Bridging the Gap: How AI is Revolutionizing Canadian Legal Tech
While Canadian law firms have traditionally lagged behind their American counterparts in adopting legal tech, the AI explosion is closing the gap. This slower adoption rate isn’t due to a lack of innovation—Canada boasts a thriving legal tech sector. Instead, factors like a smaller legal market and stricter privacy regulations have historically hindered technology uptake. This often resulted in a noticeable delay between a product’s US launch and its availability in Canada.
Although direct comparisons are challenging due to the continuous evolution of legal tech, the recent announcements and release timelines for major AI-powered tools point to a notable shift in how the Canadian market is being prioritized. For instance, Westlaw Edge was announced in the US in July 2018, but the Canadian launch wasn’t announced until September 2021—a gap of over three years. Similarly, Lexis+ was announced in the US in September 2020, with the Canadian announcement following in August 2022. However, the latest AI products show a different trend. Thomson Reuters’ CoCounsel Core was announced in the US in November 2023 and shortly followed in Canada in February 2024. The announcement for Lexis+ AI came in October 2023 in the US and July 2024 in Canada. This rapid succession of announcements suggests that the Canadian legal tech market is no longer an afterthought.
The Canadian federal government has demonstrated a strong commitment to fostering AI innovation. It has dedicated CAD$568 million to its national AI strategy, with the goals of fostering AI research and development, building a skilled workforce in the field, and creating robust industry standards for AI systems. This investment should help Canadian legal tech companies, such as Clio, Kira Systems, Spellbook, and Blue J Legal, all headquartered in Canada. With the Canadian government’s focus on establishing Canada as a hub for AI and innovation, these companies stand to benefit significantly from increased funding and talent attraction.
While the Canadian government is actively investing in AI innovation, it’s also taking steps to ensure responsible development through proposed legislation, which could impact the availability of AI legal tech products in Canada. In June 2022, the Government of Canada introduced the Artificial Intelligence and Data Act (AIDA), which aims to regulate high-impact AI systems. While AI tools used by law firms for tasks like legal research and document review likely fall outside this initial scope, AIDA’s evolving framework could still impact the sector. For example, the Act’s emphasis on mitigating bias and discrimination may lead to greater scrutiny of AI algorithms used in legal research, requiring developers to demonstrate fairness and transparency.
While AIDA may present hurdles for US companies entering the Canadian market with AI products, it could conversely provide a competitive advantage for Canadian companies seeking to expand into Europe. This is because AIDA, despite having some material differences, aligns more closely with the comprehensive approach in the European Union’s Artificial Intelligence Act (EU AI Act).
While US companies are working to comply with the EU AI Act, Canadian companies may have an advantage. Although AIDA isn’t yet in force and has some differences from the EU AI Act, it provides a comprehensive regulatory framework that Canadian legal tech leaders are already engaging with. This engagement with AIDA could prove invaluable to Canadian legal tech companies as AI regulation continues to evolve globally.
Canadian companies looking to leverage their experiences with AIDA for European expansion will nonetheless encounter some material differences. For instance, the EU AI Act casts a wider net, regulating a broader range of AI systems than AIDA. The EU AI Act’s multi-tiered risk-based system is designed to address a wider spectrum of concerns, capturing even “limited-risk” AI systems with specific transparency obligations. Furthermore, tools used for legal interpretation could be classified as “high-risk” systems under the EU AI Act, triggering more stringent requirements.
In conclusion, the rise of generative AI is not only revolutionizing Canadian legal tech and closing the gap with the US, but it could also be positioning Canada as a key player in the global legal tech market. While AIDA’s impact remains to be seen, its emphasis on responsible AI could shape the development and deployment of AI-powered legal tools in Canada.
FDA Finalizes a New Definition of ‘Healthy’ for Food Labeling
On Dec. 19, 2024, the U.S. Food and Drug Administration (FDA) announced a long-awaited final rule revising the definition of “healthy” when used in the labeling of food products.
The rule revises the FDA’s criteria for use of terms like “healthy,” “healthful,” and “healthier,” terms that are implied nutrient content claims (NCCs) under FDA regulations in 21 CFR 101.65. To make a compliant “healthy” claim under the new criteria, a food product needs to (1) contain a specified amount of food from at least one of the food groups or subgroups identified, which include fruit, vegetables, grains, fat-free and low-fat dairy, and proteins recommended by the Dietary Guidelines for Americans and (2) contain levels of added sugars, saturated fat, and sodium below certain specified limits. The new definition of “healthy” also includes water, tea, and coffee with five calories or fewer per serving, without having to meet any other criteria.
The FDA, which has regulated the term “healthy” since 1994, noted that the definition needed an update “to be consistent with current nutrition science and Federal dietary guidance, especially the Dietary Guidelines for Americans (Dietary Guidelines), regarding how consumers can maintain healthy dietary practices.” While the effective date of this rule is 60 days from the Dec. 27, 2024, date of publication in the Federal Register, the industry will have over three years to evaluate this new definition of “healthy” and to change packaging and labeling as necessary, as the compliance date is Feb. 25, 2028.
The FDA issued a proposed rule in September 2022, soliciting comments from stakeholders on its revised definition of “healthy.” The FDA then issued its final rule after reviewing over 400 submitted comments. The final rule revises the criteria for determining when the term “healthy,” or derivative terms such as “healthful” and “healthier,” can be legally used as a NCC when labeling human food, beverage, and dietary supplement products to help consumers identify foods that are particularly useful as the foundation of a nutritious diet consistent with dietary recommendations. The FDA amended 21 CFR 101.65(d) by removing various upper limits pertaining to total fat and cholesterol, as well as certain minimums for at least one of fiber, protein, vitamin A, vitamin C, calcium, or iron. Instead, the new definition focuses on just three nutrients: saturated fat, added sugars, and sodium.
In addition to allowing water, tea, and coffee with five calories or fewer to be identified as “healthy,” the FDA, for the first time, has recognized that certain food categories should be recognized as inherently “healthy” when comprising no added ingredients other than water. Those foods include vegetables, fruit, whole grains, fat-free or low-fat dairy, lean meat, seafood, eggs, beans, peas, lentils, nuts, and seeds. This means that companies selling products like avocados and cashews, which were previously excluded because of high levels of naturally occurring saturated fat, may now label these foods “healthy” under the new definition.
The FDA has also introduced the concept of food groups and food group equivalents (FGEs) as an aspect of the “healthy” definition, identifying different ceilings for allowable added sugars, sodium, and saturated fat, based on the food group. For mixed ingredient products, certain threshold levels of one or more of the food groups must be included, in addition to meeting the requisite levels of saturated fat, sodium, and added sugars, in order to use the term “healthy.” The FDA provides a table listing the various criteria for each type of food or group in the revised 21 CFR 101.65(d).
Included in the revised rule are obligations for manufacturers to make and keep written records to verify that any food promoted with a “healthy” claim meets the FGE requirements. The FDA is also exploring the development of a “healthy” symbol that manufacturers could use to market a product’s “healthy” characteristics, although no symbol has yet been finalized.
Car Accident vs. Slip-and-Fall Claims in Philadelphia: What’s the Difference?
Accidents happen daily in Philadelphia, and when they do, it’s often hard to know what to do next. Whether you’re injured in a car accident on I-76 near the Schuylkill River or take a bad fall on an icy sidewalk at Rittenhouse Square, the results can be life-changing. Injuries can interrupt your work, limit your mobility, and put significant financial strain on you and your loved ones.
If you’ve been hurt in an accident, you’re likely considering filing a claim to recover damages. However, not all personal injury claims are the same. Car accident claims and slip-and-fall claims are among the most common, but they are very different in terms of legal processes, types of evidence, and the challenges involved. A skilled slip and fall accident lawyer can help navigate the complexities of such cases and ensure you receive the compensation you deserve.
Understanding Car Accident Claims in Philadelphia
Car accidents happen every day in the bustling streets of Philadelphia. From fender benders on Roosevelt Boulevard to multi-car pileups on I-95, car accidents can lead to severe and even life-altering injuries. When an accident occurs, understanding the process for filing a claim is essential for recovering the compensation you need.
Common Causes of Car Accidents
Car accidents can result from various factors, including but not limited to:
Distracted driving, such as texting while driving on Broad Street.
Speeding through residential neighborhoods like Northern Liberties.
Driving under the influence of alcohol or drugs.
Failing to obey traffic laws, such as running red lights at busy intersections like the one at City Avenue and Belmont Avenue.
Weather-related hazards, like icy roads during Philadelphia’s harsh winters.
Each of these causes involves potential negligence, which is the legal basis for most car accident claims. If another driver’s negligence caused the accident and your injuries, you have a right to pursue compensation.
Legal Processes for Car Accident Claims
Car accident claims in Pennsylvania involve several steps, starting with dealing with insurance companies. Pennsylvania follows a no-fault insurance system, which means that your own insurance policy, specifically your personal injury protection (PIP) coverage, pays for your medical bills and other out-of-pocket expenses, regardless of who caused the accident.
However, you may also file a claim directly against the at-fault driver. This process typically involves:
Reporting the Accident to your insurance company and law enforcement.
Gathering Evidence, such as police reports, traffic camera footage, and witness statements.
Proving that the at-fault driver was negligent (for instance, they were texting while driving on Market Street).
Negotiating a settlement with the at-fault driver’s insurance company.
If a settlement isn’t possible, you may need to file a personal injury lawsuit and potentially go to court.
Potential Compensation in Car Accident Cases
Car accident claims in Philadelphia allow you to pursue both economic damages and non-economic damages:
Economic damages include medical expenses, lost income, and property damage. For example, if your car was totaled in an accident outside The Philadelphia Museum of Art, you could recover the cost of repairs or replacement.
Non-economic damages include compensation for pain and suffering, emotional distress, and loss of enjoyment in life.
Who May Be Victims of a Car Accident?
Car accidents can impact a wide range of individuals, each with their own unique circumstances and challenges. Victims may include drivers, whether operating their own vehicle or someone else’s. Passengers are often innocent bystanders, suffering injuries from situations entirely out of their control.
Pedestrians are especially vulnerable, as they lack the protection of a vehicle and may face severe or life-altering injuries from even low-speed collisions. Cyclists and motorcyclists also account for many car accident victims, and their lack of physical shielding often puts them at greater risk of traumatic injuries like fractures, spinal damage, or head trauma.
From parents commuting to work to children crossing the street to delivery drivers on the job—car accidents can touch the lives of anyone. The physical injuries, emotional scars, and financial strain these accidents impose can drastically alter someone’s future.
Challenges in Car Accident Claims
Car accident claims often involve dealing with the complexities of insurance policies. Insurers may try to minimize payouts by questioning the severity of your injuries or blaming you for the accident. For example, they might argue you were partially responsible for the collision on Walnut Street because you were speeding. Pennsylvania follows a modified comparative negligence rule, which could reduce the compensation you receive if you’re found partially at fault. And, if you are found to be more than 50% at fault, you are barred from recovering any damages.
Understanding Slip-and-Fall Claims in Philadelphia
Slip-and-fall accidents, while often dismissed as minor incidents, can result in serious injuries with long-term consequences. These accidents can happen anywhere in the city—from slipping on spilled coffee at Reading Terminal Market to tripping over a cracked sidewalk on South Street.
Common Causes of Slip-and-Fall Accidents
Slip-and-fall incidents can occur for many reasons, such as:
Wet or slippery floors at local businesses like Wawa or Giant supermarkets.
Uneven or poorly maintained sidewalks, common in some parts of Old City.
Hazardous conditions like snow and ice that aren’t cleared promptly, particularly during Philadelphia’s snowy winters.
When someone else’s negligence causes these conditions—like a property owner failing to provide a safe environment—you may be eligible to file a slip-and-fall claim.
Legal Processes for Slip-and-Fall Claims
Unlike car accidents, slip-and-fall claims often focus on premises liability law. Premises liability holds property owners and managers responsible for maintaining safe conditions for visitors. However, to succeed in a slip-and-fall case, you must prove:
Unsafe Conditions Existed – For example, a shop owner failed to put up a “Caution Wet Floor” sign after mopping at their store in Liberty Place.
The Property Owner’s Negligence – You must show the owner was aware (or should have been aware) of the hazardous condition and failed to address it in a reasonable time.
Causation – You must prove the dangerous condition caused your injuries.
Pennsylvania follows the comparative negligence rule for slip-and-fall claims as well. If you’re partially responsible for the accident (for example, if you were running and not watching where you were going), your compensation can be reduced.
Potential Compensation in Slip-and-Fall Cases
Like car accident claims, slip-and-fall cases may include both economic and non-economic damages:
Economic damages often cover medical expenses, ongoing treatment, or adaptive devices (like a wheelchair). For instance, if you broke your ankle slipping on icy steps at a condo building in Point Breeze, you’d likely seek compensation for hospital bills and physical therapy.
Non-economic damages aim to compensate for pain, emotional suffering, or loss of mobility caused by the accident.
Invitees, Licensees, and Trespassers in Premises Liability
When it comes to slip-and-fall accidents, the duty of care a property owner owes someone often depends on that person’s status on the property. Under premises liability law, individuals typically fall into one of three categories—invitees, licensees, or trespassers—and each category is owed a different level of protection.
Invitees: These are people who are on the property for a purpose that benefits the property owner, such as customers in a store like Target or Giant supermarkets. Property owners owe the highest duty of care to invitees. This includes regularly inspecting the property for hazards, promptly addressing dangerous conditions, and warning invitees about any risks that can’t be immediately fixed, such as wet floors or loose steps.
Licensees: Licensees are people who have permission to be on the property but are there for their own purposes, like a social guest visiting a friend’s home. Property owners owe licensees a reasonable duty of care, which means they must warn them of known dangers that aren’t obvious, such as a broken handrail or a hidden hole in the backyard.
Trespassers: Trespassers are individuals who enter a property without permission. Generally, property owners do not owe a duty to keep trespassers safe from hazards. However, they must refrain from willfully or recklessly causing harm. A special exception exists for child trespassers under the attractive nuisance doctrine, which applies to hazards like unsecured swimming pools or abandoned construction sites that could lure children onto the property.
Understanding these distinctions is key to determining whether a property owner acted negligently and to what extent they may be held accountable in a slip-and-fall case.
Challenges in Slip-and-Fall Claims
One of the biggest challenges is proving negligence. Property owners often argue that the hazardous condition was “open and obvious,” meaning you should have noticed and avoided it. Additionally, it can be difficult to prove that the property owner had enough time to address the hazard before your fall occurred.
Key Differences Between Car Accidents and Slip-and-Fall Claims in Philadelphia
While both types of accidents involve personal injury claims, key differences set car accident claims and slip-and-fall claims apart:
Aspect
Car Accident
Slip-and-Fall
Nature of Negligence
Focuses on driver negligence (e.g., texting, speeding).
Focuses on property owner negligence (e.g., failing to maintain safe conditions).
Evidence
Includes police reports, traffic footage, witness statements, and vehicle damage.
Includes photos of hazards, incident reports, and maintenance logs.
Legal Framework
Often involves no-fault insurance and third party liability claims.
Relies on premises liability and proving owner responsibility.
Challenges
Insurers may shift blame or question injury severity.
Owners may argue hazards were “open and obvious” or unavoidable.
What Both Claims Have in Common
Despite their differences, car accident claims and slip-and-fall claims share one important similarity—they are both about making victims whole again. Injuries from either type of accident can make life incredibly challenging, from dealing with chronic pain to losing the ability to work.
Compensation isn’t just about money—it’s about securing the resources you need to move forward, whether that means covering medical bills, paying rent, or undergoing physical therapy to regain mobility.
The Importance of Legal Representation in Personal Injury Claims
Dealing with the aftermath of a personal injury—whether caused by a car accident or a slip-and-fall—can be overwhelming. Physically and emotionally, you may feel drained as you deal with medical bills, time away from work, and the uncertainty of what lies ahead. At the same time, the legal process can be complex, with unfamiliar jargon and procedural hurdles that can make it hard to know where to begin. That’s where having the right legal representation makes all the difference.
An experienced personal injury lawyer acts as your advocate, guiding you through every step of your claim. They’ll help you understand your legal rights and options, ensuring you don’t accidentally waive any protections you’re entitled to. Insurance companies, in particular, often underestimate claims or look for ways to minimize payouts. Without someone on your side, it’s all too easy to accept an offer that falls short of meeting your financial needs. A personal injury attorney has the knowledge to evaluate the true value of your case, including factors like lost wages or income, medical expenses, and the emotional toll of your injuries, to ensure you receive the full compensation you’re entitled to.
Beyond negotiating with insurance companies, your lawyer will handle the paperwork, gather evidence, and work with experts to strengthen your case. If your claim turns into a lawsuit, having skilled legal representation is even more critical. The courtroom requires a deep understanding of rules, procedures, and strategies that only a seasoned attorney can bring to the table.
But it’s not just about the legal complexities—it’s about the peace of mind professional guidance provides. When you have an attorney by your side, you can focus on what truly matters: your recovery and well-being. They’ll lighten your burden, fight for justice, and give you the confidence to move forward, knowing a legal professional is in your corner, advocating for your best interests every step of the way.
How to Get Started with Your Claim
Filing a claim—even for an injury that seems obvious—can be overwhelming, especially when you’re already focused on recovery. That’s why it’s critical to have experienced legal support. A skilled personal injury attorney can help you gather evidence, deal with insurance companies, and build a strong case while you concentrate on healing.
So What’s Going on in Belgium?
Well, a lot in fact! A number of new provisions are taking effect at the start of the new year and we have tried to summarise them for you in one little blog post. Our New Year’s gift to you!
1. Extended information obligations in the event of a transfer of an undertaking
As from 1 February 2025, changes to national Collective Labour Agreement nr. 32 bis (“CLA 32bis” – Belgium’s equivalent to TUPE) will enter into force, increasing the involvement of the new employer (transferee) in the information and consultation process.
Going forward, at the request of the employee representatives or individual employees involved in the transfer, the transferor must communicate the information required to be given as part of the process to the transferee as well. This information sharing must occur during the information and consultation process with the employee representatives or individual employees, and prior to the transfer.
In addition, the transferor must invite the transferee to introduce themselves to the employees or their representatives during the information and consultation process. This invitation must be issued in a timely manner during the information and consultation process, and in any case before the transfer. While there was previously no obligation to do this, in practice it was already quite common for the transferee to have a meeting with the employee representatives and/or the transferring employees ahead of the actual transfer date. CLA 32bis now codifies this practice. CLA 32bis does not, however, oblige the transferee to accept the invitation.
2. State and workplace pensions
State pensions
The statutory retirement age will gradually be raised from 65 to 67. A first step will be taken in February 2025 by raising the retirement age to 66.
Early retirement at a younger age remains possible, but the conditions have become stricter in recent years. From the age of 63, early retirement is possible for those with a professional career of 42 years. For those who have worked even longer, early retirement is possible as early as 60 or 61.
Workplace pensions
From 1 January 2025, the minimum return guarantee under the Workplace Pensions Act (WAP) will increase for the first time in 10 years, from 1.75 to 2.5%, due to higher government bond yields over the past two years.
This increase imposes additional financial obligations on employers, who will have to take into account the new minimum return guarantee when calculating their liabilities. If the investments of the pension vehicle are not sufficient to guarantee a 2.5% return, the shortfall will require additional financing by the employer.
3. Revision of the rules around extra-contractual liability
Up until now, so-called agents or auxiliary persons (such as employees) were protected from liability, meaning that an employee could not be held liable by a third party (such as a customer or business partner of the employer) for damages caused in the course of their work.
As from 1 January 2025, in relation to events occurring from this date, the provisions of the new Civil Code will apply and this protection for agents has been removed. Employees can now be held directly liable by a third party, even if they themselves do not have a contract with that party. Directors of companies, representatives, subcontractors and employees can also qualify as auxiliary persons under the new regime.
This means that for events occurring from 1 January 2025, a contractual party can sue an employee directly for compensation, but only if the damage has been caused by fraud, gross misconduct or repeated minor fault of the employee. This limitation does not apply however where the damage has been caused by “impairment of physical or psychological integrity” or intentional damage by the employee.
While it will be exceptional for customers to go after your employees instead of the company (deeper pockets and all) and employers will still remain liable for all errors made by employees, including minor errors, that cause damage to third parties, your employees (and directors) may wish to be protected against this possibility. The New Civil Code allows contracting parties to include provisions in their agreements with customers, suppliers and other contractors stating that their employees and other auxiliary persons will not be held liable during the performance of their contracts.
This may be something that you want to consider including in your contract templates. We will of course be happy to assist.
4. Indexation time
January is traditionally also the time where there are wage increases in a lot of sectors due to the automatic link to the index. The most notable sector in this regard is joint committee 200. Both minimum wages and actual salaries will increase by 3.58% this January.
The amount of the annual premium payable in this sector is also indexed annually. The initial amount of €250 will increase to €323.69 this year. This premium is paid during the month of June, unless it was converted into another equivalent benefit. So quite some hefty changes already for the start of the year. And with the new (national) government almost in place – optimism is a moral duty, it is inevitable there is more to come.
Litigation Minute: A Look Back and Ahead
What You Need to Know in a Minute or Less
Throughout 2024, we published three series highlighting emerging and evolving trends in litigation. From generative AI to ESG litigation, our lawyers continue to provide concise, timely updates on the issues most critical to our clients and their businesses.
In a minute or less, find our Litigation Minute highlights from the past year—as well as a look ahead to 2025.
Beauty and Wellness
Our first series of the year covered trends in the beauty and wellness industry, beginning with products categorized as “beauty from within,” including oral supplements focused on wellness. We outlined the risks of FDA enforcement and class action litigation arising from certain marketing claims associated these products.
We next reviewed the use of “clean” and “natural” marketing terminology. We assessed these labeling claims across a range of potentially impacted products and brands, as well as regulatory and litigation risks associated with such claims.
Alongside these marketing-focused issues, companies also face increased regulatory scrutiny, including new extended producer responsibility laws and the FTC Green Guides. We concluded our series by assessing product packaging and end-of-life considerations for beauty and wellness brands.
Generative AI
One of the most-discussed developments of 2024, generative AI was the focus of our second series of the year, which examined key legal, regulatory, and operational considerations associated with generative AI. We outlined education, training, and risk management frameworks in light of litigation trends targeting these systems.
2024 also saw several new state statutes regulating generative AI. From mandatory disclosures in Utah to Tennessee’s ELVIS Act, we examined how new state approaches would remain at the forefront of attention for companies currently utilizing or considering generative AI.
With the need for compliance and training in mind, we next discussed the potential for generative AI in discovery. With the ability to rapidly sort through data and provide timely requested outputs, we provided an overview of how generative AI has created valuable tools for lawyers as well as their clients.
ESG Litigation
2024 highlighted the impacts of extreme weather, as well as the importance of preparation for such natural disasters. With extreme weather events expected to increase in both frequency and intensity around the world, we provided insurance coverage considerations for policyholders seeking to restore business operations following these events and weather the consequential financial storms.
Further ESG headlines this year focused on the questions surrounding microplastics—including general definition, scientific risk factors, potential for litigation, and the hurdles complicating this litigation.
Greenwashing claims, on the other hand, have experienced fewer setbacks, with expanded litigation targeting manufacturers, distributors, and retailers of consumer products. Alleging false representation of companies or their products as “environmentally friendly,” we reviewed how the risk of such claims can be mitigated through proper substantiation and documentation of company claims and certifications.
EPA Issues Final Risk Management Rules for Trichloroethylene, Perchloroethylene, and Carbon Tetrachloride
The U.S. Environmental Protection Agency (EPA) released final risk management rules under the Toxic Substances Control Act (TSCA) for trichloroethylene (TCE) and perchloroethylene (PCE) on December 9, 2024, and for carbon tetrachloride (CTC) on December 11, 2024. EPA states that all uses of TCE will be banned over time, with “the vast majority of identified risks eliminated within one year,” and safer alternatives readily available for the majority of uses. The PCE rule will ban manufacture, processing, and distribution in commerce of PCE for all consumer uses and many commercial uses, while allowing some workplace uses to continue only where robust workplace controls can be implemented. The CTC rule will require “robust worker safety programs” while banning some uses.
TCE
EPA’s December 9, 2024, press release states that TCE is used as a solvent in consumer and commercial products such as cleaning and furniture care products, degreasers, brake cleaners, sealants, lubricants, adhesives, paints and coatings, and arts and crafts spray coatings, and is also used in the manufacture of some refrigerants. According to EPA, “[s]afer alternatives are readily available for the majority of these uses.”
The final rule (89 Fed. Reg. 102568) states that to address unreasonable risk, EPA is:
Prohibiting the manufacture (including import), processing, and distribution in commerce of TCE for all uses (including all consumer uses), with longer compliance timeframes for manufacture, processing, and distribution in commerce related to certain industrial and commercial uses;
Prohibiting the industrial and commercial use of TCE, with longer compliance timeframes for certain uses;
Prohibiting the manufacture (including import) and processing of TCE as an intermediate for the manufacturing of hydrofluorocarbon 134a (HFC-134a), following an eight-and-a-half-year phase-out;
Prohibiting the industrial and commercial use of TCE as a solvent for closed-loop batch vapor degreasing for rayon fabric scouring for end use in rocket booster nozzle production by federal agencies and their contractors, following a ten-year phase-out;
Prohibiting the manufacture (including import), processing, distribution in commerce, and use of TCE as a laboratory chemical for asphalt testing and recovery, following a ten-year phase-out;
Prohibiting the manufacture (including import), processing, distribution in commerce, and industrial and commercial use of TCE as a solvent in batch vapor degreasing for essential aerospace parts and components and narrow tubing used in medical devices, following a seven-year TSCA Section 6(g) exemption;
Prohibiting the manufacture (including import), processing, distribution in commerce, and industrial and commercial use of TCE as a solvent in closed-loop vapor degreasing necessary for rocket engine cleaning by federal agencies and their contractors, following a seven-year TSCA Section 6(g) exemption;
For vessels of the Armed Forces and their systems, and in the maintenance, fabrication, and sustainment for and of such vessels and systems, prohibiting the industrial and commercial use of TCE as: potting compounds for naval electronic systems and equipment; sealing compounds for high and ultra-high vacuum systems; bonding compounds for materials testing and maintenance of underwater systems and bonding of nonmetallic materials; and cleaning agents to satisfy cleaning requirements for: materials and components required for military ordnance testing; temporary resin repairs in vessel spaces where welding is not authorized; ensuring polyurethane adhesion for electronic systems and equipment repair and installation of elastomeric materials; various naval combat systems, radars, sensors, and equipment; fabrication and prototyping processes to remove coolant and other residue from machine parts; machined part fabrications for naval systems; installation of topside rubber tile material aboard vessels; and vapor degreasing required for substrate surface preparation prior to electroplating processes, following a ten-year TSCA Section 6(g) exemption;
Prohibiting the emergency industrial and commercial use of TCE in furtherance of the National Aeronautics and Space Administration (NASA) mission for specific conditions that are critical or essential and for which no technically and economically feasible safer alternative is available, following a ten-year TSCA Section 6(g) exemption;
Prohibiting the manufacture (including import), processing, distribution in commerce, disposal, and use of TCE as a processing aid for manufacturing battery separators for lead acid batteries, following a 20-year TSCA Section 6(g) exemption;
Prohibiting the manufacture (including import), processing, distribution in commerce, disposal, and use of TCE as a processing aid for manufacturing specialty polymeric microporous sheet materials following a 15-year TSCA Section 6(g) exemption;
Prohibiting the manufacture (including import), processing, distribution in commerce, and use of TCE as a laboratory chemical for essential laboratory activities and some research and development activities, following a 50-year TSCA Section 6(g) exemption;
Requiring strict workplace controls to limit exposure to TCE, including compliance with a TCE workplace chemical protection program (WCPP), that includes requirements for an interim existing chemical exposure limit (ECEL) revised from the proposed rule, as well as dermal protection, for conditions of use (COU) with long term phase-outs or time-limited exemptions under TSCA Section 6(g) or prescriptive workplace controls;
Prohibiting the disposal of TCE to industrial pre-treatment, industrial treatment, or publicly owned treatment works (POTW), through a phase-out allowing for longer timeframes for disposal necessary for certain industrial and commercial uses, along with a 50-year TSCA Section 6(g) exemption for disposal for cleanup projects before prohibition and interim requirements for wastewater worker protection; and
Establishing recordkeeping and downstream notification requirements.
EPA notes that all TSCA COUs of TCE are subject to the final rule. The final rule will be effective January 16, 2025.
PCE
EPA’s December 9, 2024, press release states that PCE is a solvent that is widely used for consumer uses such as brake cleaners and adhesives, in commercial applications such as dry cleaning, and in many industrial settings. According to EPA, “[s]afer alternatives are readily available for the majority of these uses.”
The final rule (89 Fed. Reg. 103560) states that to address unreasonable risk, EPA is:
Prohibiting most industrial and commercial uses and the manufacture (including import), processing, and distribution in commerce of PCE for those uses;
Prohibiting the manufacture (including import), processing, and distribution in commerce of PCE for all consumer use;
Prohibiting the manufacture (including import), processing, distribution in commerce, and commercial use of PCE in dry cleaning and spot cleaning through a ten-year phase-out;
Requiring a WCPP, including an inhalation exposure concentration limit, direct dermal contact controls, and related workplace exposure controls, for many occupational COUs of PCE not prohibited;
Requiring prescriptive workplace controls for use of PCE in laboratories and energized electrical cleaners;
Establishing recordkeeping and downstream notification requirements;
Providing a ten-year time limited exemption under TSCA Section 6(g) for certain emergency uses of PCE in furtherance of NASA’s mission, for specific COUs that are critical or essential and for which no technically and economically feasible safer alternative is available; and
Identifying a regulatory threshold for products containing PCE for the prohibitions and restrictions on PCE.
EPA notes that all TSCA COUs of PCE are subject to the final rule. The final rule will be effective January 17, 2025.
CTC
EPA’s December 11, 2024, press release states that CTC is a solvent used in commercial settings as a raw material for producing other chemicals like those used in refrigerants, aerosol propellants, and foam-blowing agents. EPA notes that the U.S. Consumer Product Safety Commission banned the use of CTC in consumer products in 1970. According to EPA, requirements under the Montreal Protocol on Substances that Deplete the Ozone Layer and the Clean Air Act phased out CTC production in the United States in 1996 for most domestic uses that did not involve manufacturing other chemicals. The continued, safe use of CTC in the manufacture of low global warming potential chemicals used in refrigerants, aerosol propellants, and foam-blowing agents “is particularly important in the agency’s efforts to support the American Innovation and Manufacturing Act of 2020 (AIM Act) and the Kigali Amendment to the Montreal Protocol.”
The final rule (89 Fed. Reg. 103512) states that to address unreasonable risk, EPA is:
Requiring a WCPP, including an inhalation exposure concentration limit, direct dermal contact controls, and related workplace exposure controls, for the following occupational COUs of CTC not prohibited:
Domestic manufacture;
Import;
Processing as a reactant in the production of hydrochlorofluorocarbons (HCFC), hydrofluorocarbons (HFC), HFOs, and PCE;
Incorporation into formulation, mixture, or reaction products in agricultural products manufacturing, vinyl chloride manufacturing, and other basic organic and inorganic chemical manufacturing;
Repackaging for use as a laboratory chemical;
Recycling;
Industrial and commercial use as an industrial processing aid in the manufacture of agricultural products and vinyl chloride;
Industrial and commercial use in the elimination of nitrogen trichloride in the production of chlorine and caustic soda and the recovery of chlorine in tail gas from the production of chlorine; and
Disposal;
Requiring use of laboratory ventilation devices, such as fume hoods or glove boxes, and dermal personal protective equipment (PPE) for the industrial and commercial use as a laboratory chemical;
Prohibiting these additional COUs, for which EPA understands use of CTC has already ceased:
Incorporation into formulation, mixture, or reaction products in petrochemical-derived manufacturing, except in the manufacture of vinyl chloride (for which EPA is requiring a WCPP);
Industrial and commercial use as an industrial processing aid in the manufacture of petrochemicals-derived products, except in the manufacture of vinyl chloride (for which EPA is requiring a WCPP);
Industrial and commercial use in the manufacture of other basic chemicals (including manufacturing of chlorinated compounds used in solvents, adhesives, asphalt, and paints and coatings), except for use in the elimination of nitrogen trichloride in the production of chlorine and caustic soda and the recovery of chlorine in tail gas from the production of chlorine (for which EPA is requiring a WCPP);
Industrial and commercial use in metal recovery;
Industrial and commercial use as an additive; and
Industrial and commercial use in specialty uses by the U.S. Department of Defense (DOD);
Requiring recordkeeping; and
Requiring manufacturers (including importers), processors, and distributors to provide downstream notification of the requirements.
EPA notes that all TSCA COUs of CTC are subject to the final rule. The final rule will be effective January 17, 2025.
Commentary
Bergeson & Campbell, P.C. (B&C®) is pleased that EPA completed its risk management activities but disappointed with the approach EPA has taken. It is vitally important that EPA take action to protect health and the environment, especially workers who may be exposed to these three substances, but EPA fails to follow the statutory standard and meet its own regulations, and neglects to use the best available science. As with the other risk management rules, EPA remains vulnerable to legal challenges for not meeting the scientific standards under TSCA Section 26. In addition, EPA failed to comply with its own regulations for following the procedures for conducting risk evaluations. We discuss each of these points in more detail below. B&C expects entities impacted by these final rules to seek petitions for review, further delaying the implementation of the measures necessary to protect against unreasonable risk.
Under TSCA Section 6(b)(4)(C), EPA is required to “conduct and publish risk evaluations” in accordance with a rulemaking that establishes procedures for such evaluations. The relevant rulemaking cited in the final risk evaluations for TCE, PCE, and CTC was the 2017 Procedures for Chemical Risk Evaluation Under the Amended Toxic Substances Control Act (the Risk Evaluation Rule). The Risk Evaluation Rule codified regulatory definitions (e.g., weight of scientific evidence) and required application of a systematic review method that “uses a preestablished protocol…and integrate[s] evidence…”.
EPA was informed publicly about issues with its systematic review method as early as July 2019 by a public commenter at a meeting of the TSCA Science Advisory Committee on Chemicals (SACC). The public commenter made the following statements about EPA’s use of the 2018 Application of Systematic Review in TSCA Risk Evaluations (the 2018 TSCA SR document), including:
The first critical piece of missing information is creating a protocol which is used to review all the evidence and outline the process for conducting the review. This helps minimize bias and ensure transparency in the decision-making process. It’s also required by law to have a preestablished protocol, and there’s not one for 1,4-Dioxane or the other TSCA chemicals. [see pp. 125-126 of the meeting transcript.]
EPA was informed in February 2021 by the U.S. National Academies of Sciences, Engineering, and Medicine (NASEM) that its 2018 TSCA SR document did not meet the criteria of “comprehensive, workable, objective, and transparent” and that “The OPPT approach to systematic review does not adequately meet the state-of-practice.”
EPA acknowledged in its December 2021 Draft Systematic Review Protocol Supporting TSCA Risk Evaluations for Chemical Substances Version 1.0 that it “did not have a complete clear and documented TSCA systematic review (SR) Protocol [in the first ten risk evaluations].” EPA further acknowledged that an “Evidence Integration process…was not previously included in the 2018 TSCA SR document [used for TCE, PCE, and CTC].”
Despite public comments, NASEM’s review, and EPA’s acknowledgements, EPA did not remedy these issues in the first ten risk evaluations, including the risk evaluations for TCE, PCE, and CTC. Rather, EPA re-issued final unreasonable risk determinations with the following unsupported blanket statement in each: “EPA views the peer reviewed hazard and exposure assessments and associated risk characterization [for TCE, PCE, and CTC] as robust and upholding the standards of best available science and weight of the scientific evidence per TSCA sections 26(h) and (i).”
In addition to these weaknesses that apply to all the completed risk management rules, each of these three rules suffers from additional weaknesses.
TCE
EPA stated in the preamble of the final rule that it “recognizes that the interim ECEL of 0.2 ppm as an 8-hr TWA does not fully address the unreasonable risk from TCE, hence, the term ‘interim.’’’ EPA further stated that “Potentially exposed persons may continue to be at risk for the developmental [i.e., fetal cardiac defects] and immunotoxicity effects that provide the basis for EPA’s ultimate prohibition.” In comparison, EPA concluded in the 2020 Final Risk Evaluation for Trichloroethylene “that acute immunosuppression and chronic autoimmunity were the best overall non-cancer endpoints for use in Risk Evaluation under TSCA, based on the best available science and weight of the scientific evidence, and were used as the basis of risk conclusions…”.
EPA subsequently departed from its statements about the best available science and weight of scientific evidence for TCE in the proposed and final risk management rules. As noted above, EPA stated on January 9, 2023, in the final revision to the risk determination for TCE that the 2020 Final Risk Evaluation for Trichloroethylene upheld the scientific standards under TSCA Section 26. Also on January 9, 2023, EPA issued a press release stating that it will develop “existing chemical exposure limits [ECELs] based on both the immune endpoint [i.e., a generally agreed upon effect by the TSCA SACC; see p. 70 of the TSCA SACC final report and consistent with the final risk evaluation] and the CHD endpoint [i.e., fetal cardiac defects, which EPA had rated previously as a lower quality study] in support of risk management.” EPA clarified this decision by stating that the fetal cardiac defects endpoint “was not relied on to determine whether there is unreasonable risk from TCE [in the 2020 Final Risk Evaluation for Trichloroethylene] because of direction not to do so that was provided by the previous political leadership.” For discussion of this claim, see our memorandum dated January 19, 2023. Because Section 6(a) mandates that EPA regulate to the extent necessary to mitigate the risk identified in the risk evaluation, it is not clear that EPA can promulgate a rule to protect against hazards not identified as representing the best available science and weight of scientific evidence in the final risk evaluation.
PCE
EPA stated the following in the final risk management rule for PCE:
EPA is finalizing as proposed an ECEL under TSCA section 6(a) of 0.14 ppm (0.98 mg/m3) as an 8-hour TWA based on the chronic non-cancer human equivalent concentration for neurotoxicity.
EPA’s ECEL was derived using studies (i.e., Cavalleri et al., 1994 and Echeverria et al., 1995) judged by NASEM as “appropriate to use as a point of departure [POD] for derivation of the [Integrated Risk Information System’s (IRIS) reference concentration] RfC…[see p. 5 of the NASEM report].” The TSCA SACC concluded that EPA’s use of these studies and deriving a midpoint value as the POD was “appropriate [see pp. 62-63 of the TSCA SACC final report].” We, therefore, do not anticipate successful challenges of EPA’s ECEL, based on the scientific standards under TSCA Section 26. Given the scientific robustness of the ECEL, it is not clear why EPA elected to ban COUs that might be undertaken in compliance with a WCPP that includes that ECEL. As with other of EPA’s final risk management rules, EPA seems to be issuing regulations with prohibitions that go beyond the extent necessary to protect against the unreasonable risks identified in the final risk evaluation.
CTC
EPA stated the following in the final risk management rule for CTC:
EPA is finalizing as proposed an ECEL under TSCA section 6(a) of 0.03 ppm (0.2 mg/m3) for inhalation exposures to CTC as an 8-hour TWA based on the threshold POD for liver cancer (assuming a margin of exposure of 300) and the [inhalation unit risk] IUR for adrenal cancer.
EPA derived the ECEL using a POD of 6 mg/m3 based on liver tumor data from female mice chronically exposed to CTC via inhalation. As EPA stated, it applied a benchmark margin of exposure (MOE) of 300 to this POD, which consisted of 10× for intraspecies (human to human) uncertainty (i.e., UFH), 3× for interspecies (animal to human) uncertainty (i.e., UFA), and 10× for uncertainty with extrapolating from a lowest-observed-adverse-effect-concentration (LOAEC) to a no-observed-adverse-effect-concentration (NOAEC) (i.e., UFLOAEC to NOAEC or UFL).
We agree with EPA’s use of a threshold approach for carcinogenicity of CTC as recommended by the TSCA SACC. See p. 51 of the TSCA SACC’s final report to “Consider adoption of a threshold-type [mode of action] MOA in estimating the carcinogenic risks of carbon tetrachloride.” Unfortunately, EPA did not follow its own guidance for developing the POD and benchmark MOE.
During the public comment period on the proposed risk management rule for CTC, members of the public commented on EPA’s threshold approach, specifically noting that application of the LOAEC-to-NOAEC (UFL) approach rather than using benchmark dose (BMD) modeling was inconsistent with EPA’s own guidance documents (see slides 15 and 16 of the public comments). Note, when BMD modeling is used, a UFL is not applied because BMD modeling reduces the uncertainty represented by the UFL. The public commenters performed BMD modeling on the liver tumor data from female mice and concluded that their results “were statistically valid and identical to EPA’s 2010 BMD results” (see slide 11 of the public comments). Using the BMD approach, rather than the UFL approach, the public commenters derived an ECEL of 1.5 ppm (i.e., 9.5 mg/m3) (see slide 12 of the public comments). EPA did not explain why it did not use the BMD modeling approach.
EPA’s statement about the “IUR for adrenal cancer” is questionable, given that these tumors were evaluated recently by carcinogenicity experts who concluded that “The pheochromocytomas in rodents are not relevant to human cancer risk.” EPA has yet to refute that conclusion.
Conclusions
B&C anticipates that the common procedural issues with the final risk evaluations for TCE, PCE, and CTC may serve as an underlying basis for challenging the final risk management rules on these substances. We acknowledge that courts will generally give deference to EPA’s interpretation of science, but we question whether this will occur, particularly with the issues discussed above with TCE and CTC, when EPA departs from its own standards. We anticipate that EPA may be challenged for prohibiting occupational COUs when EPA concludes that compliance with the WCPP and ECELs protects against the unreasonable risks identified. EPA’s own conclusion about the protective effect of a WCPP undermines any argument that a ban is required to protect to the “extent necessary” under TSCA Section 6(a).
Protecting Against Residential Price Gouging During the Los Angeles Wildfires
As devastating wildfires displace thousands in Los Angeles County, Governor Newsom has declared a state of emergency. In the wake of this crisis, California’s price-gouging laws impose strict limits on rental price increases to prevent exploitation of displaced individuals.
Key Protections for Renters
Under California Penal Code section 396:
Rent Increase Cap. Residential landlords may not raise rents by more than 10% unless the increase reflects verified additional costs or pre-existing contracts.
New Rentals. Properties not rented or advertised before the emergency cannot exceed 160% of the U.S. Department of Housing and Urban Development’s (HUD) fair market rental determination (FMR).[1] In some localities (e.g., Beverly Hills), rental rates included in the schedule may be less than fair market value prior to the emergency declaration, as the rates are based on regional market valuations.
Evictions & Relisting. It is illegal to evict tenants and relist properties at a higher rate than the previous rental price.
These Section 396 protections last 30 days following the emergency declaration and may be extended.
What Landlords Should Know
Compliance Is Critical. Violating price-gouging laws can result in significant penalties, such as:
Criminal Penalties: Up to one year in jail and $10,000 in fines.
Civil Penalties: Additional fines under California’s Business and Professions Code and the Los Angeles County Code.
Scrutiny Is High. State and local authorities are actively investigating violations, and penalties can apply to each separate act of non-compliance.
What To Keep in Mind
Audit Your Pricing. Ensure any rental increases during the emergency align with the law.
Document Costs. Keep detailed records of any price increases justified by added expenses or repairs.
Stay Informed. Follow updates from the California Attorney General’s Office and other state agencies.
Why It Matters
Price gouging not only violates the law but undermines community trust during a critical time. Landlords play a pivotal role in helping Los Angeles recover by providing fair and compliant housing solutions to those in need.
We will continue to provide updates as they become available from the California Attorney General’s Office and other regulatory agencies.
FOOTNOTES
[1] A schedule of HUDs fair market rental rates is available at this link.
Kennedy Kline also contributed to this article.
Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced
1. Higher Jurisdictional Thresholds For HSR Filings
On January 10, 2025, the Federal Trade Commission announced[1] revised, higher thresholds for premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The jurisdictional thresholds are revised annually, based on the change in Gross National Product (GNP).
The new thresholds will become effective 30 days after publication in the Federal Register. Acquisitions that close on or after the effective date will be subject to the new thresholds. In addition, the new HSR rules are scheduled to become effective on February 10, 2025.[2]
The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” thresholds. The key adjusted thresholds are summarized in the following chart:
Size of Transaction Test
Notification is required if– the acquiring person will hold certain assets, voting securities, and/or interests in non-corporate entities valued at more than $126.4 million AND the parties meet the Size of Person test; OR– the acquiring person will hold certain assets, voting securities, and/or interests in non-corporate entities valued at more than $505.8 million – such transactions are not subject to the Size of Person test.
Size of Person Test
Generally, one “person” to the transaction must have at least $252.9 million in total assets or annual net sales, and the other must have at least $25.3 million in total assets or annual net sales.
The above descriptions are general guidelines only. Determining if a transaction meets the thresholds can be complex and applying the thresholds may vary depending on the particular transaction. Parties engaging in transactions that may meet the thresholds or in series of transactions should consult counsel.
The adjusted filing fees will be based on the new thresholds as follows:
Filing fee
Size of Transaction
$30,000
Greater than $126.4M to less than $179.4M
$105,000
$179.4M to less than 555.5M
$265,000
$555.5M to less than $1.111B
$425,000
$1.111B to less than $2.222B
$850,000
$2.222B to less than $5.555B
$2,390,000
Deals valued at $5.555B or more
2. Higher Thresholds For the Prohibition Against Interlocking Directorates
New higher thresholds applicable to the prohibition in Section 8 of the Clayton Act against interlocking directorates will become effective upon publication in the Federal Register. Section 8 prohibits, with certain exceptions, one person from serving as a director or officer of two competing corporations if two thresholds are met. Applying the new thresholds, competitor corporations are covered by Section 8 if each one has capital, surplus and undivided profits aggregating to more than $51,380,000 with the exception that the interlock is not prohibited if the competitive sales of either corporation are less than $5,138,000.
FOOTNOTES
[1] FTC Announces 2025 Jurisdictional Threshold Updates for Interlocking Directorates | Federal Trade Commission
[2] The FTC Adopts New Premerger Notification Rules Implementing the Hart-Scott-Rodino (HSR) Act | Antitrust Law Blog
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EPA Adds Nine PFAS to Toxics Release Inventory for Reporting Year 2025
The U.S. Environmental Protection Agency (EPA) announced on January 6, 2025, that it is updating the list of chemicals subject to toxic chemical release reporting under the Emergency Planning and Community Right-to-Know Act (EPCRA) and the Pollution Prevention Act (PPA). 90 Fed. Reg. 573. Specifically, the final rule updates the regulations to identify nine per- and polyfluoroalkyl substances (PFAS) that must be reported pursuant to the National Defense Authorization Act for Fiscal Year 2020 (FY2020 NDAA) enacted on December 20, 2019. EPA notes that as this action is being taken to conform the regulations to a Congressional legislative mandate, notice and comment rulemaking is unnecessary. The PFAS added to the Toxics Release Inventory (TRI) and the triggering events are:
Ammonium perfluorodecanoate (PFDA NH4) (Chemical Abstracts Service Registry Number® (CAS RN®) 3108-42-7) (Final Toxicity Value);
Sodium perfluorodecanoate (PFDA-Na) (CAS RN 3830-45-3) (Final Toxicity Value);
Perfluoro-3-methoxypropanoic acid (CAS RN 377-73-1) (Final Toxicity Value);
6:2 Fluorotelomer sulfonate acid (CAS RN 27619-97-2) (Final Toxicity Value);
6:2 Fluorotelomer sulfonate anion (CAS RN 425670-75-3) (Final Toxicity Value);
6:2 Fluorotelomer sulfonate potassium salt (CAS RN 59587-38-1) (Final Toxicity Value);
6:2 Fluorotelomer sulfonate ammonium salt (CAS RN 59587-39-2) (Final Toxicity Value);
6:2 Fluorotelomer sulfonate sodium salt (CAS RN 27619-94-9) (Final Toxicity Value); and
Acetic acid, [(γ-ω-perfluoro-C8-10-alkyl)thio] derivs., Bu esters (CAS RN 3030471-22-5) (Confidential Business Information (CBI) Declassification).
The final rule will be effective February 5, 2025. As of January 1, 2025, facilities that are subject to reporting requirements for these PFAS should begin tracking their activities involving these chemicals as required by EPCRA Section 313. Reporting forms will be due by July 1, 2026.
CPPA Extends Public Comment Period from January 14, 2025, to February 19, 2025; Public Hearings for Interested Parties to be Held January 14, 2025, and February 19, 2025
The California Privacy Protection Agency (CPPA) published a Notice of Extension of Public Comment Period and Additional Hearing Date on Friday, January 10, 2025, informing that the CPPA is extending the formal public comment period for the proposed updates to the California Consumer Privacy Act regulations regarding cybersecurity audits, risk assessments, automated decision-making technology (ADMT), and insurance companies to ensure all Californians, including those affected by the devastating wildfires in Southern California, have the opportunity to participate. More information regarding public comments and the new deadline can be found here.
The CPPA will also be hosting two public hearings to provide all interested parties an opportunity to present oral and written statements or arguments regarding the proposed regulations. The first session will be tomorrow, January 14, 2025. More information can be found here. The second session will be held on February 19, 2025, with more information regarding the date, time, and location to be published.
Otherwise, the substance of the proposed updates to the regulations did not change. Our team provided a summary of the key updates from the November 8th CPPA Board meeting, including regarding the proposed updates to the regulations, here.
Mexico’s General Foreign Trade Rules For 2025
On Dec. 30, 2024, the Mexican Tax Administration Service (SAT) published in the Official Gazette of the Federation (DOF) the General Foreign Trade Rules for 2025, which seek to implement certain measures in order to optimize tax collection in Mexico and expand compliance standards. These rules will be in effect from Jan. 1 to Dec. 31, 2025.
This GT Alert highlights the most relevant changes to the General Foreign Trade Rules. Companies involved in Mexican foreign trade should timely review these provisions to enhance compliance. Adherence to the rules may also impact companies’ strategic planning, operating costs, and risk management activities.
General Considerations
ANAM Portal
Various guidelines that were previously released through the SAT Portal must now be managed through the National Customs Agency of Mexico (ANAM) Portal. Users should verify and follow the specific requirements stipulated in this new portal.Reference to Rules 1.6.28, 1.7.1, 1.7.7, 1.8.2, 1.9.4, 1.9.5, 1.9.6, 1.9.9, 1.9.11, 1.9.20, 1.9.21, 2.3.4, 2.3.8, 2.3.10, and 2.4.12 for 2025.
Changes of forms or procedure files
Various forms and/or files corresponding to foreign trade procedures were modified, so companies may need to carefully review their updated versions and ensure they comply with the requirements established in each case.Reference to Rules 1.1.10., 1.4.14., 2.2.6., 2.3.8., 3.1.26., 3.5.7., 4.2.2., 7.3.3. for 2025.
Considerations by Title, Chapter, and Rule
Title 1. General Provisions and Acts Prior to Dispatch
Chapter 1.2. Filing Promotions, Statements, Notices, and Forms
Submission of promotions, applications, or notices without format (Annex 2)
The 2025 rules explicitly specify the requirements that must be met by promotions, applications, or notices submitted in writing to the customs authority, in accordance with articles 18 and 18-A of the Federal Tax Code (CFF), strengthening clarity in their application.
The procedures established in Annex 2 (formats for foreign trade procedures) may continue to be presented via traditional means that were used before these documents had to be submitted to the authority’s digital platform or the tax mailbox.
However, new procedures must be submitted in writing to the competent authority, complying with the corresponding provisions. This situation will be maintained until the corresponding authority publishes the specific formats that must be used to carry out these procedures electronically.Reference to Rule 1.2.2. for 2025.
Chapter 1.6. Determination, Payment, Deferral, and Compensation of Contributions and Guarantees
Transfer and change of fixed asset regime, companies in the IMMEX Program
Neither the physical presentation nor the payment of the General Import Tax (IGI) is required for the transfer of goods classified as fixed assets between companies in the IMMEX Program (Manufacturing, Maquiladora, and Export Services Program), provided that certain requirements are met.
The section of the regulatory provision that allowed companies to offset the IGI payment made when transferring fixed asset goods temporarily imported before Jan. 1, 2001, was deleted. This rule applied only when the IGI had been paid at the time of the transfer, allowing its crediting on future imports.
The 2025 rules also establish that, when changing the regime from temporary to definitive importation of fixed asset goods under the IMMEX Program, the customs value declared in the temporary import declaration must be considered. This value can be reduced in proportion to the number of days in which the goods were deducted. If there are no authorized deduction percentages, it is assumed that the asset was deducted for 3,650 days.
The 2025 rules eliminate the portion that expressly referred to the possibility of applying the preferential rate of an authorized Sectoral Promotion Program (PROSEC) when changing the import regime from temporary to definitive, even for goods imported before Jan. 1, 2001, provided that the importer was registered in said program.Reference to Rule 1.6.10. for 2025.
Title 2. Entry, Exit, and Control of Goods
Chapter 2.3. Authorized Customs Facilities, Strategic Customs Facilities, and Operations within the Customs Facility
Obligations of strategic authorized customs facilities
Legal entities managing or operating a strategic authorized customs facility must henceforth comply with the “Guidelines for Infrastructure, Control, Surveillance, and Security, as well as Technological Recommendations regarding Closed-Circuit Television Cameras, Installations, and Systems, for Administrators and Operators of Strategic Authorized Customs Facilities.”Reference to Rule 2.3.4. for 2025.
Title 3. Customs Clearance of Goods
Chapter 3.7. Simplified Administrative Procedures
Obligations of courier and parcel companies
From now on, companies registered as courier and parcel services with ANAM must provide access to their risk analysis system through a written document submitted to the corresponding customs office, as well as to the General Directorate of Customs Investigation (DGIA) and the General Administration of Foreign Trade Audits (AGACE).
This document must be submitted within the month following registration or renewal in the Courier and Parcel Companies Registry. The document will be valid for six months and must be resubmitted whenever there is any modification related to system access.
According to the transitional provisions published in the DOF, companies currently operating under this scheme must submit the document no later than Jan. 31, 2025.Reference to Rule 3.7.4 for 2025.
Assessment of contributions for the import of goods through the simplified procedure carried out by courier and parcel companies
There are significant changes in the assessment of import contributions made by courier and parcel companies:
In general, the new regulations establish that the contributions caused by the importation of goods made through courier and parcel using the simplified procedure will be determined by applying a global rate of 19% to the goods’ value.
It should be noted that the 2024 rules allowed exemption from VAT and IGI when the imported goods did not exceed $50 USD, as long as they were not subject to non-tariff regulations and that the corresponding quota of the Customs Processing Fee (DTA) was covered.
However, the new 2025 provision limits the exemption from such taxes to goods whose value does not exceed $1 USD and that come from countries party to international instruments such as the FTA, PAAP, and TIPAT (a different scheme from the USMCA that will be specifically addressed), maintaining the same general requirements that were addressed in the previous paragraph. This amendment represents a tightening of the criteria for exemption, reducing the threshold for application of the facility.
Under the USMCA, goods whose value does not exceed $50 USD will not be subject to IGI and VAT payments and must comply with the general requirements referred to above. Merchandise with a value that exceeds that amount and does not exceed $117 USD will be subject to a preferential rate of 17%.Reference to Rule 3.7.35. for 2025.
Title 4. Customs Regimes
Chapter 4.2. Temporary Import Procedure to Return Abroad in the Same State
Return of foreign vehicles whose permit for entry or temporary importation of vehicles has expired
The 2025 rules include a change to the process of returning foreign vehicles whose temporary import permit has expired. Now, in addition to transmitting the B17 form, a folio must be generated after the transmission of the notice. Once done, the transfer of the vehicle to the border strip or region or to the customs office of departure for its return abroad may be carried out within a period of five days beginning the next business day after the notice is submitted.Reference to Rule 4.2.20. for 2025.
Chapter 4.5. Fiscal Warehouse
Destruction of bonded warehousing goods for display and sale
According to the 2025 rules, authorized legal entities must comply with the requirements established in the procedure sheet 111/LA “Notice for the destruction of goods from the tax warehouse for the exhibition and sale of goods,” contained in Annex 2, before being able to proceed with destruction. This change introduces an additional condition, as the notice is no longer sufficient on its own to authorize the destruction of goods—its presentation is subject to prior compliance with the specific requirements set out in the procedure sheet 111/LA.Reference to Rule 4.5.22. for 2025.
Chapter 4.6. Transit of Goods
Internal and international transits between customs, authorized customs sections, and international airports
The 2025 rules designate the transfer of goods in both directions between the customs section of the General Mariano Escobedo International Airport and the customs section of Salinas Victoria B (Interpuerto) as an international internal transit route.Reference to Rule 4.6.1. for 2025.
Obligations in international transits (Annex 16)
The 2025 rules account for the possibility of allowing the untimely arrival of goods, on a one-off occasion, when circumstances of force majeure or a fortuitous event arises that prevents compliance with the established deadlines. In these cases, the customs broker, customs agency, or person responsible for international transit must submit a written notice to the customs authorities explaining the reasons for the delay.Reference to Rule 4.6.20. for 2025.
Provisions Removed
Chapter 4.3. Temporary Import for Processing, Transformation, or Repair
Guarantee of the payment of taxes for the temporary importation of goods indicated in Annex II of the IMMEX Decree
The 2025 rules eliminate the stipulation that companies in the IMMEX Program, when temporarily importing sensitive goods referred to in Annex II of the Decree, had to guarantee the payment of contributions through bond policies issued by authorized institutions. These bonds had to meet specific requirements and be submitted electronically to the tax authorities.
This modification is related to the decree published in the DOF Dec. 19, 2024, through which the government made significant modifications to the IMMEX Decree, transferring various tariff items corresponding to textile products from Annex II (which includes sensitive goods) to Annex I, which lists those goods whose temporary importation under the IMMEX Decree is prohibited.
Notwithstanding the foregoing, goods such as sugar and steel continue to be included in Annex II, so companies importing these goods and others listed in Annex II should be aware of the implications of this modification.Reference to Rule 4.3.2. for 2024 eliminated.
Chapter 4.4. Temporary Export
Temporary export of livestock and research goods
The 2025 rules eliminate the explicit mention of the procedures and requirements for the temporary export of livestock and goods used in scientific research.Reference to Rule 4.4.4. for 2024 eliminated.
Additional Considerations
Chapter 1.10. Direct Firm and Legal Representative
Authorization for the transmission of customs declarations through the SEA, accreditation of legal representative, auxiliaries, and customs
Following the constitutional reform published Oct. 31, 2024, which modifies articles 25, 27, and 28 of the Political Constitution of the United Mexican States, the productive companies of the state are now considered state-owned public enterprises, losing their operational independence.
The 2025 rules incorporate this change.Reference to Rule 1.10.1. for 2025.
Publication of annexes
As a complement to the publication of the General Foreign Trade Rules for 2025, on Jan. 6, 2025, Annexes 3–9, 11, 12, 14–21, 23–26, and 28–30 were released in the DOF. These annexes contain key information on the classification of goods, valuation criteria, official formats, applicable tariffs, and operating procedures, among other aspects relevant to compliance with customs regulations.
Annex 13 was published together with the General Foreign Trade Rules for 2025 Dec. 30, 2024. Annexes 1, 2, 10, 22, and 27 are expected to be disseminated in the future.
These annexes establish guidelines and requirements applicable to foreign trade operations and companies should review their content in detail to assess their impact and comply with the 2025 provisions.
Provisions Removed
Chapter 1.4. Customs Brokers and Authorized Representatives
Authorization and extension of customs agents
The 2025 rules remove the provision that allowed individuals obtaining a customs broker license to designate authorized representatives in cases of the original broker’s death, permanent disability, or voluntary withdrawal. This change may restrict the continuity of customs operations by eliminating this right of action in exceptional situations.Reference to Rule 1.4.2. by 2025.
Authorization to amend the designation, ratification, and publication of customs broker patent by replacement
The 2025 rules remove the procedure that allowed a customs broker who ratified their retirement in a timely manner and received the Voluntary Retirement Agreement to access the benefit of obtaining the “Agreement for the granting of a customs broker patent by substitution.” The last date a customs broker could obtain this benefit was July 21, 2021.Reference to Rules 1.4.11. for 2024 eliminated.
Notice of incorporation of substitute customs broker to entities previously constituted by the customs agents they replace
Related to the removal of the above procedure, the 2025 rules also eliminate specific procedures for the incorporation of substitute customs agents to previously constituted entities.Reference to Rules 1.4.13. for 2024 eliminated.
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Federal Circuit Clarifies Claim Construction at the Pleading Stage
Many lower courts have interpreted the Federal Circuit’s Nalco decision to hold that claim construction is inappropriate at the motion to dismiss stage. But the Federal Circuit’s recent UTTO decision clarified that claim construction is not categorically forbidden at the motion to dismiss stage.
The Court noted whether claim construction is appropriate at the motion to dismiss stage is case-specific, as sometimes “a claim’s meaning may be so clear . . . that no additional process is needed.” For patent litigants, the UTTO decision provides express support for patent litigants to make claim construction arguments at the motion to dismiss stage.
Prior Understandings From Nalco
Nalco Co. (“Nalco”) was the exclusive licensee of U.S. Patent No. U.S. 6,808,692 (the “’692 Patent), which was directed to “Enhanced mercury control in coal-fired power plants.” Independent claim 1 of the ’692 Patent recites “[a] method of treating coal combustion flue gas containing mercury, comprising . . . injecting a member selected from the group consisting of molecular halogen and a thermolabile molecular halogen precursor into said flue gas.” Chem-Mod, LLC (“Chem-Mod”) is an environmental services company that specializes in pollutant control technologies and licenses its “Chem-Mod Solution.” The Chem-Mod Solution comprises mixing a thermolabile molecular halogen precursor with coal before the coal is fed into a coal combustion process.
Nalco brought an action for patent infringement against Chem-Mod, arguing that the Chem-Mod Solution practices all steps of at least claim 1 of the ’692 Patent. At the district court, Chem-Mod argued that the Chem-Mod Solution did not infringe because mixing thermolabile molecular halogen precursors prior to combustion does not constitute “injecting” such precursors into flue gas post-combustion. The district court ultimately agreed, dismissing Nalco’s complaint and subsequent amended complaints, which Nalco ultimately appealed to the Federal Circuit.
The Federal Circuit reversed and remanded the district court’s dismissal and, in doing so, discussed the inappropriateness of claim construction at the pleading stage in this case. Focusing on the Twombly/Iqbal pleading standards, the Court held that Nalco had plausibly alleged that “injection” of the halogen precursor occurred when treated coal was fed into a furnace for combustion. In discussing this theory of infringement, the Court went on to explain:
Defendants’ objections to this theory of infringement read like classic Markman arguments. Defendants first take issue with Nalco’s allegation that “coal combustion flue gas” is “the gas that is created during the combustion of coal. But Defendants’ arguments boil down to objections to Nalco’s proposed claim construction for “flue gas,” a dispute not suitable for resolution on a motion to dismiss.
Many lower courts have read this passage and others in Nalco to hold that claim construction is categorically forbidden at the motion to dismiss stage.
UTTO’s Clarification of Nalco
UTTO Inc. (“UTTO”) owned U.S. Patent No. U.S. 9,086,441 (the “’441 Patent), which was directed to “Detection of buried assets using current location and known buffer zones.” Independent claim 1 of the ’441 Patent recites “[a] method . . . comprising . . . generating, based on the group of buried asset data points, a two dimensional area comprising the buffer zone . . ..” The core of the process involves using both (1) a GPS to pinpoint a person’s location and (2) previously stored buried assert data to locate and generate a buffer zone around a buried asset.
Metrotech Corp. (“Metrotech”), a competitor of UTTO, sold a device that had a “walk back” feature that performed substantially similar to the claimed method. However, the walk back feature “requires only a single point” to generate a buffer zone, as opposed to a group of buried asset data points.
UTTO brought an action for patent infringement and moved for a preliminary injunction against Metrotech, arguing that the walk back feature infringes on the ’441 Patent. In denying Metrotech’s motion for preliminary injunction, the district court construed the claims in favor of Metrotech.
Specifically with respect to claim 1, the Court noted that “[t]he claim does not mention ‘one or more’ data points, or ‘a’ data point. It describes a ‘group’ of ‘data points,’ plural. The ordinary and customary meaning indicates that more than one data point is necessary to create the buffer zone.” Based on the Court’s construction, Metrotech moved to dismiss UTTO’s complaint, and the dismissal of UTTO’s third amended complaint was ultimately appealed to the Federal Circuit.
The Federal Circuit sided with UTTO and vacated the dismissal of UTTO’s third amended complaint, finding the district court’s claim construction to be incomplete in this case. However, the Court squarely addressed arguments made in UTTO’s briefing that misconstrued Nalco. Specifically directed to the passages of Nalco provided in the previous Section, the Court noted that:
Those passages, we conclude, should not be read as stating a categorical rule against a district court’s adoption of a claim construction in adjudicating a motion to dismiss. The passages do not in terms state such a rule. They are readily understood to be drawing a conclusion about the need for further proceedings to resolve the particular claim-construction issues in that case before a sound determination of the appropriateness of dismissal could be reached. Nalco should be read in that case-specific way.
The Court went on to say that some case-specific circumstances make it improper to resolve a claim construction dispute at the pleading stage, but “sometimes a claim’s meaning may be so clear . . . that no additional process is needed.”
While claim construction is now expressly not forbidden at the pleading stage under UTTO, Nalco is still good law and should be read in a case-specific way. Like the Federal Circuit did in both Nalco and UTTO, cases will still be remanded where “[t]here has been insufficient exploration in the record, both [at the Federal Circuit] and in the district court, of too many questions of apparent relevance to identifying a proper construction of [a] limitation.”