- Increased Adoption of Generative AI and Push to Minimize Algorithmic Biases – Generative AI took center stage in 2023 and popularity of this technology will continue to grow. The importance behind the art of crafting nuanced and effective prompts will heighten, and there will be greater adoption across a wider variety of industries. There should be advancements in algorithms, increasing accessibility through more user-friendly platforms. These can lead to increased focus on minimizing algorithmic biases and the establishment of guardrails governing AI policies. Of course, a keen awareness of the ethical considerations and policy frameworks will help guide generative AI’s responsible use.
- Convergence of AR/VR and AI May Result in “AR/VR on steroids” The fusion of Augmented Reality (AR) and Virtual Reality (VR) technologies with AI unlocks a new era of customization and promises enhanced immersive experiences, blurring the lines between the digital and physical worlds. We expect to see further refining and personalizing of AR/VR to redefine gaming, education, and healthcare, along with various industrial applications.
- EV/Battery Companies Charge into Greener Future. With new technologies and chemistries, advancements in battery efficiency, energy density, and sustainability can move the adoption of electric vehicles (EVs) to new heights. Decreasing prices for battery metals canbatter help make EVs more competitive with traditional vehicles. AI may providenew opportunities in optimizing EV performance and help solve challenges in battery development, reliability, and safety.
- “Rosie the Robot” is Closer than You Think. With advancements in machine learning algorithms, sensor technologies, and integration of AI, the intelligence and adaptability of robotics should continue to grow. Large language models (LLMs) will likely encourage effective human-robot collaboration, and even non-technical users will find it easy to employ robotics to accomplish a task. Robotics is developing into a field where machines can learn, make decisions, and work in unison with people. It is no longer limited to monotonous activities and repetitive tasks.
- Unified Defense in Battle Against Cyber-Attacks. Digital threats are expected to only increase in 2024, including more sophisticated AI-powered attacks. As the international battle against hackers wages on, threat detection, response, and mitigation will play a crucial role in staying ahead of rapidly evolving cyber-attacks. As risks to national security and economic growth, there should be increased collaboration between industries and governments to establish standardized cybersecurity frameworks to protect data and privacy.
Category: Green Tech
New Climate Guidance Issued to Federal Agencies Conducting Environmental Impact Analyses
Overview
On January 9, 2023, the Council for Environmental Quality (“CEQ”) published interim National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions and Climate Change (hereafter, “guidance” or “GHG Guidance”).1 CEQ intends for agencies to apply the guidance now even as CEQ seeks public comment on it.2 The guidance aims to establish best practices to ensure that Federal agencies conduct detailed analyses of greenhouse gas emissions and climate change when evaluating proposed major Federal actions in accordance with the National Environmental Policy Act (“NEPA”) and CEQ’s Regulations Implementing the Procedural Provisions of NEPA.3 The guidance states that these analyses should (1) quantify a proposed action’s GHG emissions; (2) place GHG emissions in appropriate context and disclose relevant GHG emissions and relevant climate impacts; and (3) identify alternatives and mitigation measures to avoid or reduce GHG emissions.
The long-awaited GHG Guidance does not set a numerical threshold for significant impact under NEPA, but it emphasizes achievement of national and other climate objectives. The guidance also stresses monetization of climate-related impacts (social cost of carbon) and consideration of alternatives to fossil energy production and transport, mitigation of climate-related impacts, and resilience and adaptation to climate-related vulnerability. Also prominent in the guidance is consideration of disparate impacts to environmental justice communities.
GHG Guidance
Quantifying a Proposed Action’s GHG Emissions
The guidance explains that agencies should quantify the reasonably foreseeable direct and indirect GHG emissions of their proposed actions and reasonable alternatives (including the no-action alternative) to ensure that each agency adequately considers the incremental contribution of its action to climate change. CEQ recommends that agencies quantify gross emissions increases or reductions (including direct and indirect emissions) individually by each GHG, as well as aggregated in terms of total CO2 by factoring in each pollutant’s global warming potential (“GWP”). CEQ further recommends that agencies quantify the proposed action’s total net GHG emissions or reductions (both by pollutant and by total CO2 emissions) relative to baseline conditions. Finally, CEQ recommends that “[w]here feasible . . . [agencies] should present annual GHG emissions increases or reductions, as well as net GHG emissions over the projected lifetime of the action, consistent with existing best practices.”4 CEQ emphasizes that agencies should be guided by the rule of reason when quantifying emissions. The guidance does not set a “significance” threshold that would trigger the requirement to prepare an EIS.
Disclosing and Providing Context for a Proposed Action’s GHG Emissions and Climate Effects
In the eyes of CEQ, quantifying emissions and summarizing this information in a NEPA document is not sufficient. Agencies should also disclose and provide context for GHG emissions and climate effects to help decision makers and the public understand a proposed action’s potential GHG emissions and climate change effects. CEQ provides a list of best practices for disclosing and contextualizing quantified GHG emissions:5
- Use the Social Cost of Greenhouse Gases (“SC-GHG”) to estimate the dollar value of impacts associated with each type of GHG emission;
- Explain how the proposed action and alternatives would help meet or detract from achieving climate action goals and commitments, and discuss whether and to what extent the proposal’s reasonably foreseeable GHG emissions are consistent with GHG reduction goals;
- Summarize and cite to available scientific literature to help explain the real-world effects associated with an increase in GHG emissions that contribute to climate change; and
- Provide accessible comparisons or equivalents to help the public and decision makers understand GHG emissions in more familiar terms (i.e., household emissions per year, annual average emissions from a certain number of cars on the road, etc.).
CEQ explicitly states that monetizing the “social cost” of GHG emissions as recommended does not require the agency also to monetize the social benefits of the proposed action, nor does it have to compare estimated costs and benefits.6 The guidance also emphasizes the use of “substitution analysis” to discern the GHG-related changes associated with shifting energy sources if the proposed or alternative actions occurred.7
Identifying Reasonable Alternatives and Potential Mitigation Measures
The GHG Guidance directs agencies to use the NEPA process to identify and assess the reasonable alternatives to proposed actions that will avoid or minimize GHG emissions or climate change effects. CEQ recognizes that reasonable alternatives must be consistent with the purpose and need of the proposed action, and that agencies are not required to select the alternative with the lowest net GHG emissions or climate costs or the greatest net climate benefits.8 However, “in line with the urgency of the climate crisis,” agencies should identify the alternative with the lowest net GHG emissions or the greatest net climate benefits among the alternatives they assess and should “use the NEPA process to make informed decisions grounded in science that are transparent with respect to how Federal actions will help meet climate change goals and commitments, or alternately, detract from them.”9 When quantifying reasonably foreseeable emissions associated with the proposed action or alternatives, CEQ directs agencies to include reasonably foreseeable direct and indirect GHG emissions of their proposed actions. CEQ provides that processing, refining, transporting, and end-use of the fossil fuel being extracted, including combustion of the resource to produce energy, would constitute indirect emissions of fossil fuel extraction.10
CEQ encourages agencies to mitigate GHG emissions “to the greatest extent possible.”11 It instructs agencies to consider potential mitigation measures by determining whether impacts from a proposed action or alternatives can be avoided, considering whether adverse impacts can be minimized, and rectifying or requiring compensation for residual impacts where unavoidable. CEQ considers available mitigation that avoids, minimizes, or compensates for GHG emissions and climate change effects to include measures like renewable energy generation and energy storage, carbon capture and sequestration, and capturing GHG emissions such as methane.12
Examples
The guidance provides a number of examples as to how it would work in specific scenarios. For example, the guidance notes that “absent exceptional circumstances,” construction of renewable energy projects “should not warrant a detailed analysis of lifetime GHG emissions.”13 CEQ uses natural gas pipelines as an example of consideration of indirect effects, stating that they create the “economic conditions for additional natural gas production and consumption, including both domestically and internationally, which produce indirect (both upstream and downstream) GHG emissions that contribute to climate change.”14 When discussing the need to analyze the effects of climate change on a proposed action (and not just the impacts of the proposed action on climate change), CEQ gives as an example a project that may require water from a source with diminishing quantities available and advises the agency consider such issues to “inform decisions on siting, whether to proceed with and how to design potential actions and reasonable alternatives, and to eliminate or mitigate effects exacerbated by climate change.”15
Conclusion
Robust comments are likely to be filed to further inform CEQ’s effort on the GHG Guidance. Nevertheless, CEQ has directed agencies to apply the guidance to all new proposed actions and to consider applying it to proposed actions that are currently under NEPA review. Comments on the interim guidance are due March 10, 2023.
FOOTNOTES
1. CEQ, National Environmental Policy Act Guidance on Consideration of Greenhouse Gas, 88 Fed. Reg. 1,196 (Jan. 9, 2023), https://www.govinfo.gov/content/pkg/FR-2023-01-09/pdf/2023-00158.pdf (“GHG Guidance”).
2. Id.
3. Note that CEQ has announced its intention to further revise its existing NEPA regulations in 2023, after having issued an earlier round of regulatory amendments in 2022. See CEQ Fall 2022 Regulatory Agenda, National Environmental Policy Act Implementing Regulations Revisions Phase 2, RIN No. 0331-AA07, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202210&RIN=0331-AA07; CEQ, National Environmental Policy Act Implementing Regulations Revisions, 87 Fed. Reg. 23,453 (Apr. 20, 2022), https://www.govinfo.gov/content/pkg/FR-2022-04-20/pdf/2022-08288.pdf.
4. GHG Guidance at 1,201.
5. Id. at 1,202-03.
6. Id. at 1,203, 1,211.
7. Id. at 1,205.
8. Id. at 1,204.
9. Id.
10. Id.
11. Id. at 1,206.
12. Id.
13. Id. at 1,202.
14. Id. at 1,204 n.86.
15. Id. at 1,208.
For more Environmental and Energy News, click here to visit the National Law Review.
© 2023 Bracewell LLP
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.”
© 2022 Foley & Lardner LLP
Draft SEC Five-Year Strategic Plan Emphasizes Importance of Climate Disclosures
Recently, the SEC issued its five-year strategic plan for public comment. This strategic plan covers a wide variety of topics, ranging from adapting to new technology to plans for increasing internal SEC workforce diversity. Significantly, this draft strategic plan stated that “the SEC must update its disclosure framework,” and highlighted three areas in which it should do so: “issuers’ climate risks, cybersecurity hygiene policies, and their most important asset: their people.”
The SEC has already undertaken steps to enact these proposed updates to its disclosure requirements for public companies. Notably, this past March it proposed draft climate disclosure rules, which provoked a significant response from the public–including widespread criticism from many companies (as well as praise from environmental organizations). The fact that the SEC chose to highlight these rules in its (draft) five-year strategic plan indicates the depth of the commitment it has made to these draft climate disclosures, and further suggests that the final form of the climate disclosures is unlikely to be significantly altered in substance from what the SEC has already proposed. This statement reinforces the commitment of Chairman Gensler’s SEC and the Biden Administration to financial disclosures as a method to combat climate change.
“The markets have begun to embrace the necessity of providing a greater level of disclosure to investors. From time to time, the SEC must update its disclosure framework to reflect investor demand. Today, investors increasingly seek information related to, among other things, issuers’ climate risks, cybersecurity hygiene policies, and their most important asset: their people. In order to catch up to that reality, the agency should continue to update the disclosure framework to address these areas of investor demand, as well as continue to take concrete steps to modernize the systems that support the disclosure framework, to make public disclosures easier to access and analyze and thus more decision-useful to investors. . . . Across the agency, the SEC must continually reassess its risks, including in new areas such as climate risk, and document necessary controls.”
©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
CFTC Wades Into Climate Regulation
On June 2, 2022, the Commodities Futures Trading Commission (CFTC) issued a Request for Information (“RFI”) for “public comment on climate-related financial risk to better inform its understanding and oversight of climate-related financial risk as pertinent to the derivatives markets and underlying commodities markets.” According to the RFI, the CFTC is contemplating “potential future actions including, but not limited to, issuing new or amended guidance, interpretations, policy statements, regulations, or other potential Commission action within its authority under the Commodity Exchange Act as well as its participation in any domestic or international fora.”
Specifically, the RFI issued by the CFTC is quite wide-ranging, and engages with numerous aspects of the CFTC’s authority, focusing on both systemic and narrow issues. For example, the CFTC has, among other things, issued a broad request for comment on how “its existing regulatory framework and market oversight . . . may be affected by climate-related financial risk” and “how climate-related financial risk may affect any of its registered entities, registrants, or other market participants, and the soundness of the derivatives markets.” It is hard to imagine a broader request by the CFTC–it is effectively asking for input on how “climate-related financial risk” may impact any portion of its regulatory purview. Conversely, the CFTC has also posed very specific questions, including as to how the CFTC “could enhance the integrity of voluntary carbon markets and foster transparency, fairness, and liquidity in those markets,” and how it could “adapt its oversight of the derivatives markets, including any new or amended derivative products created to hedge-climate-related financial risk.” In short, based upon the RFI, the CFTC could conceivably adopt a narrow or broad view of how it should adjust its regulations to account for climate-related financial risk. Notably, however, the CFTC also asked if there were “ways in which updated disclosure requirements could aid market participants in better assessing climate-related risks,” which suggests that the CFTC may echo the SEC’s recent proposed rule for mandatory climate disclosures.
Most significantly, the fact that yet another financial regulatory agency is focused on “climate-related financial risk” suggests that the Biden Administration is willing to expend significant resources and energy in engaging in this type of regulation to advance its climate agenda. When considered in tandem with the SEC’s recent proposed rules for mandatory climate disclosures and to combat greenwashing, it is apparent that there is a significant regulatory focus on climate issues and the financial markets. This move by the CFTC also suggests that the Biden Administration will fully support the SEC’s proposed rules against the inevitable legal challenge. (And, based upon the concurrences of the Republican CFTC commissioners to this RFI, it is likely that any climate-related regulation proposed by the CFTC will also be subject to legal challenge, likely on the grounds that such a regulation exceeded the CFTC’s authority.) Most importantly, this move by the CFTC–that seeks to “understand how market participants use the derivative markets to hedge and speculate on various aspects of physical and transition [climate] risk”–demonstrates that the regulatory focus on climate and the financial markets will remain a top priority for the foreseeable future.
The Commodity Futures Trading Commission today unanimously voted to release a Request for Information (RFI) to seek public comment on climate-related financial risk to better inform its understanding and oversight of climate-related financial risk as pertinent to the derivatives markets and underlying commodities markets.
Article By Jacob H. Hupart of Mintz
For more environmental legal news, click here to visit the National Law Review.
©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
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:
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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.
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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.
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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.
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Applicants must use Form PTO/SB/457—which contains the petition and requisite certifications—to request participation in this program.
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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.
Copyright © 2022 Womble Bond Dickinson (US) LLP All Rights Reserved.
Biden Revisions to the NEPA Regulations Now in Effect
The Biden Administration is amending the federal regulations for implementing the National Environmental Policy Act (NEPA) to reverse certain changes made by the Trump Administration. The first set of amendments took effect last Friday on May 20, 2022.
As background, the Council for Environmental Quality (CEQ) first issued the NEPA implementing regulations in 1978. They remained unchanged for more than 40 years until the Trump Administration published its 2020 rule updating the regulations to facilitate “more efficient, effective, timely NEPA reviews.” Developers, construction companies, and other businesses generally supported these changes with the hope they would streamline a lengthy process that often significantly delays projects. However, environmentalists opposed the changes, fearing they would weaken important protections, including those aimed at reducing climate change impacts and protecting natural resources. Upon taking office, the Biden Administration immediately began an effort to reverse parts of the 2020 rule.
The Biden amendments will be issued in two phases. The “Phase One” rule was published on April 20, 2022, and is in effect as of May 20, 2022. The “Phase Two” rule, which is expected to include more comprehensive revisions, will be issued “over the coming months”.
The Phase One rule reinstates the following three key provisions of the NEPA regulations:
1. Statement of Purpose and Need, and Scope of Reasonable Alternatives (40 CFR 1502.13)
Under NEPA, an agency’s statement of purpose and need informs the range of alternative actions analyzed in an environmental assessment (EA) or environmental impact statement (EIS). The NEPA regulations historically required agencies to consider “reasonable alternatives not within the jurisdiction of the lead agency.” The 2020 rule updates, however, instructed agencies to limit the statement of purpose and need, and therefore the range of alternatives, to only those that are consistent with the applicant’s goals and the agency’s statutory authority.
The Phase One rule removes these limitations to re-establish federal agencies’ discretion to consider a variety of factors, including a range of reasonable alternatives that are not entirely consistent with the goals of the project applicant. Accordingly, federal agencies may again coordinate with communities and project proponents to evaluate alternatives that could minimize environmental and public health costs, but extend beyond the scope of the agency’s authority or do not serve the applicant’s goals.
2. Agency Implementing Regulations (40 CFR 1507.3)
The Phase One rule also removes language that could limit agencies’ standards and procedures for implementing NEPA rules that extend beyond CEQ regulatory requirements. This update reestablishes CEQ regulations as the “floor” for NEPA environmental review, and restores the agency’s discretion and flexibility to tailor NEPA procedures to align with specific agency and public needs. In contrast, the 2020 rule would have made the CEQ regulations a “ceiling” for NEPA requirements, effectively restricting agencies’ discretion to develop and implement procedures beyond requisite CEQ regulations.
3. Scope of Effects (40 CFR 1508.1(g))
Finally, the Phase One rule restores the definition of “effects” that requires agencies to consider the historic categories of “reasonably foreseeable” direct, indirect, and cumulative effects. The 2020 rule, in contrast, limited the scope of this analysis to effects with a “reasonably close causal relationship,” and included language indicating that agencies were only required to consider direct effects, had discretion to consider indirect effects, and should not consider cumulative effects in NEPA review. The Phase One rule change thus ensures that agencies’ NEPA documents will evaluate all relevant environmental impacts resulting from the agency decision.
Here, the Phase One rule reversal is particularly impactful in terms of an agency’s consideration of climate change, where cumulative effects tend to be substantially greater than the effects of the individual project. The Phase One update confirms CEQ’s view that climate change impacts are adequately considered in evaluating direct, indirect and cumulative effects.
*****
Except for reinstating these three key provisions, the Phase One rule does not affect other changes made by the 2020 rule. The Biden Administration plans to introduce more comprehensive changes as part of the forthcoming Phase Two rule. These changes, which are anticipated to be more controversial and draw additional public attention, are expected to address environmental justice, public participation, and streamlining provisions, including the use of plain language, deadlines, page limits, and inter-agency coordination.
Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.
Calling All Whistleblowers: Department of Justice Launches Office of Environmental Justice
Last week, the United States Attorney General announced the creation of the Office of Environmental Justice (OEJ) within the Department of Justice. The OEJ will manage DOJ’s environmental justice projects and “serve as the central hub for our efforts to advance our comprehensive environmental justice enforcement strategy” and address the “harm caused by environmental crime, pollution, and climate change.”
In his speech, Attorney General Merrick B. Garland remarked that OEJ will “prioritize the cases that will have the greatest impact on the communities most overburdened by environmental harm” in partnership with the Civil Rights Division, Office for Access to Justice, Office of Tribal Justice, and United States Attorneys’ Offices.
Whistleblowers take note: violations of environmental laws (Clean Air Act, Clean Water Act) can be a basis for a False Claims Act case.
In 2019, the DOJ settled a case against a domestic producer of Omega-3 fish oil supplements, fishmeal, and fish solubles for livestock and aquaculture feed. The producer allegedly falsely certified compliance with federal environmental laws on a loan application. Under the terms of the settlement, the fish oil producer paid $1 million. A former employee blew the whistle on their employer’s fishy business and was rewarded $200,000 as part of a qui tam lawsuit.
False certification of environmental law compliance harms taxpayers, workers, residents, and the environment for generations. The Assistant Attorney General of the DOJ’s Civil Division said about the case, “Companies will face appropriate consequences if they misrepresent their eligibility to participate in federal programs and divert resources from those who should receive federal support.” It’s up to employees of manufacturers, contractors, construction companies, power plants, and others who receive government funds to report environmentally hazardous misconduct, so that, as the U.S. Attorney said, “Businessmen and companies that lie to get their hands on taxpayer money will be held accountable for their actions.”
Article By Eva Gunasekera and Renée Brooker of Tycko & Zavareei LLP
For more whistleblower legal news, click here to visit the National Law Review.
© 2022 by Tycko & Zavareei LLP
ARPA-E: Biden’s Proposed FY 2023 Budget Boosts Investment in Clean Energy Technologies
On March 28, 2022, the Biden-Harris Administration sent the President’s Budget for Fiscal Year (FY) 2023 to the United States Congress (“Congress”). The President’s proposed $5.8 trillion budget for FY 2023 allocates billions of dollars toward combating climate change and boosting clean energy development. Biden’s budget requests $48.2 billion for the Department of Energy (“DOE”), with $700 million of those funds allocated to the DOE’s Advanced Research Projects Agency-Energy program (“ARPA-E”).[1] With these increased funds, the Biden administration plans for ARPA-E to expand its scope beyond energy technology–focused projects to include climate adaptation and resilience innovations.[2]
What Is ARPA-E?
ARPA-E is a United States federal government agency under the purview of the Department of Energy that funds and promotes the research and development of advanced energy technologies. ARPA-E was recommended to Congress in the 2005 National Academies report Rising Above the Gathering Storm: Energizing and Employing America for a Bright Economic Future, which published recommendations for federal government actions to maintain and expand U.S. competitiveness.[3] In 2007, ARPA-E was officially created after Congress implemented a number of the report’s recommendations by enacting the America COMPETES Act.[4] The 2007 Act was superseded by the America COMPETES Reauthorization Act of 2010, which incorporated much of the original language of the 2007 Act but made some modifications to ARPA-E structure.[5] In 2009, ARPA-E officially commenced operations after receiving its first appropriated funds through the American Recovery and Reinvestment Act of 2009 —$400 million to fund the establishment of ARPA-E.[6]
ARPA-E’s mission is statutorily defined as overcoming “the long-term and high-risk technology barriers in the development of energy technologies.”[7] This involves the development of energy technologies that will achieve various goals, including the reduction of fossil fuel imports, the reduction of energy-related emissions, improvements in energy efficiency, and increased resilience and security of energy infrastructure.[8] The statute directs ARPA-E to pursue these objectives through particular means:
- Identifying and promoting revolutionary advances in fundamental and applied sciences;
- Translating scientific discoveries and cutting-edge inventions into technological innovations; and
- Accelerating transformational technological advances in areas industry is unlikely to undertake because of technical and financial uncertainty.[9]
The Impact of ARPA-E
Since 2009, ARPA-E has provided approximately $3 billion in R&D funding for over 1,294 potentially transformational energy technology projects.[10] Publishing annual reports to analyze and catalog its influence, the agency tracks commercial impact with key early indicators, including private-sector follow-on funding, new company formation, partnership with other government agencies, publications, inventions, and patents.[11]
Many ARPA-E project teams have continued to advance their technologies: 129 new companies have been formed, 285 licenses have been issued, 268 teams have partnered with another government agency, and 185 teams have together raised over $9.87 billion in private-sector follow-on funding.[12] In addition, ARPA-E projects fostered technological innovation and advanced scientific knowledge, as evidenced by the 5,497 peer-reviewed journal articles and 829 patents issued by the U.S. Patent and Trademark Office that sprung from the ARPA-E program.[13] ARPA-E recently announced that it is starting to count exits through public listings, mergers, and acquisitions. As of January 2022, ARPA-E has 20 exits with a total reported value of $21.6 billion.[14]
How Does Biden’s FY 2023 Budget Affect ARPA-E?
Biden has requested a 56% increase for ARPA-E, to $700 million.[15] The budget also proposes expansions of ARPA-E’s purview to more fully address innovation gaps around adaptation, mitigation, and resilience to the impacts of climate change.[16] This investment in research and development of high-potential and high-impact technologies aims to help remove technological barriers to advance energy and environmental missions.[17]
The request provides that ARPA-E shall also expand its scope “to invest in climate-related innovations necessary to achieve net zero climate-inducing emissions by 2050.”[18] Given the increasing bipartisan support for alternative energy funding and ARPA-E’s continuing and rising commercial impact, it is likely that ARPA-E’s funding and support of the research and development of early-stage energy technologies will continue to pave the way for the commercialization of advanced energy technologies.
Endnotes
- https://www.law360.com/articles/1478133/biden-budget-provides-billions-for-clean-energy
- https://www.energy.gov/articles/statement-energy-secretary-granholm-president-bidens-doe-fiscal-year-2023-budget
- https://doi.org/10.17226/24778
- Id. at 22
- Id.
- Id.
- 42 U.S.C. § 16538(b)
- 42 U.S.C. § 16538(c)(1)(A)
- 42 U.S.C. § 16538(c)(2)
- https://arpa-e.energy.gov/about/our-impact
- Id.
- Id.
- Id.
- Id.
- https://www.science.org/content/article/biden-s-2023-budget-request-science-aims-high-again
- https://www.whitehouse.gov/wp-content/uploads/2022/03/budget_fy2023.pdf
- Id.
- https://www.science.org/content/article/biden-s-2023-budget-request-science-aims-high-again
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President Biden’s FY 2023 Budget Request Would Strengthen TSCA and Tackle PFAS Pollution
On March 28, 2022, the Biden Administration submitted to Congress President Biden’s budget for fiscal year (FY) 2023. According to the U.S. Environmental Protection Agency’s (EPA) March 28, 2022, press release, the budget makes critical investments, including:
- Strengthening EPA’s Commitment and Ability to Implement Toxic Substances Control Act (TSCA) Successfully: The budget provides $124 million and 449 full time equivalents (FTE) for TSCA efforts “to deliver on the promises made to the American people by the bipartisan Lautenberg Act.” According to the budget, “[t]hese resources will support EPA-initiated chemical risk evaluations and protective regulations in accordance with statutory timelines.”
- Tackling Per- and Polyfluoroalkyl Substances (PFAS) Pollution: PFAS are a group of man-made chemicals that threaten the health and safety of communities across the United States. As part of the President’s commitment to tackling PFAS pollution, the budget provides approximately $126 million in FY 2023 for EPA to increase its understanding of human health and ecological effects of PFAS, restrict uses to prevent PFAS from entering the air, land, and water, and remediate PFAS that have been released into the environment. EPA states that it will continue to act on its PFAS Strategic Roadmap to safeguard communities from PFAS contamination.
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