Election Law / Legislative News

Washington State Enacts Broad Antitrust Premerger Notification Law

On 4 April 2025, Washington became the first state to enact a broad, industry-agnostic merger control regime. Under the new law, parties submitting premerger notification filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) must simultaneously submit their HSR filings to the Washington attorney general (AG) if they meet certain local nexus requirements or are a healthcare provider or provider organization. The law will take effect on 27 July 2025.
While many states (including Washington) have recently established notification requirements for healthcare transactions, the new Washington law is unique in its broad application to deals in any sector. Together with the new HSR rules, which took effect in February 2025, the law could increase regulatory costs and antitrust scrutiny for reportable transactions, particularly for companies with a significant presence in the state. More broadly, the legislation continues a trend of heightened state-level merger review, and underscores that states remain an important factor in the US antitrust enforcement landscape.
Washington Premerger Notification Law
On 4 April 2025, Washington Governor Bob Ferguson signed into law the Uniform Antitrust Premerger Notification Act (the Act). The Act will take effect on 27 July 2025 and apply to any HSR filings made on or after that date.
Thresholds
The Act requires any “person”1 submitting an HSR filing to contemporaneously file an electronic copy of the HSR form with the Washington AG if any of the following applies:

The person’s principal place of business is in Washington.
The person, or any entity it directly or indirectly controls, had annual net sales in Washington of goods or services involved in the transaction of at least 20% of the HSR filing threshold (under the current threshold of US$126.4 million, this would mean local annual net sales of at least US$25.28 million).
The person is a healthcare provider or provider organization (as defined in RCW 19.390.020) conducting business in Washington.

Documents
If the “principal place of business” threshold is met, or if the AG otherwise requests, then the filing party must also submit documentary attachments to the HSR form, including the transaction agreement and any other agreements between the parties, audited financials for the most recent year, and documents analyzing the transaction with respect to various competition issues.
Confidentiality
Under the Act, filings and related materials are confidential and exempt from public disclosure, other than in connection with certain administrative or judicial proceedings, subject to protective order. The AG may also disclose information to the Federal Trade Commission, US Department of Justice, or the AGs of other states that have adopted similar reciprocal legislation.
Penalties
Failure to submit filings required by the Act can trigger civil penalties of up to US$10,000 for each day of noncompliance.
Interplay With Washington Healthcare Notification Law
Like many states, Washington already has a premerger notification requirement on the books applicable to certain healthcare transactions. Under this law, both parties to “material change transactions” (mergers, acquisitions, or contracting affiliations) between two or more in-state hospitals, hospital systems, providers, or provider organizations must submit a written notice (Notice of Material Change) to the AG at least 60 days prior to closing.2 This requirement applies to transactions involving an in-state and out-of-state entity where the latter generates US$10 million or more in healthcare services revenues from patients residing in Washington. The law also states that any provider or provider organization that conducts business in Washington and files an HSR form must provide a copy of the filing to the AG’s office in lieu of a Notice of Material Change.
The Act has a much broader scope, capturing HSR-reportable transactions in any industry, not just healthcare. HSR filings submitted under the Act by providers and provider organizations will be sufficient to satisfy the requirements under the healthcare transactions notification law, which will remain on the books. Note, however, that the definitions for “provider” and “provider organizations” do not specifically include hospitals or hospital systems. Therefore, absent additional guidance from the AG, hospitals and hospital systems that meet the thresholds under the Act may need to submit a copy of the HSR form and a Notice of Material Change.
What Happens Next? Premerger Notification in Other States
The Act is based on model legislation from the Uniform Law Commission, which adopted the Uniform Antitrust Pre-Merger Notification Act in July 2024. Similar bills have been introduced in Colorado, Hawaii, Nevada, Utah, West Virginia, and the District of Columbia. One of the goals of the model legislation is to “facilitate early information sharing and coordination among state AGs and the federal antitrust agencies” and encourage reciprocal adoption by states. As state AGs assume an increasingly significant role in US antitrust enforcement—including in the M&A context—the new Washington law could signal the beginning of a trend of heightened, industry-agnostic, state-level merger control.
What Should I Do Now?
In light of the new requirements under the Act, dealmakers should consider the following:

Evaluating state-level merger control filings alongside HSR, global merger control, and foreign direct investment filing requirements as part of standard transaction diligence, as well as building these filing considerations into deal negotiations and documents, as appropriate.
If an HSR filing is required, assessing potential filings under the Act, particularly where companies have a significant nexus to the state of Washington (in terms of principal location or local revenues).
Closely monitoring developments in other states, including new regimes coming online or proposed amendments broadening the scope of existing requirements, and preparing for reciprocal sharing of filings between states with similar legislation.
Assessing the impact of filings that may be required under the Act with respect to budget, timing, and the potential for increased visibility into business operations by regulators.
Assessing potential competitive impacts on local markets when evaluating transactions and how these effects are discussed in ordinary-course documents.

Footnotes

1 Under the Act, “person” means an individual; estate; business or nonprofit entity; government or governmental subdivision, agency, or instrumentality; or other legal entity. “Person” has a different definition under the rules implementing the HSR Act.
2 “In-state” entities are those that are licensed or operating in the state of Washington.

McDermott+ Check-Up: April 25, 2025

THIS WEEK’S DOSE

HELP Committee Releases 340B Report. Health, Education, Labor, and Pensions (HELP) Chair Cassidy (R-LA) released findings from his investigation and laid out potential reforms to the 340B Drug Pricing Program.
CMS Releases FY 2026 Medicare IPPS Proposed Rule. The Centers for Medicare and Medicaid Services’ (CMS’s) fiscal year (FY) 2026 hospital Inpatient Prospective Payment System (IPPS) proposed rule includes payment updates, proposals related to the Transforming Episode Accountability Model, and deregulation.
CMS Releases Additional FY 2026 Medicare Proposed Rules. The rules would update the hospice wage index and the skilled nursing facility, inpatient psychiatric facility, and inpatient rehabilitation facility prospective payment systems.
President Trump Signs EO on Lowering Drug Prices. The executive order (EO) includes directives to lower Medicare drug prices and reduce anticompetitive behavior.
Administration Acts on Gender-Affirming Care. A CMS letter reminded states of existing Medicaid requirements, a separate US Department of Justice memo outlined potential future action, and the US Department of Health and Human Services (HHS) created an online portal for whistleblowers.
President Trump Sends Memo on Immigrants’ Use of Medicare and Medicaid Benefits. Various departments, including HHS, were directed to ensure ineligible immigrants do not receive benefits.
NIH Releases New Grant Guidelines. The National Institutes of Health (NIH) expanded the actions that are prohibited by antidiscrimination laws.
Administration Continues Federal Workforce Restructuring. The latest proposal seeks to create a new class of at-will civil service employees.
President Trump Issues EO on Higher Education Accreditation. The directive includes medical school accreditation reforms.

CONGRESS

HELP Committee Releases 340B Report. The report includes findings from Chair Cassidy’s long-running investigation into the 340B program that looked at two hospitals, two federally qualified community health centers, two contract pharmacies, and two drug manufacturers. The report highlights five potential reforms for Congress to consider:

Requiring covered entities to provide detailed annual reporting on how 340B revenue is used to ensure direct savings for patients, creating more transparency into the link between program savings and patient benefit.
Addressing potential logistical challenges caused by increased administrative complexity; these burdens may impede patient benefit from the program.
Investigating the types of financial benefits that contract pharmacies and third-party administrators (TPAs) receive for administering the 340B program to ensure that increasing fees do not disadvantage covered entities and patients.
Requiring transparency and data reporting for entities supporting participants in the 340B program (i.e., contract pharmacies and TPAs).
Providing clear guidelines to ensure that manufacturer discounts actually benefit 340B-eligible patients and examining legislative changes to the definition of eligible patient and contract pharmacies’ use of the inventory replenishment model.

ADMINISTRATION

CMS Releases FY 2026 Medicare IPPS Proposed Rule. The rule, released April 11, 2025, proposes a 2.4% payment rate. A fact sheet is available here.
New proposals include:

Updates to the Transforming Episode Accountability Model (TEAM), which would remain a five-year mandatory model but would include a limited deferment for certain hospitals, neutral scoring on quality for hospitals with insufficient quality data, changes to the payment methodology and risk adjustment, and expansion of the skilled nursing facility (SNF) three-day-rule waiver. The model is slated to begin on January 1, 2026.
A request for comments on future quality measures supporting the Make America Healthy Again priorities of well-being and nutrition and on proposals to remove quality measures on health equity and social determinants of health.
A deregulation request for information (RFI) on ways to streamline regulations, reduce administrative burdens, and identify duplicative requirements across the Medicare program. Responses should be submitted through a web-based form, separate from other comments on the rule.

CMS Releases Additional FY 2026 Medicare Proposed Rules. Additional proposed regulations were released on April 11, 2025. These rules include the same deregulation and quality measure RFIs that were included in the IPPS proposed rule.
Key takeaways include:

Hospice Wage Index. CMS proposes to increase rates by 2.4% and clarify technical certification regulations.
SNF Prospective Payment System (PPS). CMS proposes to increase rates by 2.8% and implement operational and administrative updates to the SNF value-based purchasing program.
Inpatient Psychiatric Facility (IPF) PPS. CMS proposes to increase rates by 2.4% and issued an RFI on the IPF quality reporting program.
Inpatient Rehabilitation Facility (IRF) PPS. CMS proposes to increase rates by 2.6% and remove social determinants of health patient assessment data elements from the IRF quality reporting program.

Comments on the hospice wage index and SNF PPS are due by June 29, 2025, and comments on IPF PPS and IRF PPS are due by June 10, 2025.
President Trump Signs EO on Lowering Drug Prices. The EO directs HHS to:

Seek comment within 60 days on revisions to the Medicare Drug Price Negotiation Program for initial price applicability in 2028.
Coordinate with Congress to address the timing disparity between small-molecule and biologic drugs.
Conduct a survey to determine hospital acquisition costs for outpatient drugs and propose adjustments.
Condition health center grant funding on providing insulin and injectable epinephrine at or below the 340B acquisition cost, plus a minimal administrative fee.
Address payment incentives that encourage shifting of drug administration volume from physician offices to hospital outpatient departments.

The EO directs the CMS Innovation Center to develop a model for high-cost Medicare-covered drugs and biologicals. It also calls on agencies to develop recommendations to reduce anticompetitive behavior from drug manufacturers. Read the fact sheet here.
Administration Acts on Gender-Affirming Care. Pursuant to President Trump’s January EO on gender-affirming care for children, “Protecting Children from Chemical and Surgical Mutilation,” CMS sent a state Medicaid director letter. It states that the use of medical interventions for gender dysphoria in children has increased in recent years and that such interventions can cause long-term harm. The letter reminds states of existing federal requirements, including to ensure care is provided in the best interests of recipients. It reiterates that states must develop a drug utilization review (DUR) program that ensures drugs are appropriate, medically necessary, and not likely to result in adverse outcomes. CMS encourages states to review their DUR programs and indicates there will be additional DUR guidance in the future. Read more in a statement from CMS Administrator Oz.
HHS launched an online portal where whistleblowers can submit a tip or complaint regarding gender affirming care for minors. Read the press release here.
The US Department of Justice issued a memo outlining potential future actions in this arena, including:

Enforcement of laws outlawing female genital mutilation.
Investigation of violations of the Food, Drug, and Cosmetic Act and False Claims Act.
Withdrawal of any regulatory action based on World Professional Association for Transgender Health guidelines.
Establishment of the Attorney General’s Coalition Against Child Mutilation.
Legislation that bans gender-affirming care for minors.

President Trump Sends Memo on Immigrants’ Use of Medicare and Medicaid Benefits. With regard to healthcare programs, the memo:

Directs the heads of HHS, the US Department of Labor, and the Social Security Administration to take all reasonable measures to ensure ineligible immigrants do not receive funds from Social Security Act programs, which include Medicare and Medicaid.
Directs the attorney general and HHS secretary to ramp up fraud prosecution for all CMS programs.
Directs the social security commissioner, with the HHS secretary’s cooperation, to ensure death information is up to date.

On April 16, 2025, it was reported that officials from Immigration and Customs Enforcement and the Department of Government Efficiency sought access to a CMS database that includes health and personal information of beneficiaries, including immigrants.
NIH Releases New Grant Guidelines. In its Notice of Civil Rights Term and Condition of Award update (NOT-OD-25-090), NIH alerted domestic recipients that when accepting NIH grant funding, recipients must now certify that they are not in violation of federal antidiscrimination laws. Specifically, the notice highlights that such violations include operation of diversity and equity programs, engaging in “discriminatory equity ideology,” and participation in any prohibited boycott of businesses. Based on the memo, the NIH can terminate financial assistance and recover funds from recipients that engage in prohibited conduct.
Administration Continues Federal Workforce Restructuring. An Office of Personnel Management proposed rule seeks to create a new category of federal employees (“Schedule Policy/Career”) for employees with policy-influencing duties. These are not political appointees, and they currently have federal civil service protections. The new proposed category would remove these protections for an estimated 50,000 employees and instead make them “at-will,” which means agencies could remove them more quickly. Read the fact sheet here.
President Trump also issued a memo extending the hiring freeze on federal civilian employees through July 15, 2025.
President Trump Issues EO on Higher Education Accreditation. With regard to healthcare, the EO directs the attorney general and education secretary to terminate diversity, equity, and inclusion requirements advanced by the Liaison Committee on Medical Education, the Accreditation Council for Graduate Medical Education, or other accreditors of graduate medical education. The EO also directs the education secretary to assess whether to suspend or terminate the council’s status as an accreditation agency. Read the fact sheet here.
QUICK HITS

Vulnerable House Republicans Express Concerns About Medicaid Cuts. A group of 12 House Republicans sent a letter to House Republican leadership and Energy and Commerce Committee Chair Guthrie (R-KY) stating that they will not vote for any reconciliation bill that reduces Medicaid coverage for children, seniors, individuals with disabilities, or pregnant women, although they emphasized their support for targeted reforms.
FTC Issues RFI on Anticompetitive Regulations. In response to President Trump’s EO on “Reducing Anticompetitive Regulatory Barriers,” the Federal Trade Commission (FTC) launched a public inquiry into the impact of federal regulations on competition. The RFI invites members of the public to comment on how federal regulations can harm competition, and seeks to understand which federal regulations have an anticompetitive effect. Comments are due on May 27, 2025.
Commerce Department Launches Investigation Into Imports of Pharmaceuticals, Pharmaceutical Ingredients. The RFI announced that Commerce Secretary Lutnick initiated an investigation to determine the national security effects of imports of pharmaceuticals and pharmaceutical ingredients, including finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, key starting materials, and derivative products of those items. Comments are due on May 7, 2025.
House Republicans Launch American-Made Medicines Caucus. House Energy and Commerce Health Subcommittee Chair Carter (R-GA) and Reps. Tenney (R-NY) and Bilirakis (R-FL) announced the launch of a new caucus that will focus on ways to bring the pharmaceutical supply chain to the United States and become less dependent on China for pharmaceutical products.
FDA Limits Industry Employees From Advisory Committees. The policy directive limits individuals employed at companies regulated by the US Food and Drug Administration (FDA) from serving as official members on FDA advisory committees.
House Ways and Means Committee Members Send Letter to IRS. The letter from Committee Chair Smith (R-MO), Health Subcommittee Chair Buchanan (R-FL), and Rep. Panetta (D-CA) encourages Acting Internal Revenue Service (IRS) Commissioner Shapley to update and expand the IRS list of services and treatments for chronic diseases covered under an employer-sponsored high deductible health plan.
HHS Secretary Kennedy Focuses on Autism Spectrum Disorder. In a press conference, Kennedy highlighted recently released data from the Centers for Disease Control and Prevention that found an increased prevalence of Autism Spectrum Disorder. He stated that a large research effort would be underway, with findings published by September 2025, although NIH stated that its goal is just to award research grants by then. Read the press release here.
House Ways and Means Committee Republicans Issue RFI on OPOs. In an open letter, Chair Smith and Oversight Subcommittee Chair Schweikert (R-AZ) requested information on organ procurement organizations (OPOs) related to their operations, their allocation of resources, and the rules and regulations governing them. This RFI is part of the committee’s broader effort to examine OPOs’ potential violations of Medicare reimbursement rules and US tax law.
GAO Examines College Student Health Coverage. The US Government Accountability Office (GAO) report found that the percentage of college students with health insurance has increased by 11 percentage points in the last decade, but found that 1.6 million students still lack coverage. GAO identified barriers such as lack of Medicaid expansion and geographic limitations on coverage for students attending school out of state.
GAO Releases Reports on Defense Healthcare. The first report found that sepsis-related quality measures at medical facilities run by the US Department of Defense (DOD) have been improving. The second report recommended that DOD monitor mental health screenings for prenatal and postpartum TRICARE beneficiaries to ensure the recommended screenings are being provided.

NEXT WEEK’S DIAGNOSIS

Both chambers of Congress will be back in session next week, and the House plans to forge ahead on the reconciliation process during this upcoming work period. It’s being reported that the House Energy and Commerce Committee will mark up its reconciliation package on May 7, 2025, and House Republicans have indicated they plan to have a full bill on the floor the week of May 19, 2025. At the committee level, next week’s healthcare activities include:

House Education and Workforce Committee hearing on the Employee Retirement Income Security Act.
Senate Appropriations Committee hearing on US biomedical innovation.
House Oversight and Government Reform Cybersecurity, Information Technology, and Government Innovation Subcommittee hearing on government IT modernization.
House Veterans’ Affairs Oversight and Investigations Subcommittee hearing on the VA’s mental health policies.

We await the release of the Trump administration’s FY 2026 budget request, which is expected in the form of an abbreviated, or “skinny,” budget (as is common in a new administration) this month, followed by a full budget request at a later date. HHS confirmed that HHS Secretary Kennedy will testify in front of the Senate HELP Committee, likely after the skinny budget is released next month.

Expanded Definition of ‘Low-Wage’ Employees in Virginia Non-Compete Ban: Employers Need to Act Now

Takeaways

Effective 07.01.25, a new amendment to Virginia’s non-compete law expands the definition of “low-wage” employees to include employees classified as non-exempt under the FLSA.
The new definition will not apply retroactively to existing agreements.
Employers should audit their employee classifications and policies that contain non-compete provisions.

Deregulatory Push by Trump Administration Picks Up Speed

It’s no secret that President Trump, his Cabinet, and other executive branch leaders are prioritizing deregulatory activities over more historical federal governance approaches. Indeed, one of President Trump’s earliest executive orders – issued on January 31, 2025 – is entitled “Unleashing Prosperity Through Deregulation” and states that for each new regulation issued, at least ten prior regulations must be identified for repeal (and it defines the term “regulation” broadly to include memoranda, guidance documents, and policy statements, among others). In addition to this new 10-for-1 directive, on February 19, 2025, President Trump issued executive order 14219, “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative” (EO 14219). The president’s order directs all executive agency heads, in coordination with the Director of the Office of Management and Budget (OMB) and its Department of Government Efficiency (DOGE) Team Lead, to review all existing regulations for “consistency with law and Administration policy” and, within 60 days, to identify regulations that fall under the following categories:

regulations that are unconstitutional and those that raise serious constitutional difficulties, such as exceeding the scope of power vested in the federal government by the Constitution;
regulations based on unlawful delegations of legislative power;
regulations based on anything other than the best reading of the underlying statutory authority or prohibition;
regulations that implicate matters of social, political, or economic significance that are not authorized by clear statutory authority;
regulations that impose significant costs upon private parties that are not outweighed by public benefits;
regulations that harm the national interest by significantly and unjustifiably impeding technological innovation, infrastructure development, disaster response, inflation reduction, research and development, economic development, energy production, land use, and foreign policy objectives; and
regulations that impose undue burdens on small businesses and impede private enterprise and entrepreneurship.

The 60-day period granted to agency heads under EO 14219 ended on April 19, 2025. Just prior to the deadline for responsive agency submissions to the White House, on April 11, 2025, OMB also published a notice styled as “Request for Information: Deregulation,” which seeks comments from the broader public on “regulations that are unnecessary, unlawful, unduly burdensome, or unsound.” This brief public Request for Information (RFI) from OMB asks commentators specifically to identify “regulations that stifle American businesses and American ingenuity.” The open-ended RFI could reasonably garner comments on regulations across a multitude of industries, including the health care, clinical research, and life sciences sectors. Comments are due to OMB no later than May 12, 2025, and should be submitted via Regulations.gov (Docket ID OMB-2025-0003) with information on the rule’s background and the submitter’s rationale for proposing its rescission.
Also on April 11, the Centers for Medicare & Medicaid Services (CMS) published its own request for information pursuant to its deregulatory activities under EO 14219. CMS is asking “healthcare providers, researchers, stakeholders, health and drug plans, and other members of the public” to submit feedback on a diverse array of topics. Topics of interest include how to streamline regulatory requirements; whether there are opportunities to reduce the administrative burden of reporting and documentation; and whether duplicative requirements can be identified and reduced. CMS also requests that responsive public comments include, where practical “data, examples, narrative anecdotes, and recommended actions.”
In parallel to the ongoing and wide-ranging processes of identifying federal rules and regulations that may be ripe for revocation, the Trump Administration has signaled in multiple forums that it intends to bypass procedural requirements created by Congress with the Administrative Procedure Act (APA). Most conspicuously, on April 9, 2025, President Trump issued a Memorandum to the Heads of Executive Departments and Agencies on the subject of “Directing the Repeal of Unlawful Regulations.” The memo directs executive branch leaders to identify categories of unlawful and potentially unlawful regulations following their completion of the 60-day review period ordered in February via EO 14219 and to immediately repeal any regulation that “clearly exceeds the agency’s statutory authority or is otherwise unlawful.”
In directing his administration regarding what regulations may be unlawful, President Trump cites a slew of recent Supreme Court decisions that he characterizes as having “recognized appropriate constitutional boundaries on the power of unelected bureaucrats and that restore checks on unlawful agency actions,” such as last year’s Loper Bright v. Raimondo. The memo continues to state that: “In effectuating repeals of facially unlawful regulations, agency heads shall finalize rules without notice and comment, where doing so is consistent with the ‘good cause’ exception in the [APA]…that allows agencies to dispense with notice-and-comment rulemaking” in certain situations.
Whether such regulatory changes can be implemented without following the typical rulemaking process is very likely to be subject to litigation initiated by stakeholders who prefer the regulations in question stay in place, as the APA’s “good cause” exception has not been used to support widespread deregulatory activities such as this one, and existing case law does not appear to support the President’s expansive view of the exception’s applicability. It’s also worth noting that the Department of Health and Human Services (HHS) separately published a notice on March 3, 2025 rescinding a long-standing departmental policy that directed HHS to use the APA’s good cause exception “sparingly.” This HHS policy shift makes it more likely that the department may seek to make significant regulatory changes – whether promulgating new rules or revoking existing rules – without engaging in public notice-and-comment processes. Stakeholders should continue to closely monitor HHS and agencies within its purview (e.g., CMS) for actions that would affect their rights and that may not comply with the statutory mandates of the APA.

Disappearing Act: Latest Executive Order Takes Aim at Disparate Impact Liability

On April 23, 2025, President Trump signed an executive order aimed at eliminating enforcement of “disparate impact” discrimination claims, asserting that the disparate impact liability theory—used by courts for over five decades—violates the U.S. Constitution, “by requiring race-oriented policies and practices to rebalance outcomes along racial lines.” The executive order, titled “Restoring Equality of Opportunity and Meritocracy,” broadly addresses federal civil rights laws, including Title VII of the Civil Rights Act, by:

Revoking certain presidential actions that approve the disparate impact theory of liability.
Ordering all federal agencies to “deprioritize enforcement of all statutes and regulations” that “impose” disparate impact liability (notably including by its terms “other laws or decisions, including at the State level, that impose disparate impact liability”).
Directing the U.S. attorney general to repeal or amend Title VI regulations that contemplate disparate impact liability (Title VI of the Civil Rights Act of 1964 protects every person in the U.S. from discrimination based on race, color, or national origin in programs or activities receiving federal financial assistance).
Requiring the U.S. attorney general and the chair of the EEOC to review all pending investigations and suits under federal civil rights law that rely on a theory of disparate impact liability, and “take appropriate action with respect to such matters consistent with the policy” of the executive order (i.e. ceasing enforcement of a disparate impact claims for liability.
Instructing the U.S. attorney general and chair of the EEOC to formulate and issue guidance to employers regarding ways to promote equal access to employment.

Notably, the executive order cannot and does not change or supersede state or federal law or Supreme Court precedent and does not affect how individual employees can assert claims against employers. However, the executive order does indicate the federal government’s enforcement priorities in employment cases, at least for the foreseeable future.
What’s Changed
Under the current statutory and common law framework, in addition to direct discrimination claims, employers can be held liable for facially neutral policies that have a discriminatory impact on individuals based on a protected characteristic such as their race or gender. Under such disparate impact theory of liability, courts are asked to consider the effects of a policy—not the intent—and review policies that disproportionately impact protected groups.
For example, if an employer requires a certain level of education to be eligible for a job, and that requirement disproportionately impacts employees in a protected class, then such requirement may be said to have a disparate impact on the affected individuals, even though the employer may not have been motivated to discriminate against any protected class on the basis of race, color, religion, sex, or national origin.
Under the new executive order, President Trump has directed enforcement arms of the executive branch to stop using disparate impact as a basis for pursuing discrimination claims, because, as the executive order argues, disparate impact liability itself contravenes the principles of equality and meritocracy as they relate to ensuring a “colorblind society.”
How the Executive Order Impacts Employers
At least for the next several years of the Trump administration, employers can expect that the EEOC and other federal agencies will quickly terminate all enforcement efforts relating to disparate impact theories of discrimination.
This means that if an employer is currently under investigation or is being sued based on a disparate impact claim, all investigations or prosecution efforts will cease. Additionally, while employees can still bring disparate impact claims under state and federal law, such claims may be more difficult to prove in the face of disappearing and amended rules and regulations (albeit applicable statutes and state and federal case law on point remains untouched by the EO).
Furthermore, employers should be on the lookout for additional guidance from the Office of the Attorney General and the EEOC regarding enforcement activities.

Leaked Budget Proposal Suggests Major Restructuring of Federal Health and Safety Agencies, Including the Consumer Product Safety Commission

A recently leaked and apparently genuine Office of Management and Budget (OMB) Budget “Passback” memorandum—the OMB’s official feedback mechanism for budget submissions from federal agencies—signals major changes to the Department of Health and Human Services’ (HHS) proposed discretionary budget for Fiscal Year 2026. Namely, the draft Passback shows the Trump administration is considering sweeping changes to the structure and funding of federal health and safety programs, including not only HHS but also the Consumer Product Safety Commission (CPSC).
Dated April 10, 2025, the draft Passback is marked “pre-decisional” and explicitly not intended for dissemination. According to its language, the proposed funding levels “reflect the reforms necessary to enable agencies to fulfill their statutory responsibilities in the most cost-effective manner possible,” while acknowledging that “many difficult decisions were necessary to reach the funding level provided in the Passback.” The Washington Post has verified the authenticity of the draft Passback, though no formal confirmation has been issued by the White House or the relevant agencies.
In the draft Passback, the Trump administration proposes cutting nearly one-third of the federal health department’s budget. This would be achieved primarily through the elimination of select programs and the consolidation of various health and safety-related agencies under a new umbrella entity: the Administration for a Healthy America (AHA), overseen by Health Secretary Robert F. Kennedy, Jr.
Among the potentially affected agencies is the CPSC, an independent, bipartisan regulatory body established by Congress during the Nixon administration in 1972 through the Consumer Product Safety Act (CPSA). The CPSC is tasked with protecting the public from unreasonable risks of injury or death associated with consumer products. Under the proposed restructuring, the CPSC’s functions and staff would be absorbed into a newly created “Assistant Secretary for Consumer Product Safety” within the Immediate Office of the Secretary. The draft Passback also outlines a reduction in funding for administrative and support functions, stating that those responsibilities could be handled by existing staff within the Immediate Office of the Secretary. The CPSC reported total budgetary resources of $174.3 million in FY 2024. Its operating plan for FY 2025—last revised on February 25, 2025—requests $151 million at the Continuing Resolution level and $183.05 million under the President’s proposed budget. By contrast the FY 2025 budget for the Immediate of Office of the Secretary was $15.2 million. How the proposed restructuring would affect these appropriations remains unclear.
What Is Next for the CPSC?
The future of the CPSC remains uncertain. The CPSC is an independent agency created and empowered through congressional legislation. As only Congress has historically had the power to create and eliminate independent agencies, this draft Passback raises questions regarding whether the executive branch has the necessary authority to actually do what it proposes.
The CPSA mandated the CPSC’s creation in 1972, which was expanded in 2008 through the Consumer Product Safety Improvement Act (CPSIA). Traditionally, these enacting legislations would have insulated the CPSC from unilateral intervention by the executive branch. However, this draft Passback, in combination with several recent executive orders, signals plans to reduce the independence of regulatory agencies and asserts a level of executive oversight that would depart from historical norms. These efforts raise constitutional questions, particularly ones regarding the separation of powers between the executive and legislative branches.
These actions are likely to spark significant legal challenges. But with a Supreme Court that has reviewed and overturned related precedent, there is a possibility that these challenges may not succeed. Notably, the Court recently stayed a lower court ruling that reinstated Gwynne Wilcox to the National Labor Relations Board, and the matter is pending final disposition. Wilcox’s removal raises questions under Humphrey’s Executor v. United States, 295 U.S. 602 (1935), a landmark case that limited a president’s power to remove officers of independent agencies. That precedent may now be at risk. In its reply brief, the Trump administration leaves little doubt about its intentions: “Article II of the Constitution vests the ‘executive Power’—‘all of it’—in the President alone.”
In short, the possibility that the CPSC may be subject to restructuring cannot be ruled out. If implemented, the changes outlined in the draft Passback would mark a significant step toward increased executive oversight of independent agencies like the CPSC.

New Law Impacts Massachusetts Employers Obligations on Salary Transparency

The Massachusetts Pay Transparency Act, officially titled the Frances Perkins Workplace Equity Act, was signed into law on July 31, 2024. Set to take effect in stages beginning in 2025, the law imposes new obligations on employers aimed at increasing wage transparency and pay equity across the Commonwealth. For employers operating in Massachusetts, now is the time to understand the law’s requirements and prepare for the changes ahead.
Major Requirements of New Law
The new Massachusetts law introduces two major requirements: wage data reporting and salary range disclosures. Employers with 100 or more employees in Massachusetts are required to submit federally mandated wage data reports—such as EEO-1, EEO-3, and EEO-5—to the Massachusetts Secretary of State starting February 1, 2025. These are not new reports but rather copies of those already submitted to federal agencies. The EEO-4 will be added to the reporting list beginning in 2026. Once submitted, this data will be aggregated and made publicly available by the state.
In addition to wage data reporting, employers with 25 or more employees, including remote workers who report to Massachusetts-based offices, will be required to include salary ranges in job postings starting October 29, 2025. They must also provide salary ranges upon request to current employees, regardless of whether a job is actively posted. These ranges must reflect what the employer “reasonably and in good faith” expects to pay for a given role.
Consequences for Not Following the Law
Enforcement of the salary range provision is under the exclusive jurisdiction of the Attorney General’s Office. Employers found in violation will first receive a warning. Penalties increase with repeated offenses, starting at $500 and rising to as much as $25,000 for persistent non-compliance. Importantly, for the first two years following the law’s effective date, employers will be given two business days to cure any salary range violation after receiving notice from the state. Even though the initial penalties are modest, the public disclosure of wage data and salary ranges introduces broader risks.
Employers should expect employees to take note of posted salary ranges and ask questions—sometimes uncomfortable ones—about pay equity. If a current employee notices a posted range that exceeds their salary for the same role, they may request a raise. Employers should be ready to respond with clear, objective reasoning based on established salary criteria. In cases where an objective explanation is lacking, the prudent response may be to adjust the salary accordingly. These situations underscore the need for internal alignment among HR, management, and legal teams to ensure consistent, fair, and well-documented compensation practices.
Employers Need to Protect Themselves
To mitigate risk and build trust, employers are encouraged to proactively conduct internal pay equity audits. These self-evaluations not only help identify and correct discrepancies but also serve as an affirmative defense under the Massachusetts Equal Pay Act—provided they are documented, reasonable in scope, and completed within the past three years. Employers should make measurable progress toward eliminating wage differentials and maintain records of any changes implemented.
Establishing and maintaining well-defined salary ranges is now a business imperative. Employers should base these ranges on market research, geographic cost of living, and industry benchmarks. They should consider factors such as seniority, performance metrics, production output, geographic location, education, and experience, applying them uniformly across comparable roles. Regular reviews are essential to ensure salary ranges remain aligned with market conditions and internal expectations. Employers must also reassess positions periodically, especially as roles evolve or teams consolidate.
Additional Steps
Transparent communication will be just as important as compliance. Companies should consider sharing internal memorandums when posting new jobs, clarifying how salary ranges are determined, and setting expectations for how employees can move within those ranges. Training managers on how to communicate compensation is critical. A lack of coordination can lead to inconsistent messaging and employee dissatisfaction. To prevent this, employers should implement a centralized oversight process, especially for salary adjustments and raises.
The Massachusetts Pay Transparency Act introduces a more transparent compensation framework, but it also places the burden on employers to manage the cultural and practical challenges that come with greater visibility. By taking early, thoughtful steps—such as conducting pay audits, developing consistent salary ranges, and training leadership—employers can not only comply with the law but also foster a more equitable and engaged workforce.
For further guidance, employers can review the official Attorney General’s Office Guidance on the Wage Transparency Act.

Department of the Interior to Adopt Expedited NEPA Permitting Procedures for Energy and Minerals Projects on Federal Lands

On April 23, 2025, the U.S. Department of the Interior announced plans to implement unprecedented emergency procedures to fast-track permitting for energy and critical minerals projects on federal lands. The initiative follows President Donald Trump’s Jan. 20, 2025 declaration of a National Energy Emergency and implements that executive order’s direction to “identify and exercise any lawful emergency authorities available” to facilitate energy development, including critical minerals. In his executive order dated March 20, 2025, President Trump used a broad definition of the term “critical mineral” to include all critical minerals identified by the Secretary of the Department of the Interior pursuant to the Energy Act of 2020, as well as uranium, copper, potash, and gold. Eligible energy permitting projects include those that seek to “identify, lease, site, produce, transport, refine, or generate” energy resources.
The Department of the Interior will use the new procedures to expedite its permitting approvals, “if appropriate,” employing existing regulations issued pursuant to the National Environmental Policy Act (NEPA), the Endangered Species Act (ESA), and the National Historic Preservation Act (NHPA). Notably, the press release promises the completion of environmental impact statements (EISs) in just 28 days, and environmental assessments (EAs) within two weeks. The expedited NEPA procedures will rely on 43 C.F.R. § 46.150(b), which authorizes Department of the Interior officials to take emergency actions before preparing a NEPA analysis under certain circumstances. The rule provides that if emergency action is necessary before preparing an EIS, officials must consult with the Council on Environmental Quality (CEQ) regarding the necessary NEPA compliance.
CEQ also released guidance on April 23, 2025 for federal agencies to use in updating their NEPA regulations. The guidance follows CEQ’s withdrawal of its own NEPA rules, as directed by President Trump in his January 20, 2025 executive order entitled Unleashing American Energy. An internal Interior memorandum from the same day documents the Department of the Interior’s consultation with CEQ – required by the Interior NEPA regulations – and its reliance on the CEQ guidance to develop its “alternative [NEPA] compliance process,” and explains how an EIS could be completed in just 28 days under these emergency procedures:

Project applicants must agree in writing to use the alternative procedures and must have submitted plans of operation, drilling permit applications, or other approval requests.
The Department of the Interior would publish the Notice of Intent to prepare an EIS, solicit written comments, and schedule a public meeting that would be held during the agency’s preparation of the EIS.
Comment periods would be approximately ten (10) days in most cases, and occur during the preparation of the EIS.
The EIS would be published in final form within the 28-day period. There would be no draft EIS.
The Record of Decision must document how the action “addresses the national energy emergency.

The press release contemplates similar emergency procedures for compliance with ESA and NHPA requirements. It is unclear when or how these new procedures will be adopted, and remains to be seen whether they will be widely employed by the Department of the Interior.

The State of Employment Law: Three States Have Virtually No Anti-Discrimination Laws

Under federal employment discrimination laws, race, color, religion, national origin, sex, sexual orientation, gender identity, disability, age, citizenship status, and genetic information are protected classifications. Most states have a list of protected classes that closely mirrors federal law, and many states have even added more protected classifications. However, three states have largely left civil rights protections in employment to the federal government.
Mississippi has no anti-discrimination statute and therefore has no protected classes of its own. Alabama and Georgia prohibit age discrimination and unequal pay on the basis of sex, and Georgia additionally prohibits disability discrimination, but Alabama and Georgia otherwise have no protected classes. As such, employees who work in those three states are largely dependent on federal law for protection against employment discrimination.
Employers in Mississippi, Alabama, and Georgia may feel they benefit from lesser regulation, as fewer anti-discrimination laws may translate into fewer discrimination charges, as well as less time and lower legal fees devoted to administrative investigations. Many states with more robust anti-discrimination laws conduct civil rights investigations that employers would just as soon avoid. However, the lack of regulation could cut both ways. In fact, those same civil rights investigations that employers dread often prevent lawsuits, as a no-cause dismissal from a state civil rights agency often persuades an employee not to file suit.
Because of their minimal state law protections, employees in Mississippi, Alabama, and Georgia are likely to pursue any discrimination claims at the federal Equal Employment Opportunity Commission. But the EEOC has largely abdicated its duty to investigate charges of discrimination in the past five years, instead simply issuing “right-to-sue” letters that provide said employees with an easy path to court.
Consequently, employers in Mississippi, Alabama, and Georgia may pine for state civil rights agencies to play a more active, gatekeeping role–minimizing costly and time-consuming discrimination lawsuits.

Re: Watch What You Say Here

The Commercial Electronic Mail Act (CEMA) is a Washington State law that prohibits sending state residents a commercial email misrepresenting the sender’s identity. A commercial email promotes real property, goods, or services for sale or lease. A recent Washington Supreme Court opinion held that this prohibition includes the use of any false or misleading information in the subject line of a commercial email and is not limited to false or misleading information about the commercial nature of the message. Brown v. Old Navy, LLC, No. 102592-1 (Wash. 4/17/25).
The case arose when the plaintiffs sued Old Navy after allegedly receiving emails with false or misleading subject lines about the retailer’s promotions . The plaintiffs categorized four types of false and misleading emails from Old Navy:

Emails that announced offers available longer than stated in the subject line;
Emails that suggested an old offer was new;
Emails that suggested the end of an offer; and
Emails that stated a promotion extension.

For example, plaintiffs claimed that they received emails with subject lines including phrases like “today only” or “three days only” when sales or promotions lasted longer. The plaintiffs also pointed to emails from Old Navy about a 50% off promotion that would supposedly end that day, but continued in the following days. Plaintiffs argued that such emails violate CEMA because of false or misleading subject lines.
The applicable CEMA provision prohibits entities from sending commercial emails that “contain false or misleading information in the subject line.” RCW 19.190.020(1)(b). While plaintiffs argued that the provision refers to any information, Old Navy asserted that the prohibition is directed at statements in the subject line that mislead the recipient as to what the email is about. The Washington Supreme Court noted that the plain meaning of Subsection 1(b), and CEMA’s general truthfulness requirements, indicate that the statute applies to any information contained in an email subject line.
Old Navy also claimed that the plaintiffs’ interpretation of the subsection would punish Old Navy for “banal hyperbole.” According to the retailer, such puffery was not intended to be in CEMA’s scope. The court noted that though this issue was not within the scope of the narrow question in the case, typical puffery, including statements such as “Best Deal of the Year,” is not misrepresentation or false because “market conditions change such that a better sale is later available.” According to the court, mere puffery differs from representations of fact, such as “the duration or availability of a promotion, its terms and nature, the cost of goods, and other facts” that are important to Washington consumers when making decisions.
Though five justices signed the majority opinion, four others dissented. The dissent notes the antispam legislative intent and history behind CEMA, holding that the legislature was concerned about the “volume of commercial electronic mail being sent,” suggesting the narrower interpretation of Subsection 1(b) that Old Navy proposed. The dissent opinion points to the preceding provision of CEMA, which precludes transmitting an email that “[u]ses a third party’s internet domain name without permission of the third party, or otherwise misrepresents or obscures any information in identifying the point of origin or the transmission path of a commercial electronic mail message.” RCW 19.190.020(1)(a). According to the dissent, Subsection (1)(b) should “be read in harmony” with Subsection 1(a) and should be interpreted to address the prevention of sending emails that hide the email’s origin and promotional purpose. In support of its position, the dissent includes the example of the Washington Attorney General’s Office website, which directs consumers to “[c]arefully examine the body of the email message as it relates to the email’s subject line” and see if “it accurately describe[s] what is contained in the email” to determine whether the subject line would violate CEMA.
Companies can expect increased CEMA litigation due to this case. Those engaging in email marketing should be mindful of their subject line language. Statements about the nature of specific offers could be subject to increased scrutiny in Washington state. When choosing between general puffery and a more targeted subject about a specific offer, businesses may want to err on the more conservative side of the line (pun intended).

New Jersey Bill to Eliminate Minimum Wage Tip Credit Will Impact Hospitality Industry

New Jersey stands at a crossroads regarding the compensation of tipped workers. Introduced on March 10, 2025, Assembly Bill A5433 proposes a significant change to the New Jersey Wage and Hour Law: phasing out the “tip credit.”

Quick Hits

New Jersey Assembly Bill A5433 proposes a five-year phase-out of the tip credit, spanning from 2026 to 2030.
The bill would mandate employers pay the full state minimum wage to tipped employees before the addition of tips.
Potential consequences include increased labor expenses for businesses, higher prices for consumers, and uncertain effects on the overall income of tipped workers.

The tip credit is a legal provision allowing employers to pay tipped employees a direct cash wage below the applicable minimum wage rate, and allows employers to use a portion of the tips received by the employee to make up the difference.
This initiative has sparked intense debate about its potential consequences. Advocates claim the bill promotes fairness and worker protection, while opponents fear it will inflate business costs, drive up consumer prices, and trigger job losses within the restaurant and hospitality sectors.
Understanding the Tip Credit
Most employers in New Jersey are governed by two wage and hour laws: the federal Fair Labor Standards Act (FLSA) and the New Jersey Wage and Hour Law (NJWHL). Employers must pay their nonexempt employees the federal ($7.25) or state ($15.49) minimum wage rate, whichever is higher. Currently, both laws also permit employers to count a portion of their employees’ tips toward their minimum wage obligation—a legal mechanism known as the “tip credit.”
Under the FLSA, to utilize the tip credit, employers must first inform employees of their intent to do so. Subsequently, employers must pay “customarily tipped” employees (e.g., waiters and bartenders) a direct cash wage of at least $2.13 per hour. If an employee earns at least $5.12 per hour in tips (the difference between the $2.13 minimum cash wage and the $7.25 minimum wage) over the employee’s shift, the employer can apply these tips as a “credit” against the employee’s minimum wage obligations.
The NJWHL also allows for a tip credit, capped at $9.87 per hour as of 2025. Employers must pay tipped employees a minimum cash wage ($5.62 per hour in 2025), and the total of wages and tips must meet or exceed the state minimum wage.
Employers must ensure that the sum of the direct cash wage and the received tips equals or surpasses the federal (and state) minimum wage for all hours worked in a workweek. If the total falls short, the employer must pay the difference to the employee. This guarantees that the employee receives at least the minimum wage, regardless of the combination of employer-provided cash wages and customer tips. Employers are not required to use the tip credit, but employers commonly use it because it can reduce their costs.
Proposed Changes: Assembly Bill A5433
Assembly Bill A5433 aims to completely eliminate the tip credit under the NJWHL by reducing the amount of tip credit an employer may claim over a five-year period:

2026: $7.90 per hour allowable tip credit
2027: $5.92 per hour allowable tip credit
2028: $3.95 per hour allowable tip credit
2029: $1.97 per hour allowable tip credit
2030 and beyond: Tip credit eliminated

Crucially, the bill would not prohibit tipping; it would only prevent employers from using a portion of those tips to fulfill their obligation to pay nonexempt employees the minimum wage. By 2030, employers would be required to pay all tipped employees the full state minimum wage before any additional tips.
While the FLSA still permits employers in other states to utilize the tip credit, employers in New Jersey would be obligated to comply with the more stringent requirements of the bill. Thus, eliminating the tip credit under the NJWHL would effectively prohibit New Jersey employers from utilizing the tip credit under the FLSA as well, as taking any tip credit would constitute a violation of New Jersey’s minimum wage law for tipped employees.
Potential Impacts and Concerns
On April 10, 2025, the New Jersey Assembly convened a two-hour hearing to gather public feedback on the bill. The potential elimination of the tip credit elicited strong and contrasting reactions from employees and employers.
The bill’s sponsor, Assemblywoman Verlina Reynolds-Jackson, stated the bill’s intent is to ensure tipped workers “make a decent wage; people should be paid fairly for the work they do.” Proponents argue that eliminating the tip credit guarantees a stable baseline income that is not dependent on the discretionary nature of tipping. This simplified wage structure could also enhance employees’ understanding of their rights and streamline the enforcement of wage laws, thereby reducing wage theft.
Opponents say it would paradoxically reduce earnings for servers, who often make significantly more than minimum wage through tips. Restaurants would bear the increased burden of directly paying all tipped employees the full minimum wage, leading to increased labor costs. Restaurants might be forced to implement mandatory service charges that don’t necessarily benefit their tipped employees, or they could reduce staff hours and eliminate positions altogether. These changes could result in higher menu prices, potentially harming the business, and could also discourage individuals from seeking server positions due to diminished earning potential. Opponents also argue New Jersey’s current system functions effectively, already guaranteeing minimum wage while allowing for substantial earning potential through tips.
Conclusion
The proposed elimination of the tip credit in New Jersey has the potential to dramatically reshape the state’s legal landscape, particularly within the restaurant and hospitality industry. While intended to foster a more equitable wage system, the potential repercussions for employees, businesses, and consumers warrant careful consideration as the legislative process unfolds.

Unleashing American Energy: Trump Administration’s Latest Executive Orders

New Executive Orders and Proclamation
On April 8, 2025, President Donald J. Trump issued three significant executive orders (“EOs”) and a fourth proclamation consistent with his pledge to “Unleash American Energy.” These Presidential actions, titled (1) Strengthening the Reliability and Security of the U.S. Electric Grid, (2) Protecting American Energy from State Overreach, (3) Reinvigorating America’s Beautiful Clean Coal Industry, and (4) Regulatory Relief for Certain Stationary Sources to Promote American Energy, seek to promote domestic oil, gas, and coal energy production. Each of these actions is discussed below.
Strengthening the Reliability and Security of the U.S. Electric Grid, EO 14262
This EO directs the Secretary of Energy to streamline emergency processes and to develop a uniform methodology for analyzing reserve margins across all regions of the bulk power system. The stated needs for the EO include aging infrastructure, increased need for electricity, and demand for energy use by datacenters.
Using Section 202(c) of the Federal Power Act, the EO seeks to curtail the decommissioning of generation resources or to prevent fuel-switching of generation resources in excess of 50 megawatts if the fuel-switching will reduce the nameplate capacity. While not expressly stated, this EO likely seeks to prevent oil, gas, and coal generation resources from going offline.
The EO requires the Secretary of Energy to develop the uniform methodology by May 8, 2025, at which time we will have a better sense of how the Administration intends to implement this order.
Protecting American Energy from State Overreach, EO 14260
EO 14260 aims to counter the more recent state efforts to target oil and gas companies for greenhouse gas emissions and climate change issues. For example, several municipalities, counties, and state governments have initiated litigation against oil and gas companies for alleged climate change damages, using various state tort law theories. We have previously written about these cases and, with this EO, these cases will likely take a new twist. We can expect to see the federal government intervene in these cases if they have not done so already.
The EO also seeks to challenge state laws and regulations that curtail greenhouse gas emissions or seek payments from oil and gas companies for climate change damages. The EO cites New York’s and Vermont’s climate superfund legislation, where the states seek collective payments from oil and gas companies for remediation involving climate change related damages. In addition, the EO cites to California’s carbon cap-and-trade program.
The EO directs the attorney general to identify all state and local laws and regulations burdening domestic energy production, including “any such State laws purporting to address ‘climate change’ or involving ‘environmental, social, and governance’ initiatives, ‘environmental justice’, carbon or ‘greenhouse gas’ emissions, and funds to collect carbon penalties or carbon taxes.” The EO also directs that the attorney general take all appropriate action to stop the enforcement of these state laws and to provide a report to the president within 60 days (by June 7) of the attorney general’s efforts. We will likely see the federal government initiating lawsuits against these states under various theories of the Dormant Commerce Clause and federal law supremacy related to the Clean Air Act.
Reinvigorating America’s Beautiful Clean Coal Industry and Amending Executive Order 14241, EO 14261
The third EO is an effort to support the domestic coal industry. Originally issued by President Trump on March 20, 2025, EO 14241 aims to enhance coal production and use as a means of securing economic prosperity and national security, lowering electricity costs, and supporting job creation. The revised April 8 EO further outlines a series of policies and actions to remove regulatory barriers, promote coal exports, and assess coal resources on federal lands, while also encouraging the development of coal technologies. Working together, these orders seek to promote coal as a key fuel source for steel production and artificial intelligence data centers in the United States.
By previously designating coal as a “mineral” under the March 20 EO, coal will be granted various benefits specific to mineral production, including expedited environmental review and a streamlined permitting process.
The April 8 EO also grants specific powers to various federal agencies to identify and assess coal resources and reserves on federal lands, as well as to prioritize coal leasing and related activities. The Secretary of the Interior, the Secretary of Agriculture, and the Secretary of Energy are instructed to identify, revise, or rescind any guidance, regulations, programs, or policies that seek to transition the United States away from coal production and electricity generation, or that discourage investment in coal projects, both domestically and internationally. These agencies are further instructed to promote and identify export opportunities for coal and coal technologies, and to facilitate international offtake agreements for U.S. coal. The order also specifically directs the Secretary of the Interior to publish a notice in the Federal Register terminating the Obama Administration’s 2016 “Jewell Moratorium,” which halted federal coal leasing on public lands with the intent to change the way the United States managed its coal and oil resources.
Finally, this EO expands the use of categorical exclusions for coal under the National Environmental Policy Act (“NEPA”), which would allow coal-related projects to avoid NEPA’s requirements to prepare an environmental impact statement or an environmental assessment.
Due to the broad powers being granted to these few federal agencies, along with the rescinding of previous administrations’ programs designed to limit coal production and reliance nationally, we anticipate litigation from various energy and environmental groups challenging this order.
Regulatory Relief for Certain Stationary Sources to Promote American Energy
The fourth action, a Presidential proclamation, also addresses coal usage in the United States but specifically in the context of coal-fired electricity production.
Invoking the authority of Section 112(i)(4) of the Clean Air Act, which allows the President to exempt stationary sources from compliance with federal emissions standards, this proclamation exempts certain coal-fired power plants from compliance with the U.S. Environmental Protection Agency’s May 7, 2024, final rule amending the preexisting Mercury and Air Toxics Standards (“MATS”) Rule that was issued to make air emissions more stringent. Citing national security concerns pertaining to the shutdown of coal-fired power plants that would cause the elimination of jobs and place the United States’ electrical grid at risk, as well as the unavailability of necessary technology to implement the MATS Rule, this proclamation issues an exemption to certain stationary sources subject to the Rule. Therefore, the Rule, which is scheduled to go into effect on July 8, 2027, will allow the stationary sources to be further exempt from the Rule’s stricter emissions requirements until July 8, 2029. All stationary sources that are specifically subject to this exemption are identified in Annex I of the proclamation.
Because there are certain stationary sources that may be excluded from Annex I and, thus, this exemption, we anticipate litigation from various companies and industries challenging their lack of inclusion in this exemption. Furthermore, it is expected that various energy and environmental organizations will file challenges to this EO in court.
Conclusion
All of these new executive actions are likely to face legal challenges from different states and energy and environmental groups. Blank Rome will continue to monitor any developments and provide updates on the legal and policy implications of these EOs.