The Pendulum Swings Back (Again) on Prohibition of Incidental Take under the Migratory Bird Treaty Act
The scope of the prohibition of “take” under the Migratory Bird Treaty Act (MBTA or the Act) – and specifically whether the prohibition includes the incidental (unintentional) take of migratory birds – is an issue that has been hotly debated for years. As we reported previously, the federal circuit courts do not agree on the issue, and the federal government’s position has changed several times in recent years, depending on the political party in control of the Executive Branch.
The Trump administration amended the government’s position again on April 11, 2025, when the Acting Solicitor for the US Department of the Interior issued a one-page legal opinion (or “M-Opinion”) repealing opinion M-37065, which was issued during the Biden administration and specified that the MBTA prohibits both intentional and incidental take of migratory birds, and restoring opinion M-37050, which was issued during the first Trump administration and specifies that only intentional take of migratory birds is prohibited. This latest legal opinion cites President Trump’s January 20, 2025 Executive Order on “Unleashing American Energy,” which directed the heads of each federal agency to implement plans “to suspend, revise, or rescind all agency actions identified as unduly burdensome,” and Interior Secretary Doug Burgum’s identification of opinion M-37065 as falling within this directive as reasons for the change of direction.
Enacted over 100 years ago, in 1918, the MBTA is one of the oldest wildlife protection laws in the US. and protects approximately 90 percent of all birds occurring in North America. The Act makes it a crime for any person to “take” a migratory bird. “Take” is defined broadly under the MBTA to include “pursue, hunt, shoot, wound, kill, trap, capture, or collect” migratory birds, or to attempt such activities. 50 C.F.R. § 10.12.
The original purpose of the MBTA was to regulate over-hunting of migratory birds, primarily by commercial enterprises, but the US Fish and Wildlife Service (USFWS or the Service) – the agency with primary responsibility for MBTA enforcement – broadened its interpretation during the 1970s and began prosecuting incidental take of protected birds. Since that time, persons engaging in an activity likely to result in a take of migratory birds, however unintentional and otherwise lawful, have faced the risk of enforcement. Permits for incidental take under the MBTA remain unavailable, as efforts to establish a permitting program under the Biden administration stalled, and the Service withdrew a rule that it was developing in late 2023. This lack of available permitting adds to the long-term uncertainty created by the federal government’s shifting interpretations of the scope of the MBTA take prohibition for those engaged in industries or activities that may result in unintentional and even unavoidable incidental impacts to birds.
Adding to this uncertainty, the federal courts of appeals have split on the scope of the MBTA’s take prohibition. The Fifth and Eighth Circuits have held that the MBTA does not prohibit incidental take, while the Second and Tenth Circuits have held that it does. As a result, the geographic location where an action that could result in take of migratory birds occurs may determine the risk of enforcement under the Act.
While the US Supreme Court has not had occasion to consider the question, the US District Court for the Southern District of New York reviewed the first Trump administration’s opinion M-37050, found it unlawful, and vacated it in 2020. See Natural Res. Def. Council v. US Dep’t of the Interior, 478 F.Supp.3d 469 (S.D.N.Y. 2020). For this reason, the April 11 opinion specifies that the newly restored M-Opinion will be “administrative and binding on the Department, except with respect to actions relying on such opinion that are taken within the jurisdiction of the United States District Court for the Southern District of New York.” In addition, a similar legal challenge to this new opinion, perhaps in a different jurisdiction, is a distinct possibility. Regardless of the outcome of any such legal challenge, the new M-Opinion signals that the Department of the Interior can be expected to exercise its discretion to forego enforcement action for incidental take of migratory birds while the current administration remains in control.
Case Alert: Repetitious Claims in Adjudication
Executive Summary
The South Australian Court of Appeal (Court of Appeal) in Goyder Wind Farm 1 Pty Ltd v GE Renewable Energy Australia Pty Ltd & Ors has delivered a landmark judgment.
The decision provides much needed clarity as to when, and in what circumstances, a contractor may (and may not) repeat claims made under the statutory security of payment (SoP) regime.
While this is a decision of the Court of Appeal and its direct impact will be limited to projects in South Australia (SA), the decision is likely to be applicable under the equivalent SoP regimes which exist in all other Australian states and territories (except the Northern Territory). The other interstate SoP regimes are drafted in similar, and often exactly the same, terms, albeit the various regimes also differ in other respects.
The Court of Appeal considered the following issues:
Whether the principle of Anshun estoppel, whether described in that way or in terms of an abuse of process, applies to subsequent payment claims and adjudication applications under the SoP regime; and
If so, whether that principle, howsoever described, applied to prevent the contractor from making and prosecuting the second payment claim for delay costs in respect of extension of time claims made by the Contractor.
The Court of Appeal held:
There is no scope under the Building and Construction Industry Security of Payment Act 2009 (SA) (SoP Act) for the common law doctrine of issue estoppel or, consequently, the extended doctrine of Anshun estoppel to operate against a payment claim or an application for an adjudication determination under that Act. This is a finding of some significance, given there was some uncertainty about this issue following earlier authorities.
There, however, remains scope for the operation of a doctrine of preclusion under the SA SoP Act, in regard to conduct which may be characterised as an abuse of the processes of that Act. This is again a significant finding and provides useful clarification as to the limits which may be placed on the alleged repetition of claims.
In this case, it was not an abuse of the processes of the SA SoP Act for the Contractor to have included different categories of delay costs in subsequent payment claims. That is, there was no repetition of claims as a matter of fact, despite that the claims arose out of the same delay events. This is also despite the earlier articulation of the delay costs claim in a Notice of Arbitration.
Background
The case relates to a significant wind farm project in country SA. The joint venture Contractor claimed it was entitled to various extensions of time and delay costs attributable to Principal caused access delays. These access delays were alleged to have been caused by delays in obtaining environmental approvals.
The Contractor issued two separate payment claims (in February 2024 and April 2024) in respect of different reference dates. It subsequently made two separate applications for adjudication of those payment claims, both of which resulted in adjudication determinations. The Principal sought to quash the second adjudication determination by way of judicial review, on the basis that the second adjudication application was a reagitation of the first. Both the primary judge and the Court of Appeal found that there was no overlap between the first and second payment claims.
The judge at first instance dismissed the Principal’s application for judicial review. Whilst the judge accepted that the two claims arose from a common cause of delay, it did not follow that delay costs arising from the same delay constituted a singular claim for delay. The Principal appealed the judge’s decision.
Court’s Findings and Commentaries
The Court of Appeal dismissed the appeal. The Court of Appeal, having regard to the provisions of s32 of the SoP Act, did not consider the common law concept of issue estoppel to be applicable. It then followed that an extended doctrine of Anshun estoppel was similarly inapplicable. The Court of Appeal held that this was not to say that there is no scope for the operation of a doctrine of preclusion under the SoP Act; however, this would likely be made pursuant to an application for an abuse of process.
The Court of Appeal went on to consider whether the Contractor’s submission of two payment claims for delay costs amounted to an abuse of process, however, it could not conceive of a situation where nonoverlapping claims for delay costs amounted to an abuse. That is, there would at least need to be factual repetition of claims for there to be an abuse of process, noting, however, that repetition alone may not be sufficient.
Takeaways
For the construction industry, the key takeaways are:
The SoP Acts themselves set certain limits on the making of claims. In particular, under s13(5), only one payment claim may be made in respect of each reference date. Under s22(4), an adjudicator must value work the same as has been previously determined, unless the value has changed. These provisions provide for some amount of “finality” in the adjudication process. The SoP Act, however, concerns progress payments and expressly does not finally determine the parties’ rights and obligations in respect of payment. The SoP Acts are therefore relevantly different to other sorts of proceedings, in which the doctrines of issue and Anshun estoppel apply. The Court of Appeal rejected the imposition of additional limitations on the making of nonoverlapping claims on the basis of these broader legal doctrines.
A contractor may therefore claim nonoverlapping components of a delay costs claim in separate payment claims (so long as the making of such claims is otherwise within the other limitations set by the SoP Act, such as the requirement for claims to be within the six-month period mandated by s13(4)(b)).
Commission Proposes to Provide Flexibility for Manufacturers in Meeting 2025 CO2 Emission Targets for Cars and Vans
As anticipated in the Industrial Action Plan for the European Automotive Sector, the European Commission has proposed a targeted amendment to Regulation (EU) 2019/631 on CO₂ emission performance standards for new vehicles through the submission, on the 1st of April 2025, of a Proposed Regulation “to introduce additional flexibility in the calculation of manufacturers’ compliance with CO₂ emission performance standards for new passenger cars and light commercial vehicles for the calendar years 2025 to 2027.”
Regulation (EU) 2019/631 was recently amended by Regulation (EU) 2023/851, which established new specific CO₂ emissions targets for new passenger cars (category M1) and new light commercial vehicles (category N1) starting in 2025, modifying Point 6.3 of Parts A and B of Annex I of Regulation (EU) 2019/631. Under the current regulatory framework, specific emissions targets, as outlined in Article 4(1)(c) of Regulation (EU) 2019/631, are set annually.
With this new proposal, compliance with these specific emissions targets would instead be measured using an average value over the three-year period (2025, 2026, and 2027), rather than requiring manufacturers to meet distinct annual targets. This aggregated compliance approach would allow manufacturers to offset excessive emissions in one year by outperforming the target in another, providing greater flexibility while still maintaining the 2025 target and keeping the industry on track for future reductions. The automotive manufacturing sector has been a strong advocate for this amendment, citing its importance in ensuring continued investment in the clean transition while managing operational and technological constraints.
Following the proposal by the EU Commission, the file was sent to the EU co-legislators, i.e., the European Parliament and the Council of the European Union, both of which will now proceed to develop their negotiating mandates prior to initiating the interinstitutional negotiations (commonly referred to as the “trilogue”). This process ultimately leads to the adoption of the final legislative text, as agreed upon by both the Council and the Parliament. Upon introducing the proposal, the Commission urged the co-legislators to provide regulatory certainty for the automotive industry and investors.
Recent Federal Developments for April 15, 2025
TSCA/FIFRA/TRI
EPA Releases New TSCA And FIFRA Enforcement Policies: On January 17, 2025, days before the end of President Biden’s term, the U.S. Environmental Protection Agency (EPA) released two new enforcement documents: (1) Expedited Settlement Agreement Pilot Program Under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) (FIFRA Settlement Pilot Program or Pilot Program); and (2) Interim Consolidated Enforcement Response and Penalty Policy (CERPP) for the Toxic Substances Control Act (TSCA) New and Existing Chemicals Program. In that both of these enforcement documents were prepared by the prior Administration, their enduring relevance, like so many other issues at EPA, is unclear. As new leadership populates the ranks at EPA program offices, including the Office of Enforcement and Compliance Assurance, we may learn more. For more information on these enforcement documents, please read our March 21, 2025, memorandum.
EPA Argues For Remand Of Final Rule Amending Risk Evaluation Framework: On March 21, 2025, the U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in a case challenging EPA’s May 3, 2024, final rule amending the procedural framework rule for conducting risk evaluations under TSCA. United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) v. EPA, Consolidated Case No. 24-1151. If you have a couple of hours to spare, listening to the argument is well worth the time. The court was uniquely curious about the litigants’ request for a remand and probed deeply into the difference between a remand and a vacatur. Judge Rao bluntly questioned on what authority the court could rely to remand the case. An answer was not forthcoming, fueling speculation the court will rule on the merits. According to EPA, the court should not rule on the case when the Agency plans to revise and issue a new final rule by April 2026. The court expressed skepticism that EPA can complete a rulemaking so quickly. The court also questioned when TSCA requires that conditions of use (COU) be identified, whether making a single risk determination for a chemical is consistent with TSCA, and whether USW has standing to challenge the May 2024 rule’s provisions regarding personal protective equipment (PPE). More information is available in our March 31, 2025, blog item.
EPA Postpones Effective Date Of Certain Provisions Of TCE Risk Management Rule To June 20, 2025: On April 2, 2025, EPA announced that it is postponing the effectiveness of certain provisions of its December 17, 2024, final risk management rule for trichloroethylene (TCE) until June 20, 2025. 90 Fed. Reg. 14415. EPA states in the April 2, 2025, notice that, in light of pending litigation, it has reconsidered its position from its earlier denial of an administrative stay pending judicial review and determined that justice requires a 90-day postponement of the effective date of the conditions for each of the TSCA Section 6(g) exemptions. According to EPA, petitioners allege that because the interim workplace conditions would require petitioners to reduce TCE exposure levels to the interim existing chemical exposure limit (ECEL) of 0.2 parts per million (ppm), the final rule effectively requires the use of PPE “that cannot feasibly be worn all day, and therefore could cause petitioners to cease operations.” EPA notes that although it does not concede these allegations, “petitioners have raised significant legal challenges and allege significant harms as a result of the workplace conditions required by the final rule’s TSCA section 6(g) exemptions.” EPA states that “[m]oreover, a limited postponement that maintains the status quo for these uses appropriately balances the alleged harm to petitioners and other entities with critical uses against the public interest in the health protections that will be afforded by the broader TCE prohibitions and workplace protections going into effect.”
EPA Announces Changes To Pesticide Data Submission Process For Data Matrix Form: On April 3, 2025, EPA announced changes on how the data matrix form (EPA Form 8570-35) is submitted to EPA, stating this change is an improvement to simplify the process for how companies submit data to EPA as part of a pesticide registration package. EPA states these improvements also will make EPA’s processing of this information more efficient. Companies are required to submit a data matrix form when their pesticide registration packages contain submitted data or cited data from outside sources. Previously, companies submitted two versions of the data matrix form (in either paper or electronic format): one for internal EPA use and one with reference data redacted for public use. EPA states in the interest of reducing burden and, according to EPA, because no information on the data matrix form is confidential business information (CBI), it determined that there is no need for a redacted version and is now only requiring one unredacted version of the form to be submitted for both internal and public use. Additionally, EPA will no longer accept paper submissions of this form and will only accept this information via a web-based portal.
Additional information on the new update is available in EPA’s recently issued Pesticide Registration (PR) Notice 2025-1. Instructions on how to complete and submit the revised forms will be available in the updated Pesticide Registration Manual.
EPA Proposes SNURs For Certain Chemical Substances: EPA proposed significant new use rules (SNUR) on April 4, 2025, for certain chemical substances that were the subject of premanufacture notices (PMN) and are also subject to an Order issued by EPA pursuant to TSCA. 90 Fed. Reg. 14743. The SNURs require persons who intend to manufacture (defined by statute to include import) or process any of these chemical substances for an activity that is proposed as a significant new use by this rulemaking to notify EPA at least 90 days before commencing that activity. The required notification initiates EPA’s evaluation of the conditions of that use for that chemical substance. In addition, the manufacture or processing for the significant new use may not commence until EPA has conducted a review of the required notification, made an appropriate determination regarding that notification, and taken such actions as required by that determination. Comments are due May 5, 2025.
RCRA/CERCLA/CWA/CAA/PHMSA/SDWA
States Take Action To Regulate And Limit PFAS In Industrial Effluent Despite Federal Inaction: On January 21, 2025, EPA’s proposed rule seeking to set effluent limitation guidelines for certain PFAS under the Clean Water Act (CWA) was withdrawn from Office of Management and Budget (OMB) review following President Trump’s Executive Order (EO) implementing a regulatory freeze. Federal action may be halted, but states are beginning to enact legislation that seeks to address PFAS contained in industrial effluent. These laws are currently sparse, with Maryland being the most recent state to establish a robust framework that requires industrial sources to limit PFAS in effluent. A handful of other states have laws establishing monitoring and reporting protocols for PFAS in industrial effluent, and other states have similar frameworks planned for future implementation. While these efforts are not yet widespread, heightened scrutiny of PFAS use suggests that more and more states will seek to monitor and limit PFAS in industrial effluent. For more information, please read our March 28, 2025, memorandum.
EPA Accepts Requests For Presidential Exemption Under CAA Section 112: On March 12, 2025, EPA set up an electronic mailbox to allow the regulated community to request a Presidential Exemption under Section 112(i)(4) of the Clean Air Act (CAA). EPA states that the CAA allows the President to exempt stationary sources of air pollution from compliance with any standard or limitation under Section 112 for up to two years if the technology to implement the standard is not available and it is in the national security interests of the United States to do so. EPA notes that submitting a request does not entitle the submitter to an exemption and that the President will make a decision on the merits. An exemption may be extended for up to two additional years and can be renewed, if appropriate. Requests were due March 31, 2025.
EPA Extends Reporting Deadline Under GHG Reporting Rule For 2024 Data: On March 20, 2025, EPA extended the reporting deadline under the Greenhouse Gas (GHG) Reporting Rule for reporting year 2024 data from March 31, 2025, to May 30, 2025. 90 Fed. Reg. 13085. The rule changes only the reporting deadline for annual GHG reports for reporting year 2024. It does not change the reporting deadline for future years, and it does not change the requirements for what regulated entities must report. The rule was effective March 20, 2025.
EPA And Army Corps Of Engineers Announce WOTUS Listening Sessions And Solicit Stakeholder Feedback: On March 24, 2025, EPA and U.S. Army Corps of Engineers announced that they will hold listening sessions on specific key topic areas to hear interested stakeholders’ perspectives on defining “waters of the United States” (WOTUS) consistent with the Supreme Court’s interpretation of the scope of CWA jurisdiction and how to implement that interpretation as the agencies consider next steps. 90 Fed. Reg. 13428. The listening sessions will be held in-person with a virtual option for states, Tribes, industry and agricultural stakeholders, environmental and conservation stakeholders, and the general public. The agencies seek input from a full spectrum of co-regulators and stakeholders on key topic areas related to the definition of WOTUS in light of Sackett v. EPA regarding “continuous surface connection,” “relatively permanent,” and jurisdictional versus non-jurisdictional ditches. The agencies also seek input on implementation challenges related to those key topic areas. Information on the listening sessions is available on EPA’s website. The agencies are also accepting written recommendations from members of the public via a recommendations docket. Written recommendations are due April 23, 2025.
EPA Issues Partial Stay Of Integrated Iron And Steel Manufacturing Facilities Technology Review: By a letter dated August 14, 2024, and supplemented by a letter dated March 5, 2025, the EPA’s Office of Air and Radiation announced the convening of a proceeding for reconsideration of certain requirements in the final rule “National Emission Standards for Hazardous Air Pollutants: Integrated Iron and Steel Manufacturing Facilities Technology Review,” published on April 3, 2024. On March 31, 2025, EPA issued a final rule that stayed provisions establishing compliance deadlines in 2025 for requirements that were added or revised by the April 3, 2024, final rule for 90 days pending reconsideration. 90 Fed. Reg. 14207. EPA states that it will reconsider the following topics from two petitions pursuant to CAA Section 307(d)(7)(B): work practice standards for unmeasured fugitive and intermittent particulate from unplanned bleeder valve openings; the opacity limit for planned bleeder valve openings; work practice standards for bell leaks; and the opacity limit for slag processing and handling. The final rule was effective March 31, 2025.
EPA Will Review NESHAP For Brick And Structural Clay Products Manufacturing And Clay Ceramics Manufacturing: On March 31, 2025, EPA requested comments for a review pursuant to Section 610 of the Regulatory Flexibility Act of the National Emission Standards for Hazardous Air Pollutants (NESHAP) for Brick and Structural Clay Products Manufacturing; and Clay Ceramics Manufacturing (Brick and Clay 610 Review). 90 Fed. Reg. 14227. EPA states that as part of this review, it will consider comments on the following factors: the continued need for the rule; the nature of complaints or comments received concerning the rule; the complexity of the rule; the extent to which the rule overlaps, duplicates, or conflicts with other federal, state, or local government rules; and the degree to which the technology, economic conditions, or other factors have changed in areas affected by the rule. Comments are due May 30, 2025.
EPA Will Review New Science On Fluoride In Drinking Water: EPA announced on April 7, 2025, that it will “expeditiously review new scientific information on potential health risks of fluoride in drinking water.” According to EPA, the evaluation will inform its decisions on the standard for fluoride under the Safe Drinking Water Act (SDWA). EPA notes that the National Toxicology Program (NTP) released a report in August 2024 concluding with “moderate confidence” that fluoride exposure above 1.5 milligrams per liter is associated with lower intelligence quotient (IQ) in children and that more research is needed to understand better if there are health risks associated with exposure to lower fluoride concentrations. EPA states that it “is committing to conduct a thorough review of these findings and additional peer reviewed studies to prepare an updated health effects assessment for fluoride that will inform any potential revisions to EPA’s fluoride drinking water standard.”
FDA
FDA Provides Summary Data On Cosmetic Product Facility And Product Registration Listing: On March 13, 2025, the U.S. Food and Drug Administration (FDA) updated constituents by providing a tabulated summary of the data collected from its mandatory registration of cosmetic product facilities and listings of cosmetic products under the Modernization of Cosmetics Regulation Act of 2022 (MoCRA). MoCRA requires manufacturers and processors to register their facilities and renew registrations every two years. This requirement includes providing details on the type of cosmetic products manufactured or processed, and a list of ingredients used in those products at each facility. The tabulated list includes the number of domestic and foreign registered facilities as of January 1, 2025. There are 1,800 domestic facilities registered and 7,732 foreign facility registrations, with the highest number of facility registrations being noted in China with 4,260.
FDA Announces Chemical Contaminants Tool: On March 20, 2025, FDA announced the Chemical Contaminants Transparency Tool for foods, which is an online database providing a list of contaminant levels used by FDA to evaluate potential health risks of contaminants in human foods. The tool lists thresholds (e.g., action levels, recommended maximum levels) for contaminants such as heavy metals and pesticides, in foods. The FDA Acting Commissioner stated that “Ideally there would be no contaminants in our food supply, but chemical contaminants may occur in food when they are present in the growing, storage or processing environments.”
FDA Intends To Extend Compliance Date For FSMA Program: On March 20, 2025, FDA announced an intention to extend the compliance date for the Food Safety Modernization Act (FSMA) Food Traceability Rule by 30 months. An excerpt from the announcement states that “FDA intends to use the extended time period to continue the agency’s work with stakeholders, including by participating in cross-sector dialogue to identify solutions to implementation challenges and by continuing to provide technical assistance, tools, and other resources to assist industry with implementation.” Additional details for the Food Traceability Rule are available at the link here.
NANOTECHNOLOGY
EC Scientific Committee Begins Public Consultation On Preliminary Opinion On Hydroxyapatite (Nano): On April 3, 2024, the European Commission’s (EC) Scientific Committee on Consumer Safety (SCCS) began a public consultation on its preliminary opinion on the safety of hydroxyapatite (nano) in oral products. The EC asked SCCS if it considers hydroxyapatite (nano) safe when used in toothpaste up to a maximum concentration of 29.5 percent and in mouthwash up to a maximum concentration of ten percent according to the specifications as reported in the submission, taking into account reasonably foreseeable exposure conditions. According to the preliminary opinion, based on the data provided, SCCS considers hydroxyapatite (nano) safe when used at concentrations up to 29.5 percent in toothpaste, and up to ten percent in mouthwash. Comments on the preliminary opinion are due May 30, 2025. More information is available in our April 9, 2025, blog item.
EUON Publishes Nanopinion On Enhancing The Regulatory Application Of NAMs To Assess Nanomaterial Risks In The Food And Feed Sector: On April 8, 2025, the EU Observatory for Nanomaterials (EUON) published a Nanopinion entitled “A Qualification System to Accelerate Development and Regulatory Implementation of New Approach Methodologies (NAMs).” The authors explain how the NAMs4NANO project, funded by the European Food Safety Authority (EFSA), enhances the regulatory application of NAMs for assessing nanomaterial risks in the food and feed sector. The authors propose to establish three qualification programs, covering NAMs for nanomaterial physicochemical characterization, characterization of nanomaterials in relevant biological fluid and toxicity screening. More information is available in our April 15, 2025, blog item.
PUBLIC POLICY AND REGULATION
What It Means To Be “Essential” In The Federal Workforce: Current news on the government efficiency and reform front concerns the near-miss of a government shutdown (the budget would have lapsed at midnight on March 14, 2025). One reason some cited against allowing a shutdown to occur is how it might encourage or otherwise aid in attempts to eliminate positions if they were deemed “essential” or not. The recent potential shutdown was averted, but the essential/non-essential distinction will have little meaningful impact on workforce planning. Federal agencies have long had plans for a possible shutdown, especially in recent years, distinguishing who or what positions were needed if the budget was not authorized in time. These designations are already made, so if the categorization was useful as some kind of autonomous decision mechanism to make personnel decisions, shutdown or no shutdown would not make a difference. For more thoughts on this issue, please read our March 19, 2025, blog item.
Reorganize EPA? A Very Old Idea: Recent press reports tell of rumors of impactful (some fear catastrophic) budget cuts to EPA. The organization of EPA, and how that organization impacts its effectiveness, has been an issue since its founding. From its earliest days, there have been proposals for making EPA a cabinet-level Department. During the George H.W. Bush Administration, to knit together the programs and statutes more coherently, the EPA policy office developed a comprehensive draft of possible ways to reorganize the underlying environmental legislation and a parallel EPA structure. Most recently, and perhaps most important given the current Administration’s efforts at government reform, the subject of “reorganizing” EPA is included as a chapter in the Project 2025 report. That chapter has led to fears from many that budget and personnel cuts are part of a larger plan to upend the Agency. Recent press reports (like The Washington Post’s March 27, 2025, article, “Internal White House document details layoff plans across U.S. agencies”) indicate that the “plan” for EPA is to cut 10 percent of its workforce — which would seem less than some aggregated possibilities discussed in the Project 2025 chapter but could still include “firing up to 1,115 people” from the Office of Research and Development (ORD) alone. Project 2025 suggests large cuts to regional offices, the elimination of the Integrated Risk Information System (IRIS) program, a “reorganization” of the enforcement office and environmental justice programs, and other changes which would seem to add up to less than a 10 percent cut to the workforce. Attrition rates alone are estimated to be an average of 6 percent, and early retirements accelerated by, among other things, the fear of possible cuts, would likely add up to 10 percent or more.
But the goal of reforming, reorganizing, or reducing the workforce is neither a new idea nor one lacking merit. EPA’s organizational structure has been under review since its inception. In the present moment, however, the lack of a cohesive or consistent approach leaves significant questions not only about the underlying motivation but also about the final impact of the effort. “Less bureaucracy” does not necessarily equate to reduced numbers of staff. And as some government functions will now contend with seemingly disorganized staff reductions, public resentment about “the bureaucracy” may only increase. Something to think about as we wait (and hope) to get our social security check or passport — or pesticide registration — on time. More information is available in our April 2, 2025, blog.
The Clock Is Ticking For Republicans To Use The Congressional Review Act: Congress has approximately one month to use the Congressional Review Act (CRA) to undo qualifying Biden Administration-issued regulations. According to an updated analysis by Bloomberg Government, the estimated period to expedite repeal of Biden Administration rules ends May 8, 2025. This gives Congress approximately four weeks to act on the dozens of pending CRA bills. More information is available in our April 10, 2025, blog item.
LEGISLATIVE
House Bill Would Codify EPA’s Office Of Children’s Health Protection: On March 25, 2025, Representatives Jerrold Nadler (D-NY), John Garamendi (D-CA), and Kathy Castor (D-FL) reintroduced the Children’s Health Protection Act of 2025 (H.R. 2339) that would codify into law the only office within EPA dedicated to children’s health, the Office of Children’s Health Protection (OCHP). According to Nadler’s March 25, 2025, press release, this office would be responsible for rulemaking, policy, enforcement actions, research, and applications of science that focus on prenatal and childhood vulnerabilities, safe chemicals management, and coordination of community-based programs. The bill would make the EPA Children’s Health Protection Advisory Committee a permanent advisory committee. This advisory committee will advise the EPA Administrator in regard to the activities of the Office of Children’s Health Protection, all relevant information regarding regulations, research, and communications related to children’s health, and continue to serve the EPA in protecting children from environmental harm.
Nitrate And Arsenic In Drinking Water Act Reintroduced In The House: On Aril 3, 2025, Representatives David Valadao (R-CA) and Norma Torres (D-CA) reintroduced the Nitrate and Arsenic in Drinking Water Act (H.R. 2656). According to Valadao’s April 3, 2025, press release, the bipartisan bill would:
Amend the SDWA to provide grants for nitrate and arsenic reduction;
Authorize $15 million for fiscal year 2026 and every fiscal year after; and
Direct the EPA Administrator to conduct a review on programs under the SDWA, taking into consideration the diverse needs of underserved populations.
Bipartisan Bill Would Clean Up Marine Debris: On April 3, 2025, Representatives Suzanne Bonamici (D-OR), Amata Coleman Radewagen (R-American Samoa-At Large), and James Moylan (R-Guam-At Large) introduced the Save Our Seas (S.O.S.) 2.0 Amendments Act of 2025 (H.R. 2620) to strengthen efforts to combat marine debris and protect the ocean. According to Bonamici’s April 3, 2025, press release, the bipartisan bill builds upon the success of the Save Our Seas 2.0 Act and provides greater flexibility to the National Oceanic and Atmospheric Administration (NOAA) to work with other stakeholders in marine debris prevention and removal efforts.
MISCELLANEOUS
Canada Releases Final State Of PFAS Report And Proposed Risk Management Approach: On March 5, 2025, Environment and Climate Change Canada (ECCC) announced the availability of its final State of Per- and Polyfluoroalkyl Substances (PFAS) Report (State of PFAS Report) and proposed risk management approach for PFAS, excluding fluoropolymers. The State of PFAS Report concludes that the class of PFAS, excluding fluoropolymers, is harmful to human health and the environment. To address these risks, Canada proposed on March 8, 2025, to add the class of PFAS, excluding fluoropolymers, to Part 2 of Schedule 1 to the Canadian Environmental Protection Act, 1999 (CEPA). ECCC states that it will prioritize the protection of health and the environment while considering factors such as the availability of alternatives. Phase 1, starting in 2025, will address PFAS in firefighting foams to protect better firefighters and the environment. Phase 2 will focus on limiting exposure to PFAS in products that are not needed for the protection of human health, safety, or the environment. ECCC notes that this will include products like cosmetics, food packaging materials, and textiles. ECCC states that it will publish a final decision on the proposed addition of 131 individual PFAS to the National Pollutant Release Inventory (NPRI) with reporting to take place by June 2026 for PFAS releases that occurred during the 2025 calendar year. ECCC states that these data will improve its understanding of how PFAS are used in Canada, help it evaluate possible industrial PFAS contamination, and support efforts to reduce environmental and human exposure to harmful substances. Comments on the proposed risk management approach and the proposed order to add the class of PFAS, excluding fluoropolymers, to CEPA Schedule 1 Part 2 are due May 7, 2025. More information is available in our March 24, 2025, memorandum.
Amazon Files Suit Against CPSC, Challenging CPSC’s Determination That Amazon Is A Distributor: On March 14, 2025, Amazon filed suit against the Consumer Product Safety Commission (CPSC) in the U.S. District Court for the District of Maryland, challenging CPSC’s July 29, 2024, and January 16, 2025, orders determining that Amazon is “a ‘distributor’ of certain products that are defective or fail to meet federal consumer product safety standards, and therefore bears legal responsibility for their recall.” According to CPSC’s January 17, 2025, announcement, “[m]ore than 400,000 products are subject to this Order: specifically, faulty carbon monoxide (CO) detectors, hairdryers without electrocution protection, and children’s sleepwear that violated federal flammability standards.” CPSC determined that the products, listed on Amazon.com and sold by third-party sellers using the Fulfillment by Amazon (FBA) program, pose a “substantial product hazard” under the Consumer Product Safety Act (CPSA). In its complaint, Amazon argues that CPSC “overstepped” the statutory limits of the CPSA by ordering “a wide-ranging recall of products that were manufactured, owned, and sold by third parties,” not Amazon itself. Amazon states that CPSC’s recall order “relies on an unprecedented legal theory that stretches the [CPSA] beyond the breaking point and fails to discharge” CPSC’s obligations under the Administrative Procedure Act (APA). More information is available in our March 20, 2025, blog item.
NSF Announces PFAS-Free Certification For Nonfood Compounds And Food Equipment Materials: On March 24, 2025, NSF announced the release of NSF Certification Guideline 537: PFAS-Free Products for Nonfood Compounds and Food Equipment Materials (NSF 537). The press release states that to be certified, nonfood compound products “must first be registered under NSF’s Nonfood Compounds Guidelines or certified by NSF to ISO 21469, Safety of Machinery, Lubricants with Incidental Product Contact-Hygiene Requirements.” According to the press release, food equipment materials “must be certified to NSF/ANSI Standard 51: Food Equipment Materials to ensure that products meet minimum public health and sanitation requirements.” The press release notes that “PFAS-Free means that the product contains no intentionally added PFAS, no post-consumer recycled material, no intentionally used PFAS additives (PPA, etc.) and the Total Organic Fluorine [(TOF)] is less than 50 ppm.” Certification will require that TOF levels be retested annually. NSF will add certified nonfood compounds to the NSF White Book™ and add certified food equipment materials to the NSF Certified Food Equipment listing.
Petitions Filed To Add Chemicals To List Of Chemical Substances Subject To Superfund Excise Tax: On April 2 and April 3, 2025, the Internal Revenue Service (IRS) announced that petitions have been filed to add the following chemicals to the list of taxable substances:
Polyisobutylene (90 Fed. Reg. 14521): Petition filed by TPC Group, Inc., an exporter of polyisobutylene;
Acrylonitrile butadiene styrene (90 Fed. Reg. 14687): Petition filed by Trinseo LLC, an importer and exporter of acrylonitrile butadiene styrene;
Acrylonitrile-butadiene rubber (90 Fed. Reg. 14684): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of acrylonitrile-butadiene rubber;
Chloroprene rubber (90 Fed. Reg. 14691): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of chloroprene rubber;
Emulsion styrene butadiene rubber (90 Fed. Reg. 14692): Petition filed by Michelin North America, Inc., an importer of emulsion styrene butadiene rubber;
Emulsion styrene-butadiene rubber (90 Fed. Reg. 14686): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of emulsion styrene-butadiene rubber;
Ethylene vinyl acetate (VA < 50 percent) (90 Fed. Reg. 14688): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of ethylene vinyl acetate (VA < 50 percent);
Ethylene vinyl acetate (VA ≥ 50%) (90 Fed. Reg. 14683): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of ethylene vinyl acetate (VA ≥ 50 percent);
Ethylene-propylene-ethylidene norbornene rubber (90 Fed. Reg. 14695): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of ethylene-propylene-ethylidene norbornene rubber;
Hydrogenated acrylonitrile-butadiene rubber (90 Fed. Reg. 14686): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of hydrogenated acrylonitrile-butadiene rubber;
Hydrogenated acrylonitrile-butadiene rubber (90 Fed. Reg. 14685): Petition filed by Zeon Chemicals L.P., an importer and exporter of hydrogenated acrylonitrile-butadiene rubber;
Isobutene-isoprene rubber (90 Fed. Reg. 14689): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of isobutene-isoprene rubber;
Solution styrene-butadiene rubber (90 Fed. Reg. 14690): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of solution styrene-butadiene rubber;
Bromo-isobutene-isoprene rubber (90 Fed. Reg. 14694): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of bromo-isobutene-isoprene rubber;
Poly(ethylene-propylene) rubber (90 Fed. Reg. 14690): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of poly(ethylene-propylene) rubber;
Solution styrene-butadiene rubber (90 Fed. Reg. 14693): Petition filed by Michelin North America, Inc., an importer of solution styrene-butadiene rubber; and
Styrene-acrylonitrile (90 Fed. Reg. 14693): Petition filed by Trinseo LLC, an importer and exporter of styrene-acrylonitrile.
Comments on the petitions are due June 2, 2025.
Maine Board Approves Motion To Adopt Rule On PFAS In Products; CUU Proposals For Products Prohibited As Of January 1, 2026, Are Due June 1, 2025: As reported in our April 1, 2025, blog item, the Maine Board of Environmental Protection (MBEP) was scheduled to consider the Maine Department of Environmental Protection’s (MDEP) December 2024 proposed rule regarding products containing PFAS during its April 7, 2025, meeting. As reported in our December 31, 2024, memorandum, on December 20, 2024, MDEP published a proposed rule that would establish criteria for currently unavoidable uses (CUU) of intentionally added PFAS in products and implement sales prohibitions and notification requirements for products containing intentionally added PFAS but determined to be a CUU. During the April 7, 2025, meeting, MBEP unanimously approved a motion to adopt the Chapter 90 rule, the Chapter 90 basis statement, and MDEP’s response to comments “as presented and with correction of minor typographical errors, and the addition of ‘Maine Department of Transportation’ at section 4(A)(8),” according to MBEP’s draft meeting minutes. Under the approved rule, CUU requests for products scheduled to be prohibited January 1, 2026, are due June 1, 2025. The products containing intentionally added PFAS that are scheduled to be prohibited include:
Cleaning products;
Cookware;
Cosmetics;
Dental floss;
Juvenile products;
Menstruation products;
Textile articles. The prohibition does not include:
Outdoor apparel for severe wet conditions; or
A textile article that is included in or a component part of a watercraft, aircraft or motor vehicle, including an off-highway vehicle;
Ski wax; or
Upholstered furniture.
The January 1, 2026, prohibition applies to any of the products listed that do not contain intentionally added PFAS but that are sold, offered for sale, or distributed for sale in a fluorinated container or container that otherwise contains intentionally added PFAS. More information is available in our April 11, 2025, blog item.
OMB RFI Seeks Proposals To Rescind Or Replace Regulations: On April 11, 2025, OMB published a request for information (RFI) to solicit ideas for deregulation. 90 Fed. Reg. 15481. OMB seeks proposals to rescind or replace regulations “that stifle American businesses and American ingenuity,” including regulations “that are unnecessary, unlawful, unduly burdensome, or unsound.” According to the notice, “comments should address the background of the rule and the reasons for the proposed rescission, with particular attention to regulations that are inconsistent with statutory text or the Constitution, where costs exceed benefits, where the regulation is outdated or unnecessary, or where regulation is burdening American businesses in unforeseen ways.” Comments are due May 12, 2025. Earlier in the week, on April 9, 2025, President Trump issued the following memorandum and EOs regarding federal regulations:
Presidential Memorandum Regarding Directing the Repeal of Unlawful Regulations;
EO on Reducing Anti-Competitive Regulatory Barriers; and
EO on Zero-Based Regulatory Budgeting to Unleash American Energy.
More information is available in our April 14, 2025, blog item.
Brussels Regulatory Brief: March 2025
Antitrust and Competition
European Commission Launches Evaluation of the Geo-Blocking Regulation
On 11 February 2025, the European Commission launched a call for evidence to seek stakeholders’ views on the Geo-Blocking Regulation (EU) 2018/302 to assess its effectiveness. The Geo-Blocking Regulation prohibits geography-based restrictions that limit online shopping and cross-border sales within the European Union.
Financial Affairs
Commission Proposes to Amend CSDR and Shorten Settlement Cycle, ESMA Consults on Technical Amendments to Settlement Standards
The Commission is proposing to shorten the settlement cycle under the Central Securities Depository Regulation (CSDR) while the European Securities and Market Authority (ESMA) is consulting on technical amendments to standards in relation to settlement discipline.
Omnibus Simplification Package: Parliament and Council Start Internal Discussions
Member States and Members of the European Parliament (MEPs) started examining the simplification proposal put forward by the European Commission (Commission), outlining next steps and indicative timeline for its adoption.
Other
European Commission Proposes Simplification CBAM Ahead of Full Entry into Force
The European Commission has proposed a series of measures to simplify the implementation of the EU Carbon Border Adjustment Mechanism (CBAM), which is set to take full effect in January 2026.
ANTITRUST AND COMPETITION
European Commission Launches Evaluation of the Geo-Blocking Regulation
On 11 February 2025, the European Commission (Commission) launched a call for evidence on the Geo-Blocking Regulation (EU) 2018/302 (Geo-Blocking Regulation) aimed at evaluating its effectiveness. Geo-blocking refers to the practice used by online sellers to restrict online cross-border sales based on nationality, residence, or place of establishment. This type of conduct can be implemented in different forms, such as blocking access to websites, redirecting users to country-specific sites, or applying different prices and conditions based on the user’s location.
The Geo-Blocking Regulation, which entered into force on 3 December 2018, lays down provisions that aim at preventing these practices. It implements the “shop-like-a-local” principle, under which customers from other Member States should be able to purchase under the same conditions as those applied to domestic customers. Thus, the Geo-Blocking Regulation aims at eliminating unjustified geo-blocking and other forms of discrimination based on nationality, place of residence, or establishment within the European Union (EU).
The call for evidence seeks feedback from stakeholders, including consumers, businesses, and national authorities, to assess whether the Geo-Blocking Regulation has met its objectives and to identify any remaining barriers to cross-border trade or whether further measures are needed to enhance its effectiveness. In particular, the evaluation will cover issues raised by stakeholders, such as territorial supply constraints and cross-border availability of (and access to) copyright-protected content. The call for evidence is based on the review clause set forth in Article 9 of the Geo-Blocking Regulation, which requires the Commission to report on its evaluation to the European Parliament, the Council of the EU, and the European Economic and Social Committee. The scope of the evaluation includes the period running from 3 December 2018 to 31 December 2024 and will cover the entire European Economic Area (EEA) which comprises the EU 27 Member States and Liechtenstein, Iceland, and Norway.
The evaluation should help the Commission to determine whether further measures are needed to address perceived barriers and strengthen cross-border trade in the EU. Therefore, based on the feedback received during the call for evidence, the Commission may consider changes to the current Geo-Blocking Regulation to enhance consumer protection, promote cross-border trade, and foster a more integrated and dynamic EU economy. Stakeholders were invited to provide feedback until 11 March 2025. Subsequently, the Commission will launch a public consultation consisting in the form of a questionnaire.
Geo-blocking is also relevant from a competition law enforcement perspective. In 2021, the Commission imposed a fine on Valve and five video game publishers of €7.8 million for bilaterally agreeing to geo-block video games within certain EEA Member States in breach of Article 101 of the Treaty on the Functioning of the European Union. The Commission found that the agreement between Valve and each publisher inadmissibly partitioned the EEA market. Likewise, in May 2024, the Commission fined one of the world’s largest producers of chocolate and biscuit products €337.5 million for engaging in anticompetitive agreements or concerted practices aimed at restricting cross-border trade of various chocolate, biscuit, and coffee products.
The continued focus on geo-blocking practices confirms the Commission’s strong stance against any perceived restrictions to the detriment of the EU single market.
FINANCIAL AFFAIRS
Commission Proposes to Amend CSDR and Shorten Settlement Cycle, ESMA Consults on Technical Amendments to Settlement Standards
On 12 February, the Commission adopted a proposal to amend the Central Securities Depositories Regulation (CSDR) to shorten the securities settlement cycle from two business days to one.
This initiative builds on the European Securities and Markets Authority (ESMA) report, which assessed the feasibility, impact, and implementation roadmap for the transition to a shorter settlement cycle. The Commission’s proposal amends Article 5 of the CSDR, mandating that transactions in transferable securities be settled no later than the first business day after trading. Following ESMA’s recommendations, the Commission proposes that the new cycle take effect on 11 October 2027. The proposal is now under review by the European Parliament’s Economic and Monetary Affairs Committee (ECON), with Johan Van Overtveldt (European Conservatives and Reformists Group (ECR), Belgium) serving as leading rapporteur, and by Member States at the Council of the EU. Once both institutions agree on their positions, negotiations will take place with the Commission to finalize the legislative text.
In a related development, on 13 February, ESMA launched a public consultation on amendments to the regulatory technical standards on settlement discipline, addressing key operational challenges in settlement efficiency. The amendments propose stricter requirements for timely trade confirmations, automation through standardized electronic messaging formats, and improved reporting mechanisms for settlement failures. ESMA welcomes feedback and comments on the amendments by 14 April 2025.
Omnibus Simplification Package: Parliament and Council Start Internal Discussions
On 10 and 11 March, Members of the European Parliament (MEPs) and Member States representatives at the Council of the EU started internal discussions on the proposed Omnibus simplification package, which aims to (i) postpone the entry into force of the requirements under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D)—renamed “Omnibus I,” and (ii) simplify sustainability requirements under CSRD, CS3D, the Taxonomy Regulation and specific provisions of the Carbon Border Adjustment Mechanism (CBAM)—renamed “Omnibus II.”
European Parliament
During a plenary session on 10 March, MEPs held an initial exchange of views on the package highlighting the positioning of each party on the proposal. MEPs from the European People’s Party (EPP) strongly support the package and advocate for a swift adoption of the first part of the proposal postponing the application of CS3D and CSRD. For that, on 3 April, MEPs approved a request for urgent procedure introduced by the EPP.
MEPs from Renew Europe Group (Renew) expressed only limited support for the Omnibus II proposal and, while they recognize the need for simplification to foster economic growth, they emphasized the importance of ensuring that the rules remain effective through negotiations. Representatives from the Socialists & Democrats and the Greens largely opposed the proposal, expressing strong concerns about the potential dilution of previously agreed requirements. Other MEPs from the far-right ECR Patriots for Europe and Europe of Sovereign Nations supported the package but called for further deregulation, while representatives from The Left were entirely opposed to the proposal and rejected the Commission’s approach to simplification in this context.
In a related development, on 19 March, the European Parliament Committee on Legal Affairs, the Committee responsible for the Omnibus package, appointed MEP Jörgen Warborn (EPP, Sweden) as lead negotiator for the Omnibus II proposal. Pascal Canfin (France) has been appointed as shadow rapporteur for Renew, while other political groups are expected to shortly communicate shadow rapporteurs involved on the file. Other committees involved (Foreign Affairs; International Trade; ECON; Employment and Social Affairs; and Environment, Climate and Food Safety) are expected to also announce whether they will provide an opinion on the file. The next meeting on this part of the proposal has been set for 23 April 2025.
Council of the EU
On 11 March, Member States in the Economic and Financial Affairs configuration of the Council of the EU also discussed the proposal. All governments showed strong support for the postponement of the rules and welcomed the Commission’s approach in this area. However, not all Member States agreed on the substantial amendments introduced to CSRD and CS3D; France opposes eliminating civil liability rules, while the Czech Republic, Italy, and Hungary push for deeper deregulation to boost competitiveness. Trade and business ministers further examined the package on 12 March during a Competitiveness Council meeting, showing general support for the amendments put forward. While it seems that an agreement will be quickly reached for the Omnibus I, Member States will need to further negotiate on the substantial amendments introduced by the second part of the proposal (so called “Omnibus II”).
Timeline
For both proposals, Member States and MEPs will need to negotiate the final content of the directives through interinstitutional negotiations. The Omnibus I will likely be adopted in the next three to six months, with transposition into national law by end of this year, meaning that the postponement will presumably happen before an additional wave of companies would have been obliged under the directives in their current form. The substantial amendments introduced by Omnibus II will likely involve lengthier negotiations within the Council of the EU and the Parliament.
OTHER
Commission Proposes Simplification of CBAM Ahead of Full Entry Into Force
CBAM, the world’s first carbon border tariff, is set to come into full force in January next year. This means that importers of goods covered by CBAM legislation (iron and steel, cement, fertilizers, aluminum, electricity, and hydrogen) will be required to declare the emissions embedded in their imports and surrender corresponding certificates, and be priced based on the EU Emissions Trading System (ETS). However, even before CBAM is fully implemented, the Commission has already proposed changes to the legislation in response to economic competitiveness and geopolitical challenges.
As part of the Omnibus simplification package announced on 26 February, the Commission proposed several changes to streamline CBAM implementation.
Firstly, the Commission aims to simplify CBAM requirements for small importers, primarily small and medium-sized enterprises and individuals, by introducing a new CBAM de minimis threshold exemption of 50 tons per shipment. This will exempt over 182,000 or 90% of importers from CBAM obligations, while still covering over 99% of emissions in scope.
Secondly, for importers that remain within the scope of CBAM, the proposed changes aim to simplify compliance with its obligations. Specifically, the proposal simplifies the calculation of embedded emissions for certain goods, clarifies the rules for emission verification, and streamlines the process for calculating the financial liability of authorized CBAM declarants.
These changes will now have to be approved by the European Parliament and EU Member States before they come into force.
Additionally, a comprehensive review of CBAM is expected later this year to assess the potential extension of the mechanism to additional ETS sectors (potentially including aviation and maritime shipping), downstream goods, and indirect emissions. As part of this review, the Commission will also explore measures to support exporters of CBAM-covered products facing carbon leakage risks. A legislative proposal is anticipated to follow in early 2026.
Covadonga Corell Perez de Rada, Simas Gerdvila, Antoine de Rohan Chabot, Kathleen Keating, Lena Sandberg, and Sara Rayon Gonzalez contributed to his article.
President Trump Issues Executive Order on “Strengthening the Reliability and Security of the United States Electric Grid”
On April 8, President Donald Trump issued a series of orders and a proclamation (collectively the “orders”) intended to revitalize US coal production and the industrial use of coal, including for power generation. Among them was an Executive Order on “Strengthening the Reliability and Security of the United States Electric Grid”[1] directing the Secretary of Energy to take a series of steps intended to enhance electric grid reliability and security.
The order states “It is the policy of the United States to ensure the reliability, resilience, and security of the electric power grid,” and that the “electric grid must utilize all available power generation resources, particularly those secure, redundant fuel supplies that are capable of extended operations” to assure adequate generation, meet growing demand, and address the national energy emergency declared on January 20.[2]
Its directives to the Secretary include the following:
“[T]o the maximum extent permitted by law, streamline, systematize, and expedite the Department of Energy’s processes for issuing orders under section 202(c) of the Federal Power Act” during periods when a grid operator “forecasts a temporary interruption of electric supply.” FPA section 202(c) authorizes the Secretary, whenever he determines that an emergency exists “by reason of a sudden increase in the demand for electric energy, or a shortage of electric energy or of facilities for the generation or transmission of electric energy, or of fuel or water for generating facilities, or other causes . . . to require by order such temporary connections of facilities and such generation, delivery, interchange, or transmission of electric energy as in its judgment will best meet the emergency and serve the public interest.” It has been used sparingly during its history and almost always in response to requests by utilities or states to address short-term emergency conditions. Section 202(c) was substantially amended by Congress in 2015, ostensibly to provide liability protection for entities ordered to operate, but those changes also made use of the authority more cumbersome.
Within 30 days of the Executive Order, “develop a uniform methodology for analyzing current and anticipated reserve margins for all regions of the bulk power system regulated by the Federal Energy Regulatory Commission,” and upon doing so, “identify current and anticipated regions with reserve margins below acceptable thresholds.”
“[E]stablish a process by which the methodology . . . and any analysis and results it produces, are assessed on a regular basis, and a protocol to identify which generation resources within a region are critical to system reliability.” The protocol must include all mechanisms available to retain generation identified as critical.
“[P]revent, as the Secretary of Energy deems appropriate and consistent with applicable law, including section 202 of the Federal Power Act, an identified generation resource in excess of 50 megawatts of nameplate capacity from leaving the bulk-power system or converting the source of fuel of such generation resource if such conversion would result in a net reduction in accredited generating capacity,” as determined under the reserve margin methodology developed as a result of the Order.
To date, the Department of Energy (DOE) has not issued a public notice regarding revisions to its FPA section 202(c) procedures or the development of a uniform reserve margin methodology. DOE’s existing emergency authorities web page has also not been updated. Trade press reports indicate that the North American Electricity Reliability Corporation (NERC) staff is in contact with DOE regarding the new methodology. However, it is unclear to what extent DOE will consider industry input on the new methodology by the 30-day or 90-day deadlines.
By its terms, the Executive Order applies to coal-fired generation and was issued alongside other orders that focused exclusively on promoting coal and coal-fired generation. However, other resource types seemingly could be subject to it.
The Executive Order raises various legal questions, several of which might be tested in litigation. These include:
Whether the Secretary’s authority under FPA section 202(c) is broad enough to support the actions envisioned by the Executive Order or whether section 202(c) may be used only for temporary emergencies when supply is, or is in imminent danger of being, insufficient to meet demand.[4]
Whether DOE has legal authority to prohibit resources from retiring or from changing their fuel source for indefinite periods.
Whether the Executive Order is in conflict with the overall structure of the FPA, which generally reserves regulatory authority over electric generation to the States.
Whether there will be legal conflicts between DOE’s reserve margin methodology and NERC and Federal Energy Regulatory Commission [FERC]-approved resource adequacy, capacity accreditation, and “reliability must run” rules.
[1] Executive Order No. 14262, 90 FR 15521 (April 14, 2025).
[2] “Declaring a National Energy Emergency,” Executive Order No. 14156, 90 FR 8433 (Jan. 29, 2025).
[3] Robb: NERC Working with DOE on Energy Orders, RTO Insider (April 15, 2025).
[4] In Richmond Power & Light v. FERC, 574 F.2d 610, 617 (D.C. Cir. 1977), the court suggested that section 202(c) “speaks of ‘temporary emergencies,’ epitomized by wartime disturbances, and is aimed at situations in which demand for electricity exceeds supply and not at those in which supply is adequate[.]”
Regulatory Update and Recent SEC Actions: April 2025
Recent SEC Administration Changes
Senate Confirms Paul Atkins as SEC Chairman
The Senate, on April 9, 2025, confirmed Paul Atkins as the Chairman of the Securities and Exchange Commission (“SEC”). Atkins takes over the Chairman role from the current Acting Chair, Mark T. Uyeda, who was appointed in January 2025 to serve in the interim until Atkins was confirmed. Atkins previously served as a Commissioner from 2002 to 2008, and most recently served as CEO and founder of risk-management firm Patomak Global Partners. He also served as co-chairman of the Digital Chamber’s Token Alliance, where he led industry efforts to develop best practices for digital asset issuances and trading platforms.
Recent SEC Staff Departures
In addition to the departures of SEC Chairman Gary Gensler and Commissioner Jaime Lizarriga on January 20 and January 17, respectively:
Paul Munter, Chief Accountant;
Jessica Wachter, Chief Economist and Director of the Division of Economic and Risk Analysis;
Sanjay Wadhwa, Acting Director of the Division of Enforcement;
Scott Schneider, Director of the Office of Public Affairs;
Amanda Fischer, Chief of Staff;
YJ Fischer, Director of the Office of International Affairs; and
Megan Barbero, General Counsel.
SEC Restructuring and Hiring Freeze
The Trump administration, on January 20, 2025, issued a memorandum that implemented a federal hiring freeze across the executive branch, including the SEC. Further, the SEC plans to restructure the Enforcement and Exams divisions by removing the top leaders at its 10 regional offices across the country and replace them with deputy directors, Katherine Zoladz, Nekia Jones, and Antonia Apps, who will oversee one of three regions–West, Southeast, and Northeast. There will also be a deputy director for specialized units. Additionally, the SEC announced the closures of Los Angeles and Philadelphia offices and a review of the lease for the SEC’s Chicago Regional Office.
SEC Rulemaking
SEC Issues Temporary Exemption from Exchange Act Rule 13f-2 and Related Form SHO
The SEC announced on February 7, 2025, it was providing a temporary exemption from compliance with Rule 13f-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and from reporting on Form SHO, which generally requires certain institutional investment managers to report short positions and daily trading activity for equity securities exceeding certain thresholds. The effective date for Rule 13f-2 and Form SHO was January 2, 2024, and the compliance date for such rule and form was January 2, 2025, with initial Form SHO filings originally due by February 14, 2025. The exemption, for certain institutional investment managers that meet or exceed certain specified thresholds, pushes the due date for the initial Form SHO reports to February 17, 2026.
SEC Announces Exemption from Reporting of Certain Personally Identifiable Information to Consolidation Audit Trail
The SEC, on February 10, 2025, announced it was providing an exemption from the requirement to report certain personally identifiable information (“PII”) – names, addresses, and years of birth – to the Consolidated Audit Trail (“CAT”) for natural persons. CAT was established by the SEC to track trading activity for National Market System securities including stocks and options, allowing regulators to monitor trading activity. The SEC has justified the exemption because the inclusion of this information may allow bad actors to impersonate a customer or broker-dealer and gain access to a customer’s account.
SEC Extends Compliance Dates for Funds Name Rule Amendment and Updates FAQ
The SEC announced, on March 14, 2025, a six-month extension of the compliance dates for amendments adopted in September 2023 to the “Names Rule” (Rule 35d-1) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The compliance date for larger fund groups is extended from December 11, 2025 to June 11, 2026, and the compliance date for smaller fund groups is extended from June 11, 2026 to December 11, 2026. The SEC indicated that the extension is designed to balance the investor benefit of the amended Names Rule framework with funds’ needs for additional time to implement the amendments properly, develop and finalize their compliance systems, and test their compliance plans. The Commission further indicated that the compliance dates have been aligned with the timing of certain annual disclosure and reporting obligations that are tied to the end of a fund’s fiscal year in order to help funds avoid additional costs when coming into operational compliance with the Names Rule amendments.
Additionally, the SEC has updated the Names Rule FAQ, releasing a new 2025 Names Rule FAQ on January 8, 2025. Key clarifications include:
Shareholder approval is not required for a fund to add or revise a fundamental 80 percent investment policy unless the change would permit a “deviation from the existing policy or some other existing fundamental policy;”
The 2025 FAQ expanded the SEC staff’s note that the term “tax-sensitivity” indicates a fund’s strategy instead of a focus on particular types of investments to terms “similar” to tax-sensitive (such as “tax-advantaged” or “tax-efficient”); and
The use of the term “income” in a fund’s name does not refer to “fixed-income” securities, and instead is used to emphasize an investment goal of generating current income. As such, the use of the term “income” in a fund’s name would not alone require the adoption of an 80 percent investment policy.
SEC Votes to End Defense of Climate Disclosure Rules
The SEC, on March 27, 2025, voted to end its defense of the rules requiring disclosure of climate-related risks and greenhouse gas emissions. The rules, adopted by the SEC on March 6, 2024, required registrants to provide certain climate-related information in their registration statements and annual reports. Following the SEC’s vote, the SEC staff sent a letter to the Eighth Circuit (who was hearing Iowa v. SEC, No 24-1522 (8th Cir.) evaluating the legality of the rules) stating that the SEC withdraws its defense of the rules and that the SEC counsel are no longer to authorized to advance the arguments in the brief filed on behalf of the SEC. SEC Acting Chairman Mark T. Uyeda stated that “[t]he goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”
The SEC did not, however, withdraw the actual climate disclosure rules. Commissioner Caroline Crenshaw issued a statement challenging the decision, that if the SEC chose not to defend the rules, then it should ask the court to stay the litigation while the agency comes up with a rule that it is prepared to defend and that if not, the court should hire counsel to defend the rules. Although the SEC is no longer defending the rules, 20 democratic attorney generals (the “AGs”) have intervened in the lawsuit to defend them. In April 2025, the court ruled that the AGs, led by those from Massachusetts and the District of Columbia, can themselves defend the rules.
SEC Enforcement Actions and Other Cases
Airline Faulted for ESG Focus in 401(k) Plan
A Texas judge issued a 70-page finding of fact and conclusion of law that an international airline company (the “Defendant”) violated federal benefits law by emphasizing environmental, social, and governance factors (“ESG”) in its 401(k) plan decisions. The judge found that the Defendant’s corporate commitment to ESG, the influence and conflicts of interests with the investment manager, and the lack of separation between the corporate and fiduciary roles all attributed to the fiduciary lapse. Despite finding the Defendant breached the Employee Retirement Income Security Act’s (“ERISA”) duty of loyalty, the judge determined the Defendant had not breached ERISA’s fiduciary duty of prudence because the practices fell within the prevailing industry standards.
12 Firms to Pay More Than $63 Million Combined to Settle SEC’s Charges in Connection with Off-Channel Communications
In its continued focus on off-channel communications, the SEC announced charges against nine investment advisers and three broker-dealers (each a “Firm” and collectively, the “Firms”) on January 13, 2025. The charges are for failures by the Firms and their personnel to maintain and preserve electronic communications, in violation of recordkeeping provisions of the federal securities laws. The Firms admitted to the facts set out in their respective SEC orders and have begun implementing improvements to their compliance policies and procedures to address these violations. One Firm self-reported and, as a result, paid significantly lower civil penalties.
“In order to effectively carry out their oversight responsibilities, the Commission’s Examinations and Enforcement Divisions must, and indeed do, rely heavily on registrants complying with the books and records requirements of the federal securities laws. When firms fall short of those obligations, the consequences go far beyond deficient document productions; such failures implicate the transparency and the integrity of the markets and their participants, like the firms at issue here,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “In today’s actions, while holding firms responsible for their recordkeeping failures, the Commission once more recognized and credited a registrant’s self-report, demonstrating yet again that there are tangible benefits to be gained from proactive cooperation.”
SEC Charges Advisory Firm with Misrepresenting its Anti-Money Laundering Procedures to Investors
The SEC charged a Connecticut-based investment adviser (the “Adviser”) with making misrepresentations about its anti-money laundering (“AML”) procedures and related compliance failures. The SEC’s order finds that the Adviser’s offering documents stated that the Adviser was voluntarily complying with AML due diligence laws despite those laws not applying to investment advisers. However, according to the order, the Adviser did not always conduct due diligence with respect to an entity owned by an individual who was publicly reported to have suspected connections to money laundering activities. The order further found that the Adviser failed to adopt and implement written policies and procedures reasonably designed to ensure the accuracy of offering and other documents provided to prospective and existing investors.
“This case reinforces the fundamental duty of investment advisers to say what they do and do what they say,” said Tejal D. Shah, Associate Regional Director of the SEC’s New York Regional Office. “Here, [the Adviser] failed to follow the AML due diligence procedures that it said it would, thus misleading investors about the level of risk they were undertaking.”
SEC Charges Two Affiliated Investment Advisers for Failing to Address Known Vulnerabilities in its Investment Models
The SEC announced, on January 16, 2025, that it had settled charges against two affiliated New York-based investment advisers (the “Advisers”) for breaching their fiduciary duties by failing to reasonably address known vulnerabilities in their investment models and for related compliance and supervisory failures, as well as violating the SEC’s whistleblower protection rule. According to the SEC’s order, around March 2019, the Advisers’ employees identified and recognized vulnerabilities in certain investment models that could negatively impact clients’ investment returns, but did not take any action to remedy the situation until August 2023. The Advisers failed to adopt and implement written policies and procedures to address these vulnerabilities and failed to supervise an employee who made unauthorized changes to more than a dozen models. Further, the Advisers required departing individuals to state as a fact—in separate written agreements—that they had not filed a complaint with any governmental agency. The SEC’s order finds that the Advisers willfully violated the antifraud provisions of the Investment Advisers Act of 1940, as amended (the “Advisers Act”), the Advisers Act’s compliance rule, as well as Rule 21F-17(a) under the Exchange Act.
SEC Charges Advisory Firms with Compliance Failures Relating to Cash Sweep Programs
The SEC, on January 17, 2025, settled charges against two affiliated registered investment advisers and a third unaffiliated investment adviser (collectively, the “Advisers”) for failing to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder relating to the Advisers’ cash sweep programs. According to the SEC’s order, the Advisers offered their own bank deposit sweep programs as the only cash sweep options for most advisory clients and received a significant financial benefit from advisory client cash in the bank deposit program. The order finds that the Advisers failed to adopt and implement reasonably designed policies and procedures (1) to consider the best interest of clients when evaluating and selecting which cash sweep program options to make available to clients and (2) concerning the duties of financial advisors in managing client cash in advisory accounts.
SEC Charges Dually Registered Broker-Dealer/Investment Adviser with Anti-Money Laundering Violations
The SEC announced charges against a firm that is registered as both a broker-dealer and investment adviser (the “Firm”) with multiple failures related to its AML program. According to the SEC’s order, from at least May 2019 through December 2023, the Firm experienced longstanding failures in its customer identification program, including a failure to timely close accounts for which it had not properly verified the customer’s identity. Furthermore, the Firm failed to close or restrict thousands of high-risk accounts that were prohibited under the Firm’s AML policies.
Financial Institution to Pay More than $100 Million to Resolve Violations Related to Target Date Funds
The SEC announced on January 17, 2025, that an institutional investment management company (the “Company”) has agreed to settle charges for misleading statements related to capital gains distributions and tax consequences for retail investors who held the Company’s Investor Target Retirement Funds (“Investor TRFs”) in taxable accounts. The SEC’s order finds that in December 2020, the Company announced that the minimum initial investment amount of the Company’s Institutional Target Retirement Funds (“Institutional TRFs”) would be lowered from $100 million to $5 million. A substantial number of plan investors redeemed their Investor TRFs and switched to Institutional TRFs due to the latter having lower expenses. The retail investors of the Investor TRFs who did not switch and continued to hold their fund shares in taxable accounts, faced historically large capital gains distributions and tax liabilities due to the large number of redemptions. The order also finds that the Investor TRFs’ prospectuses, effective and distributed in 2020 and 2021, were materially misleading because they failed to disclose the potential for increased capital gains distributions resulting from redemptions of fund shares by newly eligible investors switching from the Investor TRFs to the Institutional TRFs.
“Materially accurate information about capital gains and tax implications is critical to investors saving for their retirements,” said Corey Schuster, Chief of the Division of Enforcement’s Asset Management Unit. “Firms must ensure that they are accurately describing to investors the potential risks and consequences associated with their investments.”
SEC Charges Investment Adviser and Two Officers for Misuse of Fund and Portfolio Company Assets
The SEC filed settled charges on March 7, 2025, against a registered investment adviser (the “Adviser”), former managing partner (the “Managing Partner”) and its former chief operating officer and partner (the “COO”) for breaches of the fiduciary duties for their misuse of fund and portfolio company assets. According to the SEC’s orders, from at least August 2021 through February 2024, the COO misappropriated approximately $223,000 from portfolio companies of a private fund managed by the Adviser. This included transactions for vacations, personal expenses, and the payment of compensation in excess of the COO’s salary. The SEC order states that the Managing Partner failed to reasonably supervise the COO despite red flags of misappropriation and that they caused the fund to pay a business debt that should have been paid by an entity the Managing Partner and COO controlled, resulting in an unearned benefit to the entity of nearly $350,000. Additionally, the order finds the Adviser failed to adopt and implement adequate policies and procedures and to have the fund audited as required.
SEC Charges New Jersey Investment Adviser and His Firm with Fraud and Other Violations
The SEC, on March 17, 2025, announced it filed charges against an individual investment adviser and his advisory firm (collectively, the “Adviser”) for misconduct and for investing more than 25 percent of a mutual fund’s assets in a single company over multiple years, causing losses of $1.6 million. In November 2021, the Adviser settled charges that the Adviser violated its policy by investing more than 25 percent of a fund’s assets in one industry between July 2017 and June 2020, committing fraud and breaching its fiduciary duties. Despite being ordered to stop the conduct, the Adviser continued violating its 25 percent industry concentration limit and making associated misrepresentations about it between November 2021 and June 2024. The SEC’s complaint alleges the defendant Adviser engaged in further misconduct during this same period by operating the fund’s board without the required number of independent trustees and misrepresenting the independence of one board member in filings. The complaint also alleges that the Adviser failed to provide or withheld key information from the board and hired an accountant for the fund without the required vote by the board.
“As alleged, the defendants not only ran the fund contrary to its fundamental investment policies, but they actively misled investors and the fund’s board about their conduct,” said Corey Schuster, Chief of the Division of Enforcement’s Asset Management Unit. “Undeterred by their prior SEC settlement involving these very same issues, we allege that the defendants repeatedly violated fundamental rules designed to protect investors in mutual funds.”
Business Development Company and Directors Sued for Causing Fund’s Value to Decline
Directors of a business development company (the “BDC”) have been sued for allegedly approving fraudulent valuations, and the BDC’s investment adviser (the “Adviser”) is accused of extracting millions of dollars in fees from the BDC while its assets dipped. According to the complaint, the Adviser caused the BDC’s $200 million portfolio to decline while extracting nearly $30 million in fees and concealed the decline from shareholders through fraudulent, inflated asset valuations that the directors repeatedly approved before the fund went into liquidation in 2023. When shareholders proposed ways for the shareholders to realize value (such as a tender offer or merger), the complaint alleges that the Directors amended the BDC’s bylaws to illegally restrict shareholder voting powers. The lawsuit seeks a trial and alleges violations of Section 10(b) and Section 20 of the Exchange Act, breach of fiduciary duty by the directors, aiding and abetting a breach of fiduciary duty, and breach of contract.
Revenue Sharing Ruling Struck Down by First Circuit Court of Appeals
In 2019, the SEC initiated an enforcement action against a dually registered broker-dealer and investment adviser (the “Adviser”). The SEC alleged that, from July 2014 through December 2018, the Adviser failed to adequately disclose that its revenue sharing agreement with a national brokerage and custody service provider (the “Provider”) created a conflict of interest by incentivizing the Adviser to direct its clients’ investments (through client representatives) to mutual fund share classes that produced revenue-sharing income for the Adviser. At the close of evidence, the district court granted partial summary judgment for the SEC which included an order for the firm to pay $93.3 million (including disgorgement of nearly $65.6 million in revenue-sharing related profits), which the Adviser appealed. On April 1, 2025, the United States Court of Appeals for the First Circuit, finding that there was a material issue of fact to be decided by a jury, reversed the order and remanded it back to district court to be heard by a jury. Applying the “total mix” test from Basic Inc. v. Levinson, the Court of Appeals concluded that a “reasonable jury could find” that the additional disclosure about the Adviser’s conflict of interest would not have “so significantly altered the ‘total mix’ of information made available, that summary judgment was appropriate.” Importantly, the Court of Appeals noted that the district court relied on cases predating the U.S. Supreme Court’s decision in SEC v. Jarkesy, decision which held that the Seventh Amendment right to a jury trial applies to SEC enforcement actions of its administrative orders. Additionally, the Court of Appeals found that the SEC failed to adequately show a reasonable approximation or casual connection sufficient to support the district court’s disgorgement award.
Other Industry Highlights
SEC Announces Record Enforcement Actions Brought in First Quarter of Fiscal Year 2025
The SEC announced on January 17, 2025, that, based on preliminary results, it filed 200 total enforcement actions in the first quarter of fiscal year 2025, which ran from October through December 2024, including 118 standalone enforcement actions. This is the most actions filed in the respective period since at least 2000. The SEC filed more than 40 enforcement actions from January 1, 2025, through January 17, 2025, indicating that the Division’s high level of enforcement activity continues into the second quarter of fiscal year 2025.
DRAO Issues Observations Relating to Website Posting Requirements
The Division of Investment Management’s Disclosure Review and Accounting Office (“DRAO”) is responsible for reviewing fund disclosures. As part of this effort, the staff recently observed several issues relating to the website posting requirements under various Commission rules and certain exemptive orders, including those related to the use of summary prospectuses, exchange-traded funds (“ETFs”), and money market funds (“MMFs”). Some of the DRAO’s observations include:
Summary Prospectuses
Some summary prospectuses did not include a website address that investors could use to obtain the required online documents, while other addresses were generic links to the registrant’s homepage.
A number of registrants did not include any links from the summary prospectus to the statutory prospectus and the Statement of Additional Information, or only partially satisfied the linking requirement.
ETFs
Some ETFs failed to include their daily holdings information, expressed their premiums and discounts as a dollar figure rather than as a percentage, or used alternative terminology when referring to premiums and discounts that have potential to confuse investors.
Some ETFs did not disclose timely historic premium and discount information on their websites, or the information was not easily accessible on the website.
Some ETFs used alternative terminology when referring to the 30-day median bid-ask spread, by omitting the term “30-day,” such that the nature of the figure presented may be unclear to investors.
MMFs
Several MMFs did not post on their websites the required link to the Commission’s website where a user may obtain the most recent 12 months of publicly available information filed by the MMF on Form N-MFP.
Acting Chairman Uyeda Announces Formation of New Crypto Task Force
SEC Acting Chairman Mark Uyeda, on January 21, 2025, launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets. The SEC announced that Commissioner Hester Peirce will lead the task force with a focus on drawing clear regulatory lines, providing realistic paths to registration, crafting disclosure frameworks, and deploying enforcement resources. With the disbandment of the Crypto Asset and Cyber Unit, the task force will be the Commissioners’ primary adviser on matters related to Crypto. On March 3, 2025, Commissioner Peirce announced the members of the Crypto Task Force staff.
Executive Order Halts All Pending Regulations
The Trump administration issued an executive order on January 20, 2025, freezing all pending regulations. The order also suggests that agencies should postpone the effective date for any regulations that have been published in the Federal Register for 60 days. Additionally, the order states that federal agencies should withdraw any regulations that have been sent to the Office of the Federal Register but have not yet been published. Finally, the order recommends that agencies should consider reopening comment periods for pending regulations and should not propose or issue any new regulations until a department or agency head appointed by President Trump has reviewed and approve such regulations.
New Executive Order Imposes Increased Presidential Oversight and Control of Independent Regulatory Agencies
The Trump administration, on February 18, 2025, issued a new Executive Order, “Ensuring Accountability for All Agencies,” (the “Executive Order”) that seeks to increase presidential oversight of independent regulatory agencies. The Executive Order imposes new constraints on independent regulatory agencies, like the SEC, including:
The independent regulatory agencies must submit “significant regulatory actions” to the White House’s Office of Information and Regulatory Affairs before publication in the Federal Register;
The Director of the White House’s Office of Management and Budget (“OMB”) will establish performance standards and management objectives of independent agency heads, like the Commissioners of the SEC, and for OMB to report to the President on the agencies’ performance and efficiency;
The Director of OMB will review the agencies’ obligations for “consistency with the President’s policies and priorities” and will change an agencies’ activity or objective, as necessary, to advance the “President’s policies and priorities;”
Chairs of independent regulatory agencies must now meet with and coordinate policies and priorities with the White House, including establishing a position of White House Liaison and submitting strategic plans to OMB for clearance; and
Members of independent regulatory agencies cannot “advance an interpretation of the law” that vary from the president and the attorney general’s authoritative interpretation of the law including, but not limited to, interpretations of regulations, guidance, and positions advanced in litigation (which may include enforcement actions).
SEC Announces Cyber and Emerging Technologies Unit
The SEC announced, on February 20, 2025, the creation of the Cyber and Emerging Technologies Unit (“CETU”) to focus on combatting cyber-related misconduct and to protect retail investors from bad actors in the emerging technologies space. Specifically, the CETU will focus on the following priority areas:
Fraud committed using emerging technologies, such as artificial intelligence and machine learning;
Use of social media, the dark web, or false websites to perpetrate fraud;
Hacking to obtain material nonpublic information;
Takeovers of retail brokerage accounts;
Fraud involving blockchain technology and crypto assets;
Regulated entities’ compliance with cybersecurity rules and regulations; and
Public issuer fraudulent disclosure relating to cybersecurity.
CETU replaces the SEC Enforcement Division’s Crypto Asset and Cyber Unit, which brought more than 100 enforcement actions. CETU’s establishment is a part of a series of initiatives highlighting the SEC’s new, more positive, approach to crypto products. See Acting Chairman Uyeda Announces Formation of New Crypto Task Force above.
ICI Issues Recommendations for Reform and Modernization of the 1940 Act
The Investment Company Institute (“ICI”), on March 17, 2025, issued key recommendations for the reform and modernization of the 1940 Act, titled Reimagining the 1940 Act: Key Recommendations for Innovation and Investor Protection. The ICI worked closely with its members and Independent Directors Council members over three years to develop their “blueprint” to reform the 1940 Act. The 19 recommendations focus on fostering ETF innovation, expanding retail investors’ access to private markets, eliminating unnecessary regulatory costs and burdens, and leveraging the expertise and independence of Fund directors. The ICI has called for the SEC to address these recommendations, including to:
Enable a new or existing fund to offer both mutual fund and ETF share classes;
Allow closed-end funds to more flexibly invest in private funds;
Create more flexibility for closed-end funds to provide repurchase opportunities to their investors;
Adopt electronic delivery of information as the default delivery option;
Update requirements for in-person voting by directors;
Permit streamlined board approval of new sub-advisory contracts and annual renewals;
Revise the “interested person” standard;
Permit fund boards to appoint a greater number of new independent directors; and
Update fund board responsibility with respect to auditor approval.
Executive Order Targets State Climate Laws, But Existing GHG Permit Requirements Remain Enforceable
On April 8, 2025, President Donald J. Trump issued an executive order titled Protecting American Energy From State Overreach. The order directs the U.S. attorney general to identify and take action against state and local laws “burdening” domestic energy development, especially laws addressing climate change, environmental, social, and government (ESG) initiatives, and environmental justice. The order highlights New York, Vermont, and California climate laws as examples of state actions that may be “beyond their constitutional or statutory authorities” and should be targeted by the Justice Department.
Key Provisions of the Executive Order
Identification of State Laws: The attorney general is tasked with identifying “all State and local laws, regulations, causes of action, policies, and practices:
–
That interfere with domestic energy development, and
–
That “are or may be unconstitutional, preempted by Federal law, or otherwise.
Of these, the attorney general is directed to prioritize identification of climate change, ESG, environmental justice, and carbon or greenhouse gas laws and regulations, as well as lawsuits brought under nuisance or other tort theories, such as those brought against fossil fuel producers.
Legal Action: The attorney general is directed to take “expeditious action,” including legal action, to halt the enforcement of such laws and policies and to prevent the continuation of related civil actions deemed illegal.
Reporting Requirement: By June 7, 2025 (within 60 days of the executive order), the attorney general must submit a report to the president detailing the actions taken and recommending additional “Presidential or legislative action” necessary to stop the enforcement of state laws burdening domestic energy development.
Implications for State Energy Regulations
The executive order reinforces the administration’s policy to “unleash American energy,” and targets state-level climate (and other) initiatives that the administration regards as ideological and contrary to federal policy initiatives to expedite domestic energy production. In furtherance of the order, the attorney general may pursue lawsuits challenging state and local laws on grounds such as the Commerce Clause, federal preemption, or other legal theories.
Additionally, based on other recent initiatives from the Trump administration, the Justice Department may attempt to use non-litigation tools such as the withholding federal funding from states that refuse to abandon laws and policies deemed objectionable to the administration.
State-Level Responses
The executive order has elicited swift responses from states with climate-focused laws. New York Gov. Hochul and New Mexico Gov. Michelle Lujan Grisham, co-chairs of the Climate Alliance, have pledged on behalf of the Alliance’s member states continue advancing their energy policies.
New York, in particular, has implemented some of the nation’s most ambitious climate policies, including requiring a net zero-emissions power grid by 2040 and limiting statewide GHG emissions to 15% of 1990 levels by 2050. Notably, the executive order specifically referenced legislation recently enacted in New York that would require compensatory payments by the fossil fuel industry to fund various climate initiatives, which is already being challenged by industry. New York and other similarly situated states are almost certainly preparing to defend their climate agendas, and the outcomes of these legal challenges could have far-reaching implications.
GT Insights
The attorney general faces a 60-day deadline to:
Identify burdensome state and local laws and policies in all 50 states;
Take action against laws deemed illegal; and
Prepare a report documenting such actions and recommending further actions to the president and Congress.
The attorney general may initially prioritize high-profile states and laws explicitly referenced in the executive order, such as New York, Vermont, and California. Litigation is inevitable, both to defend against Justice Department attempts to invalidate state climate programs and to challenge non-litigation measures the department might employ in furtherance of the order.
These legal battles are expected to test the boundaries of the U.S. Supreme Court’s landmark case, California Coastal Commission v. Granite Rock Co., 480 U.S. 572 (1987), which clarified that state law can be preempted if Congress demonstrates an intent to occupy the field or if the state law conflicts with federal law, making compliance with both impossible. At this time, however, state climate initiatives remain in effect until courts say otherwise or states move to revise their approaches.
Portland City Council Member Proposes Increase to Clean Energy Surcharge Rate
On April 10, 2025, Portland’s Climate, Resilience, and Land Use Committee reviewed a proposal from City Council Member Steve Novick to increase the Clean Energy Surcharge (CES) rate from 1% to 1.33%. The additional revenue from this increase would be redirected into Portland’s general fund, instead of the voter-approved Portland Clean Energy Fund (PCEF). This proposal raises questions regarding Portland’s authority to modify a voter-approved tax.
The CES, which voters approved in November 2018 and took effect Jan. 1, 2019, is a 1% gross receipts tax to “retail sales” that “large retailers” make. All revenues from this tax were specifically earmarked for the PCEF. While the 2018 ballot initiative did not define “retail sales” or “large retailers,” Portland has generally imposed the tax on nearly all businesses with more than $1 billion in worldwide receipts and $500,000 in Portland receipts, with only a few exceptions.
Faced with budget shortfalls, at least one Portland council member is now considering the CES as a potential source of additional general fund revenue. However, Portland’s city charter does not specifically authorize the imposition of taxes without voter approval.1 Furthermore, Portland’s current administration of the CES, as it applies to non-retailers, is facing legal challenges. Considering these limitations on Portland’s taxing authority, the city council’s ability to increase the CES rate and divert those funds from the PCEF will warrant further legal analysis.
1 City of Portland v. HomeAway Inc., 240 F. Supp. 3d 1099, 1107, (D. Or. 2017).
Sustainability-Related Governance, Incentives and Competence – FCA Confirms No New Rules for Now
Background
In February 2023, the United Kingdom Financial Conduct Authority (“FCA”) published a discussion paper (DP23/1) to encourage an industry-wide dialogue on firms’ sustainability-related governance, incentives, and competence (the “Discussion Paper”).
On 2 April 2025, the FCA published a summary of the feedback received on the Discussion Paper, as well as its own responses and planned next steps. The FCA is not currently considering introducing new rules on the themes in the Discussion Paper.
Industry Feedback
The responses received by the FCA were generally positive about the importance of sustainability matters and the role of the themes outlined in the Discussion Paper. The feedback covered several areas, including:
Objectives, purpose, business model, and strategy;
Board and senior management roles;
Accountability structures;
Incentives and remuneration practices;
Investor stewardship; and
Training and competency development.
The FCA noted that a common theme across the responses was the need for new regulations (such as the Consumer Duty and Sustainability Disclosure Requirements (“SDR”)) to “bed in” before determining whether any additional rules would be needed.
In addition, some respondents cited the existing rules at the time as sufficient and some also mentioned the role of the International Sustainability Standards Board (“ISSB”) standards, and previously the Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations, in establishing a global baseline for sustainability disclosures.
FCA’s Response
The FCA welcomed the level of engagement from respondents and the importance with which they generally regarded the themes and issues in the Discussion Paper. The FCA also noted that the insights gained from the feedback have been important to assist their understanding of the current market.
The FCA drew attention to the recent introduction of rules relating to some of the themes, which many respondents recognised the importance of – in particular:
The Consumer Duty;
SDR and related labelling requirements; and
The Anti-Greenwashing Rule.
The FCA also recognised the importance of allowing time for new measures to be implemented before introducing further rules in these areas. For themes in the Discussion Paper not captured by the measures above, the FCA will continue to work with the industry to enable market-led solutions and guidance – for example, through the Climate Financial Risk Forum (CFRF) and the Adviser’s Sustainability Group (ASG).
Next Steps
Although the FCA is not currently considering introducing new rules on sustainability-related governance, incentives, and competence, it will continue to monitor market developments and promote these themes to help the sustainable finance market grow responsibly, as well as to continue to promote the UK as a leading financial centre.
EPA Postpones Effective Date of Certain Provisions of TCE Risk Management Rule to June 20, 2025
On April 2, 2025, the U.S. Environmental Protection Agency (EPA) announced that it is postponing the effectiveness of certain provisions of its December 17, 2024, final risk management rule for trichloroethylene (TCE) until June 20, 2025. 90 Fed. Reg. 14415. After EPA issued the final rule in December 2024, it received multiple petitions for an administrative stay of the effective date. EPA denied the requests, and the companies submitted renewed petitions to stay the effective date of the rule, or, in the alternative, for an administrative stay of certain workplace conditions. As reported in our January 30, 2025, blog item, 13 petitions for review of the final rule were filed in various federal appellate courts. On January 13, 2025, the Fifth Circuit Court of Appeals granted a petitioner’s motion to stay temporarily the rule’s effective date. The petitions were then consolidated and transferred to the Third Circuit Court of Appeals. The Third Circuit issued a January 16, 2025, order leaving the temporary stay of the effective date in place pending briefing on whether the temporary stay of the effective date should remain in effect.
EPA states in the April 2, 2025, notice that, in light of the pending litigation, it has reconsidered its position from its earlier denial of an administrative stay pending judicial review and determined that justice requires a 90-day postponement of the effective date of the conditions for each of the TSCA Section 6(g) exemptions. According to EPA, petitioners allege that because the interim workplace conditions would require petitioners to reduce TCE exposure levels to the interim existing chemical exposure limit (ECEL) of 0.2 parts per million (ppm), the final rule effectively requires the use of personal protective equipment (PPE) “that cannot feasibly be worn all day, and therefore could cause petitioners to cease operations.” EPA notes that although it does not concede these allegations, “petitioners have raised significant legal challenges and allege significant harms as a result of the workplace conditions required by the final rule’s TSCA section 6(g) exemptions.” EPA states that “[m]oreover, a limited postponement that maintains the status quo for these uses appropriately balances the alleged harm to petitioners and other entities with critical uses against the public interest in the health protections that will be afforded by the broader TCE prohibitions and workplace protections going into effect.”
OMB RFI Seeks Proposals to Rescind or Replace Regulations
On April 11, 2025, the Office of Management and Budget (OMB) published a request for information to solicit ideas for deregulation. 90 Fed. Reg. 15481. OMB seeks proposals to rescind or replace regulations “that stifle American businesses and American ingenuity,” including regulations “that are unnecessary, unlawful, unduly burdensome, or unsound.” According to the notice, “comments should address the background of the rule and the reasons for the proposed rescission, with particular attention to regulations that are inconsistent with statutory text or the Constitution, where costs exceed benefits, where the regulation is outdated or unnecessary, or where regulation is burdening American businesses in unforeseen ways.” Comments are due May 12, 2025.
Earlier in the week, on April 9, 2025, President Trump issued the following memorandum and Executive Orders (EO) regarding federal regulations:
Presidential Memorandum Regarding Directing the Repeal of Unlawful Regulations: EO 14219, “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative,” directed the heads of all executive departments and agencies to identify certain categories of unlawful and potentially unlawful regulations within 60 days and begin plans to repeal them. The April 9, 2025, memorandum directs executive departments and agencies to prioritize evaluating each existing regulation’s lawfulness under the following U.S. Supreme Court decisions: Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024); West Virginia v. EPA, 597 U.S. 697 (2022); SEC v. Jarkesy, 603 U.S. 109 (2024); Michigan v. EPA, 576 U.S. 743 (2015); Sackett v. EPA, 598 U.S. 651 (2023); Ohio v. EPA, 603 U.S. 279 (2024); Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021); Students for Fair Admissions v. Harvard, 600 U.S. 181 (2023); Carson v. Makin, 596 U.S. 767 (2022); and Roman Cath. Diocese of Brooklyn v. Cuomo, 592 U.S. 14 (2020).
EO on Reducing Anti-Competitive Regulatory Barriers: The EO begins the process for “eliminating anti-competitive regulations to revitalize the American economy,” directing agency heads, in consultation with the Chair of the Federal Trade Commission (FTC) and the Attorney General, to complete a review of all regulations subject to their rulemaking authority and identify those that:
Create, or facilitate the creation of, de facto or de jure monopolies;
Create unnecessary barriers to entry for new market participants;
Limit competition between competing entities or have the effect of limiting competition between competing entities;
Create or facilitate licensure or accreditation requirements that unduly limit competition;
Unnecessarily burden the agency’s procurement processes, thereby limiting companies’ ability to compete for procurements; or
Otherwise impose anti-competitive restraints or distortions on the operation of the free market.
EO on Zero-Based Regulatory Budgeting to Unleash American Energy: The EO directs certain agencies to incorporate a sunset provision into their regulations governing energy production to the extent permitted by law, “thus compelling those agencies to reexamine their regulations periodically to ensure that those rules serve the public good.”