Industrials Regulatory News and Trends - February 2, 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.

March 1 is key compliance date for two state PFAS in Products laws. As Maine and Minnesota forge ahead with their wide-reaching PFAS in Products laws, March 1, 2024 is a key date for businesses to keep in mind. Both states have set that date for comments and submissions related to identification of currently unavoidable uses of PFAS in products. See our alert to learn more.

STB adopts rule intended to benefit freight rail customers in emergencies. On January 25, the Surface Transportation Board announced it has adopted a final rule that will allow freight rail customers to seek immediate relief in certain emergency situations. The final rule, the STB says, establishes that it “may act on its own initiative to direct emergency rail service,” helping shippers “receive swift action, when warranted, to ensure that the nation’s freight rail traffic continues to move.” The STB also announced an accelerated process for situations when rail service failures threaten public health and safety or could force a plant shutdown or business closure. Jeff Sloan, the American Chemistry Council’s Senior Director for Regulatory and Scientific Affairs, praised these developments, then stated that the new rules “are not a solution for all, or even most, service problems, which is why we want to make it clear that the Board must take additional action to address long-standing and ongoing freight rail problems.” 

Canada approves funding for research on risks of microplastics. Canada’s federal Ministry of Health is providing $2.1 ‎million over the course of four years to McGill University, Memorial University of Newfoundland, and the ‎University of Toronto to increase research on microplastics and their potential impact on human health. This ‎research will examine potential exposure to microplastics from various sources, including food, ‎food packaging, drinking water, indoor/outdoor air, and dust. Research through this program aligns with the priorities of Canada’s Plastics Science Agenda and will fill knowledge gaps identified in the Government of Canada’s 2020 Science Assessment of Plastic Pollution. Minister of Health Mark Holland said, “There is a lot we don’t know about the effect of microplastics on human health. That is why programs like this one were created – to support Canadian scientists in improving the understanding of the human health impacts of microplastics.”

New York state environmental groups announce 2024 legislative priorities for plastics. On January 18, environmental groups in New York announced that one of their top priorities this year will be getting a law approved in the state legislature that would cut the amount of plastic packaging in consumer products in half over 12 years to help combat climate change. Vanessa Fajans-Turner of the nonprofit Environmental Advocates said, “We can't recycle our way out of this problem that we see growing around us every day, because only 6 percent of plastic actually gets recycled. That means 94 percent of the plastic we think we're recycling actually ends up in landfills across New York and New Jersey and beyond.” The cost to municipalities of tackling such waste, she noted, is rising. “The only way forward,“ she said, “is to reduce how much plastic we use.” The proposed bill would also aim to increase recycling efforts and would ban so-called chemical recycling, an industrial-scale process that heats plastic waste to a high temperature and converts it into a form of fossil fuel. The law is facing fierce opposition from the plastics industry.

Projects aim to cut GHGs in heavy industry. On January 25, the Biden Administration announced $254 million in funding for projects to cut greenhouse gas emissions from such heavy industries as iron, steel, and cement. Secretary of Energy Jennifer Granholm said that the projects "will help advance the innovative technologies we need to lower costs and improve energy efficiency in America’s factories and industrial centers." The funds, $171 million from annual department appropriations, will go to speed up decarbonization technologies via nearly 50 projects across 21 states. The DOE has also opened the application process for $83 million in funding to cut emissions in hard to decarbonize industries. Among the awards: six projects on decarbonizing chemicals such as fuels, polymers, and paints; six on commercial development of hydrogen-fueled heating and power technologies; and 10 on decarbonizing industrial heat.

GOP members say SEC lacks authority to develop climate rule. At a January 18 US House of Representatives hearing, Republican House members and the witnesses they called claimed that the Securities and Exchange Commission (SEC) lacks the legal authority to promulgate its proposed public company climate disclosure rule. “Congress has not delegated the authority to the SEC to require climate disclosures,” said Representative Bill Huizenga (R-MI), chair of the House Financial Services Committee's Oversight and Investigations Subcommittee, at a hearing on the SEC's proposal. “The court's decision signals the SEC’s authority to develop, finalize, and implement a climate disclosure rule is in jeopardy,” he added, referring to a 2022 US Supreme Court decision restraining the Environmental Protection Agency's power to regulate greenhouse gas emissions. The SEC unveiled its proposed rule in March 2022 aiming to mandate and standardize a framework for disclosing greenhouse gas emissions and climate-related risks, metrics, and data for public companies within the SEC’s jurisdiction. The SEC has placed the proposed climate disclosure rule for review on its upcoming agenda for April 2024. Please see our related alerts: SEC proposes mandatory climate-related disclosure and governance rules and SEC proposes rules on climate-related disclosures and transitioning to a lower carbon economy: 8 steps to consider as you prepare.

Manufacturers group supports tax expensing provisions for R&D. On January 26, the Small and Medium Manufacturers Group of the National Association of Manufacturers called on Congress to pass the Tax Relief for American Families and Workers Act of 2024. Among other things, the bill retroactively extends expiring business expensing provisions for research and development and short-lived capital. “There is so much at stake for small and medium-sized manufacturers as Congress debates pro-growth tax policy, which is why I strongly support the Tax Relief for American Families and Workers Act,” said Courtney Silver, chair of the group. “When Congress allowed immediate R&D expensing, interest deductibility and full expensing to expire, it created a higher tax bill and tremendous uncertainty for businesses like mine. The loss of these provisions directly impacts our ability to invest in new technology, to purchase equipment and to create jobs.”