Landmark Supreme Court Decision Limits NEPA Review Scope: Agencies Granted ‘Substantial Deference’ in Environmental Assessments
In an 8-0 decision, the U.S. Supreme Court reversed a D.C. Circuit ruling that had blocked construction of a new 88-mile freight railroad line, clarifying the scope of impacts that federal agencies must consider under the National Environmental Policy Act (NEPA). The Court’s majority opinion in Seven County Infrastructure Coalition v. Eagle County, No. 23-975 (May 29, 2025) is a sharp rebuke to what the Court describes as the aggressive interference by certain federal lower courts with the exercise of agency discretion in determining the scope of a NEPA review, a practice the Court found contrary to the intent of NEPA as a “purely procedural statute” designed to assist in agency decision making.
Background
The Uinta Basin Railway is a proposed 88-mile freight rail line intended to connect Utah’s Uinta Basin oil production to the national rail network. In 2020, the Seven County Infrastructure Coalition applied to the U.S. Surface Transportation Board (STB) for construction approval under 49 U.S.C. § 10901.
Pursuant to NEPA, the STB prepared a comprehensive Environmental Impact Statement (EIS), analyzing thousands of pages of potential environmental effects tied to the railway’s construction and operation. The EIS noted, but did not fully assess, potential upstream effects from increased oil drilling in the Uinta Basin and downstream impacts from oil refining along the Gulf Coast. In December 2021, the STB approved construction of the line, citing its economic and transportation benefits.
Eagle County, Colorado and several environmental organizations challenged the approval. The U.S. Court of Appeals for the D.C. Circuit ultimately vacated the STB’s decision authorizing the line’s construction, as well as the associated EIS and biological opinion.1 The D.C. Circuit held that the STB violated NEPA by failing to analyze foreseeable indirect environmental effects of increased fossil fuel development tied to authorizing and operating the line.
The Supreme Court’s Decision
Justice Kavanaugh authored the majority opinion for the Court, joined by Justices Roberts, Alito, Thomas, and Barrett. Justice Sotomayor filed a concurring opinion, joined by Justices Kagan and Jackson. Justice Gorsuch did not take part in the case.
The Court held that the D.C. Circuit erred in two fundamental respects:
1.
Failing to grant proper judicial deference to the STB’s judgment regarding the scope of the EIS.2
2.
Misinterpreting NEPA’s scope by requiring the STB to assess indirect effects of third-party oil and gas development and refining not caused by the project at issue.3
In an introductory discussion, Justice Kavanaugh briefly recounted the history of NEPA’s interpretation by courts and noted that “some courts have assumed an aggressive role in policing agency compliance with NEPA,” while others take a more “restrained” approach.4 Offering a corrective to “continuing confusion and disagreement” among federal courts, the opinion comes down decidedly on the side of judicial restraint. It “reiterate[s] and clarif[ies] the fundamental principles” of NEPA judicial review, including that NEPA is a purely procedural statute that grants broad discretion to agencies, and courts should not interfere if agency decision making falls within “a broad zone of reasonableness.”
Justice Kavanaugh emphasized that NEPA “does not mandate particular results” and, unlike other federal environmental statutes, does not impose any “substantive constraints” on the agency’s decision about a project. Agencies must take a “hard look” at the environmental consequences of their actions in the context of projects under consideration, but they are not required to assess indirect effects of separate federal, state, or private projects, even if the action under review might facilitate those projects.5 Making this scoping determination about indirect effects is clearly within the discretion of the agency preparing the NEPA document, and courts should honor it if it is “reasonable” and “reasonably explained.”6 Further, and of importance to NEPA jurisprudence, the Court instructed that “the adequacy of an EIS is relevant only to the question of whether an agency’s final decision … was reasonably explained.”7
Focusing on the question at issue – whether impacts of potential separate projects upstream and downstream of the proposed railroad must be evaluated in the EIS – the Court criticized the D.C. Circuit’s legal conclusion requiring inclusion of such projects in the EIS analysis. The Court reasoned that the STB had no decision-making or regulatory authority over such projects, and concluded that a separate project “breaks the chain of proximate causation.”8 Crucially, the Court stated that an agency’s determination of project scope–including whether a particular impact is the result of the action itself or of a separate project–is entitled to substantial deference, provided the agency offers a reasoned explanation.9 But the decision goes further, concluding that NEPA’s requirement to consider reasonably foreseeable impacts does not, as a matter of law, require agencies to include the indirect impacts of separate projects for which the lead agency plays no role in an EIS.
Justice Sotomayor’s concurrence emphasized that the majority reasoning should not be used to sidestep meaningful environmental review.10 The concurring opinion agreed with the outcome but emphasized the need for vigilance in ensuring agencies do not avoid meaningful environmental review through overly narrow interpretations of project scope or causation.
GT Insights
The decision is a win for project sponsors–including developers of infrastructure, housing, renewable energy, and industrial facilities–because it narrows the circumstances under which federal agencies must evaluate indirect adverse impacts of a project undergoing NEPA review. The Court reaffirmed that NEPA imposes procedural obligations only; agencies must take a “hard look” at environmental effects, but they are not required to engage in speculative or limitless analysis of impacts from separate projects.11
Much of the decision is a general discussion – citing the Court’s precedents – about the broad discretion agencies enjoy under NEPA and the requirement of judicial deference to that discretion. While some of this language may be dicta, it nonetheless has importance to lower court judges, agencies, and project proponents because it signals that the Court believes that the time and effort spent by agencies in preparing comprehensive NEPA reviews has gone beyond the statute’s intent at the expense of new infrastructure projects. Particularly relevant is the Court’s observation that “intrusive (and unpredictable)” reviews by lower courts “have slowed down or blocked many projects and, in turn, caused litigation-averse agencies to take ever more time and to prepare ever longer EISs for future projects.” The decision at multiple points expresses disapproval of the use of NEPA to delay or block projects that “otherwise comply with all relevant substantive environmental laws,” leading to “fewer and more expensive railroads, airports, wind turbines, transmission lines, dams, housing developments, highways, bridges, subways, stadiums, arenas, data centers, and the like.”
The decision, however, also emphasizes that the substantial deference that courts should afford agency NEPA determinations in no way should be viewed as inconsistent with its recent decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), which eliminated Chevron deference. The Court distinguished between Chevron deference to agency interpretations of statutory language with agencies’ exercise of discretion expressly granted to them by NEPA. The Court found that agency determinations as to the scope and detail of a NEPA review are not statutory interpretations, but rather fact-intensive endeavors to which courts must defer unless the decisions issued in connection with such review violate the Administrative Procedure Act’s “arbitrary and capricious” standard.
The Court explicitly noted that omissions in an EIS are not automatically fatal to an agency approval. So long as the agency provides a rational explanation for its ultimate decision, including decisions about what need not be considered in a NEPA review, courts may not substitute their judgment for that of the agency.12 Also, echoing arguments of some NEPA reform advocates, the Court introduced a new concept that EIS deficiencies need not always result in vacatur, “absent a reason to believe that the agency might disapprove the project if it added more to the EIS.”13
The Court pointed to a broader concern: NEPA litigation has increasingly been used to block or delay projects, resulting in more litigation and fewer projects. The decision may therefore provide needed guardrails for agencies and developers, reducing litigation risk stemming from speculative or tangential environmental claims.14
Seven County stands as a declaration by the U.S. Supreme Court that lower courts should not allow litigants to use the strictly procedural requirements of NEPA in a manner that unnecessarily delays or blocks infrastructure projects approved by federal agencies. It remains to be seen the extent to which the lower courts and federal agencies that grapple with future controversial projects will take that declaration to heart.
1 See Eagle County v. Surface Transp. Bd., 60 F.4th 828 (D.C. Cir. 2023)
2Slip op. at 9, 21.
3 Id. at 6-9, 19-21.
4 Id. at 8.
5 Id. at 20-21.
6 Id. at 9.
7 Id.
8 Id.at 16-17.
9 Id. at 21.
10 Id., Sotomayor, J., concurring at 1-2.
11 Id. at 6-7.
12 Id. at 9.
13 Id. at 14.14 Id. at 23.
Additional Authors: Courtney M. Shephard, Eric Waeckerlin, and Jenna Rackerby
New Louisiana State Legislation Rolls Back Advantages Long Afforded to Personal Injury Claimants
Louisiana has enacted new laws addressing the burden of proof and limitation on damages in personal injury claims. These enactments not only affect claims arising on land but also may extend to claims arising on fixed structures in state waters and on the Outer Continental Shelf, where state law has been applied as surrogate federal law. Among the notable new legislative actions are the enactment of Code of Evidence Article 306.1, the amendment of Civil Code Article 2323(A), and the enactment of Civil Code Article 2323(D).
The newly enacted Code of Evidence Article 306.1 is meant to overrule the long-held evidentiary standard of Housley v. Cerise, 579 So.2d 973 (La. 1991), otherwise known as the Housley Presumption. Under the rule of Housley, a claimant’s personal injury was presumed to have resulted from the accident in controversy so long as the claimant could prove that the injury in question did not exist prior to the accident’s occurrence. This was widely considered to be a liberal standard, highly favoring plaintiffs engaged in litigation. Now, Art. 306.1 does away with this presumption, as it expressly states that “the lack of a prior history of an illness, injury, or condition shall not create a presumption that an illness, injury, or condition was caused by the act that is the subject of the claim.” Of note is the fact that the updated provisions of Art. 306.1 will not be applied to presently ongoing matters. It is to have “prospective application only” and therefore will apply exclusively to causes of action arising after it goes into effect. Nonetheless, Art. 306.1 will create a more onerous burden of proof for claimants in personal injury actions brought under Louisiana state law, much to the benefit of defendants in the same.
The changes to Civil Code Article 2323 center on state law theories of comparative fault. Prior to the signing of this new legislation, Civ. Code Art. 2323(A)(1) provided that a claimant found to have suffered injury, death, or loss partially due to his own negligence would see his recoverable damages reduced in proportion to the “degree or percentage of negligence attributable” to the claimant. This language has been removed from the statute entirely. Instead, Civ. Code Art. 2323(A)(2)(a) will now provide that a claimant found to be at least 51% responsible for his own injury will not be entitled to recovery of any related damages whatsoever. The sentiment of the rule as it was previously written is preserved in altered form in Civ. Code Art. 2323 (A)(2)(b), however, which now reads that a claimant found to be less than 51% responsible for his injuries will see his recoverable damages reduced in proportion “to the degree or percentage of negligence attributable” to the claimant. In addition to its amendments to Civ. Code Art. 2323(A), the legislature has added a Civ. Code Art. 2323(D), which provides that “[i]n cases where the issue of comparative fault is submitted to the jury, the jury shall be instructed on the effect of this Article.” This is to say that juries tasked with assigning percentages of fault to each party will receive instruction outlining the new ramifications of Civ. Code Art. 2323.
Impact on the Environment and Potentially Greater Impact on Administrative Law – SCOTUS Today
Readers of this blog will recall our recent discussion concerning the U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, in which the Court overruled the long-standing doctrine of Chevron U.S.A. Inc. v. Natural Resources Defense Counsel.
Under Chevron, courts had been required to defer to “permissible” agency interpretations of ambiguous statutes even where a reviewing court might have read the statute differently from the agency.
Instead, the Court held in Loper Bright that the Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous. As the Court put it, “Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.”
Yesterday, in a significant environmental case, Seven County Infrastructure Coalition v. Eagle County, the Court provided a gloss on Loper Bright, now describing an issue of administrative law where a court must defer to the judgment of an agency.
The case arose when the Seven County Infrastructure Coalition applied to the U.S. Surface Transportation Board (“the Board”), the agency empowered by federal law with authority over new railroad construction and operation, to approve construction of an 88-mile railroad line connecting the oil-rich Uinta Basin with Gulf Coast refineries. The Board, consistent with the National Environmental Policy Act (NEPA), held six public hearings, received more than 1,900 public comments, and then issued a 3,600-page Environmental Impact Statement (EIS) that addressed various environmental effects of the railway’s construction and operation.
However, the EIS noted, but did not fully analyze, the potential effects of increased upstream oil drilling in the Uinta Basin and increased downstream refining of crude oil. The Board ultimately approved the railroad line through a cost-benefit analysis. However, the U.S. Court of Appeals for the District of Columbia Circuit held that the Board impermissibly limited its analysis by failing to link it to consideration of the ancillary effects related to the project. The Supreme Court reversed, holding that the D.C. Circuit failed to afford the Board “the substantial judicial deference required in NEPA cases and incorrectly interpreted NEPA to require the Board to consider the environmental effects of upstream and downstream projects that are separate in time or place from the Uinta Basin Railway.”
Wait a second: You might say that Loper Bright says “no deference,” and Seven County mandates a lot of it. What gives?
The answer is that the two cases are not about the same thing.
Loper Bright is about the interpretation of an ambiguous statute, a matter of law that is the province of the judiciary, not an agency.On the other hand, there is no asserted ambiguity in NEPA’s dictates. Instead, it is a matter of compliance based on the consideration of facts and their application to predictive scientific determinations that are matters for agency experts, not judges. In such cases, a reviewing court is “most deferential” to agency determinations.
Interestingly, no Justice dissented from yesterday’s ruling. The operative, majority opinion of the Court was written by Justice Kavanaugh, who as I’ve written previously, has succeeded retired Justice Breyer as the Court’s leader on administrative law matters. Kavanaugh was joined by the Chief Justice and Justices Thomas, Alito, and Barrett. Justice Sotomayor, joined by Justices Kagan and Jackson, wrote separately, concurring in the judgment based on statutory language and case precedent that the Board lacked authority to reject the construction application on account of the harms that third parties would suffer with respect to products that the railway would transport. They criticize the majority for relying too much on policy matters instead of text and caselaw. Justice Gorsuch recused. Thus, no Justice would have ruled against the Board.
Strict adherence to the majority decision might help the reader make wise litigation choices, recognizing that a court provides the relevant frame of inquiry as to the resolution of jurisdictional arguments where statutes are ambiguous. That is why, for example, without any reference to Chevron, the Court ruled against the government in another environmental case, West Virginia v. Environmental Protection Agency. But agencies are going to get great deference with respect to judgments in their areas of scientific or other expertise. In such a case, it might be wise to focus on trying to demonstrate that agency action is “arbitrary and capricious” in what it actually did or failed to do in a manner consistent with eroding presumption.
Yesterday’s decision suggests that arguments about whether a particular report is detailed enough are matters of agency discretion that should not be second-guessed by a court. So, arguments premised on length, or the lack of it, are going to fail. The same thing goes for time. Expeditiousness is now favored as to NEPA determinations; the fact that consideration wasn’t lengthy is unlikely to be disqualifying. Moreover, because an agency’s predictive and scientific judgments as to relevant impacts and potential alternative actions are presumptively valid, their validity, as Justice Kavanaugh notes, is going to come down to “common sense.”
In the case at bar, “the Board’s determination that its EIS need not evaluate possible environmental effects from upstream and downstream projects separate from the Uinta Basin Railway complied with NEPA’s procedural requirements, particularly NEPA’s textually mandated focus on the ‘proposed action’ under agency review. While indirect environmental effects of the project itself may fall within NEPA’s scope even if they might extend outside the geographical territory of the project or materialize later in time, the fact that the project might foreseeably lead to the construction or increased use of a separate project does not mean the agency must consider that separate project’s environmental effects.”
Investment Management Client Alert May 2025
ESMA Publishes Final Reports on Liquidity Management Tools
On 15 April 2025, the European Securities and Markets Authority (ESMA) published its final reports on the Regulatory Technical Standards (RTS) and the Guidelines on Liquidity Management Tools (Guidelines). The liquidity management tools (LMTs) were significantly amended by the Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD) review. ESMA has a mandate to develop the regulatory technical standards and guidelines and initiated a consultation on this in July 2024.
The RTS are intended to specify the characteristics of the nine LMTs that have been introduced by the AIFMD review. The Guidelines, which are to be read together with the RTS, also concern the selection, activation, and adjustment of the LMTs.
The Guidelines contain a breakdown of the LMTs into three categories: quantitative-based tools (e.g., redemption suspension and restriction), anti-dilution tools (e.g., redemption fees), and other tools (e.g., separating illiquid investments into so-called side pockets). Management companies should assess which LMTs are suitable for which fund types and in which (normal or stressed) market situations and provide a number of examples.
Compared to the consultation, the RTS provide for greater flexibility in the design of the activation limits for redemption restrictions. The requirement for LMTs to be applied uniformly across all share classes has been removed (except for the case of suspension). The organizational requirements for a so-called LMT policy to be drawn up have also been removed from the Guidelines.
In principle, the European Commission has three months to adopt the RTS or submit proposals for amendments (15 July 2025). The RTS will enter into force 20 days after adoption by the European Commission, although no explicit date is specified for the applicability of the regulations in the RTS and Guidelines (the AIFMD review itself must be implemented by 16 April 2026). A 12-month transitional period applies to investment funds that already exist prior to the date of applicability of the RTS and Guidelines.
ESMA Publishes Final Report on MiFID II Best Execution Requirements
On 10 April 2025, ESMA published its final report on the RTS on best execution. The best execution requirements in the EU Markets in Financial Instruments Directive (MiFID II) were amended as part of the MiFID II review. ESMA has a mandate to develop the technical regulatory standards and initiated a consultation on this in July 2024.
Investment firms executing client orders must monitor the effectiveness of their order execution policy and arrangements and assess, among other things, whether execution venues are providing the best possible result for clients. The RTS should specify criteria to be taken into account when determining and assessing the effectiveness of the order execution policy.
The RTS stipulate that the selected trading venue must be regularly reviewed on the basis of alternative trading venues to ensure that the best possible result is achieved for the client. Compared to the consultation, the requirements for selecting the trading venue have been simplified (e.g., fewer selection criteria).
The European Commission generally has three months to adopt the RTS or submit proposals for amendments (10 July 2025). The RTS enter into force 20 days after adoption by the European Commission. The RTS are applicable 18 months after entry into force.
ESMA Consults RTS on ESG Rating Regulation
On 2 May 2025, ESMA published a consultation paper on draft RTS regarding various aspects of the European Environmental, Social, and Governance (ESG) Rating Regulation.
The ESG Rating Regulation aims to contribute to the transparency and quality of ESG ratings by improving the integrity, transparency, comparability, responsibility, reliability, good governance, and independence of ESG ratings.
The draft RTS defines information that ESG rating providers should provide in applications for authorization and recognition. In addition, the draft details the measures and safeguards that should be put in place to mitigate the risks of conflicts of interest for ESG rating providers when they also engage in activities other than issuing ESG ratings. Finally, the draft proposes information that ESG rating providers should disclose to the public, rated entities, and issuers of rated entities, as well as users of ESG ratings.
ESMA will review the consultation feedback received by 20 June 2025 and plans to publish a final report in October 2025.
ESMA Publishes New Consolidated PRIIPs Q&A
On 5 May 2025, ESMA published an updated version of its Consolidated Questions and Answers (Q&A) on the PRIIPs Key Information Document (KID). Compared to the last version dated 15 March 2024, the document contains further clarifications regarding the definition of the class for the market risk measure (MRM class), the performance scenarios, and the calculation of the summary cost indicator. Regarding entry costs (e.g., issue premiums), for example, it is clarified that these are included in the assumed investment amount of EUR 10,000 (as per point 90 of Annex VI of Delegated Regulation (EU) 2017/653) and are not added on top.
BaFin Consults on “Circular on Members of the Management Board and of Administrative and Supervisory Bodies pursuant to the German Banking Act (KWG)”
On 14 May 2025, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, or BaFin) published a draft of a “Circular on Members of the Management Board and of Administrative and Supervisory Bodies pursuant to the German Banking Act” (also known as the “Fit and Proper” Circular) for consultation. The final circular is intended to replace the existing “Guidance Note on Managers in accordance with the KWG, ZAG and KAGB” and the “Guidance Note on Members of Administrative and Supervisory Bodies in accordance with the KWG and KAGB”. The aim of the new circular is to summarize the currently existing individual guidance notes for the future in order to avoid duplication and to implement common European guidelines, insofar as BaFin adopts these in its administrative practice. It also contains completion and administrative instructions and takes into account requirements from the German Risk Reduction Act (Risikoreduzierungsgesetz). The consultation is open for comments until 13 June 2025.
BaFin Consults on Ordinance to Simplify Holder Control Procedures and Certain Personal Notifications
On 20 May 2025, BaFin published a draft of an “Ordinance on the Simplification of Holder Control Procedures and Certain Personal Disclosures” for consultation. This ordinance is intended to simplify the holder control procedure in relation to credit institutions, financial services institutions, insurance companies, pension funds, and insurance holding companies in accordance with the German Holder Control Regulation Ordinance (Inhaberkontrollverordnung – InhKontrollV) and in relation to other financial companies to which the InhKontrollV applies accordingly with regard to the documents (e.g., certificates of good conduct) and declarations (e.g., CVs) to be submitted. Indirect acquirers who are not at the top of the acquiring group should, as a rule, no longer have to submit any documents beyond the notification of their intention to acquire, and, in the case of holder control proceedings relating to leasing and factoring institutions in liquidation, the submission of documents may be waived if necessary. Further simplifications focus on natural persons and the documents relating to their reliability. The consultation is open for comments until 5 June 2025.
BaFin Plans Product Intervention With Regard to Trading in Turbo Certificates
BaFin announced on 21 May 2025 that it intends to restrict trading in turbo certificates by issuing a general ruling due to significant concerns for investor protection, and that it is now launching a consultation with affected market participants. Accordingly, the marketing, distribution, and sale of the products shall only be permitted under certain conditions in the future. In particular, a standardized risk warning is to be included, bonuses (e.g., reduced order fees) are no longer to be granted, and an extended appropriateness test is to be carried out. This was preceded by a market investigation by BaFin, which found that 74.2% of investors had suffered losses when trading these leveraged derivative products. The legal bases for this supervisory measure are Art. 42 of the European Markets in Financial Instruments Regulation (MiFIR) and § 15 (1), sentence 2, of the German Securities Trading Act (Wertpapierhandelsgesetz) in conjunction with Art. 42 MiFIR. Responses to the planned measure can be submitted to BaFin until 3 July 2025.
Trump Administration Will Replace the Biden Administration’s Department of Labor Rule Permitting ESG Investing
Under the Biden Administration, the Department of Labor (“DOL”) had issued a rule that permitted ESG factors to be considered when making investments on behalf of 401(k) plans. (This rule had replaced an earlier one from the first Trump Administration that had expressly forbidden that practice.) Despite lawsuits questioning the validity of the rule, and the demise of the Chevron doctrine (that afforded greater judicial deference to agency decision), the Biden Administration’s DOL rule had nonetheless survived these legal challenges. (In part, this may be due to the fact that the conservative federal court judge in Texas presiding over the case had determined that the rule–enabling ESG factors to be considered as a “tiebreaker”–would have little practical impact.) However, the demise of this Biden Administration policy, despite the successful defense of this initiative in the courts, is now certain. On May 28, 2025, lawyers from the Trump Administration’s Department of Justice officially reported to the Fifth Circuit Court of Appeals (the court currently exercising jurisdiction over the legal challenge) that the “Department [of Labor] has reported that it will engage in a new rulemaking on the subject of the challenged rule”–in other words, the Biden Administration DOL rule will soon be replaced by a new rule that will likely prohibit the consideration of ESG factors when investing 401(k) plans.
This development is not especially surprising, and reflects the regulatory reversal between Republican and Democratic administrations. Nevertheless, it is still significant, as it demonstrates the continuing salience of ESG and its financial implications on the policy disputes between the political parties in the United States.
The Trump administration will replace a controversial Biden-era rule permitting companies that sponsor workplace 401(k)s to consider eco-friendly factors when picking and choosing investments on behalf of workers and retirees. Lawyers for the government filed a status report Wednesday telling the US Court of Appeals for the Fifth Circuit it will engage in rulemaking set to appear on the US Labor Department’s spring regulatory agenda. A notice-and-comment rulemaking process would be required to rescind the rule altogether. The Biden rule’s demise marks an escalation in Republican efforts to root out environmental, social, and corporate governance investing from the federal as well as state and local governments. The rule served as a proxy for conservative ire against “woke” Wall Street activity under Biden, who had to exercise his veto power in 2023 against a bipartisan attempt to axe the rule ….
news.bloomberglaw.com/…
McDermott+ Check-Up: May 30, 2025
THIS WEEK’S DOSE
Senate Prepares to Take Up Reconciliation Bill. Discussions about the bill’s real-world implications continued during this week’s recess.
HHS Removes COVID-19 Vaccine Recommendations for Healthy Children, Pregnant Women. US Department of Health and Human Services (HHS) Secretary Kennedy announced the change without input from the agency’s independent advisory panel.
CMS Increases Oversight on States Providing Medicaid to Certain Immigrants. The Centers for Medicare & Medicaid Services (CMS) announced that it will take actions to ensure states are not using federal Medicaid funds to cover healthcare for ineligible individuals.
President Trump Signs EO on Science Research. The executive order (EO) seeks to adopt new “gold standard” science principles.
CMS Requests Information From Hospitals on Gender-Affirming Care. The letter seeks data on certain hospitals’ provision of gender-affirming care to minors.
CONGRESS
Senate Prepares to Take Up Reconciliation. When the Senate returns from the Memorial Day recess next week, it starts a busy four-week stretch leading up to the Independence Day recess. During this period, leaders intend to advance the budget reconciliation package, the One Big Beautiful Bill Act, H.R. 1. As Senate Republican leaders consider their intraparty political balancing act (they can only lose three votes for the bill to still advance), expect changes to the House-passed bill, which Speaker Johnson (R-LA) advanced through his chamber by a narrow 215 – 214 margin just before Memorial Day.
In an updated analysis of the estimated revenue effects of H.R.1’s tax provisions, the Joint Tax Committee found that, in total, the bill loses $3.94 trillion in revenue. On the healthcare front, the House Ways and Means Committee’s changes to the Affordable Care Act (ACA) are estimated to save more than $150 billion in revenue. We do not have the Congressional Budget Office’s (CBO’s) final estimate of the coverage loss associated with these policy changes, but its preliminary May 18, 2025, analysis estimated that 2.1 million people would become uninsured as a result of the House Ways and Means Committee’s changes. These policies also interact with ACA policies included by the House Energy and Commerce Committee, so we await the updated CBO analysis to get a more complete picture of the combined impact of the bill’s provisions.
As discussion about the bill’s impact on state budgets continues, 20 Republican governors sent a letter to President Trump in support of the One Big Beautiful Bill Act; notably, the Republican governors of Florida, Nevada, New Hampshire, Ohio, Oklahoma, South Dakota, and Vermont did not sign on.
ADMINISTRATION
HHS Removes COVID-19 Vaccine Recommendations for Healthy Children, Pregnant Women. In a video posted on X, HHS Secretary Kennedy, alongside US Food and Drug Administration (FDA) Commissioner Makary and National Institutes of Health (NIH) Director Bhattacharya, announced that the Centers for Disease Control and Prevention’s (CDC’s) vaccine recommendations will no longer include the COVID-19 vaccine for healthy children and pregnant women. Normally, the Advisory Committee on Immunization Practices (ACIP) provides vaccine recommendations, and the CDC director is responsible for adopting them. Only then do the recommendations become official CDC policy. CDC previously adopted ACIP’s recommendation that all Americans six months and older, including pregnant women, get at least one updated COVID-19 vaccine. Kennedy’s announcement comes before ACIP’s scheduled meeting in June to make recommendations about fall shots, meaning the decision was made without input from the independent advisory panel.
CMS Announces Plans to Increase Oversight on States Providing Medicaid to Certain Immigrants. In a letter to states, CMS Administrator Oz clarified that federal Medicaid funding is only available for limited Medicaid coverage necessary for treatment of an emergency medical condition for individuals who meet all Medicaid eligibility requirements but are not lawful permanent residents. He announced that, in an effort to ensure states do not use federal Medicaid funds to cover healthcare for ineligible individuals, CMS will undertake the following actions:
Focused evaluations of select state Medicaid spending reports (CMS-64 form submissions).
In-depth reviews of select states’ financial management systems.
Assessment of existing eligibility rules and policies to close loopholes and strengthen enforcement.
CMS urges all states to immediately examine and update internal controls, eligibility systems, and cost allocation policies to ensure full compliance with federal law, and reminded states that any improper spending will be subject to recoupment of the federal share. Read the press release here.
President Trump Signs EO on Science Research. The EO, “Restoring Gold Standard Science,” directs:
The Office of Science and Technology Policy (OSTP) to issue guidance to agencies within 30 days for adopting new “gold standard” science principles, including that science is reproducible, transparent, collaborative, and without conflicts of interest.
Federal agencies to update their processes and report to OSTP within 60 days about implementation progress.
Federal agencies to ensure that employees do not engage in scientific misconduct, to publicly report certain data, and to communicate uncertainty within 30 days.
The EO states that the Biden administration politicized science by encouraging agencies to incorporate diversity, equity, and inclusion. The EO reinstates scientific integrity policies from the first Trump administration, encouraging US research organizations to adopt these standards. Read the fact sheet here.
CMS Requests Information From Hospitals on Gender-Affirming Care. A letter to certain hospitals requested information about quality standards adherence and federal funding related to gender-affirming care procedures for minors. This letter follows previous actions from the Trump administration regarding gender-affirming care for minors and reiterates concerns about the long-term risks of such care previously communicated in an executive order, a report reviewing best practices for gender dysphoria treatment, and a quality and safety special alert memo for hospitals. The letter requests certain information within 30 days, including the following, and does not cite the authority for requesting such data:
Information regarding informed consent protocols.
Planned changes to clinical guidelines in response to the gender dysphoria report.
Any adverse events in response to gender-affirming care.
Billing codes used for specified procedures.
Facility- and provider-level revenue, operating margins, and profit margins for each specified procedure.
Projected revenue forecasts for each service line.
A list of hospitals that received the letter has not been released. Read the press release here.
QUICK HITS
HRSA Revises CHGME Resident Count Methodology. The Health Resources and Services Administration (HRSA) finalized a previously proposed change to how Children’s Hospitals Graduate Medical Education (CHGME) full-time equivalent (FTE) residency slots are counted to align with the methodology CMS uses for the Medicare graduate medical education FTE resident cap.
CMS Innovation Center Adjusts KCC Model. The updates to the Kidney Care Choices (KCC) Model adjust financial methodology and participation options beginning in performance year 2026. The center also extended the model through 2027.
House Energy and Commerce Democrats Seek Answers on HHS Staffing Changes. The letter asked HHS Secretary Kennedy to answer questions sent in an April 2025 letter that have still not been answered, and posed additional questions about legal compliance, impacts of staff and grant terminations at FDA and NIH, and other issues. Read the press release here.
BIPARTISAN LEGISLATION SPOTLIGHT
Sens. Rounds (R-SD), Blackburn (R-TN), and Heinrich (D-NM) introduced S. 1399, the Health Tech Investment Act, which would create a Medicare reimbursement pathway for FDA-cleared AI-enabled devices. Read the press release here.
NEXT WEEK’S DIAGNOSIS
Congress will be back in session next week, and the FY 2026 appropriations process will get underway in earnest as the House Appropriations Committee begins its markups (see full schedule here). The committee intends to finish marking up all 12 of its annual spending bills by July 24, 2025, with the Labor-HHS bill scheduled as the final markup. Meanwhile, as noted above, the Senate is turning its attention to reconciliation.We anticipate more details on the president’s FY 2026 budget request may be released to Congress shortly, though reports indicate that the full FY 2026 request may not be unveiled until after the reconciliation package is completed. Congressional Republicans will use the request as they move through the appropriations process. We also expect the Trump administration to send a recissions package to Congress next week that is anticipated to include about $9 billion in clawbacks of already-approved funding for the current fiscal year. The recission process is a formal way for Congress to fast track recommended cuts in spending by the administration. Congress will have 45 days to consider the recission package. Congress can choose to approve it, delete some provisions, or not consider it at all, but Congress does not have the opportunity to add new policies to a recissions package. We wait to see if health policies are included in the package.
Supreme Court Restores Agency Deference In NEPA Reviews
On May 29, 2025, the United States Supreme Court issued an 8-0 opinion in Seven County Infrastructure Coalition, et al. v. Eagle County, Colorado, et al. that affirmed agency deference in review of environmental documents prepared under the National Environmental Policy Act (NEPA).[1] This important decision will bring much-needed certainty for project developers and financing agencies that should reduce permitting obstacles resulting in greater time and cost savings to developers.
In approving an 88-mile railroad line in northeastern Utah, the Surface Transportation Board prepared a comprehensive Environmental Impact Statement (EIS) consisting of more than 3,600 pages and analyzing impacts to local wetlands, land use, and recreation. The EIS declined to analyze the potential effects of upstream oil and gas drilling or downstream oil refining as outside the Surface Transportation Board’s jurisdiction. On appeal, the D.C. Circuit vacated the approval of the railroad line, finding that the Surface Transportation Board failed to take the requisite “hard look” at all of the environmental impacts of the railway line as it impermissibly limited its analysis of upstream and downstream projects.[2]
The Supreme Court reversed the judgment of the D.C. Circuit and held that the Surface Transportation Board appropriately reviewed the environmental effects of the proposed railroad line under NEPA. The Court affirmed a number of important aspects of judicial review under NEPA:
NEPA is a procedural statute and simply prescribes the necessary process for an agency’s environmental review of a project;
Under NEPA, an agency’s only obligation is to prepare an adequate report and NEPA imposes no substantive constraints on the agency’s ultimate decision to approve a project;
A court’s review must be at its “most deferential” when reviewing the sufficiency of an agency’s analysis of project alternatives and environmental impacts; and
Agencies retain discretion to determine where to draw the line with respect to indirect impacts.
In recent years, courts have “strayed and not applied NEPA with the level of deference demanded by the statutory text” and have “engaged in overly intrusive (and unpredictable) review in NEPA cases.”[3] The Court correctly notes that these court decisions “have slowed down or blocked many projects and, in turn, caused litigation-averse agencies to take ever more time and to prepare ever longer EISs for future projects.”[4]
Energy infrastructure project developers have long faced substantial uncertainty with respect to court review of agency NEPA actions. Project costs have skyrocketed as opponents have weaponized NEPA to block the development of essential energy infrastructure. Today’s Supreme Court decision is a welcome and overdue affirmation of agency discretion.
Footnotes
[1] Seven Cty. Infrastructure Coalition, et al. v. Eagle Cty., Co., et al., No. 23-975 (May 29, 2025).
[2] Eagle Cty. v. Surface Transp. Bd., 82 F.4th 1152, 1196 (2023).
[3] Opinion at 12.
[4] Id.
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Trump Administration Redefines “Harm” Under the Endangered Species Act (ESA)
On April 17, 2025, the U.S. Fish and Wildlife Service and the National Marine Fisheries Service (together, the “Services”) proposed to rescind their longstanding regulatory definition of “harm”, which has for decades served as a foundational element in ESA enforcement and permitting.
The ESA prohibits any action that “harasses, harms, pursues, hunts, shoots, wounds, kills, traps, captures, or collects” endangered or threatened species. Historically, the Services have defined “harm” to include “significant habitat modification or degradation which actually kills or injures wildlife by significantly impairing essential behavioral patterns, including breeding, feeding, or sheltering.” This expansive definition enabled the Services to regulate indirect impacts—such as habitat destruction—that may not immediately result in observable injury or death but nonetheless threaten species survival.
Under the Services’ proposed approach, “harm” would be interpreted more narrowly to encompass only affirmative, intentional actions that directly affect protected wildlife. As a result, incidental or indirect impacts—like habitat modification—may no longer trigger ESA liability or require Section 7 consultation. This change could significantly reduce the regulatory burden for developers, infrastructure planners, and federal permitting agencies, particularly where activities occur in or near designated critical habitats.
How Did We Get Here?
For decades, the Services’ definition of “harm” has been a linchpin of ESA enforcement. Because direct violations—like killing or injuring protected wildlife—are often nearly impossible to detect or prove, regulators have relied on habitat modification as a more practical and observable proxy for prohibited actions.
This approach won approval in Babbitt v. Sweet Home Chapter of Communities for a Great Oregon (1995), where a divided U.S. Supreme Court upheld the Services’ interpretation as reasonable under Chevron deference, though it noted other readings were possible. Indeed, Justice Antonin Scalia’s sharp dissent argued that the ESA’s active, purposeful verbs— “harass,” “pursue,” “shoot,” and “capture”—show Congress intended to prohibit only deliberate, direct acts against wildlife, not indirect effects like habitat degradation, which he saw as stretching the law beyond its text and burdening landowners unfairly.
The Services’ proposed rule now echoes Scalia’s view, presenting the narrowed definition of “harm” as a return to the ESA’s original intent. They argue this shift is necessary after the Supreme Court’s 2024 Loper Bright Enterprises v. Raimondo decision, which eliminated Chevron deference, and directed courts to decide for themselves the “single best reading” of a statute.
What This Means Going Forward
Prospective Application Only. The proposed rule would apply only to future actions. Existing ESA authorizations—including Section 10 incidental take permits (ITPs), Section 7 consultation determinations, and past enforcement actions—would remain unaffected. However, new projects, especially those located near designated critical habitats, will need to reevaluate their ESA exposure under this revised framework.
Impact on Permitting and Compliance. By excluding habitat modification from the definition of “harm,” the rule could substantially reduce permitting obligations and enforcement risk for industries like energy, infrastructure, and real estate development. Projects such as solar farms, data centers, pipelines, and wind installations—frequently sited in areas that may support listed species—might no longer require incidental take permits unless they involve direct, purposeful harm to wildlife.
Impact on Section 7 Consultations. Federal agencies may also adopt narrower views of their obligations to consult under Section 7 of the ESA. If habitat impacts alone no longer constitute prohibited take, fewer projects may trigger the need for interagency consultation. This approach aligns with the Trump administration’s deregulatory efforts to streamline environmental reviews for major infrastructure and energy projects.
Uncertainty and the Need for Guidance. Although the Services intend to clarify the scope of ESA liability, eliminating the regulatory definition of “harm” may introduce new uncertainties. Courts and regulated entities will be left to interpret the statutory language without agency guidance, potentially leading to inconsistent judicial outcomes and enforcement practices. Clear, timely guidance from the Services will be critical to ensure predictability and reduce legal risk during the transition.
State-Level and Citizen Enforcement. Many states—including California, New York, and Massachusetts—have enacted their own ESA-style statutes with broader definitions of prohibited conduct. These states are likely to maintain expansive interpretations of “harm” regardless of federal changes, and they have already submitted critical comments on the proposed rule. Developers and landowners in these states must stay alert to stringent regulations, which can impose substantial restrictions beyond federal requirements. At the same time, citizen suits that have historically relied on habitat-based “harm” claims may face new hurdles in federal court if the Services’ narrower interpretation prevails.
Looking Ahead
The public comment period closed on May 19, 2025. The Services are now reviewing feedback and may revise the proposal before issuing a final rule. Given the far-reaching implications for ESA enforcement, federal permitting, and environmental litigation, stakeholders—especially those with projects in or near ecologically sensitive areas—should closely monitor this issue and be prepared for potential implementation hurdles and litigation challenges.
Supreme Court Hits the Reset Button on the National Environmental Policy Act
On May 29, 2025, the US Supreme Court pressed the reset button on the National Environmental Policy Act (NEPA), issuing an 8-0 decision intended to convert what NEPA has become, a “judicial oak,” back into the originally intended “legislative acorn.” Justice Kavanaugh, joined by Chief Justice Roberts and Justices Thomas, Alito and Barrett, penned the opinion of the Court in Seven County Infrastructure Coalition v. Eagle County. Justice Sotomayor, joined by Justices Kagan and Jackson, wrote a concurrence.
The question before the Court was whether NEPA requires an agency to evaluate environmental impacts from projects that may be separate in time or space from the project before the agency. Under NEPA, federal agencies have an obligation to evaluate the environmental impacts of a federal action or project that are “reasonably foreseeable” effects of the action. The infrastructure project at the center of the litigation is an 88-mile-long railway in Utah’s Uinta Basin. The railway’s proposed purpose is to transport goods, predominantly expected to be waxy crude oil, out of the Basin and towards refineries along the Gulf Coast. In the project opponents’ challenge to the US Surface Transportation Board’s (STB) decision to approve the railway, the DC Circuit held that the STB had failed to consider the effects of increased oil refining along the Gulf Coast and the additional oil production that might take place in the Basin. Key to the Supreme Court’s opinion, the DC Circuit found that these effects were attributable to the railway.
Pulling from its decisions dating back to 1976, the Court’s opinion implements clear principles for NEPA analysis and judicial review of agency actions under NEPA. The Court deemed these principles necessary in response to decisions by lower federal courts that created requirements beyond those established in NEPA, resulting in fewer projects, delayed projects, unnecessarily expensive projects and fewer jobs. First, Seven County emphasizes that “the central principle of judicial review in NEPA cases is deference.” Unlike when an agency interprets a statute and is due no deference under Loper-Bright, when an agency is exercising discretion granted by statute that agency must have “broad latitude to draw a ‘manageable line’” (quoting Public Citizen). The decision provides clear direction to cease “overly intrusive (and unpredictable) review,” stating that as long as the NEPA review “addresses environmental effects from the project, courts should defer to agencies’ decisions about where to draw the line….” In the Court’s view, this deference is informed by the fact that NEPA is a procedural statute intended to put information before the decisionmaker, not to result in any particular decision. “The bedrock principle of judicial review in NEPA cases can be stated in a word: Deference.”
The Court’s opinion goes on to address the central question — whether NEPA requires the STB to consider “upstream drilling in the Uinta Basin and downstream oil refining along the Gulf Coast.” In answering the question firmly in the negative, the Court explained: “if the project at issue might lead to construction or increased use of a separate project … the agency need not consider the environmental effects of that separate project.” Presumably anticipating future factual applications of this principle, the Court acknowledges that “a new airport may someday lead to a new stretch of highway; a new pipeline to a new power plant; a new housing development to a new subway stop” but the text of NEPA focuses the agency only on the “project at hand” and not the effects “of future or geographically separate projects.” This aspect of the decision has the potential to change agency approach to NEPA review and furthers the administration’s direction in the wake of the withdrawal of the Council on Environmental Quality NEPA regulations.
The Court’s opinion addresses an issue that has been plaguing infrastructure projects in recent years: whether a project’s approval should be vacated for NEPA deficiencies, effectively requiring that the agency start over and the project stop. The Court concluded that “[e]ven if an [environmental impact statement] falls short in some respects, that deficiency may not necessarily require a court to vacate the agency’s ultimate approval of a project, at least absent reason to believe that the agency might disapprove the project if it added more to the [environmental impact statement].” The Court’s conclusion on this issue creates questions surrounding whether federal courts will be able to discern what information might lead the agency to disapprove of the project, and whether courts are qualified to do so.
Justice Sotomayor’s concurring opinion criticizes the majority for engaging in policy analysis but arrives that the same conclusion under prior Supreme Court precedent — that NEPA did not require the STB to analyze the downstream and upstream projects and their effects because the STB’s permitting statute does not allow the Board to reject the railway project because of effects that may be caused by third parties. “NEPA requires consideration of environmental impacts only if such consideration would result in information on which the agency could act.”
In Seven County, the Supreme Court reiterates and expands upon its prior NEPA precedent in an effort to redirect the federal courts and agencies — to reverse the transformation of NEPA “from a modest procedural requirement into a blunt and haphazard tool employed by project opponents … to try to stop or at least slow down new infrastructure and construction projects.” In so doing, the Supreme Court adds support to the substantial changes in NEPA implementation that are ongoing in an eventful year.
Foley Automotive Update- May 29, 2025
Trump Administration Trade and Tariff Policies
Foley & Lardner provided an overview for multinational companies regarding the most common False Claims Act risks that may arise from improper management of import operations.
A May 28 ruling from the U.S. Court of International Trade suspended a significant portion of the Trump administration’s tariffs, after the panel determined the executive branch had wrongfully invoked an emergency law to justify the levies. The Trump administration has requested a stay and appealed the ruling.
The Department of Commerce on May 20 issued the “procedures for submission of documentation related to automobile tariffs,” for automobile importers to comply with the process of identifying the amount of U.S. content in each model imported into the United States. The agency stated there were roughly 200 repeat importers of subject automobiles in 2024. The notice indicated there are 13 OEMs with automobile operations in Canada and Mexico, with production spanning 54 vehicle model lines.
The Commerce Department on May 20 announced preliminary determinations that active anode material produced in China is unfairly subsidized by the Chinese government, which could lead to anti-subsidy duties on imports. The agency expects to issue final determinations in countervailing duty (CVD) investigations later this year. Active anode material is a key component in lithium-ion batteries.
China began issuing a limited number of export licenses for certain rare earth magnets, following weeks of uncertainty after the nation imposed trade restrictions over certain rare earth minerals and magnets in early April. The magnets are essential for a range of auto components.
Section 232 tariffs will not help the United States diversify its sources of critical minerals and reduce its reliance on China, according to a recent letter from the National Association of Manufacturers to the Commerce Department. The NAM suggested policymakers should instead pursue permitting reforms, secure favorable trade and investment terms with international allies, and enact strategic incentives to enhance domestic production. China mines roughly 70% of the world’s rare earths, and the nation has a 90% share for the processing of rare earths mined worldwide.
President Trump on May 25 stated the U.S. will delay implementation of a 50% tariff on goods from the European Union from June 1 until July 9, 2025.
Automotive Key Developments
In a May 29 Society of Automotive Analysts Coffee Break webinar, Ann Marie Uetz of Foley & Lardner and Steven Wybo of Riveron provided an overview of the mounting risk of EV programs and the resulting key takeaways for automotive suppliers.
Crain’s Detroit provided an update regarding the status of several ongoing legal disputes between Stellantis and certain suppliers.
MEMA survey data found three-quarters of automotive suppliers expect worse financial performances in 2025 than previously anticipated. In addition, more than half of the trade group’s members are concerned about sub-tier supplier financial distress resulting from higher tariff-related costs, as well as the potential for North American production volumes to fall as low as 13.9 million to 14.3 million this year.
U.S. new light-vehicles sales are projected to reach a SAAR of 15.6 million units in May, according to a joint forecast from J.D. Power and GlobalData. The analysis estimates “approximately 149,000 extra vehicles were sold” in March and April ahead of the expectation for higher prices due to tariffs, and the “re-timed sales will present a headwind to the industry sales pace for the balance of this year.”
The National Highway Traffic Safety Administration submitted its interpretive rule, “Resetting the Corporate Average Fuel Economy Program,” to the White House for review. The Environmental Protection Agency is pursuing parallel vehicle emissions rules.
The U.S. Senate on May 22 approved three House-passed Congressional Review Act resolutions to revoke EPA-granted waivers that allowed California to impose vehicle emissions standards that were stricter than federal regulations.
The “big, beautiful” tax and budget bill passed by the U.S. House on May 22 would terminate several tax credits for EVs after December 31, 2025, including commercial EVs under Section 45W, consumer credits of up to $7,500 for new EVs under Section 30D and up to $4,000 in consumer credits for used EVs under Section 25E, as well as a credit for charging infrastructure under Section 30C. The bill also included a measure to establish annual registration fees of $250 for electric vehicles and $100 for hybrid vehicles to supplement the Highway Trust Fund.
Companies that collect and store personal data will soon have to comply with a Department of Justice rule that restricts sharing bulk sensitive personal data with persons from China, Russia, Iran, and other countries identified as foreign adversaries. The Data Security Program implemented by the National Security Division (NSD) under Executive Order 14117 took effect April 8, 2025. However, the DOJ will not prioritize enforcement actions between April 8 and July 8, 2025 if a company is “engaging in good faith efforts” towards compliance.
While President Trump expressed approval for a “planned partnership” between Nippon Steel and U.S. Steel, questions remain about the timeline for the proposed $14 billion merger first announced in December 2023. The deal may involve a so-called “golden share,” allowing the U.S. federal government to weigh in on certain company decisions, according to unconfirmed reports.
The University of Michigan predicted U.S. vehicle prices could rise 13.2% on average, or by $6,200 per vehicle, due to tariffs and retaliatory trade policies.
OEMs/Suppliers
Plante Moran’s annual North American Automotive OEM – Supplier Working Relations Index® (WRI®) Study found supplier relationships improved with Toyota, Honda and GM, and declined with Nissan, Ford and Stellantis compared to last year’s study. Toyota gained 18 points for its highest WRI score since 2007, while Stellantis dropped 11 points and remains in last place.
Stellantis named Antonio Filosa as CEO, effective June 23. Filosa currently serves as chief operating officer for the Americas and chief quality officer.
GM will invest $888 million to produce next-generation V-8 engines at its Tonawanda Propulsion plant near Buffalo, NY, representing the largest single investment the automaker has ever made in an engine plant. The automaker canceled a $300 million investment to retool the plant to manufacture EV drive units.
Toyota will revise its supply chain process to provide 52-week forecasts using cloud-based forecasting tools.
Bosch has a goal for North America to represent 20% of its global sales by 2030.
Toyota is reported to be considering a compact pickup truck for the U.S. market to compete with the Ford Maverick and Hyundai Santa Cruz.
Market Trends and Regulatory
Ford will recall over one million vehicles in the U.S. due to a software error that may cause the rearview camera image to delay, freeze, or not display.
Installations of industrial robots in the automotive industry in 2024 rose 11% year-over-year to 13,700 units, and roughly 40% of all new industrial robot installations in 2024 were in automotive, according to preliminary analysis from the International Federation of Robotics. Deployments of automation technologies and robotics are expected to increase at U.S. factories in response to high tariffs and trade uncertainty.
Seventy-six percent of respondents in Kerrigan Advisors’ 2025 OEM Survey believe Chinese carmakers eventually will enter the U.S. market, and 70% are concerned about the impact of Chinese brands’ rising global market share.
New orders for heavy-duty trucks in North America fell 48% year-over-year in April to levels not seen since the onset of the Covid pandemic, according to ACT Research.
Autonomous Technologies and Vehicle Software
The Wall Street Journal provided an exclusive report on allegations that now-defunct San Diego-headquartered autonomous truck developer TuSimple shared sensitive data with various partners in China. The former CEO of TuSimple recently founded Houston-based self-driving truck developer Bot Auto.
Amazon’s Zoox plans to expand testing of its autonomous driving technology in Atlanta. Waymo offers driverless rides in Atlanta in partnership with Uber, and Lyft plans to roll out ride-hail services in the area with May Mobility later this year.
Reuters reports a project between Stellantis and Amazon to develop SmartCockpit in-car software is “winding down” without achieving its goals.
The New York Times provided an assessment of the regulatory and market risks that may complicate the rollout of driverless semi trucks in the U.S.
Swedish driverless truck startup Einride is considering a U.S. IPO.
Electric Vehicles and Low-Emissions Technology
Honda reduced its planned all-electric vehicle investments by over $20 billion as part of an electrification strategy realignment that will target 2.2 million hybrid-electric vehicle (HEV) sales by 2030.
Stellantis will delay production of its 2026 base-model electric Dodge Charger Daytona at its plant in Ontario due to uncertainty over market demand and the impact of tariffs.
Cox Automotive estimated inventory levels for new EVs reached a 99 days’ supply industrywide in April 2025, representing a YOY decline of 20% due to efforts by automakers to adjust production in response to consumer demand. The average transaction price (ATP) for a new EV was $59,255 in April, up 3.7% compared to April 2024.
Nissan is considering a deal to procure EV batteries in the U.S. from a joint venture between Ford and South Korea’s SK On, according to unnamed sources in Bloomberg and The Wall Street Journal.
Chinese EV maker BYD plans to establish a European hub in Hungary, with 2,000 jobs to support vehicle sales, after-sales service, testing and development.
Four New Executive Orders Aim to Unleash U.S. Nuclear Energy
On May 23, 2025, President Trump signed four new executive orders (the Orders) to “usher in a nuclear energy renaissance.” In an article, the White House explained that the Orders provide “a path forward for nuclear innovation” as they “allow for reactor design testing at [Department of Energy (DOE)] labs, clear the way for construction on federal lands to protect national and economic security, and remove regulatory barriers by requiring the Nuclear Regulatory Commission [(NRC)] to issue timely licensing decisions.” Characterizing the Orders as “the most significant nuclear regulatory reform actions taken in decades,” the White House declared that it is “restoring a strong American nuclear industrial base, rebuilding a secure and sovereign domestic nuclear fuel supply chain, and leading the world towards a future fueled by American nuclear energy.” Below is a summary of some of the significant aspects of the Orders.
Reforming Nuclear Reactor Testing at the Department of Energy
Finds that the design, construction, and operation of certain DOE-controlled advanced reactors fall within DOE’s jurisdiction.
Directs the Secretary of Energy to take actions to reform and streamline National Laboratory processes for reactor testing at DOE, including but not limited to, revising regulations to expedite the approval of reactors under DOE’s jurisdiction to enable test reactors to be safely operational within 2 years following submission of a substantially complete application.
Directs the Secretary of Energy to create a pilot program for reactor construction and operation outside the National Laboratories, and to approve at least three reactors under this program with the goal of achieving criticality in each of the three reactors by July 4, 2026.
Directs the Secretary of Energy to eliminate or expedite internal environmental reviews for authorizations, permits, approvals, and other activities related to reactor testing.
Deploying Nuclear Reactors for National Security
Directs the Secretary of Defense, acting through the Secretary of the Army, to create a program for building and deploying a nuclear reactor at a domestic military installation by September 30, 2028.
Directs the Secretary of Energy to take actions to deploy a privately funded advanced reactor to power artificial intelligence (AI) infrastructure and meet other national security objectives at a DOE site within 30 months.
Directs the Secretary of Energy to designate certain AI data centers that are located at or operated in coordination with DOE facilities as critical defense facilities, where appropriate, and the electrical infrastructure that power them as defense critical electric infrastructure.
Directs the Secretary of Energy to make available at least 20 metric tons of high-assay low-enriched uranium for private sector nuclear projects powering AI infrastructure at DOE sites.
Directs the Secretaries of Energy and Defense to enable the construction and operation of privately funded nuclear fuel facilities at DOE and/or Department of Defense (DOD) controlled sites for use in national security reactors, commercial power reactors, and non-power research reactors.
Directs the Secretary of State to take certain actions to promote the U.S. nuclear industry in the development of commercial civil nuclear projects globally.
Ordering the Reform of the Nuclear Regulatory Commission
Establishes a goal of quadrupling American nuclear energy capacity from 100 gigawatts (GW) to 400 GW by 2050.
Directs the reorganization of the NRC and a reduction in force in consultation with the Department of Government Efficiency.
Directs the NRC to undertake a wholesale review and revision of its regulations and guidance within 18 months, including but not limited to, establishing:
Fixed deadlines to evaluate and approve new reactor license applications within 18 months and applications for the continued operation of existing reactors within one year;
Science-based radiation limits, instead of relying on the linear no-threshold model for radiation exposure;
An expedited approval process for reactor designs that have been safely tested by the DOD or DOE; and
A process for high-volume licensing of microreactors and modular reactors.
Reinvigorating the Nuclear Industrial Base
Directs the Secretary of Energy to recommend a national policy regarding management of spent nuclear fuel and the development and deployment of advanced fuel cycle capabilities, evaluate policies concerning commercial recycling and reprocessing of nuclear fuels, and make recommendations for the efficient use of nuclear waste materials.
Directs the Secretary of Energy to develop a plan to expand domestic uranium processing and enrichment capabilities to meet projected civilian and defense reactor needs.
Halts the surplus plutonium disposition program, with certain exceptions, and directs the Secretary of Energy to process and make surplus plutonium available for advanced reactor fuel fabrication.
Leverages the authority in the Defense Production Act to seek voluntary agreements with domestic nuclear energy companies for the cooperative procurement of enriched uranium and for consultation regarding the management of spent nuclear fuel.
Directs DOE to prioritize the facilitation of 5 GW of power uprates to existing reactors and construction of 10 new large reactors by 2030.
Directs DOE’s Loan Programs Office and U.S. Small Business Administration to prioritize funding to support the nuclear energy industry.
Seeks to expand the American nuclear workforce by directing the Secretaries of Labor and Education to increase participation in nuclear energy-related training and apprenticeship programs and ordering the Secretary of Energy to increase access to DOE’s National Laboratories for nuclear engineering students.
Overall, the Orders signal a renewed commitment to revitalize the U.S. nuclear energy industry and build upon a well-established bipartisan consensus in favor of nuclear innovation, accelerating nuclear deployment, and strengthening domestic uranium supply chains. Nonetheless, efforts to reduce federal staffing and weaken NRC’s regulatory independence could compromise the viability of the Trump administration’s goal to “unleash nuclear energy in the U.S.,” placing greater importance on sound regulatory execution and legally durable policymaking.
Minnesota Extends Public Comment Period on Proposed PFAS Reporting Rule as Entities Voice Concerns about Compliance with Deadlines and Due Diligence Standards
On May 22, 2025, the Minnesota Pollution Control Agency (MPCA) held a public hearing on its “Proposed Permanent Rules Relating to PFAS in Products; Reporting and Fees” (proposed rule). Administrative Law Judge (ALJ) Jim Mortenson facilitated the hearing, which had more than 100 participants in attendance. MPCA has made available online the PowerPoint document used for the hearing presentation, the hearing exhibits, and a transcript of the hearing.
Procedural Background
The pre-hearing public comment period for the proposed rule closed on May 21, 2025. Under Minnesota administrative procedure, comments must be accepted for five days following a hearing on a proposed rule, and the overseeing ALJ may extend the comment period by no more than 20 days. Following the close of comments and a brief rebuttal period, the presiding ALJ will issue a report on the proposed rule within 30 days, unless an extension is granted.
The post-hearing comment period for the proposed rule has been extended until 4:30 p.m. (CDT) on June 23, 2025. A rebuttal period of five business days, lasting from the close of the public comment period until 4:30 p.m. (CDT) on June 30, 2025, will follow. Persons may respond to public comments during this rebuttal period, but they may not submit new comments. Any person who wishes to comment on the rule or provide rebuttal may do so via e-comments, mail, or fax. MPCA will not accept comments submitted via e-mail. Comments must be received by MPCA by the end of the respective periods, so persons planning to submit comments or rebuttals via mail should ensure comments are sent with enough time to reach MPCA by the cutoff.
To allow a proposed rule to move forward, the presiding ALJ must answer in the affirmative the following three questions: (1) Does the agency have legal authority to adopt the rule? (2) Has the agency fulfilled all relevant legal and procedural requirements to promulgate the rules? and (3) Has the agency demonstrated the need and reasonableness of each portion of the proposed rule? ALJ Mortenson will consider the comments provided both during the hearing and in writing as he evaluates the proposed rule following the close of the record. More information on the proposed rule is available in our April 22, 2025, memorandum.
Comments on the Proposed Rule
While the comments provided at the hearing covered a wide range of topics and industry concerns, two topics were the focus of many of the comments. First, commenting parties raised concerns about the statutory deadline for initial reporting of January 1, 2026. Second, commenters questioned whether the proposed due diligence standard, which requires reporting parties to search for information until all required information is known, is attainable. Supply chain and product complexity were cited as factors impacting the regulated community’s ability to meet the reporting deadline and to comply with the due diligence standard. Representatives of the following parties commented during the hearing (with links to written comments, if available):
The RV Industry Association spoke about the implications of reporting for complex products with potentially thousands of components and international supply chains and stated that the proposed due diligence standard is impractical.
The Complex Products Manufacturers Coalition (CPMCoalition) discussed the reporting deadline, stating that reporting by January 1, 2026, is infeasible for manufacturers of complex products because the manufacturers are the downstream users of many component parts. The CPMCoalition also commented on the due diligence standard, stating that “until all required information is known” is unachievable and asking MPCA to adopt the U.S. Environmental Protection Agency’s (EPA) “not known or reasonably ascertainable” (NKRA) standard instead.
The Alliance for Automotive Innovation (Auto Innovators) cited the challenges that component-level reporting places on products with potentially thousands of parts, such as vehicles. Auto Innovators also mentioned the proposed due diligence standard and the reporting timeline and noted that compliance with these would be burdensome to the regulated community.
Sustainable PFAS Action Network (SPAN) asked that the first reporting deadline be extended to allow affected entities to fulfill the regulatory obligations. SPAN also noted that additional exemptions should be offered for fluoropolymers and that greater confidential business information (CBI) protections should be available.
The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) reviewed the reporting deadline and noted that six months would not be enough time to fulfill the proposed regulatory obligations. AHRI asked that MPCA release a list of compounds meeting the definition of PFAS under the law and sought clarification on definitions and the scope of the regulations. Finally, AHRI asked that MPCA adopt EPA’s NKRA due diligence standard.
SEMI and the Semiconductor Industry Association (SIA) brought up the importance of PFAS in the semiconductor industry and noted that there are no viable alternatives for certain PFAS used in critical components of semiconductors.
The Association of Equipment Manufacturers (AEM) commented that the Toxic Substances Control Act’s (TSCA) Section 8(a)(7) NKRA due diligence standard should be adopted and noted that compliance is not feasible for industrial entities under the proposed due diligence standard and reporting deadline. AEM also noted that testing infrastructure and laboratory capacity to meet the reporting standard, as proposed, may not exist.
Perlick Corporation commented on the compliance implications with a fast-approaching deadline and primarily discussed issues related to accountability. Perlick noted that manufacturers may sell to distributors, which may then sell to contractors in various locations, and therefore a manufacturer may have no hand in a product entering Minnesota’s market. The corporation stated that requiring manufacturers to track where products end up is a problematic standard.
Daikin Applied Americas Inc. (DAA) mentioned the complexity of certain heating, ventilation, and air conditioning (HVAC) products and the burden that requiring information about each specific component would place on the manufacturer under the existing reporting deadline. DAA noted that it has about a 40 percent response rate from its top suppliers on information about PFAS in components, which does not include local businesses and smaller suppliers.
The American Coatings Association (ACA) noted that the existing reporting deadline is not viable. ACA also cited the testing requirements in the proposed rule and stated both that fluorine measurements are not a good approximation for PFAS and that estimates should be allowed, as they are more reliable than testing for certain products.
Environmental Law and Science PLLC noted that the proposed reporting deadline is not realistic, given how complex many supply chains are.
Sixty-six written comments were filed during the pre-hearing comment period. The majority of these comments echo points raised during the public hearing. In responding to comments, MPCA will need either to justify how the statutory reporting deadline and proposed due diligence standard can be met or issue reporting extensions and modify the due diligence standard in response to comments. MPCA will also likely address questions about scope, testing infrastructure and methodology, language clarifications, applicability of exemptions, and more.
Commentary
Manufacturers and other entities impacted by the proposed rule and upcoming reporting requirements that have not participated in these public comment opportunities should review the submitted comments and determine whether their respective interests and concerns have been adequately addressed. Entities should consider submitting comments about areas of concern or uncertainty, even if other comments have raised similar or identical issues. Reviewing existing comments may help entities better understand the potential legal and business impacts of the proposed rule. Comments are due by June 23, 2025, at 4:30 p.m. (CDT).
Catherina D. Narigon contributed to this article