Chemical Industry Regulatory Update – February 2020

A Newsletter from The Adhesive and Sealant Council and Thompson Hine LLP

Date: February 18, 2020

The chemical industry is subject to complex and ever-evolving laws and regulations. New standards governing the production and use of chemicals are implemented every year worldwide, and existing laws and regulations are constantly changing to keep pace with new information and scientific advancements. Chemical Industry Regulatory Update provides a monthly digest of recent legislative and regulatory developments and related industry news.

Ever Changing Cannabis Industry Poses Challenges for Lawmakers, Manufacturers, Suppliers & Other Businesses

Joe Smith

With the cannabis industry, including hemp, CBD and marijuana, continuing to grow, more and more companies outside the industry are faced with how best to handle working with companies in these or related industries. Federal and state laws and regulations in the cannabis field have been constantly developing and changing since the passage of the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”). They are expected to continue changing over the next several years and protecting one’s company can seem like a daunting challenge. This is particularly so for raw material or chemical suppliers who may be supplying materials directly to a manufacturer or processor who plans to produce certain products, such as a CBD final product, or indirectly through a processor who will use the material before sending it along to the final manufacturer.

As the laws applicable to hemp, CBD, and marijuana products can vary not only from state-to-state, but also within in a state, a good first step to protect one’s company is to review the company’s supply agreements and terms and conditions. An agreement should include warranties stating that the customer will comply with the applicable state and federal laws and regulations while also providing indemnification for the raw material supplier for any such potential liability or exposure should the customer be in violation. Because of the ever-changing legal landscape, it is important to keep these provisions broad enough to allow for any changes in the law that could broaden or narrow the legality of the particular product. Similarly, depending on the final product for which the raw materials are being supplied, the choice of law and forum or venue provision should also be examined, and modified if necessary, to ensure that a court will find the agreement and its provisions binding and enforceable.

FAA Releases Proposed Rule to Require Remote Identification of Drones

Jason D. Tutrone

The Federal Aviation Administration has issued a proposed rule that would impose remote identification (Remote ID) requirements on unmanned aircraft systems (UAS or drones). Remote ID would provide important safety and security benefits for chemical companies by enabling the FAA and law enforcement to electronically locate and identify drones near sensitive facilities in near real time. It would also impose additional burdens on chemical companies that use drones by essentially requiring these companies to update their drone fleet with Remote ID capability. Additionally, it is an important step to more advanced drone operations, like pipeline and facility inspections beyond visual line of sight of the drone’s operator. Comments on the rule must be submitted by March 2, 2020. To learn more, read our Transportation Update, “FAA Releases Long-Awaited Proposed Drone Remote Identification Rule.”

The First Lawsuit Opposing California’s Green Chemistry Regulations Survives a Legal Challenge

William J. Hubbard

California’s Department of Toxic Substances Control (DTSC) launched its Safer Consumer Products green chemistry program in 2013. Under the program, the DTSC evaluates products for chemicals of concern, and based upon potential exposure to a chemical of concern, they might list a product as a priority product. The DTSC has prioritized products in the following categories: Beauty, Personal Care, and Hygiene Products; Cleaning Products; Household, School, and Workplace Furnishings and Décor; Building Products and Materials Used in Construction and Renovation; Consumable Office, School, and Business Supplies; Food Packaging; and Lead-Acid Batteries. Once a product is listed as a priority, manufacturers, importers and distributors are required to conduct a chemical alternatives analysis to evaluate whether a safer chemical can be substituted for the chemical of concern.

Effective July 1, 2018, spray polyurethane foam (SPF) systems with unreacted methylene diphenyl diisocyanates (MDI) were listed as priority products. On August 9, 2019, the American Chemistry Council (ACC) and an SPF manufacturer filed the first challenge to the Safer Consumer Products program, which seeks to force the DTSC to remove SPF systems as a listed priority product. The DTSC sought to have the challenge dismissed. In January, the Court denied that request holding that the ACC and the manufacturer alleged facts sufficient enough “to state a claim based on the theory that respondents exceeded their statutory authority when they listed the SPF systems as priority products." Specifically, the court recognized that the ACC and the manufacturer “alleged that the proposed listing does not distinguish between different types of SPF products, it lists products that are not 'consumer products' for the purposes of the Green Chemistry statute, the respondents failed to establish a minimum threshold for exposure to SPF systems, and they failed to show how the products would cause a potential for significant or widespread adverse impacts, as well as already being regulated under existing state and federal law.”

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For more information about this newsletter or its contents, please contact the editor, William J. Hubbard, or any of the authors.

Chemical Industry Regulatory Update is compiled by Thompson Hine lawyers on behalf of The Adhesive and Sealant Council. It should not be construed as legal advice, and the views and opinions expressed herein are those of the authors and do not necessarily reflect those of the ASC or its members.

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