Other Notable Developments
EPA Awards Grants for Clean Energy Projects: On April 4, 2024, the Biden administration announced that it had selected clean energy and climate initiatives that collectively will be awarded $20 billion as part of the Environmental Protection Agency’s Greenhouse Gas Reduction Fund. Of this amount, over 70% will be earmarked for projects in low-income and disadvantaged communities. The grantees are expected to mobilize the capital awarded into $150 billion of total investments.
Fall in EU Carbon Market Emissions: As of April 2024, EU member states have reported a 15.5% fall in 2023 emissions, as compared to 2022 numbers. This suggests that the EU’s Emission Trading System is on track to achieve the 2030 target: a 62% drop in emissions levels as compared to 2005. One of the biggest drivers in this record decrease has reportedly been changes in the electricity sector, where renewable energy production from wind and solar sources is on the rise.
U.S.: SEC Voluntarily Stays Final Climate Disclosure Rule
On April 4, 2024, the Securities and Exchange Commission (the “SEC”) stayed its final climate disclosure rule (the “Rule”), issued on March 6, 2024, pending completion of judicial review of consolidated petitions in the U.S. Court of Appeals for the Eighth Circuit.
As reported in our recent updates, legal challenges to the Rule were filed in the Second, Fifth, Sixth, Eighth, Eleventh, and D.C. Circuits. On March 21, 2024, the SEC’s request that the cases be consolidated was granted, and the cases were assigned to the Eighth Circuit. On March 26, Liberty Energy Inc. and Nomad Proppant Services LLC filed requests with the Eighth Circuit for a stay of the Rule. Separately, on the same date, the U.S. Chamber of Commerce, the Texas Association of Business, and the Longview Chamber of Commerce also filed an emergency motion for a stay in the Eighth Circuit. On April 1, thirty-one petitioners opposed the SEC’s motion to establish a consolidated briefing schedule to hear all motions seeking a stay and urged the Eighth Circuit to expedite briefing on the petitioners’ emergency stay motions.
The SEC noted that it exercised its discretion to stay the Rule to facilitate the “orderly judicial resolution” of the large number of petitions filed for judicial review of the Rule and to avoid “potential regulatory uncertainty” if registrants were to become subject to the Rule during pendency of the legal challenges. Nonetheless, the SEC emphasized that, in issuing the stay, the regulator is not departing from its view that the Rule is consistent with applicable law, and it will continue “vigorously defending” the Rule in court.
Links:
SEC Order Issuing Stay of Climate-Related Disclosure Rule
Chamber of Commerce Motion
SEC Response
Debevoise In Depth – SEC Issues Long-Awaited Climate-Related Disclosure Rule
Debevoise In Depth – An In-Depth Analysis of the SEC’s Climate-Related Disclosure Rules
Debevoise In Depth – Potential Legal Challenges to the SEC’s Climate Disclosure Rule
U.S.: Texas Attorney General Seeks Information on Diversity from Spirit Aerosystems
On March 28, 2024, Texas Attorney General Ken Paxton announced that he would investigate Spirit Aerosystems, following incidents that may have involved fuselages manufactured by Spirit.
In addition to documents relevant to manufacturing defects generally, Paxton has requested documents related to the company’s diversity, equity, and inclusion (“DEI”) commitments. Paxton has requested that Spirit produce, among other items, meeting minutes of its diversity council, employee demographic information for the current year, employee demographic information prior to its introduction of DEI policies, and demographic information for employees laid off in 2020.
Paxton’s request comes on the heels of Federal Aviation Administration audits of Spirit, which revealed noncompliance with quality control requirements.
Links:
Texas AG Press Release
Texas AG Request to Examine
Federal Aviation Administration Updates
U.S.: Nike Defeats Class Action Related to Greenwashing
On March 28, 2024, Judge Matthew Schlep of the U.S. District Court for the Eastern District of Missouri granted Nike’s motion to dismiss claims that it had engaged in greenwashing with respect to marketing its products.
Plaintiff Maria Ellis filed suit against Nike in May of 2023, accusing Nike of violating the Missouri Merchandising Practices Act by falsely advertising the sustainability of its products in marketing materials. In her complaint, Ellis stated that she had purchased products from Nike’s Sustainability Collection “in reliance on Nike’s representations” that its products were environmentally friendly and sustainable, and accused Nike of exploiting the consumer shift toward sustainability by charging a premium for such products.
Dismissing Ellis’s claims, Judge Schlep ruled that the complaint lacked facts that would enable the Court to reasonably infer that Nike engaged in greenwashing. The Court cited to Ellis’s conclusory statements that Nike products “are not made with sustainable materials,” without citing “any testing or analysis” in support. Furthermore, Ellis alleged that she paid a premium for the Nike products, but had stated neither the amount she actually paid nor the amount she would have paid if she had “known the truth.”
Links:
Initial Complaint
Amended Complaint
Order of Dismissal
U.S.: Vermont Advances Legislation Requiring Fossil Fuel Companies to Contribute to Climate Change Superfund
On April 4, 2024, Vermont’s proposed Climate Superfund Act (the “Act”) was passed by the Vermont State Senate and progressed to the Vermont House of Representatives and Committee on Environment and Energy for review.
If approved by the House, the Act would require the Vermont State Treasurer and Agency for Natural Resources to issue a report in early 2026 on the total cost to the state related to greenhouse gas emissions occurring between 1995 and 2024 (covering, for example, areas such as agriculture, housing, and public health). Following the report’s publication, companies that produced more than one billion metric tons of carbon dioxide over this period would be required to contribute to a superfund, which would be used to pay for climate change adaptation and remediation projects in the state.
The Act follows climate-change-related flooding in Vermont during the summer of 2023. If passed, the Act is expected to face legal challenge. The American Petroleum Institute, for instance, recently issued a warning that the Act would retroactively impose liability for prior lawful activities, preempt federal law, and violate equal protection and due process rights by holding fossil fuel companies liable for the actions of society generally.
Other states, such as Maryland, Massachusetts and New York, are in the early stages of considering similar legislation, and a similar bill has also been introduced at the federal level.
Link:
Vermont Bill S.259
This publication is for general information purposes only. It is not intended to provide, nor is it to be used as, a substitute for legal advice. In some jurisdictions it may be considered attorney advertising.