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 (ESA) 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 (Interim CERPP) for the Toxic Substances Control Act (TSCA) New and Existing Chemicals Program. Their relevance is unclear.
FIFRA Settlement Pilot Program
EPA states that the “purpose of this Pilot Program is to provide an additional enforcement tool that encourages resource prioritization and violation deterrence through expedited resolution of cases involving minor violations that are easily correctible and do not cause significant health or environmental harm.”
Although “easily correctible” is not defined, from a timing perspective, it appears that EPA considers a violation easily correctible if FIFRA compliance can be achieved within 30 days, although EPA may, “at its discretion, grant an extension for corrective action in limited circumstances upon submission of a written extension request detailing why achieving compliance within 30 calendar days of receipt of this letter is infeasible or impracticable.”
EPA also provides the following “general parameters” that EPA considers when determining whether a case involves “minor violations” that are suitable for resolution under this Pilot Program, including but not limited to:
The case involves domestically produced or imported pesticides or device products.
The case does not require EPA review and approval of registration changes, including but not limited to labeling changes.
The total proposed penalty should not exceed $24,000, with a penalty matrix provided at Attachment B.
The company is not a “repeat violator” (noting that in the Pilot Program, EPA discusses when a repeat violator may be eligible under the Pilot Program depending on the type of violation and when the violation occurred and provides a hypothetical timeline when a ESA may be permissible).
The case does not involve criminal or fraudulent behavior (e.g., intentionally falsifying information).
For additional clarity, EPA lists at Appendix A the violations that are eligible for resolution under this Pilot Program.
If EPA determines that a case qualifies under the Pilot Program, EPA has developed a template cover letter and final order that it can provide to the company as an opportunity to resolve the violations. Upon receipt, if the company does not respond within 30 calendar days, the ESA is automatically withdrawn. EPA states that an “adequate response” from the ESA recipient would include the following:
Returning a signed agreement;
Paying the full penalty per the ESA terms offered; and
Submitting a signed, certified statement that Respondent no longer engages in violative activities, that the violations have been corrected, or that lists the steps Respondent has or will take to prevent recurrence of the violation(s), as applicable.
If an ESA is withdrawn, EPA without prejudice retains its ability to file any other enforcement action for the cited violation(s) and to seek up to the statutory maximum penalty for each violation.
Interim CERPP
EPA states that the Interim CERPP guidance is intended to help ensure that enforcement actions and the assessment of civil administrative penalties are “appropriate, nationally consistent and promote compliance among TSCA-regulated entities.” The CERPP contains the following Parts:
CERPP Part One provides cross-cutting background information: Introduction; TSCA Legal Background; Enforcement Response Options; and Regulatory Responses.
CERPP Part Two provides a cross-cutting overview of the process for determining penalties: Introduction; General Principles; Steps in Computing Civil Penalties; Factors as to Violation; and Factors as to Violator.
CERPP Part Three encompasses Modules for computing Gravity-based Penalties for specific Core TSCA programs, including: Module A for the Section 6(a) Rules.
CERPP Part Four presents the cross-cutting Gravity-based Penalty Matrix, which states the “initial” (per violation) Gravity-based Penalty dollar amount applicable in all Core TSCA programs.
CERPP Part Five provides cross-cutting guidance for adjusting (or remitting) the Gravity-based Penalty to derive the final civil administrative penalty in a case: Overview; Preliminary Information; Ability to Pay/Continue in Business; Prior Violation; Culpability; Other Matters Justice May Require; and Penalty Remittance.
Currently, there are several enforcement response policies (ERP) applicable to different statutory violations under TSCA:
Guidelines for Assessment of Civil Penalties Under Section 16 of the Toxic Substances Control Act, 45 Fed. Reg. 59770 (Sept. 10, 1980) (TSCA Penalty Policy), https://www.epa.gov/sites/default/files/documents/tscapen.pdf.
Final TSCA GLP Enforcement Response Policy, https://www.epa.gov/enforcement/final-tsca-glp-enforcement-response-policy.
Enforcement Response Policy for TSCA Section 4 Test Rules, https://www.epa.gov/enforcement/enforcement-response-policy-tsca-section-4-test-rules.
Amended TSCA Section 5 Enforcement Response Policy, https://www.epa.gov/enforcement/amendment-tsca-section-5-enforcement-response-policy-penalty-limit-untimely-noc.
Issuance of Revised Enforcement Response Policy for TSCA Sections 8, 12 & 13, https://www.epa.gov/enforcement/issuance-revised-enforcement-response-policy-tsca-sections-812-13.
EPA intends to consolidate and update these TSCA ERPs with this CERPP, but states that “until a module for a specific Core TSCA program is added to the CERPP, use the current ERP for that Core TSCA program.” When a module is available for a particular TSCA provision, the CERPP will be immediately effective and supersede any prior TSCA ERP.
At this time, the Interim CERPP appears to address only penalties for TSCA Section 6(a) violations, as described under “Module A,” and for which there is no current ERP counterpart.
As with all ERPs, the initial gravity-based penalty is determined based on three factors: nature, circumstances, and extent. Since there is no existing ERP for Section 6, the program-specific Module A provides EPA’s guidance for how it will consider Section 6(a) violations:
Nature: The Nature classification for all Section 6(a) violations is Chemical Control (CC), excluding recordkeeping violations. The Nature classification for recordkeeping violations under Section 6(a) is Control-associated Data-Gathering (CADG).
Circumstance: The Circumstance Level depends on the type of requirement that was violated, and EPA provides a chart to explain the “high,” “medium,” and “low” range Circumstance Levels.
Extent: The Extent Level Matrix establishes three classifications: Major, Significant, or Minor. For Section 6 violations, EPA describes how a violation will be classified based on two factors relevant to the unreasonable risks from Section 6(a) chemicals: (1) Potential Injury, meaning “the scope of the violation in relation to the potential injury from noncompliance;” and (2) Potentially Impacted Entity (PIE), meaning “the population or environment that could be subject to the potential injury from the violation.” The Interim CERPP provides additional guidance explaining how these classifications will be derived.
Commentary
EPA states that in issuing this FIFRA Settlement Pilot Program, its intent is to “decrease transaction costs and achieve speedy compliance.” This would seem to align with the recent Trump Administration’s Executive Order (EO) titled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative” that instructs agencies to “preserve their limited enforcement resources by generally de-prioritizing actions to enforce regulations that are based on anything other than the best reading of a statute” and “direct the termination of all such enforcement proceedings that do not comply with the Constitution, laws, or Administration policy.” The list of violations that are eligible for ESAs is limited, however. The Pilot Program is expected to be available for three years, so it will be interesting to see whether and how this Pilot Program is implemented.
While the Pilot Program might be considerably narrow, the Interim CERPP has the potential for much broader applicability. Although the current Interim CERPP only has a Module focused on Section 6(a), for which there is no current ERP, EPA has stated its interest in developing Modules for other TSCA Sections, which will then supersede those existing ERPs. The existing ERPs have many parallels and similarities, but they also address distinct differences depending on the TSCA sections at issue. There thus is the likelihood that one consolidated CERPP will impact how penalties are calculated for all TSCA violations, and stakeholders should be prepared to review carefully any additional Modules released.
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.
President Trump Issues Executive Order Promoting Domestic Mineral Production
On March 20, 2025, President Donald Trump signed a sweeping executive order promoting mining and processing of “critical minerals” in the United States. The order – Immediate Measures to Increase American Mineral Production – directs agencies of the federal government to prioritize and expedite permitting for mining and mineral processing projects, invoking the Defense Production Act among and other authorities. Key provisions include:
Expanded Critical Minerals List
For purposes of the order, “critical minerals” include uranium, copper, potash, and gold, in addition to the existing list of critical minerals designated by the secretary of the interior pursuant to the Energy Act of 2020 (30 U.S.C. § 1606(a)(3). Further, the order grants authority to Interior Secretary Doug Burgum, who serves as chair of the National Energy Dominance Council (NEDC), to add “any other element, compound, or material” to the critical minerals list.
Priority Projects
The order directs permitting agencies to identify all mine and mineral processing projects awaiting federal approvals, to issue permits and approvals immediately where possible, and to expedite all permitting activities. The NEDC is to identify mine and mineral processing projects for inclusion in the expedited permitting procedures available under the Fixing America’s Surface Transportation (FAST) Act (41 U.S.C. § 41003), and the Permitting Council must add the identified projects to the FAST Act Permitting Dashboard within 30 days of the order.
Mining the Primary Land Use
The Interior Secretary is instructed to provide a list of all federal lands known to contain mineral “deposits and reserves.” Mining and mineral processing are to be prioritized as the primary land use on these lands. Federal land managers are required to revise land use plans to align with the executive order’s directives.
Permitting Reform
To address regulatory inefficiencies, Interior Secretary Burgum, in his role as NEDC chair, is directed to publish a request for information seeking industry input on “regulatory bottlenecks” and “recommended strategies for expediting domestic mineral production.” The order further instructs the NEDC to develop legislative recommendations to clarify the treatment of mine waste disposal on federal lands under the Mining Law. This direction aims to address permitting delays and uncertainty stemming from Center for Biological Diversity v. U.S. Fish & Wildlife Service, 33 Fed. 4th 1202 (9th Cir. 2022) (commonly referred to as the “Rosemont” decision).
Defense Production Act
The order delegates Defense Production Act authority to the secretary of defense to facilitate domestic mineral production. Mineral production is to be added to the Defense Department’s Industrial Base Analysis and Sustainment Program as a priority area. The defense secretary is also directed to work with the International Development Finance Corporation to use financing authorities and mechanisms to advance mineral production, including the creation of a dedicated mineral production fund.
Unneeded Federal Lands for Mining Projects
The secretaries of defense, energy, interior, and agriculture are tasked with identifying sites on “unneeded” federal lands within their jurisdiction that are suitable for “leasing or development” under the authority of 10 U.S.C. § 2667 (Defense), 42 U.S.C. § 7256 (Energy), or other applicable authorities (Interior and Agriculture).
President Trump Revokes 2022 EO on Advancing Biotechnology and Biomanufacturing
On March 14, 2025, President Trump signed Executive Order (EO) 14236, rescinding 19 executive actions, including former President Biden’s September 2022 EO 14081, “Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy.” 90 Fed. Reg. 13037. According to the White House’s March 14, 2025, fact sheet, EO 14081 “funneled Federal resources into radical biotech and biomanufacturing initiatives under the guise of environmental policy.” As reported in our September 13, 2022, blog item, Biden’s EO created a National Biotechnology and Biomanufacturing Initiative to accelerate biotechnology innovation and grow America’s bioeconomy across multiple sectors in industries such as health, agriculture, and energy. EO 14081 called for the Secretary of Agriculture, the Administrator of the U.S. Environmental Protection Agency (EPA), and the Commissioner of Food and Drugs to identify areas of ambiguity, gaps, or uncertainties in the January 2017 Update to the Coordinated Framework for the Regulation of Biotechnology or in the policy changes made pursuant to the June 2019 EO 13874, “Modernizing the Regulatory Framework for Agricultural Biotechnology Products.” To update the Coordinated Framework, the U.S. Department of Agriculture (USDA), EPA, and the U.S. Food and Drug Administration (FDA) prepared The Coordinated Framework for the Regulation of Biotechnology: Plan for Regulatory Reform under the Coordinated Framework for the Regulation of Biotechnology, an ambitious plan to update, streamline, and clarify their regulations and oversight mechanisms for products of biotechnology. While the USDA, EPA, and FDA intended to release an updated Coordinated Framework in December 2024, the agencies did not do so. More information on the 2017 Update to the Coordinated Framework is available in our January 9, 2017, memorandum. More information on the 2024 Plan for Regulatory Reform is available in our May 16, 2024, memorandum.
House Republicans Demand Answers on Biden-Era EPA Allocations and Financial Agreements
Congressional Republicans have asked the Administrator for the Environmental Protection Agency (EPA) Lee Zeldin for a briefing on grants and funding awarded by the agency under the Biden Administration, signaling their interest in entering the controversy.
In the letter to Administrator Zeldin, House Oversight and Government Reform Committee Chair James Comer (R-Ky.) and Rep. Eric Burlison (R-Mo.), Subcommittee on Economic Growth, Energy Policy and Regulatory Affairs Chair, asked for a briefing “to better understand what EPA is uncovering about the Biden Administration’s allocation of funding resources to outside groups and its novel agreements with financial institutions to escape oversight.”
In the letter, Comer and Burlison raised concerns about the Biden Administration depositing $20 billion to Citbank as part of the Greenhouse Gas Reduction Fund (GGRF) grant program. Earlier this month, U.S. District Judge Tanya Chutkan temporarily blocked the Trump Administration from terminating these awards. However, the ruling does not permit grantees from drawing from the funds either.
The March 20 letter appears to be part of a larger coordinated effort to claw back EPA expenditures made by the previous administration under the Inflation Reduction Act (IRA). As we previously shared, the House Energy and Commerce Committee recently revealed its oversight plan for the 119th Congress, focusing on clean energy and advanced technology programs authorized under the Energy Policy Act of 2005, the Infrastructure Investment and Jobs Act (IIJA), and the Inflation Reduction Act (IRA).
Meanwhile, four Democratic Attorneys General led by Minnesota AG Keith Ellison – are suing the EPA for the climate grant cancellations, arguing that EPA’s actions violates fundamental constitutional guarantees of liberty in the separation of powers.”
Should you receive an inquiry from Congress, be it a letter or a phone call, take notice of the due date for a response.
When Congress initiates an inquiry, an initial request letters typically provides an exceedingly short time to respond, traditionally within two weeks of receipt. While this deadline is often negotiable, the optimal time to prepare for a Congressional investigation is before you hear from Congress.
Understanding potential political risks allows a company’s leaders to proactively take steps, on their own schedule, to reduce the impact of an investigation. These steps range from implementing appropriate records retention policies to conducting tabletop exercises, to engaging proactively with advocates on Capitol Hill.
Taking these steps before you hear from Congress empowers a confident response, allows for the development of a strategy to diffuse the conflict, and avoids the consequences of receiving a Congressional subpoena.
Should Congress request records or testimony, it is still very feasible to come to the table and negotiate an optimal outcome that avoids unnecessary exposure, while also responding to Congress with integrity.
If you receive a Congressional inquiry, call us. Womble Bond Dickinson (US) LLP has a team of leading practitioners with nuanced experiences guiding and advising clients through Congressional investigations.
Click here to read our previous client alert, “Congress Puts DOE & EPA Grants/Loans Under the Microscope.”
Interpretation and Application of EU Taxonomy Delegated Acts
Open Questions Regarding the Taxonomy Regulation
While the legislative file of the EU Taxonomy Regulation has been reopened with some proposed amendments by the Commission in its recently released Omnibus Sustainability Package, and a notice providing useful guidance to companies subject to the EU Taxonomy.
Following scrutiny by the European Parliament and the Council, the Taxonomy Environmental Delegated Act, the amendments to the Taxonomy Disclosures Delegated Act and to the Taxonomy Climate Delegated Act were published in the Official Journal on 21 November 2023 and these came into force on 1 January 2024.
The EU Commission released a Commission Notice on the interpretation and application of specific EU law provisions on 5 March 2025. Notably, the notice contains technical clarifications responding to frequently asked questions (FAQs) on the Technical Screening Criteria set out in the Taxonomy Climate Delegated Act (as amended) and the Taxonomy Environmental Delegated Act, as well as on the disclosure obligations for the non-climate environmental objectives laid down in the Taxonomy Disclosures Delegated Act.
The aim of the notice is to help stakeholders comply with the regulatory requirements in a cost-effective way and to ensure that the reported information is comparable and useful also in scaling up sustainable finance. Thereby, the EU Commission attempts to assist businesses in putting the law into practice by answering 155 questions that cover both the interpretation of the law and the justification of its provisions.
Key Topics of the Notice
The EU Commission specifically addresses inquiries about the following topics:
Mitigation and adaptation to climate change
Water and marine resources
Circular economy transition
Pollution prevention and control
Biodiversity and ecosystems
Generic Do No Significant Harm (DNSH) criteria
The questions in Section IX regarding the Taxonomy Disclosures Delegated Act reporting requirements are especially pertinent to the financial industry, with specific information given on the following subjects:
Timeframe for reporting on Taxonomy eligibility and alignment of economic activities
Modified reporting templates included in the Taxonomy Environmental Delegated Act
CapEx and OpEx reporting scope
Terminology interpretation
The Omnibus Simplification Package
The Commission has prior presented on 26 February 2025 its Omnibus Simplification Package, which aims to create a consolidated sustainability framework, and simplify overlapping EU reporting and due diligence requirements. The omnibus package also proposes several changes to the Taxonomy framework. For companies within the proposed amended CSRD scope (that is, large companies with more than 1,000 employees and a net turnover up to EUR 450 million), the proposal envisages voluntary taxonomy reporting, reducing the number of companies obliged to report their taxonomy alignment. Companies that partially meet EU taxonomy requirements can voluntarily report their progress. The notice published by the Commission on 5 March remains fully relevant in that context.
Maine Considers Bill to Establish Maximum Levels of PFAS in Farm Products
If passed, Maine’s SB130, titled An Act to Establish the PFAS Response Program and to Modify the Fund To Address PFAS Contamination, would be the first state law to establish PFAS limits in food (PFAS limits have been established for other categories of goods).
The bill would formally establish a PFAS response program to “respond to and address PFAS contamination affecting agricultural producers in the State, to assist commercial farms affected by PFAS contamination and to safeguard public health.” We note that the bill would in part codify existing portions of Maine’s PFAS response program, which has already set an action level for PFOS (a type of PFAS) in milk of 210 ppt.
Specifically, under the proposed bill, the PFAS response program would, among other things:
Establish maximum levels for PFAS in farm products (defined as “plants and animals useful to humans” and includes, by way of example, products ranging from grains and food crops to Christmas trees).
Provide PFAS testing support to help agricultural producers understand the extend of PFAS contamination and provide technical support to assist in mitigation efforts.
Provide financial assistance to PFAS-impacted agricultural producers.
Establish baseline criteria that agricultural producers would have to adhere to in order to receive technical and financial assistance, including granting property access to conduct PFAS investigations and providing relevant information to program staff.
We will continue to monitor and report on PFAS regulation.
February 2025 ESG Policy Update — Australia
Australian Update
ASIC’s Key Issues Outlook for 2025
On 24 January 2025, the Australian Securities and Investments Commission (ASIC) released its key issues outlook for 2025 which provides insights for Australian businesses and consumers on the most significant current, ongoing and emerging issues within ASIC’s regulatory remit.
ASIC emphasised its desire to be a proactive regulator, ensuring a safe environment for Australian businesses and markets whilst safeguarding consumers. ASIC noted that key factors influencing its perspective on the issues facing Australia’s financial system included:
Increased market volatility;
Geopolitical changes;
The global accumulation of debt to drive growth;
Perceived and real inequality of wealth;
Shifts in the way capital is invested; and
Advances in artificial intelligence, data and cyber risk.
Among other issues, ASIC identified poor quality climate-related disclosures as leading to misinformed investment decisions. ASIC noted that informed decision making by investors is facilitated by the provision of high quality, consistent and comparable information regarding a reporting entities’ climate related risks and opportunities.
Furthermore, ASIC emphasised the importance of reporting entities having appropriate governance and reporting processes to comply with new mandatory climate reporting obligations introduced as part of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth), which took effect on 1 January 2025. Please refer to our earlier summary of the regime here.
ASIC also noted it will continue to scrutinise disclosures which misrepresent the green credentials of a financial product or investment strategies. Please refer to our summary of ASIC’s guidelines to prevent greenwashing here.
AU$2 Billion Investment in Clean Energy Finance Corporation
On 23 January 2025, the Australian Government announced it is providing an additional AU$2 billion to the Clean Energy Finance Corporation (CEFC). This is Australia’s specialist investor in the nation’s transition to net zero emissions.
The investment aims to enable the CEFC to support Australian households, workers and businesses who are making the shift to renewable energy by offering significant savings.
The investment aims to also help deliver reliable, renewable, cost-saving technologies to the Australian community by generating an expected AU$6 billion in private investment. It is anticipated that this will come from global and local organisations looking to capitalise on the nation’s future renewable energy plan.
This follows the CEFC’s announcement on 16 January 2025 that it had invested AU$100 million in a build-to-rent strategy to facilitate the design and delivery of affordable, sustainable and high-quality homes. These homes will harness the benefits of clean energy technologies, by aiming to be highly efficient, fully electric and powered by renewable energy.
Since its establishment in 2012, the CEFC has played a key role in helping Australia strive towards its emissions reduction targets. In 2024, the CEFC invested over AU$4 billion in local projects which the Australian Government claims unlocked around AU$12 billion in private investment and supported over 4,000 Australian jobs.
Superannuation CEO Roundtables Emphasise Importance of Consistent Climate Risk Disclosures
The Australian Prudential Regulation Authority (APRA) and ASIC recently hosted two Superannuation CEO Roundtables in November and December of 2024, attended by 14 chief executive officers (CEOs) and other executives from a cross-section of superannuation funds. Climate and nature risks were the key focus of discussions, given the recent legislation mandating climate-related financial disclosures and the introduction of the Australian Sustainability Reporting Standards.
The CEOs collectively acknowledged the importance of consistent climate risk disclosure whilst emphasising the need for clear and practical guidance from regulators and calling for standardised metrics, methods and scenarios to ensure comparability across the industry. The CEOs also outlined the current challenge of aligning different reporting standards across jurisdictions. The host regulatory bodies recognised the value of consistency with international standards of climate risk reporting. They noted that appropriate alignment can avoid duplication of efforts, ensure Australian superannuation funds remain in line with global best practices and provide for effective disclosures for members through which informed investment decisions may be made. In turn, discussions further touched on the impact of climate risk on investment strategies and the selection of investment managers and custodians, highlighting the impact on investment decision-making by participants across the industry.
The discussion also covered nature risk, with APRA interested in understanding how superannuation trustees are addressing nature risk given it is a topic of growing importance. It was acknowledged this was a topic that should continue to be explored.
Participants also discussed the role of industry bodies, and all agreed these bodies can play a crucial role in supporting trustees navigate the complexities of the data. ASIC and APRA expressed their commitment to support the superannuation industry and collaborate with industry bodies to drive consistent and accurate disclosures, effective communication with members and alignment with global standards.
Australian Government Announces Green Iron Investment Fund
On 20 February 2025, the Australian Government announced an AU$1 billion Green Iron Investment Fund to support green iron manufacturing and its supply chains by assisting early mover green iron projects and encouraging private investment at scale. “Green iron” refers to iron products made using renewable energy.
Australia is the world’s largest iron ore producer, earning over AU$100 billion in export income in the 2023-24 financial year. The iron and steel industry supports more than 100,000 jobs within Australia.
An initial AU$500 million of the Green Iron Investment Fund will be used to support the Whyalla Steelworks (Whyalla) after the Premier of South Australia, Peter Malinauskas, placed Whyalla into administration on 19 February 2025. The funding is proposed to transform Whyalla into a hub for green iron and steel.
Whyalla is considered strategically important for Australia due to its manufacturing capacity, highly skilled workforce, and access to a deep-water port, high-grade magnetite ore reserves and renewable energy sources.
The remaining AU$500 million will be available for nationwide green iron projects, targeting both existing facilities and new developments. Several companies within the industry are already exploring low-carbon iron production from the Pilbara ores in Western Australia.
The Green Iron Investment Fund is the latest initiative from the Australian Government aimed at bolstering Australia’s green metals sector. Existing initiatives include:
An AU$2 billion investment in Australian-made aluminium;
Passing legislation to deliver Production Tax Credits for hydrogen and critical minerals;
Investing in major critical minerals and rare earth projects through the Critical Minerals Facility;
An AU$3.4 billion investment in Geoscience Australia to accelerate the discovery of resources; and
Funding Hydrogen Headstart to support Australia’s hydrogen and clean energy industries.
View From Abroad
CFOs Expect Higher Returns from Sustainability Initiatives than Traditional Investments
A new report from Kearney, ‘Staying the Course: Chief Financial Officers and the Green Transition’ (Report), released on 17 February 2025, reveals that chief financial officers (CFOs) across the world are prioritising sustainability investments.
Despite recent speculation that investments in the green economy would face a slowdown, this Report clearly indicates that out of more than the 500 CFO respondents across several jurisdictions, including the United Kingdom, United States, United Arab Emirates, and India, 92% noted their intention to increase current investments in sustainability. This Report also found that of all the CFOs surveyed:
69% expected a higher return from sustainability initiatives than from traditional investments;
93% saw a clear business case for investing in sustainability; and
61% saw sustainability investments primarily as a cost decision rather than as something that creates value.
This commitment to increasing climate investments indicates that sustainability investment is not viewed as merely an arm of corporate social responsibility but is also seen as an integral means to maximise efficiencies and returns, take advantage of market opportunities and navigate rapidly evolving regulatory landscapes.
Decision to Scrap DEI Policies May Be Indicative of a Broader Trend
The recent omission of diversity, equity, and inclusion (DEI) commitments from numerous listed companies in their annual filing with the US Securities and Exchange Commission may be a harbinger of a broader global trend which could have repercussions for Australia’s environmental, social and governance (ESG) investment landscape.
Many of Australia’s largest funds currently hold significant capital under management which is invested based on ethical criteria.
DEI policies are integral to a company’s ESG rating, as determined by third-party analytics firms, particularly through the lens of social responsibility practices. By demonstrating a commitment to DEI, companies not only fulfil ethical obligations but also align with investor expectations for responsible corporate behaviour, thereby positively influencing their ESG rating. Contrastingly, deprioritising DEI commitments may result in reduced investor demand and potential exclusion from ESG-focused indices.
In the weeks since President Donald Trump signed executive orders to remove DEI hiring initiatives in the US government and its federal contractors, several US companies have begun withdrawing from similar commitments, potentially signalling a broader global trend that other companies might follow. Companies who withdraw from DEI-related commitments may face the possibility of a decrease in their ESG ratings. Broader market consequences include potentially increased volatility in the ESG indices and long-term negative impacts on corporate performance and investor confidence in sustainable economic growth.
Funds with active ESG investment strategies will need to monitor this trend to ensure that their investment portfolios maintain any positive or negative screens and that any ESG disclosures are not misleading or deceptive. ASIC has shown through its recent enforcement activity targeting greenwashing that it will pursue fund managers who do not have appropriate measures in place to ensure the effectiveness of its ESG-related representations.
Nathan Bodlovich, Cathy Ma, Daniel Shlager, and Bernard Sia also contributed to this article.
The authors would like to thank graduates Daniel Nastasi, Katie Richards, Natalia Tan and clerk Juliette Petro for their contributions to this alert.
Foley Automotive Update 19 March 2025
Foley is here to help you through all aspects of rethinking your long-term business strategies, investments, partnerships, and technology. Contact the authors, your Foley relationship partner, or our Automotive Team to discuss and learn more.
Special Update — Trump Administration and Tariff Policies
Foley & Lardner partner Kathleen Wegrzyn addressed a number of FAQs regarding force majeure and price increases amid the current turbulent tariff landscape.
Key tariff announcements include:
President Trump on March 17 told reporters that “in certain cases, both” 25% sector-specific tariffs as well as unspecified “reciprocal tariffs” could apply on U.S. imports beginning April 2. U.S. imports that have been traded duty-free under the United States-Mexico-Canada Agreement (USMCA) are exempt — until April 2 — from the 25% tariffs on goods from Mexico and Canada that were announced on March 4.
Following the implementation of 25% tariffs on U.S. imports of steel and aluminum, Canada on March 13 imposed levies on C$29.8 billion in U.S. imported goods. This follows 25% tariffs on C$30 billion of products Canada announced on March 4.
Mexican President Claudia Sheinbaum thus far has not moved forward with a plans to apply retaliatory tariffs on U.S. imports.
The European Union intends to reinstate 2018 and 2020 countermeasures on April 1 against a range of U.S. goods, with a more extensive retaliatory tariff package planned for later next month.
China imposed tariffs on U.S. goods including large-engine vehicles, as well as export and investment controls on over two dozen U.S. firms after the Trump administration applied 20% duties on Chinese imports.
Automotive Key Developments
Analysis from S&P Global Mobility indicates the disruptive effects of 25% tariffs on all vehicle imports could potentially reduce North American production “by up to 20,000 units per day within a week.” S&P predicted a 50% probability for a tariff-related “extended disruption scenario” this year, during which certain high-profile vehicles “will slow or cease production.”
MichAuto and AlixPartners described volatile tariff policies as “crippling” and “debilitating” for the automotive industry and noted the ongoing uncertainty has already damaged OEMs’ and suppliers’ ability to make investment and product decisions.
Statements from MEMA and the American Automotive Policy Council emphasized the potential for significant cost increases for automakers, suppliers, and consumers resulting from the 25% tariffs on U.S. imports of steel and aluminum. In addition, a recent survey by the vehicle suppliers association found 97% of respondents had concerns regarding increased financial distress among sub-tier suppliers due to the announced tariffs, and over 80% of surveyed suppliers are exposed to steel and aluminum derivative tariffs.
Tariffs on steel and aluminum could raise costs up to$400 to $500 per vehicle on average, with the potential for greater impact on larger, aluminum-intensive vehicles such as the Ford F-150 pickup.
Relocating an assembly line between existing facilities can take up to eight months, and an automaker would likely need up to three years or longer to fully staff and significantly build out new U.S. manufacturing capacity.
Ford is reported to be amassing inventories of USMCA-compliant parts to mitigate the effects of tariffs, and the automaker has told its suppliers to keep shipping under existing terms, according to an update from Crain’s Detroit.
Automotive News assessed the exposure of certain EV brands to the impact of U.S. import tariffs.
University of Michigan economists projected U.S. new light-vehicle sales will reach 16.3 million units in 2025, while noting the projections have “substantial uncertainty” due to trade policy volatility. The economists also expect steel and aluminum tariffs to “raise production costs in the automotive supply chain,” and the levies could reduce Michigan’s employment by approximately 2,300 jobs by 2026.
Preliminary discussions concerning the renewal of the USMCA suggested a revised pact could result in higher tariffs for non-compliance, according to unidentified sources in The Wall Street Journal.
The Environmental Protection Agency on March 12 announced 31 deregulatory actions that include the reconsideration of the Biden administration’s emissions standards for light-duty, medium-duty and heavy-duty vehicles.
OEMs/Suppliers
While tariffs in the U.S., Canada, and the EU may continue to impede sales by Chinese automakers in the near term, market share is rising in emerging markets for Chinese brands that include BYD, Great Wall Motor, Chery Automobile, and SAIC Motor Corp.
Volkswagen intends to reduce production and headcount at its Chattanooga, Tennessee plant to support cost-cutting initiatives and in response to lower EV demand. Planned layoffs across VW Group have reached nearly 48,000 globally, including a 30% headcount reduction at its Cariad software unit by the end of this year.
Ford will invest €4.4 billion ($4.8 billion) in its German operations, in an effort to boost sluggish sales in Europe.
Nissan named Ivan Espinosa, currently serving as Chief Planning Officer, to succeed CEO Makoto Uchida, effective April 1.
Market Trends and Regulatory
U.S. new light-vehicle inventory reached 3 million units at the beginning of March, representing an 89-day supply industrywide, according to analysis from Cox Automotive.
The percentage of subprime auto borrowers at least 60 days past due on their loans reached 6.56% in January, representing the highest level in over 30 years, according to data from Fitch Ratings. The share of auto loans in serious delinquency across all borrower types was 2.96% in the fourth quarter of 2024, compared to 2.66% in Q4 2023 and 2.22% in Q4 2022.
Kelley Blue Book estimates that new-vehicle sales incentives were up 18.6% year-over-year in February 2025. The average incentive package last month reached 7.1% of average transaction price, or $3,392, compared to 6% of ATP in February 2024.
U.S. Senate Republicans introduced the Preserving Choice in Vehicle Purchases Act (S. 2090) to “prevent the elimination of the sale of motor vehicles with internal combustion engines” by limiting the Environmental Protection Agency’s issuance of certain Clean Air Act waivers.
GM has again applied with the Federal Deposit Insurance Corp. to establish an industrial bank, and this would enable the automaker to hold deposits and expand their financial offerings to consumers, dealerships, and employees. Stellantis and Ford have also recently submitted applications for banking licenses.
U.S. House lawmakers included language in an amendment to the Full-Year Continuing Appropriations and Extensions Act that effectively “removes the ability for any House members to use an expedited process” to compel a vote for the remainder of this calendar year on whether to terminate the national emergency declaration utilized as the basis to pursue tariffs on imports from Canada and Mexico. The “continuing resolution” (CR) to fund the federal government through the rest of the fiscal year 2025 was signed by the president on March 15, 2025.
Autonomous Technologies and Vehicle Software
Industry organizations, including the Alliance For Automotive Innovation, urged the Department of Transportation to establish a national framework to support the deployment of autonomous vehicles.
NVIDIA will collaborate with GM and Magna to advance next-generation vehicle technologies. NVIDIA has described artificial intelligence technologies in the auto industry as a “trillion-dollar opportunity.”
GM named Barak Turovsky, formerly of Cisco and Google, as its first Chief Artificial Intelligence Officer.
Ford announced tech veteran Mike Aragon will join the company as President, Integrated Services. The position is expected to support the automaker’s goals to boost revenue from software-enabled subscriptions and features.
Autonomous trucking startup Bot Auto plans to begin its first driver-out commercial freight pilot program in Texas this year, on routes between Houston and San Antonio. Houston-based Bot Auto was founded in 2023 by former TuSimple CEO Xiaodi Hou.
Electric Vehicles and Low-Emissions Technology
Over 50% of new EV purchases in the fourth quarter of 2024 were leases, and EVs accounted for nearly 20% of all new vehicle leases during the quarter, according to data from Experian released this month.
BYD plans to launch new charging technology on certain models in China next month that will enable 400 kilometers (249 miles) of range with five minutes of charge time, or roughly the same duration required to refuel comparable gas-powered models.
Cadillac intends to begin production of the electric 2026 Cadillac Escalade IQL in mid-2025 at GM’s Factory Zero electric vehicle assembly plant in Detroit.
Volkswagen recently debuted its ID Every1 electric minicar concept, and the low-cost EV will be the brand’s first model to use software from the automaker’s joint venture with Rivian.
Isuzu will invest $280 millionto establish a commercial EV plant in Piedmont, South Carolina.
UAW members ratified their first labor agreement at the Ultium Cells joint venture battery plant in Spring Hill, Tennessee.
SK On will supply Nissan with nearly 100 gigawatt-hours of batteries from 2028 to 2033, to support future EV models produced at the automaker’s Canton, Mississippi plant.
Stellantis will invest €38 million ($41 million) to produce EV engine parts at its Verrone transmissions plant in Italy.
Analysis by Julie Dautermann, Competitive Intelligence Analyst
California Delays Extended Producer Responsibility Regulations for Plastic and Packaging: Three Takeaways
Earlier this month, California Governor Gavin Newsom directed the state’s recycling agency, CalRecycle, to restart the process of issuing regulations for California’s landmark plastic and packaging extended producer responsibility (EPR) law.
Over the past year, CalRecycle has been working to finalize implementing regulations by March 7. Facing a one-year deadline to finalize the regulations, Governor Newsom asked them to start again.
CalRecycle will now issue a new administrative rulemaking notice and reopen draft regulations for public comment. The agency is expected to revise its proposed rules due to Governor Newsom’s concern over the cost of the initial draft regulations, estimated at $36 billion over 10 years.
As this development with California’s EPR legislation shows, EPR programs for plastic and packaging are still evolving. Even before Governor Newsom’s decision, CalRecycle had revised its draft regulations twice in response to public feedback. We have previously covered trends in plastic regulation at state, national and global levels here and here, as well as California’s first-in-the-nation producer responsibility law for textiles here.
An overview of California’s plastic and packaging EPR law and key takeaways for impacted businesses follow below.
California’s EPR Landscape
In 2022, California enacted the Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54), setting ambitious goals for reducing and recycling plastic. By 2032, the law requires:
A 25% reduction in single-use plastic packaging and food ware.
65% of single-use plastic packaging and food ware to be recycled.
100% of single-use packaging and plastic food ware to be recyclable.
The law also sets interim recycling targets, requiring 30% plastic packaging and food ware recycling by 2028, and 40% Fby 2030.
The law requires “producers” of “covered material” to join a producer responsibility organization (PRO), a nonprofit organization formed by producers. The PRO works with CalRecycle and producers to build and operate source reduction and recycling programs.
“Covered material” includes single-use packaging and plastic food service ware, such as plates and utensils. The “producer” is typically a California-located entity that owns or licenses the brand under which the covered product is sold. If there is no California-located entity, the distributor into California is considered the “producer.”
The PRO’s responsibilities include submitting a program plan for CalRecycle’s approval, detailing how it will meet the law’s targets. For example, the plan may involve creating recycling programs, like curbside or drop-off collection, or improving sorting processes. To fund these efforts, the PRO will assess fees on producers. It will also collect funds for California’s Plastic Pollution Mitigation Fund. From 2027-2037, the PRO must deposit $500 million annually into the fund. CalRecycle has named the Circular Action Alliance as the PRO.
Takeaways
There are three key takeaway points from the regulated community:
EPR Programs Are Evolving: Although some EPR laws have existed for decades, producer responsibility for many products is new. Recent years have seen state EPR laws for batteries, pharmaceutical drugs, tires, and household items such as mattresses, textiles, paint, and carpets. We expect more regulatory developments over the next several years, as states refine these laws and their implementing regulations.
Impacted Businesses Have Another Chance to Comment: By restarting the regulatory process, businesses have another opportunity to comment on the proposed regulations. California law requires at least 45 days for public comment on new proposals.
Potential Changes in Regulation: Over the past year, CalRecycle considered whether to include plastic-coated paper items in its source reduction and recycling rate targets. CalRecycle decided to include these items (composed mostly of paper and less than 20% plastic) because it believed that option better served the law’s goals. However, given Governor Newsom’s concern about program cost, CalRecycle may decide to exclude these items from some recycling targets.
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February 2025 Bounty Hunter Plaintiff Claims
California’s Proposition 65 (“Prop. 65”), the Safe Drinking Water and Toxic Enforcement Act of 1986, requires, among other things, sellers of products to provide a “clear and reasonable warning” if use of the product results in a knowing and intentional exposure to one of more than 900 different chemicals “known to the State of California” to cause cancer or reproductive toxicity, which are included on The Proposition 65 List. For additional background information, see the Special Focus article, California’s Proposition 65: A Regulatory Conundrum.
Because Prop. 65 permits enforcement of the law by private individuals (the so-called bounty hunter provision), this section of the statute has long been a source of significant claims and litigation in California. It has also gone a long way in helping to create a plaintiff’s bar that specializes in such lawsuits. This is because the statute allows recovery of attorney’s fees, in addition to the imposition of civil penalties as high as $2,500 per day per violation. Thus, the costs of litigation and settlement can be substantial.
The purpose of Keller and Heckman’s latest publication, Prop 65 Pulse, is to provide our readers with an idea of the ongoing trends in bounty hunter activity.
In February of 2025, product manufacturers, distributors, and retailers were the targets of 341 new Notices of Violation (“Notices”) and amended Notices, alleging a violation of Prop. 65 for failure to provide a warning for their products. This was based on the alleged presence of the following chemicals in these products. Noteworthy trends and categories from Notices sent in February 2025 are excerpted and discussed below. A complete list of Notices sent in February 2025 can be found on the California Attorney General’s website, located here: 60-Day Notice Search.
Food and Drug
Product Category
Notice(s)
Alleged Chemicals
Prepared Foods: Notices include falafel mix, organic veggie wraps, cassava chips, protein bites, plant-based chili mac, vanilla pudding, soba noodles, plant-based flavored ramen, biryani masala, and tofu veggie burger
46 Notices
Lead and Lead Compounds, and Cadmium
Dietary Supplements: Notices include plant-based fruit shakes, daily greens and multivitamins, superfood smoothie kits, customized protein powder, astragalus, chickpea plant-based protein powder, ashwaganda powder, maca root powder, sparkling probiotic elixir
22 Notices
Lead and Lead Compounds, Cadmium, and Mercury
Fruits, Vegetables, and Mushrooms: Notices include carrot juice, sun-dried tomatoes in olive oil, Greek marinated mixed olives, organic mixed vegetables, chopped kale, fruit and vegetable puree, pickled sliced ginger, mushroom powder extract, cactus nopalitos, and basmati rice
18 Notices
Lead and Lead Compounds, and Cadmium
Seafood: Notices include sun dried sea moss, dried seaweed knots, dried shrimp, sardines, calamari tubes and tentacles, seafood stock, cod liver, fermented fish paste, and mackerel in extra virgin olive oil
17 Notices
Cadmium and Cadmium Compounds, Lead and Lead Compounds
Herbs, Spices, and Seeds: Notices include freeze-dried mint, sunflower seeds, golden chai, and dried ginger
7 Notices
Lead and Lead Compounds, and Cadmium
Various Foods: Notices include traditional refried beans, hearts of palm, green pigeon peas, coconut milk, and olives with minced anchovies
5 Notices
Bisphenol A (BPA)
Dietary Supplements: Notices include plant-based post-workout protein powder, vegan protein muscle building fuel, and plant-based shakes
3 Notices
Perfluorooctanoic Acid (PFOA)
THC-Containing Products: Notices include cannabis-infused edibles
2 Notices
Delta-9-tetrahydrocannabinol
Cosmetics and Personal Care
Product Category
Notice(s)
Alleged Chemicals
Personal Care Items: Notices include body lotions, burn relief gel, facial scrubs, anti-cellulite hot creams, shave gels, healing gels, barrier repair skin creams, stem cell serums, hair makeup, sunscreen, liquid brow soap, shave gel with aloe
37 Notices
Diethanolamine
Cosmetics: Notices include mascara, UV neon makeup, fluid foundation, theatrical blood, body paint makeup, plumping lip balm, lip oil and glitter makeup
16 Notices
Diethanolamine
Consumer Products
Product Category
Notice(s)
Alleged Chemicals
Miscellaneous Consumer Products: Notices include polaroid card holder, foam puzzle play mat, PVC ice packs, jewelry pliers, brass candle snuffer, cup cleaning brushes, vinyl covers, bracelet holder, vinyl banners, PVC aprons, salt and pepper shakers with PVC components, and glassware with exterior designs
40 Notices
Di(2-ethylhexyl)phthalate (DEHP), Diisononyl phthalate (DINP), and Di-n-butyl phthalate (DBP), Lead
Bags and Cases: Notices include backpacks, shower curtain storage bags, makeup bags, phone bag, toiletry bags, dry bag, rug bag, tote bag with PVC components, and purses
27 Notices
Di(2-ethylhexyl)phthalate (DEHP), Di-isodecyl phthalate (DIDP), and Diisononyl phthalate (DINP)
Hardware and Home Improvement Products: Notices include hammer sets, kitchen accessories with USB cords, tire gauges, brass hose fittings, cables, thermometers, flush cutters, brass garden hose splitters
16 Notices
Lead, Di(2-ethylhexyl)phthalate (DEHP), Di-n-butyl phthalate (DBP), and Di-isodecyl phthalate (DIDP)
Metals and Ceramics: Notices include kettles, canisters, bowls, trays, teacups, mugs, teapots, jars, and candle holders
13 Notices
Lead
Clothing and Shoes: Notices include sweatpants, hi-vision gloves, girls jacket, faux fur jacket, gloves with leather, footwear with leather, and sandals
10 Notices
Di(2-ethylhexyl)phthalate (DEHP), and Chromium (hexavalent compounds)
Hobby Items: Notices include fishing weights, badminton rackets, art panels, artist kits for children, exercise equipment, and an artist brush set
8 Notices
Lead and Di(2-ethylhexyl)phthalate (DEHP)
Miscellaneous Consumer Products: Notices include umbrella, tablecloths, shower curtains, girl’s bag, children’s gloves, hi-viz field jacket, rain jacket, and shorts
8 Notices
Perfluorooctanoic Acid (PFOA)
Mexican Government Proposes Bill to Regulate the Energy Sector
On February 4, 2025, Mexican President Claudia Sheinbaum submitted a bill to the Mexican Senate to revoke, issue, and amend various energy laws in accordance with the constitutional amendments passed in December 2024. This is part of her administration’s “Plan México” announced on January 13, 2025.
The bill was passed by the Senate on February 27 and by the House on March 12, the bill is on hold to be published in the Mexican Federal Register in order for the laws to become effective. This collection of legislative actions is consistent with the plan to streamline governmental processes that the current administration will be implementing in the upcoming years. This means that even though we do not know the specific content of the new laws, we could expect a completely new system of governmental processes that should differ from the currently used administrative methodology to obtain energy-related permits or any publicly related matter for the sector. The bill’s key point consist in strengthening the Electricity Commission (CFE) and PEMEX, designating them as State-Owned Entities (SOE) and consolidating their legal status as an SOE.
From this, the primary changes to the current Mexican legal framework consist in expediting eight (8) new secondary laws and the amendment of two (2) more to merge their content with the already passed constitutional amendments:
Law of SOE PEMEX and Law of SOE CFE: In order to eliminate monopolistic practices, protect energy sovereignty, and to embed the “energy justice concept” within the development of the new Mexican energy model, both PEMEX and CFE will change their legal status from productive state enterprises to public enterprises.
This change is aimed at establishing the basis for more efficient delivery of public services, favoring efficient use of energy (electricity and hydrocarbons) over economic interest and commercial speculation.
Biofuels Law: This law is created as a legal framework for the regulation of the production, storage, transportation, commercialization, import, export, distribution, and other commercial operations within the biofuels production chain that factor in its valuation. As part of this law, the authority of the Ministries of Energy, Environmental, and Agriculture are expanded to include research and development of technologies that allow for the greater use of animal and vegetable residues with which biomass is generated.
Electricity Sector Law: Repealing the Electricity Industry Law, this provision will govern the generation, transmission, distribution, and supply of electricity and the issuance of authorizations by the Ministry of Energy (SENER). This change will ensure that at least 54% of the annual average of supply of electricity to the grid is provided by state-owned companies.
Likewise, it establishes participation by privately-owned parties in the generation of electricity, individually or jointly, with CFE related to distributed generation or for the wholesale market, self-consumption, or cogeneration. The law also provides for self-consumption permits for electric generation plants between 0.7 MW and 20 MW as long as they are not connected to the national network.
Licenses granted under the repealed law will be allowed to operate under those terms. SENER, however, will promote ways for self-supply and cogeneration companies to implement the new provisions stated in this law.
National Energy Commission (CNE) Law: Through the authority conferred to the Energy Regulatory Commission and the National Hydrocarbons Commission, the CNE is a decentralized agency of SENER, with technical and operational autonomy, which will have the following functions: (i) Granting licenses for the generation of electricity; (ii) Granting licenses for the transportation, storage, and distribution of petroleum products, natural gas, and liquefied petroleum gas through pipelines; and (iii) Approving tariffs for the transmission, distribution, and basic supply of electricity and hydrocarbons.
The CNE will be led by a central board and a technical committee which will jointly adopt decisions.
Planning and Energy Transition Law: To guarantee equitable access to reliable, safe, and clean energy by the entire population, this law regulates the implementation of plans to improve the infrastructure of the energy sector, in order to expand electricity coverage to vulnerable populations. This objective will be led, promoted, and supervised by the Energy Planning Board.
Hydrocarbons Sector Law: By repealing the Hydrocarbons Law, this regulation intends to promote self-sufficiency in the hydrocarbons sector and specifies the way which private parties may participate in the exploration and extraction of hydrocarbons. PEMEX will choose the allocations and maintain the majority participation in these arrangements.
Additionally, it outlines the permits granted and supervised by SENER and the CNE regarding activities involving oil, petroleum products, petrochemicals, and natural gas.
Geothermal Law: As in the case of the new biofuels regulation, this regulation is also based on energy planning, strategic generation, and distribution for social purposes. It establishes a regulatory framework that will govern permits and usage, innovation in financing, exploration, and production of geothermal energy.
Other amendments: The final legal changes proposed by the bill can be divided into two main points: Mexico’s Petroleum Fund Law will now be adjusted in accordance to the public company status of PEMEX, along with the new regulations, and; the granting of powers to the new energy authorities to consolidate a true self-sufficient supply of energy. Both of these validate the new public administration regime which aims to reach energy sovereignty and provide a new market for private companies.
Council of the EU Agrees on Negotiating Mandate on Plants Obtained by New Genomic Techniques
The Council of the European Union (EU) announced on March 14, 2025, that the Committee of the Permanent Representatives of the Governments of the Member States to the EU (Coreper) endorsed the Council’s negotiating mandate on the regulation on plants obtained by new genomic techniques (NGT) and their food and feed. The regulation proposed by the European Commission (EC) would create two ways for NGT plants to be placed on the market:
Category 1 NGT plants: Could occur naturally or through conventional breeding methods; they would be exempted from the rules currently set out in the genetically modified organism (GMO) legislation and would not be labeled; seeds produced through those techniques would have to be labeled, however; or
Category 2 NGT plants: All other NGT plants; rules under GMO legislation would apply (including a risk assessment and authorization before they are placed on the market); they would be labeled as such.
The proposed regulation would exclude the use of NGTs in organic production.
The press release states that the Council suggested the following changes in its negotiating mandate, including:
Cultivation and presence of new genomic techniques plants:
Opt-out from cultivation: Under the Council’s mandate, EU member states can decide to prohibit the cultivation of category 2 NGT plants on their territory;
Optional coexistence measures: EU member states can take measures to avoid the unintended presence of category 2 NGT plants in other products and will need to take measures to prevent cross-border contamination; and
The Council’s position also clarifies that, to avoid the unintended presence of category 1 NGT plants in organic farming on their territories, EU member states can adopt measures, in particular in areas with specific geographical conditions, such as certain Mediterranean island countries and insular regions.
Category 1 new genomic techniques plants and patenting: According to the press release, under the Council’s mandate, when applying to register a category 1 NGT plant or product, companies or breeders must submit information on all existing or pending patents. The patenting information must be included in a publicly available database created by the EC that lists all NGT plants that have obtained a category 1 status. The press release notes that the database would ensure transparency regarding NGT 1 plants and information about patents included in the database would be updated. The press release states that on a voluntary basis, companies or breeders could also report the patent holder’s intention to license the use of a patented NGT 1 plant or product under equitable conditions.
Patenting expert group: The Council’s mandate provides for the creation of an expert group on the effect of patents on NGT plants, with experts from all member states and the European Patent Office.
Study on patenting: The press release states that according to the Council’s mandate, one year after the entry into force of the regulation, the EC would be required to publish a study on the impact of patenting on innovation, on the availability of seeds to farmers, and on the competitiveness of the EU plant breeding sector. The study would also have a special focus on how breeders can have access to patented NGT plants. To produce the study, the EC would take into account the findings of the patenting expert group and input from the plant breeding sector. According to the press release, if appropriate, the EC would indicate what follow-up measures are needed or publish a legislative proposal to address any issues found in the study. The press release notes that if the first study does not foresee any follow-up measures or a new legislative proposal, the EC would be required to issue a second study four to six years after the publication of the first one.
Labeling: Category 2 NGT plants must contain a label indicating them as such, in line with the EC proposal. The press release states that the Council proposes that, in case information on modified traits appears on the label, it must cover all the relevant traits (e.g., if a plant is both gluten-free and drought-tolerant owing to genomic changes, either both of those features or neither of them should be mentioned on the label). The Council intends this proposal to ensure that consumers have access to accurate and comprehensive information.
Traits: The Council negotiating mandate states that tolerance to herbicides cannot be one of the traits for category 1 NGT plants. According to the press release, the Council proposes this change to ensure that such plants remain subject to the authorization, traceability, and monitoring requirements for category 2 NGT plants.
The agreement on the Council’s negotiating mandate allows its presidency to begin negotiations with the European Parliament (EP) on the final text of the regulation. The final text must be formally adopted by the Council and the EP before the regulation can enter into force.