Welcome to Industrials Regulatory News and Trends. In this regular bulletin, DLA Piper lawyers provide concise updates on key developments in the industrials sector to help you navigate the ever-changing business, legal, and regulatory landscape.
Two Executive Orders modify aspects of tariffs on imported auto parts and components. On April 29, President Donald Trump issued two Executive Orders (EOs) that modify aspects of the previously announced tariffs on certain imported auto parts and components. The changes set out in the first EO create offsets that may be used to reduce the amount of Section 232 tariffs for a period of two years. Amendments to Adjusting Imports of Automobiles and Automobile Parts into the United States provides for a system of “import adjustment offsets” to tariffs on auto parts scheduled to take effect on May 3, 2025. The new offset mechanism has several eligibility requirements and limitations, including that the offset applies only if the imported parts and components are incorporated in a vehicle whose final assembly is conducted in the United States. The offsets are intended to allow companies that manufacture automobiles in the US a two-year opportunity to shift their supply chains to incorporate more US domestic content. At the conclusion of the two-year adjustment period, the tariffs would return to the full 25 percent announced in March 2025.
A second EO, Addressing Certain Tariffs on Imported Articles, provides that other tariffs recently imposed on imports of automotive materials, components, and equipment will not apply cumulatively or “stack” on one another, which would result in higher total duties on automobiles containing imported materials (including steel and aluminum) or equipment. The EO outlines new rules and procedures designed to eliminate the cumulative effect of such overlapping tariffs on automobiles. Both EOs direct relevant federal departments and agencies (including the Departments of Commerce, Treasury, and Homeland Security and the US Trade Representative and Customs and Border Protection agencies) to adopt implementing rules and regulations in 30 days or less from their issuance.
Subaru plans to ship vehicles to Canada directly from Japan. On April 25, automaker Subaru said that it is reorganizing its supply chain for vehicles manufactured for sale in Canada, to avoid costs associated with tariffs on vehicles manufactured in the US and imported to Canada. Rather than importing US-manufactured vehicles to Canada, Subaru’s Canadian division will instead import vehicles intended for the Canadian market directly to Canada from its factories in Japan. Outbacks built at Subaru’s sole US plant, in Indiana, will no longer be shipped to Canada. Instead, Canadians will be offered Outbacks manufactured in Japan, which will feature a “made in Japan” badge. Tomohiro Kubota, CEO of Subaru Canada, stated that the change is intended to “minimize the impact of the counter surtax” on Canadian consumers. At this writing, the company has not announced cuts to jobs or production volume at its US factory.
Mazda to suspend production of CX-50s intended for Canada. Meanwhile, automaker Mazda has announced that starting May 12 it will suspend production of CX-50 SUVs intended for the Canadian market and halt exports to Canada of existing CX-50 stock. The crossover vehicles, the only Mazda model built in the US, are assembled at a joint Mazda and Toyota facility in Huntsville, Alabama. Mazda Canada spokesperson Sandra Lemaitre stated, “Mazda Canada currently has a limited supply of CX-50 inventory and in-transit units that our retailers will continue to sell.” In 2024, CX-50s made up about 14 percent of Mazda sales in Canada. Huntsville production of the CX-50 for the US and other markets will continue. Other Japanese automakers have addressed new US import tariffs in different ways. Toyota is at this writing maintaining its existing approach; Nissan has suspended US orders for some SUVs built in Mexico; and Honda intends to move hybrid Civic model production to the US.
Executive Order promotes deep-sea mining industry. On April 24, President Donald Trump issued Unleashing America’s Offshore Critical Minerals and Resources, an Executive Order (EO) intended to boost US access to critical minerals through deep-sea mining in both US and international waters - part of a push to offset China’s broad control of much of the world’s supply of critical minerals. The EO directs the Secretary of Commerce to “expedite the process for reviewing and issuing seabed mineral exploration licenses and commercial recovery permits in areas beyond national jurisdiction under the Deep Seabed Hard Mineral Resources Act,” and directs the Secretary of the Interior to establish an expedited process for reviewing and approving permits for prospecting and granting leases for exploration, development, and production of seabed mineral resources within the United States Outer Continental Shelf under the Outer Continental Shelf Lands Act.” Deep plains throughout the world’s oceans are estimated to contain large amounts of potato-shaped rocks known as polymetallic nodules - concretions rich in such metals as copper, manganese, cobalt, and nickel. More than one billion metric tons of those nodules are estimated to be in US waters alone.
The state of shipping. During the week of April 21, a number of major US retailers asked their Chinese suppliers to resume shipments of certain goods to the US. Those shipments had been suspended in the midst of the ongoing tariff war. Meanwhile, an array of media reports note that cargo shipments from China to the US dropped dramatically this month – some sources estimate a 60 percent fall in shipments. The Port of Los Angeles, the primary entry route for goods from China, states that scheduled arrivals in the week of May 4 will be a third lower than during the same period in 2024. Overall, bookings for standard 20-foot shipping containers to the US from China are 45 percent lower than a year ago. Air freight handlers have also reported steep declines in bookings. Observers are expressing concern that these declines will lead not only to serious retail shortages but to widespread layoffs in such sectors as logistics, trucking, and retail. While some shipments have resumed – for instance, seasonal products – others reportedly have been cancelled.
Move to change protections for lands across the West and in Alaska. The Trump Administration has announced that it is moving to rescind two key Biden-era rules finalized by the Bureau of Land Management (BLM) last year that advanced environmental protections for millions of acres of public lands across the American West and Alaska’s North Slope. The Office of Information and Regulatory Affairs (OIRA), which is part of the White House Office of Management and Budget, posted a notice on April 15 stating that the BLM’s public lands rule, implemented in June 2024, is under formal review and has been marked for possible rescission. The OIRA also announced that it is reviewing a BLM rule implemented last year that restricts oil and gas development in the National Petroleum Reserve-Alaska. In March, President Trump issued the Executive Order titled Immediate Expansion of American Timber Production, followed in early April by Increasing Timber Production and Designating an Emergency Situation on National Forest System Lands, a memo from USDA Secretary Brooke Rollins, which could open more than 50 percent of the national forests to industrial logging.
California proposes testing self-driving heavy-duty trucks on public roads. On April 25, the California Department of Motor Vehicles proposed to allow testing of self-driving heavy-duty vehicles on state public roads. California currently allows self-driving light-duty passenger vehicles to be tested on public roads, but not heavy-duty vehicles weighing more than 10,000 pounds. Heavy-duty testing of self-driving vehicles on public roads is currently allowed in a few other states, including Arizona, Arkansas, and Texas. California would limit autonomous heavy-duty commercial motor vehicle testing to specified routes that already allow operation of heavy-duty vehicles and would largely ban operation on city streets.
Maryland, Washington state legislatures pass extended producer responsibility bills. On April 24, the Washington state legislature passed the state’s Recycling Reform Act, SB 5284, an extended producer responsibility (EPR) measure which would require manufacturers and consumer brands to participate in a producer responsibility organization (PRO), reduce unnecessary packaging, fund statewide collection services, and ensure that materials put in curbside bins are recycled. Meanwhile, earlier in April, the Maryland legislature passed SB 901, which similarly would create a statewide EPR program. Please be on the lookout for our coming alerts about these bills, which are on the governors’ desks awaiting signature.
Tariff concerns contribute to cancellation of Pennsylvania recycling facility. Early in April, International Recycling Group, a Pennsylvania-based wholesale recycler, cancelled the construction of a massive long-planned plastics recycling facility in Erie, Pennsylvania, citing financial pressures and regulatory uncertainty, including potential issues arising from tariffs on materials and equipment and the potential loss of a $182.6 million Department of Energy loan granted during the Biden Administration. The company said it will repay a $300,000 loan it received from the Erie County Redevelopment Authority. At the same time, the operations of IRG affiliate newBin, which runs a public drop-off plastics collection service in Erie and Summit Township, is being suspended. Some of the materials gathered by newBin, the company said, have been used for research purposes, but most at the moment are in secure storage and will likely either be sold to another recycler or sent to landfill. At least one other major recycling project that had obtained a DOE loan – a lithium-ion battery recycling project planned by resource recovery company Li-Cycle – also appears endangered.
Impact of tariffs on metal exports. On April 15, Recycling Today reported that US-based processors of recovered nonferrous metals, particularly copper, are likely to feel the impact of China’s recently increased retaliatory tariff of 125 percent on imports from the United States. Adam Shaffer, vice president of international trade and global affairs for the Recycled Materials Association, said that recycled copper shipments from the US to China represented nearly 10 percent of the total value of all US exports of recycled and recyclable material in 2024. “The increasing retaliatory measures imposed by the Chinese government in response to the escalating reciprocal tariff rate imposed by the White House will cause significant disruption to U.S. trade in recycled copper, as was similarly seen during parts of President Trump’s first term,” he said. “Our industry has long been concerned about trade-restrictive measures and the potential impact of import tariffs on the competitiveness of the U.S. recycled materials industry, so this significant retaliation by China against U.S. exports of recycled products is going to be very disruptive if these tariffs remain in place for an extended period of time.”
EPA to cut Greenhouse Gas Reporting Program. The EPA intends to drastically cut back the Greenhouse Gas Reporting Program (GHGRP), which documents the volume of GHGs emitted by individual facilities across the US. About 85 to 90 percent of all GHGs in the US are tallied under the program, with about 8,000 US facilities currently providing annual emissions data reports. Reportedly, Abigale Tardif, principal deputy assistant administrator of the EPA’s Office of Air and Radiation, has directed GHGRP staff to draft a rule that would eliminate reporting requirements for 40 of the 41 sectors that are now required to submit data to GHGRP. This would effectively slash the number of reporting facilities to about 2,300. Many businesses find their GHRGP reporting to be useful in fulfilling international disclosure requirements, populating annual sustainability reports, and demonstrating environmental progress to shareholders and investors. GHGRP data has also been essential to the reporting of Nationally Determined Contributions under the Paris Agreement to the United Nations Framework Convention on Climate Change and as a keystone of international collaborative efforts to tackle climate heating.
Coal-fired plants receive presidential exemption from Clean Air Act standards via unprecedented email application process. President Donald Trump announced early in April that he was issuing a presidential exemption from Clean Air Act emissions standards to a number of US coal-fired power plants. The power plants received the exemptions through an unprecedented email-application process that the EPA quietly opened on March 24 and closed on March 31. The EPA informational sheet about the process stated that the mailbox was created “to allow the regulated community to request a Presidential Exemption under section 112(i)(4) of the Clean Air Act” (CAA), then went on to list nine particular CAA emissions standards that affect such industries as copper smelting, chemical manufacturing, coal plants, and iron and steel manufacturing. The informational sheet, which at this writing is still online, notes, “The Clean Air Act allows the President to exempt stationary sources of air pollution from compliance with any standard or limitation under section 112 for up to two years if the technology to implement the standard is not available and it is in the national security interests of the United States to do so.” The existence of the mailbox and the exemption-via-email process received scant media attention – the agency did not even issue a press release about it, simply setting up the mailbox and posting the informational sheet.
EPA issues permit for CO2 injection well in Texas. On April 7, the EPA issued a permit to Oxy Low Carbon Ventures, a subsidiary of Occidental Petroleum, to allow drilling to inject and store CO2. This is the first carbon sequestration project ever approved for the state of Texas. The Class VI permit will allow Oxy to drill three CO2 wells under the Safe Drinking Water Act Underground Injection Control program in Ector County in the Permian Basin and inject 8.5 million metric tons of CO2. The Biden Administration strongly supported carbon capture and storage projects, including with billions of dollars of subsidies under the Inflation Reduction Act, and in September 2024 proposed to approve the permits; the current Administration also is supporting this project, stating in the press release announcing its approval that its technology “will provide well-paying jobs and can be implemented in an environmentally responsible way."
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