Industrials Regulatory News and Trends - September 22, 2023

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.

California governor says he will sign two climate-disclosure bills. California Governor Gavin Newsom said September 17 that he plans to sign into law a pair of climate-focused bills aiming to require major corporations to be more transparent about greenhouse gas emissions and the financial risks stemming from global warming. Our alert takes a concise look.

Proposed new rule would increase competitive options for rail shippers. On September 7, the Surface Transportation Board issued a new proposal calling for major changes in its “reciprocal switching” rules for rail freight, a proposal that many say would improve access to competitive rail service for rail shippers. Reciprocal switching allows a shipper served by a single rail carrier to request that its freight be transferred to another rail carrier at a designated interchange point. When Congress adopted the Staggers Rail Act in 1980, which substantially deregulated the industry, it envisioned such a process as a way to promote freight rail competition. But in practice, existing STB rules effectively foreclose that competitive switching option in many instances. The STB’s proposal would allow shippers to seek reciprocal switching as a competitive option when their current carrier fails to meet specified service performance standards.

Lawmakers express concern about defense industry consolidation. In a letter dated September 15, Senator Elizabeth Warren (D-MA) questioned Defense Secretary Lloyd Austin about the Pentagon's role in the approval in July of L3 Harris Technologies’ purchase of Aerojet Rocketdyne at a time when the number of defense contractors is at a historic low. The letter was also signed by US Representatives John Garamendi (D-CA) and Mark Pocan (D-WI). The lawmakers expressed their concern that consolidation in the defense industry could lead to less competition and higher prices. On July 26, L3 Harris said it had been informed that the Federal Trade Commission would not block its $4.7 billion deal to acquire Aerojet Rocketdyne – that transaction closed within days of the L3 Harris announcement. In the letter, the lawmakers said they were “troubled by DoD’s lack of transparency” regarding the transaction and noted concerns DoD itself had expressed beforehand about how the defense industrial base was already “historically consolidated.” They are calling on the Department of Defense to provide answers about the conditions of the deal no later than September 28, 2023. This interest in the defense industry, and more generally national security, in the context of mergers has also been noted in recently proposed changes to the Hart-Scott-Rodino Act. These proposed changes include, as part of an expansion of information to be provided in HSR filings, a requirement to provide the details of parties’ involvement with “governments of concern” or defense/intelligence contracts.

New York state obtains convictions of e-waste dumpers. On September 14, the New York State Department of Environmental Conservation announced the convictions of Alpco Recycling Inc. and its owner, Alton Plumb Jr., as well as Finger Lakes Cleanup and Recycling Consultants Inc. and its project manager, Craig Foster, for their roles in illegally processing and disposing of 800 tons of obsolete electronics in Wayne County, New York. The convictions were the result of a joint investigation by the department, the State Attorney General’s office, and the US EPA. In 2016, Finger Lakes Cleanup was hired to clean up a massive pile of abandoned, hazardous electronic scrap in Seneca County; despite knowing that ALPCO was not authorized to process hazardous waste and did not have appropriate permits, Foster, on behalf of his company, entered into an agreement with Plumb to process and dispose of the abandoned e-waste. "When hazardous waste is not managed properly, it puts families and communities at risk, and endangers the environment," Attorney General Letitia James said. "By disregarding public safety laws and common sense, these companies put residents in harm's way and stuck local communities with the mess they left behind." The ALPCO site has been remediated; all the residual e-waste has been lawfully disposed of at ALPCO’s expense.

New bill would keep single-use plastics out of national parks. On September 6, 12 US senators introduced the Reducing Waste in Natural Parks Act, a bill that would keep single-use plastics out of the nation’s national parks. The proposed legislation would restore an Obama-era policy permitting a ban on the sale of single-use plastic water bottles in the parks, as well as a ban on the sale and distribution of other disposable single-use plastic products to the greatest extent feasible. A companion bill has also been introduced in the US House of Representatives. The Obama-era policy, which prevented the sale of an estimated two million plastic water bottles per year in national parks, was reversed by the Trump Administration in 2017.

Foundation report says cars collect too much personal data. The Mozilla Foundation, which developed the Firefox web browser and now advocates for online privacy, issued a report September 6 asserting that automobile companies are now collecting “too much personal data” from drivers, who have insufficient opportunity to opt out. The Mozilla researchers’ report assessed the data privacy policies of 25 automakers, and all received “Privacy Not Included” warnings from the foundation. The report expresses concerns that as vehicles become increasingly connected to each other and to the Internet, they are becoming tech products that provide sellers with customer data that can be easily sold and shared without the explicit consent of their end users. And, the report opined, the government can use this data in questionable ways. “There are so many ways for law enforcement to unlock the treasure trove of data that’s collected by your car,” the report said. “In the United States, they can just ask for it (without a warrant) or hack into your car to get it.”

Chemistry group pledges to engage in “sustainable chemistry.” On September 13, the American Chemistry Council set forth the principles on “sustainable chemistry” to be adhered to by its members in the chemical industry. The group said, “While we recognize there are a variety of ways that stakeholders define sustainable chemistry, ACC advocates for a risk-based, holistic approach to sustainability. We all have a common goal: to innovate products and design processes with greater sustainability for people and the planet. Our society and its needs are continuously changing and progressing, which means innovating new products, materials and technologies that meet these needs, while also helping to achieve priorities set forward in the United Nations Sustainable Development Goals (SDGs).” The group said these principles “help protect human health, conserve natural resources, minimize waste, enhance our communities and society, and contribute to technical innovation and economic success.”