Industrials Regulatory News and Trends - March 1, 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.

SEC vote on Climate Change Rule coming soon. The Securities and Exchange Commission will hold an open meeting on March 6 to vote on rules that would require public companies to disclose climate-related information in their registration statements and annual reports. These disclosure rules were first proposed in March 2022. Be on the lookout for our coming series of alerts about these coming rules.

Biden Administration may slow pace of proposed increases of auto air emissions standards, sources say. On February 17 and February 18, media outlets reported that the Biden Administration intends to reduce annual increases of vehicle tailpipe emissions standards  below proposed levels for model years 2027-30. Those standards are intended to reduce vehicle greenhouse gas emissions, which is expected to be achieved primarily to transition to electric-powered vehicles from fossil-fueled vehicles. Automakers and the United Auto Workers have been urging the Administration to slow that transition, maintaining that EV technology is still too costly for many US consumers and that more time is needed to develop sufficient nationwide EV charging infrastructure. Sources indicate the Administration is considering a reduction in the pace of proposed increases in stringency of tailpipe emissions standards through 2030. Reportedly, the overall targeted emission standards by 2032 would remain the same. The Administration plans to publish the final rule this spring. You may also be interested in DLA Piper’s survey concerning electric vehicle infrastructure investment, which is projected to exceed US$57.4 billion by 2028.

NHTSA is investigating 4,000 SUVs for “unintended movement.” On February 16, the National Highway Traffic Safety Administration (NHTSA) opened a preliminary probe into claims of “unintended vehicle movement” in about 4,000 of Fisker Automotive’s 2023 Ocean electric SUVs. The NHTSA's Office of Defects Investigation received four complaints alleging an inability to shift the vehicle into the park mode or into the intended gear, causing the vehicle to roll away unexpectedly. One person was injured in such a rollaway. The company is already addressing another NHTSA investigation announced in January this year regarding complaints of loss of braking performance in 2023 Fisker Oceans. Fisker, originally founded in 2007, is known for its Fisker Karma, one of the world's first production luxury plug-in hybrid electric vehicles.

Administration moves to increase cybersecurity at ports. On February 21, the Biden Administration issued an Executive Order aiming to strengthen cybersecurity at US port facilities. This is part of a larger strategy to improve maritime cybersecurity, protect supply chains, and increase the nation’s industrial base. The US Coast Guard will have express authority to respond to malicious cyber activity in the nation’s marine transportation system, the White House said. The order will also require the prompt reporting of cyber threats and cyber incidents involving a vessel, harbor, port, or waterfront facility. In addition, the Administration will invest more than $20 billion into port infrastructure over five years as part of a plan to help bring manufacturing capacity back to the United States. One of its goals is to ensure that cranes operating at port facilities are safe and secure.

Secretary Granholm expresses concern about China’s hold on key minerals for industry. On February 14, Energy Secretary Jennifer Granholm said in a press interview that the Biden Administration is “very concerned” about China’s grip on the global supply chain for critical minerals. Granholm’s thoughts came amid skyrocketing demand for minerals and raw materials used in manufacturing that are vital to the energy transition. The end uses of metals such as nickel, copper, lithium, and cobalt are wide-ranging and include electric vehicles, wind turbines and solar panels. China is the undisputed leader in the critical minerals supply chain, with about 60 percent of the world’s production of rare earth minerals and materials and 85 percent of mineral processing. US officials have previously warned that this poses a strategic challenge to the global pivot to low-carbon energy sources.

FAA awards money for improvements to 114 airports. On February 15, the Federal Aviation Administration announced it is awarding $970 million to 114 airports across the country as part of the Biden Administration’s Bipartisan Investing in America initiative, which includes efforts to refurbish and expand the nation’s aging infrastructure. The awards include $35 million to Washington Dulles International Airport to fund part of a 14-gate terminal building and $40 million to Chicago’s O'Hare International Airport to fund improvements to one of its terminals, the FAA said in a statement. The Biden Administration has already awarded similar amounts to other US airports in the past two years, as the nation spends tens of billions to renovate aging airports. The FAA said the grants would help “meet the growing demand for air travel and launches projects that will improve passenger experience.”

EPA classifies nine PFAS compounds as hazardous constituents. On February 8, the Environmental Protection Agency proposed changes to the regulations under the Resource Conservation and Recovery Act (RCRA) by adding nine additional per- and polyfluoroalkyl (PFAS) compounds, their salts, and their structural isomers to its list of hazardous constituents in Title 40 of the Code of Federal Regulations Part 261 Appendix VIII. For a chemical to be listed as a hazardous constituent under RCRA, scientific studies must show that it has toxic, carcinogenic, mutagenic, or teratogenic effects on humans or other life forms. The EPA evaluated toxicity and epidemiology data for these chemicals and determined that these nine PFAS compounds meet the criteria for such listing. Comments on this proposed change are due by April 8, 2024.

Advocacy group argues US should block import of Chinese autos and parts from Mexico. The US government should block the import of low-cost Chinese autos and parts from Mexico, a US manufacturing advocacy group said February 23, warning that these cars and parts could threaten the viability of American car companies. “The introduction of cheap Chinese autos – which are so inexpensive because they are backed with the power and funding of the Chinese government – to the American market could end up being an extinction-level event for the U.S. auto sector,” the Alliance for American Manufacturing said in a report. The group argued that the United States should work to prevent automobiles and parts manufactured in Mexico by companies headquartered in China from benefiting from a North American free trade agreement. The alliance is a nonprofit, nonpartisan partnership formed in 2007 by some of America’s leading manufacturers and the United Steelworkers. Its mission is to strengthen American manufacturing and create new private sector jobs through smart public policies.

Manufacturing is sector hardest hit by ransomware. A new report from cybersecurity firm Dragos finds that manufacturing remains the industrial sector hit hardest by ransomware. The Dragos 2023 Year In Review identified more than 900 ransomware incidents that attacked industrial organizations in 2023, a more than 50 percent increase over 2022. Of those incidents, 70 percent targeted manufacturers. Robert M. Lee, the CEO and founder of Dragos, said that the manufacturing sector is a preferred target because it adopted digitization at a much quicker pace than other sectors, and hackers are able to take advantage of flaws arising from that swift transition. If the security of companies’ operational technology is not improved, Lee said, “we will start to see more and more disruption.”

Plastics industry chief says industry is committed to recycling. On February 15, Ross Eisenberg, president of America’s Plastic Makers, part of the American Chemistry Council, wrote in a report that “changing the way plastics are made and remade is a top priority for America’s plastic makers. We’ve set an ambitious goal for all US plastic packaging to be reused, recycled, recovered by 2040, and we are working towards this goal by supporting systems and technologies that remake new plastics from used plastics. To improve how plastics are made and remade, we need an all-the-above approach that combines innovation, investments and good policy.” Eisenberg was responding to a report issued that same day by the nonprofit Center for Climate Integrity that alleges that “Big Oil and the plastics industry have created and perpetuated a decades-long campaign of fraud and deception about the recyclability of plastics that has directly fueled the plastic waste crisis.”

NAM leader says EPA must change its rules on particulate matter. On February 15, a leader of the National Association of Manufacturers told a US House of Representatives Energy and Commerce subcommittee that the Environmental Protection Agency’s recently finalized standard for particulate matter will hamstring US economic growth, job creation and competitiveness, and therefore needs to be reversed. The NAM’s managing vice president of policy, Chris Netram, told representatives that the EPA’s standard is now below the amount of pollution that naturally occurs. Netram said that as a result of this overly stringent National Ambient Air Quality Standards level, large swaths of the United States will be forced into “nonattainment” status, making permitting for critical infrastructure nearly impossible and all but guaranteeing job cuts, not growth. “In particular, the EPA’s recent revision will make it more difficult to create jobs, build cutting-edge factories and lead the world in the development of products that will shape modern life in the decades ahead,” Netram said at the hearing.