Category: Energy Law

Developers Submit Unsolicited Requests for Wind Leases Offshore Massachusetts and New York

wind leases, windmills, Massachusetts, New YorkOn March 10, 2017, the U.S. Department of Interior’s Bureau of Ocean Energy Management (BOEM) posted four unsolicited applications for wind project leases on the Outer Continental Shelf.  PNE Wind U.S.A., Inc. has filed three lease applications, two for offshore Massachusetts and one for offshore New York. Separately, Statoil Wind US LLC filed a lease application for offshore Massachusetts.

The developers’ lease requests, particularly the overlapping requests for offshore Massachusetts, indicate continued interest and growing competition in the U.S. offshore wind sector.  The quickening pace of activity in the U.S. offshore wind market, including completion of Deepwater Wind’s Block Island offshore wind farm and today’s auction process for offshore North Carolina, suggests that offshore wind projects may become a more important part of the U.S. power generation portfolio in the coming years.  In addition, the unsolicited application for offshore New York and the federal government’s response may provide an early indication as to the Trump Administration’s position on offshore wind development going forward.  Increased activity and a new administration in the White House present opportunities to engage on this issue and shape the policies that will govern the federal offshore leasing program for the next four or eight years, or beyond.

Background

BOEM is charged with managing energy development on the U.S. Outer Continental Shelf (OCS), for both traditional energy resources and renewable energy projects alike.  The agency discharges this responsibility for renewable energy projects via its leasing process outlined in the Code of Federal Relations at 30 C.F.R. Part 585.  BOEM’s rules set out a comprehensive site evaluation, lease auction, project management, and decommissioning program for renewable energy projects on the OCS.

To date, BOEM has completed twelve offshore wind commercial leases and one research lease.[1]  BOEM has issued commercial leases to four lessees for offshore Massachusetts: Cape Wind, Bay State Wind, Offshore MW, and Deepwater Wind New England (joint lease offshore Massachusetts and Rhode Island).  Separately, BOEM has concluded a provisional lease with Statoil Wind for a site offshore New York.[2]  The Massachusetts auction in January 2015, lasted two rounds and the New York auction in December 2016, lasted 33 rounds, suggesting growing interest and competition for lease blocks on the eastern seaboard.

Unsolicited Lease Applications

Following these competitive lease auctions, both Statoil Wind and PNE Wind submitted unsolicited applications to lease OCS lands offshore Massachusetts for wind power projects.  In addition, PNE Wind also filed an application for a potential lease area offshore New York.

For the offshore Massachusetts lease proposals, BOEM has stated that it will proceed with the competitive leasing process outlined in the agency’s regulations.  BOEM notes that because both Statoil Wind and PNE Wind are qualified to hold an OCS lease and both companies nominated the same area for lease, BOEM has determined that there is competitive interest for this OCS land.  BOEM’s next steps will be to publish its leasing process in the Federal Register, including identifying the lease areas for environmental analysis, issuing a Proposed Sale Notice with a 60-day public comment period, and a Final Sale Notice at least 30 days before the lease sale.

In contrast, BOEM states that it will consider whether to move forward with PNE Wind’s application for offshore New York.  If the agency determines that it will move forward with PNE Wind’s application, BOEM will issue a public notice to determine whether there is competitive interest in the proposed lease area.  BOEM’s regulations allow the agency discretion to review unsolicited lease applications on a case-by-case basis.  The rules do not require that the agency formally evaluate the application.  BOEM may exercise its discretion to grant an unsolicited application following issuance of a Determination of No Competitive Interest and additional inter-agency coordination.

Implications

The key takeaway from these filings is that, as a new presidential administration assumes control over the Interior Department and BOEM, interest in U.S. OCS leasing for wind energy projects remains strong despite relatively low fuel prices for hydrocarbon-based power generation.  These lease applications suggest that the suite of subsidies and other incentives supporting offshore wind development at federal and state levels, including in Massachusetts and New York, continue to encourage developers to think creatively as to how they can access this growing market.

In addition, PNE Wind’s unsolicited application for offshore New York offers an early opportunity to gauge the Trump Administration’s support for offshore wind projects.  Given U.S. President Donald Trump’s past skepticism regarding offshore wind, industry players are unsure of the Trump Administration’s support for offshore wind development, notwithstanding Secretary of the Interior Ryan Zinke’s endorsement of an “all of the above” energy strategy during his confirmation hearing.  BOEM’s response to the unsolicited lease application may illustrate the Trump Administration’s level of support for offshore wind.

The next indicator for the strength of the U.S. offshore wind market will come from today’s OCS auction for offshore North Carolina.  Following a lease auction in New York that attracted a winning bid of more than $42 million, industry watchers will closely monitor the outcome of the North Carolina auction to determine whether the sector will maintain its rapid growth.  Recognizing that the specific characteristics for the North Carolina proposed lease and auction will differ from those in the New York auction, the strong showing of interest in the North Carolina auction, as demonstrated by the nine companies qualified to participate in the auction, may keep momentum building for the offshore wind sector in the United States.

ARTICLE BY Stanford D. Baird, Joseph D. Condo,  Ankur K. Tohan, David L. Wochner & Michael L. O’Neill of K&L Gates
Copyright 2017 K & L Gates

[1] BOEM Lease Areas Shapefile, https://www.boem.gov/BOEM-Lease-Areas-Metadata/ (last visited Mar. 15, 2017).

[2] In denying a preliminary injunction, the U.S. District Court for the District of Columbia recently held that BOEM complied with the National Environmental Policy Act when it relied on an environmental assessment and finding of no significant impact (“EA/FONSI”) to issue Statoil Wind’s provisional lease for offshore New York.  Fisheries Survival Fund, et al. v. Jewell, et al., Case No. 16-cv-2409 (D.D.C. Feb. 17, 2017).  This decision clears one potential obstacle for Statoil and helps reduce the risk of similar challenges to BOEM’s determinations to approve leases that allow project evaluation and design to move forward.  Responses on the merits to the challengers’ claims are due by May 8, 2017.

FERC Staff’s White Paper on Manipulation Provides Insights on Commission’s Developing Manipulation Law

FERC Manipulation LawOn November 17, 2016, the Office of Enforcement (“FERC Staff”) of the Federal Energy Regulatory Commission (the “Commission” or “FERC”) issued a White Paper on Anti-Market Manipulation Enforcement Efforts Ten Years After EPAct 2005 (“Manipulation White Paper”) to “provide insight” on its ten years of experience investigating potentially manipulative conduct under the Anti-Manipulation Rule.1  During this period, FERC Staff has investigated over 100 matters, settled 24 proceedings resulting from those investigations, and pursued two matters in administrative proceedings.  In addition, FERC currently is litigating six penalty assessment orders in federal district courts.2  According to FERC Staff, through these investigations and proceedings, the Commission and the courts have “developed a body of law that, while still in its early stages and continuing to evolve, identifies and provides notice on specific types of conduct that can constitute market manipulation in the energy markets and factors that are indicative of such conduct.”3

In its Manipulation White Paper, FERC Staff largely restates its litigation positions – many of which currently are being challenged – and seeks to provide notice of: (1) factors that typically indicate manipulative conduct; (2) specific types of conduct that often constitute manipulation; (3) mitigating and aggravating factors affecting penalty amounts for manipulation violations; and (4) the types of investigations that it has closed without further action.

FERC Staff first provides the following non-exhaustive list of key elements emerging from FERC’s developing manipulation law:

  • Fraud is a question of fact;

  • Fraud includes open-market transactions (g., transactions executed with manipulative intent on exchanges or public trading platforms);

  • Fraud is not limited to violations of a tariff or other express rule;

  • A manipulation violation does not require a showing that the manipulative conduct resulted in artificial prices;

  • The Anti-Manipulation Rule includes attempted fraud;

  • Manipulative intent, even where it is combined with a legitimate purpose, establishes the scienter element of the Anti-Manipulation Rule;

  • Pursuant to its “in connection with” jurisdiction, the Commission has jurisdiction over conduct that affects jurisdictional transactions, including the “rates, terms, and conditions of service in a market”; and

  • Individuals constitute “entities” and, as such, are subject to the Anti-Manipulation Rule.4

Indicia of Fraud

Identifying what it characterizes as typical indicia of fraud, FERC Staff explains that the distinction between fraudulent and lawful market behavior can hinge on the underlying purpose of the behavior.5  For example, in three orders relating to Up-To Congestion (“UTC”) trades, the Commission compared the purpose of UTC trading against the purpose behind respondents’ UTC trades and determined that their trades “were neither consistent with how the UTC product historically traded nor aligned with the arbitrage purpose of those trades.”6  The Manipulation White Paper does not identify where market participants should look to understand what Staff will view as “the purpose” of particular products like UTCs.  Staff emphasizes, however, that the purpose driving a market participant’s behavior in the market is a “critical factor” in a manipulation determination.  FERC Staff recommends, therefore, that companies require employees to document the purpose behind conduct likely to raise red flags.7  In the right circumstances, market participants should also consider documenting their understanding of the purpose of the relevant products and why their trading aligns with those purposes.

Continue reading at the National Law Review

ARTICLE BY George D. Billinson, Mark R. Haskell, Thomas Reid Millar, Paul J. Pantano Jr. & Mary Treanor of Cadwalader, Wickersham & Taft LLP
© Copyright 2016 Cadwalader, Wickersham & Taft LLP

DOE Releases $7 Million Funding Opportunity Announcment For Co-Optimization Of Fuels And Engines Initiative

Funding Opportunity Announcement, FOAOn August 1, 2016, DOE released a Funding Opportunity Announcement (FOA) for $7 million to research fuel and engine co-optimization technologies. Funding will be provided through the Co-Optimization of Fuels and Engines (Co-Optima) initiative, a collaboration between DOE’s Bioenergy Technologies Office (BETO) and Vehicle Technologies Office (VTO), bringing together national laboratories and industry to conduct tandem fuel and engine research, development, and deployment assessments. This initiative works to improve near-term conventional spark-ignition engine efficiency and enable full operability of advanced compression ignition engines. Research cycles include identifying fuel candidates, understanding their characteristics, and determining market transformation requirements. This FOA is restricted to U.S. Institutions of Higher Education and nonprofit research institutions operating under U.S. Institutions of Higher Education. Proposals should address one or more of the following sub-topics:

  • Fuel characterization and fuel property prediction;
  • Kinetic measurement and mechanism development;
  • Emissions and environmental impact analysis;
  • Impact of fuel chemistry and fuel properties on particulate emissions;
  • Small-volume, high-throughput fuel testing; and
  • Additional barriers.

Concept papers are due by August 15, 2016, at 5:00 p.m. (EDT), with full applications due on September 18, 2016, at 5:00 p.m. (EDT).

ARTICLE BY Kathleen M. Roberts of Bergeson & Campbell, P.C.

©2016 Bergeson & Campbell, P.C.

Obama Administration Announces Plan to Promote Electric Vehicles

Electric VehiclesIn late July, the Obama administration announced a collaboration with 50 federal and state agencies, electric utility companies, vehicle manufacturers, electric charging station companies, and others in the private sector to promote faster development of electric vehicle charging infrastructure and increased numbers of electric cars on the roads.

This announcement, made in partnership with the Department of Energy (DOE), Department of Transportation (DOT), Environmental Protection Agency (EPA), Air Force and Army, comes just after the DOE’s first-ever Sustainable Transportation Summit. To learn more about the collaboration, continue reading!

This collaboration aims to promote consumer adoption of electric vehicles and increase the accessibility of charging infrastructure across the country. Major goals include:

  • Guaranteeing $4.5 billion in loans to finance a national network of electric vehicle charging infrastructure to increase consumer access;

  • Utilizing funds from the Fixing America’s Surface Transportation(FAST) Act, signed into law by Obama in December 2015, to identify zero emission and alternative fuel corridors and developing a 2020 vision for the optimal placement of fast charging infrastructure; and

  • Encouraging state, county, and municipal governments to partner with the Federal government to procure subsidized electric vehicle fleets.

Additionally, the collaboration has agreed to a set of Guiding Principles to Promote Electric Vehicles and Charging Infrastructure to encourage market growth and spur adoption of electric vehicles by developing vehicles and charging infrastructure that are accessible, affordable, reliable and convenient for consumers.

The market for electric vehicles has grown significantly in recent years, with battery costs falling 70%, more than 20 plug-in electric vehicle models now on the market, and more than 16,000 charging stations deployed – up from fewer than 500 in 2008.

ARTICLE BY Sahir Surmeli of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

European Commission Gives Portugal Two Months To Address Issues With Biofuel Law Compliance

On April 28, 2016, the European Commission (EC) encouraged Portugal to become fully compliant with the Renewable Energy Directive (Directive) through the release of an April infringements fact sheet. The Directive has set the goal of 20 percent of the European Union’s (EU) 2020 energy consumption coming from renewable energy, with each Member State consuming at least ten percent renewable energy. Biofuels used in reaching this goal must meet a set of harmonized sustainability requirements, and must be treated equally by Member States regardless of the country of origin. Portugal has been sent a reasoned opinion urging it to stop favoring biofuels produced in Portugal over those produced in other countries, and to reduce sustainability requirements that are not warranted by the Directive. Portugal has two months to address these concerns, or else it could be sent to the Court of Justice of the EU.

Article By Kathleen M. Roberts of Bergeson & Campbell, P.C

©2016 Bergeson & Campbell, P.C.

Biomass Research And Development Initiative Provides Seven Projects With Up To $10 Million In Funding

On May 9, 2016, the U.S. Department of Energy (DOE), the U.S. Department of Agriculture (USDA), and the National Institute of Food and Agriculture (NIFA) announced the recipients of up to $10 million in funding through the Biomass Research and Development Initiative (BRDI). BRDI is a joint program through DOE and USDA that helps develop sustainable sources of biomass and increase the availability of biobased fuels and products. DOE selected two of the grant winners to receive between $1 million and $2 million: the Ohio State University (OSU) project is “Biomass Gasification for Chemicals Production Using Chemical Looping Techniques,” and the Massachusetts Institute of Technology (MIT) project is “Improving Tolerance of Yeast to Lignocellulose-derived Feedstocks and Products.”

USDA then selected five grant winners to receive a total of $7.3 million in funding:

  • University of California-Riverside, to convert poplar to ethanol and polyurethane via pretreatment and lignin polymer synthesis;

  • University of Montana, to quantify ecological and economic opportunities of various forest types and to quantify benefits of replacing fossil fuel with forest-based bioenergy;

  • North Carolina Biotechnology Center, to optimize production of educational resources on biomass sorghum production in the Mid-Atlantic region;

  • Dartmouth College, to overcome the lignocellulosic recalcitrance barrier; and

  • State University of New York College of Environmental Science and Forestry, to provide life cycle understanding for the production of willow and forest biomass to mitigate investment risk.

Article By Kathleen M. Roberts of Bergeson & Campbell, P.C.

©2016 Bergeson & Campbell, P.C.

U.S. Solar Installations Reach 1 Million

Last week the Solar Energy Industries Association (SEIA) and George Washington University (GWU) issued a report estimating that the United States has reached 1 million solar installations and will surpass 2 million installations by 2018.  This is a 1,000-fold increase over 15 years as only 1,000 systems were installed in 2001, and these numbers highlight the tremendous growth experienced by the solar industry.  Of the 1 million PV systems, there are currently over 942,000 residential installations, nearly 57,000 PV installations at businesses, non-profits and government agencies, and over 1,500 utility-scale PV installations.  SEIA and GWU anticipate 4 million installations by 2020 and for the U.S. to be installing one million PV systems annually by 2025. To learn more about this solar milestone and the factors contributing to the solar industry’s growth, read on!

While currently only supplying 1 percent of U.S. electricity generation, solar energy accounted for 30 percent of new capacity last year and is expected to continue developing.  This growth has profoundly affected the job sector, where solar jobs grew 123 percent in the past five years and created 1 in 83 new U.S. jobs in 2015.  Overall, the solar industry now employs over 200,000 Americans, three times more jobs than U.S. coal mining.

Multiple factors were credited for playing a role in the U.S. reaching 1 million solar installations, including lower installation costs and predictable, stable federal and state policies.  In the last ten years, installation costs have dropped more than 70 percent, driven by declining solar module prices.  Enacted in 2008, the solar Investment Tax Credit (ITC), a 30 percent tax credit for solar systems on residential and commercial properties, was extended in December through 2021.  Meanwhile, state policies such as net-metering and renewable portfolio standards (RPS) have allowed solar to enter markets.  Currently, 44 states have net metering policies and 29 have RPS policies.

One challenge for the future of solar is the inability of lower-income households to benefit from solar due to a multitude of barriers, including a high rate of renters, multi-tenant buildings, and a lack of access to financing.

Article By Thomas R. Burton, III of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

San Francisco Mandates Solar Power on New Buildings

The City of San Francisco announced today that it will now mandate solar photovoltaic or solar water panels on all new residential and commercial buildings of 10 floors or less. The City’s renewable energy ordinance makes San Francisco the first major city in the country to require solar panels on new construction.

Will San Francisco’s action spur Cal/OSHA to take a renewed look at workplace safety in the solar industry?  Indeed, as solar installations increase rapidly throughout the country, perhaps Federal OSHA will dust off its Green Job Hazards guidance in light of what appears to be a continued movement toward renewable energy sources and the inevitable increase in workplace hazards that occurs when industries rapidly expand.

Article By Matthew Linton of Holland & Hart LLP
Copyright Holland & Hart LLP 1995-2016.

U.S. Air Force Testing BioBased Vehicle Oil Created From Canola Seed, Soybean, And Synthetic Petroleum

OilOn March 22, 2016, a team visited Malmstrom Air Force Base to test a new biobased synthetic oil in the base’s vehicles. The testing is sponsored by the Defense Logistics Agency (DLA) and the Office of the Secretary of Defense, with four bases chosen to use the plant based synthetic oil in vehicles. The Department of Homeland Security’s Law Enforcement Training Center has also begun testing the oil and will be monitoring the impacts on vehicle performance and engine quality over the next 12-18 months. George Handy, the project manager, stated that the use of biobased oil is not expected to result in “any change in the performance of any of the vehicles because they are already running on synthetic fuels.” If the testing goes well, the biobased oil will be available to purchase through normal channels, improving national security through the use of a domestically produced sustainable product.

Article By Kathleen M. Roberts of Bergeson & Campbell, P.C.

©2016 Bergeson & Campbell, P.C.

EU Policy Update – February 2016 re: Dutch Presidency and Brexit, Digital Single Market Policy, Energy and Environment

Dutch Presidency and Brexit

In January, the Netherlands took over the Presidency of the Council of the European Union from Luxembourg.  In line with the political intentions of the Juncker Commission to be ‘big on the big issues but small on the small issues’, the Netherlands promises to focus on the essentials during its Presidency.  In particular, the Dutch Presidency would like to focus on migration and international security.  Another priority is to strengthen the free movement of services and the free movement of workers, where the Presidency would like to strengthen the protection of workers posted abroad.

Additionally, on February 2, the President of the European Council, Donald Tusk, presented his proposals for a ‘new settlement of the United Kingdom within the European Union’.  If accepted, they would allow David Cameron to campaign in the ‘Brexit’ referendum on the continuing membership of the UK in the bloc.  The Heads of State and Government will discuss and adopt the text in a meeting on February 18.  For Covington’s analysis of the proposals presented and the referendum, please see here.

Digital Single Market Policy

The formal adoption of the EU Network and Information Security (NIS) Directive is a step closer following a vote on January 14 by the European Parliament’s internal market and consumer protection (IMCO) committee.  The committee confirmed that the minimum harmonisation requirements under the Directive do not apply to digital service providers.  This means that Member States will not be able to impose any further security or notification requirements on digital service providers beyond those contained in the Directive, when transposing it into national law.  The NIS Directive will now be put forward for a plenary vote in the European Parliament.  Once it is published in the Official Journal of the European Union and enters into force later this year, Member States will have 21 months to transpose it into national law.  Member States will then have a further 6 months to apply criteria laid down in the Directive to identify specific operators of essential services covered by national rules.  These processes are likely to be complicated, and companies that may fall within scope should participate in consultations and monitor developments across the EU over the coming months.

On January 19, the European Parliament adopted a resolution on the Digital Single Market Strategy of the European Commission.  The parliamentarians called for ambitious and targeted actions to complete Europe’s digital single market.  Among other things, the MEPs support the end of geo-blocking practices across Europe, the setting of a single set of contract rules and consumer rights for online sales and for digital content, and the modernization of the copyright framework.

On February 2, the European Commission and U.S. Government reached a political agreement on the new framework for transatlantic data flows.  The new framework – the EU-U.S. Privacy Shield – succeeds the EU-U.S. Safe Harbor framework. The EU’s College of Commissioners has also mandated Vice-President Ansip, in charge of the Digital Single Market, and Commissioner Jourová, Commissioner for Justice, Consumers and Gender Equality, to prepare the necessary steps to put in place the new arrangement.  For Covington’s full analysis of the announcement of the EU-U.S. Privacy Shield, please see here.

Energy and Environment Policy

The European Commission published a proposal to update the approval requirements and market surveillance of new passenger cars and their respective systems and components.  The Commission’s proposal aims at strengthening the credibility and enforcement of the applicable safety and environmental requirements for cars, following the controversy regarding Volkswagen last year.

In a significant departure from past EU legislation, the proposal would empower the Commission to impose administrative fines on economic operators who are found not to have complied with the approval requirements, of up to €30,000 per non-compliant vehicle.

The Commission’s proposal focuses on three elements.  First, the European Commission proposes to reinforce the credibility of the type-approval assessment of new vehicles by ensuring that the technical services testing the new vehicles are fully independent from car manufacturers.  For this purpose, the proposal would enhance the financial independence of such technical services and require Member States to create a national fee structure to cover the costs of type-approval testing and market surveillance activities for vehicles.  Moreover, in order to prevent the use of ‘defeat devices’, as in the Volkswagen controversy, the proposal would grant approval authorities and technical services access to the software and algorithms of the vehicles tested.

Second, the proposal includes measures to strengthen the market surveillance of vehicles after they are type-approved and in circulation.  Member State authorities and the Commission would be able to conduct tests and inspections on cars available on the market and would be empowered to adopt restrictive measures in case of non-compliance of vehicles.  Among other proposed measures, the Commission would establish and chair a forum to coordinate the network of national authorities responsible for type-approval and market surveillance.  Member States would also be able to inspect and take measures against vehicles type-approved in a different EU Member State.

Third, the Commission proposes measures to ensure that non-compliant manufacturers are penalized in case of non-compliance.  Member States would be required to adopt penalties for non-compliant economic operators, including car manufacturers, importers and distributors, as well as technical services.  This may be complemented by administrative fines, imposed by the Commission, of up to €30,000 per non-compliant vehicle, as referred to above.

Finally, the European Commission hopes to ensure a more uniform application of the legislation in the EU by proposing a Regulation as opposed to the current Framework Directive 2007/46/EC.  If adopted, the Regulation would be directly applicable in national law with no requirement of transposition.

The Commission proposal is available here; it has been sent to the Council and European Parliament for consideration.

The European Commission is expected to propose a revision of the Fertilizers Regulation (EC) 2003/2003 in March 2016.  This revision comes in parallel to the Circular Economy Package announced in December 2015, which aims to create a single market for the reuse of materials and resources.

Under the current EU Regulation 2003/2003, manufacturers and importers of fertilizers may choose to comply with the laws of the Member States where they market their products, or to get their products approved and CE-labeled under the Regulation.  However, Regulation 2003/2003 only regulates a limited number of categories of fertilizer products.

According to Commission officials, the proposal aims to create a level playing field between existing, mostly inorganic categories of fertilizers, and innovative fertilizers, which often contain nutrients or organic matter recovered and recycled from biowaste or other secondary raw materials.  Therefore, the proposal will make the approval process more flexible for new categories of CE-labeled fertilizers.

The draft legislative text is structured in four parts: (i) a list of materials that could be used for the production of CE-marketed fertilizing products under the conditions included in the annexes of the proposal; (ii) a list of product function categories for fertilizers, rules for blends of different product categories, and respective safety and quality requirements for each category included in the annexes; (iii) an annex with the labelling requirements by product function; and (iv) a section with the different conformity assessment procedures.  Fertilizers that follow the harmonized EN standards will be presumed to conform with the requirements of the regulation.

Moreover, the proposal would continue to allow Member States to regulate national fertilizing products.  Products that are not in compliance with the EU Fertilizers Regulation and do not carry the CE label would be able to marketed in a particular Member State if they comply with its national legislation.

Importantly, the revised Fertilizers Regulation is also likely to include an EU-wide limit on the presence of cadmium in fertilizers.  In November 2015, the Scientific Committee on Health and Environmental Risks published an opinion concluding that new scientific information available justifies an update of the 2002 opinion on Member State Assessments of Risk to health and the Environment from Cadmium – see here.

The draft proposal is currently in inter-service consultation among the different Directorates General of the European Commission.  Fertilizer manufacturers wishing to voice their opinion regarding the future Regulation on fertilizers should reach out now to the different services of the Commission.

Internal Market and Financial Services Policies

On January 15, the European Commission launched a public consultation on non-binding guidance for reporting non-financial information by certain large companies, following Article 2 of Directive 2014/95/EU – see here.  Directive 2014/95/EU aims at improving the transparency of certain large companies related to Environmental matters, social and employee matters, human rights, and anticorruption and bribery matters.  The feedback gathered during the consultation will be used to prepare the guidelines and facilitate the disclosure of non-financial information by undertakings.  The public consultation will run until April 15, 2016.

On January 28, the European Commission presented its so-called Anti-tax Avoidance Package – see here.  The initiative includes: (i) a new communication on tax avoidance in the EU; (ii) a proposal for an Anti-Tax Avoidance Directive; (iii) a proposal for a Directive implementing the G20/OECD Country by Country Reporting (CbC Reporting); (iv) a Recommendation to the Member States on Tax Treaties, and (v) a Communication on an External Strategy regarding tax avoidance.

The Anti-Tax Avoidance Directive includes six measures, which aim at limiting the abuse of six well-established practices used to avoid taxes in various jurisdictions in Europe.  These include the mismatch in legal characterisation of financial instruments or legal entities between Member States, excessive inter-group interest charges, and a general anti-abuse rule against arrangements the essential purpose of which is to obtain a tax advantage.

The legislative proposal on CbC Reporting aims to strengthen the existing mandatory and automatic exchange of information between the Member States in the field of taxation.  The proposal also requires the parent entity of a multinational group to report to the competent authorities the aggregated information on the revenue, profit (or loss) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash equivalents, in respect of each jurisdiction in which the group operates.

Finally, because tax avoidance has a strong global dimension, the EU will also cooperate better with third countries on tax issues. The Commission therefore proposes to adopt a common EU system to screen, list and put pressure on third countries that refuse to adopt policies to limit tax avoidance. In addition, before the end of 2016, the Commission and Member States will consider whether to put in place sanctions to incentivize third countries to improve their tax systems.

Life Sciences and Healthcare Policies

At the beginning of February 2016, the Dutch presidency will resume trilogues on the legislative proposals regarding the medical devices Regulation (“MD proposal”) and the in vitro diagnostic medical devices Regulation  (“IVD proposal”).  The European Commission presented this pair of proposals in September 2012, and recently called upon the Council of Ministers and the European Parliament to reach an agreement in the first half of 2016.  The Dutch delegation therefore intends to ramp up the number of trilogues between the institutions to five political meetings and 10 to 15 technical meetings during its presidency.  Nonetheless, important differences remain between the negotiators on the reprocessing of single use devices, liability insurance for manufactures, and the classification of devices in the framework of the IVD proposal.  It is understood that the Dutch presidency hopes to achieve an agreement by the Employment, Social Policy, Health and Consumer Affairs Council of June 17, 2016.

Trade Policy and Sanctions

On January 1, the Deep and Comprehensive Free Trade Area (“DCFTA”) between the EU and Ukraine became operational.  According to the Commission, the implementation of the DCFTA will improve the Gross Domestic Product of Ukraine by circa 6% and increase economic welfare for Ukrainians by 12% over the medium term.

On January 13, the European Commission held an initial orientation debate on Market Economy Status for China in anti-dumping proceedings.  Under the current WTO rules, the EU can calculate potential anti-dumping duties on the basis of data from another market economy country rather than the domestic prices used in China, because there is a presumption that market economy conditions do not prevail in China.  However, this provision, included under Article 15(a)(ii) of China’s Protocol of Accession to the WTO, will expire on December 12, 2016.  The Commission is therefore considering its options for changing the methods used to calculate dumping margins in respect of China.  It is important for the Commission to start the process on time, because any change in the anti-dumping rules are likely to require legislation to be adopted by the Council and the European Parliament.  Given the delicate nature of such negotiations, the process is expected to take a year.

January 16, 2016, saw the Implementation Day of the Joint Comprehensive Plan of Action (“JCPOA”) – the historic deal reached among China, France, Germany, Russia, the UK, the U.S., the EU and Iran to ensure the exclusively peaceful nature of Iran’s nuclear program.  As part of that agreement, the Council of the EU lifted all nuclear-related economic and financial EU sanctions on Iran.  It did so by bringing into force the EU legislative package adopted on October 18, 2015, following the verification by the International Atomic Energy Agency (“IAEA”) that Iran had complied with the requirements laid down in the JCPOA.  As of January 16, many sectors and activities have been reactivated, including, among others: financial, banking and insurance measures; oil, gas and petrochemical; shipping and transport; gold and other metals; software; and the un-freezing of the assets of certain persons and entities.  Note that proliferation-related sanctions, including arms and missile technology sanctions, will remain in place until 2023 (subject to various conditions).  For the Council press release, see here.  For more details, see the Council Information Note here.

Article By Sebastian F.A. Vos of Covington & Burling LLP
© 2016 Covington & Burling LLP