On Friday, February 28, 2025, New York Governor Kathy Hochul signed into law Senate Bill 824 amending New York’s Climate Change Superfund Act (Act) just two months after the Act had itself been signed into law in December 2024. As previously reported in a Duane Morris Alert, the Act, which seeks to hold major fossil fuel companies financially accountable for alleged contributions to climate change, has been met with a lawsuit filed by a coalition of state attorneys general and industry groups asserting various causes of action under both federal and New York state law. The amendment to the Act has prompted a new lawsuit filed by the U.S. Chamber of Commerce, the Business Council of New York State, the American Petroleum Institute, and the National Mining Association (U.S. Chamber Coalition) in the Southern District of New York which asserts, among other things, that the U.S. Constitution precludes the Act and that the Act is preempted by the Clean Air Act.
The Amendment
Among the pertinent changes to the Act are a litany of additions which seek both to facilitate the New York Department of Environmental Conservation’s (NYSDEC) administration of its duties under the Act and to seemingly assuage some of the concerns raised by detractors to the Act.
Among the primary additions to the Act is an increase to the lookback period under which NYSDEC may consider the emissions of a potentially responsible party under the Act. Previously the Act had authorized an eighteen-year lookback window (extending from 2000 to 2018). The Act will now consider emissions from 2000 to 2024 – adding six years of potential liability to emitters. The amendment also clarifies that “covered greenhouse gas emissions” include “those emissions attributable to all fossil fuel extraction and refining worldwide by such entity and are not limited to such emissions within the state.”
To facilitate NYSDEC’s investigation into potentially responsible parties, the Act also requires such entities to provide information to NYSDEC related to their “past practices, production, extraction, refining, emissions, or other historical information” as may be needed by NYSDEC to “determine the amount of greenhouse gas emissions attributable to an entity”. NYSDEC will make publicly available data and information received from potentially responsible parties.
Additionally, Changes to NYSDEC’s administration of the Act include an increase in the amount of time afforded to NYSDEC to promulgate regulations necessary to perform under the Act and to publish its resilience plan – a statewide climate change adaptation plan guiding the disbursement of funds anticipated to be collected from allegedly responsible parties.
Lastly, the amended Act now provides for a procedure by which a potentially responsible party may file a request for reconsideration of its cost recovery demand with the NYSDEC.
The U.S. Chamber Coalition’s Lawsuit
The lawsuit filed on February 28th by the U.S. Chamber Coalition mirrors the claims filed by those state attorneys general and industry groups appearing in the February 6, 2025, litigation. Namely, the new suit argues that New York exceeded the bounds of its authority through the Act by exposing responsible parties to significant and unduly burdensome penalties for greenhouse gas emissions – some of which may have occurred beyond state lines. Moreover, the U.S. Chamber Coalition asserts that the Act is preempted by the federal Clean Air Act.
Additionally, the U.S. Chamber Coalition argues that there is no meaningful way to trace greenhouse gas emissions back to a particular generator, nor is there a discernible way of measuring damages for those specific emissions.
Duane Morris, LLP will continue to follow the developments on this lawsuit and will issue subsequent Alerts and blog posts on the New York Climate Change Superfund Act.
Over time, I have noticed that colleagues and friends have a passing interest and knowledge base regarding where we get our energy from and how we use it in the United States. Folks are interested in learning but are not sure where to look. Given this, we have decided to kick off an introductory series for those interested in learning more about energy, the players in the energy arena, energy policy both federal and state, and technology involving energy.
If you are a 301 or 401 student, this is NOT the place for you, even though you are always welcome.
The US energy mix (i.e., where we get our energy from and how we use it) is primarily composed of fossil fuels, with petroleum being the largest source (36%), natural gas being the second largest source (31%), followed by coal (13%), making up approximately 79% of total primary energy production; renewable energy sources like solar, geothermal, hydro and wind accounting for approximately 14% (but showing continued growth), with nuclear power also contributing approximately 7% to the source of power.
Sources focus on where our energy comes from. Uses focus on how energy is used.
Sources of Energy in the United States:
Petroleum is the top source of energy in the US, accounting for approximately 38% of total source energy; petroleum is primarily used in the transportation sector and the industrial sectors to run motor vehicles and equipment.
Natural gas is the second highest source of energy in the US, accounting for around 31% of total primary energy production; natural gas is primarily used in the industrial sector, the residential, commercial sectors and to a great degree in the creation of electricity.
Nuclear power is a significant contributor to electricity generation in the US.
Renewable energy growth – Renewable energy sources like solar, hydro, geothermal and wind are and have been continuing to increase their share in the US energy mix. Their use continues to increase and expand over time with increased creation being used in electric generation and industrial use for power.
Coal – while reducing in overall use as time marches on, coal continues to be used as a back up source of power to create electricity and commercial buildings as a source of heat.
The breakdown of what sources of energy are used to create electricity in the US are as follows:
Natural gas: 43% – a naturally occurring fossil fuel found underground; used in electric power creation, industry, residential, commercial buildings, and transportation; production has increased 90% in the US since 2008; The power sector continues to be a huge consumer of natural gas.
Renewable energy: 21% – includes hydroelectric, solar, wind as well as geothermal; in 2022, renewable energy generation surpassed coal as a source of energy for the first time in history; US electric production.
Nuclear power: 19% – contributed nearly 20% of the electric power generated in the US; used to produce reliable, low-carbon energy;
Coal: 16% – found underground in sedimentary deposits; continues to diminish in use even though a relatively cheap source of power given its impact on the workers who mine it and the air quality around areas that use it; nearly all coal that is mined in the US is used to create electricity; and
Petroleum (crude oil): .4% – per Statista, petroleum is the primary source of energy in the US; it is a naturally occurring fossil fuel found underground; refined into gasoline, diesel, jet fuel and other fuels. The biggest use of petroleum products is in fuel for vehicles, planes and ships.
Electricity Generation –
In 2023, approximately 4,178 billion kilowatt hours (kWh) (or about 4.18 trillion kWh) of electricity were generated at utility-scale electricity generation facilities in the United States[i]. About 60% of this electricity generation was from fossil fuels—coal, natural gas, petroleum, and other gases. About 19% was from nuclear energy, and about 21% was from renewable energy sources.
The U.S. Energy Information Administration estimates that an additional 73.62 billion kWh of electricity generation was from small-scale solar photovoltaic systems in 2023.[ii]
U.S. utility-scale electricity generation by source, amount, and share of total in 2023
Data source: U.S. Energy Information Administration, Electric Power Monthly, February 2024; preliminary data
Electricity Consumption in the US:
After decades of flat electricity consumption, US energy demand is now projected to increase from between 24 to 29% by 2035, nearly twice the rate estimated in 2023. A combination of new investments in AI data centers, manufacturing, and broader electrification are the primary drivers behind this projected increase, with data centers accounting for 30% of the expected growth, according to a Goldman Sachs report in April 2024. One estimate suggests that data centers alone could consume 9% of total US electricity generation by 2030 (up from 4% today).
Energy Uses in the United States
There are generally five energy consuming sectors in the US:
The industrial sector consumes approximately 35% of all energy consumption, including electricity; this sector includes facilities and equipment used for manufacturing, agriculture, mining, and construction. The largest contributor of power to this sector is natural gas.
The transportation sector consumes approximately 37% of all energy consumption, including electricity; this sector includes vehicles that transport people or goods, such as cars, trucks, buses, motorcycles, trains, aircraft, boats, barges, and ships. Note that the lion’s share of petroleum uses are consumed in transportation related activities.
The residential sector consumes approximately 16% of all energy consumption, including electricity; consists of homes and apartments.
The commercial sector consumes approximately 12% of all energy consumption, including electricity and includes offices, malls, stores, schools, hospitals, hotels, warehouses, restaurants, and places of worship and public assembly.
The electric power sector consumes primary energy to generate most of the electricity consumed by the other four sectors.
If you have additional energy topics you would like to see us explore, feel free to drop me a note at bamolotsky@duanemorris.com and we would be happy to add it to our growing list of things folks are asking for information about.
Duane Morris has a robust industry facing Energy and Environmental Group focused on incentives, regulatory, permitting, financing and development of energy projects internationally including renewables, solar, wind, geothermal and power purchase agreements and P-3 procurements. If you have any questions or follow ups, please do not hesitate to contact Brad A. Molotsky, Brad Thompson, Phil Cha, Shelton Vaughan or the lawyer in the firm whom you normally deal with on other matters.
[i] Utility-scale electricity generation is electricity generation from power plants with at least one megawatt (or 1,000 kilowatts) of total electricity generating capacity. Data is for net electricity generation. From USEIA data set.
[ii] Small-scale solar photovoltaic (PV) systems are electricity generators with less than one megawatt (MW) of electricity generating capacity, which are not connected at a power plant that has a combined capacity of one MW or larger. Most small-scale PV systems are at or near the location where the electricity is consumed and many are net metered systems. Smaller PV systems are usually installed on building rooftops or parking lots. From USEIA data set.
[iii] Other (utility-scale) sources includes non-biogenic municipal solid waste, batteries, hydrogen, purchased steam, sulfur, tire-derived fuel, and other miscellaneous energy sources. From USEIA data set.
The proposed rule “clarifies” that the PFAS chemical will be automatically added to the TRI list of chemicals as of January 1 regardless of whether the EPA has published a rule updating the TRI list.
On January 17, 2025, the U.S. Environmental Protection Agency (EPA) proposed a rule clarifying that the PFAS automatically added to the Toxics Release Inventory (TRI) list by the National Defense Authorization Act for Fiscal Year 2020 (NDAA) are effectively TRI-listed chemicals (i.e., “toxic chemicals”) as of January 1 of the applicable year. This means that all TRI requirements, including the supplier notification requirements, apply to these chemicals at that time, regardless of whether the EPA has issued a final rule adding the chemical(s) to the TRI list. This clarification, if approved, emphasizes the need for suppliers subject to the TRI supplier notification requirements to pay close (or even closer) attention to the triggers identified in the NDAA for adding PFAS to the TRI.
The NDAA automatically adds certain PFAS to the TRI list beginning January 1 of the year following the occurrence of certain EPA triggering activities listed in the NDAA. Since the enactment of the NDAA, each year the EPA has issued a final rule officially “adding” the PFAS to the TRI list. That final rule, however, often comes days, weeks or even months after January 1, creating some confusion in the regulated community as to when the chemicals are officially listed and subject to the TRI requirements. The proposed rule “clarifies” that the PFAS chemical will be automatically added to the TRI list of chemicals as of January 1 regardless of whether the EPA has published a rule updating the TRI list.
In terms of TRI chemical reporting, the proposed clarification changes little, as TRI reporting for any newly added chemical would not be due to the EPA until July 1 of the following year. Hence facilities will have time to assess the reporting impact of any PFAS that may have been added to the TRI, even if the EPA triggering activity occurred late in the year.
But for suppliers required to provide supplier notifications to their customers informing them of the presence of any toxic chemicals or mixtures in their product, the proposed rule highlights the importance of closely tracking any triggering activities by the EPA. If an EPA triggering activity occurs on December 31, the PFAS chemical at issue will be added to the TRI list the very next day,and suppliers will be required to ensure all shipments of products containing the newly added PFAS have an updated notification providing the required information about the chemical. When triggering events occur late in the year, suppliers may have little to no advance notice of the required change in their supplier notifications—unless they have been closely monitoring the EPA’s triggering activities.
Thus, suppliers are urged to diligently monitor the EPA’s trigging activities, now more than ever, so they are not caught off guard by late-year additions to the TRI list. The EPA triggering activities include:
Finalizing a toxicity value for the PFAS or class of PFAS.
Making a determination that a use of the PFAS or class of PFAS is a significant new use under TSCA Section 5(a)(2).
Adding the PFAS or class of PFAS to a list of substances covered by an existing significant new use rule.
Adding the PFAS or class of PFAS to the list of active chemical substances on the TSCA Inventory. See NDAA 2020 Section 7321(c)(1)(A).
Customers receiving supplier notifications should always pay careful attention to revisions in those notifications, which are either included in or attached to the product safety data sheets for those products. As we advised in a prior Alert, PFAS added to the TRI have been designated as chemicals of special concern. This means they have lower reporting thresholds and the de minimis exemption does not apply when determining reporting thresholds or notification requirements. This will result in more PFAS being identified in supplier notifications potentially triggering new or additional reporting requirements for the receiving facilities when their annual TRI reporting is due the following July.
Comments on the proposed rule must be received on or before February 18, 2025.
For More Information
If you have any questions about this Alert, please contact Lindsay Ann Brown, Lori A. Mills, any of the attorneys in our PFAS Group or the attorney in the firm with whom you are regularly in contact.
On January 8, 2025, the Pennsylvania Public Utility Commission (PA PUC) reversed its longstanding enforcement stance, holding that landlords will be regulated as a “gas pipeline operators” when furnishing gas to their tenants using behind-the-meter gas distribution systems on their properties. In addition to aboveground and underground pipelines, the commission now claims jurisdiction over gas piping contained entirely within buildings.
The PA PUC’s unprecedented interpretation will require any landlord—regardless of size and whether they own one building or many in one complex—to comply with federal gas pipeline safety laws, including the federal Pipeline Safety and Hazardous Materials Administration, which have historically only applied to natural gas distribution companies and gas pipeline operators. Further, the PUC held that submetered properties are defined as master meter systems when meeting the other factors of the definition. These new, onerous and costly requirements include registration, operation, maintenance and reporting obligations, undoubtedly resulting in increased costs to landlords.
To no one’s surprise, President Trump signed a slew of executive orders in his first hours back in office on January 20, many of them aimed at rolling back or dismantling the energy and environmental policies of the Biden Administration. A tally of those executive orders appears below. We will publish a deeper dive into several of these actions in the coming days and weeks, examining the impact of particular policies in specific sectors of the economy.
Withdrawal from Paris Agreement. Trump withdrew the United States from the Paris Agreement, adopted by 196 parties at the UN Climate Change Conference (COP21) in Paris in December 2015, for the second time.
Reversing Ban on Offshore Drilling. Trump issued an Executive Order reversing a long list of Biden Administration policies, including two Jan. 6, 2025 Presidential Memoranda that banned new offshore drilling leases across approximately 625 million acres along the Atlantic and Pacific coastlines, the eastern Gulf of Mexico, and parts of Alaska’s Northern Bering Sea.
Restarting Permitting for LNG Export Projects. In an Executive Order titled “Unleashing American Energy,” Trump reversed a Biden Administration pause on permitting reviews for liquefied natural gas (LNG) export projects. The EO contains specific instructions for completing environmental review of such projects under the National Environmental Policy Act (NEPA), which was also targeted for reform in Trump’s flurry of action. The EO also addresses a litany of other energy policies of the new administration, including challenging the EPA’s 2009 greenhouse gas emissions risk finding that serves as the basis for several EPA climate rules, ending work on the “social cost of carbon” metric, and ordering the Council on Environmental Quality (CEQ) to look at rescinding CEQ’s NEPA regulations in order to streamline permitting for fossil fuel projects.
Ending New Offshore Wind Leasing. Trump also withdrew all areas of the outer continental shelf from disposition for leasing for new offshore wind energy projects. The order may not have an immediate impact on areas already leased, but several projects within those areas have experienced significant headwinds, leaving their futures unclear.
Reopening Swaths of Alaska Wilderness for Fossil Fuel Development. Trump directed several agencies to take specific actions aimed at reopening the Arctic National Wildlife Refuge (ANWR) in Alaska to oil and gas development, marking an immediate reinstatement of policies that were in place upon Trump’s first departure from office. Whether oil and gas companies will move quickly to bid for newly available lease areas remains to be seen.
Lifting Tailpipe Emissions Standards for Cars and Light Trucks. In further evidence of the new administration’s turn away from carbon-free transportation and toward the fossil fuel industry, Trump began an effort to repeal Biden Administration regulations that set stringent emissions standards for cars and light trucks beginning in 2027, over the objections of several automakers who had begun to implement a strategy focused on manufacturing more electric vehicles.
Declaring a National Energy Emergency. Yet another executive order signed on Monday declared a “national energy emergency,” in an effort to spur emergency approvals of various energy-related infrastructure, including accelerated permitting under environmental statutes. The language of the EO makes clear that it is calibrated to favor fossil fuel energy sources while disfavoring solar and wind energy.
The above actions, while dramatic, comprise only a portion of the new administration’s energy and environmental platform, which will be rolled out in the coming weeks and months. Duane Morris has a full-service team of energy and environmental attorneys following developments as they arise and helping clients to strategize in turbulent times. If you have questions or wish to speak with someone, please do not hesitate to contact Brad Thompson, Phil Cha, Shelton Vaughn, or any other attorney in the firm.
Earlier this week, on December 4, 2024, the U.S. Treasury Department released final regulations for Section 48 – also known as the clean energy investment tax credit.
After much industry push back, of particular note is, that the proposed definition of what qualifies as applicable “energy property” was modified to include functional components of various systems in calculating what the total energy credit is worth.
The revised definition reflects what Treasury intended to be broad but functional descriptions of integral components for various renewable energy technologies eligible under Internal Revenue Code Section 48.
To avoid limiting future energy technologies, Treasury, in consultation with the U.S. Department of Energy, determined that “the best option is to adopt a function-oriented approach to describe the types of components that are considered energy property”.
Per Treasury, the ITC has fueled US clean energy development by providing a tax credit for investments in qualifying clean energy projects – generally 30% of the cost of the project.
The Inflation Reduction Act extended the ITC as well as the production tax credit (the “PTC”), until 2025, at which point the ITC and PTC will switch to a technology neutral approach with investment tax credits that will be available in full for projects beginning construction through at least 2033.
The final rules now allows project owners to include the costs of upgrading equipment in the basis, which is used to calculate the value of the Section 48 credit.
Additional clarity was provided for offshore wind equipment (allowing owners to claim the credit for power conditioning and transfer equipment and cables), geothermal heat pumps (allowing owners of underground coils to claim the ITC if they own at least one heat pumps used in connection with the coils), biogas (clarifies what property is qualified biogas property and what is integral part of the project), co-located energy storage (allows that claimed energy storage technology that is co-located with and shares power conditioning equipment with a qualified facility will also qualify) and hydrogen storage (allows that energy storage property does not need to store hydrogen that is solely used as energy to qualify).
The proposed rules, released November 2023, initially prohibited upgrading equipment to qualify. Moreover, initially, Treasury said in the proposed rules that the ownership of only geothermal components is not considered ownership of the entire unit of the energy property. The final rules modified both of these provisions to allow for upgraded equipment and component ownership to qualify.
The regulations also revised the definition of “energy project” so that multiple properties with the same owner can claim the credit. Such properties must meet at least 4 of the 7 factors of an energy project listed in the final regulations, such as the facilities share a common substation or are financed by the same loan agreement.
Energy storage equipment located in the same area as power conditioning equipment for a facility that claims a related renewable energy production tax credit is also eligible for the credit under the final regulations.
The final regulations implemented start with a base credit of 6% of a renewable energy development’s basis or qualified investment. The value of the credit can increase to 30% for projects that meet certain standards, such as the prevailing wages and apprenticeship requirements. The law also made newer renewable energy technologies, such as electrochromic glass, energy storage, microgrid controllers and biogas properties, eligible for the incentive.
The 2022 law created a new clean electricity ITC that has a much longer expiration date under Section 48E. This new provision will apply to any energy property designed to emit zero greenhouse gas emissions, including nuclear facilities. Section 48E, along with the related clean electricity production tax credit under Section 45Y will take effect in January, 2025 but the effectiveness of those incentives could be scaled back as President-elect Donald Trump and Congress seek revenue sources to offset the renewal of expiring provisions under the 2017 Tax Cuts and Jobs Act.
Duane Morris has a robust industry facing Energy Group focused on incentives, regulatory, permitting, financing and development of energy projects internationally including renewables, solar, wind, geothermal and power purchase agreements and P-3 procurements. If you have any questions or follow ups, please do not hesitate to contact Brad A. Molotsky, Brad Thompson, Phil Cha, Shelton Vaughan or the lawyer in the firm whom you normally deal with on other matters.
Last year, President Joe Biden signed Executive Order 14110 on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” Since the issuance of the executive order, a lot of attention has been focused on the provision requiring “the head of each agency with relevant regulatory authority over critical infrastructure … to assess potential risks related to the use of AI in critical infrastructure sectors involved, … and to consider ways to mitigate these vulnerabilities.” Naturally, government agencies generated numerous reports cataloging the well-documented risks of AI. At the same time, nearly every company has implemented risk-mitigation guidelines governing the use of artificial intelligence. To be sure, the risks of AI are real, from privacy and cybersecurity concerns, to potential copyright infringements, to broader societal risks posed by automated decision-making tools. Perhaps because of these risks, less attention has been focused on the offensive applications of AI, and relatedly, fewer companies have implemented guidelines promoting the use of artificial intelligence. Those companies may be missing out on opportunities to reduce legal risks, as a recent report by the Department of Energy highlights.
Recent oral argument before the Supreme Court of the United States has raised significant questions concerning the Chevron doctrine, a 40-year-old ruling that requires federal courts to defer to an agency’s reasonable interpretation of certain statutory provisions that Congress charged the agency with implementing. Because a majority of the Supreme Court appears inclined to overturn or at least modify that doctrine, many in the regulated community are bracing for potentially significant changes in the administration of regulatory law. Still others are warning that there may be a “flood of litigation” seeking to overturn prior decisions that relied on the doctrine. The Supreme Court’s decision on the issue is expected before July 2024.
Fresh off a panel of distinguished contributors at the MidAtlantic Real EstateHealthcare Conference in Edison, NJ earlier today featuring Andrew Antognoli, Blake Goodman, Randy Horning, Cory Atkins, Pasquale Avallone and Jonathan Marks, where they discussed and debated a wide range of topics focusing on healthcare related real estate issues.
As you may be aware, New Jersey ranks 8th in the US in terms of healthcare satisfaction, with over 113 hospitals and 72 acute care facilities in the State. Over 150,000 employees are employed in these facilities making them the largest private sector employee base in the State with over 15 Million patients being served a year.
Key Take Aways:
Development – limited new development due to interest rates and constructions costs despite there not being many if any new facilities for rent at the moment. Adaptive reuse of existing buildings continues to be the main game noting that some of the older B and C product in the marketplace will not be able to meet current design specifications of the users.
Construction Costs for Medical Office – continue to be at or near an all time high in NJ.
Key Design Issues – access, parking, visibility, redundant sources of power, sewage capacity and growing desire to have more sustainable spaces.
Acquisitions – muted at the moment due to interest rates and slow moving product historically.
Cap Rates – generally around 6-6.5% on single tenant, good credit buildings and 7-7.5% for multi tenant buildings.
Average Lease Size – approximately 3,000 SF but as more and more systems continue to consolidate, the larger systems want larger spaces for back office operations of around 10,000 SF.
Rents – depending on product type but mid to high $20s depending on what part of the state and how old the building is with approximately $3.00 in electric.
Leasing Velocity – our team of top shelf brokers felt that leasing velocity is picking up and relatively strong due to the lack of new space availability.
Tenant Improvement Dollars – owners prefer tenants to be investing in sophisticated equipment to create more “stickiness” but willing, with the right tenant, to provide T/I dollars of approximately $50 psf for a 7 year term.
Urgent Care – continued activity in this space with multiple engagements for 10 sites or more around the state.
Sustainability – more important to some owners than in the past. Electric Car chargers are being considered and requested by more and more tenants and owners but surprisingly solar was less of interest to the panelists, despite the ability to use state incentives and reduce power costs.
Section 179-D – with changes under the Inflation Reduction Act to allow non-profits to monetize and transfer the tax deduction or reduce the cost of their building out, many of the owners and brokers in the room thought this was worth exploring to see how the potential $5.25 PSF in tax deduction could be utilized by their clients.
A super turn out, packed house and folks engaging in networking and learning. Kudos to MARE for yet another excellent, well attended event. Duane Morris, LLP looks forward to our continued involvement with the group.
Duane Morris has a robust real estate group and healthcare group focused on regulatory, permitting, executive compensation and real estate related and incentive issues and programs. f you have any questions or follow ups, please do not hesitate to contact Brad A. Molotsky, Erin Duffy or the lawyer in the firm whom you normally deal with on other maters.
Queen Mary University of London has undertaken a major International Arbitration Survey, focusing on the energy sector entitled “Future of International Energy Arbitration, Survey Report 2022”. This was led by Professor Loukas Mistelis FCArb[1] and his team. The Survey was based on feedback from over 900 respondents from a diverse range of jurisdictions, end users, leading practitioners, arbitrators and experts, as well as arbitral and academic institutions.
