Regulatory Playbook

Trending Issues

SBA Discloses Identities of PPP Borrowers
07.07.20
SBA, in conjunction with the Department of the Treasury, announced in a June 6, 2020 press release that it would disclose “detailed loan-level data” regarding all of the 4.9 million PPP loans made to date. Recent legislation, which we summarized here, extended the deadline to apply for new PPP loans to August 8, 2020.

Tour de Force: Do the Current Economic Conditions Caused by COVID-19 Constitute a Force Majeure Event?
07.01.20
Past Economic Crises Typically Have Not Constituted Force Majeure Events

In most jurisdictions, courts have been reluctant to find that an extreme economic downturn, such as the Great Recession of 2008 or the earlier post-9/11 downturn, constitutes a force majeure event excusing performance of a party’s contractual obligations.

The Main Street Lending Program – Avoiding the Potholes on the Road to Recovery 

06.17.20
Introduction
Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Congress authorized the Treasury Department to provide more than $450 billion for loans, loan guarantees, and investments in support of the Federal Reserve’s lending facilities.

Tour de Force: What Constitutes an “Act of God,” and Other Developments in Force Majeure Law
06.15.20
What is an Act of God?
Absent an express reference to “epidemics” or “pandemics,” a contracting party seeking to invoke a force majeure clause is most likely to look to catch-all language like “Acts of God” or events “not within the parties’ reasonable control” as the most likely language to cover COVID-19. Historically, courts indeed defined “Act of God” to encompass sickness. See, e.g., Herter v. Mullen, 159 N.Y. 28, 37 (1899) (“The disability of a party to do the particular thing, or to perform the contract by reason of sickness is held to be a disability by the act of God.”); Love v. Barnesville Mfg. Co., 19 Del. 152, 50 A. 536, 537 (Del. Super. Ct. 1901) (“The defendant would not be liable for damages caused solely by the act of God, such as an epidemic of sickness in the defendant’s factory.”).

President’s Executive Order to Expedite Environmental Reviews of Infrastructure Pushes the Envelope on the Interpretation of Emergency Authorities
06.15.20
The Key Environmental Laws at Issue
Citing the economic downturn caused by the outbreak of COVID-19, on June 4, 2020, President Trump signed an executive order (EO) directing federal agencies to invoke emergency powers available to them to expedite the environmental review and permitting of infrastructure projects. The EO explicitly enumerates the emergency provisions of the following federal laws:

Compliance Programs Must Track and Adapt to Changes and Risks
06.11.20
On June 1, 2020, DOJ updated its Guidance (2020 Update), once again, on how it will evaluate corporate compliance programs in deciding “whether to bring charges, and negotiating plea or other agreements.” The 2020 Update builds on the 2019 Update from April 30, 2019, and emphasizes three questions:

Fed Expands and Enhances Main Street Lending Program
06.09.20
Larger loans available, and more small and medium-sized businesses may qualify for support with new changes to minimum loan amounts and amortization schedule.

Key Changes to Paycheck Protection Program Await President’s Signature
06.04.20
Both the House and Senate have passed a bipartisan bill to modify elements of the PPP established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The legislation is intended to provide a “quick fix” to obstacles faced by small businesses seeking relief under the forgivable loan program.

Senate Bill Could Result in De-Listing of Certain Chinese Companies and Non-Chinese State-Owned Enterprises from U.S. Securities Exchanges
06.03.20
On May 20, 2020, the U.S. Senate unanimously passed S. 945, the Holding Foreign Companies Accountable Act (HFCAA). If enacted, the bill would amend the Sarbanes-Oxley Act of 2002 (15 U.S.C. §7214) to require additional disclosures from certain issuers regarding foreign jurisdictions that prevent the Public Company Accounting Oversight Board (PCAOB) from performing inspections of auditors of public companies.

DC Real Estate and Construction Committee Issues Recommendations as DC Prepares for Phased Reopening
06.03.20
As we pivot toward the next phase of the COVID-19 pandemic, many states and cities around the country have proposed safety measures for construction projects during the pandemic. These guidelines range from a single page of suggestions to multipage requirements handed down by state public health officers.

Updated CDC Guidelines Impact Business Districts, Office Buildings and Their Tenants, and Users
06.01.20
For the past two-and-a-half months, unlike many service workers, most white-collar office workers have been able to work from home (WFH). While some companies like Twitter and Facebook have implemented permanent “work from home” policies, many other companies are contemplating when and how to bring their workforces back to the office. National attention has now turned to “returning to work” and the changes needed to ensure workplace safety, including for those in office buildings.

Tour de Force: Tracking the Evolution of COVID-19 as a Force Majeure Event
06.01.20
This is the first issue of a new client alert series titled Tour de Force, focused on the doctrine of force majeure and its significance in a post-COVID-19 world. Each issue will explore a discrete nuance in application of the force majeure doctrine and include an annotated list of cases filed across the United States, updated with new cases and relevant decisions.

IRS Extends Continuity Safe Harbor for Renewable Energy Projects 
05.28.20
Overview
On May 27, 2020, the Internal Revenue Service issued Notice 2020-40 (“Notice”), which modifies certain rules related to the production tax credit (PTC) available pursuant to IRC Section 45 and the investment tax credit (ITC) available pursuant to IRC Section 48 in light of the COVID-19 pandemic.

SBA Issues Long-Awaited Paycheck Protection Program Forgiveness Regulations 
05.26.20
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted March 27, 2020, established the PPP and set aside $349 billion for small business loans. We summarized the Act’s small business loan provisions here. On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act increased appropriations for the PPP by $310 billion. Perhaps the most notable facet of the PPP—and the reason that many thousands of companies applied for loans under it—was Congress’ promise to forgive loan amounts expended for up to eight weeks of permissible uses enumerated by the CARES Act.

Distressed Real Estate During COVID-19: New York State Court Order Finds UCC Foreclosures Are Not Suspended by New York E.O. 202.8.
05.22.20
A recent court order issued as part of an ongoing litigation involving a Manhattan hotel held that a mezzanine lender may proceed with a UCC foreclosure sale of the mezzanine loan collateral despite N.Y.E.O. 202.8, which prevents creditors from initiating judicial foreclosures. That clarification alone would have been enough to make the decision important during the COVID-19 pandemic but, in a few short pages, the order touches upon the appropriate remedies involving the foreclosure of an indirect ownership interest in real estate. The “secondary” implications from the order are likely to impact real estate lending even after N.Y.E.O. 202.8 has been lifted. Mezzanine lenders and borrowers should take note as they evaluate remedies under existing mezzanine loans.

New York State Courts to Restore (Electronic) Filing of New Nonessential Actions
05.22.20
In our last alert, we noted that litigants had been banned from commencing new nonessential actions (including most commercial actions) in New York State courts since March 22, 2020. On that date, New York Chief Administrative Judge Lawrence K. Marks issued an administrative order (AO-78-20), prohibiting litigants from making any court filings (paper or electronic) in any non-essential matters, whether new or pending. While the Chief Administrative Judge loosened the restrictions on electronic filings in pending nonessential matters in Administrative Order 87-20, issued on May 1, 2020, the ban on the filing of new nonessential cases remained in place.

Safety Measures for Construction Projects During the COVID-19 Pandemic
05.21.20
Over the past few months, construction projects in most states have carried on because construction was deemed essential and projects were exempted from government orders that closed businesses. In the jurisdictions that halted construction operations, state and local authorities are now easing those restrictions and allowing construction to resume. As we pivot toward this next phase of the COVID-19 pandemic, construction sites will be very different than they were a few months ago and business-as-usual is likely a thing of the past.

All Employers Must Monitor Employee COVID-19 Cases Under Updates to OSHA’s Interim Enforcement Plan and Guidance for Recording Cases
05.20.20
On May 19, 2020, the Occupational Safety and Health Administration (OSHA) of the U.S. Department of Labor issued both an Updated Interim Enforcement Plan and Revised Enforcement Guidance for Recording Cases, which will on May 26, 2020, rescind April 10 guidance issued on the respective topics.

Implications of PPP Certifications for D&O Coverage
05.18.20
The Paycheck Protection Program (PPP), a key feature of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), was enacted to provide forgivable loans to certain small business and self-employed individuals demonstrating urgent financial need in the wake of the COVID-19 pandemic. (See H.R. 748 § 1102.) Loan recipients must certify their compliance with the terms and conditions of the loan, and violations expose them to a wide array of potential civil and criminal penalties, forfeiture, and other liabilities. If you or your company have already obtained, or are considering applying for a PPP loan, it is highly advisable for you to carefully review your D&O Liability Insurance Policy, as coverages for defense or ultimate liability vary significantly.

COVID-19: New York and New Jersey Announce Phased Reopening of Businesses
05.18.20
On Friday, May 15, New York began reopening businesses after widespread closures in response to the coronavirus pandemic. New York Forward, the New York plan to reopen the state, divides the state into ten (10) regions. Each region may reopen in a four-phased process as it satisfies certain metrics. Generally, the metrics monitor the region’s new infections and analyze the region’s health care, diagnostic testing, and contact tracing capacities.¹ The executive orders remain in effect, as described in this alert, requiring all people in New York to wear masks or face coverings in public, including when taking public or private transportation. As previously advised, employers will generally be expected to provide face masks to employees.(This link provides an updated map and table of each region’s status.)

Proposed California Bill Would Ban Commercial Evictions During the State of Emergency and Grant Lease Termination Rights to Qualifying Tenants
05.18.19
On May 13, 2020, proposed California Senate Bill No. 939 was amended to not only prohibit landlords from evicting commercial tenants during the pendency of the COVID-19 state of emergency, but to extend protections to certain qualifying tenants permitting express rent reduction negotiation rights and lease termination rights. Unlike the eviction moratorium restrictions imposed in many counties and cities across the state, tenants are not required to show financial losses related to COVID-19; all commercial tenants are shielded from eviction. In addition, the bill gives a subset of commercial tenants express negotiation and termination rights.

The Regulation of Medical Waste During COVID-19
05.15.20
After many used medical syringes washed up on beaches in the eastern United States, Congress enacted the Medical Waste Tracking Act of 1988, which directed EPA to establish a two-year medical waste demonstration project that would principally affect several northeastern states. The Act amended the Resource Conservation and Recovery Act (RCRA) and EPA promulgated medical waste standards in 1989. (See 54 FR 12326.) The rules were located in EPA’s solid, non-hazardous waste rules at 40 CFR Part 259 (later revoked). These rules followed the standard RCRA format and regulated Generators, Transporters, and Treatment and Disposal Facilities. When the initial batch of EPA’s RCRA Hazardous Waste Rules were promulgated in 1980, EPA decided against designating infectious waste as a hazardous waste. As a result, medical waste was not made subject to the rigorous RCRA regulatory regime. According to EPA, medical waste is a subset of solid wastes generated at health care facilities—principally hospitals—that may be contaminated by blood, bodily fluids or other potentially infectious materials and can take different forms.

FCC Grants Relief to Address Medical Device Company’s COVID-19 Supply Chain Issues
05.15.20
On May 11, 2020, the FCC issued an order granting a request for waiver filed by GE Healthcare relating to its health care equipment that is subject to the FCC’s equipment authorization rules. GE requested a waiver because it was unable to obtain certain components contained within its healthcare equipment due to severe supply chain disruptions caused by the COVID-19 pandemic.

SBA Issues Critical New Guidance on PPP Borrowers’ Certification of Necessity
05.13.20
On April 24, 2020, President Trump signed into law the Paycheck Protection Program and Health Care Enhancement Act, whose provisions we summarized here. PPP applicants are required to make a number of certifications in connection with their applications, for example concerning their eligibility and the purposes for which they will use the loans. Attention to these certifications is extremely important, given the severe penalties that are possible for submitting false or misleading certifications to the government. One such certification that has drawn particular scrutiny is the certification that the “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

COVID-19’s Impact on the Motion Picture and Television Industries and How Insurance Can Soften the Blow
05.13.20
COVID-19 has left few industries unscathed. For those facing substantial financial damages, insurance policies may offer hope, and this is just as true for those losses being suffered in the entertainment industry as government orders have placed nearly all TV and film production in stasis because of the pandemic.

COVID-19, Corruption and Money Laundering – Managing Risk and Avoiding the Coming Wave of Enforcement
05.12.20
The pandemic crisis gripping the world has dramatically expanded demand for medical, food, household and other supplies. Governments, international organizations, NGOs and private companies have unleashed a wave of spending. Sadly, corruption, fraud and money laundering thrive in such environments.

California Allows Localities to Reopen Certain Businesses Consistent with State Guidance
05.12.20
On Thursday, May 7, California rolled out a modified stay-home order and issued guidance to move into “Stage 2” of reopening certain sectors of the economy. This new statewide order, and the county-level reactions to it, create another layer in the patchwork of compliance requirements, but provide a pathway for certain industries to open doors sooner than others.

Sellers Beware: The Blurry Line Between Profit and Price Gouging under the Defense Production Act
05.11.20
On March 23, 2020, President Trump invoked the authority under the Defense Production Act of 1950, as amended (50 U.S.C. § 4501 et seq.) (DPA) and signed Executive Order 13910. The Defense Production Act provides, in part, that “to prevent hoarding, no person shall accumulate (1) in excess of the reasonable demands of business, personal, or home consumption, or (2) for the purpose of resale at prices in excess of prevailing market prices, materials which have been designated by the President as scarce materials or materials the supply of which would be threatened by such accumulation.” 50 U.S.C. § 4512. That same provision requires the President to designate the “materials the accumulation of which is unlawful and any withdrawal of such designation.” Id. By Executive Order 13910, the President delegated the task to identify such materials to the Secretary of Health and Human Services (HHS). See Executive Order 13910. As a result, on March 25, 2020, the Secretary of HHS issued a Notice of Designation of Scarce Materials or Threatened Materials Subject to COVID-19, designating no less than 15 categories of materials falling under the Executive Order (e.g., N-95 masks, ventilators, surgical or exam gloves, sanitizing and disinfecting products suitable for use in a clinical setting). But what is “in excess of the reasonable demands” or “in excess of prevailing market prices” is murky at best, with violators subject to punishment by a fine up to $10,000 and/or imprisonment for up to a year. 50 U.S.C. § 4513. In addition, those same materials are subject to seizure from law enforcement and those reselling, whether directly or indirectly, could be exposed to civil liability from various market participants.