Brad A. Molotsky – Page 2 – Sustainability, Resiliency and Risk Mitigation

August 24, 2023 by Brad A. Molotsky

HUD – over $4B in lending capacity and $840M in grant funds under its Green and Resilient Retrofit Program

The U. S. Department of Housing and Urban Development (HUD) has announced more than $4 Billion in loan capacity and $840 Million in grant funding availability for investments in clean energy at multifamily properties that receive HUD assistance.

The funding is designed to encourage investment in a variety of clean energy projects with a stated goal to improve the quality and the resilience of those properties.

The Green and Resilient Retrofit Program (“GRRP”) was created as a part of the Inflation Reduction Act of 2022 to incentivize investments that reduce energy and utility costs and hope to reduce greenhouse gas emissions at the applicable properties.

HUD put forth 3 key goals for the GRRP:

1. to reduce energy and water use in HUD-assisted multifamily properties;

2. to make HUD-assisted multifamily properties more resilient to extreme weather events and natural disasters, and

3. to reduce greenhouse gas emissions from HUD-assisted multifamily properties.

HUD’s view is that by achieving the stated goals the properties will reduce utility bills and costs of operations, which in turn benefit their tenants. By reducing consumption, a natural outcome will be to also reduce greenhouse gas emissions HUD’s goal is to reduce greenhouse gas emissions by 50% across all participating properties and to reduce modeled energy consumption by at least 25% in each property.

Eligible properties are those receiving HUD assistance through Sections 8, 202, 811 and 236.

Awards are available for the following categories of properties:

Element Awards are for properties that are materially advanced in a recapitalization transaction that includes targeted utility efficiency, carbon emissions, reduction, renewable energy and/or climate resilience measures.

Leading Edge Awards are for properties with a significant capacity to execute a rehabilitation that will achieve an advanced green certification.

Comprehensive Awards are for properties, including those not yet developed, where the property owner is interested in improving the utility efficiency and resilience to climate hazards.

Green Sprouts – The Inflation Reduction Act is a rather amazing cluster of potential benefits and incentive programs for the built environment. HUD has taken the baton and has proceeded to incentivize energy efficiency investments where they are lending money. $4 Billion in lending capacity and $840M in grants are now available. Worthy of checking it out.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

August 17, 2023 by Brad A. Molotsky

Plastic Bag Bans – A New Jersey Update

By way of an update to our April 27, 2023 Blog post regarding plastic bag and straw bans, we thought it a good time to circle back to what is going in New Jersey (other state updates will follow).

The relevant NJ plastic bag ban bill can be found at https://dep.nj.gov/wp-content/uploads/plastic-ban-law/docs/plastic-bag-law-c117.pdf

Per a press release issued earlier this week, the New Jersey Business Action Center is reminding small restaurants and stores of their need to comply with the recent plastic and paper carryout bag ban before local health departments conduct inspections of their facilities.

Under state law, retail stores, grocery stores and food service businesses may NOT provide or sell single-use plastic carryout bags and polystyrene foam food service products (i.e., styrofoam). Single-use paper carryout bags are allowed to be provided or sold, except by grocery stores equal to or larger than 2,500 SF, which may only provide or sell reusable carryout bags.

The state maintains an online vendor list where businesses affected by the ban can find alternative carryout products.

According to the New Jersey Plastics Council’s annual report, released in May 2023, approximately 5.5 billion single-use plastic bags and 110 million single-use paper bags were eliminated from entering the waste stream and environment by the supermarket sector alone from May 2022, the effective date of the law through the end of 2022.

Parting Shot – While there was the normal outrage at the ban being enacted in the first place, and that the plastic bag ban would cause massive inconvenience and potential loss of jobs, the reality on the ground is that other than minor inconvenience, constituents quickly learned to bring bags with them and that they could and would survive in a non-styrofoam providing environment. While 5.5 billion single use bags might not seem like much to some, in this author’s view, it is a big step in positive direction where people take greater interest in where their waste is going and whether the waste can be reused for another purpose.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

August 10, 2023 by Brad A. Molotsky

Seattle – Not Just for Starbucks These Days – Mayor Proposes Greenhouse Gas Reduction Legislation

Seattle Mayor Bruce Harrell recently proposed legislation that would require the city’s large commercial and multifamily buildings to reduce greenhouse gas emissions (“GhG”) over the next several decades and achieve net-zero emissions by 2050.

Per the City’s press release, the standards were nearly 2 years in the making, are expected to reduce annual commercial building greenhouse gas emissions by 27% compared with 2008 levels,

According to the EPA and multiple studies, the built environment (i.e., buildings) are a large contributor to GhG emissions nationwide, and in Seattle, contributes more than 33% of the city’s total GhG emissions.

Seattle is one of a growing list of cities (including Boston who announced this policy 2 weeks ago) — and more recently, some states (e.g., Washington) — that require many new buildings to be all-electric. While these policies will likely reduce consumption of fossil fuels in many cases, they do not address existing buildings that use gas, oil and fossil fuels to provide heat, hot water and chiller water.

During 2023, more and more states and municipalities are developing building performance standards that aim to reduce buildings’ carbon footprint by requiring them to meet certain standards. These more recent standards focus on greenhouse gas emissions rather than just energy usage.

Seattle’s proposed new standard is, per Construction Dive, the product of nearly 2 years of meetings, open houses, webinars, advisory group and specialized task force sessions. Not surprisingly, not all constituents were happy with pushback during the development of these standards coming from environmental groups that want more and faster emission reductions and from real estate and business groups that believe that standards are far too reaching.

All told, according to the Seattle Office of Sustainability and Environment, the new standards will cover approximately 4,100 buildings in Seattle, including about 1,885 multifamily buildings and 1,650 nonresidential buildings that are mostly downtown and in dense neighborhoods. Like many of the other cities adopting these type of GhG emissions based standards (see, e.g., New York City with Local Law 97), the proposal offers several pathways for buildings to comply with the standards; owners who do not comply would be fined.

It is believe by the City Administration that the new standard will help Seattle secure federal funding and incentives. Seattle City Council is expected to review and likely implement the legislation in their fall session.

Parting Shot – Seattle is part of a growing list of cities and States that are looking to reduce energy consumption in its building stock by way of focusing on fossil fuel consumption and GhG emissions by requiring monitoring, measuring and reporting by larger buildings, and, if standards set by the applicable governing body have been exceeded, the owner of the building (and thereafter, likely the tenants under their leases) will be subject to a fine until they correct their exceedance. Carrots have been offered in the past as incentives, these types of ordinances are much more of the stick approach.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

May 19, 2023May 19, 2023 by Brad A. Molotsky

The General Services Administration and the National Deep Energy Retrofit Program – Electrification of over 41 Buildings – $300M of Investment Value!

Last week, the U.S. General Services Administration (GSA) issued its largest ever notice of opportunity under its “National Deep Energy Retrofit” program, announcing their intent to leverage funding from the Inflation Reduction Act for projects in four (4) states and the District of Columbia. The projects are intended to accelerate the agency’s efforts to achieve President Biden’s goal to achieve net-zero emissions in the federal buildings portfolio by 2045, and are part of his “Investing In America” agenda to attempt to rebuild the economy, create good-paying jobs, and accelerate the deployment of clean energy.

Through “Energy Savings Performance Contracts (ESPCs)”, the GSA stated that it intends to use Inflation Reduction Act funding to bring energy and cost-saving improvements to 41 facilities, including 17 in the DC area and 24 across Illinois, Indiana, Minnesota, and Wisconsin. The projects, with an estimated value of more than $300 million, are looking to convert facilities to all-electric, rather than relying on onsite fossil fuels equipment, and promote opportunities to achieve net zero operations.

According to the GSA, “this historic call for proposals is another example of how GSA is making meaningful progress towards decarbonization and net zero buildings – while delivering savings to taxpayers and a healthier future for the next generation,” said GSA Administrator Robin Carnahan. “We’re excited to partner with innovative energy service companies to rapidly accelerate our progress toward achieving a net zero federal footprint – and create good-paying jobs along the way.”

As part of the White House’s Climate Smart Buildings Initiative, GSA’s National Deep Energy Retrofit program in intended to help modernize federal buildings to cut greenhouse gas emissions and reduce site energy consumption by renovating buildings to maximize reductions in onsite energy use. These projects will also help support GSA’s efforts to meet the recently released “Federal Building Performance Standard” and convert buildings to all-electric buildings in which none of the equipment will use onsite fossil fuel combustion.

Per the GSA, GSA provides centralized procurement and shared services for the federal government, managing a nationwide real estate portfolio of nearly 370 million rentable square feet, overseeing approximately $75 billion in annual contracts, and delivering technology services that serve millions of people across dozens of federal agencies.

Take Aways – it appears pretty clear that the Biden Administration is moving to solidify its positions regarding climate change and action to reduce green house gas emissions by having the GSA push forward with their National Deep Energy Retrofit Program. This is a furthering of the Administration’s prior climate comments and commitments regarding greenhouse gas reduction and doing what it views as being within its preview without having to obtain Congressional approval or authorization. Given the GSA’s broad impact on its own portfolio and on landlords where it leases space, this will indeed cause more than a ripple and is likely to significantly affect much of its inventory of hundreds of millions of square feet of space nationally.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information or if you have any questions about this post, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

April 27, 2023 by Brad A. Molotsky

Plastic Bag Bans – Do They Work?

According to an article in the Philadelphia Inquirer per a report issued by the City of Philadelphia (the “City”), the City’s 2019 plastic bag ban has resulted in a significant reduction in the use of plastic bags – i.e., the equivalent of filling Philadelphia City Hall with plastic bags every 8 months which would be approximately 200 Million less plastic bags. The City’s report – “Evaluating the Ban: Philadelphia’s Plastic Bag Ban and Changes in Bag Usage in the City” (the “Report”) focused on 2021 to 2022, was conducted by the University of Pittsburgh and Swarthmore College and, concluded that the ban significantly reduced plastic bag use in the City.

Click on this link for a copy of the Report. extension://elhekieabhbkpmcefcoobjddigjcaadp/https://www.phila.gov/media/20230426164234/PlasticBagBanReport-1.pdf#:~:text=We%20used%20a%20difference-in-difference%20approach%20to%20estimate%20the,clear%20boundary%20between%20the%20regulated%20and%20unregulated%20areas.

The City’s ban was passed by City Council in 2019 and took effect on July 1, 2021. It prohibits retailer from providing single use plastic bags and paper bags not made of at least 40% recycled material.

Per the Inquirer, 16 other municipalities in Pennsylvania have some sort of plastic bag ban, including Cheltenham, Radnor, Haverford, Media and Pittsburgh. Cheltenham’s ordinance was recently adopted earlier this week and regulates single use plastic bags, including restaurants’ use of such bags.

The Report concluded that in each category improvement was shown in both the City and the suburbs by way of reusable bag use and reduction of plastic bag use (i.e., proportion using any plastic bag (down), proportion using any paper bag (up) , proportion using any recycled bag (up), proportion using no bag (up), number of plastic bags used per customer (down), number of paper bags used per customer (up) and number of reusable bags used per customer (up)).

As hoped for, the ban resulted in a 53% reduction in the likelihood of a consumer using a plastic bag.

Across the bridge in New Jersey, the State enacted the Single Use Waste Reduction Act in May, 2022 which banned plastic bags and foam food containers and built off of an earlier plastic straw ban which went into effect in 2021. Bags in NJ used to wrap uncooked meat, fish or poultry; bags used to package loose items; and bags used to carry live animals are all exempt from the ban. Residents continue to be frustrated, per recent polling, with the inclusion of a ban on paper bags which are not permitted to be handed out or sold at big box stores and grocery stores larger than 2,500 feet in size. The NJ ban also includes carry out and to go styrofoam cups, plates and to go containers .

Take Aways – it appears pretty clear that behavior can be changed via regulation and that the ban on the use of single use plastic bags and similar products is, in fact, reducing the among of these bags in the waste stream and in common usage without a real negative effect other than some convenience by consumers. Like many things these days, not all municipalities or States will pursue this avenue as a means to reduce dependence on plastics which tend to find their way into our water ways and waste streams, but those that do pass such bans are seeing a marked decrease in the use of these products.

April 17, 2023 by Brad A. Molotsky

The SEC and its continued focus and enforcement of “Greenwashing” by Alek Smolij

The U.S. Securities and Exchange Commission (SEC) has positioned itself as one of the United States’ leading government regulators on environmental, social, and governance (ESG) issues and in 2023 has continued a pattern of active enforcement actions focusing on their perceived view of ESG misconduct.

The underpinning of these actions has its roots in various places, including those that occurred on March 4, 2021, when the SEC announced the creation of a “Climate and ESG Task Force” in its Division of Enforcement, to focus on ESG-related gaps and misstatements in disclosures by publicly-traded companies, mutual funds, and other investment vehicles.

One of the SEC’s main enforcement focuses is “greenwashing,” a term that describes when a publicly-traded company, mutual fund, or other public investment vehicle makes a misleading claim about its ESG policies or credentials. For instance, some mutual funds may market themselves as an “environmentally-friendly” energy fund but have a relatively small amount of investor funds invested in renewable energy sources. Critics of the current regulation regime have asserted that many investment vehicles mislead investors with terms like “green,” “carbon-neutral,” and “environmentally-friendly.” These broad terms, critics say, are not adequately defined and may convince investors to direct their money to funds that the investors believe align with ESG values when the funds themselves are not actually evaluating whether their investments are in line with such values.

In late March 2022, the SEC’s Division of Examinations used the term “greenwashing” in its 2022 Examination Priorities to describe certain activities that the SEC would be paying particular attention to in the coming months The SEC noted that it would focus on whether public investment vehicles are “overstating or misrepresenting the ESG factors considered or incorporated into portfolio selection (e.g., greenwashing), such as in their performance advertising and marketing.”

The SEC proposed new greenwashing-focused rules in 2022 that would strengthen the Division of Enforcement’s ability to fight against misleading ESG disclosures. In August 2022, after a public comment period, the SEC’s commissioners voted 3-to-1 to move forward with proposed climate disclosure ESG-focused rules. These rules focus on both publicly-traded companies and investment advisors and funds. Under these climate disclosure rules (expected to be made final in April, 2023), publicly-traded companies are required to include certain climate-related disclosures in their public filings. Further, these rules will require investment advisors and funds who associate their investments with ESG to provide specific disclosures about how they pursue ESG strategies in their investments.

While these rules are still pending and have not yet been finalized, the Division of Enforcement has continued its focus on greenwashing enforcement efforts without even having the benefit of these proposed rules.

The SEC has publicly announced various settlements in the banking space and in the manufacturing space involving tens of millions of dollars in agreed-upon penalties in multiple enforcement actions focused on greenwashing. These actions have focused on SEC investigations of internal policies governing mutual funds and investment strategies branded as ESG investments.

The ESG task force has also investigated and charged companies whom the SEC found were not adequately disclosing environmental-related risks. The SEC has, for instance, settled a charge with a mining company related to failure to disclose the financial risks of mercury contamination of a river located near a Brazilian mine.

Through these actions, the SEC has indicated that it will target companies whose policies do not adequately ensure that these investment products align with stated goals of investing in ESG-focused products. Further, the SEC is keeping a close eye on required disclosures by public companies as these disclosures relate to ESG risks and issues that companies may be required to communicate to investors. The SEC undertook these enforcement efforts under existing securities laws and regulations without final passage of the proposed ESG-focused climate disclosure rules mentioned above.

Clearly, the SEC is not waiting for final climate disclosure rules to hone in on greenwashing practices, and the proposed climate disclosure rules will only strengthen the SEC’s ability to engage in similar investigations and enforcement actions.

The Division of Examination’s 2023 Examination Priorities do not explicitly use the term “greenwashing,” but they indicate that the SEC will continue to focus on enforcement actions against companies that engage in this practice. The 2023 Priorities state that the SEC will examine “whether ESG products are appropriately labeled and whether recommendations of such products for retail investors are made in investors’ best interests.” This language indicates that greenwashing-focused enforcement is clearly still a priority for the SEC, especially when paired with the SEC’s proposed new rules requiring ESG climate disclosures.

The SEC’s focus on greenwashing means that organizations associating themselves or their investments with ESG objectives should assess whether their actions line up with their stated ESG efforts and whether their disclosure matches what their records show and whether they are measurable, verifiable and provable statistics and data. Regular auditing of ESG programs, company disclosure, ESG reporting and comprehensive ESG strategy planning could help avoid a costly SEC enforcement action.

Note, we have also published on the Federal Drug Administrations renewed focus on “Greenwashing” in an early post on our blog where we documented the renewed FDA focus in the area of cosmetics and other products and issued additional guidance on greenwashing in the context of utilization of words such as “natural”, “free (of)”, “eco-friendly”, “Cruelty Free”, “renewable” and “sustainable”.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information or if you have any questions about this post, please contact Alek Smolij (the author), Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

April 12, 2023 by Brad A. Molotsky

NJ Legislature Passes Flood Warning Requirements for Leases and the Sales of Real Property – Applies to both Commercial and Residential Property

Earlier this week, New Jersey lawmakers passed SB 3110, a bill (the “Bill”) that would require Landlords and Seller of commercial and residential Real Estate to warn prospective tenants and buyers about previous flooding on various types of properties.

SB 3110 has been sent to NJ Governor Murphy for review and execution and will need implementing regulations from the New Jersey Department of Community Affairs (NJDCA) that are anticipated within 90 days of passage of the Bill.

SB 3110 requires that both Sellers and Landlords disclose whether a property is located in a 100-year floodplain or 500-year floodplain, as determined by the Federal Emergency Management Agency (FEMA).

The Bill mandates that NJ Department of Environmental Protection (NJDEP) create a user-friendly website where landlords, owners, tenants and buyers can check whether a property is in a flood zone or at risk of flooding in the future.

NJDCA will also be charged with developing a standard notice for landlords and owners to fill out to disclose whether a flood risks exist.

Note, that, under SB 3110, a tenant who experiences “substantial flood damage” but whom wasn’t properly notified by a landlord of the risk of such a flood, could terminate a lease and sue to recover damages,. “Substantial Flood Damage” is defined as damages of at least 5 months rent worth of damage.

Some of the questions the disclosure form will likely address include:

Is any or all of the property located wholly or partially in the Special Flood Hazard Area (“100-year floodplain”) according to FEMA’s current flood insurance rate maps for your area?
Is any or all of the property located wholly or partially in a Moderate Risk Flood Hazard Area (“500-year floodplain”) according to FEMA’s current flood insurance rate maps for your area?
Is the property subject to any requirement under federal law to obtain and maintain flood insurance on the property?
Have you ever received assistance, or are you aware of any previous owners receiving assistance, from FEMA, the U.S. Small Business Administration, or any other federal disaster flood assistance for flood damage to the property?
Is there flood insurance on the property?
Is there a FEMA elevation certificate available for the property? If so, the elevation certificate must be shared with the buyer.
Have you ever filed a claim for flood damage to the property with any insurance provider, including the National Flood Insurance Program? If the claim was approved, what was the amount received?
Is any or all of the property located in a designated wetland?
Has the property experienced any flood damage, water seepage, or pooled water due to a natural flood event, such as heavy rainfall, costal storm surge, tidal inundation, or river overflow? If so, how many times?

Some of these questions are contained within the Bill and others are likely the subject of DCA’s form creation to address the disclosure obligation if SB 3110 is signed into law.

Parting Thoughts – Given New Jersey’s past history in the last decade with hurricanes and increasing flooding and given that New Jersey has been assigned a grade of an F by the NRDC in connection with its flood disclosure policies, it should come as no real surprise that the legislature is moving to attempt to address this type of tenant and buyer of real property risk and provide for a more informed purchase/leasing process.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG questions, planning and initiatives. We would be happy to discussion your proposed project and how this DOE funding prize might apply to you. For more information or if you have any questions about this post, please contact Brad A. Molotsky, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo, Seth Cooley or David Amerikaner or the attorney in the firm with whom you in regular contact or the attorney in the firm with whom you are regularly in contact.

April 5, 2023 by Brad A. Molotsky

5th Circuit Court of Appeals – Dismissal and Vacation of Lower Court Ruling – the Social Cost of Greenhouse Gas is Back in Action

In January, 2021, the Biden Administration issued Executive Order 13990 (“EO”) which re-established an interagency working group (the “Working Group”) in order to formulate guidance on the “social cost of greenhouse gases“. The EO directed the Working Group to publish dollar estimates quantifying changes in carbon, methane and nitrous oxide emissions for consideration by all federal agencies when policy making.

Since 2021, the working group has published their Interim Estimates which were based largely on findings of their predecessor Working Group which was established during the Obama Administration.

Various State Attorneys General from Louisiana, Alabama, Florida, Georgia, Kentucky, Mississippi, South Dakota, Texas, West Virginia and Wyoming (the “Plaintiff States“) challenged the EO and the Interim Estimates as procedurally invalid, arbitrary and capricious and obtained a preliminary injunction in the Western District Court of Louisiana.

The 5th Circuit concluded that the Plaintiff States did NOT establish standing to bring such a claim, and, as such, dismissed their action for lack of jurisdiction and vacated the lower courts preliminary injunction. The court indicated that the Plaintiff States failed to meet their burden to prove standing as they did not show an injury in fact. With this ruling, the Working Group and the Interim Estimates may now be used by various federal agencies as part of their analysis and policymaking.

For more than a decade, federal agencies have considered the effect of greenhouse gas emissions (along with a host of other variables) in their cost benefit analysis in determining whether to and the cost of implement various regulations. As the Court pointed out, before proposing any significant action, federal agencies are required to assess the costs and benefits of the regulation and submit to the Office of Management and Budget their assessment for review.

In 2009, the Obama Administration established the original working group to develop a transparent and defensible method, designed for the federal rulemaking process, to quantify the social costs of greenhouse gases. In 2017, after years of work and research, this group derived estimates from peer-reviewed models for translating emissions into dollar costs. Their findings were the subject of public notices and comments and were peer reviewed by the National Academies of Science, Engineering and Medicine.

Later in 2017, the Trump Administration disbanded the prior working group and its work product withdrawn from federal agencies, but these federal agencies were not barred from “monetizing the value of changes in greenhouse gas emissions resulting from proposed regulations.” In ohter words, the agencies were not mandated to include the Interim Estimates BUT they were still permitted to include greenhouse gas emissions and their impact in the agencies’ recommendations. The result of the disbanding of the working group was that instead of utilizing a coordinated approach across all agencies, each agency was left to its own devices in determining how and whether to score green house gas emissions in preparing its cost benefit analysis for a given regulation.

In early 2021, under the Biden Administration, the Working Group was reconvened under EO 13990 and re-tasked with developing Interim Estimates that would be “appropriate and consistent with applicable law.” When the applicable federal agency relies on the Interim Estimates to justify a final action, the court noted that the agency “must respond to any significant comment on those estimates and ensure it analysis” is “not arbitrary or capricious”.

Although some could characterize the Court’s ruling as a bit of legal “in the weeds” arguments over standing and injury, the crux of the court’s ruling hinged on the fact that the “EO 13990 does NOT require any action from federal agencies”. Agencies are required to exercise discretion in conducting their cost benefit analysis and deciding whether or not to use the Interim Estimates. If used, “the Interim Estimates are required by the EO to be appropriate and consistent with applicable law.” The Court further noted that “nothing in EO 13990 requires States to implement the Interim Estimates.”

Parting Thoughts – activism by the Plaintiff States Attorneys’ General is on the rise in the ESG arena and is evident in various articles and actions being taken to oppose various ESG and environmentally focused regulations. It is likely that this activism continues and that further ESG focused programs in investments arena and in disclosure of the impacts of climate change (like the proposed SEC Rules on Climate Change Disclosure which are supposed to be announces as final this month) continue to be called into question by these Plaintiff States. We will continue to monitor and report on these developments as they occur and are here if we can be helpful to you in your analysis on how they might affect your operations, your businesses or you.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. We would be happy to discussion your proposed project and how this DOE funding prize might apply to you. For more information or if you have any questions about this post, please contact Brad A. Molotsky, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo, Seth Cooley or David Amerikaner or the attorney in the firm with whom you in regular contact or the attorney in the firm with whom you are regularly in contact.

April 4, 2023 by Brad A. Molotsky

The Biden Administration and the ESG Investment Rule Congressional Veto

In late March, 2023, President Biden issued the first veto of his Administration. The veto overturned a Republican led measure that was seeking to overturn a Department of Labor retirement plan rule.

Pretty wonky stuff you say?

The Republican measure was designed to overturn a Labor Department rule that would allow (note the word allow, NOT mandate) retirement plan managers to consider climate change in making their investment decisions.

Sounds like some double speak there doesn’t it? The Department of Labor rule was enacted to “permit” investment managers to consider climate change in making decisions. The rules did NOT require this consideration, rather, it permitted it at the discretion of the investment manager.

Congress (in a House vote of 216-204 mostly along party lines and a Senate vote of 50-46 with Democratic Senators Manchin and Tester voting with their Republican colleagues,) voted to overturn the Department of Labor Rule – effectively saying, investment managers should NOT be permitted to consider what some view as relevant information in making an informed decision (e.g., if an area floods daily, should one invest in an asset located there or instead invest where there is not a flooding risk; alternatively, if an area is prone to forest fire risk vs. an area that is not prone to this type of risk, should a manager be able to consider this if they think it relevant?).

The Administration took issue with the overturned Labor Department rule and opted to veto the Congressional restriction on being able to consider climate change in investment manager decisions. Again, as noted above, the Labor Department Rule does NOT require every or any investment manager to consider climate change in their investment decisions, instead it enables these managers to choose how they view climate change, and if they believe climate change to be a relevant factor in making an investment decision, to take it into account when making their decision.

This is likely the first of many such skirmishes to come on the ESG front and its use as a tool or a hammer, depending on your perspective, in making decisions.

Parting Thoughts – if you are an investor looking to deploy your investment dollars, the question is whether you think your investment advisor should be able to (without being required to) take into account climate factors when making investment suggestions to you or not. How and whether resiliency, climate factors, resource allocation and applicable risk mitigation is permitted or mandated into future investment decisions are some of the areas where it is highly likely that additional political party skirmishes will occur.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. We would be happy to discussion your proposed project and how this DOE funding prize might apply to you. For more information or if you have any questions about this post, please contact Brad A. Molotsky, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo, Seth Cooley or David Amerikaner or the attorney in the firm with whom you in regular contact or the attorney in the firm with whom you are regularly in contact.

January 18, 2023 by Brad A. Molotsky

Department of Energy – $22M in Funds available under the Buildings Upgrade Prize

Earlier this week, the Department of Energy (“DOE”) announced $22 Million Dollars in prize money availability under a new program entitled “The Buildings Upgrade Prize” or “Buildings UP“.

According to the DOE, the Buildings UP program is designed to accelerate the transformation of U.S. buildings into energy-efficient and clean energy-ready homes, commercial spaces, and communities

The Buildings Upgrade Prize is offering more than $22 million in cash prizes and technical assistance to teams across America with winning ideas to accelerate widespread, equitable energy efficiency and building electrification upgrades.

According to Alejandro Moreno, Acting Assistant Secretary for Energy Efficiency and Renewable Energy, “We have a once-in-a-generation opportunity to leverage billions of dollars in funding available through the Bipartisan Infrastructure Law, the Inflation Reduction Act, utility rebate programs, and many other sources to upgrade our existing buildings and help address climate change”.

Per DOE’s press release, proposed solutions can be varied and may include adoption of efficient electric equipment and appliances, including heat pumps and heat pump water heaters, as well as enhanced building efficiency through measures such as insulation and air sealing. Together, these efforts should help reduce carbon emissions and energy costs while improving indoor air quality and occupant comfort.

In Phase 1 of Buildings UP, teams are required to submit ideas for innovative concepts to increase building energy upgrades, choosing to enter one of two pathways: “Equity-Centered Innovation” or “Open Innovation.”

Winning “Equity-Centered Innovation” teams, focused on delivering upgrades to low- and moderate-income homes; small, disadvantaged businesses; and other equity-eligible buildings, will receive $400,000 in cash.

Winning “Open Innovation” teams will receive $200,000 in cash. Winners from both pathways will also receive expert technical assistance and coaching to help bring their ideas to life.

Community-based organizations, state and local governments, Indian tribes, building owners, utilities, nonprofit organizations, energy efficiency program implementers, and other organizations are encouraged to team up and apply.

Phase 1 opens for submissions on February 18, 2023.

Separately, up to 50 Application Support Prizes of $5,000 and 10 hours of technical assistance are available to help new and under-resourced teams complete Phase 1 applications.

The Application Support Prize opens for submissions on Jan. 18, 2023, and will be awarded on a rolling basis until funds are expended.

Buildings UP is administered by the National Renewable Energy Laboratory and is part of the American-Made program, which fast-tracks innovation through prizes, training, teaming, and mentoring. Teams competing in Buildings UP will have access to the American-Made Network, connecting the nation’s entrepreneurs and innovators to America’s national labs and the private sector. Mentoring, tools, resources, and support through the American-Made Network help accelerate the transition of ideas into real-world solutions to achieve clean energy goals.

Buildings UP was developed and funded by the U.S. Department of Energy Building Technologies Office as part of its overall mission to reduce the carbon footprint of the U.S. building stock while maintaining or improving affordability, comfort, and performance.

Phase 1 submissions are due by July 18, 2023.

Parting Thoughts – if you are an owner of a building or a community-based organization, state and local government entity, an Indian tribe, a utility a nonprofit organizations or an energy efficiency program implementers, now is the time to dust off your thinking cap and team with others who can be helpful to apply for these grant funds. Real money available to assist along with technical know how – what do you have to lose.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. We would be happy to discussion your proposed project and how this DOE funding prize might apply to you. For more information or if you have any questions about this post, please contact Brad A. Molotsky, Alice Shanahan, Jeff Hamera, Nanette Heide, Jolie-Anne Ansley, Robert Montejo, Seth Cooley or David Amerikaner or the attorney in the firm with whom you in regular contact or the attorney in the firm with whom you are regularly in contact.