Regulatory Playbook | Pillsbury Law
Regulatory Playbook
Inside analysis direct from Washington, DC
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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

The Qualified Opportunity Zone Program—Thoughts on the Long-Awaited Treasury Guidance

Section 13823 of the Tax Cuts and Jobs Act, P.L. No. 115-97 (2017) added Sections 1400Z-1 and 1400Z-2 to the Internal Revenue Code of 1986, as amended (the “Code”). These provisions created the Qualified Opportunity Zone (“QOZ”) program that has recently generated such a wave of media attention that one might surmise President Trump had sent an angry late-night tweet about it.

Pillsbury's Post-Election Outlook

The 2018 Midterm Election played out as most poll forecasters speculated. Although several races have yet to be decided, Republicans have retained control of the Senate, but lost at least 29 seats, allowing the Democrats to wrest back control of the House for the first time since 2010.

Below is Pillsbury’s assessment of some of the top issues where the incoming 116th Congress will likely be most active, including:

- Congressional Investigations
- Financial Services
- Tax Reform
- Cybersecurity and Privacy
- Foreign Policy, International Trade, and Sanctions
- Energy and the Environment
- Transportation and Aviation
- Health Care
- State and Local Government
- Compliance, Ethics, and Campaign Reform

Human Trafficking Corporate Liability Under the New U.S. Development Finance Agency
Last month, Congress passed the Better Utilization of Investment Leading to Development, a historic piece of legislation creating a new development finance agency: the U.S. International Development Finance Corporation (USIDFC). Aimed at helping developing countries prosper while advancing U.S. foreign policy goals and enhancing American national security interests, USIDFC will combine the U.S. Overseas Private Investment Corporation (OPIC) with various private investments functions of the U.S. Agency for International Development. As the U.S. government agency tasked with helping American businesses invest in emerging markets, USIDFC is expected to continue OPIC’s work by providing financial support to investments in developing countries, including areas of the world that suffer from significant poverty and armed conflict. However, because human trafficking such as forced labor is often prevalent in these regions, current recipients of OPIC funding and new participants under the upcoming USIDFC’s financing initiatives may be subject to significant civil and criminal liability if compulsory labor is used in connection with their U.S. government-supported business ventures and investments.

2018 Election Night Guide
Pillsbury’s Political Law and Public Policy groups break down the need-to-know numbers for this year’s election. Pillsbury’s biennial Election Night Guide examines the potential outcomes for the 2018 Congressional and Governor’s races. Our Public Policy team is also preparing a post-election guide that will be useful in navigating potential changes in Congress.

CFIUS: China Deals That Can Still Be Done
Chinese investment in the United States is an important source of funds, and an attractive exit alternative, for many U.S. businesses. Under the Obama Administration, more than 90 percent of U.S.-China deals were clearing CFIUS. Since the Trump Administration took office, the clearance rate has fallen to under 60 percent.

Fall 2018 CFIUS Briefing
Many US-China deals are still getting done, but there is no question the challenges facing those deals has increased over recent months. Relatively few transactions have emerged from the CFIUS process since earlier this year; some have cleared and some have not. Our review of publicly available information indicates that the clearance rate for US-China deals since the Trump Administration took office has fallen from about 55% earlier this year to about 50%, but two very high-profile deals received approval (an acquisition by COSCO which involved a pier in Long Beach Harbor, and China Oceanwide’s acquisition of Genworth Financial). We continue to believe that careful selection of target assets, early risk assessment, and transparent filings with CFIUS will still allow many if not most deals to get through.

President Trump Signs FY 2019 NDAA
On August 13, 2018, President Trump signed the Fiscal Year 2019 National Defense Authorization Act (2019 NDAA), which includes $616.9 billion for the Department of Defense’s (DoD) base budget, $69 billion for overseas contingency operations funding, $8.9 billion for mandatory defense spending and $21.9 billion for nuclear weapons programs under the Department of Energy. We have written extensively on numerous provisions of this new law.

Congress Commissions Study of Bid Protests Filed at Both the GAO and COFC
We have previously discussed Congress’ efforts to reform the bid protest process through recent National Defense Authorization Acts (NDAA). In the Fiscal Year 2017 NDAA, Congress mandated a review of the bid protest process for Department of Defense (DoD) acquisitions, which led to a nearly year-long research study by the RAND National Defense Research Institute (RAND). The Fiscal Year 2018 NDAA provided for a number of reforms to the bid protest system, including enhanced debriefing rights for protestors. Much of these enhanced debriefing rights were implemented on March 22, 2018, by a Class Deviation issued by DoD. This year’s NDAA signals Congress’ continued interest in reforming the bid protest system to enhance the efficiency of the acquisition system.

New SIGAR Report Identifies “Waste, Fraud and Abuse” in Afghanistan
We recently reported on a Department of Defense (DoD) regulation effective April 13, 2018, that prevents government contracting officers from funding projects in Afghanistan that cannot be safely accessed and monitored by military or civilian personnel, as these projects raise a heightened specter of waste, fraud, and abuse. A new report (the “SIGAR Report”) from the Office of the Special Inspector General for Afghanistan Reconstruction, the government entity charged with monitoring U.S. reconstruction efforts in Afghanistan, effectively validates the concerns that gave rise to this regulation and suggests that government scrutiny of public spending in Afghanistan is likely to continue to intensify.

Congress Reaches Agreement on CFIUS Reform Legislation Broadening National Security Reviews and Addressing Emerging Technologies
House and Senate negotiators have agreed on proposed reforms to the Committee on Foreign Investment in the United States (CFIUS) foreign investment review process, which has been added as Title XVII of the FY2019 National Defense Authorization Act (NDAA). The final bill makes a number of changes intended to improve the efficiency of national security reviews and investigations, although a significant increase in staff and funding will be required in order to handle the increased caseload. Importantly, outbound technology transfers in the context of joint ventures and other collaborative arrangements will not be added to the “covered transaction” definition, but will instead be addressed by U.S. export controls.

DoD’s Enhanced Debriefings: GAO Provides Timeliness Guidance
In previous Client Alerts (found here and here), we have discussed the new rules issued by the Department of Defense (DoD) that significantly bolster the rights of government contractors to receive “debriefings” pursuant to Part 15 of the Federal Acquisition Regulation (FAR), following the award of defense contracts. The Government Accountability Office’s (GAO) recent decision in State Women Corporation, B-416510 (July 12, 2018) provides important new guidance regarding GAO’s timeliness rules in the context of these newly enhanced debriefings.