Effective Dates of DEA Final Rules for Telemedicine Prescribing Delayed
On Friday, February 14, 2025, the Drug Enforcement Administration (“DEA”) and the U.S. Department of Health and Human Services (“HHS”) announced that the effective dates for two recently published final rules involving telemedicine prescribing of controlled substances – the final rule titled “Expansion of Buprenorphine Treatment via Telemedicine Encounter” and the final rule titled “Continuity of Care via Telemedicine for Veterans Affairs Patients” (collectively referred to herein as the “Buprenorphine and VA Telemedicine Prescribing Rules”) – are delayed from February 18, 2025, until at least March 21, 2025 (see our previous post on the Buprenorphine and VA Telemedicine Prescribing Rules).
The final rule delaying the effective dates of these final rules is scheduled for publication to the Federal Register on Wednesday, February 19, 2025.
The delays stem from the Presidential Memorandum titled “Regulatory Freeze Pending Review,” (the “Freeze Memo”) issued on January 20, 2025. The Freeze Memo orders all executive departments and agencies to “consider postponing” the effective dates of all rules published to the Federal Register that have not yet taken effect, such as the Buprenorphine and VA Telemedicine Prescribing Rules, until at least March 21, 2025 (sixty days from the issuance of the Freeze Memo), to allow review of any questions of fact, law, and/or policy raised by the rule, and to “consider opening” a comment period for stakeholders to comment on those questions. Accordingly, the DEA is also soliciting comments on: 1) the extension of the effective dates, 2) whether the effective dates should be further extended, and 3) questions of fact, law, and policy raised by these rules, for consideration by officials of the two agencies. Comments are due by February 28, 2025.
The Friday, February 14, 2025 announcement by HHS and DEA, delaying the effective dates, clarified that: “[t]hese new effective dates will not delay or limit the ability of the practitioners covered by these two rules to prescribe via telemedicine, because the ‘Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications,’ which has been in effect since May 10, 2023, permits practitioners to prescribe via telemedicine through December 31, 2025.”
The DEA issued a Notice of Proposed Rulemaking (“NPRM”) titled “Special Registrations for Telemedicine and Limited State Telemedicine Registrations” on January 17, 2025, the same date that HHS and DEA published the Buprenorphine and VA Telemedicine Prescribing Rules. Because the NPRM is in the early stages of the administrative rulemaking process, the proposed rule appears largely unaffected by the Freeze Memo, and comments remain due March 18, 2025.
Takeaways
Practitioners can continue to prescribe via telemedicine without first having an in-person visit with the patient, subject to compliance with other federal and state prescribing requirements, because the Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications, permits practitioners to prescribe via telemedicine through December 31, 2025. The EBG team continues to monitor any changes to the Buprenorphine and VA Telemedicine Prescribing Rules, which are now scheduled to go into effect on March 21, 2025.
David Shillcutt contributed to this article.
January 2025 Bounty Hunter Plaintiff Claims
California’s Proposition 65 (“Prop. 65”), the Safe Drinking Water and Toxic Enforcement Act of 1986, requires, among other things, sellers of products to provide a “clear and reasonable warning” if use of the product results in a knowing and intentional exposure to one of more than 900 different chemicals “known to the State of California” to cause cancer or reproductive toxicity, which are included on The Proposition 65 List. For additional background information, see the Special Focus article, California’s Proposition 65: A Regulatory Conundrum.
Because Prop. 65 permits enforcement of the law by private individuals (the so-called bounty hunter provision), this section of the statute has long been a source of significant claims and litigation in California. It has also gone a long way in helping to create a plaintiff’s bar that specializes in such lawsuits. This is because the statute allows recovery of attorney’s fees, in addition to the imposition of civil penalties as high as $2,500 per day per violation. Thus, the costs of litigation and settlement can be substantial.
The purpose of Keller and Heckman’s latest publication, Prop 65 Pulse, is to provide our readers with an idea of the ongoing trends in bounty hunter activity.
In January of 2025, product manufacturers, distributors, and retailers were the targets of 337 new Notices of Violation (“Notices”) and amended Notices, alleging a violation of Prop. 65 for failure to provide a warning for their products. This was based on the alleged presence of the following chemicals in these products. Noteworthy trends and categories from Notices sent in January 2025 are excerpted and discussed below. A complete list of Notices sent in January 2025 can be found on the California Attorney General’s website, located here: 60-Day Notice Search.
Food and Drug
Product Category
Notice(s)
Alleged Chemicals
Dietary Supplements: Notices include protein powder, prenatal vitamins, and spirulina
22 Notices
Lead and Lead Compounds
Assorted Prepared Food and Snacks: Notices include chips, soup mix, plant-based patties, and protein bars
21 Notices
Cadmium and Lead and Lead Compounds
Seafood: Notices include sardines, mussels, cod liver, tuna, and clams
19 Notices
Cadmium and Cadmium Compounds and Lead and Lead Compounds
Cannabinoid Products: Notices include tinctures, gummies, CBD oil, and seltzer
14 Notices
Delta-9-tetrahydrocannabinol
Fruits and Vegetables: Notices include olives, chopped spinach, dried tomatoes, and artichoke hearts
13 Notices
Lead and Lead Compounds and Cadmium and Cadmium Compounds
Spices and Sauces: Notices include chat masala, dried ginger, and chili
6 Notices
Lead and Lead Compounds
Noodles, Pasta, and Rice: Notices include vegetable lasagna, cheese tortellini, and angel hair pasta
4 Notices
Lead and Lead Compounds and Cadmium
Mint Products: Notices include mint candy and mint caffeine pouches
2 Notices
Pulegone
Seafood: Notices include whole clams and sardines
2 Notices
Perfluorononanoic acid (PFNA) and its salts, Perfluorooctane Sulfonate (PFOS), and Perfluorooctanoic Acid (PFOA)
Dietary Supplements
1 Notice
Perfluorooctanoic Acid (PFOA)
Fruits and Vegetables: Notices include dried mandarin oranges
1 Notice
Perfluorooctanoic Acid (PFOA)
Cosmetics and Personal Care
Product Category
Notice(s)
Alleged Chemicals
Personal Care Products: Notices include shaving cream, moisturizers, shampoo, sunscreen, and hair dye
52 Notices
Diethanolamine
Personal Care Products: Notices include shaving cream, cleansing foam, and hair mousse
5 Notices
Nitrous oxide
Consumer Products
Product Category
Notice(s)
Alleged Chemicals
Plastic Pouches, Bags, and Accessories: Notices include pet carriers, water bottle sleeves, lunch bags, and eyewear cases
60 Notices
Bisphenol A (BPA), Di(2-ethylhexyl)phthalate (DEHP), Diisononyl phthalate (DINP), and Di-n-butyl Phthalate (DBP)
Tools: Notices include screws, solder slugs, lead anchors, and brass hose nozzles
45 Notices
Bisphenol S (BPS), Di(2-ethylhexyl)phthalate (DEHP), Di-n-butyl Phthalate (DBP), and Lead and Lead Compounds
Glassware and Ceramics: Notices include mugs, vases, ramekins, and bowls
38 Notices
Lead
Housewares: Notices include tablecloths, corkscrews, and vinyl seat cushions
11 Notices
Di(2-ethylhexyl)phthalate (DEHP), Diisononyl phthalate (DINP), Di-n-butyl Phthalate (DBP), and Lead
Sports Gear: Notices include roller skates, batting gloves, and dumbbells
8 Notices
Chromium (hexavalent compounds), Di(2-ethylhexyl)phthalate (DEHP), Diisononyl phthalate (DINP), and Lead
Moth Balls
6 Notices
Naphthalene and p-Dichlorobenzene
Clothing, Shoes, and Jewelry: Notices include hats, gloves, rain footwear, and sandals
5 Notices
Di(2-ethylhexyl)phthalate (DEHP) and Chromium (hexavalent compounds)
Cookware: Notices include single-use oval burrito bowls and paper straws
2 Notices
Perfluorooctanoic Acid (PFOA)
There are numerous defenses to Prop. 65 claims, and proactive measures that industry can take prior to receiving a Prop. 65 Notice in the first place. Keller and Heckman attorneys have extensive experience in defense of Prop. 65 claims and in all aspects of Prop. 65 compliance and risk management. We provide tailored Proposition 65 services to a wide range of industries, including food and beverage, personal care, consumer products, chemical products, e-vapor and tobacco products, household products, plastics and rubber, and retail distribution.
DEA Delays Final Buprenorphine Rule
The Department of Health and Human Services (HHS) and the Drug Enforcement Administration (DEA) have delayed the effective date of the final rule regarding telemedicine prescribing of buprenorphine (the final buprenorphine rule) to March 21, 2025, and have requested public comments on the rule. In its final rule delaying the effective date, the DEA reiterates that the delay in effective date will not delay or limit the ability of practitioners covered by the final buprenorphine rule to prescribe via telemedicine due to the current telemedicine prescribing flexibilities in place through December 31, 2025.
A Brief History
On January 17, 2025, in anticipation of the change of administration, the DEA and HHS finalized and published the final buprenorphine rule, which establishes a permanent pathway for the telemedicine prescribing of buprenorphine for opioid use disorder (OUD). The final buprenorphine rule was set to take effect February 18, 2025. (See our discussion on the requirements of the final buprenorphine rule here.) On January 20, 2025, the Trump administration issued the Regulatory Freeze Pending Review Presidential Memorandum authorizing HHS and the DEA to delay until March 21, 2025, the effective date of the final buprenorphine rule for the purpose of reviewing any questions of fact, law, and policy the rule may raise and to open a comment period to gather input from interested parties.
Make Your Voice Heard
Stakeholders are encouraged to participate in the comment process and share their insights on the final buprenorphine rule. The DEA is soliciting comments on the extension of the effective date of the final buprenorphine rule and whether the effective date should be further extended to address issues of fact, law, and policy raised by the rule. Comments may be submitted until 11:59 p.m. ET February 28, 2025. Stakeholders may submit comments electronically here or via regular or express mail to the following address:
Drug Enforcement AdministrationAttn: DEA Federal Register Representative/DPW8701 Morrissette Drive, Springfield, VA 22152
All correspondence, including attachments, must include a reference to “Docket No. DEA-948”.
Additionally, those with concerns about the final buprenorphine rule can share their feedback by contacting their local Congressperson or the White House.
Opportunity for Clarity
Because so much time had passed since the proposed buprenorphine rule was introduced in March 2023, its finalization in January caught many stakeholders by surprise. This additional comment period is a welcome opportunity for the telemedicine industry to seek clarity on several key issues regarding the final buprenorphine rule.
One concern is whether practitioners may continue to rely on the existing telemedicine flexibilities through the end of year if the final buprenorphine rule takes effect before the flexibilities expire, or if they will need to comply with the additional requirements of the rule once it takes effect. Additionally, stakeholders have raised concerns about the DEA’s shift from the originally proposed 30-day supply to a six-month initial supply. Although a step in the right direction to increase the supply, six months seems like an arbitrary choice to OUD telehealth providers who foresee a potential disruption in patient care depending on the available pathways for telemedicine prescribing after the initial supply.
To help initiate discussions, ATA Action has submitted a letter to the DEA seeking further clarification on several aspects of the final buprenorphine rule. We will continue to monitor developments regarding the final buprenorphine rule, including any further extensions of its effective date.
For Whom the Bell Tolls: Alabama Proposal Would Ban All Psychoactive Hemp
For the hemp industry, it appears the beatings will continue until morale improves. Following the lead of a number of other states in recent years, the Alabama Legislature is set to consider a measure that would eliminate essentially all non-industrial hemp in the state.
Meet Alabama Senate Bill 132. This proposal, in its current form, “would 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. If 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.
Again, this type of proposal is not specific to Alabama. But since the 2018 Farm Bill, Alabama has had one of the least-regulated hemp programs in the country. The only meaningful regulation for the retail sale of hemp came last year when a law was enacted to restrict the sale of psychoactive hemp products to adults 21 years and older. As such, SB132 would be a watershed moment for the cannabis industry in Alabama.
What Is the Purpose of SB132?
This is where things get interesting and a little grayer and subject to skepticism and cynicism. Most supporters of proposals like SB132 point to two general goals: (1) keeping psychoactive hemp out of the hands of children and (2) keeping unsafe products off the shelves. These are laudable goals, are politically popular, and as discussed below, are welcomed by responsible hemp operators.
Time and again, we’ve seen measures like SB132 in other states. Many believe marijuana companies would far rather occupy a world without the competition of psychoactive hemp. And it’s not only a question of supply and demand: Rather, psychoactive hemp companies in Alabama are not currently hamstrung by the extremely onerous regulatory barriers and costs, as well as the extraordinary tax burdens, facing marijuana companies. [We can set aside that there isn’t currently an operating medical cannabis program in Alabama – a fact we have addressed in countless posts.] There is no doubt that marijuana operators face far more significant challenges than hemp companies, and it is certainly understandable that marijuana companies view psychoactive hemp companies not only as competitors, but competitors with an unfair advantage. And although I personally don’t believe there is any nefarious motive behind SB132, I guess I could see why grizzled marijuana veterans may believe that SB132 is a preemptive move by would-be medical cannabis operators to stave off competition once the medical cannabis program is off the ground.
Is SB132 Going to Become Law?
Listen, if I could predict the future with certainty, I wouldn’t be hammering out blog posts about legislative proposals. That said, for the reasons explained below, I am optimistic that legislators will revise the current language to allow medical marijuana and hemp to co-exist in Alabama.
On the one hand, even the most optimistic hemp advocate should realize that an entirely unregulated psychoactive hemp market will not remain in perpetuity. Nor, if we’re being honest, should it. On the other hand, as drafted, SB132 is overbroad and unnecessarily encompasses products that do not implicate the stated concerns of its supporters.
A Better Path Forward?
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.
Conclusion
If we aren’t there yet, we are approaching the Alamo in the marijuana vs. hemp battle. And while I know certain of my clients on the hemp side and certain of those on the marijuana side believe that this is a zero-sum proposition, I’m reminded of the opening stanza from the poem that formed the title of this post:
No man is an island,
Entire of itself;
Every man is a piece of the continent,
A part of the main.
There is room for marijuana and hemp to co-exist in this country. That will require reform efforts that place the two on more even playing fields. In its current form, SB132 fails in that regard because it chooses one side over the other. But I remain hopeful that the stakeholders involved will see that their goals can be accomplished without banning psychoactive hemp. Again, regulate, don’t eliminate.
And for psychoactive hemp products, I guess it comes down to a simple choice, expressed so simply and poignantly by Andy Dufresne and Ellis Boyd “Red” Redding – “get busy living or get busy dying.”
Recent Federal Developments for February 14, 2025
TSCA/FIFRA/TRI
EPA Releases Final Risk Evaluation For DINP, Finding Unreasonable Risk Of Injury To Human Health When Workers Are Exposed Under Four Conditions Of Use (COU): On January 14, 2025, EPA released the final risk evaluation for diisononyl phthalate (DINP) conducted under the Toxic Substances Control Act (TSCA). EPA states that it has determined that DINP presents an unreasonable risk of injury to human health because workers could be exposed to high concentrations of DINP in mist when spraying adhesive, sealant, paint, and coating products that contain DINP. According to EPA, DINP can cause developmental toxicity and harm the liver and can cause cancer at higher rates of exposure. EPA notes that DINP can also harm the developing male reproductive system, known as “phthalate syndrome,” and that it is including DINP in its cumulative risk analysis for six phthalates that demonstrate effects consistent with phthalate syndrome. EPA released this draft risk analysis on January 6, 2025. For more information and our commentary, please read the full memorandum.
EPA Proposes Risk Management Rule To Protect Workers From Inhalation Exposure To PV29: On January 14, 2025, EPA issued a proposed rule to address the unreasonable risk of injury to human health presented by Color Index (C.I.) Pigment Violet 29 (PV29) under its COUs as documented in EPA’s January 2021 risk evaluation and September 2022 revised risk determination. 90 Fed. Reg. 3107. The proposed rule states that TSCA requires that EPA address by rule any unreasonable risk of injury to health or the environment identified in a TSCA risk evaluation and apply requirements to the extent necessary so the chemical no longer presents unreasonable risk. To address the identified unreasonable risk, EPA proposes requirements to protect workers during manufacturing and processing, certain industrial and commercial uses of PV29, and disposal, while also allowing for a reasonable transition period prior to enforcement of said requirements. Comments are due February 28, 2025. For more information, please read our January 27, 2025, memorandum.
EPA Releases Draft Scope Document For Vinyl Chloride TSCA Risk Evaluation: On January 16, 2025, EPA announced the availability of and requested public comment on the draft scope of the risk evaluation to be conducted under TSCA for vinyl chloride. 90 Fed. Reg. 4738. EPA notes that under TSCA, the scope documents must include the COUs, hazards, exposures, and the potentially exposed or susceptible subpopulations (PESS) that EPA expects to consider in conducting its risk evaluation. EPA states that the purpose of risk evaluations under TSCA is to determine whether a chemical substance presents an unreasonable risk of injury to health or the environment under the COUs, including unreasonable risk to PESS identified as relevant to the risk evaluation by EPA, and without consideration of costs or non-risk factors. Comments are due March 3, 2025. More information is available in our January 28, 2025, memorandum.
EPA Releases Compliance Guidance For Workplace Chemical Protection Requirements In TSCA Risk Management Rules: On January 16, 2025, EPA released a compliance guide to assist the regulated community in complying with Workplace Chemical Protection Program (WCPP) requirements for chemicals regulated under Section 6 of TSCA. EPA states that a WCPP “is a chemical protection program designed to address unreasonable risk posed by chemical exposure to persons in occupational settings.” The compliance guide provides an overview of typical WCPP requirements that the regulated community may be subject to as part of a TSCA Section 6(a) rulemaking. As reported in our previous memoranda, in 2024, EPA issued final risk management rules with WCPP requirements for methylene chloride, perchloroethylene, trichloroethylene (TCE), and carbon tetrachloride.
According to EPA, the compliance guide is intended for owners and operators of businesses that manufacture (including import) or process, distribute in commerce, use, or dispose of a chemical regulated under TSCA Section 6 that is subject to the WCPP in EPA rules. EPA notes that the guide will also be of interest to people who may be exposed to these regulated chemicals in the workplace. The guide broadly addresses the requirements of a typical WCPP, including:
EPA TSCA occupational exposure limits (Existing Chemical Exposure Limits (ECEL) or EPA Short-Term Exposure Limits (EPA STEL)) designated under TSCA;
ECEL action levels;
Occupational exposure monitoring;
Regulated areas;
Direct dermal contact controls (DDCC);
Respirators;
Personal protective equipment (PPE);
Exposure control plans;
Recordkeeping; and
Downstream notifications.
EPA states that while the compliance guide “provides useful information to consider when implementing a WCPP, the regulated community should also consult the WCPP provisions within the applicable risk management rule.” Individual compliance guides for rules may also provide additional chemical-specific guidance. EPA has issued guides for methylene chloride, TCE, and for the use of perchloroethylene in dry cleaning (also available in Korean and Spanish) and energized electrical cleaning.
EPA Releases New MyPest Tracking System: On January 17, 2025, EPA released its new MyPest tracking system to provide transparency and visibility into the real-time status of pesticide submissions. MyPest is a web-based system that tracks a registrant’s pesticide applications and products after submission via EPA’s Central Data Exchange (CDX). MyPest allows users to view and communicate with the Office of Pesticide Programs (OPP) regarding their pesticide products and pending applications. Pursuant to the requirements in the Pesticide Registration Improvement Act of 2022 (PRIA 5), MyPest seeks to provide accurate, up-to-date information about pesticide applications that are with EPA’s OPP for review. The MyPest application is available at https://oppt.my.site.com/mypestapp/s/. More information on MyPest is available in our January 27, 2025, blog item.
EPA Proposes To Clarify Supplier Notification Requirements For TRI-Listed PFAS: EPA proposed on January 17, 2025, to clarify the timeframe for when companies must first notify a customer that one of its mixtures or trade name products contains a per- or polyfluoroalkyl substance (PFAS) listed on the Toxics Release Inventory (TRI). 90 Fed. Reg. 5795. The National Defense Authorization Act for Fiscal Year 2020 (NDAA) adds certain PFAS automatically to the TRI beginning January 1 of the year following specific triggering events. According to EPA’s January 16, 2025, press release, EPA is proposing the rule in response to questions from industry regarding the effective date of supplier notifications for PFAS added to the TRI pursuant to the NDAA. Stakeholders questioned whether the supplier notification requirements for such PFAS begin on January 1, when the PFAS are added to the statutory TRI chemical list, or upon EPA completing a rulemaking to include the added PFAS in the Code of Federal Regulations. EPA states that the proposed rule would clarify that the supplier notification requirement for these PFAS starts immediately when they are added to the TRI (January 1) by explicitly defining PFAS added to the TRI by the NDAA as TRI chemicals. EPA notes that as TRI chemicals, they are immediately covered by the TRI regulation’s supplier notification provision, as well as all other TRI reporting requirements. Supplier notifications must begin with the first shipment of the calendar year in which the chemical addition to the TRI is effective. Comments are due February 18, 2025.
EPA Updates TSCA Inventory: On January 17, 2025, EPA announced the release of the latest TSCA Inventory. The TSCA Inventory lists all existing chemical substances manufactured, processed, or imported in the United States under TSCA that do not otherwise qualify for an exemption or exclusion. EPA states that “[t]his biannual update to the public TSCA Inventory is part of EPA’s regular posting of non-confidential TSCA Inventory data.” EPA plans the next regular update of the TSCA Inventory for summer 2025. According to EPA, the TSCA Inventory currently contains 86,847 chemicals, of which 42,495 are active (currently known to be in use) in U.S. commerce. Other updates to the TSCA Inventory include commercial activity data and regulatory flags (e.g., significant new use rules (SNUR)).
Biden EPA Filed Notice Of Appeal Of Ruling That Typical Levels Of Drinking Water Fluoridation Present An Unreasonable Risk To Health: As reported in our September 30, 2024, blog item, the U.S. District Court for the Northern District of California ruled in September 2024 that the plaintiffs established by a preponderance of the evidence that the levels of fluoride typical in drinking water in the United States pose an unreasonable risk of injury to the health of the public. Food & Water Watch v. EPA (No. 3:17-cv-02162-EMC). On January 17, 2025, the Biden EPA filed a notice of appeal in the U.S. Court of Appeals for the Ninth Circuit. Food & Water Watch v. EPA (No. 25-384). Now that President Trump’s nominee for EPA Administrator, Lee Zeldin, has been confirmed, it remains to be seen how the Trump EPA will proceed. A mediation conference is scheduled for February 26, 2025.
GAO Recommends EPA’s New Chemicals Program Develop A Systematic Process To Manage And Assess Performance Better: The U.S. Government Accountability Office (GAO) publicly released a report entitled “New Chemicals Program: EPA Needs a Systematic Process to Better Manage and Assess Performance” on January 22, 2025. GAO states that it was asked to review EPA’s implementation of its TSCA New Chemicals Program. The report summarizes the perspectives of selected manufacturers on EPA’s review process and evaluates the extent to which EPA follows key practices for managing and assessing the program. GAO identified a random, nongeneralizable sample of premanufacture notices (PMN) submitted to EPA from October 2021 to April 2024 and interviewed 19 manufacturers that submitted these notices. GAO also compared EPA’s management and assessment activities to key practices it developed based on federal laws, federal guidance, and prior GAO work.
EPA Delays Effective Date Of TCE Risk Management Rule: On January 28, 2025, EPA issued a final rule delaying the effective date of four rules, including the December 17, 2024, final risk management rule for TCE issued under TSCA Section 6(a), until March 21, 2025. 90 Fed. Reg. 8254. EPA states that it is delaying the effective dates of the rules in response to President Trump’s January 20, 2025, memorandum entitled “Regulatory Freeze Pending Review.” The memorandum directed the heads of executive departments and agencies to consider postponing for 60 days from the date of the memorandum the effective date for any rules published in the Federal Register that had not yet taken effect for the purpose of reviewing any questions of fact, law, and policy that the rules may raise. According to EPA, 13 petitions for review of the final TCE rule were filed in various federal appellate courts. On January 13, 2025, the Fifth Circuit Court of Appeals granted a petitioner’s motion to stay temporarily the TCE rule’s effective date. The petitions were then consolidated by the Judicial Panel for Multidistrict Litigation and transferred to the Third Circuit Court of Appeals. The Third Circuit issued a January 16, 2025, order leaving the temporary stay of the effective date in place pending briefing on whether the temporary stay of the effective date should remain in effect. EPA notes that because of the court decisions, the TCE rule never went into effect and is therefore also covered by the terms of the Regulatory Freeze Pending Review memorandum. As reported in our January 24, 2025, blog item, Representatives Diana Harshbarger (R-TN) and Mariannette Miller-Meeks (R-IA) introduced a resolution (H.J. Res. 27) expressing congressional disapproval of EPA’s final TCE rule. The joint resolution is an attempt to use the Congressional Review Act (CRA) to overturn the rule. More information on the final TCE rule is available in our January 13, 2025, memorandum.
EPA Extends Comment Period On Draft TSCA Risk Evaluation For 1,3-Butadiene: EPA announced on January 31, 2025, that it is extending the public comment period on the draft risk evaluation for 1,3-butadiene under TSCA. 90 Fed. Reg. 8798. Comments that were due February 3, 2025, are now due March 5, 2025. EPA states in its announcement that to give the peer reviewers on the Science Advisory Committee on Chemicals (SACC) time to review any additional comments received, it is in the process of rescheduling the February 4, 2025, virtual preparatory meeting and the February 25-28, 2025, peer review meeting for the draft risk evaluation. EPA will announce the new dates for these meetings once they have been selected.
EPA Postpones Addition Of Nine PFAS To TRI For Reporting Year 2025: On February 5, 2025, EPA delayed until March 21, 2025, the effective date of a January 2025 rule adding nine PFAS to 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. 9010. As reported in our January 13, 2025, blog item, the January rule updates the regulations to identify nine PFAS that must be reported pursuant to the NDAA. The PFAS added to the TRI are:
Ammonium perfluorodecanoate (PFDA NH4) (Chemical Abstracts Service Registry Number® (CAS RN®) 3108-42-7);
Sodium perfluorodecanoate (PFDA-Na) (CAS RN 3830-45-3);
Perfluoro-3-methoxypropanoic acid (CAS RN 377-73-1);
6:2 Fluorotelomer sulfonate acid (CAS RN 27619-97-2);
6:2 Fluorotelomer sulfonate anion (CAS RN 425670-75-3);
6:2 Fluorotelomer sulfonate potassium salt (CAS RN 59587-38-1);
6:2 Fluorotelomer sulfonate ammonium salt (CAS RN 59587-39-2);
6:2 Fluorotelomer sulfonate sodium salt (CAS RN 27619-94-9); and
Acetic acid, [(γ-ω-perfluoro-C8-10-alkyl)thio] derivs., Bu esters (CAS RN 3030471-22-5).
In the February 5, 2025, notice, EPA states that it is delaying the effective date of the rule in response to President Trump’s January 20, 2025, memorandum entitled “Regulatory Freeze Pending Review.” The memorandum directed the heads of executive departments and agencies to consider postponing for 60 days from the date of the memorandum the effective date for any rules published in the Federal Register that had not yet taken effect for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.
Community And Environmental Groups File TSCA Section 21 Petition Seeking The Phase Out Of Hydrogen Fluoride In Domestic Oil Refining: The Natural Resources Defense Council (NRDC) announced on February 11, 2025, that community and environmental groups submitted a petition under TSCA Section 21 to EPA to prohibit the use of hydrogen fluoride in domestic oil refining “to eliminate the extreme and unreasonable risks this use presents to public health and the environment.” Brought by NRDC, Clean Air Council (CAC), and Communities for a Better Environment (CBE), the petition states that EPA must issue a TSCA Section 6(a) rule prohibiting the use of hydrogen fluoride in domestic oil refining to eliminate unreasonable risks to public health and the environment. According to the petition, “TSCA requires EPA to issue such a rule because this petition identifies (1) a ‘chemical substance’ ([hydrogen fluoride]) that presents, (2) under one or more ‘conditions of use’ (the use of HF for alkylation at U.S. refineries, and the rail and truck transportation needed to supply HF to those refineries), (3) an unreasonable risk to health or the environment.” The petition notes that hydrogen fluoride can take different forms and that anhydrous hydrogen fluoride tends to form hydrofluoric acid when it mixes with water. As reported in our November 13, 2019, blog item, in 2019, EPA denied a similar TSCA Section 21 petition to prohibit the use of hydrofluoric acid in manufacturing processes at oil refineries. TSCA requires EPA to grant or deny the petition within 90 days from the day the petition is filed. If EPA grants the petition, EPA must promptly commence an appropriate proceeding. If EPA denies the petition, EPA must publish the reasons for denial in the Federal Register.
Deadline For Filing Annual Pesticide Production Reports Is March 1, 2025: The March 1, 2025, deadline for all establishments, foreign and domestic, that produce pesticides, devices, or active ingredients to file their annual production for the 2024 reporting year is fast approaching. Pursuant to Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 7(c)(1) (7 U.S.C. § 136e(c)(1)), “Any producer operating an establishment registered under [Section 7] shall inform the Administrator within 30 days after it is registered of the types and amounts of pesticides and, if applicable, active ingredients used in producing pesticides” and this information “shall be kept current and submitted to the Administrator annually as required.” More information is available in our February 3, 2025, blog item.
RCRA/CERCLA/CWA/CAA/PHMSA/SDWA
EPA Amends National VOC Emission Standards For Aerosol Coatings: On January 17, 2025, EPA amended the National Volatile Organic Compound (VOC) Emission Standards for Aerosol Coatings. 90 Fed. Reg. 5697. EPA states that the regulation employs a relative reactivity-based approach to control aerosol coating products’ contribution to ozone formation by encouraging the use of less reactive VOC ingredients in formulations. In the final rule, EPA updates the coating category product-weighted reactivity (PWR) limits, adding new compounds and reactivity factors, updating existing reactivity factors, revising the rule’s default reactivity factor, amending thresholds for VOC regulated by the rule, amending reporting requirements, updating test methods to reflect more recent versions, adding a new compliance date, and making clarifying edits. The effective date of the final rule is January 17, 2025. The incorporation by reference of certain material listed in the rule is approved by the Director of the Federal Register as of January 17, 2025. The incorporation by reference of certain other material listed in this rule was approved by the Director of the Federal Register as of March 24, 2008.
EPA Proposes To Promulgate New Methods And Update Tables Of Approved Methods For The CWA: EPA proposed on January 21, 2025, to promulgate new methods and update the tables of approved methods for the Clean Water Act (CWA). 90 Fed. Reg. 6967. EPA proposes to add new EPA methods for PFAS and polychlorinated biphenyl (PCB) congeners, and add methods previously published by voluntary consensus bodies that industries and municipalities would use for reporting under EPA’s National Pollutant Discharge Elimination System (NPDES) permit program. EPA also proposes to withdraw the seven Aroclor (PCB mixtures) parameters. In addition, EPA proposes to simplify the sampling requirements for two VOCs, and make a series of minor corrections to existing tables of approved methods. The proposed rule does not mandate when a parameter must be monitored or establish a discharge limit. Comments are due February 20, 2025.
EPA Proposes New Area Source Category To Address Chemical Manufacturing Process Units Using Ethylene Oxide: EPA proposed on January 22, 2025, to establish a new area source category to address chemical manufacturing process units (CMPU) using ethylene oxide (EtO). 90 Fed. Reg. 7942. EPA proposes to list EtO in table 1 to the National Emission Standards for Hazardous Air Pollutants (NESHAP) for Chemical Manufacturing Area Sources (CMAS NESHAP) and to add EtO-specific requirements to the CMAS NESHAP. EPA also proposes to add a fenceline monitoring program for EtO. In addition, EPA proposes new requirements for pressure vessels and pressure relief devices (PRD). EPA states that this proposal also presents the results of its technology review of the CMAS NESHAP as required under the Clean Air Act (CAA). As part of this technology review, EPA proposes to add new leak detection and repair (LDAR) requirements to the CMAS NESHAP for equipment leaks in organic hazardous air pollutant (HAP) service and heat exchange systems. EPA also proposes performance testing once every five years and to add provisions for electronic reporting. According to the notice, EPA estimates that the proposed amendments to the CMAS NESHAP, excluding the proposed EtO emission standards, would reduce HAP emissions from emission sources by approximately 158 tons per year (tpy). Additionally, the proposed EtO emission standards are expected to reduce EtO emissions by approximately 4.6 tpy. Comments are due March 24, 2025. EPA notes that under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives comments on or before February 21, 2025.
FDA
FDA Revokes Authorization For FD&C Red No. 3: On January 16, 2025, the U.S. Food and Drug Administration (FDA) announced the revocation of authorization to use FD&C Red No. 3 based on the Delaney Clause of the Federal Food, Drug, and Cosmetic Act (FFDCA). 90 Fed. Reg. 4628. According to FDA’s January 15, 2025, announcement, FDA’s action is in response to a Color Additive Petition filed by the Center for Science in the Public Interest, et al., in 2022, which required FDA to review whether the Delaney Clause applied to this food additive. Manufacturers who use FD&C Red No. 3 in food and ingested drugs will have until January 15, 2027, or January 18, 2028, respectively, to reformulate their products. According to the Federal Register notice, either electronic or written objections and requests for a hearing on the order must be submitted by February 18, 2025.
NANOTECHNOLOGY
OECD Tour de Table Includes Information On U.S. And International Developments On The Safety Of Manufactured Nanomaterials: The Organisation for Economic Co-operation and Development (OECD) has published the Developments in Delegations on the Safety of Manufactured Nanomaterials and Advanced Materials between July 2023 and June 2024 — Tour de Table (Tour de Table). The Tour de Table lists U.S. and international developments on the human health and environmental safety of nanomaterials. More information is available in our February 7 and February 14, 2025, blog items.
PUBLIC POLICY AND REGULATION
TSCA In The Spotlight: TSCA Is Focus Of First Energy & Commerce Hearing Of 119th Congress; GAO Issues Report On New Chemicals Program: In a development no one could have predicted several weeks ago, the first hearing of the 119th Congress in the House Committee on Energy and Commerce (E&C) focused on TSCA and amendments to TSCA that were enacted more than eight years ago. The E&C Subcommittee on Environment (Subcommittee) hearing on January 22, 2025, “A Decade Later: Assessing the Legacy and Impact of the Frank R. Lautenberg Chemical Safety for the 21st Century Act,” featured four witnesses and robust and enthusiastic attendance by the Subcommittee members. (Attendance exceeded the Subcommittee roster because Representative Diana Harshbarger (R-TN) waived onto the Subcommittee to participate in the hearing, where she made news by announcing her intent to introduce a CRA resolution.)
Minutes before the E&C hearing, GAO released the report “New Chemicals Program: EPA Needs a Systematic Process to Better Manage and Assess Performance.” The report echoes a 2023 report by the EPA Office of Inspector General, “The EPA Lacks Complete Guidance for the New Chemicals Program to Ensure Consistency and Transparency in Decisions” (23-P-0026). GAO found that EPA’s New Chemicals Division (NCD) “does not follow most key practices for managing and assessing the results of the New Chemicals Program.” More information is available in our January 24, 2025, blog item and in our item in the TSCA section above.
Senate Confirms Zeldin As EPA Administrator; Nomination Hearing Highlights: The Senate Committee on Environment and Public Works (EPW) on January 23, 2025, advanced the nomination of Lee Zeldin to the full Senate for a vote to confirm him as the next Administrator of EPA. The 11-8 vote to advance the nomination was largely along party lines, with Senator Mark Kelly (D-AZ) as the only Democrat to vote in favor of advancing Zeldin’s nomination. On January 29, 2025, the Senate confirmed Zeldin as EPA Administrator by a vote of 56-42. More information on the nomination hearing is available in our January 23, 2025, blog item.
EPA Administrator Zeldin Announces Five Pillar Initiative To Guide EPA; What Does It Mean For OCSPP?: EPA Administrator Lee Zeldin on February 4, 2025, announced the “Powering the Great American Comeback Initiative” (PGAC Initiative). It consists of five pillars and is intended to serve as a roadmap to guide EPA’s actions under Administrator Zeldin.
The five pillars are:
Clean Air, Land, and Water for Every American;
Restore American Energy Dominance;
Permitting Reform, Cooperative Federalism, and Cross-Agency Partnership;
Make the United States the Artificial Intelligence Capital of the World; and
Protecting and Bringing Back American Auto Jobs.
Administrator Zeldin explained Pillar 3 by stating, “Any business that wants to invest in America should be able to do so without having to face years-long, uncertain, and costly permitting processes that deter them from doing business in our country in the first place.” [Emphasis added.] We agree and would urge Administrator Zeldin to consider the years-long new chemical approval process under TSCA. For more information, please read our February 7, 2025, blog.
“Unleashing Prosperity Through Deregulation” — How Effective Will It Be In Practice?: President Trump, on January 31, 2025, issued Executive Order 14192, “Unleashing Prosperity Through Deregulation.” This has been referred to as President Trump’s “ten-to-one deregulation initiative” that he spoke about when he was campaigning. If this initiative seems familiar, it may be because you remember Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” issued on February 3, 2017, by President Trump in his first term. That Executive Order called for a two-to-one repeal of regulations. It remains to be seen how many significant regulations will be targeted for repeal and eventually be repealed by the Trump Administration. It will be interesting to watch how businesses in highly regulated industries, including the chemical manufacturing industry, could benefit or be challenged by these potential regulatory actions. More information is available in our February 12, 2025, blog.
What Can Happen When Federal Career Employees Are Told “You’re Fired!”: Among the less-noticed, less-reported implications of “firing” federal employees for whatever reason (or no reason) is the process under current law and regulations that applies to reducing or eliminating programs and positions within the U.S. government. Known as a reduction in force (RIF), these procedures are arcane, complicated, and could have many unintended impacts even if imposed to attain targeted reductions in specific parts or programs of the federal workforce. The Executive Order issued on February 11, 2025, designed to implement “workforce optimization” (Implementing The President’s “Department of Government Efficiency” Workforce Optimization Initiative), has stated that to reduce the workforce, RIF procedures will be followed.
The RIF procedures are found in the Workforce Reshaping Operations Handbook, 119 pages long, not including an Appendix of 107 pages. This manual from the U.S. Office of Personnel Management (OPM) outlines how and what happens to a federal employee who has their position eliminated due to budget cuts or management decisions to stop a program activity. More information on the RIF issue is available in our February 13, 2025, blog.
LEGISLATIVE
CRA Resolutions Would Overturn Recent EPA Rules: On January 22, 2025, Representatives Diana Harshbarger (R-TN) and Mariannette Miller-Meeks (R-IA) introduced H.J. Res. 27, a resolution expressing congressional disapproval of EPA’s rule on TCE. This joint resolution is an attempt to use the CRA to overturn EPA’s recent TCE rule issued under TSCA. Senator John Kennedy (R-LA) introduced a similar resolution (S.J. Res. 19) on February 13, 2025. More information on H.J. Res. 27 is available in our January 24, 2025, blog item, and more information on EPA’s final TCE rule is available in our January 13, 2025, memorandum. On February 12, 2025, Representative Andrew S. Clyde (R-GA) introduced a resolution (H.J. Res. 46) to overturn EPA’s recent decabromodiphenyl ether (decaBDE) and phenol, isopropylated phosphate (3:1) (PIP (3:1)) rule. More information on EPA’s final rule is available in our November 13, 2024, memorandum.
House Bill Would Repeal Superfund Tax: On January 22, 2025, Representatives Beth Van Duyne (R-TX), Carol Miller (R-WV), Darin LaHood (R-IL), and Mike Carey (R-OH) introduced the Chemical Tax Repeal Act (H.R. 640). According to Van Duyne’s January 23, 2025, press release, the bill would repeal the Biden-era Superfund Tax “targeting chemical manufacturers with $15 billion in taxes on materials essential in the production of household goods.”
MISCELLANEOUS
President Trump Issues Memorandum Implementing Regulatory Freeze Pending Review: On January 20, 2025, President Trump issued a memorandum entitled “Regulatory Freeze Pending Review” that directs agencies to take the following steps:
Do not propose or issue any rule in any manner, including by sending a rule to the Office of the Federal Register, until a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule;
Immediately withdraw any rules that have been sent to the Office of the Federal Register but not published in the Federal Register so that they can be reviewed and approved; and
Consistent with applicable law, consider postponing for 60 days from the date of this memorandum the effective date for any rules that have been published in the Federal Register, or any rules that have been issued in any manner but have not taken effect, for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.
USPS Issues New Mailing Standards For Hazardous Materials Outer Packaging And Nonregulated Toxic Materials: On January 27, 2025, the U.S. Postal Service (USPS) amended Publication 52, Hazardous, Restricted, and Perishable Mail, by adding new Section 131 to require specific outer packaging when mailing most hazardous materials (HAZMAT) or dangerous goods (DG), to remove quantity restrictions for nonregulated toxic materials, and to remove the telephone number requirement from the lithium battery mark. The amendment was effective January 27, 2025, and applicable beginning January 19, 2025.
MPCA Recommends Exempting Until 2032 Intentionally Added PFAS In Electronic Or Other Internal Components Within The 11 Product Categories Prohibiting PFAS In 2025: The Minnesota Pollution Control Agency (MPCA) has posted a January 2025 report to the legislature regarding recommendations for products containing lead, cadmium, and PFAS. During the previous legislative session, the legislature directed MPCA to support a report by January 31, 2025, with legislative recommendations related to the following chemicals and products:
The use of intentionally added PFAS in electronic or other internal components of upholstered furniture in the 2025 prohibition under Minnesota Statutes, Section 116.943;
The use of lead and cadmium in internal electronic components of keys fobs in the prohibition under Minnesota Statutes, Section 325E.3892;
The use of lead in pens or mechanical pencils included in the prohibition under Minnesota Statutes, Section 325E.3892; and
The use of intentionally added PFAS in firefighting foam used in fire suppression systems installed in airport hangers in the prohibitions under Minnesota Statutes, Section 325F.072.
The MPCA report recommends that the legislature grant an exemption until 2032 for the use of intentionally added PFAS in electronic or other internal components in the 11 product categories that prohibit intentionally added PFAS in 2025. MPCA notes that internal components pose less threat of direct human exposure and that products within the 11 categories often use similar electronic or other internal components as products outside these categories. MPCA states that there are currently limited available alternatives to PFAS for many electronic or other internal component applications and an exemption will allow manufacturers time to find, develop, test, and implement PFAS-free safer alternatives. According to MPCA, an exemption “will give manufacturers of products within the 11 categories the same amount of time provided to manufacturers of products outside these categories (until 2032) to find and implement PFAS-free electronic or other internal components.”
Twenty-Three States Support Iowa Pork Producers Association Petition for SCOTUS Review of Prop 12
Iowa and 22 states have filed a brief supporting the petition of the Iowa Pork Producers Association (IPPA) to the Supreme Court for a writ of certiorari to review the judgment of the 9th Circuit Court of Appeals in a case involving a challenge to California Proposition 12. Prop 12 is an animal welfare law which prohibits the sale of pork from swine housed in conditions inconsistent with California standards.
In National Pork Producers Council (NPPC) v. Ross, the Supreme Court, in a fractured opinion, dismissed a similar challenge to Prop 12 and held that it did not violate the dormant commerce clause.
However, IPPA argues that this case presents different questions, in part because it alleges discrimination against out-of-state pork producers. In contrast, NPCC had disavowed any discrimination-based claims in their challenge to Prop 12.
The petition for certiorari also requests that the Court address the issue of whether dissenting opinions should be considered in determining a majority opinion on a point of law. In affirming the dismissal of the IPPA challenge to Prop 12, the 9th Circuit applied its own precedent and not the Supreme Court’s precedent in NPPC v. Ross because the “majority of the Justices . . . did not agree upon a single rationale and there is no opinion that can reasonably be described as a logical subset of the other.”
A grant of writ of certiorari is up to the discretion of the Supreme Court, but the Court typically considers factors that include the importance of resolving conflicts in judicial interpretations and the significance of the issue(s).
You ® Mine: Valentine’s Day Trademarks & Trade Dresses
Where I’m from in the Northeast U.S., February is a month full of snowy weather, winter blues, and hope that a groundhog will not see its shadow. But halfway through this month, there comes a day that has everyone spending hard earned dollars on chocolate, candy, flowers, and jewelry or they are spending time writing notes to friends and loved ones on heart-covered cards. Valentine’s Day is symbolic of love, friendship and, of course, capitalism. Naturally, businesses have tried to trademark names of various goods and services to market these items for sale on this popular holiday.
What better way to honor the day than to share some trademarks that protect the use of phrases and expressions of love that accompany Valentine’s Day.
Certain catchy jingles from commercials have trademark protection for jewelry or jewelry retail services. For example, Kay Jewelers’ “Every Kiss Begins with Kay”® is protected via TM Registration No. 2602439. Also, Jared the Galleria of Jewelry protects the slogan “That’s Why He Went to Jared” with TM Registration No. 4321228.
Popular Valentine’s Day treats are also protected such as “Sweethearts” by the Spangler Candy Company for conversation heart candy, with a U.S. trademark registration No.2172266. The product touts itself through the use of the slogan “the official candy of love.”
In addition to slogans, jingles, and product names, trademark protection extends to product shapes if they are distinctive enough and source identifying. A Valentine gift may include chocolate this year and a few stand outs have shapes that are protected as trademarks. These include the shape of a Hershey Kiss, U.S Registration No. 186828; the pyramid shape of the Toblerone bar, U.S Registration No. 2649833; and the shape of the Ferrero Rocher gold wrapped candy ball, U.S Registration No. 2839680. The distinctive shape of these products protects them under their trade dress and any dupes could face legal action for infringing on these products’ registration. This infringement is not limited to candy that can be enjoyed by all, either. I’ve previously written on the candy dupes for THC-edible dupes of Sour Patch Kids.
Of course, given the widespread use of some of catchy phrases of love like “be mine” or “ILY,” it can be a challenge to enforce rights to words and phrases for a particular product or service. However, with a distinctive design and strong consumer recognition, such as the Hershey kiss shape, these trademarks can be valuable and enforceable assets.
This Week in 340B: February 4 – 10, 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: HRSA Audit Process; Rebate Model; Other
In a case brought by a 340B covered entity against the Health Resources and Services Administration (HRSA) alleging that HRSA prevented the covered entity from accessing the 340B Program, the covered entity filed a notice of voluntary dismissal.
In a case challenging HRSA’s policy prohibiting all manufacturer conditions on 340B transactions, plaintiffs filed a motion for summary judgment.
In a Freedom of Information Act (FOIA) case, the plaintiff filed a motion to strike HRSA’s motion for summary judgment.
In one HRSA audit process case, the plaintiff filed a brief in opposition to a drug manufacturer’s motion for leave to file as amicus curiae.
In four HRSA audit process cases, the parties filed joint stipulations that the government will provide to the plaintiffs thirty days’ written notice before termination of the plaintiffs from the 340B Program.
In five cases against HRSA alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models:
In two cases, each drug manufacturer plaintiff filed a motion for summary judgment and a group of interested parties filed a motion to intervene.
In one case, two patient advocacy groups filed a motion for leave to file as amicus curiae.
In one case, the drug manufacturer plaintiff filed a motion for summary judgment, a group of interested parties filed a motion to intervene, and two patient advocacy groups filed a motion for leave to file as amicus curiae.
In one case, a group of interested parties filed a motion to intervene.
Kelsey Reinhardt and Nadine Tejadilla also contributed to this article.
Continued Momentum for Social Consumption Lounges
For a long time, social consumption lounges have been a sort of “White Whale” in the adult-use cannabis industry, murmured about and pursued but rarely spotted. Luckily for us Captain Ahabs, a number of state legislatures have begun taking action on developing a licensing and operational framework for social consumption lounges and cannabis events permitting consumption. The Cannabis Control Commission of Massachusetts issued its proposed rules and licensing structure at the end of 2024 (see Social Consumption Lounges in Massachusetts: Proposed Rules for more information). Most recently at the end of January, Maryland’s house and senate also took action by introducing two complementary bills to establish rules and to regulate the hosting of events permitting cannabis consumption in the Old Line State (Legislation – HB0132 and Legislation – SB0215). Connecticut, New Jersey, and New York have also recently taken steps towards developing and enhancing the social consumption lounge regime in their respective states.
Both Maryland bills remain under review of the respective finance committees, but here is a quick hitter summary on the contents.
Initially, the state would accept applications for 15 licenses that would permit the serving of single-serving, infused beverages and edibles sourced from third-party operators.
Neither the smoking of cannabis nor the infusion of foods and beverages on-site would be permitted.
Licensed locations would provide the Maryland Cannabis Administration at least 60 days advance notice of an event involving cannabis consumption. Therefore, this license type wouldn’t operate as a social consumption lounge, but would permit a location to host a temporary cannabis event where the consumption of cannabis products is permitted.
As you can see, the proposed bills are quite restrictive, but I choose to view progress as is and take solace in the old adage, “Rome wasn’t built in a day.”
The 340B Reimbursement Battle: What Hospitals and Insurers Need to Know
The U.S. Supreme Court’s ruling in American Hospital Association (“AHA”) v. Becerra (2022) sent shockwaves through the 340B drug pricing program when it held that CMS’ reduction of reimbursement for drugs purchased under the 340B program was not permitted by law.
The Supreme Court chose not to address potential remedies and remanded the case back to the D.C. District Court for further proceedings on how to correct the underpayments. Instead of vacating the unlawful reimbursement rates, the District Court decided to remand without vacatur, allowing HHS the opportunity to remediate its underpayments.[1] AHA v. Becerra (2023).
In response, the Centers for Medicare & Medicaid Services (CMS) issued a 2023 Final Rule mandating a retroactive lump-sum reimbursement to 340B participating hospitals for 340B underpayments made between 2018 and 2022. The Supreme Court’s decision, coupled with CMS’s administrative action, has led to significant contractual disputes and regulatory challenges as 340B contract hospitals seek restitution for past financial shortfalls while Medicare Advantage organizations (“MAOs”) grapple with the fiscal implications of these payment adjustments. The stakes are high, with hospitals seeking significant back payments and MAOs pushing back, arguing that their obligations are dictated by contracts, not federal rulemaking. As legal battles unfold, the question remains: Who is financially responsible for correcting these underpayments? This article analyzes these developments, focusing on the litigation between hospitals and MAOs and offering strategic contractual considerations in this shifting landscape.
Historical and Legal Context
The Supreme Court’s ruling in AHA v. Becerra represents a pivotal moment in healthcare law, particularly for hospitals participating in the 340B program. The litigation centered on the legality of CMS’s previous reductions in reimbursement rates for 340B drugs, a policy the Court ultimately found to be incompatible with statutory mandates. Hospitals that rely on the 340B program had long contended that CMS’s payment reductions disproportionately impacted their ability to provide essential care to economically disadvantaged populations. By invalidating CMS’s reimbursement policy, the Court reaffirmed that federal payment methodologies must meet certain statutory processes that support transparent and non-discriminatory reimbursement practices.
Following the ruling, CMS issued the 2023 Final Rule to remedy previous underpayments by providing a lump-sum reimbursement to 340B participating hospitals for the period spanning 2018 to 2022. CMS, however, did not extend this corrective measure to MAOs, which negotiate contracts independently with healthcare providers.[2] This regulatory gap has resulted in legal disputes over whether MAOs bear a similar obligation to rectify past underpayments.[3] Given the absence of explicit regulatory directives, hospitals and MAOs are now engaged in legal disputes with potentially far-reaching consequences for reimbursement policy and contractual obligations.
Medicare Advantage Regulatory Framework – Federal Law Considerations
Medicare Advantage (Part C) plans operate under federal law (42 U.S.C. § 1395w-22 et seq.), with regulations from the Centers for Medicare and Medicaid Services (CMS) (42 C.F.R. § 422.504) mandating that MAOs contracting with CMS must provide benefits that are “at least as favorable” as those under traditional Medicare Fee-for-Service (FFS) structure. Hospitals may argue that this federal requirement implies an obligation for MAOs to reimburse 340B providers at corrected rates, particularly in light of CMS’s 2023 Final Rule. They may further contend that CMS’s failure to extend the same correction to MAO reimbursements constitutes an arbitrary and capricious action under the Administrative Procedure Act (APA), as it undermines the statutory requirement for parity between MAO and FFS coverage.
However, MAOs will likely argue that CMS regulations do not require payment parity with 340B participating hospitals. Moreover, because reimbursement rates are determined through contractual agreements rather than statutory mandates, CMS’s decision to correct 340B payments for FFS Medicare does not automatically extend to MAOs. This position is supported by cases such as Caris MPI v. UnitedHealthcare, Inc. (5th Cir. 2024) and Wise v. UnitedHealthcare of Florida, Inc. (M.D. FLA. 2019), where courts upheld MAOs’ autonomy in structuring reimbursement rates with providers, distinguishing them from traditional Medicare FFS.
At their core, these legal disputes revolve around the interpretation of contractual terms and obligations. The outcomes hinge on how courts construe key provisions governing pricing, reimbursements, and program compliance. Provider agreements that specify reimbursement at the Medicare allowable rates and in accordance with Medicare Advantage rules, laws and regulations, raises the question of whether CMS’s retroactive correction of 340B underpayments creates contractual obligation for MAOs to make corresponding adjustment, even in the absence of explicit regulatory mandates. Hospitals argue that references to Medicare rates imply a duty for MAOs to adhere to CMS’s updated methodology. See Baptist Health v. Health Value Management, Inc. (2024); see also University of Alabama Hospital v. UnitedHealthCare of Alabama, Inc. et al., (2024). However, MAOs will likely assert that their contractual obligations are limited to the reimbursement rates “in effect at the time services were rendered.” Further, because CMS’s remedy was issued post hoc, MAOs may contend that it does not alter historical payment obligations, thus precluding any duty to make retrospective adjustments. In support, MAOs may cite cases like UnitedHealthcare Ins. Co. v. Becerra, (2021) and Bowen v. Georgetown University Hospital (1988), where courts sided with insurers, concluding that CMS’s policy guidance did not mandate retroactive application. Moreover, many MAO contracts employ independently negotiated rate structures rather than directly incorporating Medicare payment policies, further complicating claims of automatic applicability.
State Law Considerations
The specific language in provider contracts is critical in determining payment obligations. Courts will assess whether MAOs agreed to pay Medicare-equivalent rates, whether contracts reference CMS payment policies, and whether such references include retroactive corrections. If contract language is ambiguous, courts may construe terms against the drafter (usually the MAO) under standard rules of contract interpretation.
Further, most states recognize an implied duty of good faith and fair dealing in contracts. Hospitals may argue that MAOs acted in bad faith by refusing to adjust payments after CMS corrected its 340B policy. MAOs, however, will likely assert that they followed their contracts as written and that good faith does not translate into retroactive payments unless explicitly stated. Courts have previously ruled in Empire HealthChoice Assurance, Inc. v. McVeigh, (2006) that contract disputes in federally regulated insurance contexts require explicit statutory or regulatory guidance to override private agreements.
Hospitals may also bring equitable claims, asserting that MAOs benefited financially from lower reimbursement rates while hospitals unfairly bore the losses. In Maine Community Health Options v. United States, (2020), the Supreme Court recognized the federal government’s obligation to honor payment commitments under statutory frameworks, which may be used to argue that similar obligations apply to MAOs operating under Medicare Advantage. Under quantum meruit (fair value claims), hospitals might argue that they provided services at a discounted rate due to an unlawful payment cut and should be reimbursed at corrected rates. MAOs will likely counter that they were not unjustly enriched, since they paid in accordance with contractual agreements at the time.
MAOs may also argue that federal law preempts state contract law in Medicare Advantage disputes, which could limit hospitals’ ability to seek remedies under state law. Prior cases, such as UnitedHealthcare Ins. Co. v. Becerra (2021) and Empire Health Foundation v. Becerra (2022), illustrate courts’ deference to clear CMS regulatory guidance in contractual disputes. Courts deferring to CMS’s lack of explicit guidance requiring retroactive MAO reimbursements, could further limit hospital recourse under state contract laws.
Additionally, statutes of limitations could play a role in determining the viability of hospitals’ claims. Federal law typically imposes a six-year statute of limitations for claims involving Medicare payments, while state contract laws vary widely, ranging from three to ten years depending on the jurisdiction. Further, some contracts contain “claim reconciliation” provisions, which establish a time limit for providers to submit adjustments or appeals for payment discrepancies. MAOs may use these statutory and/or contractual deadlines as a defense, arguing that claims for underpayments made in earlier years are time-barred, limiting hospitals’ ability to recover retroactively. Hospitals seeking reimbursement must be mindful of these limitations, as failure to file claims within the applicable timeframe could preclude recovery.
Given the complex interaction between federal administrative law and state contract enforcement mechanisms, courts will need to assess whether claims fall within permissible legal timeframes or if they are procedurally barred due to expiration of applicable statutes of limitations. In Heckler v. Community Health Services of Crawford County, (1984), the Supreme Court examined equitable tolling in Medicare disputes, a concept that could be relevant in assessing whether hospitals’ claims should be extended due to CMS’s prior miscalculations. In Sebelius v. Auburn Regional Medical Center, (2013), the Supreme Court ruled that administrative appeals involving Medicare payments are subject to strict statutory deadlines, which could be relevant in determining whether hospitals’ reimbursement claims are time-barred.
Further, if MAOs knowingly underpaid hospitals despite CMS’s acknowledgment that its 340B reductions were unlawful, they could face claims under state bad faith insurance laws or deceptive trade practice statutes.
Budget Neutrality and Fiscal Considerations
A critical consideration in this area is CMS’s budget neutrality principle, which offsets the cost of the 340B reimbursement correction by reducing future outpatient payments to hospitals. CMS’s approach to correcting underpayments for 340B participating hospitals adhered to this principle by offsetting increased payments with corresponding reductions. However, the application of budget neutrality in the Medicare Advantage context is less defined, raising questions about how funding structures impact reimbursement obligations. Because the corresponding reductions are spread out over sixteen (16) years, it raises questions as to how the MAOs might benefit from this split process. However, CMS plans to adjust premiums for reductions beginning in 2026, so MAOs will likely argue they do not benefit from the split process. See CMS’s January 10, 2025 Advance Notice.
Hospitals may contend that MAOs should apply a similar adjustment framework, given that CMS’s corrective action was internally funded within the Medicare system. Without requiring MAOs to adjust payments, financial disparities could be further exacerbated, disproportionately impacting 340B hospitals already burdened by CMS’s budget neutrality offsets.
Conversely, MAOs may highlight that CMS’s corrective action did not allocate funding for retroactive adjustments to MAOs. MAOs operate within a fixed payment framework, with capitation rates determined by CMS based on actuarial assumptions. If compelled to issue retroactive payments to hospitals, MAOs may argue that such obligations would disrupt the actuarial stability of their reimbursement models and create an unanticipated financial burden. Unlike traditional Medicare, where CMS can implement budget-neutral adjustments across the broader system, MAOs do not have a direct mechanism to recover additional expenditures incurred due to retroactive payment obligations. They argue that imposing reimbursement obligations without corresponding federal compensation would constitute an unfunded mandate, contravening CMS’s budget neutrality principle. This raises other complex questions regarding whether requiring MAOs to adopt CMS’s revised methodology would necessitate a recalibration of their funding structure, potentially leading to increased premiums or reduced benefits for beneficiaries.
Key Takeaways – Strategic Considerations for Hospitals and MAOs
Hospitals pursuing retroactive reimbursement from MAOs should undertake a detailed review of their agreements with those MAOs to ascertain whether their reimbursement provisions provide a contractual basis for such claims. Key considerations include explicit references to Medicare FFS methodologies, provisions regarding compliance with CMS payment policies, and any clauses addressing retroactive adjustments. In cases where contractual language supports reimbursement at corrected Medicare rates, hospitals may pursue breach of contract claims or seek recovery for unjust enrichment, particularly where MAOs benefited from reduced payments now deemed unlawful.
Conversely, MAOs should conduct a rigorous evaluation of their contractual obligations to determine the extent to which retroactive adjustments may be required. If agreements do not explicitly incorporate Medicare FFS revisions, MAOs may argue that any retroactive payment obligations fall outside the scope of their contractual responsibilities.
Consequently, both hospitals and MAOs should consider negotiating more precise contractual terms regarding the applicability of CMS rate adjustments—particularly those with retroactive implications—to minimize financial uncertainty and potential disputes.
Conclusion
The battle over 340B reimbursement through MAO-hospital relationships highlights the complex interplay between contractual obligations, regulatory policies, and financial feasibility under Medicare’s budget neutrality framework. As this conundrum continues to unfold, hospitals and MAOs must carefully assess their contractual positions and financial exposure while remaining attuned to judicial and regulatory developments that will shape the future of 340B reimbursement obligations.
ENDNOTES
[1] The court reasoned that vacatur would be highly disruptive due to the complexity of the Medicare system and potential budget neutrality concerns.
[2] Per 42 U.S.C. § 1395w-24(a)(6)(B), CMS is prohibited from requiring a particular payment structure in contracts between MAOs and providers.
[3] CMS’s 2023 Final Rule restates that MAOs must pay non-contract hospitals at least the amount such hospitals receive under Original Medicare payment rules but fails to comment on MAOs obligations with respect to contracted hospitals. See 88 FR 77150, 77184.
Alabama Appellate Court Appears Poised to Deliver Big Win for Cannabis Commission
Longtime readers of Budding Trends (and there are dozens of you) know that I have been saying over and over recently that – as counterintuitive as it may sound – the fastest way to get Alabama’s medical cannabis program launched is through the court system.
At times did it feel like I was trying to speak it into existence in the face of facts on the ground? Look, I majored in history not psychology. But whether I was well-informed, clairvoyant, or just lucky, it appears as though we had our first breakthrough in Alabama’s medical cannabis program, and it came courtesy of the court system.
What Happened?
Yesterday the Alabama Court of Civil Appeals heard arguments in an appeal from the Montgomery County Circuit Court hearing all of the medical cannabis cases. Specifically, the court focused its inquiry on two questions: (1) does the circuit court have jurisdiction to entertain the claims of Alabama Always, an applicant for an integrated facility license who has not been awarded a license, against the Alabama Medical Cannabis Commission, and (2) does the temporary restraining order halt the AMCC from taking any steps towards issuing integrated facility licenses?
Over the course of three hours, it became apparent to the author that the court was prepared to rule in the AMCC’s favor on both issues. I got the sense that the panel believed disappointed applicants should have exhausted their administrative options – including, most importantly here, participating in the investigative hearing process – before resorting to litigation. It also seemed clear that the panel believed the existing TRO was unnecessarily broad and should be modified to, at a minimum, call for the AMCC to conduct investigative hearings and then perhaps refrain from actually issuing the licenses until further word from the court.
What’s Next?
As always, what happened is only part of the analysis, and often the harder question is what happens next. I believe the tone and substance of the questions from the court very well may impact the next steps.
Less than two hours after the oral argument in the Alabama Court of Civil Appeals, the circuit court had a status conference to discuss steps moving forward in the various medical marijuana cases currently pending. The court set several briefing schedules and appears to be taking steps to move the cases along. It will be interesting to see whether the circuit court, which has not been moving with all deliberate speed, will now begin to move more quickly with a decision from the appeals court looming.
Then, there’s the ole “legislative fix.” As I wrote previously:
Looking around and finding themselves in this maze, many have turned to the Alabama Legislature for help. This is nothing new to those who have been working on medical cannabis since it was enacted into law in 2021. Like clockwork, every year when a new legislative session approaches, certain dissatisfied applicants use the specter of a “legislative fix” in an effort to bring other stakeholders to the table to find a compromise. The problem with finding a compromise under the existing law is that limited licensing is a zero-sum proposition and there is very little chance all applicants will agree to the same rules.
True to form, and as we wrote earlier this week, Alabama Senate Bill 72 dropped last week. It would, among other things, (1) expand the total number of integrated licenses from five to seven; (2) shift the authority of issuing licenses from the AMCC to a consultant; and (3) shield the decision from any judicial review. At the time, I wrote that “this bill has little chance of becoming law as drafted.” Having now heard oral arguments and believing that the court may expedite this process, I think the chances are even lower.
It’s faint, but I believe that just might be light at the end of this long and winding tunnel. It’s impossible to know when the court will hand down its ruling in this case. Prognosticators predict a ruling in late March or early May. As always, we’ll stay on top of this so you don’t have to.
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Count Your Eggs Before They Crack: Coverage Options in the Event of a Poultry Crisis
The recent surge in the cost of eggs because of the avian influenza (bird flu) is impacting many consumers. Multiple grocery store chains have implemented limitations on the amount of eggs a customer can buy and restaurants have imposed surcharges on menu items with eggs. Consumers, however, are not the only ones feeling the economic impact of the ravage to poultry flocks, poultry farmers and producers are also feeling the financial strain. As we have explained in the past, insurance can help mitigate the risks to poultry farmers and producers associated with these kinds of events. Here, we explore how some types of coverages can help protect poultry farmers and producers who face unexpected events, such as those stemming from illness or contamination of a flock, that disrupt operations or cause a business loss.
Poultry-Related Risks Coverage
Poultry farm insurance is meant to protect poultry farming operations from an array of losses because of damages to equipment and property; and the death, injury or illness of the birds. Insurance products specific to poultry risks can also cover animal loss and loss of production due to diseases. Poultry insurance can also protect against unexpected mortality (like sudden death due to a farming accident or natural disaster), theft, contamination and flock repopulation costs. Insurance for poultry farmers and producers is also available in certain livestock policies, which also cover some risks associated with poultry farming.
Disease & Contamination Coverage
Disease or contamination insurance covers losses resulting from the outbreak of diseases, like bird flu and salmonella, that can affect the egg-production process. Some policies include coverage for flock culling (the process of removing birds from a flock and often later replacing them) to prevent the spread of a disease or illness within a flock. In some cases, coverage may even be available for costs of treatments for ill birds and for sanitizing a poultry farm before bringing new birds in. Disease or contamination coverage may also cover costs for poultry farmers and producers who face egg recalls and government mandates to destroy an egg supply due to contamination or suspected contamination.
Business Interruption Coverage
Business interruption coverage protects against income losses. Often, this type of insurance also covers the additional costs of keeping a business running after an interruption caused by events like supply chain issues, natural disasters and potential disease outbreaks. In some instances, business income insurance also covers lost income due to direct loss of a poultry farming operation. Some insurance offerings also protect against risk of loss due to market conditions that impact livestock businesses and owners considering events like the bird flu. For example, “gross margin” insurance policies, which are part of a federal risk-management program, protect against the loss of gross margins when costs to feed and care for animals exceeds the market value of the animals. Notably, however, business interruption coverage may require a showing of direct physical loss to insured property, which may vary depending on the policy. In this regard, insurers might also attempt to apply pro-insurer rulings from cases arising from the Covid-19 pandemic that interpret the meaning of “physical loss or damage” to limit what otherwise would have been a covered business interruption loss arising from bird flu-related issues. Instances of such insurer conduct have already been seen in cases involving smoke damage from California wildfires.
Key Takeaways
Poultry farming involves many unique risks, from disease outbreaks and egg recalls, to devastation resulting from severe weather conditions. For that reason, it is key for farmers and producers in the poultry industry to understand the various insurance products and unique elements associated with events that can impact their flocks and their finances. As a best practice, poultry businesses should assess potential risks of loss early and identify which insurance offerings can maximize their coverage options if their flock and farm operations are impacted by an event that leads to a loss.
Alundai J. Benjamin also contributed to this article.