Industrials Regulatory News and Trends - June 7, 2024

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.

US government settles with Norfolk Southern over Ohio derailment. On May 23, the US Department of Justice and US EPA announced a settlement with railway company Norfolk Southern with respect to a February 2023 train derailment (involving 20 rail cars carrying hazardous materials) that occurred in East Palestine, Ohio. The settlement includes an estimated $235 million for cleanup efforts and a $15 million penalty for alleged violations of the Clean Water Act. According to the government, Norfolk Southern will also be required to improve the safety of trains that transport hazardous materials, including installing devices to timely detect overheated wheel bearings – which was identified as the root cause of the East Palestine derailment. Under the settlement, the railroad is not admitting to any wrongdoing. The agreement must still be approved by a court. The previous day, a federal court preliminarily approved a proposed $600 million settlement of a class action suit bought on behalf of East Palestine residents. The National Transportation Safety Board’s final report on the derailment is scheduled to be released at a June 25 hearing in East Palestine.

Supporting development of a high-integrity voluntary carbon market. The White House has unveiled a Joint Statement of Policy and new Principles for Responsible Participation in Voluntary Carbon Markets. A strategic component of the Biden Administration's broader climate policy, the Principles build on existing and ongoing efforts across the Biden Administration climate agenda. See our concise alert.

Proposed acquisition of US Steel. On May 30, United States Steel Corp. and Japan-based Nippon Steel Corp. said that the proposed acquisition of US Steel by Nippon Steel has “received all regulatory approvals outside of the United States.” These approvals came from the Directorate-General for Competition of the European Commission, the Mexican Federal Economic Competition Commission, the Serbian Competition Commission, the Ministry of Economy of Slovakia, and the Turkish Competition Authority; further, the UK’s Competition and Markets Authority confirmed it has no further questions regarding the proposed transaction. David Burritt, president and CEO of US Steel, said, “We are pleased with the regulatory approvals received, as they are a clear indication that the transaction with Nippon Steel is pro-competitive and supports the strategic merits of foreign investment.” US Steel shareholders approved the prospective takeover in April; the home page of the US Steel website now features the logos of both US Steel and Nippon Steel with the slogan “Moving forward as the BEST STEELMAKER with world-leading capabilities.” However, President Joe Biden has emphasized his opposition to the takeover. “We’re finally making sure that United States Steel stays United States Steel,” he said during a campaign event in April. “It’s not going to be anybody else’s steel.” A review of the acquisition by the Committee on Foreign Investment in the US (CFIUS) is unlikely to conclude until late 2024 and may extend into 2025. CFIUS is an interagency panel led by the Treasury Department that has the power to approve, block, or amend the deal on national security grounds.

Lithium mining in Chile: latest steps. Chile has taken a major step forward to implement its National Lithium Strategy with the announcement of a new tender. Find out more in our alert.

EPA meeting on draft risk evaluation of formaldehyde. In March, the EPA issued a draft risk evaluation preliminarily finding that formaldehyde “presents an unreasonable risk to workers under multiple conditions.” It also found that people who frequently use certain consumer products containing formaldehyde are at risk. From May 20 to May 23, its Science Advisory Committee on Chemicals (SACC) held a virtual public meeting in which nearly 40 public stakeholders commented on the scientific, legal, and economic issues associated with the draft risk evaluation. The commenters – among them scientists, elected officials, and representatives of trade associations and businesses – were critical of the draft risk evaluation and the limited timeline it sets out for peer review. Overall, they noted that formaldehyde technologies have a broad role in the US economy and are critical to essential products in numerous industries, ranging from agriculture and construction to semiconductors and medical devices. During the comment period, which ended May 14, more than 200 public comments were also submitted to EPA regarding the draft risk evaluation. Ultimately, the EPA’s action could lead to changes in formaldehyde regulation under the Toxic Substances Control Act. EPA notes that it is also reviewing formaldehyde’s use as a pesticide under the Federal Insecticide, Fungicide, and Rodenticide Act.

NHTSA opens probe into Waymo self-driving vehicles. On May 24, the National Highway Traffic Safety Administration’s Office of Defects Investigation (ODI) announced it had opened an investigation into Waymo, after receiving 22 reports of Waymo self-driving vehicles exhibiting unexpected driving behavior that potentially violated traffic safety laws. Among the incidents were 17 collisions. While Waymo self-reported most of the incidents to NHTSA, the ODI reported that it learned of 9 additional incidents through social media postings. Waymo has until mid-June to respond to a series of questions and documentation requests from the Agency regarding the company’s 5th generation automated driving system software.

US FAR Council’s coming GHG disclosure rules. Later this year, the US Federal Acquisition Regulatory Council – composed of representatives from the US General Services Administration, the US Department of Defense, the National Aeronautics and Space Administration, and other federal agencies – is expected to finalize its proposed rule on the disclosure of greenhouse gas emissions and climate-related financial risk. Contractors are encouraged to actively develop a plan for meeting the requirements in the proposed rule. Our alert outlines four specific actions that contractors should be considering.