Category: Energy Law

Nigeria’s Energy Sector: Looking Back at 2022 and Looking Ahead in 2023

We review the key events of 2022 in Nigeria’s energy sector – a year that saw significant steps in the implementation of PIA, intermittent M&A activity and the continuing effects of crude theft. We also consider what we can expect in 2023, ahead of what appears to be Nigeria’ closest presidential election yet.

2022: What happened in legal matters?

The Petroleum Industry Act (PIA) entered its second year of effectiveness and continued its slow march of implementation . The most notable step was the official “relaunch” of The Nigerian National Petroleum Corporation as NNPC Limited in July in a high profile ceremony led by President Buhari. As mandated in the PIA, NNPC Limited was incorporated as a new CAMA company which is wholly owned by the Nigerian government. Key consequences of this transition include:

  • Commercial entity: NNPC Limited is a limited liability company (rather than a state-owned and state-funded corporation) and is intended to operate as a commercial entity. It is expected to publish annual reports and audited accounts and declare dividends to its shareholders – the Nigerian government, and therefore should remain a vital contributor to state revenues.

  • Independence from government and self supporting: The new NNPC Limited is independent and should not depend on government support for its operations. It is expected to raise its own funds, which may lead to wider adoption of the incorporated joint venture model (as provided for, but is not mandatory, under PIA). Whether this will help unlock NNPC’s capability to be a functioning and cash call paying partner in its joint operations remains to be seen. The extent of actual government control and direction over NNPC Limited will also only become clear through practice. PIA retains (for now) total government ownerships of NNPC Limited and control over the selection of its management team.

  • Royalty-paying entity: NNPC Limited is, like any other oil and company operating in Nigeria, required to pay its share of all fees, rents, royalties, profit oil shares and taxes to the government in relation to any participating interests it holds in petroleum leases or licences.

NNPC Limited’s first actions as a commercial entity were notable: these included exercising pre-emption rights over a 40% stake in OML 86 and OML 88 and buying OVH Energy’s downstream assets (giving NNPC access to 380 fuel stations and eight liquefied petroleum gas plants), along with other purported pre-emptions over upstream M&A transactions. NNPC Limited has partnered with Afreximbank to raise US$5 billion to support NNPC Limited’s upstream business and energy transition plans.  NNPC Limited also made senior appointments in 2022 with Senator Margery Chuba Okadigbo as chair and Mele Kyari continuing as CEO.

Another consequential step in PIA implementation was the promulgation of the Nigeria Upstream Petroleum Host Communities Development Regulations in June, setting out the requirements for the establishment and funding of host community development trusts. The new trust structure was one of the more controversial parts of PIA, with licence holders required to pay into the trust a levy of 3% of their actual annual operating expenditure of the preceding financial year in the upstream petroleum operations affecting the host communities for which the fund was established.

What happened in politics / regulatory matters?

The continuing impact of the global pandemic, the war in Ukraine, rising energy costs and the consequences of crude theft and spills made for a challenging final year in office for President Buhari.

Progress was made on some of Nigeria’s key gas projects that form part of the “Decade of Gas” programme. Construction is under way on Nigeria LNG’s Train 7 project, which promises to increase LNG production capacity by 35%. The Assa North-Ohaji South Gas project moves closer to completion and promises to accelerate Nigeria’s transition towards cleaner fuels and improve availability of natural gas for power generation.

New projects were also lined up: Nigerian Minister of State for Petroleum Resources Timipre Sylva, alongside the Ministers of Energy of Niger and Algeria signed a memorandum of understanding to build an over 4,000km trans-Saharan gas pipeline at an estimated cost of US$13 billion. The pipeline is intended to start in Nigeria and end in Algeria and be connected to existing pipelines that run to Europe.

The government launched its energy transition plan in 2022 as it works towards Nigeria’s commitment to reach net zero by 2060 and provide access to affordable, reliable and sustainable energy to all of its citizens by 2030. Vice President H.E Yemi Osinbajo said that Nigeria would need to spend an additional US$10 billion per annum on energy projects. Nigeria’s federal minister of power, Engr. Abubakar D. Aliyu also announced new renewable energy policies: the national renewable energy and energy efficiency policy, the national renewable energy action plan, the national energy efficiency action plan and the sustainable energy for all action agenda.

Crude theft was rampant in 2022 and remains a huge critical and unresolved issue for Nigeria, resulting in the shutdown of two of Nigeria’s major pipelines in July. Its impact is significant: the petroleum regulator estimated that Nigeria suffered a US$1 billion loss in revenue in the first quarter of 2022 as a result, and the (attempted) flight of international oil companies from the worst-affected onshore acreage has continued.

What deal activity happened?

Panoro Energy received government approval for the sale of its interest in OML 113 to PetroNor at the start of the year. The Majors divestment plans continued but encountered significant delays, with some being indefinitely postponed and others becoming mired in regulatory approval roadblocks and facing the new appetite of NNPC to assert purported pre-emptory rights.

What is expected in 2023?

  • Politics: The 2023 elections loom large, with the Presidential and National Assembly elections commencing on 25 February and Governorship and State House elections following on 11 March. The Presidential election is presently too close to call and we make no predictions. The onset of electioneering will slow regulatory decision making. International investments may pause until the election outcome is decided, key appointments made and the direction of economic and energy policies are explained.

  • Legal: Industry participants will continue to grapple with the new PIA regime, while its implementation continues over the coming year. Expected key steps include:

    • The deadline for voluntary conversion of existing OPLs and OMLs into their new forms was set for February 2023. Licence holders will need to decide whether to adopt early conversion, balancing the extent of improved PIA fiscal terms against the consequences, including termination of all outstanding arbitration and court cases related to the relevant OPL / OML, removal of any stability provisions or guarantees given by NNPC, and relinquishment of no less than 60% of the acreage. If not converted by this date, then it becomes mandatory on licence expiry / renewal.

    • The deadline for segregation of upstream, midstream and downstream operations also falls in February. Any midstream and downstream activities that were being carried out as part of upstream operations require the grant of a new midstream / downstream licence.

  • Regulatory: A new licensing round covering seven deepwater blocks has been announced for 2023, marking Nigeria’s first offshore bid round in 15 years. A pre-bid conference is taking place this month with pre-qualification applications due by the end of January.

  • Transaction activity: Upstream deals may need to wait for the dust from the 2023 election to settle, but there should be a resumption of the divestment programmes of the Majors in 2023.  Outside of M&A, Nigeria is due to go to trial in London in January 2023 as it seeks to overturn an approximately US$11 billion (including interest) arbitration award won by Process and Industrial Developments Ltd in relation to a 2010 gas project agreement. The award is now worth about a third of Nigeria’s foreign reserves.

  • Projects: Following significant delays, in part due to the COVID-19 pandemic, we understand that the Dangote refinery is expected to be officially commissioned by President Buhari in January and start up mid-2023. First gas from both the Ajaokuta-Kaduna-Kano pipeline and from Seplat’s Assa North-Ohaji South Gas project is forecast for the first half of 2023.

© 2023 Bracewell LLP

Environmental Justice Update: EPA Announces $100 Million in EJ Grants to Local Groups and Issues Guidance Outlining Potential Federal ‘Cumulative Impact’ Claims

“Environmental justice” (EJ) continues as the primary leitmotif of Biden Administration environmental policy in the first weeks of 2023.

Below, we unpack two recently announced EJ efforts: a grant program for groups in environmentally overburdened communities and guidance on legal resources to address “cumulative impacts” issued by the US Environmental Protection Agency’s (EPA) Office of Legal Counsel and outline what these mean for the regulated community taken together in the context of other recent EJ developments.

EPA Announces $100 Million in Grants to Community Groups

This week, EPA announced the availability of approximately $100 million in grants for projects that “advance EJ in underserved and overburdened communities.” The grant programs are part of funding allocated by the Inflation Reduction Act programs discussed here.

Summaries of the two programs:

  • The Environmental Justice Collaborative Problem-Solving Program (EJCPS) Cooperative Agreement Program. The EJCPS program provides $30 million in funding directly to community-based non-profit organizations for projects focused on addressing local environmental or public health issues in their communities. Five million of the funding is reserved for small community-based nonprofit organizations with five or fewer full-time employees. EPA anticipates funding approximately 50 awards of $500,000 and 30 awards of $150,000.

  • Environmental Justice Government-to-Government (EJG2G) Program. EJG2G will provide an estimated $70 million in funding for state, tribal, and local projects completed in conjunction with community-based organizations. In total the agency anticipates funding approximately 70 projects of up to $1 million each for a 3-year project.

Interested applicants must submit proposal packages on or before April 10, 2023, for projects to begin on October 1, 2023.

EPA’s efforts to fund local groups are part of its broader strategic goal of enhancing equitable apportionment of resources and the benefits of environmental policies. EPA’s Equity Action Plan, discussed here, prioritizes building capacity in environmentally underserved communities to lead projects. Projects like these would lead to increased community engagement, which in turn could lead to more equitable outcomes in the environmental space. The strategy of building up local capacity to engage on environmental issues, mirrors private-sector efforts like Bloomberg Philanthropies $85 million “Beyond Petrochemicals” campaign, discussed here.

Federal Cumulative Impact Guidance

EPA’s Office of General Counsel released its Cumulative Impacts Addendum this week. This addendum builds on EPA’s Legal Tools to Advance Environmental Justice, which was released in May 2022. Taken together, these encyclopedia-like documents were created with the purpose of “identifying and making appropriate use of every authority and tool available to EPA under the law to incorporate environmental and climate justice considerations in our work,” in the words of EPA Administrator Michael Regan. The addendum itself indicates that it “is not intended to prescribe when and how [EPA] should undertake specific actions, nor does it provide methodologies for how to conduct a cumulative impacts assessment.” (Note: EPA’s Office of Research and Development has advanced a definition of “cumulative impacts,” summarized here, and is researching methodologies to deploy the concept.)

Structurally, the addendum breaks EPA’s authorities to address cumulative impacts into six subject-matter focused chapters:

  • Clean Air Act Programs

  • Water Programs

  • Waste Management and Emergency Response Programs (i.e. Resource Conservation and Recovery Act; Oil Pollution Act; the Emergency Planning and Community Right-to-Know Act; and the Comprehensive Environmental Response, Compensation, and Liability Act)

  • Pesticides and Toxics Programs (i.e. Federal Insecticide, Fungicide, and Rodenticide Act; the Federal Food, Drug, and Cosmetic Act; and the Toxic Substances Control Act); and

  • Environmental Review Programs (i.e. National Environmental Policy Act and Clean Air Act Section 309 Reviews).

EPA’s intent with the addendum was to outline legal resources for federal, state, and local regulators to consult situationally outlining potential tools that could be used to address cumulative impacts. These legal tools, used in conjunction with EJ-focused screening tools like EJSCREEN (discussed here) and newly developed and (increasingly available) data (see our discussions here and here), are part of EPA’s high prioritization of EJ issues.

Takeaways for the Regulated Community

We offer two takeaways from these developments:

First, EPA’s commitment to a “whole of government” approach to address EJ issues continues unabated. Over time, the Biden Administration has exhibited a willingness to allocate money to address EJ issues; reorient EPA and DOJ to better address them; develop new tools; and indeed, build capacity to engage local communities in an effort to benefit more Americans regardless of their race, language or socioeconomic status.

Second, taken collectively, these efforts will necessitate changes in process for regulated entities because governmental and community engagement in the EJ space is altering the policymaking process at a rapid rate. Relevant here, we expect that a secondary effect of EPA and private parties “building capacity” in local communities will be an increase in community involvement — and potentially opposition — to businesses operating in their communities. These groups are likely to deploy all available resources — including those outlined in the addendum — to address their concerns.

© 2023 ArentFox Schiff LLP
For more Environmental Policy Legal News, click here to visit the National Law Review.

U.S. Fish & Wildlife Service Proposes New Regulations Creating General Eagle “Take” Permits for Certain Wind Energy and Power Line Infrastructure Projects

The U.S. Fish and Wildlife Service recently published a proposed rule revising regulations that authorize permit issuance for eagle incidental take and eagle nest take under the Bald and Golden Eagle Protection Act (the “Act”). In addition to retaining the individual permits already available under the Act, the new rule proposes creation of a “general” permit for qualifying wind energy and power line infrastructure projects.

The Act generally prohibits the “take,”[1] possession, and transportation of bald eagles and golden eagles, except pursuant to federal regulations. However, the Act also authorizes the Secretary of the Interior to issue regulations to permit the take of these eagle species for various purposes. Under the current regulations, there are 2 permit types for the incidental take of eagles and eagle nests, which are issued on an individual, project-specific basis. Due, in part, to inefficiencies in the application review and approval process, issuance of these project-specific eagle take permits has – historically – been relatively rare. The Service acknowledges that, while participation in the permit program by wind energy projects has increased since 2016, it still remains well below the Service’s expectations.

According to the Service, the purpose of the new regulations is to: (i) increase the efficiency and effectiveness of permitting; (ii) facilitate and improve compliance with the regulations; (iii) and increase the conservation benefit for eagles. The Service proposes to do this by creating a general permit program to streamline the permitting process and provide more timely and cost-effective coverage for affected industries.

General permits would be available to authorize incidental take by activities that occur frequently enough for the Service to have developed a standardized approach to permitting. Specifically, the Service proposes activity-specific eligibility criteria and permit requirements in 4 new sections based on activity and type of take: (i) incidental eagle take for permitting wind energy; (ii) incidental eagle take for permitting power lines; (iii) bald eagle disturbance take; and (iv) bald eagle nest take. As part of the revised application process, a general permit applicant would self-identify as eligible and register with the Service. The applicant is then required to submit an application containing all requested information and fees, as well as certification that the applicant meets the eligibility criteria and would implement permit conditions and reporting requirements.

Two particular proposed general permits – for wind energy and power line projects – could prove particularly useful for renewable energy developers.

Wind Energy Projects

The core general permit eligibility criterion for wind energy projects would be a relative eagle abundance threshold, which a project would need to be below in order to qualify for a general permit. The proposed rule includes specific abundance thresholds for bald and golden eagles, applicable during 5 defined portions of the year. For project eligibility, seasonal bald or golden eagle abundance at all existing or proposed turbine locations must be lower than all 5 seasonal thresholds listed. Presently, the Service estimates that nearly 80% of all existing wind-energy turbines in the coterminous United States are located in areas under the proposed relative abundance thresholds for both species and thus eligible for a general permit under this proposal. The Service plans to offer publicly available online mapping resources depicting areas that qualify. However, at this time, we note that under the proposed rule, Alaska would be excluded from the general permitting program.

In addition to falling below the relative eagle abundance thresholds, wind energy projects would also need to be sited more than 660 feet from bald eagle nests and more than 2 miles from golden eagle nests to be eligible for a general permit.

For existing projects where not all turbines are located within an area below the designated thresholds of relative abundance, the project operator would need to apply for an individual permit and request consideration for a general permit in the application. The Service would review the project and issue a letter of authorization if it determines it is “appropriate” to extend general permit coverage.

Although the Service has not yet promulgated a complete set of conditions for wind energy project general permits, the proposed rule requires permittees to implement all practicable avoidance and minimization measures to reduce the likelihood of take. Permittees would also be subject to a 4 discovered-eagle permit condition, under which discovery of 4 eagle mortalities at a wind energy project covered by a general permit would prohibit the project from reapplying for additional 5-year general permits. Such a project would have to apply for an individual permit.

Power Lines

In the proposed rule, the Service acknowledged that it has sufficient understanding of how eagles interact with power lines to develop a general permit for eagle take resulting from power-line infrastructure.

While the proposed rule does not include detailed eligibility criteria, the Service contemplates 6 key conditions for the new power line general permit:

  1. All new construction and reconstruction of pole infrastructure must be electrocution-safe for bald eagles and golden eagles, except as limited by human health and safety.
  2. All new construction and reconstruction of pole infrastructure must be electrocution-safe for bald eagles and golden eagles, except as limited by human health and safety. All new construction and reconstruction of transmission lines must consider eagle nesting, foraging, and roosting areas in siting and design, as limited by human health and safety. Specifically, the Service recommends siting utility infrastructure at least 2 miles from golden eagle nests, 660 feet from a bald eagle nest, 660 feet from a bald eagle roost, and 1 mile from a bald eagle or golden eagle foraging area.
  3. A reactive retrofit strategy must be developed that governs retrofitting high-risk poles when an eagle electrocution is discovered. A reactive retrofit strategy responds to incidents in which eagles are killed or injured by electrocution.
  4. A proactive retrofit strategy must be developed and implemented to convert all existing infrastructure to be electrocution-safe, prioritizing poles identified as the highest risk to eagles.
  5. A collision-response strategy must be implemented for all eagle collisions with power lines. If an eagle collision is detected, a strategy must outline the steps to identify and assess the collision, consider options for response, and implement a response.
  6. An eagle shooting response strategy must be developed and implemented when an eagle shooting is discovered near power-line infrastructure.

Service review and approval would not be required prior to obtaining coverage under either of these general permits. Rather, according to the Service, the general permit authorization would be “generated” using permit conditions and reporting requirements for the proposed activity. Under the proposed rule, upon submitting an application, the Service will “automatically issue a general permit to authorize the take requested in the application.”

The Service intends to conduct annual audits for a small percentage of all general permits to ensure applicants are appropriately interpreting and applying eligibility criteria. The maximum term for wind energy and power line project general permits would be 5 years; after expiration, with certain narrow exceptions, projects could reapply for new 5-year general permits.

Finally, because the Service will undertake environmental review to support its final rule, obtaining coverage under the general permits would not require project-specific environmental review under the National Environmental Policy Act. However, applicants for the general permit must certify, among other things, that: (i) the activity for which take is to be authorized does not affect a property that is listed, or is eligible for listing, in the National Register of Historic Places; or (ii) that the applicant has obtained, and is in compliance with, a written agreement with the relevant State Historic Preservation Officer or Tribal Historic Preservation Officer that outlines all measures the applicant will undertake to mitigate or prevent adverse effects to the historic property.

The Service is accepting comments on the proposed rule until November 29, 2022. The Service hosted an initial listening session for the general public on October 20th, and will host an additional listening session on November 3, 2022.

FOOTNOTES

[1]Under the federal Endangered Species Act, “take” is defined as any action “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”

Article By S. Keith Garner and Daniel S. Maroon of Sheppard, Mullin, Richter & Hampton LLP

For more environment and energy legal news, click here to visit the National Law Review.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.

Supreme Court Questions Whether Highly Compensated Oil Rig Worker Is Overtime Exempt

On October 12, 2022, the Supreme Court of the United States heard oral arguments in a case regarding whether an oil rig worker who performed supervisory duties and was paid more than $200,000 per year on a day rate basis is exempt from the overtime requirements of the Fair Labor Standards Act (FLSA).

The case is especially significant for employers that pay exempt employees on a day rate. It could have a major impact on the oil and gas industry in the way that it recruits, staffs, and compensates employees who work on offshore oil rigs and at remote oil and gas work sites. In addition, depending on how the Supreme Court rules, its decision could have much broader implications.

During the arguments in Helix Energy Solutions Group, Inc. v. Hewitt, the justices questioned whether, despite the employee’s high earnings, he was eligible for overtime compensation because he was paid by the day and not on a weekly salary basis. There is no express statutory requirement that an employee be paid on a “salary basis” to be exempt from overtime requirements, but such a requirement has long been included in the regulations issued by the U.S. Department of Labor (DOL) applicable to the FLSA’s white-collar exemptions. Notably, Justice Brett Kavanaugh suggested during the arguments that the regulations may be in conflict with the text of FLSA, although Helix did not raise this issue in its petition for certiorari.

Background

The case involves an oil rig “toolpusher,” an oilfield term for a rig or worksite supervisor, who managed twelve to fourteen other employees, was paid a daily rate of $963, and earned more than $200,000 annually. Between December 2014 and August 2017, when Michael Hewitt was discharged for performance reasons, he worked twenty-eight-day “hitches” on an offshore oil rig where he would work twelve-hour shifts each day, sometimes working eighty-four hours in a week. After his discharge, Hewitt filed suit alleging that he was improperly classified as exempt and therefore was entitled to overtime pay. The district court ruled in favor of Helix.

In September 2021, a divided (12-6) en banc panel of the U.S. Court of Appeals for the Fifth Circuit held that Hewitt was not exempt from the FLSA because his payment on a day-rate basis did “not constitute payment on a salary basis” for purposes of the highly compensated employee (HCE) exemption that is found in the FLSA regulations.

The Fifth Circuit further concluded that the employer’s day-rate pay plan did not qualify as the equivalent of payment on a salary basis under another FLSA regulation because the guaranteed pay for any workweek did not have “a reasonable relationship” to the total income earned. In other words, the court found that the employee was not exempt because the $963 he earned per day was not reasonably related to the $3,846 the employee earned on average each week.

Oral Arguments

Oral arguments at the Supreme Court focused on the interplay between the DOL’s HCE regulation, 29 C.F.R. § 541.601, and another DOL regulation, 29 C.F.R. § 541.604(b), which states that an employer will not violate the salary basis requirement under certain limited circumstances even if the employee’s earnings are computed on an hourly, daily, or shift basis.

At the time of Hewitt’s employment, the HCE exemption required an employee to be paid at least $455 per week on a “salary or fee basis” and to earn at least $100,000 in total annual compensation. Those threshold amounts have since been increased to $684 per week and $107,432 per year.

The other regulation, 29 C.F.R. § 541.604(b), states that an employee whose earnings are “computed on an hourly, a daily or a shift basis” may still be classified as exempt if the “employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned. The reasonable relationship test will be met if the weekly guarantee is roughly equivalent to the employee’s usual earnings at the assigned hourly, daily, or shift rate for the employee’s normal scheduled workweek.”

Hewitt earned double the minimum total compensation level for the HCE exemption. Since the minimum salary level for the exemption was only $455 per week, and Hewitt was guaranteed that he would be paid at least $963 per week for each week he worked at least one day, Helix argued that he was exempt from the FLSA’s overtime requirements because the HCE exemption was completely self-contained and to be applied without regard to other regulations, including the “salary basis” test and the minimum guarantee regulation. Hewitt argued that the HCE exemption required compliance with either the “salary basis” test or the minimum guarantee regulation since he was admittedly paid on a day rate basis.

However, Justice Ketanji Brown Jackson suggested that it was not that simple. Justice Jackson said the question of salary basis is more about the “predictability and regularity of the payment” for each workweek. “What he has to know is how much is coming in at a regular clip so that he can get a babysitter, so that he can hire a nanny, so that he can pay his mortgage,” Justice Jackson stated. Justice Jackson echoed the language of the salary basis test requiring that an exempt employee be paid a predetermined amount for any week in which she performed any work.

Similarly, Justice Sonia Sotomayor asked Helix, “so what you’re asking us to do is take an hourly wage earner and take them out of 604, which is the only provision that deals with someone who’s not paid on a salary basis.” Justice Sotomayor additionally raised the FLSA’s goal of “preventing overwork and the dangers of overwork.”

In contrast, Justice Clarence Thomas suggested that Hewitt’s high annual compensation relative to the average worker is a strong indication that he was paid on a salary basis and should be exempt. “The difficulty is just, for the average person looking at it, when someone makes over $200,000 a year, they normally think of that as an indication that it’s a salary,” Justice Thomas stated.

Justice Kavanaugh asked if the issue of whether the DOL regulations conflict with the FLSA is being litigated in the courts. He said, “it seems a pretty easy argument to say, oh, by the way, or maybe, oh, let’s start with the fact that the regs [sic] are inconsistent with the statute and the regs [sic] are, therefore, just invalid across the board to the extent they refer to salary.” He further stated, “if the statutory argument is not here, I’m sure someone’s going to raise it because it’s strong.”

Key Takeaways

It is difficult to predict how the Supreme Court will rule in this case. A decision that requires strict adherence to the regulation’s reasonable relationship test, even when the minimum daily pay far exceeds the minimum weekly salary threshold, would have a significant negative impact on the manner in which certain industries compensate their workers. It also could lead to even more litigation by highly compensated employees, many of whom make more money without receiving overtime pay than what many people who currently are paid overtime compensation make.

Depending upon its breadth, a decision that the regulations are in conflict with the statutory text of the FLSA could provide a roadmap for additional challenges to other parts of the regulations. This could have a wide-ranging impact, as the DOL currently is in the process of preparing a proposal to revise its FLSA regulations. Then again, if a future litigant takes up Justice Kavanaugh’s invitation to challenge whether the salary regulations are overbroad compared to the language of the FLSA, the current effort to revise the regulations regarding exemptions for executive, administrative, and professional employees may be moot.

Article By Andrew P. Burnside, Steven F. Pockrass, and Zachary V. Zagger of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

For more supreme court and litigation legal news, click here to visit the National Law Review.

© 2022, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

Federal Agencies Announce Investments and Resources to Advance National Biotechnology and Biomanufacturing Initiative

As reported in our September 13, 2022, blog item, on September 12, 2022, President Joseph Biden signed an Executive Order (EO) creating a National Biotechnology and Biomanufacturing Initiative “that will ensure we can make in the United States all that we invent in the United States.” The White House hosted a Summit on Biotechnology and Biomanufacturing on September 14, 2022. According to the White House fact sheet on the summit, federal departments and agencies, with funding of more than $2 billion, will take the following actions:

  • Leverage biotechnology for strengthened supply chains: The Department of Health and Human Services (DHHS) will invest $40 million to expand the role of biomanufacturing for active pharmaceutical ingredients (API), antibiotics, and the key starting materials needed to produce essential medications and respond to pandemics. The Department of Defense (DOD) is launching the Tri-Service Biotechnology for a Resilient Supply Chain program with a more than $270 million investment over five years to turn research into products more quickly and to support the advanced development of biobased materials for defense supply chains, such as fuels, fire-resistant composites, polymers and resins, and protective materials. Through the Sustainable Aviation Fuel Grand Challenge, the Department of Energy (DOE) will work with the Department of Transportation and the U.S. Department of Agriculture (USDA) to leverage the estimated one billion tons of sustainable biomass and waste resources in the United States to provide domestic supply chains for fuels, chemicals, and materials.
  • Expand domestic biomanufacturing: DOD will invest $1 billion in bioindustrial domestic manufacturing infrastructure over five years to catalyze the establishment of the domestic bioindustrial manufacturing base that is accessible to U.S. innovators. According to the fact sheet, this support will provide incentives for private- and public-sector partners to expand manufacturing capacity for products important to both commercial and defense supply chains, such as critical chemicals.
  • Foster innovation across the United States: The National Science Foundation (NSF) recently announced a competition to fund Regional Innovation Engines that will support key areas of national interest and economic promise, including biotechnology and biomanufacturing topics such as manufacturing life-saving medicines, reducing waste, and mitigating climate change. In May 2022, USDA announced $32 million for wood innovation and community wood grants, leveraging an additional $93 million in partner funds to develop new wood products and enable effective use of U.S. forest resources. DOE also plans to announce new awards of approximately $178 million to advance innovative research efforts in biotechnology, bioproducts, and biomaterials. In addition, the U.S. Economic Development Administration’s $1 billion Build Back Better Regional Challenge will invest more than $200 million to strengthen America’s bioeconomy by advancing regional biotechnology and biomanufacturing programs.
  • Bring bioproducts to market: DOE will provide up to $100 million for research and development (R&D) for conversion of biomass to fuels and chemicals, including R&D for improved production and recycling of biobased plastics. DOE will also double efforts, adding an additional $60 million, to de-risk the scale-up of biotechnology and biomanufacturing that will lead to commercialization of biorefineries that produce renewable chemicals and fuels that significantly reduce greenhouse gas emissions from transportation, industry, and agriculture. The new $10 million Bioproduct Pilot Program will support scale-up activities and studies on the benefits of biobased products. Manufacturing USA institutes BioFabUSA and BioMADE (launched by DOD) and the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL) (launched by the Department of Commerce (DOC)) will expand their industry partnerships to enable commercialization across regenerative medicine, industrial biomanufacturing, and biopharmaceuticals.
  • Train the next generation of biotechnologists: The National Institutes of Health (NIH) is expanding the Innovation Corps (I-Corps™), a biotech entrepreneurship bootcamp. NIIMBL will continue to offer a summer immersion program, the NIIMBL eXperience, in partnership with the National Society for Black Engineers, which connects underrepresented students with biopharmaceutical companies, and support pathways to careers in biotechnology. In March 2022, USDA announced $68 million through the Agriculture and Food Research Initiative to train the next generation of research and education professionals.
  • Drive regulatory innovation to increase access to products of biotechnology: The Food and Drug Administration (FDA) is spearheading efforts to support advanced manufacturing through regulatory science, technical guidance, and increased engagement with industry seeking to leverage these emerging technologies. For agricultural biotechnologies, USDA is building new regulatory processes to promote safe innovation in agriculture and alternative foods, allowing USDA to review more diverse products.
  • Advance measurements and standards for the bioeconomy: DOC plans to invest an additional $14 million next year at the National Institute of Standards and Technology for biotechnology research programs to develop measurement technologies, standards, and data for the U.S. bioeconomy.
  • Reduce risk through investing in biosecurity innovations: DOE’s National Nuclear Security Administration plans to initiate a new $20 million bioassurance program that will advance U.S. capabilities to anticipate, assess, detect, and mitigate biotechnology and biomanufacturing risks, and will integrate biosecurity into biotechnology development.
  • Facilitate data sharing to advance the bioeconomy: Through the Cancer Moonshot, NIH is expanding the Cancer Research Data Ecosystem, a national data infrastructure that encourages data sharing to support cancer care for individual patients and enables discovery of new treatments. USDA is working with NIH to ensure that data on persistent poverty can be integrated with cancer surveillance. NSF recently announced a competition for a new $20 million biosciences data center to increase our understanding of living systems at small scales, which will produce new biotechnology designs to make products in agriculture, medicine and health, and materials.

A recording of the White House summit is available online.

Article By Lynn L. Bergeson and Carla N. Hutton of Bergeson & Campbell, P.C.

For more environmental, energy, and resources legal news, click here to visit the National Law Review.

©2022 Bergeson & Campbell, P.C.

Tax Credits in the Inflation Reduction Act Aim to Build a More Equitable EV Market

In February of this year, it was high time for me to buy a new car. I had driven the same car since 2008, and getting this-or-that replaced was costing more and more every year. As a first-time car buyer, I had two criteria: I wanted to go fast, and I wanted the car to plug in.

Like many prospective purchasers, I started my search online and by speaking with friends and who drove electric vehicles, or EVs for short. I settled on a plug-in hybrid sedan, reasoning that a plug-in hybrid electric vehicle (PHEV) was the best of both worlds: the 20-mile electric range was perfect for my short commute and getting around Houston’s inner loop, and the 10-gallon gas tank offered freedom to roam. In the eight months since I’ve had the car, I’ve bought less than ten tanks of gas. As the price of a gallon in Texas soared to $4.69 in June, the timing of my purchase seemed miraculous.

When it was time to transact, the dealer made vague mention of rebates and tax credits, but didn’t have a comprehensive understanding of the details. Enter Texas’s Light-Duty Motor Vehicle Purchase or Lease Incentive Program (LDPLIP). Administered by the Texas Commission on Environmental Quality (TCEQ), the program grants rebates of up to $5,000 for consumers, businesses, and government entities who buy or lease new vehicles powered by compressed natural gas or liquefied petroleum gas (propane), and up to $2,500 for those who buy or lease new EVs or vehicles powered by hydrogen fuel cells.

Rebates are only available to purchasers who buy or lease from dealerships (so some of the most popular EVs in the U.S. don’t qualify). There is no vehicle price cap, nor is there an income limit for purchasers. In June of 2022, the average price for a new electric vehicle was over $66,000, according to Kelley Blue Book estimates. But the median Texan household income (in 2020 dollars) for 2016-2020 was $63,826.

According to the grant specialist to whom I initially sent my application, the TCEQ has received “a vigorous response” from applicants, however, the TCEQ is limited in the number of rebate grants that it can award: 2,000 grants for EVs or vehicles powered by hydrogen fuel cells, and 1,000 grants for vehicles powered by compressed natural gas or liquefied petroleum gas (propane).

The grant period in Texas ends on January 7, 2023, but on July 5, 2022, the TCEQ suspended acceptance of applications for EVs or vehicles powered by hydrogen fuel cells. As of the writing of this post, the total number of applications received and reservations pending on the program’s website is 2,480.

In comparison with Texas’s rebate program, the EV tax credits in the Inflation Reduction Act of 2022 demonstrate a commitment to building a more equitable EV market. While EVs may be cheaper to own than gas-powered vehicles—especially when gas prices are high—a lot of lower and middle-income families have historically been priced out of the EV market. The IRA takes several meaningful steps towards accessibility and sustainability for a more diverse swath of consumers:

  • Allows point-of-sale incentives starting in 2024. Purchasers will be able to apply the credit (up to $7,500) at the dealership, and because sticker price is such an important factor for so many purchasers, this incentive will make buying an EV more attractive up front.
  • Removes 200,000 vehicle-per-manufacturer cap. Some American manufacturers are already past the maximum. Eliminating the cap means bringing back the tax credit for many popular and affordable EVs, which should attract new buyers.
  • Creates income and purchase price limits. SUVs, vans, and pickup trucks under $80,000, and all other vehicles (e.g. sedans) under $55,000, will qualify for the EV tax credit. For new vehicles, purchaser income will be subject to an AGI cap: $150,000 for individuals and $300,000 for a joint filers.
  • Extends the tax credit to pre-owned EVs. As long as the purchase price does not exceed $25,000, purchasers of pre-owned EVs (EVs whose model year is at least two years earlier than the calendar year in which the purchase occurs) will receive a tax credit for 30% of the sale price up to $4,000. The income cap for pre-owned EVs is $75,000 for individuals and $150,000 for a joint filers.

A purchaser who qualifies under both programs can get both incentives. Comparing Texas’s state government-level incentives and those soon to be offered at the federal level reveals a few telling differences—new vs. used, income caps, purchase price caps, post-purchase rebates vs. up-front point-of-sale incentives—but the differences all fall under the same umbrella: equity. The IRA’s tax credits are designed, among other things, to make purchasing an EV more attractive to a wider audience.

Of course, the EV incentive landscape has greatly changed since the Energy Improvement and Extension Act of 2008 first granted tax credits for new, qualified EVs. The LDPLIP wasn’t approved by the TCEQ until late 2013, so the U.S. government has arguably had more time to get it right. Some might say that the fact that Texas’s program offers the purchaser of the $150,000+ PHEV the same opportunity to access grant funds as the purchaser of the $30,000 EV means that the LDPLIP is even more “equal.”

It is worth noting that the IRA also sets a handful of production and assembly requirements. For instance, to qualify for the credit, a vehicle’s final assembly must occur in North America. Further, at least 40% the value of the critical minerals contained in the vehicle’s battery must be “extracted or processed in any country with which the United States has a free trade agreement in effect” or be “recycled in North America”—and this percentage increases each year, topping out at 80% in 2027. There is also a rising requirement that 50% of the vehicle’s battery components be manufactured or assembled in North America, with the requirement set to hit 100% in 2029. It is unclear whether automotive manufacturers and the U.S. critical mineral supply chains will be able to meet these targets—and that uncertainty may cause a potential limiting effect on the options a purchaser would have for EVs that qualify for the tax credit.

Time will tell whether the intentions behind the EV tax credits in the IRA have the effect that this particular blogger and PHEV owner is hoping for. While we wait to see whether this bid at creating an equitable EV market bears fruit, we can at least admire this attempt at, as the saying goes, “giving everyone a pair of shoes that fits.”

Article By Dania Abbasi of Foley & Lardner LLP

For more energy and environment legal news, click here to visit the National Law Review.

© 2022 Foley & Lardner LLP

Reinventing the American Road Trip: What the Inflation Reduction Act Means for Electric Vehicle Infrastructure

The Inflation Reduction Act of 2022 (“IRA”) signifies a turning point in domestic efforts to tackle climate change. Within the multibillion-dollar package are robust investments in climate mitigation initiatives, such as production tax credits, investment tax credits for battery and solar cell manufacturers, tax credits for new and used electric vehicles (“EV”)1, automaker facility transition grants, and additional financing for the construction of new electric vehicle manufacturing facilities.2 One thing is abundantly clear, the IRA’s focus on stimulating domestic production of electric vehicles means that the marketplace for electric vehicles will see a dramatic change. The Biden Administration has set an ambitious target of 50% of EV sale shares in the U.S. by 2030. However, if electric vehicles are going to achieve mass market adoption, a central question remains — where is the infrastructure to support them?

Addressing gaps in EV Supply and EV Infrastructure

As it stands, the shortage of charging infrastructure is a substantial barrier in the push for mass consumer adoption of EVs.3 Experts estimate that in order to meet the Biden Administration’s EV sale target by 2030, America would require 1.2 million public EV chargers and 28 million private EV chargers by that year.4 Department of Energy data shows that approximately 50,000 EV public charging sites are currently operational in the United States.5 In comparison, gasoline fueling stations total more than 145,000.6 However, federal legislation such as the Bipartisan Infrastructure Law (“BIL”) passed earlier this year signifies a clear commitment to remedying this disparity. The BIL establishes a National Electric Vehicle Infrastructure Formula Program (“NEVI”) to provide funding to States and private entities to deploy EV-charging infrastructure and to establish an interconnected network to facilitate “data collection, access and reliability.”7 The Federal Highway Administration, the federal agency charged with implementing NEVI, proposed minimum standards and requirements that states must meet to spend NEVI funds:

  • Installation, operation and maintenance by qualified technicians of EV infrastructure

  • Interoperability of EV charging infrastructure

  • Network connectivity of EV charging infrastructure

  • Data collection pertaining to pricing, real-time availability and accessibility8

The goal of the proposed rule is to secure EV charging infrastructure that works seamlessly for industrial, commercial and consumer drivers. Combining the historic investments in clean energy and climate infrastructure in the BIL and IRA, the federal government has jumpstarted what will be a fundamental shift in how consumers use transportation. Earlier this week, the Biden Administration announced more than two-thirds of EV Infrastructure Deployment Plans from States, the District of Columbia and Puerto Rico have been approved ahead of schedule under NEVI.9 With this early approval, these states can now unlock more than $900 million in NEVI funding from FY22 and FY23 to help build EV chargers across highways throughout the country.10

Section 13404’s Alternative Fuel Refueling Property Credit

Building up the U.S. capacity to build EVs, and then ensuring people can use said vehicles more easily by shoring up EV infrastructure is a crucial facet of the Inflation Reduction Act. Section 13404 of the IRA provides an Alternative Fuel Refueling Property Credit that targets the accelerated installation of EV charging infrastructure and assets.11 Section 13404 extends existing alternative fuel vehicle refueling property credit through 2032, and significantly restructures the credit by allowing taxpayers to claim a base credit of 6% for expenses up to $100,000 (for each piece refueling property located at a given facility) so long as the property is placed in service before Jan. 1, 2033.12 However, the alternative fuel property must be manufactured for use on public streets, roads and highways, but only if they are (1) intended for general public use, or (2) intended for exclusive use by government or commercial vehicles and (3) must be located in a qualifying census tract (i.e., low-income communities or non-urban areas).13 From a job creation standpoint, the IRA also provides an alternative bonus credit for taxpayers that meet certain wage requirements during the construction phase.14

The Future of EV Infrastructure

EV stations in city streets, parking garages and gas stations will become a prominent part of the nation’s infrastructure as it moves towards a green future. The effort will require coordination among municipal, state and federal policymakers. Even more, electric utilities must ensure that local infrastructure can support the additional strain on the grid. Utilities also have a direct interest in a cleaner, efficient, and less overburdened grid. Federal tax incentives, like the IRA, and subsides from states and local ordinances are integral to the implementation and construction of these networks. The private sector has already taken steps to do its part. In a recent study conducted by consulting company AlixPartners, as of June 2022, automakers and suppliers expect to invest at least $526 billion to fund the transition from gasoline powered vehicles to EVs through 2026.15 This is double the five-year EV investment forecast of $234 billion from 2020-2024.16 Even more, according to Bloomberg, not including deals that have disclosed financials, more than $4.8 billion has already been invested in the EV charging industry this year in the form of debt financing and acquisitions.17 Driven by fast growth and robust availability of government funds, financiers and large companies seeking to acquire EV charging companies, sense immense opportunity.18

FOOTNOTES

1“Electric Vehicle” is used interchangeably with the acronym “EV” throughout this article.

2 Isaacs-Thomas, I. (2022, August 11). What the Inflation Reduction act does for green energy. PBS. https://www.pbs.org/newshour/science/what-the-inflation-reduction-act-do…

3 Consumer Reports (2022, April). Breakthrough Energy: A Nationally Representative Multi-Mode Survey. https://article.images.consumerreports.org/prod/content/dam/surveys/Cons…

4 Kampshoff, P., Kumar, A., Peloquin, S., & Sahdev, S. (2022, August 31). Building the electric-vehicle charging infrastructure America needs. McKinsey & Company. https://www.mckinsey.com/industries/public-and-social-sector/our-insight…

5 U.S Department of Energy. (2022). Alternative Fueling Station Locator. Alternative Fuels Data Center: Alternative Fueling Station Locator. https://afdc.energy.gov/stations/#/find/nearest?fuel=ELEC&ev_levels=all&…

6 American Petroleum Institute. (n.d.). Service station FAQs. Energy API. https://www.api.org/oil-and-natural-gas/consumer-information/consumer-re…

7 U.S. Department of Transportation/Federal Highway Administration. (n.d.). Bipartisan Infrastructure Law – National Electric Vehicle Infrastructure (NEVI) formula program fact sheet: Federal Highway Administration. U.S. Department of Transportation/Federal Highway Administration. https://www.fhwa.dot.gov/bipartisan-infrastructure-law/nevi_formula_prog…

8 The Office of the Federal Register of the National Archives and Records Administration and the U.S. Government Publishing Office. (2022, June 22). National Electric Vehicle Infrastructure Formula Program. Federal Register. https://www.federalregister.gov/documents/2022/06/22/2022-12704/national…

9 United States Department of Transportation. (2022, September 14). Biden-Harris Administration announces approval of First 35 state plans to build out EV charging infrastructure across 53,000 miles of Highways. United States Department of Transportation. https://highways.dot.gov/newsroom/biden-harris-administration-announces-…

10 See Id.

11 As a note, “refueling property” is property used for the storage or dispensing of clean-burning fuel or electricity into the vehicle fuel tank or battery.  Clean-burning fuels include CNG, LNG, electricity, and hydrogen.

12 Inflation Reduction Act of 2022, H.R. 5376, 117th Cong. § 13404 (2022); See also Wells Hall III, C., Holloway, M. D., Wagner, T., & Baldwin, E. (2022, August 10). Nelson Mullins tax report–Senate passes Inflation Reduction Act. Nelson Mullins Riley & Scarborough LLP. https://www.nelsonmullins.com/idea_exchange/alerts/additional_nelson_mul…

13  Id.

14  Id.

15 AlixPartners, LLP. (2022, June 22). 2022 Alixpartners global automotive outlook. AlixPartners. https://www.alixpartners.com/media-center/press-releases/2022-alixpartne… See also Lienert, P. (2022, June 22). Electric vehicles could take 33% of global sales by 2028. Reuters. https://www.reuters.com/business/autos-transportation/electric-vehicles-…

16 Id.

17 Fisher, R. (2022, August 16). Electric car-charging investment soars driven by EV Growth, government funds. Bloomberg. https://www.bloomberg.com/news/articles/2022-08-16/car-charging-investme…

18 Id.

Article By Lawrence L. Ostema and Jeffrey E. Joseph of Nelson Mullins

For more utilities and transportation legal news, click here to visit the National Law Review.

Copyright ©2022 Nelson Mullins Riley & Scarborough LLP

The Inflation Reduction Act: How Do Tribal Communities Benefit?

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”), ushering in substantial changes for tax law, climate resilience, healthcare, and more in the United States. According to the Biden administration’s press release, the new $750 billion legislation aims to lower everyday costs for families, insist that corporations pay their fair share, and combat the climate crisis. During the signing ceremony, President Biden stated, “With this law, the American people won and the special interests lost […] For a while people doubted whether any of that was going to happen, but we are in a season of substance.”

Notably, the legislation provides significant provisions for tribal communities and the Bureau of Indian Affairs. Once the funding is appropriated by Congress, it will be directed toward drought mitigation programs, fish hatcheries, modernization of electric systems, and more for Native communities, including ones in Alaska and Hawaii.

How the Inflation Reduction Act of 2022 Supports the Environment and Tribal Communities

The Inflation Reduction Act of 2022 contains an array of provisions, including the reduction of drug prices, the lowering of energy costs, and, notably, federal infrastructure investments that benefit Native communities. Andrew M. VanderJack and Laura Jones, Co-Coordinators of Van Ness Feldman’s Native Affairs Practice, highlight the most significant facets of the bill: “This legislation provides some opportunities specifically for tribes and tribal entities, including programs related to climate resiliency and adaptation, electrification, and drought relief. For example, the Emergency Drought Relief program for Tribes extends direct financial assistance to tribal governments to address drinking water shortages and to mitigate the loss of tribal trust resources.”

Pilar Thomas, Partner in Quarles & Brady’s Energy, Environment & Natural Resources Practice Group, expanded on the most significant inclusions for Tribes: “[…] the creation of a Direct Pay tax credit payment program that allows Tribes to receive a payment equal to the clean energy technology tax credits – especially for solar, wind, storage, geothermal and EV charging stations; […] direct funding for electrification and climate resiliency through DOI and USDA; […] access to the greenhouse gas reduction fund, environmental and climate justice grants; and expanded energy efficiency tax benefits and rebates for tribes and tribal members.”

“Tribal governments are also eligible to apply for other programs such as the Clean Vehicle Credit program, the Energy Efficient Commercial Buildings Deduction, and the State and Private Forestry Conservation Programs,” noted Mr. VanderJack and Ms. Jones.

How the 2022 Inflation Reduction Act Has Been Received by Tribal Communities

The 2022 Inflation Reduction Act has received a warm reception from groups such as the National Indian Health Board and Native Organizers Alliance, who laud the bill’s potential to improve environmental, medical, and economic conditions for tribal communities, some of whom still lack access to electricity or clean water. The increase in funding will allow tribes to use green energy technology to increase climate resilience and decrease individual energy costs, while reducing the effects of environmental racism with risk assessments for drinking water and climate hazards. These infrastructural changes will stimulate economic development by creating new jobs. “With critical investments in the Inflation Reduction Act, we’re making sure the federal government steps up to support Native-driven climate resilience, advance tribal energy development, and fulfill its trust responsibility to Native communities,” said Senator and Senate Committee on Indian Affairs Chairman Brian Schatz.

“This legislation will result in hundreds of millions of funding available for Tribes, and non-profits that work with tribes and tribal communities to support the clean energy transition for tribal communities, reduce energy costs for tribal members, and create jobs,” said Ms. Thomas of Quarles & Brady. “The IRA will provide a substantial down payment for every tribe to take advantage of clean energy technologies, energy efficiency and energy savings, and climate resilient solutions for their communities and tribal members individually.  The new projects, technology implementation and economic development opportunities are substantial and will create long term community and economic development sustainable improvements in tribal communities.”

Some groups feel that the new legislation does not go far enough. In an open letter to President Biden, Senate Majority Leader Chuck Schumer, and House Speaker Nancy Pelosi, Indigenous-led advocacy organization NDN Collective argued that Congress’ hesitance to fully reject fossil fuels undermines the stated goals of addressing climate change, a misstep that could disproportionately affect tribal communities at the frontlines of the environmental crisis. “We believe that moving away from investments in the fossil fuel and other extractive industries and reallocating the funding to further research and development will help us find the solutions we need for true decarbonization and large-scale equitable carbon emissions reductions,” the collective stated. “We are already aware of innovative, Indigenous-led solutions that just need the proper funding and support to be scaled and replicated.”

Challenges in Getting the 2022 Inflation Reduction Act Passed

Up to this point, the Inflation Reduction Act has faced significant challenges in Congress. The legislation is the product of extensive compromise over the Build Back Better Act within the Democratic party. The Build Back Better Bill was initially estimated to cost over $3 trillion, and ultimately, the Inflation Reduction Act was passed with a budget of $750 billion. Senator Joe Manchin of West Virginia held back his support of the bill until late July, and Republicans successfully blocked an aspect of the bill that would have capped the price of insulin for Americans with private health insurance. When presented to Congress, the vote was split by party lines with every Republican voting against the bill. Biden has criticized Republicans for this decision, saying at the signing of the Inflation Reduction Act, “every single Republican in the Congress sided with the special interests in this vote — every single one.”

Challenges for tribal governments remain as well, specifically concerning the IRA’s implementation. “Despite the incredible opportunity for tribes, major barriers remain including tribal internal capacity and capabilities, [and] federal regulatory hurdles (such as BIA leasing and easement approvals),” said Ms. Thomas.

“[…] Navigating the complexities of each program and actually obtaining funding is always the challenge,” said Mr. VanderJack and Ms. Jones of Van Ness Feldman. “Tribes and tribal entities should engage directly, whenever possible, with the grant funding agencies to make sure proposals are tailored to fit both program requirements and community needs.”

Early Assessment of How the IRA will Impact Tribal Communities

The Inflation Reduction Act, ultimately, provides meaningful resources and investments for tribal communities in a variety of ways. While the provisions are not as significant as COVID-19 relief and infrastructure funding that tribal governments have received in previous years, the new legislation is nonetheless beneficial. “While the federal grant funding is relatively small, the potential major impact is the ability to access funding through tax credit payments and rebates,” said Ms. Thomas. “This mechanism is critical as it is simplifies tribes’ access to funding (rather than, for example, seeking to obtain funding through the competitive grant programs).”

Article By Chandler Ford, Casey Karthaus, Crissonna Tennison, and Shelby Garrett of The National Law Review / The National Law Forum LLC.

For more tribal law / indigenous peoples legal news, click here to visit the National Law Review.

Copyright ©2022 National Law Forum, LLC

Green Innovation Being Fast Tracked by USPTO

The USPTO now fast tracks applications involving greenhouse gas reduction technologies. The new Climate Change Mitigation Pilot Program targets impact on the climate by accelerating examination of patent applications for innovations that reduce greenhouse gas emissions. Qualifying applications may be advanced out of turn for examination (granted special status) until a first action on the merits—typically the first substantive examination—is complete. Advantageously, qualifying applications do not incur the petition to make special fee and is not required to satisfy the other requirements of the accelerated examination program.

The United States Patent and Trademark Office (USPTO) accept petitions to make special under this program until June 5, 2023, or the date when 1,000 applications have been granted special status under this program, whichever occurs earlier. “This program aligns with and supports Executive Order 14008, dated January 27, 2021, and supports the USPTO’s efforts to secure an equitable economic future, reduce greenhouse gas emissions, and mitigate the effects of climate change.” The new program takes steps toward working to incentivize and expedite clean energy technologies that will help reduce greenhouse gas emissions and mitigate the effects of climate change.

To qualify for the Program:

  • Patent Applications must contain one or more claims to a product or process that mitigates climate change by reducing greenhouse gas emissions, and be: (a) a non-continuing original utility non-provisional application; and (b) an original utility non-provisional application that claims the benefit of the filing date under 35 U.S.C. 120, 121, 365(c), or 386(c) of only one prior application that is either a non-provisional application or an international application designating the United States. Note: Claiming the benefit under 35 U.S.C. 119(e) of one or more prior provisional applications or claiming a right of foreign priority under 35 U.S.C. 119(a)-(d) or (f) to one or more foreign applications will not affect eligibility for this pilot program.

  • The application or national stage entry and the requisite petition form must be electronically filed by use of the Patent Center of the USPTO, and the specification, claims, and abstract must be submitted in DOCX format.

  • Applicants must file the petition to make special with the application or entry into the national stage under 35 U.S.C. 371 or within 30 days of the filing date or entry date of the application. The fee for the petition to make special under 37 CFR 1.102(d) has been waived for this program.

  • Applicants must use Form PTO/SB/457—which contains the petition and requisite certifications—to request participation in this program.

  • Petition filing limitations: Applicants may not file a petition to participate in this pilot program if the inventor or any joint inventor has been named as the inventor or a joint inventor on more than four other non-provisional applications in which a petition to make special under this program has been filed.

In a recent blog post announcing the Climate Change Mitigation Pilot Program, USPTO Director Kathi Vidal said, “It’s essential to protect these transformative energy innovations with intellectual property (IP). Innovation is a primary driver of the U.S. economy, and IP is the bridge between an idea and bringing that innovation to market. Industries based on innovation and the protection of intellectual property generate almost $8 trillion ($7.8 trillion) in GDP, and account for 44% of all U.S. jobs. Workers in patent-intensive industries earn almost $1,900 per week. That is 97% higher than the average weekly wage of workers in non-IP intensive industries.”

Vidal also said, “Startup companies that have a patent are far more likely to be successful in raising funding than those that have not secured intellectual property protection. When used as collateral, a patent increases venture capital funding by 76% over three years, and increases funding from an initial public offering by 128%, the approval of a startup’s first patent application increases its employee growth by 36% over the next five years, and after five years, a new company with a patent increase its sales by a cumulative 80% more than companies that do not have a patent.”

Moving forward to protect essential green energy transition technology can be helpful for future corporate and strategic goals. This new Climate Change Mitigation Pilot Program opens the door to accelerating potential patent protection for many of these developing technological fields.

Article By Jeffrey S. Whittle,  Karthika Perumal, Ph.D., Christopher Kent, Kevin J. Davis, Ph.D., and Samuel A. Savanich of  Womble Bond Dickinson (US) LLP

For more environmental, energy, and resources news, click here to visit the National Law Review.

Copyright © 2022 Womble Bond Dickinson (US) LLP All Rights Reserved.

Environmental Enforcement, Suspension and Debarment With Robert Wagman, Jason Hutt and Kevin Collins [PODCAST]

On this episode of the Bracewell Environmental Law Monitor, host Daniel Pope talks with Kevin Collins, Jason Hutt and Robert Wagman about current trends and environmental and federal enforcement.

Kevin Collins is a partner in our Austin office.  He is a former Assistant U.S. Attorney from the Eastern District of Texas, and he helps manage the problems that arise during government investigations.

Jason Hutt is a partner in our DC office and chair of the firm’s environmental department.  He advises and defends clients on the complex environmental and energy issues of our day.

Robert Wagman is a partner in our DC office and heads up the government contracts practice.  He does a lot of government enforcement work.

What are you seeing generally these days from DOJ in the criminal enforcement context? What is the EPA doing on the civil side?

There’s been a resurgence and activity at DOJ. I think they feel invigorated under the new administration. The stats support that feeling. The United States attorney’s offices across the country are up about 10 percent in their charges. They’ve charged roughly 5,500 individuals for white-collar related crimes. Environment Natural Resources Division, in particular, at DOJ has already indicted 11 companies and 34 individuals. Many of those individuals are senior executives. Budget wise, they’re asking for a lot more money. So, there’s definitely interest in going after bad actors, particularly individuals at companies to a certain extent.

We’re still enforcing the same environmental laws, but the leniency factor or the posture factor is different. Part of the settlement expectations is increasingly a focus on protection of the community in which a facility or a violator operates. We are seeing increased expectations related to fence line monitoring demands and reparations or mitigation under a resolution that involves making things right, but in the community where the violation occurs or where the environmental damage associated with that violation occurs. Those are pieces that are seen as a posture shift in the government.

One of the terms that has come up a few times on this podcast already is the term suspension and debarment.  Can you give us your quickest suspension and debarment for dummies course so that we can all be on the same page?

A lot of companies don’t realize suspension debarment will impact them. It’s not just for government contractors. A lot of times it’ll apply to both procurement actions and what’s called non-procurement actions. The term that’s used in the regulations is cover transactions, which is essentially anything that’s not exempted out. When government money is involved, chances are it’s a covered transaction. This comes up a lot with federal leases. If you are a federal lessee, or if you are an oil field services company servicing federal lessees, suspension debarment can have a tremendous impact on your business. A lot of times this is companies, individuals. They don’t think about suspension and debarment and the administrative remedy that could be associated with it. So, in broad strokes, suspension and debarment means you’re excluded from doing business with the federal government for some period of time, usually three years. But it can vary. It usually follows criminal or civil enforcement, but it doesn’t have to follow civil or criminal enforcement. It can come from any referrals.

What are some areas where suspension and debarment issues might be a higher risk than others?

Environmental because of the statutory debarment provisions. It’s much more likely to hit the radar of the suspension and debarment official than other types of enforcement activities. If you are doing a lot of business with the government, you’re more likely to end up on somebody’s radar. Again, every agency has their own suspension and debarment official, so you could be facing debarment. It’s not just an EPA thing or not just one particular agency. Any agency in theory could debar you. If you end up being debarred, it applies company-wide.

There’s also a statutory debarment under several of the environmental statutes, but also there’s an ability to find yourself in the criminal culpability realm based upon mere negligence. That’s very different than most of these other statutes that we’re talking about. It’s the coupling those two things that gives rise to this being a heightened risk in the environmental world. In particular, when you have an incident or an accident, the notion of negligence is almost in the minds of enforcement folks because there was some significant amount of environmental damage or loss of human life that in their minds, and perhaps appropriately, that shouldn’t happen.

What best practices can companies implement into their accountability systems to make sure they’re looking at these kinds of issues and where their exposures are?

There really is no substitute for good corporate governance — all the types of things that say this is a trustworthy company the government can feel comfortable doing business with. It’s going to help in your criminal enforcement, your civil enforcement and everything else that you’re doing.

© 2022 Bracewell LLP
For more articles about climate change regulations, visit the NLR Environmental & Energy section.