An additional piece of the section 30D puzzle arrived last Friday when the Department of the Treasury (Treasury) and Department of Energy (DOE) released final rules (Treasury Rule and DOE Rule).  Largely tracking the proposed regulations, which we described in our prior blog posts (here and here), but with notable changes, these rules provide further clarity to the electric vehicle sector, essential to foster the widespread EV adoption in the United States.

Continue Reading Further Clarity to the Electric Vehicle Industry and Consumers Is Here, But It Is Not Done

On May 1, 2024, the White House Council on Environmental Quality (“CEQ”) published its final “Phase 2” National Environmental Policy Act (“NEPA”) regulations, formally called the Bipartisan Permitting Reform Implementation Rule (“Final Rule”). Publication of the Final Rule completes a multi-year effort by the Biden Administration that included publication of final, narrower “Phase 1” rule in April 2022. The Final Rule is predominantly consistent with the 2023 proposed rule, which is analyzed in an earlier blog post.

CEQ’s Final Rule is notable in many respects. It advances sound environmental analysis to inform the public and decisionmakers while implementing new efficiencies to help accelerate the environmental permitting process for infrastructure projects, from solar, wind, and transmission lines to federally-funded domestic manufacturing projects. In this regard, the Final Rule is a key component of the Biden Administration’s commitment to advancing domestic infrastructure, including projects aligned with the Biden Administration’s climate and clean goals that are being further propelled by federal grants and tax incentives pursuant to the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA). 

Continue Reading CEQ Final NEPA Regulations and Department of Energy Actions Aim to Responsibly Accelerate Clean Energy, Transmission, and Other Infrastructure Development

First observed on April 22, 1970, Earth Day has long been recognized as a watershed moment for the modern environmental movement.  On that day, over 20 million demonstrators nationwide marched to raise awareness of the need to protect and preserve the environment.  The energy generated from that day galvanized the country to action, leading to the creation of the U.S. Environmental Protection Agency (EPA) in December 1970 and the passage of several statutes later that decade—including the Clean Air Act (CAA) the Clean Water Act (CWA), the Endangered Species Act (ESA), and the Resource Conservation and Recovery Act (RCRA)—that serve as the foundation of U.S. environmental legislation.  Today, Earth Day is recognized by countries around the world, and has expanded from its initial focus on pollution control to include elevating environmental justice in low-income, disadvantaged, and indigenous communities and promoting domestic and international climate action.

Beginning with a proclamation on April 19 declaring climate change to be “the existential crisis of our time,” the Biden-Harris Administration marked Earth Day and the week after by announcing a suite of final rules and grant programs aimed at fossil fuel abatement and pollution control, accelerating electric transmission grid modernization and solar energy development, and reducing greenhouse gas (GHG) emissions from the transportation sector.  These actions underscore not only the continued “whole-of-government” approach that the Administration has taken to combat climate change but also the urgency with which federal agencies have moved to promulgate final rules and protect them from potential congressional revocation ahead of the Congressional Review Act deadline later this spring. 

To assist industries and markets as they evaluate the impact of these final rules and programs, we’ve spotlighted several of these Earth Week regulatory and grant-funding actions.

Continue Reading A Week of Climate Action: Spotlight on the Biden-Harris Administration’s Earth Week Regulatory and Grant-Funding Actions

On April 17, 2024, the EPA released a final rule designating two perfluorinated chemicals—Perfluorooctanoic Acid (PFOA) and Perfluorooctanesulfonic Acid (PFOS)—as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).  EPA also released enforcement guidance explaining how it intends to apply the new listing with respect to certain types of potentially responsible parties.

Continue Reading EPA Finalizes Rule Listing PFOA and PFOS as CERCLA Hazardous Substances

With the 2024 election rapidly approaching, the Biden Administration must race to finalize proposed agency actions as early as mid-May to avoid facing possible nullification if the Republican Party controls both chambers of Congress and the White House next year. 

The Congressional Review Act (CRA) allows Congress to overturn rules issued by the Executive Branch by enacting a joint resolution of disapproval that cancels the rule and prohibits the agency from issuing a rule that is “substantially the same.”  One of the CRA’s most unique features—a 60-day “lookback period”—allows the next Congress 60 days to review rules issued near the end of the last Congress.  This means that the Administration must finalize and publish certain rules long before Election Day to avoid being eligible for CRA review in the new year.

Continue Reading Congressional Review Act Threat Looms Over Biden Administration Rulemakings

On April 9, the Board of Trustees of the Science Based Targets initiative (SBTi), a climate action organization that has validated corporate decarbonization targets for more than 4,200 companies to-date, issued a statement announcing that environmental attribute certificates (EACs), including carbon credits generated by voluntary carbon projects, may be used to abate Scope 3 greenhouse gas (GHG) emissions. It is possible to view the Board’s statement, unprecedented for SBTi, as recognition of the practical challenges associated with achieving Scope 3 emissions abatement without utilizing EACs. Yet, the statement also drew swift criticism from some stakeholders and observers, who argue that it represents a departure from SBTi’s science-based approach to corporate climate action. 

Following the criticism, on April 11, “the overwhelming majority” of SBTi’s staff, which felt “compelled to issue multiple clarifications” of the Board’s statement, published a remarkable public response.  Thereafter, on April 12, the Board supplemented its April 9 statement to clarify that no changes to the SBTi standards had been finalized. However, the Board’s statement and staff’s response show that interested stakeholders will have opportunities to provide SBTi with critical input regarding the use of EACs in Scope 3 emissions abatement that could have a material effect on any related revisions to the SBTi standards.  

Continue Reading SBTi Board Announces Role for Carbon Credits in Scope 3 Emissions Abatement; Staff Clarifies Review Remains On-going

Yesterday, the European Parliament approved a new (recast) Urban Wastewater Treatment Directive (“UWWTD”) that will impose new additional costs on producers marketing pharmaceutical and cosmetic products in the European Economic Area by the end of 2027.  Some studies suggest that the costs that producers would have to collectively pay could be around €1 billion per Member State.  This is well above the figures published in the Commission’s impact assessment, which estimated the annual cost of implementing the various requirements of the UWWTD in all Member States at €3.8 billion, including €1.2 billion for micro-pollutants treatment.

The upcoming UWWTD lays down rules on the collection, treatment, and discharge of urban wastewater, and puts particular emphasis on the implementation of the polluter pays principle.  The Directive aims to address the environmental and health concerns resulting from the presence of micro-pollutants, other pollutants (e.g., heavy metals, PFAS), microplastics and antimicrobial resistant (“AMR”) bacteria in European waters.  It introduces new measures for the treatment of wastewater, including quaternary treatment for micro-pollutants, and makes producers of pharmaceutical and cosmetic producers pay for such treatment.

Continue Reading New EU Wastewater Treatment Fees on Producers of Pharmaceutical and Cosmetic Products

On February 12, the U.S. Department of Energy (DOE)’s Office of Fossil Energy and Carbon Management (FECM) announced that it will award up to $100 million to support U.S. pilot projects and testing facilities demonstrating and scaling carbon dioxide removal (CDR) technologies.  The funding will support projects and facilities that remove carbon dioxide (CO2) directly from the atmosphere and store it in geological, bio-based, or ocean reservoirs, or that convert the captured CO2 into value-added products.  The funding is intended to support the development of a commercially viable U.S. CDR industry, in advancement of the goal of DOE’s Carbon Negative Shot of reducing the cost of capturing CO2 from the atmosphere and storing it at gigaton scales to less than $100 per net metric ton of CO2-equivalent by 2032.  The funding is a significant opportunity for developers and investors in CDR ventures that are prepared to deploy a pilot project in an area of interest for DOE.

Continue Reading DOE Announces $100 Million in Funding to Accelerate Carbon Removal

On January 17, 2024, the European Parliament formally endorsed its provisional agreement with the Council on the Directive Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and Better Information (“Greenwashing Directive”).  The Council is now expected to endorse the provisional agreement after which the Directive will be published in the EU Official Journal and enter into force.

The Greenwashing Directive aims to contribute to the EU’s green transition by empowering consumers to make informed purchases using reliable sustainability information about products and traders.  To do so, the Directive amends Directive 2005/29 on Unfair Business-to-Consumer Practices (“Unfair Commercial Practices Directive”) by introducing specific rules on sustainability and environmental claims.  The Greenwashing Directive is intended to work in tandem with the proposed Directive on substantiation and communication of explicit environmental claims (the “Proposed Green Claims Directive”), which we reported on here

Companies should keep a close eye on the transposition of this Directive, as it will have a significant impact on how they communicate about their sustainability, environmental, and social or ethical efforts.  Covington can help companies with navigating these regulatory requirements while meeting their business objectives.

Continue Reading EU Adopts New Rules on Greenwashing and Social Impact Claims

California’s Department of Resources Recycling and Recovery (CalRecycle) recently released a preliminary report analyzing data related to the recyclability of certain materials in California.  The report, issued in accordance with CalRecycle’s obligations under California Senate Bill 343 (SB 343), is intended to help the public determine whether businesses may legally claim their products and packaging are recyclable in California, including through the inclusion of the common “chasing arrows” symbol.

Enacted in 2021, SB 343 provides that products or packaging may not include messaging “indicating that the product or packaging is recyclable, or otherwise directing the consumer to recycle the product or packaging” unless it satisfies the statutory definition of “recyclable.”  Cal. Pub. Res. Code § 42355.51(b)(1).  To be considered recyclable, items must be collected by recycling programs that serve at least 60% of the state’s population and sorted by large volume transfer or processing facilities (LVTPs) that serve at least 60% of statewide recycling programs.  Companies that make noncompliant recyclable claims may face liability under the state’s consumer protection statutes. It is also important to note that compliance with the Federal Trade Commission’s Green Guides may be insufficient to assure compliance with these new California requirements.

The preliminary report analyzes whether certain categories of materials—including subcategories of metal, plastic, fiber, and glass—are collected by local recycling programs and whether they are sorted by a sample of the state’s LVTPs.  The report also estimates the percentages of the state’s population served by the analyzed programs and facilities.  The results are broken down by type of material to aid the public in determining whether specific items may be advertised as “recyclable” in California.  Covington’s more detailed analysis of the report’s findings and implications is available via email here.

CalRecycle will present its preliminary findings and solicit feedback on February 13, 2024 during a public workshop.  The workshop is live in Sacramento and may also be attended via webcast.  Additionally, interested parties may submit written comments until February 29, 2024.  CalRecycle plans to finalize its findings within 60 days of the public workshop.