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.
New water bill will be a major boon to auto and steel manufacturers. On December 23, President Joe Biden signed a major defense bill including a water bill that will be a major boon to auto and steel manufacturers. In addition to measures that support flood control, harbor maintenance, and navigation projects, the Water Resources Development Act of 2022 includes $3.2 billion authorizing a new Soo Lock at Sault Ste. Marie, Michigan on the St. Marys River – the artery connecting Lake Superior with Lake Huron. Nearly all iron ore mined in the US is found near Lake Superior, but the ore then needs to travel on large vessels through a single lock that federal officials have called the Achilles’ heel of the North American industrial economy. Two locks actually operate at Sault Ste. Marie, but only one of them is large enough to handle the massive freighters that move the iron ore, and it is aging. “When you have steel components that are in the water for 50 years, they do tend to fatigue and deteriorate,” said Kevin McDaniels, deputy district engineer for the Army Corps of Engineers Detroit District. The new lock is slated to be complete by 2030.
Treasury delays guidance on sourcing requirements for batteries of EVs. On December 29, the US Department of the Treasury announced that it will delay at least until March 2023 guidance implementing the sourcing requirements for battery materials (critical minerals and components). Under the Inflation Reduction Act’s Clean Vehicles provisions (IRC Section 30D), batteries used in electric vehicles must meet those requirements to qualify vehicle purchasers for up to $7,500 in federal tax credits. Other new Clean Vehicle credit requirements, including purchaser income and vehicle price caps, took effect on January 1, 2023. Until critical minerals and battery component sourcing guidance and regulations are proposed, however, EVs may qualify for credits without meeting those battery content requirements. The deferred Treasury guidance is necessary to implement statutory requirements that make $3,750 of the credit contingent on at least 40 percent of the value of the critical battery minerals being (i) extracted or processed in the United States or in a country with a US free trade agreement or (ii) recycled in North America. Eligibility for the other $3,750 of the credit requires that 50 percent of the vehicle’s battery components be manufactured or assembled in North America.
Automakers are queried in US Senate about their links to Chinese abuses. At a December 22 hearing, the US Senate Finance Committee asked eight automobile manufacturers to disclose whether any of their components are linked to alleged forced labor in China. On June 21, 2022, the Uyghur Forced Labor Prevention Act (UFLPA), enacted to “ensure that goods made with forced labor in the Xinjiang Uyghur Autonomous Region [XUAR] of the People’s Republic of China do not enter the United States market,” took effect. The committee’s chair, Ron Wyden (D-OR), wrote to automaker CEOs, noting that “it is vital that automakers scrutinize their relationships with all suppliers linked to Xinjiang.” The letters said that “unless due diligence confirms that components are not linked to forced labor, automakers cannot and should not sell cars in the United States that include components mined or produced in Xinjiang.”
3M Co. announces it is discontinuing production of PFAS. On December 20, the 3M Co. announced that as of 2025, it will stop producing PFAS, the “forever chemicals” used in a wide variety of manufactured products. Last month, 3M and DuPont de Nemours Inc. were among several companies sued by California's attorney general to recover the costs of environmental cleanups of PFAS. In other developments, some shareholders have also called for production of the chemicals to stop. You may also be interested in some of our alerts on other aspects of PFAS, such as EPA’s new ultralow PFAS health advisory levels portend regulatory and litigation risks and Dispatches from the PFAS regulatory front: California “bans” PFAS in cosmetics and textiles but vetoes reporting obligations for manufacturers.
Plastics industry association gives views on recycling at Senate hearing. At a December 15 hearing of a US Senate subcommittee, the head of the Plastics Industry Association set forth his views on plastics waste and recycling. Appearing before the Subcommittee on Chemical Safety of the Senate Public Works Committee, Matt Seaholm, CEO of the trade association, said, “We appreciate the commitment of this committee to pursue solutions that reduce waste. There’s a saying in our industry: We love plastic. We hate plastic waste. The way we see it, any molecule of plastic material that leaves the economy is truly a waste. We need to collect, sort, and ultimately reprocess more material. And that goes for all substrates, not just plastic.” Seaholm also outlined policy approaches for Congress to consider, including increased investments in critical recycling infrastructure to ensure that collection, sorting and processing can keep up with the complexities of all materials in the marketplace; promoting end-market development for the variety of plastic resins to ensure that demand remains for recycled materials; and encouraging innovations in recycling technologies to ensure that materials that cannot economically be recovered through traditional methods can still be recycled.
Michigan governor signs overhaul of state’s recycling and waste management law. On December 22, Michigan Governor Gretchen Whitmer signed a bill that would overhaul recycling and waste management in that state by dramatically changing the state’s solid waste law. The bill had recently been approved by both houses of the state legislature. Among other things, the bill would divert more recyclable material from landfills and promote the growing circular economy for recyclables and compostable organics. The governor’s action is being seen as a boost for Michigan manufacturing. Jim Holcomb, president and CEO of the Michigan Chamber of Commerce, praised the reforms as historic and “the kind of pragmatic problem solving that is good for our environment, Michiganders and business.”
Commission set up to support biotech and biomanufacturing in the military. US legislative defense leaders announced on December 30 the full slate of members tapped to serve on a recently established commission tasked with making recommendations on the use of emerging biotechnology and biomanufacturing in the military. Although the congressional defense committee’s top Democrats and Republicans had previously announced selections of eight appointees last March, it wasn’t the end of 2022 that the final four commissioner slots – and the panel’s chair and vice chair – were unveiled. The 12-member body was created in the Fiscal Year 2022 National Defense Authorization Act, which set up the panel with the mission of reviewing advances in emerging biotech, biomanufacturing and related areas while keeping in mind “the methods, means, and investments necessary to advance and secure” development of those technologies. Please also see our recent alert Another look at the coordinated framework for the regulation of biotechnology.
