Industrials Regulatory News and Trends - June 16, 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.

UN conference on plastic pollution ends in Paris. A major United Nations conference on plastic pollution ended June 2 in Paris without a detailed agreement on how to prevent this type of pollution but with all sides saying that progress had been made. On the one hand, nations such as Russia, India, Saudi Arabia, China, and the United States advocate a “circular” approach to plastics waste, which involves extensive recycling. On the other side, a 55-nation coalition and many environmental activists aim to end plastic pollution by reaching an agreement that enforces caps on plastic production and reductions or bans on hard-to-recycle plastics and toxic chemicals. The next meeting is set to take place in Nairobi later this year. “The negotiations underscored that there is significant alignment on the need for an agreement to accelerate circularity of plastics, unleash innovation, promote sustainable consumption and production of plastics, encourage design for circularity, and help build and sustain waste management systems around the world, all based on the unique needs and circumstances of each country,” said David Baca, vice president of plastics at the American Chemistry Council. 

EPA rule aims to phase out major dry-cleaning chemical. On June 8, the EPA announced plans to restrict the use of the widely used dry-cleaning solvent perchloroethylene, also known as perc or PCE. Under the EPA’s proposed rule, the substance would be phased out from all its consumer uses within two years and from its use in dry cleaning within 10 years. Chemical manufacturers would still be allowed to use perchloroethylene to make the hydrofluorocarbon refrigerants HFC-125 and HFC-134a with strict worker safety protections. The proposed regulation would also allow the use of perc in petrochemical manufacturing and limited aerospace applications. In 2020, the agency identified dozens of uses of the product that it says pose health risks, including neurological, kidney, liver, and immunological effects, to workers and consumers. “We know that exposure to PCE is dangerous for people’s health, and today’s rule is an important first step to keeping communities and workers safe,” said Michal Freedhoff, an assistant EPA administrator.

President Biden withdraws his nominee for permanent head of NHTSA. On May 30, President Joe Biden withdrew the nomination of Ann Carlson, the acting head of the National Highway Traffic Safety Administration (NHTSA), to take the top job at the safety agency. Neither President Biden nor Transportation Secretary Pete Buttigieg gave a reason for the withdrawal. However, Carlson’s nomination had faced strong opposition on the Hill.  Earlier this month the 13 Republicans on the Senate Commerce Committee criticized her role in the development of fuel-economy standards in 2021, asserting that the standards were “consistent with your long career as an environmentalist without traffic safety experience.” The agency’s current agenda includes the proposal of new fuel economy standards for 2027 to 2032.

NHTSA is faulted for slowness in completing safety investigations. A report by the Office of Inspector General of the US Department of Transportation released June 1 found that NHTSA has failed to meet its internal timelines for completing its investigations of auto safety defects. The OIG report concluded that as a result the agency is sometimes unable to respond in a timely manner to severe safety risks. The inspector general said that 26 out of 27 NHTSA investigations reviewed for 2018 and 2019 did not meet its targets for timeliness. In a statement responding to OIG report, NHTSA said that it has already completed most of the improvements in its processes recommended by the Inspector General.

House bill would block rule requiring federal contractors to disclose GHG emissions and climate-related risk.  In November 2022, the Federal Acquisition Regulation (FAR) Council published a proposed rule on Disclosure of Greenhouse Gas (GHG) Emissions and Climate-Related Financial Risk, which would require certain government contractors to inventory and publish their GHG emissions and take certain actions relating to emissions reductions (see our alert discussing the proposed rule).  The proposed rule has been subject to intense industry criticism, and, in May 2022, the Mission Not Emissions Act (HR 3358) was introduced in the US House of Representatives.  If passed, the Act would prohibit federal contractors from being required to disclose GHG emissions and potential climate-related financial risk as described in the proposed rule.  The bill also would prohibit contractors from being required to provide any inventory or report regarding GHG emissions and from developing emissions reduction targets.  The Mission Not Emissions Act is similar to a Senate bill titled Focus on the Mission Act of 2022 (S 5269), introduced in December 2022, which seeks to prohibit the Secretary of Defense from requiring a federal contractor to provide a GHG inventory or report.

American and JetBlue ask court for some relief from antitrust decree. On June 9, American Airlines and JetBlue Airways asked a federal district judge to permit them to continue to engage in mutual frequent flyer recognition and codeshare arrangements. In May, US District Judge Leo Sorokin ruled that the two airlines are legally obligated under the antitrust laws to end the alliance that they had entered to coordinate flights and to pool revenue. He gave them 30 days to do that. The airlines, however, petitioned the judge to permit them to continue the frequent flyer recognition and codeshare arrangements. They contended that these arrangements are lawful and are necessary “to ensure that the right airline is paid for the service provided to the consumer.” Codeshare arrangements allow multiple airlines to sell seats for the same flight.

Major trial over PFAS pollution is postponed as settlement looms. According to a June 5 order in the United States District Court for the District of South Carolina, a major trial over alleged water contamination by per- and polyfluoroalkyl (PFAS) chemicals has been postponed as both manufacturer 3M and a city seeking damages say they are close to reaching a deal. The trial of the case brought by the city of Stuart, Florida, against 3M was originally set to start on June 3 but is being postponed to June 24.  The City of Stuart claimed in its 2018 lawsuit that 3M firefighting foams containing PFAS polluted local soil and groundwater. It has been seeking more than $100 million for filtration and remediation. The court order noted that both sides had said “they have reached a stage in those discussions where they believe a final binding agreement is achievable in the near future.”

Consultancy says environmental justice executive order could stymie construction of new chemical plants.  In a new analysis, the consultancy firm Independent Commodity Intelligence Services, which provides data and research to the energy, petrochemical and fertilizer industries, says a recent Executive Order from President Joe Biden means that environmental justice is now a factor that could stymie the building of new chemical plants and other large-scale projects in the United States. Environmental justice is a concept that addresses concerns of alleged systematic environmental violations in underserved, vulnerable communities. In a press release about its study, ICIS said that the Executive Order on environmental justice exposes future chemical projects to challenges and uncertainties. It also notes that the challenges posed by environmental justice highlight the need for permit reform, which could remove barriers to chemical projects as well as the infrastructure that companies need to provide their operations with energy and feedstocks. See our alert about the Executive Order. 

NAM assails Energy Department’s regulations on gas stoves. In a June 7 news article on its website, the National Association of Manufacturers pointed to several currently proposed rules from the US Department of Energy that it says are unneeded for energy-saving purposes and will be harmful to the economy. It specifically noted that the Save Our Gas Stoves Act, a bill that is expected to pass the US House in the near future, would be a needed corrective to the department’s “overly stringent” proposed efficiency threshold for gas stoves. Passage of this bill, the group said, “would be a win for reining in DOE, but work remains in the fight against a regulatory onslaught by the agency.” It said that the DOE’s proposal on gas stoves, along with its other proposals for energy regulation, would impose burdens on manufacturers without providing significant energy savings for consumers.