Blockading the Ports: U.S. Imposes 10% Global Tariff; Higher Reciprocal Tariff Rates by Country
On April 2, President Trump issued an Executive Order (EO) imposing global reciprocal tariffs (White House Fact Sheet). The EO drew enough parallels to the Smoot-Hawley Tariff Act that Trump mentioned it in his Rose Garden announcement. The EO imposes a 10% baseline tariff on all imports to the United States beginning April 3, 2025.
On top of that baseline, the EO also imposes country-by-country tariffs reciprocal tariffs represented in the chart below. Those amounts are based on what the United States Trade Representative (USTR) determined in its 2025 Foreign Trade Barriers report to be the current tariff rate imposed on U.S. goods for imports to that country. That rate includes official tariffs, as well currency manipulation and other “trade barriers.” The “kind” reciprocal tariffs for each country are roughly half of that amount.
Certain goods will not be subject to the reciprocal tariff. Those include the following:
Communications of no value, humanitarian donations, information materials and media, and personal luggage, subject to 50 USC 1702(b);
Steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs;
Copper, pharmaceuticals, semiconductors, and lumber articles;
All articles that are or become subject to future Section 232 tariffs (e.g., steel, aluminum, autos and auto parts);
Bullion; and
Energy and other certain minerals that are not available in the United States.
For Mexico and Canada the existing tariffs imposed in March remain in effect. USMCA compliant goods will continue to see a 0% tariff, non-USMCA compliant goods will be subject to a 25% tariff, and non-USMCA compliant energy and potash will be subject to a 10% tariff. However, if the EO specific to Mexico and Canada were to be terminated, USMCA compliant goods would receive preferential treatment, and non-USMCA compliant goods would be subject to the 12% reciprocal tariff.
In addition to the universal tariff imposition, beginning on May 2, 2025, the 54% tariff rate on imports from China will also be applied to packages worth less than $800 coming to the United States from China or Hong Kong.
Because the new tariffs are imposed under the International Emergency Economic Powers Act (IEEPA), there does not appear to be a formal process for requesting a waiver to the tariffs or providing comments on their implementation. However, it is likely that actions will be filed in U.S. courts as well as before the World Trade Organization contesting the tariffs.
Additional Author: Marta Piñol Lindin
What Every Multinational Company Should Know About … The Global and Reciprocal Tariffs Announcement
On April 2, 2025, President Trump implemented the steepest American tariffs in over a century. The implications for numerous multinational companies — including importers, manufacturers, distributors, and retailers — will be immense. As an aid to the importing community, we are providing: (1) a summary of the April 2 “reciprocal tariff” and other trade-related proclamations, including how these tariffs fit within other tariff pronouncements and the prior Section 232 and 301 tariffs; (2) an overview of multinational companies that could be most impacted by the reciprocal tariffs; and (3) the implications for importers trying to manage these drastic changes to the cost of importing goods into the United States.
At its core, the reciprocal tariff announcement consists of a baseline 10% tariff on all exports to the United States, with significantly higher duties on approximately 60 nations. In essence, countries that maintain a trade surplus or roughly equal trade in manufactured goods were hit with a 10% tariff, while countries that maintain significant trade surpluses — including China, the European Union (EU), Japan, Cambodia, and Vietnam — face steep new levies. China, the primary target of Trump’s trade war, now faces tariffs exceeding 50% on nearly all goods, and tariffs approaching 89% for many imports. Moreover, the tariffs are almost as great on countries that generally have formed the “China +1” strategy of many multinational companies, such as Cambodia, Vietnam, and Malaysia. The net result is an average tariff rate that has climbed from a historic average of under 3% to around 23% — the highest level in over a century.
Details of the Reciprocal Tariff Plan
A statement from the U.S. Trade Representative confirmed that the Trump administration calculated tariffs primarily based on trade imbalances rather than an analysis of trade barriers, as was initially telegraphed by the administration. Countries with neutral trade patterns or even trade deficits with the United States face a minimum 10% duty (the global tariff), while all other major trading partners (with the exception of Canada and Mexico) will be subject to sharply higher rates (the reciprocal tariffs). Tariffs will be imposed using the following timetable:
Implementation Timeline: The 10% global tariff takes effect at 12:01 a.m. on April 5, 2025. The higher reciprocal tariffs will take effect at 12:01 a.m. on April 9, 2025. It is not clear if Customs is already equipped to handle collecting these special tariffs, which likely will require implementation in the Automated Commercial Environment (ACE) portal that Customs maintains for importers to submit import-related information and to pay tariffs.
Notable Exemptions: Prior Trump administration tariffs were carved out:
25% Steel and Aluminum Tariffs:The tariffs on steel and aluminum, and identified derivative products, remain undisturbed at 25%.
25% Canada and Mexico:Canada and Mexico also are exempt from this round of tariffs, although separate 25% tariffs imposed due to the Trump administration’s concerns regarding unauthorized immigration and fentanyl imports remain in place. These latter tariffs continue to be partially suspended for United States-Mexico-Canada Agreement (USMCA)-compliant goods.
25% Automotive Tariffs: The reciprocal tariffs also exclude all automobiles and automotive parts, subject to the additional 25% duties imposed in Proclamation 10908 (“Adjusting Imports of Automobiles and Automobile Parts into the United States”) on March 26, 2025. The automotive tariffs, which became effective on April 3, impose a 25% sectoral tariff on sedans, SUVs, crossovers, minivans, cargo vans, and light trucks up to 8,500 pounds, with a payload capacity up to 4,000 pounds. The tariffs also extend to automobile parts such as engines, transmissions, powertrain parts, and electrical components, beginning on May 3, 2025. Again, this tariff construct is left untouched.
Sector-Specific Exclusions: Certain products, such as copper, pharmaceuticals, semiconductors, lumber, critical minerals, and energy products, are unaffected by the April 2 reciprocal announcement. It is expected that these products will be subject to future tariffs, thus making this an “exemption” to allow for future action, rather than indicating no tariff imposition.
Future Sectoral Tariffs: The proclamation states that it will not apply to any future special tariffs that might be imposed under Section 232.
U.S.-Origin Content: The proclamation states that “the ad valorem rates of duty set forth in this order shall apply only to the non-U.S. content of a subject article, provided at least 20 percent of the value of the subject article is U.S. originating.”
Finally, President Trump also announced the end of duty-free shipping for many small parcels using the “de minimis” exemption. This further tightens trade restrictions, particularly on goods from China, which most commonly used the exemption.
U.S. Multinational Companies and Importers Hit Hardest Hit by the New Tariff Announcements
The new tariffs are likely to hit U.S. multinationals hardest in the following areas:
Companies that Import from China: China, which runs the largest trade surplus with the United States, continues to bear the brunt of duties. Goods from China now have to pay: (1) the normal Chapter 1-97 duties (generally 3%–6%); (2) the 20% additional duties imposed earlier this year by the Trump administration, related to Chinese government’s alleged failure to prevent fentanyl precursor exports; (3) a 34% reciprocal tariff rate; and (4) for about half of all Chinese imports, the 2018 Section 301 tariffs, which range from 7.5% to 25%. All of these tariffs stack, meaning that imports of Chinese-origin goods now face duties of 55%–60% and potentially up to 89%. There are no exceptions for goods produced by U.S.-owned subsidiaries.
Companies that Pivoted from China, Using a “China +1 Strategy”: In response to the tariffs imposed on China during the first Trump administration, many multinational companies — with the encouragement of both the Trump and the Biden administrations — pivoted to a “China +1” strategy. This involved generally moving production out of China and into other countries (the +1) to minimize tariffs and geopolitical risks and to reduce dependency on Chinese production. But the countries that most popularly used this strategy — Cambodia, Vietnam, Thailand, Malaysia, and India — now are facing high tariffs of their own, upending the benefits of the China +1 strategy.
Companies that Import from the EU: Companies importing goods from the European Union will be impacted more than anticipated by the reciprocal tariffs, with the Trump administration imposing a 20% duty on EU-origin products.
Automotive Companies: Automotive companies will be hit particularly hard in the new tariff environment, as they face increased costs on multiple fronts. Automobiles and automotive parts that fall under the specific automotive tariffs will see significant duty hikes, raising the cost of manufacturing and assembly. Additionally, reciprocal tariffs on all other imported components will further strain supply chains and profit margins.
Moreover, the following countries and sectors, while not a focus of the new tariffs, are at heightened risk for future tariff increases:
U.S. Importers Already Hit by High Reciprocal Tariffs: According to administration officials, the currently announced tariffs are the “ceiling” — unless other countries retaliate. To this end, many countries (and the European Union) have announced plans to develop retaliatory tariffs. The currently announced tariffs could thus increase even further if other countries implement their own retaliatory tariffs.
Canada and Mexico: Canada and Mexico were carved out from the April 2 tariffs, but this exemption is largely because of previously implemented tariffs on certain imports from these countries. For some importers, it may seem encouraging that USMCA-compliant products from Canada and Mexico remain duty-free. This relief, however, may be temporary. The USMCA is set to be reviewed by 2026, creating uncertainty about future trade terms.
Lumber, Pharmaceuticals, and Copper: While lumber, pharmaceuticals, and copper were excluded from the new reciprocal tariffs, this exemption is not expected to provide long-term relief for importers in these sectors. Instead, it is widely anticipated that these goods will be targeted by separate sector-specific tariffs in the coming months.
U.S. Companies Selling U.S.-Origin Goods into the EU, Canada, Japan, Korea, and Other Countries Hit by High U.S. Tariffs: While the Trump administration has cautioned countries from retaliating, all of the countries listed above are known to be preparing retaliatory tariffs, which potentially will be done on a joint basis.
Implications of the Tariff Announcements
The April 2 tariffs exceed initial expectations, both in scale and impact. The average U.S. tariff rate was just 2.7% at the outset of the first Trump administration, with earlier increases confined to one country and a couple of products. It now stands at 23% or higher, a nearly fourfold increase. The U.S. government is projected to collect $600–700 billion in tariffs annually, up from $95 billion per year — with importers of record (generally, U.S. companies) paying these tariffs. Further, unlike prior tariffs, the administration has signaled that few, if any, exemptions will be granted.
The April 2 tariffs also introduce significant compliance and cost-allocation challenges for U.S. importers. In this new trade environment, we expect CBP will increase its enforcement efforts considerably, focusing on high-tariff goods. Further, while previous tariffs generally were focused on one country (China), tariff-related risks are now spreading out to a large number of countries, especially those that once benefited from U.S. efforts to reduce reliance on China such as Cambodia, Vietnam, Thailand, and Malaysia.
Multinational companies thus should carefully and thoroughly reevaluate their import and customs programs in light of the new tariffs to ensure compliance and to mitigate potential financial risks. Below are several items that merit a special Customs and tariff compliance focus:
Country of Origin Determination: The level of tariffs is now most heavily influenced by the country of origin of imported goods, making accurate country of origin determinations a top (if not the highest) priority. Incorrect origin reporting could result in penalties, back duties, and potential legal consequences. To help prevent these outcomes, importers should focus on the following:
Importers should conduct thorough origin analysis by reviewing raw material/component sourcing, manufacturing processes, and assembly locations to ensure compliance with CBP transformation requirements.
Importers should consider working with customs compliance specialists or trade attorneys to assist with complex origin determinations and to avoid unexpected tariff liabilities.
Importers should prepare reasonable care memorandums to document the methodology and evidence used in determining the country of origin, providing a defensible position in case of an audit.
Importers should consider requesting advisory opinions regarding gray areas relating to the country of origin.
USMCA Compliance: USMCA-compliant goods may be exempt from many of the newly imposed tariffs, including the April 2 reciprocal tariffs. Accordingly, we expect Customs will focus heavily on ensuring all goods claiming preferential status under the USMCA in fact meet all requirements. Items for a probing compliance review in these areas include:
To take advantage of duty-free treatment under the USMCA, companies must have valid and complete USMCA certificates of origin at the time of entry. Post-entry certification is not permitted.
CBP is expected to closely scrutinize USMCA claims, so importers should immediately confirm all originating status claims are well documented. This includes conducting product-specific audits to verify that products meet regional value content (RVC) and tariff shift rules, ensuring eligibility before making a claim.
Anti-Dumping and Countervailing Duties (AD/CVD): In addition to reciprocal tariffs, we expect CBP to continue its strict enforcement of AD/CVD orders, particularly on imports from China and Southeast Asia. Importers should take steps to ensure compliance and minimize exposure to unexpected duty liabilities, including:
Importers should closely review Commerce Department scope determinations to confirm whether their products fall within the scope of existing AD/CVD orders.
Customs entry documentation (CF-7501) and supplier contracts should be carefully reviewed to ensure proper classification and duty payment. Importers should be prepared for enhanced CBP audits and verifications.
Chinese Parts and Components: We expect that the presence of Chinese-origin parts and components in finished goods will continue to be an area of particular CBP scrutiny. Consistent with the above point regarding country-of-origin determinations, the presence of Chinese-origin parts and components raises concerns about substantial transformation claims, which determine whether a product’s country of origin is considered China or another jurisdiction. Importers should consider putting reasonable care memorandums in place to document the analysis supporting substantial transformation claims, including descriptions of manufacturing processes and component alterations and supporting CBP advisory rulings.
Direct and Indirect Supply Chain Costs: Companies should take a holistic approach when evaluating the impact of tariffs, considering not just the direct cost but also indirect costs associated with supply chain adjustments, contract renegotiations, and compliance risks. Steps to consider include the following:
Importers should review supplier contracts to determine how tariff costs are allocated between buyers and sellers.
Importers should consider that supply chain disruptions due to increased tariffs may lead to delays in production and ordering, higher transportation costs, and the need to identify alternative sourcing options.
Companies should conduct cost-benefit analyses to evaluate whether shifting production to low-tariff jurisdictions or USMCA partners would provide long-term savings, despite short-term transition costs.
The message from Washington is clear: We are entering what will likely be an extended high-tariff, high-enforcement environment. The current trade landscape has vastly multiplied the need for multinational companies to understand the new importing rules and emphasize full compliance.
New “Reciprocal” Tariffs Announced, Effective Starting April 5 for Nearly All Countries and Sectors
On April 2, President Trump announced new tariffs impacting a wide array of imported products from nearly all countries. Additional tariffs range from 10% to nearly 50% and become effective starting April 5. Concurrently, the President took action to again terminate the eligibility of Chinese-origin items for low-value shipment benefits, including duty-free treatment.
President Trump’s actions are intended to address “a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits.” Invoking for a second time the International Emergency Economic Powers Act of 1977 (IEEPA), President Trump’s “Reciprocal Tariff” executive order imposes:
A 10% additional tariff on the vast majority of countries effective April 5, 2025, at 12:01 a.m. ET. Excluded from these duties are goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. ET on April 5, 2025.
Higher individualized tariffs on countries with which the US has the largest trade deficits, as set out in Annex I. This higher rate will replace the 10% additional tariff for the identified countries effective April 9, 2025, at 12:01 a.m. EDT. Excluded from these duties are goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. ET on April 9, 2025.
Countries subject to Column 2 rates (such as Russia and Belarus) remain the same.
A list of all country-specific tariff rates can also be found here. These country-specific ad valorem rates of duty shall apply to all goods, including articles imported pursuant to the terms of all existing U.S. trade agreements, except as provided below.
The following are excluded from any of the above tariffs regardless of country of origin:
Donations intended to relieve human suffering, informational materials, importations ordinarily incident to travel to or from any country (such as personal luggage), and any other articles subject to 50 USC 1702(b);
steel and aluminum articles and autos and auto parts already subject to Section 232 tariffs;
all articles that may become subject to future Section 232 tariffs; and
copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals and energy and energy products, as set out in Annex II.
For goods of Canada and Mexico, the existing February/March IEEPA orders and exclusions are unaffected by these announcements. This means that USMCA eligible goods will continue to enter free of the newly announced reciprocal tariffs, and non-USMCA eligible goods will be subject to the same 25% IEEPA tariff as has been in place since March 4, 2025, (other than Canadian energy and potash which will continue to be subject to a 10% IEEPA tariff which has been in place since March 4, 2025).
If at least 20% of the value of any article imported into the U.S. is U.S.-originating, and that value is substantiated by the importer, then the newly announced reciprocal duties will be collected only on the non-U.S. content of the imported article.
Finally, concurrent with today’s actions imposing new tariffs as discussed above, President Trump also took further action to eliminate the ability of articles of country-of-origin China to utilize de minimis duty-free treatment. Generally, shipments valued at $800 or less have been eligible for duty-free entry under provisions allowing smoother entry for low-value shipments. However, concurrent with the Reciprocal Tariff Executive Order President Trump signed an executive order amending the prior China-related IEEPA executive orders to decree that effective 12:01 am ET on May 2, 2025, shipments of Chinese-origin items, including international postal packages sent to the United States through the international postal network from the PRC or Hong Kong, will be ineligible for de minimis treatment and duties will be collected
For all other items subject to the reciprocal tariff announcements, de minimis will be terminated as soon as Commerce notifies the President that systems are in place to collect duties on those shipments.
No ‘X’ Marks: USCIS No Longer Issuing Documents with ‘X’ Gender
Effective April 2, 2025, all documents issued by U.S. Citizenship and Immigration Services (USCIS) will identify individuals as either male or female. Previously, USCIS-issued documents also listed “X” as a gender.
This policy change is a direct response to President Donald Trump’s Jan. 20, 2025, executive order (EO) vowing to “defend women’s rights and protect freedom of conscience by using clear and accurate language and policies that recognize women are biologically female, and men are biologically male.” In this EO, Trump called for the secretary of homeland security to issue identification documents reflecting the holder’s sex as either male or female only.
In addition to eliminating the term “gender” from its Policy Manual, USCIS clarifies that, for purposes of reviewing immigration applications and issuing documents, it will look to the individual’s birth certificate at or near their time of birth to determine their sex. It may also rely on documents other than the birth certificate (secondary evidence) if:
The applicant is missing their birth certificate;
The birth certificate provided lists a sex other than male or female; or
The sex the individual chooses on the application is different from the one listed on their birth certificate, and it is more appropriate to use secondary evidence than the birth certificate.
USCIS clarifies it will not leave the sex field of a document blank. While an immigration benefit may not be denied solely for failure to select male or female on an application, USCIS encourages individuals to make a selection to avoid application-processing delays because of this omission. The agency intends to notify applicants when it issues a document listing a sex the applicant did not select, but it has not addressed the possibility of challenging this determination.
Wyoming Bans Most Non-Compete Agreements
Wyoming just banned most non-compete agreements (Wyo. Stat. § 1-23-108): starting July 1, 2025, most agreements that restrict workers from working in competitive jobs will be void, absent some exceptions for:
High-Level Employees: Non-compete agreements with “executive and management personnel” and “officers and employees who constitute professional staff to executive and management personnel” will still be enforceable. However, the statute does not define these terms, so employers should review those roles carefully.
Sale-of-Business: Sellers and buyers can agree to non-competes when selling or transferring a business.
Trade Secrets: Employers can protect trade secrets through narrowly tailored non-compete agreements that comply with the state’s definition of trade secrets, i.e. “the whole or a portion or phase of a formula, pattern, device, combination of devices or compilation of information which is for use, or is used in the operation of a business and which provides the business an advantage or an opportunity to obtain an advantage over those who do not know or use it.” Wyo. Stat. § 6-3-501(a)(xi).
Recovery of Relocation, Education, and Training Expenses: Employers can contract with employees to recoup training, education, and/or relocation expenses if an employee leaves within 4 years, with varying repayment percentages based on tenure:
Up to 100% if employment lasted less than two yearsUp to 66% if employment was between two and three years
Up to 33% if employment was between three and four years
Special Rules for Physicians
Non-compete agreements for physicians that restrict practice are prohibited. Further, doctors may notify patients with rare disorders about their new practice location and contact information. Notably, the statute clarifies that an agreement that contains an enforceable non-compete against a physician that is otherwise permitted by law will remain enforceable.
Looking Ahead
The statute applies only prospectively to contracts signed on or after July 1, 2025. Wyoming employers and business should consult legal counsel to update or implement restrictive covenant agreements in a timely manner.
The Third Time’s A Charm: Colorado Adds Nuclear Energy as a Clean Energy Resource
After considering similar legislation in two prior sessions, the Colorado General Assembly passed, and Gov. Jared Polis signed into law, House Bill 25-1040 which explicitly adds nuclear energy to the state’s statutory definitions of “clean energy” and “clean energy resource” for purposes of complying with Colorado’s carbon dioxide emission reduction requirements and applying for financial assistance under Colorado’s Rural Clean Energy Project Finance Program. In so doing, Colorado joins more than a dozen other states that consider nuclear power to be a clean energy resource under various state energy policies, and is consistent with the growing number of states taking legislative, regulatory, or policy steps to support or at least consider adding nuclear power to their energy mix.
Acknowledging Colorado’s projected growth in peak electricity demand and the potential energy supply, reliability, climate, and economic benefits of nuclear energy, including advanced reactors such as Small Modular Reactors (SMRs), the legislation expands the statutory definitions to include “nuclear energy, including nuclear energy projects awarded funding through the United States Department of Energy’s Advanced Nuclear Reactor Programs.”
Under Colorado’s carbon dioxide emission reduction statute, qualifying retail utilities in Colorado are required to submit to the Colorado Public Utilities Commission (CPUC) a plan detailing how they intend to reduce by 2030 carbon dioxide emissions associated with their electricity sales by 80 percent as compared to 2005 levels, and how they will seek to achieve 100% emission free electricity sales by 2050. For compliance purposes, the Statute incorporates the “eligible energy resources” that can be used to comply with Colorado’s separate Renewable Energy Standards (RES); these include recycled energy, renewable energy resources (wind, solar, geothermal, new small hydropower, and certain biomass), and renewable energy storage, however, nuclear energy is expressly excluded. Recognizing that not all clean energy resources may be considered renewable, the Statute also allows any other “electricity-generating technology that generates or stores electricity without emitting carbon dioxide into the atmosphere.” While this catch-all language arguably encompasses nuclear energy, HB25-1040 amends the statute to remove any doubt and emphasize the potential benefits of nuclear energy.
Colorado’s three largest electric utilities are in the process of implementing their respective CPUC-approved clean energy plan or electric resource plan that meets the state’s emission reduction requirements. While none of the plans presently include nuclear power, Colorado’s largest investor-owned electric utility, Public Service Company of Colorado (PSCo), has indicated it is open to considering nuclear energy resources in the future.
HB25-1040 also expands the types of energy that qualify for potential financial assistance through Colorado’s Rural Clean Energy Project Finance Program. The Program allows certain rural property owners to apply to their board of county commissioners for the issuance of tax-exempt private activity bonds to help finance the construction, expansion, or upgrade of a clean energy project having a capacity of no more than 50 MW and which is owned by and located on the property owner’s land. The electricity generated by such a project would be delivered to the cooperative electric association in whose service territory the project is located. Similar to Colorado’s RES, the Program defined “clean energy” to include only biomass, geothermal, solar, wind, and small hydropower resources as well as hydrogen derived from these resources. As such, only projects using these technologies were eligible for financial assistance under the Program. Now, small nuclear power projects are also eligible for financial assistance under the Program.
Colorado presently has no operating commercial nuclear power plants. From 1979 until 1989, Colorado was home to the Fort St. Vrain Nuclear Power Plant, a 330 MW(e) high temperature gas cooled reactor, owned and operated by PSCo. The plant was decommissioned in 1992 following a series of operational issues and portions of the plant were converted to a natural gas combustion turbine generating plant. The statutory amendments resulting from HB25-1040 do not mean that new nuclear power is coming to Colorado, but they do evidence a state policy environment more favorable to nuclear power and provide practical, incremental improvements that may incentivize utilities and landowners to consider developing nuclear power generating facilities in the state.
For example, PSCo has indicated that new nuclear generation is one possible option to replace the electricity and economic benefits of its Comanche-3 power plant located in Pueblo, Colorado and which is scheduled to retire by January 1, 2031. The ability to count nuclear energy toward PSCo’s carbon dioxide emission reduction obligations may be an additional consideration as PSCo evaluates this option. Furthermore, once advanced reactor designs progress from First-of-a-Kind to Nth-of-a-Kind, cost effective, deployable systems, some SMRs and microreactors could align well with Colorado’s Rural Clean Energy Project Finance Program and become viable power supply options for Colorado’s rural communities.
Ultimately, taking advantage of HB25-1040’s incremental improvements will also require sound legal and regulatory advice related to nuclear matters as well as siting, permitting, environmental, and numerous other issues. If you have questions concerning this legislation or the opportunities it may create, please reach out to the author of this alert or the Womble Bond Dickinson attorney with whom you normally work.
Reorganize EPA? A Very Old Idea
Recent press reports tell of rumors of impactful (some fear catastrophic) budget cuts to the U.S. Environmental Protection Agency (EPA). Politically, priority on reducing EPA’s climate programs, along with budget and personnel cuts, are not surprising given the election results. Recent rumors include chatter that the EPA Office of Research and Development (ORD) might be eliminated and/or its staff redistributed, with a specific target on the back of ORD’s Integrated Risk Information System (IRIS).
In recent years, the IRIS program has skirted controversy particularly aimed at its underlying assessment methods and assumptions used in its reports about chemical exposures. In theory the program is an attempt to have a single hazard assessment act as a platform of sorts, for the individual media program offices across EPA (air, water, waste, and toxics) to then present an integrated approach to chemical risks. This singular assessment would then facilitate a cross-media, integrated approach that is easier to implement. Like so many ideas that are good on paper, fulfilling this goal has proven difficult over time (see the tortured history of the IRIS formaldehyde assessment).
Other forums have and will continue to discuss EPA science and assessment methods, both important issues for understanding and achieving EPA’s objectives. Yet what is also interesting is the long-standing, and much less noticed, discussion of EPA’s organizational structure and the ideas for changing the structure first created over five decades ago.
For the record, EPA was created by then-President Nixon in 1970. He had signed Reorganization Plan No. 3, calling for the establishment of EPA in July 1970. After conducting hearings that summer, the House and Senate approved the proposal. The Agency’s first Administrator, William Ruckelshaus, took the oath of office on December 2, 1970. Two days later, President Nixon issued EPA Order 1110.2 — Initial Organization of the EPA.
The original “organization” of EPA was a mix of existing programs, agencies, and departments — dispersed elements of the government working on environmental issues. A November 29, 1990, press release from EPA describes “EPA’s genesis” as “an executive order dealing with a pastiche of 15 programs from 5 agencies involving 5,800 employees and a $1.4 billion budget.
The organization of EPA, and how that organization impacts its effectiveness, has been an issue since its founding. From its earliest days, there have been proposals for making EPA a cabinet-level Department. During the H.W. Bush Administration, to knit together the programs and statures more coherently, the EPA policy office developed a comprehensive draft of possible ways to reorganize the underlying environmental legislation and a parallel EPA structure.
In August of 2006, the EPA Office of Inspector General (OIG) issued a report titled “Studies Addressing EPA’s Organizational Structure.” The objective of the report is to summarize 13 studies’ pertinent findings in a single, “informational document that provides perspectives on what has been problematic and what EPA may need to change regarding its organizational structure.” The OIG review includes research studies, articles, publications, and reports that address the EPA’s organizational structure and provide suggestions to improve performance. The report’s evaluation focuses especially on cross-media management, regional offices, “reliable information,” and “reliable science.”
Most recently, and perhaps most important given the current Administration’s efforts at government reform, the subject of “reorganizing” EPA is included as a chapter in the Project 2025 report. That chapter has led to fears from many that budget and personnel cuts are part of a larger plan to upend the Agency.
Recent press reports (like The Washington Post’s March 27, 2025, article, “Internal White House document details layoff plans across U.S. agencies”) indicate that the “plan” for EPA is to cut 10 percent of its workforce — which would seem less than some aggregated possibilities discussed in the Project 2025 chapter but could still include “firing up to 1,115 people” from ORD alone. Project 2025 suggests large cuts to regional offices, the elimination of the afore-mentioned IRIS program, a “reorganization” of the enforcement office and environmental justice programs, and other changes which would seem to add up to less than a 10 percent cut to the workforce. Attrition rates alone are estimated to be an average of 6 percent, and early retirements accelerated by, among other things, the fear of possible cuts, would likely add up to 10 percent or more.
Does this spell out some kind of preferential treatment for EPA? Unlikely, given the overall rhetoric of this Administration’s efforts. It may be that the larger target savings at EPA are the significant sums included for climate protection grant programs appropriated during the Biden Administration. Or it may be that the workforce cuts at EPA as a percentage contribute less to some unknown target of reducing the overall government payroll. While a 10 percent cut would result in a large impact on EPA capabilities, it is less than other programs eliminated altogether, or the announced 20 percent cut in staff at the Department of Health and Human Services (HHS) or 50 percent cut at the Department of Housing and Urban Development (HUD).
But the goal of reforming, reorganizing, or reducing the workforce is neither a new idea nor one lacking merit. EPA’s organizational structure has been under review since its inception. In the present moment, however, the lack of a cohesive or consistent approach leaves significant questions not only about the underlying motivation but also about the final impact of the effort. “Less bureaucracy” does not necessarily equate to reduced numbers of staff. And as some government functions will now contend with seemingly disorganized staff reductions, public resentment about “the bureaucracy” may only increase. Something to think about as we wait (and hope) to get our social security check or passport – or pesticide registration – on time
New Life for Nuclear Power: License Extensions and Recommissioning
Key Takeaways:
Secure Financial and Regulatory Support Early
Recommissioning projects (like Palisades and TMI Unit 1) demonstrate the importance of securing strong financial backing (government loans, state support) and long-term PPAs
Early engagement with USNRC is crucial given the complex regulatory process
Leverage Experienced Contractors and Learn from Precedents
Engage experienced regulatory counsel and third-party contractors to identify potential risks early
Study recommissioning cases (like Palisades and TMI Unit 1) as they establish regulatory precedents
Introduction
At its peak, the commercial nuclear power industry in the United States included 112 operating nuclear reactors. Many of those reactors entered operation in the 1970s and 1980s and were typically licensed to operate for 40 years. When some of these reactors reached the end of their operating life, they were decommissioned. Others were taken out of service for various reasons but not fully dismantled. Yet others received extensions of their operating licenses and continue to provide clean, reliable, baseload electricity. The Trump Administration’s recent Executive Order, “Unleashing American Energy,” counts nuclear energy among the resources for which regulatory burdens must be reviewed, and suggests uranium should be included in the US’ list of critical minerals. With the renewed interest in nuclear power, former and existing nuclear power plants will be critical among the opportunities to meet the growing demand for electricity to power a variety of energy intensive industries.
This article explores the challenges and opportunities associated with nuclear power plants at or near the end of their planned operating life.
…there is a growing interest in nuclear power as a non-greenhouse gas emitting source of baseload electricity.
Old Plants, New Licenses : Nuclear Power’s Extended Stay
The average age of currently operating commercial nuclear reactors in the US is more than 40 years.1 Under current regulations,2 the US Nuclear Regulatory Commission (USNRC) may grant a 20-year extension of the plant’s original operating license, and potentially a subsequent 20-year license extension for a total of 80 operating years. Given the economic and regulatory pressures that have driven the retirement of coal-fired baseload generating power plants in recent years, there is a growing interest in nuclear power as a non-greenhouse gas emitting source of baseload electricity. This interest is driving some utilities to consider whether it is appropriate to pursue operating license extensions for nuclear power plants that would otherwise be considered for decommissioning.
A recent example of the confluence of these factors is Pacific Gas & Electric’s two-reactor Diablo Canyon Power Plant – California’s largest power plant. In 2023, driven by concerns related to statewide electricity reliability and climate change, California Senate Bill No. 846 became law and directed PG&E to pursue an extension of Diablo Canyon’s operating license to 2030. Following the conclusion of litigation that sought to prevent the license extension, PG&E’s application is currently under review by USNRC while both reactors continue to operate. Since 2000, USNRC has issued operating license extensions for more than 90 nuclear reactors. 3
The Long Goodbye: Navigating Nuclear Plant Decommissioning
Despite opportunities for life extension, some nuclear plant owners choose decommissioning for financial or operational reasons. In such cases, plant owners must first notify the USNRC of their planned shutdown, then work with the USNRC to coordinate all post-shutdown decommissioning activities including developing and implementing a License Termination Plan. Once these steps are complete, the owner must finish the full decommissioning process within 60 years of terminating plant operations. The final goal is to have the reactor site approved by the USNRC for future use which may be subject to specific restrictions. 4 Navigating this highly regulated process can be challenging in the best of circumstances and, in some instances, may be the subject of litigation, including with respect to disposal of spent reactor fuel. There are currently 20 US commercial nuclear reactors in various stages of the regulated decommissioning process. 5
These risks tend to become more apparent as the DECON phase progresses and the true scope of the necessary decontamination becomes apparent.
Full scale decommissioning and dismantling to obtain release of the USNRC license is a multi-year and costly process fraught with risks. This process includes: 6
Removing the spent nuclear fuel from the reactor.
Storing the spent nuclear fuel, typically in dry storage containers, either on-site or at licensed off-site locations.
Dismantling radioactive systems and equipment; and
Cleaning up contaminated material (e.g., contaminated soil, groundwater, etc.) and packaging and transporting it to a disposal facility.
Nuclear plants can be decommissioned and dismantled in either one or two phases. The first is safe storage (SAFSTOR), where the facility is placed in protective storage for an extended period. During this time, radioactivity naturally decreases in key components like the reactor vessel, fuel pools, and turbines. Spent fuel is removed from the reactor vessel and placed in secure storage, and the plant remains under USNRC oversight throughout this period.
The second phase is decontamination (DECON) during which contaminated equipment and materials are removed from the site. Plant owners with sufficient decommissioning funds may choose to skip SAFSTOR and proceed directly to DECON. However, those needing to accumulate additional funds may opt for SAFSTOR, in part to allow their decommissioning fund to grow over time. As part of DECON, the nuclear plant owner decontaminates and removes contaminated equipment and material. The DECON process can take up to five years, if not longer. 7
Given the number of US commercial nuclear reactors that have been decommissioned or are in the process of decommissioning, a number of third-party contractors have gained vital experience that can help nuclear plant owners better understand the risks inherent in decommissioning. These risks tend to become more apparent as the DECON phase progresses and the true scope of the necessary decontamination becomes apparent. For example, while it is expected that components in close contact with radioactive material will need to be decontaminated, other debris from the dismantling effort may be more contaminated than initially expected, requiring special techniques for removal and disposal. The scope, duration, and expense of decommissioning will further expand, sometimes significantly, if surrounding soil and ground water is also contaminated and requires treatment and removal. These risks cannot be eliminated entirely, but an experienced contractor and knowledgeable regulatory counsel can help the nuclear plant owner identify the potential issues early and develop the most cost-effective and regulatorily efficient solution.
…USNRC has taken a number of regulatory actions to oversee what it describes as a “first of a kind effort to restart a shuttered plant.”
Recommissioning: Back from the Brink
As noted above, some nuclear power plants have been decommissioned but not fully dismantled. For many of the same reasons some plant owners are seeking operating license extensions for existing reactors, other plant owners are seeking to restart reactors that have begun the decommissioning process.
The Palisades Nuclear Plant (PNP) ceased operations in 2022, and Entergy transferred the plant’s operating license to Holtec Decommissioning International for purposes of decommissioning the facility. In 2023, however, citing the need for safe, reliable, carbon-free electricity, Holtec announced plans to seek USNRC approval to restart PNP. Holtec’s plans have received financial assistance from the State of Michigan, a $1.52 billion loan from the US Department of Energy, and the company has entered into a long-term power purchase agreement (PPA). In response to Holtec’s plans, USNRC has taken a number of regulatory actions to oversee what it describes as a “first of a kind effort to restart a shuttered plant.”8 In addition to restarting the plant’s 800 MW reactor by late-2025, Holtec has also announced its intent to explore siting small modular reactors (SMRs) at the facility to make the plant a major clean energy hub for the region.
Similarly, in 2023, Constellation Energy announced its plans to restart operations at Three Mile Island (TMI) Unit 1, the companion to TMI Unit 2 which experienced a partial core meltdown in 1979. TMI Unit 1 ceased operations in 2019 and, like PNP, its license status was changed to SAFSTOR (Safe Storage) to facilitate later decommissioning efforts. Constellation estimates the cost to bring TMI-1 back to operating status at $1.6 billion. The project is supported by a 20-year PPA with Microsoft to purchase all power from the plant to supply its regional data center operations with carbon-free electricity. Assuming all regulatory approvals are obtained, TMI Unit 1, which is to be renamed the Crane Clean Energy Center, is projected to resume operations in 2028.
The future of America’s nuclear power plants stands at a critical crossroads.
In July 2024, NextEra announced that it was considering a possible restart of the 45-year-old Duane Arnold nuclear plant in Palo, Iowa which ceased operations in August 2020. In a clear response to growing electricity demand, on January 23, 2025, NextEra filed with the USNRC a proposed regulatory path for the potential reauthorization of operations at the Duane Arnold power plant.
While there are likely a limited number of nuclear plants that could be considered for recommissioning, recent statements by the Trump Administration suggesting that nuclear energy will be viewed as a priority resource to meet future energy demand may bode well for the regulatory path forward for nuclear plant restarts.
Conclusion
The future of America’s nuclear power plants stands at a critical crossroads. The growing demand for reliable, baseload power, coupled with concerns about climate change and energy security, has sparked renewed interest in preserving and expanding nuclear capacity. As a result, while some nuclear plants may face decommissioning, others are finding new life through license extensions and recommissioning efforts.
Early indications are the Trump Administration intends to “unleash commercial nuclear power in the United States” through the development and deployment of next-generation nuclear technology.9 It is possible that the Administration’s support for nuclear power will extend to optimizing the use of the nation’s existing and former nuclear plants. Similarly, the Administration’s concurrent interest in streamlining regulatory processes may provide more regulatory certainty for existing and former nuclear plants being considered for operating license extensions or for recommissioning.
The story of America’s nuclear plants is thus not simply one of sunset versus second life, but rather one of evolution and adaptation to meet the changing energy needs of the 21st century.
1https://www.eia.gov/tools/faqs/faq.php?id=228&t=3 210 CFR § 543https://www.nrc.gov/reactors/operating/licensing/renewal/applications.html#completed 410 CFR § 20 and §§ 50.75, 50.82, 51.53, and 51.955https://www.nrc.gov/info-finder/decommissioning/power-reactor/index.html 6https://www.nei.org/advocacy/make-regulations-smarter/decommissioning 7https:// www.nei.org/resources/fact-sheets/decommissioning-nuclear-power-plants8https://www.nrc.gov/info-finder/reactors/pali.html 9Secretary Wright Acts to “Unleash Golden Era of American Energy Dominance” | Department of Energy
Fifth Circuit Court of Appeals Negates Ruling on Federal Contractor Minimum Wage
On March 28, 2025, the Fifth Circuit Court of Appeals vacated its previous ruling that permitted a $15 per hour minimum wage for federal contractors, shortly after President Donald Trump revoked the Biden administration rule setting that wage rate.
Quick Hits
The Fifth Circuit vacated its decision to uphold a $15 per hour minimum wage for federal contractors.
The court acted shortly after President Trump rescinded a Biden administration rule raising the minimum wage for federal contractors to $15 per hour.
An Obama-era rule establishing a $13.30 per hour minimum wage for federal contractors still stands.
On the website for the U.S. Department of Labor, the agency said it is “no longer enforcing” the final rule that raised the minimum wage for federal contractors to $15 per hour with an annual increase depending on inflation.
As of January 1, 2025, the minimum wage for federal contractors was $17.75 per hour, but that rate is no longer in effect. Therefore, an Obama-era executive order setting the minimum wage for federal contractors at $13.30 per hour now remains in force.
Some federal contracts may be covered by prevailing wage laws, such as the Davis-Bacon Act or the McNamara-O’Hara Service Contract Act. Those prevailing wage laws are still applicable.
Many states have their own minimum wage, and those vary widely.
Background on the Case
In February 2022, Louisiana, Mississippi, and Texas sued the federal government to challenge the Biden-era Executive Order 14026, which directed federal agencies to pay federal contractors a minimum wage of $15 per hour. The states argued the executive order violated the Administrative Procedure Act (APA) and the Federal Property and Administrative Services Act of 1949 (FPASA) because it exceeded the president’s statutory authority. The states also claimed the executive order represented an “unconstitutional exercise of Congress’s spending power.”
On February 4, 2025, the Fifth Circuit Court of Appeals upheld the $15 per hour minimum wage for federal contractors. A three-judge panel ruled that this minimum wage rule was permissible under federal law.
On March 14, 2025, President Trump rescinded the Biden-era executive order that established a $15 per hour minimum wage for federal contractors. In effect, that made the earlier court ruling moot, according to the Fifth Circuit.
Next Steps
Going forward, the Obama-era $13.30 minimum wage rate for federal contractors still stands. Federal contractors operating in multiple states may wish to review their policies and practices to ensure they comply with state minimum wage laws and federal prevailing wage laws. If they use a third-party payroll administrator, they may wish to communicate with the administrator to confirm legal compliance.
Delaware Enacts Sweeping Changes to the Delaware General Corporation Law
On March 25, 2025, the governor of Delaware signed into law Senate Bill 21, over much opposition from the plaintiffs’ bar and some academics. The bill, which amends Sections 144 and Section 220 of the Delaware General Corporation Law, 8 Del. C. (the “DGCL”), seeks to provide clarity for transactional planners in conflicted and controller transactions, and seeks to limit the reach of Section 220 books and records demands. These amendments significantly alter the controller transaction and books and records landscape.
Background
Senate Bill 21 comes in the backdrop of heightened anxiety over whether Delaware will retain its dominance in the corporate law franchise. Businesses have cited a seemingly increased litigious environment in Delaware, and when coupled with a handful of high-profile companies redomesticating or considering redomesticating to other jurisdictions (see our blog article about the Tripadvisor redomestication here), other states such as Texas and Nevada making a strong push to accommodate for new incorporations and redomestications, and a series of opinions out of the Delaware Court of Chancery that were unpopular in certain circles, concern was growing of Delaware falling from its position as the leading jurisdiction for corporate law.
This is not the first time the Delaware legislature has acted to re-instill confidence in Delaware corporate law to the market. Senate Bill 21 also comes less than a year after Senate Bill 313 was signed into law. Senate Bill 313, coined the “market practice” amendments, sought to address the decisions in West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, 311 A.3d 809 (Del. Ch. 2024), Sjunde AP-Fonden v. Activision Blizzard, 124 A.3d 1025 (Del. Ch. 2024), and Crispo v. Musk, 304 A.3d 567 (Del. Ch. 2023), which many found surprising. And perhaps most famously, Section 102(b)(7), the director exculpation clause (now the director and officer exculpation clause following an amendment in 2022), was enacted in the wake of the Delaware Supreme Court’s decision in Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985), which caused shockwaves throughout the corporate law community as well as the director and officer insurance market.
Senate Bill 21 Amendments
Section 144. Section 144 of the DGCL was revamped entirely from being a provision speaking on the voidability of conflicted transactions, into a statutory safe harbor for conflicted and controller transactions. The essence of the new Section 144 is defining what a controlling stockholder is, and providing different safe-harbor frameworks for conflicted transactions, controlling stockholder transactions, and controlling stockholder “go private” transactions for public companies.
Controllers are now statutorily designated as those persons (together with affiliates and associates) that (1) has majority control in voting power, (2) has the right to nominate and elect a majority of the board, or (3) possess the functional equivalent of majority control by having both control of at least one-third in voting power of the outstanding stock entitled to vote generally in the election of directors and the power to exercise managerial authority. The last category will likely be the subject of much litigation in the future, but the defined boundaries will limit a plaintiff’s ability to cast a person as a controller.
Under the new Section 144, controllers (and directors or officers of a controlled company) can shield themselves from a fiduciary claim in a conflicted transaction if (1) a committee of 2 or more disinterested directors that has been empowered to negotiate and reject the transaction, on a fully-informed basis, approve or recommend to approve (by majority approval) the transaction, or (2) it is approved by a fully-informed, uncoerced, affirmative vote of a majority of the votes cast by the disinterested stockholder. And in a “go private” transaction, both (1) and (2) above need to be accomplished. Such actions will grant the transaction “business judgment rule” deference. This is a significant change from recent Delaware Supreme Court precedent under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”), and its progeny holding that a controller transaction providing a non-ratable benefit to the controller will be reviewed under the discerning “entire fairness” standard unless the transaction is conditioned “ab initio” (i.e., at the outset) on the approval of a majority of fully-informed disinterested director and fully-informed, disinterested and uncoerced stockholders. The legislature has spoken that the spirit and structure of MFW will only apply to “go private” transactions, whereas in a non-“go private” transaction the controller needs to meet just one of the MFW prongs, and a disinterested director cleansing does not have to be “ab initio.” Note also that Section 144 provides that controllers are not liable for monetary damages for breaches of the duty of care.
New Section 144 also creates a new presumption that directors of public corporations that are deemed independent to the company under exchange rules are disinterested directors under Delaware law (and, if the director meets such independence criteria with respect to a controller, the director is presumed disinterested from such controller). To overcome this presumption, there must be “substantial and particularized facts” of a material interest or a material relationship with a person with a material interest in the act or transaction. Note that NYSE and NASDAQ independence is a somewhat different inquiry from director disinterestedness under Delaware corporate law. To qualify as independent for exchange purposes, directors cannot hold management positions at the company, its parents or subsidiaries, and former executives are not considered independent for three years after their departures. See Nasdaq Rule 5605 and NYSE Listed Company Manual 303A.02. A director also does not qualify as independent if the director or their families received more than $120,000 in compensation from the company in any 12-month period in the prior three years. In contrast, disinterestedness of a director under Delaware law has been historically a much more fact-and-circumstances inquiry, where judges have looked to things like co-owning an airplane, personal friendships and other “soft” factors.
Section 220. Under Section 220, a stockholder is entitled to examine a corporation’s “books and records” in furtherance of a “proper purpose” reasonably related to the person’s status as a stockholder. The use of this potent tool has proliferated through the years, with stockholders of Delaware corporations becoming increasingly savvy, sophisticated and demanding with their books and records demands to investigate potential corporate wrongdoings before filing suit. Delaware courts have encouraged the use of Section 220, in many cases urging stockholders to use the “tools at hand” ahead of filing suit, presumably with the hope of curtailing bad claims clogging up the docket.
The amended Section 220 limits the universe of what a stockholder may demand under Section 220. Prior to the amendments, a stockholder could pursue materials, even if not “formal board materials,” if they make particularized allegations of the existence of such materials and a showing that an investigation of the suspected wrongdoing was “necessary and essential.” The statute, as amended, limits the ability for stockholders to pursue materials such as personal director or officer emails that may have relevant information, which could be allowed under the prior regime. Under the amended Section 220, if what the stockholder seeks is not part of the nine types of “books and records” spelled out in the statute, the stockholder cannot have access to it in a Section 220 books and records demand.
Questions Going Forward
The amendments to Sections 144 and 220 collide with or directly overturn several Delaware caselaw precedents. The landscape has changed, and we will see how Delaware corporations and its constituents respond. From a transactional planning perspective, the safe-harbors of Section 144 provide much-needed guidance, but with limited caselaw overlay interpreting the boundaries of the safe-harbors, the structuring is not without risk.
Turning back to the backdrop of Senate Bill 21: does this fix the “DExit” concern? Perhaps. But these amendments undoubtedly swing the pendulum to the corporation, controller and management. Whether it is swinging back toward the center is up for debate, but what is not debatable is that preserving the Delaware corporate law franchise depends upon balance. Through the legislative process there were some institutional investors that opposed Senate Bill 21. We will see what kinds of moves, if any, investors of Delaware corporations will make going forward.
Finally, is Section 144 an “opt out” provision? The DGCL is a regime of mandatory statutes, enabling statutes, and default statutes one can opt in or out of. Returning to Section 102(b)(7), this exculpation provision is a well-known example of an opt-in, where a corporation has the option to add that exculpation clause to the company’s certificate of incorporation. Section 203, on the other hand, is an “opt out” statute where a corporation can choose not to have certain restrictions on business combinations with interested stockholders. In the legislative process, several prominent corporate law professors sought to have Senate Bill 21 revised such that it would be a charter “opt-in,” meaning that the default is the status quo, and companies (with stockholder approval) can adopt the controller transaction safe-harbor and books and records limitations in the new Sections 144 and 220. This proposal was ultimately not accepted, but there has been some mention that the text of the new Section 144 suggests it is actually an “opt out” statute. If that is the case, and investors do feel strongly about the Senate Bill 21 amendments, we may see stockholder proposals in the coming years for amendments to the corporate charter to opt out of the new Sections 144 and 220. We will watch the SEC Rule 14a-8 proposals in upcoming proxy cycles to see if this is the case.
New Mexico Bills Would Expand Protections for Medical Marijuana and Allow Use of Medical Psilocybin
Lawmakers in New Mexico have advanced two bills that would expand protections for medical marijuana patients and permit the use of medical psilocybin.
Quick Hits
The New Mexico House of Representatives recently passed a bill to protect workers from penalties at work for off-duty use of medical marijuana.
The New Mexico Senate and House of Representatives both passed a bill to permit medical use of psilocybin.
The governor has until April 11, 2025, to sign or veto any bill that passes both chambers.
A bill (House Bill (HB) 230) in the New Mexico Legislature would protect employees from being disciplined at work for off-duty use of medical cannabis. HB 230 passed the state House of Representatives on March 12, 2025, and was sent to a Senate committee. It clarifies that an employee could not be considered impaired by cannabis at work solely because of the presence of THC metabolites or components of cannabis in the body. It would prohibit employers from conducting random drug testing for cannabis, if the employee is a qualified medical marijuana patient over the age of eighteen. Random drug testing would be permitted if the employer has a reasonable suspicion of marijuana consumption during work hours that resulted in an accident or property damage.
In 2021, New Mexico legalized the possession, consumption, and cultivation of recreational cannabis for adults twenty-one and older. The state legalized medical marijuana in 2007. The medical conditions that may qualify under the New Mexico Medical Marijuana Program include cancer, anxiety, post-traumatic stress disorder, insomnia, glaucoma, HIV/AIDS, hepatitis C, and multiple sclerosis, among others.
In a growing national trend, recreational marijuana is now legal in twenty-four states and Washington, D.C. Cannabis use and possession remain illegal on federal property under federal law.
Medical Psilocybin
Another bill, Senate Bill (SB) 219, recently passed the New Mexico legislature to approve medical use of psilocybin, sometimes called “magic mushrooms.” If signed by the governor, SB 219 would make it legal for patients to use psilocybin prescribed by a doctor for a qualifying medical condition, including major treatment-resistant depression, post-traumatic stress disorder, substance use disorder, and end-of-life care.
Next Steps
Governor Michelle Lujan Grisham has until April 11, 2025, to sign or veto bills that pass both chambers of the legislature.
In the meantime, employers in New Mexico may wish to review their drug testing policies and practices to ensure they comply with state law, particularly with respect to medical marijuana patients. Employers can discipline or fire workers who use marijuana while on duty or arrive at work intoxicated.
FDA Can’t Stop, Won’t Stop – Navigating the New Administration [Podcast]
In this episode of Food & Chemicals Unpacked, we dive into the current adjustments experienced at the U.S. Food and Drug Administration (FDA) so far under the Trump administration. Keller and Heckman Partner George Misko joins us to discuss the future of food safety regulations, including the downsizing of HHS under Secretary Robert F. Kennedy Jr., potential changes to the GRAS process, and FDA’s ongoing post-market review program.