Industrials Regulatory News and Trends - October 20, 2023

Welcome to Industrials Regulatory News and Trends. In this regular bulletin, DLA Piper lawyers provide concise updates on key developments in the industrials sector to help you navigate the ever-changing business, legal and regulatory landscape.

EPA issues final PFAS rule. On September 28, the Environmental Protection Agency issued a prepublication notice for its long-awaited new rule on PFAS chemicals, the so-called “forever” chemicals. Under the rule, any entity that has manufactured or imported PFAS - including “articles” containing PFAS -- will have 18 or 24 months to submit a report of PFAS usage to the EPA from the date the final rule is published in the Federal Register. “The data we’ll receive from this rule will be a game-changer in advancing our ability to understand and effectively protect people from PFAS,” said Michal Freedhoff, the EPA’s assistant administrator for the Office of Chemical Safety and Pollution Prevention. “Today we take another important step under EPA’s PFAS Strategic Roadmap to deliver on President Biden’s clear direction to finally address this legacy pollution endangering people across America.”  See our related alert, California lawmakers send new PFAS restrictions to Governor’s desk.    

Senate considers a new permanent FAA chief. On October 5, Senator Ted Cruz (R-TX), a key vote on aviation matters, said he plans to support the White House nominee to head the Federal Aviation Administration. The agency is addressing an array of issues, among them a series of near-miss incidents, proposed reforms of its pilot training rules, and serious staff shortages - at present, says Transportation Secretary Pete Buttigieg, the FAA has 3,000 air traffic controller vacancies. Last month, President Joe Biden nominated Michael Whitaker, a lawyer who served as a deputy FAA administrator under President Barack Obama and who has since served as an airline executive, to head the agency. Whitaker’s October 4 nomination hearing before the Committee on Commerce, Science and Transportation nomination hearing was mostly friendly; Senator Cruz’s announcement may pave the way for a quick confirmation. The FAA has been without a permanent head for 18 months. The prior nominee, Phil Washington, withdrew in March.  

Hourly wage increase for workers at Tennessee battery plants. BlueOval SK, the Ford electric vehicle and battery joint venture, has announced an increase in the hourly wages for workers at its two Tennessee facilities, even though the factories have not opened yet. Hourly wages for employees at the plants will begin at $24 an hour and are capped at $37.50, the company announced on October 11. Back on July 31, BlueOval said its starting hourly wage at the Tennessee plants would be $21 an hour. The Detroit Free Press notes that BlueOval SK is thus offering wages that could “surpass what unionized Ford workers can earn – and at a quicker rate – and benefits including performance bonuses up to 5% annually, vision and dental insurance, low-cost medical premiums and 401(k) matching.” Any employees already hired under the old rate would have their pay raised to match the new rate, the company said. The announced increase comes in the midst of a strike by the United Auto Workers against Ford, General Motors, and Stellantis that is now in its second month. On October 8, GM agreed to include its future electric vehicle plants under its national master agreement with the UAW. On October 11, the UAW expanded its strike to include the Ford Kentucky Truck Plant, which, according to Ford, generates about $25 billion a year in revenue, around one-sixth of its global automotive revenue. There, 8,700 UAW members manufacture Ford Expedition and Lincoln Navigator SUVS and Ford Super Duty pickups.

Treasury Department announces sanctions for violations of Russian oil cap. On October 12, the US Department of the Treasury announced its first imposition of sanctions on companies that allegedly violated the $60 per barrel price cap when transporting oil from Russia. According to the Department, Lumber Marine, a company registered in the United Arab Emirates, carried oil priced above $75 per barrel, and Ice Pearl Navigation, a Turkish company, transported oil priced above $80 per barrel. Both have been added to the OFAC SDN List (along with their vessels, SCF Primorye and the Yasa Golden Bosphorus) pursuant to EO 14024.  These sanctions, Treasury said, are designed to enforce the price cap more strictly as the US looks to further limit Russian oil profits and therefore restrict its financing of the war in Ukraine. “This action underscores the Treasury Department’s commitment with its international partners to responsibly reducing Russian government oil profits and constraining the Russian war machine,” the department said in a press release.  

EPA withdraws controversial cybersecurity rule. On October 11, the Environmental Protection Agency announced that it is withdrawing a proposed cybersecurity rule it had put forward earlier this year. The rule would have required states to include an evaluation of the cybersecurity of operational technology during their audits of public water systems. However, the Attorneys General of three states took legal action to challenge the EPA’s position, taking the view that the new requirements would put a significant financial burden on small towns. In July, the US Court of Appeals for the Eighth Circuit told the EPA to pause the new rule during the litigation; the agency subsequently withdrew the rule. In its withdrawal announcement, the agency said it still said “encourages all states to voluntarily engage in reviewing public water system cybersecurity programs within the sanitary survey or an alternate process to ensure that deficiencies are corrected, and potential public health impacts are minimized.” 

Newsom vetoes bill to establish new state working group on plastics. On October 8, California Governor Gavin Newsom vetoed a bill that would have established a working group to evaluate “novel” materials that could be used as alternatives to plastic in single-use products. The bill was meant to help the state implement some provisions in a bill passed by the legislature last year, including a requirement that producers reduce the amount of single-use plastic they use by 25 percent by 2032. In his veto letter, Newsom said the idea of a new working group is duplicative and unnecessary since the state is already “in the process of conducting needs assessments, source reduction studies, end market studies, industry surveys, and waste characterization studies,” and that this, coupled with other efforts by his administration, “will provide insight for the same policy.”

Companies work together to limit SEC rules on climate disclosure. According to an October 13 NPR article, major US manufacturing companies are working together to limit the impact of upcoming regulations from the Securities and Exchange Commission that would require businesses to disclose their carbon emissions and the risks they face from climate change. “The economy is awash in climate disclosures that companies tout, but there are few ways for customers and investors to gauge the validity of the claims. The SEC's goal is to ensure that publicly traded corporations are reporting comparable information, and also to make sure they aren't misleading investors about their environmental activities — a practice known as greenwashing,” the article said. California has already approved a similar disclosure regulation at the state level, signed by Governor Newsom on October 7. Opponents of these disclosure requirements say they aren’t really about disclosure but about reducing investment in fossil fuels. 

Trade groups produce best practices guide for compost laws. On October 6, the US Composting Council and the New York-based Biodegradable Products Institute released a set of guiding principles to inform model legislation for labeling compostable products. The idea is to help states draft laws that promote the use of compostable products by means of labeling and testing and to create “best practices” for such laws. The principles include a set of 10 “do’s and don’ts” for these laws. The principles were developed after months of consensus-building by a task force comprised of both organizations’ members, including compostable product-makers, certifiers, municipal leaders, allied members of USCC and compost manufacturers. Task force members agreed that products should be labeled with distinguishing elements, including tinting and striping, and the use of certification logos, while non-compostable items should be prohibited from using identical labeling and misleading terminology.

NAM decries proposed overhaul of merger rules. On September 27, the National Association of Manufacturers wrote a letter to the Federal Trade Commission decrying the FTC’s proposed overhaul of a set of rules that require disclosure to the agency and the Justice Department of certain facts about a corporate merger or acquisition in advance of the deal’s completion. The NAM said that the new rules would be burdensome and would damage the US economy. “Unfortunately, the proposed amendments to the Rules would stifle job-creating growth in the manufacturing industry without any corresponding benefit to the Agencies, merging parties, or the public,” the NAM said. “The new and unduly burdensome information and processes required by the amendments represent a major overhaul of established, well-understood standards that have been relied upon by businesses and regulators for more than 45 years.” Also see our alert Proposed new merger guidelines would increase antitrust scrutiny.         

Lockheed Martin chief emphasizes importance of resilience for government contractors. On October 4, Jim Taiclet, president and CEO of Lockheed Martin, told an audience at the Hudson Institute that in its defense procurement strategies the US government needs to invest in antifragility measures to improve resilience during periods of rising geopolitical tension. He noted the example of supply chain disruptions due to COVID-19, which highlighted weaknesses in industries in all sectors, including the US defense industry. Taiclet cited the work of thinker Nassim Taleb on the concept of antifragility: “Basically, the concept is almost all systems, whether they're natural or manmade systems, when subjected to a shock or disruption, weaken or even fail,” Taiclet said. “And his theory is there are ways to reduce that risk of failure and maybe even build and design a system that, if it is disrupted, can actually get stronger. We don't need to go that far, but let's, how about keep it resilient?” Ensuring such a systemic change, he said, would require government buy-in.