On 19 June 2023, after almost 20 years of negotiations, the United Nations (“UN”) member states adopted a landmark treaty to ensure the conservation and sustainable use of marine Biodiversity of areas Beyond National Jurisdiction (the “BBNJ” treaty).

One of the cornerstones of the BBNJ treaty is the creation of a new mechanism for the fair and equitable sharing of benefits arising from activities with respect to “marine genetic resources” (“MGRs”) and “digital sequence information” (“DSI”) from MGRs.  This mechanism is groundbreaking because it will require companies to pay for the use of genetic resources beyond national jurisdiction for the first time.  Until now, under the existing Convention on Biological Diversity (“CBD”) and its Nagoya Protocol, companies were required to make (non-)monetary contributions only for the utilization of genetic resources under national jurisdiction (e.g., from national territories, national seas and exclusive economic zones).  The BBNJ creates new “Access and Benefit-Sharing” (“ABS”) obligations on MGRs from maritime areas beyond national jurisdiction (i.e., the High Seas and the Area). 

Companies in sectors whose R&D depends on marine genetic resources will be required to contribute to share financial and other benefits.  In this blog we focus on those provisions of the BBNJ which will have the most direct impact on companies.

Continue Reading Historic Marine Biodiversity Treaty creates new Access and Benefit-Sharing obligations for life sciences companies

The Fiscal Responsibility Act of 2023, signed into law on June 3, raised the U.S. debt limit and ushered in the most significant revisions of the National Environmental Policy Act (NEPA) in its 50+ year history. While the statutory changes are notable and important to understand, most of the changes codify longstanding agency practice and are expected to have only modest effects on environmental reviews, primarily with respect to timelines for completion.

In addition to these statutory changes, energy and infrastructure developers and other stakeholders are awaiting the White House Council on Environmental Quality’s (CEQ’s) “Phase 2” proposed NEPA rule. CEQ will likely seek to harmonize its proposed rule with the new statutory changes and could pose questions for public comment regarding new provisions that may warrant interpretation by CEQ. Congress may pursue additional permitting-related changes in the coming months, as well.

The following is a summary of the key changes to NEPA, placed in relevant context.

Continue Reading Amendments to the National Environmental Policy Act (NEPA): Permitting Reform in Context 

On May 23, 2023, the FTC hosted a public workshop on recyclable claims called “Talking Trash at the FTC: Recyclable Claims and the Green Guides.”  The FTC convened the workshop in connection with its ongoing review of the Green Guides.  The workshop included three panels of stakeholders discussing a variety of issues relating to the current state of recycling claims, consumer perception of such claims, and how the FTC should consider updating its guidance.

Continue Reading FTC Solicits Diverse Perspectives during Workshop on Recyclable Claims

On May 24, 2023, EPA released a guidance memorandum addressing the hazardous waste status of lithium ion batteries under the Resource Conservation and Recovery Act (“RCRA”).  EPA released the guidance to “both remove uncertainties for the states and industry about the regulatory status of these materials,” and to ensure that lithium ion batteries are properly handled when they are recycled.

Continue Reading EPA Clarifies Hazardous Waste Requirements Applicable to Lithium Ion Batteries

The Energy Strategy Coalition is a group of companies that operates in nearly every state and includes some of the nation’s largest investor-owned electric and gas utilities, public power authorities and generators of electricity from renewable, nuclear and gas-fired sources.[1]

The EPA’s proposal of carbon pollution standards for existing coal-fired power plants and new and existing gas-fired power plants represents an important step for the U.S. electricity sector.  Well-designed standards can help support the deployment of technologies supported by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act and serve as a backstop to the emission reductions expected to occur under both of these laws. 

The Coalition looks forward to examining EPA’s proposals in more detail and providing comments on how durable carbon pollution standards can support its members’ and this Administration’s decarbonization objectives, while preserving affordability, reliability, job-creation and strong incentives for the continued deployment and operation of zero-carbon resources. 

[1] For more information on the Coalition’s current membership, visit https://www.cov.com/en/professionals/p/kevin-poloncarz.

On March 30, the Integrity Council for Voluntary Carbon Markets (ICVCM),  an independent governance body that aims to set and maintain a global standard for quality in the voluntary carbon market, announced the launch of its Core Carbon Principles. The Core Carbon Principles (CCPs) are intended to establish fundamental principles for high-quality carbon credits that create a verifiable climate impact, based on the latest science and best practice. On the same day, ICVCM also issued the Program-level Assessment Framework and the Assessment Procedures, both designed to assist carbon-crediting programs in verifying that such programs and the credits that they issue comply with the CCPs.  Given the role that ICVCM has assumed in recent discussions concerning integrity in the voluntary carbon market (VCM), the CCPs and related Program-level Assessment Framework and Assessment Procedures are likely to draw significant attention from stakeholders at all stages of the VCM-supply chain. 

Continue Reading ICVCM Launches Core Carbon Principles for Voluntary Carbon Market

Funding incentives under the U.S. Inflation Reduction Act of 2022 (IRA) to transition to a clean energy economy are unleashing opportunities for key U.S. allies and partners around the world. In particular, tax credits exceeding 10% of the price of average electric vehicle (EV) sold in the United States are leading to new investments in Mexico and Canada, and have triggered high-level political negotiations from U.S. partners such as the European Union and Japan.

Continue Reading Global Spotlight: the IRA’s Implications for Key U.S. Allies

On March 22, 2023, the European Commission (“Commission”) presented its proposal for a Directive on substantiation and communication of explicit environmental claims (“Proposed Green Claims Directive”).  The Proposed Green Claims Directive is intended to work in tandem with the Commission’s 2022 Proposal for a Directive empowering consumers for the green transition through better protection against unfair practices and better information (“Proposed Greenwashing Directive”).  Both Proposed Directives are intended to contribute to the EU’s green transition towards a circular, climate-neutral and clean economy by enabling consumers to make informed purchasing decisions based on reliable information about the sustainability of products and traders.  In particular, the Proposed Green Claims Directive would create a common methodology for substantiating green claims about the environmental footprint of products, services and companies and require companies making environmental claims to secure a certification of compliance from an independent national “verifier.”

Continue Reading Greenwashing: EU Unveils Ambitious Proposal on Green Claims

Today, the Department of the Treasury and IRS made available for public inspection proposed regulations on the new clean vehicle credit under the Inflation Reduction Act of 2022, as codified in section 30D of the Internal Revenue Code.  These proposed regulations will be published in the Federal Register on April 17, 2023, and the due date for comments will be 60 days after the publication (or Friday, June 16, 2023).

Continue Reading Much-Anticipated Proposed Regulations on the 30D EV Tax Credit Have Finally Arrived—but Leave a Key Question Unresolved

Background

Later this week the Department of the Treasury is expected to release guidance on the Inflation Reduction Act (IRA)’s EV tax credit under section 30D of the Internal Revenue Code.  Highly consequential for the guidance and practical availability of the credit will be how Treasury interprets the term “foreign entity of concern.”  This is because Section 30D(d)(7) excludes from credit eligibility vehicles that are:

  • placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle . . . were extracted, processed, or recycled by a foreign entity of concern; or
  • placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle . . . were manufactured or assembled by a foreign entity of concern.

Meanwhile, last week, Treasury and the Commerce Department released proposed regulations (here and here, respectively) that interpret “foreign entity of concern” for purposes of various incentive programs under the CHIPS & Science Act (CHIPS Act).  Because the IRA’s definition of “foreign entity of concern” mirrors the CHIPS Act’s definition of “foreign entity of concern” interpreted by Commerce, and because Treasury cross-referenced Commerce’s interpretation of “foreign entity of concern” in Treasury’s CHIPS Act guidance, it is reasonable to wonder whether Treasury will adopt the same interpretation of “foreign entity of concern” for purposes of the EV credit exclusion in section 30D(d)(7). 

If it does, there could be a dramatic diminution of vehicles eligible for the EV credits.  Under Treasury’s proposed CHIPS Act regulations, a foreign entity of concern would include, inter alia, (i) any entity organized under the laws of China or having its principal place of business in China, and (ii) any entity organized outside of China 25% or more of whose voting interests are owned by the Chinese government (as in the case of foreign subsidiaries of Chinese state-owned entities (SOEs)).  If that interpretation is used for purposes of section 30D, absent a nearly impossibly fast elimination of Chinese critical minerals and battery components from the EV supply chain, the number of vehicles eligible for the 30D EV credit will sharply decrease in 2024 and will be practically eliminated in 2025. 

EV manufacturers and suppliers may wish to flag this concern to Treasury.

Continue Reading Will Treasury Adopt the Same Interpretation of “Foreign Entity of Concern” for both the Section 48D Credit under the CHIPS Act and the Section 30D Credit under the Inflation Reduction Act?