Regulatory Playbook | Pillsbury Law
Regulatory Playbook
Inside analysis direct from Washington, DC
This links to the home page

Regulatory Playbook

Inside analysis direct from Washington, DC

Welcome to Pillsbury’s Regulatory Playbook, where you’ll find news and insights on the regulatory trends that are driving markets and shaping businesses. Here, Pillsbury’s market-leading regulatory group illuminates critical developments at the intersection of law and policy. If you need to know what’s happening, why it’s happening and how to respond, consult the Playbook.

 

Trending Issues

Treasury Department and IRS Issue Final Regulations and Other Guidance on the Direct Pay Election under Section 6417 of the Internal Revenue Code
03.18.2024

Under Section 6417 of the Internal Revenue Code (IRC), “applicable entities” and certain electing taxpayers can elect to treat various renewable energy tax credits as payments against tax, essentially making those credits refundable as direct payments from Treasury (the “direct pay election”). Proposed and temporary regulations relating to the direct pay election were issued by Treasury and the Internal Revenue Service (IRS) on June 14, 2023, and were published in the Federal Register on June 21, 2023 (the “Prior Regulations”). After considering numerous comments submitted by interested parties with respect to the proposed regulations, Treasury and the IRS issued final regulations on the direct pay election on March 5, 2024, which were published in the Federal Register on March 11, 2024 (the “Final Regulations”).


SEC Adopts Long-Anticipated Final Rules on Climate-Related Disclosure Requirements
03.14.2024

On March 6, 2024, the Securities and Exchange Commission (SEC) adopted final rules imposing new climate-related disclosure requirements on domestic and foreign registrants with respect to their annual reports and registration statements ( “Final Rules”). The Final Rules scaled back many of the proposals from 2022, including the elimination of certain aspects of the greenhouse gas (GHG) emission disclosure mandates, modification of the financial statement disclosure requirements, removal of some of the more granular disclosure requirements, extension of certain phase-in periods, and elimination of Scope 3 GHG emissions disclosure requirements.


FinCEN’s Proposed Rule to Regulate Investment Advisers: The Questions Industry Should Be Following
03.14.2024

On February 15, 2024, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking to regulate specified investment advisers as “financial institutions” under the Bank Secrecy Act (BSA) (the “Proposed Rule”). Investment advisers have presented a target for anti-money laundering (AML) regulation for a decade, with an earlier 2015 rulemaking effort failing to advance. The 2021 U.S. Strategy on Countering Corruption again highlighted the investment adviser sector, and the Treasury Department’s 2024 Investment Adviser Risk Assessment helped inform the Proposed Rule.


U.S. Fish & Wildlife Service Rolls Out BGEPA General Permit, Streamlining Wind and Power Line Project Approvals
03.13.2024

On February 12, 2024, the U.S. Fish and Wildlife Service (USFWS) published a final rule revising the eagle permit program under the Bald and Golden Eagle Protection Act (BGEPA). 89 Fed. Reg. 9920. The new rule streamlines the issuance of project-specific incidental take permits by establishing, for the first time, general permits for certain eligible wind energy generation and power line infrastructure projects. The rule, codified at 50 C.F.R. Parts 13 and 22, also improves the project-specific permitting process for those projects that would not otherwise qualify for the general permit by removing the requirement that permits include a specific take limit and third-party monitoring provisions for wind projects. The new permitting regime can potentially result in significant time and cost savings for eligible projects.
 

Congress Continues to Address AI in Bipartisan Fashion, Launching House AI Task Force as Latest Step
03.13.2024

On February 20, Speaker Mike Johnson (R-LA-4) and Democratic Leader Hakeem Jeffries (D-NY-8) revealed the creation of a bipartisan Task Force on Artificial Intelligence, to be chaired by Congressman Jay Obernolte (R-CA-23) and Congressman Ted Lieu (D-CA-36).


U.S. Courts of Appeals Block Two Legal Efforts to Curb DEI Initiatives
03.13.2024

The first week of March 2024 saw two U.S. Courts of Appeals separately block efforts to restrict initiatives designed to promote diversity, equity, and inclusion (DEI). Although each court decision was grounded in provisions of the U.S. Constitution, one ruling rested on the First Amendment in affirming a preliminary injunction against an anti-DEI statute, while the other applied Article III standing principles to affirm dismissal of an advocacy group’s challenge to a corporate initiative designed to increase its pipeline of diverse employees.


Conflicting Court Rulings on Subchapter V Eligibility Leave Small Businesses in Limbo
03.12.2024

In 2019, Congress passed the Small Business Reorganization Act (SBRA), which created subchapter V to chapter 11 of the Bankruptcy Code. Subchapter V is designed to create a streamlined, efficient and cost-effective way for smaller businesses to reorganize in a way that increases the likelihood of investors retaining their ownership. For example, subchapter V eliminates the absolute priority rule and instead allows the debtor to confirm, over the objection of creditors, a plan whereby equity retains ownership so long as it does not unfairly discriminate and is fair and equitable.


Sweden’s NATO Membership Is Official! Significant Business Opportunities Now Available to Swedish Companies
03.11.2024

On March 7, 2024, Sweden officially joined the North Atlantic Treaty Organization (NATO) after Hungary’s parliament cleared the last hurdle to Sweden’s membership. Sweden and Finland began pursuing NATO membership following Russia’s invasion of Ukraine in 2022. Finland joined NATO in April 2023. Sweden’s accession, however, was met with significant opposition from Hungary and Turkey based on geopolitical concerns. NATO is an alliance of over 30 countries committed to working together to guarantee the freedom and security of its members through various political and military means. The admission of Finland and Sweden into NATO is monumental because it represents the most significant expansion of the alliance since the addition of eastern European countries after the Soviet Union collapsed in 1991.


The Ayes Have It: Dartmouth Men’s Basketball Team Is the First Student-Athletes to Unionize
03.08.2024

On March 5, 2024, the Dartmouth Men’s Basketball Team voted 13-2 in favor of being represented by SEIU Local 560 (the “Union”). This vote follows the decision issued by Region 1 of the National Labor Relations Board (NLRB) that student-athletes are “employees” within the meaning of the National Labor Relations Act, as discussed in detail in our prior alert.


With Federal Efforts Stalled, States Take the Lead in Regulating the Use of Artificial Intelligence in Political Advertising
03.08.2024

In the two months since we published our article on the use of artificial intelligence in political advertising, efforts to legislate and regulate the use of such media at the federal level in Congress and at the Federal Election Commission have largely stalled. States, however, have stepped in to fill the void in advance of the November 2024 general election. With eight months to go before that election, at least 40 states have addressed the use of AI in political advertising, with dozens of bills pending in state legislatures and laws on the books in a handful of states.


Delaware Court of Chancery Invalidates Certain Board Control Rights Commonly Found in Stockholder Agreements
03.05.2024

Last month, the Delaware Court of Chancery issued a strong reminder that (1) when prevalent market practice is pitted against statutory law, it is the statute that will prevail in Delaware courts, and (2) the bedrock of Delaware law is that the board of directors manages the business and affairs of a corporation, not the stockholders.


Another Brick in the Wall: NCAA Enjoined from Enforcing NIL Rules Prohibiting Student-Athletes from Negotiating with Third Parties
03.05.2024

On February 23, 2024, U.S. District Judge Clifton Corker issued a preliminary injunction that prohibits the National College Athletic Association (NCAA) from enforcing any rules to the extent those rules “prohibit[] student-athletes from negotiating compensation for [name, image, or likeness (“NIL”)] with any third-party entity,” including boosters and booster-led collectives.


Four New State Consumer Privacy Laws Are Slated to Take Effect in 2024
03.04.2024

Despite growing momentum, the United States remains one of the largest nations without a comprehensive federal privacy law. This has led to a significant uptick in state-level privacy legislation since the 2018 enactment of the California Consumer Privacy Act. In 2023, alone, four consumer privacy laws went into effect in Colorado, Connecticut, Virginia and Utah and eight new states enacted similar laws.


USAID’s Proposed AIDAR Clause Protects Children from Sexual Exploitation and Abuse
03.01.2024

On February 28, 2024, the U.S. Agency for International Development (USAID) published a proposed rule to strengthen and consolidate USAID-specific requirements to prevent exploitation and abuse of children. If adopted, the proposed rule will add subpart 722.70, Safeguarding Against Exploitation, Sexual Abuse, Child Abuse, and Child Neglect, to the Agency for International Development Acquisition Regulation (AIDAR). It will also add a new AIDAR clause in Part 752 to enforce the requirements of subpart 722.70, to be included in USAID contracts and subcontracts.


New York District Court Holds Teaming Agreements May Be Enforced
02.29.2024

The U.S. District Court for the Southern District of New York (Crotty, J.) partially denied a motion to dismiss several claims brought by BAE Systems asserting a breach of contract by L3 Harris challenging, among other things, the enforceability of the parties’ teaming agreement. The contract relates to a Department of the Navy prime contract won by L3 Harris. BAE Systems Information and Electronics System Integration Inc. v. L3 Harris Cincinnati Electronics Corporation, S.D.N.Y. 23-cv-01860 (Feb. 9, 2024).


Reviewing Key CHIPS Act Implementation Milestones to Deliver Opportunities for the Semiconductor Supply Chain
02.29.2024

The CHIPS and Science Act, enacted in August of 2022, appropriated $52 billion to expand the U.S. semiconductor market—accounting for research, development and ultimately domestic manufacturing of current and next-generation semiconductor technology. To carry out this mission, the Department of Commerce established the CHIPS Program Office, to administer the funding opportunities for manufacturing under the Act, and the CHIPS R&D Office, to carry out the research and development activities under the Act. In addition to the CHIPS Office, other agencies have been authorized to carry out CHIPS Act programming—including the Department of Defense (DoD), which is administering the Microelectronic Commons, a lab-to-fab pathway for microelectronic products to overcome the “valley of death” and reach commercialization. The CHIPS Offices, as well as the DoD, met several milestones in 2023 and the early months of 2024.


IRS Ramps Up Audits on Corporate Aircraft Use for High-Net-Worth Individuals and Affiliated Entities
02.29.2024

The Internal Revenue Service (IRS) is continuing to increase scrutiny on high-net-worth individuals, large corporations and complex partnerships. On February 21, 2024, the IRS announced that it plans to begin dozens of audits on corporate aircraft and specifically focus on the issue of whether the use of the aircraft is being properly allocated between business and personal. As part of the announcement, IRS Commissioner Danny Werfel stated that “personal use of corporate jets and other aircraft by executives and others have tax implications, and it’s a complex area where IRS work has been stretched thin. With expanded resources, IRS work in this area will take off. These aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities.”


Cal/OSHA Approves Stricter Standards for Occupational Exposure to Lead
02.27.2024

On February 15, 2024, the California Occupational Safety & Health Standards Board approved revisions to regulations for occupational exposure to lead. (Employers in the construction industry are governed by 8 C.C.R. section 1532.1, and employers in general industry are governed by 8 C.C.R. section 5198.) The revisions are now with the Office of Administrative Law and are expected to go into effect on January 1, 2025.


Confronting Regulatory Fluidity in the Post-Maui and Post-Sackett World of Water Regulation
02.23.2024

The year 2023 will go down as a landmark year for water regulation—not because certainty was achieved with the ever-elusive, indefinable “waters of the U.S.” (WOTUS), but rather because of the regulatory whiplash that occurred within that 12-month period. In its wake, 2024 promises to be a year of dealing with the fallout—continued legal challenges, uncertain and inconsistent application of regulations, testing the limits of Supreme Court decisions—which have created a “regulatory fluidity” in whether and to what degree waters may be treated as jurisdictional under the Clean Water Act (CWA) and what regulations may apply.


China Passes Significant Amendments to Company Law
02.21.2024

On December 29, 2023, the Standing Committee of the National People’s Congress of the People’s Republic of China (PRC) passed the final version of the long-awaited new Company Law (2024 Company Law) after deliberating on four versions of draft amendments. The new law will come into effect on July 1, 2024. The 2024 Company Law deletes 16 provisions in the latest version of the Company Law, which was amended in 2018, and makes substantial amendments to over 110 provisions. This is the sixth round of amendments and includes the most amendments to the Company Law since its initial introduction in 1993.


NLRB Shoots Its Shot: Dartmouth Basketball Players Deemed Employees, Allowed to Hold Union Election
02.20.2024

On February 5, 2024, Region 1 of the National Labor Relations Board (NLRB) issued a 26-page decision finding that members of the Dartmouth men’s basketball program (the “Players”) are “employees” within the definition of the National Labor Relations Act (NLRA) because they perform work under the direction of their employer (Dartmouth) for compensation. The Region’s decision directs an election to take place as to whether the Players will be represented by Local 560 of the Service Employees International Union (the Union). The Union has represented other employees at Dartmouth for decades, including, inter alia, employees in Dartmouth’s facilities, operations and security departments.


DoD Publishes Final Rule Implementing Executive Order 14005
02.16.2024

On February 15, 2024, the Department of Defense (DoD) issued a final rule that amends the Defense Federal Acquisition Regulation Supplement (DFARS) and imposes higher U.S. and qualifying country content requirements for certain DoD procurements. As we discussed at the time of the proposed rule, this represents the U.S. government’s overall push to ensure that products and services it acquires are manufactured domestically. The final rule implements President Biden’s January 28, 2021 Executive Order, “Ensuring the Future Is Made in All of America by All of America’s Workers,” and follows a similar rule amending the applicable Federal Acquisition Regulation (FAR) clauses published on March 7, 2022. The DoD’s final rule is effective as of February 15, 2024—the date of its publication.


Congress and the FCC Seek to Protect Americans from Robocalls and Robotexts Using AI-Generated Content
02.16.2024

The federal government in recent weeks has taken steps to protect Americans from robocalls and robotexts that use artificial intelligence (AI)-generated content. Bad actors are increasingly using AI to fool consumers into thinking that the caller or texter is a real person, and certain AI technologies have become sophisticated enough to hold a conversation with the caller. To this end, the Federal Communications Commission (FCC) issued a Notice of Inquiry in an effort to better understand how AI technologies are currently being used in robocalling and robotexting and how they might be used in the future. In the most recent high-profile example of using AI-generated content in a robocall, New Hampshire residents received a call purportedly from President Joe Biden telling them to stay home and not vote in the state’s primary election. The call was not authorized by President Biden or his campaign, nor did it include a legitimate message from the president but instead was a so-called deepfake using the president’s voice. The FCC acted swiftly in the wake of the New Hampshire incident by issuing a cease-and desist letter to the company that it suspected of originating the illegal calls and by adopting a Declaratory Ruling to clarify the applicability of certain of its rules to robocalls and robotexts that use AI-generated content. U.S. Rep. Frank Pallone, Jr. (D-NJ), ranking member of the U.S. House Committee on Energy and Commerce, which has jurisdiction over the FCC and telecommunications issues, introduced legislation that seeks to require a disclosure for any robocall that uses AI to emulate a human.


Federal Circuit Reverses COFC Protest Decision on Standing
02.16.2024

In REV, LLC v. United States, a veteran-owned small business appealed a Court of Federal Claims (COFC) decision that the protester lacked standing to challenge the evaluation of multiple awardees, after being excluded from the competition after Phase 1 of a two-phase qualifying process under the Department of Veteran Affairs (VA) Twenty-One Total Technology-Next Generation (T4NG) multi-award Indefinite Delivery, Indefinite Quantity (IDIQ) on-ramp procurement. On January 29, 2024, the Federal Circuit reversed the COFC decision.


Unplugging the Green Light on California’s New Climate Disclosure Laws
02.09.2024

On January 30, 2024, a coalition of business organizations—including the U.S. Chamber of Commerce, American Farm Bureau Federation, Los Angeles County Business Federation, Central Valley Business Federation and the Western Growers Association—sued the State of California to prevent the California Air Resources Board (CARB) from enforcing California’s recently enacted climate disclosure laws—Senate Bills 253 and 261. The lawsuit, filed in the Central District of California, mounts the first legal challenge to these new, controversial laws and argues, among other things, that the laws’ requirements unconstitutionally compel speech by business entities in violation of the First Amendment and are otherwise precluded by federal law.