California Court Clarifies CEQA Tribal Consultation Duties in First Published AB 52 Decision
On March 14, 2025, the California Court of Appeal for the First District issued the first published opinion interpreting Assembly Bill 52 (AB 52), the law governing tribal consultation procedures under the California Environmental Quality Act (CEQA). In Koi Nation of Northern California v. City of Clearlake (Cal. Ct. App., Mar. 14, 2025, No. A169438) (Koi Nation), the court held that a city’s failure to engage in “meaningful” consultation with a California Native American tribe violated AB 52, resulting in the invalidation of project approvals for a hotel and roadway development. The ruling significantly elevates the expectations placed on lead agencies and developers with respect to documenting and conducting tribal consultation under CEQA.
Overview of AB 52 Tribal Consultation Requirements
AB 52, enacted in 2014 and codified in Public Resources Code section 21080.3.1 et seq., establishes a formal process for consultation between CEQA lead agencies and California Native American tribes traditionally and culturally affiliated with the geographic area of a proposed project.
Consultation is only required if a tribe has submitted a written request to the lead agency for notice of projects within its traditional territory. Once a lead agency deems a project application complete, it must notify the tribe within 14 days. The tribe then has 30 days from receipt of the notice to request consultation in writing. If the tribe timely requests consultation, the lead agency must begin the process within 30 days. Importantly, consultation must begin prior to the release of a CEQA environmental document and must be conducted in good faith, with the goal of reaching a mutual agreement on mitigation measures to avoid or reduce impacts to tribal cultural resources.
The Dispute in Koi Nation
The case arose after the City of Clearlake (City) approved a Mitigated Negative Declaration (MND) for a proposed four-story hotel and associated road extension within the traditional territory of the Koi Nation. The Koi Nation had previously requested formal consultation pursuant to AB 52, and a designated representative attended an initial meeting with the City, which the City subsequently failed to document in the record.
Following the meeting, the tribal representative submitted a letter to the City requesting three mitigation measures to safeguard potential tribal cultural resources. However, the City did not respond to this letter or otherwise continue consultation. Instead, it adopted the MND, incorporating only one of the three proposed measures, and provided no documentation explaining its decision to end the consultation.
Court’s Findings: Consultation Must Be Meaningful and Documented
The Court rejected the City’s argument that its general coordination efforts and consideration of archaeological surveys (the latter of which were not shared with the representative, nor the Koi Nation generally) satisfied AB 52. The court emphasized that consultation must be “meaningful” and directed toward seeking agreement and found that the administrative record lacked sufficient evidence to support the City’s decision to terminate the consultation process. The City’s failure to respond to tribal input, to share the results of its archaeological survey, or to document its rationale for limiting mitigation measures proved fatal to its CEQA compliance.
Importantly, the Court distinguished between informal discussions held outside the AB 52 framework and the formal consultation process required by statute. While the Court acknowledged that the tribal representative’s correspondence could have more clearly referenced the Koi Nation, it concluded that the City’s reliance on that technical omission did not excuse its broader failure to engage in the statutorily mandated process. The opinion affirms that meaningful consultation is not merely procedural, but substantive — requiring reciprocal communication, thorough documentation, and a demonstrable effort to address tribal concerns.
Consequences for CEQA Noncompliance
As a result of the decision, the court vacated the City’s MND and all associated project approvals. The Court further ordered that consultation must recommence in accordance with AB 52 and awarded litigation costs to the Koi Nation. Notably, although the tribe had not submitted comments on the draft MND during the public review period, its earlier request for consultation and subsequent efforts to reengage with the City Council proved sufficient to preserve its claims.
Key Takeaways for Agencies and Developers
This decision signals that lead agencies and project proponents must treat tribal consultation not as a box-checking exercise, but as a substantive and confidential intergovernmental dialogue. Agencies must be prepared to demonstrate in the administrative record that they actively sought agreement with tribal representatives, responded in good faith to proposed mitigation measures, and documented the rationale for any decisions to limit or reject tribal input. Although AB 52 mandates confidentiality regarding tribal cultural resources, the lead agency must still summarize the consultation process in environmental review documents and maintain a sealed appendix for judicial review, as occurred in Koi Nation.
For developers, the case reinforces the importance of early and continuous engagement with both lead agencies and tribes. Incomplete consultation records or failure to substantively address tribal concerns may result in significant project delays or invalidated approvals. To ensure compliance and reduce litigation risk, developers should work closely with CEQA counsel to structure consultation efforts that meet both the procedural and substantive requirements of AB 52.
Executive Order Seeks to Increase Domestic Coal Production
On April 8, 2025, President Trump signed an executive order titled Reinvigorating America’s Beautiful Clean Coal Industry and Amending Executive Order 14241, which builds on the March 20 Executive Order titled Immediate Measures to Increase American Mineral Production (Executive Order 14241). The new order provides for immediate action to remove restrictions on coal leasing, mining and exporting and outlines initiatives to extend coal-power infrastructure and support coal technologies. This order is part of the administration’s holistic strategy to promote coal production in order to support domestic job creation, provide reliable energy supply for resurgent electricity demand from emerging technologies, lower energy costs, capitalize on vast U.S. coal reserves and facilitate coal exports and includes the following initiatives and mandates:
[Section 3 and 9] Designation of coal as a “mineral” under Executive Order 14241 and as a “critical mineral”: The order directs the Chair of the National Energy Dominance Council (NEDC) to designate coal as a “mineral” under Executive Order 14241, enabling coal and coal projects to qualify for the benefits under Executive Order 14241, including streamlined permitting and accelerated financing initiatives, as outlined in our previous blog posts: President Trump Issues Executive Order to Increase American Mineral Production and Executive Order Mandates Immediate Action to Accelerate Funding for Domestic Mineral Production and Processing. The order also directs the heads of the Energy and Interior departments to determine whether coal used in the production of steel qualifies as a “critical material” to be placed on the Department of Energy Critical Minerals List and the Department of the Interior Critical Minerals List.
[Section 4-5] Evaluating and enabling coal mining on federal lands: The order directs the Secretary of the Interior, the Secretary of Agriculture and the Secretary of Energy to conduct a review of coal resources and reserves contained on federal lands and submit a comprehensive report (i) outlining barriers to mining such coal resources, (ii) making policy proposals to address such barriers in order to facilitate the mining of the identified coal resources and (iii) providing an analysis of the impact the coal resources could have on electricity costs and grid reliability. The order further directs the Secretary of the Interior and Secretary of Agriculture to designate coal leasing activities as the primary land use for such federal lands containing coal resources identified in the report, to expeditiously process royalty rate reduction applications from Federal coal lessees, and to acknowledge the end of the Jewell Moratorium. The Jewell Moratorium, which was established 2016, had established a moratorium on coal leasing on federal lands. The Moratorium had been lifted by a federal court in 2024.]
[Section 10] Extending the life of coal-powered infrastructure: In response to growing electricity demand from artificial intelligence (AI) data centers and other high-performance computing activities, the order directs the Secretary of the Interior, Secretary of Commerce, and the Secretary of Energy to identify regions with coal-powered infrastructure sufficient to support AI data centers, evaluate such infrastructure for growth opportunities and submit to the Chair of the NEDC a comprehensive report with findings and proposals.
Expansive support for coal: The order includes an expansive approach to strengthen the coal industry, including a comprehensive review of restrictive practices towards coal production, measures to increase coal exports and support for coal technologies. These initiatives include:
[Section 6] Removing regulatory and policy barriers to coal production and use: The order mandates a comprehensive review of guidance, regulations, programs, and policies of executive departments or agencies that promote an energy transition away from coal production and coal-fired electricity generation, including guidance, policies or agreements of the International Development Finance Corporation, the Export-Import Bank of the United States, and other funding agencies discouraging investment in coal-related projects. Such agencies are directed to eliminate any such preferences against coal use, unless required by law.
[Section 7] Facilitating coal exports: The Secretary of Commerce, in coordination with other agencies, is directed to promote exports of coal technology and coal, including facilitating international offtake agreements for US coal.
[Section 8] Streamlining environmental review of coal projects: Agencies are directed to identify to Council on Environmental Quality any existing, or potential, exclusions under the National Environmental Policy Act that could support the production and export of coal.
[Section 11] Advancing commercial coal technologies: The Secretary of Energy is directed to take necessary actions to accelerate the development and commercialization of coal technologies, using available funding to support innovations in coal use and byproducts, batteries, power generation, and steelmaking.
Additional guidance regarding these programs and initiatives is expected to be issued within 30-90 days after the order was published on April 8.
A copy of the Executive Order is available here. Contact Martin Stratte and Joanna Enns with questions about the Executive Order and related opportunities.
Have Your Say on CSRD: EFRAG Launches Public Call for Input on Revisions to ESRS
The European Financial Reporting Advisory Group (EFRAG) has launched a public call for input (Call for Input) on 9 April 2025, seeking feedback from stakeholders and, in particular, from the first wave of preparers who applied the European Sustainability Reporting Standards (ESRS) in their 2024 Corporate Sustainability Reporting Directive (CSRD) sustainability reports. The ESRS are at the core of the CSRD’s sustainability assessment and reporting requirements.
This follows the publication of the European Commission’s (the Commission) Omnibus proposals aimed to streamline European Union corporate sustainability requirements. To support these aims, on 27 March 2025, EFRAG received a targeted mandate from the Commission to provide proposals to revise and simplify the ESRS by 31 October 2025. The Commission intends to utilize EFRAG’s technical advice to draft a delegated act covering the reduced ESRS reporting obligations under CSRD.
EFRAG sets out that this Call for Input will complement its ongoing interviews and workshops with preparers, auditors, and users of sustainability data, which will also inform their technical advice on the revised ESRS. The request in the Call for Input is on key areas of the Commission’s identified areas for simplification, including:
Least relevant/most challenging: identifying mandatory datapoints that are least relevant or most problematic for general-purpose sustainability per each disclosure requirement in the ESRS, with separate consideration across cross-cutting, environmental, social, and governance matters in the ESRS;
Clarity: how to modify the ESRS provisions that are deemed unclear;
Consistency: how to improve consistency with other EU legislation;
Materiality: how to improve the ESRS provisions on materiality to ensure that undertakings report only material information, do not report unnecessary information and do not dedicate excessive resources to the materiality assessment process;
Simplifying: how to simplify the structure and presentation of the ESRS and any other modifications that could simplify the ESRS without comprising their role in supporting the European Union’s Green Deal; and
Interoperability: how to further enhance interoperability with global sustainability reporting standards.
Input is expected on the basis of an online questionnaire. The outcome of this Call for Input will be anonymized and leveraged only in aggregate form.
What’s Next for MSHA Amid Government Dismantlement?
As everyone in the country watches the Trump administration’s dramatic downsizing of the federal government, there have been many comments and opinions about how this process will impact Mine Safety and Health Administration (MSHA) enforcement.
Quick Hits
Despite the Trump administration’s downsizing of the federal government, mine operators may want to continue their efforts to maintain safe workplaces due to the Mine Act’s inspection requirements and political support for MSHA’s mission.
The possibility of reduced MSHA inspections is tempered by legal requirements and political considerations, though manpower restrictions and hiring freezes may complicate the agency’s ability to meet its obligations.
While the new administration’s deregulation efforts may halt the introduction of new MSHA regulations, existing regulations like the silica rule are unlikely to be eliminated due to procedural and legal constraints.
Specifically, some have opined that this development will produce fewer inspections, eliminate unpopular regulations, and create a much more sympathetic enforcement environment for mine operators.
While we will clearly acknowledge that the current government dismantlement project is unprecedented, our past experience with other government overhauls, including the first Trump administration’s efforts, somewhat tamps down that enthusiasm. At a minimum, that experience tells us mine operators will want to continue their good-faith, effective efforts to maintain safe workplaces for their personnel.
The idea that inspections might slow down during the new administration is tempered by two important points. First, the Mine Act, passed by the U.S. Congress in 1977, requires that all surface mines receive at least two annual inspections and that underground mines receive at least four annual inspections. That’s the law, and it is theoretically very tough to get around that.
Second, the Trump campaign heavily courted voters in the coalfield states, which contain a large mining community constituency that strongly supports MSHA’s mission. Undercutting that mission would be politically difficult.
Inspection Impacts
Still, the idea of reduced inspections is not complete fantasy.
It is no secret that MSHA was already—due to manpower restrictions—having a hard time completing its annual “twos” and “fours.” The deferred resignation program, sweeping layoffs, and hiring freezes affecting the entire government will certainly complicate the agency’s efforts to complete its inspection obligations.
As of this writing, there is no indication of whether the Department of Government Efficiency (DOGE) will allow the Office of Personnel Management to issue a hiring freeze waiver to MSHA. Without that waiver, MSHA can only add one employee for every four that leave the agency.
It is worth noting that, in the past, when MSHA has not met its “twos” and “fours” commitment, the U.S. Department of Labor’s Office of Inspector General (OIG) has stepped in to force increased efforts. The administration’s firing of this inspector general, among many others, and the reduction of the agency’s OIG watchdog department has made it unlikely there will be similar pressure on inspections in the near term.
To say the situation is fluid is an understatement. Nonetheless, inspector visits should still be anticipated.
Next for Rulemaking
We have also heard a good deal of speculation that the new administration’s deregulation bent could eliminate some of the more onerous regulations confronting mine operators.
On many people’s lists are the Biden administration’s silica rule and surface mobile equipment rule, and the Obama administration’s enhanced workplace examination rule. Again, a reality check is necessary.
While it is a virtual certainty that no new regulations will be promulgated at MSHA during the next four years following an executive order requiring ten regulations to be repealed for every regulation added, it is unlikely that any existing regulation—silica or otherwise—will be eliminated.
The reason for this is the procedure must be followed in order to repeal or amend a regulation. Essentially, it requires full notice and comment rulemaking with an opportunity for stakeholders to weigh in on proposed changes.
Anecdotally, the group within the agency that would conduct and manage such a rulemaking appeal or amendment process has been decimated by the current cuts. In effect, the resources necessary to carry such a process through may not be available.
Even more significantly, Section 101(a)(9) of the Mine Act states that “[n]o mandatory health or safety standard promulgated under this title shall reduce the protection afforded miners by an existing mandatory health or safety standard.” This is a difficult requirement to overcome. It is the provision that prevented the Trump administration from making any inroads with regard to existing MSHA standards in its first four years.
Most mine operators are simply ignoring “the noise” at this point and continuing to advance their safety performance. Their safety efforts have always been based on ensuring the welfare of their miners rather than on meeting government benchmarks.
Going Nuclear–Industry Outlook and Issues
The nuclear energy industry continues to gain momentum and has a strong outlook for 2025 and beyond. This positive forecast is buoyed by support from both major political parties, increased demand, technical advancements, and some out-of-the-box thinking for deploying existing assets. There have also been a few notable judicial and legislative developments that are contributing to what some hope will be the realization of a long-promised nuclear renaissance.
Outlook for 2025 and Beyond
The new year is already off to a good start for nuclear power generation.
Expansion of the Price-Anderson Act
First, the US Court of Appeals for the Federal Circuit recently advanced a broad interpretation of the Price-Anderson Act that will expand the definition of private parties covered for certain nuclear accidents. This positive development broadens who can take advantage of government indemnification under the Price-Anderson Act, encouraging new parties to participate in the nuclear market. We wrote about this development and its impact on limiting private liability for nuclear accidents here.
Nuclear Market Growth
Second, a dynamic nuclear market appears to be taking root. As Nuclear Business Platform reports: (1) small modular reactors (SMRs) should lead the way in 2025, with several designs under development and NuScale Power Corporation achieving US Nuclear Regulatory Commission (NRC) certification; (2) increased demand from data centers and artificial intelligence should continue to drive new generation; (3) a positive financing environment for nuclear projects also appears to be in place; (4) new technology developments in both reactors and fuels from a variety of private market players should support further growth; and (5) new market participants in India, Turkey, and Africa will also support continued advancements and efficiencies.
Nuclear-Powered Hydrogen
Third, the US nuclear industry continues to evaluate opportunities for using nuclear fuel as an electricity source to produce hydrogen following the US Department of the Treasury’s final changes to the 45V clean hydrogen production tax credit, which exempt (with some restrictions) existing and future nuclear power plants from the additionality requirements imposed on other renewable energy sources. US nuclear leaders, along with EDF Energy’s initiatives in France and Japan’s High Temperature Engineering Test Reactor, could carve out a new generation space.
Global Agreements to Support Nuclear Power
Fourth, a collection of large tech companies, financial institutions, and members of the nuclear industry announced a pledge at the CERAWeek conference to “triple global nuclear capacity by 2050.” The coalition, including Amazon, Meta, Google, key nuclear power associations, and 31 countries, committed to supporting the rapid expansion of global nuclear power through financial investment, aggressive political advocacy, and global cooperation.
Palisades Nuclear Plant Set to Restart
Fifth, on Monday, 17 March, the US Department of Energy (DOE) approved a nearly US$57 million loan disbursement to Holtec for the Palisades Nuclear Plant in Covert, Michigan. The Palisades plant, retired in 2022, could be the first commercial reactor in the country brought back into service after being previously shut down. US Energy Secretary Chris Wright called the disbursement “yet another step toward advancing President Trump’s commitment to increase domestic energy production, bolster our security and lower costs for the American people.” The Palisades plant will have to receive approval from the NRC to resume operation.
World Bank Set to Invest in Nuclear Projects
Sixth, on Thursday, 20 March, the head of the World Bank announced that he had petitioned the bank’s board of directors to reverse its policy against investing in nuclear energy projects. Ajay Banga, the World Bank president, called small nuclear reactors “transformative and safe,” and he stated that nuclear power could be a viable path to green power for developing countries.
Support for Nuclear from the Trump Administration
Finally, the Trump administration has released several statements and executive orders promoting new nuclear generation. On his first day in office, President Trump issued the “Unleashing American Energy” executive order, which directed agencies to identify, revise, or rescind any regulations that “unduly burdened” domestic energy production. Among the domestic energy sources identified as key domestic resources, nuclear energy was included. President Trump, along with Secretary of Energy Chris Wright and Secretary of the Interior Doug Burgum, have expressed public support for increasing nuclear capacity as a reliable source of baseload power for the US electrical grid.
2024 in Review
The promise of 2025, and beyond, comes on the heels of an extremely successful 2024 in the commercial nuclear industry. DOE recently summarized the major nuclear achievements from 2024.
New Reactors Come Online in Georgia
Vogtle 4 entered commercial service on 29 April 2024. Plant Vogtle is now the largest clean power generator in the country and is home to two Westinghouse AP1000 reactors. These are the first new builds in the United States in more than 30 years.
Significant Restart and Recommissioning Activity Is on the Horizon
DOE closed a US$1.52 billion loan to repower and upgrade the Palisades nuclear power plant in Michigan. This would be the first reactor ever recommissioned in the United States, if approved by the NRC. Holtec’s decision to recommission Palisades is significant because the company originally purchased the plant with plans to decommission the plant at a profit. Holtec’s decision to stick with the plant provides a clear signal as to the improved economics and demand for nuclear power generation. The DOE loan was made possible by the Inflation Reduction Act.
In addition to Palisades, Constellation Energy recently announced its plans to restart Three Mile Island Unit 1, thanks to a 20-year power purchase agreement with Microsoft to power its data centers. The plant will be renamed the Crane Clean Energy Center and is expected to be online in 2028, pending regulatory approval.
The United States Announces Nuclear Generation Goals
The Biden administration released nuclear deployment targets in 2024 to expand domestic capacity by 200 gigawatts (GW). The plan outlines more than 30 actions the US government can take to add 35 GW of new capacity by 2035 and achieve a sustained pace of 15 GW per year by 2040. Most of that capacity could come from existing power plant sites. Research also shows that US nuclear power plants could host up to 95 GW of new capacity. An additional 174 GW could also be built near US coal plants, depending on the reactor type. The Trump administration has not specifically endorsed the Biden plan, but, as discussed above, the Trump administration has expressed support for a “nuclear renaissance.”
Strides Being Made in Development of a Domestic Nuclear Fuel Supply
Multiple companies are participating in low-enriched uranium and high-assay, low-enriched uranium capacity building programs sponsored by DOE. The US$3.4 billion effort will allow the awardees to bid on future task orders to produce, store, and deconvert material that can be fabricated into fuel for current and future reactors. The United States also took crucial steps toward strengthening our domestic energy security by issuing a ban on imported uranium products from Russia.
New Technologies Are Under Development
DOE-supported projects started in 2024 will bring the United States one step closer to the deployment of new advanced small modular and microreactor systems. TerraPower started nonnuclear construction on a sodium test facility in support of its Natrium reactor in Kemmerer, Wyoming. The Department of Defense broke ground on its Project Pele microreactor at Idaho National Laboratory. X-energy, which is already developing its high-temperature, gas-cooled reactor technology with Dow in Texas, announced a commitment from Amazon for a 320-megawatt project with Energy Northwest in Washington State. Kairos Power also started construction on its Hermes reactor in Oak Ridge, Tennessee. The project is one of several projects being supported through DOE’s Advanced Reactor Demonstration Program.
DOE Launched a US$900 Million Program to Demonstrate up to Two Advanced Light-Water Small Modular Reactor Systems in the United States
The new program encourages a consortium-based approach to lower the risk of deploying new reactor technologies. It will also facilitate multi-reactor order books and provide additional support to build out the advanced light-water reactor supply chain.
The ADVANCE Act to Address the Speed of Licensing New Reactors
Four years after President Trump signed the 2019 Nuclear Energy Innovation and Modernization Act, President Biden signed another key bipartisan bill known as the ADVANCE Act to help speed up the deployment and licensing of new reactors and fuels. The new bill helps develop a modernized approach to licensing new reactor technologies. The bill also makes strides to develop guidance for smaller reactor technologies and advanced fuel cycles.
In response to Congress’s legislation directing NRC to develop new frameworks for licensing nuclear technology, NRC is currently in the process of crafting two new regulatory processes—one for advanced reactor technology like SMRs and microreactors, and another for fusion energy machines under the byproduct materials rule. The new licensing regulations are designed to streamline applications to NRC and allow for design-specific safety reviews of first-of-a-kind reactor technology. The final rule for advanced reactor technology is expected to be issued in summer 2026, and the proposed rule for fusion machines is expected to be published in May 2025.
Further, in February 2025, NRC published its proposed fee schedule fiscal year 2025. The new fee schedule would reduce the hourly fee for advanced reactor pre-applicants and applicants by 50%, from US$146/hour to US$323 per hour. The rule is set to take effect on 1 October 2025.
New Areas of International Cooperation Were Put Forward
DOE launched the world’s first two regional Clean Energy Training Centers in Poland and Ghana this year to jump-start the countries’ domestic civil nuclear energy programs. The centers will serve the regions as training hubs for countries considering new or expanded nuclear reactor deployments and will build on previous international agreements to grow global nuclear energy capacity.
Additional Proposed Solutions to Deal with Spent Nuclear Fuel
DOE is moving forward on a project to design, build, and operate a federal consolidated interim storage facility for spent nuclear fuel that would be sited through DOE’s consent-based siting process. The facility would be licensed by NRC and initially built to store around 15,000 metric tons of spent nuclear fuel, with options to expand. It would also include the development of new modern railcars to transport the spent fuel.
The firm is actively monitoring the exciting growth of nuclear power in the United States and across the world. As nuclear policy continues to evolve, and opportunities in the nuclear industry continue to grow, the energy, policy, and regulatory professionals at the firm stand ready to help guide you through the exciting developments happening now in nuclear energy.
EPA Announces Changes to Pesticide Data Submission Process for Data Matrix Form
On April 3, 2025, the U.S. Environmental Protection Agency (EPA) announced changes on how the data matrix form (EPA Form 8570-35) is submitted to EPA, stating this change is an improvement to simplify the process for how companies submit data to EPA as part of a pesticide registration package. EPA states these improvements also will make EPA’s processing of this information more efficient.
Companies are required to submit a data matrix form when their pesticide registration packages contain submitted data or cited data from outside sources. Previously, companies submitted two versions of the data matrix form (in either paper or electronic format): one for internal EPA use and one with reference data redacted for public use. EPA states in the interest of reducing burden and, according to EPA, because no information on the data matrix form is confidential business information (CBI), it determined that there is no need for a redacted version and is now only requiring one unredacted version of the form to be submitted for both internal and public use. Additionally, EPA will no longer accept paper submissions of this form and will only accept this information via a web-based portal.
Additional information on the new update is available in EPA’s recently issued Pesticide Registration (PR) Notice 2025-1. Instructions on how to complete and submit the revised forms will be available in the updated Pesticide Registration Manual.
City and County of San Francisco v. EPA (No. 23-753)
Under the Clean Water Act (“CWA”), the EPA issues permits limiting the pollutants that regulated entities can discharge into federal waters. Those permits generally operate either by establishing effluent limitations for certain pollutants or by imposing narrative requirements, like requiring the permittee to use “best practices” to limit pollution. But in recent years, the EPA has sometimes taken a third approach, issuing results-oriented permits that impose penalties on the permittee if the water quality in the discharge area falls short of a certain level. In City and County of San Francisco v. EPA (No. 23-753), a 5-4 Supreme Court majority agreed with the City of San Francisco that these “end-result” provision exceed the EPA’s authority.
We’ll begin with a short primer on the EPA’s permit authority under the CWA. A core component of the CWA is the “National Pollutant Discharge Elimination System,” a regulatory scheme that makes it illegal for regulated entities to discharge permits into covered bodies of water unless authorized by a permit. Historically, the EPA permits imposed two basic types of restrictions. The first, “effluent limitations,” restricted the discharge of prohibited “quantities, rates, and concentrations” of pollutants. The second approach was the use of “narrative” requirements, which can be promulgated either in addition to or in place of effluent limits. These narrative limits can take various forms, with the most common one being the requirement that a permittee follow “best practices” to limit pollution. Failure to comply with these permit limitations can expose permittees to civil penalties or even criminal prosecution. But under the so-called permit shield provision, an entity that adheres to the terms of its permit is deemed to be compliant with the CWA.
The present case involves Oceanside, a water treatment facility operated by the City of San Francisco that, as its names suggests, discharges water into the Pacific Ocean. During heavy rains, the facility can become overwhelmed, leading to the release of untreated sewage. In 2019, when the EPA renewed Oceanside’s permit, it added two so-called end-result requirements to its permit, which prohibit it from “contribut[ing] to a violation of any applicable water quality standard” or “creat[ing] pollution, contamination, or nuisance,” as defined under California law. Oceanside challenged these permit conditions before the EPA’s Environmental Appeals Board. When that challenge failed, it petitioned for review in the Ninth Circuit. But the Ninth Circuit rejected San Francisco’s challenge to the end-result requirements of the permit, reasoning that the CWA grants the EPA authority to impose “any” limitations necessary to ensure water quality standards, including the end-result provisions in question. See 33 U.S.C § 1311(b)(1)(C) (“In order to carry out the objective of this chapter there shall be achieved . . . any more stringent limitation, including those necessary to meet water quality standards, treatment standards, or schedules of compliance, established pursuant to any State law or regulations [] or any other Federal law or regulation, or required to implement any applicable water quality standard established pursuant to this chapter.”). One judge dissented, and the Supreme Court granted certiorari to review whether the CWA allows the EPA to impose such end-result requirements.
Based on the text, history, and structure of the CWA, the Supreme Court reversed the Ninth Circuit and held that the EPA lacks statutory authority to impose end-result requirements. Writing for a majority of five (his fellow conservatives except Justice Barrett), Justice Alito first addressed San Francisco’s argument that the only permit “limitations” authorized by Section 1311(b)(1)(C) are effluent limitations. He concluded that the statutory text “doom[ed]” that argument: While Sections 1311(b)(1)(A) and (B) referred to “effluent limitations,” the very next provision, Section 1311(b)(1)(C), discussed the EPA’s authority to issue “any more stringent limitations” that are “necessary to meet” or “required to implement” water quality standards. The absence of the term “effluent” from Section 1311(b)(1)(C) must be treated as significant, showing that Congress authorized the EPA to issue limitations beyond simply effluent limits.
Justice Alito then turned to San Francisco’s narrower argument: that Section 1311(b)(1)(C) does not authorize EPA to impose permit requirements that condition a permitholder’s compliance on whether the receiving waters meet applicable water quality standards. And on that score, he concluded that the text, structure, and context of the CWA supported the City. He started with the text, pointing out that Section 1311(b)(1)C) only authorizes the EPA to issue “limitations,” a word that naturally suggests some external restriction what a permittee can do rather than an end result it must achieve. Statutory history supported this narrower reading. Congress enacted the CWA in 1972 to overhaul prior federal attempts to protect water quality, which had focused primarily on achieving certain end results by holding polluters legally responsible for substandard water quality in the area of discharge. But the CWA replaced that ex post regime with a permitting scheme—the National Pollutant Discharge Elimination System—designed to regulate polluters ex ante. Because Congress sought to protect water quality by means of “direct restrictions” on polluters rather than a backward-looking nuisance regime, Alito rejected the EPA’s argument that it could still include such provisions in permits.
Justice Alito also found support for his reading of Section 1311(b)(1)(C) in the general statutory scheme. Because the statute imposes strict liability for permit violations, Alito thought it made sense that permits should provide regulated parties with clear, advanced notice of the steps they must take to find safe harbor. As he noted, subtle changes in water quality can take months to detect, while the penalties for violations can accrue at a rate of up to $25,000 per day. Under the EPA’s theory, an entity could face such retrospective liability based on discharges by another polluter in the vicinity entirely beyond its control. Alito also rejected the EPA’s argument that end-result permits were the best way for to protect water quality. As he observed, the EPA has the expertise to advise permittees up front what they need to do to maintain appropriate standards and has both permitting and emergency powers to force reticent entities into compliance. The Court therefore held that the CWA does not authorize the EPA to include end-result provisions in permits.
Justice Barrett dissented, joined by Justices Sotomayor, Kagan, and Jackson. They agreed with the majority’s rejection of San Francisco’s sweeping statutory argument that Section 1311 only authorizes effluent limitations, implicitly precluding narrative requirements. But the dissenters would take that recognition a step further, holding that the phrase “any more stringent limitation” in Section 1311(b)(1)(C) properly encompasses “requirements defining the permissible discharge by reference to its effect on the quality of the waters that receive it, rather than by reference to the nature of the discharge itself.” Barrett thought this backstop was particularly necessary for cases like this one, where effluent limitations had proven insufficient to prevent “serious breaches of the water quality standards, such as ‘discoloration, scum, and floating material, including toilet paper, in Mission Creek.’”
The dissenters were unpersuaded by the majority’s textual argument that the EPA could impose only external limitations on entities, rather than limiting the entity to a plan of its own making that was required to achieve specified water quality standards. As Barrett observed, the word “[l]imitation” can be general as well as specific. Barrett was similarly unimpressed by the majority’s historical argument. In her view, Congress had not scrapped consideration of water quality end-results altogether; it simply added the front-end vehicle of effluent limitations to address most of those concerns, leaving Section 1311(b)(1)(C) to address “any residual risk that discharges will violate the water quality standards.” Finally, Barrett was unmoved by the majority’s structural analysis: If an entity objected to lack of adequate notice based on a particularly vague or unreasonable end-result requirements, it could challenge that specific end-result requirement as arbitrary and capricious under the Administrative Procedure Act. Such challenges were also the appropriate vehicle to address concerns about multiple contributing polluters. Finally, Barrett expressed concern that the majority’s approach would deprive the EPA of a valuable enforcement tool, causing delay or denial of permits and adversely impacting regulated entities.
‘Secondary’ Tariffs Target Countries Importing Venezuelan Oil
On March 24, President Donald Trump issued a new Executive Order that authorizes tariffs on countries importing Venezuelan oil. More specifically, starting on or after April 2, 2025, the U.S. may impose a 25 percent tariff on all goods imported into the U.S. from any country that imports Venezuelan oil, whether directly from Venezuela or indirectly through third parties. These tariffs would expire one year after the last date on which the country imported Venezuelan oil, or at an earlier date subject to U.S. government discretion.
For these purposes:
“Venezuelan oil” means crude oil or petroleum products extracted, refined, or exported from Venezuela, regardless of the nationality of the entity involved in the production or sale of such crude oil or petroleum products
“Indirectly” includes purchases of Venezuelan oil through intermediaries or third countries where the origin of the oil can reasonably be traced to Venezuela, as determined by the U.S. Secretary of Commerce
The Secretary of Commerce, with the U.S. Secretary of State and Attorney General, will determine whether a country has imported Venezuelan oil, directly or indirectly, and issue regulations to implement the order.
It is not yet clear which countries may be subject to tariffs under this Executive Order, but news reports suggest the Chinese government buys the largest amount of Venezuelan crude oil, followed by India and Spain, among others. Indeed, the Executive Order also provides that if the Secretary of State decides to impose tariffs under this order on China, the tariffs will also apply to Hong Kong and Macau to prevent transshipment and evasion.
Companies should prepare by evaluating their supply chain for suppliers located in countries dependent on Venezuelan oil. Companies should also review their import procedures (including tariff classification and country of origin) to prepare for additional potential tariffs.
If tariffs are imposed on China, they will also apply to Hong Kong and Macau to prevent transshipment and evasion.
www.whitehouse.gov/…
From New York to Washington, Courts Shift the Landscape on Legality of State and Local Gas Bans
Following the election wins we reported on in November 2024, state and local bans on the use of natural gas remain a highly litigated issue across the country. In this alert, we cover two recent cases dealing with local and state natural gas bans. First, we discuss a March 2025 federal district court decision upholding a New York City natural gas ban against arguments that it is preempted by the federal Energy Policy and Conservation Act (EPCA). In contrast, we reported previously on a 2023 Ninth Circuit decision striking down a City of Berkeley law prohibiting gas piping in new buildings. The recent New York decision has the potential to lead to a circuit split and potentially to the United States Supreme Court. Second, we provide an update on a March 2025 Washington state court decision that struck down a voter initiative addressing the use of gas and gas bans in the state.
The US District Court for Southern District of New York Upholds New York’s Gas Ban
In Association of Contracting Plumbers of New York, Inc. v. City of New York, the US District Court for the Southern District of New York upheld New York City’s Local Law 154, which generally prohibits the use of fossil fuel, such as natural gas, for heating in newly constructed residential buildings.1 Plaintiffs, which included six trade associations and a union whose members work in the construction, delivery, and servicing of fuel gas systems and appliances, argued that Local Law 154 is expressly preempted by EPCA.2 The city moved to dismiss the complaint, arguing that EPCA does not preempt Local Law 154.3 The court found that Law 154 does not “concern” “energy use” of covered products, as defined by EPCA, because Law 154 regulates the type of fuel used rather than the energy efficiency or use of the products themselves, which is what EPCA covers.4
In reaching this conclusion, the court took a markedly different approach to EPCA preemption than the US Court of Appeals for the Ninth Circuit in California Restaurant Association v. City of Berkeley. In Berkeley, the Ninth Circuit found that a city-level ordinance that prohibited natural gas piping in new buildings was preempted by EPCA.5 We covered that decision here and provided an update regarding the case in February 2024. The S.D.N.Y. decision marks a victory for natural gas ban proponents. If the court’s finding is appealed and upheld by the US Court of Appeals for the Second Circuit, the circuit split could result in an appeal to the US Supreme Court for final resolution on whether EPCA preempts state and local gas bans.
The Ninth Circuit’s and S.D.N.Y.’s Different Approaches to EPCA Preemption
EPCA establishes “national energy conservation standards for major residential appliances”6 and aims to “avoid the burdens of a patchwork of conflicting and unpredictable State regulations.”7 EPCA preempts state regulations “concerning the . . . energy use” of covered products.8 Faced with a lawsuit challenging a gas ban under EPCA, a court therefore must determine both the meaning of “energy use” and whether the local law at issue “concerns” “energy use” within the meaning of EPCA.9
Meaning of “Energy Use” Under EPCA
The court in Berkeley interpreted “energy use” broadly, including “not only from where the product rolls off the factory floor, but also from where consumers use the products.”10 The Berkeley court explained that EPCA preempts regulations, including building codes, that “relate to” the quantity of natural gas directly consumed by certain consumer appliances at the place where those products are used.11 Because EPCA is concerned with the end-user’s ability to use installed covered products at their intended final destinations, the court concluded that the plain language of EPCA preempts Berkeley’s regulation that prohibits the installation of necessary natural gas infrastructure on premises where covered appliances are used.12
The federal district court in New York took a different approach, interpreting “energy use” narrowly to mean a fixed value, determined using administratively prescribed testing procedures, that represents the amount of energy a product consumes under typical conditions.13 The district court declined to adopt the Ninth Circuit’s view, explaining that it rests on a flawed reading of the term “point of use.”14 In Berkeley, the Ninth Circuit defined “point of use” broadly to mean the “place where something is used,” which led it to conclude that “EPCA is concerned with the end-user’s ability to use installed covered products at their intended final destinations.”15 In contrast, the New York court determined that “point of use” is a technical term that must be interpreted in accordance with its specialized meaning.16
The New York court explained that “point of use” specifically means only that a covered product’s “energy use,” when determined in accordance with prescribed test procedures, should be measured without adjustment for any energy loss in the generation, transmission, and distribution of energy.17 Such a definition neither expands EPCA’s scope to reach the actual use of covered products nor grants consumers an absolute right to use such products.18 Rather, the definition fits within the statutory definition of “energy use,” which refers to a covered product’s characteristics as manufactured.19 Ultimately, the New York court concluded that “energy use” refers to a “predetermined fixed value that measures the characteristics of a covered product as manufactured.”20
Whether the Law “Concerns” “Energy Use”
Once a federal energy conservation standard takes effect for a covered product, state regulations concerning the product’s energy efficiency or “energy use” are preempted.21
In Berkeley, the Ninth Circuit determined that local bans on natural gas infrastructure on premises where covered products are used indirectly affect the use of those products and thus are preempted by EPCA.22
The court explained that the language “concerns” has “a broadening effect, ensuring that the scope of a provision covers not only its subject but also matters relating to that subject.”23 The court took an expansive view of the term, concluding that “a building code that bans the installation of piping that transports natural gas from a utility’s meter on the premises to products that operate on such gas ‘concerns’ the energy use of those products as much as a direct ban on the products themselves.”24 While this ruling appears to close the door on local gas bans, the Ninth Circuit stated that EPCA’s preemption may apply narrowly to building codes that target the on-site use of natural gas and signaled that state and local governments may have broader authority to regulate utility distribution of natural gas.25
In contrast, New York held that EPCA does not preempt regulations that do not directly impose energy conservation standards on products.26 The court explained that Local Law 154 does not have a connection with EPCA’s subject matter because it does not “focus on” the performance standards applicable to covered products.27 Local Law 154 indirectly regulates the type of fuel that a covered product may consume in certain settings, irrespective of that product’s energy efficiency or use. The court reasoned that it would be an absurd result if indirect regulation of this sort was preempted by EPCA.28
The court said that state laws like Local Law 154 do not risk creating a patchwork of conflicting standards because they neither require anything of manufacturers nor constrain their activities.29 It concluded that prohibiting certain fuel types in certain settings does not impose performance standards by proxy, and therefore, Local Law 154 does not “reference” the subject matter of EPCA.30 Local Law 154 is not preempted because it does not “relate to” and thus does not “concern,” “energy use” within the meaning of EPCA.31 Given that EPCA’s preemption clause does not apply, the court found that Plaintiffs failed to state a claim upon which relief can be granted and accordingly granted the motion to dismiss.32
Implications of the Ninth Circuit’s and S.D.N.Y.’s Distinct Approaches to EPCA
The divergent applications of EPCA in these cases illustrate the current unpredictable nature of how courts will assess natural gas bans under EPCA. The Berkeley decision limits local authority to enact gas bans by reading EPCA’s preemptive scope broadly to include even indirect regulations on “energy use.” The New York decision preserves local regulatory power by focusing only on direct regulations of product standards. It remains to be seen how other courts in other parts of the country will apply EPCA to natural gas bans.
Another battle over natural gas’ future is also playing out in Washington state. On 21 March 2025, a King County Superior Court judge ruled that Washington state Initiative 2066 violates the state constitution’s single subject rule, which provides that voter initiatives can only address a single subject. Our November 2024 alert covered natural gas’ election wins and losses, including the passage of Initiative 2066, which was designed to protect natural gas access in the state and to bar local governments from banning its use. While the superior court’s decision did not directly address EPCA preemption, federal court decisions on EPCA are undoubtedly shaping these issues across the country. We are continuing to monitor this case for an appeal and are keeping a close eye on other efforts to protect or ban natural gas from New York to California and Washington. Check back on our page for updates.
FOOTNOTES
1 Association of Contracting Plumbers of the City of New York, et al. v. City of New York, No. 23-CV-11292 (RA), 2025 WL 843619, at *6-7 (S.D.N.Y. Mar. 18, 2025) (New York).
2Id. at *2.
3Id. at *2.
4Id. at *6-7.
5 Cal. Rest. Ass’n v. City of Berkeley, 65 F.4th 1045 (Apr. 17, 2023); See also David L. Wochner, Benjamin A. Mayer, John Longstreth, Nathan C. Howe, Timothy J. Furdyna, and David Wang, U.S. Court of Appeals for the Ninth Circuit Cans Berkeley Gas Ban Under Federal Law, 23-7 PRATT’S ENERGY LAW REPORT 243 (LexisNexis A.S. Pratt). In that case, the appeals court found that EPCA’s preemption clause extends to regulations that (i) directly address the covered products, or (ii) affect the on-site infrastructure related to the use of those products. The Ninth Circuit concluded that EPCA preempted Berkeley’s ban because it prohibited the onsite installation of natural gas infrastructure necessary to support covered natural gas appliances.
6 S. Rep. 100-6, at 2 (1987).
7 Id. at 12.
8 42 U.S.C. § 6297(c).
9 See New York, 2025 WL 843619, at *4.
10 See Berkeley, 89 F.4th at 1103. EPCA defines “energy use” as “the quantity of energy directly consumed by a consumer product at point of use, determined in accordance with test procedures under section 6293 of this title.” 42 U.S.C. § 6291(4). Section 6293 requires those procedures to be “reasonably designed to produce test results which measure [the] . . . energy use . . . of a covered product during a representative average use cycle or period of use.” 42 U.S.C. § 6293(b)(3).
11 Id. at 1102 (9th Cir. 2024).
12 Id.
13 New York, 2025 WL 843619, at *4-5.
14 Id. at *5.
15 Berkeley, 89 F.4th at 1102.
16 See New York, 2025 WL 843619, at *5.
17 Id. (citing to Energy Intensity Indicators: Terminology and Definitions, U.S. Dep’t of Energy, https://www.energy.gov/eere/analysis/energy-intensity-indicators-terminology-and-definitions).
18 Id.
19 Id.
20 Id.
21 Id. at *6 (citing to 42 U.S.C. § 6291(6)).
22 Berkeley, 89 F.4th at 1102.
23 Id. at 1103 (citing Lamar, Archer & Cofrin, LLP v. Appling, 584 U.S. 709, 138 S. Ct. 1752, 1759, 201 L. Ed. 2d 102 (2018)).
24 Id. at 1103.
25 Berkeley, 89 F.4th at 1103.
26 See New York, 2025 WL 843619, at *5-7.
27 Id. at *6.
28Id.
29Id. at *7 (citing to Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, at 263–64 (2013)).
30Id. at *7.
31 Id.
32 Id. at *3, 7.
Conflicting Rulings and Looming Congressional Inquiries Create New Levels of Complexity for State and Local Government Retirement Systems
Two recent decisions from the United States District Court for the Northern District of Texas have created confusion among private-sector retirement trustees governed by the Employee Retirement Income Security Act (ERISA) as to the factors to be considered in making investment decisions and assets allocations. Although state and local government retirement plans are exempt from ERISA, the fiduciary standards for investment of plan assets are generally the same in state laws as they are in ERISA.
The first decision issued on January 10th in Spence v. American Airlines determined that the trusts of the airline’s retirement plan for pilots failed to abide by the fiduciary duty of loyalty by considering matters other than pure economic return. The managers were criticized for their inclusion of ESG (environmental, social, governance) issues in the proxy voting and shareholder activism of the companies. Although there was no evidence presented that the particular investment offerings performed any less well than investment offerings with no ESG component.
In reaching its conclusion, the Court analyzed the key elements of fiduciary duty – prudence and undivided loyalty. On the first issue, the Court found that the consideration of ESG factors in reaching investment decision-making was ubiquitous in the retirement industry. At the very least, all investment decisions are based on measures of risk and every investment strategy, by necessity, must consider the effect of ESG factors on risk. Having found that the airline’s trustees acted prudently in using BlackRock products, the court turned to the question of undivided loyalty. The Court was critical of BlackRock’s proxy practices which included votes on social issues. The Court found that giving heed to those issues, even in the absence of an economic impact on the retirement products offered nonetheless places other factors ahead of the best interest of the plan participants. Ironically, there was no criticism of the investment results.
Only a month after the Spence decision, a different judge in the Northern District of Texas in Utah v. Micone, upheld the Biden-era rules from the Department of Labor (DOL) allowing ESG considerations if the economic or pecuniary measures of an investment were the same with an ESG as those without. In Utah, a number of state attorneys general, trade associations and others sued to invalidate the DOL rule as being contrary to ERISA fiduciary standards. In a 2023 decision, Judge Kacsmaryk upheld the rule as a valid exercise of agency discretion. In 2024, the U.S. Supreme Court vacated a 40-year-old rule of judicial deferral (Chevron deferral) to agency expertise in the case of Loper Bright Enterprises v. Raimondo. The 2023 decision was appealed to the U.S. Court of Appeals for the Fifth Circuit which returned the case to Judge Kacsmaryk to reconsider his earlier decision in light of the Supreme Court decision. Judge Kacsmaryk reaffirmed his decision. The Court found that ERISA defines whose interest a fiduciary must protect and what the fiduciary’s purpose is. He also found that ERISA says nothing about what a fiduciary may consider. The Court further found that a fiduciary cannot advance interests other than the those of the participants. Most significantly, the Court said: “[W]hen a fiduciary comes to two routes that each equally serve the plan’s financial interests, any choice the fiduciary makes is for the ‘exclusive purpose’ of financial benefit. He has acted with the duty ERISA requires. If a fiduciary chooses between financially equal plans using other factors, nothing about the fiduciary’s purpose has changed.”
When read side by side, Spence and Utah reach diametrically opposing results. So, where does that leave a prudent fiduciary? It leaves them uncertain and confused. More significantly, it leaves fiduciaries with the choice of selecting less potentially successful financial decisions that have an element of ESG consideration in favor of those decisions that eschew ESG altogether even though doing so may increase risk or decrease reward.
Contrary to a Greek chorus of naysayers, the American retirement programs, both for private and public sector employers has been generally successful. The tangential consideration of ESG as a measure of determining risk has not derailed or retarded that success. For public plans, which are expressly excluded from ERISA, a significant number of state laws have similarly attempted to restrict fiduciary discretion in investment decisions by mandating boycotts in some cases and outlawing them in others. At least one Congressional committee has expressed an interest in regulating public plan investment decisions even though the federal government has never provided any financial support to state and local pensions.
Fiduciaries should be left to exercise their sound discretion for the best interest of members and beneficiaries. Legislative forays into politicizing investment decisions have actually placed one set of social or political objectives ahead of the financial interests of the pension participants. This is no different than a decision by a wayward fiduciary who attempts to use the pension fund’s assets to achieve a goal other than achieving the highest and best return at a reasonable rate of risk.
This battle is neither new nor settled. Beginning with divestment requirements aimed at the former apartheid government in South Africa in the early 1980s, politically based rules and limits on investments have ebbed and followed. Fiduciaries should focus on “doing well,” meaning making money prudently for the retirement plan. If in doing so, the investment decision also does “good,” that salutary byproduct should not jeopardize the independence of retirement trustees to focus on securing a sound retirement for plan members and beneficiaries.
Mr. Klausner is the principal in the law firm of Klausner, Kaufman, Jensen & Levinson. For 47 years, he has been engaged in the practice of law, specializing in the representation of public employee pension funds.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of The National Law Review.
Green Commercial Leases
Green leases are emerging as a key component of commercial leasing, as both landlords and tenants in different industries place an increasing emphasis on sustainability and environmental impact.
A “green lease” is a commercial real estate lease agreement that focuses on environmental performance and sustainability practices, and aligns the environmental and financial goals of the parties. The parties to a green lease commit to work together to meet certain environmentally-sound goals, such as efficient energy consumption, waste reduction, water conservation and healthier air quality.
The benefits of green leases to both landlords and tenants include:
Cost savings resulting from reduced energy consumption, water conservation and efficiency measures such as energy-efficient HVAC systems, lighting an insulation;
Health benefits and increased productivity stemming from employees enjoying better air quality, use of non-toxic cleaning materials, temperature comfort and use of natural lighting;
Increased property value and marketability by demonstrating a commitment to the environment with green certifications or eco-friendly features, which leads to attracting and retaining tenants who value sustainability practices;
Positive long-term environmental impact of reducing a building’s carbon footprint by preserving natural resources and reducing waste;
Fostering collaboration between landlords and tenants by creating shared accountability for meeting common sustainability goals;
Supporting the building’s compliance with current and evolving environmental standards, such as reducing carbon emissions and meeting energy-efficiency standards; and
Potential for governmental incentives for sustainable building practices, which provide economic benefits for both parties.
Green lease provisions often include:
Data sharing and performance assessments clauses to allow landlords and tenants to track progress and identify areas in need of improvement with respect to sustainability goals;
Specific obligations for installation of energy efficient appliances and equipment, adherence to waste management practices and recycling programs, use of non-toxic cleaning materials and minimizing water consumption;
Cost sharing of capital improvements that reduce energy costs, ensuring that each party has an interest in the success of their joint sustainability efforts;
Requirements that tenant improvements align with sustainability goals, such as use of certain sustainable construction materials;
Establishment of communication channels for sustainability issues, such as designation of a point person or group for each party, a schedule of meetings and training programs;
Agreement of the parties to cooperatively strive toward meeting sustainability goals and to work together to identify new opportunities for conservation of natural resources throughout the lease term; and
Flexibility provisions that allow the parties to modify the lease to meet new legal requirements and incorporate new sustainability technologies and standards.
Green leases can have a particularly important impact in healthcare space. Hospitals and clinics consume enormous amounts of energy and have substantial carbon footprints as a result of medical equipment use and heating, ventilating and cooling needs. By promoting energy efficient measures, water conservation practices, better waste management practices, recycling programs and use of renewable energy sources, green leases in healthcare space can have a significant impact on the environment. Green leases also encourage natural lighting and better air quality, which can be particularly important in a hospital setting for both recovering patients and overworked healthcare providers.
As concern for the environment and sustainable practices continues to grow, green leases will play an increasingly significant role in commercial real estate. These leases offer significant financial, health and environmental benefits to the parties and foster collaboration between landlords and tenants. The result of green leases is the development of more sustainable buildings, which has a positive environmental impact on the broader global community.
Agencies Issue Guidance Clarifying Sackett Implementation
The U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Corps) (jointly, “the Agencies”) issued guidance on March 12, 2025 addressing implementation of the definition of “waters of the U.S.” (WOTUS) under the Clean Water Act (CWA). The guidance addresses the jurisdictional requirement that, for a wetland to be subject to Corps jurisdiction, the wetland must have a “continuous surface connection” to and directly abut an otherwise jurisdictional water (a traditional navigable water or a relatively permanent body of water connected to a traditional navigable water). The jurisdictional requirement addressed by the new guidance can have substantial time and cost implications for projects.
Consistent with the Supreme Court’s 2023 decision in Sackett v. EPA,[1] the Agencies state that WOTUS includes “only those adjacent wetlands that have a continuous surface connection because they directly abut the [requisite jurisdictional water].” An adjacent wetland that is separated from the jurisdictional water by uplands, a berm, dike or similar feature does not directly abut covered waters and is not, therefore, jurisdictional. This interpretation provides a plain language reading of Sackett, and departs from and narrows the prior Administration’s interpretation, which allowed for jurisdiction over adjacent wetlands separated from a jurisdictional waterbody by a berm or similar feature.
The Agencies also published a Federal Register notice announcing upcoming listening sessions and soliciting feedback to inform potential future administrative action to provide additional clarification on the WOTUS definition. Written recommendations on the meaning of key terms must be received by the Agencies on or before April 23, 2025. The listening sessions for various stakeholder groups will be held as web and in-person conferences in April-May 2025. Registration instructions and dates are available at this website.
Background
The Supreme Court’s Sackett decision limited CWA jurisdiction over WOTUS to: (1) traditional interstate navigable waters; (2) relatively permanent bodies of water connected to traditional interstate navigable waters; and (3) wetlands with a continuous surface connection to such waters. The Court held that the CWA extends only to wetlands that are practically indistinguishable from WOTUS, which requires a party asserting jurisdiction over adjacent wetlands to establish that (1) the adjacent body of water is a WOTUS in its own right; and (2) the wetland has a continuous surface connection with that water, making it practically impossible to tell where the water ends and the wetland begins.
Following Sackett, the Agencies issued a rule amending the 2023 WOTUS Rule. To “conform with” the Sackett decision, the 2023 Amended WOTUS Rule struck portions of the earlier 2023 Rule the Agencies acknowledged were inconsistent with the Sackett decision.
Importantly, the Agencies’ interpretation and use of concepts not directly addressed in Sackett to continue to assert jurisdiction over a variety of features created significant confusion about WOTUS jurisdiction. Specifically, on September 27, 2023, the Agencies issued implementation memos setting forth coordination practices among the Corps Districts, EPA Regions, and EPA and Corps Headquarters, and providing for Headquarters’ review of certain Approved Jurisdictional Determinations. Under the prior Administration, the Agencies occasionally published “policy memoranda” resulting from this coordination process, in which EPA and Corps Headquarters provided direction to the Corps Districts on how to implement the WOTUS regime for certain types of features. Some of the issues discussed in the memos are ones flagged as open questions by Justice Kavanaugh in Sackett, including whether a continuous surface connection can be established by a ditch, swale, pipe or culvert; how difficult it has to be to discern a wetland boundary; and how temporary interruptions in a surface connection can be.
The Agencies’ recent guidance seeks to clarify some of this confusion and, as discussed below, rescinds many of these field memos.
Guidance on “Continuous Surface Connection” for Purposes of Determining “Adjacency”
Sackett states that the CWA “extends to only those wetlands that are ‘as a practical matter indistinguishable from waters of the United States,’” 598 U.S. at 678, and to make this determination, the Agencies must establish that (1) an adjacent body of water constitutes WOTUS; and (2) the wetland has a continuous surface connection with that water. Thus, under Sackett, adjacent wetlands are only jurisdictional if they have a continuous surface connection to waters that are WOTUS in their own right (e.g., traditional navigable waters, the territorial seas, interstate waters, relatively permanent jurisdictional impoundments or relatively permanent tributaries).
The guidance provides clarification on implementation of “continuous surface connection” and took effect immediately. It states that WOTUS only includes those adjacent wetlands that have a continuous surface connection to a jurisdictional water because they directly abut that jurisdictional water. Guidance at 5. If the adjacent wetlands are separated from the jurisdictional water by uplands, a berm, dike, or similar feature, the wetlands are not jurisdictional because they do not have the “necessary connection” to covered waters to trigger CWA jurisdiction. Id.
Under the prior Administration, the Agencies took the position that, “depending on the factual context, … a channel, ditch, swale, pipe or culvert [can] serve[] as a physical connection that maintains a continuous surface connection between an adjacent wetland and a relatively permanent water.” See, e.g., Memorandum on POH-2023-00187 (Nov. 20, 2024). This position is explicitly rescinded by the guidance, and the case-specific memoranda to the field that addressed continuous surface connection and jurisdiction over “discrete features” are rescinded. Guidance at 5 n.8.
In the guidance, the Agencies recognize that there may be some instances where the “line drawing” to determine where the water ends and the wetland begins may be difficult to ascertain – including during periods of drought or low tide, or where there may be temporary interruptions in surface connection. The Agencies state that they will work to resolve those scenarios on a case-by-case basis and provide further clarity when appropriate. Guidance at 5-6.
[1] 598 U.S. 651 (2023).