United States

U.S. Securities and Exchange Commission (SEC) Voluntarily Stays Climate Rules

On April 4, 2024, the SEC issued an order which voluntarily stayed its climate rules, which were previously announced on March 6, 2024. The SEC noted that the stay “avoids potential regulatory uncertainty” for registrants as various legal challenges remain pending. Please see our summary of the status of the challenge to the rules in the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) for further detail.

Please see our client alert on the voluntary stay for more information.

Environmental Protection Agency (EPA) Announces Final Rules Governing Vehicle Emissions Standards

In March 2024, the EPA announced final rules for light-, medium-, and heavy-duty vehicles. The light-duty and medium-duty emissions standards set new emissions requirements for light- and medium-duty vehicles to reduce smog- and soot-forming pollution from vehicles and will phase in over model years 2027 through 2032. The final rules for heavy-duty vehicles set stronger emissions standards for heavy-duty vehicles in an effort to reduce greenhouse gas emissions from vehicles such as tractors, trucks, and refuse haulers. The heavy-duty vehicle standards enable each manufacturer to choose the type of emissions control technologies best suited to them and their customers and will apply to heavy-duty vehicles beginning in model year 2027.

U.S. Patent and Trademark Office (USPTO) Continues to Accelerate Patent Examination Based on Climate Change Mitigation

In an expanded second phase of the Climate Change Mitigation Pilot Program (CCMPP), the USPTO has granted 621 applications under the CCMPP out of 852 petitions filed as of March 19, 2024. The CCMPP program will continue until the earlier of June 7, 2027, or until a total of 4,000 grantable petitions have been filed. The statutory criteria for qualifying CCMPP applications are a) removing greenhouse gases; b) reducing additional greenhouse gases; and/or c) monitoring, tracking, and/or verifying greenhouse gas emission reductions. Recent examples of qualifying applications include: i) processes for lithium extraction from naturally occurring brine; ii) methods for decomposing ammonia to produce gaseous hydrogen for use in a fuel cell; and iii) methods for solar array construction involving autonomous positioning of individual solar modules. These recent examples provide evidence that the USPTO recognizes that additional technologies can fall under the scope of the CCMPP program beyond the statutorily mandated greenhouse gas programs.

States Take Measures to Ban Cell-Grown Meat

Legislators in multiple states are advancing measures to prohibit cell-cultivated meat production and penalize associated manufacturing, distribution, or serving practices. The manufacturing process involves cultivation of real animal cells, as opposed to traditional farming practices. Florida is poised to become the first state to successfully implement such a prohibition after its legislature passed a bill. The bill is currently awaiting Governor Ron DeSantis’s approval. The Florida legislation would criminalize the manufacture, sale, or distribution of cell-grown meat products, but it would not prohibit its cultivation for research purposes.

Washington Enacts Legislation to Promote Carbon-Free Fusion Power

On March 28, 2024, Governor Jay Inslee of Washington signed legislation (SHB 1942) to classify fusion power as a clean energy source, a move which supports the state’s climate change mitigation goals. SHB 1942 stipulates that the Energy Facility Site Evaluation Council and the Department of Health must establish a work group to formulate plans for the creation and licensing of fusion energy plants. There are several companies in the Pacific Northwest that are actively working towards the commercialization of fusion technology who may benefit from this legislation. SHB 1942 will become effective on June 6, 2024.

Europe

European Union (EU) Delays Nature Restoration Act

Following increasing opposition by several Member States, the Council of the EU (the Council) canceled the formal vote on the Nature Restoration Act on March 24, 2024. The Council and the European Parliament had earlier agreed on a compromise for the proposed regulation, which the European Parliament formally approved on February 27, 2024. Approval is required by both co-legislators.

The compromise text of the regulation called for Member States to restore at least 30 percent of covered habitats by 2030, increasing to 60 percent by 2040, and 90 percent by 2050. Demands of the Member States had already significantly reduced the scope of the proposed law, but some countries are pushing for further concessions. The Belgian Presidency of the Council suggested revisiting it only after the EU elections in June 2024.

Latin America

Brazilian Securities and Exchange Commission (CVM) Amends Requirements for Diversity Disclosures for Publicly Traded Companies

The CVM has amended CVM Resolution No. 80 and will now require the disclosure of information on Persons with Disabilities (PWDs) in the Reference Form of publicly traded companies in Brazil. The amendment to CVM Resolution No. 80 expands the mandatory information regarding diversity within the administrative bodies and the workforce of publicly traded companies. The disclosure of information about PWDs will be mandatory starting in 2025.

U.S. Department of the Treasury (Treasury) and Internal Revenue Service (IRS) Update Energy Community Bonus Credit Guidance

On March 22, 2024, the Treasury and the IRS jointly issued Notice 2024-30 (the Notice), which provides two key updates to the energy community bonus credit. First, the Notice expands the “nameplate capacity attribution” rule, previously announced in Notice 2023-39 issued in April 2023, to make it easier for offshore wind projects to qualify for the bonus credit. Under the nameplate capacity attribution test, an energy project is deemed to be located in a qualifying energy community if more than 50 percent of its nameplate capacity resides in such area. Under the Notice, if an offshore wind project has a nameplate capacity, all of the nameplate capacity may be attributed to either: 1) any land-based power conditioning equipment that makes energy ready for transmission, distribution, or use before interconnection; or 2) any supervisory control and data acquisition equipment located in an “EC Project Port.” Second, the Notice adds two additional NAICS industry codes, for “Natural Gas Distribution” and “Oil and Gas Pipeline and Related Structures Construction,” for purposes of determining whether a “metropolitan statistical area” (MSA) or non-MSA meets the minimum fossil fuel employment threshold, which is one of the criteria used to determine eligibility for the energy community bonus credit under the MSA/non-MSA category.

Treasury and IRS Announce 2024 Application Cycle for Low-Income Communities Bonus Credit

On March 29, 2024, the Treasury and the IRS issued procedural guidance formally announced the 2024 program year for the Internal Revenue Code Section 48(e) low-income communities bonus credit program. The announcement states that applications for the 2024 cycle will begin during the second quarter of 2024. For purposes of the 2024 program year, 1.8 gigawatts of capacity will be made available through a competitive application process across four specified categories of qualified solar or wind facilities with a maximum output of less than 5 megawatts: 1) 600 megawatts for facilities located in low-income communities; 2) 200 megawatts for facilities located on Indian lands; 3) 200 megawatts for facilities that are part of federally-subsidized residential buildings; and 4) 800 megawatts for facilities where at least 50 percent of the financial benefits of the electricity produced go to households with incomes below 200 percent of the poverty line or below 80 percent of area median gross income. As was the case for the 2023 program year, at least 50 percent of the overall capacity will be reserved for projects meeting certain ownership and/or geographic selection criteria as outlined in prior Treasury and IRS guidance.

Treasury and IRS Propose Supplemental Notice Regarding Clean Hydrogen Production Tax Credit Regulations

On April 10, 2024, Treasury and the IRS released a notice of proposed rulemaking (the Supplemental Regulations) to supplement the Clean Hydrogen Production Tax Credit (PTC) under Section 45V of the Internal Revenue Code of 1986, as amended (the Code), providing additional information on the provisional emissions rate (PER) process and a request for comments. This notice follows the initial proposed regulations issued on December 26, 2023, discussed in our January client alert, and clarifies the Department of Energy (DOE) emissions value request process. For more on the Supplemental Regulations, please see our client alert released on April 17, 2024.

The Supplemental Regulations clarify that taxpayers with hydrogen production pathways that fall outside the scope of the GREET Model should use the PER process to obtain an emissions value analysis from the DOE. To obtain a PER, applicants must complete a front-end engineering and design (FEED) study, based on an Association for Advanced Cost Engineering Class 3 Cost Estimate. This Cost Estimate may pose economic considerations and timing constraints for taxpayers who want to claim a Section 45V credit. The Supplemental Regulations also provide specific instructions, including an email point of contact, for applications to request an emissions value from the DOE and subsequently apply for a PER to access the Section 45V credit.

United States

U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) Transfers SEC Climate Rules Suit

On March 22, 2024, the Fifth Circuit lifted the stay it had previously imposed on the SEC’s climate disclosure rules. Accordingly, the rules were published in the Federal Register on March 28, 2024, and will become effective after the SEC lifts its stay, which is discussed earlier in this update. The cases challenging the SEC’s climate disclosure rules were consolidated by order of the U.S. Judicial Panel on Multidistrict Litigation in the U.S. Court of Appeals for the Eighth Circuit.

Please see our client alert for details on the SEC’s climate-related disclosure rules.

Fifth Circuit Agrees to Rehear Board Diversity Rules Case

Earlier this year, the Fifth Circuit agreed to rehear the Alliance for Fair Board Recruitment (AFBR) and the National Center for Public Policy Research's (NCPPR) challenge to Nasdaq Stock Market, LLC’s (Nasdaq) board diversity rule. This decision comes after the Fifth Circuit previously denied a petition to review Nasdaq’s diversity rule on October 18, 2023, concluding that the AFBR and NCPPR had “given no reason to conclude that the SEC’s Approval Order violate[d] the Exchange Act or the APA.”

Booking.com Ends Allegedly Misleading “Travel Sustainable” Program

On March 25, 2024, the Netherlands Authority for Consumers and Markets (ACM) announced that online travel agent website Booking.com had decided to end its so-called “Travel Sustainable” program effective immediately, following engagement with the ACM. As part of this program, participating hotels and accommodations received a sustainability score depending on their sustainability efforts.

The ACM alleged this program misled consumers because the program’s name may have falsely suggested that travel itself was sustainable, and the program may have deceived customers into believing that nonparticipating accommodations were not undertaking any sustainability efforts at all. It was also unclear which sustainability efforts it assessed in calculating the sustainability score, while some of the mentioned sustainability efforts were already legally required.

The ACM noted that Booking.com is working on a new sustainability program for accommodations using third-party certification and referred to its Guidelines On Sustainability Claims.

United Kingdom (UK) Fashion Retailers Commit to Changing Green Claims

On March 27, 2024, the UK’s Competition and Markets Authority (CMA) announced that fashion retailers ASOS, Boohoo, and George at Asda had given commitments to use only accurate and clear green claims following an investigation into whether fashion retailers were misleading consumers through unclear and unverifiable green claims.

The companies committed to making all green claims accurate and not misleading. Statements about materials should be clear and specific, such as “organic” or “recycled” rather than ambiguous descriptions such as “eco” or “responsible.” The criteria used to place products into “environmental” collections should be clearly set out and include any minimum requirements, such as the minimum percentage of recycled fibers in a garment. Companies may not use natural or green imagery or logos—such as green leaves—to suggest that a product is more environmentally friendly than it in fact is. Any claims about environmental targets should be backed up by a clear and verifiable strategy to reach these, and customers should be able to access details such as what the target entails, by which date it will be met, and which measures the company will take.

The companies will provide regular reports to the CMA showing how they are complying with their commitments. The CMA also issued a public letter to all companies in the fashion industry, urging them to comply with the Green Claims Code published in September 2021.

Wilson Sonsini Files Pro Bono Lawsuit Against United States Department of Agriculture (USDA)

On March 29, 2024, Wilson Sonsini filed a lawsuit against the USDA in the U.S. District Court of Columbia on behalf of pro bono clients Angie and Weceslaus (June) Provost Jr. and a proposed class, in response to alleged discriminatory practices against Black and minority farmers in federal farm programs. These alleged practices include, but are not limited to, disproportionately denying loans, imposing unfair terms, delaying loans, and/or treating individuals differently based on race. The complaint also alleges that the USDA has been negligent in addressing discrimination claims by moving forward with foreclosure proceedings against farmers with pending complaints.

Wilson Sonsini Supports Justice Climate Fund (JCF) in Successful Funding Award Bid

On April 4, 2024, the EPA and Vice President Kamala Harris announced that JCF had been selected to receive funding of approximately $1 billion through the Greenhouse Gas Reduction Fund Clean Communities Investment Accelerator program. JCF, a nonprofit financial institution, was chosen to provide funding and technical support to leading community and minority-led lenders present in underserved communities, so that those communities have resources and the financing infrastructure necessary to implement clean energy technologies. Wilson Sonsini acted as counsel to JCF in its bid for the awards.

Wilson Sonsini Participates in San Francisco Climate Week

Wilson Sonsini is participating in a number of events in connection with SF Climate Week, a decentralized climate gathering organized by and for the community, including:

Will AI & Electrification Break the Grid? A focused panel discussion on the challenges posed by rising energy demand and its impact on our shared climate goals with Wireframe, Better Ventures, and Buoyant Ventures; and

AI for Climate: Women Leading the Way: Join us for an inspiring evening and hear from women founders and leaders harnessing the power of AI to develop innovative climate solutions.

Wilson Sonsini Develops Comparison Tool to Help Companies Navigate SEC, California, and the European Union’s Corporate Sustainability Reporting Directive (CSRD) Climate Disclosure Requirements

Wilson Sonsini has released a tool to help companies understand the reporting obligations they face under the SEC climate disclosure rules, the California climate disclosure rules, and the CSRD. The comparison tool identifies disclosure requirements by company type, initial disclosure dates under each reporting framework, and lays out the circumstances which may trigger new disclosure requirements for reporting companies.

Please see our client advisory for more information on the comparison tool.

Other Recent Updates:

The DOE’s Office of Energy Efficiency and Renewable Energy released a blueprint for decarbonizing the buildings sector by 2050.

The California Independent System Operator proposed a draft Transmission Plan aimed at advancing grid reliability and clean energy efforts, with particular emphasis on offshore wind-generated power.

The EPA announced the final National Primary Drinking Water Regulation, the first drinking water standard to be legally enforceable on a national scale.

BIVA, one of Mexico’s largest stock exchanges, joins nine other stock exchanges, including Honduras, Ecuador, Chile, and Columbia, in committing to the Climate Bonds Initiative.