Tag: government

The New Paradigm in Mexico for Damage Claims in Industrial Property.

The Federal Law for the Protection of Industrial Property, in force since the 5th of November of 2020, is distinguished from its predecessor, among other things, by the particularities in the claims of a compensation for damages caused by the infringement of industrial property rights.

Currently, individuals may claim a compensation for damages through the administrative venue, before the Mexican Institute of Industrial Property (IMPI), or through the civil venue before the corresponding Courts in the matter. This implies that the holder of infringed exclusive rights may opt for two procedures and authorities of different nature, which has its benefits and disadvantages.

Before the IMPI, the compensation action is exercised in an ancillary proceeding, provided that such authority has previously issued a declaration of administrative infringement that is enforceable. Alternatively, it is still possible for the action to be brought directly before the Civil Courts, once the resolution from IMPI is final.

Although the exercise of the action for compensation before the administrative authority implies that a specialized authority in the matter is to hear the case, it has the disadvantages that its ancillary proceeding requires the prior prosecution of an administrative infringement claim before the same administrative authority (IMPI) and the lack of experience to quantify damages and losses. Additionally, the time required for the enforcement of the resolution issued by the IMPI before the Federal Courts in Civil Matters must be added to the time required for the substantiation of the action.

Thanks to the entry into force of the new Law, individuals may also resort directly to the civil Courts to claim infringement of their industrial property rights and compensation for damages, without the need for a prior declaration of infringement by the IMPI. This implies that a Judge, an expert in civil law, will have to delve into complex, specialized and technical issues, specific to industrial property.

Additionally, it is provided that the proceeding of the civil action will be suspended if an invalidity claim is filed before the IMPI against the right basis the civil claim, as long as the administrative authority does not issue a final resolution to such nullity action. This counteracts the advantage of a civil proceeding whose resolution may be quicker than before IMPI.

The new landscape for the claim for damages requires a careful study of the particularities of each specific case to determine the suitability of each route, since this is influenced, among other factors, by the complexity, the sophistication of the counterparty, the causes and technical considerations of the violation caused, among others.

© 2005-2024 OLIVARES Y COMPAÑIA S.C.
For more news on Damage Claims in Industrial Property in Mexico, visit the NLR Real Estate section.

Biden Administration Changes Green Card Process for Mixed-Status Families

To improve immigration processes and provide additional support to immigrants, the Biden administration has announced several policy changes.

Starting Aug. 19, 2024, unauthorized spouses and children of U.S. citizens who have been in the United States for at least 10 years can apply for parole in place, allowing these individuals to obtain green cards without having to leave the country. If approved, eligible family members will have three years to apply for permanent residency while being granted work authorization. By enabling family members to adjust their immigration status from within the United States, rather than traveling abroad and potentially facing a 10-year reentry ban, this change may significantly simplify the permanent residency process for eligible individuals.

The U.S. Department of State has also revised its guidance to favor immigrants with U.S. college degrees and job offers. The updated guidelines clarify that it is in the public interest for these individuals, including those with work authorization from the Deferred Action for Childhood Arrivals (DACA) program, to utilize their degrees in the United States. Consular officers will now have the discretion to weigh an applicant’s college degree and job offer favorably when deciding whether to grant a waiver to a visa applicant who would otherwise be ineligible. These adjustments aim to expedite the work visa process for college graduates.

Additionally, the Biden administration announced plans to double the locations for the Executive Office Immigration Review (EOIR), a program that provides volunteer attorneys in immigration courts for those without legal representation. Currently operating in San Francisco, Chicago, and New Orleans, the EOIR will expand to Maryland, New York City, and Atlanta by the end of the fiscal year. This expansion seeks to ensure fair representation for immigrants during legal proceedings. The EOIR has issued a call for attorneys to provide pro bono support to the program.

To expand opportunities for Latino communities, the Biden administration also announced that the U.S. Department of Education will propose to expand federal outreach programs targeting beneficiaries of the DACA program. Known as the Trio Program, this initiative aims to assist individuals from disadvantaged backgrounds as they transition from high school to college. The Department of Education’s proposal would extend the Trio Program to reach an additional 50,000 individuals.

©2024 Greenberg Traurig, LLP. All rights reserved.
For more news on Biden Administration Green Card Processes, visit the NLR Immigration section.

15% Discount on Chinese Patent Annuities for Open Licensing

Per a slightly ambiguous notice from the Ministry of Finance and the National Development and Reform Commission released July 24, 2024 (财政部 国家发展改革委关于调整优化专利收费政策的通知), annuity fees will be reduced by 15% for Chinese patents for participating in China’s open licensing system. As of the time of writing, there were over 2,000 open licenses published on China’s Intellectual Property Administration’s (CNIPA) online publication system.

15% Discount on Chinese Patent

Specifically, section 2 reads:

A 15% reduction in annual patent fees during the implementation period of patent open licensing. If other patent fee reduction policies are also applicable, the most favorable policy can be selected, but it cannot be enjoyed repeatedly.

However, it is unclear if this requires an actual license or simply having an offer to license published on CNIPA’s open license system.

In addition, there appears to be an additional annuity fee due for patents that receive patent term compensation (presumably for both patent term extensions for pharmaceutical patents and patent term adjustment for CNIPA delay in patent examination). It is unclear if this additional annuity is due for the entire patent term or just for the added patent term.

Specifically, section 1 reads, in part:

A patent owner who files a request for patent term compensation shall pay a patent term compensation request fee.

If a request for patent term compensation is found to meet the conditions for term compensation upon review, an annual patent compensation fee shall be paid…

CNIPA earlier this month also released additional information about open licensing system including royalty rates.

The full text of the Notice if available here (Chinese only).

© 2024 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.
For more news on Chinese Patent Licensing, visit the NLR Intellectual Property section.

Triggers That Require Reporting Companies to File Updated Beneficial Ownership Interest Reports

On January 1, 2024, Congress enacted the Corporate Transparency Act (the “CTA”) as part of the Anti-Money Laundering Act of 2020 and its annual National Defense Authorization Act. Every entity that meets the definition of a “reporting company” under the CTA and does not qualify for an exemption must file a beneficial ownership information report (a “BOI Report”) with the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). Reporting companies include any entity that is created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe (this includes corporations, LLCs, and limited partnerships).

In most circumstances, a reporting company only has to file an initial BOI Report to comply with the CTA’s reporting requirements. However, when the required information reported by an individual or reporting company changes after a BOI Report has been filed or when either discovers that the reported information is inaccurate, the individual or reporting company must update or correct the reporting information.

Deadline: If an updated BOI Report is required, the reporting company has 30 calendar days after the change to file an updated report.

What triggers an updated BOI Report? There is no materiality threshold as to what warrants an updated report. According to FinCEN, any change to the required information about the reporting company or its beneficial owners in its BOI Report triggers a responsibility to file an updated BOI Report.

Some examples that trigger an updated BOI Report:

  • Any change to the information reported for the reporting company, such as registering a new DBA, new principal place of business, or change in legal name.
  • A change in the beneficial owners exercising substantial control over the reporting company, such as a new CEO, a sale (whether as a result of a new equity issuance or transfer of equity) that changes who meets the ownership interest threshold of 25%, or the death of a beneficial owner listed in the BOI Report.
  • Any change to any listed beneficial owner’s name, address, or unique identifying number provided in a BOI report.
  • Any other change to existing ownership information that was previously listed in the BOI Report.

Below is a reminder of the information report on the BOI report:

  • (1) For a reporting company, any change to the following information triggers an updated report:
    • Full legal name;
    • Any trade or “doing business as” name;
    • A complete current address (cannot be a post office box);
    • The state, territory, possession, tribal or foreign jurisdiction of formation; and
      TIN.
  • (2) For the beneficial owners and company applicants, any change to the following information triggers an updated report:
    • Full legal name of the individual;
    • Date of the birth of the individual;
    • A complete current address;
    • A unique identifying number and the issuing jurisdiction from one of the following non-expired documents; and
    • An image of the document.

It is important to note that if a beneficial owner or company applicant has a FinCEN ID and any change is made to the required information for either individual, then such individuals are responsible for updating their information with FinCEN directly. This is not the responsibility of the reporting company

© 2024 Winstead PC.

The Gig Continues: California Supreme Court Upholds Proposition 22

On July 25, 2024, the California Supreme Court issued its long-awaited ruling in Castellanos et al., v. State of California and Protect App-Based Drivers and Services, et al., upholding the 2020 voter initiative known as Proposition 22 the allows certain gig economy companies to classify drivers as independent contractors.

In 2019, California Assembly Bill 5, also known as AB5, expanded the landmark California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court, and made the “ABC” test law.

Pursuant to the ABC test, in order to maintain independent contractor status, the hiring entity must establish each of the following three factors:

  1. that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
  2. that the worker performs work that is outside the usual course of the hiring entity’s business; and
  3. that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

As a result, AB5 is widely perceived as the most draconian independent contractor test in the country.

The impact of AB5 has been pronounced and widespread, perhaps most noticeably for California’s gig economy.

In November 2020, following significant investment by affected companies such as Uber and Lyft, Proposition 22 hit the ballot. It asked voters whether “App-Based Transportation and Delivery Companies” should be exempted from providing employee rights and benefits to their drivers. In other words, whether gig drivers could be classified independent contractors. The initiative passed by 59% of the vote, and was codified as Business and Professions Code section 7451.

Shortly thereafter, drivers’ groups and unions challenged Proposition 22, arguing that section 7451 was unconstitutional because it infringed upon the power granted to the legislature to regulate workers’ compensation. After winning that argument in the Superior Court, the Court of Appeal reversed, and the Supreme Court agreed to hear the dispute.

The state’s highest court rejected the challenge in a unanimous decision, holding that the state constitution does not preclude the “electorate from exercising its initiative power to legislate on matters affecting workers’ compensation.” The decision was careful to examine only the question presented, i.e., whether section 7451 was unconstitutional. The Court specifically declined further exploration of the underlying workers’ compensation issue, stating: “We reserve these issues until we are presented with an actual challenge to an act of the Legislature providing workers’ compensation to app-based drivers.”

As a result of this decision, covered gig workers may maintain independent contractor status, with additional rights such as guaranteed earnings above minimum wage, health care stipends, and insurance — but without the protections of California’s employment laws — while maintaining the flexibility often attractive to those who choose this work.

In addition to drivers for app-based companies covered by Proposition 22, there are other limited exceptions to AB5, such as businesses that work through referral agencies, real estate professionals, and workers providing professional services. Each of the applicable tests is involved and often complicated.

At this stage, before classifying anyone as an independent contractor in California, companies would be wise to review the issues closely with their counsel.

©2024 Epstein Becker & Green, P.C. All rights reserved.
For more news on California Proposition 22, visit the NLR Labor Employment section.

DOE Ramping Up General Service Lamp Enforcement

Largely out of public view, the U.S. Department of Energy (DOE) has been ramping up enforcement of its “backstop” efficiency standard and sales prohibition regarding general service lamps, including incandescent bulbs. After a period of enforcement discretion (previewed in published guidance) that has now passed, we expect at least some of DOE’s efforts to become public in the coming months as the Department begins to settle enforcement actions and assess civil penalties against non-compliant lamp manufacturers, importers, distributors, and retailers.

The Final Rule

Following a rulemaking process that took many twists and turns over the past decade (as summarized in a prior alert), as of July 25, 2022, the sale of any general service lamp that does not meet a minimum efficacy standard of 45 lumens per watt hour (lm/W) is prohibited. 10 C.F.R. § 430.32(dd).

A “general service lamp” (GSL) is a lamp that:

  1. Has an ANSI base;
  2. For an integrated lamp, is able to operate at a voltage or in a voltage range of 12 or 24 volts, 100–130 volts, 220–240 volts, or 277 volts;
  3. For a non-integrated lamp, is able to operate at any voltage;
  4. Has an initial lumen output of greater than or equal to 310 lumens (or 232 lumens for modified spectrum general service incandescent lamps) and less than or equal to 3,300 lumens;
  5. Is not a light fixture;
  6. Is not an LED downlight retrofit kit; and
  7. Is used in general lighting applications.

10 C.F.R. § 430.2. GSLs include, but are not limited to, general service incandescent lamps, compact fluorescent lamps, general service light-emitting diode lamps, and general service organic light-emitting diode lamps. GSLs consist of pear-shaped A-type bulbs, but also five categories of specialty incandescent lamps (rough service lamps, shatter-resistant lamps, 3-way incandescent lamps, high lumen incandescent lamps, and vibration service lamps), incandescent reflector lamps, and a variety of decorative lamps (T-Shape, B, BA, CA, F, G16-1/2, G25, G30, S, M-14 of 40W or less, and candelabra base lamps). DOE maintains exclusions for twenty-six categories of lamps, including appliance lamps and colored lamps, among others. Id.

Approximately 30 percent of light bulbs sold across the United States in 2020 were incandescent or halogen incandescent lamps. Almost all such lamps would fail to meet the statutory 45 lm/W backstop standard. Because many LED lamps, in contrast, can meet the 45 lm/W standard, DOE’s actions are accelerating a transition to LEDs.

Federal and State Enforcement

During this transition, DOE enforcement is likely to most aggressively target manufacturers and importers continuing to distribute non-compliant lamps, and will include the assessment of civil penalties. DOE is authorized to assess penalties of as much as $560 for each non-compliant lamp sold. While enforcement actions typically settle for tens or hundreds of thousands of dollars, DOE has obtained seven-figure settlements for more significant violations or where a business has repeatedly failed to comply.

Specifically with respect to general service lamps (but not for other covered products), the Department is also authorized to enforce against distributors and retailers who sell non-compliant lamps, and early indications are that DOE is beginning to act on that authority. Because the federal backstop standard is enforced at the time of sale, lamps imported into the United States before July 25, 2022, are not exempt from enforcement if sold after the deadline.

Separately, some states—including California—also enforce their own efficiency standards for products not subject to federal standards. The California Energy Commission recently settled an enforcement action for over $120,000 against a company that was selling state-regulated LEDs that were not certified in California’s compliance database prior to sale, and which did not meet state standards.

Next Steps

Businesses operating at any stage in the lamp supply chain should, therefore, take immediate steps to ensure they are not making, importing, distributing, or selling to consumers any lamps that do not meet applicable federal or state requirements. To determine whether a particular general service lamp meets the backstop standard, one can take the total lumens produced by the lamp and divide it by its wattage. If the calculated number is below 45, and the product does not qualify for any of the listed exclusions, then it is non-compliant, and its continued sale could prompt federal enforcement.

© 2024 Beveridge & Diamond PC
For more news on DOE Lighting Enforcement, visit the NLR Environmental Energy Resources section.

Environmental Compliance in 2024: What Does it Take to Avoid Triggering EPA Scrutiny?

As environmental concerns continue to take center stage, more and more companies are finding themselves facing scrutiny from the U.S. Environmental Protection Agency (EPA). As a result, from a risk management perspective, environmental compliance is more important than ever in 2024—and this is likely to remain the case for the foreseeable future.

What does this mean for companies whose operations have (or have the potential to have) environmental impacts? The short answer is that they need to make EPA compliance a priority. They must proactively address all areas of concern, and they must be prepared to demonstrate their proactive efforts to the EPA if necessary.

The EPA’s enforcement arm is extremely active, and several offices within the agency are tasked with uncovering and addressing environmental regulations violations. As discussed below, many federal environmental laws include criminal enforcement provisions as well, and the EPA regularly works with the U.S. Department of Justice (DOJ) to pursue criminal charges when warranted.

7 Keys to Avoiding EPA Scrutiny in 2024 (and Beyond)

With all of this in mind, what do company owners and executives need to know in order to avoid triggering EPA scrutiny in 2024 (and beyond)? Here are seven tips for effectively manage environmental compliance in today’s world:

1. Thoroughly Assess the Company’s Environmental Compliance Obligations

The EPA enforces numerous federal environmental statutes, and it has promulgated an extraordinarily long, dense, and complicated set of regulations under these statutes. The EPA enforces a number of environmentally focused Executive Orders (EOs) as well. As a result, for all companies, the first step toward implementing an effective EPA compliance program is determining which laws, regulations, and EOs apply. Here are just some of the most common examples:

  • Clean Air Act (CAA) compliance
  • Clean Water Act (CWA) compliance
  • Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) compliance
  • Endangered Species Act (ESA) compliance
  • Energy Independence and Security Act (EISA) compliance
  • Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) compliance
  • Food Quality Protection Act (FQPA) compliance
  • Marine Protection, Research, and Sanctuaries Act (MPRSA) compliance
  • Resource Conservation Recovery Act (RCRA) compliance
  • Safe Drinking Water Act (SDWA) compliance
  • Toxic Substances Control Act (TSCA) compliance
  • Environmental Executive Order (EO) compliance

Determining applicability requires an in-depth understanding of each source of authority’s focus and scope. As a result, assessing a company’s environmental compliance obligations generally involves engaging experienced outside EPA counsel.

2. Develop Custom-Tailored Environmental Compliance Policies, Procedures, and Protocols

Of course, simply understanding a company’s compliance obligations is not enough. To effectively manage environmental compliance, companies must develop environmental compliance policies, procedures, and protocols that are custom-tailored to their operations and facilities. These should be sustainable practices that will increase operational efficiency and reduce costs and waste.

This, too, involves working with experienced EPA counsel. To establish and maintain EPA compliance, companies may need to take a variety of different steps. Depending on the specific environmental risks a company’s operations present (or may present), these steps may include:

  • Applying for a license, permit, or registration with the EPA
  • Passing EPA inspections
  • Restricting or preventing the discharge of contaminants or pollutants
  • Issuing notifications to consumers and/or the EPA
  • Promptly remediating spills and other exposure events

These are just a handful of numerous possibilities. While managing EPA compliance will be relatively straightforward for some companies, for others it can be a substantial undertaking. In both cases, developing custom-tailored policies, procedures, and protocols is a critical step toward effective regulatory compliance management.

3. Prioritize Environmental Compliance as an Element of Corporate Culture and Responsibility

Managing EPA compliance is not a one-time event. In other words, while developing custom-tailored policies, procedures, and protocols is a critical step toward effective compliance management, it is ultimately just one step in an ongoing process.

To effectively manage EPA compliance, companies need to take a top-down approach. They need to prioritize environmental compliance as an element of corporate culture and responsibility, and they need to make clear that personnel at all levels of the organization play an important role in protecting both the environment and the company. Lack of understanding and commitment at the executive level is a red flag for the EPA, and ineffective implementation of a company’s EPA compliance program can significantly increase its risk of both committing violations and facing enforcement.

4. Monitor and Audit Environmental Compliance

Another critical aspect of effectively managing a company’s environmental compliance-related risk is internally assessing compliance on an ongoing basis. Once a company has implemented its custom-tailored policies, procedures, and protocols, it must determine whether these are functioning as intended. While they should be, companies cannot afford to assume that this is the case. Ineffective training, oversights during implementation, changes in a company’s operational procedures, and various other issues can lead to compliance failures despite the implementation of an otherwise well-suited EPA compliance program.

Internally assessing compliance has two main components: (i) continuous monitoring, and (ii) periodic auditing. Companies should have safeguards in place that are designed to detect material violations when they occur. Companies must also conduct compliance audits at least annually to perform a deep-dive analysis of the efficacy of their compliance efforts. Crucially, if a company’s monitoring or auditing efforts uncover a violation of environmental rules, the company must then respond appropriately—and it must do so as efficiently as possible.

5. Generate and Store Environmental Compliance Documentation as a Matter of Course

When facing scrutiny from the EPA, being prepared to affirmatively demonstrate a company’s good-faith environmental compliance efforts is essential. In almost all cases, this is both the most effective and the most efficient way to resolve an EPA inquiry. Doing so requires clear and comprehensive documentation of the company’s ongoing compliance efforts, including its efforts to monitor, audit, and enforce compliance.

This means that companies need to generate and store environmental compliance documentation as a matter of course. By building documentation into their procedures and protocols, companies can do this efficiently and in a manner that facilitates demonstrating compliance to the EPA when necessary.

6. Respond Promptly (and Appropriately) to Information Requests and Other Inquiries

Companies can hear from the EPA under a variety of different circumstances. While different types of inquiries call for different types of responses, in all cases, a prompt and informed response is critical.

Once the EPA initiates an inquiry, it isn’t simply going to go away. Delay tactics will raise red flags; and, in the meantime, the EPA will be continuing its investigative and enforcement efforts. As part of their EPA compliance policies and procedures, companies should establish a step-by-step process for responding to the EPA in various scenarios. In most scenarios, the first step in this process will be engaging the company’s outside EPA counsel to provide guidance.

7. Update the Company’s Environmental Compliance Program as Necessary

Just as companies need to monitor their EPA compliance efforts on an ongoing basis, they must also monitor for any changes that necessitate updates to their environmental compliance programs. These changes could involve either: (i) changes in the environmental legislation; or, (ii) changes in the company’s operations that present new environmental compliance risks. In both cases, prompt action is key, as the EPA expects companies to consistently maintain comprehensive compliance.

Failing to Effectively Address Environmental Compliance: What Are the Risks?

Ideally, companies will maintain effective EPA compliance programs, and this means that they won’t have to worry about the risks of noncompliance. But, let’s say a company doesn’t do everything that is required. If the EPA has grounds to pursue enforcement, what are the risks involved?

Depending on the circumstances, the risks of environmental noncompliance can include:

  • Loss of License, Permit, or Registration – Companies may need to obtain a license, permit, or registration from the EPA in various scenarios. Failure to comply with the terms of licensure, permitting, or registration can lead to temporary suspension or permanent revocation.
  • “No Sale” Orders, Injunctions, and Other Administrative Remedies – The EPA also has the authority to impose “no sale” orders, injunctions, and other administrative remedies as necessary. If a company’s products or operations pose immediate environmental risks, the EPA can—and will—step in to intervene.
  • Civil Monetary Penalties – Environmental noncompliance can also trigger civil monetary penalties in many cases. Under several statutes, these penalties accrue on a daily or per-violation basis, which can lead to substantial financial liability for companies of all sizes.
  • Criminal Fines – As noted above, many of the statutes within the EPA’s enforcement jurisdiction include provisions for criminal enforcement. In criminal enforcement cases, companies can face substantial fines—and, in the aggregate, these fines can easily total millions, if not tens or hundreds of millions, of dollars.
  • Federal Imprisonment for Owners, Executives, and Others – Criminal enforcement cases can also expose companies’ owners, executives, and others to the risk of federal imprisonment. While relatively rare, the EPA and DOJ do not hesitate to pursue incarceration of implicated individuals when warranted.
Oberheiden P.C. © 2024
For more news on Environmental Compliance in 2024, visit the NLR Environmental Energy Resources section.

PFAS CERCLA Expansion Now On Hold

We have regularly reported on the EPA‘s long-anticipated  rule to designate PFOA and PFOS as “hazardous substances” under CERCLA. In April 2024, the EPA also issued an Advanced Notice of Proposed Rulemaking (ANPRM), which aimed to have seven additional PFAS added to the CERCLA list of “hazardous substances.” EPA originally set a deadline of April 2025 to finalize the rule to add seven additional PFAS to CERCLA; however, EPA’s July 2024 Unified Agenda now indicates that the deadline to finalize the rule for the additional seven PFAS is “to be determined.”

The shift in priorities away from an expanded PFAS CERCLA designation is a significant development that anyone follows PFAS regulatory or litigation news.

CERCLA PFAS Scope Designation To Date

On January 10, 2022, the EPA submitted a plan for a PFAS Superfund designation to the White House Office of Management and Budget (OMB) when it indicated an intent to designate two legacy PFAS – PFOA and PFOS – as “hazardous substances” under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA, also known as the Superfund law). The EPA previously stated its intent to make the proposed designation by March 2022 when it introduced its PFAS Roadmap in October 2021. Under the Roadmap, the EPA planned to issue its proposed CERCLA designation in the spring of 2022. On August 12, 2022, a CERCLA PFAS designation took a significant step forward when the OMB approved the EPA’s plan for PFOA and PFOS designation. This step opened the door for the EPA to put forth its proposed designation of PFOA and PFOS under CERCLA and engage in the required public comment period.

When OMB initially contemplated approving the EPA’s proposed rule, it designated the rule as “other significant”, which meant that the rule was predicted to have costs or benefits less than $100 million annually. However, the OMB received several pieces of feedback expressing concern that such an estimate fa undervalued the impact that such a designation will have. More specifically, the Chamber of Commerce provided its own estimate that the CERCLA designation would have a cost impact of over $700 million annually. As a result, the OMB changed its designation of the EPA’s propose rule to “economically significant”, which triggered the EPA to have to conduct a RIA prior to proposing the PFAS CERCLA designation. Under the RIA, the EPA will have to provide support for its position that a CERCLA designation is justified to achieve EPA goals and to provide support for the contention that such a designation is the least burdensome and most cost-effective way to achieve the EPA’s goals.

Despite the call for a RIA by the OMB, the EPA nevertheless released its final CERCLA designation in May 2024, the significance of which, if it survives legal challenges, will be felt for some time.

Additional CERCLA Designation

In February 2023, the EPA sent a proposed rule to the OMB that states the following:

“EPA plans to publish in the Federal Register an advance notice of proposed rulemaking requesting public input on whether the agency should consider designating as hazardous substances precursors to PFOA and PFOS, whether the agency should consider designating other PFAS as CERCLA hazardous substances and whether there is information that would allow the agency to designate PFAS as a class or subclass.”

The OMB reviewed the proposal and on March 24, 2023, approved the proposal so as to permit the EPA to proceed with publishing the Advanced Notice of Proposed Rulemaking (ANPRM).

On April 13, 2023, the EPA published in the Federal Register an ANPRM that seeks public comment on a proposal to list as “hazardous substances” the following additional PFAS: PFBS, PFHxS, PFNA, HFPO-DA, PFBA, PFHxA, and PFDA. The EPA indicated that the seven PFAS were chosen based on available toxicity data for the chemicals.

CERCLA PFAS Designation: Impact On Businesses

Once a substance is classified as a “hazardous substance” under CERCLA, the EPA can force parties that it deems to be polluters to either cleanup the polluted site or reimburse the EPA for the full remediation of the contaminated site. Without a PFAS Superfund designation, the EPA can merely attribute blame to parties that it feels contributed to the pollution, but it has no authority to force the parties to remediate or pay costs. The designation also triggers considerable reporting requirements for companies. Currently, those reporting requirements with respect to PFAS do not exist, but they would apply to industries well beyond just PFAS manufacturers. The CERCLA PFAS scope in any final regulation is therefore critical to numerous industries that were or are downstream users of PFAS.

The downstream effects of a PFOA and PFOS designation would be massive, but a designation of the entire class of PFAS or even various subclasses of PFAS would be potentially unquantifiable in financial magnitude. With over 15,000 PFAS in existence according to the EPA and many of them in continued use to this day, the potential environmental pollution ramifications touch on countless industry types. Companies that utilized PFAS in their industrial or manufacturing processes and sent the PFAS waste to landfills or otherwise discharged the chemicals into the environment will be at immediate risk for enforcement action by the EPA given the EPA’s stated intent to hold all PFAS polluters of any kind accountable. Waste management companies should be especially concerned given the large swaths of land that are utilized for landfills and the likely PFAS pollution that can be found in most landfills due to the chemicals’ prevalence in consumer goods. These site owners may be the first targeted when the PFOA/PFOS designation is made, which will lead to lawsuits filed against any company that sent waste to the landfills for contribution to the cost of cleanup that the waste management company or its insured will bear. However, with a broader PFAS designation a possibility now, there should naturally be concern regarding re-openers in the future for these same sites.

Of course, all of the above are subject now to legal challenges of the final CERCLA designation, which will play out over the next several months. In addition, EPA (and the rest of the country) are now living in a post-Chevron world, which is sure to have significant impacts on challenges to EPA’s intentions with respect to PFAS under CERCLA. It is perhaps for these reasons that EPA recently adjusted its deadline to finalize the expended PFAS CERCLA designation to a status of “to be determined.” This is quite significant and shows to me that EPA is adjusting its resources to prepare for the legal challenges to come, as well as focusing more earnestly on initiatives that it can pass prior to a potential shift in party power in the November 2024 elections.

Conclusion

While it is likely fair to say that almost all significant PFAS initiatives that EPA wishes to undertake will not be pushed forward until after the November election cycle, it is nevertheless of great importance for companies, insurers, and financial world specialists to continue to monitor PFAS developments. Even with a party shift in November, PFAS is unlikely to be wiped off of the map, so to speak, in terms of an environmental issue. The awareness of PFAS issues among media, politicians and citizens is simply too great at this point. In addition, developments that will be critical to monitor because of the impact that they may have on PFAS litigation, which will surely subsume PFAS regulatory impacts if November brings a party power shift.

©2024 CMBG3 Law, LLC. All rights reserved.
For more news on PFAS CERCLA Expansion, visit the NLR Environmental Energy Resources section.

This Michigan Supreme Court Case Has the Potential to Guide Drone and Air Rights Law for the Nation

While at first glance the Michigan Supreme Court case of Long Lake Township v. Maxon, appears to be a simple zoning dispute with a Fourth Amendment twist, the real impact of the case may ultimately fall on drones and air rights law, particularly the rights of landowners to exclude drones from flying in the airspace immediately above their land, and relatedly the ability of state and municipal governments to regulate such flights.

The history of the case is straightforward. When the Michigan municipality of Long Lake Township sought to enforce a zoning ordinance against Todd Maxon, Mr. Maxon asked the trial court to exclude all evidence obtained by flying a drone over Mr. Maxon’s land. After the trial court refused to exclude the evidence on the grounds that the photographs did not violate the Fourth Amendment, an appellate court ruled that the Fourth Amendment issue was irrelevant because a legal proceeding to enforce a local zoning ordinance is not required to exclude evidence obtained in violation of the Fourth Amendment (the requirement to exclude such evidence is known as the “exclusionary rule”).

Now, we await the Michigan Supreme Court’s decision as to whether the exclusionary rule applies, and if so, whether the use of the drone to inspect Mr. Maxon’s land for zoning compliance violated the Fourth Amendment’s prohibition of unreasonable searches.

A decision on that second question will center on landowners’ right to exclude drones from the airspace immediately above their land, because a warrantless search violates the Fourth Amendment if there is a reasonable expectation of privacy in the searched area that society recognizes as reasonable. It follows then, that, if a landowner has no legal right to exclude drones from flying over his or her land, then it would be inherently unreasonable to expect privacy in portions of their property that can be observed from such public drone flight paths above their land, as courts routinely rule that there cannot be a reasonable expectation of privacy in land that can be observed from adjacent, publicly-accessible space.

As drone technology developed from a curious, niche hobby into a potential billion-dollar business with the ability to change the way packages are delivered to our homes and offices, legal debates quickly followed about whether all airspace above the blades of the grass constitutes “publicly navigable airspace” that is beyond the control of the landowners below, or if those landowners maintain some residual control over some airspace above their land. A decision from the Michigan Supreme Court on this issue would be one of the highest level state or federal courts to confront this question.

Hopefully, the exclusionary rule will not prevent a thorough analysis of the issue, as its resolution will ultimately be necessary to confirm the permissibility of local government regulation of the time, place, and manner of drone flights, and landowners’ airspace control rights, and only when those questions are resolved will drone technology be able to fully flourish in the United States as part of a legal regime that acknowledges and respects the traditional property rights of landowners.

This is a bellwether. This decision will affect the course of not just Michigan, but all of America about how it treats drone surveillance.
Copyright 2024 Goulston & Storrs PC.
For more news on Drone Air Regulations and Zoning Rights, visit the NLR Real Estate section.

It’s a Cruel Summer (for Employers Still Facing Uncertainty of Looming Federal Trade Commission Noncompete Rule)

Summer 2024 may be remembered for its uncertainty. On top of the surprises in political campaigns and the Supreme Court’s overruling of decades-old precedents, employers nationwide still face uncertainty with the FTC’s looming rule banning the vast majority of employee noncompetes across the United States. This uncertainty was underscored on Tuesday, July 23, 2024, when a federal judge in Pennsylvania declined to enjoin the FTC’s Noncompete Rule (the “Rule”) from taking effect September 4, 2024.

What will happen in September remains unclear, as the nation still awaits a final ruling next month from U.S. District Judge Ada Brown of the Northern District of Texas. On July 3, 2024, Judge Brown temporarily enjoined the Rule, but only for the named plaintiffs — not nationwide.

One thing is certain: Without a nationwide vacatur of the Rule or an injunction against its enforcement, employers will face further uncertainty.

Back in the Northern District of Texas, Plaintiff Ryan LLC and Intervenor U.S. Chamber of Commerce filed briefs this week requesting that Judge Brown’s injunction against the Rule be expanded nationwide. They argued that expanding the injunction nationally would “spare tens of thousands of American businesses the illegal burdens imposed by the rule,” promptly conclude litigation, and avoid “a torrent of lawsuits.”

The FTC’s responsive brief in Texas is expected late next week, with a final ruling from Judge Brown expected on or before August 30, 2024.

What Should Employers Be Doing Now?

Our advice from the July 5, 2024, article remains relevant — for now. We will continue monitoring developments in the courts and providing updates on best practices.

  • Get ready to distribute the required notices informing employees that their noncompetes will no longer be enforced. The Noncompete Rule requires notifying current and former employees that their noncompete agreements will not be — and cannot be — enforced going forward, with notice being provided at the employees’ last known street address, email address, or phone number. For large employers, this could be a significant undertaking to prepare. Since no courts have stopped the FTC rule from taking effect on a nationwide basis, it would be prudent for employers to start gathering all the information they would need to comply with the notice requirement. That said, employers should still wait until after further action is taken by the courts, or in another one of the cases challenging the Rule, before sending the notices.
  • Businesses should explore whether they might have other ways to accomplish some of the same goals as noncompetes, such as nondisclosure agreements or fixed-duration employment contracts.
  • Businesses should review their other restrictive covenants, including non-solicitation and no-hire clauses, to ensure those clauses are narrowly tailored to protect their legitimate interests, thereby reducing the risk that they will be challenged as being within the Rule’s catchall provision prohibiting terms that “function[ ] to prevent” a worker from working for a different company after employment.
  • Businesses should have confidentiality agreements in place with employees and should prepare for a potential wave of trade secret litigation as employees are increasingly enticed to leave their employment to work for competitors. This means businesses will need to be prepared for increased costs of data and forensic work that are generally prevalent in trade secret and confidentiality litigation matters.
  • It may be time for businesses potentially impacted by the Rule to substantively review their existing agreements and policies as described in the points above and get started on drafting replacement forms of agreements that will comply with the Rule — if it goes into effect.
© 2024 Foley & Lardner LLP
For more news on the Looming Federal Trade Commission Noncompete Rule, visit the NLR Antitrust Trade Regulation and Labor Employment sections.