Water Legislation from the 89th Texas Legislature
The 89th Texas Legislature advanced several water infrastructure measures during the 2025 legislative session. Most importantly, Senate Bill 7 and House Joint Resolution 7 were passed to expand the tools available for statewide water planning, financing, and project coordination. Texas voters also approved Proposition 4 on Nov. 4, 2025, establishing a dedicated revenue stream for the Texas Water Fund. Together, these actions will create long-term support for water supply development, wastewater and flood infrastructure, and future planning needs across the state.
Texas Water Infrastructure and Supply Planning
Senate Bill 7 makes several updates to the Texas Water Code to strengthen statewide coordination for water supply planning and infrastructure development. The legislation establishes a Water Supply Conveyance Coordination framework, directing the Texas Water Development Board to facilitate joint planning among project sponsors, governmental entities, utilities, and other relevant participants.
The bill also directs the board to develop statewide guidance, standards, and best practices for project design, materials, and system interoperability. To support this work, the agency is authorized to procure professional and consulting services and convene advisory committees to assist in planning and implementation.
Senate Bill 7 expands the range of eligible projects financed through the Texas Water Fund to include desalination, water reuse, out-of-state water acquisition, and other initiatives to diversify the state’s water sources. These projects expand the state’s available water resources by developing alternative water supplies. The bill also broadens funding priorities to include water and wastewater infrastructure, permit-ready projects, water conservation strategies, water loss mitigation, statewide water awareness initiatives, and technical assistance for applicants.
Voter-Approved Dedication of Sales Tax Revenue to the Texas Water Fund
House Joint Resolution 7 proposed a constitutional amendment dedicating a portion of state sales and use tax revenue to the Texas Water Fund, which funds statewide water, wastewater, flood, and conservation infrastructure administered by the Texas Water Development Board. Texas voters overwhelmingly approved this amendment as Proposition 4 on Nov. 4, 2025.
Beginning Sept. 1, 2027, the resolution requires the comptroller of public accounts to deposit up to one billion dollars each fiscal year into the Texas Water Fund once state sales and use tax collections exceed $46.5 billion. The first $46.5 billion in revenue each year will continue to flow into general revenue, with the next one billion dollars dedicated to the Texas Water Fund and maintained in a separate account.
The legislature may, by concurrent resolution adopted by a record vote of a majority of the members in each chamber, direct the comptroller to allocate deposited funds to programs the Texas Water Development Board administers, including the State Water Implementation Fund for Texas, the New Water Supply for Texas Fund, and other authorized accounts. The amendment prohibits using the allocated funds to finance infrastructure transporting non-brackish groundwater, except in limited cases involving aquifer storage and recovery projects. Allocations cannot be modified during the first 10 fiscal years they apply. The legislature may also suspend these allocations during a declared state disaster, allowing temporary redirection of funds with the intent to restore them to the Texas Water Fund when practicable. These provisions will remain in effect until Aug. 31, 2047.
This legislation, culminating in the voter-approved constitutional amendment, creates a long-term funding stream to ensure Texans have the water needed for the continued population and business growth that Texas continues to see each year. This provides opportunities for an array of new water projects, which can serve as another component of the state’s ongoing economic development.
Puerto Rico’s Climate Suit Dismissal Exposes Stark Policy Limits to Extreme Climate Action
Recently, U.S. District Judge Silvia Carreño-Coll dismissed an amalgamation of climate lawsuits filed by 37 Puerto Rican municipalities against American energy producers. Led by the municipality of Bayamón, lawyers sought to hold American oil and gas companies liable for infrastructure damages caused by 2017’s Hurricane Maria. The premise of the lawsuits was that oil and gas producers coordinated to hide the environmental effects of fossil fuels in the research on climate change.
The court concluded the municipalities had waited too long, blowing past the four-year statute of limitations for racketeering claims. While the municipalities plan to appeal, this time limit importantly sheds light on climate lawsuit losses in the past few years: it exposes the stark legal limits of climate litigation and the way some climate activists are twisting and abusing our judicial system for their own policy gain.
The Puerto Rico lawsuit, first filed in 2022, broke new ground by including Racketeer Influenced and Corrupt Organizations Act (RICO) and antitrust charges, novel claims in climate litigation that hinge on criminal coordination to deceive the public about widely-known facts around emissions and climate change.
For actual RICO charges, prosecutors must prove that the defendant has engaged in a “pattern of racketeering activity” within a criminal enterprise. Further, for civil RICO cases like this one, existing law upheld by the Supreme Court states that plaintiffs must bring forward a suit within four years from when the injury occurred or was discovered.
The municipalities argued that the statute of limitations here should be tolled because companies concealed critical information from the public. Judge Carreño-Coll found that reasoning flimsy, in part because the public scientific information around man-made climate change goes back to the 1970s and has been widely discussed and debated by U.S. officials for years. In 1970, Puerto Rico specifically passed the “Environmental Public Policy Act of the Commonwealth of Puerto Rico,” which was amended in 1973, 1999, and 2004, respectively. As she noted, the doctrine of “fraudulent concealment” requires concrete evidence that information was hidden and the plaintiffs simply failed in its burden of proving that risks were hidden. Here, abundant public reporting already existed and municipalities had a duty to investigate, not stall.
The ruling underscores a larger truth: Statutes of limitations aren’t just technicalities, but are core to ensuring fairness in our legal system. Without them, defendants of all sorts could face perpetual liability for actions debated, litigated, and regulated decades earlier.
Climate activists now face their eleventh straight dismissal in emissions tort litigation. Courts across the country have consistently rejected the theory that energy producers can be treated like a criminal cartel. In January, a judge in New York dismissed New York City’s climate lawsuit, writing that the City contradicts itself when claiming deception, yet arguing that “there is near universal consensus that global warming is primarily caused, or at least accelerated, by the burning of fossil fuels.” A similar dismissal in August in Charleston, South Carolina involved another statute of limitations issue, as the city’s 2020 lawsuit also blew past a three-year statute of limitations under South Carolina’s Unfair Trade Practices Act.
For these lawsuits and others – like Honolulu’s ongoing 2020 suit that has long passed a two-year deadline to act – the statute of limitations is critical for determining cases of harm. However, a mountain of evidence going back decades, from the 1978 National Climate Program Act and even back to a 1965 speech from President Johnson, recognizes the possibility of climate risks from an increase in carbon dioxide.
U.S. federal law does not outlaw oil and gas activities, as fossil fuels still account for 84% of total U.S. primary energy production in 2023. Even plaintiff states in these lawsuits use fossil fuels: 46% of New York state’s energy is through natural gas and 78.8% of Hawaii’s electricity in 2023 was generated using fossil fuels. Because of the nature of oil and gas, with its risks and universal importance to our economy, security, and affordability, it is clear that none of these criminal deception claims hold water.
Judge Carreño-Coll’s opinion dismantled the idea that Puerto Rico was uniquely “targeted” by energy companies, exposing how RICO and antitrust allegations have been weaponized against American energy producers. She also reminded the plaintiffs that courts cannot assume the role of legislatures by designing carbon policies and issuing sweeping payouts from the bench.
Ultimately, Judge Carreño-Coll’s ruling is a reality check for extreme climate activists looking to force state courts into the roles reserved for Congress and the EPA. The dismissal highlights the dangers of treating the legal system as a blunt instrument of climate activism. By cutting through legally unsound claims, Judge Carreño-Coll protected the integrity of the courts, the long-standing legal principles of limitation statutes and reminded us that real solutions must come from policymakers, not flimsy litigation.
Disclaimer: The views and opinions expressed in this article are those of the author and not necessarily those of The National Law Review (NLR). Please see NLR’s terms of use.
Title XVII- From Clean Energy Innovation to Energy Dominance – The Evolution of DOE Financing
On October 15, 2025, AEP Transmission LLC, a wholly owned subsidiary of American Electric Power Company (AEP), closed a $1.6 billion term-loan financing guaranteed by the US Department of Energy (DOE), marking the first DOE loan guaranteed financing to close since President Trump’s inauguration in January. AEP operates the nation’s largest electric transmission system, spanning more than 40,000 miles and serving over five million customers. The company sought DOE financing to rebuild and reconductor approximately 5,000 miles of transmission lines across five states – Indiana, Michigan, Ohio, Oklahoma and West Virginia – modernizing grid infrastructure and improving reliability for millions of consumers.
The credit facility was structured as a low-interest term loan advanced by the Federal Financing Bank and fully guaranteed by the DOE under its Energy Infrastructure Reinvestment authority. The federal financing backed by DOE’s guarantee will significantly reduce borrowing costs and allow AEP to accelerate capital deployment at a time when private financing for large-scale transmission upgrades may be constrained.
The AEP transaction may very well serve as an early model for subsequent electric power infrastructure financings under the DOE’s newly branded Energy Infrastructure Reinvestment and Energy Dominance Financing Programs.
A Program Built to Bridge Innovation and Capital
The DOE’s loan guarantee program was created under Title XVII of the Energy Policy Act of 2005 (then called “Incentives for Innovative Technologies”) to help finance innovative energy technologies that, at time of financing, wouldn’t meet market norms for “commercial technology.” By providing federal guarantees for loans provided by the Federal Financing Bank, or potentially private lenders, the program aimed to close the financing gap between innovative technology and market-tested (i.e., bankable) deployment.
Over the years, the DOE’s Loan Program Office (LPO), created to administer the loan guarantee program, financed projects that redefined the US energy landscape: utility-scale solar farms, advanced vehicle manufacturing, and more recently, next-generation carbon-capture facilities among them. Through these investments, DOE has been perhaps the principal actor in the US helping to move new-generation clean energy technologies from the margin to the mainstream.
Following the inauguration of President Biden, the loan guarantee program received a boost from both the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), which among other things increased the funds authorized for the program. The IRA also created a new category of projects eligible for funding under Section 1706 of Title XVII named the Energy Infrastructure Reinvestment Financing program (EIRF). In its guidance, the Biden era LPO described the new funding as aiming to provide a “bridge to bankability,” especially for new projects that contribute to the reduction of greenhouse gas pollution that may have trouble arranging financing from commercial lenders.
A New Mandate: Financing Energy Dominance
The new Trump Administration has significantly shifted US energy policy, rejecting the concept of climate change, and emphasizing instead fossil fuels as the means to achieving energy security and dominance.
The new Congress reflected President Trump’s pivot in passing the One Big Beautiful Bill Act (OBBBA). The OBBBA revised Section 1706, rebranding it as the “Energy Dominance Program” and changing its emphasis from promoting clean energy generation to facilitating projects using fossil resources, as well as mining projects, for the sake of national security. The OBBBA rescinded the unobligated funds inked by the IRA for Section 1706 but at the same time appropriated $1 billion to DOE to “carry out activities” under section 1706 (of which not more than 3 percent is to be used for administrative expenses) and authorized $250 billion in new loan guarantees for the revised Energy Dominance program through September 30, 2028.
Consistent with the policy shift to encompass fossil resources, Section 50403 of the OBBBA removed a Section 1706 eligibility criterion that a project must “avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions.” Additionally, program eligibility is expanded to include projects that will “increase capacity or output” or “support or enable the provision of known or forecastable electric supply at time intervals necessary to maintain or enhance grid reliability or other system adequacy needs.” The OBBBA also revised the definition of “Energy Infrastructure” to become a facility (and associated equipment), used to enable “production, processing, transportation, transmission, refining and generation needed for energy and critical minerals.”
On October 28, DOE published an Interim Final Rule which amends the DOE’s loan guarantee regulations to implement the Energy Dominance Financing provisions of the OBBBA. Among other provisions it will add a requirement that an electricity utility infrastructure project applying for funding from the 1706 program demonstrate that the financial benefits from a DOE guarantee will be shared with its customers, or the associated community served by it. Significantly, no similar requirement is made in the Interim Final Rule with respect to other types of Energy Infrastructure covered by the Energy Dominance program. While it is “effective” as of October 28, the period for public comment on the Interim Final Rule expires on December 29, 2025. The text of he rule and information on how to provide comments can be found here.
The above notwithstanding, Title XVII survived mostly unchanged, except for the revised Section 1706. As an important example, the OBBB did not change Section 1706 (a)(1) under which the AEP financing was closed, and which contemplates guarantees for projects to “retool, repower, repurpose or replace energy infrastructure that has ceased operations.” Moreover, the OBBBA did not amend Section 1703 of the Energy Policy Act, which authorizes DOE loan guarantees for projects that “avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases and employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued”, including, among others, Renewable Energy Systems, carbon capture projects and those projects that increase the domestically produced supply of critical minerals. However, the OBBBA in practice defunded the innovative energy program (among other programs) for future projects.
The AEP Transmission Financing: A Case Study in Transition
Bracewell’s representation of AEP in this transaction provides some unique insights into how DOE’s pre-existing loan guarantee framework will evolve to operate effectively within the new energy-dominance policy environment. AEP, like several utilities in the DOE queue, applied for funding and executed a preliminary term sheet before President Trump’s second inauguration in January.
The AEP deal advanced under challenging conditions – not only the change in administration after term sheet signing, but also the longest ever federal government shutdown that halted some agency operations. Despite these challenges, the transaction closed smoothly in October, aided by a pragmatic and flexible approach implemented by both the AEP and DOE teams to navigate the DOE’s existing procedural complexities, while balancing the policies and interests of DOE in following governmental norms with the commercial interests of AEP in achieving a resilient and administratively manageable financing structure under its 30-year tenure.
The willingness of both parties to overcome challenges within existing statutory and policy constraints was essential. The transaction helped establish a working model for balancing regulatory compliance with project-level realities. It provides a roadmap for future DOE-guaranteed financings, not only for the small group of forthcoming utility-oriented financings already in the queue, but also for new projects under the OBBBA’s expanded eligibility scope.
Looking Forward
Under the energy-dominance framework and its expanded reach, the DOE loan guarantee program is poised to continue to be a strategic financing platform encompassing the full spectrum of US energy infrastructure, with an emphasis on innovation, reliability, security and independence, and agnostic on type of fuel or feedstock. To prove this point, in late October DOE closed a second loan, a $1.5 billion loan to Wabash Valley Resources to finance the restart and repurposing of a coal to ammonia fertilizer facility in Indiana that was idled since 2016. The revamped facility will produce 500,000 mtpy of anhydrous ammonia from coal from a nearby mine and pet coke as feedstock. And, on November 18, Constellation Energy announced a $1 billion loan from DOE to restart Three Mile Island nuclear facility.
For utilities and other project investors, the lesson is clear: US federal credit support remains one of the most powerful tools for accelerating capital into a changing environment for the energy infrastructure that underpins US economic strength.
Key Takeaways from COP30- UN Climate Change Conference
Last week marked the close of the 30th Conference of the Parties (COP30) to the United Nations Framework Convention on Climate Change (UNFCCC) in Belém, Brazil. COP30, billed by some as the COP of “truth” or “implementation,” sought to advance key issues tied to the climate goals established under the Paris Agreement, now ten years in effect. Below is an overview of the most notable developments from Belém and the emerging expectations for future climate action.
A much reported takeaway from COP30 is the fact that it concluded without agreement on a unified roadmap to phase down fossil fuel use. More than 80 countries reportedly pushed for a detailed global plan. But consensus proved elusive, underscoring persistent geopolitical and economic divisions, and the term “fossil fuels” does not appear in the final COP30 decision text—the Global Mutirão (a Brazilian term derived from the indigenous Tupi-Guarani language meaning “collective effort”). Instead, the outcome defers the issue to voluntary national and regional processes and a Brazil‑led initiative outside the formal UNFCCC track focused on developing transition strategies.
Attention also focused on the absence of US federal officials, marking the first COP in 30 years without formal US government representation. This absence reflects the Trump Administration’s climate and energy policy positions and its narrower approach to multilateral climate engagement. In contrast, California Governor Gavin Newsom attended COP30, sharply criticizing federal climate policy and positioning California—the world’s fourth‑largest economy—as a “stable and reliable partner” for global climate mitigation efforts.
At the same time, many observers viewed COP30 as an important step in sustaining international climate cooperation amid significant geopolitical and market headwinds. COP30 involved consultations on several key topics, led by pairs of developed and developing countries, including adaptation, finance, mitigation, just transition, technology, and gender. The Global Mutirão decision document emphasizes progress made over the past decade, including rapid technological advancements, falling clean‑energy costs, and record investment in renewable power and low‑carbon infrastructure. It also expressly reaffirms the commitment made in the Paris Agreement to pursue efforts to limit the global average temperature increase to 1.5°C above pre-industrial levels and “acknowledges that the global transition towards low greenhouse gas emissions and climate‑resilient development is irreversible and the trend of the future,” signaling the continued long‑term direction of global climate policy.
Below are additional high level takeaways from COP30:
Nationally Determined Contributions- In the lead-up to COP30, many stakeholders called for greater climate ambition—including updated Nationally Determined Contributions (NDCs), which outline each nation’s emissions-reduction targets and broader climate-action commitments. NDC revisions can translate into new permitting requirements, technology standards, procurement rules, and climate‑related disclosure obligations. A significant number of countries have yet to submit their updated NDCs, and there was broad consensus in Belém that the current set of NDCs is insufficient to keep global temperature rise below 1.5°C. Under the Paris Agreement, the next NDC cycle will cover 2025–2035, with progress assessed during the next Global Stocktake.
The final COP30 decision underscored the need to align existing NDCs with nations’ long-term strategies for low-emissions development and encouraged nations to chart pathways toward global net-zero emissions by mid-century, keeping the 1.5°C goal “within reach.” Post-COP30, attention will shift to both raising ambition (e.g., stronger mitigation targets in forthcoming NDCs) and moving from ambition to implementation, including country-specific and sector-specific plans—particularly in energy, industry, transport, and land use. These forthcoming strategies will shape regulatory frameworks, investment signals, and compliance obligations for private-sector actors across multiple jurisdictions.
Forest Preservation- Although the Global Mutirão omitted any formal plan to address deforestation, despite fairly widespread support among countries, one of the most consequential outcomes of COP30 was the announcement of the Tropical Forests Forever Facility (TFFF)—a proposed $125 billion, performance-based fund aimed at compensating tropical nations for preserving standing forests. Potential performance metrics expected under TFFF include verified reductions in annual deforestation, forest carbon stock maintenance, and satellite validated land use change avoidance. Although questions remain about how TFFF will be capitalized and governed, its launch marks a major pivot toward scalable, results-based finance for nature, with an emphasis on high-value forest regions in the Amazon, Congo Basin, and Southeast Asia.
TFFF’s design signals a shift away from short-term, project-level conservation toward predictable, multi-decade, sovereign-level forest-protection finance supported by robust, science-driven monitoring. Importantly for private-sector stakeholders, payments will be tied to verified reductions in deforestation, opening clearer commercial pathways for carbon-market integration, jurisdictional nature-based credits, and blended-finance structures. TFFF is also expected to operate alongside emerging regulatory regimes—such as the EU Deforestation Regulation (EUDR)—and may help create a more coherent policy environment for corporate supply-chain compliance and sustainability reporting. Together, these developments position TFFF as a potentially transformative tool for companies navigating evolving legal, financial, and ESG expectations around forest risk.
Carbon Capture Utilization and Storage- Although the Global Mutirão does not explicitly reference “carbon capture, utilization, and storage” (CCUS), several provisions in the COP30 Global Climate Action Agenda Outcomes Report (Action Agenda) directly implicate CCUS deployment and national abatement strategies. The Action Agenda acknowledges the role of industrial abatement technologies where they are technologically and economically feasible—an important signal for private-sector stakeholders. In practice, CCUS remains the only scalable abatement pathway capable of enabling continued operation of certain carbon-intensive assets, particularly in hard-to-decarbonize sectors. The Action Agenda urges nations to accelerate emissions reductions in heavy industry, emphasizing net-zero-aligned technology pathways for iron and steel, cement, chemicals, refining, and other major sources of CO₂. For project developers, investors, and industrial operators, this language provides a clearer policy basis for CCUS integration—supporting investment certainty, informing permitting strategies, and shaping long-term decarbonization planning.
Notably, the London Register of Subsurface CO2 Storage, a consortium of scientists and industrial partners led by the Imperial College London, published its first annual report on global CO₂ storage during COP30. The report finds that over 383 million tons of CO₂ have been sequestered since 1996—the equivalent of 81 million vehicles driven for a year. The report’s authors claim that the report illustrates that CCUS is an essential tool—a proven, scalable technology needed to tackle climate change. As countries revise their NDCs and develop associated implementation plans, CCUS is poised to become a more prominent component of national strategies.
Transparency- Measurement, reporting, and verification (MRV) emerged as a central theme at COP30, reflecting the growing emphasis on implementation, transparency, and accountability across all pillars of the Paris Agreement. The final agreement reaffirmed obligations under the Enhanced Transparency Framework (ETF) and underscored that high-quality MRV systems are essential for tracking progress toward NDCs – emissions and removals – and supporting the next Global Stocktake. Regarding carbon markets, COP30 focused on operationalizing MRV rules under Article 6, with renewed attention to ensuring environmental integrity, preventing double counting, and standardizing reporting formats for internationally transferred mitigation outcomes (ITMOs) under Article 6.2. Practically, this call for further progress on MRV must be balanced with nation-specific developments to pull back from existing MRV frameworks.
Adaptation- A major headline from COP30 was the political commitment to “at least triple” global adaptation finance with a target of $120 billion by 2035, signaling an intent to substantially scale resources for climate-resilient infrastructure, water systems, and agriculture. Like with TFFF noted above, this pledge is not yet accompanied by financial commitments, reflecting remaining uncertainty associated with climate finance. This commitment nonetheless reflects growing international recognition that adaptation funding must increase. For private-sector stakeholders, increased funding is expected to drive demand for resilient energy systems, grid and transmission upgrades, long-duration storage, cooling technologies, flood- and heat-resistant infrastructure, and sophisticated monitoring, data, and risk-management services. It would also support the growth of public-private partnerships, blended-finance structures, and resilience-focused investment platforms.
Article 6 Carbon Markets- The final COP30 agreement reiterates countries’ obligations under Article 6 of the Paris Agreement, which governs international carbon markets. Article 6.2 enables countries to trade internationally transferred mitigation outcomes (ITMOs) towards their NDCs, while Article 6.4 establishes a centralized crediting mechanism allowing both public and private entities to generate and trade carbon credits—often referred to as the Paris Agreement Crediting Mechanism. Although the Article 6 “rulebook” was largely completed at COP29 in Baku, COP30 shifted attention from negotiation to implementation. Discussions emphasized the practical steps needed to operationalize these markets, including safeguards for environmental integrity, measures to prevent low-quality credits, and alignment of Article 6 transactions with countries’ NDCs.
A consistent message from negotiators and observers was the need for accelerated deployment of Article 6 frameworks to unlock investment and support carbon markets. Looking ahead, the post-COP30 work will need to address several outstanding issues. These include rules on permanence and reversal risk, procedures for transitioning legacy Clean Development Mechanism (CDM) credits into the Article 6.4 system, and the development of nature-based methodologies, particularly for forestry and other land-sector activities. These decisions will shape market confidence, credit eligibility, and investment strategies in the emerging Article 6 landscape.
Trade- The Global Mutirão acknowledged the importance of international trade policies to climate action. Although the COP30 agenda did not formally include trade measures discussion, as some parties reportedly advocated for, the final agreement nonetheless reaffirmed that climate action measures “should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.” It also established a series of dialogs to occur over the next three years years among the Parties and other key stakeholders, including the World Trade Organization, to “consider opportunities, challenges and barriers in relation to enhancing international cooperation related to the role of trade.”
COP moves to Antalya, Turkey in 2026, with plenty remaining on the agenda, in particular updating NDCs and the creation of country-specific implementation plans, further engagement on the role of fossil fuels, and operationalizing the Article 6 framework to maximize the potential of carbon markets. These conversations will occur against the backdrop of challenging issues like a historic increase in base load power demand and emerging global trade barriers, among other geopolitical and economic developments. 2026 promises to be an eventful year in the advancement of the issues central to global climate change and the energy transition.
Securing the Future- Tackling Automotive Material Challenges in a Changing World
Introduction
In today’s rapidly evolving automotive industry, the reliance on battery and other key materials and components, such as microchips and rare earth metals, has become more pronounced than ever. As suppliers navigate a world fraught with supply chain disruptions and geopolitical uncertainties, securing these vital materials is crucial not just for production continuity but also for maintaining a competitive edge. This article explores the risks, strategies, and innovations shaping the future of material resource procurement in the automotive industry.
Understanding the Risks
The first step in addressing any challenge is to understand the nature of the issue. The automotive industry is increasingly vulnerable to external shocks, which can range from trade disputes and political instability to natural disasters and pandemics. These shocks have the potential to disrupt supply chains significantly, making the procurement of critical materials a strategic challenge. Microchips, essential for modern vehicle electronics and autonomous driving technology, have seen shortages that lay bare the fragility of current sourcing strategies. Similarly, battery metals like lithium, cobalt, and nickel are subject to fluctuating prices and limited availability, influenced by mining constraints and environmental regulations.
One notable recent example of the complexities in securing automotive materials is the case of Nexperia, a semiconductor manufacturer with roots in the Netherlands, now owned by Chinese technology company Wingtech. Nexperia’s strategic position in Europe highlights the intricate geopolitical dynamics at play in the semiconductor market, an area critical to the automotive industry. The Dutch government, cognizant of its country’s pivotal role in the global semiconductor supply chain, has been actively working with the European Union to create policies that balance economic interests with national security concerns. Meanwhile, the Chinese government’s ambition to strengthen its foothold in the global tech market adds another layer of complexity. The tensions between these competing interests recently boiled over as the Dutch government moved to take control of Nexperia, prompting the Chinese government to retaliate by restricting Nexperia’s affiliates in China from exporting components made in China. This multifaceted situation underscores the interconnected nature of global supply chains, how countries can use these resources as weapons, and the necessity for automakers to remain vigilant and proactive in navigating such geopolitical landscapes to secure essential materials for future production needs.
Dependency on these materials, many of which are available from only a limited number of sources, creates the risk that a disruption on the other side of the world, several tiers down the supply chain, can cripple production lines, delay vehicle launches, and ultimately affect profitability. The problem is compounded in the context of electric vehicles (EVs), which require critical materials and components that have more limited sources than those for internal combustion vehicles. These issues are creating significant upward pressure on supply systems already stretched thin.
Strategic Approaches to Securing Materials
To mitigate these risks, suppliers and OEMs are adopting various strategic approaches. One key strategy is diversifying suppliers and spreading geographic risk. By nurturing relationships with suppliers in multiple countries, companies can reduce the impact of a localized disruption. Additionally, partnerships and alliances with suppliers can provide more predictable access to necessary materials. However, for such a strategy to be successful, it is critical that buyers have visibility and understanding of the full scope of their supply chains. A tier 1 supplier may think that it is diversifying its supply chain by sourcing multiple tier 2 suppliers for a component. However, if all of those tier 2 suppliers are sourcing critical materials from the same tier 3, the tier 1 still faces the risk of an interruption if there is a disruption at the tier 3.
Other companies are taking a different approach by focusing on efforts to localize, or at least shorten, their supply chains. Rather than expanding their supply chain footprint, these companies seek to mitigate risk by locating their production closer to their supply base (or requiring the supply base to locate production closer to them). Whether simply locating production within the same country, or even having plants within miles of each other, this approach seeks to mitigate risk by shrinking the distance, borders, and overall exposure to risk between buyers and suppliers.
Finally, some automakers and suppliers are exploring joint ventures or other strategic partnerships to ensure priority access to materials and components. While the exact structure of such relationships varies, they most often involve the buyer making some form of investment into, or with, the supplier – typically through an ownership stake or loans – that allows the supplier to expand capacity. These arrangements are usually packaged with a supply or offtake agreement under which the buyer has priority to the materials being produced with the increased capacity.
Innovative Solutions and New Technologies
Another significant strategy involves investing in technological advancements and innovation to promote the development of new materials and increased resource efficiency. Innovation plays a pivotal role in securing the future of automotive materials. The continued evolution of synthetic materials and composites presents new opportunities for reducing reliance on traditional metals and microchips. Enhanced, durable synthetics and lightweight composites help decrease vehicle weight and improve fuel efficiency, offering indirect mitigation of resource scarcity.
Automakers and suppliers also are focusing on developing technologies that reduce reliance on scarce materials or substitute them with more abundant alternatives. For instance, advancements in battery technology are paving the way for increased use of solid-state batteries, which require fewer critical metals than current lithium-ion models. Automakers and suppliers also are investing in recycling initiatives, turning waste into value. By creating closed-loop systems for materials like lithium and cobalt, companies can mitigate the dependency on new raw material sources. These systems not only reduce environmental impact but also contribute to supply chain resilience.
Digital transformation, including AI and blockchain, is becoming integral to managing automotive supply chains. AI algorithms can quickly identify, or even predict, potential shortages and disruptions through advanced data analytics, enabling preemptive action. Meanwhile, blockchain technology provides transparency and traceability, crucial for ensuring ethical sourcing and compliance with environmental regulations.
The development of alternative energy sources, such as hydrogen fuel cells and biofuels, also represents significant potential for reducing reliance on battery metals. Automakers are actively researching and investing in these alternatives, recognizing the need to diversify energy reliance.
Conclusion
The future of the automotive industry is inextricably tied to the continuous and secure access to vital materials. As the automotive industry grapples with unprecedented challenges and greater volatility than it has seen for decades, strategic planning, innovative solutions, and leveraging technological advancements remain key to resilience. By understanding risks and implementing diverse strategies, automakers can navigate the complex landscape and ensure the sustainability of their resource pipelines. By embracing innovation and collaborative efforts to turn challenges into new opportunities, the automotive industry can thrive amidst uncertainty and change.
Towards a Second EUDR Implementation Delay and a Confirmed New Coalition at EU Parliament
The last attempt of the European Commission to simplify the EU Deforestation Regulation (EUDR) comes closer to becoming a reality today, although not quite as was initially planned. The European Parliament adopted today its position on the proposal, endorsing a broad 12 month delay of the EUDR (i.e. 30 December 2026) – as opposed to a targeted delay of the original proposal – and 18 months for the micro and small operators (i.e. 30 June 2027) as well as further simplification measures for micro and small operators.
The Parliament’s position follows closely the Council’s proposal, adopted on 19 November. Both co-legislators are removing the grace period for sanctions and enforcement originally proposed by the European Commission. Other amendments include:
due diligence statement would remain the obligation on the operators first placing the product on the market,
downstream operators and traders would no longer be required to submit separate due diligence statements, and
a one-off and simplified declaration will be needed for micro and small operators.
Member States were keen to ensure that further simplification measures of the EUDR would be envisioned. As such, they are calling on the European Commission to carry out a simplification review by 30 April 2026, assessing the law’s impact and administrative burden on operators, particularly small and micro operators, with the possibility of introducing an accompanying legislative proposal. The Parliament seconds the review clause.
What does this mean?
This development has a far lasting impact than being a simplification instrument. This is an unprecedented situation where a EU law is postponed twice in a year’s time. The EUDR, was delayed already once in a dramatic fashion at the end of 2024, provided that many technical and administrative requirements were not ready in time for the original implementation deadline.
What’s more, today’s vote demonstrated the largest political party’s willingness to break the cordon sanitaire, in order to gather enough supporting votes for amendments. This marks the second example – most likely one of many to come – following the vote in Parliament of the Omnibus I proposal, a few weeks ago. This opens the way for even more similar compromises, notably, but not limited to, sustainability policies.
More importantly, this revision opens the way for another legislative revision, which could be envisaged in less than 6 months from now, marking a never-ending exercise that co-legislators, governments and companies must prepare for. The question arises then: would this be an exceptional situation, or a trend setter for other EU policies? Although it’s too soon to tell, it appears more likely to be the latter, setting a new precedence for the way EU policies will be carried out in the short to medium term. This is something the Commission will now need to cautiously consider prior to releasing new amendment or simplification proposals.
Companies must now be prepared for every likely scenario in their compliance strategies with EU laws, provided that it could become more ‘normal’ for costly compliance exercises to end up becoming futile after such drastic legislative changes. Ultimately, it cannot be predicted with certainty, but companies should start showing flexibility in their compliance efforts. The case with the EUDR shows that large companies who invested in their compliance strategies being ready for the end of 2025 implementation, will now end up being penalized, in such a short period of time.
Equally, there is no certainty about what comes next, due to a foreseen simplification review. A new EUDR amendment could risk creating yet another debate whereby policy makers, governments and companies would change their focus to negotiating, and interpreting the effect of any future changes, instead of actually starting to implement the law. This will inevitably lead to a lack of engagement in what is necessary to be done, in creating the expertise, and in developing knowledge to implement the law.
What will happen now?
Trilogue negotiations will now need to take place in the coming two weeks. Given the proximity of both the Parliament’s and Council’s positions, it is very likely that an agreement will be easy to reach, in order to align the final text of the revision.
The Europe Parliament will need to endorse the final revision at the latest by the week of 15 December, followed by – exceptionally – a written approval by the Council, provided the limitation in time.
Only once the proposed revision is published in the Official Journal of the EU can the law become official and consequently the EUDR’s implementation is officially delayed.
Forthcoming EU Measures on Greening Corporate Fleets and the 2035 CO₂ Standards Revision
As part of the automotive competitiveness package expected to be published on 10 December 2025, the European Commission is finalising two major initiatives with direct implications for vehicle manufacturers, suppliers, fleet operators and mobility providers: the Greening Corporate Fleets proposal and the revision of the 2035 CO₂-emission standards for cars and vans.
The Greening Corporate Fleets initiative, initially foreseen in the 2023 revision of the Clean Vehicles Directive, aims to accelerate the decarbonisation of corporate and publicly owned fleets, which represent a significant share of vehicle turnover in several Member States. Internal discussions within the Commission over recent months have highlighted substantial political sensitivities surrounding the design of the measure. Divergences persist among Member States regarding the feasibility of national-level targets, the proportionality of possible local content criteria, and the administrative burden of new reporting requirements. As a result, the scope and structure of the final proposal remain subject to refinement.
Early indications suggest that the Commission may adopt a Member State–focused approach, setting national objectives for the gradual uptake of low- and zero-emission vehicles in corporate fleets. These objectives may be complemented by data-reporting and traceability obligations requiring operators to submit standardised information on vehicle characteristics and emissions performance to national authorities. Discussions are also ongoing regarding the potential inclusion of local content provisions for specific components or manufacturing stages, an issue on which Member State views remain divided.
In parallel, the Commission is finalising a revision of the 2035 CO₂ standards for new passenger cars and light commercial vehicles. While the target architecture established under Regulation (EU) 2019/631 is expected to remain intact, the Commission is examining options to introduce greater technological neutrality within the post-2035 framework. Among the elements under consideration are potential compliance pathways for plug-in hybrid electric vehicles (PHEVs), the regulatory treatment of range-extender architectures, and the possible recognition of synthetic and renewable fuels under defined certification conditions. The accompanying impact assessment is also exploring adjustments to lifecycle-based emissions methodologies and potential refinements to type-approval procedures. Questions have emerged regarding the scope of transitional provisions, the viability of existing hybrid portfolios under revised conformity requirements, and the interaction between future emissions methodologies and current type-approval certifications..
With several Commission services now engaged in the final drafting phase, and publication expected within weeks, both the Greening Corporate Fleets initiative and the revision of the 2035 CO₂ standards are expected to be released as full legislative proposals. Once issued, each proposal will be transmitted to the European Parliament and the Council under the ordinary legislative procedure. The Parliament will designate a committee and appoint a rapporteur and shadow rapporteurs, while Council working parties begin their technical examination. These early stages will frame the initial interpretation of the texts, influence the amendments proposed by co-legislators, and help operators understand where compliance burdens or operational impacts may arise.
How Does This Affect Your Company?
For companies, this initial scrutiny phase is critical for identifying provisions requiring clarification, preparing internal governance adjustments, and anticipating where delegated or implementing acts may introduce further obligations.
How We Can Assist
Given that both initiatives will shortly be tabled as legislative proposals and will proceed through the ordinary legislative procedure, companies across the automotive sector are preparing for the initial scrutiny phase. In this context, we can support clients with targeted, concrete services, including:
Early-stage analysis of the legislative proposals, identifying obligations, transitional provisions, delegated-act mandates, and points likely to attract amendments from Parliament or Council.
Monitoring of the parliamentary and Council process, including committee allocation, rapporteur and shadow appointments, Council working party discussions, and emerging amendment trends.
Preparation of technical-legal briefings to facilitate company participation in stakeholder hearings, committee discussions, or targeted exchanges with Member States.
Contractual risk and readiness analyses, assessing whether procurement, supply-chain or fleet-management contracts require adjustment in light of expected obligations.
Technology-specific regulatory opinions regarding the treatment of PHEVs, range extenders and synthetic-fuel pathways under the proposals and future delegated acts.
California DPR Announces First Meeting of New Environmental Justice Advisory Committee
Key Takeaways
What Happened: The California Department of Pesticide Regulation announced that the first meeting of its Environmental Justice Advisory Committee will take place on December 10, 2025.
Who’s Impacted: Manufacturers, distributors, and users of pesticide products.
What Companies Should Consider Doing In Response: Tracking the newly established Committee’s recommendations and monitoring for future developments in this space.
Background
Earlier this month, the California Department of Pesticide Regulation (DPR) announced that it will host the first public meeting of its newly formed Environmental Justice Advisory Committee (EJAC) on December 10, 2025. Established by Assembly Bill (AB) 652 in 2023, the EJAC will advise DPR on environmental justice (EJ) concerns in communities with the highest exposure to pesticides. DPR appointed the members of the inaugural EJAC earlier this year.
For years, advocates have raised concerns that farmworkers in California – the majority of whom are of Latin-American descent – may face an elevated risk of exposure to pesticides. According to an analysis published by California Environmental Protection Agency researchers in the American Journal of Public Health in 2015, pesticide use represents one of the most ‘unequally distributed’ pollution sources with regard to race and ethnicity in California. According to DPR’s Pesticide Use Annual Report (2023), the San Joaquin Valley is the region of highest pesticide use in the state.
Earlier this year, the EJAC published a Scope of Work that presents a useful preview of the Committee’s expected activities and priorities. Among other things, the EJAC is charged with helping DPR integrate EJ, promote equity in decision-making, strengthen community engagement, identify barriers and solutions, and review progress and accountability.
A draft charter is also available. It states that EJAC’s purpose is to provide an “ongoing, formal public forum for meaningful involvement of environmental justice community members in pesticide issues impacting them.” Further, the charter provides that EJAC will hold at least two public meetings annually, at least one of which will be held in “a community with high pesticide use.” Importantly, it also states that EJAC’s prioritized recommendations will be “done through a public process and take public feedback into consideration.”
Next Steps
DPR’s recent activity in this space is consistent with California’s ongoing commitment to EJ, even as the federal government has eliminated its own EJ policies. For a broad overview of various state actions, see our previous alert.
Though the EJAC “holds no inherent decision-making authority,” the Committee’s Scope of Work indicates that it will advise DPR and “serve as a liaison between DPR and communities most impacted by pesticide use.” DPR will maintain final authority to accept or implement EJAC recommendations, but the Committee’s recommendations are likely to influence DPR’s regulatory decisions and enforcement priorities.
EJAC’s December 10 meeting agenda is available here. Pesticide industry stakeholders should consider monitoring DPR’s EJ-related developments and comments submitted through EJAC’s public processes. While details of the exact format and structure of EJAC’s next steps have not yet been announced, future EJAC meetings and publications may provide useful insight into the perspectives of impacted communities and help companies shape their engagement activities accordingly. Tracking forthcoming EJAC recommendations may be especially helpful for California pesticide registrants to prepare for potential DPR regulatory and enforcement updates.
EPA Publishes Default Values Used in New Chemical Risk Assessments under TSCA
On November 24, 2025, the U.S. Environmental Protection Agency (EPA) released the key default values that it uses in its risk assessments of new chemicals under the Toxic Substances Control Act (TSCA). EPA is making the assumptions available on its website in the New Chemicals Division Reference Library. EPA states that it expects the publication of the default values “to improve efficiency, reducing the likelihood that submissions need to be reworked or resubmitted.”
According to EPA, providing these established numeric assumptions will help new chemical submitters better understand EPA’s chemical assessment process and develop higher-quality submissions. This is the latest in a series of steps that EPA has taken to improve efficiency, worker protections, and transparency in new chemical reviews. In June 2024, Michal Ilana Freedhoff, Ph.D., then Assistant Administrator of EPA’s Office of Chemical Safety and Pollution Prevention, announced four new initiatives in EPA’s review of new chemicals under TSCA: engineering checklist; worker protections; updated statistics for new chemical review timelines; and the New Chemicals Division Reference Library. More recently, in April 2025, EPA announced the availability of new resources intended to help companies with the requirements in EPA’s December 2024 final rule governing the review of new chemicals. According to EPA, the new materials “provide companies with clear instructions on how to include required data elements in the current system used for new chemical submissions while the agency works to update that system.”
EPA notes that under TSCA Section 5, it is required to review new chemicals before they may be manufactured, processed, or used, to determine whether they present an unreasonable risk of injury to human health or the environment. The reviews include an assessment of how much of the chemical may be released into the environment and the potential exposure levels in the workplace. EPA states that “[w]hen chemical-specific information is not available or substantiated — such as the type of containers used to transport the chemical or the quantity of residue that remain in process equipment before they are cleaned out — EPA uses assumptions to assess levels of environmental release and worker exposure during the lifecycle of a new chemical.”
EPA used three primary sources to create this assumption guide:
EPA models hosted in the Chemical Screening Tool for Exposures and Environmental Releases (ChemSTEER);
EPA’s Generic Scenarios Documents; and
The Organisation for Economic Co-operation and Development’s (OECD) Emission Scenario Documents (ESD).
EPA considers the guide “an evolving document” that may be updated in the future. EPA states that it “welcomes the submission of representative data to [email protected] from industrial sectors to ensure that the inputs and assumptions used in new chemical reviews are grounded in gold standard science, fit for purpose and appropriate for use.”
Commentary
Bergeson & Campbell, P.C. (B&C®) welcomes increased transparency on new chemical review. While this announcement is an important step, more improvement is needed. For example, ChemSTEER (last updated in 2015), EPA’s Generic Scenarios, and the OECD ESDs are not new; all have been available for years, if not decades. It is, nevertheless, useful for newer submitters to understand and have access to these key resources. The more significant issue is under what circumstances EPA will deviate from the baseline assumptions described in these documents. Although EPA suggests that chemical-specific information could move the needle, EPA does not describe in this guidance, for example, what it deems to be “substantiated adequately” or “relevant documentation.” We have experienced instances in which a submitter has provided data to refine EPA’s release and exposure scenarios, only to have EPA rely on the generic scenarios in preference to the submitted data. We also have experienced instances in which EPA deviates from these scenarios for more conservative assumptions. These examples are not uncommon. It is as important that EPA ensure that its assessments consistently follow its own guidance as it is for submitters to understand what that guidance is.
FERC Requests Information on Streamlining Post-Licensing Hydropower Approvals and Issuance of a Blanket Rule for Post-Licensing Amendments
On November 20, 2025, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) seeking stakeholder input on how it could streamline approval for post-licensing activities at hydropower projects, including whether it should establish blanket authorizations for post-licensing activities that currently require a license amendment. Comments are due January 26, 2026.
Background
FERC issues licenses for the construction, operation, and maintenance of non-Federal hydroelectric projects pursuant to section 4(e) of the Federal Power Act. FERC hydroelectric licenses are typically issued for a duration of 30 to 50 years in order to provide a certain level of regulatory certainty to operators of these projects, which require significant capital investments to construct and maintain. Given the long duration of a license term, hydroelectric operators often need to modify portions of the project works or operational requirements prior to relicensing. However, the Federal Power Act requires that any project modifications that are “substantial” or “significant” first receive authorization from FERC.
FERC’s existing regulations require hydropower operators to apply for a license amendment to make certain changes to the physical features of the project or to make a change to the plans for the project under the license. These license amendments may either be a “capacity” or “non-capacity” amendment, depending on whether the power generating potential of the project is affected. Additional minor changes to the project may be authorized under the terms of the individual hydropower license without requiring a license amendment, but often still require review and approval by FERC staff before implementation.
FERC and stakeholders have identified that the process for authorizing post-licensing activities for the maintenance, repair, and improvement of hydropower projects is often time consuming and unclear. FERC explained that it is processing a significant number of non-capacity amendments from hydropower operators who are seeking to modify or improve their operations, but who cannot accomplish these changes without first receiving Commission approval.
Summary of the NOI
The NOI seeks input from stakeholders on how the approval process for minor post-licensing activities at hydropower projects could be streamlined and improved, including whether certain activities can be implemented without case-specific authorization, i.e., through blanket authorizations.
The NOI requests input on the following broad categories of activities:
Minor Post-Licensing Activities. FERC requests information on how it could streamline approval for minor post-licensing activities that do not require a license amendment, including feedback on the scope of activities addressed, the process that should be used, and documentation that should be required.
Post-Licensing Activities Requiring Amendments. FERC requests information on whether it should implement a blanket authorization for post-licensing activities at hydropower projects that currently require a license amendment. FERC further requests input on how such a blanket authorization should be structured and implemented and what specific post-licensing activities would fit within the blanket authorization.
Implications
A blanket approval process for post-licensing activities at hydropower projects would significantly enhance the ability of hydropower operators to maintain and improve infrastructure projects in a timely and responsive manner. Streamlining the post-licensing approval process could lead to significant cost savings for hydropower operators, as the effort involved in preparing and submitting post-licensing applications for minor modifications is significant. The Commission has identified the increasing number of non-capacity amendment applications for minor modifications as an obstacle to the goal of maintaining and enhancing the Nation’s hydropower infrastructure. The NOI demonstrates that FERC is willing to find solutions to this roadblock by investigating more efficient approval processes. Hydropower operators would benefit from providing detailed feedback to FERC on the challenges posed by the current process and tailored advice on how it may be improved within the framework proposed by the Commission.
California Mandates Easy Social Media Account Deletion
California recently enacted California Assembly Bill 656 (the “Act”), which requires social media platforms to make it easier and more straightforward for users to delete their social media accounts and personal information. The Act applies to social media platforms that generate more than $100 million in annual gross revenues.
Key provisions of the Act include:
Conspicuous Account Deletion Button. Social media platforms must display a clearly visible and accessible account deletion button labeled “Delete Account” in the platform’s settings menu. Once a user clicks the “Delete Account” button, the social media platform must provide the steps necessary to complete the account deletion request, which must also include the deletion of the user’s personal information.
Easy-to-Use Verification Method. The Act specifies that if a social media platform requires verification of the account deletion request (e.g., through two-factor authentication, email, SMS message), such verification must be easy-to-use and cost-effective.
CCPA Deletion Request. An account deletion request must be treated as a request to delete under the California Consumer Privacy Act (CCPA) and processed in accordance with the CCPA’s requirements (e.g., within 45 days, flowed down to service providers).
No Obstruction or Interference. Social media platforms may not use confusing designs, including dark patterns, to obstruct or interfere with users’ ability to delete their accounts and personal information.
Subsequent Login Does Not Revoke the Request. User login after an account deletion request does not revoke or cancel the deletion request.
The Act takes effect on January 1, 2026.
Proposed ESA Changes Would Restore Key Trump 1.0 Regulations
The U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) (collectively, the Services) proposed four rules that would modify key Endangered Species Act (ESA) regulations. Two of the proposed rules were issued jointly by the Services, and two were issued solely by FWS. Together, these proposed changes would restore regulatory changes promulgated under the first Trump administration in 2019 and 2020 that largely were rescinded by the Biden administration in 2022 and 2024, while adding clarifications intended to improve transparency and align regulatory standards more closely with longstanding agency practice.
The proposals would affect several foundational ESA processes, including listing and delisting determinations, critical habitat designations and exclusions, threatened species protections, and interagency consultation requirements. Per the Services, these proposed changes aim to better reflect the statutory text, provide clearer guidance to the regulated community, and enhance the predictability and consistency of ESA implementation. As with other recent ESA regulatory changes, these changes, if adopted, are likely to engender litigation.
Interested parties have until December 22, 2025, to submit comments on the agencies’ proposals.
Section 4: Species Listing and Critical Habitat Designation
The Services jointly propose revisions under Section 4 of the ESA, which governs the listing of species as threatened or endangered and the designation of critical habitat for listed species. The proposed changes would address how the Services evaluate species for potential listing, delisting, or reclassification, and how they determine when and where to designate critical habitat. The rule, if finalized as proposed, would largely restore regulatory language adopted in 2019, yet rescinded in 2022.
The revisions focus on clarifying the standards for listing determinations, when designating critical habitat may be considered “not prudent,” and the approach the Services must follow when designating unoccupied areas as critical habitat.
“Foreseeable future.” When listing a threatened species, the Services propose to restore the 2019 regulatory definition for whether the species is likely to become an endangered species in the “foreseeable future.” Under the proposed standard, the “foreseeable future” would extend only so far into the future as the Services can reasonably determine, based on the best scientific and commercial data available, that both the future threats and the species’ responses to those threats are likely.
“Not prudent” critical habitat determinations. The proposal would reinstate language providing that designating critical habitat may not be prudent when the only threats to the species’ habitat stem solely from causes that cannot be addressed by management actions identified in a Section 7 consultation.
Designating unoccupied critical habitat. The proposed rule would restore the 2019 requirement that the Services must first evaluate areas occupied by the species and designate unoccupied critical habitat only where occupied areas alone are inadequate to support the species’ conservation.
In addition, FWS proposes to restore regulations issued in 2020 and rescinded in 2022 with respect to how the agency evaluates critical habitat designations (including declining to designate), impacts to designated critical habitat, and critical habitat exclusions. The proposed changes would apply only to FWS, as NMFS did not modify its parallel regulations in 2020 and 2022.
Economic analysis and disclosure of impacts. When proposing critical habitat, FWS would be required to issue a draft economic analysis, and the accompanying Federal Register notice would identify known economic, national security, or other relevant impacts associated with the proposed critical habitat designation.
Exclusion analysis. The proposal specifies that FWS would analyze excluding an area from a critical habitat designation under Section 4(b)(2) in two circumstances: (1) when a proponent provides “credible information” supporting exclusion of a specific area from the critical habitat designation; or (2) when the Secretary otherwise exercises discretion to evaluate an area for exclusion.
Mandatory exclusion. If, after conducting its Section 4(b)(2) exclusion analysis, FWS determines that the benefits of excluding an area from a critical habitat designation outweigh the benefits of including it, the agency would exclude that area unless doing so would result in the species’ extinction.
Section 4(d): Elimination of the “Blanket Rule” for Newly Listed Threatened Species
In an effort to reinstate another important aspect of the 2020 regulatory changes, FWS again proposes to eliminate its so-called “blanket 4(d) rule” under which newly listed threatened species automatically receive the same protections that apply to endangered species unless FWS adopts a species-specific rule. (NMFS has no such blanket rule and evaluates each threatened species individually.)
Under the proposal, FWS would have to complete a species-specific 4(d) assessment for each threatened species listed on or after the effective date of the final regulation to determine whether to extend the ESA’s full protections to the species. The species-specific rule would:
Include a written “necessary and advisable” determination tailored to the species’ conservation needs;
Consider economic and other relevant impacts; and
Undergo public notice and comment.
The proposed rule would apply only prospectively to threatened species after the rule becomes effective. Threatened species currently covered by the existing blanket rule would not be automatically reevaluated and would continue to receive blanket rule protections unless FWS issues a species-specific 4(d) rule for that species. FWS would still have discretion to propose revisions to any 4(d) rule protections if new information or management needs warrant changes.
Section 7: Agency Consultations
FWS and NMFS jointly propose revisions to their regulations under Section 7 of the ESA, which requires federal agencies to consult with the Services on any proposed federal action to ensure the action would not jeopardize the continued existence of a listed species or result in the destruction or adverse modification of designated critical habitat. The proposed rule would largely restore the Services’ 2019 regulatory framework by reversing several 2024 changes.
The revisions focus on how federal agencies identify the environmental baseline, determine the effects of a proposed action, and assess whether those effects are “reasonably certain to occur.”
Environmental baseline. The Services propose returning to the 2019 definition, under which the baseline reflects the existing condition of the species and its critical habitat in the action area, separate from the consequences caused by the proposed action. This definition would clarify that components of federal activities or facilities over which the agency has no discretion are not a consequence of the action. Impacts from those nondiscretionary activities and facilities would be included in the environmental baseline.
Effects of the action. The proposed rule would limit consideration of “effects” to those that are both caused by the proposed action (i.e., it would not occur but for the action) and reasonably certain to occur. The Services also propose to restore and clarify factors relevant to determining whether an effect is “reasonably certain,” including temporal and geographic remoteness, the complexity of the causal chain, and whether the action agency could prevent the effect.
These proposed revisions place a stronger emphasis on causal connection and predictability in identifying an action’s effects. The proposed rule would apply prospectively to Section 7(a)(2) consultations occurring after the effective date of the final rule; it would not require reopening previously completed consultations.
Conclusion and Implications
If adopted, the proposed rules would significantly change how the Services currently implement several core ESA provisions, but they would largely mirror the regulatory program in place in the latter part of the first Trump administration and the first half of the Biden administration. The proposals would restore earlier regulatory frameworks for listing decisions, critical habitat designations, and interagency consultations, while replacing the “blanket rule” for threatened species with a species-specific approach under Section 4(d).
For project proponents, permit applicants, and other regulated entities, these changes would provide greater transparency and predictability by clarifying the analytical standards that govern listing, critical habitat, and consultation decisions.
The Section 4 Proposed Rule, Listing Species and Designating Critical Habitat (Joint Services Rule), can be found here.
The Section 4 Proposed Rule, Regulations for Designating Critical Habitat (FWS-Only Rule), can be found here.
The Section 4(d) Proposed Rule, Regulations Pertaining to Endangered and Threatened Wildlife and Plants (FWS-Only), can be found here.
The Section 7 Proposed Rule (Joint Services Rule), Interagency Cooperation Regulations, can be found here.