Biden administration Archives - The National Law Forum

USCIS Improvements Cut Naturalization Processing Time

USCIS is processing naturalization cases faster than they have in years, and the agency is managing to cut down on its naturalization backlog. Given the current average timing, eligible green card holders who applied early in the summer 2024 might be sworn in in time to vote in the upcoming November elections.

Of course, field offices vary in processing times, but USCIS stated it was effectively eliminating the net backlog of naturalization applications and reducing the median processing time from 10.5 months to as little as five months. This is a 50 percent drop in processing time since 2022, achieving the agency’s longstanding goal and significantly reducing waiting times for most individuals seeking U.S. citizenship. Naturalization has always been a target of note in the agency’s backlog reduction effort. This was achieved by increasing capacity, improving technology, and expanding staffing.

Naturalization cases often increase ahead of elections. Voting is not the only personal benefit of citizenship. Immigrants who become U.S. citizens may also serve on juries, travel on a U.S. passport, bring family members to the U.S. more easily, apply for certain federal jobs, run for federal office, become eligible for certain federal grants, scholarships and benefits, and, importantly, have the right to remain in the U.S. that cannot be taken away. Beyond that, findings show that naturalized citizens have higher employment rates and earn between 50 and 70 percent more than noncitizens. Increasing the number of citizens also helps the economy in general. It leads to an increase in tax revenue and greater home ownership.

When President Joe Biden came into office, he issued an executive order to reduce naturalization barriers to strengthen the integration of new Americans. About 100,300 naturalization petitions were denied in FY 2023, a 10 percent drop from the 111,600 petitions denied in FY 2022. The Biden Administration also made the naturalization application shorter and, while it raised the naturalization fee, a number of discounts are available.

Eligibility requirements for naturalization include age, continuous residence, physical presence, jurisdiction, knowledge of U.S. history, civics, and English, and good moral character.

A Look at the Evolving Scope of Transatlantic AI Regulations

There have been significant changes to the regulations surrounding artificial intelligence (AI) on a global scale. New measures from governments worldwide are coming online, including the United States (U.S.) government’s executive order on AI, California’s upcoming regulations, the European Union’s AI Act, and emerging developments in the United Kingdom that contribute to this evolving environment.

The European Union (EU) AI Act and the U.S. Executive Order on AI aim to develop and utilize AI safely, securely, and with respect for fundamental rights, yet their approaches are markedly different. The EU AI Act establishes a binding legal framework across EU member states, directly applies to businesses involved in the AI value chain, classifies AI systems by risk, and imposes significant fines for violations. In contrast, the U.S. Executive Order is more of a guideline as federal agencies develop AI standards and policies. It prioritizes AI safety and trustworthiness but lacks specific penalties, instead relying on voluntary compliance and agency collaboration.

The EU approach includes detailed oversight and enforcement, while the U.S. method encourages the adoption of new standards and international cooperation that aligns with global standards but is less prescriptive. Despite their shared objectives, differences in regulatory approach, scope, enforcement, and penalties could lead to contradictions in AI governance standards between the two regions.

There has also been some collaboration on an international scale. Recently, there has been an effort between antitrust officials at the U.S. Department of Justice (DOJ), U.S. Federal Trade Commission (FTC), the European Commission, and the UK’s Competition and Markets Authority to monitor AI and its risks to competition. The agencies have issued a joint statement, with all four antitrust enforcers pledging to “to remain vigilant for potential competition issues” and to use the powers of their agencies to provide safeguards against the utilization of AI to undermine competition or lead to unfair or deceptive practices.

The regulatory landscape for AI across the globe is evolving in real time as the technology develops at a record pace. As regulations strive to keep up with the technology, there are real challenges and risks that exist for companies involved in the development or utilization of AI. Therefore, it is critical that business leaders understand regulatory changes on an international scale, adapt, and stay compliant to avoid what could be significant penalties and reputational damage.

The U.S. Federal Executive Order on AI

In October 2023, the Biden Administration issued an executive order to foster responsible AI innovation. This order outlines several key initiatives, including promoting ethical, trustworthy, and lawful AI technologies. It also calls for collaboration between federal agencies, private companies, academia, and international partners to advance AI capabilities and realize its myriad benefits. The order emphasizes the need for robust frameworks to address potential AI risks such as bias, privacy concerns, and security vulnerabilities. In addition, the order directs that various sweeping actions be taken, including the establishment of new standards for AI safety and security, the passing of bipartisan data privacy legislation to protect Americans’ privacy from the risks posed by AI, the promotion of the safe, responsible, and rights-affirming development and deployment of AI abroad to solve global challenges, and the implementation of actions to ensure responsible government deployment of AI and modernization of the federal AI infrastructure through the rapid hiring of AI professionals.

At the state level, Colorado and California are leading the way. Colorado enacted the first comprehensive regulation of AI at the state level with The Colorado Artificial Intelligence Act (Senate Bill (SB) 24-205), signed into law by Governor Jared Polis on May 17, 2024. As our team previously outlined, The Colorado AI Act is comprehensive, establishing requirements for developers and deployers of “high-risk artificial intelligence systems,” to adhere to a host of obligations, including disclosures, risk management practices, and consumer protections. The Colorado law goes into effect on February 1, 2026, giving companies over a year to thoroughly adapt.

In California, a host of proposed AI regulations focusing on transparency, accountability, and consumer protection would require the disclosure of information such as AI systems’ functions, data sources, and decision-making processes. For example, AB2013 was introduced on January 31, 2024, and would require that developers of an AI system or service made available to Californians to post on the developer’s website documentation of the datasets used to train the AI system or service.

SB970 is another bill that was introduced in January 2024 and would require any person or entity that sells or provides access to any AI technology that is designed to create synthetic images, video, or voice to give a consumer warning that misuse of the technology may result in civil or criminal liability for the user.

Finally, on July 2, 2024 the California State Assembly Judiciary Committee passed SB-1047 (Safe and Secure Innovation for Frontier Artificial Intelligence Models Act), which regulates AI models based on complexity.

The European Union’s AI Act

The EU is leading the way in AI regulation through its AI Act, which establishes a framework and represents Europe’s first comprehensive attempt to regulate AI. The AI Act was adopted to promote the uptake of human-centric and trustworthy AI while ensuring high level protections of health, safety, and fundamental rights against the harmful effects of AI systems in the EU and supporting innovation.

The AI Act sets forth harmonized rules for the release and use of AI systems in the EU; prohibitions of certain AI practices; specific requirements for high-risk AI systems and obligations for operators of such systems; harmonized transparency rules for certain AI systems; harmonized rules for the release of general-purpose AI models; rules on market monitoring, market surveillance, governance, and enforcement; and measures to support innovation, with a particular focus on SMEs, including startups.

The AI Act classifies AI systems into four risk levels: unacceptable, high, limited, and minimal. Applications that pose an unacceptable risk, such as government social scoring systems, are outright banned. High-risk applications, including CV-scanning tools, face stringent regulations to ensure safety and accountability. Limited risk applications lack full transparency as to AI usage, and the AI Act imposes transparency obligations. For example, humans should be informed when they are using AI systems (such as chatbots) that they are interacting with a machine and not a human so as to enable the user to make an informed decision whether or not to continue. The AI Act allows the free use of minimal-risk AI, including applications such as AI-enabled video games or spam filters. The vast majority of AI systems currently used in the EU fall into this category.

The adoption of the AI Act has not come without criticism from major European companies. In an open letter signed by 150 executives, they raised concerns over the heavy regulation of generative AI and foundation models. The fear is that the increased compliance costs and hindered productivity would drive companies away from the EU. Despite these concerns, the AI Act is here to stay, and it would be wise for companies to prepare for compliance by assessing their systems.

Recommendations for Global Businesses

As governments and regulatory bodies worldwide implement diverse AI regulations, companies have the power to adopt strategies that both ensure compliance and mitigate risks proactively. Global businesses should consider the following recommendations:

Risk Assessments: Conducting thorough risk assessments of AI systems is important for companies to align with the EU’s classification scheme and the U.S.’s focus on safety and security. There must also be an assessment of the safety and security of your AI systems, particularly those categorized as high-risk under the EU’s AI Act. This proactive approach will not only help you meet regulatory requirements but also protect your business from potential sanctions as the legal landscape evolves.
Compliance Strategy: Develop a compliance strategy that specifically addresses the most stringent aspects of the EU and U.S. regulations.
Legal Monitoring: Stay on top of evolving best practices and guidelines. Monitor regulatory developments in regions in which your company operates to adapt to new requirements and avoid penalties and engage with policymakers and industry groups to stay ahead of compliance requirements. Participation in public consultations and industry forums can provide valuable insights and influence regulatory outcomes.
Transparency and Accountability: To meet ethical and regulatory expectations, transparency and accountability should be prioritized in AI development. This means ensuring AI systems are transparent, with clear documentation of data sources, decision-making processes, and system functionalities. There should also be accountability measures in place, such as regular audits and impact assessments.
Data Governance: Implement robust data governance measures to meet the EU’s requirements and align with the U.S.’s emphasis on trustworthy AI. Establish governance structures that ensure compliance with federal, state, and international AI regulations, including appointing compliance officers and developing internal policies.
Invest in Ethical AI Practices: Develop and deploy AI systems that adhere to ethical guidelines, focusing on fairness, privacy, and user rights. Ethical AI practices ensure compliance, build public trust, and enhance brand reputation.

Biden Administration Changes Green Card Process for Mixed-Status Families

To improve immigration processes and provide additional support to immigrants, the Biden administration has announced several policy changes.

Starting Aug. 19, 2024, unauthorized spouses and children of U.S. citizens who have been in the United States for at least 10 years can apply for parole in place, allowing these individuals to obtain green cards without having to leave the country. If approved, eligible family members will have three years to apply for permanent residency while being granted work authorization. By enabling family members to adjust their immigration status from within the United States, rather than traveling abroad and potentially facing a 10-year reentry ban, this change may significantly simplify the permanent residency process for eligible individuals.

The U.S. Department of State has also revised its guidance to favor immigrants with U.S. college degrees and job offers. The updated guidelines clarify that it is in the public interest for these individuals, including those with work authorization from the Deferred Action for Childhood Arrivals (DACA) program, to utilize their degrees in the United States. Consular officers will now have the discretion to weigh an applicant’s college degree and job offer favorably when deciding whether to grant a waiver to a visa applicant who would otherwise be ineligible. These adjustments aim to expedite the work visa process for college graduates.

Additionally, the Biden administration announced plans to double the locations for the Executive Office Immigration Review (EOIR), a program that provides volunteer attorneys in immigration courts for those without legal representation. Currently operating in San Francisco, Chicago, and New Orleans, the EOIR will expand to Maryland, New York City, and Atlanta by the end of the fiscal year. This expansion seeks to ensure fair representation for immigrants during legal proceedings. The EOIR has issued a call for attorneys to provide pro bono support to the program.

To expand opportunities for Latino communities, the Biden administration also announced that the U.S. Department of Education will propose to expand federal outreach programs targeting beneficiaries of the DACA program. Known as the Trio Program, this initiative aims to assist individuals from disadvantaged backgrounds as they transition from high school to college. The Department of Education’s proposal would extend the Trio Program to reach an additional 50,000 individuals.

Biden Administration Announces Voluntary Carbon Market Principles

The recent Joint Policy Statement and Principles (Principles) released by the Biden Administration, and related remarks by Secretary of the Treasury Janet L. Yellen, mark a significant milestone in the development of the voluntary carbon market (VCM).

Our views on this announcement and a brief summary of these Principles are set out below.

This is a very encouraging, and intriguing, governmental announcement in respect of an unregulated, international market.

One of the critical aspects of this announcement is the US government’s approach to balancing market promotion with non-regulation. The VCM is notably unregulated, and the intention is for it to remain so. As such, the announcement appears to be striving to foster integrity and growth within the market whilst avoiding the imposition of rigid regulatory frameworks that could stifle growth. There is a clear nod from the government to the market’s voluntary nature, thereby allowing for flexibility and the opportunity for diverse, creative solutions to emerge. However, the VCM has faced challenges that are not unusual for a nascent, evolving market and the government clearly wants to stimulate the market by providing clear guidance that enhances trust and integrity. This delicate equilibrium is essential for the long-term success and scalability of the VCM.

These Principles therefore serve as voluntary (but government-endorsed) guidelines, moving towards establishing a structure that market participants can follow to ensure the credibility and reliability of carbon credits.

The Principles do not reshape the current market. They are based instead, in large part, on existing best practice advocated by private sector and non-governmental organisations and initiatives. We have considered in some detail in a prior article these existing quasi-regulatory bodies and their functions – much of which is echoed in the Principles.

The Principles seek to bolster integrity in three main areas: on the supply side, demand side and the actual market itself.

Supply-side

Principle 1 – “Integrity & Standards”: Carbon credits must meet strict integrity standards and be certified through robust, transparent verification processes to ensure additionality, quantifiability and permanence.
Principle 2 – “Avoid Harm”: Generating credits should cause no environmental or social harm and promote co-benefits including sustainable development and increased biodiversity, involving relevant stakeholders in the process.

Demand-side

Principle 3 – “Buyer Responsibility”: Companies offsetting credits should set net-zero strategies, maintain an inventory of emissions (detailing Scope 1, 2, and 3 emissions) and regularly report.
Principle 4 – “Transparency”: Companies offsetting credits should publicly disclose details of purchased and retired credits annually, ensuring information is accessible and comparable.
Principle 5 – “Accurate Claims”: Public offsetting claims must accurately reflect the climate impact of credits and only use those meeting high integrity standards, prioritising internal emissions reductions.

Market-side

Principle 6 – “Market Integrity”: Stakeholders should seek to improve market functionality, transparency and equity to enhance the market’s overall health and high-integrity.
Principle 7 – “Facilitate Participation”: Policymakers and market participants should lower transaction costs and barriers for credit providers, ensuring market certainty and bankability of VCM projects, especially from developing regions.

On the supply side (Principles 1 and 2), inspiration has been drawn from, amongst other sources, the Core Carbon Principles and other standards of the Integrity Council for the Voluntary Carbon Market. On the demand side (Principles 3, 4 and 5), inspiration has been drawn from, amongst other sources, the Claims Code of Practice and other standards of the Voluntary Carbon Market Initiative. On the market side (Principles 6 and 7) the message is more general and is aimed at promoting the integrity of the standards/registries and their participants and focussing on the policymakers. The Principles conclude with a rallying cry for policymakers and buyers to consider ways to enhance market certainty for lenders undertaking long term investments. The current financing landscape of the VCM is an area which we have also considered in some detail in a prior article.

The Principles and comments from Treasury acknowledge that the VCM, in its current state, suffers from some key challenges that inhibit growth at the scale needed to achieve national and international climate goals. The seven Principles outlined above are the government’s initial efforts at assisting to overcome those challenges. They reflect the importance of a functioning carbon reduction infrastructure (both physical and financial) to the government, and a high level of understanding of the carbon abatement ecosystem. And, perhaps most importantly, these statements recognise and encourage the involvement and initiative of all participating stakeholders to take demonstrative steps to establish a market-based approach to carbon reduction. As Secretary Yellen’s statement says, “harnessing the power of markets and private capital is critical.”

While the VCM principles announcement reflects an attempt to improve confidence in voluntary carbon offsets, at the same time the US Department of Agriculture (USDA) signalled its interest in establishing public protocols specifically for third-party verification of offsets deriving from forestry and farming. This action reflects a keen interest on both sides of the political aisle in Congress. Sen. Debbie Stabenow (D-MI), chair of the Senate Agriculture Committee noted that both the VCM principles and the USDA announcement established that, “Voluntary carbon credit markets generate new revenue streams for farmers, foresters, and rural communities, and there is clear enthusiasm across private industry and the public sector to tap into that potential.” Sen. Stabenow further notes that these actions “will strengthen the integrity of these markets and build a foundation for the future.”

The VCM principles and USDA statement can be seen as part of an effort to implement the Growing Climate Solutions Act which was designed to break down barriers for farmers, ranchers, and foresters interested in participating in carbon markets and in embracing so-called climate-smart agricultural practices. The Act was passed by Congress on a bipartisan basis and signed into law by President Biden on December 29, 2022. As the House and Senate consider “farm bills” in the near future, we can expect more action on agricultural offsets.

These announcements clearly underscore the government’s commitment to promoting the VCM without the enforcement of laws or regulations. It is a firm message of support for the VCM, and explicit recognition that development of the VCM is critical to unlocking carbon abatement projects globally. It clarifies that the current administration recognises the VCM as another component of the energy transition required to achieve national and international climate goals, as well as sustainable environmental practices. In particular, these seven Principles provide a framework that can guide the VCM’s growth. Whilst the Principles goldplate (rather than reinvent) existing best practice, this achieves the sensitive balancing act required from a government seeking to promote an unregulated market.

States Sue the Biden Administration to Stop Loan Relief Plan

On April 9, 2024, seven states filed suit against the Biden administration in an attempt to block its new “SAVE” plan, an income-driven repayment plan that leads to eventual loan forgiveness. The case is pending in the U.S. District Court for the Eastern District of Missouri.

Plaintiff states claim that the plan is unlawful because it evades limits Congress imposed for income-based repayment plans and sets arbitrarily high thresholds that would effectively create a grant program for student borrowers. Plaintiffs allege that the US Supreme Court struck down a similar plan last year proposed by the Biden administration which would have cost taxpayers $430 billion. See Biden v. Nebraska, 143 S. Ct. 2355, 2362 (2023). The states allege that the plan violates the Higher Education Act of 1965 and subsequent amendments, which allows student-loan cancelation to occur only after a borrower pays 15% of their disposable income (which is defined as 150% above the poverty line) after 25 years.

The states further allege that the disposable income threshold would increase from 150% to 225% above the poverty line and that the plan would only require borrowers to pay 5% of their income for 10 years before loans are cancelled, “gut[ting] the statutory purpose of providing loans.”

Plaintiffs seek a declaratory judgment that the relief plan is unlawful and injunctive relief.

Putting It Into Practice: State attorneys general continue to challenge Biden regulatory actions through litigation (previously discussed here and here). Given the success they have achieved thus far, it will be interesting to see how this litigation develops. We will continue to monitor the case for developments.

Meeting New Challenges: Environmental, Energy, and ESG Issues to Watch in 2024

The regulated community faces a complex and evolving landscape. As we head into 2024, our team of energy, environmental, and environmental, social, and governance (ESG) attorneys provide insights and guidance on how to navigate the changing environment.

While these challenges may not be new, their significance continues to grow. We recently released our 2023 “Top 10” lists for Environmental & Energy and ESG, outlining the biggest challenges we encountered last year. Below, we summarize nine issues likely to surface as we head into 2024.

Federal Regulatory Priorities

The Biden Administration’s Fall 2023 regulatory Unified Agenda was released December 6. US Environmental Protection Agency (EPA) Administrator Michael Regan indicated that EPA intends to “aggressively deliver” on President Biden’s “climate and environmental agenda.” In general, EPA’s portion of the Unified Agenda shows that past priorities — including updates to its greenhouse gas reporting rule — largely remain on track. EPA’s efforts to designate certain Per- and polyfluoroalkyl substances (PFAS) chemicals as CERCLA “hazardous substances” are now scheduled for March 2024. (We discuss PFAS issues in greater detail below.) Finally, EPA now intends to release an effluent limitation guideline for the category consisting of organic chemicals, plastics, and synthetic fibers in May 2024.

Environment, Social, and Governance

ESG issues will continue to be a high priority for the regulated community in 2024. Three issues are worth watching:

First, “anti-ESG” litigation will continue with the lead case this year being in New York State Court. This case, Wong v. New York Employers’ Retirement System, is a New York state breach of fiduciary duty case alleging that teachers’ retirement system plan administrators breached their duty to plan participants by divesting from fossil-fuel related businesses. The complaint in the case hitches on to political pressure from politicians, and initial unease of plan administrators, to say that factoring in divestment cost plan participants money and was made for ideological reasons as many fossil-fuel tied companies in the energy industry have had record profits in recent years.
Second, we will see sustainability reporting move from voluntary to mandatory with concrete requirements for how companies measure and report on sustainability metrics. We expect the US Securities and Exchange Commission (SEC) to finalize the climate-related disclosures rule, following three California climate disclosure bills finalized in 2023. (See our discussion here.) Public companies will likely be required to report anywhere from 2024 onward, putting them in the difficult position of setting internal goals and making public disclosures that are consistent with regulatory requirements but at the same time do not to create risk of litigation or noncompliance. Given the recent rise in anti-ESG sentiment, the 2024 election year a tug of war between ESG supporters and deniers in the United States.
Third, we likely will see social-focused cases have a higher priority in the ESG space in 2024, such as, for example, one regarding the federal government and many businesses to use “sustainable” fuels. Some of the fuel manufacturing processes use plastic as a feedstock, giving rise to “greenwashing” allegations, and the some of the processing locations are in “environmentally overburdened” communities. (For details, see here.) The confluence between new processes, “greenwashing,” and environmental justice (EJ) issues may represent a perfect storm in terms of future litigation.

Supreme Court Cases to Watch

The two issues to watch at the US Supreme Court level: the fate of “Chevron” deference and regulatory “takings.” Summaries:

“Chevron” deference. The concept of administrative deference — i.e., that the courts should defer to relevant agencies’ interpretations of ambiguous statutes they are tasked to administer — is a key component to the modern regulatory state. With a paired set of cases –Loper Bright Enterprises v. Raimondoand Relentless, Inc. v. Dept. of Commerce– the Court will evaluate the continued viability of Chevron deference under which courts defer to agencies’ technical decisions related to the statutes they administer. (Our most detailed discussion of this issue is here.)
Regulatory takings. In Sheetz v. County of El Dorado, California, the Supreme Court will evaluate whether “impact fees” associated with permits can violate the Fifth Amendment to the US Constitution. At stake is the determination of when, how, and under what circumstances state and local governments can require fees or other conditions in exchange for land-use permit approvals. (Our detailed discussion is here.)

Continued Focus on Plastic and Petrochemicals

In 2023, regulators at all levels addressed plastic — including pollution prevention, recycling initiatives, and extended producer responsibility.

Internationally, at COP28 (the United Nations (UN) Climate change Conference currently taking place through December 12), Inger Andersen, the Under-Secretary-General of the UN and Executive Director of the UN Environment Programme (UNEP) delivered a speech highlighting the climate impact of plastic and plastic production and calling for a road to a global plastics treaty.).

At the federal level, two recycling-related bills were introduced in Congress. The Recycling and Composting Accountability Act would allow the EPA to collect and create a database tracking recycling and composting programs. The Recycling Infrastructure and Accessibility Act of 2023 allows EPA to establish a pilot program to improve recycling accessibility in underserved communities.

And at the state level, at least seven states proposed EPR packaging legislation in 2023. Other states, like California, passed additional legislation, such as The Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54) which seeks to address the impact of single-use packaging and plastic food service ware, in part, by reducing the use of single-use plastic packaging by 25% by 2023.

The focus on plastic regulation is expected to continue in 2024. Many initiatives introduced in past years will take effect in 2024. For example, in 2022, UNEP resolved to complete a draft of a globally binding agreement on plastic pollution by 2024. UNEP released its “zero draft” in September 2023, which is expected to be refined next year. Similarly, EPA issued its draft National Strategy to Prevent Plastic Pollution this year that drew criticism from a group of state attorneys general who called on the EPA to withdraw and redraft the draft document. Several state-level EPR packaging-related laws have compliance dates that also start in 2024, including California’s SB 54 and New Jersey’s recycled content standards. With regulators clearly focused on plastic regulation and reduction, industry has similarly focused on how it might work with regulators to ensure compliance with upcoming legislation, promote their own sustainability initiatives, and potentially shift some of their manufacturing to plastic alternatives.

Environmental Justice

Federal, state, and local regulators have all worked aggressively to address EJ issues in recent years and we expect these efforts to continue. Some predictions:

Federal, state, and local EJ prioritization will continue in 2024. EJ will have a role in virtually every aspect of environmental law from the regulatory process through permitting and enforcement. The Biden Administration’s “whole of government” approach will continue. (See here for examples.)
At the federal level, as we get closer to the election, we may begin to see EJ efforts tailored to support political ends. Funding and visits from key regulatory personnel may be highlighted in certain parts of the country to support political ends.
Efforts to develop science supporting key EJ concepts like cumulative impact will continue. This week, we’ve seen EPA highlight cardiorespiratory concerns highlighted related to a lead pipe replacement program. Regulators may work to develop closer support between public health and policy goals.
EJ will continue to drive how regulators prioritize their enforcement resources. And EJ will also likely play a significant role in the ultimate resolution of enforcement matters. (For more on this, see here and here.)
Related to permitting, EJ issues to be prioritized, both for new permits, and renewal of existing permits. We have already seen EJ issues directly impact the permitting process at locations across the country and we expect this to continue. (We discuss steps regulated parties can take to minimize these risks here.)
EJ issues may begin to surface increasingly in relation to projects like pipeline and transmission line siting and development.

PM NAAQS

EPA is primed to strengthen National Ambient Air Quality Standards (NAAQS) for fine particulate matter (PM), known as PM2.5 (particulate matter smaller than 25 micrometers) in 2024. The revised standard, if promulgated, will have near immediate and significant permitting and operating implications on sources of air pollution across the country.

On January 27, 2023, EPA proposed to lower the current PM2.5 long-term (annual) standard of 12.0 micrograms per cubic meter (ug/m3) to a value between 9.0 to 10.0 ug/m3 (EPA requested comments on an even lower standard of 8.0 ug/m3). Revision of the NAAQS will trigger a mandatory process under the Clean Air Act for states and EPA to determine which areas within each state “attain” (attainment/unclassifiable) or do not attain (nonattainment) the revised annual PM2.5 NAAQS. Revisions to the State Implementation Plans (SIPs) are then required within 18 months of such designations, designed to reduce emissions of PM2.5 in nonattainment areas to achieve compliance with the revised PM2.5 annual NAAQS.

The lowering of the annual PM2.5 NAAQS to 9.0 to 10.0 ug/m3 brings the NAAQS standard precariously close to existing background concentrations of PM2.5 in many states. This will have significant implications on the ability of sources to obtain permits to construct or modify their existing operations, particularly in cases where ambient air quality modeling is needed to demonstrate that a proposed project will not cause or contribute to a violation of the NAAQS (a demonstration that would be near impossible if the facility is located in an area that already exceeds the revised PM2.5 NAAQS). The revised standard will also have significant implications for environmental justice areas like those discussed above.

On June 27, 2023, the White House Environmental Justice Advisory Council issued a letter requesting that EPA lower the annual PM2.5 NAAQS to 8.0 ug/m3 to protect public health disparities in EJ communities, or, alternatively, that such a limit apply specifically in EJ areas. Regardless of whether EPA decides to lower the annual PM2.5 NAAQs to 8.0 rather than 9.0-10.0 ug/m3, the strengthening of the standard will serve to impose additional burdens and restrictions on the regulated community in and around existing and threatened EJ areas.

Coal Combustion Residuals

EPA’s efforts to compel the investigation, characterization, and remediation of legacy coal combustion residuals (CCR) will continue in 2024:

On May 18, 2023, EPA proposed a rule to regulate legacy CCR surface impoundments and a new category of unit called CCR management units. The proposal would require owners and operators of power plants to identify CCR management units and to engage in closure and corrective action activities for legacy CCR surface impoundments and CCR management units. EPA is reviewing comments on the proposed rule.
EPA is currently under a deadline to finalize a legacy CCR surface impoundment rule by May 6, 2024 under a Consent Decree entered in Statewide Organizing for Community eMpowerment v. EPA, No. 22-cv-2562-JDB (D.D.C.).

Per- and Polyfluoroalkyl Substances

Like CCR, EPA has prioritized addressing health risks associated with PFAS. Since 2021, EPA has been engaged in action to address risk assessment, monitoring and regulation of PFAS through its “PFAS Strategic Roadmap.” 2024 marks the last year addressed through EPA’s roadmap. EPA is currently considering comments on a proposed rule to designate the PFAS chemicals commonly referred to as PFOA and PFOS as hazardous substances under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), and an advance notice of proposed rulemaking regarding the designation of seven additional types of PFAS as hazardous substances under CERCLA. Movement on both of these rulemakings is likely in the next year. EPA also has a pending rulemaking to establish National Primary Drinking Water Standards for PFOS, PFOA and mixtures of certain other PFAS. EPA has a stated goal of finalizing this rulemaking by the end of 2023. To the extent a final rule on is not promulgated by the end of 2023, finalization is likely in 2024.

In addition to continued regulation of PFAS, EPA has added addressing exposure to PFAS as one of its National Enforcement and Compliance Initiatives for the years 2024-2027. EPA has noted it will increase enforcement actions to address PFAS “endangerment issues” as they arise. EPA has stated its initial goals under this initiative include: (1) identifying and characterizing PFAS contamination near manufacturing and use facilities under CERCLA, the Resource Conservation and Recovery Act, the Clean Water Act, and the Safe Drinking Water Act; (2) performing oversight of PFAS characterization and control activities at federal facilities to ensure compliance and also to serve as a model for the regulated community; and (3) addressing statutory/regulatory violations and substantial endangerment situations by major PFAS manufacturers, federal facilities, and other industrial parties who have significantly contributed to releases of PFAS into the environment.

Increased State and Local Regulation

Finally, recent years have seen more aggressive efforts by states to themselves regulate the environment. Examples include New York’s recent “Green Amendment,” New Jersey’s recent EJ laws, or, most notably, various climate-related tort and procedural cases pending in various states. (See here, here, and here.) Similarly, local regulators may continue to attempt to use building codes, plastic bag bans, and other efforts to address environmental concerns. We expect these efforts to continue into 2024.

Members of the firm’s Environmental and Energy & Cleantech groups regularly monitor state and federal administrative activity with broad implications to the regulated community.

U.S. Department of Transportation Finalizes EV Charging Infrastructure Rules

Effective as of March 30, 2023, the Federal Highway Administration (“FHWA”) within the U.S. Department of Transportation (“DOT”) announced the National Electric Vehicle Infrastructure Standards and Requirements final rule (the “Final Rule”) (23 CFR 680). The Final Rule included several significant updates to the Notice of Proposed Rulemaking published on June 9, 2022 which we summarized in our prior article. These updates function to establish a set of minimum standards and requirements for electric vehicle (“EV”) charging infrastructure projects funded with federal dollars from the Bipartisan Infrastructure Law (“BIL”), and with these updates in place, interested parties will have certainty with respect to NEVI-funded projects.¹

The key updates included in the Final Rule are located in the following sections:

Installation, operation, and maintenance by qualified technicians of EV infrastructure (§ 680.106)
Interoperability of EV charging infrastructure (§ 680.108)
Data requested related to a project funded under the NEVI Formula Program, including the format and schedule for the submission of such data (§ 680.112)
Network connectivity of EV charging infrastructure (§ 680.114)
Information on publicly available EV charging infrastructure locations, pricing, real-time availability, and accessibility though mapping applications. (§ 680.116)

Installation and Operation

The Final Rule contains modified language clarifying that any time charging stations are installed, there must be a minimum of four (4) ports, notwithstanding the type of port–including Direct Current Fast Charger (“DCFC”) and AC Level 2 chargers. Additionally, charging stations may also have non-proprietary connectors. This modification allows permanently attached non-proprietary connectors to be provided on each charging port so long as each DCFC charging ports have at least one permanently attached CCS type 1 connector and is capable of charging a CCS compliant vehicle. These modifications will allow for increased accessibility to owners of all types of electric vehicles.

Concerned commenters expressed distain toward the Notice of Proposed Rulemaking for lack of clarity on whether the Final Rule would apply to the NEVI formula program, Title 23, and publicly accessible EV chargers funded as a project on a federal aid highway. The FHWA responded in the Final Rule with modified language to confirm its applicability across these programs. To address concerns about opposition to the rule as applied to Title 23 projects, the language in the Final Rule was revised to provide increased flexibility in the use of funds to install different types of chargers, including for projects not located along Alternative Fuel Corridors and installing AC Level 2 charges and DCFCs at lower power levels. Additionally, AC Level 2 charger capability was modified to incorporate the ability to charge at 208-volt.

The Final Rule also reevaluated and modified charging capacity. Modifications require that each DCFW must simultaneously deliver up to 150 kW. Additionally, each AC level 2 port is required to have the capability of providing at least 6 kW, however, the customer has the option to accept a lower power level to allow power sharing or to participate in smart charge management programs. Smart charge management involves controlling charging power levels in response to external conditions and is typically applied in situations where EVs are connected to charges for long periods of time, such that prolonging charging for the benefit of the grid is not objectionable to charging customers. In contrast, power sharing involves dynamically curtailing power levels of charging ports based on the total power demand of all EVs concurrently charging at the same station. Power sharing is permissible above the minimum per-port requirements for DCFC and AC Level 2 chargers. Further, each DCFC port must support output voltage with a permitted range between 250 and 920 volts. This all allows for greater flexibility to manage the cost of the stations designed to meet current and future demand for increases in power, given the strong market trend towards EV charging power capacity above 150 kW for DCFC and above 6 kW for AC Level 2 charging.

The Notice of Proposed Rulemaking required charging stations to remain open for 24 hours, but commenters believed this requirement did not present a realistic standard nationwide. In the Final Rule, the language was amended to allow for less restrictive charging hours for charging stations located off designated AFCs and requires that the charging station must be available for use at least as frequently as the business operating hours of the site host, with discretion to the site host to allow longer access.

Payment and Price Transparency

Payment and Price Transparency received both modification and expansion under the Final Rule. State programs may allow for certain charging stations to be free, and as such, language in the Final Rule was modified to specify that payment mechanisms may be omitted from charging stations if charging is provided for free. Regarding acceptable payment methods, the Final Rule explicitly incorporated payment by mobile application in the “contactless payment methods” definition. Further, the Final Rule modified acceptable payment methods to include an automated toll-free calling or an SMS option as an additional payment method. While there is no guarantee that every individual will have access or the ability to speak on the phone or send a text, the FHWA sees this addition as a step in the right direction to help bridge the accessibility gap in access and payment for EV charging.

The Final Rule also altered price transparency to require that the dollar per kWh be transparently communicated prior to initiating a charge, and that other fees be clearly explained prior to payment.

Charging Station Information, Data Sharing, and Interoperability of EV Charging Infrastructure

The Final Rule also modified uptime requirements. The uptimes calculations were clarified by modifying the definition of when a charger is considered “up” and further modifying the equation to calculate uptime to the nearest minute to make the calculation more uniform across all charging station operators and network providers.

Open Charge Point Protocol (“OCPP”) and ISO 15118 are key components of interoperability. OCPP is an open source communication standard for EV charging stations and networks, and ISO 15118 is hardware that specifies the communication between EVs including Battery Electric Vehicles and Plug-In Hybrid Electric Vehicles, and the Electric Vehicle Supply Equipment. In the Final Rule, the FHWA discussed that OCPP version 2.01 has significant improvements over previous versions and contains compelling benefits to the EV charging ecosystem. As such, the Final Rule contains modifications regarding the charger-to-charger network requiring that charging networks conform to the newer OCPP version 2.01 by one year after the date of publication of the Final Rule in the Federal Register. Additionally, FHWA requires charging station conformance to ISO 15118 and Plug and Charge capability by one year after the date of publication of the Final Rule in the Federal Register. Although many chargers on the market today are not yet using ISO 15118, the FHWA sees value in establishing a national standard for compliance. .

Annual data submittal, quarterly, and one time submittal requirements were modified to be completely streamlined and requiring any data made public to be aggregated and anonymized to protect confidential business information. The Joint Office of Energy and Transportation will establish and manage a national database and analytics platform that will streamline submission of data from States and their contractors along with providing ongoing technical assistance to States.

The Final Rule removed interoperability requirements and instead requires that chargers remain functional even if communication with the charging network is temporarily disrupted.

Community Engagement

For NEVI formula program projects, community engagement outcomes were modified in the Final Rule to require inclusion in the annual state EV infrastructure deployment plan rather than a separate report. This will allow for the type of information and data from the States to be most beneficial for informing and improving community engagement. Though we will have to wait until release of the annual Plan guidance to receive details regarding content expectations, commenters suggested several ways the report could be developed, including (i) conditioning funding for future years on meeting robust engagement requirements, including community engagement and equity and inclusion efforts by States (ii) describing how community engagement informed station and siting operations (iii) describing how workforce opportunities were integrated into community engagement efforts; and (iv) describing engagement with disabled community members.

The Future of EV Infrastructure

We will quickly see the significant effects the Final Rule will have on customers and manufacturers alike in enhancing EV charging capacity across the United States in this rapidly changing and ever-growing sector. As regulators, developers, and financiers of EV infrastructure evaluate the Final Rule, the Foley team is at the ready with significant experience, knowledge and expertise related to each element of this transformation, including issues related to the automotive, manufacturing, supply chain, regulatory, IP, private equity, tax equity, project finance, and public-private financing issues.

For more Environmental Law News, click here to visit the National Law Review.

FOOTNOTES

¹ For a summary of the NEVI Formula Program, refer to our February 2022 article linked here.

Silicon Valley Bank Fails After Run on Deposits

“The Federal Deposit Insurance Corporation took control of the bank’s assets on Friday. The failure raised concerns that other banks could face problems, too.”

Read the New York Times article (Free Subscription Required)

In light of the news this morning that Silicon Valley Bank (SVB) has been closed by the California Department of Financial Protection, which appointed the Federal Deposit Insurance Corporation as SVB’s receiver, it’s fair to ask if this is the beginning of a trend among regional banks or an isolated incident. SVB, while unique in the banking industry, since it would lend against illiquid (pre-IPO) securities, mainly issued by ventured-backed companies, faced challenges in a rising interest rate environment that are not unique and which, many similarly situated regional banks, are still facing.

As the Federal Reserve considers whether to raise interest rates by 0.25% or 0.5%, in order to combat inflation, a key factor in their analysis will be the impact these interest rate hikes have on regional banks and their portfolios. Regional banks, unlike their Fortune 100, multi-national counterparts, derive their value from vast portfolios of bonds, which are very sensitive to interest rate hikes (as interest rates rise, the value of these bonds fall). For instance, the S&P Regional Banks Select Industry Index is down 3.69% today, 19.92% month-to-date, and 13.02% year-to-date.

Therefore, in the coming days, it will be crucial to watch both the Federal Reserve’s Federal Open Market Committee meeting on March 21-22 and whether SVB’s collapse signals a contagion among the regional bank sector. SVB’s closure is the biggest bank collapse since the financial crisis and many start-up/early-stage companies will be very interested to see if it is the last or the first of many.

Article By Aaron H. Jacoby and Justin A. Goldberg of ArentFox Schiff LLP

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

Biden Administration Sets New Course on ESG Investing in Retirement Plans

In late 2022, the Department of Labor finalized a new rule titled “Prudence in Selecting Plan Investments and Exercising Shareholder Rights,” largely reversing Trump-era guidance that had strictly limited the ability of plan fiduciaries to consider “environmental, social, and governance” (ESG) factors in selecting retirement plan investments and generally discouraged the exercise of proxy voting. In short, the new rule allows a fiduciary to consider ESG factors in selecting investment options, provided that the selection serves the financial interests of the plan and its participants over an appropriate time horizon, and encourages fiduciaries to engage in proxy voting.

The final rule moves away from 2020 Trump-era rulemaking by allowing more leeway for fiduciaries to consider ESG factors in selecting investment options. Specifically, the rule states that a “fiduciary’s duty of prudence must be based on factors that the fiduciary reasonably determines are relevant to a risk and return analysis and that such factors may include the economic effects of climate change and other ESG considerations on the particular investment or investment course of action.” The rule makes clear, however, that there is no requirement to affirmatively consider ESG factors, effectively limiting its scope and effect and putting the onus on fiduciaries to determine whether they want to incorporate ESG factors into their assessments of competing investments.

Overview

Similar to the Trump-era guidance, there is no definition of “ESG” or an “ESG”-style fund. Debate continues over what kinds of funds can be considered ESG investments, especially in light of the fact that some companies in industries traditionally thought to be inconsistent with ESG conscious investing are now trying to attract ESG investors (e.g. industrials, energy).

Fiduciaries are not required to consider ESG factors in selecting investment options. However, the consideration of such factors is not a presumed violation of a fiduciary’s duty of loyalty or prudence. Unlike the prior rule, which suggested that consideration of ESG factors could only be considered if all other pecuniary factors between competing investments were equal (the “tiebreaker” approach), the new rule allows a fiduciary to consider potential financial benefits of ESG investing in all circumstances.

Plan fiduciaries may take into account participant preferences in constructing a fund lineup. Therefore, if participants express a desire for ESG investment options, then it may be reasonable for plan fiduciaries to add ESG funds or to consider ESG factors in crafting the fund lineup.

ESG-centric funds may be used as qualified default investments (QDIAs) within retirement plans, reversing the prior outright prohibition on use of such funds as QDIAs.

In some situations, fiduciaries may be required to exercise shareholder rights when required to protect participant interests. It is unclear whether the exercise of such rights is only limited to situations that have an economic impact on the plan, or applies to additional situations. The clarification suggests that the exercise of proxy voting is not disfavored as an inefficient use of fiduciaries’ time and resources, as the prior iteration of the rule suggested.

Effective Date and Challenges to the Regulation

The new rule became effective in January 2023, except for delayed applicability of proxy voting provisions. However, twenty five state attorneys general have joined a lawsuit in federal court in Texas that seeks to overturn the regulation. The court is in the Fifth Circuit, which historically has been hostile to past Department of Labor regulations (including Obama-era fiduciary rules overturned in 2018, though the ESG rule is less far-reaching than the fiduciary rule and may survive a challenge even in the Fifth Circuit). Congressional Republicans have also introduced a Congressional Review Act (CRA) review proposal to repeal the regulation that has gained the support of Joe Manchin (D-WV). Although CRA actions are not subject to Senate filibuster rules, they are subject to presidential veto, which President Biden is sure to do if the repeal reaches his desk.

Action Steps

Employers should assume that the ESG rules will remain in effect and engage with plan fiduciaries, advisors, and employees and determine the extent to which ESG considerations should (or should not) enter into fiduciary deliberations when considering plan investment alternatives. Some investment advisors have already begun to include separate ESG scorecards for mutual funds and other investments in their regular plan investment reviews. Fiduciaries should also consider whether and how the approach that is ultimately taken should be reflected in the plan’s investment policy statement. Plans that delegate full control over investments to an independent fiduciary (an ERISA 3(38) advisor) should engage with their advisor to determine whether and the extent to which ESG considerations will be part of that fiduciary’s process, and whether that is consistent with the desires of the plan fiduciaries and participants.

Article By Alex H. Glaser and Timothy Brechtel of Jones Walker LLP

For more labor and employment legal news, click here to visit the National Law Review.

Washington’s Focus on the Electric Vehicle Supply Chain in 2023

If a picture is worth a thousand words, the “photo-op” of the president test driving Ford’s new electric F-150 in May of 2021 was the burning image that foretold the US policy direction for the electric mobility industry.

In 2022, the president and US Congress solidified their support of the industry by passing sweeping legislation aimed at funding and incentivizing US electric mobility manufacturing for the next decade and beyond.

Looking ahead to 2023, the Administration will be writing the rules to implement that support. This will take the form of rulemaking for key statutes such as the Infrastructure Investment and Jobs Act (IIJA), the CHIPS Act, and the more recent Inflation Reduction Act of 2022 (IRA). On the non-tariff front, Congress passed, and the president signed, the 2021 Uyghur Forced Labor Prevention Act.

Background

The IIJA authorized $18.6 billion to fund new and existing electric vehicle (EV)-related programs, including a nationwide network of 500,000 EV charging stations and monies for publicly accessible alternative fuel infrastructure. Also, the law injected $10.9 billion in funding for transitioning school buses, transit buses, and passenger ferries to low- and/or zero-emissions alternatives.
The CHIPS Act allocated $11 billion in support of advanced semiconductor manufacturing research and set up a $2 billion fund to support technology transfers from laboratory to applications.
The IRA, perhaps the most significant development from Washington, DC, injected billions of dollars in tax credits and other incentives to spur US domestic manufacturing of electric vehicles.
In December 2022, news came that a United States-Mexico-Canada Agreement (USMCA) Dispute Settlement Panel had completed its findings on a complaint by Mexico and supported by Canada that the United States has been misinterpreting the product origin calculations for “core parts” for USMCA vehicle qualification. In January of 2023, that ruling was made public. See Long Awaited USMCA Panel Decision on Automotive “Core Parts” – What Happened and What’s Next.
In June 2022, the Administration published its “Strategy to Prevent the Importation of Goods Mined, Produced, or Manufacture with Forced Labor.” Customs and Border Protection (CBP) has launched a vigorous and highly intrusive enforcement strategy for a number of key sectors, including the automotive industry.

What to Know

Based on the legislative developments from the last year, the EV industry should expect:

Import Enforcement. If 2022 was the year of federal infusion of funding and policy development, 2023 will be the year of import enforcement and accountability. Supply chains will be scrutinized, and compliance will have to be demonstrated. In addition, claims of tariff preferences under US trade agreements will be closely monitored to guard against fraudulent product descriptions or county of origin. In terms of US forced labor legislation, a January 2023 article in a well-read trade media reported on a meeting with US Trade Representative Katherine Tai at which the Ambassador “suggested that auto or auto parts imported from China could be in CBP crosshairs.” (International Trade Today, January 6, 2023 Vol 39, No 4).
Accountability. With the massive funding from Congress and the White House, federal agencies will be scrutinizing how monies have been spent, particularly whether they have been spent to meet the goals to incentive US domestic production. Global supply chains will come under the microscope. A December 2022 Treasury Department publication can be read here.
Corporate Readiness. Companies that engage in the global marketplace dread the unknown. There is no crystal ball. But what corporate executives can do to mitigate the risk of potentially bad news on the trade front is to monitor developments, conduct self-assessments, and, where possible, build in flexibilities.
Know Your Customer. Know Your Suppliers. Know Your Suppliers’ Suppliers. A common thread weaving throughout these developments on the trade front is Washington’s not so subtle objective of determining the essential source of imported products. That effort will shift the onus onto the private sector, with companies having to provide far more transparency into their product’s life span.

For product development and marketing executives in the electric mobility sector, 2023 is potentially a very good news story. But for general counsels and corporate compliance and procurement officers, the uncertainties of regulatory change will require extra attention. In the interim, company officials are taking a fresh look at the current legal and regulatory exposures of their supply chains to be best prepared for the trade policy changes ahead. The adage “when in uncertain times, start with what you know” is particularly relevant today.

To that end, the USMCA can play a critical “bridge” for many companies with strategic business interests in the US market.

Article By Birgit Matthiesen, David R. Hamill, Antonio J. Rivera, and James Kim of ArentFox Schiff LLP

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

Tag: Biden administration

USCIS Improvements Cut Naturalization Processing Time

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