Where the Rubber Meets Regulation – FTC Clarifies Data Security Requirements for Auto Dealers Under Safeguards Rule
On June 16, 2025, the Federal Trade Commission (FTC) issued FAQs that directly affect many automobile dealers, clarifying how its Safeguards Rule (the Rule), part of the FTC’s implementation of the Gramm-Leach-Bliley Act (GLBA), applies to the automotive sector. The Rule requires non-banking financial institutions to implement measures to protect customer information—and the FTC is making it clear that many car dealerships fall within that definition.
While “financial institution” might traditionally bring to mind banks or lenders, the Rule defines the term much more broadly. It includes businesses significantly engaged in financial activities or closely related services. That means mortgage brokers, finance companies, financial advisors, credit counselors—and yes, car dealers who either finance or lease vehicles to consumers.
According to the FAQs, if a car dealership helps customers secure auto loans or directly provides financing, it qualifies as a financial institution under the Rule. The same goes for dealerships that lease vehicles for over 90 days, since leasing is also considered a financial activity.
The FAQs also clarify what counts as “customer information” protected by the Rule. Customer information includes a dealer’s documents like approved financing or leasing applications, spreadsheets containing customer names and financial data, and other information that could be linked to a customer’s financial profile. However, general sales reports that don’t relate to a consumer’s financing or leasing aren’t covered.
The Rule requires covered financial institutions to maintain an information security program that outlines all of the ways dealers collect and store customer information, how this information is shared with other companies, and how dealers delete such information when it is no longer needed. Though there is no one-size-fits-all approach regarding what constitutes a sufficient information security program, the FAQs advise that these programs should contain administrative, technical, and physical safeguards appropriate for a dealer’s size, complexity, type of activities, and sensitivity of the customer information involved.
The FAQs list ten key requirements for an information security program, which include a written risk assessment of reasonably foreseeable risks, oversight of service providers, a written incident response plan, and notifying the FTC of certain security breaches.
The FAQs further address various other issues and scenarios specific to automobile dealers. But the key takeaway? If your dealership is involved in financing or long-term leasing, the FTC Safeguards Rule applies—and if you are a car dealer, now is the time to evaluate whether your current data security practices meet the FTC’s expectations. With the agency signaling that it’s watching this sector, it’s best not to steer off course.
EPA Signals Approval of Texas’ Class VI Injection Well Primacy: Streamlining Carbon Capture and Climate Action
In a significant move for environmental policy and energy innovation, the U.S. Environmental Protection Agency (EPA) has proposed to approve Texas’ application to administer its own Class VI underground injection well program. This decision, announced on June 9, 2025, marks a pivotal step in accelerating carbon capture and sequestration (CCS) efforts across the state and potentially the nation.[1]
Results of the EPA Announcement
The EPA’s proposal grants Texas the authority to issue permits for Class VI wells—specialized underground injection wells used to store carbon dioxide (CO2) deep underground. These wells are a cornerstone of CCS technology, which captures CO2 emissions from industrial sources and power plants and stores the CO2 underground, preventing it from entering the atmosphere.
Under the Safe Drinking Water Act (SDWA), the EPA typically oversees the permitting of these wells. However, states can apply for “primacy,” or the right to manage the permitting process themselves, provided they meet stringent federal standards. Texas’ application, led by the Texas Railroad Commission, has now received the EPA’s preliminary approval, pending a final rule.
Streamlining Permits and Boosting Investor Confidence
Once finalized, one of the most immediate benefits of this decision is the expected reduction in permitting times for CCS projects. Under federal oversight, the permitting process for Class VI wells has often been criticized for being slow and cumbersome, sometimes taking several years. By shifting control to Texas, which has decades of experience managing other classes of underground injection wells within their state, the process is expected to become significantly more efficient.
This streamlining is crucial for attracting private investment. Carbon capture projects are capital-intensive and require long-term planning. With Texas now poised to manage its own Class VI program, companies and investors can expect faster approvals, more accurate timelines, and more predictable regulatory outcomes.
A Catalyst for Carbon Capture and Sequestration?
The EPA’s move may not be just a bureaucratic shift—it can be a catalyst for broader adoption of CCS technologies and greater utilization of Texas well space. Companies engaging in CSS may qualify for tax credits, with benefits ranging from $17 to $180 per metric ton of CO2 captured.[2] However, investors may still want to proceed with caution: while the administration has taken steps to ease permitting and regulatory barriers, the 2026 federal budget includes cuts to several CCS-related funding programs, potentially limiting the financial viability of some projects.[3]
Texas, as a leader in both energy production and geological storage potential, is uniquely positioned to scale up CCS. Much of the state’s vast underground formations, particularly saline aquifers and depleted oil and gas reservoirs, offer ideal conditions for long-term CO2 storage. By enabling Texas to take the reins, the EPA may be clearing a path for a new wave of potential CCS projects. This could include retrofitting existing power plants, supporting industrial decarbonization, and even facilitating direct air capture (DAC) technologies that remove CO2 directly from the atmosphere. Still, the long-term success of these efforts may hinge on whether financial incentives can keep pace with the regulatory momentum.
Cooperative Federalism in Action
The EPA’s decision also reflects a broader philosophy of “cooperative federalism,” where federal and state governments work together to achieve shared goals. Administrator Zeldin framed the move as a return to this principle, emphasizing that states like Texas are best equipped to manage their own environmental programs.
This approach has garnered bipartisan support in Texas, with both federal and state officials applauding the decision. It also sets a precedent for other states seeking primacy over Class VI wells, potentially accelerating CCS deployment nationwide.
Looking Ahead
While the EPA’s proposal is not yet final, it represents a major milestone. A public comment period will follow, after which the agency will issue a final rule. If approved, Texas will join the growing list of states with full authority over Class VI well permitting, similar to the state’s management of existing Class I, II, III, IV, and V wells.
This development may spur rapid adoption of CCS technologies, not just in Texas but across the U.S. as the EPA continues to delegate authority to other states. Such changes promise faster project timelines, increased investor confidence, and a stronger foundation for meaningful climate action.
Footnotes
[1] https://www.epa.gov/newsreleases/epa-proposes-approve-texas-application-administer-class-vi-underground-injection-well
[2] https://www.rrc.texas.gov/about-us/faqs/oil-gas-faq/class-vi-wells-in-texas/
[3] https://www.whitehouse.gov/wp-content/uploads/2025/05/Ending-the-Green-New-Scam-Fact-Sheet.pdf
Foley Automotive Update June 26, 2025
Foley is here to help you through all aspects of rethinking your long-term business strategies, investments, partnerships, and technology. Contact the authors, your Foley relationship partner, or our Automotive Team to discuss and learn more.
Trade and Tariff Policies
Foley & Lardner provided an update for multinational companies to mitigate risks posed by the Trump administration’s focus on drug cartels and transnational criminal organizations (TCOs).
Mexico will impose an Export Notice requirement for five tariff lines that include certain mechanical and electrical machinery, according to an update from Foley & Lardner.
A Section 232 investigation into imports of semiconductors and semiconductor manufacturing equipment that may result in new import tariffs prompted widespread concern from automakers and other stakeholders in a review of public comments featured in Bloomberg. The Commerce Department did not provide an update on the expected outcome of the investigation.
President Trump on June 12 stated he may raise automotive tariffs “in the not-too-distant future. The higher you go, the more likely it is they build a plant here.”
The U.S. Supreme Court rejected a request from two family-owned businesses to expedite their challenge to President Trump’s broad “reciprocal” tariffs. A federal appeals court had ruled in a separate case that the tariffs can remain in effect at least until a hearing in late July.
Ford and other automakers are still experiencing challenges obtaining adequate supplies of certain rare earth magnets two weeks after the announcement of a U.S.–China trade deal.
The Trump administration’s attention to the U.S. auto trade deficit with Japan is one of the key issues that have impeded that nation’s trade agreement negotiations.
Automotive Key Developments
Automotive News released its annual ranking of the top 100 global parts suppliers.
U.S. new light-vehicle sales in June are projected to increase 2.5% year-over-year to reach a SAAR of 15 million units, according to a joint forecast from J.D. Power and GlobalData.
A draft of the “big, beautiful” budget and tax bill released by the Senate Finance Committee on June 16 would end EV tax credits for all automakers 180 days after bill passage.
California and 10 other states sued the federal government on June 12 over Congressional Resolutions that revoked Clean Air Act waivers which had allowed the Golden State to establish vehicle emission standards that were more stringent than federal requirements. The waivers had also facilitated a California program that required increasing percentages of zero-emission vehicle sales in the state over the next decade.
California Governor Gavin Newsom signed an executive order on June 12 reaffirming the state’s “commitment to accelerate the deployment of zero-emission technologies.”
The U.S. Supreme Court on June 20 ruled that fuel producers have standing to sue over California’s vehicle emissions standards.
A Seattle federal judge on June 24 issued a preliminary injunction blocking the Trump administration from withholding funds for EV charging infrastructure projects in certain states, but stayed the order to allow time for an appeal.
The National Highway Traffic Safety Administration (NHTSA) plans to streamline reviews of automakers’ exemption requests to deploy self-driving vehicles without certain required human controls such as steering wheels or brake pedals.
The Alliance for Automotive Innovation expressed concernsover risks to vehicles’ wireless safety features resulting from provisions in the “big, beautiful” bill that may require the Federal Communications Commission (FCC) to auction federal spectrum rights in the years ahead. Features at risk of losing functionality may include remote parking, hands-free trunk release, and anti-theft capabilities, as well as certain systems to prevent collisions.
OEMs/Suppliers
Certain ongoing trade challenges experienced by a Japanese supplier to Honda suggest “the true toll of the trade war on the auto sector will be magnitudes more than the billions of dollars forecast” by the top automakers, according to a report in Bloomberg. Japan’s top automakers estimated the Trump administration’s tariffs will cost them over $19 billion.
German automakers incurred approximately €500 million ($576 million) in tariff-related costs in April.
Marelli CEO David Slump cited tariffs “against automotive manufacturers and suppliers” as a key factor in the company’s Chapter 11 bankruptcy filing.
Toyota intends to raise prices on certain vehicles sold in the U.S. by up to $270 per vehicle beginning in July in response to the Trump administration’s tariffs. Ford and Subaru raised vehicle prices by up to $2,000 because of the levies, and Mitsubishi will raise prices on U.S. vehicles by an average of 2.1%.
Consultancy AlixPartners estimated consumers’ new-vehicle prices will increase by nearly $2,000 per vehicle due to tariffs.
A number of parts suppliers are reported to be skeptical of certain Chinese automakers’ promises to adhere to 60-day payment terms. This coincides with concerns over the impact to profit margins and financial risk resulting from ongoing price wars among China’s car companies.
Dana Inc. announced an agreement to sell its off-highway business to Allison Transmission for $2.7 billion. The divestment supports Dana’s goal to reduce the complexity of its business and “become a streamlined light- and commercial-vehicle supplier with traditional and electrified systems.”
Continental announced a partnership with GlobalFoundries to establish an Advanced Electronics and Semiconductor Solutions (AESS) organization to design automotive semiconductors.
Market Trends and Regulatory
The Alliance for Automotive Innovation called for significant reforms to NHTSA, and stated the regulator has impeded automotive industry progress and innovation.
Nippon Steel closed its $14.1 billion acquisition of U.S. Steel after reaching an agreement that will give the U.S. government approval over certain provisions such as job moves, facility closures or future acquisitions.
Exports of Chinese-built vehicles to Brazil are projected to rise by 40% year-over-year to represent approximately 8% of the nation’s total light-vehicle registrations in 2025.
China suspended vehicle trade-in subsidies in certain cities due to funding shortfalls, as well as scrutiny over the prevalence of exporting new zero-mileage cars as “used” to boost sales volumes.
New-vehicle registrations in Europe rose 1.6% YOY in May, but declined 0.6% for the first five months of 2025, according to data from the European Automobile Manufacturers’ Association (ACEA).
Ford will require the majority of its salaried workforce to report to the office four days a week.
A report from a court-appointed monitor concluded that UAW President Shawn Fain unjustly withdrew certain key duties of Secretary-Treasurer Margaret Mock in 2024 after Mock was “falsely accused of misconduct.”
Workers at GM’s plant in San Luis Potosí, Mexico will vote this week on whether to join the National Auto Workers Union (SINTTIA).
Autonomous Technologies and Vehicle Software
Waymo launched driverless rides in parts of Atlanta for Uber passengers on June 24, expanding a partnership that started earlier this year in Austin, Texas. Separately, Waymo applied for a permit to begin autonomous vehicle testing in New York City.
Daimler Truck subsidiary Torc Robotics announced a new $5.6 million engineering center in Ann Arbor, Michigan.
Livonia, Michigan-based Roush Industries was selected to scale upfitting trucks with autonomous driving systems for Kodiak Robotics.
Amazon-owned autonomous vehicle company Zoox opened a plant in Hayward, California that will be capable of producing up to 10,000 robotaxis annually.
China released draft guidance to regulate the export of data generated by cars in the country, including details of scenarios that may require security assessments for companies seeking to transfer data outside the nation.
Volvo and Daimler Truck announced the launch of joint venture Coretura to develop a software-defined vehicle platform for commercial vehicles.
Electric Vehicles and Low-Emissions Technology
BloombergNEF expects battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) to represent 27% of U.S. new light-vehicle sales by 2030, from a previous forecast of 47.5%. The updated analysis eliminated 14 million units from the 2030 sales projection, and assumes California will retain its ability to set its emissions standards.
A report from the Alliance for Automotive Innovation indicates BEVs and PHEVs achieved a 9.6% share of total new light-vehicle sales in the first quarter of 2025, representing a decline of 1.3 percentage points from the fourth quarter of 2024, and a 0.3 percentage point increase YOY.
Cox Automotive estimated new EV sales in May fell 10.7% year-over-year to 103,435 units, representing a 6.9% share of the total U.S. new light-vehicle market. The average transaction price (ATP) for a new EV in May declined 1% YOY to $57,734.
Leases represented nearly 60% of first quarter 2025 new EV sales in the U.S.,up from 36% one year ago, according to data from Experian.
Automotive News provided an update on the status of notable U.S. battery manufacturing investments and projects.
Uber announced an international partnership with C40 Cities to increase access to charging infrastructure in London, Boston and Phoenix. Uber also launched the Electric Vehicle Infrastructure Estimator (EVIE) tool to help cities project EV charging demand from Uber drivers. Uber estimated there are 230,000 EV drivers on its platform globally, and charging access has overtaken vehicle cost as drivers’ top concern.
Ion Storage Systems began small-scale production of solid-state batteries at its factory in Maryland. Solid-state technology is expected to significantly extend batteries’ range and improve charging speeds. However, the technology has a number of challenges to overcome to achieve cost-effective production at scale.
Analysis by Julie Dautermann, Competitive Intelligence Analyst
Legislature’s Report Captures California’s Permitting Reform Zeitgeist and Creates the Launchpad for More Than 20 New Housing Bills
In the summer of 2024, the State Assembly Select Committee on Permitting Reform began convening public hearings, interviews, and forums to understand how to reform land use permitting to address California’s ongoing “housing crisis and climate crisis.” This effort culminated in two parts: on March 4, 2025 the Select Committee released its Final Report on Permitting Reform, and on March 27, legislators operationalized the Final Report’s recommendations in a sweeping “Fast Track Housing package” of over 20 bills intended to make housing “more affordable by slashing red tape, removing uncertainty, and drastically diminishing the time it takes to get new housing approved and built.” We separately review these bills here.
The Final Report itself does not propose specific legislation. Instead, it reiterates that California needs to build more housing, renewable energy facilities, and climate-resilient infrastructure “at an unprecedented scale” to achieve its climate and housing goals. And to do so, the Final Report explains that California must transform its permitting processes from “time-consuming, opaque, confusing” endeavors into “timely, transparent, consistent, and outcome-oriented” sequences.
The Final Report unpacks four areas of permitting that underpin the housing and climate crises: Housing, Electricity, Water, and Transportation. Key recommendations for each topic are summarized below.
HOUSING
The Final Report lists five recommendations to improve permitting for housing development projects:
Eliminate uncertainty in the application process.
Minimize uncertainty in the entitlement process.
Create more consistency across permitting entities.
Focus CEQA review of housing developments on addressing potential environmental harms (versus nonenvironmental concerns often raised by project opponents).
Minimize uncertainty for post-entitlement permits.
Echoing the Final Report’s overarching themes, these recommendations focus on increasing certainty for housing developers throughout the permitting process. Stakeholders testifying about permitting challenges emphasized the need for clear, predictable local permitting requirements and decreased permitting timelines.
Regarding CEQA, the Final Report explains that “CEQA has proven highly susceptible to being leveraged to prevent development of projects for nonenvironmental reasons, such as dislike of development by those living near the proposed project, desire to lock in labor agreements by labor unions, desire for community benefits by community groups, and as a way for businesses to hurt their competitors. To facilitate the best environmental outcomes, and facilitate necessary projects, the environmental review of projects must be focused on those aspects of the project that are potentially harmful to the environment.”
ELECTRICITY
The Final Report identifies five opportunities to improve permitting for electrical infrastructure projects:
Improve implementation of Assembly Bill (AB) 205 (which allows the California Energy Commission, rather than a local agency, to permit a clean energy project).
Facilitate conversion of fallowed agricultural land to clean energy purposes.
Minimize unnecessary restrictions on battery storage.
Reduce barriers to reconductoring.
Facilitate alignment between local, state, and federal agencies.
Emphasizing the need to “deploy new electricity infrastructure at a scale and speed never before seen,” these recommendations focus on removing unnecessary or redundant barriers to constructing new energy facilities. As one stakeholder put it: “Meeting [California’s clean energy goals] is literally a moonshot. It requires a total of 70 gigawatts of utility-scale solar, 48 gigawatts of utility-scale battery storage by 2045 by the state’s own projections. And to succeed, we have to figure out how to build, on average, three times more than the fastest year we’ve ever built before.”
WATER
The Final Report identifies three opportunities to improve permitting for water storage, conveyance, and flood control projects:
Eliminating uncertainty in the application process.
Enhancing interagency coordination and consistency.
Creating distinct permitting pathways for drought resilience and flood risk reduction projects.
Stakeholders testifying about the challenges of permitting water infrastructure projects emphasized that long, complex, and multi-jurisdictional permitting processes can compound rather than surmount the urgent need to increase water capture and protect other critical infrastructure.
TRANSPORTATION
The Final Report notes that the transportation sector is California’s largest producer of greenhouse gas emissions and identifies three opportunities to improve permitting for transportation projects:
Increase consistency across local permitting entities.
Remove inefficiencies in repeat engagements.
Create distinct permitting pathways for important transit projects.
According to the Final Report, shifting trips from personal vehicles to alternative modes of transportation is an essential step in reducing greenhouse gases from California’s transportation sector. However, such projects often require approvals from multiple agencies, and that process is not always coordinated or consistent. Stakeholders testifying about these challenges recommended that the state legislature require local and state agencies to standardize the permitting process for transit projects.
IMPLEMENTING THE FINAL REPORT’S RECOMMENDATIONS
Legislators have sought to promptly implement the Final Report’s recommendations. The “Fast Track Housing package” unveiled on March 27 is based on the Final Report and includes over 20 bills aimed at reducing housing production delays. According to Assemblymember Buffy Wicks, who chaired the Select Committee on Permitting Reform, “The Fast Track Housing package is about making our systems work better: clearer rules, faster timelines, and fewer bureaucratic hoops.” Our full analysis of the new bills is available here.
Supreme Court Allows Fuel Producers to Contest California’s Emissions Rules
For decades, California has been granted unique deference in setting Clean Air Act (CAA) emissions limitations for California-sold vehicles through use of a state-specific waiver.
California’s state-specific waiver allows the state to impose stricter emission standards than those issued at the federal level. In recent years, California has aggressively used this state-specific waiver to target greenhouse gas emissions and mandate a shift toward electric vehicles (EVs). This approach has been controversial and — unsurprisingly — led to litigation as product manufacturers of all kinds factor in California regulatory particularities in determining their nationwide mix of products.
We have chronicled recent, though frequent, push-and-pull between states like California seeking stricter environmental controls and others favoring less regulations. (e.g.,here and here.) And if you have been following the ongoing saga of state-led climate regulation, the US Supreme Court’s new decision in Diamond Alternative Energy, LLC v. EPA is a must-read. It addresses environmental policy, federalism, and the question of who gets to challenge government action in court. Below, we break down what happened and why it matters to the regulated community.
CAA and California’s Climate Ambitions
California has long been the nation’s laboratory by enacting aggressive vehicle emissions standards. Under the CAA, the US Environmental Protection Agency (EPA) sets nationwide emissions rules for new cars, but it allows California, as a result of US Congress recognizing its unique air quality challenges like smog, to seek a waiver to impose stricter CAA standards. Other states can then choose to adopt California’s rules but are not permitted by CAA to unilaterally create their own rules in the same manner as does California. The rules, as currently in effect, require automakers to sell more EVs and limit average greenhouse gas emissions across their fleets. As of now, 17 other states and Washington, DC, have followed California’s lead, together representing about 40% of the buyers in the US auto market.
The Legal Challenge: Who Gets to Sue?
Enter the fuel producers — companies that make and sell gasoline, diesel, and ethanol. Before the Court, fuel producers argue that California’s rules, by reducing the number of gas-powered cars on the road in favor of EVs which can meet California’s requirements, directly hurt their bottom line because less demand for gasoline means less revenue. The litigation focuses on EPA’s approval of California state-specific waiver, claiming the agency overstepped its authority by greenlighting state rules aimed at global climate change rather than addressing local air quality.
As with many challenges, before reaching the merits, reviewing courts needed to determine if fuel producers had standing to sue. Legal standing requires plaintiffs to show that they have suffered a concrete injury, that the injury is caused by the challenged action and that a favorable court decision would likely redress that injury. “Injury in fact,” causation, and redressability are often referred to as the three prongs of standing analysis. The Supreme Court frequently reviews standing. Last term, the Court reviewed the organizational standing case FDA v. Alliance for Hippocratic Medicine (for more, see here).
The Court’s Decision
The DC Circuit Court of Appeals determined that the challengers lacked standing because they depended on claims that automakers could have asserted but did not pursue. It reasoned that even if it struck down EPA’s approval of California’s rules, the holding might not lead automakers to actually build more gas-powered cars. After all, consumer demand for EVs is surging, and manufacturers have already invested heavily in electrification. Without clear evidence that the market would shift back toward gasoline vehicles, the court found the fuel producers’ alleged injury too speculative.
The Supreme Court, in a 7-2 decision authored by Justice Brett Kavanaugh, disagreed. The majority held that the fuel producers had standing to challenge EPA’s approval. Here is why:
Injury in Fact: The Court found it “straightforward” that fuel producers are financially harmed by regulations designed to reduce gasoline consumption. Indeed, it noted that the point of the rules was to compel a transition away from gasoline-powered vehicles.
Causation: It ruled that the link between California’s regulations and reduced fuel sales is direct. The regulations compel automakers to build more EVs and fewer cars that use gas or other liquid fuels, something that directly affects the fuel producers.
Redressability: Here, the Court pushed back hardest against the circuit court’s decision. The majority reasoned that it’s “predictable,” based on common sense and the record, that if the regulations were invalidated, at least some automakers would build more gas-powered cars leading to more fuel sales. The Court emphasized that even a small increase in sales would satisfy the legal standard.
The Court also rejected the idea that plaintiffs must provide expert affidavits or direct evidence from automakers about how they would respond to regulatory changes. Instead, it noted that it is enough for plaintiffs to show a “predictable chain of events” based on economic logic and the government’s own statements about the regulations’ impact.
Practical Takeaways
This ruling is significant for several reasons:
Broader Access to the Courts: The decision may lower the bar for industry plaintiffs to challenge environmental regulations, especially when they can show a direct economic impact — even if the market is complex and third-party behavior is involved. Justice Ketanji Brown Jackson’s dissent argues that the Supreme Court does not apply standing doctrine “evenhandedly” and notes that allowing petrochemical companies to sue here is inconsistent with precedent and “comes at a reputational cost for the Court, which is already viewed as being overly sympathetic to corporate interest.” Justice Jackson concluded that the Court should have refrained from deciding this case.
Increased Regulatory Uncertainty: By allowing fuel producers to challenge EPA’s approval of California’s rules, the Court has injected new uncertainty into the future of state-led climate initiatives. If the fuel producers ultimately prevail on the merits, it could upend California’s (and other states’) ability to push the auto industry toward electrification of changing the kinds of cars they sell.
A Signal to Agencies and States: The Court’s skepticism toward arguments that regulations are “irrelevant” because the market has already shifted should be taken as a warning to regulators. If an agency is still enforcing and defending a rule, do not expect courts to believe it has no real-world effect.
The Bottom Line
The decision did not determine whether California’s rules are lawful; that fight is ongoing in the courts, in Congress, and at EPA. But by clearing the way for fuel producers to have their day in court, the justices have set one stage for a high-stakes battle over the future of vehicle emissions regulation, the scope of state authority, and the role of courts in refereeing these disputes. For anyone monitoring the intersection of climate policy, industry, and the law, this is a case worth following.
FMC Announces Investigation Into Flags of Convenience and Unfavorable Conditions Created by Flagging Practices
The U.S. Federal Maritime Commission (“FMC”) announced on May 21, 2025 that it is initiating a non-adjudicatory investigation into whether the: 1) vessel flagging laws, regulations, and/or practices of certain foreign governments, including the so-called flags of convenience (“FOC” or “open registries”), or 2) competitive methods employed by owners, operators, agents, or masters of foreign-flag vessels, are creating unfavorable shipping conditions in the foreign trade of the United States (the “Notice”).
The investigation includes a 90-day public comment period, which ends on August 20, 2025.
FMC’s “Section 19” Trade Authority
Section 19 of the Merchant Marine Act of 1920, 46 U.S.C. § 42101 et seq., authorizes the FMC to evaluate conditions that affect U.S. shipping in foreign trade and to issue regulations or take action to address such conditions. Potential remedies include port fees up to one million U.S. dollars, limits on voyages to and from U.S. ports or the amount or type of cargo carried, and other trade restrictions.
The FMC exercised this authority frequently in the 1980s and 90s (before the sell-off of the major U.S. liner operators to foreign buyers) to force market-opening concessions and eliminate discriminatory fees and trade barriers that impeded U.S. shipping companies’ competitiveness in overseas. However, these powers have been left nearly dormant for the past two decades.
The current investigation does not target particular flag States or propose any remedial measures; rather, it is a non-adjudicatory investigation pursuant to 46 C.F.R. Part 502, Subpart R, which allows the FMC to request information, conduct hearings, issue subpoenas, conduct depositions, and issue reports, at its discretion.
Summary of Investigation
This investigation breaks new ground for the FMC, which traditionally has not had any role concerning vessel registries, marine safety, or the International Maritime Organization (“IMO”) conventions, which set the global framework for vessel regulation. In the Notice, the FMC expressed concern about the conditions created by the wide and uneven range of foreign vessel flagging laws, regulations, and practices. While the Notice indicated that many nations take “great care in creating standards for vessels flagged by their registries,” it also observed that other countries have engaged in a global “race to the bottom” by lowering standards and easing compliance requirements to gain a potential competitive edge.
The Notice asserted that FOCs “operate under lax regulatory oversight, leading to lower safety, environmental, and labor standards . . . and FOC vessels exploit lower operational costs through reduced taxes, cheaper labor, and irregular maintenance or safety measures.” But the FMC failed to recognize the quality chasm between industry-leading, U.S.-managed international open registries, such as the Marshall Islands and Liberia, versus thinly staffed or sham registries serving non-compliant shadow fleet ships.
The FMC’s Notice discussed other unfavorable flagging practices, including “flag-hopping” or using false flags to avoid regulatory oversight; using fraudulent ship registrations without the knowledge or approval of the relevant maritime administration; and operating in the “shadow fleet,” i.e., outside the regular or official frameworks and often engaging in illegal or illicit activities such as smuggling, sanctions evasion, or the transportation of prohibited goods. The Notice recognized IMO’s policy recommendations and resolutions addressing such practices, but asserted that the IMO’s effort has not led to meaningful change or deterrence.
The FMC did not single-out any particular open registry, but it referenced certain recent incidents and inaccurately linked them to certain open registries as a basis for its action (e.g., the Singapore-flag DALI’s allision with the Francis Scott Key Bridge, the Malta-flag APL QINGDAO’s narrowly-avoided allision with the Verrazzano Bridge, and the MS MELENIA, currently under the Djibouti flag, where crew were left stranded when the tanker was abandoned for the third time). The Notice offered these incidents as examples, yet failed to provide any analysis linking the performance of the flag State to the events at issue. In fact, the references to the DALI and APL QINGDAO were particularly questionable, as Malta and Singapore are among the top-performing registries according to the U.S. Coast Guard’s 2024 Annual Port State Control report.
According to the Notice, the FMC launched this investigation for the purpose of identifying “best practices” that contribute to responsible and safe vessel operations and to identify practices that allow or contribute to unsafe conditions that endanger or imperil the reliability and efficiency of ocean shipping.
It appears likely that the current investigation is driven, at least in part, by a growing FMC dialogue with U.S. trade sanctions enforcers in the U.S. Departments of Treasury and State regarding the rapid growth of the “dark fleet” or “shadow fleet,” and the role of flag States in allowing vessels to evade or flout U.S. trade sanctions. FMC Chairman Lou Sola raised this issue in an April 2025 speech, in which he announced: “I have tasked our staff with identifying options on how to address the role flags of convenience play in enabling avoidance of sanctions. Registries hosting outlaw vessels used by reprehensible regimes to facilitate their evasion of international regulations would certainly qualify as conduct warranting the Commission’s attention and action.”
The FMC therefore may be assessing how its unilateral powers (which often are used in tandem with diplomatic approaches by the U.S. Department of State and other agencies) might be used to increase the pressure on the most problematic flag States to adhere to international standards or withdraw from market.
Public Comments Due August 20, 2025
Comments may be submitted by all members of the public (including ship owners, operators, and managers; flag States; shippers; carriers; governments; and non-governmental organizations), but the Notice said the FMC is particularly interested in receiving input from individuals and organizations with expertise or experience in vessel operations, international trade, international law, and national security, including international standards-setting organizations (e.g., the IMO and International Transport Workers’ Federation), countries with large ship registries, and those with evidence of the burdens and risk created by irresponsible flagging practices. Specifically, the FMC is seeking comments on the following topics:
Specific examples of responsible flagging laws, regulations, practices, and proposals, including how they contribute or would contribute to the efficiency and reliability of the ocean shipping supply chain;
Specific examples of unfavorable flagging laws, regulations, and practices that endanger the efficiency and reliability of the ocean shipping supply chain;
Practices by owners or operators of vessels that undermine the efficiency and reliability of international ocean shipping;
The benefits to international ocean shipping of responsible vessel registration and flagging practices; and
The burdens on foreign nations and vessel operators or owners of irresponsible flagging practices.
Key Takeaways
At this time, the investigation is only informational—FMC has not proposed or threatened any penalties or restrictions. However, the FMC has the power to impose vessel fees similar to what the U.S. Trade Representative has done recently in connection with its Section 301 investigation of China’s targeting of the maritime, logistics, and shipbuilding sectors. See our previous alert. Thus, the information submitted during the investigation comment period likely will help shape the FMC’s next steps.
Interested parties should strongly consider submitting comments on the topics noted above, which are further described with added examples in the Notice.
Navigating Safely: Tips for Commercial and Recreational Vessels Operating near Military Craft
Every day, commercial, recreational, and military vessels encounter one another on the seas with different prerogatives—moving product as safely and efficiently as possible, enjoying a day on the water, or completing a mission, whatever that might be. This article will provide context to commercial, merchant, and recreational craft regarding the types of military craft and operations they may encounter in order to make better-informed maneuvering decisions.
Surface Vessels
Anticipated Locations: U.S. Navy surface vessels sail around the globe—however, the highest density areas are: Everett, Washington; San Diego, California; Pearl Harbor, Hawaii; Mayport, Florida; Norfolk, Virginia; Rota, Spain; Yokosuka, Japan; Sasebo, Japan; and Manama, Bahrain.
Bridge Manning: Military vessels in the U.S. Navy Surface Fleet are not manned in the same way merchant vessels are. It is common during normal operations for there to be upwards of seven watchstanders on the bridge at any given time or upwards of ten during special operations (Sea & Anchor Detail, Underway Replenishment, etc.). During normal operations, it is common to have an Officer of the Deck, Junior Officer of the Deck, Conning Officer, Helm, Boatswain’s Mate of the Watch, and two lookouts. Expect delays in responding to radio calls as each Captain has different reporting requirements that may require the Officer of the Deck to contact them before responding.
When Vessels Meet: Military vessels will generally have a greater factor of safety regarding the closest point of approach than their civilian counterparts. Commercial vessels should anticipate earlier and more frequent radio calls than may be expected in the vicinity of commercial or recreational traffic. Unlike commercial traffic, military vessels are often not traveling at the same consistent course and speed. If such vessels are operating on a mission or conducting a training exercise, you may see what appears to be significant course and speed changes in short iteration.
Operating Aircraft: Commercial vessels should be aware that some military vessels will frequently be conducting air operations. As mandated by the COLREGs, military vessels will display Restricted in Ability to Maneuver when conducting air operations. When conducting training, it is common for military vessels to maintain the same course and speed for long stretches so helicopters can practice “touch downs.” Aircraft carriers may maneuver in a racetrack-type approach, launching and landing fixed-wing aircraft and then resetting before beginning again. Under certain circumstances, smaller vessels (cruisers/destroyers) might trail behind a carrier during air operations serving as the horizon reference unit.
Live Fire Exercises: When military vessels are conducting live fire exercises (missile shoots, five-inch gun, small arms, etc.), they will always make multiple warning calls over VHF Channel 16. Military vessels may request commercial or recreational operators in their vicinity to declare their maneuvering intentions. It is common to see military vessels transit at slow speed down a designated “firing line” before speeding up to reset and begin firing again.
Underway Replenishment (“UNREP”): A common method for resupply of military vessels is underway replenishment (for both fuel and stores). The vessel and the supply ship generally choose a course and speed to maintain for up to a few hours. Commercial and recreational vessels operating in the vicinity of an UNREP should anticipate an early radio call as maneuvering and speed changes are restricted during UNREP and can only be done in small iterations (one degree course change, one RPM speed change, etc.) There may also be air operations simultaneous with an UNREP.
USCG-Specific
U.S. Coast Guard surface vessel operations are similar to those of U.S. Navy surface vessels, but their multi-mission capabilities introduce additional considerations for commercial or recreational vessels operating nearby.
Coast Guard vessels are designed to transition seamlessly between various mission sets. For instance, a Sentinel-class cutter in certain Areas of Responsibility might start the day with recreational vessel safety boardings, shift to a search and rescue mission in the afternoon, and conclude with immigration enforcement operations in the evening. These diverse operations often require the rapid launching and recovery of small boats, sometimes with little notice. Therefore, commercial and recreational vessels should be prepared for Coast Guard vessels to change course and speed suddenly and should maintain a wide berth around such operations.
Additionally, the Coast Guard’s law enforcement activities can result in unique lighting configurations. While Coast Guard vessels are generally required to display navigation lights between sunset and sunrise or during periods of restricted visibility, there are exceptions. When conducting specific law enforcement or public safety operations, Coast Guard vessels may operate without certain navigation lights. Commercial vessels or recreational vessels that encounter a Coast Guard vessel without normal navigational lights between sunset and sunrise should keep a wide berth and avoid hailing them on the radio about their lighting configuration, as this could compromise their operations.
Subsurface Vessels
U.S. submarines operate globally but, except for entering and leaving port and in certain limited circumstances, they do so while submerged.
Operating Areas: Submarines are most often found operating on the surface in the vicinity of U.S. Navy homeports in Groton, Connecticut; Norfolk, Virginia; Kings Bay, Georgia; Bangor, Washington; San Diego, California; Pearl Harbor, Hawaii; and Apra Harbor, Guam.
The United States operates three types of submarines, all nuclear powered: attack submarines, ballistic missile submarines, and cruise missile submarines. Although each type of submarine carries different weapons and has different missions, for the purposes of understanding their actions on the surface, they operate identically.
While submarines can operate in shallow water, submerging in less than 100 fathoms (600 feet) presents challenges, such as the difficulty in avoiding vessel traffic that may not be aware of the submarine’s presence, or the possibility of bottom contact. As a result, when proceeding to sea on routine operations, a submarine will usually delay submerging until it reaches an area where the water depth is at least 100 fathoms.
Bridge Manning: When on the surface, submarines are usually conned from the bridge at the top of the “sail” (also called the “fin” or “fairing” by the Royal Navy but no longer called the “conning tower” as it was during World War II). The bridge will be manned by an Officer of the Deck and a lookout, and during some maneuvers the Captain will also be present on the bridge. The Officer of the Deck or the Captain gives orders from the bridge cockpit to the Helmsman below in the control room using a public address type of announcing system or a sound-powered telephone. In addition to the Helmsman, the control room will be manned by a radar operator and fire control watchstander who tracks other vessels, a Quartermaster who keeps track of the ship’s position, and a Chief of the Watch who operates the ship’s mechanical systems. A ship’s officer will be assigned as the Contact Coordinator in charge of the Control Room to maintain a lookout using a periscope, and to assist the Officer of the Deck on the bridge in deciding on collision avoidance maneuvers.
During heavy weather, such as when waves break over the top of the sail, the bridge watch is sometimes moved below deck and the Officer of the Deck conns the ship from the Control Room, similar to when the submarine is submerged. When this occurs, however, the lookout’s view is limited to what can be seen through the periscopes.
When Vessels Meet: A U.S. submarine, when operating on the surface in narrow channels or areas with limited depth, is treated as a “vessel constrained by her draft.” This means it is severely restricted in its ability to deviate from its course due to the available channel width and water depth as compared to its draft. It will display a black cylinder day shape and also may display three all-round red lights in a vertical line in addition to the lights required for a power-driven vessel. It also may display, as a distinctive means of identification, an intermittent flashing amber “Sub ID beacon.”
A surfaced submarine can be tracked using commercial radar systems, even those not specifically designed for military applications. The submarine’s hull, periscopes, and antennas will reflect radar signals, making it possible to detect the submarine. Visual identification, however, especially at a distance, can be challenging. Although surfaced submarines have unique structures like a sail, radar masts, and antennas unlike those typically found on surface ships that can help differentiate them from other vessels, because of its low freeboard, surfaced submarines are often mistakenly identified as small vessels like fishing trawlers when first visually sighted.
U.S. submarines, like other U.S. warships, are equipped with Automatic Identification System (“AIS”), but are not required under U.S. law to use it. All U.S. Navy ships, however, are now instructed to activate AIS in designated areas, with the specific implementation subject to command discretion based on operational needs and security considerations.
U.S. submarines will use bridge-to-bridge communication and will comply with the Bridge-to-Bridge Radiotelephone Act. In sharing information about its course, speed, and intended collision avoidance maneuvers with nearby vessels, a U.S. submarine may in some circumstances, for security purposes, only identify itself as a “U.S. Navy warship,” or “U.S. Navy unit.”
Weapons Firing Exercises: The United States has established submarine operating areas for torpedo and missile practice firing exercises, the boundary limits and designations of which are shown on charts in magenta or purple lines. Vessels should proceed with caution in designated areas. There is a real danger that a well-intentioned ship or boat, unaware of these operations, might turn in the submarine’s direction to investigate a submarine periscope. During torpedo practice firing, all vessels are cautioned to keep well clear of naval target vessels flying a large red flag.
Regulated Navigation Areas, Safety Zones, Security Zones, and Military Craft
Under U.S. law, 33 U.S.C. §91, the Secretary of Homeland Security is empowered to control the anchorage and movement of any vessel in the navigable waters of the United States to ensure the safety or security of any United States naval vessel in those waters.
Federal regulations governing Regulated Navigation Areas, Safety Zones, and Security Zones outlined in 33 CFR Part 165 establish different types of limited or controlled access areas to protect U.S. Coast Guard vessels and U.S. Navy and Coast Guard facilities.
U.S. naval vessels are protected by a system of rules and regulations, primarily through the Naval Vessel Protection Zone (“NVPZ”) and the implementation of Homeland Security regulations. This includes establishing restricted zones around naval vessels, requiring commercial and recreational vessels to slow down and maintain minimum speed, and ensuring commercial and recreational vessels do not enter the NVPZ within certain distances without authorization to protect naval vessels from potential threats and maintain the security of U.S. waters.
The NVPZ regulations prohibit any commercial or recreational vessels from coming within 100 yards of the NVPZ and require that any such vessels slow to minimum speed within 500 yards of any large U.S. naval vessel (over 100 feet in length). Commercial or recreational vessels that need to pass within 100 yards of a large U.S. naval vessel within an NVPZ to operate safely in a navigable channel must contact the Coast Guard, the senior naval officer present in command, or the official patrol on VHF Channel 16. Violating the NVPZ Regulations is a felony offense, punishable by up to six years in prison and/or a $250,000 fine.
Coast Guard vessels are protected by “Security Zones” established by the U.S. Coast Guard Captain of the Port (“COTP”). For example, in the Long Island Sound COTP Zone, a Security Zone has been established for a 100-yard radius of any anchored U.S. Coast Guard vessel. Security Zones also have been established in the vicinity of the U.S. Coast Guard Academy and the Naval Submarine Base at Groton, Connecticut. A “Restricted Area” also has been established in the vicinity of the Groton Submarine Base that requires all vessels to leave the Restricted Area when notified by submarine base personnel that such use will interfere with submarine maneuvering, operations, or security.
U.S. Coast Guard-established Security Zones are closed to all vessel traffic, except as may be permitted by the COTP or a designated representative. Commercial or recreational vessel operators given permission to enter or operate in the Security Zones must comply with all directions given to them by the COTP or the designated representative. Commercial or recreational vessel operators desiring to enter or operate within the Security Zones must request permission to do so by contacting the COTP by telephone or via VHF Channel 16.
Both the U.S. Navy and the U.S. Coast Guard are authorized to use deadly force to protect themselves within the NVPZ, Security Zones, and in other security situations.
Conclusion
We hope this article can be used as a circulated fleet message for any commercial traffic operating in the vicinity of military vessels to provide further context about standard military operations in the United States.
New Jersey BPU Launches Multi-Phase Energy Storage Incentive Program
Key Takeaways:
PJM-ready projects are a must. Eligible projects must (1) be transmission-connected (PJM bulk power system) and located in a New Jersey transmission zone; (2) have PJM interconnection approval (or capacity interconnection rights (CIRs) from a deactivating facility); and (3) commit to a commercial operation date (COD) within 30 months of application period close (plus a 150-day grace period). To reach a COD, the project must be fully constructed and interconnected to the PJM transmission network.
Site control and permitting matter as developers must demonstrate they are ready to secure all required approvals.
Brownfield redevelopment, community benefits and environmental attributes may be favored over lower bid levels.
The New Jersey Board of Public Utilities (BPU) approved Phase 1 of the Garden State Energy Storage Program (GSESP) after two years of stakeholder engagement. Rules related to the GSESP were also approved for publishing in a future New Jersey Register. Phase 1 is the first of a new, multi-phase incentive program to support the development of 2,000 megawatts (MW) of energy storage by 2030, as required under the Clean Energy Act of 2018 (P.L. 2018, c.17). This is a significant milestone in New Jersey’s energy policy, allowing the integration of intermittent renewable energy sources and a critical opportunity for energy storage developers to secure long-term, fixed-price incentives.
Phase 1 targets transmission-scale, front-of-the-meter energy storage systems. Distributed storage incentives will follow in Phase 2 (expected in 2026). Below is a comprehensive breakdown of what developers need to know.
Phase 1: Transmission-Scale Storage Solicitation
To align with the pending New Jersey Assembly Bill A-5267 that would require the BPU to establish a transmission-scale energy storage procurement and incentive program, the BPU limited Phase 1 incentives to transmission-scale energy storage systems, directly interconnected to the bulk transmission system. Both standalone storage and storage additions to existing solar, solar-plus-storage and other Class I renewable energy resources (solar, geothermal electric generation, landfill gas, biogas, etc.) are eligible provided they are not already receiving incentives from the Competitive Solar Program. Despite a call for increased utility involvement and ownership of energy storage systems, the BPU will limit Phase 1 incentives to private (non-EDC) and governmental entities.
Additional components of Phase 1 include:
Final awards will determine eligible projects and the size of each project’s incentive award.
Payments will be made annually over a 15-year term.
“Pay-as-bid” model bidding process where developers propose a fixed annual incentive (e.g., $/MW/year) for providing energy storage capacity. The projects awarded funding are those that offer the lowest incentive cost per MW, promoting cost-effectiveness.
Initial solicitation (“Tranche 1”) aims to procure 350–750 MW.
Total Phase 1 goal is 1,000 MW of transmission-scale storage.
The prequalification review for deficiencies for Phase 1 applications opens on June 25, 2025, with a deadline for guaranteed review of July 23, 2025. Final bids are due by August 20, 2025. The BPU will announce awards in October 2025.
Phase 2: Distributed Storage Coming in 2026
Developers with behind-the-meter or distribution-level assets should prepare for Phase 2 in 2026. Expected features include distributed fixed incentives (capacity-based), distributed performance incentives (likely grid-service or dispatch-based), participation from distributed energy resource aggregators and systems co-located with rooftop solar and EVs, and prioritization of projects that serve overburdened communities or improve distribution system resilience.
A “Course Correction” for NEPA: Supreme Court Underscores the Need for Agency Deference and Limits the Scope of NEPA Reviews
On May 29, 2025, in a decision long-awaited by project developers, the Supreme Court issued Seven County Infrastructure Coalition v. Eagle County, Colorado, which clarified the proper scope of review and deference to be afforded to agency decisionmaking under the National Environmental Policy Act (NEPA). This decision reinforces longstanding Supreme Court holdings and may help improve the NEPA process by providing support for agencies to focus their NEPA reviews on impacts associated with their authorizations.
Background
In Seven County, the U.S. Surface Transportation Board (Board) prepared a 3,600 page environmental impact statement (EIS) to evaluate a proposal by seven Utah counties to construct an 88-mile railroad line connecting Utah’s oil-rich Uinta Basin to the national rail network. The EIS acknowledged the potential upstream environmental effects from additional oil drilling projects in the Uinta Basin and potential downstream environmental effects of increased oil refining along the Gulf Coast, but found that those impacts did not need to be analyzed in further detail. The D.C. Circuit vacated the EIS and the Board’s final approval of the railway, finding that the Board erred by failing to analyze those potential upstream and downstream effects in the EIS.
The Supreme Court’s Decision
In a unanimous decision authored by Justice Kavanaugh, the Court reversed the D.C. Circuit and held that (1) NEPA requires courts to afford agencies “substantial judicial deference,” and (2) NEPA does not require the Board to evaluate “effects from potential future projects or from geographically separate projects.” The Court also found it salient that the Board would have no authority over such projects. Notably, all eight Justices who took part in the decision concurred in the judgment on the basis that it was consistent with the Court’s longstanding NEPA precedent.
The Court began its analysis by reinforcing the fundamental principle that NEPA is a purely procedural statute; it does not mandate particular results, but simply prescribes the necessary process for an agency’s environmental review of a project. It proceeded to explain that the D.C. Circuit erred both on the deference afforded to the Board’s decisionmaking and on its review of the merits.
Deference
The Court stated that “when determining whether an agency’s EIS complied with NEPA, a court should afford substantial deference to the agency.” In the context of NEPA reviews, agencies are forced to make numerous determinations of fact and policy; the Court “doubly underscored” that NEPA is inherently a “rule of reason,” and lower courts may not substitute their judgement for that of the agency as to the environmental consequences of its actions. The Court noted that agencies are in the best position to “determine whether and to what extent to prepare an EIS.” When it comes to environmental effects associated with a proposed project, feasible alternatives to that project, and the scope of effects to be analyzed (i.e., indirect effects or effects from future or geographically separate projects), it is the agency’s role to draw an appropriate line, “so long as [those decisions] fall within a broad zone of reasonableness.”
The Court observed that some reviewing courts have not applied NEPA correctly and, instead, have “engaged in overly intrusive (and unpredictable) review.” The Court concluded that, absent a “course correction of sorts,” this application of NEPA will continue to hamstring new infrastructure and construction projects. When evaluating an EIS for deficiencies, reviewing courts must keep in mind that NEPA is “purely procedural,” only obligating an agency to prepare an adequate report, and does not impose any substantive constraints on the agency’s ultimate decision to approve or support a project. In short, “[t]he bedrock principle of judicial review in NEPA cases can be stated in a word: Deference.”
The Court also found that even if an EIS is deficient in some aspects, those deficiencies do not necessarily require a reviewing court to invalidate an agency’s decision to approve a project.
Merits
On the merits, the Court concluded that NEPA does not require an agency to evaluate environmental effects from separate projects that may occur in the future or are geographically distinct, reiterating its holding in Department of Transportation v. Public Citizen that the effects of a separate project need not be considered under NEPA because the separate project breaks the chain of proximate causation. Here, the Uinta Basin Railway was the relevant project and the Court concluded that nothing in NEPA required the Board to study environmental impacts from separate upstream or downstream projects. In other words, a mere “but for” causal relationship is insufficient to make an agency responsible for a particular effect.
The Court recognized that indirect effects—i.e., environmental effects generated by the project that occur later in time or outside the project’s location—may fall within NEPA, but consideration of such effects is different than an agency considering effects of separate projects that may result. The Court concluded that NEPA does not require the latter.
Key Takeaways
Seven County is significant for numerous reasons, including:
It reinforces the longstanding principle that NEPA is a purely procedural statute, and it instructs courts to account for that principle when considering the reasonableness of the agency’s decisionmaking.
It highlights the significant deference that is to be afforded to agency decisionmaking under NEPA.
It preserves and reinforces the “proximate cause” standard articulated in Public Citizen for assessing the connection between the federal agency action and the environmental effects of a separate activity. It also confirms that “but-for” causation is not sufficient to demonstrate that an effect should be analyzed.
The decision is also noteworthy for its commentary on how NEPA litigation has negatively impacted project development. The Court noted that project opponents may not always be motivated by their concern for the environment, instead using NEPA to prevent new infrastructure projects. The end result is that “fewer projects make it to the finish line. Indeed, fewer projects make it to the starting line. Those that survive often end up costing much more than is anticipated or necessary, both for the agency preparing the EIS and for the builder of the project.” To the extent the Court’s decision helps clarify and improve the NEPA review process and makes it more difficult to set aside an agency’s NEPA review, this decision may spur additional development and innovation.
The Court’s finding that a determination that a NEPA review is inadequate in some respects does not necessarily require a reviewing court to invalidate an agency’s approval may result in more lower court decisions declining to vacate or set aside NEPA reviews, even where there may be some deficiencies.
Daniel C. Warren and Thurston Moore also contributed to this article.
*Thurston Moore is a Summer Associate at Hunton Andrews Kurth LLP and is not admitted to practice law.
Circuit Court Roundup: DC Cir. Rejects NLRB’s “Irrational” Impasse Ruling, Fourth Circuit Green-Lights Union’s “Sharp-Elbowed” Campaign
While the National Labor Relations Board (“NLRB” or the “Board”) does not have a quorum, a pair of June 13, 2025, decisions by federal courts of appeal highlight key labor law issues under the National Labor Relations Act (“NLRA” or “Act”).
In Grove v. NLRB, the D.C. Circuit vacated the Board’s finding that an employer unlawfully declared impasse after protracted pension bargaining, clarifying the legal standard for impasse determinations.
In Welch v. International Association of Sheet Metal, Air, Rail & Transportation Workers, Local 100, the Fourth Circuit affirmed that a union’s organizing tactics—including public communications and litigation support—remained protected under the NLRA and did not constitute unlawful secondary activity or actionable defamation.
These opinions reinforce that impasse findings must be based on objective evidence and that peaceful union advocacy is generally lawful under federal labor law.
D.C. Circuit Slams NLRB’s “Irrational” Impasse Analysis
In Grove v. NLRB, No. 23-1164 (D.C. Cir. June 13, 2025), the D.C. Circuit addressed whether an employer lawfully declared impasse after years of bargaining over pension contributions. The parties engaged in extensive negotiations, including numerous sessions and a lengthy strike, but remained deadlocked over the pension issue. When both sides confirmed their positions were non-negotiable, the employer declared impasse. The Board found the employer had not bargained in good faith and could not declare impasse; however, the D.C. Circuit rejected the Board’s conclusion, finding that the Board’s analysis lacked substantial evidence and failed to apply the correct legal standard for impasse under labor law.
Objective Evidence Controls Impasse. The D.C. Circuit emphasized that a lengthy history of deadlocked bargaining and strikes is strong evidence of impasse. The Board must consider the full bargaining record when making impasse determinations.
Union Denials Are Not Dispositive. The court clarified that a union’s subjective denial of impasse does not override objective evidence of deadlock. Labor law requires an analysis of bargaining conduct—not just party statements.
Timing of Information Requests. Last-minute information requests by a union—which the court termed an “obvious ploy” because there was no clear link to renewed bargaining movement—did not prevent a finding of impasse.
The court did enforce one narrow part of the Board’s order finding that the employer violated the Act by laying off two union employees that served as election observers.
Fourth Circuit Blesses Union’s Aggressive Organizing Campaign
On the same day, in Welch v. International Associate of Sheet Metal, Air, Rail & Transportation Workers, Local 100, No. 24-2067 (4th Cir. June 13, 2025), the Fourth Circuit addressed the boundaries of lawful union advocacy under federal labor law. The court considered whether union activities—such as distributing leaflets, sending letters to customers, publicizing allegations, and supporting litigation—constituted unlawful secondary activity or defamation under the NLRA and state law. The court held that these actions, absent violence or picketing, were protected forms of peaceful, persuasive advocacy under federal labor law.
Protected Union Advocacy. The court reaffirmed that under Supreme Court precedent in Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568 (1988), peaceful union advocacy—including letters, leaflets, and litigation—is not considered “threatening, coercing, or restraining” under Section 8(b)(4) of the NLRA unless accompanied by violence or picketing.
Preemption of Defamation Claims. The court applied Supreme Court precedent in Linn v. United Plant Guard Workers of Am., 383 U.S. 53 (1966), which held that state-law defamation claims arising from labor disputes are preempted unless the plaintiff can show actual malice and falsity, accompanied by damages. The union’s communications accurately described pending accusations and investigations, and the complaint failed to allege actionable falsehoods or malice as required by federal labor law.
Takeaways
These decisions provide guidance on the facts that give rise to a finding of lawful impasse and on the standard applied when a union engages in aggressive tactics that fall short of an unlawful secondary boycott.
As the Board continues to operate without a quorum, these dual decisions should serve as a reminder of the importance of federal courts in hearing and resolving labor disputes. Where appropriate, a federal court of appeals can provide redress if a party believes the Board decided an issue incorrectly. Additionally, in cases involving secondary boycotts, employers can file a complaint in federal court in the first instance, without having to avail itself of the procedures of the Board (although secondary boycott cases receive priority processing at the Board). Though the Supreme Court has yet to revisit the high standard of deference provided to orders of the Board since its ruling in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), any change to that deferential standard may only increase the frequency with which parties end up before a federal court of appeals.
Trump’s Drone Duet: Executive Orders Cracking Down on Threats While Boosting U.S. Drone Leadership
On June 6, 2025, President Donald Trump signed two executive orders aimed at significantly reshaping the future of drone policy in the United States. One focuses on protecting national airspace from malicious drone threats, while the other seeks to supercharge the U.S. drone industry at home and abroad.
Together, these orders paint a clear picture of a dual strategy: tighten security while boosting innovation. Here’s a breakdown, without the legal jargon, of what these two executive orders mean and why they matter.
Restoring American Airspace Sovereignty: Cracking Down on Dangerous Drone Use
This executive order is all about defending U.S. airspace from threats posed by drones—especially when used by hostile actors.
The order warns that while drones can offer many benefits, bad actors have increasingly weaponized them, raising serious national security and public safety concerns. From hovering over stadiums and critical infrastructure to spying on sensitive government sites, drones have become a tool for potential harm.
The key actions in the executive order:
New Task Force: A special interagency task force will review the United States’ current drone policies and tech capabilities and propose solutions to improve drone defense.
Federal Aviation Administration (FAA) Rulemaking: The FAA will write new rules to restrict drone flights over “fixed site facilities”— think power plants, military bases, or large venues.
Better Geofencing Tools: FAA notices and airspace restrictions will be made available in a more open, digital-friendly format so drone systems can automatically avoid no-fly zones.
Law Enforcement Mandate: The Attorney General must step up enforcement of laws against reckless or criminal drone use.
Expanded Detection Powers: Agencies are directed to use all tools available to detect, track, and identify drones and their signals.
Counter-Drone Coordination: The Attorney General and Homeland Security Secretary will explore embedding drone defense into Joint Terrorism Task Forces, especially around mass gathering events like sports games, concerts, or political rallies.
This is a crackdown on dangerous or unlawful drone activity. It could lead to more enforcement, stricter no-fly zones, and tighter coordination across federal and local agencies to stop drone threats before they escalate.
Unleashing Drone Dominance: Promoting U.S. Drone Innovation and Exports
The second order flips the script. While the first one cracks down, this one opens up new doors for U.S.-made drone technology to thrive.
President Trump argues that drones are not just flying gadgets, they’re a key part of the future economy. They can improve productivity, create high-skilled jobs, and modernize transportation and logistics. To stay competitive globally, the United States must scale production, expand exports, and support homegrown innovation.
The key actions in the executive order:
Beyond Visual Line of Sight (BVLOS) Rules: The FAA will issue new regulations to allow drones to fly beyond the pilot’s line of sight, critical for delivery services, search and rescue, and more.
AI-Powered Waiver Reviews: The government will start using artificial intelligence tools to speed up the approval of drone waiver applications, cutting red tape.
Easing International Flight Restrictions: U.S.-based drone flights that begin and end domestically (or from U.S.-owned platforms) will no longer face manned aircraft-style rules under international law.
National Integration Roadmap: A new plan will guide how drones are fully integrated into U.S. airspace—from small consumer drones to delivery fleets.
Test Range Expansion: FAA test sites will be used more aggressively to develop and scale up next-gen drone tech.
Electric Vertical Take-Off and Landing (eVTOL) Pilot Program: The government will launch a program to accelerate the rollout of eVTOL aircraft (think flying taxis).
Supply Chain Protections: A “Covered Foreign Entity List” will identify risky suppliers, and new measures will be taken to protect the U.S. drone supply chain from foreign control or espionage.
Export Boost: Export control rules will be revised to make it easier to sell U.S.-made drones abroad, as long as they’re not going to adversaries.
Military Access to Drones: The Department of Defense will take steps to improve service members’ access to drones, possibly for training or battlefield use.
This order lays the groundwork for a full-scale push to grow the domestic drone economy, loosening rules, accelerating innovation, and taking aim at global drone markets.
Taken together, these two executive orders represent a new drone doctrine: protect U.S. skies and dominate the drone market.
For drone operators and manufacturers, the message is mixed but clear: follow the rules, especially around security, and the government will support your growth.
For regulators and law enforcement, the orders add urgency to modernizing systems, cracking down on threats, and speeding up approvals.
For the drone industry, it could mean faster innovation, broader markets, and a bigger push to bring manufacturing back home.
Whether you’re flying drones, building them, regulating them, or just watching from the ground, 2025 may be a defining year for how the United States handles the skies.
This post was co-authored by Government Enforcement + White-Collar Defense partner David E. Carney.
Driving Towards the Legalisation of Fully Autonomous Vehicles in the UK
As many will know, the Autonomous Vehicle Act 2024 (the “AV Act”) paved the way to legalising the use of autonomous vehicles on UK roads. However, before any autonomous vehicles can be used on the UK roads (other than under controlled trials), it is important to be aware that the AV Act does not, at this stage, authorise those vehicles for use on the UK’s roads. Rather, the AV Act grants the Secretary of State the power to authorise this at a later date once the “safety principles” for such usage have been determined.
On 10 June 2025, the Secretary of State launched a call for evidence and consultation on the secondary legislation which will be required to establish these “safety principles”:
Call for Evidence on Automated Vehicles: Statement of Safety Principles
The AV Act requires the Secretary of State to prepare a Statement of Safety Principles which is to be used in different ways across the safety framework for automated vehicles including for:
pre-deployment authorisation checks;
carrying out in-use monitoring and regulatory compliance checks; and
undertaking annual assessment on the overall performance of automated vehicles.
This call for evidence seeks information to support an understanding of:
what safety principles might be used;
the safety standards which might be described; and
how safety performance can be measured.
There are also questions about the development of safety principles and how those could be used in practice.
See the “full list of questions” section of the call for evidence for all questions: Automated vehicles: statement of safety principles – GOV.UK
Consultation on Automated Vehicles: Protecting Marketing Terms
The AV Act also gives the Secretary of State the power to protect certain terms, so that they can only be used to market vehicles which have been authorised under the AV Act as being automated (self-driving). In turn, the AV Act then provides that these protected terms must not be used to market driver assistance systems.
This consultation seeks views on this including whether certain terms including “self-driving”, “driverless” and “automated driving” should be protected, whether any symbols should be protected and whether restrictions should only apply only when used to describe a vehicle as a whole.
See section 4 of the consultation for the full list of questions: Automated vehicles: protecting marketing terms – GOV.UK.
Deadline
The deadline for responding to both the call for evidence and consultation (there is no requirement to respond to both though) is 23:59 on 1 September 2025.