Congress Eliminates Corporate Average Fuel Economy (CAFE) Penalties for Passenger Cars and Light Trucks

In one of its many changes, the One Big Beautiful Bill Act, enacted on July 4, 2025, eliminated civil penalties for noncompliance with federal fuel economy standards.  Specifically, Section 40006 of the Act amends the language of the Corporate Average Fuel Economy (CAFE) statute to reset the maximum civil penalty to $0.00.  Although the statute and its implementing regulations otherwise remain in place, this amendment removes any civil penalties for producing passenger cars and light trucks that do not meet fuel economy requirements.

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Agencies Collectively Move to Overhaul Environmental Review Regulations

On July 3, 2025, numerous federal agencies initiated an effort to revise the manner in which they comply with the National Environmental Policy Act (NEPA).  NEPA, a cornerstone of environmental governance and project development in the U.S., has historically been implemented through regulations from the Council on Environmental Quality (CEQ).  The DC Circuit questioned the legality of those regulations, as well as CEQ’s authority to implement them.  And at the direction of President Trump’s February 25, 2025 Executive Order 14154 — “Unleashing American Energy” — CEQ rescinded its NEPA implementing regulations.  In place, CEQ provided guidance for agencies that instructed them to update their NEPA procedures by February 2026 in a manner consistent with recent statutory amendments that prioritizes “efficiency and certainty over any other policy objectives.”  Today, we are getting our first glimpse into what that process will look like.

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EPA Updates Clean Air Act Standards Applicable to Small Waste Incinerators

On June 30, 2025, the U.S. Environmental Protection Agency (EPA) finalized updates to its New Source Performance Standards (NSPS) and Emission Guidelines for Other Solid Waste Incineration (OSWI) units under the Clean Air Act (CAA). These units — combustion systems that incinerate solid waste from commercial or institutional sources not otherwise regulated under specific incinerator categories — include very small municipal waste combustors and institutional incinerators. The final rule includes applicability-related and definitional changes expanding the class of incinerators subject to NSPS, revises the OSWI subcategories and tightens emission limits for key pollutants. It also adopts changes to startup, shutdown, and malfunction (SSM), and expands testing, monitoring, reporting, and recordkeeping requirements that will affect both existing and new OSWI units.

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FERC Accelerates Natural Gas Infrastructure Expansion Through Key Waivers and Rulemaking

On January 20, 2025, President Donald J. Trump issued Executive Order No. 14156, Declaring a National Energy Emergency, which directed federal agencies to “identify and use all relevant lawful emergency and other authorities available to them to expedite the completion of all authorized and appropriated infrastructure [and] energy . . . projects.” On June 18, 2025, in alignment with this Executive Order and in response to two petitions filed by the Interstate Natural Gas Association of America (“INGAA”), the U.S. Federal Energy Regulatory Commission (“FERC”) advanced a package of regulatory actions aimed at accelerating the development of natural gas infrastructure.

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California Proposes Adding Microplastics to Candidate Chemicals List – Comment Period Open Through August 4, 2025

The California Department of Toxic Substances Control (DTSC) has proposed to amend its Safer Consumer Products (SCP) regulations by adding microplastics to the Candidate Chemicals List (Cal. Code Regs., tit. 22, § 69502.2). While this proposed action does not impose immediate compliance obligations, it has substantial implications because once microplastics are listed as Candidate Chemicals, DTSC may identify consumer products containing microplastics as Priority Products. The identification of a Priority Product triggers requirements under California law for manufacturers and entities throughout the supply chain, who must assess alternative product formulations and are subject to response measures prescribed by DTSC.

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U.S. Army Corps of Engineers Proposes to Reissue and Modify Nationwide Permits

On June 18, the U.S. Army Corps of Engineers (Corps) published a Notice of Proposed Rulemaking that would reissue 56 of its existing Nationwide Permits (NWPs), introduce one new NWP, and make targeted modifications to the scope of certain NWPs and their terms. Key updates include a new NWP for fish passage improvements and changes to reflect recent litigation outcomes — including rescinding Florida’s program authorization and the NWPs for finfish and (in part) shellfish mariculture activities — as well as clarifying the trigger for state water quality certification under Section 401. The Corps also proposes, among other changes, an express prohibition on combining acreage limits when using more than one NWP to purportedly authorize a greater impact, and requiring restoration of areas affected by construction mats.

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California Proposes Expanding Safer Consumer Products Regulations Under SB 502

On June 6, 2025, the California Department of Toxic Substances Control (DTSC) issued a Notice of Proposed Action to amend the Safer Consumer Products (SCP) Regulations. These proposed amendments implement Senate Bill (SB) 502 and expand public access to DTSC’s regulatory process. Among other changes, the proposal creates a pathway for public petitions to result directly in regulatory action, bypassing the traditional Alternatives Analysis process.

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Supreme Court Issues Split Rulings on Clean Air Act Venue Disputes

On June 18, 2025, the U.S. Supreme Court issued decisions in two significant Clean Air Act cases — EPA v. Calumet Shreveport Refining and Oklahoma v. EPA — clarifying the appropriate venue for legal challenges to certain final EPA actions. In Calumet, the Court held that EPA’s universal denials of small-refinery-exemption (SRE) petitions under the Renewable Fuel Standard program were “based on a determination of nationwide scope or effect,” and thus challenges may only be brought in the D.C. Circuit Court of Appeals. By contrast, the Court in Oklahoma held that challenges to EPA’s disapproval of State Implementation Plans (SIPs) belong in the applicable regional circuit courts because the agency’s determinations were based on facts and rationales unique to each state. Although some gray areas remain, the twin decisions put several long-standing venue issues to rest and should encourage quicker resolution of Clean Air Act regulatory challenges.

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<a target=‘_blank’ href="https://www.sidley.com/en/people/b/boxerman-samuel-b">Samuel B. Boxerman</a>

Samuel B. Boxerman

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Keturah A. Brown

Washington, D.C.
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Grace Dickson Gerbas

Dallas
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Terence T. Healey

Boston
<a target=‘_blank’ href="https://www.sidley.com/en/people/i/irvin-kenneth-w">Kenneth W. Irvin</a>

Kenneth W. Irvin

Washington, D.C.
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Casey Khan

Houston
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Michael L. Lisak

Chicago
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Brittany A. Bolen

Washington, D.C.
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Brooklyn Hildebrandt

Los Angeles
<a target=‘_blank’ href="https://www.sidley.com/en/people/n/noelliste-nicole-e">Nicole E. Noëlliste</a>

Nicole E. Noëlliste

Washington, D.C.
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Hannah Posen

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/r/raffetto-jack-c">Jack Raffetto</a>

Jack Raffetto

Washington, D.C.

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