backdrop.  A few thoughts and reflections on discussions there follow…

Continue Reading A Few Thoughts from Davos…

            On May 24, 2022, the National Academies of Sciences released a report, sponsored by EPA, CDC, and others, on indoor chemistry and air quality issues.  The report stresses the importance of these issues given that “people spend, on average, more than 80 percent of their time” in indoor environments, “often in close proximity to sources and processes that emit chemicals” and biological pollutants.  A main theme of the report is that there remain many outstanding questions in this area, and that “the management of indoor chemistry is at a nascent stage,” but rapidly evolving.

            Several aspects of the report are likely to be of particular interest to companies that market products for indoor use, particularly air cleaning and air sensor products.

Continue Reading National Academies of Sciences Report Highlights Indoor Air Quality Issues and Regulatory Considerations

On April 20, 2022, the cybersecurity authorities of the United States, Australia, Canada, New Zealand, and the United Kingdom—the so-called “Five Eye” governments—announced the publication of Alert AA22-110A, a Joint Cybersecurity Advisory (the “Advisory”) warning critical infrastructure organizations throughout the world that the Russian invasion of Ukraine could expose them “to increased malicious cyber activity from Russian state-sponsored cyber actors or Russian-aligned cybercrime groups.”  The Advisory is intended to update a January 2022 Joint Cybersecurity Advisory, which provided an overview of Russian state-sponsored cyber operations and tactics, techniques, and procedures (“TTPs”).

In its announcement, the authorities urged critical infrastructure network defenders in particular “to prepare for and mitigate potential cyber threats by hardening their cyber defenses” as recommended in the Advisory.

Continue Reading International Cybersecurity Authorities Issue Joint Advisory on Russian Cyber Threats to Critical Infrastructure

The Fifth Circuit recently allowed the federal government to resume use of the “social cost of carbon” (SCC), after a district court enjoined reliance on the metric earlier this year.  The SCC aids cost-benefit analysis of regulatory actions and can provide insights into the impacts of climate change and greenhouse gas emissions reductions.  The continued legal back and forth over the SCC demonstrates that it is a highly contested and important concept, supporting much of President Biden’s climate agenda and with potential spillover effects for corporate carbon pricing.

Background

The legal battles directly stem from an Executive Order President Biden issued on his first day in office, but continue a dispute that began in the last two presidential administrations.  Executive Order 13990 re-established an Interagency Working Group (IWG); directed it to issue an interim estimate of the SCC (the “interim SCC”); directed agencies to use the SCC “when monetizing the value of changes in greenhouse gas emissions resulting from regulations and other relevant agency actions”; and directed the IWG to continue work towards a “final” SCC figure, originally set to be published in January of this year.  The portions of the order addressing the SCC were themselves a response to Trump Administration actions which disbanded the IWG and directed use of an SCC estimate far lower than what prevailed under the Obama Administration.  In February 2021, the Biden IWG issued the interim SCC, which returned to the Obama-era estimates as follows:

Source: Interagency Working Group on Social Cost of Greenhouse Gases

Litigation over the Biden SCC estimates and effects on the Federal Government

A host of state attorneys general immediately challenged the interim SCC in two separate lawsuits in Louisiana and Missouri.  Among other claims, these suits alleged the interim SCC failed to comply with the Administrative Procedure Act’s notice-and-comment requirements, was arbitrary and capricious, and otherwise was enacted without statutory authorization.[1]  In February, a District Court Judge in the Western District of Louisiana hearing one of these challenges issued a preliminary injunction, prohibiting agencies from “adopting, employing, treating as binding, or relying upon” any SCC estimates that depart from those used in the Trump Administration.

This opinion immediately reverberated across the federal government.  In a motion to stay the injunction pending further appeal, the Justice Department wrote:

The consequences of the injunction are dramatic.  Pending rule-makings in separate agencies throughout the government—none of which were actually challenged here—will now be delayed.  Other agency actions may now be abandoned due to an inability to redo related environmental analyses in time to meet mandatory deadlines.[2]

In light of this injunction, a host of federal rulemakings, grants, and agency processes were delayed, including federal oil and gas leasing and grants made under a $2.3 billion program for capital-intensive transportation projects.  In court filings, the Justice Department further catalogued how the injunction was derailing federal operations dealing with climate change.  A declaration filed by a high ranking Office of Management and Budget (OMB) official documented disruptions to at least 21 rulemakings by the Department of Energy, 5 by Environmental Protection Agency, 9 by the Department of Transportation, and 3 by the Department of the Interior.[3]  The injunction would have forced the Transportation and Interior Departments to redo 60 and 27 environmental impact analyses, respectively.

Apart from its impact on agency rulemaking, the injunction threatened to implicate the White House’s international climate efforts.  For instance, the United States engages in regular conversations with the Canadian government to align SCC measurements across borders.[4]  Multilateral discussions with the Asian Development Bank may also be affected, as its energy policy reviews often incorporate references to SCC measures.[5]  The Justice Department argued the injunction would impede this international cooperation.

On March 16th, the Fifth Circuit stayed the injunction pending appeal.  The Court primarily rested its decision on Plaintiff’s lack of standing, noting the states’ injuries are “merely hypothetical.”[6]  Even if an agency did consider the SCC, it would only be one factor agencies consider “in determining when, what, and how to regulate or take agency action”[7]  The Fifth Circuit also considered the breadth of the impacts on government activities caused by the lower court’s sweeping injunction.[8]

The SCC moving forward

The IWG will now continue its work as litigation challenging the SCC continues.  This includes the Louisiana proceeding and the Fifth Circuit’s stay, as well as a pending 8th Circuit appeal of a Missouri district court decision, [9] which dismissed another challenge to the interim SCC for lack of both standing and ripeness.[10]

The IWG must still promulgate updated “final” SCC figures, which are expected to be higher than the interim ones based on President Obama’s IWG.  It is unclear when this might occur: neither the White House nor OMB has issued an official update.  Prior to the injunction, however, OMB had already solicited and received detailed public comment on how to incorporate the latest peer reviewed science and economics literature into the new SCC measure.[11]  Since, technical experts across federal agencies had been synthesizing and summarizing this input, with the “goal of providing updated estimates in the next couple of months.”[12]  Given delays caused by the litigation, it’s uncertain if the Government intends to honor this timeline.  Additionally, the IWG had intended to subject their updated estimates to a peer review process and, to this end, EPA had published a request to nominate experts on January 25th.[13]

The IWG’s work and the final SCC will be closely watched, both by the federal government and the private sector.  Under the SEC’s recently proposed climate-disclosure rule, publicly registered companies that use an internal carbon price—i.e., an “estimated cost of carbon emissions used internally within an organization”—would be required to disclose the price per metric ton of carbon dioxide equivalent used, and the company’s rationale for selecting that price.[14]  While not bound to do so, in setting internal carbon prices some companies may reference or even adopt the IWG’s estimate of the SCC.  However, with the fate of the interim SCC unclear, and an array of carbon markets around the globe setting other prices on carbon, many companies may be less inclined to adopt the IWG’s SCC in their internal carbon pricing.

[1] See, e.g., Complaint, Louisiana et al., v Biden et al., 21-CV-01074 (W.D. La., filed on April 22, 2021), ECF No. 1.

[2] Mem. in Sup. of Defs’ Motion for a Stay (“Gov. Mem.”), 21-CV-01074, (W. D. LA., February 19, 2022), ECF No. 103-1.

[3] Declaration of Dominic J. Mancini (“Mancini Decl.”), 21-CV-01074 (W. D. LA., February 19, 2022), ECF No. 104 at 10.

[4] Id. at 19–20.

[5] Id.

[6] Louisiana v. Biden, 22-30087, (5th Circuit, March 16, 2022), Document #00516242341 at 5.

[7] Id.

[8] Id. In particular, it noted how the injunction halted “the President’s directive to agencies in how to make agency decisions, before they even make those decisions.”  Id.  It also forced the government to comply with the Trump Administration’s SCC estimates, “even though that document was not mandated by any regulation or statute in the first place.”  Id.

[9] Missouri, et al., v. Biden, 21-03013 (8th Circuit).

[10] Missouri, et al., v. Biden, 21-CV-287, (Aug. 31, 2021), ECF No. 48.

[11] Id. at 22-23.

[12] Id. at 23.

[13] Id.

[14] Securities and Exchange Commission, “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” Proposed Rule at 83–86 (March 21, 2022).

On March 3 and 14, 2022, the European Financial Reporting Advisory Group (“EFRAG”) published its most recent set of Working Papers on the future of the EU’s European Sustainability Reporting Standards (“ESRS”). The ESRS will establish dozens of sustainability-related disclosure requirements that will be mandatory for thousands of EU companies under the Corporate Sustainability Reporting Directive (“CSRD”) (see our blog on the CSRD as background). Companies subject to the CSRD will be required to include these disclosures in their annual reports, and these disclosures will need to be audited. Importantly, this is the first time EFRAG has provided significant detail regarding reporting standards for topics that fall under the “S” pillar of the ESG (environmental, social, and governance) framework. The European Commission is currently aiming to have the CSRD and ESRS apply from January 2023, with initial reports due in 2024, and EFRAG will hold public consultations on its draft reporting standards in the coming months.

Continue Reading European Reporting Standards for the “S” in ESG: EFRAG’s New CSRD Disclosure Requirements for Workers and Human Rights Take Shape

As the world struggles to adjust to the harsh new reality of Russia’s invasion of Ukraine, the most recent instalment of the Sixth IPCC Report slipped out almost unnoticed.  And that is worrying, since the assessment in this section of the Report is even starker than previous assessments – noting in particular that in order to avoid global temperatures increasing by greater than 1.5 degrees C above preindustrial levels, the world needs to halve its emissions this decade: a reduction that the world does not currently appear to be remotely on course to do.

However, whilst the IPCC Report and the Russian invasion of Ukraine are not linked, Russian aggression in Ukraine may serve as a catalyst to speed up the European energy transition and accelerate its retreat from dependency on Russian gas and exposure to volatile international oil markets, which could in turn deliver a more rapid reduction in European emissions.  In the process, perhaps setting the world on a path to achieving an outcome that currently seems unattainable.

Continue Reading The IPCC and The Ukraine Crisis