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Proposed Senate Bill Would Deny Deductions for NIL Contributions

On September 28, 2022, U.S. Senators Ben Cardin (D-Md.), a member of the Senate Finance Subcommittee on Taxation and Internal Revenue Service (IRS) Oversight, and John Thune (R-S.D.), ranking member of the Subcommittee on Taxation and IRS Oversight, introduced the Athlete Opportunity and Taxpayer Integrity Act, which seeks to deny charitable deductions for any contribution used by the donee to compensate college athletes for the use of their name, image, or likeness (“NIL”) by reason of their status as athletes.

One entity type that is impacted by the Athlete Opportunity and Taxpayer Integrity Act are “NIL collectives” that have been established as 501(c)(3) organizations. These types of NIL collectives have been used to allow donors to make tax deductible contributions that are then used to fund NIL opportunities for college athletes, for example, by having a college athlete provide services to a separate charity in exchange for payment from the NIL collective. A press release from Senator Cardin noted that “[s]uch activity is inconsistent with the intended purpose of the charitable tax deduction, and it forces taxpayers to subsidize the potential recruitment of – or payment to – college athletes based on their NIL status.”

Notably, the Opportunity and Taxpayer Integrity Act would only apply to charitable deductions. A person engaged in a trade or business would still be able to deduct payments to college athletes for the use of their name, image, or likeness if such payments qualify as ordinary and necessary business expenses.

Although it is not clear at this time whether the Opportunity and Taxpayer Integrity Act will pass, it does indicate increased scrutiny over nonprofit NIL collectives and possibly other NIL arrangements.

Article By Richard T. Hewlett, Shawn A. Strand, and Jessica E. Visser of Varnum LLP

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A Summary of Inflation Reduction Act’s Main Energy Tax Proposals

On August 7, the Senate passed the Inflation Reduction Act of 2022 (the “IRA”). The IRA contains a significant number of climate and energy tax proposals, many of which were previously proposed in substantially similar form by the House of Representatives in November 2021 (in the “Build Back Better Act”).

Extension and expansion of production tax credit

Section 45 of the Internal Revenue Code provides a tax credit for renewable electricity production. To be eligible for the credit, a taxpayer must (i) produce electricity from renewable energy resources at certain facilities during a ten-year period beginning on the date the facility was placed in service and (ii) sell that renewable electricity to an unrelated person.^[1] Under current law, the credit is not available for renewable electricity produced at facilities whose construction began after December 31, 2021.

The IRA would extend the credit for renewable electricity produced at facilities whose construction begins before January 1, 2025. The credit for electricity produced by solar power –which expired in 2016—would be reinstated, as extended by the IRA.

The IRA would also increase the credit from 1.5 to 3 cents per kilowatt hour of electricity produced.

A taxpayer would be entitled to increase its production tax credit by 500% if (i) its facility’s maximum net output is less than 1 megawatt, (ii) it meets the IRA’s prevailing wage and apprenticeship requirements,^[2]and (iii) the construction of its facility begins within fifty-nine days after the Secretary publishes guidance on these requirements.

In addition, the IRA would add a 10% bonus credit for a taxpayer (i) that certifies that any steel, iron, or manufactured product that is a component of its facility was produced in the United States (the “domestic content bonus credit”) or (ii) whose facility is in an energy community (the “energy community bonus credit”).^[3]

Extension, expansion, and reduction of investment tax credit

Section 48(a) provides an investment tax credit for the installation of renewable energy property. The amount of the credit is equal to a certain percentage (described below) of the property’s tax basis. Under current law, the credit is limited to property whose construction began before January 1, 2024.

The IRA would extend the credit to property whose construction begins before January 1, 2025. This period would be extended to January 1, 2035 for geothermal property projects. The IRA would also allow the investment tax credit for energy storage technology, qualified biogas property, and microgrid controllers.

The IRA would reduce the base credit from 30% to 6% for qualified fuel cell property; energy property whose construction begins before January 1, 2025; qualified small wind energy property; waste energy recovery property; energy storage technology; qualified biogas property; microgrid controllers; and qualified facilities that a taxpayer elects to treat as energy property. For all other types of energy property, the base credit would be reduced from 10% to 2%.

A taxpayer would be entitled to increase this base credit by 500% (for a total investment tax credit of 30%) if (i) its facility’s maximum net output is less than 1 megawatt of electrical or thermal energy, (ii) it meets the prevailing wage and apprenticeship requirements, and (iii) its facility begins construction within fifty-nine days after the Secretary publishes guidance on these requirements.

In addition, a taxpayer would be entitled to a 10% domestic content bonus credit and 10% energy community bonus credit (subject to the same requirements as for bonus credits under section 45). The IRA would also add a (i) 10% bonus credit for projects undertaken in a facility with a maximum net output of 5 megawatts and is located in low-income communities or on Indian land, and (ii) 20% bonus credit if the facility is part of a qualified low-income building project or qualified low-income benefit project.

Section 45Q (Carbon Oxide Sequestration Credit)

Section 45Q provides a tax credit for each metric ton of qualified carbon oxide (“QCO”) captured using carbon capture equipment and either disposed of in secure geological storage or used as a tertiary injection in certain oil or natural gas recovery projects. While eligibility for the section 45Q credit under current law requires that projects begin construction before January 1, 2026, the IRA would extend credit eligibility to those carbon sequestration projects that commence construction before January 1, 2033.

The IRA would increase the amount of tax credits for projects that meet certain wage and apprenticeship requirements. Specifically, the IRA would increase the amount of section 45Q credits for industrial facilities and power plants to $85/metric ton for QCOstored in geologic formations, $60/metric ton for the use of captured carbon emissions, and $60/metric ton for QCOstored in oil and gas fields. With respect to direct air capture projects, the IRA would increase the credit to $180/metric ton for projects that store captured QCO in secure geologic formations, $130/metric ton for carbon utilization, and $130/metric ton for QCO stored in oil and gas fields. The proposed changes in the amount of the credit would apply to facilities or equipment placed in service after December 31, 2022.

The IRA also would decrease the minimum annual QCO capture requirements for credit eligibility to 1,000 metric tons (from 100,000 metric tons) for direct air capture facilities, 18,750 metric tons (from 500,000 metric tons) of QCO for an electricity generating facility that has a minimum design capture capacity of 75% of “baseline carbon oxide” and 12,500 metric tons (from 100,000 metric tons) for all other facilities. These changes to the minimum capture requirements would apply to facilities or equipment that begin construction after the date of enactment.

Introduction of zero-emission nuclear power production credit

The IRA would introduce, as new section 45U, a credit for zero-emission nuclear power production.

The credit for a taxable year would be the amount by which 3 cents multiplied by the kilowatt hours of electricity produced by a taxpayer at a qualified nuclear power facility and sold by the taxpayer to an unrelated person during the taxable year exceeds the “reduction amount” for that taxable year.^[4]

In addition, a taxpayer would be entitled to increase this base credit by 500% if it meets the prevailing wage requirements.

New section 45U would not apply to taxable years beginning after December 31, 2032.

Biodiesel, Alternative Fuels, and Aviation Fuel Credit

The IRA would extend the existing tax credit for biodiesel and renewable diesel at $1.00/gallon and the existing tax credit for alternative fuels at $.50/gallon through the end of 2024. Additionally, the IRA would create a new tax credit for sustainable aviation fuel of between $1.25/gallon and $1.75/gallon. Eligibility for the aviation fuel credit would depend on whether the aviation fuel reduces lifecycle greenhouse gas emissions by at least 50%, which corresponds to a $1.25/gallon credit (with an additional $0.01/gallon for each percentage point above the 50% reduction, resulting in a maximum possible credit of $1.75/gallon). This credit would apply to sales or uses of qualified aviation fuel before the end of 2024.

Introduction of clean hydrogen credit

The IRA would introduce, as new section 45V, a clean hydrogen production tax credit. To be eligible, a taxpayer must produce the clean hydrogen after December 31, 2022 in facilities whose construction begins before January 1, 2033.

The credit for the taxable year would be equal to the kilograms of qualified clean hydrogen produced by the taxpayer during the taxable year at a qualified clean hydrogen production facility during the ten-year period beginning on the date the facility was originally placed in service, multiplied by the “applicable amount” with respect to such hydrogen.^[5]

The “applicable amount” is equal to the “applicable percentage” of $0.60. The “applicable percentage” is equal to:

20% for qualified clean hydrogen produced through a process that results in a lifecycle greenhouse gas emissions rate between 2.5 and 4 kilograms of CO₂e per kilogram of hydrogen;
25% for qualified clean hydrogen produced through a process that results in a lifecycle greenhouse gas emissions rate between 1.5 and 2.5 kilograms of CO₂e per kilogram of hydrogen;
4% for qualified clean hydrogen produced through a process that results in a lifecycle greenhouse gas emissions rate between 0.45 and 1.5 kilograms of CO₂e per kilogram of hydrogen; and
100% for qualified clean hydrogen produced through a process that results in a lifecycle greenhouse gas emissions rate of less than 0.45 kilograms of CO₂e per kilogram of hydrogen.

A taxpayer would be entitled to increase this base credit by 500% if (i) it meets the prevailing wage and apprenticeship requirements or (ii) it meets the prevailing wage requirements, and its facility begins construction within fifty-nine days after the Secretary publishes guidance on the prevailing wage and apprenticeship requirements.

FOOTNOTES

^[1] All references to section are to the Internal Revenue Code.

^[2] The IRA would require new prevailing wage and apprenticeship requirements to be satisfied in order for a taxpayer to be eligible for increased credits. To satisfy the prevailing wage requirements, a taxpayer would be required to ensure that any laborers and mechanics employed by contractors or subcontractors to construct, alter or repair the taxpayer’s facility are paid at least prevailing local wages with respect to those activities. To satisfy the apprenticeship requirements, “qualified apprentices” would be required to construct a certain percentage of the taxpayer’s facilities (10% for facilities whose construction begins before January 1, 2023 and 15% for facilities whose construction begins on January 1, 2024 or after). A “qualified apprentice” is a person employed by a contractor or subcontractor to work on a taxpayer’s facilities and is participating in a registered apprenticeship program.

^[3] An “energy community” is a brownfield site; an area which has (or had at any time after December 31, 1999) significant employment related to the extraction, processing, transport, or storage of coal, oil, or natural gas; and a census tract in which a coal mine closed or was retired after December 31, 1999 (or an adjoining census tract).

^[4]A “qualified nuclear power facility” is any nuclear facility that is owned by the taxpayer, that uses nuclear energy to produce electricity, that is not an “advanced nuclear power facility” as described in section 45J(d)(1), and is placed in service before the date that new section 45U is enacted.

“Reduction amount” is, for any taxable year, the amount equal to (x) the lesser of (i) the product of 3 cents multiplied by the kilowatt hours of electricity produced by a taxpayer at a qualified nuclear power facility and sold by the taxpayer to an unrelated person during the taxable year and (ii) the amount equal to 80% of the excess of the gross receipts from any electricity produced by the facility (excluding an advanced nuclear power facility) and sold to an unrelated person during the taxable year; (y) over the amount equal to the product of 2.5 cents multiplied by the kilowatt hours of electricity produced by the taxpayer at a qualified nuclear power facility and sold by the taxpayer to an unrelated person during the taxable year.

^[5]“Qualified clean hydrogen” is hydrogen that is produced (i) through a process that results in a lifecycle greenhouse gas emissions rate of no more than 4 kilograms of CO₂e per kilogram of hydrogen, (ii) in the United States, (iii) in the ordinary course of the taxpayer’s trade or business, (iv) for sale or use, and (v) whose production and sale or use is verified by an unrelated party. The IRA does not explain what “verified by an unrelated party” means.

Article By David S Miller, Amanda H Nussbaum, Martin T Hamilton, J. Tyler Moser, and Rita N. Halabi of Proskauer Rose LLP

For more tax law legal news, click here to visit the National Law Review.

Uyghur Forced Labor Prevention Act Takes Effect: What Importers Need to Know

The Uyghur Forced Labor Prevention Act (UFLPA) is in effect as of June 21, 2022. Congress passed the Act in December 2021 to increase enforcement of longstanding U.S. policy prohibiting the importation of goods, or components thereof, made with forced labor and to create a “rebuttable presumption” that merchandise from the Xinjiang Uyghur Autonomous Region (XUAR) or by an entity on the UFLPA Entity List is made with forced labor and thereby prohibited from entry into the United States. The rebuttable presumption applies to downstream products that incorporate inputs from XUAR, regardless of where the finished products are manufactured, including goods from outside XUAR in the People’s Republic of China (PRC), or in third countries. There is no de minimis provision in the law – any prohibited content, no matter how small, will make a product subject to the rebuttable presumption made by the law. If an importer can demonstrate by “clear and convincing” evidence that the goods were not produced wholly or in part by forced labor, U.S. Customs and Border Protection (CBP) will grant an “exception” to the presumption. The UFLPA provides for increased detentions and seizures of merchandise and potential civil and criminal penalties. See prior GT Alerts on the UFLPA.

Pursuant to the UFLPA, a multi-agency task force chaired by the Department of Homeland Security was mandated to develop a strategy for the Act’s implementation. On June 17, in anticipation of the June 21 effective date, DHS released the “Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China” (Enforcement Strategy), which includes:

An assessment of risk of importing goods mined, produced, or manufactured, wholly or in part, in the PRC; according to the strategy, complex supply chains that touch XUAR are “highly susceptible to contamination by goods made using forced labor.”
A list of entities affiliated with forced labor; therefore, their products are subject to the presumption that their goods are prohibited from entry. The Entity list will be updated multiple times per year and will be publicly available.
A list of high priority sectors and products including apparel and textiles, cotton and cotton products, polysilicon, and tomato products. Other products listed include footwear, nails, electronics, and toys.
Guidance to importers advising that companies need heightened due diligence to ensure compliance with UFLPA and to identify potential supply chain exposure to Xinjiang. Supply chain tracing is the general method to demonstrate that goods are free of inputs from Xinjiang, but CBP expects that barriers to supply chain tracing may make it difficult for importers to be compliant and has stated that third-party audits alone are insufficient to demonstrate due diligence.

Should CBP detain goods on suspicion of being made wholly or in part with forced labor, the importer has options. It can re-export the goods (up until CBP seizes them); it can abandon the goods; it can seek an “exception” for the goods, to get them released from CBP custody; it can also provide information to CBP demonstrating that the goods are not subject in any way to the Act. The evidence and documentation needed for the latter two must be “clear and convincing.”

It should be noted that in order to obtain an “exception” for goods that have been detained, an importer must meet all three of the following requirements:

Provide clear and convincing evidence that the detained goods were not made in whole or in part with forced labor, or were sourced from entities on the Entity List.
Fully and substantively respond to any questions from CBP.
Show that it has complied with all of the requirements set out in the Enforcement Strategy and CBP’s Operational Guidance (i.e., due diligence, supply chain tracing and management, etc.).

The Enforcement Strategy document provides importers with guidance in the following three areas:

Due diligence, effective supply chain tracing, and supply chain management measures to ensure that no goods violating the Act enter the importer’s supply chain.
The type, nature, and extent of evidence that demonstrates that goods originating in China were not mined (or grown), produced, or manufactured wholly or in part in Xinjiang.
The type, nature, and extent of evidence that demonstrates goods originating in China, including goods detained under Section 307 of the Tariff Act, were not mined (or grown), produced, or manufactured wholly or in part with forced labor.

CBP has made it clear that should there be a detention, participants in the Customs and Trade Partnership Against Terrorism program (C-TPAT) will be prioritized for review of submissions to rebut the presumption that the merchandise was made with forced labor.

Importers may wish to plan for contingencies should CBP detain imported merchandise, map complex supply chains and review purchase agreements and supplier codes of conduct.

Article By Laura Siegel Rabinowitz and Donald S. Stein of Greenberg Traurig, LLP

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

Heated Debate Surrounds Proposed Federal Privacy Legislation

As we previously reported on the CPW blog, the leadership of the House Energy and Commerce Committee and the Ranking Member of the Senate Commerce Committee released a discussion draft of proposed federal privacy legislation, the American Data Privacy and Protection Act (“ADPPA”), on June 3, 2022. Signaling potential differences amongst key members of the Senate Committee on Commerce, Science, and Transportation, Chair Maria Cantwell (D-WA) withheld her support. Staking out her own position, Cantwell is reportedly floating an updated version of the Consumer Online Privacy Rights Act (“COPRA”), originally proposed in 2019.

Early Stakeholder Disagreement

As soon as a discussion draft of the ADPPA was published, privacy rights organizations, civil liberty groups, and businesses entered the fray, drawing up sides for and against the bill. The ACLU came out as an early critic of the legislation. In an open letter to Congress sent June 10, the group urged caution, arguing that both the ADPPA and COPRA contain “very problematic provisions.” According to the group, more time is required to develop truly meaningful privacy legislation, as evidenced by “ACLU state affiliates who have been unable to stop harmful or effectively useless state privacy bills from being pushed quickly to enactment with enormous lobbying and advertising support of sectors of the technology industry that resist changing a business model that depends on consumers not having protections against privacy invasions and discrimination.” To avoid this fate, the ACLU urges Congress to “bolster enforcement provisions, including providing a strong private right of action, and allow the states to continue to respond to new technologies and new privacy challenges with state privacy laws.”

On June 13, a trio of trade groups representing some of the largest tech companies sent their open letter to Congress, supporting passage of a federal privacy law, but ultimately opposing the ADPPA. Contrary to the position taken by the ACLU, the industry groups worry that the bill’s inclusion of a private right of action with the potential to recover attorneys’ fees will lead to litigation abuse. The groups took issue with other provisions as well, such as the legislation’s restrictions on the use of data derived from publicly-available sources and the “duty of loyalty” to individuals whose covered data is processed.

Industry groups and consumer protection organizations had the opportunity to voice their opinions regarding the ADPPA in a public hearing on June 14. Video of the proceedings and prepared testimony of the witnesses are available here. Two common themes arose in the witnesses’ testimony: (1) general support for federal privacy legislation; and (2) opposition to discrete aspects of the bill. As has been the case for the better part of a decade in which Congress has sought to draft a federal privacy bill, two fundamental issues continue to drive the debate and must be resolved in order for the legislation to become law: the private right of action to enforce the law and preemption of state laws or portions of them. . While civil rights and privacy advocacy groups maintain that the private right of action does not go far enough and that federal privacy legislation should not preempt state law, industry groups argue that a private right of action should not be permitted and that state privacy laws should be broadly preempted.

The Path Forward

The Subcommittee on Consumer Protection and Commerce of the House Energy and Commerce Committee is expected to mark up the draft bill the week of June 20. We expect the subcommittee to approve the draft bill with little or no changes. The full Energy and Commerce Committee should complete work on the bill before the August recess. Given the broad bipartisan support for the legislation in the House, we anticipate that the legislation, with minor tweaks, is likely to be approved by the House, setting up a showdown with the Senate after a decade of debate.

With the legislative session rapidly drawing to a close, the prospects for the ADPPA’s passage remain unclear. Intense disagreement remains amongst key constituency groups regarding important aspects of the proposed legislation. Yet, in spite of the differences, a review of the public comments to date regarding the ADPPA reveal one nearly unanimous opinion: the United States needs federal privacy legislation. In light of the fact that most interested parties agree that the U.S. would benefit from federal privacy legislation, Congress has more incentive than ever to reach compromise regarding one of the proposed privacy bills.

Article By Shea Leitch, Jeffrey L. Turner, Kristin L. Bryan, and Kyle R. Fath of Squire Patton Boggs (US) LLP

For more data privacy and cybersecurity legal news, click here to visit the National Law Review.

DOJ Limits Application of Computer Fraud and Abuse Act, Providing Clarity for Ethical Hackers and Employees Paying Bills at Work Alike

On May 19, 2022, the Department of Justice announced it would not charge good-faith hackers who expose weaknesses in computer systems with violating the Computer Fraud and Abuse Act (CFAA or Act), 18 U.S.C. § 1030. Congress enacted the CFAA in 1986 to promote computer privacy and cybersecurity and amended the Act several times, most recently in 2008. However, the evolving cybersecurity landscape has left courts and commentators troubled by potential applications of the CFAA to circumstances unrelated to the CFAA’s original purpose, including prosecution of so-called “white hat” hackers. The new charging policy, which became effective immediately, seeks to advance the CFAA’s original purpose by clarifying when and how federal prosecutors are authorized to bring charges under the Act.

DOJ to Decline Prosecution of Good-Faith Security Research

The new policy exempts activity of white-hat hackers and states that “the government should decline prosecution if available evidence shows the defendant’s conduct consisted of, and the defendant intended, good-faith security research.” The policy defines “good-faith security research” as “accessing a computer solely for purposes of good-faith testing, investigation, and/or correction of a security flaw or vulnerability, where such activity is carried out in a manner designed to avoid any harm to individuals or the public, and where the information derived from the activity is used primarily to promote the security or safety of the class of devices, machines, or online services to which the accessed computer belongs, or those who use such devices, machines, or online services.”

In practice, this policy appears to provide, for example, protection from federal charges for the type of ethical hacking a St. Louis Post-Dispatch reporter performed in 2021. The reporter uncovered security flaws in a Missouri state website that exposed the Social Security numbers of over 100,000 teachers and other school employees. The Missouri governor’s office initiated an investigation into the reporter’s conduct for unauthorized computer access. While the DOJ’s policy would not affect prosecutions under state law, it would preclude federal prosecution for the conduct if determined to be good-faith security research.

The new policy also promises protection from prosecution for certain arguably common but contractually prohibited online conduct, including “[e]mbellishing an online dating profile contrary to the terms of service of the dating website; creating fictional accounts on hiring, housing, or rental websites; using a pseudonym on a social networking site that prohibits them; checking sports scores at work; paying bills at work; or violating an access restriction contained in a term of service.” Such activities resemble the facts of Van Buren v. United States, No. 19-783, which the Supreme Court decided in June 2021. In Van Buren, the 6-3 majority rejected the government’s broad interpretation of the CFAA’s prohibition on “unauthorized access” and held that a police officer who looked up license plate information on a law-enforcement database for personal use—in violation of his employer’s policy but without circumventing any access controls—did not violate the CFAA. The DOJ did not cite Van Buren as the basis for the new policy. Nor did the DOJ identify any another impetus for the change.

To Achieve More Consistent Application of Policy, All Federal Prosecutors Must Consult with Main Justice Before Bringing CFAA Charges

In addition to exempting good-faith security research from prosecution, the new policy specifies the steps for charging violations of the CFAA. To help distinguish between actual good-faith security research and pretextual claims of such research that mask a hacker’s malintent, federal prosecutors must consult with the Computer Crime and Intellectual Property Section (CCIPS) before bringing any charges. If CCIPS recommends declining charges, prosecutors must inform the Office of the Deputy Attorney General (DAG) and may need to obtain approval from the DAG before initiating charges.

Article By Kyle R. Freeny, Linda Ricci, Jena M. Valdetero, and Brittany M. Fisher of Greenberg Traurig, LLP

For more data privacy and cybersecurity legal news, click here to visit the National Law Review.

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

Article By Kaoru C. Suzuki of Mintz

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

Judge Ketanji Brown Jackson Confirmed to U.S. Supreme Court

Judge Ketanji Brown Jackson will become the first Black woman and the third Black Justice to serve on the U.S. Supreme Court.

With support of only a handful of Republican senators, a Senate majority voted to confirm Judge Jackson’s nomination to the Supreme Court, 53-47, on April 7, 2022. Judge Jackson will fill the vacancy left by Justice Stephen Breyer, who will retire at the end of the Court’s current term.

During Judge Jackson’s distinguished legal career, she served as a federal district judge from 2013 to 2021, a judge on the U.S. Court of Appeals for the D.C. Circuit from 2021 to 2022, assistant special counsel and then vice chair on the U.S. Sentencing Commission, a federal public defender, and a private practice attorney.

Despite bringing a new perspective to the bench, Judge Jackson is unlikely to affect the current composition of the Court. Her decisions as a district and appellate judge suggest that, like Justice Breyer, she takes a pragmatic approach to the law.

Judge Jackson’s legal methodology will become apparent shortly after she takes her seat for the 2022-2023 term, which begins on October 3, 2022. The Court is scheduled to hear oral arguments on three cases touching on contentious issues during Judge Jackson’s first term. Judge Jackson, who serves on Harvard University’s board of overseers, has stated she will recuse herself from hearing Students for Fair Admissions, Inc. v. President & Fellows of Harvard, a case involving the use of race in college admissions. However, she will participate in 303 Creative LLC v. Elenis, which asks the Court to decide on the constitutionality of a Colorado state law that prohibits business owners from refusing to provide service to people on the basis of sex, including sexual orientation and gender identity. Judge Jackson also will participate in the Court’s hearing of Merrill v. Millgan, which asks the Court to weigh in on whether Alabama’s proposed congressional district plan violates Section 2 of the Voting Rights Act of 1965.

Judge Jackson is expected to be sworn in before the start of the 2022-2023 term.

Article By Stephanie L. Adler-Paindiris and Stephanie E. Lewis of Jackson Lewis P.C.

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

PFAS Air Regulations Proposed By House

In the latest federal legislative move to try to force the EPA to take quicker action than contemplated by the agency’s PFAS Roadmap of 2021, a bill was recently introduced in the House that would require the EPA to set air emission limits for all PFAS under the Clean Air Act. PFAS air regulations are something that advocates concerned about PFAS pollution issues beyond just drinking water have advocated for in the past few years. There are barriers, though, to achieving the desired results even if the legislation passes. Nevertheless, the federal legislative activity underscores the need for all companies that are currently using PFAS in their manufacturing or industrial processes to understand the full scope of compliance needs when and if PFAS air regulations become a reality.

House Bill For PFAS Air Regulations

On March 17, 2022, a bipartisan group in the House introduced the “Prevent Release Of Toxics Emissions, Contamination, and Transfer Act of 2022” (also known as the PROTECT Act of 2022 or HR 7142). The aim of the bill is to require the EPA to list all PFAS as hazardous air pollutants (HAPs) under the Clean Air Act. If passed, the designation as HAPs would require the EPA to develop regulatory limits for the emission of PFAS into the air.

The proposed steps, however, go well beyond the EPA’s own plan for potential PFAS air regulations as detailed in the EPA’s PFAS Strategic Roadmap 2021. In the PFAS Roadmap, the EPA indicates that it commits to performing ongoing investigation to:

Identify sources of PFAS air emissions;
Develop and finalize monitoring approaches for measuring stack emissions and ambient concentrations of PFAS;
Develop information on cost-effective mitigation technologies; and
Increase understanding of the fate and transport of PFAS air emissions to assess their potential for impacting human health via contaminated groundwater and other media pathways.

The EPA committed to using this information and data in order to, by the Fall of 2022, “evaluate mitigation options”, which could include listing “certain PFAS” as HAPs. However, the EPA also indicated that it might use other regulatory or non-regulatory tools to achieve results similar to formal PFAS air regulations under the Clean Air Act.

The bill, therefore, would considerably accelerate the EPA’s process for potential HAPs, which in turn could result in legal challenges to any rushed HAPs, as the EPA would not have had the opportunity to collect all necessary data and evaluate the soundness of the science behind any HAP designation.

Impact On Business

Any designation of PFAS as HAPs under the Clean Air Act will of course immediately impact companies that are utilizing PFAS and emitting PFAS into the air. While it remains to be seen whether the PROTECT Act will pass, if it were to pass and the EPA’s HAP designations were to survive any legal challenges, the impacts on businesses would be significant. Companies would need to undertake extensive testing of air emissions to determine their risk of Clean Air Act violations, which will be complicated due to limitations on current technology to do this type of testing. Companies may also need to pivot their production practices to reduce or limit PFAS air emissions, which would add unplanned costs to balance sheets. Finally, companies may wish to explore substitutes for PFAS rather than navigate Clean Air Act regulatory compliance, which is a significant undertaking that takes time and money.

It is also worth noting that a designation as a HAP for any PFAS would also trigger significant regulatory challenges to businesses that might have nothing to do with air emissions. Any substance listed as a HAP under the Clean Air Act is automatically designated as a “hazardous substance” under CERCLA (the Superfund law). Once a substance is classified as a “hazardous substance” under CERCLA, the EPA can force parties that it deems to be polluters to either cleanup the polluted site or reimburse the EPA for the full remediation of the contaminated site. Without a PFAS Superfund designation, the EPA can merely attribute blame to parties that it feels contributed to the pollution, but it has no authority to force the parties to remediate or pay costs. The designation also triggers considerable reporting requirements for companies. Currently, those reporting requirements with respect to PFAS do not exist, but they would apply to industries well beyond just PFAS manufacturers. Superfund site cleanup costs can be extensive, even as high as hundreds of millions of dollars, depending on the scope of pollution at issue and the amount of territory involved in the site.

Article By John Gardella of CMBG3 Law

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Congress Grants Five Month Extension for Telehealth Flexibilities

On Tuesday, March 16, 2022, President Biden signed into law H.R. 2471, the Consolidated Appropriations Act, 2022 (“2022 CAA”). This new law includes several provisions that extend the Medicare telehealth waivers and flexibilities, implemented as a result of COVID-19 to facilitate access to care, for an additional 151 days after the end of the Public Health Emergency (“PHE”). This equates to about a five-month period.

The 2022 CAA extension captures most of the core PHE telehealth flexibilities authorized as part of Medicare’s pandemic response, including the following:

Geographic Restrictions and Originating Sites: During the extension, Medicare beneficiaries can continue to receive telehealth services from anywhere in the country, including their home. Medicare is permitting telehealth services to be provided to patients at any site within the United States, not just qualifying zip codes or locations (e.g. physician offices/facilities).
Eligible Practitioners: Occupational therapists, physical therapists, speech-language pathologists, and qualified audiologists will continue to be able to furnish and receive payment for telehealth services as eligible distant site practitioners during the extension period.
Mental Health: In-person requirements for certain mental health services will continue to be waived through the 151-day extension period.
Audio-Only Telehealth Services: Medicare will continue to provide coverage and payment for most telehealth services furnished using audio-only technology. This includes professional consultations, office visits, and office psychiatry services (identified as of July 1, 2000 by HCPCS Codes 99241-99275, 99201-99215, 90804-90809 and 90862) and any other services added to the telehealth list by the CMS Secretary for which CMS has not expressly required the use of real-time, interactive audio-visual equipment during the PHE.

Additionally, the 2022 CAA allocates $62,500,000 from the federal budget to be used for grants for telemedicine and distance learning services in rural areas. Such funds may be used to finance construction of facilities and systems providing telemedicine services and distance learning services in qualified “rural areas.”

Passage of the 2022 CAA is a substantial step in the right direction for stakeholders hoping to see permanent legislative change surrounding Medicare telehealth reimbursement.

Article By Joelle M. Wilson and Laura Little of Polsinelli PC

For more health law legal news, click here to visit the National Law Review.

A View From Washington, DC — Budgets, Bills, and Elections

February in Washington, DC, usually ushers in the start of a new federal budget approval process, but that will not be the case this year. President Joe Biden is not expected to release his fiscal year 2023 budget until later this spring, which will be followed by congressional hearings and oversight on our nation’s federal spending. While the president’s budget is not binding, in a Congress controlled by his own party, his suggestions on how Congress should appropriate our federal dollars are certainly taken seriously.

Furthering delays, Congress is still mired in passing the fiscal year 2022 appropriations bills — which appear to now be on target for passage in mid-March. Part of the slowdown on passing these bills revolves around an agreement on the overall topline spending number. The House approved $1.506 trillion in spending in its versions of the 12 annual appropriations bills. The Senate never released a topline number. President Biden’s budget request was for $1.523 trillion, $770 billion for nondefense spending and $753 billion for defense spending. Also of note, assuming these bills are enacted, it will be the first time in a decade that Congress has provided funds for earmarks (now referred to as “community projects”) through appropriations legislation.

Another weighty item on Congress’ agenda is the reauthorization of the nation’s flood insurance program. The National Flood Insurance Program (NFIP) was last reauthorized in 2012, when Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012. The NFIP’s five-year reauthorization ended on September 30, 2017, and since then, the program has been funded by a series of short-term measures. The program is currently operating under an extension that expired on February 18, 2022. The purpose of the Biggert-Waters Act was to make the NFIP solvent, as the program faced a $24 billion deficit. But anyone who has kept apprised of the program knows it’s not solvent and is broken in many respects. Current policyholders are facing an 18% policy rate increase in the coming year.

Finally, once summer arrives, many in Congress will turn their attention in earnest to the mid-term elections in November. Several states have new congressional maps due to redistricting. The released census data gave Texas, Florida, North Carolina, Montana, and Oregon additional seats, while California, New York, and Pennsylvania (among others) lost seats. In an almost evenly divided House, the Republicans only need to pick up three to five seats in order to take control, and most observers expect that to happen. The current US Senate is evenly divided and most incumbent Senate seats are safe, but a few states, such as Georgia, Nevada, Wisconsin, and Pennsylvania, are statistically tied in current polling and are truly toss-up elections at this point, leaving control of the US Senate up for grabs.

Article By Elizabeth Leoty Craddock and R. Christian Johnsen with Jones Walker LLP.

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