2020 Environmental, Health & Safety Outlook for Manufacturers

Welcome to 2020! As always, we at the Manufacturing Law Blog are starting the year with our annual forecasts of hot topics. We start the series with our Environmental, Health & Safety outlook.

PFAS

We highlighted per- and polyfluoroalkyl substances, or PFAS, as a hot topic in last year’s 2019 outlook post, saying, “If you haven’t yet heard of PFAS, you will.” This year, we think it is safe to say you’ve probably heard of them. PFAS are getting a lot of attention everywhere you look, state regulations, federal plans, court rooms, around the deal table, and even on the silver screen. PFAS manufacturing facilities may have been the first targets, but landfills and other potential release sites are gaining attention from regulators and plaintiffs alike. States are moving quickly to adopt regulations, or at the very least request information from parties that do have or may have had a connection to PFAS compounds.

With all of this attention, there has been a growing effort to sample water supplies to evaluate potential exposure issues. These efforts are sure to turn up additional PFAS contamination areas, particularly given the lengthy and prolific use of these compounds. As we identify more and more areas of contamination, the network of potentially responsible parties could expand beyond PFAS manufacturers to include landfill operators, property owners, and PFAS users and suppliers, among others.

EPA developed and released its PFAS Action Plan in February 2019, but the process to change federal regulations and standards is, well, slow. Congress is trying to speed up the action, with House bill H.R. 535 requiring time frames for a number of regulatory and other actions under the Comprehensive Environmental Response, Compensation, and Liability Act, Safe Drinking Water Act, and the Toxic Substances Control Act. The Senate and White House vow a fight, but in 2020, it’s safe to say everyone is getting in on the PFAS action.

OSHA Inspection Weighting  

In late 2019, OSHA developed new standards for how it prioritizes inspections. Previously, OSHA focused on the length of time an inspection would take and the number of inspections performed. Under the new Enforcement Weighting System, OSHA is prioritizing inspections based on a number of factors with a goal of targeting higher risk activities and establishments. OSHA plans to prioritize inspections in a weighted fashion in the order listed below:

Group A: Criminal and significant cases

Group B:

  • Fatalities and catastrophes
  • Chemical plan national enforcement priority and process safety management covered inspections

Group C:

  • Caught-in hazards, such as trenching, equipment operations, oil & gas
  • Electrical hazards, such as overhead power lines, electrical wiring methods
  • Fall hazards, such as scaffolds, elevated walking working surfaces
  • Struck-by hazards, such as highway work zones, landscaping, material handling

 Group D:

  • Programmed inspections following an established priority of hazards that are time insensitive and a high priority, such as:
    • Amputation
    • Combustible dust
    • Ergonomics
    • Federal agency inspections
    • Heat hazards
    • Non-permissible exposure limit overexposures
    • Workplace violence hazards
    • Confined space hazards
    • Personal sampling
    • Site-specific targeting

 Group E: all other inspections

This weighting system provides good insight into the types of hazards that might attract OSHA’s attention in 2020.

EPA Focus on Air and Water

EPA sets National Compliance Initiatives (NCIs, formerly known as National Enforcement Initiatives) for multi-year periods to focus its compliance and enforcement resources. The newly established NCIs focus on EPA’s bread and butter—air and water. For FYs 2020-2023, EPA plans to focus on reducing air emissions of hazardous air pollutants and volatile organic compounds, particularly when those emissions would contribute to non-attainment with National Ambient Air Quality Standards or would adversely affect vulnerable populations. EPA also plans to reduce significant noncompliance with the Clean Water Act permit program. EPA has identified approximately 11,000 permittees with effluent violations that are significantly noncompliant. EPA plans to cut the incidence of significant noncompliance in half by the end of FY 2022.

PBGC Report Reminds Manufacturers of the Coming Threat

The Pension Benefit Guaranty Corporation released its Fiscal Year 2019 Annual Report and, you guessed it, it was “un-good” (a legal term I think).  The Multiemployer Insurance Program recorded a record-breaking deficit of $65.2 billion.  The PBGC warned that the Multiemployer fund will likely be insolvent by 2025, within 6 years from today.  Without the PBGC insurance fund, the pensions of 10.8 American workers will be at risk.  Read the Report Here.

Regular readers of this space may recall I have blogged about the impending crisis four times over the last five years.  “Teamsters’ Central States Pension Plan: A Saga Becomes a Nightmare?” (Aug. 16, 2016);  See “The Gift-Giving Season? Three “Game-Changing” Employment Developments Impacting Manufacturers” (Oct. 15, 2014); “Teamster Plan to Cut Pensions Presents Significant Issues for Manufacturers” (May 25, 2015); and “A Troubling Future Part One:  Teamsters’ Pension Rescue Plan” (Oct. 22, 2015).  While Congress has held hearings on legislation to attack the problem, time seems to be running out.  Some of the nation’s largest multi-employer pension plans are likely to become insolvent during the next decade.  Without a comprehensive fix, the pensions of hundreds of thousands of retired American workers will be slashed.  The resulting fallout will stress an already fragile social safety net.

We will continue to watch this space and help manufacturers plan for events as they develop.

PFAS Update: EPA Progress Under PFAS Action Plan

Earlier this year, we wrote about EPA’s PFAS Action Plan, the agency’s blueprint for addressing contamination and protecting public health from per- and polyfluoroalkyl substances (PFAS). The PFAS Action Plan, released in February 2019, details a number of actions EPA plans to take with regard to PFAS, including time frames for implementation. EPA has been making some progress towards implementation, albeit not always on the timeline set forth in the Plan. Below are a few updates since February:

Toxics Release Inventory (TRI) Listing for PFAS 

Yesterday, EPA published notice that it is considering a rule to add PFAS compounds to the list of toxic chemicals subject to reporting under section 313 of the Emergency Planning and Community Right-to-Know Act. This listing would require certain industry sectors to annually report releases of these chemicals. The purpose of the TRI program is to provide the public with information, or, as EPA puts it, “A Right to Know, A Basis to Act.”

The published notice seeks comment from the public as to whether PFAS compounds should be included in the TRI. Specifically, EPA seeks input on:

  • which PFAS compounds should be evaluated for inclusion;
  • whether PFAS compounds should be listed individually or in categories;
  • the appropriate reporting thresholds; and
  • the human health and environmental toxicity, persistence, and bioaccumulation of PFAS.

The public comment period ends on February 3, 2020.

Regulation of PFAS Under the Safe Drinking Water Act (SDWA)

In the PFAS Action Plan, EPA committed to proposing regulatory determinations for PFOA and PFOS—two of the most common PFAS compounds—by the end of 2019. These regulatory determinations are the first step under the SDWA towards the development of Maximum Contaminant Levels (MCLs). EPA is still moving towards this goal, but the draft regulatory determinations are not likely to be released for public comment until early 2020.

Monitoring for PFAS

EPA intends to test for PFAS compounds during the next round of unregulated contaminant monitoring under the SDWA. The purpose of this monitoring is to collect data for contaminants that are suspected to be in drinking water but do not yet have established health-based standards under the SDWA. During the last round of monitoring, EPA tested for six PFAS compounds. EPA may look to expand that list, and it also plans to use newer sampling methods to detect compounds at lower minimum reporting levels than previously possible. The list of contaminants for the next round of testing is expected to be released in 2020.

PFAS Update: EPA Progress Under PFAS Action Plan

Earlier this year, we wrote about EPA’s PFAS Action Plan, the agency’s blueprint for addressing contamination and protecting public health from per- and polyfluoroalkyl substances (PFAS). The PFAS Action Plan, released in February 2019, details a number of actions EPA plans to take with regard to PFAS, including time frames for implementation. EPA has been making some progress towards implementation, albeit not always on the timeline set forth in the Plan. Below are a few updates since February:

Toxics Release Inventory (TRI) Listing for Certain PFAS Compounds 

Yesterday, EPA published notice that it is considering a rule to add PFAS compounds to the list of toxic chemicals subject to reporting under section 313 of the Emergency Planning and Community Right-to-Know Act. This listing would require certain industry sectors to annually report releases of these chemicals. The purpose of the TRI program is to provide the public with information, or, as EPA puts it, “A Right to Know, A Basis to Act.”

The published notice seeks comment from the public as to whether PFAS compounds should be included in the TRI. Specifically, EPA seeks input on:

  • which PFAS compounds should be evaluated for inclusion;
  • whether PFAS compounds should be listed individually or in categories;
  • the appropriate reporting thresholds; and
  • the human health and environmental toxicity, persistence, and bioaccumulation of PFAS.

The public comment period ends on February 3, 2020.

Regulation of PFAS Under the Safe Drinking Water Act (SDWA)

In the PFAS Action Plan, EPA committed to proposing regulatory determinations for PFOA and PFOS—two of the most common PFAS compounds—by the end of 2019. These regulatory determinations are the first step under the SDWA towards the development of Maximum Contaminant Levels (MCLs). EPA is still moving towards this goal, but the draft regulatory determinations are not likely to be released for public comment until early 2020.

Monitoring for PFAS

EPA intends to test for PFAS compounds during the next round of unregulated contaminant monitoring under the SDWA. The purpose of this monitoring is to collect data for contaminants that are suspected to be in drinking water but do not yet have established health-based standards under the SDWA. During the last round of monitoring, EPA tested for six PFAS compounds. EPA may look to expand that list, and it also plans to use newer sampling methods to detect compounds at lower minimum reporting levels than previously possible. The list of contaminants for the next round of testing is expected to be released in 2020.

Conviction of Foreign Employee Reinforces Broad Geographic Reach of FCPA

This week we are pleased to have a guest post from 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.

 Last week, a jury found a former executive of a French multinational company guilty of violating the Foreign Corrupt Practices Act, money laundering, and conspiracy in connection with alleged bribery in Indonesia. The case is a significant test of the geographic reach of the FCPA because the defendant was a foreign national who was employed by a foreign corporation and never entered U.S. territory during the course of his employment, but he was convicted on the theory that his actions were taken as an agent for his employer’s U.S. subsidiary. Continue Reading

Legal Pot = Manufacturing Storm Clouds (the Refrain)

A few months back, I posted some thoughts about recent efforts to legalize medical and recreational marijuana, with an emphasis on the potential issues such laws would have on manufacturers – particularly manufacturers in a space requiring a heightened concern for employee safety.  See Legal Pot = Manufacturing Storm Clouds” (May 29, 2019).  To my surprise, I started fielding related questions as soon as I published the blog.

So here is the question:  What do you do when an employee has a prescription to use medical marijuana under your state’s law and arrives to work reeking of marijuana?  Suppose the employee is employed in a job where a mistake could be dangerous to him or herself, or to the public at large.  (Think airline pilot, health care professional, high steel construction worker, or a laborer in a large equipment manufacturing facility.)

If we assume the employee’s medical condition would be covered under the Americans with Disabilities Act or a comparable state law, the employee’s employer may be required to accommodate that person’s off-duty use of marijuana.  See  Wild v. Carriage Funeral Holdings, Inc. and Noffsinger v. SS Niantic Operating Co., 2018 WL 4224075 (D. CT 2018).  But what if the person’s medical condition required him or her to use marijuana during a break?  Or what happens if the prescription says simply, “as needed?”

Generally speaking, an unsubstantiated fear that “something bad” may happen does not justify refusing to accommodate the individual.  So an employer’s concern or belief that the employee really does not “need” to use marijuana during break times or that she or he is “under the influence at work” may not be sufficient absence proof of intoxication.

Arguably, the above court decisions would permit an employer to discipline an employee for using marijuana at work or being under the influence of marijuana while at work.  The challenge of course is proving it.  I am told that like a fine cigar, the aroma of marijuana can linger on a person’s clothing long after use.  I also understand from my review of the literature that there has yet to be developed a reliable test for determining whether someone is under the influence (unlike alcohol, where reliable field sobriety and blood tests are highly accurate).

I admit I have no perfect answers.

This remains one area where society has outpaced both the law and the science.  Until we can agree on where we draw the line between public safety and individual liberty, I think these issues will continue to confound HR and legal professionals.

Manufacturers are Not Immune to Claims that their Inventions are Patent-Ineligible

This week, we are pleased to have a guest post from John Cordani.  John is a member of Robinson+Cole’s Manufacturing Industry Team and regularly counsels clients on intellectual property issues involving patent procurement, licensing, and litigation.

It is no secret that the competitive edge of U.S.-based manufacturers is often predicated, at least in large part, on technological innovation and the patents that protect them. The broader the patents, the better. Usually the only significant obstacle faced by manufacturers trying to obtain broad patent rights was ensuring that their patents were still narrow enough to be new and non-obvious in light of the known technologies in the industry. Most manufactures are not used to considering whether their innovations are not eligible for patent protection in the first place. After all, in order to be patent eligible, an invention need only be drawn to a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Since the statute explicitly calls out “manufactures” as eligible for patenting, manufacturers might be forgiven for believing that their patents would easily satisfy this standard. Not so, says the Federal Circuit. Continue Reading

Executive Orders Seek to Limit the Bite of Agency Guidance

On October 9, 2019, President Trump issued two executive orders regarding agency guidance – one focused on the development of new guidance and the other on the appropriate use of guidance in enforcement actions. And EPA is not wasting any time taking action. EPA Administrator Andrew Wheeler issued a memorandum on October 21, 2019 announcing the creation of two working groups to interpret and apply the executive orders. While he did not establish a time frame for completion of the working groups’ review processes, Administrator Wheeler indicated that the working groups would provide the agency with further instructions in the “coming weeks.”

One of the executive orders seeks to ensure that agencies cannot use guidance documents to enforce standards that are not otherwise contained in a statute or regulation. “When an agency uses a guidance document to state the legal applicability of a statute or regulation that document can do no more, with respect to prohibition of conduct, than articulate the agency’s understanding of how a statute or regulation applies to particular circumstances.” If an agency relies on a document or decision to assert a new or expanded claim of jurisdiction, the document or decision must be published in the Federal Register before the conduct over which jurisdiction is sought occurs. The order also requires that regulated parties have an opportunity to contest an agency’s legal and factual determinations before the agency issues that party a no action letter, notice of noncompliance, or other similar document.

The other executive order sets forth more stringent procedures for the development and publication of agency guidance. Within a specified timeframe, all agency guidance must be available on the agency’s website in a single, searchable database. Under the order, agencies are also required review their guidance documents and rescind any that should no longer be in effect. The order also requires agencies to develop (or amend) regulations establishing procedures for issuing guidance documents. At a minimum, these regulations must contain the following provisions:

  • A requirement that guidance documents clearly state that they do not bind the public, except as authorized by law or as incorporated into a contract;
  • Procedures for the public to petition for withdrawal or modification of a particular guidance document; and
  • A more stringent review process, including a public notice and comment period, for “significant” guidance documents.

Each agency will be responsible for addressing these executive orders, but it is clear that EPA has already begun that process. We will stay tuned to see how EPA will incorporate these executive orders into its daily compliance and enforcement activities.

Protecting a Manufacturer’s Competitive Advantage: Recent Developments in Post-Employment Restrictions

I have posted a few times here about using post-employment restrictions to preserve a manufacturer’s competitive advantage.  See  “Non-Compete Cautionary Tale” (Nov, 2, 2018); “I’m New – And It’s No [Trade] Secret” (Oct. 27, 2014) and “Even More Reason for Manufacturers to Update Their Employment Agreements” (June 15, 2015).  Many of my clients use these tools (and others) to protect that “secret sauce” that gives them a market advantage.

And so, I watch with more than a little interest as state legislatures move to adopt new restrictions on these tools.  California long held the title for the most restrictive of states, with its statutory prohibition on virtually all post-employment restrictions.  Maine, New Hampshire, Maryland and Rhode Island have each joined that club by enacting laws prohibiting non-competes for low wage workers (although each defines “low wage” differently).  Massachusetts’ adopted a law banning non-competes for non-exempt employees, limits them to one-year, and imposes a “garden leave” requirement.  Oregon now requires notice of the non-compete within 30 days of the employee’s termination, while proposed legislation in New Jersey imposes a 30-day pre-hire notice.  Washington State recently adopted a comprehensive scheme banning non-competes for employees earning less than $100,000 per year (contractors earning less than $250,000 per year).  And, to add a bit of intrigue, the Washington law will not take effect until January 2020, but will apply retroactively.

This changing landscape requires manufacturers and others to think creatively about their employment and other agreements to enhance protections.  Many such agreements have sought to “contract around” state law by using different so-called “forum selection” and/or “choice of law” provisions, with mixed success.  See generally Brown & Brown, Inc. v. Johnson and Lawley Benefits Group, LLC, 25 N.Y.3d 364 (2015)(rejecting Florida “choice of law” provision); NuVasive, Inc. v. Patrick Miles, 2019 WL 4010814 (Del. Ch. Aug. 26, 2019)(rejecting Delaware choice of law); Gen. Electric Co. v. Uptake Technologies, Inc., 2019 WL 2601351 (N.D. Ill. June 25, 2019) (applying New York law).  Others have sought to circumvent state restrictions by tying the restriction to a number of federal laws which pre-empt contrary state laws under the Supremacy Clause to the United States Constitution.  See e.g. Latif v. Morgan Stanley & Co., 2019 WL 2610985 (SDNY June 26, 2019)(Federal Arbitration Act); Abdullayeva v. Attending Home Care Services, LLC, 18-651 (2d Cir. 2019)(National Labor Relations Act); Clark v. Lauren Young Tire Center Profit Sharing Trust, 816 F.2d 480, 481 (9th Cir. 1987)(ERISA).

Given this evolving landscape, manufacturers seeking to maintain their advantage should periodically review and update agreements and policies.

Common Mistakes That Lead To Big Customer Disputes

By nature, lawyers tend to be reactive and we are trained to respond to crisis and/or problems.  So, it takes a lot of work to develop proactive skills so that we can help our clients avoid problems such as large customer disputes or worse (the dreaded class action).

Over time, we have noticed common themes that are precursors to these kinds of disputes.  We have been sharing them with clients as we train sales staff globally.

Here are some of the themes that can cause enhanced risk and/or liability for a manufacturer:

  • Ignoring communications from outside parties
  • Responding slowly to internal tasks and questions
  • Sending unnecessary, inaccurate or unprofessional internal emails
  • Conducting your own independent analysis/investigation
  • Poor record-keeping (not preserving records)
  • Without specific authorization from management –
    • Commenting on legal/contract issues
    • Revealing internal operations or product details
    • Sharing internal communications
    • Admitting fault or mistake
    • Making a settlement offer
    • Agreeing on a settlement/resolution
    • Signing documents related to a claim/dispute
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