Prop 65 Regulatory Update for the Cannabis Industry: Tailored Warnings Become Effective October 1, 2022 with a 1-Year Grace Period for Compliance

CBD Products

As we noted in a prior post, the California Office of Environmental Health Hazard Assessment (OEHHA) proposed tailored Prop 65 safe harbor warnings for THC and marijuana smoke, following listing THC for reproductive harm and marijuana smoke as cancer-causing in January 2020 (marijuana smoke was already listed for reproductive harm as of 2009). After considerable public comment and a published final statement of reasons addressing those comments, OEHHA announced on August 8, 2022 that it had approved amendments to the new tailored warnings.

The regulations will become effective on October 1, 2022. However, there is a one-year phase-in period and unlimited sell-through provision for products manufactured and labeled with compliant warnings before October 1, 2023.

In general, these amendments provide “non-mandatory, specific safe harbor exposure warning methods of transmission and content for retail products that can expose consumers to cannabis (marijuana) smoke or delta-9-THC via inhalation, ingestion, or dermal application, and for environmental exposures . . .” However, there are a few important items to note in the newly adopted regulations.

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US EPA Proposes PFAS Hazardous Substances Designation

In a landmark action, US EPA recently proposed to designate two of the most widely used per- and polyfluoroalkyl substances (PFAS) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as “Superfund.”  If finalized, this rule would require entities to report releases of those PFAS substances and would authorize US EPA to order cleanups by potentially responsible parties.  Given the potential for widespread liability for such parties if the rule is finalized, it is likely to trigger significant debate from supporters and challengers alike.

The proposed rule would designate perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), including their salts and structural isomers, as hazardous substances under CERCLA.  Although CERCLA has been enacted since 1980, this is the first time US EPA has proposed adding new substances to the hazardous substances list.  To propose designation as a hazardous substance, the Agency must determine that the substance may present substantial danger to public health or welfare or the environment when released. In the proposed rule, US EPA noted the widespread detection of PFOA and PFOS in the environment and cited the health and safety assessments for the substances that have been undertaken by numerous federal, state, and international governmental entities. Based on the adverse health effects identified in these studies, US EPA found a hazardous substance designation for PFOA and PFOS appropriate.  Notably, the Agency interpreted CERCLA to preclude it from taking cost into account in making this designation.

If the rule is finalized such that PFOA and PFOS are added to the list of hazardous substances under CERCLA, the most direct effect would be that parties will be required to report releases of one pound or more of those substances.  However, the indirect effects of the rule would likely be much more extensive and could include the ability for US EPA or state agencies to recover cleanup costs from potentially responsible parties and the ability for those agencies to respond to releases without making the “imminent and substantial danger” finding that is currently required.

Due to the persistent nature of PFAS, which are often termed “forever chemicals,” the pool of potentially responsible parties who could be held responsible for cleanup costs is extremely large.  US EPA has said that it is focused on holding responsible those who have manufactured and released “significant amounts” of PFOA and PFOS into the environment, and noted that it plans further outreach and engagement to hear from impacted communities during the consideration of the proposed rule.  Further, US EPA plans to consider designating other PFAS compounds as hazardous substances following this rulemaking. 

It is likely that the proposal will result in robust comment from many perspectives.  The rule stands to set significant CERCLA precedent as well as open the door to significant remediation efforts.  Squire Patton Boggs will continue to monitor this important issue. 

Environmental Justice for All: Expanding the US Environmental Justice Movement Through Permitting Decisions

Our team at Squire Patton Boggs continues to track environmental justice matters as the landscape evolves according to Biden Administration executive orders.  We have previously posted on environmental justice considerations in affordable housing and have updated readers on environmental justice initiatives under the Biden Administration.  This post explores how environmental justice considerations under Title VI of the Civil Rights Act of 1964 (Title VI) can impact environmental permitting decisions and, at times, business viability.

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Perspectives on the Evolving Regulatory Landscape for US Food and Beverage

There are a number of product safety challenges and risks facing the food and drink industry in the US, including balancing innovative products with regulatory compliance. Here, we explore what these risks are, how companies can prepare, how the recall landscape is evolving and our predictions for the future.

What Do You See as the Biggest Product Safety Challenges and Risks Facing the Food and Drink Industry?

Risks From Novel Foods and Health Claims

The Food and Drug Administration (FDA) in the US continues to issue warning letters for food products with novel ingredients, such as CBD. Any substance added to food is a food additive and must either be submitted for premarket review and approval, or be generally recognized as safe among qualified experts (GRAS). CBD generally is not recognized as GRAS or approved by FDA for use in food; therefore, food with CBD is prohibited from entering interstate commerce. Further, some companies add product claims that imply treatment/mitigation of a disease or effects on the structure/function of the body – causing the food to qualify as a new drug or a dietary supplement. Entities seeking to enter into the CBD market in the US, for humans or animal food products, should carefully assess the risks and engage legal counsel to review the products and claims being used.

Food and drink businesses in the US increasingly seek to cater to health-conscious consumers with claims such as “gluten-free,” “dairy-free,” or highlighting a lack of artificial flavors, etc. Industry participants need to be aware that each of these claims may be subject to FDA regulation. Consumers with allergies or dietary restrictions need to be able to rely on the veracity of such claims. For example, FDA is expected to release guidance on the Labeling of Plant-based Milk Alternatives: Draft Guidance for the Industry. The question of whether plant-based products, such as almond and oat milk, can be classified as a “milk” as part of their statement of identity has been a hotly contested issue in the US.

Read the full publication here.

US EPA’s Submission of Reconsidered Fugitive Emissions Rule Signals Movement Forward on Agency Air Permitting Initiatives

While the US has begun considering the implications of the US Supreme Court’s monumental June 28, 2022 opinion addressing air emissions from power plants, without much fanfare US EPA sent a proposed rulemaking to the White House Office of Management & Budget (OMB) for pre-publication interagency review that could be significant for “major source” air permitting.

The proposed rulemaking would address a 2008 Fugitive Emissions Rule that was subsequently granted reconsideration based upon a petition from the National Resources Defense Council (“NRDC”) and then stayed pending US EPA’s reconsideration.  The central controversy concerns how (and whether) fugitive emissions are considered under Section 111 of the Clean Air Act, which in relevant part provides:

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US EPA Resurrects Long-Dormant DINP Rulemaking

While rulemakings under the Administrative Procedure Act typically take several years from proposal to enactment, that can vary significantly.  While some rules run a fairly standard course, others languish for years with no action nor any apparent reason for inaction.  EPA’s recent revival of a proposed rule that is now, were it a person, old enough to drink should serve as a reminder for the public that mere inaction on a rulemaking is no guarantee that the rule is off the table. 

On August 8, 2022, the United States Environmental Protection Agency resurrected a long-dormant effort to add diisononyl phthalate (DINP) to the list of toxic chemicals subject to the reporting requirements under the Emergency Planning and Community Right-to-Know Act (EPCRA) and the Pollution Prevention Act (PPA) first proposed in September 2000.  The potential listing is based on an updated hazard assessment indicating adverse health effects associated with DINP; EPA initially published and invited comment on a hazard assessment in 2005 but took no further action until this August.

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The Revival of Supplemental Environmental Projects and How It May Impact Settlement Agreements Moving Forward

As the US Department of Justice (DOJ) begins to revive the use of Supplemental Environmental Projects (SEPs), it is likely that they will appear again with increasing frequency in settlement agreements moving forward.  DOJ received comments through July 11, 2022 on its interim final rule to revoke the Trump-era regulation that prohibited payments to non-governmental, third-party organizations who are not parties to an enforcement action—the regulation that effectively prohibited SEPs in settlement agreements.  This post will provide an overview of SEPs, regulations surrounding SEPs, comments received pertaining to the revival of SEPs, and the likely use of SEPs moving forward. 

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US EPA’S Draft Screening Level Approach May Broaden Scope of Chemical Risk Evaluations Under TSCA

Environment Strategy Planning

The United States Environmental Protection Agency (US EPA) continues to advance various aspects of its chemicals regulatory agenda under the Toxic Substances Control Act (TSCA). A key part of the Biden Administration’s revisions to the TSCA program is its planned new screening approach for assessing ambient air and water exposures to fenceline communities. This screening approach is intended to broaden the scope of chemical risk evaluations to include exposures to fenceline communities from air emissions and water discharges of chemicals undergoing risk evaluation. 

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US Supreme Court Limits EPA’s Authority to Regulate Carbon Emissions from Existing Power Plants Under Major Questions Doctrine with Implications for Agency Rulemaking Generally

Gas turbine electrical power plant

On June 30, 2022, the US Supreme Court held that the Obama-era Clean Power Plan (CPP) “[c]apping carbon dioxide emissions at a level that [would] force” energy generation shifting from coal to natural gas to renewables nationwide was not within the statutory authority that Section 111(d) of the Clean Air Act (CAA), codified as 42 U.S.C. § 7411(d), granted to EPA. West Virginia v. Env’t Prot. Agency, 597 U. S. ____, 2022 U.S. LEXIS 3268, at *54 (2022). Applying the major questions doctrine, the Court held that Congress must be express in granting EPA the authority to adopt the kind of transformational regulatory scheme that EPA tried to implement under Section 111(d).

Under the major questions doctrine, a court will not follow the general rule of deferring to an agency’s interpretation of a statutory provision in certain “extraordinary cases” that involve “highly consequential power beyond what Congress could reasonably be understood to have granted.” This typically occurs when (1) there is an issue of deep economic or political significance; or (2) Congress did not clearly give an agency authority over an issue. The Court found no reason to defer here. Read more about the case and potential broader implications of the Supreme Court’s decision here.

China’s New Pollutant Control Action Plan: A Focused Plan that Could Impact the Chemical Industry Outside of China

Chemicals Lab

It is no secret that China has long struggled with implementing measures for pollution control and regulating hazardous chemicals. We have watched this issue closely and published about it in years past here. However, on May 24, 2022, the China State Council issued its most focused plan yet, known as the “New Pollutant Control Action Plan” or “新污染物治理行动方案,” and it will likely have far-reaching impacts on companies manufacturing, using or discharging certain chemicals in China. It could also impact companies outside of China importing chemicals into China.

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