By Ilana R. Morady and Eric E. Boyd

On October 1, 2012, the Federal Trade Commission (FTC) published final changes to its Guides for the Use of Environmental Marketing Claims, commonly known as the “Green Guides.” The FTC first issued the Green Guides in 1992 to help marketers ensure that claims they make are true and substantiated. The guidance they provide includes: 1) general principles that apply to all environmental marketing claims; 2) how consumers are likely to interpret particular claims and how marketers can substantiate these claims; and 3) how marketers can qualify their claims to avoid deceiving consumers. The agency revised the Green Guides in 1996 and 1998, and in 2010 it proposed the current revisions.

The updated Green Guides address emerging environmental claims, namely renewable material claims, renewable energy claims, and carbon-offset claims.  They also clarify and supplement existing guidance on general environmental benefit claims, ozone-safe, compostable, degradable, recyclable, recycled content, source reduction, refillable, and free-of/non-toxic claims, and the use of certifications and seals of approval. Although some public comments requested that the agency add a section to the revised Green Guides discussing organic and natural claims, the FTC declined because the Food and Drug Administration (FDA) and United States Department of Agriculture (USDA) also regulate the use of these terms.

The Green Guides are published at 16 CFR Part 260. As agency guidance, they do not have the force and effect of law and are not independently enforceable. The FTC can, however, take action under Section 5 of FTC Act, which prohibits unfair or deceptive practices, if a marketer makes an environmental claim inconsistent with the Green Guides. Seyfarth Shaw’s Green Marketing Compliance Team regularly advises clients on strategies for marketing the environmental and health benefits of their products while avoiding legal pitfalls. For further information on how the Green Marketing Compliance Team can help your company, please contact us.

By Ilana R. Morady and Eric E. Boyd

On September 25, 2012, the United States Department of Agriculture (USDA) announced that it is trying to bolster the manufacturing industry by increasing the number of biobased products available to federal agencies.  Under the USDA’s BioPreferred program, the Department designates categories of biobased products and lists individual products available for preferred purchasing by federal agencies and their contractors.  Pursuant to an Executive Order signed by President Obama in 2009, federal agencies are required to ensure that ninety-five percent of new contracts use biobased products when available.

Biobased products are defined by the 2002 Farm Bill as “commercial or industrial products (other than food or feed) that are composed in whole, or in significant part, of biological products, renewable agricultural materials (including plant, animal, and marine materials), or forestry materials.”   The 2008 Farm Bill extended the definition of biobased products to include biobased intermediate ingredients or feedstocks.  Biobased products do not include fossil fuels such as coal or petroleum, motor vehicle fuels, heating oil and electricity produced from biomass (biological material from living or recently living organisms, most commonly used as a renewal energy source).   

The USDA currently has a total of seventy-seven categories in its catalog of approved biobased products. Twelve of these categories have been added since June of this year, and the Department expects to add more categories by February, 2013.  The seventy-seven categories, including categories for lotions and moisturizers, and shaving products, represent 9,300 individual products approved for federal purchasing. The Department has stated a goal of increasing the number of individual products approved for federal purchasing to 18,000.

By James L. Curtis, Meagan Newman, and Craig B. Simonsen

The Occupational Safety and Health Administration (OSHA) has adopted a new directive, CPL 02-03-004 (September 12, 2012), to provide procedures for the processing of appeals filed under Section 11(c) of the Occupational Safety and Health Act of 1970 (Section 11(c)), and appeals filed under the Asbestos Hazard Emergency Response Act (AHERA), and the International Safe Container Act (ISCA). OSHA is responsible for the enforcement of whistleblower provisions under twenty-two statutes. All of these statutes provide for an avenue of appeal, except for these three laws (Section 11(c), AHERA, and ISCA). Although such appeals were not specifically provided for by statute or regulation, it has been OSHA’s policy and procedure to provide complainants with the right to appeal determinations under Section 11(c), AHERA, and ISCA.

Originally, Section 11(c), AHERA, and ISCA appeals were heard in Washington, DC, however in 2009 and 2010 Regions IV, V, and VI began piloting their own appeals programs. A government audit, though, found issues with the regional programs. “The team has concerns about the lack of effort being made to decrease and/or eliminate the backlog. The team’s other concern is that permitting four separate appeals programs will lead to inconsistencies and further external criticism.” This instruction establishes an updated national program using a new process and the best practices from all the regional appeal programs.

The directive grants Section 11(c), AHERA, and ISCA complainants fifteen calendar days from receipt of the dismissal letter to appeal the decision with OSHA’s Whistleblower Protection Program (OWPP). The directive also establishes an Appeals Committee to examine any cases that merit further review.

By Philip L. Comella and William R. Schubert

As a recent trade ruling by the European Commission illustrates, the economic forecast for the U.S. biofuels industry is susceptible to the decisions of governments at home and abroad.

In Council Regulation (EC) No 771/2012, published on August 23, the European Commission required the registration of U.S. bioethanol imports for which an anti-subsidy investigation is currently pending.  The purpose of the required registration is to enable the EU to retroactively impose countervailing duties — designed to offset foreign export subsidies and create a “level playing field” in the importing country — on bioethanol from the U.S.  The EU would only impose retroactive duties, however, in the event that the Commission later determines that the U.S. has retroactively re-instated countervailable bioethanol subsidies.

To clarify, the Commission determined that imposing duties pending issuance of the final order is unnecessary (at least for now) because evidently, the U.S. has discontinued its bioethanol subsidies.  Nonetheless, the Commission required registration of the imports based on the possibility that the U.S. could retroactively reinstate subsidies in the near future.  As the Commission observed:

“[d]espite positive findings of countervailing subsidisation and material injury caused thereby to the Union industry during the investigation period (‘IP’), namely from 1 October 2010 to 30 September 2011, the Commission decided not to adopt provisional countervailing duties pursuant to Article 12 of the basic Regulation because it was provisionally found that the main subsidy scheme in force during the IP had ceased, in the sense that it no longer conferred a benefit at the time provisional measures would have been imposed. However, there is evidence that the United States might reinstate the main subsidy scheme found to be countervailable in the coming months with retroactive effects. In that event, the Commission considers that it would have been entitled to adopt (and eventually collect) provisional countervailing duties in the present investigation.”

Aside from the anti-subsidy investigation, the Commission also has an anti-dumping investigation pending against U.S. bioethanol imports.  Both the petitioning industry in Europe and the respondent industry in the U.S. will have opportunities to submit comments and have hearings in these investigations.  A final order is due by December 25, 2012 in the anti-subsidy investigation and by February 25, 2013 in the anti-dumping investigation. Positive findings would make the U.S. imports subject to anti-dumping and countervailing duties (which in theory, would bring artificially low U.S. export prices back up to “normal value”) for the next five years.

Trade remedies that aim to curb sales of foreign goods priced at “less than fair value” have already slowed the circulation of biofuels in European export markets — and if recent headlines are any indication, this may be a continuing trend.  U.S. biodiesel, for example, is already subject to anti-dumping duties ranging from 0 to 36.2% and countervailing duties ranging from 29.1% to 41% in the EU until at least 2014.  Further, the European Commission just announced new anti-dumping investigations against biodiesel imports from Argentina and Indonesia two weeks ago.

Seyfarth Shaw partner and Co-Chair of the firm’s Whistleblower Team Jim Curtis was quoted in Business Insurance on August 23. The article discusses a recent study published by Seyfarth Shaw which demonstrated the growing number of whistleblower lawsuits filed with the Occupational Health and Safety Administration (OSHA) and the inability of OSHA to resolve these claims in a timely manner.

By Ilana R. Morady and Eric E. Boyd

The Pipeline and Hazardous Materials Safety Administration (PHMSA) recently released a five-year Strategic Plan that sets targets to improve the safe handling and transportation of hazardous materials.  PHMSA is the principle arm of the U.S. Department of Transportation (DOT) that promulgates and enforces regulations pertaining to the movement of hazmat by all modes of transportation, including pipelines. By 2016, the agency aims to reduce the number of pipeline incidents involving death or major injury to between 26-37 per year, and the number of other hazmat incidents involving death or major injury to between 21-32 per year.  The Strategic Plan notes that hazardous materials transportation (all modes, including pipelines) accounts for an average of 28 deaths per year.  Oddly, that number fits squarely within the agency’s new goals for 2012-2016.  The Strategic Plan also sets environmental goals for 2012-2016: to reduce the number of hazardous liquid pipeline spills with environmental consequences to between 65-81 per year, and to reduce the number of other hazmat incidents with environmental damage to between 44-64 per year.  The Strategic Plan does not, however, state the per-year number of environmental hazmat incidents in past years. 

Overall, the Strategic Plan is long on words but short on information and explanation.  For example, it also provides “key challenges” the agency expects to face, but addresses these challenges vaguely.  One key challenge is “advances in technology,” which PHMSA apparently intends to address by “systematically identify[ing] and evaluat[ing] trends” in technology development.  The agency does, however, offer a couple relatively specific challenges on which it will focus in 2012-2016: hazmat that presents a risk of fire aboard aircraft and bulk transportation of hazmat that is toxic by inhalation.  To address these challenges, the agency’s strategy includes developing standards for loading and unloading bulk hazardous materials, and publishing new safety rules for transporting flammable and combustible liquids aboard aircraft.  PHMSA also states its intention to strengthen current rules for transporting lithium batteries by air.

For more information about PHMSA’s hazmat program and agency enforcement, click here.

By Philip L. Comella

Ending, for the time being, a fiercely contested rulemaking in which even the Chicago Tribune’s editorial board weighed in, the Illinois Pollution Control Board on August 23, 2012 issued its Final Rule changing the standards for Clean Construction or Demolition Debris (CCDD) Fill Operations. The heart of the controversy in this rulemaking was whether the Board should require these fill operators to conduct groundwater monitoring to satisfy amendments the General Assembly made to the Environmental Protection Act in 2010.

As a perceptual matter, it did not look good to some observers that a fill operator would be able to dispose of debris and clean soil without conducting groundwater monitoring.  This is what caught the attention of the Chicago Tribune, which said, “We don’t believe self-policing within the waste industry is a wise strategy when drinking water is at stake.”  But fears, politics, and business interests wound up giving way to the evidence.  The Board “found no evidence .  .  . to demonstrate that CCDD or uncontaminated soil fill sites were a source of drinking water contamination.”  It must be remembered that under the Act “uncontaminated soil” and “clean construction debris” are not solid wastes and therefore deserve separate management standards.  Furthermore, even though it did not require groundwater monitoring, the Board imposed strict certification requirements on the “front-end” to ensure that fill operators accept only clean soils meeting the same general standards as required to obtain a “no further remediation” letter from the Illinois Environmental Protection Agency.  (The point of a “no futher remediation” letter is that once a site is found to meet the requisite standards, no further action is required, including of course groundwater monitoring. )

But the groundwater monitoring issue is not completely dead. Before the issuance of the final notice, the Joint Committee on Administrative Rules issued a recommendation that the Board give further consideration to whether groundwater monitoring should be required for these facilities. Finessing this recommendation, the Board opened another docket in the rulemaking to further evaluate the monitoring issue, indicating it will issue an order in that docket “at a later date.”

Stay tuned for further developments.

By James L. Curtis and Craig B. Simonsen

The Occupational Safety and Health Administration (OSHA) has just published a Guidance on removing employers from the Severe Violator Enforcement Program (SVEP). As we noted in a previous blog, since the SVEP has been in effect over 300 employers have been designated as severe violators. However, until now, there has not  been an established means for an employer to get out from under this designation. 

The OSHA Directorate of Enforcement Programs (DEP) announced that they have completed a review of SVEP policy for removal of employers from the list and has established guidelines for getting off the severe violators list. Under the new Guidance an employer may be considered for removal from the SVEP by an OSHA Regional Administrator (except in cases where national corporate-wide settlements are involved) after:

  • A period of three years from the date of the final disposition of the SVEP inspection citation items including: failure to contest, settlement agreement, Review Commission final order, or court of appeals decision.
  • All affirmed violations have been abated, all final penalties have been paid, the employer has abided by and completed all settlement provisions, and has not received any additional serious citations related to the hazards identified in the SVEP inspection at the initial establishment or at any related establishments.

If an employer fails to adhere to the terms and provisions of the agreement, the employer will remain in the program for an additional three years and will then be reevaluated.

For cases involving national corporate-wide settlement agreements, the DEP will make a determination, “upon the termination of the agreement, regarding the employer’s removal from the program.” The Guidance specifies that pursuant to Guidelines for Administering Corporate-Wide Settlement Agreements (June 22, 2011), the National Corporate-Wide Settlement Coordinator “will ensure that the follow-up requirements of the SVEP have been completed and the terms of the agreement have been implemented.”

To complicate the process of removal, the Guidance indicates that “the previous guidance regarding lining-out establishments remains in effect when facts indicate that reclassification of the SVEP qualifying citations is appropriate due to the quality of evidence brought forth during settlement. However, removal from the SVEP list cannot be used as an incentive for settlement.”

Whistleblower Gap Widens

By James Curtis and Meagan Newman

Data shows that the gap between the number of whistleblower claims filed–under all 21 provisions that provide OSHA with jurisdiction, including OSHA 11(c), STAA, AIR21 and SOX–and the number that are completed is growing.  The result is an ever-increasing number of unresolved whistleblower claims and a commensurate number of whistleblowers that remain in the workplace.  Employers need to think proactively in terms of preventing whistleblower discrimination claims as well as how to deal with those employees who have filed claims, yet remain in the workplace while awaiting a determination.

 

 

By Brent I. Clark, Meagan Newman, and Craig B. Simonsen

The Second Circuit Court, in a recent opinion, has upheld a ruling by the Occupational Safety and Health Review Commission (Commission) that different facilities/subsidiaries or affiliated companies with a common owner/parent corporation were not a “single employer” under the Occupational Safety and Health Act (OSH Act), thus repeat citations were not appropriate. The Commission overruled the administrative law judge (ALJ) who found against the company and upheld the repeat citations issued by Occupational Safety and Health Administration (OSHA).

The Court reached this conclusion by applying the Commission’s three-prong test that focused on whether there was a (1) common worksite, (2) whether the facilities had interrelated and integrated operations, and (3) whether they shared a common management. The Commission held that the respondent’s facilities shared some common features, such as top officers, but that the facilities operated with such independence, and in different cities, that they were not parts of a single employer under existing Commission precedent.

The Secretary of Labor, on appeal of the Commission’s decision, argued for a much more liberal test for determining a “single employer.”  Specifically, the Secretary argued for the 4 prong single employer test used by the National Labor Relations Board (NLRB) which does not include the common worksite criteria.  Hence, the Secretary argued that multiple facilities/companies can be treated as a single employer even if they do not share a common worksite and might even have facilities located across the country.   In rejecting this more liberal single employer test the Court relied upon the Secretary’s procedural error in not raising this argument before the Review Commission.  Hence, the Court ruled the Secretary waived the argument.   The Court’s decision makes clear that in future cases it would defer to the Secretary and adopt this more liberal single employer test.  Employer’s beware!

Applying the Commission’s existing single employer test, it was agreed that all the facilities shared a common president, chief executive officer, and chief financial officer. It was also agreed that the facilities did not share a common worksite. So, a key element under review was whether the entities had interrelated and integrated operations. The Court upheld the Commission’s conclusion that the parent company could exercise control over the facility but that, “in practice, local personnel supervised safety matters at the facility.”

The Second Circuit’s decision highlights the Secretary’s continued attempts to expand OSHA’s jurisdiction and impose more significant citations and penalties.  For corporations with subsidiary companies and affiliates, the Secretary continues to try to treat these separate, but related companies, as a single employer so it can issue repeat citations across these different companies/employers.  It is critical that such organizations take special care to maintain independence and separateness of related companies, especially in matters of labor relations and safety.  Command and control on such matters from the parent corporation creates the risk that OSHA will take the position that all entities are a single employer with the increased risk of increased citations and increased penalties as one company’s OSHA history is used against all related companies.  Unfortunately, the Secretary’s approach appears to penalize corporate parent’s for hiring sophisticated safety and health professionals who can then provide safety programs, auditing, and other high level safety and health support to subsidiary and related companies.  In this regard, the Secretary’s approach has the very real risk of chilling the substantial benefits that are achieved by sharing these resources among multiple related companies.   Corporations with subsidiary companies and affiliates need to carefully evaluate the risks and procedures they use to promote and enhance worker safety and health, and OSHA compliance in light of the Secretary’s effort to increase enforcement using the single employer theory.

This decision may also effect OSHA’s use, and further implementation, of enterprise-wide enforcement where it issues citations to all facilities operated by an “employer”, even when OSHA has not actually inspected those facilities.