Industrials Regulatory News and Trends

Welcome to issue 1 of 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.

Aerojet settles federal case that alleged it violated cybersecurity rules. On July 8, rocket-engine maker Aerojet Rocketdyne Inc. agreed to pay $9 million to resolve allegations that it violated the federal false Claims Act by misrepresenting its compliance with cybersecurity requirements in certain government contracts. Aerojet Rocketdyne is the last remaining US-based manufacturer of rocket engines. The settlement of the case, on the second day of trial in the US District Court for the Eastern District of California, resolves the suit that was filed and litigated by a former Aerojet Rocketdyne employee against the company under the whistleblower provisions of the false Claims Act, which permit a private party to file a lawsuit on behalf of the United States and receive a portion of any money recovered. The case marks a recent example of the government’s efforts on compliance with cybersecurity requirements in federal contracts.

Virginia delays effective date of polystyrene foam prohibition. On July 6, Virginia legislators delayed for five years a statewide commitment to ban polystyrene foam in restaurant to-go containers. Now, restaurants with 20 or more locations in the state will have until 2028 to phase out the containers, while smaller businesses have until 2030. Expanded polystyrene foam is a common takeout product for restaurants because it is inexpensive and insulates well. However, environmentalists point out that it is not biodegradable and its porous nature makes it a sponge of sorts – often picking up harmful chemicals while it is moved by wind or water. Over the past decade, numerous countries have passed bans on the use of polystyrene, and in recent years, states such as Maryland and New Jersey have followed suit. You may also enjoy this alert, California’s new Extended Producer Responsibility Act is major addition to suite of plastic-focused laws.

NAM urges federal support for nuclear power. The National Association of Manufacturers on July 14 published an online op-ed article urging the federal government to prioritize the use of nuclear energy to promote America’s energy security. The article asserts nuclear energy is safe and reliable and is the largest zero-emission source of energy in the United States. “At a time of pronounced supply chain challenges, oil-and-gas lease cancellations and costly shortages of critical minerals, nuclear energy could go a long way toward fortifying the grid,” the article added. “In addition, the technology has advanced enormously in recent years. Microreactors, small enough to be moved by truck, are poised to help solve the challenge of powering remote areas.” It further asserts that both small modular reactors and microreactors are portable and self-sufficient and that both will be crucial for next-generation nuclear power – but that the US government must invest in their manufacturing and modernize regulations accordingly.

Reconnaissance office seeks major bids from private sector. On July 14, the National Reconnaissance Office announced that it is soliciting bid proposals from companies that provide space-based radio frequency (RF) imagery. The office is a major player in the US intelligence community. It designs, builds, launches and operates the reconnaissance satellites of the US government and provides satellite intelligence to government agencies such as the National Security Agency and the Department of Defense. The bid solicitation is part of a concerted effort by the agency to reach out to the private sector in order to assess how commercial radio frequency imagery can play a part in the larger signals intelligence overhead architecture. In January, the agency announced that it signed agreements with five companies, giving it access to data collected by commercial satellites so that government analysts can better understand the quality of commercially available imagery. 

GAO report compares airplane certification in US and Europe. On July 8, the Government Accountability Office issued a report that found key differences between the approaches used by the Federal Aviation Administration in certifying new and modified commercial airplane manufacturing designs and the approaches used by the European Union Safety Agency, the FAA’s European counterpart. The report was compiled by the GAO based on interviews with people representing both of the government agencies as well as aviation industry manufacturers. The GAO study was prompted by two highly publicized fatal accidents which raised concerns about the FAA’s oversight of airplane manufacturers. The study found that there were a great many similarities between the oversight processes here and in Europe.

Missouri becomes latest state to promote advanced plastics recycling. On July 1, Missouri became the latest state to adopt legislation promoting advanced recycling for plastics, a position championed by the plastics industry. Advanced recycling is a manufacturing process that converts used plastics into high-quality new plastics without incinerating solid waste. With advanced recycling, more types of plastics can be recycled compared to traditional recycling technologies. “This is a great opportunity for Missouri and exciting progress toward a more circular economy for plastics,” said Chris Jahn, president and CEO of the American Chemistry Council. “Over the past five years, 40 percent of states in this country have signed advanced recycling legislation into law, demonstrating that recognition of these innovative technologies and their immense potential is rapidly growing. Advanced recycling diverts plastics from landfills, decreases greenhouse gas emissions, and helps create new jobs and revenue streams.” Nineteen other states already have similar legislation in place.

Opinion article looks toward a new era in which regulators will be reined in. According to a June 30 opinion article by Patrick Parenteau, a law professor at Vermont Law School, in the magazine The Conversation, the recent 6-3 Supreme Court ruling in an Environmental Protection Agency case will pose serious questions for federal agencies that wish to regulate segments of American industry. Beyond climate-change policy, which was at issue in the case itself, the author wrote that he expects the decision “to affect how the EPA and other regulatory agencies interpret laws that have been on the books for many years. Regulators may shy away from advancing policies that the court could view as marked departures from past interpretations and actions with big economic and political consequences.” He pointed to the Securities and Exchange Commission, which recently proposed a new rule to require publicly traded companies to provide more robust disclosure of the financial risks that climate change poses to their balance sheets. He also noted that the SEC is moving to act more vigorously against “greenwashing” by companies claiming to be committed to a net-zero carbon future. “In my view, it is clear that the U.S. has entered a new era of administrative law, with an activist court asserting its power to curtail what it perceives as the excesses of regulatory agencies – and not always waiting for those agencies to complete their work,” Parenteau wrote. To find out more, see our July 19 alert on this Supreme Court decision.

EPA announces updates for its toxicity assessments for PFAS. On June 27, the Environmental Protection Agency announced that it expects to finalize its toxicity assessments for two more PFAS and issue a draft third analysis for public comment by the end of 2022. PFAS refers to per- and polyfluoroalkyl substances, sometimes called “forever chemicals,” which are used in packaging and other applications. The EPA’s research office also updated its plans to analyze the human health effects of 18 chemicals, including five PFAS, and to determine what amounts of those compounds might be harmful. The agency’s regulatory offices use this information to decide whether cleanups, air emissions permits, or other actions will be needed. Also see our June 29 alert,” EPA’s new ultralow PFAS health advisory levels portend regulatory and litigation risks – but do not overextend them.”