HIPAA VIOLATIONS?: Health Insurance Company Allegedly Tracks and Shares Private Health Information
Hey, CIPAWorld! The Baroness here. Happy Friday everyone
Believe it or not, even health insurance companies are facing litigation for allegedly tracking and sharing consumer information. Just yesterday, Blue Cross Blue Shield of Massachusetts (BCBS) and its subsidiary removed such a case to the District of Massachusetts. Vita v. Blue Cross & Blue Shield of Mass., Inc., No. 1:25-cv-10420 (D. Mass. Feb. 20, 2025).
In the Amended Complaint, Plaintiff Vita claims that she lives in Massachusetts and obtains health insurance from BCBS. She claims that BCBS’s Website, https://ww.bluecrossma.org/, offers consumers general information about insurance plan offerings by BCBS and individualized information about consumers’ insurance plans. Notably, Plaintiff states that the website includes a “Find a Doctor” function that enables users to search by condition, specialty, gender, language, and location; a “24/7 Nurse Line” through which consumers can communicate with nurses employed by BCBS; allows consumers to access their insurance information, including services and medications obtained, amounts paid, and benefits available; and it allows consumers to access their private medical information through the MyBlue patient portal.
Vita argues that BCBS Website users have legitimate expectations of privacy and that BCBS will not share with third parties their communications with BCBS without consent. She alleges that these expectations are supported by Massachusetts state law and HIPAA, which prohibit healthcare companies from using or disclosing individuals’ protected health information without valid authorization from the individual.
Additionally, Vita references multiple statements in BCBS’s online policies in which it explicitly states that BCBS’s cookies, clear gifs, and other web monitoring technologies do not collect any personally identifiable information. Because of this, Vita claims that healthcare consumers would not anticipate that their communications with BCBS would be intercepted and shared with third parties, like Google, Facebook, Twitter, and LinkedIn for marketing purposes, and that BCBS did not inform consumers of this via a pop-up notification or otherwise.
Despite this expectation, Vita alleges that BCBS’s Website is designed with tracking technology that permits third parties such as Google and Facebook to intercept consumers’ interactions with BCBS, and that the information intercepted includes private health information. Vita claims that BCBS uses or has used tracking technologies such as Google Analytics, Google DoubleClick, Meta Pixel, and others, and that such tracking is injected into the code of almost all of the pages on BCBS’s Website, including the MyBlue patient portal. The Amended Complaint is detailed, going so far as to include screenshots of the code of the Website with portions highlighted to show tracking.
Based on these facts, Vita seeks to represent the following class:
All Massachusetts residents who, while in the Commonwealth of Massachusetts, accessed any portion of the website at bluecrossma.org between three years prior to the date of the filing of the initial complaint in this action and September 29, 2023.
Based on these facts, Vita alleges that BCBS violated the ECPA, 18 USC § 2511, which prohibits the intentional interception of the content of any electronic communications, as well as HIPAA, which imposes a criminal penalty for knowingly disclosing individually identifying health information to a third party. 42 USC § 1320d-6(a)(3). Second, Vita claims that BCBS violated M.G.L. c. 93A §§ 2, 9, which proscribes unfair competition and unfair or deceptive acts in trade or commerce, by falsely stating that its website does not capture personally identifiable information. Third, Vita brings a cause of action for violating the Massachusetts Right to Privacy Act, M.G.L. c. 214 § 1B, which confers a private right of action to Massachusetts citizens for privacy violations. Vita also brings claims for negligence, breach of confidence, breach of contract, and unjust enrichment.
Because this case was just removed, it is still in its nascent stage. We will be sure to keep you folks updated as the case progresses.
ESTA Amendment Submitted to Gov. Whitmer- What it Means for Employers This Morning
The Michigan House and Senate recently agreed on bills to amend both the Michigan Improved Workforce Opportunity Wage Act and the Earned Sick Time Act (ESTA). The bills have been submitted to Governor Whitmer for signature.
Varnum attorneys are analyzing these changes that are expected to be approved and signed into law. Stay tuned for a more comprehensive advisory regarding these changes to follow.
In the meantime, employers who planned to roll out ESTA policies and programs today should pause their efforts in light of this development. The ESTA amendments may impact many employer policies and approaches to ESTA compliance. More will be clear shortly based on the Governor’s review and analysis of the changes.
Charlotte E. Jolly, Francesca L. Parnham, and Carolyn M.H. Sullivan also contributed to this article.
Location Data as Health Data? Precedent-Setting Lawsuit Brought Against Retailer Under Washington My Health My Data Act
An online retailer was recently hit with the first class action under Washington’s consumer health data privacy law alleging that it used advertising software attached to certain third-party mobile phone apps to unlawfully harvest the locations and online marketing identifiers of tens of millions of users. This case highlights how seemingly innocuous location data can become sensitive health information through inference and aggregation, potentially setting the stage for a flood of similar copycat lawsuits.
Quick Hits
An online retailer was hit with the first class action under Washington State’s My Health My Data Act (MHMDA), claiming that the retailer unlawfully harvested sensitive location data from users through advertising software integrated into third-party mobile apps.
The lawsuit alleges that the retailer did not obtain proper consent or provide adequate disclosure regarding the collection and sharing of consumer health data; a term that is defined incredibly broadly as personal information that is or could be linked to a specific individual and that can reveal details about an individual’s past, present, or future health status.
This case marks the first significant test of the MHMDA and could provide a roadmap for litigants in Washington and other states.
On February 10, 2025, Washington resident Cassaundra Maxwell filed a class action lawsuit in the U.S. District Court for the Western District of Washington alleging violations of Washington’s MHMDA. The suit alleged that the retailer’s advertising software, known as a “software development kit,” or SDK, is licensed to and “runs in the background of thousands of mobile apps” and “covertly withdraws sensitive location data” that cannot be completely anonymized.
“Mobile users may agree to share their location while using certain apps, such as a weather app, where location data provides the user with the prompt and accurate information they’re seeking,” the suit alleges. “But that user has no idea that [the online retailer] will have equal access to sensitive geolocation data that it can then exfiltrate and monetize.”
The suit brings claims under federal wiretap laws, federal and state consumer protection laws, and violations of the MHMDA, making it a likely test case for consumer privacy claims under the MHMDA. This case evokes parallels to the surge over the past several years of claims under the California Invasion of Privacy Act (CIPA), a criminal wiretap statute. Both involve allegations of unauthorized data collection and sharing facilitated by digital tracking technologies. These technologies, including cookies, pixels, and beacons, are often embedded in websites, apps, or marketing emails, operating in ways that consumers may not fully understand or consent to.
As we previously covered, hundreds if not thousands of lawsuits relating to similar technologies were brought pursuant to CIPA after a California district court denied a motion to dismiss such claims in Greenley v. Kochava, Inc. Given the parallels and the onslaught of litigation that CIPA entailed, the MHMDA case may set important precedents for how consumer health data privacy is interpreted and enforced in the digital age, similar to the impact CIPA litigation has had on broader privacy practices. Like CIPA, the MHMDA also allows for the recovery of attorneys’ fees, but unlike CIPA (which provides for statutory damages even without proof of actual harm), a plaintiff must prove an “injury” to his or her business or property to establish an MHMDA claim.
Consumer Health Data
As many companies working in the retail space likely know, the MHMDA imposes a host of new requirements for companies doing business in Washington or targeting Washington consumers with respect to the collection of “consumer health data.” The law broadly defines “consumer health data” as any personal information that can be linked or reasonably associated with an individual’s past, present, or future physical or mental health status. The MHMDA enumerates an entire list of data points that could constitute “health status,” including information that would not traditionally be thought of as indicative of health, such as:
biometric data;
precise location information that could suggest health-related activities (such as an attempt to obtain health services or supplies);
information about bodily functions, vital signs, and symptoms; and
mere measurements related to any one of the thirteen enumerated data points.
Critically, even inferences can become health status information in the eyes of the MHMDA, including inferences derived from nonhealth data if they can be associated with or used to identify a consumer’s health data.
For instance, Maxwell’s suit alleges the retailer collected her biometric data and precise location information that could reasonably indicate an attempt to acquire or receive health services or supplies. However, the complaint is light on factual support, alleging only that the data harvesting conducted via the retailer’s SDK couldreveal (presumably via inference in most cases) “intimate aspects of an individual’s health,” including:
visits to cancer clinics;
“health behaviors” like visiting the gym or fast food habits;
“social detriments of health,” such as where an individual lives or works; and
“social networks that may influence health, such as close contact during the COVID 19 pandemic.”
Notice and Consent
The suit further alleges that the retailer failed to provide appropriate notice of the collection and use of the putative class members’ consumer health data and did not obtain consent before collecting and sharing the data. These allegations serve as a timely reminder of the breadth and depth of the MHMDA’s notice and consent requirements.
Unlike most other state-level privacy laws, which allow different state-mandated disclosures to be combined in a single notice, the Washington attorney general has indicated in (nonbinding) guidance that the MHMDA “Consumer Health Privacy Policy must be a separate and distinct link on the regulated entity’s homepage and may not contain additional information not required under the My Health My Data Act.” Said differently, businesses in Washington cannot rely upon their standard privacy policies, or even their typical geolocation consent pop-up flows with respect to consumer health data.
Additionally, at a high-level, the MHMDA contains unusually stringent consent requirements, demanding the business obtain “freely given, specific, informed, opt-in, voluntary, and unambiguous” consent before consumer health data is collected or shared for any purpose other than the provision of the specific product or service the consumer has requested from the business, or collected, used, or shared for any purpose not identified in the business’s Consumer Health Privacy Policy.
Next Steps
The Maxwell lawsuit is significant as it is the first to be filed under Washington’s MHMDA, a law that has already spawned a copycat law in Nevada, a lookalike amendment to the Connecticut Data Privacy Act, and a whole host of similar bills in state legislatures across the country—most recently in New York, which has its own version of the MHMDA awaiting presentation to the governor for signature. The suit appears to take an expansive interpretation that could treat nearly all or essentially all location data as consumer health data, inasmuch as conclusions about an individual’s health that can be drawn from the data. And, while the MHMDA does use expansive language, the suit appears likely to answer still lingering questions about the extent of what should be considered “consumer health data” subject to the rigorous requirements of the MHMDA.
As this suit progresses, companies targeting Washington consumers or otherwise doing any business in Washington may want to review their use of SDKs or similar technologies, geolocation collection, and any other collection or usage of consumer data with an eye toward the possibility that the data could be treated as consumer health data. Also, their processors may wish to do the same (remember, the Washington attorney general has made it clear that out-of-state entities acting as processors for entities subject to MHMDA must also comply). Depending on what they find, those companies may wish to reevaluate the notice-and-consent processes applicable to the location data they collect, as well as their handling of consumer rights applicable to the same.
‘What Is a Woman?’ Alabama Governor Signs Bill Declaring There Are Only Two Sexes
On February 13, 2025, Alabama Governor Kay Ivey signed into law Senate Bill 79 / Act 2025-3, declaring that there are only two sexes, male and female. Originally introduced on February 4, 2025, the legislation amends Alabama Code § 1-1-1, which defines certain words used throughout the Alabama Code. Officially codified as the “‘What Is a Woman?’ Act,” the act carries implications for various aspects of public policy, legal definitions, data collection, and protections of sex-based rights and spaces.
Quick Hits
Alabama’s “‘What Is a Woman?’ Act” applies “wherever state law classifies individuals on the basis of sex or otherwise mentions individuals as being male or female, men or women, or boys or girls.”
According to the act, there are only two sexes: male and female.
Under the act, public entities may establish certain single-sex spaces or environments without running afoul of anti-discrimination laws.
The act becomes effective on October 1, 2025.
About the Act
The act follows President Donald Trump’s Executive Order 14168, titled, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” declaring there are two sexes. The act applies throughout the Alabama Code where the law classifies individuals based on sex or as “male” or “female” and proclaims that men and women “are legally equal but not physically the same.” It aims to prevent “unjust sex discrimination” while “maintaining safety, privacy, and fairness for both sexes.”
These definitions apply for purposes of applying the act’s provisions:
“(1) Boy. A human male who has not yet reached adulthood.
(2) Father. The male parent of a child or children.
(3) Female. When used in reference to a natural person, an individual who has, had, will have, or would have, but for a developmental anomaly, genetic anomaly, or accident, the reproductive system that at some point produced ova.
(4) Girl. A human female who has not yet reached adulthood.
(6) Male. When used in reference to a natural person, an individual who has, had, will have, or would have, but for a development anomaly, genetic anomaly, or accident, the reproductive system that at some point produces sperm.
(7) Man. An adult human of the male sex.
(9) Mother. The female parent of a child or children.
(10) Person. Includes an individual, corporation, partnership, company, or other business entity.
(14) Sex. When the term is used to classify or describe a natural person, the state of being male or female as observed or clinically verified at birth.
(18) Woman. An adult human of the female sex.”
The act allows public entities to establish single-sex spaces or environments “when biology, privacy, safety, or fairness” are at stake. The law explicitly provides that school districts, public schools, state agencies, and political subdivisions that “collect[] vital statistics related to sex as male or female for the purpose of complying with anti-discrimination laws …” shall identify individuals as “either male or female.”
Implications
The act reflects an ongoing push to define sex and gender identity in the United States. The bill’s sponsor, Senator April Weaver (R-Alabaster), said the law is a necessary measure “for clarity, certainty and uniformity in the courts and in the laws of Alabama,” and Governor Ivey called the act “common sense.” Detractors of the act say it does not protect women and is a restrictive approach relying on gender stereotypes that discriminates against transgender Alabamians. Nine states have similar laws, and several others are pushing to enact similar laws this year.
This act may change the way public employers are currently collecting and reporting data from employees, students, and others, and may implicate issues relating to bathrooms, locker rooms, and other typically sex-segregated spaces. The act affects any aspect of Alabama law where the law classifies individuals based on sex or as “male” or “female,” which could implicate state anti-discrimination laws and other employment laws for both public and private employers. The implications for private employers are less clear than those for public employers, but the act could affect any required reporting to public entities where individuals may be classified based on sex. As with any legislative change, the act may spark discussions about its implications, but it remains to be seen how this law will shape the legal and social landscape in Alabama.
California: Private Equity Management of Medical Practices Again Appears in Proposed Legislation
The California legislature recently introduced legislation, SB 351, that would impact private equity or hedge funds managing physician or dental practices in California. The bill is similar to a portion of California legislation from last year, AB 3129, which targeted private equity group and hedge fund management of medical practices. Last year, AB 3129 passed in the legislature but was vetoed by the Governor before becoming law. The introduction of SB 351 is part of a continuing trend in California and across the country in examining the influence of private equity investment in medical practices.
What Does SB 351 Do?
SB 351 is intended to ensure health care providers maintain control of clinical decision-making and treatment choices and to limit the influence of private equity or hedge fund influence or control over care delivery in the state.
SB 351 would codify and reinforce existing guidance relating to the prohibition on the corporate practice of medicine and dentistry. Specifically, SB 351 would prohibit a private equity group or hedge fund involved in any manner with a California physician or dental practice from interfering with professional judgment in making health care decisions or exercising control of certain practice operations.
Under the proposed legislation, prohibited activities include: determining the diagnostic tests appropriate for a particular condition; determining the need for referrals to other providers; being responsible for the ultimate care or treatment options for the patient; and determining the number of patient visits in a time period or how many hours a physician or dentist may work. Exercising control over a practice would include the following types of activities: owning or determining the content of patient medical record; selecting, hiring, or firing physicians, dentists, allied health staff, and medical assistants based on clinical competency; setting the parameters of contracts with third-party payors; setting the parameters for contracts with other physicians or dentists for care delivery; making coding and billing decisions; and approving the selection of medical equipment and supplies.
In addition, SB 351 would limit the ability of a private equity or hedge fund to restrict a provider or practice from engaging in competitive activities. SB 351 would prohibit a private equity group or hedge fund from explicitly or implicitly barring any practice provider from competing with the practice in the event of a termination or resignation of that provider from that practice. The bill would also prohibit a private equity group or hedge fund from barring a provider from disparaging, opining, or commenting on issues relating to quality of care, utilization, ethical or professional changes in the practice of medicine or dentistry, or revenue-increasing strategies employed by the private equity group or hedge fund. The California Attorney General would be entitled to injunctive relief and other equitable remedies for enforcement of the provisions of SB 351.
SB 351 contains some of the provisions that were included in AB 3129 relating to management of physician and dental practices but does not include the same breadth of limitations that were in AB 3129. Notably, SB 351 does not require the notice to and consent of the California Attorney General for certain private equity health care transactions. SB 351 also does not extend to hedge fund or private equity involvement with psychiatric practices. The scope is limited to private equity or hedge fund involvement with a physician or dental practice.
What Happens Next?
SB 351 will continue to make its way through the California legislature this year and may undergo further amendments throughout the process. Similar to AB 3129, SB 351 may garnish sufficient support to be passed by the California legislature.
The reintroduction of this legislation in California demonstrates the continuing national focus on private investment in medical practices across the country and the limitation on restrictive covenants. Management organizations and professional entities in California should review their existing arrangements to ensure compliance with applicable laws and existing corporate practice restrictions. Given the continued interest in the California legislature in addressing these issues, it may be prudent to proactively align those arrangements with the limitations in SB 351. We will continue tracking SB 351’s progress.
Congress Extends Certain Telehealth Flexibilities Through March 31, 2025
Overview
KEY UPDATE
At the close of 2024, US Congress passed a short-term extension of Medicare telehealth flexibilities as part of the American Relief Act, 2025 (ARA). The Medicare telehealth waivers, originally enacted as part of the COVID-19 public health emergency (PHE) and subsequently extended through legislation, were set to end on December 31, 2024. These flexibilities, along with the Acute Hospital Care at Home waiver program, are now set to expire March 31, 2025. The ARA failed to extend other waivers, such as the temporary safe harbor for high-deductible health plans (HDHPs) to provide first-dollar coverage of telehealth without interfering with health savings account (HSA) eligibility. While the short-term extension provides continued access to telehealth for Medicare patients, stakeholders should continue to engage with Congress for a more permanent solution.
WHY IT MATTERS
The ARA extension is limited to certain Medicare policies and is only effective through March 31, 2025. Some bipartisan policies, such as the extension of the telehealth HDHP safe harbor, were not included in the ARA. Additionally, the flexibilities related to coverage of cardiac and pulmonary rehabilitation services provided via telehealth were not extended.
The extension indicates bipartisan support for continuing coverage for telehealth services, but the short timeline warrants continued stakeholder engagement for the extension and eventual permanence of the Medicare telehealth flexibilities and reinstatement of the HDHP safe harbor. As the new administration takes office, it is unclear where telehealth will fall on the list of priorities.
In Depth
Historically, Medicare has provided coverage for telehealth services in instances where patients would otherwise be geographically distant from approved providers (e.g., physicians, nurse practitioners, and clinical psychologists). Section 1834(m) of the Social Security Act provides that telehealth services are covered if the beneficiary is seen:
At an approved “originating site” (e.g., physician office, hospital, or skilled nursing facility) that is located within a rural health professional shortage area that is either outside of a metropolitan statistical area (MSA), in a rural census tract, or in a county outside of an MSA
By an approved provider
For a defined set of services
Using certain telecommunications technologies.
Many of these Medicare restrictions regarding coverage and payment for telehealth services were waived via authority delegated in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Congress subsequently extended the waivers in other pieces of legislation, including the Consolidated Appropriations Act (CAA) 2022 and CAA 2023, with the flexibilities most recently set to expire on December 31, 2024.
The ARA extended the following Medicare flexibilities through March 31, 2025:
Geographic restrictions and originating sites. Patients’ homes will continue to serve as eligible originating sites for all telehealth services (ARA § 3207(a)(2)). Geographic restrictions also remain waived (ARA § 3207(a)(1)).
Eligible practitioners. The expanded definition of the term “practitioner” will continue to apply. The expanded definition includes qualified occupational therapists, physical therapists, speech-language pathologists, and audiologists (ARA § 3207(b)).
Audio-only. Audio-only telehealth services remain eligible for reimbursement (ARA § 3207(e)).
Extending telehealth services for federally qualified health centers (FQHCs) and rural health clinics (RHCs). The US Department of Health and Human Services will cover telehealth services furnished via FQHCs and RHCs to eligible individuals (ARA § 3207(c)).
In-person requirements for mental health. The in-person requirement for mental health care to be reimbursed under Medicare has been delayed until April 1, 2025 (ARA § 3207(d)(1)).
Telehealth for hospice. Telehealth can continue to be used for the required face-to-face encounter prior to the recertification of a patient’s eligibility for hospice care (ARA § 3207(f)).
The ARA also extended the Acute Hospital Care at Home waiver program through March 31, 2025. In the midst of the PHE, the Centers for Medicare & Medicaid Services (CMS) used its PHE flexibilities to issue waivers to certain Medicare hospital conditions of participation (CoPs). These waivers, along with the PHE-related telehealth flexibilities, allowed Medicare-certified hospitals to furnish inpatient-level care in patients’ homes. Addressing hospital bed capacity during the pandemic was a high priority for CMS. These waivers and flexibilities, collectively referred to as the AHCAH Initiative, included:
Waiver of the CoP requiring nursing services to be provided on-premises 24 hours a day, seven days a week.
Waiver of the CoP requiring immediate on-premises availability of a registered nurse for care of any patient.
Waiver of CoPs that define structural and physical environment criteria specific to the hospital setting.
Telehealth flexibility allowing the home or temporary residence of an individual to serve as an originating telehealth site.
Telehealth flexibility allowing a hospital to use remote clinician services in combination with in-home nursing services to provide inpatient-level care in the patient’s home.
As with the Medicare telehealth flexibilities, these had been previously extended through December 31, 2024.
Notable flexibilities that expired or were absent from the ARA include the following:
The telehealth safe harbor for HDHPs. The CARES Act created a temporary safe harbor that permitted HDHPs to cover telehealth and remote care services on a first-dollar basis without jeopardizing eligibility for HSA contributions. By permitting health plans to provide HDHP participants coverage for telehealth services without requiring them to first meet the minimum required deductible, the safe harbor increased access to telehealth services. Additionally, covered individuals who received these services were still able to make or receive contributions to their HSAs because telehealth services were temporarily disregarded in determining eligibility for HSA contributions. Previously, the telehealth HDHP safe harbor ceased for three months from January 1, 2022, to March 31, 2022, before the CAA 2022 renewed it. Most recently extended by the CAA 2023, the telehealth safe harbor for HDHPs expired on December 31, 2024. Starting on January 1, 2025, health plans, insurers, and health plan vendors that previously relied on the telehealth HDHP safe harbor may need to update telehealth coverage for HDHP participants, such as updating plan design and/or cost sharing, to prevent disqualifying HDHP participants from making or receiving HSA contributions.
The SPEAK Act, which would establish a task force to improve access to health IT for non-English speakers.
The PREVENT DIABETES Act, which would broaden access to diabetes prevention services through the Medicare Diabetes Prevention Program.
The Sustainable Cardiopulmonary Rehabilitation Services in the Home Act, which would permanently codify cardiopulmonary rehabilitation Medicare telehealth flexibilities.
With the March 31, 2025, deadline in the not-too-distant future, stakeholders should continue to engage with Congress regarding an extension and permanent solution for the telehealth flexibilities, reinstatement of flexibilities that expired, and inclusion of the other bipartisan telehealth policies that were not included in the final ARA.
Lisa Mazur, Sarah G. Raaii, and Dale C. Van Demark contributed to this article.
Make Food “Healthy” Again: FDA’s Resolution for a Healthier 2025
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The U.S. Food and Drug Administration (FDA) began 2025 with a resolution to make food “healthy” again by announcing a trio of new final and proposed rules that are intended to make it easier for consumers to identify healthy food choices. These rules – which include a new ban on the use of red dye No. 3, a revised definition of what “healthy” claims can be made about foods, and new proposed requirements for nutritional labeling on the front of food packaging – have implications for many stakeholders in the food industry.
Although these healthy food initiatives were initiated under the Biden Administration, they directly align with the new Trump Administration’s agenda for the U.S. Department of Health and Human Services (HHS). The recently confirmed Secretary of HHS under the second Trump administration, Robert F. Kennedy Jr., has campaigned on limiting the use of food dyes and taking aim at highly processed “junk foods” that contribute to obesity. Therefore, we expect that these new rules will be here to stay, despite the new administration’s recent freeze on new proposed rules and recommended postponement of new final rules (which is currently pending court review). Regulated stakeholders should take steps now to prepare for compliance.
Revocation of Use of Red Dye No. 3 in Food and Ingestible Drugs
On January 16, 2025, FDA announced that it amended its color additive regulations to revoke the authorization for the use of FD&C Red No. 3 (commonly known as “red dye No. 3”) as a color additive in food and drugs (90 Fed. Reg. 4628 (Jan. 16, 2025)). Therefore, effective January 15, 2027, red dye No. 3 will no longer be permitted for use in food products, such as candy, cakes, cupcakes, cookies, frozen desserts, frostings, and icings, and all certificates for the use of red dye No. 3 in such products will cease to be effective. Red dye No. 3 will be banned from use as a color additive in ingestible drugs, effective January 18, 2027. Any food and ingestible drug products (including imports) containing red dye No. 3 without effective certification will be considered adulterated.
Notably, although other countries still permit certain uses of red dye No. 3 (sometimes called “erythrosine” abroad), foreign manufactured food products imported into the U.S. will also need to comply with this new ban. Though FDA has not yet signaled whether the implementation of this new rule will be delayed further, food industry members should take steps now to reformulate any products containing red dye No. 3.
FDA’s action on red dye No. 3 is not surprising to some extent, considering that the agency revoked use of the dye in cosmetics in 1990, and its use is already prohibited in food in other countries. What remains to be seen is whether FDA will continue down the regulatory path it has begun. Petitions are presently before the agency to ban other chemicals in food use, such as PFAS, BPA, TCE, and titanium dioxide—some of which have been pending for years. Further, prior to the change in administrations, FDA announced that it is developing a “systemic process” for conducting post-market assessments of chemicals in food, including GRAS ingredients, color additives, food contact substances, and potential contaminants, and established a docket for public comment. By the time the comment period closed, more than 34,000 comments had been submitted to FDA, signaling significant interest in this issue. Given the new HHS Secretary’s stated priorities, it would not surprise us if FDA continues its rulemaking efforts in this space.
Updated Requirements for “Healthy” Claims
In recent years, FDA has expressed concern over the growing prevalence of preventable chronic diseases and health conditions associated with unhealthy diet choices. Because FDA’s research demonstrates that U.S. consumers choose foods based on information readily (and easily) available to them, FDA has focused its attention on revising its food labeling regulations to provide consumers with additional information about a food’s nutritional benefits (or lack thereof). The result is the revised final rule for “healthy” claims and a proposed rule mandating front-of-pack nutrition disclosures, as discussed below.
The preambles to these rulemaking efforts demonstrate that FDA’s thinking has been heavily influenced by the Dietary Guidelines for Americans, 2020-2025 (the “Dietary Guidelines”). Under the National Nutrition Monitoring and Related Research Act of 1990, the U.S. Department of Agriculture (USDA) and HHS must publish the Dietary Guidelines at least once every five years, based on the current state of scientific and medical knowledge. The current Dietary Guidelines deemphasize the importance of individual nutrients or food groups in isolation in favor of a more holistic approach that focuses on dietary patterns during different life stages. A healthy dietary pattern, according to the Dietary Guidelines, emphasizes nutrient dense foods across all food groups, while staying within calorie limits and limiting sugars, saturated fats, and sodium.
FDA regulations have included parameters on “healthy” claims since 1994, but the requirements have not significantly changed since that time, even though nutrition science has evolved. The parameters established under the original rule were fairly rigid, and included specific limits on total fat, saturated fat, cholesterol, and sodium, as well as minimum amounts of nutrients whose consumption was encouraged (e.g., vitamin A, iron, protein). Under the 1994 rule, a food had to meet all the limits of the “discouraged” nutrients and contain the minimum amount of at least one of the “encouraged” nutrients to bear a “healthy” claim. That had the effect of excluding certain “nutrient dense” foods often viewed by consumers as healthy, such as salmon (due to its fat content).
The new Final Rule (89 Fed. Reg. 106,064 (Dec. 27, 2024)) proposes a more flexible approach consistent with the revised Dietary Guidelines. Current nutrition science emphasizes nutrient-dense foods – such as fruits, vegetables, and whole grains – as part of a healthy dietary pattern. Nutrient-dense foods and beverages are defined as those that provide vitamins, minerals, and other health promoting nutrients but also have little or no added sugars, saturated fats, or sodium. Accordingly, foods that meet the requirements for “healthy”, as defined in the new rule, are foods that, because of their overall nutrition profiles, can be the “foundation” or “building blocks” of an overall healthy dietary pattern recommended by the Dietary Guidelines.
Under the rule, a “healthy” food claim “[s]uggests that a food, because of its nutrient content, may be useful in maintaining healthy dietary practices, where there is also implied or explicit information about the nutrition content of the food (e.g., “healthy”).” See 89 Fed. Reg. 106,064, 106161. In general, to meet the new parameters for “healthy” food claims, including claims that foods are “healthful” or “healthier”, food products (including individual foods, mixed products, main dishes, and meals) must (1) for example, contain a certain amount of food (referred to as a “food group equivalent”) from at least one of the food groups or subgroups recommended by the Dietary Guidelines for Americans (e.g., vegetables, fruits, whole grains, fat-free or low-fat dairy, lean meat, seafood, eggs, beans, peas, lentils, nuts, or seeds) and (2) meet specific limits for added sugars, saturated fats, and sodium (based on a percentage of the Daily Value (DV) for these nutrients). Under the new criteria, some categories of foods – vegetables, fruits, seafood, lentils, nuts and seeds, among others – automatically qualify for the “healthy” claim due to their nutrient density, so long as they do not contain any additional ingredients other than water. And some foods that did not qualify for a “healthy” claim under the old rule due to their fat content now do, including avocados, salmon, and olive oil. Conversely, some food products that qualified as “healthy” under the old rule now do not, including fortified white bread, highly sweetened yogurts, and highly sweetened cereal.
The new rule also contains a substantiation requirement. Manufacturers of foods for which “healthy” claims are made must make and keep written records substantiating the “healthy” claims in accordance with the new requirements, except where nutritional food labeling makes clear that the requirements are met.
The food industry may begin voluntarily complying with the new rule on or after February 25, 2025, and must comply by February 25, 2028. Therefore, the food industry should take steps now to review any “healthy” claims made for their products, assess whether those claims should be changed in light of the new final rule, and document the substantiation for their claims.
We add that health claims on food labeling are heavily policed by consumer class action attorneys under consumer fraud laws (particularly in California and New York), and that compliance with FDA’s requirements for “healthy” claims will not necessarily preempt these lawsuits, if a court determines that other aspects of the label or packaging renders the claim misleading on the whole. Therefore, food manufacturers should work closely with experienced counsel in formulating “healthy” claims and ensuring that these claims are properly substantiated.
Nutrition Labeling
On January 16, 2025, FDA published a proposed rule (90 Fed. Reg. 5426 (Jan. 16, 2025)) (the “Proposed Rule”), which, if finalized, would require a front-of-package nutrition label called a “Nutrition Info box” on most packaged foods to assist consumers in more easily identifying healthy foods. This new label would require manufacturers to address the relative amounts of saturated fat, sodium, and added sugars in a serving of the food, and identify whether those amounts are low, medium, or high. FDA’s proposed format for the new label appears below:
The ranges that FDA proposes for each category are as follows:
Low: 5% daily value (DV) or less
Medium: 6% to 19% DV
High: 20% DV or more
In proposing these DV ranges, FDA considered the regulatory history of the percent DV; the agency’s commitment to helping consumers understand the percent DV concept in the context of a person’s daily diet; and the agency’s existing regulatory definitions for nutrient content claims (including definitions established for “low” and “high” claims), among other factors. FDA believes that the ranges it proposes for the interpretive descriptions – and in particular, its designation of 5% DV or less as “low” and 20% DV or more as “high” – align with its longstanding regulatory approach.[1] However, FDA invites comment on its conclusions and analysis.
Calorie disclosures
In the Preamble to the Proposed Rule, FDA acknowledged that some manufacturers already voluntarily include a calorie statement on the front of the food packaging, in accordance with existing regulations. FDA invites comment from industry stakeholders on the inclusion of a mandatory or voluntary statement of calories in the proposed Nutrition Info box, as well as suggestions as to how FDA could consider including quantitative calorie information (e.g., “low”, “medium”, “high”) in the box (including any new data or other information on which FDA could base this interpretation).
Anticipated costs
One notable aspect of the Proposed Rule is its anticipated cost to industry, which FDA analyzed as part of the rulemaking effort. FDA quantified the estimated costs of relabeling to the packaged food industry as a whole to range between $66 million and $154 million per year over a ten-year time horizon. Further, although product reformulation is not a requirement or a stated goal of the Proposed Rule, FDA recognizes that the rule may result in voluntary reformulation efforts by some food producers. FDA estimates that the annualized costs of reformulation would range from $125 million to $377 million over a ten-year time horizon. FDA recognizes the possibility that some of these relabeling/reformulation costs may be passed along to consumers (at least in part).
If finalized, businesses with $10 million or more in annual food sales will be expected to comply with these requirements within three years of the final rule’s effective date. Businesses with less than $10 million in annual food sales will be expected to comply with the requirements within four years of the final rule’s effective date. FDA is accepting comments on this new proposed rule by May 16, 2025. Food industry stakeholders should consider submitting comments to this proposed rule. Foley’s Food and Beverage Industry Team members have extensive experience assisting regulated stakeholders in preparing comments on FDA rulemaking. Any of the authors would be happy to provide additional information.
Regulatory Freeze
As is standard practice for an incoming administration, one of President Trump’s first Executive Orders (“EO”) places a freeze on all pending regulations proposed in the last days of the Biden administration. The EO encourages a 60-day review of any such proposed rules or guidance, with further consultation by the Director of the Office of Management and Budget (OMB) as-needed for “for those rules that raise substantial questions of fact, law, or policy.”
Next Steps
Though there is some uncertainty about timing, overall, industry should plan for the possibility that these rules and orders will take effect. Therefore, food industry stakeholders should act now to:
Begin planning on reformulation of products with red dye No. 3;
Review and assess what “healthy” food claims are made about their products, and document their support for those claims in accordance with the new “healthy” framework; and
Consider submitting comments to the new proposed rule requiring front-of-package nutrition information labeling.
[1] FDA does not have a regulation that establishes a “medium” nutrient content claim for any nutrient. In the Preamble to the Proposed Rule, FDA effectively takes a common-sense approach to defining that term. See 90 Fed. Reg. 5426, 5445 (“The adjective ‘medium’ is defined as, for example, ‘being in the middle between an upper and lower amount, size, degree, or value . . . and ‘intermediate in quantity, quality, position, size, or degree’ . . . . The common meaning of the adjective ‘medium’, then, aligns with the meaning of the interpretive . . . we are proposing.”). Which is just to say that the “low” and “high” goalposts are really what matter for purposes of comment on the Proposed Rule.
What Will Trump 2.0 Mean for Employee Benefits?—One Place to Look for Clues: Project 2025
Even as high-priority issues such as diversity, equity, and inclusion (DEI), immigration, and Ukraine take center stage in the first months of the new presidential administration, many employers are wondering what the next four years might mean for employee benefits.
Quick Hits
The Heritage Foundation’s Project 2025 provides clues for potential employee benefits changes under the second Trump administration.
Project 2025 calls for reversing federal rules that added gender identity, sexual orientation, and pregnancy as protected classes covered under the nondiscrimination provisions of the Affordable Care Act.
Project 2025 also proposes eliminating the dispute resolution process under the No Surprises Act in favor of a “truth-in-advertising approach.”
Plan sponsors may find clues in Project 2025, the far-reaching report produced by Washington, D.C., think tank Heritage Foundation as a blueprint for a second Trump administration and actually written in part by a number officials in the first Trump administration and public advocates for the 2024 Trump presidential campaign. (The president distanced himself from Project 2025 during the campaign, although several contributors are serving in the new administration.)
Specifically, three chapters of the 900-plus page report may offer insight for plan sponsors: one covering the U.S. Department of Health and Human Services (HHS), one covering the U.S. Department of the Treasury (Treasury), and one covering the U.S. Department of Labor (DOL) and related agencies.
Below, we dust off our copies of the report—originally released in 2023—and recap a few notable Project 2025 employee benefits policy recommendations (and the specific page numbers in the report):
ACA Section 1557: Reverse federal rules that added gender identity, sexual orientation, and pregnancy as protected classes covered under the nondiscrimination provisions of Section 1557 of the Affordable Care Act (ACA). These provisions have a limited impact on employee benefit plans, and in 2020, the Trump administration issued regulations that removed provisions detailing specific forms of discrimination, including gender dysphoria treatment, health insurance participation, and benefit plan design. (Page 475)
No Surprises Act: Encourage the U.S. Congress to revisit the 2021 legislation, including addressing the “deeply flawed system for resolving payment disputes between insurers and providers.” Project 2025 advocates eliminating the dispute resolution process in favor of a “truth-in-advertising approach.” (Page 469)
State restrictions on “anti-life” benefits: Encourage Congress and the DOL to “clarify” that the Employee Retirement Income Security Act (ERISA) would not preempt state attempts to prevent employer-sponsored health benefit plans from offering plan coverage for abortion, surrogacy, or other “anti-life” health care benefits (Page 585)
Individual Retirement Accounts (IRAs): Increase the IRA contribution limit to equal the amounts that can be contributed under 401(k) or 403(b) plans with respect to married couples. (Page 588)
Independent contractor benefits: Project 2025 encourages Congress to provide “a safe harbor” from employer-employee status when an employer permits independent contractors to participate in employer-provided benefits. Traditionally, only common law employees can participate in employer-sponsored retirement programs. (Page 591)
ESG investing: Encourage the DOL to prohibit ERISA retirement plans from investing plan assets based on any factor other than investor risks and returns, specifically environmental, social, and governance (ESG) factors. In addition, Project 2025 encourages the DOL to consider taking “enforcement and/or regulatory action to subject investment in China to greater scrutiny under ERISA” based on a perceived lack of compliance with American accounting standards and state control of Chinese companies. (Page 606)
Multiemployer plans: Project 2025 advocates greater scrutiny and reporting requirements for multiemployer plans, which are jointly administered by unions and employers. Among the specific recommendations is that the Pension Benefit Guaranty Corporation (PBGC), which insures defined benefit pension plans, require more detailed and timely reporting from plans. (Page 609)
ESOPs: Project 2025 recommends the DOL issue regulations that encourage greater participation in employee stock ownership plans (ESOPs). (Page 610)
Cap benefits deductibility: Project 2025 recommends limiting the amounts that employers can deduct for certain benefit costs to $12,000 or less per year per full-time equivalent employee. Retirement plan contributions would not count against that limit, and only “a percentage” of contributions to health savings accounts (HSAs) would count toward such limitation. (Page 697)
Deductibility for dependent coverage: Limit the ability of employers to deduct the value of health insurance and other benefits provided to employee dependents who are 23 or older. (Page 697)
Universal Savings Accounts (USAs): Establish accounts for taxpayers to contribute up to $15,000 of post-tax wages into USAs, similar to Roth IRAs. Investment gains would be nontaxable, portable, and withdrawable at any time for any purpose without penalty. (Page 696)
Anti-Kickback Statute Premised False Claims Cases: The “But For” Causation Standard Finds Support from First Circuit
It’s now 3–1, with the First Circuit (2025) aligning with the Sixth (2023) and Eighth (2022) Circuits finding the meaning of the words “resulting from” — as used in a 2010 amendment to the federal Anti-Kickback Statute (AKS) — to require “but for” causation in AKS-premised False Claims Act (FCA) cases. This is the third time a circuit court has diverged from the 2018 Third Circuit decision, which held that the phrase “resulting from” requires the government (or relator) to prove only a link “between the alleged kickbacks and the medical care received. . . .”
Notably, in October 2023, the Supreme Court declined to review the Sixth Circuit Court of Appeals case. As such, the circuit split on causation continues — and all parties should be aware of the applicable case law where they reside.
Background
In 2010, Congress amended the AKS to provide that any Medicare claim “that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].” Fifteen years later, the courts are still working through what this amendment means for FCA cases.
In the First Circuit case, United States v. Regeneron Pharmaceuticals, Inc., the complaint alleged Regeneron’s efforts to funnel money into Chronic Disease Fund — an independent charitable foundation — specifically to reimburse patients’ copays from one of Regeneron’s products, Eylea, violated the AKS, and the resulting claims to Medicare were allegedly tainted by these illegal kickbacks in violation of the FCA.
This case was before Chief Judge Saylor in the District of Massachusetts. Three months after a different District of Massachusetts court judge found “but for” causation is not the causation standard in AKS-premised FCA cases, Chief Judge Saylor wrote the opinion in Regeneron, finding the “but for” standard applicable in AKS-premised FCA cases and denied the government’s motion for summary judgment. Chief Judge Saylor explicitly called out that the Third Circuit case was not binding and that the “only a link” standard “is divorced from the actual language of the statute and from basic principles of statutory interpretation.” The case was then appealed to the First Circuit.
On July 22, 2024, the First Circuit heard oral argument on what the appropriate standard of causation is for AKS-premised FCA claims. The specific issue on appeal was whether a “claim” under the FCA “result[s] from” a kickback only if the claim would not have included the items or services but for the kickback. On February 18, 2025, the First Circuit released its opinion in United States v. Regeneron Pharma., Inc., finding against the government in holding an AKS violation must be a “but for” cause of the challenged claim.
But-For Causation in Regeneron
There is a default assumption derived from the Supreme Court that “resulting from” is read as calling for a but-for causation standard “in the usual course.” While this is not an immutable rule, there needs to be support for any deviation to the typical reading.
Regeneron argued that a but-for causation standard was appropriate, and there is no reason to deviate from the standard reading. Specifically, Regeneron argued that under the 2010 AKS amendment, the government bears the burden of proving an AKS violation actually caused a provider to provide different medical treatment (and thus caused the false claim). That is, the claim would not have been submitted but for the alleged kickback.
Meanwhile, the government argued that this is exactly this situation where the usual does not apply with three points:
The AKS itself requires no proof that the government would not have paid a claim but for the inducement of the offered kickback.
Congress did not intend to alter false-certification case law by imposing a but-for causation requirement in the 2010 AKS amendment.
Legislative history for the 2010 AKS amendment supports something other than the but-for causation.
None of these arguments were persuasive to the First Circuit, which found “no convincing ‘textual or contextual’ reason to deviate from the default presumption that the phrase ‘resulting from’ as used in the 2010 amendment imposes a but for causation standard.” As a result, the First Circuit held the government must show that an illicit kickback was the but-for cause of a submitted claim.
Looking Ahead
While the spoken Circuit Courts are generally finding in favor of “but for” causation for AKS-premised FCA cases, several circuit courts have yet to weigh in, and there is a split with the Third Circuit. Unless and until the Supreme Court grants certiorari on a causation case, we will continue to see differences on how courts approach these issues within district courts without controlling case law. Government attorneys and the relators’ bar may continue to try out different theories, hoping a court may find them persuasive, which could result in splits between district courts and a deeper divide at the circuit courts.
Observers and impacted parties will want to watch the developing case law in this area to see how courts square with this circuit split.
Want to learn more about recent FCA developments?
Renewed Prohibition on Use of Sub-Regulatory Guidance – Key to False Claims Act Cases
Medicare Advantage: A Circuit Court Addresses What is (or is not) Material in False Claims Act Cases
Chevron’s Demise Creates New False Claims Act Defenses
Loper Bright False Claims Act Developments
Member of Congress Introduces Bill to Abolish Occupational Safety and Health Administration
U.S. Representative Andy Biggs (R-AZ) first introduced the “Nullify the Occupational Safety and Health Administration Act” or “NOSHA Act” in November 2021, legislation aimed at abolishing the Occupational Safety and Health Administration (OSHA). His justification for filing the bill was that OSHA was “usurping states’ authorities and forcing [President] Biden’s vaccine mandate on the private sector.” Though Arizona has a “state plan” and federal OSHA does not regulate workplaces there, he had nine cosponsors of the NOSHA Act.
Quick Hits
Representative Andy Biggs (R-AZ) reintroduced legislation (H.R. 86) that would abolish OSHA.
Although the bill has little chance of being enacted—the bill has no cosponsors and there is no companion legislation in the U.S. Senate—what seems more likely to happen is a challenge to how OSHA standards are created.
Supreme Court Justice Clarence Thomas has expressed support for curtailing the OSH Act’s delegation of authority to OSHA and stated that “[a]t least five justices have already expressed an interest in reconsidering [the] Court’s approach to Congress’s delegations of legislative power.”
The NOSHA Act was reintroduced in the 118th Congress with a single cosponsor, Representative Scott Perry (R-PA). (He became a cosponsor in August 2023, eight months after introduction in January 2023.) As was true of its predecessor bill, this version did not make it out of the House Committee on Education and Labor (renamed the “House Committee on Education and the Workforce” when Republicans took the reins of the U.S. House of Representatives in January 2023), which is the first step in becoming law.
Representative Biggs recently introduced it again in the 119th Congress, without cosponsors, as H.R. 86. It has been referred to the House Committee on Education and the Workforce.
H.R. 86 is a simple piece of legislation that includes two simple sentences that have caused an uproar: “The Occupational Safety and Health Act of 1970 is repealed. The Occupational Safety and Health Administration is abolished.” These two sentences have generated more controversy in the workplace health and safety sphere than any two other sentences have, potentially since the Occupational Safety and Health Act of 1970 (OSH Act) was signed into law.
The OSH Act was signed into law by President Richard M. Nixon on December 29, 1970, after years of movement toward a national law to regulate health and safety in the workplace. While the OSH Act and OSHA are often viewed as partisan creations, they were a bipartisan effort to improve workplace health and safety conditions for American workers.
Though some potential exists for the U.S. Congress to take action to overturn the OSH Act and eliminate OSHA, given the lack of current and historical support for the NOSHA Act bill and the fact that no companion bill has been introduced in the U.S. Senate, the likelihood of either succumbing to the NOSHA Act appears rather limited. Moreover, the impact of the bill seems suspect, given that at present twenty-two states have their own state plans that provide oversight of both private and government workplaces, while seven more have plans that provide oversight of government workplaces (while federal OSHA provides oversight of the private workplaces).
What seems more likely to happen is a challenge to the way OSHA standards are created. Supreme Court Justice Clarence Thomas, in a dissent to the denial of certiorari in Allstates Refractory Contractors, LLC, v. Su, stated that “[t]he Occupational Safety and Health Act may be the broadest delegation of power to an administrative agency found in the United States Code.” He continued, writing, “If this far-reaching grant of authority does not impermissibly confer legislative power on an agency, it is hard to imagine what would.” He also indicated that a majority of the justices had expressed an interest in reviewing this sort of broad delegation of authority.
If the Supreme Court of the United States were to determine that the OSH Act constituted an unconstitutional delegation of legislative power to an agency, Congress would need to reframe OSHA’s rulemaking authority or take on some of the rulemaking responsibilities itself. This would likely result in a dramatic decrease in OSHA’s already limited rulemaking activity.
This Week in 340B: February 11 – 17, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Contract Pharmacy; Medicare Payment; Rebate Model
In a case challenging a proposed state law governing contract pharmacy arrangements in Missouri, the court granted in part and denied in part defendant’s and intervenor’s separate motions to dismiss.
In a breach of contract claim filed by a 340B covered entity against several related party Medicare Advantage plans, defendants filed a reply in support of their motion to compel plaintiff’s claims spreadsheets.
In five cases against the Health Resources and Services Administration (HRSA) alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models:
Five amicus briefs were filed in support of the drug manufacturer.
In four such cases, drug manufacturers filed a joint position statement on consolidation.
In one such case, a drug manufacturer filed a notice of opposition to consolidation and memorandum in opposition to intervenors.
In one such case, the government filed a position statement in support of consolidation.
Kelsey Reinhardt and Nadine Tejadilla also contributed to this article.
Environmental, Health, and Safety Outlook for 2025
In putting together our thoughts on this post, it was hard not to think about the elephant in the room (see what I did there?). The change in administration has already brought significant changes in our nation’s environmental priorities. While time will show us all of the specific ways this will play out in 2025, we are already seeing some trends and can expect others to guide manufacturers as to what the Environmental, Health, and Safety (EHS) landscape might look like over the year.
Rollback of Federal Environmental Regulation and Enforcement
As my partner, Jon Schaefer, reported earlier this month, even before Lee Zeldin was confirmed as the new Environmental Protection Agency (EPA) Administrator, the EPA had temporarily frozen its lawsuits, certain communications, and some final and pending regulations. Several freezes impact per- and polyfluoroalkyl substances (PFAS) regulations. For example, the EPA instituted a 60-day delay for certain imminent Toxics Release Inventory (TRI) PFAS reporting requirements “for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.” The EPA noted that it may further delay the effective date beyond 60 days. The EPA also put a stop to Clean Water Act rulemaking to develop effluent limitations for PFAS for the organic chemicals, plastics, and synthetic fibers point source category. Whether this trend will carry through to the many other rules, both adopted and contemplated, related to PFAS remains to be seen.
In the saga of the on-again, off-again Securities Exchange Commission (SEC) Climate Disclosure Rule, the SEC recently requested that the Eighth Circuit delay oral arguments in its case defending the rule. As we previously reported, this rule would require companies to report various climate-related information to the SEC. When it became final last year, it was immediately challenged, and the rule’s fate was placed in the hands of the Eighth Circuit Court of Appeals. While it was once moving forward to defend the rule, the SEC is now requesting additional time “to deliberate and determine the appropriate next steps in these cases.” This could be the first step in the ultimate demise of the rule, at least under the current administration.
We will continue to track developments at the federal level. Given the administration’s overall priorities, we expect to see further enforcement and regulation rollbacks on several EHS issues.
Uptick in State Action
Many states are poised to pick up the slack in the face of decreasing federal action. With regard to climate disclosure laws, California has already passed several requiring climate-related disclosures for entities doing business in the state, with reporting requirements approaching next year. Other states are joining in, with New York and Colorado considering their own climate disclosure laws. And as many of us have already experienced, decision-making related to PFAS is dominated by state law. As the federal government steps back from regulation and enforcement, we can expect many states take up the mantle on various issues. The patchwork of state laws could create a compliance challenge for manufacturers operating in multiple locations around the country. It will be important for manufacturers to remain up-to-date on proposed and final state actions so they can be prepared for new requirements that could pop up in various jurisdictions.
Citizen Suit Action
In addition to increased state activity, we expect an increase in citizen enforcement of federal environmental laws in 2025. Many federal environmental statutes have provisions allowing for citizen enforcement when the federal government fails to do so. These laws also allow citizens to pursue the government for failed enforcement and oversight. Under the first Trump administration, we saw an uptick in citizen enforcement of federal environmental laws, and we expect to see the same during Trump 2.0. These lawsuits could hit manufacturers on various topics, including enforcement related to clean water, clean air, and hazardous waste. Citizens may also target the federal government, which could ultimately cause the federal government to take action of its own, even when it was not planning to do so.
We expect 2025 to be a busy year in the EHS world.