Trump Issues Sweeping Executive Order Declaring National Energy Emergency
On 20 January 2025, President Trump issued an Executive Order declaring a National Energy Emergency (Order).1 Under the National Emergencies Act,2 the president may declare a national emergency that allows the government to use statutory authorities that are reserved for times of national emergencies. In other words, a national emergency declaration does not suspend or change the law except as permitted by applicable statutory emergency authorities. The relevant statutory emergency authorities are discussed below.
In summary, the Order directs agencies to utilize their statutory emergency powers to speed up development and authorization of energy projects. Notably, however, the Order defines “energy” as: “crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals.” As such, the Order does not apply to solar, wind, batteries, or other energy sources not contained in the definition of “energy.”
The Order contains six substantive provisions:
Emergency Approvals. The Order directs the heads of executive departments and agencies to identify authorities to facilitate domestic energy production on Federal and other lands, including Federal eminent domain authorities and authorities under the Defense Production Act.3 This provision also directs the Environmental Protection Agency (EPA) to consider issuing emergency fuel waivers to allow the year-round sale of E15 gasoline.4
Expediting the Delivery of Energy Infrastructure. The Order directs agencies to use all relevant lawful emergency and other authorities to: (a) expedite the completion of authorized and appropriate energy projects; (b) facilitate energy production and transportation through the West Coast, Northeast, and Alaska; and (c) report on these activities to the Assistant to the President for Economic Policy.
Emergency Regulations and Nationwide Permits Under the Clean Water Act and Other Statutes Administered by the Army Corps of Engineers. The Order directs the heads of all agencies to identify planned or potential actions to facilitate energy production that may be subject to the Army Corps emergency permitting provisions and use these authorities to facilitate the nation’s energy supply.5 The Order also requires agencies to report on evaluations under this provision and directs the Army Corps and EPA to promptly coordinate with agencies regarding application of Army Corps permitting provisions.
Endangered Species Act (ESA) Emergency Consultation Regulations. The Order directs the heads of all agencies to identify planned or potential actions to facilitate energy production that may be subject to ESA emergency permitting provisions and use these authorities to facilitate the nation’s energy supply.6 The Order also requires agencies to report on evaluations under this provision and directs the US Fish and Wildlife Service and National Marine Fisheries Service to promptly coordinate with agencies regarding application of ESA emergency permitting provisions.
Convening the ESA Committee. The Order directs the ESA Committee to meet quarterly to review applications for exemption from requirements of the ESA (or to identify obstacles to domestic energy infrastructure, if the ESA Committee has no pending applications for review). This provision requires the Secretary of the Interior to determine an applicant’s eligibility for an ESA exemption within 20 days of receipt and the ESA Committee to grant or deny the application within 140 days of the Secretary’s eligibility determination.
Coordinated Infrastructure Assistance. The Order directs the Secretary of Defense, in collaboration with the Secretaries of Interior and Energy, to conduct an assessment of the Department of Defense’s ability to acquire and transport the energy, electricity, or fuels needed to protect the homeland and conduct operations abroad, with a focus on the Northeast and West Coast. This provision notes that the Secretary of the Army may address any of these vulnerabilities under the Army’s authority to undertake military construction projects in the event of a national emergency.7
While the Order clearly expresses the Trump Administration’s policy to encourage development of domestic conventional energy production, the affected agencies must still act within prescribed statutory limits. As such, it will take time to see how future legal challenges will shape the Order’s ultimate impact on the permitting and siting of future conventional energy projects throughout the United States.
Our multidisciplinary teams are advising a wide range of clients across the energy industry on the critical changes announced and soon-to-be-implemented by the new Trump Administration, including policy priorities, impacts to permitting and regulatory processes, environmental reviews, and the impacts of recent Supreme Court decisions like Loper Bright on future agency actions.
Footnotes
1 https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-energy-emergency/
2 See 50 U.S.C. 1601 et seq.
3 See 50 U.S.C. 4501 et seq.
4 As authorized under 42 U.S.C. 7545(c)(4)(C)(ii)(III).
5 As authorized under 33 U.S.C. 1344; 33 U.S.C. 403; 33 U.S.C. 1413.
6 As authorized under 50 C.F.R. 402.05; 16 U.S.C. 1531 et seq.
7 As authorized under 10 U.S.C. § 2808.
Additional Authors: Tim L. Peckinpaugh, Andrew H. Tabler, Varu Chilakamarri
EPA Proposes to Clarify Supplier Notification Requirements for TRI-Listed PFAS
The U.S. Environmental Protection Agency (EPA) proposed on January 17, 2025, to clarify the timeframe for when companies must first notify a customer that one of its mixtures or trade name products contains a per- or polyfluoroalkyl substance (PFAS) listed on the Toxics Release Inventory (TRI). 90 Fed. Reg. 5795. The National Defense Authorization Act for Fiscal Year 2020 (NDAA) adds certain PFAS automatically to the TRI beginning January 1 of the year following specific triggering events. According to EPA’s January 17, 2025, press release, EPA is proposing the rule in response to questions from industry regarding the effective date of supplier notifications for PFAS added to the TRI pursuant to the NDAA. Stakeholders questioned whether the supplier notification requirements for such PFAS begin on January 1, when the PFAS are added to the statutory TRI chemical list, or upon EPA completing a rulemaking to include the added PFAS in the Code of Federal Regulations. EPA states that the proposed rule would clarify that the supplier notification requirement for these PFAS starts immediately when they are added to the TRI (January 1) by explicitly defining PFAS added to the TRI by the NDAA as TRI chemicals. EPA notes that as TRI chemicals, they are immediately covered by the TRI regulation’s supplier notification provision, as well as all other TRI reporting requirements. Supplier notifications must begin with the first shipment of the calendar year in which the chemical addition to the TRI is effective. Comments are due February 18, 2025.
A Look at the Sustainability Aspects of the EU-Mercosur Free Trade Agreement
In December 2024, the EU and the Southern Common Market (Mercosur), which comprises of Argentina, Bolivia, Brazil, Paraguay and Uruguay,concluded negotiations on an EU-Mercosur partnership agreement, with the deal creating a free trade agreement (FTA) between the regions.The EU-Mercosur FTA follows an ongoing EU policy to negotiate sustainability provisions for EU FTAs.
Chapter on Trade and Sustainable Development
The FTA incorporates a chapter on Trade and Sustainable Development (TSD chapter) containing labour and environmental provisions that are strongly based on the existing multilateral frameworks (e.g. conventions of the International Labour Organization (ILO) and multilateral environmental agreements). The TSD chapter, originally announced in 2019, contains limited new and binding sustainability commitments by the EU and Mercosur (the parties).. Nevertheless, it does incorporate certain key provisions, such as a requirement that parties do not weaken, derogate from, fail to effectively enforce or misapply environmental or labour protection to encourage trade or investment.
Importantly, the TSD chapter is excluded from the scope of the general dispute settlement mechanism of the FTA. Instead, the TSD chapter contains its own dispute resolution mechanism. Noticeably, and contrary to the general dispute settlement mechanism, the TSD chapter does not provide for the suspension of concessions in case of breach (i.e. the retaliatory reversal of a benefit arising under the FTA). It therefore appears less easily enforceable than other parts of the FTA.
The Trade and Sustainable Development Annex
The FTA also incorporates a new annex to the TSD chapter, negotiated after 2019, which brings clarifications on the TSD chapter. It also specifically entrusts a sub-committee on trade and sustainable development created by the TSD chapter with monitoring its effective implementation, as well as that of listed multilateral agreements (including the Paris Agreement, conventions on hazardous chemicals and waste, and various ILO conventions and protocols).
The EU and Mercosur commit not to weaken protection afforded in their environmental laws, and to implement measures to prevent deforestation and stabilise or increase forest cover from 2030. They will collaborate in designing initiatives that support sustainable interregional value chains.
Within a year of the entry into force of the FTA, the parties will also establish a list of products from Mercosur countries deemed to contribute to forest and vulnerable system preservation. Such products should be given trade incentives by the EU (possibly including preferential EU market access).
A key aspect of the annex is that the EU recognises that the FTA and actions taken to fulfil it will be favourably considered in its risk classification of countries. As such, Mercosur countries could receive preferential treatment over non-Mercosur countries as part of the implementation of the EU Deforestation Regulation (EUDR).
The annex also provides that documentation, licenses, information and data from certification schemes and traceability and monitoring systems recognised, registered or identified by Mercosur countries must be used as a source by EU authorities to verify compliance of products with EU traceability requirements (this could e.g. be the case for the purposes of the EU Corporate Sustainability Due Diligence Directive (CS3D).
In addition, the FTA incorporates a new provision specifying that remaining part of the United Nations Framework Convention on Climate Change and its Paris Agreement is an “essential element” of the FTA.
A Real Sustainability Commitment?
The EU-Mercosur FTA constitutes a new stage in the evolution of TSD chapters incorporated in EU trade agreements since the conclusion of the EU-Korea FTA in 2009. The precise normative value of sustainability commitments under the EU-Mercosur FTA remains unclear. However, it appears that there could be concrete consequences for the implementation of key EU legislation, such as the EUDR or the CS3D. Overall, the FTA constitutes an opportunity for companies in both blocs, as well as insight into future policies of their governments.
The negotiated text now needs to be ratified by both the EU and Mercosur. The path ahead in the EU seems unclear. Some EU Member States may argue that it constitutes a so-called “mixed agreement” extending beyond the EU’s exclusive competences, for which approval is needed in each of the EU’s 27 Member States (thus rendering ratification more complex). Furthermore, some Member State governments have expressed their outright opposition to the FTA’s adoption.
Other EU FTAs
On 17 January 2025, the European Commission and Mexico reached an agreement to modernize the existing EU-Mexico Global Agreement, including new sustainability provisions. Additionally European Commission president Ursula von der Leyen has also identified sustainability as an objective as part of the recent relaunch of trade negotiations with Malaysia.
Trump Initiates Investigation of Tariffs on Imported Steel and Aluminum Products
In its first day, the Trump Administration issued a package of new executive orders and policy memoranda that impact many sectors of the economy. Included in the package is a release titled the America First Trade Policy, in which the president has initiated a new investigation into potentially imposing new or different tariff restrictions on imported steel and aluminum.
Specifically, President Trump tasked his:
“Assistant to the President for Economic Policy, in consultation with the Secretary of Commerce, the United States Trade Representative, and the Senior Counselor for Trade and Manufacturing, shall review and assess the effectiveness of the exclusions, exemptions, and other import adjustment measures on steel and aluminum under section 1862 of title 19, United States Code, in responding to threats to the national security of the United States, and shall make recommendations based upon the findings of this review.”
Title 19 of the U.S. Code section 1862, also known as Section 232 of the Trade Expansion Act, allows the president to impose tariffs or import restrictions on imports of a given commodity if such imports are deemed to be a threat to national security. Generally, the president tasks the Secretary of Commerce to investigate the impact of imports on national security and report back with that assessment within 270 days. Upon receipt of that report, the president has 90 days to decide whether to adjust imports, impose tariffs or restrictions, or take some other action.
In the current Section 232 context related to steel and aluminum, the president has asked for the initial assessment by April 1, 2025, providing less than 70 days to complete the investigation and for the Secretary to draft and submit the report. The announcement is silent on the process and timing by which the administration will receive comment.
In his first administration, President Trump imposed a 25% tariff on imported steel and a 10% tariff on aluminum imported from most countries. Since then, the U.S. has negotiated agreement tariff rate quotas suspending these tariffs on a set volume of products imported from the EU, Japan and the UK. In addition, several other countries received exceptions for derivatives of steel and aluminum. A list of those affected products can be found here, in the annexes to Proclamation 9980.
The Biden administration continued to utilize Section 232, including a July 2024 finding that imposed a 25% tariff on steel and steel derivative products imported from Mexico if the steel is melted and poured in a country other than Mexico. The same finding also imposed Section 232 tariffs on aluminum and aluminum derivative products imported from Mexico of between 10% and 200%, depending on the country in which the aluminum was smelted.
Exclusions from Section 232 tariffs may be granted if it is determined that a given steel or aluminum article: (1) is not produced in the U.S. in a sufficient and reasonably available amount or of a satisfactory quality, or (2) should be excluded based on specific national security considerations.
This issue will have a significant impact on many firm clients, as the imposition of these tariffs will result in increased costs being passed through to U.S. companies and their customers. We are staying up-to-the-minute on all the latest executive orders and policy memoranda, and will continue to keep you informed of changes.
Publication of the Packaging and Packaging Waste Regulation
Regulation (EU) 2025/40 on packaging and packaging waste (‘PPWR’) was published on 22 January 2025 in the EU official journal. It will apply from 12 August 2026.
The regulation, repealing the existing Directive 94/62/EC on packaging and packaging waste (‘PPWD’) introduces more stringent, circularity-oriented obligations.
Unlike the previous regulation, the PPWR will be directly enforceable in all EU Member States, thereby fostering the harmonization of packaging-related legislation across the EU. However, it remains to be seen whether Member States will utilize some of flexibility offered by the legislation to adjust the requirements to their national ambitions.
Obligations will apply to all packaging placed on the EU market, whether it is manufactured in the EU or in third countries.
The regulation’s requirements further cover the packaging’s full life cycle, from the design stage (e.g. composition requirements, recyclability, recycled content), through the use stage (e.g. reusability, empty space minimization) up until the waste stage. Hence, the regulation will affect the whole packaging supply chain.
While the legislative work on the file has come to an end, the Commission is tasked in the months and years to come with the elaboration of a wide array of acts of execution (i.e. implementing and delegated acts) which will ultimately frame the scope of the regulation’s requirements (e.g. recyclability and reusability criteria, labeling requirements, reuse targets).
The elaboration of each of these acts will constitute a major opportunity for further dialogue between the Commission and stakeholders. Key engagement and advocacy strategies can deliver real results where implementation and compliance may pose challenges to future business operations.
EV Trade Secrets Litigation Series: Tesla and Rivian Resolve High-Stakes Legal Clash Over IP
After getting the green light to proceed to a trial in March of 2025, Tesla and Rivian have reportedly reached an agreement to settle their trade secret dispute out of court. Tesla and Rivian officially filed for dismissals in mid-December and the Court subsequently close the case. This will mark the end of one of the highest-stakes EV battery trade secret battles between two major competitors in the industry.
Tesla filed the trade secrets lawsuit against Rivian, one of Tesla’s main competitors in the EV industry, back in July of 2020. Telsa alleged that Rivian recruited and subsequently employed Tesla employees who divulged Tesla’s proprietary information concerning Tesla’s EV battery technology. According to Tesla, Rivian encouraged these employees to steal Tesla’s trade secrets and confidential documentation and bring that information directly to Rivian.
Over the past four years, Rivian has been fighting to dismiss Tesla’s allegations, arguing that the trade secrets allegations lack merit and Tesla is using the lawsuit to tactically disadvantage its competitor. Rivian’s repeated legal attempts to dismiss Tesla’s allegations, however, have been unsuccessful, culminating in the court’s most recent decision. Rivian’s failed in its attempts to have the lawsuit dismissed, and in August, the California state court determined there was enough evidence to proceed to trial in March 2025. Now, the parties appear to have reached an agreement to settle their dispute prior to trial, however, the details of the potential settlement have not been released to the public.
Tesla has been at the forefront of EV trade secrets litigation, aggressively enforcing its intellectual property rights against competitors. As Proskauer has reported in its EV Trade Secrets Litigation Series, Tesla has filed trade secret misappropriation lawsuits against its equipment supplier, Matthews International Corp., former employees who started a competing company, and this case against Rivian.
Despite a recent trend in increased EV trade secrets litigation, the case between Tesla and Rivian would have been one of the first major EV cases between competitors to proceed to trial. While it appears the trial will no longer be going forward, Tesla’s enforcement efforts underscore the importance for EV companies to be vigilant in their approach to trade secret management. This includes implementing rigorous internal policies to protect sensitive information, regularly training employees on confidentiality obligations, actively monitoring for any signs of intellectual property theft, and being prepared to take immediate and decisive legal action when breaches occur. Proskauer’s extensive legal and technical expertise can help EV companies navigate these complex issues, ensuring they are well-prepared to protect their own intellectual property or defend against potential allegations.
Flying Taxis Brisbane 2032—Olympic Dream or Reality?
Over the next eight years as elite athletes train with their eyes on winning gold at the 2032 Olympic and Paralympic Games in Brisbane, there is another Olympic dream that edges closer to reality—that of flying taxis transporting competitors and spectators around South East Queensland to Olympic venues.
It was hoped that a small fleet of flying taxis would make their Olympic debut at the 2024 Paris Olympics. Unfortunately, flying taxis ‘missed the flight’ in Paris as there were delays in obtaining the requisite air safety certifications from the European Union Aviation Safety Agency (EASA) in time for the Games. Nevertheless, a test flight was carried out on the last day of the 2024 Olympics over Versailles palace, carrying luggage but no people.1
Now air taxi manufacturers have turned their hopes towards the Los Angeles Games in 2028.2 In a positive step forward, in October 2024, the US Federal Aviation Administration (FAA) issued a final rule for operating air taxis and how pilots will be trained to fly them.3 If flying taxis are successfully integrated into the airways for the Los Angeles Games, then in a further four years’ time, they could play an important role at the Brisbane Games.
Flying taxis could assist in managing congestion, with the RACQ Red Spot Congestion Survey 2023 raising concerns about how Queensland roads would cope in 2032.4 Flying taxis could also support Queensland’s tourism industry to allow fast access to regions from Brisbane. The recent Brisbane Olympic and Paralympic Games Arrangements and Other Legislation Amendment Act 2024 inserted a new requirement on the Games Independent Infrastructure and Coordination Authority that the Games deliver legacy benefits for all of Queensland, including regional areas.5
The last few months of 2024 have seen flying taxis progress further towards becoming a reality at the Brisbane Olympics:
In November 2024, it was announced that Archerfield Airport Corporation (AAC) and Wisk Aero had signed a Strategic Alliance Agreement to support electric vertical take-off and landing aircraft (eVTOL) air taxis at Archerfield Airport, Queensland. AAC Executive General Manager Rod Parry said at the time that the airport was uniquely well-placed to service the emerging advanced air mobility (AAM) sector given “Archerfield’s central location only 11 kilometres from Brisbane’s CBD and between three 2032 Olympic and Paralympic zones.” He further noted that “By the time of Brisbane’s Olympic Games, eVTOLs will likely be providing essential emissions-free transport services from vertiports around the region, keeping traffic off our busy roads and ensuring the efficient transfer of personnel to key sites throughout South East Queensland.”6
November 2024 also saw AMSL Aero announce that it had completed the first free flight of Vertiia, its passenger-capable, emission-free, long range eVTOL aircraft. The flight was heralded a landmark as it was the first made by an Australian-designed and built eVTOL.7
In December 2024, it was reported that three Civil Aviation Safety Authority (CASA) senior certification engineers had travelled to Santa Cruz, California, to look at how the FAA and Joby Aviation (Joby) are working together to certify the company’s eVTOL Advanced Air Mobility aircraft, the JAS4-1. Joby has applied for the aircraft to be certified by CASA for use in Australia. CASA is collaborating with other aviation authorities on standardising type certification of AAM aircraft.8
Also in December 2024, CASA issued its updated ‘RPAS and AAM Strategic Regulatory Roadmap’ which charts a path for safely integrating remotely piloted aircraft systems and advanced air mobility into Australian airspace and the future regulatory program.9
Over the last three years since it was announced that Brisbane would host the 2032 Games, a lot of conjecture has focused on the location of the stadium. Whichever venue is ultimately selected, to deliver an Olympic legacy that will be fit for purpose for years to come, the stadium and indeed any new infrastructure built for the Games like new hotels and transport hubs, will need to incorporate vertiports and other facilities to cater for flying taxis as they become a way of life in the future.
There is a complex web of Australian laws that govern the innovative technologies of AAM, including flying taxis. AAM operations fall within the domain of regulation by CASA to ensure aviation safety under the Civil Aviation Safety Act 1988 (Cth) and the Civil Aviation Safety Regulations 1988 (Cth).
Beyond CASA requirements, AAM operations and their vertiports are also governed by a broad but fragmented system of different pieces of legislation ranging from town planning to environmental, privacy, safety, property damage, personal injury and radio-communications.
We have extensive experience in assisting clients comply with CASA requirements and advising on the rapidly evolving legal framework that governs AAM operations.
Footnotes
1 Caroline Petrow-Cohen, ‘Aviation startup seeks to bring air taxis to Los Angeles in time for Olympics’, Los Angeles Times (online, 26 September 2024) https://www.latimes.com/business/story/2024-09-26/startup-seeks-to-bring-air-taxis-to-los-angeles
2 Jack Daleo, ‘Air Taxis Missed Paris Olympics Goal – Could They Soar in LA?’, Flying (12 August 2024) https://www.flyingmag.com/modern/air-taxis-missed-paris-olympics-goal-could-they-soar-in-la/
3 The Associated Press, ‘Flying air taxis move closer to US takeofff with issuing of FAA rule’, AP (online, 23 October 2024) https://apnews.com/article/faa-air-taxis-regulation-electric-aviation-85fd3c8b905a003eff64590afb5da339
4 Rebecca Borg, ‘Making things difficult: New survey finds QLD roads aren’t match fit for 2032 Olympics’, News.com.au (2 July 2023) https://www.news.com.au/national/queensland/news/making-things-difficult-new-survey-finds-qld-roads-arent-match-fit-for-2032-olympics/news-story/d2c63c828589679cb3772156dcb637be
5 S.53AE(b) Brisbane Olympics and Paralympics Games Arrangements Act 2021 (Qld)
6 ‘Archerfield Airport and Wisk Aero Sign Strategic Agreement’, Archerfield Airport News (21 November 2024) https://archerfieldairport.com.au/wp-content/uploads/2024/11/Archerfield-Airport-and-Wisk-Aero-Sign-Strategic-Agreement-1.pdf
7 ‘AMSL Aero Makes Aviation History by Completing Landmark Free Flight of Zero-Emissions Aircraft “Vertiia”, AMSL Aero (18 November 2024) https://www.amslaero.com/news/landmark-free-flight
8 Civil Aviation Safety Authority, ‘Collaboration on advanced air mobility’ (3 December 2024) https://www.linkedin.com/pulse/collaboration-advanced-air-mobility-umytc/?trackingId=WNO26%2BqGI0SQocvEDS44RA%3D%3D
9 Civil Aviation Safety Authority, ‘Our updated RPAS and AMM Strategic Regulatory Roadmap is now available’ (11 December 2024) https://www.linkedin.com/company/civil-aviation-safety-authority-casa-/posts/?feedView=all
Hong Kong’s Security Tokenization Support Initiative – A Subsidy Program
Recently, Hong Kong Monetary Authority (HKMA) initiated accepting applications for Digital Bond Grant Scheme (the Grant Scheme) to financially support digital bond issuers for the duration of three years. The Grant Scheme aims to encourage broader adoption of “tokenization technology” in capital markets and foster the development of digital securities markets in Hong Kong.
“Digital bond” is defined as a bond that utilizes distributed ledger technology (DLT) to digitally represent ownership, which may encompass legal titles and/or beneficial interests in the bond. Each eligible issuer, including its associates, may receive subsidies under the Grant Scheme for a maximum of two digital bond issuances.
The Grant Scheme subsidizes:
up to 50% of the eligible expenses for each digital bond issuances for:
Up to HK$1.25 million (Half Grant) for issuances meeting basic requirements; and
HK$2.5 million (Full Grant) for issuances meeting both basic and additional requirements, which are summarized below.
Eligibility Requirements
Half grant
It is available when the issuances meet the following basic requirements:
It must be issued in Hong Kong with at least half of the lead arrangers recognized as having substantial Hong Kong debt capital market operations; and
The DLT platform’s development and/or operations team must have a substantial Hong Kong presence or use a DLT platform operated by the Central Moneymarkets Unit (CMU).
Full grant
For a Full Grant, in addition to the basic requirements, the issuance must meet additional requirements, including:
Being issued on a DLT platform provided by an independent entity;
Having a minimum issuance size of HK$1 billion equivalent;
Being issued to five or more non-associated investors; and
Being listed on the Stock Exchange of Hong Kong (SEHK) or on licensed virtual asset trading platforms (VATP).
Eligible Expenses
The Grant Scheme subsidizes expenses related to the issuance of digital bonds, including:
Fees to non-associated DLT platform providers;
Fees to local arrangers (non-associated), legal advisors, auditors, and rating agencies;
Listing fees on the SEHK or licensed VATPs; and
CMU lodging and clearing fees.
Additionally, if the digital bond qualifies as a green, social, or sustainability bond, the following grant will be available:
Eligible general bond issuance costs: covered by either the Grant Scheme or Track I of the Green and Sustainable Finance Grant Scheme (GSF Grant Scheme), up to HK$2.5 million, and
External sustainability review costs: covered by Track II of the GSF Grant Scheme, up to HK$800,000 for all pre-issuance and post-issuance external reviews combined.
How To Apply
Potential applicants may start with an “optional pre-application consultation” with the HKMA for preliminary feedback on their eligibility.
Formal applications must be submitted within three months of the bond’s issuance.
Conclusion
As tokenization of securities is expected to be more popular this year and HKMA is providing flexible subsidiary programs with options of Half Grant or Full Grant, foreign companies as well as Hong Kong companies may wish to take advantage of the subsidy programs to issue digital bonds and save their issuance costs.
Has California Imposed Nationwide Price Controls?
On January 7, 2025, Governor Newsom proclaimed a State of Emergency in Los Angeles and Ventura Counties due to the fire in the Pacific Palisades and windstorm. This proclamation triggered price the application of California Penal Code Section 396, which generally prohibits price increases for specified goods and services for specified periods following an emergency proclamation. The statute sets forth prohibitions of varying time periods depending upon the goods, service or activity. This post focuses on just one of these prohibitions.
Section 396(b) declares it unlawful for any person, business, or other entity, to:
Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make that declaration in any county, city, or city and county, and for a period of 30 days following that proclamation or declaration, sell or offer to sell any consumer food items or goods, goods or services used for emergency cleanup, emergency supplies, medical supplies, home heating oil, building materials, housing, transportation, freight, and storage services, or gasoline or other motor fuels for a price of more than 10 percent greater than the price charged by that person for those goods or services immediately prior to the proclamation or declaration of emergency, or prior to a date set in the proclamation or declaration. . . . If the person, contractor, business, or other entity did not charge a price for the goods or services immediately prior to the proclamation or declaration of emergency, it may not charge a price that is more than 50 percent greater than the cost thereof to the vendor as “cost” is defined in Section 17026 of the Business and Professions Code.
On January 12, 2025, Governor Newsom issued an executive order extending this period until January 7, 2026.
The breadth of this prohibition is notable in at least two respects. First, it is not limited to persons who sell goods (“goods” are defined in Civil Code Section 1689(c)). On its face, therefore, it applies to all levels of the supply chain – manufacturer, distributor, and retail. Second, the statute includes no geographic limitations on the locations of the seller, buyer, or the transaction. The statute, for example, does not state that it is unlawful for a business in this statenor does the statute state that it is unlawful to sell or offer to sell in this state (c.f., Cal. Corp. Code § 25008 (defining when an offer or sale is made “in this state”). The legislature, however, did express an intention to cover online sales.
These omissions will undoubtedly lead to questions about the statute’s application. Suppose, for example, a supplier in Illinois raises its prices nationwide by 15%. Is it in violation of the statute? Does the answer change if one of the supplier’s buyers is located in California? What if a buyer is a retail chain with stores in multiple states? Can that retailer raise its prices at its stores outside of California by more than 10%? Online sales raise similar geographic questions.
These and other questions are all the more problematical because the legislature has specified that the statute is to be “liberally construed”. Consequently, they may lead to constitutional and jurisdictional challenges to the statute.
The statute does provide an exception for increased costs:
However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, during the state of emergency or local emergency, and the price is no more than 10 percent greater than the total of the cost to the seller plus the markup customarily applied by that seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency.
However, the statute makes no allowance for price increases agreed upon before the state of emergency. Clearly, the legislature knew how to include such an exception because it did so in Section 396(e) with respect to rental agreements.
Government price controls are not new. In the fourth century C.E., the Emperor Aurelius Valerius Diocletianus (aka Diocletian) attempted to tame inflation by instituting price controls in the Edictum De Pretiis Venalium (Edict Concerning the Prices of Things Sold).
[S]ed quia una est cupido furoris indomiti nullum communis necessitudinis habere dilectum . . .” (But untamed avarice has one desire – to have no care for the common need).
Diocletian’s edict was not effective and resulted, as price controls always do, in widespread shortages. Sellers hoarded their goods until restrictions were removed. R. Kent, The Edict of Diocletian Fixing Maximum Prices, 69 U. Penn. L. Rev. 35, 40 (1920). Just four years later, Diocletian abdicated.
US Treasury and IRS Unveil Proposed Regulations for Commercial EV Tax Credit, Sparking Questions on Recapture Provisions
On January 10, the US Treasury Department (Treasury) and the US Internal Revenue Service (IRS) released proposed regulations under Section 45W of the US Internal Revenue Code of 1986, as amended (the Code), which provides a US federal income tax credit (Commercial EV Credit) for the purchase and placing in service of a qualifying commercial electric vehicle (EV) after 2022 and before 2033. The Inflation Reduction Act of 2022 (P.L. 117-169) added the Commercial EV Credit to the Code along with two other EV tax credits: the current new clean vehicle tax credit under Code Section 30D (originally enacted in 2008) and the previously owned clean vehicle tax credit under Code Section 25E. The proposed regulations, among other things, would provide rules with respect to determining the qualification of an EV for the Commercial EV Credit, the amount of the Commercial EV Credit for a qualifying vehicle, and the situations in which the Commercial EV Credit would be unavailable or subject to recapture. Certain requirements of the Commercial EV Credit under Code Section 45W and under the proposed regulations are discussed more fully below.
The proposed regulations leave many important questions open, especially with respect to the recapture provisions. In the last section below, we discuss these issues and others that will likely become topics for taxpayer comments on the proposed regulations, which are due by March 17.
Commercial EV Credit, Generally
The Commercial EV Credit provides for a US federal income tax credit in an amount equal to the lesser of (x) 15 percent of the taxpayer’s basis in the commercial EV (30 percent in the case of a commercial EV not powered by a gasoline or diesel internal combustion engine (ICE)), or (y) the “incremental cost” of the commercial EV. The “incremental cost” of a “qualified commercial EV” is an amount equal to the excess of the purchase price for the EV over the purchase price of a comparable ICE vehicle in both size and use. The Commercial EV Credit for each qualified commercial EV cannot exceed $7,500 in the case of an EV with a gross vehicle weight rating (GVWR) of less than 14,000 pounds, or $40,000 in the case of a heavier commercial EV.
The Commercial EV Credit is a general business tax credit under Code Section 38. It is available for qualified commercial EVs that are “placed in service” by a taxpayer during the taxable year. The proposed regulations would provide that a qualified commercial EV is considered “placed in service” on the date that the taxpayer takes possession of the EV.
Qualified Commercial EVs
Under Code Section 45W, a “qualified commercial EV” for purposes of the Commercial EV Credit includes a commercial EV that:
is made by a qualified manufacturer that has registered as such with the IRS;
is acquired for use or lease by the taxpayer and not for resale;
either is a motor vehicle for purposes of title II of the Clean Air Act, or is manufactured primarily for use on public streets, roads and highways, or is mobile machinery;
either is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 7 kWh (for a commercial EV with a GVWR of less than 14,000 pounds) or 15 kWh (for a commercial EV with a higher GVWR) and is capable of being recharged from an external source of electricity, or is a motor vehicle that is a new qualified fuel cell motor vehicle; and
is used by the taxpayer in a trade or business in the United States (and, therefore, is subject to an allowance for depreciation).
Incremental Cost
Code Section 45W provides that the “incremental cost” of a qualified commercial EV is an amount equal to the excess of the purchase price for the EV over the purchase price of a comparable ICE vehicle in both size and use. The IRS released safe harbors for determining the incremental cost of commercial EVs in 2023 and 2024 (Notices 2023-9 and 2024-5).
Under the proposed regulations, incremental cost is determined by multiplying the manufacturer’s cost of the components necessary for the powertrain of the qualified commercial EV by the retail price equivalent (RPE) of that EV and then subtracting from that amount the product of the manufacturer’s cost of the powertrain of the comparable ICE vehicle and the RPE of the comparable ICE vehicle. The IRS stated that it intends to determine incremental cost based on the propulsion technologies of the vehicles while eliminating, to the extent possible, any cost differences unrelated to those propulsion technologies. The IRS further stated that it intends to issue RPE safe harbors for different vehicle market segments.
The proposed regulations provide that a vehicle powered solely by a gasoline or diesel ICE is comparable in size and use to a qualified commercial EV if the vehicles have substantially similar characteristics, including GVWRs, number of doors, towing capacity, passenger capacity, cargo capacity, mounted equipment, drivetrain type, overall width, height and ground clearance, and trim level. Where a qualified manufacturer produces an ICE vehicle and a qualified commercial EV of the same model and model year with substantially similar characteristics, such ICE vehicle will be the only comparable vehicle to determine incremental cost. If no comparable ICE vehicle exists for a qualified commercial EV, the proposed regulations would provide that a taxpayer may use the incremental cost safe harbors that the IRS may publish on an annual basis. If a qualified manufacturer discloses its incremental cost calculation for a qualified commercial EV, then taxpayers may rely upon that incremental cost calculation to determine the amount of Commercial EV Credit. In addition, taxpayers may rely on the incremental cost safe harbors in Notices 2023-9 and 2024-5, as any subsequent safe harbors issued by the IRS.
Previously Owned Commercial EVs
Unlike the EV tax credit under Section 30D, the Commercial EV Credit under Code Section 45W is not limited to “new” commercial EVs. The proposed regulations would provide that the incremental cost of a qualified commercial EV previously placed in service by another person is calculated by multiplying the incremental cost of that EV when new by a residual value factor determined by the age of the vehicle and as provided in the residual value factor table in the proposed regulations. The proposed regulations also would provide that the age of such a vehicle is determined by subtracting the vehicle’s model year from the calendar year in which the taxpayer places the vehicle in service as a qualified commercial EV.
Although a previously used commercial EV may be eligible for the Commercial EV Credit under Code Section 45W, the Commercial EV Credit is only allowed once per EV, and the Commercial EV Credit is not allowed for any EV for which an EV tax credit under Code Section 30D was previously allowed. A taxpayer claiming the Commercial EV Credit under Code Section 45W for an EV previously placed in service must maintain evidence in their books and records sufficient to establish that no EV tax credits under Code Sections 30D or 45W have been allowed previously with respect to the EV, and in the case of any prior EV tax credit allowed under Code Section 25E, the amount of such prior credit and the taxpayer must provide such information to the IRS upon request. That evidence may include signed attestations from all previous owners of an EV that a credit was not claimed with respect to that EV.
Ineligibility for the Commercial EV Credit and Recapture
Cancelled Sales. If the sale of a qualified commercial EV is cancelled before the taxpayer places the EV into service, then the proposed regulations would provide that the taxpayer cannot claim the Commercial EV Credit for that EV and a subsequent buyer of that EV will not be required to apply the proposed residual value rules applicable to previously owned commercial EVs in determining the incremental cost of the EV.
Returned Commercial EVs. If a taxpayer returns a qualified commercial EV to the seller within 30 days of placing that EV into service, then the proposed regulations would provide that the taxpayer cannot claim the Commercial EV Credit for the returned EV, the returned EV may still be eligible for the Commercial EV Credit, and a subsequent buyer of that EV must apply the proposed residual value rules applicable to previously-owned commercial EVs in determining the incremental cost of the EV.
Commercial EVs Sold Within 30 Days. If a taxpayer sells a qualified commercial EV within 30 days of placing that EV into service, then the proposed regulations would provide that the taxpayer is treated as having acquired the EV with the intent to resell, the taxpayer cannot claim the Commercial EV Credit for that EV, the EV may still be eligible for the Commercial EV Credit, and a subsequent buyer must apply the proposed residual value rules applicable to previously-owned commercial EVs in determining the incremental cost of the EV.
Commercial EVs With Less Than 100 Percent Business Use. If a taxpayer’s trade or business use of a qualified commercial EV for the taxable year that the taxpayer places the EV into service is less than 100 percent of the taxpayer’s total use of that EV for that taxable year (other than incidental personal use, for example, a stop for lunch on the way between two job sites), including because the EV is sold or otherwise disposed of, then the proposed regulations would provide that the EV is ineligible for the Commercial EV Credit.
General 18-Month Recapture Rule. If a taxpayer ceases to use the qualified commercial EV for 100 percent trade or business use during the 18-month period beginning on the date that the EV is placed in service — including because the EV is sold or otherwise disposed of — then the taxpayer cannot claim the Commercial EV Credit for that EV (and if the taxpayer already claimed the Commercial EV Credit for that EV then the credit is recaptured), the EV may still be eligible for the Commercial EV Credit. A subsequent buyer must apply the proposed residual value rules applicable to previously owned commercial EVs in determining the incremental cost of the EV.
Reporting Requirements
Code Section 45W provides that no Commercial EV Credit is allowed for an EV unless the taxpayer includes the vehicle identification number (VIN) of such EV on the taxpayer’s tax return for the taxable year the EV is placed in service by the taxpayer. To report the VIN, the proposed regulations would provide that the taxpayer must attach to its US federal income tax return for the year the qualified commercial EV is placed in service, a completed IRS Form 8936, Clean Vehicle Credits, along with a completed IRS Form 8936 Schedule A, Clean Vehicle Credit Amount.
The proposed regulations would provide that the Commercial EV Credit may only be claimed by a single taxpayer, and the credit cannot be allocated or prorated if a qualified commercial EV is placed in service by multiple individual taxpayers who do not file a joint tax return. In the case of a qualified commercial EV placed in service by a grantor trust, the Commercial EV Credit is allocated among the trust’s grantors. In the case of a qualified commercial EV placed in service by a partnership or S corporation, the Commercial EV Credit is allocated among the partners or shareholders under the partnership tax rules or S corporation rules, respectively.
Comments and Public Hearing
Written or electronic comments on the proposed regulations under Code Section 45W must be received by March 17, 2025. A public hearing on the proposed regulations is scheduled for April 28, 2025.
Effective Date
The proposed regulations under Code Section 45W will generally apply to qualified commercial EVs placed in service in taxable years ending after the date that final regulations are published in the Federal Register and to taxpayers’ taxable years ending after the date that final regulations are published in the Federal Register.
Further Considerations and Subjects for Taxpayer Comments
Code Section 45W(d)(1) provides that rules similar to the rules of Code Section 30D(f), including the recapture rules under Code Section 30D(f)(5), shall apply for purposes of Code Section 45W. The recapture rules in the proposed regulations deviate from Code Section 30D(f)(5) in several significant ways. For example, the regulations under Code Section 30D provide for the recapture of that credit if a sale is cancelled or if an EV is returned or sold within 30 days. That credit does not otherwise provide for recapture upon a later sale or other disposition of the EV. The proposed regulations, however, would provide for recapture if a commercial EV is not used for 100 percent business use (other than incidental personal use) or if the commercial EV is sold or otherwise disposed of within 18 months of the date of the commercial EV is placed in service. This longer and broader recapture provision raises several questions:
Why is the proposed recapture period 18 months? The notice of proposed rulemaking states that Treasury and the IRS considered longer and shorter periods of time to require as a minimum period for the vehicle to be used in a trade or business. “Based on knowledge of commercial vehicle leasing practices (fleet leasing), the Treasury and the IRS determined that it was appropriate to require a qualified commercial clean vehicle to be used for 100 percent trade or business use for 18 months after it is placed in service.” The drafters’ focus on fleet leasing does not seem to take into account the practices of the large consumer lease market. A recapture period ending after 12 months of business use would be less burdensome for taxpayers and still prevent the “lease for sale” abuses that could occur with a shorter recapture period (e.g., 30 days). A 12-month period coordinates well with depreciation rules and “pull ahead” incentives sometimes offered to consumer lessees.
Why are there no reasonable exceptions from recapture for certain sales or dispositions occurring in fewer than 18 months? When most leased vehicles come off-lease and are returned to the lessor, they are not re-leased and are sold to third parties. The proposed recapture rule does not take into account or provide reasonable exceptions for many common events that result in a consumer lessee returning a vehicle (that will then be sold) in less than 18 months. Casualty losses: EVs are moveable property and often are subject to casualty losses such as accidents and weather events. These can happen at any time and are not indicative of the lessor’s intention to sell the vehicle or to stop using the vehicle for a commercial purpose. Death of the lessee: Most consumer leases are terminated at the lessee’s death. Upon termination of the lease and return of the vehicle, the vehicle generally will be sold. Recapture in this circumstance doesn’t serve the purpose of incentivizing uninterrupted business use of the vehicle. SCRA: The Servicemembers Civil Relief Act allows active duty military members to terminate consumer lease obligations. Upon termination of the lease and return of the vehicle, the vehicle generally will be sold. Recapture in this circumstance doesn’t serve the purpose of incentivizing uninterrupted business use of the vehicle. Similar exceptions were allowed under the regulations issued under former Code Section 30 (Credit for Qualified Electric Vehicles) and apparently were not considered for inclusion in the proposed regulations.
Why are there no exceptions for certain returned commercial EVs? If a lessee leases a vehicle and immediately regrets the transaction, the lessee often may return the vehicle to the lessor within a fairly short period. Sometimes the lease agreement is cancelled then as a matter of courtesy, and other times, it is required to be cancelled under state law (i.e., during a 3-5 day contract rescission period). That vehicle may then go on to be leased again as a “new” vehicle because of its excellent condition and low mileage; however, the proposed regulations would treat that vehicle as a previously owned vehicle for the purpose of determining the Commercial EV Credit.
DOE and EPA Announce $6 Million to Support Advanced Biofuel Development
On January 8, 2025, the U.S. Department of Energy’s (DOE) Bioenergy Technologies Office (BETO) and the U.S. Environmental Protection Agency (EPA) announced $6 million in funding for three projects that will advance biofuel development and support U.S. leadership in energy and emissions innovation. According to BETO, the projects will support research to improve performance and reduce costs of high-impact biofuel production technologies; scale up production systems with industry; and support the U.S bioeconomy. The projects will support DOE’s Sustainable Aviation Fuel (SAF) Grand Challenge goals by developing biofuel technologies that use sustainable biomass and waste feedstocks while also providing industry with new technologies to meet EPA’s Renewable Fuel Standard (RFS) Program requirements to reduce greenhouse gas (GHG) emissions and expand the renewable fuels sector, reducing reliance on imported transportation fuel, heating oil, and jet fuel. Using agricultural residues and wet wastes, BETO notes that the projects also align with its 2023 Billion-Ton Report (BT23), an assessment of domestic renewable carbon resources that estimates that the United States can sustainably provide 134 million tons of agricultural residues and 32 million tons of wet waste in the near-term. The funding will address the development of advanced biofuels through pre-pilot scale-up of integrated biorefinery technologies. The following projects were selected:
Air Company Holdings, Brooklyn, New York — Biogenic Carbon Dioxide to Drop-in Sustainable Aviation Fuel;
Erg Bio Inc., Dublin, California — Demonstration of the ASPIRE Feedstock Flexible Biomass Deconstruction and Conversion Technology at the Pre-pilot Scale; and
Terragia Biofuels, Hanover, New Hampshire — Continuous Conversion of Corn Stover to Ethanol Using Engineered Thermophilic Bacteria.
Handling Insurance Claims in the Wake of the Los Angeles Wildfires
Los Angeles continues to be devastated by wildfires, and our thoughts are with those who have been affected. Tragically, lives have been lost. Homeowners and businesses ordered to evacuate have left behind properties that suffered enormous property damage and loss. At this time, more than 15,000 structures have been burned and counting. Landmarks, places of worship, schools and notable business are among the structures that have been damaged or destroyed. Recent estimates have pegged insured losses in the $20 billion to $30 billion range with some estimates coming in even higher.
Safety is the number one priority. At some point, though, the focus will shift as the fires seize and those affected rebuild and replace their property. There has already been much talk of insurance availability and maximizing insurance recoveries will be a key component of the recovery process. For those who will go through the insurance claims process, we have prepared critical action items to help policyholders navigate the claim process.
Navigating the Insurance Claims Process: Action Items
Obtain a Copy of Your Insurance Policy: Having a complete copy of your insurance policy, including all forms and endorsements (or riders), is critical. If you do not have a copy, request one immediately from the insurer.
Identify Applicable Insurance: Many policies, including homeowners and commercial property policies, cover physical loss or damage. These policies can contain many types of coverages (e.g., business interruption, dwelling, etc.) and it is important to know what coverages may apply and what limits are available as you begin the claim process.
Give Prompt Notice: Notice should be provided to the insurer consistent with the policy’s notice requirements and is crucial to preserving rights under the policy.
Detail Your Claim: When submitting the claim, it generally helps to be as detailed as reasonably possible. If necessary, the claim can always be supplemented with additional information. At the same time, avoid “padding” the claim and be as accurate as possible.
Be Wary of Public Adjusters: Following any significant disaster, unscrupulous individuals prey on vulnerable policyholders by charging exorbitant rates or making promises they can’t keep. Be careful should you decide to retain a public adjuster.
Maintain Documentation: Documentation plays a vital role in ensuring the maximum recovery under the policy. Businesses should keep records of losses suffered. Policyholders should document the property damaged, whether it be through photos, video, receipts, or other record. It is also vital to keep records of communications with the insurance adjuster, including sending follow-up written confirmation following verbal conversations, to help ensure they don’t sidestep their commitments.
Be Friendly, but Assert Your Rights: Policyholders generally have a duty to cooperate and it typically inures to one’s benefit to maintain a cordial relationship with the adjuster. Do not give an overwhelmed adjuster a reason to try to deny the claim or limit the benefits paid out. That being said, be assertive and remain steadfast in your position if you believe you are not getting what you are entitled to—adjusters are prone to making mistakes like anyone else, especially when handling an abundance of claims.