Earlier this week, a class action lawsuit was filed against Delta Air Lines alleging that the company is misleading the flying public with its claims of carbon neutrality. The complaint is the latest in the growing trend of greenwashing lawsuits filed against companies of all kinds alleging that their environmental and sustainability claims do not actually match with reality.

In the case, the plaintiff, Mayanna Berrin, alleges that Delta’s claim that it has been carbon-neutral since March 2020 is false and misleading. Berrin acknowledges that Delta has been clear that, at least at present, it achieves carbon neutrality largely by purchasing offsets (after all, that language appears right on the in-flight napkin). And she does not allege that Delta is purchasing an insufficient amount of carbon offsets, at least on paper, to account for Delta’s global emissions. Instead, Berrin criticizes the accuracy and reliability of the offsets issued by voluntary carbon offset market and alleges that these carbon offsets often “overpromise and underdeliver” on their total carbon impact. According to Berrin, these market deficiencies particularly apply to Delta’s offsets, making its claims of carbon neutrality false and misleading.

The allegations in Berrin’s complaint are largely based on media reports on deficiencies in carbon offsets generally, as opposed to deficiencies specifically identified in the offsets Delta has purchased. For example, Berrin generally criticizes the offset market for:

  • Unreliable accounting and inaccurate projections,
  • Double and triple counting of projects,
  • The use of non-additional offsets based on reductions that would have occurred regardless of carbon market involvement,
  • Failure to provide immediate offsetting, and
  • Relying on projects that are impermanent (such as creating of forests that are ultimately destroyed by natural disaster).

Berrin then alleges that Delta’s own offsets fall victim to these deficiencies.

Among other things, the complaint cites to Delta CEO Ed Bastian’s February 14, 2020 announcement that the airline was going carbon neutral by March 2020. The complaint states that, in announcing Delta’s commitment, Bastian noted that carbon offsets are “not the solution.” However, the complaint fails to mention that Bastian also said that Delta would continue to use jet fuel “for as far as the eye can see.”

On behalf of herself and others similarly situated, Berrin seeks unspecified damages, disgorgement of profits, and an order from the court to stop Delta from making any claims determined to be false or misleading.

Below is an excerpt of an article, co-authored with Robinson+Cole Labor and Employment Group lawyer Sapna K. Jain, published in the Hartford Business Journal on May 1, 2023.

With Memorial Day weekend, the unofficial start to summer, just a few weeks away, employers may be preparing to welcome summer interns into the workplace. What are the legal requirements that may impact the hiring or engagement of summer interns, what training and new hire obligations may exist, and how might employers define the goals and strategy for their particular internship program? Read the article.

There is massive confusion both in the manufacturing community and the popular press. Even some of the well-respected industry publications have had a hard time getting it right. 

We see and hear the terms all the time:  “Buy America,” “Buy American,” “Made in the USA,” “Made in America,” “Build Back Better.” While all of these terms have a tinge of economic nationalism, very few manufacturers can unravel not only what each of the terms means but what type of economic opportunity might exist.

This is the first in a series of posts that attempts to simplify (if possible) the various laws that exist and how they may be relevant for manufacturers.

First, let’s get the misconceptions out of the way:

  • “Buy American” and “Buy America” are the same thing.
  • They are the same thing as “Made in America” and “Made in the USA.”
  • These are new laws passed by the Biden administration.
  • All these laws are controlled by one agency.

All of these statements are wrong. 

Second, a history lesson. Economic nationalism or “protectionist” policies have been around since the United States was founded. 

Did you know that George Washington wore a brown suit to his inauguration? Washington did not want to wear a military uniform. He also did not want to wear a civilian suit that was made anywhere but the United States. 

Question:  Where do you find a suit in 1789? 

Answer:  You ask Henry Knox, your Secretary of War, to get it for you of course. 

Question:  Where did Knox get the suit from?

Answer:  Wait until our next blog post! 

We will answer that question and also begin by explaining the differences between “Buy American” and “Buy America.” Yes, amazingly, they are different laws. 

Below is an excerpt of an article co-authored with Robinson+Cole Labor and Employment Group lawyer Natale V. DiNatale and Environmental, Energy + Telecommunications Group Jon Schaefer published by the Connecticut Business and Industry Association (CBIA) on April 12, 2023.

OSHA is poised to revive a policy that would require employers to permit union officials to take part in agency inspections even if the union does not represent employees at the facility being inspected. 

OSHA previously maintained such a policy between 2013 and 2017. 

The policy arose out of a memo issued in response to a labor union’s inquiry. Known as the Fairfax Memo—a reference to the memo’s author—the policy was withdrawn in 2017 as the interpretation underpinning it faced legal challenges.

During the fall of 2022, OSHA issued a notice suggesting a return to the Fairfax Memo, but this time through promulgation of a regulation. 

The notice stated that a rule would be published in May of 2023 and that “[t]his rulemaking will clarify the right of workers … to specify … a union representative to accompany an OSHA inspector during the inspection process/facility walkaround, regardless of whether the representative is an employee of the employer …” Read the article.

This week’s post is authored by Emilee Mooney Scott and is also available on Robinson+Cole’s Environmental Law + blog. Thank you to Emilee for contributing. Emilee is a partner in the firm’s Environmental, Energy + Telecommunications Group, focusing her practice on a variety of environmental compliance and transactional matters, including emerging contaminants.

In mid-March EPA released its proposal for the first set of Maximum Contaminant Levels (MCLs) under the Clean Water Act for per- and polyfluoroalkyl substances (PFAS).  In contrast to non-enforceable health advisory levels introduced in 2016 and revised in 2022, MCLs constitute enforceable drinking water standards that will impact drinking water utilities and industry nationwide.  The proposal for enforceable drinking water standards marks the latest step in the evolution of PFAS from an emerging contaminant to a contaminant subject to enforceable regulations. 

The proposed rule sets standards for six PFAS compounds as follows:

*More information on how the Hazard Index will be calculated is available in an EPA fact sheet.

The proposed MCLs follow lifetime health advisory levels for PFOA, PFOS, GenX and PFBS issued by EPA in the summer of 2022.  The health advisory levels for PFOA and PFOS are 0.004 parts per trillion, which is a level that cannot yet be reliably detected in laboratories.  While the 4 ppt proposed MCL for PFOA and PFOS is low relative to the levels in place for other constituents, it is at least detectable using current technology.

In the preamble to the proposed rule, EPA indicated that no safe level for PFOA and PFOS has been identified.  Therefore, EPA is setting the non-enforceable, health-based Maximum Contaminant Level Goal (MCGL) at zero for both PFOA and PFOS.  Given that EPA requires the MCLs to be set “as close as feasible” to the MGCLs, the regulated community should be aware that EPA may move to further lower the limits for PFOA and PFOS as technology improves.   

EPA has scheduled a public hearing on the proposed MCLs for May 4, 2023.  Interested participants may register to speak by April 28, 2023 through the EPA event website.

We are also tracking a number of other PFAS-related developments, including that in August 2022, EPA released a proposed rule that would designate PFOA and PFOS as CERCLA hazardous substances.  A number of states (including California and Maine) have passed laws banning the use of PFAS in certain applications. 

While the pandemic may be behind us, many employees in manufacturing workplaces who worked on the front lines during the last few years, may be having difficulty remaining engaged at work and satisfied with their job. Whether it is called the “employee experience,” “employee satisfaction,” or “employee engagement” – this concept generally means the amount of their energy that employees are willing to invest in their work and workplace.  Regardless of what you call it, it is far more than a personnel issue, it directly impacts retention, attrition, productivity, safety in the workplace, and ultimately the “bottom line.”  So where should manufacturers start in taking the temperature of workers  and their satisfaction?

First, manufacturers should consider gathering information about the current level of employee engagement. This can be done through formal channels such as employee engagement surveys and focus groups but also through informal conversations with stakeholders (e.g., town hall meetings, small group meetings, etc.). There are a number of vendors who offer surveys, many of which can be tailored, or such surveys can be conducted by internal personnel. For manufacturers who may not have the resources to conduct a formal survey or assessment, engaging in discussions around several standardized inquiries to diverse stakeholders at all levels of the organizations can also provide insight into the status of employee engagement. In addition, metrics for key data points may also be helpful in providing insight into the workplace including: turnover and attrition rates, employee use of various benefits, safety incidents, absences, use of vacation, and similar data.  In this phase, the information solicited should help in answering the following kinds of questions:

  • What makes our employees feel valued?
  • Do employees feel their work is important?
  • Do employees perceive salary and benefits as fair?  What about competitive?
  • Do our benefits actively reflect trends and needs of our employees?  For example, if we know that employees value flexibility, are we providing that and if not, should we be?
  • How do we recognize employees and how is it being received by them?
  • Do employees believe they “fit in” at work and why?
  • Are we providing the right support to employees including personnel, tools, equipment, and a safe work environment?  Are there barriers to our employees feeling comfortable?
  • Do we have a mechanism for inviting dialogue with employees and are they using it? If not, how can we improve that?
  • According to the data gathered, how are we doing? Where do we need to improve?

Second, manufacturers should review the information received. If reliable data is obtained, employers will be able to understand the current status of engagement and the answers to questions such as those listed above. When surveys are conducted using a vendor and/or electronic platform, companies may be provided with a certain degree of analysis beyond aggregation of results, that may also prove helpful. Depending on how the data is gathered, it will need to be analyzed by the company to understand what the data is showing.

Third, key decisionmakers and stakeholders should determine the priorities and goals and then craft a plan to best attain those goals. Plans should be focused on tangible action items and the steps needed to perform each item. Ideally, one person or several people take ownership for implementation of the plan, the individuals are held accountable for working toward the goals in the plan, and the company is updated on its progress with regularity. Investing in this third step, at the highest level of the organization, is critical to the successful implementation of a plan to increase employee engagement.

While 2023 may be a year of rebuilding the workplace in various industries, for manufacturers, it may be an opportunity to gain valuable insight into the workplace and into employees, many of whom worked through a tumultuous and difficult several years.

This week’s post was co-authored with Edward Heath and Kevin Daly.  Attorneys Heath and Daly are members of Robinson+Cole’s Manufacturing Industry Team and regularly counsel clients on trade compliance, anti-corruption compliance, and other corporate compliance issues.

On the one-year anniversary of the invasion of Ukraine, the Biden administration has announced a series of additional sanction measures targeting Russia. These new sanctions are designed to further isolate Russia from goods and services that aid its war effort and to punish sanctions evaders.  These new measures will affect manufacturers of goods that are used in targeted industry sectors, including their business with certain customers outside of Russia.

Specifically, the White House has announced the following categories of new sanctions measures:

  • The U.S. Treasury and State Departments will impose sanctions against over 200 new companies and individuals in Russia and elsewhere. The list will include 12 Russian financial institutions and actors connected to Russia’s defense and technology sectors.
  • The U.S. Commerce Department will add nearly 90 Russian and third-country companies to its Entity List as sanctions evaders. This measure will prevent them from getting access to some or all U.S. exports.
  • The U.S. Commerce Department also will impose new export controls on industrial machinery, luxury goods, and drone components. These measures include:

    – Over 300 additional industrial items will now require a license for export to Russia or Belarus;

    – Over 250 types of additional luxury goods will now require a license for export to Russia or Belarus or to sanctioned individuals;

    – Expanded restrictions will be imposed on the oil, gas, and chemical sectors to better align with restrictions set by U.S. allies; and,

    – Expanded restrictions will be imposed on drone components to prevent them from reaching Iran. (To date, U.S.-manufactured parts have been found in Iranian drones used by Russia in conducting the war in Ukraine).
  • The U.S. will expand its authority to sanction Russia’s metals and mining sectors. This authority will permit OFAC to add companies and individuals operating in these industries to sanctions lists.
  • The U.S. will increase tariffs on Russian metals, minerals, and chemical products.
  • The U.S. and its G7 allies will create a coordinated enforcement mechanism to address sanctions evasion. The U.S. will chair this mechanism in the first year.

Other G7 nations are expected to announce parallel measures.

Some of these measures have already been implemented. The Commerce Department has already promulgated rules implementing the additions to the entity list and the new export controls regarding drone components, luxury goods, and industrial items. Additionally, OFAC has implemented the additions to its sanctions lists.

Other measures have not yet been fully implemented. For example, it remains to be seen how OFAC will exercise its new authority to sanction the Russian mining and metals sectors. Additionally, the scope and operations of the G7 coordinated enforcement mechanism will develop over time as it is created and implemented.

When considering these additional sanctions, it is essential to recognize that more transactions and business relationships which were once routine (or considered beyond the reach of 2022’s sanctions) must now be thoughtfully assessed. The risk is not only limited to manufacturers of the types of goods that are the focus of the industry- and product-specific sanctions. Given the number of new companies and individuals designated as blocked by these new measures, all manufacturers face the need to sufficiently scrutinize their business relationships.

As the war in Ukraine rages on, it is likely that the sanctions landscape will continue to evolve. In particular, sanctions measures are likely to increasingly reach certain third-country activity as the U.S. and its allies continue to focus on sanctions evaders and activity in third countries that aids Russia’s conduct of the war. As a result, manufacturers (particularly those in heavily affected industries such as defense, industrial, energy, and high technology sectors) may wish to actively monitor developments in order to timely assess the impact of new measures on their operations.

With the assistance of experienced legal counsel, diligence policies can be implemented that are comprehensive, yet right-sized to a company’s risk profile, to assess and manage sanctions risk.  A first step in such a review is refreshing screening protocols for customers, suppliers, vendors, and other business partners to ensure that no sanctioned parties are present. Continued refreshing of this screening is likely to be needed as the list of sanctioned parties expands. Additionally, manufacturers can assess the impact of the new export controls on luxury goods and industrial products by reviewing the specific lists of products issued by the Commerce Department to evaluate the impact on their particular product lines. Furthermore, as sanctions evolve, know-your-customer diligence takes on added importance. Asking about the end use, end user, and ultimate destination of exported products, and being attentive to any red flags presented, may help identify potentially problematic transactions before they are consummated and constitute a violation.  

At the end of March, a new OSHA policy will go into effect expanding penalties for instance-by-instance (IBI) citations. The move signals OSHA’s stated commitment to increased enforcement in 2023 and beyond.

IBI citations are those for which OSHA could issue multiple citations, with corresponding penalties, for each instance of alleged non-compliance—separate penalties for each machine, each location, each entry, each employee. Under OSHA’s prior policy, which has been in place since 1990, OSHA would only apply IBI penalties for willful citations. Under the new policy, which goes into effect on March 27, the IBI policy will now apply to high-gravity serious violations for the following areas:

  • Falls
  • Machine guarding
  • Respiratory protection
  • Lockout tagout
  • Permit required confined space
  • Trenching
  • Other-than-serious violations specific to recordkeeping

In deciding whether to apply the new IBI policy, OSHA will consider certain factors, such as:

  • Whether the employer has received a willful, repeat, or failure to abate violation within the past five years;
  • Whether the employer has failed to report a fatality, inpatient hospitalization, amputation, or loss of an eye;
  • Whether the proposed citations are related to a fatality/catastrophe; and
  • Whether the proposed recordkeeping citations are related to injury or illness(es) that occurred as a result of a serious hazard.

OSHA intends to use the new IBI policy to deter employees from maintaining or failing to fully abate certain violations and hopes that it will encourage employers to be proactive in preventing workplace fatalities and injuries.

In today’s world, employees spend increasingly more time at work, including in the manufacturing industry where jobs are generally not remote.  This means that employees may have close working and personal relationships with each other, such as dating and romantic relationships as well as friendships.  Such relationships, between peers, employees and supervisors, or even employees and individuals affiliated with the company, can create workplace issues and legal risks if not managed properly.  Therefore, manufacturers should ensure that they have adopted policies and procedures to adequately address such issues and mitigate the associated risks.

First, manufacturers should implement and update policies regarding workplace relationships, including policies addressing dating and romantic relationships as well as fraternization, familial relationships, and nepotism.  Such policies can be narrow or broad in scope and application, which may depend on the particular workplace and employee population.  Such policies should be uniformly applied to all employees and clearly address whether and what types of relationships are permitted, whether any relationships are prohibited and the reason for that position, whether relationships must or should be reported to human resources, and the consequences for failure to report.  For example, if a policy prohibits relationships between employees and supervisors, it should be clear about whether that includes all supervisors, only those in a direct reporting relationship to a particular employee, or those that could influence the employee’s terms and conditions of employment.

Second, manufacturers should ensure that their sexual harassment prevention policies are clear and up-to-date as well as their sexual harassment training programs.  Policies and trainings should be clear that unwelcome sexual advances will not be tolerated and should include examples such as repeated requests for dates, unwelcome gestures (e.g., giving of gifts or tokens of affection), among other such situations.  Furthermore, such policies should describe the legal theories of hostile work environment and quid pro quo harassment.  Quid pro quo harassment arises when someone in a position of power or authority (e.g., a supervisor) seeks sexual favors from an employee in return for a job benefit or to avoid an adverse action (e.g., demotion).  Strong policies and trainings that address workplace relationships are necessary because such relationships can create difficulties or complications in an employer’s ability to maintain a professional, respectful and harassment-free work environment; such relationships between supervisors and their direct reports can create a hostile work environment for others, feelings of favoritism or exclusion, and conflicts of interest, among other issues. 

Third, it is important for manufacturers to understand that when a relationship between employees ends or issues arise in the context of their relationship, it may impact the workplace and employers can be liable for failing to protect the employees involved. Therefore, it is important for employers to monitor such issues and take action when necessary to maintain a harassment-free work environment; in other words, once employers are on notice of such issues, they are involved and should act accordingly.

This week, we wrap up our forecast of annual trends with a focus on environmental, health, and safety issues that we expect many manufacturers may face this year.

1.  ESG Developments

Last year, we reported on the SEC’s Proposed Rule on Climate-Related Disclosures. The SEC is expected to finalize this rule in 2023, perhaps as early as March. The proposed rule is based in part on existing (but not mandatory) frameworks for climate-related disclosures, such as the recommendations of the Task Force on Climate-Related Disclosures, which some manufacturers might be familiar with – but not all. The proposed rule would require disclosures related to:

  • Governance of climate-related risks and relevant risk management processes;
  • How any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements ( in the short, medium, and long term);
  • How any identified climate-related risks have affected or are likely to affect the registrant’s strategy, business model, and outlook; and
  • The impact of climate-related events and transition activities on the line items of a registrant’s consolidated financial statements.

Most notably, however, covered companies will be required to report greenhouse gas emissions metrics, both those generated by their own company and, for some, those generated from upstream and downstream activities in their value chain. If this requirement remains in the final rule, it will impose significant data gathering obligations that some companies are already grappling with despite the proposed nature of the rule. 

Meanwhile, the SEC has stepped up scrutiny of climate-related and environmental disclosures under its existing rules and guidance. The SEC has issued letters to registrants asking for more information on filings and has even filed lawsuits against registrants based on alleged ESG deficiencies. All signs point to increased activity in 2023.

As has consistently been the case, the European Union seems to be a few steps ahead of the United States in requiring ESG-related disclosures. As an example, in late 2022, the EU passed the Corporate Sustainability Reporting Directive (CSRD), which will require covered companies to report on a variety of ESG topics, such as pollution and climate change. The CSRD will apply not only to companies in the EU, but also to non-EU companies with a significant presence there (annual generation of $150 million or more). And, while companies may use foreign sustainability reporting standards as a stand-in for the CSRD standards, the reporting requirements in the SEC proposed rule will not likely suffice.

In the midst of all of these reporting obligations, government agencies and the public alike will continue to scrutinize corporate greenwashing claims. Many companies have found themselves in the crosshairs – and the courtroom – when they can’t back up their environmental or sustainability claims. Greenwashing claims are having real consequences on companies in the form of reputation, litigation, and reporting risk. And while all of these new reporting standards are aimed, at least in part, to curtail greenwashing, with ever-increasing stakeholder awareness of ESG issues, greenwashing issues are likely to remain on the minds of manufacturers for the foreseeable future.

2.  Increased OSHA Enforcement

Manufacturers can expect OSHA to increase inspections and enforcement in 2023. One noteworthy change that took place at the end of 2022 was an expansion of OSHA’s Severe Violator Enforcement Program (SVEP). Under this program, OSHA prioritizes – and publicizes – certain employers for inspections and enforcement based on criteria regarding the severity of their safety record. In late 2022, OSHA expanded the SVEP to cover even more employers. Now, an employer may find itself on the severe violators list if it meets at least one of the following criteria: 

  • A fatality or catastrophe inspection where OSHA finds at least one willful or repeated violation or issues a failure-to-abate notice if directly related to an employee death or three or more hospitalizations;
  • An inspection where OSHA finds at least two willful or repeated violations or issues failure-to-abate notice based on a high gravity serious violation; or
  • Egregious situations (e.g., extensive violation history, bad faith, intentional disregard for health and safety).

Employers that find themselves in the SVEP will be subject to follow-up inspections at the facility in question. OSHA will also conduct inspections at related worksites if it has reason to believe that there could be a broader pattern of non-compliance.

Once an employer is part of the SVEP, it will remain on the list for at least three years. However, if an employer will agree to an enhanced settlement that includes, among other things, implementation of a safety and health management system, it may be able to exit the SVEP after two years.

Expansion of the SVEP is just one way we can expect to see increased OSHA activity in 2023. Companies that find themselves outside the SVEP may also see increased inspection and more aggressive enforcement as we move through the year, and beyond.

3.  PFAS

Are you sick of hearing about per-and polyfluoroalkyl substances (PFAS) yet? I hope not. The theme for PFAS in 2023 is more everything – more science, more investigation, more regulation, more litigation. More from the federal government, the states, the courts, the community, and your counterparts in a transaction. A couple of noteworthy highlights – first, EPA proposes to designate PFAS as a national enforcement initiative for fiscal years 2024-2027. This addition signifies that there will be increased focus on holding polluters responsible for investigating and remediating PFAS contamination, as well as preventing future releases. As part of the designation, EPA would develop a policy regarding enforcement and settlement of PFAS matters under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund.

Speaking of CERCLA, EPA has proposed to designate two PFAS compounds –perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), –  as hazardous substances. 2023 is the year this rule will likely become final. This designation will have broad impacts across the regulated community. First, as CERCLA hazardous substances, the government and private parties alike will have a clear pathway towards cost recovery and other actions related to PFAS contamination. Most manufacturers know from experience that Superfund sites typically implicate a wide variety of parties, some of whom may have had a very minimal contribution to the contamination at issue. This wide net will be of particular concern for sites with PFOA and PFOS contamination, given their ubiquitous use, presence in the environment, and ability to detect at miniscule concentrations. The designation may also result in the reopening of investigations at Superfund sites where PFOA and PFOS could be an issue but has not yet been addressed.