Issue - August 19, 2025

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Good morning. It’s Tuesday, August 19, and this week’s ESG Litigation Weekly covers lawsuits challenging California’s truck emissions rules, a landmark climate damages case against South Korea’s largest power company, new clashes over the stalled UN plastic treaty negotiations, and more.

⚖️ ESG Casefile

Environmental Groups Sue Trump Administration Over Secret Climate Skeptic Report
The Environmental Defense Fund and Union of Concerned Scientists have filed a lawsuit against the Trump administration over its secret formation of a “Climate Working Group” made up of hand-picked skeptics. The lawsuit argues that the group’s report, which misrepresents scientific findings, is being unlawfully used to support efforts to overturn the EPA’s Endangerment Finding, the foundation of U.S. climate pollution limits. The case challenges the lack of transparency, bias in membership, and violation of federal law in the group’s creation and use.
🔗 Read more → Environmental Defense Fund

Federal and Industry Lawsuits Target California’s Truck Emissions Standards
The Justice Department has filed lawsuits against the California Air Resources Board (CARB) to block enforcement of its truck emissions rules under the Clean Truck Partnership. Federal officials argue that the rules are preempted because Congress and President Trump recently nullified EPA waivers that had allowed California to adopt stricter standards. The complaints, filed in federal courts in California and Illinois, mark a direct clash between state-level climate policies and federal authority. Earlier this month, Daimler Truck North America, Volvo Group North America, Paccar, and International Motors sued CARB, claiming that the emissions deal leaves manufacturers unable to plan production effectively due to conflicting regulatory obligations.
🔗 Read more → U.S. Department of Justice, ESG Dive

Korean Farmers Sue KEPCO Over $72.9 Billion in Climate Damages
Six farmers in South Korea have filed a landmark lawsuit against Korea Electric Power Corporation (KEPCO), the state-owned utility and the country’s largest emitter, seeking compensation for climate-related damages. KEPCO and its subsidiaries were responsible for about 27% of South Korea’s greenhouse gas emissions between 2011 and 2022, representing nearly 0.4% global emissions in that period. The suit, backed by new analysis linking KEPCO’s emissions to $72.9 billion in climate losses, highlights both economic harm and the emotional toll of climate anxiety. It follows the Constitutional Court’s 2024 ruling that part of the government’s climate law was unconstitutional for failing to protect future generations, signaling growing judicial willingness to hold corporate and state actors accountable.
🔗 Read more → Solutions for Our Climate

Judge Allows PFAS Contamination Suit Against Perdue Farms to Proceed
A federal judge in Maryland denied Perdue Farms’ bid to dismiss most claims in a lawsuit alleging the company contaminated groundwater with PFAS, also known as “forever chemicals.” The suit, filed by five Salisbury residents, accuses Perdue of dumping PFAS-laden wastewater on cropland near Peggy’s Branch stream, potentially affecting nearly 500 homes that rely on private wells. While two out of the seven claims were dismissed, including one seeking an injunction for cleanup, the court allowed the case to move forward. Residents say Perdue concealed the contamination for nearly two years, which is denied by the company. Perdues’s spokesperson said PFAS treatment systems were installed at affected properties before the suit was filed.
🔗 Read more → CBS News

General Electric and United Nuclear Corporation Reach $63M Deal to Clean Up Uranium Waste on Navajo Nation
General Electric (GE) and United Nuclear Corporation (UNC) agreed to a consent decree with the U.S., Navajo Nation, and New Mexico to remove nearly one million cubic yards of uranium mine waste from the Northeast Church Rock Superfund Site. The $63 million cleanup, expected to take more than a decade, will move the waste to the adjacent UNC Mill Site, where it will be secured under improved erosion controls. Federal and state officials said the settlement ensures that the companies, not taxpayers, bear the costs of addressing decades-old contamination that has harmed Navajo communities. The agreement, subject to court approval, follows years of pressure to remediate uranium mining’s toxic legacy.
🔗 Read more → U.S. Department of Justice

Liberty Mutual to Pay $4.7M in DOJ Bribery Settlement Tied to India Subsidiary
Liberty Mutual reached a $4.7 million settlement with the U.S. Justice Department (DOJ) to resolve allegations that its Indian subsidiary paid $1.5 million in bribes to six state-owned banks in exchange for customer referrals. The case marks the first foreign bribery resolution under President Trump’s second term, after an executive order initially froze overseas corruption probes before the DOJ narrowed its enforcement scope. Prosecutors said the company earned $9.2 million in revenue from the scheme and agreed to return the full profit as part of a “declination” deal, which avoids criminal charges but still requires accountability. DOJ noted Liberty Mutual’s cooperation, remediation efforts, and separation from individuals involved in the misconduct.
🔗 Read more → Bloomberg Law

🏛️ Regulatory Developments

UN Plastic Treaty Talks Collapse Amid Petrostate Pushback
United Nations (UN) negotiations for a global treaty to end plastic pollution collapsed in Geneva after nearly three years and six rounds of negotiations. Talks broke down over whether measures should be legally binding, include limits on plastic production, and provide financial support for implementation. The EU and other “high-ambition” countries blamed opposition from a small group of oil-rich states, now joined by the U.S., while civil society groups urged abandoning the consensus rule that gives opponents veto power. With no agreement on a new draft text, any future talks will revert to the December 2024 Busan version, leaving the treaty’s future uncertain.
🔗 Read more → Politico

IRS Issues Guidance on Termination of Wind and Solar Tax Credits Under Sections 45Y and 48E
The IRS issued Notice 2025-42, setting “begin construction” rules that determine when wind and solar projects remain eligible for the clean electricity credits despite the new termination. Projects that begin construction by July 4, 2026, are not subject to the placed-in-service cutoff (December 31, 2027) if they satisfy the Physical Work Test and the four-year continuity safe harbor. Projects that begin after July 4, 2026, can qualify only if they are placed in service by December 31, 2027. The notice removes the Five Percent Safe Harbor, except for low-output solar (≤ 1.5 MW AC), and applies to facilities that had not begun construction before September 2, 2025.
🔗 Read more → IRS Notice 2025-42 (PDF)

Judge Blocks Trump Administration’s Anti-DEI Actions in Education
A federal judge in Maryland struck down two Trump administration directives that sought to end diversity, equity, and inclusion (DEI) initiatives in schools and universities. Judge Stephanie Gallagher ruled that the Department of Education violated procedural law when it threatened to withhold federal funding from institutions continuing DEI programs. The case stemmed from February and April memos that expanded a 2023 Supreme Court decision on affirmative action, warning that any race-based practices could lead to penalties and prosecution. Gallagher ordered the department to withdraw the guidance, calling it a major regulatory shift that created fear and uncertainty across the education system.
🔗 Read more → The Guardian

U.S. Rejects IMO’s Net-Zero Shipping Framework as “Global Carbon Tax”
The Trump administration issued a joint statement rejecting the International Maritime Organization’s (IMO) proposed “Net-Zero Framework,” set for consideration in October, which seeks to reduce global shipping emissions. Secretaries of State, Commerce, Energy, and Transportation said the plan functions as a “global carbon tax” that would raise energy, transportation, and cruise costs for Americans. They argued the framework favors China by mandating fuels that are costly and not widely available while sidelining U.S.-led alternatives such as LNG and biofuels. The administration pledged to block the proposal, warned of potential retaliation, and urged other IMO members to oppose its adoption.
🔗 Read more → U.S. State Department

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🧼 Greenwashing Watch

Kmart Warned Over Misleading “100% Sustainable Cotton” Claim
New Zealand’s Commerce Commission has issued a warning to Kmart after investigating its advertising claim that all cotton used in its clothing was “100% sustainably sourced.” The Commission found that Kmart’s “Better Cotton” was mixed with conventional cotton, meaning the company could not verify the claim. Regulators said the conduct likely breached the Fair Trading Act, noting that unsubstantiated environmental claims mislead consumers and disadvantage companies making legitimate efforts. Kmart has since removed the claim from its website and pledged ongoing staff compliance training.
🔗 Read more → Commerce Commission

💡 Insight of the Week

ESG Ratings Under Fire for Weak Validity and Legal Risks
A new Fraser Institute report questions whether investment fund managers can legally rely on ESG ratings when managing other people’s money. Over 88% of managers overseeing US$3.16 trillion claim to use ESG scores, yet decades of empirical research show that these ratings vary widely across providers, fail to predict future environmental or social performance, and do not correlate with lower investment risk or stronger stock returns. The study finds that ESG scores often protect companies from society rather than society from companies, raising concerns about accuracy, fiduciary duties, and potential lawsuits.
🔗 Read more → Bryce C. Tingle, KC (2025). A Lawsuit Waiting to Happen: The Use of Non-Financial Metrics by the Investment Industry. Fraser Institute.

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