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Industrials Regulatory News and Trends – February 17, 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.

Biden Administration issues long-awaited EV charger network rules. Seeking to provide Americans with greater access to electric vehicles and transform the US automotive landscape, on February 15 the Biden Administration issued final rules on its national electric vehicle charger network. Under the rules, the network of chargers will use standardized payment options – a single, universal app; require a single method of identification across all chargers; and deploy the Combined Charging System, the already dominant US system for charging connectors. Transportation Secretary Pete Buttigieg said, “No matter what EV you drive, we want to make sure that you will be able to plug in, know the price you’re going to be paying and charge up in a predictable, user-friendly experience.” Next, $7.5 billion in federal funds is being made available for companies to build the network chargers, and the first tranche of funds will roll out to states in the coming weeks. The new rules also defer the Made in America deadlines, providing more time to onshore their supply chain. Scott Paul, president of the Alliance for American Manufacturing, said, “This is a once-in-a-lifetime shot to get this right.”

Senators kick off effort to overturn EPA rule on emissions from trucks. On February 9, 34 Republican senators stated that they would try to overturn rules issued by the Environmental Protection Agency that are intended to drastically cut smog- and soot-forming emissions from heavy-duty trucks. They said that a new Bien Administration rule finalized in December was overly challenging to implement, would make trucks cost-prohibitive for small business owners, and would increase supply chain costs. Under the Congressional Review Act, a simple majority vote in both chambers of Congress can reverse recently finalized rules such as this one. The new standards, the first update to clean air standards for heavy-duty trucks in more than two decades, are set to take effect March 27 and impose standards that are 80 percent more stringent than current rules. The EPA noted that heavy-duty vehicles contribute about 23 percent of the transportation sector’s greenhouse gas emissions, making them the second-largest contributor to GHGs, behind light-duty vehicles such as cars.

NAM chief praises Biden Administration on manufacturing issues, but … In a media interview on February 9, Jay Timmons, CEO of the National Association of Manufacturers, said that recent legislation proposed by the Biden Administration and passed by Congress has led to an increase in manufacturing jobs. “I think President Biden ought to be pretty proud of the fact that there’s been more manufacturing jobs created in the last two years than in any other two-year period since the first term of Ronald Reagan,” Timmons said. “And he also rightfully and proudly pointed to part of the reason for that was the successful bipartisan legislation to invest in infrastructure that he got across the line as well as the CHIPS and Science Act, which he led with.” Timmons added, however, that although “we’re set up for success as we currently are situated,” that is only “as long as the regulatory environment is held in check, and it’s not right now, we have a lot of problems with what’s coming out of SEC and EPA, for instance.”

NAM criticizes EPA’s position on key Clean Water Act issue. In a February 8 letter to leaders of the US House committee on the environment, Nile Elam, an official of the NAM, said that the EPA’s current position on the Clean Water Act lacks sufficient clarity to guide businesses. Specifically, the EPA’s stance on waters of the United States (WOTUS) “leaves stakeholders confused and relying on unclear terminology that is difficult to apply universally,” the letter said. “Because of these expansions and ambiguous terms, the careful balance between local and state regulators is unpredictable and can leave permit seekers with little guidance, aside from the need for more time and money to achieve their permitting requests,” the letter added.

German, French officials express their views on manufacturing subsidies in US. On February 7, the economics ministers of France and Germany visited Washington, DC, to discuss with US government officials their concerns over subsidies for vehicles and other products that formed a major portion of the recently passed Inflation Reduction Act. While Canadian and Mexican companies are eligible to benefit from many of the Act’s provisions, the Act does not help many European manufacturers, such as automakers. The ministers said, after meeting with US Treasury Secretary Janet Yellen, that both sides agreed there has to be transparency on the specific subsidies so that the European Union could match them if necessary. “There is a huge willingness. Both sides agreed full transparency and we will [create] a technical group to make this transparency work,” said the German minister, Robert Habeck. The French minister, Bruno Le Maire, added, “You cannot have any fair competition if there is not full transparency on the level of public subsidies and public tax credits that are granted to private companies.”

Aircraft makers are still dealing with serious 5G wireless interference issue this year. US aircraft manufacturers will not be able to meet the US-imposed deadline to retrofit airplane altimeters to ensure they are not susceptible to 5G wireless interference, the world’s biggest airline trade association warned government authorities on February 2. The International Air Transport Association (IATA) told US regulators that many airplane manufacturers “will not make the proposed July 2023 (and in some cases the March 2023) retrofit deadline owing to supply chain issues, certification delays, and unavoidable logistical challenges.” IATA reported concerns that 5G service could interfere with airplane altimeters, which give data on a plane’s height above the ground and are crucial for bad-weather landing.

Trade group says formaldehyde is essential to industry and shouldn’t be overregulated. On January 31, the American Chemistry Council said that the Environmental Protection Agency’s approach to regulating formaldehyde is overly strict and is jeopardizing many valuable uses of the chemical in industry. “Products based on formaldehyde technologies supported roughly 1 million jobs and over a half a trillion dollars in sales in 2021 alone,” the group wrote in a position paper. “Overly restrictive regulation of formaldehyde that provides no additional public health benefit would not only jeopardize those jobs, but would also harm supply chains, affecting consumers, producers and workers in the construction, housing, wood products, agriculture, chemical, transportation, consumer products and energy industries.” The group noted that although little formaldehyde remains in the final version of many products, it remains an essential chemical building block.

Manufacturing leader says US tax law will make us less competitive with China. Recent tax law changes that increase the costs of research, machinery purchases and key business investments will harm manufacturers “at a time when 62% of manufacturing leaders already expect a recession in 2023,” the National Association of Manufacturers told congressional leaders January 30. In 2022, businesses that had for decades been allowed to immediately deduct research and development expenses now became required to amortize these costs over several years, making innovation more expensive. The change creates a competitive disadvantage for manufacturers in the US, according to the NAM. Aric Newhouse, its senior vice president of policy and government relations, told two congressional committees that China, “which has made no secret of its ambition to become the world leader in advanced manufacturing, currently provides a 200% deduction for R&D expenses for manufacturers.”

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