Environmental Vanguard is a quarterly newsletter from McGuireWoods, sharing key insights from our leading environmental attorneys and consultants at the forefront of regulatory, litigation and policy developments. This issue covers a variety of hot-button issues in the environmental field, including states challenging EPA’s rollback of HFC restrictions, a class certification in a TCE groundwater contamination suit, FERC’s mandatory reliability standards for data centers and other developments.
Look for new editions every quarter, and feel free to reach out to the McGuireWoods team with questions about litigation, regulatory, enforcement or other issues in environmental law.
I. States Challenge the EPA’s Rollback of HFC Technology Transitions Rule
On July 21, 2026, 18 state attorneys general and two cities (Washington, D.C., and New York City) filed a petition for review in the U.S. Court of Appeals for the D.C. Circuit challenging EPA’s final rule relaxing restrictions on the use of hydrofluorocarbons (HFCs) in commercial refrigeration and air conditioning equipment. The petition alleges that the rule is arbitrary and capricious and violates the American Innovation and Manufacturing Act of 2020 (AIM Act).
HFCs are gases commonly used as refrigerants in air conditioning, supermarket refrigeration systems, cold storage warehouses and semiconductor manufacturing equipment. HFCs carry potential environmental effects that have drawn attention from lawmakers. Congress addressed the potential effects of HFCs through the AIM Act, which was signed into law in December 2020 with bipartisan support. The AIM Act directs EPA to phase down HFC production and consumption by approximately 85% by 2036 and authorizes the agency to restrict HFC use in specific sectors to facilitate the transition to next-generation refrigerants.
Pursuant to that authority, EPA finalized its Technology Transitions Rule in October 2023, which prohibited the manufacture, import and installation of equipment using HFCs above specified limits in more than 40 sectors. Compliance dates ranged from Jan. 1, 2025, to Jan. 1, 2028, depending on the sector. The rule was designed to drive the market toward more climate-friendly alternatives already available in many applications.
In March 2025, however, EPA announced a reconsideration of the 2023 Rule as part of the Trump administration’s “Powering the Great American Comeback” deregulatory initiative. On May 26, 2026, the agency published a final rule titled “Phasedown of Hydrofluorocarbons: Reconsideration of Certain Regulatory Requirements Promulgated Under the Technology Transitions Provisions of the American Innovation and Manufacturing Act of 2020,” effective July 27, 2026.
The rule makes several significant changes across sectors. For supermarket systems, it replaces the 2023 Rule’s limits with a graduated schedule. Similar graduated schedules apply to retail food remote condensing units and cold storage warehouses. The rule also delays compliance dates for semiconductor manufacturing equipment used in industrial process refrigeration and allows residential and light commercial air conditioning and heat pump systems manufactured or imported before Jan. 1, 2025, to be installed indefinitely, removing a previously established installation deadline. EPA justified the changes by citing concerns about substitute availability, building code adoption for mildly flammable refrigerants, affordability for consumers and the need to prevent stranded inventory.
The coalition of 18 attorneys general contends that the rule undermines the progress required by the AIM Act and penalizes companies that have already invested in compliance with the 2023 standards. The Natural Resources Defense Council filed a separate petition for review the same day. In a regulatory filing, EPA stated the rule advances its efforts to reduce the cost of living for American families and avoids forcing companies to use technologies that increase the cost of food and semiconductors.
The case, Commonwealth of Massachusetts et al. v. U.S. Environmental Protection Agency et al., is pending in the D.C. Circuit. Given the significant investments already made by industry to comply with the 2023 Rule and the states’ assertion that EPA ignored statutory mandates, the litigation is poised to test the boundaries of the agency’s discretion to relax existing restrictions under the AIM Act’s technology transitions authority.
II. Kansas Federal Court Certifies Class of 1,700+ Homeowners in TCE Groundwater Contamination Suit Against Union Pacific
On June 30, 2026, the U.S. District Court for the District of Kansas issued a Memorandum and Order in Faye Black et al. v. Union Pacific Railroad Company, Case No. 23-1218-EFM-GEB, certifying a class of 1,754 residential homeowners in northeast Wichita whose properties overlie a trichloroethylene (TCE) groundwater contamination plume. The ruling marks a significant milestone in this environmental contamination litigation and carries substantial implications for the railroad’s litigation exposure. More broadly, this order potentially establishes new precedent for contamination threshold classes.
The plume, first discovered by Wichita in 1994, was investigated and eventually linked to a Union Pacific rail site. Union Pacific conducted extensive investigations and remediation under the oversight of Kansas Department of Health and Environment (KDHE). In 2022, KDHE hosted its first meeting to inform the public of the contamination concern. Soon after, in October 2023, local homeowners filed suit.
The plaintiffs’ claims center around vapor intrusion, a process by which contamination volatilizes and can enter indoor air, posing a health risk to residents. The damages theory, rather than focusing on diminution-in-value, is based on the cost of installation of vapor intrusion mitigation systems (VIMS) at affected homes. This distinction was central to Judge Melgren’s order, which limited the class to residential properties in the area with TCE groundwater contamination at or above a specific threshold.
While damages are framed as the cost of installing a VIMS, Union Pacific now faces increased litigation exposure due to the number of properties involved. With the property litigation moving forward, Union Pacific could face a second wave of personal injury litigation since these claims are not precluded by this class action.
Beyond Union Pacific, the order certifying a class should be viewed as a warning sign for industrial facilities with groundwater plumes. Rather than requiring individualized proof of vapor intrusion at each home, the court accepted expert opinions as to the threshold level that one would expect impacts. This means that vapor intrusion classes could be established through a specific groundwater contamination concentration as opposed to measuring indoor air quality in each residence, lowering the class certification bar.
III. FERC Orders Mandatory Reliability Standards for Data Centers and Computational Loads
On July 16, 2026, the Federal Energy Regulatory Commission (FERC) issued an order directing the North American Electric Reliability Corporation (NERC) to develop mandatory Reliability Standards for “computational loads” — power demand from information technology equipment such as servers, storage and networking hardware, including data centers and cryptocurrency mining operations. The order reflects growing concern that unprecedented load growth driven by data centers could outpace the grid’s ability to maintain stability.
Unlike traditional industrial loads that ramp up gradually, computational loads can cause swift demand fluctuations and voltage stability issues. NERC has documented multiple grid disturbances in which computational loads caused or contributed to the instability of the Bulk-Power System. Also, NERC’s 2024 Long-Term Reliability Assessment identified demand growth “higher than at any point in the last two decades,” with particular challenges from large loads that “are substantially larger and constructed more quickly than prior loads using the [Bulk-Power System].”
FERC’s order is not merely a reaction to projected future growth; it is a response to reliability concerns NERC has already studied and documented, accelerating and formalizing work that was already underway. In October 2025, the Secretary of Energy issued an advance notice of proposed rulemaking, directing the commission to consider reforms for timely interconnection of large loads. NERC subsequently developed a two-phased accelerated action plan: Phase I to file initial standards and registry criteria revisions by year-end 2026 and Phase II to develop additional standards during 2027.
FERC determined that NERC’s voluntary timelines did not provide sufficient certainty. Pursuant to section 215(d)(5) of the Federal Power Act, the commission directed NERC to (1) file one or more new or modified Reliability Standards addressing reliability risks associated with computational load integration by end of calendar year; (2) revise NERC’s Rules of Procedure to require registration of computational load entities by the same date; and (3) submit an informational workplan by March 1, 2027, detailing next steps for Phase II standards.
The order was unanimously approved. The FERC chair characterized the timelines as mandatory rather than aspirational, underscoring that grid reliability cannot be compromised in the race to deploy AI infrastructure. The commissioner noted the order builds on show-cause orders FERC issued the prior month directing grid operators to develop policies to speed up data center connections and emphasized that the compressed regulatory timelines reflect the urgency of the moment.
The order marks the first time FERC mandated reliability standards specifically targeting data center loads and represents a paradigm shift in reliability regulation. Traditionally, NERC’s Reliability Standards targeted entities responsible for planning and operating the Bulk-Power System — i.e., transmission and generation owners and operators — while load itself has been treated as an input to the reliability framework rather than a direct subject of regulation. By directing NERC to evaluate registration criteria for computational loads, FERC opened the door to certain large-load facilities becoming registered NERC entities subject to mandatory reliability standards, compliance obligations, audits and potential enforcement exposure.
The practical implications extend beyond operations. If certain computational loads ultimately become subject to NERC registration, parties may need to address compliance responsibilities, operational coordination obligations and information-sharing requirements in project development, interconnection, service and commercial agreements. Combined with the June 2026 show-cause orders, the commission is signaling that while it supports rapid deployment of data center infrastructure, the risks to grid reliability should be considered in the process. Developers, data-center operators, investors, utilities and transmission providers should closely monitor NERC’s standards-development process as new registration requirements and compliance obligations take shape before year’s end, with additional standards to follow in 2027.
IV. New York Executive Order Directs Country’s First State-Wide Moratorium on Hyperscale Data Center Permitting
On July 14, 2026, New York Gov. Kathy Hochul signed Executive Order No. 62, “Establishing a Temporary Moratorium on Data Centers in New York While the State Develops Higher Standards for Data Center Development and Benefits Blueprint to Support Localities.” This marks the first data center moratorium in the country and pauses environmental permitting to allow the state lead-time to develop regulatory programs and local initiatives to guide data center development.
The executive order describes a surge in energy demand, including, as of May 2026, “nearly 12 gigawatts (12,000 megawatts) of data center load requests” in the New York Independent System Operator interconnection queue. It also identifies local concerns with energy costs and water demands, as well as air quality, noise, lighting and other environmental impacts associated with data center development and operation.
To address some of these concerns, the executive order directs the development of several state initiatives. It instructs the Department of Public Service (DPS) to investigate the impacts of connecting data centers to the electric distribution network and to develop a Generic Environmental Impact Statement to assess the potential environmental impacts of data center construction and operation. The Department of Environmental Conservation (DEC) is instructed to hold in abeyance applications for any discretionary permits, approvals or licenses for the construction or expansion of new data centers in the interim.
The DPS is also directed to consider the development of “a mechanism to protect all consumers from the risk of significant costs and risks of stranded assets” including considering a New York Grid Acceleration Fund. This idea could require data centers to contribute to energy grid infrastructure, participate in demand response programs, support the procurement of new clean energy supply and/or establish an insurance pool with the goal of modernizing the energy grid and frontloading costs the state anticipates will be associated with serving new data center load.
Empire State Development, New York’s economic development agency, is further instructed to, within 60 days of the order, develop a Community Investment Framework to offer guidance on securing community benefits when negotiating large data center deals.
The DPS is instructed to form a Data Center Interconnection Working Group to identify and resolve issues related to connecting data centers to the energy grid and to convene the state’s transmission owners to review their practices for studying upstream impacts, with a report due to the Public Service Commission within 90 days. The DEC is instructed to assess whether its water withdrawal program requirements need to be updated to ensure the program can accommodate data center water demands. The DEC’s report is due within 12 months.
Notably, the executive order excludes from its definition of “data center” facilities that are primarily used for manufacturing, research, education or the provision of medical care.
As the first state moratorium in effect, this executive order reflects some of the concerns and anticipated resource needs of states associated with burgeoning data center development.
V. Fifth Circuit Alters Deepwater Horizon BELO Toxic Tort Causation Parameters
On May 27, 2026, the U.S. Court of Appeals for the Fifth Circuit denied rehearing en banc and issued a substitute opinion in Ruffin v. BP Exploration & Production, Inc., Case No. 23-30854, affirming the lower court’s exclusion of the plaintiff’s causation expert and grant of summary judgment to BP. This case is the latest development in Back-End Litigation Option (BELO) toxic tort cases arising from the 2010 Deepwater Horizon oil spill. The BELO cases were established as part of the Deepwater Horizon medical benefits class action settlement, allowing class members to sue if they are diagnosed with new conditions after the initial settlement closed. The court’s decision provides valuable guidance on expert testimony battles in the remaining BELO docket.
Floyd Ruffin, the plaintiff in this case, worked as a shoreline clean-up worker in Louisiana for approximately five months following the Deepwater Horizon spill. Five years later, he was diagnosed with prostate cancer. He filed suit under the BELO, alleging that exposure to polycyclic aromatic hydrocarbons (PAHs) during clean-up operations caused his disease.
At issue were quantification of the exposure and the adequacy of expert testimony in proving causation. Turning first to quantification, the court was quick to conclude that general causation can be established so long as the expert’s opinion ties the disease to the exposure levels the person experienced. There is no requirement that a specific dose or quantitative level be established to prove causation.
The court then turned to the expert testimony of Dr. Benjamin Rybicki, Ruffin’s principal causation expert. Rybicki’s testimony was offered to prove general causation — drawing a line between the chemical exposure and the particular injury. The court determined that his testimony failed in two ways. First, Rybicki failed to show that PAHs, a class of over 200 chemicals, were carcinogenic. Instead, Rybicki’s testimony only linked one PAH, benzo(a)pyrene, to cancer. Benzo(a)pyrene exposure was not specifically alleged by Ruffin. Second, Rybicki failed to link benzo(a)pyrene to prostate cancer, meaning even if one were to assume Ruffin was exposed to benzo(a)pyrene, there was still insufficient evidence to tie his exposure to prostate cancer.
Overall, the court’s decision impacts how all parties will approach the remaining BELO docket. For BP, the court’s decision reinforces that BELO plaintiffs must satisfy rigorous chemical and disease specificity requirements when presenting causation evidence. For plaintiffs, specific quantitative exposure data may no longer be necessary, so long as they can tie a specific carcinogen to a specific disease.
VI. D.C. Circuit Upholds 2024 National Ambient Air Quality Standards for Fine Particulate Matter
On June 26, 2026, the D.C. Circuit upheld a rule issued by EPA in 2024 lowering the primary annual National Ambient Air Quality Standard (NAAQS) — a nationwide health-based limit EPA sets for common air pollutants under the Clean Air Act (CAA) — for fine particulate matter (PM2.5) in Commonwealth of Kentucky v. EPA (No. 24-1050).
Under the CAA, EPA sets NAAQS by publishing scientific criteria for a listed pollutant reflecting the latest available scientific knowledge, and then setting a standard that, in the administrator’s judgment, is required to protect public health with an adequate margin of safety. The agency must complete a “thorough review” of each standard every five years, and “[t]he Administrator may review and revise criteria or promulgate new standards earlier or more frequently” under the relevant statutory provision. In setting NAAQS, the administrator considers recommendations provided by an independent council of experts, known as the Clean Air Scientific Advisory Committee (CASAC), responsible for reviewing existing NAAQS criteria and scientific developments, among other NAAQS-related advisory tasks. If the administrator’s decision differs from the committee’s recommendation “in any important respect[,]” the administrator is directed to explain.
In the 2024 rulemaking at issue, EPA reconsidered a 2020 decision made under the prior administration to leave the 12 µg/m³ standard for PM2.5 unchanged based on its consideration of scientific evidence available at that time and lowered the standard to 9 µg/m³. The CASAC was divided on whether lowering the standard was necessary to protect public health ahead of EPA’s 2020 determination. When the Biden administration took office in 2021, EPA supplemented its 2019 scientific and policy assessment, and the CASAC unanimously recommended the PM2.5 standard be lowered, though disagreeing on the appropriate standard range.
A group of industry petitioners and state petitioners led by Kentucky challenged the 2024 rule on several grounds. Industry petitioners argued that EPA lacked statutory authority to promulgate the 2024 rule, and state petitioners argued that EPA’s decision-making impermissibly included consideration of climate change and environmental justice factors. Both groups argued that the rule was arbitrary and capricious because the agency did not adequately explain its departure from its 2020 determination and scientific evidence did not support setting the standard at 9 µg/m³ specifically.
EPA initially defended the rule but asked the court to hold litigation in abeyance in 2025 following the appointment of a new administrator under the Trump administration. EPA later moved to vacate its own rule, arguing that it had exceeded its statutory authority and acted unreasonably by not considering costs. Nonprofit groups that intervened on behalf of EPA at the start of the proceedings continued to defend the rule.
The D.C. Circuit held that EPA had statutory authority to reconsider and revise the standard outside of and separate from the mandatory five-year review cycle and that such an off-cycle revision did not require the agency to first complete a “thorough review” of the kind mandated every five years, to include studies and developments already reviewed in the five-year assessment. In other words, “the Administrator must ‘complete a thorough review’ and, if appropriate, revise criteria and NAAQS every five years pursuant to the first sentence of [the statutory text], but he may revise them more frequently without completing a ‘thorough review.’” The court also held that the rule was not arbitrary or capricious, determining that petitioners’ contentions that the administrator considered impermissible environmental justice and climate considerations were unsubstantiated and that the administrator adequately explained that his revision of the standards was based on available scientific evidence and technical information and the unanimous recommendation of the CASAC. The court also found that EPA adhered to Congress’s directive via the CAA when it declined to consider costs and other nonpublic health factors when setting NAAQS and rejected other objections.
Nonprofit groups separately challenged EPA’s failure to promulgate PM2.5 nonattainment designations in April 2026. Following the D.C. Circuit’s decision in Kentucky v. EPA, the District Court for the Northern District of California partially granted plaintiffs’ motion for summary judgment in Alliance for Nurses for Health Environments v. Zeldin, finding that EPA failed to perform a nondiscretionary duty when it did not issue nonattainment designations for the 2024 PM2.5 NAAQS by the Feb. 6, 2026, statutory deadline. The Northern District of California court granted EPA until Feb. 6, 2027, to promulgate final designations consistent with the 2024 PM2.5 NAAQS.
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