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 IssuesCross-Border Data Transfer Mechanisms and Requirements in China
In recent years, alongside the rapid development of the digital economy and the concomitant increase in data generation, collection, processing and monitoring in the People’s Republic of China (PRC or China), the Chinese government has accelerated efforts to establish a robust legal framework for data protection. Over the past five years, China has promulgated several major data protection laws, including the Cybersecurity Law (CSL) (effective from June 1, 2017), the Personal Information Protection Law (PIPL) (effective from November 1, 2021) and the Data Security Law (DSL) (effective from September 1, 2021), together with a series of implementation regulations and administrative guidance. These laws and regulations, particularly with respect to requirements on the processing of personal information and cross-border data transfer, pose significant challenges and compliance obligations for multinational companies when conducting business in and with China. This article outlines our observations of the mechanisms and practice of cross-border transfer of personal information under China’s current legal framework.
Don’t Let Bank Uncertainty Delay Payroll: Considerations for Employers
Amid bank uncertainty, our Employment and Executive Compensation and Benefits practices address frequently asked questions regarding potential consequences for delayed payroll, 401(k) and health premium payments, the impacts of furloughs and reductions in force and more.
EPA Proposes Stringent Regulation of PFAS In Drinking Water
On March 14, 2023, the EPA proposed a National Primary Drinking Water Regulation under the Safe Drinking Water Act to establish Maximum Contaminant Levels (MCLs) for six per- and polyfluoroalkyl substances (PFAS).
Universities Prepare for End of Affirmative Action
In October 2022, the Supreme Court heard argument in two cases challenging the use of race in college admissions: Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 211 L. Ed. 2d 604, 142 S. Ct. 895 (2022), and Students for Fair Admissions, Inc. v. Univ. of N. Carolina, 142 S. Ct. 896 (2022) (SFA Cases). Based on the Justices’ questions, many observers believe that the Court will overturn prior precedent and hold that schools may no longer consider race in college admissions, even as part of a holistic review. A decision in the SFA Cases is expected to be issued in June 2023.
Department of Energy Announces $6 Billion Funding Opportunity for Industrial Decarbonization and Emissions Reduction Projects
On March 8, 2023, the Department of Energy (DOE) announced approximately $6 billion in funding to accelerate decarbonization projects in energy intensive industries and provide American manufacturers a competitive advantage. Funded by the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA), the Industrial Demonstrations Program will focus on revolutionizing energy intensive industrial processes with the highest emissions, where decarbonization technologies will have the greatest impact. Industries that represent the greatest opportunities include iron, steel, steel mill products, aluminum, cement, concrete, glass, pulp, paper, industrial ceramics and chemical products.
New Biden Administration Cyber Strategy Proposes Dramatic Shift in Order to Hold Software Developers Liable for “Insecure” Software
On March 2, 2023, the Biden administration released its National Cyber Security Strategy to create a more defensible, resilient and value-aligned digital ecosystem which includes, among other priorities, the administration’s efforts to make software firms liable for system insecurities.
China Publishes Measures on Standard Contract for Cross-border Transfer of Personal Information
The Cyberspace Administration of China (CAC) issued the final version of the Measures on the Standard Contract for the Cross-border Transfer of Personal Information (Standard Contract Measures) on February 24, 2023, which includes a template standard contract (Standard Contract). The Measures will take effect on June 1, 2023, but set forth a six-month grace period until December 1, 2023, to provide companies with time to take actions for compliance.
New UK GDPR Reform Bill Published
Businesses already face an uphill struggle keeping pace with fast changing and numerous new data laws being passed in multiple U.S. states as well as countries around the world. The one silver lining has been the emergence of a recent trend of basing, to some extent, many of these new laws on the GDPR. This means that one way forward has been to look to build upon effort already expended on creating and administering GDPR compliance frameworks, albeit with updating needed for relevant recent changes or enforcement. The UK government changes therefore may well leave some feeling nervous. The changes to the UK GDPR will have to be scrutinized after the post-parliamentary readings to assess final impact of the Data Protection & Digital Information (No.2) Bill (DPDI2) (e.g., regarding fines, AI, cookies, transfers, legitimate interests, records of processing activities (ROPA), data protection officers (DPOs), Data Protection Impact Assessments (DPIAs), etc.). We will also have to see how the EU responds, as any removal of adequacy status will add further complications to EU-UK data transfers. Any business with UK operations, customers, suppliers or partners will need to freshly review and consider changes to its policies, documents and procedures to account for DPDI2.
Seeking Certainty: Redefining “Waters of the United States”
Making good on a promise to redefine the Clean Water Act (CWA) term, “Waters of the United States” or WOTUS, on January 18, 2023, the latest revised definition of “Waters of the United States” was published in the Federal Register by the U.S. Army Corps of Engineers (ACOE) and the Environmental Protection Agency (EPA) at 86 FR 3004. The effective date of this rule will be March 20, 2023. Remarkably, this action marks the fourth time in eight years that these agencies have attempted to craft a workable definition of WOTUS and thereby affect far-ranging impacts on everything from infrastructure and agriculture to private land use. While the agencies indicate that the newly redefined WOTUS is, in many ways, a return to the longstanding regulatory regime, there are several notable changes.
Department of Energy Opens Second Award Cycle for Civil Nuclear Credit Program
On March 2, 2023, the Department of Energy (DOE) announced the opening of the second round awards cycle of the Civil Nuclear Credit (CNC) Program and released application guidance. The application guidance describes the timelines, deliverables and supporting information needed to apply for CNC certification and to submit sealed bids to receive allocated credits.
New DOJ Clawback Policy Brings Compensation and Employment Questions Front and Center for Companies
On March 2, 2023, Deputy Attorney General (DAG) Lisa Monaco announced a new Criminal Division policy for Department of Justice (DOJ) prosecutors to consider the implementation of compensation clawback policies as an important factor in corporate criminal resolutions. This policy is aimed at incentivizing both public and private companies to incorporate clawback clauses into contracts and compensation policies for employees, officers and directors.
New UK GDPR Proposals Incoming
Businesses already face an uphill struggle keeping pace with fast changing and multiple new data laws being passed in multiple U.S. states as well as numerous countries around the world. The one silver lining has been the emergence of a recent trend of basing, to some extent, many of these new laws on the GDPR. This means that one way forward has been to look to build upon effort already expended on creating and administering GDPR compliance frameworks, albeit with updating needed for relevant recent changes or enforcement. The current efforts of the UK government therefore may well leave some feeling nervous. The details of any proposed changes to the UK GDPR will have to be scrutinized to assess impact (and to see if Data Protection & Digital Information Bill (DPDI) proposals regarding fines, cookies, data protection officers (DPOs), Data Protection Impact Assessments (DPIAs), etc. survive). We will also have to keep an eye on how the EU responds, as any removal of adequacy status will add further complications to EU-UK data transfers. One thing that is for certain is that any business with UK operations, customers, suppliers or partners will need to freshly review and likely make changes to its policies, documents and procedures to account for any changes this year.
CHIPS Act Funds Start to Flow
On February 28, 2023, the first funding opportunity opened under the Creating Helpful Incentives to Produce Semiconductors and Science Act (CHIPS Act), federal legislation that appropriated $52.7B in federal funding to boost the semiconductor industry, including $39B in semiconductor manufacturing incentives.
Recent DOJ Action Creates Uncertainty for Information-Sharing Programs
The U.S. Department of Justice (DOJ) recently withdrew three antitrust policy statements that had provided guidance for information sharing by competitors and that DOJ had issued jointly with the Federal Trade Commission (FTC) starting 30 years ago. DOJ said that the guidance in those statements was “overly permissive on certain subjects, such as information sharing.”
NLRB Invalidates Common Confidentiality and Non-Disparagement Clauses in Severance Agreements
Section 7 of the National Labor Relations Act (NLRA) confers broad rights to non-supervisory employees to engage in “protected, concerted activity” for their “mutual aid and protection,” which generally includes discussing the terms and conditions of their employment both with other employees and, more generally, with the public (“Section 7 rights”). Section 8(a)(1) of the NLRA makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of” their Section 7 rights.
U.S. Attorney’s Offices Adopt New Voluntary Self-Disclosure Policy
It is a reality of corporate America that most companies at one point or other will become aware of misconduct at some level within their ranks. When an organization learns of such misconduct, it is important to move quickly to investigate and remediate any misdeeds. When such misconduct rises to the level of a potential criminal violation, however, organizations seeking to reduce the risk of criminal prosecution or the severity of potential penalties also can consider the further step of voluntary self-disclosure to manage risk.
EPA Launches Initiative to Replace Lead Pipes in Underserved Communities
In 2021, the White House introduced the Biden-Harris Lead Pipe and Paint Action Plan, which promises to replace all lead service lines in America over the next decade. The White House dubbed the plan “game-changing” and anticipates that it will put “pipefitters to work replacing all of America’s lead pipes and service lines.”
DoD Issues New Small Business Strategy to Bolster Participation
Small businesses are not only vital to the American economy, but they also form the backbone of the defense industrial base. More than 70% of the companies doing business with the DoD are small businesses. Despite their importance, the number of small businesses participating in the defense industrial base has declined by more than 40% over the last decade due to various factors, including complex regulations, a convoluted entry process into the defense marketplace, fewer contracting opportunities and increased costs.
Federal Court Ends California’s Ban on Mandatory Employment Arbitration Agreements
In 2019, California enacted Assembly Bill 51 (AB 51) which made it a criminal offense for an employer to require an employee or applicant to consent to arbitration as a condition of employment. In an effort to avoid preemption under the Federal Arbitration Act (FAA), an Act which bars states from treating arbitration agreements differently than other contracts, AB 51 included a provision stating that if the parties mutually entered into an arbitration agreement, it would be enforceable. Thus, an employer could be subject to criminal prosecution for requiring an employee to enter into an arbitration agreement, but if the employee signed the arbitration agreement, it would be enforced.
North Carolina, California, Wisconsin and Illinois Sue Companies over PFAS “Forever Chemicals” Contamination
In the last eight months, the attorneys general of North Carolina, California, Wisconsin and Illinois have sued various primary manufacturers of per- and polyfluoroalkyl substances (PFAS), as well as over a dozen secondary manufacturers of PFAS-containing products. Each lawsuit alleges that the manufacture and distribution of PFAS and PFAS-containing products has led to widespread environmental contamination and harmful exposure.
Alternating Current Yields Alternating Decisions on Bankruptcy Priority Treatment
Scientists have been puzzling over the nature of electricity since as early as 565 B.C., when the Greek philosopher Thales of Miletus experimented by rubbing amber on fur to attract feathers. Thales, however, did not have to ponder the legal nature of the static electricity he observed.
Amid the Rise of Greenwashing Litigation, Guidance Due for Updates May Become Law
How terms like “net zero,” “carbon neutral” and “sustainable” are defined and how such standards are measured are critically important to companies seeking to accurately brand their services and products. Lawsuits related to greenwashing are on the rise, with consumer groups and environmental non-governmental organizations (eNGOs) utilizing consumer protection laws to challenge statements made in green marketing campaigns and how companies account for their claims of environmental-friendliness.
OMB Proposes Revisions to Guidance Supporting the Implementation of IIJA’s Build America, Buy America Act Provisions
As anticipated, following President Biden’s State of the Union Address, the Office of Management and Budget (OMB) issued additional guidance to implement the Build America, Buy America Act provisions of the IIJA. Published on February 9, 2023, the proposed guidance seeks to implement consistent government-wide Buy America requirements for infrastructure projects, and includes guidance to determine the cost of manufactured products and when a variety of types of construction materials can be treated as U.S.-made. Russia Issues New Authority to Suspend Voting Rights of Some International Investors in Major Russian Companies
The Russian government continues to take measures to curtail the rights of investors from or connected to “unfriendly jurisdictions” (i.e., countries that have introduced sanctions on Russia and Russian persons) (“Western Investors”) without definitively expropriating their assets.
New York Finalizes Disclosure Requirements for Commercial Financing Transactions
In December 2020, New York became the second state to enact legislation to impose consumer-style disclosure requirements for commercial financing transactions. Although these requirements were initially scheduled to become effective on January 1, 2022, the New York Department of Financial Services (NYDFS) issued guidance stating that compliance with the requirements would be delayed until NYDFS issued final implementing regulations. NYDFS issued those final regulations on February 1, 2023, and the disclosure requirements will now become effective in New York on August 1, 2023.
Employment Law in the Golden State: 2023 Updates
As California employers update employee policies and handbooks for the coming year, it is critical that they are aware of new employment laws in 2022 and understand how these changes will potentially affect their operations in the year ahead. From key legislative, case law and wage-and-hour developments to “post”-pandemic pointers and the impacts of new and proposed federal laws, the following updates provide practical guidance to help employers ensure they are in compliance with the new laws that are generally applicable to most California employers. The SEC’s Fast-Approaching Cybersecurity Overhaul for Public Companies and Regulated Entities
In remarks last year, Gary Gensler, Chair of the Securities and Exchange Commission (SEC) made clear that the SEC “has a role to play” in regulating cybersecurity in the name of “maintaining orderly markets.” That role cannot be overstated.
New OSHA Enforcement Guidance Could Subject Employers to More Citations and Increased Associated Penalties
On January 26, 2023, the Occupational Safety and Health Administration (OSHA) announced new enforcement guidance to effectively increase the number of citations it can issue. OSHA’s current typical practice is to issue a citation containing multiple “instances” of an alleged violation. For example, a citation alleging violation of a machine guarding standard will contain an instance for each machine not properly guarded. Following the new enforcement guidance, OSHA is now encouraged to issue a separate citation for each instance, naturally multiplying the associated penalties.
What to Expect from the New York Department of Financial Services in 2023
The New York Department of Financial Services (NYDFS) is responsible for the supervision of financial services companies operating in New York, including all New York state-chartered banks, insurance companies and producers, companies engaged in virtual currency activity, money services businesses, mortgage lenders and servicers, other non-depository lenders, credit reporting agencies and student loan servicers. According to its most recent annual report, NYDFS supervises approximately 3,000 financial institutions with assets exceeding $8.8 trillion.