Pest Practices: EPA Uses FIFRA EPA to Adopt Additional Operational and Workplace Controls on Ethylene Oxide
Having adopted stringent air emission controls on commercial sterilizers that use ethylene oxide (EtO), the Environmental Protection Agency (EPA) has now adopted further controls on workplace exposure to EtO, including adopting new employee exposure limits, limiting the use of EtO in sterilizing food products and cosmetics, establishing requirements for operating commercial sterilizers that use EtO and new recordkeeping and training requirements. These controls represent the next step in EPA’s campaign to control exposure to what it considers a toxic chemical.
Unlike its prior emission regulations, EPA issued these controls as an Interim Registration Review Decision (ID) under its Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) authority to regulate pesticides. Since its primary purpose is anti-bacterial, EtO has been regulated as a pesticide since 1966 and was registered under FIFRA in 1984. FIFRA gives EPA the authority to review and reregister pesticides and to confirm the allowed uses and warning on their required labels. It also allows EPA to issue interim findings and requirements even though it has not completed its registration process.
EPA began the reregistration process for EtO in 2013 but has yet to complete it. In 2021, however, as EPA began its focus on control of EtO, it began considering an ID to limit exposure. In 2023, it issued a draft ID, inviting comments from the regulated and environmental communities. On January 5 2025, EPA issued its final ID, which is not published in the Federal Register but is on EPA’s website.
In the ID, EPA imposes stringent limits on commercial sterilizers. It limits the applicable uses for EtO by stating that EtO can no longer be used for museum, library and archival materials, cosmetics, or musical instruments. The ID also limits EtO uses for food sterilization stating that it can no longer be used generally on whole or ground spices or seasoning materials, although it can be used for a specified list of such materials and used to treat another list of such materials only if additional treatment is necessary. The ID further imposes concentration limits to be applied by 2035, limiting concentration for medical device sterilization to 600 mg/L unless the device design requires greater concentration levels or has U.S. Food and Drug Administration (“FDA”) approvals for greater levels. Finally, commercial sterilization facilities are required to have separate heating, ventilating and air conditioning systems for offices and control rooms and for EtO processing areas.
The ID adds significant rules regarding employee exposure. It goes beyond the Occupational Safety and Health Administration’s (“OSHA”) Permissible Exposure Limits and applies an eight-hour time weighted average exposure limit that ratchets down over time. Through December 31, 2027, facilities are required to assure that the eight-hour time weighted limit is no greater than 1.0 ppm, but by January 1, 2035, the exposure limit must be reduced to 0.1 ppm. EPA adopts similar reductions for the short term exposure limit and the EPA action levels. Similarly, EPA imposes requirements to workers to use either air/airline respirators or self-contained breather apparatus when engaged in tasks involving direct exposure to EtO such as connecting and disconnecting EtO containers or unloading product from the sterilization chamber or aeration area. Finally, the ID requires continuous monitoring devices in both process and non-processing areas.
The ID also imposes enhanced training and recordkeeping requirements. Training must include a discussion of the health effects of EtO exposure and specific language that EtO is a carcinogen and describe symptoms of acute and chronic exposure. Recordkeeping includes monitoring sterilizer EtO concentrations, worker exposure data, indoor monitoring results, and worker training.
The ID imposes similarly stringent rules for sterilizers in healthcare facilities, including hospitals, veterinary facilities, and dental offices. Such facilities may only use EtO in single chamber sterilization devices that utilize emission capturing systems that limit worker and public exposure. The ID also imposes similar worker exposure requirements and similar rules on respirators. The rule on training and recordkeeping are similar as well.
The ID establishes numerous new requirements for EtO use for both commercial sterilizers and healthcare facility sterilizers and each of these requirements have different start and compliance dates. Since the ID is not subject to publication in the Federal Register, these requirements may not have been subject to the broad attention applied to EPA regulations but are just as dramatic and far reaching. EPA issued the ID in the last days of the Biden administration, and it is not clear if the Trump administration is reviewing the ID, along with other late adopted EPA regulations. What is clear is that users of EtO face significant additional requirements as a result of the ID and need to review and understand them.
Attention North Carolina Retailers: Time to Renew Your ABC Permits!
If your business sells alcohol in North Carolina, now is the time to renew or register your Alcoholic Beverage Control (ABC) retail permit.
Failure to complete this process on time could result in penalties, increased costs, or even permit revocation. Here’s what you need to know to stay compliant and keep your retail business running smoothly.
Important Renewal Deadlines
April 30, 2025: This is the final day for retail permittees to renew their ABC permits without facing any penalties. Be sure to complete the process before this date to avoid unnecessary fees.
Late Fees: Beginning this year, SL-2024-41 mandates that permittees who fail to renew by April 30 will incur a 25% late fee. This additional cost could affect your business’s bottom line, so be sure to complete the renewal process promptly.
June 1, 2025: If your renewal is not completed by this date, your permit will be permanently revoked. If this happens, you’ll need to reapply for a new permit, which could cause significant disruptions to your business and an inability to sell alcoholic beverages until the permits are reissued.
How to Renew
The renewal process is simple and can be done online through the ABC Permittee Portal. Pull up the retail PIN assigned to your account by the ABC Commission and visit the portal here: https://epay.abc.nc.gov/ to submit your renewal and make the necessary payments.
No Funny Business: The Supreme Court Should Get Sirois
As you might have guessed from the title of this post, we are returning to cover new developments in the United States v. Sirois case. A few months ago, the First Circuit released an opinion that we discussed in an earlier post. As we predicted, the Rohrabacher-Farr issues have reappeared, with the Defendants in Sirois now petitioning the United States Supreme Court to grant them certiorari and review the case.
Rohrabacher-Farr Refresher
Just as a reminder, the Rohrabacher-Farr Amendment is an appropriations rider that was first passed in 2014. It bars the DOJ from using government funds to investigate and prosecute state-compliant medical marijuana operations. However, it does not on its face protect individuals who participate in adult-use marijuana operations, even if those operations are legal at the state level. Nor does it suspend the federal Controlled Substances Act. Remember, marijuana cultivation, sales, and use are still illegal under federal law, even in states with medical marijuana programs.
In practice, Rohrabacher-Farr allows state-compliant medical marijuana businesses to operate with much less fear that they will be prosecuted by the federal government.
Risky Business – United States v. Sirois
Before we head down to D.C., let’s take the third boxcar, midnight train up to our destination: Bangor, Maine. The Sirois Defendants were charged with a number of crimes, including violating the Controlled Substances Act while running their marijuana cultivation and sorting business based in Farmington, Maine. They were accused of, among other things, operating the business as a “collective” in violation of Maine law and facilitating illegal interstate sales of marijuana. Although the DEA initially claimed an even broader multi-drug conspiracy, it seems that the DOJ quickly gave up on proving that most of these people really still deal cocaine.
The trial court dismissed the Defendants’ attempt to enjoin their prosecution based on the Rohrabacher-Farr Amendment. The First Circuit upheld that decision, reasoning that the Defendants failed to show “substantial compliance” with state law and that they were not immune from prosecution due to their “blatantly illegitimate activity.”
Now, the Sirois Defendants have filed a petition for writ of certiorari to the U.S. Supreme Court. The petition seeks to resolve a split between Ninth and Eleventh Circuit precedent and get the Supreme Court to shift the burden of proof — requiring the DOJ to prove that a criminal defendant is noncompliant, rather than forcing the defendant to prove it was in either substantial or strict compliance with state law. The petition previews the Sirois Defendants’ arguments. It reasons that not only were the Defendants in compliance with state law, but that the current state of the law is uncertain, overburdens defendants, and allows the DOJ to overstep and disregard Congressional limits on its power.
We cannot know whether or how the Supreme Court will decide this case. However, given the Circuit split and the current tenor of discussions around executive overreach, this case is ripe for Court review.
Paranoia, Paranoia
Don’t worry, this is not cause for massive alarm. I know most medical marijuana operators out there don’t need to hear this, but we will say it anyway. Everyone is not, in fact, coming to get you. As we said in our last post on this case, we do not believe that Sirois signals mass-scale federal prosecution of state-legal medical marijuana businesses. It is also important to remember, too, that rescheduling may not actually affect the current state of affairs for state-legal operators (although it may make compliance more onerous, with added FDA, DEA, and state pharmaceutical oversight and licensing requirements).
If the Supreme Court grants certiorari, this case will almost certainly clarify the questions that the Sirois Defendants raise. First, state-licensed and authorized medical marijuana operators and patients will better know when the DOJ can criminally investigate and prosecute them for cultivating, distributing, possessing, or using medical marijuana. Second, those same parties will know whether they have the burden to prove they acted in compliance with state law. And third, they will know what they must show to prove that they were actually sufficiently compliant.
If you are still unconvinced, if nothing seems to satisfy you, and you feel like you’ll lose your mind trying to make sure you are following the law, give us a call. Your friends at Bradley are happy to advise you on any regulatory or compliance issues that your cannabis business faces.
Alabama Legislature Weighs Substantial Cannabis Reforms: Let’s All Take a Deep Breath
Well, it’s officially crazy season. An annual tradition in the Alabama statehouse since the inception of Alabama’s medical cannabis program, last week we saw a flurry of cannabis-related bills introduced with great fanfare and the accompanying panic amongst cannabis stakeholders in Alabama. I was inundated with a high volume of calls, texts, and emails unseen since the last Alabama legislative session.
And there was a little something for everyone involved in cannabis, both on the hemp and medical cannabis side. The good news? Things may be trending in the right direction.
Let’s get into it.
Medical Cannabis Proposal Encounters Substantial Opposition, Drawing to a Head Whether There Is a Real Need for a “Legislative Fix”
Shortly before he gaveled his committee to order, Sen. Tim Melson introduced a substitute to Senate Bill 72. As a reminder, the original version of SB72 would have, in relevant part: (1) expanded the total number of integrated licenses from five to seven; (2) shifted the authority of issuing licenses from the AMCC to a consultant; and (3) shielded the decision from any judicial review. And, just as important, licenses wouldn’t be issued until well into 2026, assuming there was no litigation – an assumption I defy any serious person to tell me with a straight face is valid.
When the original version of SB72 was introduced, I wrote:
In my opinion, this bill has little chance of becoming law as drafted. I base that on my opinion that the Alabama Legislature has little interest in revisiting cannabis proposals at this time, my conversations with various stakeholders (including well-heeled applicants that employ influential governmental affairs specialists), and by the knowledge that it is easier to defeat legislation than it is to pass it.
For what it’s worth, I do believe the Legislature would pass a bill if all of the relevant stakeholders agreed it was the right way forward. Unfortunately, and this is inherent in any limited license situation, we are operating in a zero-sum game where there will be winners and there will be losers and those who believe a proposal will end in their defeat will fight tooth and nail to stop it.
The substitute bill would change the agencies tasked with appointing the consultant and would allow for the Alabama Court of Civil Appeals to review the award of licenses if the award was arbitrary or capricious or constituted a gross abuse of discretion. It would also move up the time to issue licenses, but it would still be in 2026, again assuming no lawsuits. While the substitute is a small step in the right direction and an acknowledgment of the flaws in the original bill, I still do not see it as the right path forward.
And here’s why: I reject that Alabama’s medical cannabis program requires a “legislative fix.” I believe that the original medical cannabis law, passed four years ago, isn’t broken. Major provisions in the law are currently awaiting a decision from the Alabama Court of Civil Appeals. I attended that oral argument in person – the first oral argument heard by the appellate court about the medical cannabis program. In my opinion, and the nearly unanimous opinion of people I trust to call balls and strikes, the panel signaled with unusual clarity and unanimity that it would be upholding the law and the challenged actions of the AMCC. If that is the case, we may be mere months away from issuing licenses to dispensaries and integrated facilities.
Once a single dispensary license is issued, Alabama doctors can begin obtaining certifications to qualify patients for medical cannabis and Alabamians with qualifying conditions can begin to obtain medical cannabis cards. So, if you believe that the appellate court offers a path forward that may allow medical cannabis in 2025, why would you press for a bill that would ensure that it isn’t? Put simply, if it ain’t broke, don’t legislatively “fix” it.
Psychoactive Hemp Ban Appears to Be Heading Towards Reasonable Compromise
Shortly before he gaveled his committee to order, Melson introduced a substitute to Senate Bill 132. As a reminder, that legislation would, in relevant part, “provide that only non-psychoactive cannabinoids derived from or found in hemp are exempt from [Alabama’s] Schedule I controlled substances list, thus classifying psychoactive cannabinoids as controlled substances” under Alabama law. That means “[i]f enacted into law, that’s the ballgame for nearly all non-industrial hemp products in Alabama. Say goodbye to your increasingly popular THC-infused seltzers. Adios federally compliant gummies and the like.”
I wrote at the time:
I suspect that certain psychoactive hemp restrictions will become law in Alabama in the current legislative session or in the coming years.
If it were my call, I would choose a path that regulates these products to ensure safety and only adult access, rather than to ban them outright. Put simply: Regulate, don’t eliminate.
If the stated goals of the supporters of SB132 are to keep psychoactive hemp out of the hands of minors and ensure that psychoactive hemp is safe, then why not pass laws to keep psychoactive hemp out of the hands of minors and ensure that psychoactive hemp is safe?
When it comes to keeping psychoactive hemp out of the hands of minors, the purveyors of psychoactive hemp products should be required to employ the same type of age-gating policies employed by sellers of tobacco and alcohol. These policies have been in place for years and should be able to govern psychoactive hemp sales without much difficulty. And law enforcement – aided by law-abiding psychoactive hemp companies policing bad actors – should take the law seriously and enforce it just as they do tobacco and alcohol.
When it comes to ensuring that psychoactive hemp products are safe for consumption, the law should require that products undergo the same type of rigorous testing and analysis required of marijuana products. The products should be tested by independent laboratories, and the results should be easily accessible and made available to consumers. Any batch that fails to meet the legal requirements for hemp or reveals unsafe materials in the batch should be destroyed before it is made available to the public.
In Alabama, this would be a substantial burden to many hemp manufacturers and retailers. But there are (at least) two reasons why it makes sense. First, responsible hemp operators welcome these types of regulation, and most of them are taking these steps already. Second, the law creates a higher barrier to entry into the psychoactive hemp market and makes it more difficult for less capitalized and unsavory companies. That should have the dual benefit of eliminating untested products and reducing the shelf space of what I call “gas station crank.”
This proposal would, as a practical matter, mean that the psychoactive hemp market would be dominated by increasingly popular hemp beverages and low-THC edibles. Those are two of the most popular versions of psychoactive hemp and have been widely accepted as alternatives to alcohol and controlled substances by cohorts ranging from young adults looking to turn away from alcohol in increasing numbers, middle-aged consumers looking to cut down on their midweek alcohol intake, and older Alabamians who increasingly look to psychoactive hemp for pain relief and sleep aids.
The substitute bill addresses many of the concerns I expressed about the original version of SB132. With a few tweaks, I think it could be a workable model for other states trying to adopt responsible hemp programs.
The substitute is essentially a two-part bill that separately addresses rules for (1) “hemp beverages” and (2) “psychoactive hemp products.”
Hemp beverages would essentially be treated like beer and wine. They would be subject to the traditional three-tiered model (manufacturer to distributor to retailer) and subject to the same franchise laws. They would be subject to much stricter testing rules to ensure conformance with federal and state laws, and they would have labeling requirements to ensure both that the products are not targeting children or making health claims and that a certificate of analysis was embedded in a QR code so that consumers could be confident that the beverage is what it purports to be. There would also be a 6% excise tax on hemp beverages in addition to any other applicable sales taxes.
The substitute defines and permits under certain defined circumstances the sale of “psychoactive hemp products.” The bill would define “psychoactive hemp product” to include:
A liquid that contains psychoactive cannabinoids and may include flavorings or other ingredients that are intended for use in an electronic nicotine delivery system or any other product marketed to consumers as an electronic cigarette, electronic cigarillo, electronic pipe, electronic hookah, vape pen, vape tool, vaping device, or any variation of these terms.
A candy, gummy, capsule, or other product that contains psychoactive cannabinoids and is intended to be ingested into the body.
An oil or tincture that contains psychoactive cannabinoids and is marketed to deliver to the body sublingually psychoactive cannabinoids.
Psychoactive hemp products may not contain more than a total of 10 milligrams of psychoactive cannabinoids per serving, and one gummy may not contain more than one serving.
Each product must be labeled in a manner that includes all of the following:
The name and website of the manufacturer
The batch number
The total number of milligrams of psychoactive cannabinoids found in a single serving
The International Intoxicating Cannabinoid Product Symbol (IICPS)
A list of ingredients, including identification of any major food allergens declared by name
So, What Now?
Loyal readers of Budding Trends will recall that multiple proposals were voted out of the same committee last legislative session and did not become law. They will also recall that it took more than one legislative session to pass a medical cannabis law in the first place. Is past prologue or is this another example of reform taking time?
The Montgomery political ecosystem is largely an echo chamber powered by rumors, innuendo, gossip, and occasionally facts purveyed specifically to influence the actions of legislators. This influence can take the form of flattery, a well-intended desire for positive change, or fear. Not fear of physical harm, but fear of being out of the loop; fear of being out of touch; fear of being on the wrong side.
Anyone who can get someone to pay them to offer an opinion on what will happen moving forward can probably get whatever the opinion they are paying to hear. After all, what’s the point in hiring someone in a government affairs role if they can’t convince you they can accomplish your objectives? With that in mind, and with full disclosure that I have clients who wish for differing outcomes (although I’m obviously not working any client against another), I think the best advice is to just read the room. What is leadership in the House and Senate saying publicly on the issue? What are the implications of the fact that the Alabama Court of Civil Appeals is currently deciding a case that could bring finality (or more confusion) to the issue? Who benefits most from change? Who suffers? And what is the chance that the Alabama Legislature could see this fight unfold and decide a medical cannabis program simply isn’t workable?
Find someone who can tell you the answers to those questions, and you’ll be in good hands.
Connecticut Bill Addresses “Shrinkflation”
The Connecticut legislature is considering an anti-price-gouging bill (House Bill 6856) that would add new disclosure requirements for food companies that adjust product sizes without price changes (a practice referred to as “shrinkflation”).
If passed, the bill would require companies to “provide a clear and conspicuous notice” for at least 12 months when they reduce the “quantity, amount, weight, or size of a product” without adjusting the price. The bill applies to “essential groceries covered by federal Supplemental Nutrition Assistance Program (SNAP) regulations, including baby formula, bread, cereals, dairy products, meats and fish, non-alcoholic beverages, seeds, and snacks.” The language excludes retailers and establishments, like restaurants, that “primarily sell food to the public for consumption.”
According to Connecticut Attorney General William Tong, “[a]lthough companies must update their labels to reflect product size changes, they are not currently required to advertise that they have made a change. Since the pandemic, price sensitive consumers have started to notice these changes—for example when they open their favorite box of crackers or bag of chips only to realize that the box or bag is only half full. This leaves consumers feeling deceived and like they are receiving less value for their hard-earned dollars.”
If passed, Connecticut would be the only state in the US to explicitly address shrinkflation.
APHIS Will Begin Accepting Petitions for Nonregulated Status on March 3, 2025
The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) announced on February 27, 2025, that it will begin to accept petitions for nonregulated status according to APHIS biotechnology regulations at 7 C.F.R. Part 340 (2019) on March 3, 2025. APHIS notes that its biotechnology regulations enable developers to petition for a determination that an “article” is not regulated. The petition process applies only to plants that meet the regulatory definition of “regulated article.” APHIS states that, in general, “a regulated article is an organism or product that has been altered or produced using genetic engineering (1) that has one or more of its components derived from a plant pest or an unclassified or unknown organism; or (2) that APHIS determines is a plant pest or has reason to believe is a plant pest.” In contrast, according to APHIS, “a genome edited organism (e.g., plant, microbe, insect) that is not a plant pest or likely to be a plant pest is not subject to 7 CFR part 340 (2019), unless the organism retains DNA sourced from a plant pest. Similarly, a transgenic organism that is not a plant pest and not likely to be a plant pest and does not contain DNA sourced from a plant pest is not subject to 7 CFR part 340 (2019).”
Developers whose modified plant meets the definition of “regulated article” can petition for nonregulated status by providing relevant information, data, and publications that substantiate that the modified plant is unlikely to pose a greater plant pest risk than the unmodified plant from which it was derived. APHIS has published a February 2025 “Petition User Guide with Reference To 7 CFR Part 340 — Introduction of Organisms and Products Altered or Produced Through Genetic Engineering Which are Plant Pests or Which There is Reason to Believe are Plant Pests” that provides more information on the specific requirements and instructions on how to apply. APHIS “encourage[s] developers to request a pre-submission consultation to review the information APHIS needs to evaluate a petition and reach a decision.” Requests for a pre-submission consult may be sent to [email protected].”
McDermott+ Check-Up: February 28, 2025
THIS WEEK’S DOSE
House Passes Budget Resolution. The Senate and House must now align on a unified resolution for the reconciliation process to begin in earnest.
Senate Holds Nomination Hearings for OSTP Director, FTC Commissioner, OMB Deputy Director. Discussion focused on nominees’ views on artificial intelligence, pharmacy benefit managers (PBMs), and the impact of paused federal funding on grants and healthcare programs.
Senate HELP Committee Advances Secretary of Labor Nominee Chavez-DeRemer. Lori Chavez-DeRemer received some bipartisan support, and a full Senate vote is expected next week.
House Energy & Commerce Committee Advances Oversight Plan. The markup turned highly partisan as Republicans put forth an agenda that includes biological threat preparedness and response, substance use, and Medicare and Medicaid operations.
House Energy & Commerce Health Subcommittee Holds Hearing on PBM Reform. Members agreed on the need for PBM reform and referenced work from the 118th Congress.
Senate Aging Committee Examines Opioid Epidemic. Members discussed varying policy approaches to combatting opioid use disorder among seniors.
President Trump Signs Healthcare Price Transparency EO. The executive order (EO) directs agencies to increase enforcement of healthcare price transparency regulations.
Trump Administration Issues Memo Requiring Federal Agencies to Submit RIF Plans. Among a number of directives, the memo directs agencies, including the US Department of Health and Human Services (HHS), to submit phase one of a reduction in force (RIF) plan for their federal workforce by March 13.
HHS Issues Policy Statement on Notice-and-Comment Rulemaking. It remains unclear what scope of rules could be impacted by this statement.
CONGRESS
House Passes Budget Resolution. On February 25, the House voted 217 – 215 to advance its version of a budget resolution to outline the reconciliation process. In a dramatic display of how quickly things can change, the vote was initially cancelled because of ongoing opposition from Reps. Burchett (R-TN), Davidson (R-OH), Spartz (R-IN), and Massie (R-KY) due to concerns that the resolution did not include enough spending cuts. With only a one-seat margin, Republicans couldn’t proceed with that much opposition. However, three of the representatives were convinced to change their votes moments after the vote had been cancelled, and the vote proceeded. Ultimately, all Democrats voted no, and Rep. Massie was the sole Republican to join them.
The resolution would enable a single reconciliation bill to tackle immigration, energy, defense, and temporary extension of tax cuts from the first Trump administration. The resolution directs the House Energy & Commerce Committee to find at least $880 billion in savings, which could include significant Medicaid cuts.
The House vote follows the Senate’s vote last week to advance its version of a “skinny” budget resolution that did not include tax policy and would therefore include less healthcare savings. With two options for how to proceed on reconciliation, the House and Senate now must negotiate a unified budget resolution and pass it through both bodies in order for the reconciliation process to begin. Those budget negotiations will proceed mostly behind the scenes, as Congress must turn its attention to funding government before the March 14 deadline.
Senate Holds Nomination Hearings for OSTP Director, FTC Commissioner, OMB Deputy Director. The Senate Committee on Commerce, Science, and Transportation held a nomination hearing for Michael Kratsios to serve as the director of the Office of Science and Technology Policy (OSTP) and for Mark Meador to serve as a commissioner for the Federal Trade Commission (FTC). Members questioned Meador about FTC investigations into PBMs and consolidation, and Meador noted his intent to ensure competition in the healthcare industry. Members questioned Kratsios about guardrails for artificial intelligence, and he expressed his view that artificial intelligence can make a positive impact on healthcare.
The Senate Homeland Security & Governmental Affairs Committee held a nomination hearing for Dan Bishop to serve as deputy director of the Office of Management and Budget (OMB). Discussion predominately focused on border security and federal workforce cuts. Health-related topics included the impact of paused federal grant funding on rural hospital operations, federal funding of abortions, and transparency of federally funded research. Bishop will next testify before the Senate Budget Committee on March 5, and both committees must vote on his nomination before it heads to the Senate floor.
Senate HELP Committee Advances Secretary of Labor Nominee Chavez-DeRemer. In a 14 – 9 vote, the Senate Health, Education, Labor, and Pensions (HELP) Committee advanced the nomination of Lori Chavez-DeRemer as secretary of labor to the full Senate. Sens. Hassan (D-NH), Hickenlooper (D-CO), and Kaine (D-VA) voted yes, and Sen. Paul (R-KY) joined the remaining Democrats to vote no. Chavez-DeRemer previously represented Oregon’s fifth district in the House, and Sen. Paul expressed concern about her cosponsorship of a bill that would have made unionization easier. The US Department of Labor shares jurisdiction over certain healthcare issues with HHS, including the Affordable Care Act, the Health Insurance Portability and Accountability Act, and employer-sponsored insurance. A vote is expected next week on the Senate floor, where Chavez-DeRemer could continue to receive bipartisan support.
House Energy & Commerce Committee Advances Oversight Plan. During the markup, members discussed the committee’s oversight and authorization plan for the 119th Congress. Each House committee must submit such a plan to the House Administration and Oversight and Government Reform Committees by March 1. The plan states that the Energy & Commerce Committee will conduct oversight of federal agencies’ efforts on biological threat preparedness and response, ensure cost transparency in Medicare and Medicaid, examine the cost of chronic diseases, and examine government cybersecurity initiatives.
The markup became quite contentious, with Democrats offering numerous amendments that would require the committee to study the impact of any cuts to Medicaid and federal research funding, examine layoffs at HHS, and assess the US Food and Drug Administration’s leadership on vaccine development and safety. All amendments offered by Democrats were rejected along party lines.
House Energy & Commerce Health Subcommittee Holds Hearing on PBM Reform. There was strong bipartisan support during the hearing for PBM reform. However, Democrats expressed frustration that such policies were already fully debated in the 118th Congress and included in the December 2024 bipartisan healthcare package that was ultimately dropped from the year-end continuing resolution. Republicans indicated that they would like to investigate fraud and abuse within the drug supply chain and examine the PBM rebate model, and they noted concern about how PBMs harm independent pharmacies. Democrats also referenced the $880 billion in savings directed at the Energy & Commerce Committee in the House budget resolution, noting their concern over any cuts to Medicaid.
Senate Aging Committee Examines the Opioid Epidemic. The hearing focused on opioid use disorder’s impact on older Americans and featured a panel of local law enforcement and elected officials, caregivers, and subject matter experts. Witnesses recommended a variety of policy solutions, including taking a stronger law enforcement approach against drug dealers, increasing access to treatments such as medication-assisted therapy, and eliminating the Medicaid inmate exclusion. Democrats noted that decreasing Medicaid funding would impact access to and coverage of substance use disorder treatment, while Republicans focused on strengthening border security to prevent opioid use disorder.
ADMINISTRATION
President Trump Issues Healthcare Price Transparency EO. The EO, Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information, aims to build on the first Trump administration’s efforts to increase the transparency of healthcare prices. It specifically references a 2019 Trump EO and subsequent regulations that required hospitals and plans to publicly disclose negotiated prices. The Biden administration expanded on those regulations, but there have been reports of hospital non-compliance.
Differing from previous hospital price transparency requirements, the 2025 EO states that prices should be “actual prices” and not estimates. This EO directs the US Departments of the Treasury, Labor, and HHS to “rapidly implement and enforce” healthcare price transparency regulations within 90 days, including by:
Requiring disclosure of prices of items and services, not estimates;
Issuing updated guidance or proposed regulatory action to ensure pricing information is standardized and comparable across hospitals and plans; and
Issuing guidance or proposed regulatory action to update enforcement policies designed to ensure compliance.
A fact sheet can be found here.
Trump Administration Issues Memo Requiring Agencies to Submit Federal RIF Plans. The memo comes in response to President Trump’s February 13 EO, “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative.” The memo directs federal agencies to initiate large-scale RIFs and submit an agency RIF and reorganization plan (ARRP) as phase one of the initiative by March 13. The memo notes that ARRPs should seek to achieve:
Better service for the American people;
Increased productivity;
A significant reduction in the number of full-time-equivalent positions;
A reduced real estate footprint; and
A reduced budget outline.
Phase two of the initiative will focus on creating more productive, efficient agency operations. Agencies must submit a phase two plan by April 14, with implementation by September 30. Agencies or components that provide direct services to citizens (such as Social Security, Medicare, and veteran’s healthcare, according to the memo) are not to implement any proposed ARRPs until the OMB and Office of Personnel Management certify that the plans will have a positive effect on the delivery of such services.
HHS Issues Policy Statement on Notice-and-Comment Rulemaking. The Administrative Procedure Act (APA) exempts certain rules from formal notice-and-comment rulemaking, including rules regarding “public property, loans, grants, benefits, or contracts.” Despite this exemption, past guidance (known as the Richardson Waiver) encouraged greater public participation and directed government agencies to still use the more formal rulemaking process for this category of rules. HHS issued a new policy statement on February 28, stating that it will rescind the Richardson Waiver, and “matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts, are exempt from the notice and comment procedures of 5 U.S.C. 553, except as otherwise required by law. Agencies and offices of the Department have discretion to apply notice and comment procedures to these matters but are not required to do so, except as otherwise required by law.” The scope of the rules that could be impacted by this change are not easily defined, even under caselaw, and would need to be reconciled against other statutes and legal requirements that may still require notice-and-comment rulemaking.
QUICK HITS
Senate Judiciary Committee Advances the HALT Fentanyl Act with Bipartisan Vote. The HALT Fentanyl Act, S. 331, would permanently classify fentanyl-related substances as schedule I controlled substances, align penalties for offenses involving these substances with those for fentanyl analogues, establish a new registration process for certain research, and make other changes to research registration requirements. The legislation, which passed the House with bipartisan support in early February, advanced from the committee by a vote of 16 – 6.
Energy & Commerce Committee Privacy Working Group Issues RFI. The newly formed working group is exploring the potential creation of a federal comprehensive data privacy and security framework. The request for information (RFI) focuses on artificial intelligence, data security, enforcement, and existing privacy frameworks. Responses are due by April 7.
MACPAC Holds February 2025 Meeting. The Medicaid and CHIP Payment and Access Commission (MACPAC) meeting included discussion on transitions of care for children and youth with special healthcare needs, hospital supplemental and directed payments, self-directed home- and community-based services, access to opioid use disorder medications, Section 1115 substance use disorder demonstrations, prior authorization, healthcare for children in foster care, and access to residential care for children and youth with behavioral health needs.
CMS Announces Medicare Drug Price Negotiation Program Public Engagement Events. The events, held from April 16 to 30, will allow patients, clinicians, caregivers, and consumer and patient organizations to share input for the second cycle of Medicare drug price negotiations. More information can be found here. Read about the drug selection process in an infographic here.
Congressional Democrats Raise Concerns Over HHS Layoffs. Senate Finance Committee Ranking Member Wyden (D-OR) and Senate HELP Committee Ranking Member Sanders (I-VT) sent a letter to HHS expressing concern over the layoffs of probationary employees working on organ transplantation modernization efforts. House Energy & Commerce Committee Ranking Member Pallone (D-NJ) and Health Subcommittee Ranking Member DeGette (D-CO) raised concerns over the impact of layoffs at the Centers for Disease Control and Prevention, National Institutes of Health (NIH), and Food and Drug Administration (FDA).
HHS OIG Report Finds Increased Medicare Part D Spending for Weight Loss Drugs. From 2019 to 2023, spending increased by 364% for 10 medications, including anti-obesity medications such as Ozempic, that are covered as type 2 diabetes treatments. The report follows a proposed rule from the Biden administration that would allow Medicare Part D to cover certain anti-obesity medications for weight loss purposes; it remains unclear whether the policy will be finalized under the current administration.
NEXT WEEK’S DIAGNOSIS
Congress will be in session next week. With a budget resolution passed in both chambers and next steps in flux, discussion will likely shift to funding the government, which must be addressed by March 14 in order to avoid a government shutdown. The Senate will continue to hold nomination hearings. On March 5, the Senate HELP Committee will hold its hearing for NIH director nominee Jay Bhattacharya, and the Senate Budget Committee will hold its hearing for OMB deputy director nominee Dan Bishop. On March 6, Senate HELP will hold its hearing for FDA commissioner nominee Martin Makary. President Trump will give the joint address of his second term to Congress on March 4. The Medicare Payment Advisory Commission will meet March 6 and 7.
Florida Appellate Court Rules Hookah Products are Taxable OTP
The First District Court of Appeal upheld a ruling that hookah products are “loose tobacco suitable for smoking” and therefore taxable as Other Tobacco Products (OTP) under Florida law. The hookah products in question are made from tobacco leaves combined with a binding mixture.
In the 2-1 decision, the majority opinion claimed the statutory phrase is unambiguous while focusing on the common understanding of what “smoking” means, the physical state of the tobacco leaves in hookah products, and the ultimate consumption of nicotine during use.
The dissenting opinion took a more technical approach to defining “smoking.” The dissent reasoned that for a product to qualify as “loose tobacco suitable for smoking,” the tobacco itself must be ignited—a position consistent with precedent from other states. While acknowledging the Florida Legislature likely intended to include hookah products under the tax, the dissent argued that tax statutes must be narrowly construed, and courts should not expand statutory language to align with presumed legislative intent.
The full opinion is available here.
This ruling represents a significant shift in interpreting the relevant statutory language. Businesses operating in the tobacco product market should carefully review this decision to determine how it might affect their products and practices under current regulations.
A Regulatory Haze of Uncertainty Continues as the Clock Ticks Toward Phase One of FDA’s LDT Final Rule
Clinical laboratories still face uncertainty and the difficult decision of whether to start the work needed to comply with the with Phase 1 expectations under FDA’s Laboratory Developed Tests Final Rule (the “LDT Final Rule”), which remain set to go into effect on May 6, 2025.
To be sure, the shift in priorities of the new administration has kept the health care industry on its toes for the last few weeks, especially as the leadership and messaging of the Department of Health and Human Services (“HHS”) has started to come into sharper focus. The theme of ‘deregulation’, particularly when it comes to the activities of the Food and Drug Administration (“FDA”), has sparked interest and discussion among stakeholders in the life sciences industry – including clinical laboratories that are weighing how to approach the upcoming May 6 deadline for compliance.
We discussed the details of the LDT Final Rule in a previous Insight, explaining that as of the May 6, 2025 Phase 1 deadline FDA will expect all laboratories that manufacture LDTs to comply with medical device reporting (“MDR”) requirements, correction and removal reporting requirements, and quality system (“QS”) requirements regarding complaint files.
As is often the case with a major regulatory landscape change, the LDT Final Rule has been subject to scrutiny and legal challenges since its publication in May 2024. Perhaps the most watched of these is the ongoing litigation in which the American Clinical Laboratories Association (“ACLA”) and the Association for Molecular Pathology (“AMP”) have challenged the FDA’s authority to regulate LDTs by way of the LDT Final Rule. The presiding federal district court just heard arguments on the parties cross-motions for summary judgment, and noted a decision on those motions would be issued soon, likely before the Phase 1 deadline. The outcome will have significant implications for labs in the U.S.
In addition to the ongoing litigation, there is a growing possibility that FDA could be instructed, whether by Congress or by leadership at HHS, to retract the LDT Final Rule or delay the implementation of Phase 1. Of note, during the previous Trump administration there was resistance to FDA’s authority to regulate LDTs, in that HHS publicly required continued enforcement discretion for LDTs during the beginning of the COVID-19 pandemic. Now, with the touted theme of deregulation and public calls by trade associations like ACLA to mitigate the impact of the LDT Final Rule, there is a chance that HHS under the new Trump administration could take a similar approach. All of this is coupled with currently mounting pressure on all federal agencies to reduce spending and regulatory oversight, which may make it increasingly difficult for FDA to enforce the rule as originally written.
Nonetheless, unless there is a definitive ruling that the LDT Final Rule is retracted, or that its implementation is delayed, laboratories developing LDTs remain subject to the Final Rule’s Phase 1 requirements at this time. Arguably, even if the outcome results in removal, delay, or a change to the LDT Final Rule, the political cycle could flip again with reinvigorated efforts to bring more regulation around LDTs, whether through Congress or again through the rulemaking process.
EBG will continue to monitor these developments closely, as well as the forthcoming court ruling, and any potential administrative actions that could significantly reshape the regulatory landscape for LDTs.
TSCA Developments — A Conversation with Richard E. Engler, Ph.D. [Podcast]
This week, I discuss Toxic Substances Control Act (TSCA) developments with my colleague, Dr. Richard E. Engler, Director of Chemistry for B&C and The Acta Group (Acta®), our consulting affiliate. The U.S. Environmental Protection Agency’s (EPA) implementation of the 2016 Frank R. Lautenberg Chemical Safety for the 21st Century Act amendments has been a dynamic, evolving, and unpredictable work in progress for almost nine years. Given the new Administration, we are at a most uncertain time because of the lack of clarity regarding what the new leaders at the Office of Chemical Safety and Pollution Prevention (OCSPP) will do to address new chemical review concerns, risk evaluation under TSCA Section 6, and risk management actions resulting from those evaluations. As listeners know, all final risk management rules are being challenged and the disposition of those cases is the subject of considerable speculation. So also is OCSPP’s consideration of not yet final risk evaluations and how the new Administration intends to interpret TSCA Section 6 in general. There are growing calls for legislative action to remedy some of Lautenberg’s deficits, particularly in the area of new chemicals, another important variable that is destabilizing the status quo. Rich and I discuss these topics and many others.
Florida Court Rules That the Florida Constitution Requires Employers to Accommodate Off-Duty Medical Marijuana Use
A Florida state court recently held that an employer violated the Florida Civil Rights Act by failing to accommodate an employee’s off-duty, off-site medical marijuana use to treat his disabilities.
The court granted summary judgment in favor of the former employee, whom the employer had placed on unpaid administrative leave after he tested positive for marijuana during a random drug screening.
Quick Hits
A Florida state court ruled that employers must accommodate off-site medical marijuana use, granting summary judgment in favor of a former employee who had been placed on unpaid administrative leave after testing positive for marijuana.
Although the use of marijuana is still prohibited under federal law, the employee, an emergency medical technician, was licensed by the state of Florida, and his CBA allowed employees to report the use of prescription medications authorized under both federal or state law upon testing positive on a drug test.
Florida employers may want to review their drug-free workplace policies for language regarding marijuana usage and consider removing policy language indicating that they will not accommodate the off-duty use of medical marijuana.
Background
Angelo Giambrone was employed by Hillsborough County, Florida, as an emergency medical technician (EMT) for the county’s fire department. During a random drug screening, Giambrone tested positive for marijuana. Following the positive test, Giambrone presented his employer with a valid medical marijuana card. According to the lawsuit, Giambrone takes medical marijuana for anxiety, PTSD, and insomnia.
According to the lawsuit, Giambrone v. Hillsborough County, the county placed Giambrone on unpaid administrative leave because it refused to accommodate Giambrone’s use of medical marijuana. The sole reason for Giambrone’s suspension was the positive random drug test. There was no evidence that Giambrone used marijuana at work, possessed marijuana on work premises or during work hours, showed up to work impaired, or had any complaints or suspicion of impairment while on the job. The county also reported him to the EMT licensing board, which eventually dropped its investigation into Giambrone based on his status as a medical marijuana cardholder.
Giambrone filed a lawsuit in Florida state court, alleging disability discrimination for failing to accommodate his use of medical marijuana under the Florida Civil Rights Act. He alleged wrongful termination and breach of contract for failure to accept his state-issued medical marijuana card as a justification for a positive drug test. In opposition, the county argued that a medical marijuana card does not exempt Giambrone from complying with federal law and the county’s drug-free workplace policy.
In granting Giambrone’s motion for summary judgment, Circuit Court Judge Melissa M. Polo concluded that the Florida State Constitution requires employers to accommodate the off-site use of medical marijuana. However, Judge Polo reminded employers in her opinion that the Florida Constitution does not have a duty to accommodate on-site use of medical marijuana.
Judge Polo was not persuaded by the county’s argument that it did not have a duty to accommodate medical marijuana because marijuana is still illegal under federal law. This was in part because Giambrone’s EMT license was controlled by the state of Florida. Judge Polo further distinguished a case cited by the county, Ortiz v. Department of Corrections, where the Florida State Department of Corrections was not required to accommodate a correctional officer’s medical marijuana use because it directly conflicted with a federal firearm possession law, a condition not at play in Giambrone’s case. Furthermore, the opinion noted that language in Giambrone’s collective bargaining agreement allowed employees to report the use of prescription medications authorized under both federal or state law upon testing positive on a drug test. The county has appealed the decision.
Key Takeaways
In light of this decision, Florida employers may want to consider entering into an interactive disability accommodation process with job applicants or employees who are medical marijuana cardholders. However, Florida employers can rest easy knowing they still do not need to allow their employees to show up to work under the influence of medical marijuana, or possess marijuana on company property. The opinion serves as a good reminder to Florida employers to handle medical marijuana issues carefully and to consider focusing on reasonable suspicion testing and training.
This Week in 340B: February 18 – 24, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Contract Pharmacy; HRSA Audit Process; Rebate Model; Other
In one Health Resources and Services Administration (HRSA) audit process case, the government filed a memorandum in support of the government’s motion to dismiss.
In a case by a drug manufacture challenging a state law, the government filed a motion for judgment on the pleadings and the parties filed a joint motion for an amended protective order.In a Freedom of Information Act (FOIA) case, the government filed a response to a motion to strike the government’s motion for summary judgment.In a suit by a 340B covered entity against HRSA, the covered entity filed a notice of voluntary dismissal without prejudice.
In an appealed case challenging a proposed state law governing contract pharmacy arrangements, the appellees filed their opening brief.
A 340B covered entity filed a complaint against HRSA to challenge HRSA’s decision to allow a manufacturer’s audit.
In five cases against HRSA alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models:
In four such cases, drug manufacturers filed a joint opposition to a motion to intervene and the intervenors filed a reply in support of their motion to intervene.
In one such case, the intervenors filed a reply in support of their motion to intervene.
In one such case, the plaintiff filed a motion for summary judgment.
Nadine Tejadilla also contributed to this article.