Industrials Regulatory News and Trends - August 25, 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.

NOAA removes many licensing conditions for space imaging companies. In a move that is expected to increase competition in the global imaging industry in space, the National Oceanic and Atmospheric Administration on August 7 announced it is modifying the “Tier 3” remote-sensing licenses it had issued for several companies, which will allow them to provide higher-resolution imagery and other services. Both government and industry say removing these temporary conditions will amplify the position of US remote sensing companies in the global marketplace. The restrictions were originally imposed in 2020; NOAA Administrator Rick Spinrad stated, “We said these temporary restrictions would last no more than three years, and three years later, we lifted them.” NOAA has lifted 39 restrictions on an unspecified number of licenses.

US Energy Department funds major carbon removal projects. The US Department of Energy has selected for major funding two companies that promise to use a new direct carbon capture technology to remove carbon dioxide from the air. The EPA describes carbon dioxide as “the most important anthropogenic greenhouse gas” because it currently accounts for the greatest portion of the warming associated with human activities – in 2021 alone, the EPA reports that carbon dioxide was responsible for about two-thirds of the total heating influence of all human-produced GHGs. The direct capture projects are Occidental Petroleum’s South Texas Direct Air Capture hub, in Kleberg County, Texas, and Project Cypress in Calcasieu Parish, Louisiana, created by the applied science and technology nonprofit Battelle and clean tech developers Climeworks and Heirloom. These are the first projects selected in President Joe Biden’s Regional Direct Air Capture (DAC) Hubs program, funded under the Bipartisan Infrastructure Law, which, DOE says, “aims to kickstart a nationwide network of large-scale carbon removal sites to address legacy carbon dioxide pollution and complement rapid emissions reductions.“ The $1.2 billion funding is the world’s largest investment in engineered carbon removal in history. “These two projects are going to build these regional direct air capture hubs,” Energy Secretary Jennifer Granholm said. “That means they’re going to link everything from capture to processing to deep underground storage, all in one seamless process.” The projects are expected to create 5,000 local jobs. Nineteen other carbon capture projects have been selected for award negotiations supporting support earlier stages of direct capture project development. DOE also intends to spend $35 million on carbon-removal purchases and funding to explore other atmospheric carbon removal methods.

Warning to US space industry about foreign intelligence activity. On August 18, a bulletin from the National Counterintelligence and Security Center, the Federal Bureau of Investigation, and the Air Force Office of Special Investigations warned that companies in the US space industry are increasingly being targeted by foreign intelligence operations. The bulletin notes that “foreign intelligence entities recognize the importance of the commercial space industry to the U.S. economy and national security, including the growing dependence of critical infrastructure on space-based assets.” A US counterintelligence official said that in addition to well-known threats from China and Russia, other nations are frequently targeting US space-based companies, often with the purpose of gaining access to US industrial technology.

Sustainable products in federal acquisition. A proposed rule from the Federal Acquisition Regulation Council would require federal government agencies to procure sustainable products to the maximum extent practicable. The proposed rule also includes a new contract clause that would require contractors to deliver and use sustainable products under their contracts. This proposal is a significant development for contractors because it outlines the future of “sustainable procurement” in federal acquisition and applies to a growing range of sustainable products and services designated by the EPA. Download our concise report on the proposed rule here.

NHTSA proposes new rules to encourage seat belt use. The National Highway Traffic Safety Administration wants Americans to wear their seat belts – and wants to enlist car manufacturers to help them remember to do so. On August 21, the agency proposed new rules intended to encourage seat belt use by car and truck passengers, including those sitting in the back seat. The rules would require manufacturers to equip vehicles with additional seat belt warning systems for the right front passenger and for rear seats. “Wearing a seat belt is one of the most effective ways to prevent injury and death in a crash,” NHTSA Acting Administrator Ann Carlson said in a statement. “In 2021, almost 43,000 people lost their lives on America’s roads, and half of those in vehicles were unbelted. This proposed rule can help reduce that number by getting more to buckle up.” It would require manufacturers to set up both visual and auditory warnings for passengers.

Appeals court says FAA needs to reconsider wind-turbine ruling. On August 15, the United States Court of Appeals for the Ninth Circuit told the Federal Aviation Administration that it must reconsider a petition filed by a nonprofit group and two residents of an area in Southern California opposing the construction of 72 wind turbines to generate renewable energy. The appeals court said that although the FAA had found the Terra-Gen Development Company projects did not pose a hazard to air navigation, it had committed a procedural error in making this finding. The court said specifically that the nonprofit, Backcountry Against Dumps, had not received a proper notice of the agency’s comment period, which is contrary to the FAA’s own regulations. Thus, the FAA’s rejection of Backcountry’s petition for discretionary review, which was based on the sole reason that Backcountry did not comment on the aeronautical study of the project, was arbitrary and capricious.

Chemistry group issues critique of formaldehyde report. On August 9, the American Chemistry Council criticized a recently released report from the National Academies of Sciences, Engineering, and Medicine on the EPA’s 2022 draft assessment of formaldehyde. The chemistry group said the report in fact ignored 40 years of peer-reviewed science on the effects of the chemical. “Any assessment of formaldehyde must begin with best available science and the undeniable fact that formaldehyde is an ever-present part of the natural world that, through decades of responsible innovation and regulation, has become essential to goods including sustainable wood products, electric vehicles, and lifesaving vaccines and medical devices,” the ACC wrote. “ACC is not alone in highlighting concerns with this formaldehyde assessment, with broad scientific criticism from authors of key studies, other federal agencies, members of Congress, former government officials and advisors, and numerous stakeholder groups. It’s no wonder, then, that the current review has precluded questions about the [risk assessment] process as well as whether prior peer review recommendations were fully addressed.”

NAM head says he supports regulation that is smart and achievable. In an appearance on CNBC’s “Squawk Box” on August 7, Jay Timmons, president and CEO of the National Association of Manufacturers, said, “There are good things coming from [the Biden] administration,” such as the CHIPS and Science Act and historic infrastructure investment – but he added that there are several governmental trends that could be troublesome for US manufacturers. Among these, he said, are growing government regulations, the slowness of the permitting process, and what he described as often-confusing guidance from government when it comes to accessing the funds and credits available for manufacturing. “All three of these things together are making it very difficult for manufacturers to compete and succeed in our global economy,” he said. Timmons noted that US manufacturers are in favor of reasonable regulations that enable them to succeed. “What we’re saying is, ‘Let’s make these regulations essential, smart and achievable,’” he said.