Mass. Appeals Court Clarifies Chapter 93A, Section 2 Standards: Takeaways from Bucci v. Campbell
In Bucci v. Campbell, the Massachusetts Appeals Court, in a summary decision, clarified standards that govern a trial court’s conclusions about whether acts or practices are unfair or deceptive under Chapter 93A, Section 2.
The underlying case concerned whether the defendants had breached a contract with the plaintiffs by failing to install a natural gas line to the plaintiffs’ lot. The jury found that the defendants (i) had breached the contract, (ii) had breached the implied covenant of good faith and fair dealing, and (iii) were liable for negligent, but not intentional, misrepresentation. The plaintiffs also asserted a Chapter 93A claim against the defendants, which the trial judge reserved for the court after the jury verdict, and later found that the defendants did not violate Chapter 93A. The plaintiffs appealed the Chapter 93A judgment.
In its decision, the Appeals Court first explained that whether acts are unfair or deceptive in their factual setting is a question of fact, but whether unfair or deceptive conduct rises to a level to violate Chapter 93A is a question of law and subject to a de novo review standard. Here, the trial judge found the defendants’ conduct to be “a bit sleazy” and based on “an extremely weak claim,” but it did not “rise to the level of rascality or misconduct” required to violate Section 2. Before getting to the merits of the judge’s conclusions, the Appeals Court noted that Chapter 93A no longer includes a “rascality” standard, which the Supreme Judicial Court rejected in 1995[1]. This, according to the Appeals Court, may have caused the trial judge to err.
Based on the trial judge’s acceptance of the jury’s findings, combined with the judge’s additional findings, the Appeals Court concluded that, as a matter of law, the defendants’ conduct was both unfair and deceptive under Section 2. Specifically, the court found the defendants’ negligent misrepresentation of fact, the truth of which could be reasonably ascertained, to be unfair and deceptive. With the addition of the “sleaziness” and “weak claim” the judge found, the defendants’ conduct was sufficiently “extreme or egregious” enough to violate Section 2. A breach of the implied covenant of good faith and fair dealing may also violate Section 2. Since the jury found such a breach here, and the judge found that they breached the covenant for their own economic advantage, the court had to conclude that their conduct violated Section 2 as a matter of law. The defendants’ conduct also was unfair under 940 Code Mass. Regs. § 3.16(2), which further supported the Appeals Court’s conclusions that the trial judge had erred in finding the defendants had not violated Chapter 93A.
This case demonstrates that unfairness and deception under Section 2 are fact based in a sense that a fact finder must determine whether conduct is unfair or deceptive in the factual setting at issue. Beyond that, it is for the court to decide whether the conduct—coupled with other relevant facts—is unfair or deceptive enough to violate Section 2.
[1] See Mass. Employers Ins. Exc. v. Propac-Mass, Inc.
President Trump Orders Investigation on Effects of Copper Imports on National Security
On Feb. 25, the White House announced it will launch an investigation into the importation of copper under Section 232 of the 1962 Trade Expansion Act.
President Donald Trump signed an Executive Order instructing the U.S. Secretary of Commerce to commence an investigation into the national security impact on the import of copper in all forms. The investigation is to review the effects of imports of copper in all forms on national security, including:
Raw mined copper
Copper concentrates
Refined copper
Copper alloys
Scrap copper
Derivative products
Copper is one of the products the president had promised to impose tariffs on, in addition to aluminum and steel; 25 percent tariffs were announced on Feb. 10 on aluminum and steel).
The Executive Order instructs the Commerce secretary to assess the factors outlined in the federal law that calls for “domestic production for national defense; impact of foreign competition on economic welfare of domestic industries” to include:
(i) the current and projected demand for copper in United States defense, energy, and critical infrastructure sectors;
(ii) the extent to which domestic production, smelting, refining, and recycling can meet demand;
(iii) the role of foreign supply chains, particularly from major exporters, in meeting United States demand;
(iv) the concentration of United States copper imports from a small number of suppliers and the associated risks;
(v) the impact of foreign government subsidies, overcapacity, and predatory trade practices on United States industry competitiveness;
(vi) the economic impact of artificially suppressed copper prices due to dumping and state-sponsored overproduction;
(vii) the potential for export restrictions by foreign nations, including the ability of foreign nations to weaponize their control over refined copper supplies;
(viii) the feasibility of increasing domestic copper mining, smelting, and refining capacity to reduce import reliance; and
(ix) the impact of current trade policies on domestic copper production and whether additional measures, including tariffs or quotas, are necessary to protect national security.
The Executive Order was made pursuant to Section 232 of the Trade Expansion Act, which mandates the investigation must conclude within 270 days.
Far-Reaching Implications
If, after the conclusion of the investigation, tariffs are imposed on copper and its derivative products, it would have far-reaching supply and cost implications. Copper and its derivatives are in a wide variety of everyday products, such as electronic products, wiring, construction items, just to name a few.
“Like our steel and aluminum industries, our great American copper industry has been decimated by global actors attacking our domestic production,” said Commerce Secretary Howard Lutnick.
www.reuters.com/…
McDermott+ Check-Up: February 28, 2025
THIS WEEK’S DOSE
House Passes Budget Resolution. The Senate and House must now align on a unified resolution for the reconciliation process to begin in earnest.
Senate Holds Nomination Hearings for OSTP Director, FTC Commissioner, OMB Deputy Director. Discussion focused on nominees’ views on artificial intelligence, pharmacy benefit managers (PBMs), and the impact of paused federal funding on grants and healthcare programs.
Senate HELP Committee Advances Secretary of Labor Nominee Chavez-DeRemer. Lori Chavez-DeRemer received some bipartisan support, and a full Senate vote is expected next week.
House Energy & Commerce Committee Advances Oversight Plan. The markup turned highly partisan as Republicans put forth an agenda that includes biological threat preparedness and response, substance use, and Medicare and Medicaid operations.
House Energy & Commerce Health Subcommittee Holds Hearing on PBM Reform. Members agreed on the need for PBM reform and referenced work from the 118th Congress.
Senate Aging Committee Examines Opioid Epidemic. Members discussed varying policy approaches to combatting opioid use disorder among seniors.
President Trump Signs Healthcare Price Transparency EO. The executive order (EO) directs agencies to increase enforcement of healthcare price transparency regulations.
Trump Administration Issues Memo Requiring Federal Agencies to Submit RIF Plans. Among a number of directives, the memo directs agencies, including the US Department of Health and Human Services (HHS), to submit phase one of a reduction in force (RIF) plan for their federal workforce by March 13.
HHS Issues Policy Statement on Notice-and-Comment Rulemaking. It remains unclear what scope of rules could be impacted by this statement.
CONGRESS
House Passes Budget Resolution. On February 25, the House voted 217 – 215 to advance its version of a budget resolution to outline the reconciliation process. In a dramatic display of how quickly things can change, the vote was initially cancelled because of ongoing opposition from Reps. Burchett (R-TN), Davidson (R-OH), Spartz (R-IN), and Massie (R-KY) due to concerns that the resolution did not include enough spending cuts. With only a one-seat margin, Republicans couldn’t proceed with that much opposition. However, three of the representatives were convinced to change their votes moments after the vote had been cancelled, and the vote proceeded. Ultimately, all Democrats voted no, and Rep. Massie was the sole Republican to join them.
The resolution would enable a single reconciliation bill to tackle immigration, energy, defense, and temporary extension of tax cuts from the first Trump administration. The resolution directs the House Energy & Commerce Committee to find at least $880 billion in savings, which could include significant Medicaid cuts.
The House vote follows the Senate’s vote last week to advance its version of a “skinny” budget resolution that did not include tax policy and would therefore include less healthcare savings. With two options for how to proceed on reconciliation, the House and Senate now must negotiate a unified budget resolution and pass it through both bodies in order for the reconciliation process to begin. Those budget negotiations will proceed mostly behind the scenes, as Congress must turn its attention to funding government before the March 14 deadline.
Senate Holds Nomination Hearings for OSTP Director, FTC Commissioner, OMB Deputy Director. The Senate Committee on Commerce, Science, and Transportation held a nomination hearing for Michael Kratsios to serve as the director of the Office of Science and Technology Policy (OSTP) and for Mark Meador to serve as a commissioner for the Federal Trade Commission (FTC). Members questioned Meador about FTC investigations into PBMs and consolidation, and Meador noted his intent to ensure competition in the healthcare industry. Members questioned Kratsios about guardrails for artificial intelligence, and he expressed his view that artificial intelligence can make a positive impact on healthcare.
The Senate Homeland Security & Governmental Affairs Committee held a nomination hearing for Dan Bishop to serve as deputy director of the Office of Management and Budget (OMB). Discussion predominately focused on border security and federal workforce cuts. Health-related topics included the impact of paused federal grant funding on rural hospital operations, federal funding of abortions, and transparency of federally funded research. Bishop will next testify before the Senate Budget Committee on March 5, and both committees must vote on his nomination before it heads to the Senate floor.
Senate HELP Committee Advances Secretary of Labor Nominee Chavez-DeRemer. In a 14 – 9 vote, the Senate Health, Education, Labor, and Pensions (HELP) Committee advanced the nomination of Lori Chavez-DeRemer as secretary of labor to the full Senate. Sens. Hassan (D-NH), Hickenlooper (D-CO), and Kaine (D-VA) voted yes, and Sen. Paul (R-KY) joined the remaining Democrats to vote no. Chavez-DeRemer previously represented Oregon’s fifth district in the House, and Sen. Paul expressed concern about her cosponsorship of a bill that would have made unionization easier. The US Department of Labor shares jurisdiction over certain healthcare issues with HHS, including the Affordable Care Act, the Health Insurance Portability and Accountability Act, and employer-sponsored insurance. A vote is expected next week on the Senate floor, where Chavez-DeRemer could continue to receive bipartisan support.
House Energy & Commerce Committee Advances Oversight Plan. During the markup, members discussed the committee’s oversight and authorization plan for the 119th Congress. Each House committee must submit such a plan to the House Administration and Oversight and Government Reform Committees by March 1. The plan states that the Energy & Commerce Committee will conduct oversight of federal agencies’ efforts on biological threat preparedness and response, ensure cost transparency in Medicare and Medicaid, examine the cost of chronic diseases, and examine government cybersecurity initiatives.
The markup became quite contentious, with Democrats offering numerous amendments that would require the committee to study the impact of any cuts to Medicaid and federal research funding, examine layoffs at HHS, and assess the US Food and Drug Administration’s leadership on vaccine development and safety. All amendments offered by Democrats were rejected along party lines.
House Energy & Commerce Health Subcommittee Holds Hearing on PBM Reform. There was strong bipartisan support during the hearing for PBM reform. However, Democrats expressed frustration that such policies were already fully debated in the 118th Congress and included in the December 2024 bipartisan healthcare package that was ultimately dropped from the year-end continuing resolution. Republicans indicated that they would like to investigate fraud and abuse within the drug supply chain and examine the PBM rebate model, and they noted concern about how PBMs harm independent pharmacies. Democrats also referenced the $880 billion in savings directed at the Energy & Commerce Committee in the House budget resolution, noting their concern over any cuts to Medicaid.
Senate Aging Committee Examines the Opioid Epidemic. The hearing focused on opioid use disorder’s impact on older Americans and featured a panel of local law enforcement and elected officials, caregivers, and subject matter experts. Witnesses recommended a variety of policy solutions, including taking a stronger law enforcement approach against drug dealers, increasing access to treatments such as medication-assisted therapy, and eliminating the Medicaid inmate exclusion. Democrats noted that decreasing Medicaid funding would impact access to and coverage of substance use disorder treatment, while Republicans focused on strengthening border security to prevent opioid use disorder.
ADMINISTRATION
President Trump Issues Healthcare Price Transparency EO. The EO, Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information, aims to build on the first Trump administration’s efforts to increase the transparency of healthcare prices. It specifically references a 2019 Trump EO and subsequent regulations that required hospitals and plans to publicly disclose negotiated prices. The Biden administration expanded on those regulations, but there have been reports of hospital non-compliance.
Differing from previous hospital price transparency requirements, the 2025 EO states that prices should be “actual prices” and not estimates. This EO directs the US Departments of the Treasury, Labor, and HHS to “rapidly implement and enforce” healthcare price transparency regulations within 90 days, including by:
Requiring disclosure of prices of items and services, not estimates;
Issuing updated guidance or proposed regulatory action to ensure pricing information is standardized and comparable across hospitals and plans; and
Issuing guidance or proposed regulatory action to update enforcement policies designed to ensure compliance.
A fact sheet can be found here.
Trump Administration Issues Memo Requiring Agencies to Submit Federal RIF Plans. The memo comes in response to President Trump’s February 13 EO, “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative.” The memo directs federal agencies to initiate large-scale RIFs and submit an agency RIF and reorganization plan (ARRP) as phase one of the initiative by March 13. The memo notes that ARRPs should seek to achieve:
Better service for the American people;
Increased productivity;
A significant reduction in the number of full-time-equivalent positions;
A reduced real estate footprint; and
A reduced budget outline.
Phase two of the initiative will focus on creating more productive, efficient agency operations. Agencies must submit a phase two plan by April 14, with implementation by September 30. Agencies or components that provide direct services to citizens (such as Social Security, Medicare, and veteran’s healthcare, according to the memo) are not to implement any proposed ARRPs until the OMB and Office of Personnel Management certify that the plans will have a positive effect on the delivery of such services.
HHS Issues Policy Statement on Notice-and-Comment Rulemaking. The Administrative Procedure Act (APA) exempts certain rules from formal notice-and-comment rulemaking, including rules regarding “public property, loans, grants, benefits, or contracts.” Despite this exemption, past guidance (known as the Richardson Waiver) encouraged greater public participation and directed government agencies to still use the more formal rulemaking process for this category of rules. HHS issued a new policy statement on February 28, stating that it will rescind the Richardson Waiver, and “matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts, are exempt from the notice and comment procedures of 5 U.S.C. 553, except as otherwise required by law. Agencies and offices of the Department have discretion to apply notice and comment procedures to these matters but are not required to do so, except as otherwise required by law.” The scope of the rules that could be impacted by this change are not easily defined, even under caselaw, and would need to be reconciled against other statutes and legal requirements that may still require notice-and-comment rulemaking.
QUICK HITS
Senate Judiciary Committee Advances the HALT Fentanyl Act with Bipartisan Vote. The HALT Fentanyl Act, S. 331, would permanently classify fentanyl-related substances as schedule I controlled substances, align penalties for offenses involving these substances with those for fentanyl analogues, establish a new registration process for certain research, and make other changes to research registration requirements. The legislation, which passed the House with bipartisan support in early February, advanced from the committee by a vote of 16 – 6.
Energy & Commerce Committee Privacy Working Group Issues RFI. The newly formed working group is exploring the potential creation of a federal comprehensive data privacy and security framework. The request for information (RFI) focuses on artificial intelligence, data security, enforcement, and existing privacy frameworks. Responses are due by April 7.
MACPAC Holds February 2025 Meeting. The Medicaid and CHIP Payment and Access Commission (MACPAC) meeting included discussion on transitions of care for children and youth with special healthcare needs, hospital supplemental and directed payments, self-directed home- and community-based services, access to opioid use disorder medications, Section 1115 substance use disorder demonstrations, prior authorization, healthcare for children in foster care, and access to residential care for children and youth with behavioral health needs.
CMS Announces Medicare Drug Price Negotiation Program Public Engagement Events. The events, held from April 16 to 30, will allow patients, clinicians, caregivers, and consumer and patient organizations to share input for the second cycle of Medicare drug price negotiations. More information can be found here. Read about the drug selection process in an infographic here.
Congressional Democrats Raise Concerns Over HHS Layoffs. Senate Finance Committee Ranking Member Wyden (D-OR) and Senate HELP Committee Ranking Member Sanders (I-VT) sent a letter to HHS expressing concern over the layoffs of probationary employees working on organ transplantation modernization efforts. House Energy & Commerce Committee Ranking Member Pallone (D-NJ) and Health Subcommittee Ranking Member DeGette (D-CO) raised concerns over the impact of layoffs at the Centers for Disease Control and Prevention, National Institutes of Health (NIH), and Food and Drug Administration (FDA).
HHS OIG Report Finds Increased Medicare Part D Spending for Weight Loss Drugs. From 2019 to 2023, spending increased by 364% for 10 medications, including anti-obesity medications such as Ozempic, that are covered as type 2 diabetes treatments. The report follows a proposed rule from the Biden administration that would allow Medicare Part D to cover certain anti-obesity medications for weight loss purposes; it remains unclear whether the policy will be finalized under the current administration.
NEXT WEEK’S DIAGNOSIS
Congress will be in session next week. With a budget resolution passed in both chambers and next steps in flux, discussion will likely shift to funding the government, which must be addressed by March 14 in order to avoid a government shutdown. The Senate will continue to hold nomination hearings. On March 5, the Senate HELP Committee will hold its hearing for NIH director nominee Jay Bhattacharya, and the Senate Budget Committee will hold its hearing for OMB deputy director nominee Dan Bishop. On March 6, Senate HELP will hold its hearing for FDA commissioner nominee Martin Makary. President Trump will give the joint address of his second term to Congress on March 4. The Medicare Payment Advisory Commission will meet March 6 and 7.
Spilling Secrets Podcast: Trade Secrets in Hollywood: Lessons from Oscar-Nominated Films [Podcast]
In this episode of Spilling Secrets, Epstein Becker Green attorneys Daniel R. Levy, Aime Dempsey, and George Carroll Whipple, III, explore trade secrets through the lens of Oscar-nominated films, offering insights into protecting sensitive information in today’s competitive landscape.
Whether looking at a magical spellbook from Wicked or groundbreaking architectural designs in The Brutalist, the discussion underscores how trade secrets intertwine with innovation, employee training, and organizational culture. Discover how Hollywood’s biggest stories offer practical lessons for safeguarding your business’s most valuable assets.
CEQ Sounds the Death Knell for Existing NEPA Regulations
The rapid changes relating to NEPA-implementing regulations accelerated this week, as the White House Council on Environmental Quality (CEQ) published an interim final rule (IFR) removing its NEPA regulations from the Code of Federal Regulations.
Effective April 11, 2025, CEQ’s IFR removes all iterations of its NEPA regulations, including 40 CFR parts 1500, 1501, 1502, 1503, 1504, 1505, 1506, 1507, and 1508, which federal agencies and developers alike have relied on in permitting projects since the 1970s.
This seismic shift in the implementation of NEPA—an area of the law that remained relatively stable for nearly a half century—comes on the heels of the D.C. Circuit Court of Appeal’s denial of the requests (by both petitioners and respondents) for rehearing en banc of that court’s opinion in Marin Audubon.
As we described in our November 2024 client alert, the panel majority in Marin Audubon concluded that the CEQ lacks authority to issue binding NEPA regulations. The D.C. Circuit declined to review the panel’s opinion, but, in a concurring opinion, seven out of 12 D.C. Circuit judges described the discussion regarding CEQ’s regulatory authority as dicta.
The IFR also follows on other important judicial developments. In early February 2025, the District Court for the District of North Dakota, in Iowa v. Council on Environmental Quality, issued an opinion in which it vacated the Biden Administration’s 2024 Phase 2 NEPA rules.
The court explained that its judgment would revert the CEQ regulations to an earlier version, namely, the version promulgated by the first Trump administration in 2020 as amended by the Biden administration’s 2021 Phase 1 NEPA rules. Although the court did not finally resolve the issue, it further opined that “it is very likely that if the CEQ has no authority to promulgate the 2024 Rule, it had no authority for the 2020 Rule or the 1978 Rule and the last valid guidelines from CEQ were those set out under President Nixon.”
Citing these decisions and President Trump’s Executive Order (EO) 14154, Unleashing American Energy—which revoked President Carter’s EO 11991 that served as the basis for CEQ’s NEPA regulations—the IFR has now made it clear that CEQ’s NEPA regulations will be rescinded in full.
What does this mean for your project?
In conjunction with its IFR, CEQ released a memo to the heads of federal departments and agencies directing them to:
Revise or establish new NEPA regulations within the next year consistent with EO 14154
Not delay pending NEPA analyses while those NEPA procedures are being updated
Most importantly, “consider voluntarily relying on [the soon-to-be-rescinded] regulations in completing ongoing NEPA reviews or defending against challenges to reviews completed while those regulations were in effect.”
CEQ also encouraged agencies to use the 2020 NEPA regulations as an “initial framework” for developing revisions to their own NEPA regulations, and provided suggested guidelines for those regulations.
As the implications for project proponents and litigants unfold, we are closely monitoring not only the enforceability of CEQ’s rescinded regulations, but also the agency-specific procedures that will replace them.
Clear rules foster timely and cost-efficient environmental reviews. Project proponents should consider active participation in the rulemakings that we will see across multiple federal agencies over the next 12 months to ensure adoption of legally defensible NEPA-implementing regulations that streamline and accelerate the permitting process.
What Should Companies do on CSRD While They Wait for The EU to Make Up Its Mind?
Now that the Commission has issued its Omnibus proposal, no one can say for certain what will precisely happen to the scope and requirements of the Corporate Sustainability Reporting Directive (CSRD) in the future.
The Omnibus proposal will be debated and voted on by the EU Parliament (EP) and the EU Council, who act as co-legislators. It is true that the current majority in the Parliament and the voting majority in the Council are more aligned with a simplification agenda, but the positions expressed by Parliamentary groups and Member States vary widely.
Everyone has in mind the example the EU Regulation on Deforestation-free Products, just a few months ago, where a proposal of the Commission to postpone the entry into force of obligations by one year, triggered proposals by the EU Parliament to water down and even scrap the legislation. In the end, there was only a one-year delay in compliance.
In the present case, the Commission took care of proposing a postponement of the CSRD implementation by two years and of the transposition and implementation of the Corporate Sustainability Due Diligence Directive (CS3D) by one year through as a standalone proposal, asking the Parliament and the Council to ‘reach rapid agreement on that postponement’. Such a rapid agreement is much awaited by companies, which need to adapt their compliance efforts accordingly, some of them having to report from next year onward. Also, Member States would need to adapt the new timeframe in their own transposition.
The timeline for adoption of the Omnibus proposal, as well as future obligations remain uncertain. Although pausing CSRD workstream might be tempting in this uncertain landscape, CSRD is still a regulation in force in many Member States. Failure to effectively proceed with the CSRD could still expose companies to legal and reputational risks. In addition, pausing the process might be difficult to reinitiate once final decisions are clarified. It seems preferable to wait a few weeks to gain further clarity from a public policy perspective, while closely monitoring legislative developments.
What are the main changes of the Omnibus proposal?
When looking at the bulk of the Omnibus proposal, most changes are directed at the CS3D. An important change is the suggestion to limit due diligence assessment to Tier 1 (direct suppliers) unless there is plausible information of adverse impacts beyond Tier 1. However, many due diligence obligations that already exist under special regulations are so far not subject to the same limits. Also, CS3D’s unpopularity always came from the fact that it introduces the potential for civil liabilities and fines based on turnover – the Omnibus proposal is dropping these. Such deletion, if effectively implemented, may not have the same impact on every Member State as, for example, the statutory civil liability could still be triggered, although the Commission’s proposals otherwise rely on the maximum harmonization principle, which should ensure that Member States do not create additional obligations when transposing those directives.
Regarding the CSRD, the Commission suggests reducing the scope of application, to align more closely with the scope of the CS3D. The reporting requirements would now only apply to large companies with more than 1000 employees (i.e. companies that have more than 1000 employees and either a turnover above €50 million or a balance sheet above €25 million).
The Omnibus proposal also includes a postponement of the reporting requirements for the companies that are not yet subject to reporting, removes the reasonable assurance standard, and establishes voluntary Taxonomy reporting. The Commission would also revise the European Sustainability Reporting Standards (ESRS). Finally, the value-chain cap established by the CSRD would be extended, in an effort to reduce the trickle-down effect on smaller companies.
What has the Omnibus proposal not changed in CSRD?
Double materiality remains. This is welcomed by companies that have already carried out their resource intensive Double Materiality Exercise.
The ESRS that are in existence remain in force but are said to be subject to simplification in the six months after any Omnibus proposal is approved. In the meantime, the proposal abandoned the adoption of sector-specific ESRS.
Non-EU entities (e.g. large US corporates) with a large presence in the EU will still need to report most likely in 2029, so there is – to date – no change in that timeline. However, there was a change to the thresholds and these non-EU companies are now required to have a €450 million turnover in the EU to be in scope of CSRD. Most global companies working in the EU will still be in scope of 2029 reporting.
The reporting options have remained untouched, and many companies are still working through the various options. Interestingly the Commission European Financial Reporting Advisory Group (EFRAG) is still getting questions on the interpretation of the reporting options, and Omnibus has missed an opportunity to provide further guidance.
CSRD reports will still be subject to limited assurance but will no longer progress to having reasonable assurance as currently foreseen in the CSRD.
What will happen now in Member States?
We are monitoring the situation across various Member States where CSRD is transposed, to see if any of them call for a moratorium on the enforcement of reporting obligations pending further clarity on an amendment of the CSRD at the EU level. In the meantime, companies are faced with a hard choice, as in principle they need to comply with CSRD as currently transposed in those Member States.
Other Member States not having yet fully transposed the CSRD may be putting their transposition efforts on hold pending the outcome of the Omnibus process, which may add to the confusion for companies having in principle to submit reports in various Member States.
Conclusion
Unfortunately, as the legislative process starts, the Omnibus Proposal triggers more uncertainty than operational solutions. This calls for a quick resolution to the decision-making process.
We have taken comfort from the fact that the Commission is trying to align CSRD, CS3D and the EU Taxonomy so potentially disclosures can align more closely with compliance needs and reduce the regulatory burden, whilst keeping the virtuous objectives of those regulations. However, the proposal is not as disruptive as some companies were expecting in that the administrative burden for those companies remaining in scope (large companies) is not fundamentally changed.
It should also be noted that not all companies support the Omnibus proposal. In January 2025, major businesses opposed renegotiations of the agreed texts. They voiced their support for the sustainability due diligence and reporting rules that have “the potential to drive long term resilience and value for European businesses in support of competitive advantage” and called for greater consistency and clarity.
While simplification addresses a genuine need for companies, it must be balanced with the long-term benefits of sustainability, as well as ecological and social transitions that have a key strategic impact, going beyond mere compliance requirements.
GAO’s Updated High-Risk List Still Includes EPA’s Process for Assessing and Controlling Toxic Chemicals
On February 25, 2025, the U.S. Government Accountability Office (GAO) issued a report entitled High-Risk Series: Heightened Attention Could Save Billions More and Improve Government Efficiency and Effectiveness, “highlight[ing] 38 areas across the federal government that are seriously vulnerable to waste, fraud, abuse, and mismanagement or that are in need of transformation.” The category “Seizing Opportunities to Better Protect Public Health and Reduce Risk” lists high-risk areas focused on addressing critical weaknesses in public health efforts, including “ensuring the Environmental Protection Agency [(EPA)] provides more timely reviews of potentially toxic chemicals before they are introduced into commercial production and widespread public use.” GAO’s report includes an overview of “Transforming EPA’s Process for Assessing and Managing Chemical Risks,” noting that EPA “needs to address capacity issues to more effectively assess and manage chemicals posing risks to human health and the environment.” GAO added this issue to its High-Risk List in 2009 because EPA had not developed sufficient risk information to limit exposure to chemicals that may pose a risk to human health and because of issues with the Integrated Risk Information System’s (IRIS) Program. Since then, the Toxic Substances Control Act (TSCA) was amended in 2016 by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, prompting EPA to change its approach to assessing and managing chemicals. Similarly, the Office of Research and Development (ORD) “is more effectively using its portfolio of toxic chemical assessment products — which include IRIS and other chemical assessments like Provisional Peer-Reviewed Toxicity Values — to provide a range of risk assessments informing EPA’s decision-making on the protection of public health and the environment.” GAO states that given the changes to these programs, it is evaluating EPA’s work managing chemical risks through a single combined rating and will no longer assess the IRIS Program and TSCA implementation separately.
GAO’s rating is unchanged since the last update, finding that all five criteria still need attention:
Leadership commitment (partially met): Since 2023, EPA leadership has continued to demonstrate a strong commitment to implementing its TSCA responsibilities, including seeking resources to address outstanding program needs. According to former President Biden’s fiscal year 2025 request, these additional resources are essential for EPA to complete existing chemical risk evaluations within the statutory timeframe and modernize information technology (IT) systems supporting the TSCA program. EPA leadership and officials in ORD overseeing the IRIS Program have not increased resources or examined workforce needs for either the program or across EPA, however.
Capacity (partially met): The Office of Chemical Safety and Pollution Prevention (OCSPP) and IRIS Program officials reported a lack of capacity to carry out their work effectively, but both have taken steps to identify needed resources. According to EPA, among the 1,163 premanufacture notice (PMN) reviews completed between 2017 and 2022, EPA typically made its determination within the initial 90-day review period less than ten percent of the time. According to GAO, EPA specifically completed these reviews in 181 days or more between 53 and 90 percent of the time. GAO states that the OCSPP Assistant Administrator “stated that although EPA has prioritized resources for its new chemicals program, the agency will continue to struggle for as long as the budgetary constraints persist. Moreover, senior managers in OCSPP’s New Chemicals Division [(NCD)] told us the division lacks expertise and resources to assess the sufficiency of its existing evidence-building capacity or to identify actions to maintain or enhance that capacity.”
Action plan (partially met): The IRIS Program and OCSPP’s NCD have conducted strategic planning activities. IRIS Program staff included in their April 2024 resource analysis the Program’s plans for preparing various types of chemical assessments relying on current budget and human resources. NCD drafted a strategic plan in August 2024 that includes five goals related to the New Chemicals Program and identifies metrics and strategies for achieving each goal. GAO notes that it found that NCD “did not follow key practices for effectively assessing, building, or using evidence for its planning activities,” however.
Monitoring (partially met): The IRIS Program’s April 2024 resource analysis included metrics to track the Program’s progress in meeting user needs for chemical assessments. The IRIS Program improved its monitoring processes by implementing changes to the Program’s chemical nomination surveys in 2022 and to the way that survey was carried out. GAO states that it found that OCSPP’s NCD did not follow key practices for effectively assessing, building, or using evidence for its activities, however. It found NCD had not completed foundational planning actions, such as preparing its draft strategic plan in final.
Demonstrated progress (partially met): The IRIS Program has made progress in carrying out its chemical assessment activities. EPA has made progress in implementing its PFAS Strategic Roadmap, as well. OCSPP continues to face challenges in carrying out its responsibility to make determinations on new chemical reviews within the 90-day review period, however. According to GAO, EPA stated that it is committed to improving the efficiency and transparency of its New Chemicals Program and has launched related process improvements, such as finalizing updates to the regulations that govern new chemical reviews.
GAO concludes that attention is needed to resources (budgetary and staffing), strategic planning, and monitoring to make progress in this high-risk area. According to GAO, as of January 2025, three recommendations related to assessing and managing chemical risks remain open, including the following focused on OCSPP’s planning and assessment efforts:
OCSPP should develop a process and timeline to align fully its workforce planning efforts for implementing TSCA chemical review responsibilities with workforce planning principles;
OCSPP’s NCD should, as it prepares its strategic plan in final, address relevant key practices for managing and assessing the New Chemicals Program, including involving stakeholders and identifying resources; and
OCSPP’s NCD should implement a systematic process for aligning its performance management approach with key management and assessment practices.
President Trump’s “America First” Investment Policy Memorandum
On February 21, 2025, President Trump issued a National Security Presidential Memorandum titled “America First Investment Policy,” outlining several key strategies aimed at enhancing U.S. national and economic security through investment policy. This memorandum directs several agencies and executive departments, including the U.S. Department of the Treasury, the U.S. Department of Commerce, the Committee on Foreign Investment in the United States (“CFIUS”), the Federal Bureau of Investigation, and the Securities and Exchange Commission to take specific actions to encourage investment from allies and to protect America’s national security interests from foreign adversaries, with a particular focus on the People’s Republic of China (“PRC”).
The White House released an accompanying fact sheet outlining its reasons for issuing the memorandum.
While the memorandum does not implement any immediately effective regulatory changes, it establishes an important framework and plan of action that investors should anticipate eventually coming into effect.
Encouraging Allied Investment
The memorandum encourages foreign direct investment from allied nations by proposing a “fast-track” review process for investments from specified “allied and partner” countries. This is intended to facilitate investments in advanced technology and other strategic areas while ensuring these investors do not partner with U.S. adversaries. Along these lines, the memorandum provides that restrictions on foreign investors’ access to U.S. assets “will ease in proportion to their verifiable distance and independence from the predatory investment and technology-acquisition practices of the PRC” and other adversaries. The United States will also expedite environmental reviews for investments exceeding one billion dollars.
Restricting Inbound Investment Linked to Adversaries
The United States “will use all necessary legal instruments,” including CFIUS, to block PRC-affiliated investments in strategic sectors like technology, critical infrastructure, healthcare, agriculture, energy, and raw materials. This may result in CFIUS expanding its scrutiny of “covered transactions” with PRC links, potentially lowering thresholds for review and increasing mandatory filings for PRC-linked entities (although certain measures could require congressional action). The memorandum also provides that the Trump administration will consult with Congress regarding expansion of CFIUS review to cover “greenfield” and farmland investments, which are currently beyond CFIUS’s authority to review.
The memorandum also directs CFIUS to cease using mitigation agreements for U.S. investments from foreign adversaries, and describes these agreements as “overly bureaucratic, complex, and open-ended.” Any mitigation agreements “should consist of concrete actions that companies can complete within a specific time, rather than perpetual and expensive compliance obligations.” The memorandum emphasizes that the United States should direct administrative resources toward facilitating investments from key partner countries.
Restricting Outbound Investment Linked to Adversaries
The memorandum also mentions potential new restrictions on U.S. outbound investments to China in sensitive technologies like semiconductors, artificial intelligence (“AI”), biotechnology, quantum, hypersonics, aerospace, advanced manufacturing, and directed energy, and states that the United States will use all necessary legal instruments to further deter U.S. persons from investing in the PRC’s military-industrial sector. It also indicates that sanctions may be imposed under the International Emergency Economic Powers Act to address threats swiftly. The memorandum further states that the Trump administration will consider applying restrictions on various types of outbound investment, including private equity, venture capital, greenfield investments, corporate expansions, and investments in publicly traded securities, from sources such as pension funds, university endowments, and limited partner investors. Last, the memorandum notes that the Trump administration is reviewing Executive Order 14105 on outbound investment, issued by President Biden in August 2023, to assess whether it sufficiently addresses national security threats.
Passive Investments
The President’s memorandum emphasizes that the United States will continue to encourage “passive investments” from all foreign persons and entities, including non-controlling stakes and shares with no voting, board, or other governance rights and that do not confer any managerial influence, substantive decision-making, or access to sensitive technology or information.
Protecting U.S. Investors
Relevant agencies must review existing auditing standards for foreign companies on U.S. exchanges (e.g., under the Holding Foreign Companies Accountable Act), scrutinize variable interest entities often used by foreign adversary firms, and tighten fiduciary standards to exclude adversary-linked companies from pension plans.
Key Takeaways
The “America First Investment Policy” encourages the realignment and prioritization of investment flows between the United States and allied nations, provided that investors have “verifiable distance” from the PRC. As implementation unfolds, investors and businesses will need to navigate this evolving landscape with agility.
For U.S. companies, the memorandum could unlock significant opportunities and challenges. Firms in strategic sectors like semiconductors, AI, and biotechnology may benefit from increased allied investment and expedited project approvals, boosting domestic innovation and jobs. However, a broader range of transactions (such as greenfield transactions) may be subject to CFIUS review, and if a foreign investor has ties to the PRC that CFIUS considers concerning, it could face heightened scrutiny. (Notably, this already takes place, to an extent.)
For foreign investors, the impact hinges on their origin and affiliations. Investors based in allied countries (e.g., Japan, EU member states) without troubling PRC ties stand to gain from the fast-track process, potentially increasing their U.S. market presence if they comply with anti-adversary stipulations. Conversely, PRC-linked firms face heightened barriers. Investors interested in taking advantage of the fast-track process, once implemented, should consider how to best position themselves for fast-track treatment, including through any appropriate adjustments to operations and third-party relationships with China or other foreign adversaries.
House Leadership Announces Priorities for Congressional Review Act Action; No TSCA Rules Are in the Top Ten Targets
Much has been written about the Congressional Review Act (CRA), which Congress can use to repeal qualifying federal agency actions. The CRA was enacted as part of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). According to the Congressional Research Service (CRS), through 2024 the CRA was used to repeal 20 rules, including 16 during President Trump’s first term. The CRA was also used successfully one time in the 107th Congress (2001-2002) under former President G.W. Bush and three times in the 117th Congress (2021-2022) under former President Biden.
CRA actions seek to undo regulatory actions of an administration and are typically only used when there is a new President of a different party than their predecessor and a Congress where both the House of Representatives and Senate are controlled by the same party as that of the new President. Congress has a narrow window to act on a resolution of disapproval, which limits the number of CRA actions that Congress can take.
In the current 119th Congress (2025-2026), 55 resolutions of disapproval have been introduced as of February 25, 2025. Of that number, 16 address rules promulgated by the U.S. Environmental Protection Agency (EPA). Four of these relate to the Toxic Substances Control Act (TSCA), including three (essentially the same) regarding trichloroethylene (TCE). The other resolution of disapproval is regarding decabromodiphenyl ether (decaBDE) and phenol, isopropylated phosphate (3:1) (PIP 3:1), “Revision to the Regulation of Persistent, Bioaccumulative, and Toxic Chemicals Under the Toxic Substances Control Act (TSCA)” (89 Fed. Reg. 91486 (Nov. 19, 2024)). More information about the CRA action on TCE can be found in our January 24, 2025, blog item.
House Majority Leader Steve Scalise (R-LA) announced on February 20, 2025, the top ten rules that House Republicans are prioritizing for CRA action in the coming weeks. Only three rules relate to EPA; none relate to TSCA. Leader Scalise notes in the press release that there is the potential for more rules to be added to the list for CRA action.
In addition to the time constraint that limits Congress’s ability to enact CRA legislation, Congress is facing multiple deadlines on March 14, 2025, the date that government funding expires unless extended. March 14, 2025, also is the date that other programs expire, including the National Flood Insurance Program and Temporary Assistance for Needy Families (TANF), which provides benefits to families in need. See additional details in our February 21, 2025, blog item.
Given these deadlines, Congress will be challenged to equal the mark of 16 successful CRA actions in President Trump’s first term.
TSCA Developments — A Conversation with Richard E. Engler, Ph.D. [Podcast]
This week, I discuss Toxic Substances Control Act (TSCA) developments with my colleague, Dr. Richard E. Engler, Director of Chemistry for B&C and The Acta Group (Acta®), our consulting affiliate. The U.S. Environmental Protection Agency’s (EPA) implementation of the 2016 Frank R. Lautenberg Chemical Safety for the 21st Century Act amendments has been a dynamic, evolving, and unpredictable work in progress for almost nine years. Given the new Administration, we are at a most uncertain time because of the lack of clarity regarding what the new leaders at the Office of Chemical Safety and Pollution Prevention (OCSPP) will do to address new chemical review concerns, risk evaluation under TSCA Section 6, and risk management actions resulting from those evaluations. As listeners know, all final risk management rules are being challenged and the disposition of those cases is the subject of considerable speculation. So also is OCSPP’s consideration of not yet final risk evaluations and how the new Administration intends to interpret TSCA Section 6 in general. There are growing calls for legislative action to remedy some of Lautenberg’s deficits, particularly in the area of new chemicals, another important variable that is destabilizing the status quo. Rich and I discuss these topics and many others.
Commission Releases Its Awaited Omnibus Sustainability Package Triggering a New Legislative Process
The European Commission published on 26 February 2025 its awaited Omnibus simplification package proposing the amendment of several pieces of sustainability and ESG-related legislations adopted under the previous Commission mandate (the EU Green Deal).
The proposals, which were announced by Ursula Von der Leyen in November 2024, include:
A proposal for a Directive amending implementation and transposition deadlines of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD)
A proposal for a Directive amending the scope and requirements of the CSRD and CSDDD
A proposal for a Regulation (not yet published) amending the Carbon Border Adjustment Mechanism (CBAM) Regulation (see available Annex)
A draft amendment to the EU Taxonomy Delegated Acts, open for public consultation until 26 March 2025
The issuance of the proposals triggers the start of a legislative process that is expected to lead to substantial debates and possible dissentions between the European Parliament and the Council.
Corporate Sustainability Reporting Directive
On the CSRD, the proposal noticeably includes a narrower scope of application (beyond 1,000 employees), a postponement of reporting obligation by two years for companies not yet subject to reporting, voluntary taxonomy reporting and reliance on partial alignment (under some conditions). If the double-materiality assessment is retained, the Commission commits to simplified European Sustainability Reporting Standards (ESRS) and to abandon sectoral ESRS.
Corporate Sustainability Due Diligence Directive
The transposition of the CSDDD and the applicability of its obligations are postponed by one year (respectively 2027 and 2028), while the Commission should issue guidance by 2026. The scope of due diligence is proposed to be limited to Tier 1 suppliers, unless there is “plausible” information of adverse impacts beyond in the supply chain.
Importantly, the amended CSDDD would preclude more stringent requirements by Member States (relying on so-called maximum harmonization) leaving it up to them to rule on civil liability and the amount of penalties for breach of CSDDD obligations rather than this being established by the directive.
The choice of a separate proposal addressing the postponement of deadlines may ensure a swift adoption of the proposed postponements, ahead of the application of the concerned reporting and due diligence requirements under the CSRD and CSDDD.
Amendments on the substance of the text on the other hand are expected to face more hurdles, due to important disagreements between the European Parliament and the Council and within their members.
Contentious points notably include:
For the CSRD, the reduction of the scope of the reporting (companies subject to reporting & value chain information reported)
For the CSDDD, restriction of the scope of the due diligence assessment to tier 1 (direct) supplies and removal of civil liability provisions
On the same day, another package on investments was also released with an aim of simplification and increased efficiency
Those proposals open a hybrid momentum where companies need to continue working on complying with their existing or forthcoming obligations under the existing legislations, while factoring the likeliness of important amendments in the coming months. Recent examples of legislative processes at the EU level have shown that the outcome of those processes are uncertain, although the Commission has in the present case sought to anticipate the position of the co-legislators, i.e. the European Parliament and the Council.
Combining the public policy, compliance and legal expertise of our various practice groups on those topics, we can support in helping you understand these changing regulations.
Simplifying The EU CBAM Mechanism – The Commission Releases Its Proposals
As part of the so-called Omnibus 1 package, the European Commission has proposed a regulation (with annex) to amend several parts of the Carbon Border Adjustment Mechanism (CBAM) Regulation, Regulation (EU) 2023/956.
The most significant changes include:
Introduction of a mass-based threshold set at 50 tonnes of net mass, excluding electricity and hydrogen, on a cumulative basis per calendar year, replacing the previous “de minimis” rule, which was set at €150 per consignment. If approved, the new rule would exempt the vast majority of importers (the Commission estimates the 90% of importers) from CBAM obligations, while, according to the Commission’s proposal, still ensuring that more than 99% of embedded emissions remain within the scope of the CBAM.
Delayed obligation to purchase CBAM certificates: Importers will only be required to purchase CBAM certificates starting in 2027 for emissions embedded in goods imported during the year 2026. It is important to note that the financial obligations will still begin in January 2026, as provided by Regulation (EU) 2023/956. However, while the financial obligations will apply, the purchase of certificates will not be mandatory in 2026 and will only become mandatory starting in 2027.
Revised deadline for emissions reporting: The deadline for surrendering via the CBAM registry CBAM certificates would be moved to 31 August 2027, instead of the original 31 May 2027 deadline, as indicated in the initial proposal.
Additionally, the proposal introduces the possibility for authorized CBAM declarants to claim a carbon price paid in a third country, rather than only the country of origin, as was previously required.
Other notable changes include:
Modifications to the emission calculation to facilitate the calculation of embedded emissions for aluminium and steel downstream goods.
The addition of electricity to the list of CBAM goods for which only direct emissions are to be considered in the calculation of embedded emissions.
Finally, the Annexes contain several simplifications to the embedded emission calculation, such as default values or precursors produced in the EU, to facilitate reporting obligations.
It’s important to remember that this is the Commission’s proposal, and not yet an adopted law. The European Parliament and the Council will now need to develop their positions and agree on a final text. Therefore, the provisions outlined above are subject to change in the coming weeks.
We are monitoring these regulatory changes to prepare companies for compliance and can assist in influencing the law-making process where necessary.