Tag: legal

Supreme Court Signals Move Away from Judicial Deference to Administrative Agencies

KEY TAKEAWAYS

In a unanimous decision on June 15, 2022, the Court in American Hospital Association v. Becerra[2] examined a Medicare reimbursement formula reduction that affected certain hospitals. While rejecting the DHHS agency interpretation of the reimbursement statute, the Court made no mention of Chevron deference even though the parties extensively briefed this doctrine. Instead, the Court focused solely on the relevant language of the statute. In particular, the Court held that the “text and structure” of the statute demonstrated that the Medicare reimbursement cut was not consistent with the statute.

In a 5-4 decision a few weeks later, the Court in Becerra v. Empire Health Foundation[3] again made no mention of Chevron deference even though the majority noted that the underlying statute’s “ordinary meaning … [did] not exactly leap off the page.” Despite its initial conclusion that the ordinary meaning of the statutory language was unclear, the Court continued its recent pattern of (a) choosing to not apply Chevron deference directly and (b) instead performing textural and structural analysis of its own. Based on this statutory analysis, the Court in Empire Health concluded that the statute was “surprisingly clear” if read as technical provisions for specialists and that the language of the statute supported the agency’s implementing regulation.

Finally, in West Virginia v. EPA,[4] the Supreme Court in a 6-3 decision again refused to give any deference to the EPA’s interpretation of a Clean Air Act provision which the EPA claimed as the statutory basis to regulate greenhouse gas emissions by power plants. The Court concluded that the EPA had violated the “Major Questions” Doctrine when the EPA used this provision to regulate carbon emissions. Under the “Major Questions” Doctrine, an agency cannot make decisions of vast economic and political significance without Congress expressly giving the agency the power to do so. Since the EPA’s effort to regulate greenhouse gases by making industry-wide changes was a decision of “vast economic and political significance,” the Court concluded that the EPA lacked the authority to do so in light of the overall nature and structure of the statute. Thus, even though there was some textual support for the EPA’s position, the Court again refused to defer to the agency and its interpretation of a statute.

Read together, these three decisions show an increased skepticism by the Court of agency interpretations of statutes and signal that going forward, the federal courts will more closely scrutinize administrative agency decisions in general. Businesses that have, to date, relied on an administrative agency interpretation may need to reassess their reliance if the interpretation relies on a broad or strained reading of a statute. Conversely, businesses currently restrained by agency interpretations which were shown deference by courts may now have an opening to challenge those interpretations.

FOOTNOTES

[1] Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).

[2] Am. Hosp. Ass’n v. Becerra, 142 S. Ct. 1896 (2022).

[3] Becerra v. Empire Health Found., for Valley Hosp. Med. Ctr., 142 S. Ct. 2354 (2022).

[4] W. Virginia v. Env’t Prot. Agency, 142 S. Ct. 2587 (2022).

Article By Andrew T. Blum, Matthew J. Greenberg, and Larry J. Saylor of Miller Canfield

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

© 2022 Miller, Canfield, Paddock and Stone PLC

The FTC Seemingly Thumbs Its Nose at the Supreme Court

Despite the Supreme Court’s recent 6-3 ruling in West Virginia v. EPA that regulatory agencies must have “clear congressional authorization” to make rules pertaining to “major questions” that are of “great political significance” and would affect “a significant portion of the American economy,” and the import of that ruling to the area of noncompete regulation, the Federal Trade Commission (FTC) and National Labor Relations Board (NLRB) announced yesterday that they are teaming up to address certain issues affecting the labor market, including the regulation of noncompetes.

In a Memorandum of Understanding (MOU) issued on July 19, 2022, the FTC and NRLB shared their shared view that:

continued and enhanced coordination and cooperation concerning issues of common regulatory interest will help to protect workers against unfair methods of competition, unfair or deceptive acts or practices, and unfair labor practices. Issues of common regulatory interest include labor market developments relating to the “gig economy” and other alternative work arrangements; claims and disclosures about earnings and costs associated with gig and other work; the imposition of one-sided and restrictive contract provisions, such as noncompete and nondisclosure provisions; the extent and impact of labor market concentration; the impact of algorithmic decision making on workers; the ability of workers to act collectively; and the classification and treatment of workers. (Emphasis added.)

Accordingly, the purpose of the MOU is “to facilitate (a) information sharing and cross-agency consultations on an ad hoc basis for official law enforcement purposes, in a manner consistent with and permitted by the laws and regulations that govern the [FTC and NLRB], (b) cross-agency training to educate each [agency] about the laws and regulations enforced by the other [agency], and (c) coordinated outreach and education as appropriate.”

This follows the Biden Administration’s July 9, 2021 Executive Order in which it “encourage[d]” the FTC to “consider” exercising its statutory rulemaking authority under the FTC Act “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” Nothing concrete has yet come of that Executive Order, although the MOU perhaps represents the next stage of the FTC’s “consider[ation]” of the issue. As we previously reported, FTC Chairwoman Lina Khan recently told the Wall Street Journal that regulating noncompetes “falls squarely in [the FTC’s] wheelhouse,” and she has never been shy about sharing her view that noncompetes should be banned nationwide and that the FTC has the authority to do so. This view does not appear to have changed despite the Supreme Court’s decision in West Virginia v. EPA.

Only time will tell what, if any, action the FTC takes with respect to regulating noncompetes, but if it does take steps to ban or otherwise limit noncompetes nationwide under Section 5 of the FTC Act, there will no doubt be litigation challenging those regulations. And you can bet that the Supreme Court’s decision in West Virginia v. EPA will be front and center in any such challenge. Indeed, according to Law360, U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley said that the MOU shows Chairwoman Khan’s vision for the FTC “goes well beyond what is provided in law and what was envisioned by Congress.” Chairwoman Khan does not seem too perturbed by the prospect of challenges to the FTC’s authority in this regard, however, and seems intent on moving forward despite the Supreme Court’s admonition.

Article By Erik W. Weibust and Stuart M. Gerson of Epstein Becker & Green, P.C.

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

©2022 Epstein Becker & Green, P.C. All rights reserved.

CareDx v. Natera – The Broad Road to Patent Ineligibility

In CareDx v Natera, Appeal No. 2022-1027, (Fed. Cir., July 18, 2022), a three judge panel of Judges Lourie, Bryson and Hughes, affirmed the district court’s finding that the claims of U. S. patent nos. 8703652, 9845497 and 10329607 are invalid for failing to survive the Alice/Mayo test for patent eligibility. I subtitled this post using Mathew 7:13-14: “Enter through the narrow gate. For wide is the gate and broad is the road, that leads to destruction.” The appeal to the Federal Circuit, which I wrote about on October 15, 2021, never got on the narrow road that leads to viable diagnostic claims. It may not have been possible to overcome the obstacles that blocked the road, but CareDx managed to hit them all, and ended up with three invalid patents on natural phenomena.

The claims were directed to a method for detecting transplant rejection or organ failure by isolating and genotyping a sample from the subject who received the donation, quantifying the cfDNA, and diagnosing the transplant status for an increase in donor cfDNA over time. An increase indicates possible transplant failure.

Judge Lourie summarized the claims, some of which are more than a page long, this way:

“Here, as in Ariosa, the claims boil down to collecting a bodily sample, analyzing the cfDNA  using conventional techniques, including PCR, identifying naturally occurring DNA from the donor organ, and then using the natural correlation between heightened cfDNA levels and transplant health, to identify a potential rejection, none of which was inventive. The claims here are equally as ineligible as those in Ariosa.”

Let’s take a quick look at how CareDx got onto the broad road. CareRx hoped to avoid Ariosa by arguing that it was doing more than just measuring a biomarker correlated to an existing phenomenon. Problem 1 is that CareDx did not discover the correlation; it just improved on it (or did it?). Louie writes:

“CareDx argues that the patents’ claims are directed not to natural phenomena, but to improved laboratory techniques. CareDx contends that the ‘claimed advance’ is an ‘improved, human-designed method for measuring increases in donor cfDNA in a recipient’s body to identify organ rejection.’ … In particular, CareDx identifies the use of digital PCR, NGS, and selective amplification to more accurately measure the donor SNPs of cfDNA transplant recipients. However, CareDx does not actually claim any improvements in laboratory techniques … Furthermore the specification admits that the laboratory techniques disclosed in the claims require only conventional techniques and off-the-shelf technology.”

In fact, CareDx had at least one claim in the ‘497 patent that recites that the assay detects the donor-specific circulating cfDNA from the organ transplant when the donor-specific circulating cfDNA [makes] up at least 0.3% of the total circulating cfDNA in the biological sample. I presume that this claim limitation was put into the claim so that “improvement”  could be argued, but the limitation is not mentioned in the opinion.

Let’s look at a few other things CareDx encountered on its broad road to legal destruction. The panel looked at every step of the method in isolation. In other words, once CareDx argued “improvement” it was forced to admit that the specification disclosed that all those analytical techniques, such as PCR, NGS and “selective amplification”, would be considered as conventional in the art. CareDx might have relied on some of the decisions finding patent eligibility where physical equipment was necessarily involved, such as XL LLC v. Trans Ova Genetics or Illumina v Ariosa.

The finding of conventionality of individual steps permitted the court and the panel to effectively rule that the method was directed to a natural product, since the devices used to carry it out were given no weight. Therefore, the patents failed to pass Step 1 of Mayo/Alice. Could it have been argued, if that was the case, that the equipment used to carry out the method was arranged in a novel sequence? (Also, is someone going to argue that PCR involves replicating small amounts of DNA to afford useful amounts? – This is accomplished by the hand of man.)

These are minor thoughts, CareDX should left the word “diagnostic” out of the claims and the specification. This is certainly no more of a diagnostic test than the Mayo range-finding step was. It is presently clear that in the life sciences, recognition of the utility of a naturally occurring correlation is not enough to avoid patent ineligibility. Of course, and this is cold comfort to CareDx, would it have helped to get this method into the safe harbor of methods of medical treatment? In other words, the first step could recite the actual transplantation step and/or the final step of the process could recite some sort of medical intervention. Narrower claims might have returned CareDx to the narrow path of patent life.

Article By Warren Woessner of Schwegman, Lundberg & Woessner, P.A.

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

© 2022 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Five Ways to Encourage Lawyer Participation With Your CRM System

Lawyers are busy and often resistant to change, so getting them on board with using a new or even your existing CRM system can be challenging.

But if you approach your CRM efforts as a value-added benefit that will support their marketing and business development efforts and is not difficult to use or time-consuming, you can increase CRM adoption and participation by your lawyer population at any size law firm or professional services organization. Here’s how.

  1. Explain what’s in it for them. Spend the time to clearly outline to users how the CRM system will directly benefit them, not just the organiztion as a whole.
  2. Put yourself in their shoes. Overcomplicated systems and non-technical users are a recipe for disaster. The whole point of implementing a CRM system is to improve efficiency and productivity, not hinder it, so make it easy for your lawyers to use it – or they simply won’t. In addition, lawyers use many different systems on a daily basis, such as time and billing, practice management and document management. CRM can become the one place to get all or most of what they need and allow them more time to be lawyers. Tip – look for CRM systems that include customizable dashboards to personalize daily views.
  3. Show lawyers how easy it is to gain value and insights from the information in the CRM on their own. Engage your marketing professionals to regularly meet with lawyers on a regular basis to gather new and updated contact information.
  4. Find a system that makes it easy for lawyers to share appointments and activities with CRM. This way, marketing professionals can provide strategic, proactive support for upcoming prospect and client meetings based on CRM data. For example, let’s say your marketing manager sees a calendar appointment with a prospective client on an attorney’s schedule. She could then reach out to them and proactively create pitch materials and share who-knows-who info, past matters information and other intelligence. After meetings, attorneys can be prompted to add their meeting notes in CRM too.
  5. Maintain clean, updated CRM data. Your CRM is only as useful and strong as the information entered into it, so if its users are inputting inaccurate data, you’ll only distill inaccurate insights from it. Ensure your data is up to date and accurate, and implement a regular data cleaning process which you can outsource if you don’t have internal resources to manage it.

5 Ways to Encourage Lawyer Participation With Your CRM System

While the keys to CRM adoption success will vary for each firm, the common, important thread is always the “value exchange.” If you make it easy for your attorneys to contribute valuable information – and ensure they are getting value out of the CRM – adoption and CRM success will follow.

Increasing CRM adoption and participation takes time, but it is an important investment to make and one that will provide many long-term benefits for your lawyers and your firm.

Another strategy to consider: redefining CRM success by minimizing the need for attorney adoption. Many smart firms are moving away from the traditional model of having attorneys be responsible for data entry. We’ll discuss that in an upcoming post.

Article By Christina R. Fritsch JD of CLIENTSFirst Consulting

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

© Copyright 2022 CLIENTSFirst Consulting

What Public Comments on the SEC’s Proposed Climate-Related Rules Reveal—and the Impact They May Have on the Proposed Rules

On March 21, 2022, the Securities and Exchange Commission (“SEC”) published for comment its much-anticipated proposed rules on climate disclosures, entitled “The Enhancement and Standardization of Climate-Related Disclosures for Investors.”[1]  The SEC invited public comments on these rules, and the response was overwhelming—nearly 15,000 comments were published on the SEC’s website over the course of three months, from individuals and organizations representing all aspects of modern American society.  Few, if any, of the SEC’s rule proposals have ever received such voluminous, significant, and diverse comments.  And the comments themselves range from brief statements to complex legal arguments either in support or in opposition, as well as detailed proposals for further changes to the proposed climate disclosures.  The comment period closed on June 17, 2022, and further action by the SEC to finalize the proposed rule is anticipated this fall.

This article provides a brief summary of the comments, and analyzes and summaries the key points the comments conveyed.

Statistical Analysis of Form and Individualized Submissions

Since the beginning of the public comment period, the SEC has received 14,645 comments on the proposed climate disclosure rules.[2]  To provide some context for how massive that figure is, the SEC has only received 144 comments on its proposed cybersecurity risk management rules, which were announced two weeks before the proposed climate disclosures and have also been the subject of extensive commentary in the press.  Yet despite the prominence of the SEC’s cybersecurity proposal, it has received fewer than 1% of the comments offered on the climate disclosure rule.

Of the 14,645 comments, approximately 12,304, or 84% of the total, are form letters.  This includes 10,589 comments that the SEC itself identified as form letters, and another 1,715 apparently individualized comments that were actually form letters.  However, even when removing these form letters from consideration, fully 2,341 individualized comment letters remain—a substantial number, and a significant percentage (16%) of the volume.[3]

The form letters are worth exploring in more detail.  Of the 12,304 comments, fully 10,861 (88%) broadly express support for the proposed climate disclosure rule, and only 1,443 (12%) are in opposition.  This disparity in the level of support for the two positions is best conveyed by the chart below.

Positions for and against the new SEC Disclosures

Notably, it has been possible to identify some, although not all, of the organizations that sponsored the form letter writing campaign.  In particular, form letters proposed by the Union of Concerned Scientists in support of the proposed climate disclosures were submitted 6886 times—more than 55% of the total volume of form letters.  Additionally, the form letters proposed by the Climate Action Campaign and the National Wildlife Federation in support of the SEC’s proposed disclosures were also quite voluminous among the submissions—1208 and 956 comment letters, respectively.  The most frequent form letters submitted in opposition to the proposed climate disclosure rules—e.g., those proposed by FreedomWorks (348 letters) and the Club for Growth (172 letters)—did not achieve nearly the same volume of submissions.

But the apparent overwhelming majority in favor of the proposed SEC climate disclosure rules, as conveyed by the form letters, is belied by the individualized submissions, which were far more closely divided.  Of the 2341 individualized comment letters submitted, approximately 53% (1238 comment letters) expressed support, about 43% (1015 comment letters) were opposed, and a handful—around 4% (88 comment letters)[4]—did not express a position.  The below chart demonstrates the levels of support expressed by the individualized submissions:

Individual submissions supporting, opposing, and neutral to the new SEC Disclosures

Besides the mere volume of submissions, however, the most noteworthy aspect of the individualized submissions are the substantive arguments—both factual and legal—that these comment letters articulate, whether in support or opposition to the proposed rules, as well as the identity of those making these submissions.

Arguments in Support of the Proposed SEC Climate Disclosure Rules

The organizations and individuals that chose to offer support for the SEC’s proposed climate disclosures represent a wide swathe of society.  Broadly speaking, these proposed climate disclosures attracted support from, among others: Democratic politicians, civil society organizations (such as environmental NGOs), individual corporations, professional services organizations, and academics. While the rationales offered by these different groups varied considerably, in part due to their varying perspectives (e.g., environmental NGOs were more concerned with the impact on the transition to a clean-energy environment, while corporations often focused on the consequences of particular aspects of the rules), the individualized comments in support of the proposed disclosures nonetheless shared some common features.

Specifically, there are a number of common arguments that are frequently featured among the 1239 individualized submissions in support of the SEC’s proposed climate disclosures.  Six arguments appear in over 10% of the submissions.  In order of prevalence, these are:

  1. Environmental Protection (347 submissions, 28%): that the proposed rules will help protect the environment
  2. Investor Choice (280 submissions, 23%): that the proposed rules will enable investors to make more informed choices
  3. Investor Protection (263 submissions, 21%): that the proposed rules will enable investors to protect themselves and their investments from climate-related risk
  4. Standardization of Climate Disclosures (259 submissions, 21%): that the proposed rules will enable the standardization of climate disclosures, making data comparable
  5. Increased Transparency (171 submissions, 14%): that the proposed rules will increase transparency and hold companies accountable for their emissions
  6. Alignment with International and Foreign Regulatory Frameworks (169 submissions, 14%): that the proposed rules will bring the United States into alignment with both international frameworks and other countries (e.g., the EU)

No other argument appeared in more than 6% of the individualized submissions in support of the SEC’s proposed climate disclosures.

Notably, the most common arguments in favor of the proposed climate disclosures share a common feature: these are all policy arguments, focusing on the benefits to investors and the broader economy from the adoption of the SEC’s proposed disclosures.  Only a single argument among the top ten most frequent arguments in support was a legal argument—namely that the proposed rules fall within the SEC’s statutory authority—and that argument appeared in only around 3% of the submissions (41 submissions).[5]  This focus on policy benefits among supporters of the SEC’s proposed climate disclosures is unsurprising, as these public policy rationales were a key factor in encouraging the Biden Administration to pursue this regulatory agenda.  However, the reluctance to engage with critics of the proposed climate disclosures on a legal basis may signal the difficulties that the SEC’s proposed climate disclosures may encounter in future court challenges.

Arguments in Opposition to the Proposed SEC Climate Disclosure Rules

Those entities and individuals that submitted individualized comment letters opposing the SEC’s proposed climate disclosures also represent a broad range of American society, albeit with a somewhat different focus.  Generally, individualized letters in opposition to the SEC’s proposed climate disclosures tended to be submitted by, among others: Republican politicians, individual corporations, trade industry groups, and NGOs. (Unsurprisingly, the fossil fuel industry and extractive industries were particularly well-represented among the commenters.)  These individualized submissions—frequently lengthy and extensively analyzing the SEC’s regulatory practices and authority—shared a number of common themes.

In particular, there are a number of common arguments that featured frequently among the 1014 individualized submissions to the SEC in opposition to these proposed climate disclosures.  Three (3) arguments appeared in more than ten (10) percent of these submissions:

  1. Ultra vires (322 submissions, 32% ): that the SEC lacks the ability to issue these disclosures as the proposed rule is beyond the scope of the SEC’s legal authority
  2. Compliance Costs (218 submissions, 21% ): that compliance with the proposed rule will impose unreasonable and extensive costs on businesses
  3. Climate Science Skepticism (123 submissions, 12%): that the science concerning climate change is unsettled and therefore the proposed rule is inappropriate

Although no other common argument appeared in more than 7% of the individualized letters in opposition, it should still be noted that there were a large number of letters that objected to the increased burdens placed on particular types of businesses, whether farmers (53 submissions, 5%), fossil fuel companies (49 submissions, 5%), or small businesses (36 submissions, 4%).

Overall, it is striking that around a third of the comments submitted in opposition stated that the SEC had acted beyond its authority (ultra vires) in proposing this new rule.  While this critique is hardly novel—it has been a frequent refrain of the Republican SEC Commissioners ever since this topic was first broached—the prevalence of this argument among the individualized comments suggests that both the public and sophisticated market actors perceive this issue as a key vulnerability in the SEC’s proposal, and that this legal argument will likely be emphasized in the inevitable legal challenge to this SEC rule.  And, based on recent decisions by the Supreme Court, it is altogether likely that this line of attack may find a sympathetic audience in the courts.

Potential Changes to the SEC Climate Disclosure Rules Resulting from Public Comments

Despite the differences between the advocates and opponents of the SEC’s proposed climate disclosures, both sides submitted proposals to the SEC to change or adjust the proposed rules.  Although there was often substantial disagreement about the content of these proposed changes, there were also significant areas of convergence.

Some of the changes to the SEC’s proposed climate disclosures frequently submitted by supporters of the rule included:

  1. ISSB: that the SEC should further align its proposal with the ISSB and help create a global standard (76 comments);
  2. Extended Phase-In Period: to extend the phase-in period for these new disclosure requirements (72 comments);
  3. Alignment with International and Foreign Standards: that the SEC should further align its proposal with international and foreign standards, such as the EU or TCFD (66 comments);
  4. Enhance Scope 3 GHG Emissions: to eliminate exemptions so that all companies must disclose Scope 3 GHG emissions (55 comments);
  5. Principles-Based Approach to Materiality: to adopt a principles-based approach to materiality rather than bright-line rules (53) comments;
  6. Remove Scope 3 GHG Emissions: to remove the requirement that Scope 3 GHG emissions be disclosed (36 comments);
  7. Furnish, Not File: that the disclosures be provided in a document that is “furnished” to the SEC, rather than filed (which impacts potential liability) (26 comments).

Although certain proposed changes by proponents of the SEC’s proposed climate disclosure rule are undeniably expected (e.g., removing exemptions for disclosure of Scope 3 GHG emissions), there are others that seem somewhat surprising on initial review (e.g., extending the phase-in period or removing Scope 3 GHG emissions entirely).  This can most easily be explained by the fact that supporters of the SEC’s proposed rule include corporations and other business interests, which will resist certain burdensome regulations even if generally offering support for the overall thrust of the proposal.  There are also academics and others who continue to express skepticism concerning the utility of disclosing Scope 3 emissions, or even whether it can be adequately measured.

It should be emphasized that these changes proffered by supporters of the SEC’s proposed rule, many of which are designed to render the proposed rule less onerous, may indicate that the support for the proposed rule—or at least the most stringent aspects of it—is relatively weak (or at least among the corporate interests nominally aligned with the SEC).

The most frequent changes suggested by opponents of the rule included:

  1. Remove Scope 3 GHG Emissions: to remove the requirement that Scope 3 GHG emissions be disclosed (69 comments);
  2. Principles-Based Approach to Materiality: to adopt a principles-based approach to materiality rather than bright-line rules (35 comments);
  3. Extended Phase-In Period: to extend the phase-in period for these new disclosure requirements (25 comments);
  4. Furnish, Not File: that the disclosures be provided in a document that is “furnished” to the SEC, rather than filed (which impacts potential liability) (18 comments).

These proposed changes (and others) advanced by opponents of the SEC’s proposed rule are generally designed to make the rules less stringent and also to reduce costs and potential legal liability.

As can be seen by comparing the above lists, there are certain areas where suggested changes to the proposed rule converged.  In particular, there are issues where both opponents of the SEC’s proposed rule and some of its supporters would try to render it less intrusive or impactful, particularly with respect to the elimination of the requirement to report Scope 3 GHG emissions and to extend the phase-in period further.  (Although, as noted, this apparent convergence between opponents and supporters of the SEC’s proposed rule may be due to divergent interests among the supporters of the SEC’s proposed rule with respect to its implementation.)

But, regardless of the specific content of the particular proposed changes, what is undoubtedly significant is that these proposed changes have highlighted the aspects of the SEC’s proposed climate disclosure rule that are likely most sensitive to regulated corporations.  Such an insight reveals not only the areas where active lobbying is most likely to take place, but also previews probable priorities for corporate compliance departments.  In effect, focusing on the aspects of the proposed rule where changes were proposed is a means to identify the key issues from the perspective of the regulated entities and the public at large.

Conclusion

The level of engagement with the SEC’s proposed climate disclosures, as demonstrated by the number and detail of the public comments offered, is extraordinary. This degree of attention indicates the significant impact that is expect to result from the ultimate promulgation of these rules (or a revised version thereof).

Of course, the key question here is what changes, if any, are likely to be made to the SEC’s proposed rule based upon the public comments submitted to the SEC.  In this context, it is noteworthy that a handful of key issues have been identified by both proponents and opponents of the proposed disclosures as especially ripe for potential revision.  As noted above, these include, among others, the length of the phase-in period and the disclosure of Scope 3 GHG emissions.  If any changes are to be made to the SEC’s proposed climate disclosure rule, it is likely that such changes will be related to these issues.

However, given the relative lack of forward momentum with respect to other aspects of the Biden Administration’s climate agenda, there may well be political pressure not to weaken or otherwise rollback the SEC’s proposed rule, as this is one of the few areas where significant—and publicly-recognized—progress has been made with regulations designed to address the issue of climate change.  Further, the Biden Administration’s SEC has certainly recognized the inevitability of a legal challenge to these proposed climate disclosures, and, since no degree of alteration would suffice to preempt such a lawsuit, the SEC may conclude that it is better to seek to implement all aspects of the proposed regulation for the political benefit that can be achieved in the short term, since the substantive aspects of the proposed disclosure may not ultimately survive judicial scrutiny.  The SEC may also prefer to send a strong signal to the market by maintaining its original proposed rule.  Recognizing these pressures, it seems unlikely that the public comments submitted to the SEC will have a significant impact on the final rule promulgated in the coming months—and improbable that the SEC will make the proposed disclosures less robust.

FOO​TNOTES

[1] These proposed rules are discussed more fully in our prior publication:  https://www.mintz.com/insights-center/viewpoints/2451/2022-03-30-brief-summary-secs-proposed-climate-related-rules

[2] Although the total number of comments, when including both form letters and individualized letters, is 14,739, there are 94 comment letters on the SEC website that are duplicates, and have thus been removed from the calculation.

[3] For comparison, the proposed SEC rule on disclosing compensation ratios drew about 300,000 form letters and around 1500 individualized comment letters.  In this case, the individualized comment letters represented only about 0.5% of the total volume.  https://www.sec.gov/comments/s7-07-13/s70713.shtml

[4] The eighty-eight comment letters that did not adopt an express position on the proposed climate disclosure rules instead conveyed a number of different points, including proposing narrow changes to the proposed rule without taking a stance on the rule as a whole, or offering further context for the SEC’s actions (e.g., comparing the SEC to other regulators, whether domestic or international).  This category also includes a number of early comments that simply requested that the SEC extend the deadline for submitting comments.

[5] There are public comments in support of the proposed rule that focus on the legal issues.  In particular, the submission of Prof. John Coates of Harvard Law School, a former SEC official, is devoted exclusively to defending the legal authority of the SEC to issue the proposed climate disclosure rule. https://www.sec.gov/comments/s7-10-22/s71022-20130026-296547.pdf

Article By Jacob H. Hupart, Megan N. Gates, William F. Weld, Douglas P. Baumstein, Jennifer B. Rubin, and Courtney O. Taylor of Mintz. Luke Haubenstock also contributed to this article.

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

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

The COVID-19 Change Order

During the pandemic it has become common for contractors to submit change orders to owners seeking reimbursement for COVID-19 related expenses and costs.  This is especially true for large construction projects.  These “COVID-19 Change Orders” seek reimbursement for everything from masks, dividers, hand sanitizer and other items required to follow and implement CDC guidelines (or to comply with state and local orders) for maintaining a safe work environment.  COVID-19 Change Orders also seek reimbursement for extended general conditions caused by having less workers on site because of social distancing requirements, lost time caused by shorter working hours, and lost time associated with CDC mandated hygiene breaks and temperature checks. On larger projects, COVID-19 Change Orders can escalate into millions of dollars and are often submitted without warning towards the end of a project when final completion and the payment of retainage are approaching.

For owners and contractors that are trying to complete their projects, many of which have been delayed or suffered from cost overruns, these unexpected COVID-19 Change Orders can be very problematic and hard to navigate.  Owners will argue that increased costs associated with the pandemic have affected all businesses, not just contractors.  Contractors will respond that these are real costs that they must pay to operate.  Often, the justification for reimbursement is not black and white because it is hard to find a specific contractual provision that addresses such an unprecedented situation, which causes uncertainty and strained relations between owners and contractors at the end of a project.

The justifications asserted for COVID-19 Change Orders vary from project to project and are sometimes asserted as an event of force majeure or more commonly as a general change in site conditions.  While many force majeure clauses expressly apply to acts of God, pandemics and government shutdowns, that is not the end of analyzing whether the clause applies.  While the application of a force majeure clause to these situations is highly dependent on the wording of such a clause, most require that performance be completely prevented and do not recognize commercial impracticability as a justification for delay.  There were a small number of projects that were shut down at the beginning of the pandemic by state and local orders in stricter jurisdictions, but for the most part complete shutdowns were uncommon because of various exceptions to such orders for businesses broadly defined as “essential.”  As the pandemic extended through late 2020, and into 2021, shutdowns became non-existent.  Finally, many force majeure clauses don’t allow for the reimbursement of costs for implementing required protective measures, they simply allow for an extension of the contract time.

As a result, many contractors have turned to other contractual provisions, such as language related to changes in site conditions or clauses related to change orders in general.  But prior to the pandemic these provisions were not drafted with this circumstance (a virus) in mind.  Instead, they usually apply to changes in “physical” conditions at the site that are specifically described, like subsurface conditions, otherwise concealed physical conditions or hazardous materials found at the site.   Making the argument that a virus is an unknown “physical” condition at the site can be a challenge since the virus is airborne, not necessarily part of the site itself and not unique to the site.  In addition, because many of these clauses require the approval of the owner or are only triggered by specific conditions, they may not support a unilateral change order.

Because of the ambiguity surrounding COVID-19 Change Orders, many owners will initially be reluctant to cover such reimbursements for their contractors.  Aside from the specific language in their construction contracts, Owners should consider other factors when deciding whether to reject, accept or partially accept COVID-19 Change Orders, including the risk of strained relations with its contractor, distractions at the project and the costs of a potential dispute with its contractor.  If there are remaining construction contingency funds available, and the project has otherwise run smoothly, the owner should consider offering all or part of it at the end of the project to avoid a dispute.  Likewise, contractors should be thoughtful and thorough when deciding whether to seek reimbursement for project costs associated with COVID-19, and make sure the costs at issue were necessary and can be verified.  Finally, if the contractor received government loans or payments because of the pandemic, including funds from the Paycheck Protection Program, it should strongly consider not seeking reimbursement from the owner.

Article By Richard F. Whiteley, Phillip L. Sampson Jr., and Stacianne M. Wilson of Bracewell LLP

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

© 2022 Bracewell LLP

July 2022 Legal Industry News and Highlights: Law Firm Hiring, Industry Recognition, and the Latest in Diversity and Inclusion

Thank you for reading the National Law Review’s latest in legal industry news – read on below for updates on law firm hiring and expansion, industry awards and recognition, and diversity and inclusion initiatives! We hope you are staying safe, happy, and healthy.

Law Firm Hiring and Expansion

Womble Bond Dickinson has announced its upcoming merger with Cooper, White & Cooper LLP, a multi-practice law firm based in San Francisco. Effective on September 1, 2002, the expansion will strengthen Womble’s presence in the Bay Area, with more than two dozen legal professionals operating out of the San Francisco area.

“California is home to some of the world’s key business and technology hubs, with San Francisco chief among them,” said Betty Temple, CEO and Chair of Womble Bond Dickinson (US). “The state – and indeed the entire West Coast – is strategically important to Womble, and we are thrilled to anchor our presence in the market through a firm that is well-known for its robust litigation and transactional skills. We look forward to continuing the growth of our services and footprint on the West Coast and in other key markets to provide greater value to our clients.”

“We have been impressed by Womble’s transatlantic platform and stellar reputation for advising companies on complex, high-stakes issues,” said Jed Solomon, a partner at Cooper, White & Cooper. “Combined with our cultural compatibility and shared commitment to exceptional client service, this was an ideal opportunity to expand our services to our collective client base.”

James W. Cox, MS, an experienced biologist and risk assessor, has joined Bergeson & Campbell, P.C. and The Acta Group as Senior Scientist. Mr. Cox, who has formerly served as an Acting Lead Biologist in Risk Assessment in the EPA’s Office of Pollution Prevention and Toxics and as a Biologist at the Department of Defense, has reviewed hundreds of biological agents, nanomaterials, industrial chemicals, and more to determine risks to human health and the environment. At the firm, he will continue to provide regulatory process guidance for products subject to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the Toxic Substances Control Act (TSCA), and other notable regulatory programs.

“James’s contributions to our practice areas come at a crucial time, given the considerable uptick in the need for risk assessment skills,” said Lynn L. Bergeson, Managing Partner of Bergeson & Campbell and President of Acta. “We are so pleased James has joined our team and look forward to introducing him to our clients.”

Varnum LLP has expanded its office in Birmingham, Michigan. With growing client demand and ongoing hiring, the firm has nearly doubled the size of its operations in the area in the last three years, featuring noteworthy practices in the fields of banking, finance, corporate law, M&A, intellectual property, and more.

“Since opening our doors in Birmingham three years ago, we have been thrilled with the reception from clients, legal talent and the community alike,” said Firm Chair Ron DeWaard. “Our newly expanded office will allow us to continue our growth trajectory with first-class space for clients and talent.”

Industry Awards and Recognition

Nick Welle, Partner at Foley and Lardner LLP, has received a 2022 Philanthropic 5 Award from the United Way of Greater Milwaukee & Waukesha County. Created by the organization’s Emerging Leaders Council, the award recognizes five notable leaders in the community, particularly ones that have made significant contributions of mentoring, volunteer work, or leadership to nonprofit organizations in the area.

Mr. Welle is the Chair of the firm’s Health Benefits Practice Group, as well as the co-chair of the Pro Bono Committee based in Milwaukee. Both at the firm and through community volunteer work, Mr. Welle has managed projects such as camp clean-ups, backpack drives, and clothing fundraisers in the area, dedicating hundreds of hours to the Boys & Girls Club of Greater Milwaukee. Additionally, he assists in running the Milwaukee Street Law Legal Diversity Pipeline Program, which aids high school students from diverse backgrounds in researching potential legal professions.

At the 40 at 50 Judicial Pro Bono Recognition Breakfast, Barnes & Thornburg LLP was honored by the Judicial Conference of the District of Columbia Circuit’s Standing Committee on Pro Bono Legal Services for its ongoing commitment to pro bono legal services. More than 40 percent of the firm’s Washington D.C.-based attorneys performed more than 50 hours pro bono work in the last year, and as such, the firm was made eligible for the recognition.

In addition, the organization recognized Barnes & Thornburg for being one of only six firms in which at least 40 percent of its partners in the Washington D.C. office reached the 50-hour marker.

Tycko & Zavareei LLP’s Sabita J. Soneji has been nominated to the Public Justice Board of Directors for a term that will last three years. Working against unchecked corporate power, ongoing pollution, unjust employers, punitive credit card companies, and more, Public Justice engages in impactful legislation to take on notable systemic threats to justice in the United States. Ms. Soneji, a Partner at Tycko & Zavareei, has nearly 20 years of experience in litigation and legal policy, fighting consumer fraud at both the federal and state level.

“I’m genuinely honored to be nominated to serve on the Board of an organization that tirelessly works to promote justice, diversity, and fairness,” said Ms. Soneji. “I’m even more excited to get to do that work with such an incredible group of devoted attorneys.”

Diversity, Equity, and Inclusion

Brittainy Joyner, attorney at Shumaker, Loop & Kendrick, LLP, has been accepted into the 2022 cohort for the Nonprofit Leadership Center’s Advancing Racial Equity on Nonprofit Boards (ARENB) Fellowship. Broken into six separate sessions, the ARENB program helps to advance the racial and ethnic diversity of nonprofit boards throughout the Tampa Bay area, ensuring these organizations are prepared and committed to fostering more inclusive cultures and environments. Ms. Joyner, a member of Shumaker’s Litigation and Disputes Service Line, focuses her practice on litigation and disputes for homeowners associations, as well as arbitration, mediation, and negotiation.

“We are proud that Brittainy got accepted into Advancing Racial Equity on Nonprofit Board Fellowship,” said Maria Del Carmen Ramos, Shumaker Partner and Diversity and Inclusion Committee Co-Chair. “At Shumaker, we understand the importance of promoting racial equity. We are happy to see our attorneys, like Brittainy, being committed to doing something about it. We know Brittainy will be a valued fellow.”

In celebration of 2022’s Pride Month, New York Times bestselling author and Pulitzer Prize finalist Dr. Eric Cervini joined Katten Muchin Rosenman LLP attorneys for a virtual conversation about the history of LGBTQ+ politics in the United States, as well as the continued battle for LGBTQ+ rights. The event was moderated by firm Partner J Matthew W. Haws, who is a member of the Lesbian and Gay Bar Association of Chicago and the National LGBTQ+ Bar Association.

With more than 300 anti-LGBTQ+ bills proposed this year across the country, Mr. Cervini acknowledged the community’s ongoing struggle. However, he noted “As I remind people, we have been through much worse. We have survived the inquisition, the Lavender Scare, the AIDS crisis, and Anita Bryant […] We can certainly get through this. But we need to be studying up, how we were successful and how we failed in the past and then also be recruiting new allies, just as Frank Kameny recruited the ACLU, we need to be recruiting new allies today.”

Darrell S. Gay, partner at ArentFox Schiff LLP, has been named one of Crain New York Businesses’ 2022 Notable Diverse Leaders in Law. Selected for his contributions to local counseling, pro bono work, and community service and philanthropy, as well as his commitment to diversity, equity, and inclusion initiatives, Mr. Gay is an experienced attorney, focusing his practice on the field of labor and employment. He assists in guiding clients through employee relations issues, as well as internal investigations and traditional labor matters.

In addition, Mr. Gay is a longtime leader in the private bar and the business community. He served for three years as the Commissioner for the New York State Civil Service Commission, and additionally played a central role in founding and leading the firm’s Center for Racial Equality.

Article By Chandler Ford of The National Law Review / The National Law Forum LLC

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Copyright ©2022 National Law Forum, LLC

How Technological Advances Possibly Affect Automobile Insurance Policy Holders in New Jersey

In the 1970’s, “no-fault” insurance laws were enacted in New Jersey and several other states in response to criticism regarding the time-consuming and costly process of determining who was at-fault when an accident occurred. 

No fault insurance laws sought to streamline the claims process.  One key feature allowed insurers to pay for medical treatment of their injured policyholders.  This allowed for timely treatment and provider payment.  NJ automobile insurance policies offered up to $250,000 in coverage for medical treatment.  Recent changes in law now allow insureds to choose less coverage for medical treatment.

Further, recent technological advances change the way insurance customers choose coverage online.  While customers are served by the ease, flexibility, and pricing of policies through internet platforms, some adverse consequences naturally flow.  In this article, we discuss the changes, the consequences and subsequent response from participants and 3rd parties to address these outcomes.

Background

In the 1960’s, many more vehicles were entering into American roadways than in previous decades.  Baby boomers were coming of age and more cars were sold than ever before.  A natural consequence was automobile accidents and as a result, the necessary adjudication of which party caused the collision.

Insured and insurers alike expressed criticism of the process which consisted of petitioning the civil court system to resolve disputes.  In response, state legislatures adopted laws designed to streamline the process, and the 1970’s, many states adopted policies allowing injured accident victims to recover damages from their own auto insurance policies.

Almost half of the United States now have similar laws where policyholders are entitled to “benefits” from their own policies.  This of course means insurers are on the hook for more compensation, a fact they obviously utilized to lobby legislatures to place certain restrictions on the right to sue for damages not only against the insurer but against the tortfeasor as well.

One of the “trade-offs” made by the legislation was injured parties giving up some of their rights to sue under certain circumstances.

New Jersey No-Fault Law and Application

New Jersey’s no-fault laws have been amended throughout the years.  One of the most profound changes to the law occurred in 1998 with the passage of the Automobile Insurance Cost Reduction Act (“AICRA”).  This change in law gave NJ residents the opportunity to purchase a standard or basic policy.

The standard policy is much like a typical no-fault policy containing Personal Injury Protection (PIP) which pays for medical treatment (more on this in a moment); liability coverage for injury or property damage to another; and uninsured/underinsured coverage which kicks in if the at-fault driver has no or insufficient coverage.

A basic policy provides minimum coverage in certain areas such as personal liability, property damages, and medical benefits.  Because having automobile insurance is mandatory, the purpose of the basic policy was essentially to afford an option to those who simply wanted to follow State mandates.

With regard to the right to sue restrictions, a New Jersey insured was and still is offered a choice – give up the right to sue for “non-permanent” injuries (those with no objective medical evidence of permanency) and have the premium reflect a savings or retain the right to sue (zero threshold) and pay a much higher premium to offset the cost.  Further, one of the things insurers had to trade was that victims would have $250,000 worth of PIP coverage to pay for medical expenses.

Changes to NJ No-Fault Insurance and Consequences

The AICRA changes have been in effect for years.  Since that time, the internet altered the manner in which policyholders interact with insurers when choosing coverages.

The internet streamlines the sales process for many businesses.  Insurance is no different.  What is troubling about this streamlining is the lack of guidance users receive from insurance companies regarding their choice of coverage.

For example, one website asks you to choose between:

  • More Affordable
  • Popular Coverage
  • More Coverage

It is not so much that the choices are misleading – they aren’t.  However, other than these descriptions, there is little explanation of their consequences.  If you choose the “more affordable” option, you’re led to a screen that explains the coverages in more detail.

Do people read all the information?

Can they understand the language even if they do decide to read it?

Could it be that the ease of picking the cheapest option is too much to overcome?

Consider this description from a law firm in Maryland:

“PIP is easy to overlook, especially in this age of online insurance applications. It’s one box out of 200 that you can check. The application will say something like, “Waive PIP and save $57.” The applicant clicks and saves 57 bucks…when in reality, they’ve lost $2,500 if they get in an auto accident. Too many Maryland policyholders waive their PIP coverage. It’s really a good coverage not to waive. “

Likewise, in New Jersey’s Standard Coverage Selection Form, used by insurance companies as a questionnaire to draft a proposed policy, the PIP limits selection form actually lists the savings from choosing lower limit PIP coverage.  Remarkably, no such comparison exists on the Form for reductions in Bodily Injury/Liability limits.

In the old days, an insurance agent was tasked to explain various coverages.  A real human being who would answer questions depicting real word scenarios involving accidents.  This obviously allowed for more informed choices.

Now, a great deal of selling is done online.  Many cost-aware customers might respond only to a difference in price.  Many can and do simply choose the cheaper alternative.  This could cause problems later if an accident occurs and a claim is made.

A Potential Problem with Minimal Coverages

Consider a situation where the insured has the minimum coverages for PIP – $15,000.  The insured sustains a back injury and begins treatment.  The Emergency Room visit totals $6,000 complete with 3 level CT scans which reveal problems with the upper and lower back.  The insured then follows up with an orthopedic who requests MRI scans on the back which equal another $2,500.  Add in some physical therapy and the $15,000 PIP limits are exhausted in a couple of months.

None of this is a problem if the scans fail to reveal a major issue.  A soft tissue injury is serviceable under this scenario in that the insured gets treatment and is on the way to recovery.  If the scans reveal problems, such as multiple herniated discs and impingement on the spinal cord, treatment options become a tricky proposition.

The treatment is tricky because the benefits are gone.  Now the injured party must seek other options – some of these can be costly.

Responding to the Need

In response to the above, providers, lawyers and other market participants stepped in to serve the need for accident victims to secure medical treatment.  The following are some of those alternative payment methods.

Letters of Protection

Letters of protection (LOP’s) are agreements between the injured party’s attorney and a medical provider that the medical bills will be “protected” by the proceeds of any settlement received.  In return for the attorney’s promise to honor the lien against file, medical providers will perform a variety of treatments to the plaintiff, including surgery.  Surgery is often a deciding factor in the plaintiff’s ability to secure the treatment because normally, the case’s settlement value is increased after the procedure.

Use Existing Health Insurance to Pay Bills After PIP is Exhausted

In some instances, plaintiffs can use their own health insurance to pay for accident medical bills.  In NJ, insureds can choose which coverage is primary.  However, some health insurance policies exclude coverage for car accidents.  The standard health insurance limitations apply as well.  These include the need to pay deductibles, co-payments and sometimes co-insurance.  Further, there may be limits on the choice of medical provider.  Some policies require doctors to be “in network”.

Litigation Funding

In many cases, litigation funding is used to pay for much-needed medical treatment.  Originally utilized to bridge the gap between accidents and settlement, litigation funding sought to alleviate the need for plaintiffs to accept low-ball settlement offers simply because they were struggling financially.  Because lawsuit funding is the sale of a portion of the future proceeds of a personal injury case, they are sometimes used to pay for surgical or other procedures when there is no coverage available.

Technological Advances and Practical Trade-offs

Technology has certainly made life more convenient over the years.  Conveniences exist today that weren’t in our collective consciousness 20 years ago.  Consider being able to speak via video conference to someone on the other side of the world for FREE, when the toll charges for an overseas telephone call were many dollars only a short time ago.

But technology can cut both ways.  The ease with which insurance consumers can pick coverages that may or may not be in their best interest may be one such trade-off.  Thankfully, market participants (doctors, lawyers, litigation finance companies) step in and address the outcomes which naturally arise.  Free markets usually perform this function admirably.

Article By Paul M. Coppola of Fair Rate Funding

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

© Copyright 2022 Fair Rate Funding

Update to EEOC’s Position on Mandatory COVID Testing

On July 12, 2022, the Equal Employment Opportunity Commission (“EEOC”) updated its guidance regarding COVID-19 workplace viral screening testing. 

The EEOC’s original position on COVID-19 workplace viral screening testing was that it always met the Americans with Disabilities Act (“ADA”) standard for conducting medical examinations.

However, on July 12, 2022, the EEOC explained that going forward, “employers will need to assess whether current pandemic circumstances and individual workplace circumstances justify viral screening testing of employees to prevent workplace transmission of COVID-19.”

The EEOC’s FAQ A.6 now provides that an employer, as a mandatory screening measure, may administer a COVID-19 viral test “if the employer can show it is job-related and consistent with business necessity.”

Fortunately, the EEOC has provided eight factors for businesses to consider in determining whether the new “business necessity” standard is met:

  • the level of community transmission;
  • the vaccination status of employees;
  • the accuracy and speed of processing for different types of COVID-19 viral tests;
  • the degree to which breakthrough infections are possible for employees who are “up to date” on vaccinations;
  • the ease of transmissibility of the current variant(s);
  • the possible severity of illness from the current variant(s);
  • what types of contacts employees may have with others in the workplace or elsewhere that they are required to work (e.g., working with medically vulnerable individuals); and,
  • the potential impact on operations if an employee enters the workplace with COVID-19.

It is important for business owners to appropriately conduct and document the above analysis.

The EEOC’s COVID-19 guidance concerning COVID-19 workplace viral testing may further evolve, so it will be important for business owners to periodically review the EEOC’s current FAQs.

Article By William A. Oden, III of Ward and Smith, P.A.

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

© 2022 Ward and Smith, P.A.. All Rights Reserved.

PFAS GenX Health Advisories Challenged In Court

On June 15, 2022, the EPA issued Health Advisories (HAs) for five specific PFAS, including GenX PFAS chemicals. The PFAS GenX health advisories set levels at 10ppt for this chemical group. On July 13, 2022, The Chemours Co. filed a petition in the Third Circuit challenging the validity of the EPA’s GenX HA. The company alleges that the EPA acted outside of its bounds of authority, as well as arbitrarily and capriciously, among other arguments. Other industries that will be impacted by upcoming EPA PFAS regulations will closely follow the lawsuit as it makes its way through court, as it may provide predictive indicators of arguments that will unfold as the EPA’s PFAS regulations increase.

PFAS GenX Health Advisories

In October 2021, the EPA released its PFAS Roadmap, which stated explicit goals and deadlines for over twenty action items specific to PFAS. As part of the Roadmap, the EPA pledged to re-assess the existing Health Advisories (HAs) for PFOA and PFOS, as well as establish HAs for PFBS and GenX chemicals. In June 2022, the EPA fulfilled its promise on all fronts when it set HAs for PFOA (interim), PFOS (interim), PFBS (final) and GenX (final). While not enforceable levels for PFAS in drinking water, the EPA’s PFAS Health Advisories are nevertheless incredibly significant for a variety of reasons, including influence on future federal and state drinking water limits, as well as potential impacts on future PFAS litigation.

The levels set by the EPA’s PFAS Health Advisories were as follows:

PFOA .004 ppt
PFOS .02 ppt
GenX 10 ppt
PFBS 2,000 ppt

Chemours Challenge To GenX Health Advisories

Chemours is challenging the EPA’s PFAS GenX Health Advisories primarily on the grounds that the HAs are “arbitrary and capricious.” The company alleges that the HAs are arbitrary and capricious because (1) they incorporated toxicity assumptions that deviate from the EPA’s own standard methods; and (2) “EPA incorporated grossly incorrect and overstated exposure assumptions―in essence, EPA used the wrong chemical when making its exposure assumptions, thereby resulting in a significantly less tolerant health advisory for [GenX] than is warranted by the data. In addition, Chemours argues that the EPA failed to go through the necessary public comment period before issuing its final GenX HA, and that in creating the GenX HA, the EPA exceeded its authority under the Safe Drinking Water Act.

Conclusion

Now more than ever, the EPA is clearly on a path to regulate PFAS contamination in the country’s water, land and air. The EPA has also for the first time publicly stated when they expect such regulations to be enacted. These regulations will require states to act, as well (and some states may still enact stronger regulations than the EPA). Both the federal and the state level regulations will impact businesses and industries of many kinds, even if their contribution to drinking water contamination issues may seem on the surface to be de minimus. In states that already have PFAS drinking water standards enacted, businesses and property owners have already seen local environmental agencies scrutinize possible sources of PFAS pollution much more closely than ever before, which has resulted in unexpected costs. Beyond drinking water, though, the EPA PFAS Roadmap shows the EPA’s desire to take regulatory action well beyond just drinking water, and companies absolutely must begin preparing now for regulatory actions that will have significant financial impacts down the road.

Article By John Gardella of CMBG3 Law

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

©2022 CMBG3 Law, LLC. All rights reserved.