Maryland Expands Licensing Requirements for Mortgage Loan Assignees
On January 10, 2025, the Maryland Office of Financial Regulation (OFR) issued guidance significantly expanding licensing requirements for assignees of residential mortgage loans in Maryland. The guidance stems from an April 2024 court ruling and raises important considerations for entities involved in the secondary mortgage market.
Maryland’s licensing laws did not explicitly require a license to purchase closed and funded residential mortgage loans. However, in April 2024, the Appellate Court of Maryland ruled that an assignee of a home equity line of credit was required to obtain a license to have the legal authority to bring a foreclosure action.
The OFR’s new guidance expands upon this ruling, asserting that any assignee of residential mortgage loans, including “passive trusts,” must obtain a license under Maryland mortgage lending laws in order to acquire or obtain assignments of any mortgage loans. This applies regardless of lien position and whether the loans are open- or closed-end extensions of credit. The court highlighted that exempting assignees from these requirements would undermine consumer protection statutes designed to ensure that entities involved in mortgage lending possess the requisite oversight.
Some key takeaways from the OFR’s guidance are:
Passive trusts are subject to licensing requirements. The guidance defines a “passive trust” as a trust that acquires mortgage loans serviced by others, does not originate loans, and does not act as a mortgage broker or servicer. These trusts are now required to obtain a license to acquire or assign mortgage loans in Maryland.
Emergency regulations facilitate licensing for mortgage trusts. The OFR has issued emergency regulations to streamline the licensing process for mortgage trusts, recognizing the potential impact of the new requirements on the secondary mortgage market.
Enforcement is temporarily suspended, but action is recommended. While the OFR intends to suspend enforcement of these licensing obligations until April 10, 2025, the guidance recommends that affected parties should audit their portfolios and submit license applications promptly to ensure compliance.
Putting It Into Practice: This expansion of the applicability of licensing requirements could significantly impact the operations of state banks in Maryland. These banks may need to re-evaluate their procedures for acquiring and selling mortgage loans, raising the potential need for such banks to obtain additional licenses or adjust their loan trading practices. The guidance could also mean increased compliance costs and operational burdens for affected banks.
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CFPB Takes Action Against Illinois Mortgage Lender for Redlining Violations
On January 17, 2025, the CFPB filed a complaint against an Illinois-based non-depository mortgage lender for allegedly engaging in discriminatory practices. The CFPB alleges the lender engaged in improper redlining by deliberately excluding certain neighborhoods from its services based on the racial and ethnic composition of those areas, in violation of the Equal Credit Opportunity Act (ECOA).
The CFPB claims the lender violated ECOA by engaging in a pattern of discriminatory conduct against applicants on the basis of race or nationality. Specifically, the CFPB alleges the lender:
Concentrated office locations and marketing efforts in majority-white neighborhoods. The CFPB alleges the lender intentionally avoided locating offices and marketing its services in majority-Black and Hispanic neighborhoods in the Chicago and Boston metropolitan areas.
Discouraged prospective minority applicants. The lender allegedly engaged in practices that discouraged borrowers from applying for mortgage loans to purchase properties in majority-Black and Hispanic neighborhoods.
Failed to maintain sufficient training and compliance monitoring. The lender’s employees allegedly received little to no training on fair lender laws and regulations. The lender also allegedly failed to adequately monitor employee conduct for compliance with fair lender laws and did not perform any internal analyses to monitor for redlining.
The CFPB asserts that these actions resulted in a disproportionately low number or mortgage applications and loan originations from majority-Black and Hispanic neighborhoods.
To address these alleged violations, the CFPB is seeking a court order that would:
Ban the lender from engaging in mortgage lending for five years. This would prohibit the lender from engaging in any residential mortgage lending activities or receiving compensation for any such mortgage lending activities.
Impose a $1.5 million civil penalty. The penalty would be deposited into the CFPB’s victims relief fund to provide financial relief to harmed consumers.
Putting It Into Practice: This action is the latest of a flurry of redlining settlements by federal regulators in advance of the administration change (previously discussed here and here). It remains to be seen how the Trump Administration will approach ECOA enforcement. Lenders should nonetheless ensure their fair lender compliance protocols align with federal regulators’ standards and expectations.
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AB 238 Mortgage Deferment Act for California Wildfire: Mortgage Forbearance Relief
AB 238, also referred to as the Mortgage Deferment Act, to add Title 19.1§ 3273.20 et seq. (the “Mortgage Deferment Act” or the “Act”), was introduced in the California legislature on January 13, 2025 to provide essential financial relief to the victims of the Los Angeles County wildfires (including the Palisades and Eaton fires) that continue to burn in multiple locations throughout Southern California. The Mortgage Deferment Act may be heard in committee on February 13, 2025. If implemented, the Act is intended to provide financial relief to those who have lost their homes or livelihood to wildfires by allowing borrowers to request mortgage payment forbearance for up to 360 days, in two increments of 180 days each.
The Mortgage Deferment Act is modeled after the CARES Act, which provided similar forbearance relief to those experiencing financial hardship during the COVID-19 pandemic. To effectuate a request under the Act as currently drafted, the borrower[1] must submit a request for forbearance to the borrower’s mortgage loan servicer and affirm that the borrower is experiencing a financial hardship due to the wildfire disaster. Id. at § 3273.22(a). No additional documentation is required for a request for forbearance, other than the borrower’s attestation to a financial hardship caused by the wildfire disaster. Id. at § 3273.23(a).
Upon receipt of such a request, the mortgage servicer must provide the borrower a forbearance for up to 180 days, which may be extended for an additional period of up to 180 days at the request of the borrower. Id. at § 3273.22(b). Additionally, the mortgage servicer must communicate with the borrower to whom a forbearance has been granted to ensure that the borrower understands that the missed mortgage payments must be repaid, although they may be paid back over time. Id. at § 3273.23(a)-(b).
The proposed legislation prohibits the assessment of additional fees, penalties, or interest beyond scheduled amounts. It also requires an immediate stay of foreclosure efforts, and extends to all aspects of the foreclosure process, including foreclosure-related eviction. Moreover, during the forbearance period, the Mortgage Deferment Act prohibits a mortgage servicer from initiating any judicial or nonjudicial foreclosure process, moving for a foreclosure judgment or order of sale, or executing a foreclosure-related eviction or foreclosure sale. Id. at § 3273.24.
If the Mortgage Deferment Act is implemented, it will be of the utmost importance for mortgage servicers to work closely with borrowers who may have been impacted by the wildfire disaster in California. Servicers should also ensure that borrowers requesting forbearance are properly informed that any missed mortgage payments pursuant to the borrower’s forbearance request ultimately will be required to be repaid to the mortgage servicer. Further, upon implementation, any failure to properly adhere to the Mortgage Deferment Act by mortgage servicers could have significant negative consequences, which could include litigation and/or compliance issues. Servicers should monitor the status of the Act, to ensure that they are prepared to fully comply with its terms, should the Act become law.
[1] The Mortgage Deferment Act, as currently drafted, includes various proposed definitions. “Borrower” is defined as a natural person who is a mortgagor or trustor or a confirmed successor in interest, or a person who holds a power of attorney for a mortgagor or trustor or a confirmed successor in interest. Mortgage Deferment Act § 3273.21(a). “Mortgage loan” is defined as a loan that is secured by a mortgage and is made for financing, including refinancing of existing mortgage obligations, to create or preserve the long-term affordability of a residential structure in the state, or a buy-down mortgage loan secured by a mortgage, of an owner-occupied unit in this state. Id. at § 3273.21(b). “Mortgage servicer” means a person or entity who directly services a loan or who is responsible for interacting with the borrower, managing the loan account on a daily basis, including collecting and crediting periodic loan payments, managing any escrow account, or enforcing the note and security instrument, either as the current owner of the promissory note or as the current owner’s authorized agent. Id. at § 3273.21(c). “Wildfire disaster” means the conditions described in the proclamation of a state of emergency issued by California Governor Gavin Newsom on January 7, 2025. Id. at § 3273.21(d).
Safeguarding CRE Companies: Navigating Risks in Revenue Management Software Agreements
In the wake of the DOJ’s pending antitrust lawsuits, CRE companies should include several protections in their vendor agreements that involve the use of revenue management software. This article provides tips to mitigate risks and avoid potential legal violations.
In today’s rapidly evolving commercial real estate market, it is crucial that CRE companies include protective provisions in their agreements with vendors that utilize revenue management software (RMS). Legal actions, including a U.S. Department of Justice’s (DOJ) antitrust lawsuit against a prominent RMS provider, highlight the potential risks associated with the use of these RMS systems.
The DOJ lawsuit alleges that the provider’s RMS product enabled multifamily landlords “to share their competitively sensitive data … in return for pricing recommendations and decisions that are the result of combining and analyzing competitors’ sensitive data”. The landlords allegedly funneled their sensitive, confidential data into the RMS algorithm, which also uses other CRE companies’ proprietary, non-public data (including occupancy and rental rates), and received rental pricing recommendations for their apartment communities. The DOJ asserts that this practice resulted in increased rents and decreased market competition in rental pricing across the numerous apartment communities owned by CRE companies that use the RMS platform.
The DOJ’s antitrust lawsuit follows a 2022 investigation by ProPublica into the provider’s use of its RMS algorithm in setting rents. That investigation launched a series of lawsuits filed against the provider on behalf of apartment residents in several cities seeking class-action status. In 2023, the-then District of Columbia Attorney General filed a lawsuit against the provider and fourteen of the largest apartment landlords operating in DC. That suit accused the defendants of “colluding to illegally raise rents for tens of thousands of DC residents by collectively delegating price-setting authority to [the RMS provider], which used a centralized pricing algorithm to inflate prices, costing renters millions of dollars”.
While the provider has denied that its RMS “facilitates collusion” and has stated that it “is willing to make changes to its system to ease antitrust concerns”, CRE companies that continue to use these types of RMS risk facing similar claims by residents, the DOJ and other public agencies. According to a recent Washington Post article, in the past week, the DOJ “expanded its suit to sue six large landlords, which it says operate in 43 states and D.C.”
Here are some protective provisions that CRE owners and managers should consider including in their contracts with vendors that use RMS products similar to those that are the subject of the DOJ lawsuit:
Compliance with Laws: Have the vendor agree that in using the RMS and providing pricing recommendations, it will do so in compliance with all current and future laws. This should include court orders issued in any pending or future litigation involving any RMS.
Confidentiality: Require the vendor to keep strictly confidential all non-public information and data about the CRE company and its operations. This includes information about the CRE company’s rental rates and methods for pricing rents. The point is to have the vendor agree to not share or use any of the CRE company’s data with any competitor, including through the implementation of its RMS algorithm.
Non-Use of Confidential Information: Forbid the vendor from using any confidential or nonpublic information or data from any other CRE company in using the RMS (or implementing its algorithm) other than the information and data the vendor obtains from the CRE company that is a party to the agreement.
No Collusion: Prohibit the vendor from colluding or collaborating with the CRE company or any other CRE business in its use, application or operation of the RMS in any manner (including in setting or raising rents) that might give rise to a claim of price-fixing or other violation of any antitrust or other laws.
Documentation: Require the vendor to maintain a record documenting each action and decision concerning rental and other pricing determinations for the properties covered by the agreement, including how the RMS and its algorithm is utilized and the source of information used for each action and decision.
Antitrust Policy: Have the vendor represent in the agreement that it maintains and updates an antitrust policy and compliance program to ensure its adherence with all laws, including in the use of the RMS. The vendor should also have a continuing obligation to modify the RMS and how it is used at the CRE company’s properties to avoid any violation of antitrust or other laws.
Indemnification: The vendor should broadly indemnify the CRE company against all losses and claims resulting from the use of the RMS or otherwise from the agreement, including the vendor’s breach of the agreement or the failure of its RMS to comply with antitrust or other laws.
Vendors may push back on requests for many of these provisions. However, given the current litigious environment involving RMS systems, CRE companies may have increasing leverage in their contract negotiations to insist that vendors accept them. The RMS provider that is the subject of the DOJ lawsuit publicly acknowledged that its customers “are starting to worry about the legal threats”, which is a signal that RMS vendors may be more accommodating in negotiating their agreements in order to retain their existing customers and attract new ones.
These practical tips are intended to protect CRE companies from being inadvertently caught up in the current antitrust scrutiny involving RMS systems. Antitrust claims based on information sharing are easier to allege than prove. Proof requires specific economic analysis of the specific practice and its impact on the market, which is often difficult to determine when initially entering into seemingly benign agreements. Once entangled in an antitrust case, however, a CRE company faces significant costs and disruption of its business, regardless of the ultimate outcome of the case.
The lawsuits against the RMS provider (and now the landlords that are using the RMS) underscore the importance of safeguarding the interests of CRE companies. By ensuring that contracts with vendors using RMS include provisions that protect against potential antitrust and other legal violations, CRE companies can mitigate risks and avoid becoming embroiled in this type of lengthy and expensive litigation.
California FPPC Updates Campaign Contribution Limits
On Jan. 16, 2025, the Fair Political Practices Commission in California approved the bi-annual cost-of-living adjustment to the contribution limits to candidates and committees in California, as well as the voluntary expenditure limits.
The new limits are as follows:
Contribution Limit
2023-2024 Limit
2025-2026 Limit
Assembly/Senate/CalPERS/CalSTRS
$5,500
$5,900
Statewide (Other than Governor)
$9,100
$9,800
Governor
$36,400
$39,200
Small Contributor Committee Contribution Limit
2023-2024 Limit
2025-2026 Limit
Assembly/Senate/CalPERS/CalSTRS
$10,900
$11,800
Statewide (Other than Governor)
$18,200
$19,600
Governor
$36,400
$39,200
PAC for State Candidates
$9,100
$9,800
Voluntary Expenditure Limit
2023-2024 Limit
2025-2026 Limit
Assembly (primary/general)
$727,000/$1,273,000
$784,000/$1,373,000
Senate (primary/general)
$1,091,000/$1,636,000
$1,177,000/$1,765,000
Board of Equalization (primary/general)
$1,818,000/$2,272,000
$1,961,000/$2,942,000
Other Statewide (primary/general)
$7,272,000/$10,908,000
$7,844,000/$11,767,000
Governor (primary/general)
$10,908,000/$18,181,000
$11,767,000/$19,611,000
Officeholder Account Contribution Limits
2023-2024 Limit
2025-2026 Limit
Assembly/Senate
$4,500
$4,900
Statewide
$7,500
$8,100
Governor
$30,200
$3,600
.
Aggregate Officeholder Contribution Limits
2023-2024 Limit
2025-2026 Limit
Assembly/Senate
$75,500
$81,400
Statewide
$151,000
$162,900
Governor
$301,900
$325,700
Prop 65 Year-End Highlights: 2024’s Key Regulatory Changes, Legal Battles, and Enforcement Trends
As businesses and legal professionals strive to keep pace with California’s ever-changing regulatory environment, Proposition 65 (“Prop 65”) remains a key focal point. Known for its stringent requirements on chemical exposure warnings, Prop 65 continues to evolve, driven by new legislation, court rulings, and regulatory updates.
Below is a summary of 2024’s most notable Prop 65 developments. Whether you’re a seasoned legal expert or new to the world of compliance, staying informed on these changes is crucial for safeguarding your business against potential liabilities.
Private Enforcement Actions Still On The Rise: Beware of PFOA
Prop 65 permits private actors to bring enforcement actions “in the public interest,” provided the private enforcers first issue a 60-day notice of intent to sue the alleged violator.[1] In 2024, 5,398 notices were filed with the California Attorney General’s Office by approximately 40 private enforcers—up from 4,142 notices in 2023, and the highest number filed in any year since Prop 65’s inception.[2]
Top targeted product categories included:[3]
Food and herbal supplements
Beauty/Personal Care/Hygiene/Cosmetics/Sanitizers
Top targeted chemicals included:
Metals (including lead, cadmium, mercury and arsenic)
Phthalates (chemicals used in plastic)
Diethanolamine
Claims related to PFOA (perfluorooctanoic acid) have also been on the rise, accounting for over 200 of the notices filed in 2024—up from 53 PFOA notices in 2023.[4] PFOA is a chemical in the “PFAS”[5] family that was used to make products stain resistant, heat resistant, and waterproof, and to reduce friction.
Changes to Short-Form Warnings
After years of debate and analysis, California has adopted new guidelines for short-form warnings. On October 27, 2023, California Office of Environmental Health Hazard Assessment (“OEHHA”) published a Notice of Proposed Rulemaking, proposing amendments to existing sections of the safe harbor warning regulations for short-form warnings.[6] On November 26, 2024, the Office of Administrative Law approved the rulemaking.
The final regulatory text can be viewed here.[7] Under the new regulations, a short-form warning for food or consumer product exposures must specify at least one chemical name for which the warning is being provided.
The effective date for the amendments is January 1, 2025. However, businesses may use the previous version of the short-form warning for consumer products through 2027.
Consumer Advocacy Group v. Gulf Pacific Rice Company: Plaintiff Appeals Following Big Win for Food Manufacturers Challenging Exposure Assessments In Food Prop 65 Cases
In 2014, Consumer Advocacy Group commenced an action against an alleged manufacturer/distributor/promoter/retailer of rice for failure to provide a Prop 65 warning regarding lead in the rice product, Consumer Advocacy Group, Inc. v. Gulf Pacific Rice Co. Inc., et al., Cal. Super. Ct. Case No. BC553427. Multiple actions were consolidated into JCCP No. 4816, Prop 65 Rice Product Cases.
In 2024, following a bench trial, the Los Angeles Superior Court entered final judgment in favor of defendant Gulf Pacific Rice Co., Inc., finding that the rice product in question did not require Prop 65 warnings.[8] The court relied on data from the U.S. Center for Disease Control and Prevention’s National Center for Health Statistics’ National Health and Nutrition Examination Survey (“NHANES”[9]) for calculating the lead exposure, concluding that the level of exposure to lead from the rice products did not exceed the Safe Harbor level, i.e., the Maximum Allowable Dose Level provided in Prop 65 regulations of .05 µg/day. Consumer Advocacy Group has appealed the decision in the Second District Court of Appeal, Case No. B338777. That appeal is pending.
Epps v. Walmart: Court Denies Motion to Approve Consent Judgment After Office of the Attorney General Opposes “Unreasonable” Attorneys’ Fees
The San Francisco Superior Court recently denied[10] a motion to approve a proposed consent judgment in a lead exposure case on the grounds that plaintiff Epps failed to demonstrate its request for $200,000 in attorneys’ fees was reasonable.
In its opposition,[11] the California Attorney General noted that plaintiff’s counsel had filed well over 300 similar notices involving lead exposures since 2020 and obtained a total of at least $7,079,750 in attorneys’ fees and costs from the lead cases they have settled to date. Because the matter was not litigated, involved many template documents and non-complex legal issues, and took under 4 months from the service of the notice to signing of the settlement, the California Attorney General argued that the plaintiff had failed to show that the settlement was reasonable under California law. The Court concurred, citing, inter alia, counsel’s “extensive communication with a seasoned plaintiff,” the many hours spent on research despite counsel’s experience with similar cases, and the low novelty and difficulty of the case.
Recent Uptick In Alcohol-Related Notices of Violation For Restaurants
In April 2024 and from August to November 2024, the same private enforcer issued 143 Prop 65 notices of violation to Santa Monica restaurants for failing to provide Prop 65 warnings to their patrons. To date, 5 notices have been resolved by way of $500 payments from the restaurants.
How Can We Help?
As regulations continue to evolve, understanding and addressing compliance challenges can mitigate the risk of costly claims and penalties. From auditing your Prop 65 practices to assisting with notices of violation and Prop 65 litigation, our seasoned attorneys can help your business navigate Prop 65’s dynamic regulatory landscape.
FOOTNOTES
[1] Cal. Health & Safety Code § 25249.7(d)(1).
[2] https://oag.ca.gov/prop65/60-day-notice-search
[3]https://www.cps.bureauveritas.com/newsroom/ca-proposition-6560-day-notice-summary-q3-2024; https://www.cps.bureauveritas.com/newsroom/ca-proposition-6560-day-notice-summary-q2-2024; https://www.cps.bureauveritas.com/newsroom/ca-proposition-6560-day-notice-summary-q1-2024
[4] https://oag.ca.gov/prop65/60-day-notice-search
[5] PFAS (per- and polyfluoroalkyl substances) are a group of synthetic chemicals that are used in many consumer and industrial products. They are also known as “forever chemicals” because they break down very slowly and can build up in the environment and in living things.
[6] Notice of Proposed Rulemaking and Announcement of Public Hearing: Amendments to Article 6, Clear and Reasonable Warnings Safe Harbor Methods and Content
[7] See also https://oehha.ca.gov/media/downloads/crnr/fsor112624approval.pdf
[8] March 15, 2024 Final Judgment, Consumer Advocacy Group, Inc. v. Gulf Pacific Rice Co. Inc., et al., Los Angeles Superior Court Case No. BC553427.
[9] NHANES is publicly available consumer use data and “is designed to be representative of the entire population in the United States, and to capture how often foods are consumed, when they are consumed and how much is consumed … .” March 15, 2024 Final Judgment, Consumer Advocacy Group, Inc. v. Gulf Pacific Rice Co. Inc., et al., Los Angeles Superior Court Case No. BC553427.
[10] September 26, 2024 Order Denying Epps’s Motion to Approve Consent Judgment, Epps v. Walmart Inc., San Francisco Superior Court Case No. CGC-24-614279.
[11] July 8, 2024 Memorandum In Support of Opposition of the California Office of the Attorney General, Epps v. Walmart Inc., San Francisco Superior Court Case No. CGC-24-614279.
Massachusetts Expands Oversight of Private Equity Investment in Healthcare: Key Takeaways from House Bill 5159 Signed into Law by Governor Healey
On January 8, 2025, Massachusetts Governor Maura Healey signed House Bill 5159 (“H.5159”) into law, marking a notable expansion of the regulation of private equity investments within the Massachusetts healthcare sector. The legislation, set to take effect on April 8, 2025, introduces new measures to enhance transparency and accountability in healthcare transactions, focusing specifically on private equity firms, real estate investment trusts (“REITs”), and management services organizations (“MSOs”). This development also reflects a broader trend across the nation of increasing scrutiny of healthcare transactions and investments by private equity firms and other investors, as highlighted in our previous blog series on California’s Assembly Bill 3129.[i]
Key Provisions of H.5159
The enactment into law of H.5159 increases oversight of healthcare transactions in Massachusetts in several ways:
1. Expanded Definition of Material Changes Requiring Notice to the Massachusetts Health Policy Commission and Potential for Further Delays to Closing
Pre-existing Massachusetts law mandates that healthcare providers and provider organizations, including physician practices, healthcare facilities, independent practice associations, accountable care organizations, and any other entities that contract with carriers for the payment of healthcare services, with more than $25 million in Net Patient Service Revenue[ii] in the preceding fiscal year must submit a Material Change Notice (“MCN”) to the Massachusetts Health Policy Commission (“HPC”), Center for Health Information and Analysis (“CHIA”), and Office of the Attorney General at least 60 days prior to a proposed “material change” involving such entity.
Before H.5159 was enacted, the definition of “material change” already encompassed several types of transactions involving healthcare providers and provider organizations with more that $25 million in Net Patient Service Revenue, requiring them to submit an MCN to the Massachusetts HPC, CHIA, and Office of the Attorney General. These include:
A merger, acquisition, or affiliation between a healthcare Provider and an insurance carrier;
A merger, acquisition, or affiliation involving a hospital or hospital system;
Any acquisition, merger, or affiliation that results in an increase of $10 million or more in annual net patient service revenue, or grants the Provider or Provider Organization near-majority market share in a specific service or geographic area;
Clinical affiliations between two or more Providers or Provider Organizations with annual net patient service revenue of $25 million or more, excluding affiliations solely for clinical trials or medical education purposes; and
The formation of new entities such as joint ventures, MSOs, or accountable care organizations that contract with insurers or other administrators on behalf of healthcare Providers.
H.5159 notably broadens the definition of “material change” to include also:
Transactions involving a Significant Equity Investor that result in a change of ownership or control of a Provider or Provider Organization;
“Significant” acquisitions, sales, or transfers of assets, including, but not limited to, real estate sale-leaseback arrangements;
“Significant expansions” in a Provider or Provider Organization’s capacity;
Conversion of nonprofit Providers or Provider Organizations to for-profit entities; and
Mergers or acquisitions of Provider Organizations that will result in the Provider Organization having a dominant market share in a service or region.
The term “Significant Equity Investor” is broadly defined to include: (i) any private equity firm holding a financial interest in a Provider, Provider Organization, or MSO; and (ii) any investor, group of investors, or entity with ownership of 10% or more in such organizations. The definition specifically excludes venture capital firms solely funding startups and other early-stage businesses.
While the law expands the definition of “material change” to encompass the categories listed above, it does not explicitly define what constitutes a “significant acquisition,” “significant expansion,” or “change of ownership or control.” As of now, these terms are left to be clarified by the HPC through further regulation and guidance. Stakeholders should monitor future regulatory updates from the HPC to understand the specific thresholds for these types of transactions.
If the HPC determines within 30 days of receiving a complete MCN that a “material change” may significantly affect Massachusetts’ ability to meet healthcare cost growth benchmarks or impact market competition, the HPC can initiate a Cost and Market Impact Review (“CMIR”). This process requires detailed submissions from transaction parties and significantly extends the transaction timeline to close a deal.
The amended law also enhances the HPC’s information-gathering capabilities, authorizing the HPC to request detailed data on Significant Equity Investors, including financial data and capital structure information. Additionally, the HPC can now monitor and collect information on post-transaction impacts for up to five years following a material change. While nonpublic information submitted to the HPC remains confidential, the filed MCN and the completed CMIR report will be publicly available on the HPC’s website.
Although the HPC cannot directly prohibit a transaction or impose conditions, it can refer its CMIR findings to the Massachusetts Attorney General, Massachusetts Department of Public Health (“DPH”), or other state agencies for further action.
2. Investors May be Called as Witnesses at Annual Public Hearings
H.5159 authorizes the HPC to assess the impact of Significant Equity Investors, healthcare REITs, and MSOs on healthcare costs, prices, and cost trends. HPC is empowered to call a representative sample of these investors to testify at its annual public hearings under oath. The Attorney General may intervene in these hearings, ensuring rigorous oversight and accountability.
3. Annual Financial Reporting Requirements
Certain Provider Organizations are already required to register with the HPC (“Registered Provider Organizations”) and submit annual reports to the CHIA. To be subject to the registration requirement, a provider organization must meet at least one of the following criteria: (a) annual net patient service revenue from private carriers or third-party administrators of at least $25 million in the prior fiscal year; (b) a patient panel of more than 15,000 over the past 36 months; or (c) classification as a risk-bearing provider organization, regardless of revenue or panel size. This includes, but is not limited to, physician organizations, independent practice associations, accountable care organizations, and provider networks.
H.5159 expands reporting obligations for Registered Provider Organizations to include detailed information about the Registered Provider Organization’s Significant Equity Investors, healthcare REITs, and MSOs. It also clarifies that Registered Provider Organization financial statements must cover parent entities’ out-of-state operations and corporate affiliates. Additionally, the amended law authorizes the state to require quarterly submissions from Registered Provider Organizations with private equity involvement. These submissions may include audited financial statements, structure charts, margins, investments, and relationships with investor groups. Organizations must also report on costs, annual receipts, realized capital gains and losses, accumulated surplus, and reserves. The HPC will monitor prior transactions and investments for up to five years and notify organizations of future reporting deadlines as needed.
4. Penalties for Noncompliance with Reporting Requirements
H.5159 imposes stricter penalties for failing to submit required financial reports. Entities missing reporting deadlines may face fines of up to $25,000 per week after a two-week grace period, with no annual penalty cap. This is a substantial increase from prior penalties, which were capped at $50,000 annually.
5. Expanded Authority for the Attorney General
The Massachusetts Attorney General is authorized to review and analyze any information submitted to CHIA by a provider, provider organization, Significant Equity Investor, health care REIT, MSO or payer. The Attorney General may compel such entities to produce documents, answer interrogatories, or provide testimony under oath concerning healthcare costs, cost trends, and the relationship between provider costs and payer premiums.
The Attorney General may disclose such information during HPC annual public hearings, rate hearings before the Division of Insurance, and legal proceedings because the law deems such information to be in the public interest.
6. Expanded Massachusetts False Claims Act Liability
H.5159 amends the Massachusetts False Claims Act (the “MA FCA”), which is broader in scope than the Federal False Claims Act, to expand liability to entities holding an “ownership or investment interest” in a person or entity violating the MA FCA. Specifically, private equity owners and other investors who are aware of a violation and fail to report and remedy it within 60 days of discovery may be held liable. The law codifies this expanded accountability, explicitly including investor groups among those who can be held responsible for untimely reporting violations. Additionally, the amendments clarify the Attorney General’s authority to issue civil investigative demands to healthcare entities and investor groups.
Notable Exclusions from Earlier Proposals
H.5159 reflects several compromises that were made during the legislative process, resulting in a more moderate version compared to earlier proposals. The process began in May 2024 with the introduction of House Bill 4653, followed by Senate Bill 2871 in July 2024.[iii] Senate Bill 2871 included stricter requirements than those in House Bill 4653, but lawmakers struggled to reconcile the differences before the legislative session deadline on July 31, 2024. This stalemate led to renewed efforts in December 2024, which ultimately resulted in the passage of H.5159.
While H.5159 carries forward many of the provisions from the earlier bills, it also removes certain measures that stakeholders had identified as too burdensome, as outlined below. These exclusions include:
Restrictions on Practice Ownership and Clinical Decision Making: provisions explicitly codifying restrictions on healthcare practice ownership and prohibiting MSOs or other healthcare entities from exerting control over clinical decisions were omitted.
Boundaries Between MSOs and Physician Practices: H.5159 also excludes specific boundaries that were previously proposed to regulate the relationship between physician practices and MSOs, including restrictions on MSOs exerting ultimate control over the finances of healthcare practices and limitations on stockholders’ ability to transfer, alienate, or exercise discretion over their ownership interests in the practices.
Maximum Debt-to-EBITDA: A provision that would have allowed the Massachusetts HPC to set a maximum debt-to-EBITDA ratio for provider organizations with private equity investors was removed from the final bill that was signed into law.
Bond Requirements for Private Equity Firms: H.5159 does not include the previously proposed requirement that private equity firms deposit a bond with the DPH when submitting an MCN, including when acquiring a provider organization.
Conclusion
The passage of H.5159 represents a pivotal moment in Massachusetts’ efforts to regulate investment in health care. It also reflects, however, a compromise that did not impose even more stringent requirements that were set to impact providers, provider organizations, and investors.
Investors, including private equity firms, and healthcare providers and provider organizations, will need to adapt to the enhanced oversight mechanisms and implement more thorough due diligence practices to ensure transparency and avoid penalties for non-compliance. Pre-transaction, this includes ensuring thorough documentation and proactive engagement with regulatory authorities. Post-transaction, entities must implement systems to track and report required financial and operational data accurately and on time.
As H.5159 takes effect, we will continue to monitor and report on any further regulatory updates, particularly those concerning the HPC’s development of regulations to implement this law.
FOOTNOTES
[i] Update: Governor Newsom Vetoes California’s AB 3129 Targeting Healthcare Private Equity Deals | Healthcare Law Blog (sheppardhealthlaw.com), published October 2, 2024, Update: AB 3129 Passes in California Senate and Nears Finish Line | Healthcare Law Blog (sheppardhealthlaw.com), published September 6, 2024, California’s AB 3129: A New Hurdle for Private Equity Health Care Transactions on the Horizon? | Healthcare Law Blog (sheppardhealthlaw.com), published April 18, 2024, and Update: California State Assembly Passes AB 3129 Requiring State Approval of Private Equity Healthcare Deals | Healthcare Law Blog (sheppardhealthlaw.com), published May 30, 2024.
[ii] Net Patient Service Revenue refers to revenue received for patient care from third-party payers, net of contractual adjustments, with distinctions depending on the type of Provider or Provider Organization. For hospitals, it must comply with Massachusetts General Laws Chapter 12C, Section 8, requiring standardized reporting of gross and net revenues, including inpatient and outpatient charges, private sector charges, payer mix adjustments, and revenue from additional services. For other providers and provider organizations, it includes all revenue from third-party payers, prior-year settlements, and premium revenue (per-member-per-month payments for comprehensive healthcare services). 950 CMIR 7.00.
[iii] See our prior blog for background on Senate Bill 2871: Massachusetts Senate Passes Bill to Increase Oversight of Private Equity Healthcare Transactions | Healthcare Law Blog
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EPA’s PFAS Regulations: What Real Estate Professionals Need To Know
In 2024, the U.S. Environmental Protection Agency (“EPA”) took significant steps to regulate per- and polyfluoroalkyl substances (PFAS), commonly known as “forever chemicals.” These persistent compounds, once widely used in manufacturing, firefighting, and food packaging, were designated as hazardous under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and became subject to maximum contaminant levels (MCLs) under the Safe Drinking Water Act (SDWA).
With increased regulatory scrutiny surrounding PFAS, understanding the evolving risks and liabilities tied to these chemicals is crucial for those involved in commercial real estate. Properties with industrial, commercial, or agricultural histories are especially vulnerable to PFAS contamination, which could affect property transactions, financial exposure, and risk management. This post outlines key EPA regulations, discusses ongoing legal challenges to those regulations, and highlights important considerations for real estate professionals navigating PFAS issues.
Key EPA Actions on PFAS in 2024
CERCLA Rule (May 2024): The EPA finalized a rule designating PFOA and PFOS, two common PFAS compounds, as hazardous substances under CERCLA. This gives the EPA authority to require investigation and cleanup at contaminated sites, potentially holding property owners liable for cleanup costs—even if they weren’t responsible for the contamination. Although the rule is currently under legal challenge, it could set a de facto standard for groundwater cleanup at federal and state Superfund sites.
SDWA Rule (April 2024): The EPA also set enforceable MCLs for six PFAS compounds, including PFOA and PFOS, at extremely low thresholds. Public water systems must comply within five years. While this rule primarily affects water systems, it could also affect properties relying on water contaminated with PFAS, potentially influencing groundwater cleanup requirements under CERCLA or equivalent state laws.
Ongoing Legal Challenges and the Trump Administration’s PFAS Policy
The EPA’s PFAS regulations are facing significant pushback. In American Water Works Association v. U.S. EPA, industry groups are challenging the EPA’s MCLs, arguing that they are technologically and economically unfeasible. Meanwhile, in Chamber of Commerce v. U.S. EPA, industry groups are challenging the designation of PFAS as hazardous under CERCLA, claiming that the EPA’s methodology was “fatally flawed” and that EPA failed to adequately consider the “enormous” costs associated with making the designations.
During his recent confirmation hearings, Lee Zeldin, President Trump’s nominee to lead EPA, was asked how he plans to address PFAS using the agency’s existing authorities. Zeldin mentioned that during his time in Congress, he served on a task force concerning PFAS regulation and voted in support of legislation that would have required EPA to actions under CERCLA and the SDWA similar to those implemented by the Biden Administration. This indicates that a complete reversal of the current rules is unlikely.
Implications for Real Estate Professionals
As PFAS contamination becomes a central environmental concern, CRE professionals need to incorporate PFAS risks into due diligence and risk management processes. PFAS contamination can result in substantial cleanup costs, even for property owners not directly responsible for the contamination. CRE professionals should consider the following when evaluating PFAS risk:
Phase I Environmental Site Assessments (ESAs): PFAS contamination is increasingly flagged during Phase I ESAs. Properties with industrial or commercial histories, particularly those in high-risk areas, are more likely to identify PFAS as a recognized environmental condition (REC).
Phase II Investigations: If Phase I ESAs flag PFAS concerns, Phase II investigations may be needed. These investigations are more invasive and often more expensive due to the specialized testing required.
Reopening Closed Sites: In some cases, regulators could revisit sites previously closed after remediation if PFAS is discovered. Property owners could be held liable for further cleanup costs, even if the contamination was missed initially.
Addressing PFAS-Impacted Sites
Remediating PFAS contamination is both challenging and costly. Traditional methods like “dig and haul” and “pump and treat” are time-consuming and expensive. However, new technologies, such as thermal treatment and supercritical water oxidation, offer promising solutions that could be more cost-effective. The costs associated with remediation will vary depending on the chosen strategy and the evolving regulatory landscape.
While the EPA is currently focusing on only a few PFAS compounds, thousands of other PFAS chemicals could be subject to future regulation. At the state level, regulations are expected to become more stringent, further complicating the legal environment for real estate professionals. These regulatory changes could impact property values, development timelines, and investment strategies.
Given the complexities surrounding PFAS, it’s essential to work with environmental consultants, attorneys, and insurance brokers specializing in PFAS. These experts can help navigate regulatory changes, assess risks, and develop strategies to manage potential liabilities effectively.
Conclusion
As the EPA reshapes its regulatory framework for PFAS, staying informed and proactive is critical for anyone involved in commercial real estate. Understanding the legal, environmental, and financial implications of PFAS contamination is key to minimizing risk and succeeding in an increasingly complex real estate market. Whether conducting due diligence, managing existing properties, or addressing contamination concerns, navigating these new rules effectively is key to protecting assets and opening new opportunities.
Will New York’s New Flood Insurance Law Create a Coinsurance Problem for Lenders and Policyholders?
A law recently passed by the New York State Assembly and signed by Gov. Kathy Hochul puts significant limits on the flood insurance that lenders can require borrowers to purchase on loans secured by residential real property. Commentary in the weeks since the law went into effect has focused on potential conflicts between the law and the federal Flood Disaster Protection Act or the potential for loans and properties to be underinsured for flood. Another hidden problem may occur, however, if policyholders opt to purchase coverage for significantly less than the building replacement cost on a policy that includes a coinsurance penalty.
Signed by Gov. Hochul on December 13, 2024, and effective immediately, Assembly Bill A5073A prohibits mortgage lenders from requiring borrowers to obtain flood insurance on improved residential real property at a coverage amount exceeding the outstanding principal mortgage balance as of the beginning of the year for which the policy shall be in effect, or that includes contents coverage. The bill additionally requires lenders to provide clear and conspicuous notice to borrowers that the required flood insurance will only protect the lender’s interest and may not be sufficient to pay for repairs or other loss after a flood.
Of course, purchasing coverage for less than full replacement cost of the insured building carries the risk that coverage will be insufficient to rebuild or repair in the event of a loss. But policyholders who consider taking this chance should also consider whether their flood policy has a coinsurance penalty. These provisions can limit payouts to insureds who purchase coverage for substantially less than the building replacement cost by paying only a fraction of the full loss. For example, both the FEMA and ISO personal flood policies have the potential to pay only a specified portion of the loss or the actual (depreciated) cash value, whichever is greater, when insurance limits are less than 80% of full replacement cost. Even if the policy pays the actual cash value, however, the policyholder and their lender may come in for a nasty shock if the depreciated cash value of the building is many thousands of dollars less than what is needed to complete repairs.
If a coinsurance penalty applies, purchasing coverage at the amount of the outstanding mortgage principal balance under New York’s law thus does not necessarily translate into an insurance payout in that amount. Notably, the notice required to be given to mortgagors by New York does not include a specific warning to the property owner of this possibility.
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Considerations for Connecticut’s New Environmental Cleanup Rules
Connecticut is transitioning to a new approach to environmental cleanup and property transactions. The Release-Based Cleanup Regulations (RBCRs) will replace the Transfer Act[1], which impacted property sales and redevelopment. Effective March 1, 2026, this shift seeks to align Connecticut with other states’ practices and may create opportunities and challenges for property owners, developers, and environmental professionals.
For nearly 40 years, the Transfer Act linked environmental inspections and cleanups to property transfers. While well-intentioned, the system created barriers and could delay transactions or deter sales. As properties languished under the weight of complex regulations, contamination issues frequently went unaddressed. A 2019 study examined the economic effects, noting potential impacts on employment and state and local revenue between 2014-2018.[2]
The RBCRs aim to flip this script by focusing on contamination as it is discovered, rather than tying remediation to property sales. By doing so, the new rules seek to encourage proactive cleanup while freeing up properties for timely transactions.
Changes Under the RBCRs
Under the new rules, owners must report contamination upon discovery and adhere to specific cleanup timelines. This shift could change the landscape of Connecticut property transactions, particularly in areas with historical contamination, like urban and coastal sites.
For buyers, the rules may offer greater flexibility. Inspections are no longer mandatory before a sale, which may expedite some transactions. However, this freedom comes with heightened risk. Buyers should consider the potential liabilities of purchasing contaminated properties, especially without pre-transaction inspections, and consider clearly defining environmental responsibilities in sale agreements.
The RBCRs also introduce new allowances, such as thresholds for minor contamination and exemptions for incidental releases. For example, contamination from routine roadwork or utility projects may no longer trigger immediate regulatory action. Similarly, single-family homeowners are exempt, but landlords of multifamily properties face stricter obligations regarding tenant safety.
For urban properties, which often face environmental challenges, there may be renewed interest under the RBCRs. The Transfer Act’s soil removal requirements, which mandated replacing four feet of soil in contaminated areas, could make redevelopment cost prohibitive. The new regulations provide more flexible remediation options, which may enable developers to manage contamination without excessive costs.
Possible Regional Implications of Connecticut’s Regulatory Shift
Connecticut’s transition from the Transfer Act to Release-Based Cleanup Regulations (RBCRs) exemplifies a shift toward decoupling environmental remediation from property transactions, a model that may influence regulatory frameworks in neighboring states. New Jersey’s Site Remediation Reform Act (SRRA) already reflects a release-based approach by emphasizing site-specific cleanup responsibilities, but the RBCRs may further encourage New Jersey to refine its existing policies. The broader principles underlying the RBCRs—streamlining remediation and balancing environmental and economic priorities—may serve as a model for other states in the region as they consider reforms to improve efficiency in addressing historical contamination.
[1] Connecticut General Statutes §§ 22a-134 through 22a-134e
[2] Connecticut Economic Resource Center, Study on the Impact of the Transfer Act (2019) (finding the Act caused the loss of approximately 7,000 jobs and $178 million in tax revenue from 2014 to 2018), available at Hartford Business Journal.
Who Regulates Residential Mortgage Trigger Leads?
In a bit of a surprise development at the end of 2024, the United States Senate passed the Homebuyers Privacy Protection Act, which amends the Fair Credit Reporting Act (FCRA) to include specific restrictions on the use of trigger leads in the residential mortgage lending space. While industry groups applauded the Senate’s passage of the act, the United States House of Representatives has not passed corresponding legislation, so the act is not currently in effect. Regardless, the act draws scrutiny on what many view as an annoying and potentially abusive practice – mortgage lenders’ excessive use of trigger leads.
A trigger lead generally refers to information a consumer reporting agency (CRA) compiles on a consumer based on the consumer’s application of credit in a particular credit transaction. The FCRA allows CRAs to create these consumer reports without the express consent of the consumer, meaning the consumer does not initiate the creation of a trigger lead. Typically, the consumer report is then sold to a third-party lender that uses it to solicit the consumer for comparable loan products.
Proponents argue that trigger leads benefit consumers by promoting competition amongst lenders and potentially resulting in the consumer receiving more favorable loan terms. However, in practice, trigger leads often result in excessive and unwanted solicitations from third-party lenders that can confuse or overwhelm a typical consumer. In some cases, solicitations from third-party lenders imply an association with the lender that received the consumer’s initial application, seemingly attempting to blur the line between the entities and take advantage of potential consumer confusion. Given the potential for this negative consumer impact, several states, and now the federal government, have proposed or enacted legislation that specifically addresses the use of trigger leads.
State Regulation of Trigger Leads
In November 2024, Texas became the most recent state to enact a law regulating a mortgage lender’s use of trigger leads. However, going back to at least 2007, other states have also enacted comparable requirements governing the use of trigger leads, including Connecticut, Rhode Island, Maine, Kansas, Kentucky, and Wisconsin.
While each state varies, the laws in these states typically impose two specific consumer protections to counteract abusive trigger lead practices. First, in many of these states, the law requires any lender using trigger leads to clearly include in its initial communication with the consumer the identity of the lender, the lender’s practice of using trigger leads, an explanation of trigger leads, and an express statement that the lender is not affiliated with the lender that took the consumer’s initial application for credit. Second, many state trigger lead laws also cite the FCRA and expressly adopt the FCRA requirements that (1) a lender cannot contact a consumer who has opted out of inclusion in consumer reports compiled pursuant to the FCRA and (2) the lender must make a firm credit offer if soliciting based on consumer reports provided in compliance with the FCRA.
However, while these states impose clear obligations on lenders using trigger leads, as a practical matter the only way for a borrower to stop receiving trigger lead-based solicitations is to affirmatively take the “opt out” steps defined in the FCRA.
Potential Impact of Federal Homebuyers Privacy Protection Act
The act would largely shift this responsibility back to the CRA and lender and significantly restrain the marketability and use of trigger leads. Specifically, the act would prohibit a CRA from providing a trigger lead to a lender unless (1) the consumer provided consent for the CRA to share his or her information or (2) the lender seeking the trigger lead has some preexisting relationship with the consumer, such as the lender holding a current account of the consumer. This shifting of responsibility has generally been hailed as needed protection for borrowers. And while the proposed act would effectively flip the focus of when trigger leads are permissible, it would seemingly not conflict with the current state regulatory framework for trigger leads.
Regardless of whether the act is ultimately enacted as federal law, mortgage lenders and CRAs should prepare for a continued focus on the use of trigger leads, as this appears to be a practice that both industry experts and regulators view as in need of reform.
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Trump Administration Day One Executive Orders: Energy Policy
The Trump administration issued several Executive Orders aimed at significantly altering American energy policy, which are summarized below.
Executive Order: Declaring a National Energy Emergency
Fundamental to President Trump’s efforts to stimulate American energy production is his Executive Order declaring a national energy emergency. This is the first time that a president has declared a national energy emergency, although regional energy emergencies were declared by President Jimmy Carter in the 1970s due to shortages of fossil fuels. By declaring a national energy emergency, President Trump is allowing federal agencies to use various emergency authorities to facilitate the “identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources.” The Order defines “energy” and “energy resources” to include “crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals.”
The Order represents the administration’s first step in promoting domestic energy production which, according to the Order, will lower energy prices, create jobs, and strengthen national security. In furtherance of these objectives, the Order directs federal agencies to identify and use all relevant lawful emergency and other authorities to expedite the completion of all authorized and appropriated infrastructure, energy, environmental, and natural resources projects.
Among the more significant provisions in the Order to the regulated community are directives to agencies to evaluate the use of emergency measures in environmental regulations to facilitate and streamline permitting and environmental reviews. Federal agencies must identify and report on planned or potential actions to facilitate energy supply that may be subject to emergency treatment under the regulations and nationwide permits promulgated by the Army Corps of Engineers, such as projects subject to Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act. The Order provides similar requirements for actions that may require agency consultations under the Endangered Species Act (ESA). Agencies must identify and report on planned or potential actions that may be subject to the ESA and provide a summary report of those actions. Agencies are directed to use, to the maximum extent permissible under applicable law, the ESA regulations on consultations in emergencies.
Additionally, the Secretary of the Interior, acting as Chairman of the Endangered Species Act Committee, must convene the committee not less than quarterly to review and consider applications submitted by any applicant for a permit or license who requests an exemption from the agency consultation obligations imposed by Section 7 of the ESA. To the extent practical, the Secretary of the Interior must ensure an initial determination is made on applications within 20 days of receipt and the submission must be resolved within 140 days of the initial determination.
Executive Order: Unleashing American Energy
President Trump’s declaration of an energy emergency dovetails with his Executive Order entitled Unleashing American Energy. The Order directs federal agency heads to review all existing agency actions and identify those that unduly burden domestic energy resources and, within 30 days, develop and begin implementing action plans to suspend, revise, or rescind all such actions. It calls for a particular focus on oil, natural gas, coal, hydropower, biofuels, critical mineral, and nuclear energy resources. The Order also directs agencies to notify the Attorney General of any actions taken to review or suspend, revise or rescind regulations so that (i) notice of the Order and such actions can be provided to any court with jurisdiction over pending litigation in which such actions may be relevant and (ii) a request can be made to the court stay or otherwise delay further litigation, or seek other appropriate relief consistent with the Order.
The Order also focuses on increasing permitting efficiency across agencies, in part by revoking President Carter’s 1977 Executive Order 11991 relating to protection and enhancement of environmental quality, which authorized the Council on Environmental Quality (CEQ) to issue mandatory regulations to implement the National Environmental Policy Act (NEPA). The Order requires CEQ to provide guidance on implementing NEPA and to issue a proposed rule rescinding CEQ’s current NEPA regulations. It also encourages agencies to eliminate permitting delays in their respective processes by utilizing general permits and permit by rule and authorizes the use of emergency authorities for any project an agency head has determined is essential to the nation’s economy or national security. The Director of the National Economic Council (NEC) and the Office of Legislative Affairs are also directed to jointly prepare recommendations to Congress to streamline judicial review of NEPA applications, facilitate permitting, and construct interstate energy transportation and infrastructure.
The Order requires the Environmental Protection Agency (EPA) to issue guidance to address abandoning the social cost of carbon calculations in decision making within 60 days of the Order, and within 30 days of the Order, EPA must submit recommendations on the legality and future applicability of the 2009 Endangerment Finding for greenhouse gases under the Clean Air Act.
Significantly, the Order directs all agencies to pause the disbursement of funds appropriated through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act pending review, including funds for electric vehicle charging stations, and review agency processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds.
The Order also contains provisions pertaining to liquified natural gas, which lifted a freeze on liquified natural gas exports put in place by President Biden in early 2024. The Order directs the Secretary of Energy to restart reviews of the applications for approvals of liquified natural gas export projects, and reconsider records of decision for proposed deepwater ports for the export of liquified natural gas.
Finally, the Order contains components on mineral dominance, which directs relevant agencies to identify and rescind all agency actions that unduly burden domestic mining and processing of non-fuel minerals. It also provides for geological mapping to focus on unknown mineral deposits, tapping into the potential of uranium, allocating federal funds for critical mineral projects, and requires that policy recommendations pertaining to enhancing mining competition in the United States be submitted by relevant agencies within 60 days of the Order.
Memorandum: Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects
The Trump administration’s efforts to promote the production of energy from traditional energy sources stand in contrast to President Trump’s Memorandum aimed at curtailing wind energy production by withdrawing the Outer Continental Shelf (OCS) from offshore wind leasing and reviewing all leasing and permitting practices for wind energy projects. The Memorandum temporarily prevents consideration of any area in the OCS for any new or renewed wind energy leasing for the purposes of generation of electricity or any other such use derived from the use of wind. It directs the Secretary of the Interior, in consultation with the Attorney General, to conduct a comprehensive review of the ecological, economic, and environmental necessity of terminating or amending any existing wind energy leases, identify any legal bases for such removal, and submit a report with recommendations to the President. Finally, it directs that no new or renewed approvals, rights of way, permits, leases, or loans for onshore or offshore wind projects be issued pending the completion of a comprehensive assessment and review of federal wind leasing and permitting practices.
Executive Order: Unleashing Alaska’s Extraordinary Resource Potential
President Trump also issued an Executive Order entitled Unleashing Alaska’s Extraordinary Resource Potential. The Order’s more significant provisions include directing agencies to prioritize the development of Alaska’s LNG potential, including the permitting of all necessary pipeline and export infrastructure related to the Alaska LNG Project, and to issue permits, right-of-way permits, and easements necessary for the exploration, development, and production of oil and gas from leases within the Arctic National Wildlife Refuge.