Understanding the FAA’s ODRA Bid Protest Process: A Guide for Government Contractors
When it comes to federal procurements, the Federal Aviation Administration (FAA) operates a little differently than most other agencies. Unlike other federal agencies that follow the Federal Acquisition Regulation (FAR), the FAA is governed by its own Acquisition Management System (AMS), which includes unique procedures for handling bid protests. At the heart of this process is the FAA’s Office of Dispute Resolution for Acquisition (ODRA).
Whether you’re a contractor pursuing opportunities with the FAA or counsel advising one, understanding the ODRA bid protest process is essential.
What Is the FAA’s ODRA?
Established under the FAA’s Acquisition Management System, ODRA serves as the forum for resolving procurement disputes, including bid protests and contract disputes. ODRA is an independent tribunal within the FAA designed to provide a fair, transparent, and efficient dispute resolution process.
Jurisdiction and Scope
ODRA generally has exclusive jurisdiction over:
Pre-award protests challenging the terms of a solicitation;
Post-award protests involving contract awards; and
Disputes involving alleged violations of the AMS.
Importantly, ODRA generally does not follow the FAR.
Filing a Protest with ODRA
Who Can File
Any “interested party” — typically an actual or prospective bidder whose direct economic interest would be affected — may file a protest.
Time Limits
Solicitation protests must be filed before the closing date for receipt of proposals.
Award protests generally must be filed no later than seven business days after the date the protester knew or should have known of the grounds for protest — or, if the protester has requested a post-award debriefing, not later than five business days after the date on which the debriefing is held.
ODRA strictly enforces these deadlines, and late filings are typically dismissed.
The ODRA Protest Process: Key Steps
1. Filing the Protest
A protest is initiated by submitting a written complaint to ODRA and serving it on the FAA’s Office of the Chief Counsel and the contracting officer. The complaint should include:
A detailed statement of facts;
Legal grounds for the protest;
Copies of relevant documents; and
The relief sought.
2. Automatic Stay of Award or Performance
If a protest is timely filed, ODRA may impose a stay of contract award or performance, similar to the automatic stay under the Competition in Contracting Act (CICA), though it is discretionary under AMS.
3. Initial Status Conference
ODRA should quickly convene a status conference to establish a schedule, encourage alternative dispute resolution (ADR), and clarify procedural matters.
4. Alternative Dispute Resolution (ADR)
ADR is a hallmark of the ODRA process. ODRA typically encourages mediation, facilitated negotiations, or other ADR techniques. Many protests are resolved through ADR before reaching a formal adjudication.
5. Adjudicative Process
If ADR fails, ODRA generally proceeds to a formal adjudication, which may include:
Exchange of pleadings;
Discovery (limited and controlled);
Motion practice; and/or
Hearings (rare, but possible).
The process is more streamlined and less formal than litigation or GAO protest proceedings.
6. Decision
ODRA issues a written decision, typically within 65 business days of the protest filing (unless extended). The decision is final and binding within the FAA, but it may be “appealed” to the U.S. Court of Federal Claims in certain circumstances.
Strategic Considerations
Familiarity with AMS is key – Legal arguments generally should be tailored to the AMS.
Timeliness is critical – ODRA’s deadlines are short and strictly enforced.
Consider ADR early – ODRA favors collaborative resolution and provides resources to support it.
Limited discovery and briefing – Be prepared for a focused, document-driven process.
Conclusion
The FAA’s ODRA offers a unique, efficient, and contractor-accessible forum for resolving bid protests. While it diverges from traditional protest venues like GAO or the Court of Federal Claims, it can provide meaningful relief for aggrieved offerors — provided they understand and follow its rules. Contractors pursuing FAA opportunities should familiarize themselves with the ODRA process or consult counsel experienced in this specialized forum.
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Umbrella Insurer’s “Business Decision” to Pick Up an Insured’s Defense Leads to a Multi-Million Dollar Fraudulent Concealment Claim
A primary insurer (Truck Insurance Exchange) and an umbrella insurer (Federal Insurance Company) have been involved in a series of lawsuits dating back to 2007. The California Court of Appeal recently ruled that their litigation is not done yet. Truck Ins. Exch. v. Fed. Ins. Co., No. B332397, 2025 WL 1367172, ___ Cal. Rptr. 3d ___ (2025).
Truck and Federal insured a company named Moldex-Metric, Inc., which was named as a defendant in several civil lawsuits. Initially, Moldex was defended and indemnified by various primary insurers.
In 2003, when the primary insurers’ limits were purportedly exhausted, Federal – which had issued a commercial umbrella policy to Moldex – began to indemnify Moldex and pay for its defense. However, in late 2004, Moldex discovered it was an additional insured under a primary liability policy issued by Truck. This ultimately led to three different lawsuits between Federal and Truck.
Lawsuit #1: Federal first sued Truck seeking contribution for indemnity and defense costs that Federal had paid on Moldex’s behalf. Federal argued, among other things, that as an umbrella/excess insurer, Federal had no duty to indemnify or defend Moldex until all primary policies were exhausted – including Truck’s. The trial court ruled in Federal’s favor. While the case was on appeal, Truck reached a settlement with Federal as part of which Truck agreed to pay more than $4.8 million in defense and indemnity costs.
Lawsuit #2: Truck later sued Federal (and other defendants) seeking reimbursement or contribution for defense and indemnity costs that Truck paid after its policy limits were exhausted. In response, Federal argued Truck could not seek reimbursement from Federal for defense costs because Federal had no duty to defend Moldex; rather, Federal claimed that it “made a business decision” to exercise its right to associate in Moldex’s defense. Specifically, Federal relied on a provision in its umbrella policy that stated it “shall not be called upon to assume” the defense of any suits brought against Moldex, but that Federal “shall have the right and be given the opportunity to be associated in the defense,” which if it chose to do would be at Federal’s “own expense.” Federal ultimately prevailed in that second lawsuit, in part, based on that argument.
Lawsuit #3: Truck then filed a fraud action against Federal that alleged, among other things, that Federal had misrepresented to Truck that Federal had a duty to defend Moldex or, alternatively, that Federal concealed that it had voluntarily made defense payments as a “business decision.” Truck argued that had it known that Federal’s payments were voluntary, Truck never would have entered into the $4.8 million settlement because Federal would not have had a basis to seek contribution from Truck for defense costs that Federal voluntarily assumed.
That fraud action went to a bench trial. After considering extensive evidence, the trial court issued a tentative statement of decision in Federal’s favor finding that Federal had no duty to disclose to Truck that Federal did not have a duty under its umbrella policy to defend Moldex. The court also concluded that even if the evidence supported that Federal had committed fraud, that fraud was intrinsic to Lawsuit #1 and therefore protected by the litigation privilege. Truck objected to the trial court’s tentative, including because it did not address Truck’s alternative concealment claim. The trial court disagreed and entered judgment in Federal’s favor, which Truck appealed.
The California Court of Appeal reversed. First, the court held that the trial court failed to address Truck’s concealment claim – which was not that Federal concealed it had no duty to defend under its policy, but that Federal concealed that it made a “business decision” to voluntarily assume that duty. In doing so, the court rejected Federal’s argument that it was not acting as a “volunteer” simply because it was motivated to avoid potential bad faith liability to Moldex. The court also recognized that “California law does not require one insurer to contribute to or reimburse another insurer who makes a voluntary payment.”
Second, the court held that Truck’s concealment claim was not barred by the litigation privilege. The court concluded that during Lawsuit #1, Truck did not unreasonably neglect to explore whether Federal had voluntarily assumed the defense of Moldex. Of note, the court pointed to how Federal had alleged in its complaint in that lawsuit that Truck was “obligated” to reimburse Federal for defense costs, which was inconsistent with Federal voluntarily assuming a defense obligation. Moreover, Federal never disclosed during discovery anything that indicated that it had made a voluntary “business decision” to defend Moldex. Therefore, the court agreed with Truck that Federal’s alleged concealment would amount to extrinsic fraud, which does not fall under the litigation privilege.
Accordingly, the Court of Appeal remanded the case to the trial court with instructions to hold a new trial on Truck’s concealment claim.
There are lessons to be learned on both sides of this dispute. For primary insurers, when faced with a contribution claim from an excess insurer, it’s important to closely review the excess insurance policy to assess the nature of the excess insurer’s obligations to the insured – e.g., whether it does or does not have a duty to defend. That could impact the excess insurer’s right to seek contribution from a primary insurer, in particular, if the excess insurer’s payments could be considered voluntary.
As for excess insurers, be aware that voluntarily assuming an obligation not owed under the terms of the policy could impact your right to seek recovery from other insurers.
Contract Adjustment In The Event Of Inflation And Crises: When The World Is Upside Down, What Are The Implications For Ongoing Agreements?
The economic environment has changed dramatically in recent years. COVID-19, the war in Ukraine, geopolitical conflicts, supply chain disruptions, skyrocketing prices for raw materials and energy, and natural disasters all highlight the fragility of international supply relationships. But what does this mean in concrete terms for companies and their contractual arrangements? What happens if a contracting party is suddenly no longer able to deliver or if the agreed prices are no longer sufficient for economic viability?
In this post, we explore the legal options available under German law to adjust contracts in response to changing circumstances.
Interference with the Basis of the Agreement: When the Foundation Shifts
Under German law, a contracting party may demand an adjustment to the agreement if the circumstances that formed the basis of the contract change significantly after its conclusion, and continued adherence to the contract would be unreasonable for that party (so-called “interference with the basis of the agreement”, according to Section 313 (1) of the BGB, the German Civil Code). If a contractual adjustment is impossible or unreasonable for one party, it may even request rescission of the agreement by withdrawal or termination, as codified in the BGB.
However, such an adjustment or rescission is generally excluded if the risk of the respective contractual interference is clearly allocated to one of the parties by law or contract. Adjustments due to supply shortages or price increases resulting from a crisis are only considered if they go beyond the scope of typical contractual risk. In other words, the interference must create a performance risk so exceptional that the parties did not assume it when entering into the agreement.
A fixed-price agreement is one example of contractual risk allocation. If the supplier’s material costs rise significantly, this typically falls within its risk sphere due to the fixed-price agreement. As a rule, the supplier cannot demand a price adjustment. For this reason, price adjustment clauses are frequently agreed upon in practice, as described in more detail below.
An example of a statutory risk allocation is the risk of use, meaning the risk of not being able to use the received goods or services as intended. This risk is typically assigned to the recipient under reciprocal contracts. For instance, if a tool manufacturer takes out a loan to invest in its production capacity in anticipation of a rise in demand, the manufacturer cannot request a contract adjustment or termination of the loan agreement if demand for its tools later collapses and the loan, therefore, becomes economically pointless. In such cases, there is generally no room for an interference-based contract adjustment.
Furthermore, an interference is excluded if the contract already contains mechanisms for adjusting performance in cases of unforeseeable events (g., force majeure, hardship, or price adjustment clauses, as explained below). In these instances, there is usually little or no scope for adjusting the contract using the legal concept of interference with the basis of the transaction.
In practice, many adjustment attempts fail because the risk that has materialized was contractually or legally allocated from the outset. Without tailored contractual clauses – such as force majeure or price adjustment provisions – a party may be denied the right to amend or terminate the contract. This underscores the importance of such clauses at the time of contract formation.
Force Majeure Clauses: Contractual Protection Against the Unforeseeable
Force majeure clauses regulate what happens if an extraordinary event makes performance impossible or unreasonable. Although not specifically defined in German law, the concept is gaining importance due to the expansion of EU legislation and the increasing international nature of commercial contracts.
Force majeure clauses are designed to shield parties from liability when events occur that are unforeseeable and beyond their control. The burden must be so high that one party cannot reasonably be expected to bear it. Whether these requirements are met in individual cases depends on the nature and content of the contract.
Because there is no statutory definition of force majeure in German law, the parties must define it themselves and set out the legal consequences. The parties usually draw up a list of events that are expressly considered to be force majeure. The clause often provides that the affected party is released from liability or that deadlines are extended. To account for cases of prolonged force majeure, it may also be advisable to include a right to terminate the contract for cause.
A valid force majeure clause generally releases the affected party from the obligation to perform or allows the performance to be postponed without triggering damages, provided the party is not at fault and the event that prevents it from fulfilling its contractual obligation is outside its control. According to the German Federal Court of Justice, force majeure is ruled out if there is even slight negligence on the part of the affected party.
The clause should also clarify under what circumstances a party may invoke force majeure. This is especially important if the event only affects a supplier further down the supply chain (e.g., a production site destroyed by an earthquake) because the parties are then generally only indirectly affected by the supplier’s failure to deliver. In such cases, the party may be expected to source alternatives, even if costly or impractical.
Typical force majeure events include natural disasters, war, pandemics, strikes, and trade restrictions. The model clause for force majeure recommended by the International Chamber of Commerce – widely used in German practice – lists such examples and defines, for example, war and hostilities, starting with extensive military mobilization, as presumed events of force majeure. If the parties have included this clause in their agreement, the occurrence of a defined event generally constitutes a case of force majeure.
Similar provisions exist under international commercial law, particularly Article 79 of the United Nations Convention on Contracts for the International Sale of Goods. This article exempts a party from liability for non-performance if it proves that the failure was due to an impediment beyond its control, which could not reasonably have been foreseen or avoided.
Service and Price Adjustment Clauses: Built-in Flexibility
Because reliance on Section 313 of the BGB or force majeure clauses can be uncertain, many businesses include performance and price adjustment clauses in their contracts from the outset. These clauses allow parties to adapt to changes in raw material prices, inflation, or other factors. However, these clauses can be problematic and must strike a balance between predictability and flexibility.
When used in general terms and conditions, these clauses must be drafted with clarity and transparency, and they must align with the interests of the parties. German courts impose strict requirements:
Performance adjustment clauses are only permitted if they are reasonable for the counterparty, taking into account both parties’ interests. There must be a valid reason, and the adjustment must preserve the balance between performance and consideration.
Price adjustment clauses aim to maintain equivalence between performance and consideration during long-term relationships. These clauses must clearly specify the reason and scope of the price change and must not retroactively increase the user’s profit margin. The counterparty must be able to assess and verify the adjustment.
According to recent case law from the Federal Court of Justice, it is easier to justify price adjustment reservations, which allow the user to modify the price “at reasonable discretion” under certain conditions. It is sufficient to name the main cost drivers as change parameters in a comprehensible manner. A full breakdown of all cost components is not required.
Conclusion: Contracts Are Not A One-way Street – But Not A Wish List Either
Contracts cannot be changed easily. German law places great value on contractual certainty. Still, global economic volatility calls for updated legal tools.
The BGB’s doctrine of interference with the basis of the transaction offers relief when unforeseeable events significantly disturb the contract’s balance. Force majeure clauses provide clarity and prevent litigation. Price adjustment clauses and comparable contractual provisions create flexibility and reduce exposure on both sides.
Best Practices
Prepare for crises before they happen. In long-term contracts, include flexible mechanisms. Seek legal advice when circumstances change. And remember: Contracts should not just secure rights; they should enable fair solutions.
Because when the world is upside down, the goal remains: Getting through hard times together.
Enforcing English Proficiency: Employers of Commercial Drivers Face New FMCSA Guidance
Takeaways
DOT inspectors will enforce new guidance for English language proficiency among commercial motor vehicle drivers beginning 06.25.25.
Drivers who do not speak and understand English sufficiently will be placed out-of-service.
Planning and thoughtful, timely communication with your drivers is the key to compliance, uninterrupted customer service, and driver retention.
Businesses that employ drivers of commercial motor vehicles who operate in interstate commerce (CMV drivers) have some work to do before June 25, 2025. That is when CMV drivers who cannot speak and understand English sufficiently to meet the Department of Transportation (DOT) English language proficiency qualification standard (ELP Standard) will start being taken out-of-service. Here is what you need to know to prepare for the shift in enforcement to ensure continued timely service to customers and to retain drivers.
On April 28, 2025, President Donald Trump issued Executive Order 14286, directing the secretary of transportation and the Federal Motor Carrier Safety Administration (FMCSA) to take certain steps to ensure CMV drivers can meet the ELP Standard set forth in 49 CFR § 391.11(b)(2) and to place drivers out-of-service (OOS) if they cannot do so.
On May 20, 2025, Transportation Secretary Sean Duffy announced issuance of new guidance to enforce the ELP Standard. The guidance is explained in the FMCSA’s May 20, 2025, Internal Agency Enforcement Policy (New FMCSA Policy). The publicly available policy is redacted, perhaps to avoid sharing details that could potentially risk enforcement efforts. The New FMCSA Policy rescinds the more lenient 2016 policy. It outlines the steps below that inspectors should begin taking to enforce the ELP Standard.
New FMCSA Policy:
Step 1: Assessment of Ability to Respond to Official Inquiries
FMCSA personnel will initiate all roadside inspections in English.
The driver will be told to respond in English. Tools like interpreters, I-Speak cards, cue cards, smart phone applications and On-Call Telephone Interpretation Services cannot be used, as they may conceal a driver’s inability to communicate in English.
If it appears the driver may not understand the inspector’s initial instructions, the inspector will conduct an ELP assessment. The ELP assessment will consist of a driver interview and a highway traffic sign recognition assessment.
If the inspector determines the driver is unable to respond to official inquiries in English sufficiently, the driver will be cited for a violation of 49 CFR § 391.11(b)(2).
Step 2: Assessment of Ability to Understand Road Signs
If the driver responds to the inspector sufficiently in English, the inspector will conduct a Highway Traffic Sign Assessment to include highway traffic signs that conform to the Federal Highway Administration’s Manual on Uniform Traffic Control Devices for Streets and Highways (MUTCD) and electronic-display changeable (a.k.a. “dynamic”) message signs the driver may encounter while operating a commercial motor vehicle.
Step 3: Documentation and Consequences of Failure to Pass the ELP Assessment
If the inspector cites the driver for a violation of the ELP Standard, the inspector must document all evidence to support the violation including the driver’s responses or lack thereof.
The inspector will place the driver immediately out-of-service once a violation of the ELP Standard is incorporated into the North American Standard Out-of-Service Criteria, which has already been approved and will become effective June 25, 2025.
The inspector will, when warranted, initiate an action to disqualify the driver from operating commercial motor vehicles in interstate commerce.
Step 4: Conducting the Remainder of the Inspection If the Driver Passes the ELP Assessment
If the inspector determines that the driver meets the ELP Standard, the inspector may elect to conduct the remainder of the inspection using the communication methods and techniques best suited to facilitate the safe and effective completion of the inspection.
Applicability Of the Policy:
The New FMCSA Policy applies to all FMCSA enforcement personnel conducting inspections of motor carriers and drivers in the U.S., except in Puerto Rico, Guam, the Northern Mariana Islands, or American Samoa.
When performing inspections of CMV drivers in the border commercial zones along the U.S.-Mexico border, FMCSA enforcement personnel should cite drivers for violations, but should not place the driver out-of-service or initiate an action to disqualify them from driving in interstate commerce.
Drivers with hearing impairments who have obtained exemptions from the DOT hearing standard shall not be deemed unqualified and placed out-of- service if they are unable to communicate orally in English.
Implementation and Future Changes:
The policy is effective immediately, and FMCSA inspectors are required to implement it for all CMV drivers operating in the U.S.
The Commercial Vehicle Safety Alliance (CVSA) has already voted to incorporate violations of 49 CFR § 391.11(b)(2) into the OOS criteria, effective June 25, 2025.
As part of its regulation scheme, the DOT is reviewing state security procedures in their issuance of Commercial Drivers Licenses.
On May 20, 2025, Transportation Secretary Sean Duffy is reported to have stated that the Department will be reviewing non-domiciled CDLs and improving upon the verification protocols for both domestic and international credentials.
Next Steps for Employers
Planning and thoughtful, timely communication with your drivers is the key to compliance, uninterrupted customer service, and driver retention.
U.S. District Judge Upholds Federal Preemption Over Minnesota State Drug Testing Law
The U.S. District Court for the District of Minnesota recently sided with a natural gas distribution company in a lawsuit by an employee in a safety-sensitive position who alleged his discharge following a failed random drug test violated the Minnesota Drug and Alcohol Testing in the Workplace Act (DATWA). The court found federal statutes and U.S. Department of Transportation (DOT) drug and alcohol regulations for safety-sensitive positions preempted the state law.
Quick Hits
The U.S. District Court for the District of Minnesota ruled in favor of a natural gas distribution company that discharged an employee who failed a random drug test.
The court found that federal laws, including the Natural Gas Pipeline Safety Act, the Hazardous Liquids Pipeline Safety Act, and DOT drug and alcohol testing regulations preempted DATWA’s employment protections regarding drug testing.
The decision underscores the significance of federal preemption in workplace drug testing, emphasizing the necessity for employers to align their policies with federal regulations when conflicts arise with state laws.
U.S. District Judge Nancy Brasel granted summary judgment for Minnesota Energy Resources Corporation (MERC) in a lawsuit by a discharged employee who alleged the company violated DATWA. The employee, who worked as a gas distribution system designer, alleged the company violated DATWA in part by requiring the employee to submit to a random drug test and failing to provide him with required notices.
However, the court found that it was impossible for the company to comply with both the federal DOT regulations, which require random drug testing and immediate removal after positive results, and Minnesota’s DATWA, which provides employment protections regarding employer drug tests. Thus, the court ruled that the federal regulations preempt DATWA and dismissed the employee’s claims.
Background
The lawsuit was brought by an employee who was discharged after he tested positive for tetrahydrocannabinol, the primary psychoactive compound in marijuana or cannabis, in a random employer drug test.
The company is subject to the DOT regulations for companies transporting hazardous materials, which require employers to maintain a drug and alcohol testing program. The employer maintained a drug and alcohol testing policy that required employees in safety-sensitive positions who perform “covered functions” to submit to random drug testing.
Following his discharge, the employee and his union filed a grievance. An arbitrator determined that the employee was subject to random drug testing under federal law and that the company acted with just cause in discharging him for failing the drug test. The arbitrator did not address whether the employee was in a safety-sensitive position under DATWA or adjudicate any of the DATWA claims.
The employee then filed a lawsuit against the company, alleging he was not supposed to be subject to random testing and that the employer had failed to provide the required notices under DATWA. Specifically, the employee alleged the company violated DATWA by: (1) requiring him to submit to a random drug test, (2) failing to inform him of his rights in writing, (3) failing to offer counseling or rehabilitation before discharging him, and (4) disclosing his positive test result to a federal agency without a confirmatory test.
Federal Preemption
The district court found that the federal DOT regulations expressly preempt the employee’s DATWA claims because complying with both DATWA and the applicable federal regulations would be impossible or impede the execution of federal drug testing procedures.
DATWA includes many employment protections for employees regarding drug testing. The law requires employers to inform employees in writing of their rights to testing and to a confirmatory test, prohibits employers from discharging employees without first providing them with an opportunity to participate in a counseling or rehabilitation program, and restricts the disclosure of a positive test result.
Also, DATWA contains a preemption clause that exempts employees who are subject to drug and alcohol testing under “federal regulations that specifically preempt state regulation of [such] testing with respect to those employees.”
On the other hand, the applicable DOT regulations state that they preempt state or local requirements where compliance with both “is not possible.” The regulations also require mandatory random drug testing for employees in safety-sensitive positions, require immediate removal from such positions upon a positive test result, require the medical review officer (not the employer) to take certain actions, and further outline specific procedures for notifying employees of positive test results.
“DOT regulations expressly preempt DATWA because compliance with both federal regulations and DATWA is either impossible or an obstacle to the accomplishment and execution of DOT requirements,” the court said.
Alternatively, the court further determined that the company had met the burden of showing that the federal regulations preempt DATWA under a theory of conflict preemption for the same reasons.
Next Steps
The court’s decision in favor of the employer highlights the importance of federal preemption in workplace drug testing. Employers must adhere to federal regulations, which can override state laws when there is a conflict. This ruling serves as a critical reminder for employers to ensure their drug testing policies comply with federal standards, particularly for employees in safety-sensitive positions.
PHMSA Requests Comments on Repair Criteria for Gas Transmission, Hazardous Liquid and Carbon Dioxide Pipelines and on Inspections of Breakout Tanks
On May 21, 2025, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published an Advance Notice of Proposed Rulemaking (ANPRM) seeking stakeholder input on potential opportunities to improve the cost-effectiveness of the current repair requirements applicable to gas transmission pipelines and hazardous liquid or carbon dioxide pipelines contained in 49 C.F.R. Part 192 and Part 195 of the federal pipeline safety regulations. PHMSA also seeks input on authorizing risk-based inspection procedures for determining inspection intervals for in-service breakout tanks under Part 195. Comments are due July 21, 2025.
The ANPRM explains that current pipeline safety standards address the remediation of anomalies in pipeline facilities through both prescriptive requirements that generally apply to all pipelines and risk-based integrity management (IM) requirements that apply to pipeline segments posing risks to “high consequence areas.” PHMSA notes that some repair requirements have not been updated for decades and may not account for the latest advances in pipeline safety technologies and industry best practices. Updating repair criteria may be needed to align with recent changes to Part 192 and Part 195 regulations, to minimize barriers to the development and deployment of innovation, safety technologies and industry best practices, and to avoid overlapping regulatory requirements.
In addition, with respect to the inspections of in-service hazardous liquid breakout tanks, PHMSA notes that, while § 195.432 allows limited flexibility to use alternative inspection intervals contained in consensus standards, the regulation retains the default annual inspection requirement and does not authorize using risk-based inspection procedures to establish inspection intervals for in-service atmospheric and low-pressure steel above-ground breakout tanks.
To inform the agency’s development of proposed regulatory amendments to Part 192 and Part 195 in a future notice of proposed rulemaking (NPRM), the ANPRM poses numerous specific questions regarding existing anomaly repair criteria, remediation timelines, and IM regulations applicable to gas transmission pipelines under Part 192 and hazardous liquid pipelines and carbon dioxide pipelines under Part 195. The ANPRM also poses questions about the assessment and remediation of in-service Part 195-regulated hazardous liquid pipeline breakout tanks.
The ANPRM also requests feedback on the following:
potential amendments to Part 192 and Part 195 repair criteria, remediation timelines, and IM requirements;
the appropriateness of those amendments for different types of gas transmission pipelines and hazardous liquid or carbon dioxide pipelines;
the incremental compliance costs and benefits, including benefits pertaining to avoided compliance costs, safety harms, and environmental harms; and
the technical feasibility, reasonableness, cost-effectiveness, and practicability of those potential amendments.
With respect to cost and benefit information, PHMSA requests that stakeholders submit per-unit, aggregate, and programmatic (both one-time implementing and recurring) data. The ANPRM states that explaining the bases or methodologies employed in generating cost and benefit data, including data sources and calculations, will help PHMSA support cost and benefit benefits in an NPRM.
After receiving comments on the ANPRM, PHMSA states that it intends to convene a public meeting to supplement or clarify comments and materials received.
Sustainable Aviation Fuel: An Overview of the Current Regulatory Landscape in the UK, EU And USA
Introduction
We have set out below an overview of the current regulatory frameworks governing Sustainable Aviation Fuel (SAF) in the key jurisdictions of the UK, EU and USA.
SAF has emerged as a critical component in the global drive to decarbonise the aviation sector, a significant contributor to greenhouse gas emissions. Unlike conventional jet fuels, SAF offers substantial reductions in lifecycle carbon emissions by incorporating renewable feedstocks and innovative production technologies.
Recognising its potential to drive sustainable growth, policymakers across the UK, EU, and USA are actively shaping regulatory frameworks to accelerate its deployment and adoption.
Note that this is an evolving regulatory landscape that is subject to change – however, this overview sets out the current regulations and initiatives of each of the UK, EU and USA – and strongly indicates the direction of travel of each of these jurisdictions.
We conclude with a comparison of these jurisdictions and analyse their strengths and limitations in fostering market growth. We also examine potential pathways for future development, including harmonisation of international standards, technological advancements, and policy synergies.
By presenting such analysis and exploring projected trends, this overview offers insights into the role of regulation in shaping the trajectory of SAF as an essential enabler of sustainable aviation.
United Kingdom
The UK SAF landscape
Current Status and Future Developments
The UK’s SAF industry is progressing rapidly, driven by a number of policy measures that integrate SAF into the UK’s broader decarbonisation goals. With increasing regulatory and financial support, the UK aims to position itself as a global leader in SAF development, production, commercialisation and use.
A key component of this strategy is the SAF Mandate, alongside other legislative and market-based incentives designed to accelerate SAF adoption. Under these principles, SAF is defined based on achieving a minimum level of greenhouse gas emission reductions and specific sustainability criteria.
The key features include the introduction of compulsory, incrementally increasing SAF supply requirements, a buy-out mechanism to enforce compliance, and funding incentives to support industry growth.
The Jet Zero Taskforce (JZT) (building on the previous Government’s Jet Zero Council) was announced by the UK Government in November 2024 to advance sustainable aviation. Members include UK Government ministers, industry leaders and academics. Established to accelerate the transition to net zero aviation by 2050, the JZT aims to streamline aviation decarbonization priorities and support the development, production, commercialisation and use of SAF in the UK and globally.
Legislation
The UK is at the forefront of SAF development as the one of the first countries in the world to legislate for mandatory SAF requirements. The UK’s key policy to decarbonize aviation and secure demand for SAF is the SAF Mandate.
SAF Mandate
Key terms (2025 onwards):
The Renewable Transport Fuel Obligations (Sustainable Aviation Fuel) Order 2024 came into force on January 1, 2025. This introduced compulsory SAF requirements for suppliers of at least 15.9 terajoules (c.468,000 litres) per year of aviation fuel to the UK: from 2025, SAF is required to make up 2% of the total UK aviation fuel mix, increasing to 10% by 2030 and 22% by 2040.
SAF suppliers earn Renewable Transport Fuel Certificates for SAF supplied to the UK that meets certain GHG emission reductions and sustainability criteria (SAF must comprise fuel that achieves minimum GHG emission reductions of 40% relative to traditional fossil fuel-based jet fuel). Evidence of the SAF supplied to UK needs to be provided to the Department for Transport to assess and award corresponding certificates. The number of certificates issued will be proportionate to the level of GHG emission reductions achieved by the fuel delivered (i.e. the greater the reductions, the greater the number of certificates issued). Suppliers can either use their certificates to demonstrate that they have complied with their obligations or trade them to other suppliers.
HEFA Caps (2027 onwards):
SAF produced through hydro-processed esters and fatty acids (HEFA) can contribute 100% of SAF for the first 2 years of the Mandate and thereafter decreasing to 71% in 2030 and 35% in 2040.
This is due primarily to HEFA’s emission reduction inefficiencies (when compared to SAF alternatives) and feedstock sustainability concerns.
Power to Liquid (PtL) Obligations (2028-2040):
A separate PtL obligation requires 0.2% of UK aviation fuel to be sourced from PtL commencing in 2028 and thereafter rising to 4.4% by 2040.
PtL requires energy-derived production of aviation fuels (from e.g. green hydrogen and captured carbon dioxide).
Buy-out Mechanism (2025 onwards):
Fuel suppliers unable to meet their SAF Mandate requirements must pay a buy-out price determined by their SAF or PtL shortfall amounts.
The aim is to create a financial incentive to prioritize SAF, with the buy-out prices (currently £4.70 per litre for SAF and £5.00 per litre for PtL) being set at a level to encourage the supply of SAF over the use of the buy-out.
SAF Revenue Support
The Sustainable Aviation Fuel (Revenue Support Mechanism) Bill (2024) was announced in the King’s speech on 17 July 2024, proposing a revenue certainty mechanism for SAF producers investing in UK-based facilities. A number of funding options were proposed and, in January 2025, the UK Government confirmed that the Guaranteed Strike Price mechanism was the preferred option.
The Guaranteed Strike Price is envisaged to operate akin to a contract-for-difference (as utilised in the UK renewable power sector), offering price stability for UK SAF producers. The mechanism will operate through a private law contract between a UK SAF producer and a designated Government agency, establishing a strike price (being the guaranteed price the producer will receive for eligible SAF over a specified period). If the reference price surpasses the strike price, the producer reimburses the Government agency for the difference, and, if the reference price falls below the strike price, the Government agency compensates the producer for the shortfall.
In line with the “polluter pays” principle, the UK Government has confirmed that it intends for the revenue certainty mechanism to be funded by aviation fuel suppliers.
Further SAF Incentives
To further promote UK SAF development, the UK Government has implemented various financial incentives:
Advanced Fuels Fund: First launched in 2022 with £165 million of grant funding available, the Advanced Fuels Fund aims to support the establishment and development of first-of-a-kind SAF projects in the UK.
SAF Clearing House: Any new aviation fuel must meet strict specifications and undergo testing to meet industry standards; the cost and complexity of which can be a significant barrier to new fuels entering the market. The UK SAF Clearing House provides technical support and funding to SAF producers.
Furthermore, aircraft operators can reduce their obligations under the UK Emissions Trading Scheme (ETS) by using eligible SAF, which qualifies for emissions reductions under the scheme.
Projections and Insight
It is estimated that, by 2050, the global aviation industry will need approximately 400 million tonnes of SAF annually to meet international decarbonization goal and, whilst the SAF market is still in a nascent stage of its development, the UK is positioned to play a significant role in the global effort to decarbonize aviation. The development of SAF production facilities in the UK are key for the successful implementation of the UK Government’s SAF goals.
The SAF Mandate has only just come into force and the revenue certainty mechanism for SAF producers has yet to be finalized and take effect. As such it remains to be seen whether these mechanisms will be sufficient to meet international decarbonization goals and position the UK as a leader in SAF development, production, commercialisation and use:
The success of the buy-out mechanism in incentivizing the production and use of SAF will depend on the future production costs of SAF. Whilst the buyout rates are currently projected to exceed SAF production costs, if the buy-out price is set too low (for example, if production costs spiral), suppliers may choose to simply pay the buy- out price.
With respect to the revenue certainty mechanism, there are a number of questions and policy decisions that remain outstanding: what will be used as the “reference price” (unlike in the power market where there is a published market price for electricity, no such benchmark exists for SAF)? How will the strike price adjust over time? Precisely how will the mechanism be funded? At a most fundamental level, the deployment of significant capital into SAF development will require further clarity regarding the revenue certainty mechanism.
For further clarity on the information above, we set out below (at Figure 1) a timeline of key projected regulatory developments in the UK SAF market.
UK SAF Timeline
Figure 1: UK SAF Timeline
European Union
The EU SAF Landscape
Current Status and Future Developments
Despite efforts to curb its growth, commercial flights in the EU could rise by up to 42% by 2040 compared to 2017. Recognizing the pressing need to address the climate impact of the aviation sector, the EU has prioritized the development of a SAF market. By leveraging the collective action potential of its member states, the EU is uniquely positioned to lead in SAF implementation.
SAF is defined by the EU as a “drop-in” aviation fuel, including advanced biofuels or biofuels produced from sustainable feedstocks, recycled carbon fuels, or synthetic fuels.
With mandates introduced in 2023 and effective as from January 2025, the European Union is meticulously crafting a policy framework to stabilize the SAF market, foster innovation, and create a level playing field, driving progress toward its Fit-to-55 climate goals.
Legislation
The European regulatory framework for sustainable aviation fuel (SAF) has been shaped by two key legislative milestones: the Renewable Energy Directives (RED) and the ReFuelEU Aviation Regulation.
The RED have progressively established binding renewable energy targets across the EU, including for the transport sector, and have increasingly integrated SAF into the broader energy transition strategy. From RED I (2009), which set initial renewable energy targets, to RED II (2018), which introduced incentives for SAF, and finally RED III (2023), which reinforced sector-specific mandates, these directives have paved the way for SAF regulation.
Complementing this framework, the ReFuelEU Aviation Regulation, adopted in 2023, marks a decisive shift in SAF development by imposing direct obligations on fuel suppliers at EU airports. Unlike the RED directives, this regulation is immediately applicable across the EU and imposes a progressive incorporation of SAF into jet fuel, with binding quotas extending to 2050. Together, these two instruments define the roadmap for SAF deployment, balancing long-term policy incentives with immediate regulatory requirements.
RED Directives
RED served as the cornerstone for establishing the EU’s shift toward greener fuels.
Adopted on April 23, 2009, the RED I Directive introduced ambitious renewable energy targets across EU Member States:
General Targets: Each Member State was assigned a binding target to achieve 20% renewable energy in its final energy consumption by 2020. These targets varied for each country: Some countries were optimistic about their renewable energy potential and set ambitious targets, such as Sweden with 49% by 2020, Denmark with 30%, and France with 23%. Others, however, were more cautious, with the Netherlands setting a target of 14% and Italy aiming for 17%.
Transport Sector: A specific target of 10% renewable energy was set for the transport sector by 2020. This included biofuels and other renewable fuels but did not explicitly address aviation.
Impact on SAF: While RED I did not explicitly include SAF, it established a foundation for their future integration by defining sustainability criteria and promoting advanced biofuels.
Entering into force on December 11, 2018, the RED II Directive strengthened the EU’s renewable energy framework in response to increased climate ambitions:
Revised Targets: The overall binding target for emissions reduction was raised to 32%, with a renewable energy target of 14% for the transport sector.
Promotion of SAF
Advanced Biofuels and RFNBOs: The RED II Directive encouraged the use of advanced biofuels and Renewable Fuels of Non-Biological Origin (RFNBOs), explicitly including SAF. Advanced biofuels refer to biofuels produced from feedstocks that do not compete with food production or contribute to land-use changes that could negatively impact biodiversity. They are typically derived from waste and residues, or non-food crops such as algae and plant fibers. As for RFNBOs, they are fuels produced from renewable electricity rather than biological sources.
Incentive Multipliers
Biofuels derived from feedstocks listed in Annex IX (including advanced biofuels) count twice their energy content towards renewable targets, meaning that for every unit of energy produced from these fuels, it counts as two units towards the target.
Fuels supplied to the aviation sector (including RFNBOs) count as 1.2 times their energy content, meaning that for every unit of energy from these fuels, it counts as 1.2 units toward the target.
Limitations on Food-Based Biofuels: These are capped at 7% to mitigate adverse effects on land use and food production.
Adopted on October 18, 2023, the RED III Directive was a decisive step towards integrating SAF into the EU’s energy framework, by:
Enhanced Targets: The share of renewable energy in the EU’s overall energy consumption must reach 42.5% by 2030, with a binding target of 29% for the transport sector.
Sectoral Sub-Targets: Specific targets were introduced for advanced biofuels and RFNBOs, solidifying SAF’s role as a cornerstone of aviation decarbonization.
Aviation Catalyst: RED III emphasized increased SAF integration into national energy strategies while supporting emerging technologies, such as synthetic fuels.
Directives are legal acts that generally need be transposed into national law by EU member states, meaning that each country must adopt its own legislation to achieve the directive’s objectives. Therefore, the RED directives’ provisions need to be transposed into national law. There is generally an 18-month deadline for member states to do so, with an occasionally shorter deadline for some provisions.
Member States successfully met the RED I targets, despite varying national goals, demonstrating the EU’s commitment to renewable energy. This progress laid the foundation for the more ambitious targets in RED II and RED III, and Member States are on track to achieve these goals. In particular, the push for SAF under these directives is progressing well, with ongoing efforts to scale production and expand infrastructure. While challenges remain, Member States are well- positioned to meet the targets for both renewable energy and SAF by 2030, especially with the introduction of the ReFuelEU Aviation Regulation.
ReFuelEU Aviation regulation
Regulation (EU) 2023/2405 of October 18, 2023 through ensuring a level playing field for sustainable air transport (ReFuelEU Aviation) represents a cornerstone of the EU’s strategy to decarbonize aviation in line with the Green Deal objectives and the Fit-for-55 package. This regulation establishes a comprehensive legal framework to accelerate the adoption of SAF across the EU.
Finalized in 2023, most of its provisions entered into force on 1 January 2024, with Articles 4, 5, 6, 8, and 10 becoming applicable from January 1, 2025. As an EU regulation, ReFuelEU Aviation is directly applicable in all Member States without requiring transposition into national law.
The regulation imposes binding SAF blending obligations on aviation fuel suppliers, requiring them to progressively integrate SAF into the aviation fuel supplied at EU airports. The mandated SAF share begins at 2% in 2025 and will increase incrementally to 70% by 2050, of which a dedicated sub-target for synthetic aviation fuels starts at 0.7% in 2030, reaching 35% by 2050 (see Figure 2). For instance, the goal for 2040 is to achieve a 42% share of SAF in the aviation fuel supplied to EU airports, with 15% of that being synthetic.
To be eligible, SAF must comply with the sustainability and emissions reduction criteria set out in RED I. Acceptable SAF sources include advanced biofuels, synthetic fuels derived from renewable hydrogen, and recycled carbon aviation fuels. Fuel suppliers may also utilize hydrogen for direct aircraft propulsion or synthetic low-carbon fuels.
Within this regulatory framework, synthetic fuels—particularly e-kerosene—are set to play an increasingly prominent role, with a specific mandate ensuring their integration into the fuel mix.
EU airport operators are required to facilitate access to SAF, while aviation fuel suppliers, airports, and aircraft operators must systematically collect and report data to the European Union Aviation Safety Agency (EASA) and national competent authorities to ensure regulatory compliance.
The regulation further establishes enforcement mechanisms, designating national competent authorities responsible for supervision. Fuel suppliers failing to meet their SAF blending obligations will face financial penalties and must compensate for any shortfall by supplying the missing volume the following year.
By setting clear, long-term SAF quotas through 2050, the ReFuelEU Aviation regulation creates a stable and predictable market framework, reinforcing the EU’s ambition to achieve a more sustainable aviation sector.
Figure 2: SAF Mandate Levels in the ReFuelEU Directive
Incentives for SAF Production and Innovation
The EU Emissions Trading System (EU ETS) and Financial Incentives for SAF
In addition to the ReFuelEU Aviation regulation, the EU’s climate strategy for the aviation sector is reinforced by the EU Emissions Trading System (EU ETS), established under Directive 2003/87/EC. As a “cap-and-trade” mechanism, the EU ETS aims to progressively reduce greenhouse gas emissions by setting a cap on total emissions while allowing market- based trading of emission allowances. Initially, free allowances were allocated to aircraft operators based on the average emission of the sector and their historical performance. In 2023, approximately 22.5 million aviation allowances were allocated for free, while about 5.7 million were auctioned.
To accelerate decarbonization, the EU has initiated a phased reduction of free emission allowances for aircraft operators:
In 2024, free allowances were reduced by 25%;
In 2025, they will be further cut by 50%;
By 2026, all free allowances will be phased out, requiring operators to fully cover their emissions through auctioning.
This transition is designed to incentivize the adoption of SAF, as airlines can lower their compliance costs by integrating SAF into their fuel mix. To support this shift, the EU has introduced targeted financial incentives within the EU ETS framework:
A dedicated SAF allowance mechanism provides 20 million allowances (valued at approximately €1.7 billion) until 2030, rewarding aircraft operators based on SAF usage. This mechanism helps bridge the price gap between conventional aviation fuel and SAF. SAF remains significantly more expensive to produce. However, by reducing compliance costs for airlines under the EU ETS, it makes SAF adoption more financially viable, supporting the transition to cleaner aviation fuels while maintaining competitiveness in the sector.
SAF that meets RED sustainability criteria is attributed zero emissions under the EU ETS, reducing the number of allowances airlines must purchase.
Beyond emissions trading, the EU has also introduced monitoring, reporting, and verification (MRV) measures for non-CO₂ aviation effects, with additional policy proposals expected by 2028.
Financial Support Mechanisms for SAF Development
Recognizing the financial and technological challenges associated with SAF production, the EU has established several funding instruments to support research, innovation, and large-scale deployment:
EU Innovation Fund (EUIF): A €40 billion fund aimed at de-risking SAF production across various technology readiness levels. For example, the Innovation Fund awarded in 2023 a €167 million grant to the Biorefinery Östrand project, which seeks to develop, construct, and operate the world’s first large-scale biorefinery dedicated to producing renewable SAF and naphtha, in Östrand, Sweden.
Horizon Europe: The EU’s flagship €95.5 billion research and innovation program, which funds SAF-related projects.
InvestEU: A €26.2 billion initiative supporting sustainable infrastructure investments, including SAF production facilities. One of the most notable projects funded by InvestEU is the INERATEC synthetic fuel production facility in Frankfurt. Backed by a €70 million investment, this initiative is supported by a €40 million venture loan from the European Investment Bank (EIB) and a €30 million non-repayable grant from Breakthrough Energy Catalyst. The funding will help develop Europe’s largest carbon-neutral synthetic fuel plant, set to open in 2025.
Clean Aviation Joint Undertaking: A €1.7 billion public-private partnership between the European Commission and the aeronautics industry to accelerate the development of new aviation technologies.
Projections and Insight
While the ReFuelEU Aviation regulation establishes a robust framework and clear mandates for SAF adoption, several policy areas will require further clarification and potential amendments. The regulation’s overall timeline is generally aligned with industry expectations, but additional interventions may be necessary to ensure a smooth and effective implementation:
Penalty enforcement and cost volatility: The current penalty mechanism for suppliers failing to meet SAF quotas is directly tied to SAF costs, which remain highly volatile due to potential supply shortages. If SAF prices surge, penalties could become unsustainable, adding financial pressure on suppliers while delaying compliance. Additionally, without a price cap mechanism, rising SAF costs could impact air travel affordability, potentially triggering public and industry backlash.
Exploring a tradable SAF system: Under Article 15 of ReFuelEU, the European Commission is mandated to assess additional measures to enhance SAF market liquidity and ensure supply stability. One key consideration is the creation of a book-and-claim system, which would enable fuel suppliers and aircraft operators to purchase SAF credits and allocate them flexibly across EU airports. As of January 2025, the Commission’s report on these measures remains pending.
Beyond regulatory refinements, the political landscape in the EU is evolving, with recent electoral shifts favoring parties historically opposed to Green Deal policies. As EU policymakers shift their focus toward an Industrial Deal, maintaining strong momentum for SAF adoption will be critical. Ensuring a stable regulatory environment and continued financial support will be essential to securing the long-term success of SAF integration within the aviation sector.
The effectiveness of SAF regulations in the EU stems from the fact that they are binding, compelling operators to take immediate action and enhance their performance.
Despite its relatively high cost, airlines and operators are eager to contribute and even exceed their obligated SAF targets as early as possible. They understand that this is the only way to assert themselves in the market and to ensure the long- term sustainability and viability of the industry, which must adapt to greener practices to secure its future.
United States of America
The U.S. SAF Landscape
Current Status and Future Developments
Aviation represents roughly 3.3% of total U.S. greenhouse gas emissions and jet fuel consumption is forecasted to increase by 2-3% annually through to 2050. This obviously presents significant opportunities for SAF investment, and the market has responded: projects have been announced in recent years that are projected to meet over 10% of U.S. jet fuel demand. Nonetheless, the biggest challenge SAF faces in the U.S. is that it is not cost-competitive with fossil jet fuel. According to the U.S. Department of Energy, SAF currently costs two to ten times more than fossil jet fuel. Consequently, the federal and state incentives discussed in this section are playing and will continue to play a critical role in the growth of SAF in the U.S.
Federal Support for SAF
The U.S. government supports SAF development in several ways: annual renewable fuel regulatory mandates; tax policy; and grants. Several of these incentives are in flux, however, given the shift in the balance of political power in the U.S. Congress and the White House.
Regulatory Mandates:
The U.S. Environmental Protection Agency issues annual regulations under the Renewable Fuel Standard (RFS) program that require the national pool of transportation fuel to contain a certain percentage of alternative fuels such as SAF. Production and use of biofuels under these mandates is tracked using a system of tradeable credits (Renewable Identification Numbers or RINs). Among other requirements, eligible SAF must have lifecycle GHG emissions that are at least 50% below a 2005 fossil fuel baseline.
Although compliance with the program’s mandates falls on fossil fuel producers and importers, RINs implicitly subsidize biofuels such as SAF. Depending upon the feedstock and production process, SAF can generate RINs that may be used to meet the biomass-based diesel, advanced biofuel or cellulosic biofuel mandates and value of the RIN varies by type. RINs generated by producing SAF can be “stacked” with federal tax credits for SAF, such as those provided by the 2022 IRA, as well as state credits relevant to SAF.
Tax Policy:
The Inflation Reduction Act of 2022 (IRA) has a significant impact on the SAF market in the U.S. by offering comprehensive support to encourage the production and adoption of this fuel. Instead of setting mandates, the IRA offers SAF credits for qualified neat fuels and provides grants for SAF production and distribution.
The IRA supports SAF through two credits. First, IRA created a new SAF blender’s tax credit under Internal Revenue Code section 40B, available through to the end of 2024. Then, from January 1, 2025 through to December 31, 2027, the IRA made available a new technology neutral production credit for clean fuels including SAF, the section 45Z Clean Fuel Production Credit.
The section 45Z credit provides a tax credit for the production of clean fuels that are “suitable for use in a highway vehicle or aircraft” and meet a specified threshold for emissions reductions. The credit is worth up to $1.00 per gallon for transportation fuels and $1.75 or more per gallon for SAF, provided that prevailing wage and apprenticeship requirements are met. The 45Z credit is claimed by the producers of SAF, rather than the blenders, but can be transferred or sold to third parties as a means of monetizing the credit.
Since August 2022, significant work has been done by a multi-disciplinary task force including the U.S. Treasury, the IRS, the Energy Department, the Federal Aviation Administration, and the White House to implement the section 45Z credit and publish tax guidance. Most recently, on January 10, 2025, the U.S. Department of the Treasury and the Internal Revenue Service released Notice 2025-10 and Notice 2025-11, establishing an intent to propose regulations and clarifying annual emissions rates for the credit. At the same time, the 119th Congress is currently reviewing tax legislation that may include revisions to several clean energy tax credits established by the IRA, including section 45Z. As a result, airlines, SAF producers, and conventional energy companies are queuing up to talk to Congress and Trump tax officials about the future of federal tax support for clean fuels, since the current production credit is set to expire at the end of 2027.
Grants:
IRA Section 40007 establishes a grant program for eligible U.S. entities involved in SAF production, transportation, blending, or storage, administered by the U.S. Federal Aviation Administration (FAA) through the Fueling Aviation’s Sustainable Transition (FAST) grants program.
Section 324 of the James M. Inhofe National Defense Authorization Act for 2023 allows the U.S. Department of Defense (DOD) to pilot SAF usage, with a plan to be implemented by FY2028, while permitting waivers under certain conditions.
The Consolidated Appropriations Act for 2023 and 2024 authorize discretionary grants for airport infrastructure that supports SAF’s distribution and storage, provided they meet the 50% lifecycle GHG reduction requirement.
The U.S. Department of Agriculture’s Rural Energy for America program also provides grants and loan guarantees to rural businesses and agricultural producers for renewable energy projects, including SAF production facilities.
State Incentives for SAF Production and Innovation
State-level policies further support SAF production and consumption by allowing producers to generate and sell credits to fossil jet fuel suppliers. In 2009, California established the California Low Carbon Fuel Standard (LCFS) to reduce transportation sector GHG emissions in the state and develop a range of low- carbon and renewable alternatives to reduce petroleum dependency. This market-based program sets an annual average carbon intensity (CI) benchmark for all fuels – fossil and renewable – produced or imported into the state. Fuels with a CI below the benchmark (such as eligible SAF) generate credits that producers can sell to other fuel producers in the state as a revenue stream. Oregon, Washington, and New Mexico have adopted similar fuel programs.
In other states – Illinois, Minnesota, and Nebraska – per-gallon SAF production tax credits promote SAF alignment with national objectives.
Projections and Insight
By 2030, domestic SAF production is expected to reach 3 billion gallons annually – a 130-fold increase from 2030 consumption. By 2050, production could rise to 35 billion gallons per year, reflecting a 12-fold increase from the 2030 target.
The shift towards SAF represents a long-term transition in the aviation industry. Given the international nature of air travel, SAF is a clean fuel whose market drivers are largely insulated from the political swings of the US; and American airlines and airports will need to access this fuel to comply with global emissions standards. Driven by discretionary grants from the FAA, significant investments in airport infrastructure for SAF distribution and storage are anticipated. This could lead to an improved supply chain and logistics, facilitating broader SAF availability at major airports by 2025. Increased funding through grants and tax credits may accelerate research and development of new SAF feedstocks and production technologies, enhancing efficiency and reducing costs. This could also lead to advancements in alternative feedstocks, potentially doubling production efficiency by 2030. As government initiatives and incentives ramp up, it is likely that the market share of SAF in total jet fuel consumption will increase significantly from the current less than 0.1%. Projections estimate reaching 5 -10% market share by 2030, depending on regulatory support and industry adoption.
The incentives enacted under the IRA constitute a good beginning in establishing the support necessary for overcoming barriers to SAF adoption. With investors comparing the short three-year timeline of the IRA’s section 45Z clean fuel production credit to ten-year timelines for other clean energy technologies, producers and airlines are making a long-term legislative extension of the credit a top priority for 2025. State level initiatives, like the California LCFS program, look to play a critical role in driving SAF adoption. Other states may follow suit, creating a patchwork of supportive policies that could incentivize producers while also fostering competition among states for SAF leadership.
Conclusion: Comparative Analysis of SAF
Regulatory Frameworks in the UK, EU, and US
The regulatory approaches adopted by the UK, EU, and US to promote SAF reflect distinct policy priorities, economic
structures, and aviation market dynamics. Whilst all three jurisdictions recognize the need to scale SAF production to achieve net-zero aviation emissions, their methods for incentivization, mandate enforcement, and industry engagement exhibit some notable divergences.
Key Similarities
Despite differences in policy mechanisms, several overarching themes emerge across all three jurisdictions:
Mandatory Blending Requirements: The UK, EU, and US each employ a mix of blending mandates and incentives to encourage SAF adoption. The UK’s SAF Mandate (starting at 2% in 2025 and increasing to 22% by 2040) aligns with the EU’s ReFuelEU Aviation Regulation, which also begins at 2% in 2025 but escalates to 70% by 2050. Although the US lacks a direct federal blending mandate, the Renewable Fuel Standard (RFS) and state-level Low Carbon Fuel Standard (LCFS) programs create market-driven demand for SAF.
Financial Incentives: Each jurisdiction incorporates financial incentives to lower SAF’s production costs and bridge the price gap with fossil-based jet fuel. The UK’s proposed Revenue Support Mechanism, the EU’s SAF Allowance Mechanism under the EU Emissions Trading System (ETS), and the US’s Inflation Reduction Act (IRA) tax credits all aim to de-risk SAF investment. Notably, the US offers the most aggressive tax-based support via the Section 45Z Clean Fuel Production Credit, which directly rewards SAF producers.
Technology-Specific Targets: Recognizing the need for diversification in SAF production pathways, the UK and EU establish dedicated quotas for Power-to-Liquid (PtL) fuels and synthetic fuels, whereas the US allows greater flexibility in feedstocks, as seen in its Renewable Fuel Standard (RFS) and LCFS programs. The UK’s PtL obligation has similar aims to the EU’s sub-target for synthetic fuels, indicating a shared commitment to emerging technologies.
Market-Based Compliance Mechanisms: Each jurisdiction incorporates a credit trading system to enhance compliance flexibility. The UK’s Renewable Transport Fuel Certificates (RTFCs), the EU’s ETS allowances and (if to be applied) book-and-claim system, and the US’s RIN (Renewable Identification Number) market under the RFS facilitate compliance while stimulating a secondary market for SAF credits.
Key Differences
Despite these similarities, the jurisdictions differ in several key respects:
Direct v Market-Based Approach:
The EU and UK impose direct mandates on fuel suppliers, ensuring binding obligations for SAF blending. The UK’s buy-out mechanism acts as a penalty for non-compliance, while the EU enforces fines and requires compensation for missed SAF quotas.
The US primarily relies on market-driven incentives, with no direct SAF blending mandate at the federal level. Instead, state-based programs such as California’s LCFS and financial incentives like the IRA credits encourage voluntary SAF adoption.
Policy Longevity and Stability:
The EU offers the longest regulatory certainty, with ReFuelEU Aviation’s SAF mandates extending to 2050. The UK’s SAF Mandate provides clarity through 2040 but leaves open questions regarding future expansion.
The US approach is, potentially, more politically vulnerable. The IRA’s Section 45Z tax credit is set to expire by the end of 2027, raising questions about long-term investor confidence. This contrasts with the EU’s more predictable long-term regulatory trajectory.
Scope of SAF Eligibility and Feedstock Restrictions
The UK and EU impose stricter sustainability criteria, progressively limiting HEFA (Hydroprocessed Esters and Fatty Acids) (or similar) feedstock eligibility. The UK caps HEFA at 92% by 2027, declining to 35% by 2040, while the EU limits food-based biofuels to prevent indirect land-use impacts.
The US allows broader feedstock eligibility, including corn ethanol-derived alcohol-to-jet SAF, which the EU explicitly excludes. This reflects the political influence of the US agricultural sector, leading to a pragmatic approach to scaling SAF production with available resources.
Enforcement Mechanisms and Market Oversight
The EU employs oversight through the European Union Aviation Safety Agency and national regulatory bodies, ensuring strict compliance through direct penalties. The UK SAF Mandate will be administered by the UK’s Department for Transport and will be responsible for enforcing the scheme with power to revoke certificates or issue civil penalties.
The US relies on tax compliance mechanisms and voluntary participation in state-based LCFS (or similar) markets, which, as an incentive-driven approach results inleading to comparatively less stringent enforcement as can be expected in the EU and UK.
Comparative Insights and Future Implications
Each jurisdiction’s SAF strategy reflects its unique regulatory philosophy and economic priorities. The EU’s highly structured, mandate-driven approach aims to achieve rapid SAF integration but places cost burdens on fuel suppliers and buyers. The UK’s hybrid model, combining mandates with revenue support mechanisms, seeks to balance regulatory certainty with investment incentives. Meanwhile, the US favors a market-driven, incentive-based model, fostering innovation but opening up potential regulatory uncertainty due to shifting political landscapes.
This evolving landscape reflects a multi-faceted approach, balancing stringent emissions reduction targets with mechanisms that incentivise investment and production. The UK has introduced ambitious mandates within its Jet Zero strategy, while the EU’s Fit-to-55 package integrates SAF quotas through the ReFuelEU Aviation initiative.
Meanwhile, the USA leverages tax credits and grant programs under initiatives like the Inflation Reduction Act to stimulate domestic SAF production. These diverse regulatory tools aim to address the significant challenges of scaling SAF, including high production costs, limited feedstock availability, and infrastructure constraints.
Looking ahead, international policy harmonization will be critical to ensuring the global scalability of SAF. The International Civil Aviation Organization and industry stakeholders may push for greater alignment between EU- style mandates and US-style incentives, potentially influencing future SAF policies. Additionally, ongoing bilateral agreements between the UK, EU, and US on carbon accounting, emissions reporting, and SAF certification will play a crucial role in fostering a globally integrated SAF market.
Despite their differences, the UK, EU, and US share the common goal of scaling SAF production to enable a net zero aviation future. While their paths to achieving this differ, their collective efforts will be instrumental in driving the technological and economic transformation needed for sustainable aviation. As regulatory frameworks evolve, continued cross-border collaboration and policy adjustments will be essential to maximizing SAF’s impact on global decarbonization goals.
Additional Authors: Parker A. Lee, Brittany M. Pemberton, and Timothy J. Urban.
Competition Currents | May 2025
United States
A. Federal Trade Commission (FTC)
1. FTC requests public comment on EnCap, Verdun, XCL petition to modify order.
On April 2, 2025, the FTC announced it was seeking public comments through May 2, 2025, on a petition to reopen and modify its 2022 consent order relating to Verdun Oil Company II LLC’s acquisition of EP Energy LLC. Specifically, the parties asked to remove a prior approval requirement in the consent order (requiring the parties to seek prior approval from the FTC before engaging in certain related transactions in the future) that covered Verdun, which was under common management with XCL Resources Holdings, LLC at the time of the transaction, and their parent entities, EnCap Energy Capital Fund XI, L.P. and EnCap Investments L.P. (together, EnCap). See GT’s April 2022 Competition Currents for more information regarding the original consent order. In their request, the parties noted market changes since the consent decree was entered (including EnCap’s and XCL’s exit from crude oil exploration and production in the Uinta Basin area in Utah after a 2024 sale), which they argue obviates the need for a prior approval requirement.
2. FTC approves modification of Enbridge Inc. final order.
On April 8, 2025, the FTC approved a petition by Enbridge Inc. to set aside the 2017 final consent order in Enbridge’s merger with Spectra Energy Corp. At the time of the Spectra acquisition, Enbridge received an indirect ownership interest in the Discovery Pipeline, a competitor to the Walker Ridge Pipeline that Enbridge owns. The FTC was concerned that the acquisition would give Enbridge access to competitively sensitive information about the Discovery Pipeline and required Enbridge to establish firewalls to limit its access to information relating to the Discovery Pipeline as well as requiring Discovery Pipeline board members affiliated with Spectra to recuse themselves from votes involving the pipeline. In December 2024, Enbridge asked the FTC to reopen and set aside the 2017 order after it sold its interest in the Discovery Pipeline, making the consent decree terms obsolete.
3. Mark Meador confirmed as FTC commissioner.
President Trump nominated Mark Meador as FTC Commissioner, the Senate confirmed him on April 10, 2025, and he was sworn in as commissioner on April 16, 2025. Most recently, Meador worked in private practice and served as a visiting fellow at the Heritage Foundation Tech Policy Center. Previously, he was the deputy chief counsel for antitrust and competition policy for Sen. Mike Lee (R-Utah), as well as a trial attorney in the DOJ Antitrust Division. His term as FTC commissioner will expire on Sept. 25, 2031.
4. FTC seeks public comment on petition to modify Chevron-Hess final order.
The FTC announced on April 11, 2025, that it is seeking public comment through May 12, 2025, on a petition to set aside its final consent order (issued in January 2025) relating to Chevron Corporation’s acquisition of Hess Corporation. The consent order prohibited Chevron from appointing Hess CEO John B. Hess to its board of directors, as called for in the transaction’s merger agreement.
5. FTC seeks public comment on petition to modify Exxon-Pioneer final order.
Similarly, the same day, the FTC also announced that it is also seeking public comment through May 12, 2025, on a petition to set aside its final consent order (also issued in January 2025) relating to Exxon Mobil Corporation’s acquisition of Pioneer Natural Resources. The consent order prohibited Exxon Mobil from appointing Scott Sheffield (founder and former CEO of Pioneer) to its board of directors or from having him serve in any advisory capacity.
6. FTC launches public inquiry into anticompetitive regulations.
On April 14, 2025, the FTC announced that in response to President Trump’s executive order “Reducing Anticompetitive Regulatory Barriers,” it was launching a request for information on the impact of federal regulations on competition (to determine whether any regulations unnecessarily exclude new entrants or protect incumbents, for example). Comments can be submitted through May 27, 2025.
7. Illinois and Minnesota join FTC lawsuit challenging medical device coatings deal.
In March 2025, the FTC sued to block GTCR BC Holdings, LLC’s proposed acquisition of Surmodics, Inc., both of whom engage in manufacturing medical device coatings. GTCR is a private equity firm that also owns a majority of Biocoat, Inc., which per the FTC is the second-largest provider of outsourced hydrophilic coatings, with Surmodics being the largest. The FTC’s complaint alleges that the proposed acquisition is anticompetitive because it would give the combined company more than 50% of the market share for outsourced hydrophilic coatings, which medical device manufacturers use in devices including catheters and guidewires. On April 17, 2025, the FTC amended its complaint to add Illinois and Minnesota as co-plaintiffs.
8. FTC and DOJ issue letter seeking identification of anticompetitive regulations across the federal government.
Also as part of the antitrust agencies’ response to the executive order “Reducing Anticompetitive Regulatory Barriers,” on May 5, 2025, the FTC and DOJ issued a joint letter to all federal government agency heads requesting a list of anticompetitive federal regulations within the respective agency’s rulemaking authority that could reduce competition and innovation – including the agency’s recommendation for whether the regulation should be kept, amended, or rescinded. After receiving public and agency comments, the FTC and DOJ will provide the Office of Management and Budget with its consolidated recommendations.
B. Department of Justice (DOJ) Civil Antitrust Division
1. Justice Department hosts roundtables to address competition issues in the entertainment industry and unfair practices in the labor market.
On April 4, 2025, the DOJ hosted discussions centered on competition issues in the entertainment industry. First, DOJ Assistant Attorney General (AAG) Gail Slater met with union members and legal experts to discuss how non-compete agreements and no-poach agreements impact employees, with experts weighing in on strategies to protect workers. Second, AAG Slater discussed unfair practices in the live entertainment market in order to identify labor-market conduct that harms workers.
2. AAG Gail Slater welcomes Antitrust Division leadership team.
On May 1, AAG Slater appointed Dina Kallay to serve as DOJ deputy assistant attorney general for international, policy and appellate, joining the DOJ leadership team of Roger Alford (principal deputy assistant attorney general), Omeed Assefi (acting deputy assistant attorney general), Mark Hamer (deputy assistant attorney general), William “Bill” Rinner (deputy assistant attorney general), Dr. Chetan Sangvhi (deputy assistant attorney general), and Sara Matar (chief of staff).
3. Justice Department and FTC seek information on unfair and anticompetitive practices in live ticketing.
On May 7, 2025, the DOJ announced that in response to President Trump’s executive order “Combating Unfair Practices in the Live Entertainment Market,” it was launching, jointly with the FTC, a public inquiry aimed at identifying unfair and anticompetitive practices in the live entertainment market. AAG Slater stated of the inquiry, “Competitive live entertainment markets should deliver value to artists and fans alike,” while FTC Chair Ferguson also added, “Many Americans feel like they are being priced out of live entertainment by scalpers, bots, and other unfair and deceptive practices.” Comments can be submitted through July 7, 2025.
C. U.S. Litigation
1. Chalmers v. National Collegiate Athletic Association, Case No. 1:24-cv-05008 (S.D.N.Y. April 29, 2025).
On April 29, U.S. District Judge Paul A. Engelmayer dismissed a proposed class action by 16 former men’s basketball players against the National Collegiate Athletic Association (NCAA). The antitrust suit was filed last July, a month after the announcement of the $2.78 billion settlement that would compensate past athletes for their name, image, and likeness (NIL) and put a future revenue sharing plan in place. The players’ college careers spanned from 1994 to 2016, and Engelmayer agreed with the NCAA’s argument that the statute of limitations on their claims expired, noting in his opinion that “the NCAA’s use today of a NIL acquired decades ago as the fruit of an antitrust violation does not constitute a new overt act restarting the limitations clock.”
2. Compass Inc. v. Northwest Multiple Listing Services, Case No. 2:25-cv-00766 (W.D. Wash. Apr. 28, 2025).
On April 28, Compass Inc. sued the broker-led Northwest Multiple Listing Service (MLS), claiming that the MLS’s rules in Washington that prohibit “premarketing” real estate before they are officially listed for sale is an anticompetitive boycott. Compass—a broker service operating in Washington—engages in “office exclusive” listing that tests the asking price, pictures, and home specifications to a small set of potential buyers before the home is actually put up for sale. Compass alleges that the practice is used in other states, but that Washington prohibits this premarketing because it is “fundamentally unfair and perpetuates inequities that have long plagued the housing system.”
3. Mack’s Junk Removal LLC v Rouse Services LLC, Case No. 2:25-cv-03565 (N.D. Ill. Apr. 23, 2025).
A nationwide class action was filed alleging several large construction equipment rental companies utilized RB Global Inc.’s product, Rouse, to set rates for construction equipment rental. According to the allegations, rental companies defer all rental-pricing decisions to Rouse, which uses an AI algorithm to set rates at anticompetitive levels. The complaint also alleges that Rouse allows participants to get detailed sales data of local competitors, allowing for a greater chance of price fixing.
4. Regeneron Pharmaceuticals Inc. v. Amgen Inc., Case No. 1:22-cv-00697 (D. Del. Apr. 11, 2025).
On April 11, 2025, U.S. District Judge Jennifer L. Hall denied defendant Amgen Inc.’s motion to dismiss an antitrust lawsuit. In the lawsuit, competitor Regeneron Pharmaceuticals alleges that Amgen improperly bundled discounts of its other medications—in which it has market dominance—to pharmacy benefit managers if they would agree to exclusively cover Amgen’s Repatha, a cholesterol-reducing medication. Regeneron, which offers a competing cholesterol medication, claims that such bundling schemes effectively drive other competitors out of the market. In her ruling, Judge Hall held that Regeneron has presented evidence of both improper bundling and “de facto exclusive dealing arrangements” to proceed to further discovery.
The Netherlands
ACM
1. The ACM approves sustainability collaboration in textile sector under competition rules.
The Dutch competition authority (ACM) has issued an informal assessment of the Textile Alliance — an initiative involving companies, trade associations, and civil society organizations in the garments, shoes, leather, and textile sectors — concluding that the initiative complies with Dutch and EU competition law.
The Textile Alliance aims to promote international corporate social responsibility by improving compliance with human rights, environmental, and animal-welfare standards in production and supply chains. According to ACM’s assessment, the arrangements focus on individual company commitments and voluntary tools, such as a collective risk assessment, without mandating uniform actions or exchanging competition-sensitive information. The assessment affirms that competition law does not necessarily pose a barrier to sector-wide sustainability agreements.
2. The ACM approves FincoEnergies’ acquisition of Klaas de Boer with conditions.
The ACM has approved FincoEnergies’ acquisition of Oliehandel Klaas de Boer with conditions to maintain competition in the marine fuel supply market. Both companies are major suppliers of marine fuels in several Dutch ports. The ACM had competition concerns due to limited alternative suppliers and high costs for buyers to switch ports. To address this, FincoEnergies and Klaas de Boer must sell various assets, including tankers and a storage terminal, to GMB Groep and Slurink Transport Services, ensuring continued competition in the affected ports and eliminating competition concerns.
3. The ACM emphasizes the importance of competition for European competitiveness in joint statement.
Certain European competition authorities, including the ACM, have issued a joint statement highlighting the crucial role of competition in enhancing European competitiveness. The statement aligns with the European Commission’s recently presented “Competitiveness Compass” and emphasizes that competition fosters productivity, innovation, and investment. The authorities assert that competition and economies of scale go hand in hand and that competition rules are essential for well-functioning markets. The statement specifically addresses competition in the telecom sector, where the authorities warn that reduced merger scrutiny, particularly in telecommunications, may result in fewer incentives to improve networks, services, and innovation. As such, careful oversight of mergers is deemed necessary. Mergers that harm competition should either be blocked or approved only under strict conditions. The national competition authorities of Belgium, Portugal, Austria, Czech Republic, Ireland, and the Netherlands signed the joint statement.
4. The ACM informs healthcare institutions of competition rules for new cancer and vascular surgery standards.
The ACM has issued guidance to healthcare providers on how to comply with competition law when making regional agreements on the redistribution of care, following new national volume norms for cancer and vascular treatments. These norms limit certain complex procedures to hospitals that perform them frequently, starting in 2026. The ACM emphasized that while cooperation is allowed, such agreements must not amount to unlawful market sharing. The ACM will not intervene in regional care arrangements if all relevant stakeholders are involved and the cooperation pursues clear, measurable goals aimed at improving care accessibility, affordability, and quality.
Poland
A. UOKiK issues conditional clearance for Medicover’s acquisition of CityFit Gyms.
On March 31, 2025, the President of the Polish Office of Competition and Consumer Protection (UOKiK) conditionally approved ABC Medicover Holdings B.V.’s acquisition of 16 fitness clubs. ABC Medicover is a member of the Medicover group, a major private healthcare provider. The transaction consists of the acquisition of sole control over 16 companies operating under the CityFit and CityFit Blue brands. Medicover already has a strong presence in the Polish fitness sector through such brands as Just Gym, Well Fitness, McFit, Stellar, Platinum Fitness, Smart Gym, and Premium Fitness & Gym, operating over 150 clubs nationwide.
Based on its competition assessment, the UOKiK President concluded that while the concentration would not significantly restrict competition on most relevant markets, serious concerns arose in two cities (Bielsko-Biała and Gliwice) where the post-transaction market shares would be particularly high. To address these concerns, the clearance was made conditional on structural remedies. Medicover must divest one club in each of the two concerned cities — either an existing Medicover location or a CityFit club included in the acquisition. The buyer must be an independent third party the UOKiK President approves, with a credible commitment to operating a fitness facility at the divested location for a minimum of two years.
B. UOKiK launches investigation and conducts dawn raids in home appliances sector.
On March 31, 2025, the UOKiK President announced it was launching a preliminary investigation into a suspected price-fixing agreement between Electrolux Poland and major electronics retailers. The proceedings focus on suspicions that Electrolux Poland may have coordinated the retail prices of household appliances—including refrigerators, washing machines, dishwashers, coffee machines, ovens, vacuum cleaners, irons, and kettles—sold under the Electrolux and AEG brands. According to the authority, these practices may have prevented consumers from benefiting from lower prices, both online and in brick-and-mortar stores.
Based on signals received from the market indicating potential antitrust violations, the UOKiK President, after securing court approval, conducted unannounced inspections at the headquarters of Electrolux Poland and several entities operating retail chains, including companies running major home appliances chain stores. The case is still at its preliminary stage and is conducted in rem, meaning that it is not yet directed at any specific undertakings. Should evidence confirm the suspicions, the UOKiK President may open formal antitrust proceedings and bring charges against identified entities.
The investigation follows recent enforcement actions in the sector. Notably, in 2024, the UOKiK imposed over PLN 66 million in fines on companies involved in a decade-long price-fixing scheme concerning Jura-brand coffee machines. That decision also included a close to PLN 250,000 fine on an individual responsible for the agreement.
Italy
Italian Competition Authority (ICA)
1. ICA launches investigation against CNF for alleged concerted practice.
On March 25, 2025, ICA opened an investigation into the National Bar Council (CNF) for an alleged concerted practice in violation of Article 101 of TFEU. The investigation concerns the application of the “fair compensation rule” for lawyers, introduced by Law No. 49/2023. The “fair compensation rule” aims to provide specific protections for legal professionals when dealing with large clients, based on the presumption lawyers are often compelled to accept reduced fees from such clients.
According to ICA, CNF’s interpretation and enforcement of these rules—particularly through the new Article 25-bis of the Lawyers Code of Ethics—exceeds the scope of the law and may restrict competition among lawyers. ICA specifically challenged CNF’s use of ambiguous language prohibiting lawyers from agreeing upon or estimating fees, without specifying the context or limits. In ICA’s view, this lack of clarity failed to specify that the fair compensation obligations (and related disciplinary consequences) apply only to relationships with large corporate clients. By doing so, CNF is allegedly attempting to directly influence the economic behavior of lawyers under its supervision, potentially deterring them from negotiating fees below the indicated benchmarks.
ICA has given CNF a 60-day deadline, starting from the date of notification of this decision, to exercise its right to be heard by the legal representatives of the party. ICA has established that the procedure must conclude by the end of December 2026.
2. Unfair commercial practice: fine of almost EUR 20 million has been imposed on CoopCulture and other tourist operators.
On March 25, 2025, ICA fined Società Cooperativa Culture (CoopCulture) and the following tourist operators: Tiqets International BV, GetYourGuide Deutschland GmbH, Walks LLC, Italy With Family S.r.l., City Wonders Limited, and Musement S.p.A. almost EUR 20 million for making it difficult to purchase tickets online to access the Colosseum Archaeological Park. Specifically, the ICA found that CoopCulture failed to take adequate measures to counter ticket hoarding using automated methods while also reserving significant quantities of tickets for sales offered during its own educational tours, from which it gained considerable economic benefits. This forced consumers to turn to tour operators and platforms that resold tickets bundled with additional services (such as tour guides and pick-up) at significantly higher prices.
At the same time, the six tourist operators purchased tickets using bots or other automated tools, thus contributing to the rapid depletion of base-price tickets on the CoopCulture website. By doing so, these operators took advantage of the systematic unavailability of tickets, which forced consumers who wished to visit the Colosseum to obtain tickets bundled with additional services. ICA found that CoopCulture’s conduct constitutes an unfair commercial practice in violation of Article 20, paragraph 2, of the Italian Consumer Code. Also, the conduct of Tiqets International BV, GetYourGuide Deutschland GmbH, Walks LLC, Italy With Family S.r.l., City Wonders Limited, and Musement S.p.A. was found to be unfair under Articles 24 and 25 of the Italian Consumer Code.
3. Key takeaways from ICA’s annual report.
On March 31, 2025, ICA published its annual report on its 2024 activities. During 2024, ICA’s activity recorded a notable increase, both in quantitative and qualitative terms, confirming a trend established in recent years. Notably, between January 2024 and March 2025, ICA received 1,452 competition-related reports, examined 121 merger transactions, and concluded two proceedings on restrictive agreements and nine on abuse of dominant position.
In particular, the number of merger filings ICA reviewed increased by approximately 50% compared to the average of the past 10 years. Moreover, in seven cases, ICA exercised its call-in power, pursuant to Article 16, paragraph 1-bis, of Law No. 287/1990, to require notification of a merger not reaching the turnover thresholds for mandatory notification. According to the ICA, recent legislative amendments strengthened its investigative and intervention tools, also contributing to reinforcing enforcement activities against cartels. ICA initiated four proceedings, with over eight investigations covering as many sectors and over 30 companies. ICA reported that the intensified efforts to counter the most serious antitrust violations is also attributable to the establishment of the whistleblowing platform, which received over 200 reports, and to the leniency program, which was recently enhanced.
As for consumer protection, between January 2024 and March 2025, ICA examined 36,900 reports and concluded 71 proceedings; 46 with confirmation of the infringement, 17 with acceptance of commitments, and eight with no violations. According to the ICA’s estimates, the consumer protection activities carried out between 2023 and 2024 enabled savings of over EUR 28 million, as well as the restitution of more than EUR 150 million to 900,000 consumers.
European Union
A. European Commission
1. The European Commission opens investigation into UMG’s acquisition of Downtown after referral from the Netherlands and Austria.
The European Commission has accepted a referral request from the ACM to investigate Universal Music Group’s proposed acquisition of Downtown, a service provider to independent labels and artists. The ACM expressed concerns that the acquisition may negatively affect competition in the Netherlands and potentially other EU countries. Universal Music Group, the world’s largest record company, has a history of acquiring smaller industry players, often without regulatory oversight due to low turnover thresholds.
In this case, the ACM was notified about the acquisition in February 2025, and the deal prompted complaints from industry stakeholders. The Austrian competition authority supported the ACM’s request for a European-level review. The ACM reiterated its call for a “call-in power” to enable review of smaller, potentially harmful mergers even when they fall below standard notification thresholds. The European Commission has now launched a formal investigation into the deal’s cross-border competitive effects.
2. European Commission fines car manufacturers and ACEA EUR 458 million for cartel on end-of-life vehicle recycling.
The European Commission has fined 15 major car manufacturers and the European Automobile Manufacturers’ Association (ACEA) approximately EUR 458 million for their involvement in a long-running cartel concerning the recycling of end-of-life vehicles (ELVs). The cartel, which lasted over 15 years, involved coordination on avoiding payments to car dismantlers and restricting transparency around recycling rates in new vehicles.
Mercedes-Benz was granted immunity under the leniency program for informing the European Commission of the anticompetitive behavior. Other companies admitted their involvement and agreed to settle the case. Some companies received a reduction of their fine for cooperation under the leniency program. This decision is part of the European Commission’s broader efforts to enforce EU competition rules and address anticompetitive practices in the automotive sector.
3. The European Commission approves Safran’s acquisition of Collins Aerospace, with conditions.
The European Commission has approved Safran USA Inc.’s acquisition of parts of Collins Aerospace’s actuation business, subject to commitments to address competition concerns. Safran’s and the target’s businesses are largely complementary, but the initial transaction raised competition concerns, particularly in the market for trimmable horizontal stabilizer actuator (THSA) systems. These systems, used in civil aircraft, were found to have insufficient alternative suppliers post-merger.
To resolve these concerns, Safran committed to divesting its North American THSA business. A market test confirmed the remedy’s effectiveness, and the European Commission approved the deal subject to full compliance, which will be monitored by an independent trustee.
B. European General Court
General Court upholds Symrise raids in cross-border fragrance cartel investigation.
The EU’s General Court has rejected Symrise’s challenge to annul European Commission’s raids of its premises during a 2023 cross-border cartel investigation into the fragrance industry. The court found that the European Commission had sufficient grounds for inspections, based on credible evidence, including open-source intelligence, suspiciously similar tender bids, and confidential information exchanges. Symrise argued that the raids infringed its privacy and defense rights due to an alleged lack of reasonable suspicion. However, the court ruled that the broader context of international cartel suspicion, including indications from Symrise’s own activities and third-party findings, justified the European Commission’s actions. Symrise stressed that the ruling does not equate to the finding of guilt and reaffirmed its denial of any anticompetitive behavior, stating it continues to cooperate with authorities.
1 Due to the terms of GT’s retention by certain of its clients, these summaries may not include developments relating to matters involving those clients.
Additional Authors: Holly Smith Letourneau, Sarah-Michelle Stearns, Yongho “Andrew” Lee, Alexa S. Minesinger, Alexander L. Nowinski, Miguel Flores Bernés, Valery Dayne García Zavala, Hans Urlus, Dr. Robert Hardy, Chazz Sutherland, Manish Das, Johnny Shearman, Robert Gago, Filip Drgas, Anna Celejewska-Rajchert, Ewa Głowacka, Edoardo Gambaro, Pietro Missanelli, Martino Basilisco, Yuji Ogiwara, Mari Arakawa, Philip Ruan, and Dawn (Dan) Zhang.
Brussels Regulatory Brief: April 2025
Antitrust and Competition
European and UK Antitrust Enforcers Impose Fines Over End-of-Life Vehicles Recycling Cartel
On 1 April 2024, both the European Commission (the Commission) and the UK Competition and Markets Authority (CMA) fined major car manufacturers and trade associations for participating in a 15-year long cartel concerning end-of-life vehicle recycling. The Commission’s and CMA’s decisions highlight the authorities’ interest in pursuing novel theories of harm that may have an adverse impact on the green transition.
Financial Affairs
EU Institutions Finalize Omnibus I; EFRAG adopts Work Plan to Simplify ESRS
The European Parliament and the Council of the European Union finalized the legislative procedure for Omnibus I, while the European Financial Reporting Advisory Group (EFRAG) adopted the work plan detailing next steps for European Sustainability Reporting Standards (ESRS) simplification.
Commission Presents Savings and Investments Union
The Commission presented its Savings and Investment Union, outlining future legislative and nonlegislative initiatives to strengthen EU capital markets.
Sanctions
European Court of Justice Confirmed that the Ban on the Export of EU Banknotes to Russia Also Applies when the Money Is Intended to Finance Medical Treatments
The European Court of Justice ruled that only amounts strictly necessary for travel and basic living expenses may be brought into Russia.
Antitrust and Competition
European and UK Antitrust Enforcers Impose Fines Over End-of-Life Vehicles Recycling Cartel
On 15 March 2022, the European Commission (Commission) and the UK Competition and Markets Authority (CMA) conducted parallel unannounced inspections (dawn raids) at the premises of companies and trade associations active in the automotive sector in several EU member states and in the United Kingdom. On 1 April 2025, the Commission fined 15 major car manufacturers and a trade association a total of approximately €458 million for participating in a 15-year-long cartel concerning the recycling of end-of-life vehicles (ELVs), i.e., cars that are no longer fit for use, either due to age, wear and tear, or damage. On the same day, the CMA imposed fines against 10 car manufacturers and two trade associations of approximately £77.7 million for breaching UK competition law for a similar conduct affecting the UK market.
Both the Commission and the CMA found that the parties infringed EU and UK competition law by colluding on two aspects:
Car manufacturers agreed not to pay car dismantlers for processing ELVs and shared commercially sensitive information on their individual agreements with car dismantlers. The car dismantlers were therefore unable to negotiate a price with the car manufacturers.
The parties also agreed not to advertise how ELVs could be recycled, recovered, and reused, and how much recycled materials are used in new cars. The Commission stated that the car companies’ objective was to prevent consumers from considering recycling information when choosing a car, which could lower the pressure on companies to improve their environmental efforts and go beyond legal requirements on recyclability.
The Commission’s and CMA’s investigations involved trade associations that were found to act as a facilitator of the cartel by arranging meetings and contacts between car manufacturers.
Both investigations were triggered by a leniency application submitted by one of the cartel participants. As this participant has revealed the cartel, it was not fined and received full immunity from penalties. In addition, all companies admitted their involvement in the cartel and agreed to settle the case, which reduced the fine by 10% in the Commission’s investigation and 20% in the CMA’s investigation.
Teresa Ribera, executive vice president for Clean, Just and Competitive Transition, commented:
We will not tolerate cartels of any kind, and that includes those that suppress customer awareness and demand for more environmental-friendly products. High quality recycling in key sectors such as automotive will be central to meeting our circular economy objectives, not only to cut waste and emissions, but also to reduce dependencies, lower production costs and create a more sustainable and competitive industrial model in Europe.
The Commission also stated that this investigation was the largest settlement case it has concluded so far. This shows that the Commission can use the settlement procedure in exceptionally large settlement cases. Also, this parallel investigation illustrates the Commission’s and the CMA’s close coordination in investigating novel theories of harm that may have an adverse impact on the green transition.
Financial Affairs
EU Institutions Finalize Omnibus I; EFRAG Adopts Work Plan to Simplify ESRS
On 3 April, the European Parliament approved the text of the first part of the Omnibus package (Omnibus I). Omnibus I postpones the application date of the reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) by two years for certain groups of companies, and it also postpones the transposition deadline as the first wave of application of the Corporate Sustainability Due Diligence Directive by one year. Members of the European Parliament (MEPs) largely supported the proposal: 531 voted in favor, 69 against, and 17 abstained. The pro-European political groups (the European People’s Party, the Socialists and Democrats, and Renew Europe) were able to reach an agreement to approve the content of the proposal a few hours before the votes. Further, the final text of Omnibus I was published in the Official Journal of the European Union on 17 April and is now in force at the EU level. The directive mandates member states to transpose it into national law by 31 December 2025.
In a related development, the European Financial Advisory Reporting Group (EFRAG) adopted its work plan on the simplification of European Sustainability Reporting Standards (ESRS) under CSRD. This review is part of EFRAG’s broader mandate to assess the entire ESRS framework, as set out in a mandate letter from Commissioner Maria Luís Albuquerque. EFRAG is expected to submit its technical advice to the Commission by 31 October 2025.
Now that the first part of the package is completed, MEPs and member states at the Council of the European Union are discussing internally their approach to the second part (Omnibus II), which introduces substantial simplification amendments to the obligations and requirements notably comprised in these two frameworks. Check this article for a summary of the proposed amendments by Omnibus II.
Commission Presents Savings and Investments Union
On 19 March, the Commission issued a Communication on the Savings and Investments Union, seeking to offer EU citizens broader access to capital markets and better financing opportunities for businesses. The strategy focuses on four key pillars: (i) citizens and savings, (ii) investments and financing, (iii) integration and scale, and (iv) efficient supervision in the single market. For each pillar, the Commission underlined both legislative and nonlegislative actions to be adopted throughout 2025 and 2026.
For citizens and savings, the Commission underlined that it would facilitate negotiations between the European Parliament and member states on the Retail Investment Strategy, but it will not hesitate to withdraw the proposal if the negotiations do not meet the objectives of the strategy. Key initiatives include a review of pension frameworks to bolster retail investor participation, a financial literacy strategy by Q3 2025, and a EU-wide framework for savings and investment accounts. For the investment and financing pillar, the Commission aims to facilitate equity investments by institutional investors, revise Solvency II criteria for long-term equity investments, and streamline securitization requirements by mid-2025, with additional reforms targeting private market liquidity due in 2026.
On integration and supervision, the Commission plans to reduce capital market fragmentation and enhance cross-border activity through emerging technologies such as artificial intelligence, simplifying rules for asset managers and potentially reviewing the Shareholders Rights Directive. In the context of capital markets integration, the Commission launched a public consultation to gather views on obstacles to financial markets integration across the European Union. On oversight, reforms to the European Supervisory Authorities could delegate supervisory powers to EU-level bodies, particularly for crypto services and large cross-border managers.
The Commission will conduct a midterm review of the strategy by mid-2027 to assess progress and refine initiatives.
Sanctions
European Court of Justice Confirmed that the Ban on the Export of EU Banknotes to Russia Also Applies when the Money Is Intended to Finance Medical Treatments
Under EU sanctions imposed on Russia, it is prohibited to sell, supply, transfer, or export banknotes denominated in any official currency of an EU member state to Russia or to any natural or legal person, entity, or body in Russia, including the Russian government and the Central Bank of the Russian Federation, or for use in Russia. Only three limited exemptions to this general ban exist: (i) export of banknotes for the personal use of natural persons traveling to Russia or members of their immediate families traveling with them, (ii) export of banknotes for the official purposes of diplomatic missions, or (iii) export necessary for civil society and media activities that directly promote democracy, human rights, or the rule of law in Russia.
In case C-246/24, Generalstaatsanwaltschaft Frankfurt am Main, delivered on 20 April 2025, the European Court of Justice addressed the situation where German customs officers discovered a passenger heading to Russia carrying nearly €15,000 in banknotes. The passenger stated the money was intended not only for travel costs but also for medical procedures in Russia, including dental work, hormone therapy for fertility, and follow-up care after breast surgery. Authorities confiscated most of the money, permitting the passenger to retain around €1,000 for travel-related needs.
The court ruled that carrying banknotes to Russia for medical treatment does not qualify as personal use under the exemption. The court reiterated that exceptions are to be interpreted strictly so that general rules are not negated. A broad interpretation of the exemption would result in a situation where it would be possible to transfer to Russia, without restriction, large sums of banknotes to make personal purchases of any kind there, and, moreover, it would be difficult to verify that such purchases are carried out.
The exemption in question is limited to covering costs directly related to the journey and stay—medical treatments do not fall within that scope, as the EU sanctions are ultimately intended to prevent the Russian economic system from gaining access to cash denominated in any currency of a EU member state to support Russia’s activities in the war in Ukraine.
Additional Authors: Petr Bartoš, Vittoriana Todisco, Kathleen Keating, Sara Rayon Gonzalez, Covadonga Corell Perez de Rada, Simas Gerdvila, Edoardo Crosetto, and Martina Pesci.
The BR International Trade Report: May 2025
Recent Developments
Various trade deals in the air.
U.S.-China trade deal: Washington and Beijing take steps to ease trade war. On May 12, the United States and China announced a deal to deescalate the trade tensions between the two countries. The centerpiece of the deal is a 90-day pause to the 100+ percent tariffs each country had imposed on the other. As of May 14, the United States lowered its general tariff on Chinese goods to 30 percent, while China lowered its tariffs on American goods to 10 percent. During the 90-day pause, the countries will endeavor to negotiate a more lasting resolution to ongoing trade tensions.
Trump administration announces UK trade deal. On May 8, President Trump announced his administration’s first major trade deal since his “Liberation Day” unveiling of broad reciprocal tariffs on April 2. Leaders in Washington and London agreed to terms that would (i) establish a “new trading union” for aluminum and steel products, (ii) lower the tariff on UK-origin automobiles to 10 percent for the first 100,000 vehicles imported into the United States each year, and (iii) streamline customs procedures for products exported from the United States. Notably, under the terms of the deal, the United States’ 10 percent base reciprocal tariff on UK-origin goods remains in effect. Shortly after the agreement was announced, International Consolidated Airlines, the owner of British Airways, purchased $13 billion of Boeing planes.
White House announces trade deals with Saudi Arabia and Qatar. Over May 13-14, during President Trump’s visit to the Middle East, the White House announced a $600 billion investment commitment from Saudi Arabia and a $142 billion U.S.-Saudi arms deal, as well as “an economic exchange worth at least $1.2 trillion” with Qatar.
United States and Ukraine sign long-awaited critical minerals deal. On April 30, the United States and Ukraine signed a natural resources deal which establishes the U.S.-Ukraine Reconstruction Investment Fund (the “Investment Fund”). The Investment Fund grants the United States certain priority access to Ukrainian critical minerals, oil, and natural gas in exchange for military assistance. Unlike previous iterations of the deal, the April 30 agreement did not require Ukraine to reimburse the United States for past military aid. Treasury Secretary Scott Bessent emphasized that the deal embodies America’s efforts to encourage peace between Russia and Ukraine, stating “[t]his agreement signals clearly to Russia that the Trump Administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine over the long term.”
United Kingdom and India agree to trade deal. On May 6, after more than three years of negotiations, the United Kingdom and India announced a free trade deal, described by the UK government as “the biggest and most economically significant bilateral trade deal the UK has done since leaving the EU.” Meanwhile, the United States is seeking to enter into a significant trade agreement with India. In late April, Vice President JD Vance and Indian Prime Minister Narendra Modi met in India to “finalize[ ] the terms of reference for . . . trade negotiation[s].”
Semiconductor export controls. On May 13, Commerce announced a range of long-awaited actions regarding export controls (see our alert) applicable to advanced integrated circuits and computing items, including:
rescission of the Biden Administration’s “AI Diffusion Rule,” which was scheduled to significantly broaden preexisting controls over such items effective May 15;
informing the public that export licensing requirements may apply (a) to the export, re-export, and transfer of such items (such as to cloud providers) for use in training large AI models for persons in China and certain other restricted countries, where there is knowledge that such models are for use in WMD or military-intelligence applications, or (b) U.S. person “support” for such activity;
issuance of guidance regarding red flags that may present a risk of diversion of controlled items to prohibited end-users or end-uses; and
imposition of export licensing requirements applicable to most transactions worldwide involving certain Huawei “Ascend” chips, on the ground that such chips were produced in violation of U.S. export controls.
Section 232 investigations update.
Critical Minerals: On April 15, President Trump ordered the initiation of a Section 232 investigation into imports of processed critical minerals, which the U.S. Department of Commerce (“Commerce”) launched on April 22. Subsequently, he issued an April 24 executive order to spur the exploration and extraction of critical mineral deposits located on the seabed.
Trucks: On April 22, Commerce launched a Section 232 investigation into imports of certain medium- and heavy- duty trucks, their parts, and their derivatives. The probe aims to assess whether such imports compromise the country’s ability to meet domestic demand and pose risks to national security.
Aircraft, jet engines, and related parts: On May 1, Commerce Secretary Howard Lutnick initiated a national security investigation into imports of aircraft, jet engines, and related parts, which could lead to additional tariffs, among other measures. Among other factors, Commerce will investigate the concentration of U.S. imports of such items from a small number of suppliers, along with what Commerce described as “foreign government subsidies and predatory trade practices.”
President Trump orders rescission of Syria sanctions. During a speech in Saudi Arabia, the president announced his intent to remove all U.S. sanctions on Syria—in place for decades—explaining that his decision followed discussions with Saudi Crown Prince Mohammed bin Salman and Turkish President Recep Tayyip Erdoğan and aims to give Syria “a chance at greatness.” The next day, the president met with Syrian President Ahmad al-Sharaa, formerly associated with al-Qaeda, who led the rebel group that toppled the Assad regime in December 2024. This marked the first meeting between an American president and a Syrian leader since 2000.
U.S. Department of the Treasury (“Treasury”) announces intent to launch a “fast track” process for CFIUS review of foreign investments. Treasury’s May 8 announcement, issued under the auspices of President Trump’s February “America First Investment Policy” memorandum (see our prior alert), sets the stage for eventual implementation of streamlined review for preferred investors by the Committee on Foreign Investment in the United States (“CFIUS”). Treasury noted that it will design a pilot program featuring a “Known Investor Portal” through which CFIUS can collect information from foreign investors in advance of a CFIUS filing.
U.S. Trade Representative issues final rule on Chinese ships. On April 17, the Office of the United States Trade Representative (“USTR”) issued a final rule concerning the imposition of port fees on Chinese vessel operators, owners, and Chinese-built vessels. The rule seeks to implement steep tonnage-based port fees for both Chinese-built ships and Chinese-owned ships, with the intent of resurrecting the U.S. commercial shipbuilding industry. Following a 180-day implementation period, annually increasing tonnage-based fees will be levied at U.S. ports on Chinese-owned and operated ships, while Chinese-built ships face increasing fees based on net tonnage or containers. In addition, fees of $150 per car will be levied on all foreign-built car carriers, not just those with ties to China. After three years, incrementally increasing restrictions will be placed on the transportation of liquified natural gas (“LNG”) via foreign-built vessels. Check out our coverage of the final rule here.
Amidst U.S. trade tensions, incumbent governments retain power in Canadian and Australian elections.
Down in the polls by double digits only a few months ago, Canada’s Liberals surged in response to trade tensions with the United States and the resignation of longtime Prime Minister Justin Trudeau, who was replaced as party leader by Mark Carney. Conservative leader Pierre Poilievre, once considered the strongest contender to become prime minister, lost his parliamentary seat in the elections. The new government will look to reshape relations with the United States, which Prime Minister Carney initiated with a White House visit on May 6.
A similar story played out in Australia, where incumbent Labour Party Prime Minister Anthony Albanese fended off a challenge by Peter Dutton’s Liberal-National coalition. Similar to Canada, U.S. trade tensions loomed large in the election.
European Union announces retaliatory tariff plan against the United States. The retaliatory measures would target a list of almost 5,000 goods which total approximately $107 billion in European imports. Reports suggest that U.S.-origin aircraft and automobiles would be hit hardest by the tariff package.
UK Government takes control of last remaining “virgin steel” plant in country from Chinese company. Following the announcement by British Steel’s Chinese parent company, Jingye, that it would stop purchasing materials to keep the blast furnace running at the Scunthorpe plant, the UK government took action to prevent the closure of the plant. Although neither the plant nor British Steel have been nationalized for the time being, emergency legislation passed by the UK Parliament allows Business Secretary Jonathan Reynolds the ability to direct the British Steel board and staff, allowing for the purchase of necessary materials.
Foley Automotive Update- 15 May 2025
Trump Administration and Tariff Policies
The U.S. lowered the base level of duties on most Chinese goods to 30% from 145%, and China cut its levies on many U.S. products to 10% from 125% as part of a 90-day tariff pause scheduled between the nations that is to take effect this week.
A U.S.-UK trade deal announced May 8 would allow imports of 100,000 vehicles annually by UK car manufacturers under a 10% “reciprocal tariff,” with additional vehicles subject to 25% levies. The American Automotive Policy Council expressed disappointment that in certain instances, “it will now be cheaper to import a UK vehicle with very little U.S. content than a USMCA compliant vehicle from Mexico or Canada that is half American parts.”
A U.S. Customs and Border Protection guidance document for the auto parts tariffs that took effect May 3 indicated that US-Mexico-Canada Agreement (USMCA)-compliant parts have a “0 percent additional ad valorem rate of duty.” The duration of this exemption is unknown.
A pair of executive orders announced on April 29 will ease some of the impact of certain automotive import tariffs. One order will establish a complex system of temporary and partial reimbursements for certain tariffed auto parts, and another order indicates tariffed vehicles and auto parts will not “stack” on other levies, such as the 25% duty on steel and aluminum. One large supplier quoted in Automotive News indicated the orders were a positive step, while an unnamed major supplier stated the tariff revisions were “not cause for celebration” as the industry will still encounter significantly higher operational costs. An analyst from Wedbush described the revised tariffs as a “gut punch” for the auto industry.
May 16, 2025 is the deadline for submitting public comments regarding the Trump administration’s Section 232 investigation into imports of processed critical minerals and their derivative products.
Automotive Key Developments
Automotive News provided updates on suppliers’ concerns regarding the potential for lower production volumes this year as a result of automotive import tariffs, as well as the challenges of assessing USMCA-compliant content in vehicles.
GM estimated the Trump administration’s tariffs could increase its costs by up to $5 billion this year, and potentially reduce 2025 net profit by up to 25% year-over-year. The automaker expects to offset its projected tariff exposure by roughly 30% through spending reductions and shifting more supplies and manufacturing to the U.S. In 2024, GM imported more vehicles into the U.S. than any other automaker.
Japanese automakers could collectively experience a $19 billion impact from U.S. import tariffs, according to analysis from Bloomberg.
Toyota and Honda projected annual net profit declines of 35% and 70%, respectively, for fiscal year ending March 2026, if U.S. automotive import tariffs are maintained. Toyota estimated its tariff impact reached $1.3 billion within just two months, while Honda expects an annual tariff impact of up to $3 billion.
Ford projected a $2.5 billion impact from tariffs in 2025, but noted it plans to offset up to $1 billion of the costs.
Revised analysis from the Anderson Economic Group estimates the Trump administration’s current automotive tariff policies will raise vehicle costs from $2,000 to $15,000.
U.S. new light-vehicle inventory is down by an estimated 24% year-over-year, representing a 61 days’ supply, following robust sales in April.
Kelley Blue Book estimated the U.S. new light-vehicle average transaction price (ATP) rose 2.5% in April 2025 from March. New-vehicle sales incentives fell to 6.7% of ATP last month, down from 7% in March and compared to a pre-pandemic norm of roughly 10%.
The U.S. House Ways and Means Committee included a measure to eliminate consumer tax credits of up to $7,500 for a new EV and $4,000 for a used EV at the end of 2025 in the “Big, Beautiful” tax package introduced on May 12. The initial proposal would extend new EV tax credits until the end of 2026 for automakers that sold less than 200,000 EVs in the U.S. between 2010 and 2025.
California and 16 other states filed a lawsuit over the Trump administration’s suspension of the $5 billion National Electric Vehicle Infrastructure (NEVI) program created by the 2021 Bipartisan Infrastructure Law.
The U.S. House on May 1 passed the third of three Congressional Review Act resolutions to repeal Clean Air Act waivers issued by the Environmental Protection Agency for California’s vehicle emissions programs. A Senate vote related to the proposals has not yet been scheduled.
Federal Reserve Chair Jerome Powell cautioned the U.S. “may be entering a period of more frequent, and potentially more persistent, supply shocks” due to economic and trade policy uncertainty.
OEMs/Suppliers
First-quarter 2025 profitability dropped by 2.3% for Hyundai, 6.6% for GM, nearly 40% for Volkswagen, and over 60% for Ford.
Automakers that include Ford, Volvo, Stellantis and Mercedes recently suspended 2025 financial guidance due to tariff-related uncertainty.
Magna estimated its annual direct tariff costs will reach $250 million for 2025.
Nissan reported a net loss equivalent to $4.55 billion for its fiscal year ended March 31, 2025 due in part to restructuring charges. The automaker intends to cut 15% of its global workforce, and consolidate its global production base to 10 assembly plants from 17.
Ford plans to raise prices by as much as $2,000 on certain Mexico-produced models in response to U.S. import tariffs.
GM plans to eliminate a shift at its Oshawa Assembly plant in Ontario in response to “forecasted demand and the evolving trade environment.”
Aptiv plans to establish two new plants in China in the second half of this year that will produce high-voltage connectors and active safety products.
Stellantis plans to launch a lower-priced version of its U.S.-made Ram pickup truck later this year to boost sales and mitigate tariff exposure. The automaker previously shifted pickup truck production for certain models from Michigan to Mexico.
Market Trends and Regulatory
AlixPartners predicts Chinese brands will account for 30% of the global auto market by 2030, compared with 21% in 2024.
BYD has a goal to achieve 50% of its sales outside of China by 2030.
Congress voted to repeal an Environmental Protection Agency rule on National Emission Standards for Hazardous Air Pollutants related to rubber tire manufacturing.
According to a Gartner survey of 126 supply chain executives, 47% of respondents were renegotiating contracts with suppliers to mitigate the impact of tariffs.
Autonomous Technologies and Vehicle Software
Automotive News provided an overview of recent developments in autonomous driving.
Ford plans to cut 350 connected-vehicle software jobs in the U.S. and Canada, and the reductions account for roughly 5% of the total team, according to a report in The Detroit News.
Waymo will partner with Toyota to develop robotaxi technology for personally-owned vehicles. Waymo’s self-driving partnerships include Hyundai and China’s Geely.
Electric Vehicles and Low-Emissions Technology
U.S. EV sales declined by roughly 5% in April, amid a 10% YOY increase in overall new-vehicle sales. Global EV sales in April were up by an estimated 29% YOY, led by a 35% increase in China.
Honda will postpone a planned $11 billion investment in new EV factories in Ontario, Canada due to slowing demand in North America.
GM’s Orion Assembly Plant in Michigan may not operate as a fully electric vehicle factory as originally planned, according to unnamed sources in Crain’s Detroit.
The American and Chinese car markets are likely to diverge further due to differences in supply chain costs and consumer preferences, as well as the nations’ ongoing trade conflicts.
GM suspended a project with Piston Automotive to establish a $55 million hydrogen fuel cell plant in Detroit.
Stellantis delayed production of its first battery-electric Ram pickup truck until 2027.
Hyundai plans to launch a hydrogen production and dispensing facility for heavy-duty trucks in Georgia.
Toronto-based battery recycler Li-cycle is pursuing a sale of its business or assets.
Canadian electric truck and bus maker Lion Electric faces a “very high” likelihood of liquidation after the Quebec government decided not to support a public bailout.
The Renaissance of HVDC for a Low Carbon Future: Part 2
As we discussed in Part 1 of this series of Articles, there is likely to be significant future increased demand for low loss, long-distance interconnectors. While the concept of transmitting large amounts of energy with relatively low losses over long distances (e.g., from solar farms in North Africa to Europe) might be attractive in principle, significant political, economic and legal challenges face potential investors and lenders, particularly in developing jurisdictions.
We will explore below the key models for structuring and financing transmission infrastructure, including the integrated grid model, merchant investment and independent power transmission (IPT) projects.
Integrated grid model
Power transmission has traditionally been considered a natural monopoly. Globally, transmission assets are most commonly owned and/or operated by a transmission utility as part of an integrated grid. The transmission utility may be state-owned, privately owned or operating under a concession granted by the government. Under this model, investment in transmission lines is typically financed using the utility’s balance sheet and recovered through a regulated tariff. This tariff is charged to consumers as part of the overall retail electricity price. However, in countries where the transmission infrastructure is publicly owned, this model can strain public finances, particularly when governments and state-owned utilities face fiscal constraints. This often results in underinvestment in transmission infrastructure and delays to necessary upgrades.
Merchant investment
The merchant investment model is a privately funded approach to developing transmission lines where revenue is primarily derived from price differentials between two markets or zones creating arbitrage opportunities. This makes it particularly suited for cross-border interconnections or countries with an unbundled power market and multiple wholesale price zones. Many interconnection projects[1] to date have used the merchant investment model in which the investor builds and operates a transmission line. This model is typically for standalone assets—either a single line or a bundle of lines. A technical requirement for the merchant model is the ability to control and measure electricity flows, as the operator profits from directing power where it is most valuable. As such, this model is more suited for DC lines.
However, the revenue uncertainty of this model makes it more difficult to finance using project finance techniques, which require predictable revenue streams. To mitigate this risk, governments have sometimes intervened to support merchant lines. One example is the NeuConnect interconnector between the UK and Germany, which operates under a cap and floor mechanism. This reduces revenue uncertainty, improving bankability while still allowing private investors to benefit from price differentials. See below for further discussion on the NeuConnect project.
The merchant investment model is not generally viable in countries without liberalised wholesale electricity markets. This is the case for many emerging markets with a vertically integrated, state-owned power sector. The lack of a competitive wholesale market and transparent, market-based price signals limits the potential for price differentials and reduces opportunities for price arbitrage between different markets or zones that are essential for a merchant line’s revenue model.
IPT Projects
Another model which can facilitate private investment in transmission assets is independent power transmission (IPT). In essence, it involves the government (or the state-owned utility) tendering a long-term contract whereby the IPT (the winning bidder) will be responsible for building and operating a transmission line in exchange for contractually defined payments dependent upon the availability of the line.
A recent example of an IPT project, although not HVDC, is the 400 kV Lessos–Loosuk and 220 kV Kisumu–Musaga transmission lines in Kenya. This project involves the development, financing and construction of the transmission lines under a public-private partnership framework by Africa50 and the Power Grid Corporation of India Limited. The project is set to become Kenya’s first IPT and a pioneering example in Africa.
IPT projects have been adopted in many countries, albeit mostly for in-country transmission. Adopting the same model for international interconnectors is likely to be more complex, not least due to the need to coordinate between the governments of the relevant countries.
Also in the African context, the Côte d’Ivoire-Liberia-Sierra Leone-Guinea (CLSG) interconnection project, financed by the AfDB, EIB, KfW, World Bank and its member countries and completed and commissioned in 2021, illustrates one way forward. It involved the construction of a 1,300 km long 225 kV AC transmission line and associated substations connecting four participating countries’ energy systems into the WAPP. The project was implemented through a regional special purpose company (Transco), jointly owned by the national utilities of those countries, and responsible for the financing, construction, ownership and operation of the project assets.
To encourage the use of the CLSG transmission line, an open access policy was adopted. Power purchase agreements (PPAs) were signed between Côte d’Ivoire’s national utility and those of the other three countries, with each also entering into a transmission service agreement with Transco. The transmission tariff was set using the “postage-stamp” methodology rather than an availability-based tariff, so that transmission costs are effectively charged to the power purchasers based on their relative shares of trade through the transmission line. To mitigate the risk of a funding shortfall owing to low trading volumes, Transco’s shareholders agreed to cover any shortfall from trading revenue. This pricing methodology ensures cost recovery whilst facilitating trade through the transmission line.
While the CLSG project structure does not involve any private investment, in principle a similar structure could be adopted to implement the IPT model; for example, by replacing government-owned shareholders of Transco with private sector sponsors.
To a limited extent this was the structure adopted by the Central American Electricity Interconnection System (SIEPAC) which was taken into account in structuring the CLSG project. The SIEPAC transmission company (EPR),owns the 1,793 km interconnector (230 kV) linking the power grids of six Central American countries. EPR is owned by eight national utilities or transmission companies together with a private company (ENDESA of Spain) which is responsible for managing EPR. During the project design stage, the option of relying entirely on private investment was considered, but it was ultimately decided that there might not be sufficient interest from the private sector due to perceived project risks and the natural monopoly nature of transmission. Nevertheless, there seems to be no reason why, through proper risk management and with adequate financial incentives, such a structure could not be adopted with entirely private ownership.
Regulatory and legal challenges
In many developing countries, the electricity sector remains vertically integrated with monopoly networks. Although full “unbundling” is not a necessary pre-condition for IPT projects, existing legislation and regulation will need to be reviewed and may need to be revised to enable an IPT project to operate alongside the national utility. In particular, the grid code will likely need to be modified to include operating procedures and principles. In the context of an interconnection project, this will need to be done for each country to which it connects and could be cumbersome and result in a long development period.
This challenge was highlighted by the North Core Interconnector Project (a 330 kV AC transmission line connecting Nigeria, Niger, Benin and Burkina Faso). According to the ECOWAS Master Plan, the SPV structure adopted in the CLSG project was originally considered for the North Core project but was ultimately not adopted owing to concerns over the delay that could be caused by the need to make adjustments to national legal frameworks.
In civil law jurisdictions, specific enabling legislation may also be required to implement interconnector projects. Conflicts of law and policy questions may also arise where cross-border agreements are entered into; for example, some provisions of law may have mandatory application in certain jurisdictions; and where state-owned entities are involved, legal or policy requirements may dictate a choice of a particular governing law or dispute resolution arrangement.
“Project-on-Project” risk
For a cross-border interconnector, separate SPVs (or “sub-projects”) may be established in each relevant jurisdiction. This approach offers several benefits, including ring-fencing national risks, aligning with local licensing requirements and facilitating construction delivery management. However, it also introduces a high degree of interdependency, as each project segment must be successfully completed for the overall project to function. This creates challenges in managing interface risks, project delivery alignment and providing certainty for stakeholders in each sub-project that the other sub-project(s) will be delivered as planned.
To address these risks, risk allocation between project sponsors and other contract parties must be carefully calibrated to ensure that risk levels are acceptable to all stakeholders while achieving the bankability of the project.
Financial viability
The CLSG project provided an example of how transmission tariffs can be set to meet minimum revenue requirements. Investors, however, need confidence that contractual payments will be received from the transmission line users, which are likely to be national utilities, who may be in poor financial health. Many developing countries have experience in addressing this question in the context of independent power projects (IPPs), which may provide valuable lessons for developing IPT projects. For example, credit support may be provided through the use of escrow accounts to prioritise payments to private sector market participants. Where this is insufficient, governments may provide sovereign guarantees (or other government support) for payment obligations to IPTs. Additional security may also be provided by development finance institutions (DFIs).
EPC contract questions
The structuring of an interconnector project may present challenges in negotiating an EPC contract. For example, where multiple procuring parties decide to use a single entity (e.g., a special purpose vehicle company) to act as the employer under an EPC contract, with assets transferred to them as third party owners, particular concerns may arise for both the procuring parties and the contractor under the EPC contract, including in respect of risk allocation, indemnities, insurance and ensuring that the asset owners obtain the full benefit of rights under the EPC contract whilst the EPC contractor maintains adequate recourse against parties of sufficient financial substance; and bespoke amendments are likely to be required to standard construction contracts, e.g., those based on FIDIC forms.
The European interconnector experience and project revenue support regimes
The European market offers examples of successful privately financed submarine HVDC interconnector projects, underpinned by revenue support arrangements to make investment sufficiently attractive to sponsors and risks more palatable to prospective lenders.
The NeuConnect interconnector will create the first direct power link between Germany and the UK, two of Europe’s largest energy markets, and allowing trading of electricity between them. Construction of the pair of 725 km long terrestrial and subsea 525 kV HVDC cables is in progress and will create 1.4 GW of transmission bi-directional transmission capacity, sufficient to power 1.5 million homes.
The project has a capital cost of around £2.4 billion and achieved financial close in 2022, involving Meridiam, Allianz Capital Partners, Kansai Electric Power Grid and TEPCO Power Grid as sponsors and a consortium of more than 20 major banks and financial institutions as lenders (including EIB and JBIC). NeuConnect Britain Ltd. (NBL), incorporated in England, is responsible for all aspects of the project in the UK (as well as construction works in Dutch waters) while NeuConnect Deutschland GmbH & Co. KG, incorporated in Germany, is responsible for all aspects of the project in Germany.
NeuConnect states that it will facilitate non-discriminatory, fair and transparent access to capacity through a range of standardised auctioned products, detailed in Access Rules which are compliant with relevant regulations. The project however takes limited merchant risk as its revenues are underpinned by a 25 year cap and floor regime in the UK, which broadly covers 50% of project costs and 50% of the total revenues earned by the interconnector. Under this scheme, the project is entitled to a minimum revenue (the “notional floor”) but in return agrees to a defined cap above which all revenues will in effect be paid back to the electricity consumers. This mechanism is intended to ensure that end-consumers obtain value for money by capping investment returns if the project outperforms revenue expectations in exchange for the protection granted through the floor, with an element of commercial risk for the project in between, thereby providing an incentive for private investors to develop interconnector projects, as compared with other regimes where revenues are purely regulated and return on equity is generally insufficiently attractive.
Ofgem approved regulatory changes to the pre-existing UK cap and floor regime to allow the project to go ahead. Meanwhile, in Germany, legislative change was needed to accommodate the project. Pre-existing German legislation (the EnWG law) did not cover interconnector assets that were not owned by a German TSO, requiring an amendment to extend the German StromNEV regime to NeuConnect. Under this regime, the project receives statutory revenues based on its assessed cost base, including depreciation of the RAB and return on such RAB (differentiated between equity and debt). NeuConnect receives its regulatory revenues from TenneT TSO GmbH, the local transmission system operator in northern Germany.
In both jurisdictions, it is understood that the revenue support arrangements are adjusted based on the level of availability of the interconnector in order to incentivise the project to maximise availability.
Threats
Recent geopolitical events have highlighted the vulnerability of subsea data cables, gas pipelines and submarine electricity cables to deliberate sabotage or damage from ships’ anchors. It seems unlikely that insurance will be available for such risks and unless governments are willing to underwrite remediation costs and lost revenues, future private investment in submarine HVDC cables may be thrown into doubt in vulnerable areas of the world.
Conclusions
While AC power transmission and distribution systems are likely to remain for many years to come and may never be entirely replaced, HVDC is certain to play a vital role in providing backbone infrastructure to support a low carbon future. Investors, lenders, utilities, regulators and policymakers alike will be taking a keen interest in this exciting technology.
Endnote
[1] Outside Europe, where interconnectors are subject to regulation unless they are formally exempted. Even in the latter case, conditions may be placed on the exemption, such as an overall IRR cap.