Industrials Regulatory News and Trends

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.

• Application season may begin soon for new semiconductor program. On August 25, President Joe Biden signed an executive order that begins the implementation of the $52.7 billion semiconductor chips manufacturing subsidy and research law just approved by Congress. Under the law, manufacturing companies can apply to the US Department of Commerce for funding awards for chip production. Commerce Secretary Gina Raimondo said that the department has been preparing for months for the program, which is intended to make the US more competitive with China and other nations. “We are committed to a process that is transparent and fair,” Raimondo said at the time of signing. “We will move as swiftly as possible to deploy these funds, while also ensuring the time needed to perform due diligence.” However, it is still not clear when the department will formally make available semiconductor chip funding for prospective applications or how long it will take to make awards under the program.
• EPA waives fuel regulations after industrial accident. On August 26, the EPA and the US Department of Transportation took steps to help alleviate potential fuel shortages in four midwestern states after the unanticipated shutdown of a BP refinery in Whiting, Indiana. That 435,000-barrel-per-day refinery was closed for damage assessment following a loss of electrical power and cooling water systems in a fire. The EPA said it had waived through September 15 federal regulations concerning fuel volatility on gasoline sold in Illinois, Indiana, Michigan, and Wisconsin during the summer to ensure adequate fuel supplies for motorists.  Illinois governor JB Pritzker coordinated an effort with neighboring states to provide gas stations with ethanol which originates on Illinois farms.  Marty Marr, president of the Illinois Corn Growers Associations, said, “Ethanol has 40-45 percent fewer greenhouse gas emissions than gasoline without ethanol, making this interim change to include more biofuels in our fuel supply a positive one for the environment. Illinois corn farmers hope Midwest consumers will be pleased at the price and the emissions when they fill up with E15 fuel.”  
• California takes more steps to ensure plastics recycling. As the California legislative session ended on August 31, lawmakers passed and sent to Governor Gavin Newsom a bill, AB 2784, that would establish requirements for the quantity of recycled content in thermoformed packaging. The governor has until the end of September to decide whether to sign the bill into law. If he does, the state will require most types of thermoformed plastic containers to include a percentage of recycled content that increases incrementally from 10 percent in 2025 to 20 percent by 2028 and 30 percent by 2030. To ensure compliance, the state would impose annual penalties on noncompliers, who would deposit the fine into a Thermoform Recycling Enhancement Penalty Account, also created by the bill.
• New act of Congress provides more money for nuclear reactors and fuel. The Inflation Reduction Act just approved by Congress contains a $700 million appropriation for companies that wish to fuel and build next-generation nuclear reactors before the end of the decade. The new reactors are designed to be much smaller than the legacy reactors that exist today. They rely on high-assay low-enriched uranium, or HALEU, a product that, until now, was mostly sourced from Russia. That all changed with the Russian invasion of Ukraine, and now the federal government wants to prioritize HALEU from domestic sources - thus the $700 million available to companies that wish to do that. This is more than 15 times the appropriation for this federal program before the new act was passed. The Inflation Reduction Act “will lead to more certainty in completing this work and defining a successful path forward,” said Energy Deputy Assistant Secretary Andrew Griffith.
• In landmark move, California decides to require all new cars sold in the state to be electric by 2035. On August 25, the California Air Resources Board moved to require all new vehicles sold in the state by 2035 to be electric, hydrogen fuel-cell, or plug-in electric hybrids.  The measure is intended to  speed the transition from  gasoline-powered vehicles to electric vehicles. The new rules would set annually increasing zero tailpipe-emission vehicle requirements starting in 2026. The federal government still must  approve the new requirements before the plan can take effect. The change will encourage automakers to speed up production of cleaner vehicles but will not prohibit ownership, driving or re-sale of internal combustion engine vehicles.   As many as 17 other states are considering similar or identical standards, and five of those states are already moving to adopt the California requirements: Washington, Oregon, Virginia, Massachusetts, and New York.
• EPA formally designates two chemicals as hazardous substances. In a move that may complicate or resurrect environmental cleanup projects across the nation at commercial and military sites, on August 26 the EPA designated two fluorinated compounds as hazardous substances under the Superfund program. The EPA’s move increases the risk that industries and the federal government would be held strictly liable for release of the two compounds, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), and their salts and structural isomers. Neither substance is used commercially at present, so the rule largely targets sites with legacy contamination. Both substances, the EPA said, “may present a substantial danger to health or welfare or the environment.” Michael Regan, the EPA’s administrator, said, “The action announced today will improve transparency and advance EPA’S aggressive efforts to confront this pollution.” 

The authors thank these contributors for their help with this issue:

Robert J. Gruendel

Vanessa Richelle Wilson

George Gigounas

Adam Baas