Industrials Regulatory News and Trends - October 25, 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.

Return of the Bolt. On October 8, GM president Mark Reuss announced that the Chevy Bolt will in model year 2026. GM stated the new model will offer improved charging speed and greater range at a price point comparable to the 2023 model. The new Bolt will be built at GM's Fairfax Assembly and Stamping plant in Kansas. GM indicated that it intended to offer several variations of the Bolt at different price points.

US acts for the first time against Chinese drone manufacturers. On October 17, the US Department of the Treasury announced it is imposing sanctions on two China-based manufacturers that are “directly developing and producing complete weapons systems” which are being deployed on the battlefield in Ukraine. The weapons in question are Garpiya series long-range combat drones, designed and developed in China in collaboration with Russian defense firms, then transferred to Russia, where they are increasingly being deployed on the Ukrainian battlefield, “destroying critical infrastructure and causing mass casualties,” Treasury stated. This is the first time Chinese entities have been sanctioned for supplying complete weapons systems to Russia. Xiamen Limbach Aircraft Engine Company and Redlepus Vector Industry Shenzhen are the Chinese entities being sanctioned; also being sanctioned is Artem Mikhailovich Yamshchikov, general director and beneficial owner of Russia-based TSK Vektor, which, Treasury says, helps to ship the weapons systems to Russia.

Major federal grant to fund new polysilicon plant in Michigan. Hemlock Semiconductor will receive up to $325 million in grants via the CHIPS and Science Act to support building of a new factory in Saginaw County, Michigan to produce hyper-pure polysilicon, a building block for electronics and solar panels. In addition to construction jobs, the plant is forecast to bring at least 180 new manufacturing jobs to the region. A senior Biden Administration official told CBS News that the timing of the announcement was an outcome of the grant negotiations and not any political considerations. Commerce Secretary Gina Raimondo pointed to the Administration’s larger industrial strategy: "What we've been able to do with the CHIPS Act is not just build a few new factories, but fundamentally revitalize the semiconductor ecosystem in our country with American workers,” she said. Production at the coming plant is slated to begin in 2028.

Nuclear power: SMRs in the news. The Department of Energy announced on October 21 that it has opened applications for funding of up to $900 million to support Gen III+ small modular reactor (SMR) technologies – the latest action in the department’s growing support for nuclear power in the US. In recent weeks, DOE has already awarded a number of contracts to produce enriched uranium – on October 17 alone, awarding contracts to for American companies “to provide enrichment services to help establish a U.S. supply of high-assay low-enriched uranium (HALEU)” in the form of uranium hexafluoride gas, the agency said in a press release. Such plants offer a number of benefits over traditional nuclear power plants – for instance, they are considerably smaller, so can be built more quickly with a lower initial capital investment; they can be more easily scaled and customized to their prospective sites; they have industrial and manufacturing applications beyond power generation; and, DOE says, they help support US climate goals and meet soaring demand for carbon-free, affordable power. DOE states that the SMRs currently under development in the US, “envisioned to vary in size from tens of megawatts up to hundreds of megawatts.” In recent days, some major tech companies have announced corporate power purchase agreements centered on soon-to-be-built SMRs. Seeking to power its data centers, on October 15 Google announced it will purchase nuclear energy from multiple SMRs to be developed by California-based Kairos Power. The first of these SMRs is slated to come online by 2030.

Final rule requires water systems to replace lead pipes within 10 years. Speaking in Milwaukee on October 8, President Joe Biden announced the Lead and Copper Rule Improvements, a final rule that will require drinking water systems across the country to identify and replace lead pipes within 10 years. He also announced $2.6 billion in newly available drinking water infrastructure funding for communities through the Bipartisan Infrastructure Law. Of that funding, 49 percent must go to support lead pipe replacement and inventory projects in disadvantaged communities. The same day, EPA announced another $35 million in competitive grant funding for communities seeking to reduce lead in their drinking water. As many as 9 million homes across the US, many of them in lower-income communities and communities of color, are served through legacy lead pipes.

Supreme Court lets three EPA air-quality standards remain, for now. The Supreme Court has declined to hear emergency applications seeking to block three Biden Administration environmental regulations – one addressing methane emissions from oil and gas drilling; another addressing mercury emissions from coal-fired power plants; and a third addressing GHG emissions from power plants burning fossil fuels. Petitions for the first two were rejected on October 4 without comment and with no noted dissents. The denial order for the third was issued October 16 with a statement suggesting a few justices may think the regulation should be struck down. Industry groups and attorneys general from Republican-led states have been seeking to overturn the three rules, arguing that the EPA has overstepped its authority and has set standards for industry that are costly and unattainable. The EPA holds that the rules fall squarely within its regulatory ambit, that the standards are attainable, and that the benefits to human health and the environment outweigh compliance costs.

• The mercury rule updates regulations governing emissions of mercury and other substances, aiming to reduce such emissions from coal-fired power plants by up to 70 percent by 2038. The vast majority of such plants already are capable of meeting the standards in the rule, the EPA says, adding that it mostly affects a small group of plants which emit a disproportionate share of pollution.
  
  
• The methane rule, finalized in March this year, addresses emissions from existing oil and gas wells across the country, including smaller wells. The latter account for 6 percent of US oil and gas production but release as much as half of well site emissions.
  
  
• The power plant rule requires coal-fired power plants that operate past 2039, as well as new natural gas-fired power plants, to cut their CO2 emissions by 90 percent.

Notably, the failure of these emergency applications does not end the lawsuits – cases involving each of the rules are still moving through a federal appeals court.

Boulder: new factory to build affordable modular homes. On October 23, Boulder Mod, which will manufacture all-electric, solar-powered, affordable modular homes using repurposed steel, held a long-awaited ribbon-cutting ceremony at its new facility in Boulder, Colorado. The company is the result of an unusual partnership among the City of Boulder, Boulder Valley School District, and Flatirons Habitat for Humanity. The city website states that “the purpose of the facility is to produce much needed affordable housing for Boulder Valley residents and workers while providing workforce training” for high-school students. The average cost of a home in Boulder in August this year was $1.1 million. Boulder Senior Housing Manager Jay Sugnet has said the project offers “a path for us to help address some of our affordable housing challenges.” Some Boulder residents have sought to stop the project; among concessions the company has made, it will operate only eight hours a day, Tuesday through Saturday. Current capacity is modest – projected to be about 12 to 15 homes a year, with the goal of eventually scaling up to produce about 50 homes a year. In the first few years, most of the homes are dedicated to redeveloping a mobile home park that was severely damaged by floods in 2013.