Congressional and Agency Debates

• DC Circuit Rules White House CEQ Lacks Authority to Issue Binding NEPA Regulations

  11.14/Alert

  On November 11, 2024, in Marin Audubon Society v. Federal Aviation Administration, a divided panel of the U.S. Court of Appeals for the District of Columbia Circuit held that the White House Council on Environmental Quality (CEQ) lacks statutory authority to issue regulations implementing the National Environmental Policy Act (NEPA) that are binding upon federal agencies. The Court held that the CEQ regulations, which purport to govern how all federal agencies must implement NEPA, are beyond the scope of legal authority granted to CEQ by Congress.

• China Issues New Export Control Regulations on Civil-Military Dual-Use Items

  11.07/Alert

  On October 19, 2024, the State Council of the People’s Republic of China (China or PRC) promulgated the Regulations on the Export Control of Dual-Use Items of China (Export Control Regulations), which will become effective on December 1, 2024.

• Trump 2.0

  11.07/Alert

  Former President Donald J. Trump won the U.S. presidential election on November 5, prevailing in the key “battleground states” necessary to win the Electoral College.

• Navigating the EU’s “NIS 2” Directive: Key Cybersecurity Compliance Points for Businesses Operating in the EU to Consider

  11.04/Alert

  As cybersecurity threats continue to evolve, the European Union has advanced its regulatory framework with the introduction of a new cyber law, Directive 2022/2555, commonly referred to as “NIS 2”. It replaces Directive 2016/1148 (NIS 1), aiming to address the fragmented cybersecurity landscape across the EU by creating a unified approach to risk management and response. While NIS 1 focused on essential sectors, such as energy and transport, NIS 2 expands its reach to a broader range of industries, reflecting the digitalization of the European economy and the increasing risks associated with cyber threats across sectors.

• New York Department of Financial Services’ New Enhanced Cybersecurity Requirements Effective November 1, 2024

  10.30/Alert

  On November 1, 2024, the next phase of several significant amendments to the New York Department of Financial Services’ (NYDFS) cybersecurity regulation take effect. These specific amendments, enacted in 2023, impact the scope of entities covered by the regulation and require covered entities to implement enhanced governance, business continuity and encryption standards.

• Hurricanes Helene and Milton: Evaluating Business Interruption Claims Following a Large-Scale Disaster

  10.28/Alert

  Hurricanes Helene and Milton physically damaged large areas of the South, particularly in Florida, North and South Carolina, Georgia and Virginia. Businesses in the region are also certainly suffering long-lasting economic damage as they remain closed—and they will rightly want to secure business interruption coverage for those losses.

• U.S. Bankruptcy Court Holds that State-Court Receivership Order Does Not Bar Managing Member from Seeking LLC Bankruptcy Relief

  10.25/Alert

  When disputes involving financially distressed real estate or other property cannot readily be resolved through foreclosure, deed-in-lieu, consensual out-of-court restructuring, or a cooperative bankruptcy filing, a lender/mortgagee (or other creditors or interest holders) can ask a court to appoint a receiver to take control of the property, its rents, and sometimes the borrower entity. Typical receivership orders often grant receivers broad authority to take actions with respect to property and receivership assets. The orders also typically grant broad injunctive relief barring creditors, managers, equity holders and others, from taking actions against the property.

• Lenders Beware: The Ponzi Scheme Presumption Can Trap an Unwitting Lender

  10.15/Alert

  The Ponzi scheme presumption applies when a bankruptcy trustee (or similarly situated plaintiff) establishes that a Ponzi scheme exists. As a matter of law, it allows the court to infer the Ponzi scheme perpetrator’s actual intent to hinder, delay or defraud creditors with respect to seemingly all payments made during the existence of the scheme. See, e.g., Johnson v. Neilson (In re Slatkin), 525 F.23 805, 814 (9th Cir. 2008). Even payments received from the perpetrator in good faith can be clawed back, though recipients should be entitled to retain payments applied to their principal or actual investment in the scheme.

• District Court Finds Qui Tam Provisions of the False Claims Act Unconstitutional

  10.14/Alert

  In a groundbreaking decision issued on September 30, 2024, Judge Kathryn Mizelle of the U.S. District Court for the Middle District of Florida broke with decades of precedent and held that the qui tam provisions of the False Claims Act (FCA) are unconstitutional. See U.S. ex rel. Zafirov v. Florida Medical Assocs., LLC, No. 8:19-CV-01236-KKM-SPF, (M.D. Fla. Sept. 30, 2024).

• The Beginning of the End for the USPTO’s After Final Consideration Pilot Program 2.0

  10.14/Alert

  On October 1, 2024, the U.S. Patent and Trademark Office (USPTO) announced the termination of the After Final Consideration Pilot Program 2.0 (AFCP 2.0), a program widely used by patent applicants since 2013. As the program enters its final extension period, patent applicants should be aware of key deadlines and explore alternative strategies for responding to final office actions. Initially set to expire on September 30, 2024, the AFCP 2.0 has been extended to December 14, 2024, after which no further participation requests will be accepted. The decision to end the program follows public resistance to a proposed fee structure aimed at offsetting its high administrative costs.

• Corporate Transparency Act: Is Your Company Prepared to Meet the Deadline for Filing on January 1, 2025?

  10.10/ Alert

  The federal Corporate Transparency Act (CTA) became effective on January 1, 2024, and set a deadline of January 1, 2025, for entities existing on the effective date to file an initial report. As we enter the fourth quarter of 2024, that deadline is fast approaching. Many entities have waited to see if the statute would be invalidated, the rules further clarified, or the deadline postponed, or have decided to wait until the deadline is at hand. It now may be time for entities formed or qualified to do business in the United States to determine if they are required to file and, if so, to determine who are the “beneficial owners” whose name and personal information needs to be collected, and to begin to collect this information.

• DOJ Debuts Updates to Its Evaluation of Corporate Compliance Programs Aimed at the Responsible Use of Artificial Intelligence

  10.08/Alert

  On September 23, 2024, the U.S. Department of Justice (DOJ) Criminal Division released an updated version of its Evaluation of Corporate Compliance Programs (ECCP) guidance. DOJ first published the ECCP in 2017 to provide clear guidance on which factors federal prosecutors will consider when evaluating the strength of a corporation’s compliance programs in the context of an investigation or enforcement action. The ECCP instructs prosecutors on how to evaluate a company’s risk assessment mechanisms, to ensure that the company’s policies and procedures are responsive to the risks that it has identified and communicate those risks, and the established risk mitigations, to the corporation’s stakeholders, such as employees and vendors. The ECCP is a critical resource that companies should consider when developing compliance programs to avoid penalties associated with DOJ enforcement action.

• California Climate Disclosures Remain on Schedule

  10.02/Alert

  California is set to launch its first-in-the-nation mandatory climate disclosure framework next year as provided in the 2023 Climate Accountability Package, Senate Bills SB 253 and SB 261. (For more information on the Climate Accountability Package, see Pillsbury’s prior reporting here and here.) But the bills have not come without some lingering controversy over the ability of businesses to meet the aggressive January 1, 2026, deadline to report their carbon footprints and submit climate risk assessments to the California Air Resources Board (CARB), as well as CARB’s ability to adopt implementing regulations by this coming January 1. A proposal by California Governor Gavin Newsom to provide relief through two-year extensions for compliance arrived back in the form of a bill from the Legislature—SB 219—for his signature, but it was stripped of those extensions and only granted an additional six months for CARB to adopt regulations. On September 27, Newsom acquiesced and signed SB 219 into law. The development confirms the need for businesses to continue preparing for mandated climate disclosures by January 1, 2026, and to consider participating in the CARB rulemaking to emphasize the implementation concerns recognized by Newsom.

• Department of Justice Settles with Las Vegas Casino for $130 Million

  09.20/Alert

  The Department of Justice (DOJ), through the U.S. Attorney’s Office (USAO) for the Southern District of California, recently announced a non-prosecution agreement with a Las Vegas casino, which forfeited over $130 million under the agreement. The agreement settled criminal allegations that the casino conspired with unlicensed money transmitting businesses (MTBs) worldwide to transfer funds for its financial benefit. This announcement is the latest example of the DOJ’s expanding focus on alleged money-laundering activities involving MTBs and international transfers of funds, particularly transfers connected with mainland China and mainland Chinese-related criminal activity.

• District Court Ruling Bars Federal Trade Commission Non-Compete Rule for the Near Term

  09.10/Alert

  The Federal Trade Commission (FTC) and the Non-Compete Clause Rule (Rule)
  Under Section 5 of the FTC Act, “[t]he Commission is [] empowered and directed to prevent persons, partnerships, or corporations … from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45(a)(2). As such, Section 6 of the FTC Act, grants the FTC the power to “[f]rom time to time classify corporations and … to make rules and regulations for the purpose of carrying out the provisions” of the FTC Act.

• U.S. Government Intervenes in Georgia Tech Cybersecurity False Claims Case

  09.06/Alert

  On August 22, 2024, the U.S. Department of Justice (DOJ) filed a complaint as intervenor in a False Claims Act (FCA) lawsuit filed against Georgia Tech Research Corporation and the Board of Regents of the University System of Georgia (Georgia Tech). The case was originally filed against Georgia Tech under seal in July 2022 by two whistle-blowers, its former associate director of cybersecurity and a former principal information security engineer.

• Important Delaware General Corporation Law Amendments Are Signed into Law amid Recent Delaware Chancery Court Decisions

  09.03/Alert

  Significant amendments to the Delaware General Corporation Law (DGCL) were signed into law by Governor John Carney on July 17, 2024 (SB 313). These amendments were initially introduced in March 2024 in response to three controversial Delaware Court of Chancery rulings, Moelis, Activision and Crispo, which called into question the validity of several well-established and commonly used market practices. SB 313 went into effect on August 1, 2024, and applies retroactively to all contracts and agreements made by a corporation (including merger and consolidation agreements) and all agreements, instruments or documents approved by a board of directors. However, SB 313 will not apply to or affect any civil action or proceeding completed or pending on or before August 1, 2024.

• Bankruptcy Court Splits the Baby on Real Estate Landlord’s Claim for Unpaid Postpetition Rent

  08.20/Alert

  In In re Jughandle Brewing Co. LLC, 23-15703 (Bankr. D.N.J. June 3, 2024), the U.S. Bankruptcy Court for the District of New Jersey faced the following question: whether, in a chapter 7 case, postpetition, pre-rejection payments due under an unexpired lease of nonresidential real property must be treated as an administrative expense claim under section 503(b)(1), regardless of whether the rent payments were actual, necessary costs of preserving the estate. It answered the question in the negative, holding that there is no per se rule that a trustee’s obligation to perform postpetition lease obligations under section 365(d)(3) creates an administrative expense claim. And on the facts before it, the Court crafted a middle ground, allowing an administrative expense claim in favor of the landlord in an amount equal to three months of base rent less amounts paid to the landlord by the secured creditor as a use and occupancy fee for removal of its collateral, along with a general unsecured claim for prorated stub rent for the initial postpetition period. In so doing, the Court confirmed that courts may craft an appropriate remedy when a trustee or debtor in possession breaches a real estate lease before rejection on a case-by-case basis.

• Department of Commerce Releases Five Products to Help Guide AI Development

  08.16/Alert

  Less than a year after the publication of the Executive Oder (EO) on the Safe, Secure, and Trustworthy Development of AI, the Department of Commerce has finalized three pieces of guidance to fulfill its obligations under the EO. In addition, the recently created AI Safety Institute (AISI) has provided draft guidance to help AI developers mitigate risk of dual-use foundation models. AISI is soliciting comments on this proposal, which are due by September 9. The National Institute of Standards and Technology (NIST) has released open-source software that can be used to test AI systems responses to adversarial attacks.

• FCC Attempts to Regulate Artificial Intelligence in Political Advertising Through New Disclosure Requirements

  08.01/Alert

  The Federal Communications Commission (FCC) last week released a highly anticipated Notice of Proposed Rulemaking (NPRM) seeking comment on proposed disclosure requirements for political ads containing AI-generated content. The item was adopted earlier this month by a 3 – 2 party-line vote, nearly two months after FCC Chairwoman Rosenworcel first announced its circulation among the commissioners for consideration.

• Preclusion Confusion: Federal Circuit Decision in ZyXEL Communications v. UNM Rainforest Sparks Uncertainty at the PTAB

  07.30/Alert

  The Federal Circuit’s decision in ZyXEL Communications Corp. v. UNM Rainforest Innovations (Appeal Nos. 2022-2220, 2022-2250, July 24, 2024) starts out as a garden variety appeal from an inter partes review proceeding (“IPR”) before the Patent Trial & Appeal Board (“PTAB”). However, the opinion takes a final, unexpected turn by remanding to the PTAB to reconsider whether the new substitute claims are unpatentable in light of collateral estoppel and an additional prior art combination that the petitioner never even raised.

• Bankruptcy Court Rejects Attempts to Lock Up Creditor Votes in Favor of Reorganization Plan

  07.30/Alert

  In April 2024, Chief Judge Martin Glenn for the U.S. Bankruptcy Court for the Southern District of New York rejected a provision in certain post-petition agreements with aircraft lessors (collectively, the “Aircraft Agreements”) requiring the aircraft lessor (and creditor) to vote its claim in favor of a not yet filed or negotiated chapter 11 plan. See In re GOL Linhas Aéreas Inteligentes S.A., No. 24-10118 (WG), 2024 WL 1716490 (Bankr. S.D.N.Y. Apr. 22, 2024). The Court’s decision, as well as other decisions in In re SAS AB and In re LATAM Airlines Group S.A., reflects a renewed focus on lock-up provisions by bankruptcy courts. This focus comes as debtors are requesting with increasing frequency similar commitments from creditors to attain the requisite votes for confirmation. None of these cases, however, resulted in a court disregarding the votes cast by the lessors.

• Discovery Dilemma: An Update on the Legal Battle Between The New York Times and OpenAI

  07.29/Alert

  OpenAI’s defense of the lawsuit brought by The New York Times (“The Times”) has sparked controversy relating to OpenAI’s discovery demand for access to reporter notes and other behind-the-scenes materials associated with millions of articles that appeared in The Times. These materials, the AI company argues, are crucial for assessing the copyrightability of The New York Times’ content, which content is being incorporated into OpenAI’s AI models.

• Subsidence from Geothermal Operations: Navigating the Regulatory Landscape and Potential Claims

  07.26/Alert

  Geothermal projects in the United States and abroad face scrutiny of their potential impacts on the surrounding environment and communities. Seismic activity, noise and water contamination are commonly cited concerns.

• The End of the Chevron Doctrine and the Reassertion of Judicial Primacy in Reviewing Federal Regulatory Actions

  07.24/Alert

  In 1984, the U.S. Supreme Court (SCOTUS) decided Chevron USA, Inc. v. National Resource Defense Council. See 467 U.S. 839 (1984). The unanimous decision, written by Justice Stephens, reversed then-D.C. Circuit Judge Ruth Bader Ginsburg’s ruling that set aside EPA’s Clean Air Act “bubble policy,” which was intended to provide regulatory relief from certain EPA permitting requirements.

• Purdue Pharma and the Future of Nonconsensual Third-Party Releases in Chapter 15 Cases

  07.19/Alert

  On July 27, 2024, the U.S. Supreme Court issued a long-awaited ruling regarding the validity of nonconsensual third-party releases in the chapter 11 plan of pharmaceutical company Purdue Pharma. In Harrington v. Purdue Pharma L.P., the Supreme Court held that absent consent from the affected claimants, the bankruptcy court lacked the power to approve a plan provision releasing Purdue’s founders, the Sackler family, from liabilities arising from Purdue’s sale of opioids. In reaching that result, the Supreme Court concluded that nonconsensual third-party releases fall outside the scope of section 1123(b) of the Bankruptcy Code, which limits the types of provisions a bankruptcy plan may include. It also reasoned that nonconsensual third-party releases contravene section 1141(d), which provides “a discharge” from liability only to “a debtor.”

• U.S. Treasury Department Issues Proposed Rulemaking for Forthcoming Outbound Investment Program

  07.15/Alert

  On June 21, 2024, the U.S. Department of Treasury issued a Notice of Proposed Rulemaking (NPRM) setting forth proposed regulations that would implement regulatory framework to review and prohibit certain investments in “countries of concern,” namely the People’s Republic of China (PRC), Hong Kong and Macau. This follows the Advanced Notice of Proposed Rulemaking (ANPRM) that was released in August 2023. The NPRM issued on June 21 builds on comments received in response to the ANPRM and seeks to clarify the scope and direction of outbound investment restrictions. Comments will be accepted on the NPRM until August 4, 2024.

• U.S. District Court Enjoins Enforcement of Key Portions of DOL’s Davis-Bacon Act Rule

  07.02/Alert

  On June 24, 2024, the U.S. District Court for the Northern District of Texas granted a nationwide preliminary injunction enjoining DOL from implementing and enforcing specific portions of section 5.2 and section 5.5(e) of its final rule entitled “Updating the Davis-Bacon and Related Acts Regulations.” DOL’s final rule was published August 23, 2023, and became effective on October 23, 2023. The Court found DOL engaged in “egregious violations” of Article II, section 3 of the U.S. Constitution, because DOL “usurped Congress’ law-making power and attempted to make substantive amendments to the DBA.”

• Treasury and IRS Issue Proposed Regulations Regarding the Clean Energy Production and Clean Electricity Investment Credits Under Sections 45Y and 48E of the IRC

  06.27/Alert

  On June 3, 2024, the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) published proposed regulations (Proposed Regulations) in the Federal Register [REG-119283-23] which provide initial guidance on the Clean Electricity Production Credit (CEPC) under section 45Y of the Internal Revenue Code (IRC) and the Clean Electricity Investment Credit (CEIC) under section 48E of the IRC (collectively, the Clean Electricity Tax Credits). The CEPC and CEIC were added to the IRC by the Inflation Reduction Act of 2022 (IRA) and apply to qualified facilities and energy property placed in service after December 31, 2024.

• Maine Modifies Its Sweeping PFAS Law

  06.21/Alert

  On April 16, 2024, Maine enacted amendments revising the state perfluoroalkyl and polyfluoroalkyl substances (PFAS) law. This law generally prohibits the sale of products containing intentionally added PFAS and includes notification requirements for products with intentionally added PFAS that would continue to be sold. The recent amendments modified the effective dates of certain sales bans, revised the reporting requirements for PFAS product manufacturers, delayed the general ban on the sale of PFAS products from 2030 to 2032, and listed the categories of products exempt from the PFAS ban entirely. While this law remains one of the strictest PFAS laws nationally, the new amendments ease some of the burdens on manufacturers presented in the original bill.

• In a Landmark Decision, Federal Circuit Expands Protest Jurisdiction at COFC

  06.17/Alert

  On June 7, 2024, the U.S. Court of Appeals for the Federal Circuit issued its decision in Percipient.ai v. United States. The case was closely watched by the government contracting community because the Federal Circuit’s decision was poised to have significant impact on the bid protest jurisdiction of the U.S. Court of Federal Claims (COFC).

• SBA Takes Final Step Towards Eliminating SDVOSB Self-Certification

  06.12/Alert

  On June 6, 2024, Small Business Administration (SBA) issued a direct final rule affecting Service-Disabled Veteran-Owned Small Business (SDVOSB) credit. Under this new rule, agencies and prime contractors will not be able to receive credit towards their socio-economic contracting goals and subcontracting plan goals for SDVOSBs that are not certified by SBA’s Veteran Small Business Certification (VetCert) program. The rule includes a grace period. Self-certified SDVOSBs will continue to generate such credit until SBA acts on their application for VetCert certification, so long as they submit their VetCert application by December 22, 2024.

• AI’s Power Play: Congress Calls for Smart Energy Solutions to Fuel AI Growth

  06.10/Alert

  As artificial intelligence (AI) technologies continue to evolve and expand, their energy demands are growing significantly. This increase in energy consumption, driven by the proliferation of data centers and AI applications, presents both opportunities and challenges that intersect with national security interests.

• After Long Drought, COFC Sustains a Corrective Action Protest

  06.06/Alert

  On May 16, 2024, COFC issued its opinion in Kearney & Company, P.C. v. United States, Nos. 24-162 and 24-201, holding that the corrective action taken by the National Geo-Spatial Intelligence Agency after a post-award protest at GAO was arbitrary and capricious. In the protest, Kearney & Company, P.C. challenged the corrective action taken by the agency on the Audit Remediation and Sustainment Operations task order procurement under the General Service Administration (GSA) Federal Supply Schedule (FSS) multiple-award contract. The initial award to Kearney was terminated by the agency after a GAO protest. Before issuing a decision, GAO held an unrecorded outcome prediction conference where the GAO attorney stated that it would likely sustain one of the protest grounds—that Kearney’s quoted GSA FSS labor category did not match one of the key labor categories required by the solicitation.

• Supreme Court Unanimously Rules Federal Arbitration Act Requires Federal Courts to Issue a Stay, Where Requested, When Lawsuits Involve an Arbitrable Dispute

  06.05/ Alert

  In Smith v. Spizzirri, 601 U.S. ____, 2024 WL 2193872 (May 16, 2024), a unanimous Supreme Court clarified the obligation of federal District Courts to stay cases pending the outcome of an arbitration where the court holds that the issues are arbitrable and a party requests a stay. The Supreme Court addressed the question of whether the Federal Arbitration Act (FAA), which provides procedures for the enforcement of arbitration agreements in federal court, permits a District Court to dismiss a case instead of issuing a stay after the court decides that the dispute is subject to an arbitration agreement and a party requests a stay pending arbitration. The Supreme Court unanimously decided that it does not.

• Implications of the U.S. DOJ’s Proposed Rescheduling of Marijuana

  05.22/Alert

  Marijuana has long been classified as a Schedule I substance. Schedule I is reserved for substances that have no known medical use and have a high likelihood of abuse. A shift to Schedule III—which is reserved for substances with an accepted medical use and a moderate to low potential for physical and psychological dependence—would provide tax benefits for the industry and better opportunities to research marijuana’s medical benefits.

• Treasury Department and IRS Issue Final Regulations on the Electric Vehicle Credits Under Section 30D of the Internal Revenue Code

  05.21/Alert

  As modified by the Inflation Reduction Act of 2022, section 30D of the Internal Revenue Code of 1986, as amended (Code), provides for a tax credit of up to $7,500 for a new clean vehicle if certain requirements are met. The modified tax credit is divided between $3,750 in respect of battery components, and an additional $3,750 in respect of critical minerals. Eligibility for each part of the tax credit depends on the ability to satisfy domestic source requirements that have been met with some controversy due to difficulties in implementation and monitoring over time.

• Agency’s Silence is Golden for Protester

  05.20/Alert

  On May 3, 2024, the Government Accountability Office (GAO) sustained a bid protest filed by ITility, LLC, which challenged the Department of Homeland Security’s decision to award a task order for financial and program management support services to Integrated Finance and Accounting Solutions, LLC in a best value procurement. The protester alleged that the agency’s evaluation of technical proposals was unreasonable in several respects and that the agency conducted a flawed best-value tradeoff analysis. In a rare decision, GAO sustained the protest because the agency failed to substantively address several allegations raised in the protest. GAO also concluded that the agency failed to reasonably evaluate proposals due to unrecognized discriminators in the protester’s proposal.

• Treasury Department Announces Process and Timetable to Allocate $6 Billion in Qualifying Advanced Energy Project Credits

  05.03/Alert

  On April 29, 2024, the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) issued Notice 2024-36, announcing and providing guidance on the second allocation round (Round 2) of Qualifying Advanced Energy Project Credits (Advanced Energy Project Credits or Credits) under section 48C of the Internal Revenue Code (IRC). Advanced Energy Project Credits and the Advanced Energy Project Program were established by the Inflation Reduction Act (IRA) to incentivize investment in clean energy manufacturing and recycling, greenhouse gas (GHG) emission reduction/industrial decarbonization and critical materials projects. Under the program, developers may be granted Credits via the allocation process, and then use these Credits to offset their tax liability and help fund their respective projects.

• Employers Beware: FTC Announces Final Rule Banning Worker Non-Competes

  04.25/Alert

  On April 23, 2024, the Federal Trade Commission (FTC) voted along party lines to issue its Final Rule prohibiting almost all non-competes with workers—both those entered into in the past and in the future. The Final Rule is set to become effective 120 days after it is published in the Federal Register (the Effective Date). The Rule rests on the FTC’s authority to interpret and enforce sections 5 and 6(g) of the Federal Trade Commission Act (FTC Act), which prohibits unfair methods of competition.

• Biden Administration Publishes Final Version of Title IX Regulations

  04.25/Alert

  After months of anticipation, the Biden administration released its final amendments to the Title IX regulations on April 19, 2024 (the “New Rules”). The amendments are the latest change to the Title IX regulatory landscape, altering many of the regulations that were put into place in the 2020 rule. The New Rules broaden the scope of Title IX by expanding the definition of sex-based harassment and hostile environment harassment, as well as expanding the jurisdiction of the regulations to include off-campus conduct. The New Rules also give schools more flexibility and discretion in developing procedures for Title IX grievance proceedings. For example, they no longer require that there be a live hearing and cross-examination by the parties, and a single investigator model is now allowed. The New Rules also clarify the prohibition on retaliation and update reporting and response obligations. Finally, while the New Rules do address certain protected characteristics, including sexual orientation, gender identity, and sex characteristics, they do not address participation in athletics. The Department of Education promulgated a separate Notice of Proposed Rulemaking on Sex-Related Eligibility Criteria for Male and Female Athletic Teams, but no final rule has been published.

• Supreme Court Unanimously Rules “Pure Omissions” Not Actionable under SEC Rule 10b-5 Even If Disclosure Required by Item 303 of Regulation S-K

  04.23/Alert

  In Macquarie Infrastructure Corp. v. Moab Partners, L.P., 601 U.S. ___, 2024 WL 1588706 (Apr. 12, 2024), a unanimous Supreme Court held that “pure omissions” cannot be the basis for a private action of securities fraud under Securities and Exchange Commission (SEC) Rule 10b-5(b). Stockholders had argued, and the Second Circuit had agreed, that while many “pure omissions” are not actionable, the result should be different if the omitted information should have been disclosed under Item 303 of the SEC’s Regulation S-K, which requires public companies to disclose “material events and uncertainties” in the Management’s Discussions and Analysis (MD&A) section of annual and quarterly reports. Rejecting this argument, the Court decided that private parties can premise a Rule 10b-5(b) claim on an omission only if that omission renders something else the company has said misleading (a “half-truth”). The SEC, however, can bring actions of its own for violations of Item 303.

• The United States Moves Toward a Comprehensive Privacy Law (One More Time)

  04.22/Alert

  On April 7, 2024, U.S. Sen. Maria Cantwell (D-WA), Chair of the Senate Committee on Commerce, Science and Transportation, and U.S. Rep. Cathy McMorris Rodgers (R-WA), Chair of the House Committee on Energy and Commerce, released a discussion draft of the American Privacy Rights Act (APRA). This bipartisan, bicameral draft legislation builds upon the previous draft U.S. comprehensive privacy bills and seeks to eliminate the existing patchwork of sectoral-based and state-specific data privacy laws in the United States. If passed, the APRA would rival the EU General Data Protection Regulation (GDPR) and become one of the leading global privacy standards. “Fired up” to get the comprehensive privacy legislation across the finish line is the message we heard from the members of the Energy and Commerce (E&C) subcommittee hearing on April 17. Each of the five expert witnesses also answered unanimously “yes” to the question of whether this bill was the best chance Congress had to pass a national privacy standard. This article looks at why this time may be different.

• DOI Rule Endorses Seminole Tribe’s Model of Remote Wagering

  04.19/Alert

  On March 22, 2024, a new federal rule published by the U.S. Department of the Interior (Department or DOI) went into effect, governing the Department’s review and oversight of certain tribal gaming arrangements.

• SCOTUS Relaxes Standards for Title VII Plaintiffs in Workplace Discrimination Claims

  04.19/Alert

  In Muldrow v. City of St. Louis, No. 22-193, 2024 WL 1642826 (U.S. Apr. 17, 2024), the U.S. Supreme Court ruled that an employee alleging that an involuntary lateral job transfer constituted workplace discrimination in violation of Title VII of the Civil Rights Act of 1964 need only show that the transfer resulted in “some harm,” rejecting as “extra-textual” any heightened threshold of harm required by certain lower courts. As Justice Elena Kagan held in the majority opinion, a Title VII plaintiff “does not have to show … that the harm incurred was significant. Or serious, or substantial, or any similar adjective.” This is because “Title VII’s text nowhere establishes that high bar.” Justice Kagan’s opinion was joined by Chief Justice Roberts and Justices Sotomayor, Gorsuch, Barrett and Jackson. Justices Thomas, Alito and Kavanaugh each filed concurring opinions.

• Revving Up: Eight States in Gear with Low-Carbon Fuel Standard Legislation

  04.17/Alert

  State low-carbon fuels programs are powerful drivers for the adoption of various low-carbon fuels, particularly renewable natural gas (RNG), renewable diesel and sustainable aviation fuel (SAF). For well over a decade, California has implemented its Low-Carbon Fuel Standard (LCFS), which was wildly successful in incentivizing the use and production of RNG, renewable diesel and SAF. In recent years, Oregon and Washington followed suit, and while these programs have a much smaller net impact on the demand for low-carbon fuels due to the respective sizes of those states, they have provided additional outlets for low-carbon fuels.

• Recoupment Survives the Discharge Injunction Permitting Dollar-for-Dollar Recovery on a Prepetition Debt

  04.02/Alert

  From time to time, a debtor continues to have the right to receive benefits or payments from a non-debtor counterparty under the same contractual relationship or transaction after receiving a discharge of prepetition debt. The question then arises whether the discharge prevents the non-debtor counterparty from withholding a payment or benefit to satisfy that prepetition, now discharged, debt. A recent bankruptcy appellate panel ruling decided in the context of the recoupment of overpaid Social Security benefits suggests that under the appropriate facts, the answer is no.

• FCC Advances Its Space and Satellite Agenda

  03.27/Alert

  The Federal Communications Commission (FCC or Commission), in a flurry of 2024 activity, has sought to advance its space and satellite agenda by, among other things, adopting rules that allow satellite operators and terrestrial wireless providers to partner and deliver wireless coverage to areas difficult to reach with traditional ground-based wireless signals, proposing rules that would comprise the framework by which space stations are licensed to handle in-space servicing, assembly and manufacturing (ISAM), and clarifying orbital debris mitigation rules.

• Non-U.S. Companies on Alert: U.S. Government Issues Tri-Seal Compliance Note on Global Enforcement

  03.26/Alert

  On March 6, 2024, the U.S. Department of Justice (DOJ), U.S. Department of Commerce, and U.S. Department of the Treasury issued a Tri-Seal Compliance Note (the “Tri-Seal Note”) emphasizing the obligations of non-U.S. persons to comply with U.S. sanctions and export control laws. The Tri-Seal Note does not issue any new rules or regulations, but rather reiterates existing U.S. trade compliance obligations for non-U.S. persons, highlights recent enforcement actions, and provides recommendations to help mitigate risks.

• DoD Contractor Requirement to Disclose Greenhouse Gas Emissions Has Been Halted

  03.22/Alert

  On December 6, 2022, and January 4, 2023, we published two client alerts outlining the proposed greenhouse gas (GHG) emissions disclosure requirements and explaining the differences between the Scope 1, 2 and 3 GHG emission categories. As we previously described, FAR 23.001 defines GHG as carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride and sulfur hexafluoride. Under the proposed Federal Acquisition Regulation (FAR) regulation, virtually all federal contractors will be required to identify and report an inventory of their Scope 1 and Scope 2 GHG emissions, starting one year after a final FAR rule is issued. With limited exceptions, this requirement will apply to all government contractors who received $7.5 million or more in federal contract obligations in the prior fiscal year. Government contractors who do not qualify as small business concerns and who received more than $50 million in federal contract obligations in the prior fiscal year will also be required to report an annual inventory of their Scope 3 GHG emissions. To date, the final FAR rule has not been issued.

• 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/Alert

  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”).

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

  03.13/Alert

  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.

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

  03.13/Alert

  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).

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

  03.12/Alert

  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.

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

  03.08/Alert

  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.

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

  03.04/Alert

  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.

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

  02.29/Alert

  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.”

• New York District Court Holds Teaming Agreements May Be Enforced

  02.29/Alert

  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).

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

  02.23/Alert

  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.

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

  02.16/Alert

  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.

• AI and the “G” in ESG

  01.25/Alert

  We recently waved goodbye to 2023, and we remember many things from last year (besides Taylor Swift), including two important letters—A.I. These two letters arguably received more attention than any others, ranging from companies developing and implementing breakthrough AI technology, to government regulators expressing caution and high school students becoming best friends with ChatGPT. As AI expands into virtually every industry—whether cutting edge technology and financial companies or “old school” industries, such as construction and transportation—another letter merits our attention: the letter G.

• Not So Fast: An Option to Purchase Real Estate May Not Always Be Rejected by the Debtor in Bankruptcy

  01.18/Alert

  Speaking at an annual national bankruptcy conference decades ago, a prominent bankruptcy judge stated that “if you think about whether a contract is executory or not for more than a few minutes, then you have spent too much time thinking about it.” By this, the judge seemed to imply that (subject to the express exceptions contained in the Bankruptcy Code) a debtor should be relieved from financially burdensome obligations (or be able to take advantage of a better opportunity) through the mechanism of contract rejection, thus (1) avoiding specific performance under applicable non-bankruptcy law, and (2) leaving the counterparty with only a prepetition general unsecured creditor for its breach-of-contract damages. The bankruptcy court’s recent decision in In re Le Yang, Case No. 23-00075 (Bankr. S. D. IN October 23, 2023) may call into question such approaches, policy and results, and reinforce the minority of decisions that do not allow the rejection of real estate purchase options.

• Department of Defense Delivers Highly Anticipated CMMC Proposed Rule

  01.17/Alert

  On December 26, 2023, the Department of Defense (DoD) issued the long-awaited Cybersecurity Maturity Model Certification (CMMC) proposed rule and related guidance. As we have previously reported, CMMC is a program developed by the DoD to protect the Defense Industrial Base from cyber threats. Under this program, nearly all DoD contractors and subcontractors would be required to achieve certain levels of cybersecurity maturity. The DoD first announced the CMMC program in 2019, then issued an initial version of the program (CMMC 1.0) in November 2020. In November 2021, the DoD announced that it would be overhauling the CMMC Program and replacing it with CMMC 2.0. The purpose of CMMC 2.0 was to restructure the CMMC Program and to reduce the cost and administrative burden of achieving cybersecurity compliance. The newly released proposed rule implements many aspects of CMMC 2.0 and introduces additional requirements. Below is a summary of some of the key aspects of the new rule. If implemented, the proposed rule would represent the DoD’s first implementation of the much-debated CMMC Program. Comments on the proposed rule are due on February 26, 2024.

• The Crossroads of Cybersecurity and National Security: Delaying Disclosure of Incidents under the SEC's New Cybersecurity Rule

  01.12/Alert

  The SEC's sweeping Cybersecurity Disclosure Final Rules put registrants on a tight deadline—just four business days to disclose material cybersecurity incidents.

• New York Non-Compete Agreements Are Safe—for Now

  01.10/Alert

  On December 23, 2023, New York Governor Kathy Hochul vetoed a bill that would have imposed a broad ban on non-compete agreements in New York. The legislation proposed a sweeping and aggressive prohibition of new non-compete agreements with employees and other workers and service providers, without any exceptions for highly compensated employees, for partners leaving a partnership or even for non-competes entered into in the sale of a business context.

• Department of Energy Proposes to Revise its Acquisition Regulation

  01.03/Alert

  On October 26, 2023, the Department of Energy (DOE) released a notice of proposed rulemaking to propose a comprehensive revision to its acquisition regulations. The DOE and the National Nuclear Security Administration (NNSA) promulgate the Department of Energy Acquisition Regulation (DEAR) to provide uniform acquisition policies and procedures for the DOE and NNSA. The notice of proposed rulemaking clocks in at over 100 pages in length, making for dense reading. Companies that regularly contract with the DOE, however, will likely want to at least peruse the proposed rule for relevant changes in this first comprehensive re-write of the DEAR in decades.

• Fugitive Sentenced in China to Life Imprisonment in Landmark Corruption Case

  01.02/Alert

  In a matter of great interest to asset recovery litigants, after nearly two decades of cooperation between U.S. and China law enforcement authorities, Xu Guojun, who fled China in 2001, was sentenced in China to life imprisonment for corruption and embezzlement of nearly $500 million from the Bank of China.

• Treasury Department and IRS Issue Proposed Regulations on the Clean Hydrogen Production Tax Credit under Section 45V of the Internal Revenue Code

  12.29/Alert

  As enacted by the Inflation Reduction Act of 2022 (IRA), section 45V of the Internal Revenue Code (IRC) grants a clean hydrogen production credit (CHPC) for each kilogram of clean hydrogen produced by a taxpayer at a qualified clean hydrogen production facility. The available credit amount under IRC section 45V varies based on the lifecycle greenhouse gas (GHG) emissions generated from the qualified hydrogen production facility (as well as the taxpayer’s compliance with the IRA’s new prevailing wage and apprenticeship requirements). The maximum credit amount is $3.00 per kilogram of clean hydrogen, which requires a lifecycle GHG emissions rate of less than 0.45 kilograms of CO2e per kilogram of hydrogen.

• FCC Updates Data Breach Notification Rules

  12.28/Alert

  The Federal Communications Commission (FCC) first adopted rules in 1998 restricting the use and disclosure of customer proprietary network information (CPNI), which refers to data collected by telecommunications carriers about their customers’ usage patterns, including call information, and service and billing details. The rules were updated in 2007 to, among other things, apply to interconnected VoIP providers and require that federal law enforcement (United States Secret Service and the FBI) and customers be notified of data breaches involving CPNI. In 2013, the rules were further amended to cover telecommunications relay service providers. The FCC revised the rules again in 2016 to require providers to notify customers, the FCC, FBI and Secret Service of data breaches unless the provider reasonably determined that no harm to customers was “reasonably likely to occur.” However, in 2017, Congress nullified the FCC’s 2016 Order by invoking the seldom used Congressional Review Act (CRA), which is a tool Congress can use to overturn certain federal regulatory actions.

• FCC Closes Lead Generator Loophole, Strengthens Illegal Text Message Blocking and Lays Groundwork for Future Additional Blocking Measures

  12.21/Alert

  The Federal Communications Commission (FCC) recently adopted a Second Report and Order (Order), Second Further Notice of Proposed Rulemaking (Further Notice), and Waiver Order that, among other things, take steps to protect Americans from illegal and unwanted text messages. The Federal Trade Commission puts the harm to consumers from scam text messages at $326 million for 2022, with other sources finding the harm reaching more than $20 billion. The FCC's actions are intended to bolster Americans' trust in text messages, which, unlike spam phone calls, are delivered to mobile devices without an option to ignore them before seeing some or all of the contents of the message.

• California Combats Greenwashing with New Voluntary Carbon Offset and Carbon-Neutral and Low-Carbon Product Disclosure Law

  12.19/Alert

  On October 7, 2023, California Governor Gavin Newsom signed AB 1305 into law, requiring businesses marketing or selling voluntary carbon offsets (VCOs) or marketing products as having significantly reduced emissions within California to disclose on their website certain information concerning the projects that generated the VCOs and emission reductions. Additionally, AB 1305 requires the disclosure of certain information supporting any business activity or product purported to achieve net-zero emissions, carbon neutrality or a reduction in greenhouse gas (GHG) emissions. This law represents California’s latest attempt to reduce “greenwashing,” hold businesses accountable for claims concerning GHG emission reductions and intensify transparency within the VCO market. AB 1305 is effective January 1, 2024, and businesses are required to update their disclosures at least annually.

• NCAA Proposes New Division I Subdivision Which Allows Universities to Directly Compensate Student-Athletes

  12.14/Alert

  Last week, NCAA President Charlie Baker, without advance notice, released a framework that, if adopted, would allow schools, for the first time, to directly pay student-athletes, fundamentally altering the NCAA’s current Name, Image and Likeness (NIL) rules and governance structure.

• SEC Postpones Effective Date of Share Repurchase Disclosure Modernization Rule

  12.11/Alert

  Share Repurchase Rule Postponed
  On November 22, 2023, the Securities and Exchange Commission (SEC) issued an order postponing the effective date of the Share Repurchase Disclosure Modernization Rule (“Share Repurchase Rule”), which became effective on July 31, 2023. The postponement order was issued in light of the October 31, 2023, decision by the U.S. Court of Appeals for the Fifth Circuit. The decision by the Fifth Circuit granted a petition for review and remanded the rule to the SEC to “correct the defects” identified in the rule by November 30, 2023. As a result of the SEC’s postponement order, the Share Repurchase Rule is stayed pending further action by the SEC.

• FinCEN Extends Beneficial Ownership Reporting Deadline for Companies Created or Registered in 2024

  11.30/ Alert

  As described in our previous client alert, the Corporate Transparency Act (CTA), which becomes effective on January 1, 2024, creates novel obligations for millions of entities to report beneficial ownership information (BOI) and certain other information to FinCEN. This requirement extends to private entities previously not otherwise subject to any reporting requirements. Under prior FinCEN rulemaking (the BOI Rule), companies created or first registered after January 1, 2024, would have had only 30 calendar days (the notice date) after the date that is the earlier of the date on which a company receives actual notice or public notice that it has been created or registered to determine whether they are subject to the CTA and, if so, report required information to FinCEN. However, on November 29, 2023, FinCEN amended the BOI Rule to extend that reporting deadline to 90 calendar days after the notice date for companies created or first registered in 2024.

• International Counter Ransomware Initiative Pledges to Halt Government Ransom Payments, but with Exceptions

  11.21/Alert

  The Annual Meeting
  The International Counter Ransomware Initiative (CRI) is an international initiative comprising 48 countries, the European Union and INTERPOL. The United States is a prominent member of this group, not only in hosting this annual meeting but also by serving as the CRI Secretariat. The CRI aims to “undercut the viability of ransomware, pursue threat actors, counter illicit finance underpinning ransomware ecosystem, collaborate with the private sector to defend against ransomware attacks, and cooperate internationally to address all elements of the ransomware threats.” The CRI focuses on partnerships and information sharing to bolster collective security against ransomware threats.

• ASBCA’s FY 2023 Annual Report: Contractor Appeals Are Way Down but Dispositive Motion Activity Is Way Up

  11.10/Alert

  On November 1, 2023, the Armed Services Board of Contract Appeals (ASBCA or Board) issued its fiscal year (FY) 2023 annual report, covering the period from October 1, 2022, through September 30, 2023. During FY 2023, contractors filed 342 new appeals at the ASBCA. This activity represents a 15% decrease from the number of appeals docketed during FY 2022. In fact, this was the lowest number of docketed appeals during any fiscal year since 1979. A significant percentage of the appeals—105 of the 342 new cases (or roughly 30%)—were filed against the U.S. Army Corps of Engineers. Over the last 10 years, the U.S. Army Corps of Engineers has generally been the agency against which most new ASBCA appeals have been filed.

• SEC Adopts Rule Changes to Shareholder Ownership Reporting

  11.09/Alert

  On October 10, 2023, the U. S. Securities and Exchange Commission (SEC) adopted amendments (Amendments) to the beneficial ownership reporting requirements for beneficial owners of more than 5% of a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (Exchange Act). The Amendments adopt, modify or decline to adopt the rule amendments initially proposed in the SEC’s February 10, 2022, release (2022 Proposals).

• OFAC Issues New Sanctions Targeting Hamas’s Financing Networks

  11.01/Alert

  Following the October 7 attack on Israel by Hamas, the Treasury Department’s Office of Foreign Assets Control (OFAC) has undertaken several initial sanctions steps to counter terrorist financing and call attention to financing networks, ongoing proliferation and terrorist support by Iran and due diligence expectations.

• NCAA Rejects Theory That Apparel Company Sponsorship Agreement Converts Company and Employees into Boosters

  11.01/Alert

  In 2023, the name image and likeness (NIL) allowance, the transfer portal, conference realignment and the NCAA’s overall governance structure attracted a significant amount of media attention. But one of the most important issues in industry of collegiate athletics rules enforcement and collegiate sports law continues to be what, precisely, constitutes a “representative of [a university program’s] athletics interests,” colloquially known as a “booster.” That is, because, under long-standing NCAA legislation, member institutions are held responsible for the actions of their boosters under the very low evidentiary standard of “known or should have known.”

• Federal Banking Regulators Issue Final Rule Overhauling Community Reinvestment Act Regulations

  10.27/Alert

  On October 24, 2023, the Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System (FRB), and Office of the Comptroller of the Currency (OCC) issued a joint final rule that makes extensive amendments to the regulations that implement the Community Reinvestment Act (CRA). The agencies’ stated goal in issuing the Final Rule is to “strengthen and modernize” the CRA regulations, which have not been significantly revised in nearly three decades. The Final Rule is the culmination of a lengthy process that ends years of uncertainty about the fate of the agencies’ CRA regulations.

• U.S. Education Department’s New Accountability and Transparency Rules for Postsecondary Institutions to Take Effect in July 2024

  10.24/Alert

  On September 27, 2023, after receiving over 7,500 public comments, the U.S. Department of Education (ED) announced final regulations concerning the Gainful Employment Rule and the financial value transparency (FVT) framework it had proposed in May. The final regulations were published in the Federal Register on October 10, 2023, and will take effect on July 1, 2024.

• Biden Administration Continues Campaign to Crack Down on Junk Fees

  10.20/Alert

  Federal consumer protection agencies and the White House have escalated their efforts to target so-called “junk” or surprise, add-on fees in a wide range of industries. The Biden Administration’s focus on junk fees has been intensifying since the beginning of 2022, as the White House has realized the popularity of these consumer protection measures in the midst of rising inflation. The Administration’s junk fee initiative, driven by the White House Competition Council formed in July 2021, is yielding new regulatory requirements across a wide swath of consumer-facing industries, and is likely to lead to enforcement actions in the not-too-distant future.

• California Bill Designed to Support Underrepresented Entrepreneurs Signed into Law

  10.13/Alert

  On October 8, 2023, California Governor Gavin Newsom signed Senate Bill (SB) 54 into law. SB 54 will become effective on March 1, 2025, and will require “covered entities” to report demographic information regarding the founding teams of all businesses in which such “covered entities” had invested in the prior year. This report would be required annually and would be made to the California Civil Rights Department (CRD).

• Department of Defense Designates Eight Technology Hubs to Create “Lab to Fab” Pathways for Microelectronics Researchers

  10.05/Alert

  On September 20, the Department of Defense (DoD) announced nearly $240 million dollars to eight regional innovation hubs that will accelerate U.S. microelectronics manufacturing industry through the Microelectronics Commons, the Department’s newest program to accelerate product deployment from research to end commercialization. Companies working in the semiconductor industry should consider opportunities to partner and team with the established hubs that will be funding prototype projects key to the U.S. defense.

• Public Companies Required to Adopt Clawback Policies by December 1, 2023

  10.05/Alert

  In late 2022, the SEC adopted a new rule (Rule 10D-1) and rule amendments (collectively, the “Rules”) that, through listing standards promulgated by the national exchanges (primarily NYSE and Nasdaq), will require all issuers with securities listed in the United States to adopt an incentive-based compensation (IBC) recovery policy (hereinafter, a “clawback policy”). The Rules are sweeping and impact all domestic issuers, as well as foreign private issuers, including those whose only U.S.-listed securities are Level 2 and 3 ADRs. The NYSE and Nasdaq final listing rules implementing the Rules were approved by the SEC on June 9, 2023, and importantly, for NYSE and Nasdaq-listed companies, require the adoption of a compliant clawback policy by no later than December 1, 2023.

• Recent Updates on Foreign Investment Restrictions and Export Controls Governing Semiconductors, Quantum Computing and Artificial Intelligence (AI)

  09.21/Alert

  From August 27 to August 30, U.S. Secretary of Commerce Gina Raimondo visited China, marking the first trip to China by a U.S. commerce chief in five years. The trip, which came amid growing tensions between China and the United States, sought to open dialogue on crucial matters, including export controls, investment restrictions and national security. One reported success from Raimondo’s trip was the creation of a commercial working group which will meet twice a year at the vice minister level. While Raimondo stressed that this group will not “solve everything overnight,” it has been hailed as a welcome step towards transparency between either country.

• When Does an Alter Ego Suit Alleging Debtor and Non-Debtor Are “One and the Same” Violate the Discharge Injunction?

  09.19/Alert

  In RS AIR, LLC v. NetJets Aviation, Inc. (In re RS AIR, LLC), 2023 Bankr. LEXIS 1453, 2023 WL 3774652 (9th Cir. BAP June 2, 2023), the Ninth Circuit Bankruptcy Appellate Panel (BAP) concluded that a discharge injunction is not violated by an alter ego claim against a non-debtor that alleges that the debtor and non-debtor defendant are one and the same. The BAP reasoned that a discharge only protects a debtor from personal liability, not any other person or entity (such as a co-obligor or guarantor) that is liable with a debtor, and affirmed an order denying the debtor’s motion for contempt for violations of the discharge injunction.

• One Contractor Hurdle Defeated: Federal Circuit Holds That the “Sum Certain” Requirement for CDA Claims is Not Jurisdictional

  09.05/Alert

  On August 22, 2023, the Federal Circuit reversed and remanded an Armed Services Board of Contract Appeals (ASBCA or Board) decision on appeal by ECC International Constructors, LLC (ECCI). The Federal Circuit held that the requirement to state a sum certain amount in a Contract Disputes Act (CDA) claim is mandatory but not jurisdictional.

• The SBA Makes Significant Changes to 8(a) Program

  08.30/Alert

  On July 19, 2023, the U.S. District Court for the Eastern District of Tennessee issued an injunction that prevents the Small Business Administration (SBA) from utilizing a “rebuttable presumption” of social disadvantage for specific minority groups when evaluating applicants’ eligibility for its 8(a) program. The opinion in Ultima Servs. Corp. v. U.S. Department of Agriculture declared the SBA’s rebuttable presumption unconstitutional under the Fifth Amendment of the U.S. Constitution. This ruling departs from the SBA’s longstanding practice of using this presumption to address discriminatory practices and promote equal opportunities.

• Gatekeeping Provisions in Chapter 11 Plans May Provide an Alternative to Nonconsensual Nondebtor Releases

  08.29/Alert

  Background
  A nondebtor release releases the claims of a nondebtor party against another nondebtor party related to a debtor, potentially for both pre-petition and post-petition conduct. A nondebtor exculpation is a limited release of claims against nondebtor parties who participated in a bankruptcy case, e.g., trustees and creditor committee members, and typically concerns post-petition conduct. A nondebtor release or exculpation is “nonconsensual” if imposed on a releasing party without its explicit or, in some cases, implicit consent.

• Administration Poised to Act on “Internet of Things” Devices

  08.25/Alert

  The Federal Communications Commission (FCC or Commission) has issued a Notice of Proposed Rulemaking (NPRM) to create a labeling program for Internet of Things (IoT) devices with comments due September 25, 2023, and reply comments due October 10, 2023.

• Pointers for Employers on the Proposed Regulations Interpreting the PWFA

  08.16/Alert

  The Pregnant Workers Fairness Act (PWFA), which went into effect in June 2023, requires employers, absent undue hardship, to provide reasonable accommodations to a qualified employee or applicant for employment for any known limitations related to, affected by or arising out of pregnancy, childbirth or related medical conditions.

• AAM: Getting Cleared for Take-Off

  08.03/Alert

  Following years of unprecedented disruption resulting from the COVID-19 pandemic, the aviation industry is experiencing a doubling down of efforts to bring next-generation transportation technologies to market. The world’s sense of climate urgency is also pushing the industry to demonstrate leadership in greening the world’s transportation networks. For many, Advanced Air Mobility (AAM) represents an exciting new frontier and sustainable path forward for the aviation industry, which still has its fair share of challenges ahead.

• Leading Generative AI Companies Commit to Voluntary White House Guidelines

  08.03/Alert

  On July 21, 2023, the White House announced the voluntary commitment of seven companies to high-level principles concerning safety, security and public trust with respect to their generative artificial intelligence (AI) technologies. These voluntary principles will serve as a guidepost for the industry until Congress develops and passes legislation for AI development.

• Virtual Examination of I-9 Documentation Now Permitted for Employers Enrolled in E-Verify

  08.02/Alert

  Federal immigration law requires that, within three days after an employee’s first day of employment, an employer must confirm an employee’s identity and work authorization by physically examining the employee’s proof of identity and employment authorization documents. Employers must then complete Section 2, “Employer Review and Verification,” of Form I-9. Since March 2020, due to the COVID-19 pandemic, the Department of Homeland Security (DHS) and the U.S. Citizenship and Immigration Services (USCIS) had temporarily authorized employers to conduct virtual inspections of the documentation required to complete new employees’ Forms I-9. In May 2023, however, the DHS announced that the virtual inspection option would end on July 31, 2023, and in-person, physical examination requirements would resume on August 1, 2023. In addition, employers would be required to re-inspect any remotely inspected I-9 documents by August 30, 2023.

• One to Watch: Has the Ninth Circuit Turned on Section 230?

  07.20/Alert

  On June 21, 2023, the Ninth Circuit decided in a class action suit, Vargas, et al., v. Facebook, Inc., that Section 230 of the Communications Decency Act (Section 230) did not immunize Facebook from claims arising from allegedly discriminatory conduct by housing advertisers using the defendant’s Ad Platform. Ad Platform provides advertising users with the ability to select from among thousands of user attributes, including protected characteristics like sex, disability and familial status (e.g., whether a person has children), to target ads to advertisers’ preferred audiences on Facebook. Facebook is not alleged either to have contributed actual content to the housing ads or to have directed, induced or required advertisers to select particular audience attributes, whether or not protected under federal housing law. Nevertheless, the Ninth Circuit denied Facebook’s motion to dismiss, holding that Section 230 immunity did not apply.

• DHS Implements New Security and Privacy Measures for Controlled Unclassified Information

  07.19/Alert

  On June 21, 2023, the Department of Homeland Security (DHS or Department) issued a final rule amending the Homeland Security Acquisition Regulation (HSAR) to add requirements for DHS contractors to protect Controlled Unclassified Information (CUI) and to report cyber incidents. The final rule follows a 2017 proposed rule and builds on existing DHS security policy by updating an existing HSAR clause and creating two new HSAR clauses. The final rule imposes significant new obligations on DHS contractors that extend beyond the obligations imposed by the Department of Defense (DOD) and other agencies. In addition, the clause requires DHS contractors to protect CUI using different security controls than those required by the DOD.

• U.S. Education Department Proposes New Accountability and Transparency Rules for Postsecondary Institutions

  07.14/Alert

  Amidst the focus on President Biden’s student loan forgiveness plan, many postsecondary institutions may have missed the Department of Education’s (ED) notice of proposed rulemaking aimed at increasing accountability for career training programs and transparency into the costs and financial outcomes of nearly all postsecondary programs. Specifically, the proposed regulations cover five topics: (i) financial value transparency and gainful employment, (ii) financial responsibility, (iii) administrative capability, (iv) certification procedures, and (v) the ability to benefit (rules for students without high school diplomas).

• Understanding the EPA’s Final Renewable Fuel Standard Set Rule for 2023, 2024 and 2025

  07.13/Alert

  On July 12, 2023, the U.S. Environmental Protection Agency (EPA) published the final rule, Renewable Fuel Standard (RFS) Program: Standards for 2023-2025 and Other Changes, which sets the final volume requirements and percentage standards for the use of cellulosic biofuel, biomass-based diesel, advanced biofuel and total renewable fuel used as transportation fuel, heating oil and jet fuel. In addition, the rule finalizes a supplemental standard to compensate for 500 million gallons of renewable fuel that the EPA wrongfully waived from the 2016 volume requirement. The volume requirements also reflect the EPA’s position that it will not be granting small refinery exemptions in the foreseeable future because empirical data has consistently shown that all refineries pass through their Renewable Fuel Standard (RFS) compliance costs to customers by increasing prices for gasoline and diesel fuel. Lastly, although the proposed rule included a mechanism for the creation of credits from qualifying renewable electricity, this credit scheme was not finalized.

• Proposed Regulations for Transfer of Energy Credits under IRA

  07.11/Alert

  On June 14, 2023, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released a Notice of Proposed Rulemaking setting forth Proposed Regulations §§ 1.6418-1 through 1.6418-5 (Proposed Regulations) governing the implementation of the new tax law allowing electing taxpayers to sell a variety of eligible clean energy tax credits to unrelated parties pursuant to section 6418 of the Internal Revenue Code (Code). It is anticipated that these new transferability provisions will enhance and simplify the ability of taxpayers to monetize clean energy tax credits, thereby providing such taxpayers with additional funding for their clean energy projects. The Proposed Regulations include a temporary but mandatory pre-filing information and registration process designed to prevent fraud, duplication and excessive or improper payments that may result from such transfers.

• EPA Clarifies Requirements for Management of End-of-Life Lithium-Ion Batteries under RCRA

  07.10/Alert

  As the demand for lithium-ion batteries in industrial equipment, electric vehicles (EVs), household appliances and other battery-powered products continues to grow, battery recycling and reuse programs are becoming increasingly critical. Businesses ranging from industrial operations to auto dealers to reverse-logistics providers are increasingly grappling with how to properly manage, dispose of, store and recycle lithium-ion batteries and battery-containing products.

• Coinbase Contests the SEC’s Regulatory Authority over Crypto Exchanges, Staking

  07.05/Alert

  Background – The SEC Complaint
  On June 6, 2023, the Securities and Exchange Commission (SEC) charged Coinbase, Inc. and Coinbase Global, Inc. (Coinbase) with violations of the Securities Exchange Act of 1934 and the Securities Act of 1933. The SEC’s 101-page complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Coinbase operates as an unregistered national securities exchange, broker, and clearing agency. The SEC further alleges that Coinbase failed to register the offer and sale of its crypto asset staking-as-a-service program under Section 5 of the Securities Act, and that the Coinbase Wallet and Coinbase Prime constitute broker services under the federal securities laws.

• Contiguous Condominiums Are Not “SARE”

  06.29/Alert

  To be classified as a single asset real estate case, the U.S. Bankruptcy Court for the Southern District of New York recently held that properties must share a common scheme or plan to constitute a “single property or project.” See In re Nuovo Ciao-Di LLC, Case No. 23-10068 (JPM), 2023 Bankr. LEXIS 1331 (Bankr. S.D.N.Y. May 19, 2023). In reaching its decision, the Bankruptcy Court clarified the multifactor test to be used to determine whether property is single asset real estate and emphasized the high burden creditors (particularly secured creditors who obtain substantial benefits from the designation) face when trying to prove a debtor is a single asset real estate debtor.

• Proposed Rule Increases Buy American Act Content Thresholds for DoD Contracts

  06.22/Alert

  Once again, the U.S. government continues its push to ensure that the products and services it acquires are manufactured domestically. The latest domestic content development pertains specifically to acquisitions by the Department of Defense (DoD). By way of a refresher, we previously wrote about the Federal Acquisition Regulatory Council’s issuance of a final rule on March 7, 2022, imposing significant increases to U.S. content requirements for federal procurements subject to the Buy American Act (BAA). However, the BAA requirements specifically appliable to the DoD, which existed prior to Executive Order 14005, remained at their existing levels of 55 percent, until now.

• DoD Announces Overhaul of FMS Process to Overcome Inefficiencies

  06.20/Alert

  After many years of frustration, on June 13, 2023, the Department of Defense (DoD) announced its decision to optimize the Foreign Military Sales (FMS) program. This announcement incorporates recommendations proposed by an internal DoD task force and follows the release of a 10-point plan to improve the FMS program by the Department of State. Together, these changes aim to alleviate some of the bureaucratic hurdles of the key stakeholders involved in the FMS program.

• Bank-Fintech Partnerships and Fair Lending: Top Areas at Risk for Government Scrutiny

  06.20/Alert

  Banking regulators have recently imposed restrictive consent orders on leading banking-as-a-service (BaaS) providers, the most significant of which alleged a series of fair lending violations. These actions should serve as a warning that all banks and fintechs must be prepared for heightened fair lending scrutiny.

• Treasury Department Announces Additional Guidance and Timetable to Allocate $4 Billion in Qualifying Advanced Energy Project Credits

  06.20/Alert

  On May 31, 2023, the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) issued Notice 2023-44 (May 31 Notice) providing additional details for applicants seeking Qualifying Advanced Energy Project Credits (Advanced Energy Project Credits or Credits) under section 48C of the Internal Revenue Code (Code). In 2022, the Inflation Reduction Act (IRA) amended section 48C of the Code to establish the Qualifying Advanced Energy Project Program (Program) and provided $10 billion in Credits for qualifying advanced energy projects. The Program is meant to incentivize investment in clean-energy manufacturing and recycling projects, greenhouse gas (GHG) emission reduction projects and critical materials projects.

• AI Users Beware: Federal, State and Local Legislators and Regulators to Crack Down on AI-Related Employment Discrimination

  05.31/Alert

  According to a 2022 survey from the Society for Human Resource Management, approximately one in four organizations use automation and/or AI to support employment-related activities, such as recruitment and hiring. AI tools used in employment decision-making include chatbots that guide applicants through the application process, algorithms that screen resumes and predict job performance, and even facial recognition tools used in interviews to evaluate a candidate’s attention span. For employers, these tools may offer an efficient and effective way to recruit promising talent, but federal, state and local governments are increasingly focused on the potential for discrimination.

• Congress Contemplates Creating a New Federal AI Regulatory Agency

  05.26/Alert

  In a hearing of the Senate Judiciary Subcommittee on Privacy, Technology and the Law on May 16, multiple U.S. senators—including Senators Richard Durbin (D-IL), Lindsey Graham (R-SC), Peter Welch (D-VT) and Cory Booker (D-NJ)—supported the idea of a federal artificial intelligence (AI) agency to regulate the transformative technology.

• Outlook on AI and Civil Rights Law and Policy

  05.25/Alert

  The Administration’s October 2022 launch of the AI Bill of Rights: A Vision for Protecting Our Civil Rights was the first step toward cementing equity and civil rights with respect to artificial intelligence (AI) as core values upon which the Administration has built a series of guidance documents and executive actions.

• Mentor Protégé Joint Venture Experience: GAO Confirms Agency Must Consider Experience of Each Member

  05.25/Alert

  Earlier this year, GAO sustained the bid protest of AttainX, Inc., B-421216 et al. (Jan 23, 2023), where the protestor argued that the agency’s evaluation was inconsistent with Small Business Administration (SBA) regulations requiring agencies to consider the experience of the individual members of the JV if the JV itself does not demonstrate experience. The awardee was MiamiTSPi, LLC, an 8(a) small business joint venture, composed of an 8(a) small business as the managing member and protégé, and another small business as the minority member and the mentor. The awardee JV sought reconsideration of the GAO’s decision. In MiamiTSPi, LLC-Reconsideration, B-421216.3 (May 11, 2023), GAO recently denied the request and provided further clarification on its interpretation of the SBA regulations regarding proposal evaluation for mentor-protégé JVs.

• Supreme Court Overturns Fraud Convictions Further Limiting Prosecutorial Power in Political Corruption Cases

  05.17/Alert

  On May 11, 2023, the Supreme Court overturned two federal wire fraud convictions involving alleged corruption surrounding New York’s “Buffalo Billion” initiative. Louis Ciminelli (Ciminelli) and Joseph Percoco (Percoco) were both defendants in an underlying criminal fraud case prosecuted in the Southern District of New York.

• Where Employment and Trade Compliance Intersect—Protecting Your Company in a World of Dueling Enforcement Risks for Export Controls and Anti-Discrimination

  05.16/Alert

  On April 18, 2023, the U.S. Department of Justice (DOJ) announced a settlement agreement with GM to resolve allegations that the company violated the Immigration and Nationality Act (INA). The DOJ found that the company’s employment eligibility verification process violated U.S. law in part due to overbroad attempts to comply with export control laws. Specifically, the DOJ found that:

  During onboarding, GM required non-U.S. citizens who were lawful U.S. permanent residents, and who therefore are “U.S. persons” for export control purposes, to provide an unexpired foreign passport as a condition of employment, imposing a discriminatory barrier in the hiring process; and GM improperly combined its I-9 process to verify permission to work in the United States with its export compliance assessment, which required non-U.S. citizens to provide specific documents that were not strictly necessary to prove their permission to work.

• EPA Continues the Beat with an Advanced Notice of Proposed Rulemaking for Additional CERCLA Hazardous Substance Designations for PFAS

  05.09/Alert

  On April 13, 2023, the Environmental Protection Agency (EPA) issued an Advanced Notice of Proposed Rulemaking (ANPRM) requesting input on seven potential future hazardous substance designations of per- and polyfluoroalkyl substances (PFAS) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). (See Addressing PFAS in the Environment, 88 Fed. Reg. 22399, Apr. 13, 2023.) The seven PFAS identified are:

  • Perfluorobutanesulfonic acid (PFBS), CASRN 375–73–5;

  • Perfluorohexanesulfonic acid (PFHxS), CASRN 355–46–4;

  • Perfluorononanoic acid (PFNA), CASRN 375–95–1;

  • Hexafluoropropylene oxide dimer acid (HFPO–DA), CASRN 13252–13–6 (sometimes called GenX);

  • Perfluorobutanoic acid (PFBA), CASRN 375–22–4;

  • Perfluorohexanoic acid (PFHxA), CASRN 307–24–4; and

  • Perfluorodecanoic acid (PFDA), CASRN 335–76–2.

• Joint Statement by Federal Agencies Marks Heightened Enforcement Attention on Potential Bias in AI Systems

  05.05/Alert

  On April 25, 2023, the Consumer Financial Protection Bureau (CFPB), Department of Justice (DOJ) Civil Rights Division, the Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) issued a joint statement affirming that they will be working collaboratively to enforce existing laws and regulations as applied to potential discrimination and bias in artificial intelligence (AI) systems. Companies that use AI and other automated systems should prepare for greater scrutiny from these agencies.

• Congressional Action on AI Takes Major Step Forward

  05.04/Alert

  Congressional leaders are intensifying efforts to legislate and regulate artificial intelligence (AI) technology. On April 13, Senate Majority Leader Chuck Schumer (D-NY) publicly announced a framework on artificial intelligence (AI) regulation. The announcement came in response to the Chinese Communist Party’s release of their own AI regulatory framework. Schumer revealed his framework as part of the United States’ duty to “lead and shape the rules governing such a transformative technology” rather than allow China to “write the rules of the road.”

• U.S. Patent Trial and Appeal Board (PTAB) Considers Sweeping Reform to Address Discretionary Denials and Petitions Filed by Certain For-Profit Entities

  05.03/Alert

  On April 21, 2023, the U.S. Patent and Trademarks Office (USPTO) published an advance notice of proposed rulemaking seeking comments on the proposed changes addressing the U.S. Patent Trial and Appeal Board’s (PTAB) authority under 35 U.S.C. §§ 314(a) and 325(d) to exercise its discretion in denying petitions for inter partes review (IPR) and post-grant review (PGR). The USPTO is specifically seeking public input on a number of changes under consideration for future rule changes. Those who regularly make use of the IPR and post-grant proceedings before the PTAB will want to carefully review the changes under consideration and provide comments by June 20, 2023, if they want to affect the USPTO’s final rule changes.

• Follow the Money: AI Winners in President Biden’s FY 2024 Budget Request

  04.28/Alert

  The artificial intelligence (AI) revolution is rapidly transforming industries and reshaping our world as we know it. With advances in machine learning, natural language processing and computer vision, AI has moved beyond the realm of science fiction and become a driving force of innovation and productivity. This disruptive technology is creating new opportunities, challenges and implications for society at large. The Biden Administration is taking notice—here is a look at new AI programs and funding proposed in President Biden’s fiscal year 2024 budget proposal released on March 9, 2023.

• The Nuclear Regulatory Commission Unanimously Votes to Separate Fusion Energy Regulation from Nuclear Fission

  04.19/Alert

  On April 14, 2023, in a unanimous vote, the Commissioners of the U.S. NRC directed that fusion energy devices will be regulated under the agency’s existing rules for use of byproduct materials in 10 C.F.R. Part 30, with only a limited-scope rulemaking. This approach separates the regulatory framework for fusion from the utilization facility framework applicable to nuclear fission energy and will allow the NRC to tailor its regulatory approach to the emerging fusion energy sector.

• Consumer Financial Protection Bureau Finalizes Small Business Lending Data Rule

  04.17/Alert

  On March 30, 2023, the Consumer Financial Protection Bureau (CFPB) issued a final rule that requires small business lenders to collect detailed demographic and financial data about applications and originations, and annually report that data to the CFPB. Currently, lenders typically only collect demographic data (such as the race or ethnicity of an applicant) with residential mortgage applications because federal law has significantly restricted the collection of such data in other circumstances. The new rule will therefore require small business lenders to make substantial operational changes. Lenders will also need to assess and revise their compliance programs to manage both the new data collection and reporting requirements, as well as the increased fair lending scrutiny that is likely to result from regulators’ access to this detailed data.

• Washington Court Reaffirms Tribal Sovereignty in Sports Betting Case, But Differences Among Courts Begin to Emerge

  04.12/Alert

  Over recent decades, tribal gaming has developed into a $32 billion industry, providing economic stability and tribal government funding for sovereign nation building. More recently, the U.S. Supreme Court’s decision (in 2018) to overturn the Professional and Amateur Sports Protection Act has sparked renegotiations of tribal-state gaming compacts across the country to allow tribes to enter the online sports betting arena.

• Commerce Releases New Proposed Rule Governing Restrictions on Chinese Investments by CHIPS Act Applicants

  03.31/Alert

  On March 21, 2023, the Department of Commerce (Commerce) released a Notice of Proposed Rulemaking (NPRM) imposing guardrails preventing the “improper use of funds” made available under the CHIPS Act of 2022, which creates a private sector incentive program to boost semiconductor manufacturing in the United States. The guardrails are designed to ensure that technology and innovation spurred by the CHIPS Act is targeted towards domestic investment in semiconductor facilities and equipment, exclusively, and does not benefit adversarial countries, principally China.

• Application Windows Opening for New Federal Funding

  03.31/Alert

  On August 16, 2022, the passage of the Inflation Reduction Act (IRA) marked the establishment of a trifecta of bipartisan legislation aimed at improving U.S. economic competitiveness through innovation and domestic industrial productivity. In total, the IRA, the CHIPS and Science Act (CHIPS) and the Infrastructure Investment and Jobs Act (IIJA) provide about $2 trillion in federal funding, offering businesses and organizations a rare opportunity to apply for federal grants or take advantage of other federal incentive benefits. Many application windows for grants, loans and other incentives have opened since the passage of these landmark bills, with additional application periods opening across the first three quarters of 2023. Businesses should be assessing how available programs align with objectives and growth plans and preparing to meet critical eligibility and compliance obligations to obtain benefits. Though more details are still to come, below are considerations for companies seeking to benefit from new federal spending and incentive programs to support infrastructure projects, technology innovation, semiconductor manufacturing, and climate protection and clean energy initiatives.

• EPA Proposes Stringent Regulation of PFAS in Drinking Water

  03.16/Alert

  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).

• New Biden Administration Cyber Strategy Proposes Dramatic Shift in Order to Hold Software Developers Liable for “Insecure” Software

  03.13/Alert

  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.

• Seeking Certainty: Redefining “Waters of the United States”

  03.09/Alert

  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.

• CHIPS Act Funds Start to Flow: First Funding Opportunity Announced for Commercial Front-end and Back-end Semiconductor Fabrication Facilities

  03.03/Alert

  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
  

  03.02/Alert

  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.”

• U.S. Attorney’s Offices Adopt New Voluntary Self-Disclosure Policy

  02.27/Alert

  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

  02.23/Alert

  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.”

• Federal Court Ends California’s Ban on Mandatory Employment Arbitration Agreements

  02.22/Alert

  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.

• Amid the Rise of Greenwashing Litigation, Guidance Due for Updates May Become Law

  02.21/Alert

  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.

• Alternating Current Yields Alternating Decisions on Bankruptcy Priority Treatment

  02.21/Alert

  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.

• OMB Proposes Revisions to Guidance Supporting the Implementation of IIJA’s Build America, Buy America Act Provisions

  02/15/2023

  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.

• New York Finalizes Disclosure Requirements for Commercial Financing Transactions

  02.10/Alert

  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.

• The SEC’s Fast-Approaching Cybersecurity Overhaul for Public Companies and Regulated Entities

  02.03/Alert

  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

  02.02/Alert

  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

  02.01/Alert

  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.

• SEC Enforcement: 2022 Year in Review

  01.27/Alert

  The SEC’s Enforcement Division had a banner year in 2022—Chair Gary Gensler’s first full year on the job—validating predictions that Chair Gensler’s tenure would usher in a new era of aggressive enforcement. We expect the Enforcement Division to continue its aggressive approach in 2023, as the staff pursues the Chair’s priorities including ESG, digital assets, cybersecurity and insider trading.

• FCC Proposes Updates to Customer Proprietary Network Information Breach Reporting Requirements

  01.26/Alert

  The Federal Communications Commission (FCC) has proposed to update its data breach reporting requirements to address increasing security breaches in the telecommunications industry. In December 2022, the FCC released a Notice of Proposed Rulemaking (NPRM) launching a proceeding to improve the process for notifying customers and federal law enforcement of breaches that may have exposed customer proprietary network information (CPNI). In the NPRM, the FCC proposed several revisions to its data breach rules (which have not been updated since 2007) and seeks comment on those proposals.

• How Are Digital Assets Regulated in the United States and Elsewhere?

  01.17/Alert

  Following the fall of FTX, the global spotlight on digital asset regulation has intensified. The key question—particularly in the United States—is whether and when digital assets should be subject to securities regulation. This debate is complicated by the variety of digital asset uses. As an example, a modified ERC-20 token standard on the Ethereum blockchain has been used to tokenize company shares with the ability to automate dividend payments, while the ERC-721 token standard has been used to create Non-Fungible Tokens (NFTs). These token use cases present entirely different functionalities and can be modified even further. How varied use cases are best regulated lies at the heart of the digital assets legal debate.

• FCC Proposes Rules to License Spectrum for Unmanned Aircraft Systems

  01/11/2023

  The FCC’s proposed rules would provide licensed spectrum access to unmanned aircraft systems, allowing for riskier unmanned flights.

• FCC Adopts Rules Requiring Broadband Providers to Display Point-of-Sale Labels and Proposes New Rules Promoting Equal Access to Broadband Services

  01/10/2023

  New FCC rules require internet service providers (ISPs) to prominently display labels disclosing information about broadband prices, rates, data allowances and broadband speeds.

• HSR Merger Filing Fees Significantly Increase for Transactions Valued at $500 Million or More; Highest Fee Increasing by 800%

  01/09/2023

  The Merger Filing Fee Modernization Act (MFFM Act), included in the year-end omnibus spending bill that President Biden signed into law on December 29, 2022, updates the fee structure for filings submitted pursuant to the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) for the first time since 2001. Under the HSR Act, parties to certain mergers and acquisitions are required to report transactions valued in excess of the lowest filing threshold, currently $101 million, to the Federal Trade Commission (FTC) and Department of Justice (DOJ) and wait a proscribed period of time before closing.

• Employers Take Note: FTC Releases Notice of Proposed Rulemaking Banning Worker Non-Competes

  01.06/Alert

  Citing its interest in promoting competition and opening up “better employment opportunities” for workers, the Biden Administration is moving forward with a proposal to prohibit a feature of many U.S. employment relationships valued by employers and of significant importance in M&A transactions: non-competition agreements. Rather than looking to Congress to enact legislation to achieve this goal, the Administration is relying on the authority of the U.S. Federal Trade Commission (FTC) to enforce and engage in rulemaking under existing antitrust laws.

• FCC Modifies Equipment Authorization Rules for Certain Chinese Manufacturers

  11.28/Alert

  The FCC seeks further comment on the revocation of existing equipment authorizations issued to manufacturers on FCC Covered List.

• Congressional and Government Investigations in 2023: What to Expect from the New Congress

  11.18/Alert

  As the 118th Congress prepares to take office, those who may be targets of a new congressional agenda emphasizing government investigations should assess and address their vulnerabilities.

• Proposed Rule to Designate Two PFAS Chemicals as Hazardous Substances Stands to Up the Ante for Site Remediation

  09.02/Alert

  On Friday, August 26, 2022, the U.S. Environmental Protection Agency (EPA) released a pre-publication notice of a long-awaited proposed rule to designate two of the most-studied per- and polyfluoroalkyl substances (PFAS)—perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS)—as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

• Senate Democrats Announce Breakthrough Bill on Energy, Climate, Tax Reform and Prescription Drug Pricing 

  07.29/Alert

  The Inflation Reduction Act of 2022 would constitute a historic investment in the U.S. clean energy industry.

• Landmark Federal Privacy Bill Clears First Congressional Hurdle

  07.08/Alert

  In early June, Rep. Frank Pallone (D-NJ-6) and Rep. Cathy McMorris Rodgers (R-WA-5), the Chair and Ranking Member of the House Energy & Commerce Committee, along with Senator Roger Wicker (R-MS), Ranking Member of the Senate Science, Commerce & Transportation Committee, unveiled a draft federal privacy bill known as the “American Data Privacy and Protection Act.” The proposal—the first to garner bipartisan, bicameral support in Congress—would establish a national framework to protect consumer data privacy and security and bolster individual privacy rights.

• Corporate Transparency Act and Proposed Regulations: The Start of Applicability Is Coming upon Us Quickly

  07.06/Alert

  On January 1, 2021, Congress enacted the National Defense Authorization Act for Fiscal Year 2021 (the NDAA), after overriding a presidential veto. Contained within the NDAA is the Anti-Money Laundering Act of 2020 (the AMLA), which introduces extensive reforms to U.S. anti-money laundering (AML) and counter-terrorism financing (CFT) laws. The AMLA shows Congressional intent to combat money laundering and terrorist financing through expanding the regulatory power of the Financial Crimes Enforcement Network (FinCEN).

• Supreme Court Issues Opinion in West Virginia v. EPA

  07.01/Alert

  The Supreme Court rejected EPA’s Obama-era Clean Power Plan in a decision that has significant implications both for future attempts by EPA to regulate CO2 emissions and for other agencies attempting to promulgate rules that implicate “major questions.”

• EPA Announces Stringent New Health Advisory Levels for Four PFAS Chemicals

  06.22/Alert

  Introduction
  On June 15, 2022, the EPA released drinking water health advisory levels for four per- and polyfluoroalkyl substances (PFAS): PFOA, PFOS, PFBS and GenX. The announcement reflects the Biden administration’s continued push to regulate PFAS.

• SEC Releases Proposed Rules Targeting SPACs, Shell Companies and De-SPAC Transactions

  04.15/Alert

  On March 30, 2022, the Securities and Exchange Commission (SEC) issued Proposed Rules that, if enacted, would significantly affect the acquisition of private operating companies by publicly-traded special purpose acquisition companies (SPACs), and related financing transactions (individually and collectively, de-SPAC transactions), aligning them with requirements of traditional initial public offerings (IPOs). This alert provides an overview of the Proposed Rules and includes analysis of their impact, if adopted, on SPAC formation, de-SPAC transactions, and related de-SPAC transaction disclosure and marketing practices. The Proposed Rules do not describe what effect, if any, they will have on pending de-SPAC transactions.

• SEC Proposes Amendments to Shareholder Reporting Rules, Affecting Schedule 13D/G Filers and Impacting Section 16(a) Reporting

  04.15/Alert

  On February 10, 2022, the SEC proposed changes to Regulations 13D-G and related rules under the Securities Exchange Act of 1934 (Exchange Act) that, if enacted, would modify the existing securityholder reporting and disclosure framework for securityholders that own greater than 5% of a publicly traded company’s Exchange Act Section 12 registered securities and their derivatives (covered securities) (i.e., SEC Schedule 13G and Schedule 13D filers). The amendments, if enacted, will require issuers, Schedule 13G and 13D filers, to modify their filing practices to comply with significantly shorter filing deadlines and a clarified Regulation 13D “group” definition, and to account for certain previously excluded cash-settled derivatives, which would likely increase the number of securityholders deemed to beneficially own greater than 5% or 10% of an issuer’s covered securities, thereby subjecting them to the Exchange Act’s Section 13 and Section 16 beneficial ownership reporting framework, respectively, and related short-swing trading limitations under Exchange Act Section 16(b). This alert provides an overview of the current filing requirements for initial and amended Schedules 13D and 13G, followed by an analysis of the SEC’s proposed rule amendments to those filing requirements as well as the effects on the filing requirements under Section 16 of the Exchange Act and their impact on existing compliance and disclosure practices.

• NRC Staff Issues Environmental Justice Recommendations

  04.15/Alert

  On March 29, 2022, the Nuclear Regulatory Commission (NRC) Staff issued a SECY Paper, SECY-22-0025, “Systematic Review of How Agency Programs, Policies, and Activities Address Environmental Justice,” including an evaluation of whether the NRC should incorporate environmental justice beyond implementation through the National Environmental Policy Act, as directed by the Commission on April 23, 2021. In this SECY Paper, the Staff concluded that the NRC’s programs, polices, and activities that address environmental justice through NEPA, including the NRC’s 1995 “Environmental Justice Strategy” and its 2004 “Policy Statement on the Treatment of Environmental Justice Matters in NRC Regulatory and Licensing Matters,” (or “Environmental Justice Policy Statement”) are consistent with applicable law, and generally consistent with the spirit of Executive Orders that address environmental justice.

• FTC Announces Largest-Ever HSR Threshold Increase for 2022 Transactions

  01.24/Alert

  As a result of the increase in the U.S. Gross National Product (GNP) for 2021, after the first decrease in U.S. GNP in over a decade in 2020, the Federal Trade Commission (FTC) has announced higher revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which will become effective on February 23, 2022. Since the FTC began adjusting the thresholds in 2005, the 2022 threshold increase is the largest year-over-year increase, both in terms of dollar value and percentage increase. The thresholds determine whether parties involved in proposed mergers, consolidations, or other acquisitions of voting securities, assets, or unincorporated interests must notify the FTC and the Antitrust Division of the Department of Justice (DOJ) of a proposed transaction and comply with a mandatory waiting period before the transaction may be consummated. Note that the current $92 million threshold is still in effect for transactions that will close on or before February 22, 2022.

• EPA Takes Aim at Pesticide Devices

  11.08/Alert

  Recent enforcement actions against manufacturers and importers of air filters and purifiers highlight Environmental Protection Agency’s aggressive enforcement posture on potentially misleading claims of efficacy.

• Department of Justice Signals Reinvigorated Corporate Enforcement for White Collar Crime

  11.08/Alert

  After white collar crime enforcement reached an all-time low over the past four years, the Biden DOJ has targeted corporate misconduct for renewed enforcement efforts, announcing several policy changes aimed at increasing corporate and individual accountability for criminal malfeasance. On October 28, 2021, the Department released a memorandum detailing these policy changes to coincide with Deputy Attorney General Lisa Monaco’s keynote address at the ABA’s 36^th National Institute on White Collar Crime. As companies continue to evaluate their internal compliance programs and potential exposure to liability under the current administration, they should keep these shifts in DOJ policy in mind:

• Gensler SEC Expands Scope of Insider Trading Enforcement

  08.26/Alert

  Gensler SEC Expands Scope of Insider Trading Enforcement

• Biden’s Infrastructure Bill and the Promise of NEPA Reform

  08.23/Alert

  The current bill contains several provisions which would significantly alter the requirements of National Environmental Policy Act review, but it remains to be seen whether those changes will survive House review.

• Senate Passes $1.2 Trillion Infrastructure Package, Tees up $3.5 Trillion Budget Reconciliation Bill

  08.12/Alert

  On August 10, 2021, the U.S. Senate passed the bipartisan Infrastructure Investment and Jobs Act, a mammoth $1.2 trillion infrastructure package that represents months of negotiations between Senate Democrats and Republicans and the White House. The legislation, which passed by a 69-30 vote, includes funding for roads, bridges, electric vehicles, broadband, cybersecurity, water infrastructure, and grid resilience, among other priorities.

• DOE Requests Comments on the Price-Anderson Act

  08.11/Alert

  The U.S. Department of Energy has issued a notice of inquiry requesting comments concerning the need for continuation or modification of the provisions of the Price-Anderson Act as administered by DOE. The comments will assist DOE in the preparation of a report it plans to submit to Congress by the end of this year.

• State-Level Permitting Primacy May Boost Carbon Capture and Storage

  08.11/Alert

  Texas and Louisiana are stepping up efforts to assume regulatory authority for an emerging wave of Carbon Capture and Storage (CCS) projects.

• DoL Proposes Rule to Increase Minimum Wage to $15 for Many Federal Contractors

  07.27/Alert

  Through a proposed rule published on July 22, 2021, the Department of Labor is implementing Executive Order 14026. The new rule and Executive Order will require federal service, construction contractors and subcontractors to increase hourly wages to $15 per hour for a broad range of employees.

• Bipartisan Senators Introduce the Cyber Incident Notification Act of 2021

  07.27/Alert

  On July 21, 2021, Senator Mark Warner (D-VA), chair of the Senate Intelligence Committee, and a bipartisan group of co-sponsors including Senator Marco Rubio (R-FL) and Senator Susan Collins (R-ME), formally introduced the Cyber Incident Notification Act of 2021. In light of high-profile cybersecurity incidents such as the Colonial Pipeline attack, the Act aims to require companies and federal agencies to quickly report cybersecurity intrusions to the Federal Government.

• The Beginning of the SPAC Enforcement Wave: SEC Makes Example of SPAC for Spacing Out on Diligence

  07.16/Alert

  Chair Gensler’s enforcement agenda begins to take shape as SEC brings sprawling enforcement action against wide range of SPAC participants.

• Navigating Uncertain ESG-Related Risks at the SEC

  07.06/Alert

  Although the SEC’s ESG-related agenda is in its early stages, market participants should pay close attention to the emerging regulatory framework, which often portends both enforcement actions and shareholder litigation. As previously noted here, these regulatory developments call for careful evaluation, particularly in light of widely held expectations that the SEC will move swiftly on climate-related disclosure rulemaking following the conclusion of a notice-and-comment period this summer, as well as on potential rulemaking requiring public companies to disclose workforce metrics, including in relation to diversity.

• FCC Revises Equipment Authorization Rules

  06.22/Alert

  On June 17, 2021 the FCC approved a Report and Order modifying its equipment authorization program for radiofrequency devices. The Order updates the Commission’s marketing and importation rules in order to minimize obstacles to the development and deployment of new products while continuing to ensure that radiofrequency equipment remains compliant with Commission requirements.

• ASBCA Rejects Government’s Motion to Dismiss Despite Suspicion of Fraud

  06.17/Alert

  As we have reported previously, in actions at the Court of Federal Claims the Department of Justice often attempts to use fraud counterclaims when justifying its denial of a contractor’s claim. We are also noticing that agency lawyers are using fraud as an affirmative defense more frequently at the Boards of Contract Appeals, which unlike the Court of Federal Claims lack jurisdiction over fraud claims. Contractors should be aware that when the government attempts to use alleged fraud to strip the boards of jurisdiction, a recent decision from the Armed Services Board of Contract Appeals (the Board) makes clear that the Board retains jurisdiction unless actual fraud is found by a competent government agency or established by a federal court.

• Biden Administration Updates Framework for China-Related Investment Prohibitions and Expands the Scope of Restricted Chinese Companies

  06.15/Alert

  Summary of the E.O.

  On June 3, 2021, President Biden signed E.O. 14032 that alters the framework for restrictions on the purchase or sale of publicly traded securities of Chinese companies designated for military affiliations, but ultimately re-affirms the previous restrictions under E.O. 13959. These restrictions will continue to be applied to 31 entities previously sanctioned as well as 28 newly added companies. On the same day, the Department of Defense (DOD) independently released its annual list of Chinese military companies pursuant to recently enacted legislation.

• Boom in the Medical Spa Industry Amid Regulatory Uncertainty Creates Perfect Storm

  06.01/Alert

  The medical spa (medspa) industry in the United States is booming. In 2010, there were about 1,600 medspas operating in the United States generating about $1.1 billion in revenue (about $700,000 per medspa on average). By 2018, these numbers increased to over 5,000 medspas generating about $7 billion-$8 billion in revenue (about $1.4 million per medspa on average). The number is expected to grow to over 10,000 medspas by 2023 with about $18 billion-$20.7 billion in revenue. Since 2010, year over year revenue growth has consistently been in the double digits, with 2011 registering nearly 40 percent growth and 2017 registering nearly 50 percent growth. The 2018 profit margin for medspas was 29 percent.

• Congressional SPACtivity Continues: Draft Legislation Proposes to Eliminate Safe Harbor Protection for Projections in SPAC Transactions

  05.28/Alert

  As previously noted in Pillsbury’s earlier article, one factor that has contributed to the rise in SPACtivity has been the availability to SPACs of certain features unavailable to companies going public through traditional IPOs, most notably the Private Securities Litigation Reform Act (PSLRA) safe harbor for forward-looking statements. On May 21, 2021, the U.S. House Committee on Financial Services released draft legislation to amend the Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act) to exclude all SPACs from the safe harbor. Section 27A of the Securities Act and Section 21E of the Exchange Act currently exclude from the safe harbor forward-looking statements made “… in connection with an offering of securities by a blank check company…” Rule 419 under the Securities Act defines a “blank check company” as “…a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person… ” and is “ … issuing penny stock ...” As the vast majority of SPACs do not issue penny stock or are structured to avoid treatment as a “blank check company” as defined in Rule 419, de-SPAC transactions have generally been viewed as eligible for the PSLRA safe harbor. The draft legislation proposes to delete the term “blank check company,” replacing it with the phrase “… a development stage company that … has indicated that its business plan is to acquire or merge with an unidentified company, entity, or person…” without reference to whether or not the company issues penny stock. As a SPAC is formed for the purpose of acquiring or merging with an unidentified entity, the proposed amendments would likely make the PSLRA safe harbor unavailable for forward-looking statements, such as projections, included in documents soliciting stockholder approval of de-SPAC transactions.

• DoD Issues Proposed Rule on Enhanced Debriefing Procedures

  05.24/Alert

  The Department of Defense (DoD) recently issued a proposed rule to implement Section 818 of the FY18 NDAA. Under Section 818, Congress required the DoD to issue new regulations in the Defense Acquisition Regulation Supplement (DFARS) on the procedures for enhanced debriefing rules within six months. 

• Congress Moves to Repeal OCC’s “True Lender” Rule

  05.20/Alert

  On May 11, 2021, the Senate voted to repeal a Trump Administration regulation that defines which party is the “true lender” in partnerships between banks and non-banks, including financial technology and other non-bank lending companies. The Senate resolution now heads to the House of Representatives, which is expected to pass the resolution. President Biden has signaled his support for the repeal and will likely enact the repeal following a vote in the House. The repeal of this rule could create regulatory uncertainty for fintechs and other non-bank lenders that were relying on the rule.

• Time’s Up!: The Court Rejects the Government’s Request for a Longer Limitations Period Applicable to Fraud Counterclaims

  05.11/Alert

  Contractors often face the dilemma of whether they should appeal an adverse contracting officer final decision (COFD) issued under the Contract Disputes Act (CDA) to the cognizant Board of Contract Appeals or the Court of Federal Claims. One factor favoring the Boards is that the Court has jurisdiction over fraud counterclaims and the Boards do not. The Department of Justice (DOJ) (which represents the government at the Court) has asserted such fraud counterclaims with more regularity in recent years.  Contractors should know that when the government asserts a fraud counterclaim, the Court’s decision in Lodge Constr., Inc. v. United States, No. 13-499, 2021 WL 1418847 (Fed. Cl. Apr. 14, 2021), makes clear that the government must adhere to a hard deadline--perhaps with no exceptions.

• ASBCA Confirms the “Goldilocks Principle” in Government Contract Appeals

  05.05/Alert

  Contractors must ensure that they do not appeal a contracting officer’s decision too early or too late lest they find that the courts and board have no jurisdiction. Yet, the government continues to issue directions that provide no certainty on the issue and, indeed, serve only to muddle the question of what constitutes an appealable final decision. Last month, the Armed Services Board of Contract Appeals (ASBCA or Board) issued a decision in the appeal of Northrop Grumman Corporation, ASBCA No. 62189, dismissing the appeal for lack of jurisdiction and highlighted what these authors will refer to as “the Goldilocks Principle” for when contractors can appeal a contracting officer’s decision that certain costs are not allowable. Frustratingly, the Government often issues unclear decisions that can leave contractors wondering whether the timing for appeal is too early, too late or just right.

• Data Privacy Fines and Damages “Double Jeopardy”: UK Supreme Court Hears Google “Class Action”

  04.29/Alert

  This week sees a key hearing before the UK Supreme Court in the case of Lloyd v Google, an event long awaited by those familiar with data protection law proceedings in Europe.

• President Biden Issues an Executive Order Increasing the Minimum Wage for Many Employees of Federal Contractors to $15.00

  04.28/Alert

  On April 27, 2021, President Biden signed an Executive Order raising the minimum wage paid by Federal contractors and subcontractors to $15.00 per hour, beginning on January 30, 2022. The Federal minimum wage currently is $10.95 per hour for all workers on Federal construction and service contracts, based on President Obama’s 2014 Executive Order 13658, which had raised that minimum wage to $10.10 per hour and provided for adjustment for inflation. These Executive Orders do not change the current minimum wage of $7.25 under the Fair Labor Standards Act (FLSA) applicable to non-exempt employees who do not work for government contractors, and to employees of government contractors who do not work on or in connection with Federal construction and service contracts.

• COVID-19 Business Interruption Losses: Time is of the Essence to Pursue Coverage

  02.12/Alert

  The United States declared a national emergency in response to COVID-19 on March 13, 2020, and states quickly followed with stay-at-home orders that impacted businesses and institutions nationwide. More than 10 months have passed since the COVID-19 pandemic emerged in the United States and the prevalence of the virus has had significant impacts, not only with respect to the number of people infected and lives lost, but also to the widespread physical damages and economic losses suffered by businesses.

• Federal Support for Defense Uses of Advanced Nuclear

  02.03/Alert

  Summary of the EO

  On January 12, 2021, former President Trump issued an EO on Promoting Small Modular Reactors for National Defense and Space Exploration. The EO directs the Department of Energy (DOE), Department of Defense (DOD), and NASA to take actions to coordinate their nuclear-related activities, move forward with certain ongoing nuclear projects and promote advanced reactor and small modular reactor (SMR) technologies. The purpose of the EO is to take steps to revitalize the U.S. nuclear sector, reinvigorate the U.S. space exploration program, develop diverse energy options for national defense needs and advance U.S. technological supremacy and leadership.

• Copyright Small-Claims Court Established by Congress in the CASE Act

  01.27/Alert

  According to Register of Copyrights in its 2013 Report on Copyright Small Claims, “small claims issues are anything but small. On the contrary, they present a range of complex considerations, from constitutional constraints to procedural concerns to questions of what claims should be eligible for alternative treatment.” Before the recently enacted CASE Act, there had not been a small-claims court with jurisdiction to hear copyright claims.

• Congressional and Government Investigations in 2021: What to Expect from the Biden-Harris Administration and How to Prepare

  01.27/Alert

  Government investigations pose many risk management challenges. They are unpredictable, political and often public. If handled incorrectly, they can last for many years, spiral into multiple Congressional, criminal, and/or regulatory investigations at the state and federal levels, and generate serious reputational harm. Potential targets can take proactive steps to mitigate their risks.

• COVID-19 Relief: Loan Forgiveness Requirements and Loan Review Procedures for Renewed Paycheck Protection Program

  01.25/Alert

  On December 27, 2020, the Economic Aid Act was signed into law. The Economic Aid Act reinitiated the PPP, appropriating $284 billion for both First and Second Draw PPP Loans. The Act amended borrower eligibility criteria, added permissible uses of the loan proceeds and established new eligibility requirements for borrowers seeking Second Draw PPP Loans. We discussed these new provisions and SBA’s first implementing regulations here.

• Generational Reform of the National Environmental Policy Act Has Weighty Implications for the Nuclear Industry

  07.21/Alert

  On July 15, 2020, the White House Council on Environmental Quality (CEQ) promulgated a final rule amending the implementing regulations (40 CFR § 1500, et seq.) of the National Environmental Policy Act, 42 U.S.C. § 4321, et seq. (NEPA). The final rule largely tracks proposed amendments, which the CEQ issued on January 10, 2020. The amendments aim to align NEPA’s implementing regulations with underutilized principles embedded in statutory provisions, agency guidance, and court decisions to streamline the environmental review process. These regulatory changes represent the culmination of Trump administration efforts to modernize NEPA dating back to August 2017, when the White House issued Executive Order 13087 to mitigate the delays that environmental reviews present to infrastructure development, including the licensing and development of nuclear facilities. The final rule will become effective on September 14, 2020.

• New York Bankers Must Consider Forbearance, Other Consumer Protection in Response to COVID-19

  03.23/Alert

  With the spread of the novel coronavirus (COVID-19) throughout the country, New York Governor Andrew Cuomo issued Executive Order No. 202.9 (“EO 202.9”), dated March 21, 2020, containing a broad requirement for forbearance and relief from banking fees for those experiencing financial hardship as a result of COVID-19. EO 202.9 is operative until April 20, 2020.

• California Executive Power and Industrial Facilities in the Wake of COVID-19

  03.23/Alert

  The COVID-19 pandemic has rapidly become one of the world’s most serious public health challenges, and has caused unprecedented disruption to industries in the United States and across the globe. Industries doing business in California have felt the impacts more acutely than most, as the state has become one of the nation’s “hotspots” for new COVID-19 cases. These impacts have sparked numerous efforts by state and local authorities in California to attempt to address the virus, encompassing everything from suspension of all public gatherings, to mass cancellation of sports and entertainment events, to citywide quarantines.

• EPA’s Wide-Ranging Rule on Perfluoroalkyl Substances

  02.27/Alert

  The United States Environmental Protection Agency (EPA or the Agency) has taken another step toward regulating perfluoroalkyl substances (PFAS). Specifically, on February 20, 2020, EPA issued a pre-publication version of a Supplemental Proposed Rule that could affect a host of businesses that traditionally have not had to concern themselves with Toxic Substances Control Act (TSCA) compliance and enforcement. The proposal concerns a subcategory of PFAS known as “Long-Chain Perfluoroalkyl Carboxylates and Perfluoroalkyl Sulfonates” (collectively, LCPFAC) under TSCA. Perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), two of the most problematic PFAS substances, are among the chemicals that would be regulated.

• Highlights of the CLEAN Future Act Proposal from the House Energy and Commerce Committee

  01.30/Blog

  The Chairman of the House Energy and Commerce Committee has released a “discussion draft” of the committee’s climate bill. The legislation is over 600 pages long, but the Committee has also released a summary of this legislation, which is entitled the Climate Leadership and Environmental Action for our Nation’s Future Act or the CLEAN Future Act. Here are some highlights.

• Environmental and Regulatory Highlights of the Fall 2019 Unified Agenda of Regulatory Actions

  01.06/Blog

  In late December, the Office of Management and Budget (OMB) released the “Fall 2019 Unified Agenda of Regulatory Actions” just a few days before the Calendar turned to the year 2020. (It should be noted that the Spring Agenda was not released until June 24, 2019.) Individual agency agendas were published in the Federal Register by several agencies and executive departments on December 26, 2019. The entire agenda, which is a survey of all current and projected rule-making actions that federal agencies and departments are planning over the next 12 months, is available at such government websites as regulations.gov. The Agenda provides valuable insights into the actions these agencies believe to be most important. This survey will largely concentrate on environmental regulatory developments, although other matters are worth noting.

• SBA Proposes Far-Reaching Rule to Revise and Clarify Many of Its Small Business Regulations

  11.14/Alert

  On November 8, 2019, the U.S. Small Business Administration (SBA) issued an extensive proposed rule that would make numerous revisions to its small business regulations, including the Mentor Protégé Programs, the current limits on the use of joint ventures, and the size status certification rules for orders issued under multiple award contracts. (See 84 Fed. Reg. 60846-60881.) This proposed rule is a direct response to President Trump’s January 30, 2017 Executive Order (No. 13771) designed to reduce unnecessary and burdensome regulations and to control costs associated with regulations. The SBA’s review of its regulations led to dozens of proposed regulation changes, the most significant of which are described below.

• All Eyes Are on Regulation of Digital Assets as Federal Agencies and Lawmakers Seek to Bring Clarity: Part 1—The SEC, Utility Tokens and Quarters

  9.11/Alert

  Digital assets such as tokens and virtual currencies continue to garner market interest and press coverage, but significant questions remain about their regulation—are digital assets securities, commodities, banking products, something else? How are their creators regulated, and what are the regulations and tax rules that apply to owners and intermediaries? The summer of 2019 has brought a few helpful clarifications. In this evolving regulatory environment, the U.S. Congress is discussing future legislative steps, and on July 30, 2019, the Senate Banking Committee held a hearing “Examining Regulatory Frameworks for Digital Currencies and Blockchain.”

• SBA to Adjust Small Business Size Standards for Inflation

  07/22/Alert

  On July 18, 2019, the U.S. Small Business Administration (SBA) issued an interim final rule adjusting the revenue-based size standards for small business to account for inflation. The rule affects all small businesses, and will take effect on August 19, 2019.

• FCC Modifies Educational Broadband Service Rules

  07/15/Alert

  At its July 2019 Open Meeting, the FCC adopted revised rules for the Educational Broadband Service (EBS). While the service will continue to have “Educational” in its name, the FCC took several significant steps to eliminate the long-standing education requirements from its rules.

• Government Fails Again to Apply the VA Rule of Two

  06/18/Alert

  On June 6, 2019, the Government Accountability Office (GAO) issued a decision in the matter of Veterans4You, Inc., deciding that the Department of Veterans Affairs (VA) must apply the “Rule of Two” even when it procures goods and services through other government agencies.

• DOE’s Latest Effort to Expedite Cleanup of Cold War Sites Will Shave Cleanup Costs—and Could Hit Commercial Nuclear Utilities in the Wallet

  06/14/Alert

  The U.S. Department of Energy (DOE) on June 5 issued a Supplemental Federal Register Notice announcing a final interpretive rule (the “Rule”) asserting its authority to reclassify certain radioactive waste from reprocessing associated with Cold War-era nuclear weapons production activity. The Rule is nearly identical to a draft version published for comment in October 2018 (the “Draft Rule”).

• Time to Update Corporate Compliance Programs Following DOJ Guidance

  05.13/Alert

  Guidance for evaluating corporate compliance programs. The guidance is intended to provide insight into compliance program factors that prosecutors will considerFebruary 2017 guidance documentrecent thinking on effective corporate compliance programs, as revealed by Assistant Attorney General Brian Benczkowski’s keynote address at the Ethics and Compliance Initiative (ECI) 2019 Annual Impact Conference. In his address, AAG Benczkowski reaffirmed the central role of corporate compliance programs in the context of DOJ’s charging decisions. According to the Guidance, compliance programs will be significant in “determining the appropriate (1) form of any resolution or prosecution; (2) monetary penalty, if any; and (3) compliance obligations contained in any corporate criminal resolution (e.g., monitorship or reporting obligations).”

• EPA and States Target Widely Used PFAS

  04/30/2019

  U.S. environmental authorities, concerned about the prevalence of PFAS, are considering and taking steps to restrict usage, potentially affecting a wide variety of products and processes, and to require owners and operators of properties that have the potential to be contaminated with PFAS to investigate and, if necessary, perform remediation. Businesses and consultants are encouraged to be alert to these developments, which could give rise to litigation risks, supply chain disruptions, and a reconsideration of remedial strategies and objectives at sites with PFAS contamination.

• The IRS Issues 83(i) Guidance: Opportunity to “Opt Out”

  04/15/2019

  Internal Revenue Code Section 83(i) was introduced as part as of the Tax Cuts and Jobs Act of 2017. Under Section 83(i), if certain requirements are satisfied, employees of private companies who receive nonstatutory stock options (NSOs) or restricted stock units (RSUs) may elect to defer federal income tax on the exercise of the NSOs or settlement of the RSUs for up to five (5) years (referred to as an 83(i) election).

• Supreme Court: Intentionally Disseminating a False Statement One Did Not “Make” May Still Violate SEC Rule 10b-5

  04/04/2019

  SEC Rule 10b-5(b) makes it unlawful “[t]o make any untrue statement of a material fact . . . in connection with the purchase or sale of any security.” The Court in Janus Capital Group Inc. v. First Derivative Traders, 564 U.S. 135, 142 (2011) limited “maker” liability under 10b-5(b) to “the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it.” In Lorenzo v. Securities & Exchange Commission, No. 17-1077, 2019 WL 1369839 (S. Ct. Mar. 27, 2019), the Court considers whether one who is not a “maker” of a false statement under 10b-5(b) can nonetheless be primarily liable under 10b-5(a) or 10b-5(c) for disseminating the false statement, knowing it to be false.

• U.S. Senate Holds Hearing on B737 MAX

  04.04/Alert

  On Wednesday, March 27, 2019, U.S. Senator Ted Cruz (R-Texas), chairman of the Senate Subcommittee on Aviation and Space, convened a hearing on “The State of Airline Safety: Federal Oversight of Commercial Aviation” in response to the recent tragedies in Ethiopia and Indonesia and the subsequent grounding of the Boeing 737 MAX aircraft. The panel of government witnesses invited to testify and answer questions included Daniel Elwell, Acting Administrator of the Federal Aviation Administration (FAA), Calvin Scovel, Inspector General of the Department of Transportation (DOT), and Robert Sumwalt, Chairman of the National Transportation Safety Board (NTSB). The subcommittee intends to hold an additional hearing at a later date and plans to include a Boeing representative.

• The SBA Rules When a Letter of Intent Creates Affiliation

  03/11/Alert

  In two recent decisions, OHA discussed some of the factors that may differentiate whether an LOI triggers SBA’s “present effect rule” and creates an affiliation between parties negotiating the acquisition of a small business. In Size Appeal of Telecommunications Support Services, Inc., SBA No. SIZ-5953 (2018), OHA determined that the LOI did not create an affiliation, and in Size Appeal of Enhanced Vision Systems, Inc., SBA No. SIZ-5978 (2018), OHA found that the LOI did create an affiliation and drew several distinctions between the two fact patterns.

• OFCCP Conducts Town Hall Meetings for Tech Industry Contractors and Implements Program Changes

  03.04/Alert

  In September 2017, OFCCP held three nationwide town hall meetings. The well-attended events provided a forum for contractors to express concerns and challenges with compliance with the rules and regulations OFCCP enforces, including Executive Order 11246 (Equal Employment Opportunity), Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA). Since then, OFCCP has seen leadership changes and has issued a number of pro-contractor directives and changes that can be traced back to feedback received at the town halls and elsewhere from the contractor community.

• Easing the Prohibitions against Gun-Jumping

  02.26/Alert

  Introduction
  On February 19, 2019, the Securities and Exchange Commission (SEC) proposed a rule that would generally permit all issuers to “jump the gun”—that is, to make offers to certain institutional investors prior to the filing of a registration statement. This rule would enable any issuer, as well as its proposed underwriters, to “test the waters” to see to what extent these institutions might be interested in investing in the company before a registration statement is filed.

• Congressional Blue-Ribbon Committee Recommends Major Changes to Certain Socioeconomic and Small Business Requirements for DoD Procurements

  01.29/Alert

  Section 809 of the National Defense Authorization Act (NDAA) for Fiscal Year 2016 directed the Secretary of Defense to establish a panel to study DoD’s procurement practices and recommend legislative and other changes aimed at modernizing those practices. The Panel has released the third volume of its final report, making a total of 58 new recommendations. As we noted in our overview of Volume 3 of the Panel’s report, a number of the recommendations relate to socioeconomic and small business issues. These recommendations attempt to streamline and improve the efficiency and effectiveness of the defense acquisition process by removing barriers to entry, revising outdated and burdensome requirements, and clarifying the preference for procuring commercial items when considering small business set-asides. We discuss Recommendations 64, 65, 79 and 80 below.

• Section 809 Panel Recommendations: Overhaul Audit Practices and Increase Reliance on Private-Sector Accounting Rules

  01.28/Alert

  As we reported previously, the Congressionally mandated Section 809 Panel (the Panel) recently issued Volume 3 of its Final Report. This volume builds upon the first two volumes of the Final Report by making additional recommendations for improving DoD’s acquisition process. This is the third of four alerts about the substance of Volume 3 of the Final Report. In this client alert, we explore recommendations regarding a broad range of financial issues at DoD.

• Section 809 Panel: The Commercialization of Government Contracting

  01.23/Alert

  As we previously reported, the Congressionally mandated Section 809 Panel recently issued Volume 3 of its Final Report. Volume 3 of the Final Report makes additional recommendations for improving the Department of Defense’s (DoD) acquisition process. This is the second of four alerts about the substance of Volume 3 of the Final Report. In this client alert, we explore recommendations that the DoD replicate the commercial contracting process.

• Section 809 Panel Installment One: Expanding Agency Procurement Discretion, Narrowing Contractors’ Bid Protest Rights Recommended

  01.23/Alert

  Section 809 of the National Defense Authorization Act (NDAA) for Fiscal Year 2016 directed the Secretary of Defense to establish a panel to study DoD’s procurement practices and recommend legislative and other changes aimed at modernizing them. The Panel has released the third volume of its final report, making a total of 58 new recommendations. As we noted in our overview of Volume 3 of the Panel’s report, a number of the recommendations relate to bid protests of DoD procurements. Some recommendations may be viewed as innocuous changes that will promote transparency in DoD’s procurement practices. Other recommendations, however, may be viewed as efforts to streamline DoD’s acquisition practices—not by promoting transparency and accountability, but by eliminating avenues of relief for aggrieved offerors. We discuss Recommendations 66–69 and 76 in detail below.

• Exchange Act Reporting Companies Receive Green Light to Use Regulation A

  01.15/Alert

  Introduction
  On December 19, 2018, the Securities and Exchange Commission (SEC) adopted amendments to Regulation A to allow companies subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) to use Regulation A to conduct securities offerings of up to $50 million in a 12-month period without Securities Act registration. Regulation A provides an exemption from the registration requirements of the Securities Act of 1933 to companies organized in the United States or Canada for offers and sales of securities of up to $20 million for Tier 1 offerings and up to $50 million for Tier 2 offerings. Securities sold under Regulation A are deemed sold in a public offering and therefore are not “restricted securities” subject to Securities Act resale limitations. Prior to these amendments, Regulation A was not available to issuers that were already Exchange Act reporting companies, and its use has been modest. Following publication of the amendments in the Federal Register, which is expected to occur shortly, Exchange Act reporting companies will have the additional flexibility to use Regulation A when raising capital through the public markets.

• Natural Resources Agency Finalizes Updates to the CEQA Guidelines

  12.10/Alert

  At the end of November 2018, the California Natural Resources Agency (CNRA) posted final adopted text for amendments to the regulations implementing the California Environmental Quality Act (CEQA), known as the CEQA Guidelines. The final text is the result of over five years of development efforts by the Governor’s Office of Planning & Research (OPR) and CNRA. The amendments combine changes to transportation impact analysis as directed by Senate Bill 743 (2013) with the most comprehensive update to the CEQA Guidelines since 1998, incorporating statutory changes, court decisions, and comments from public agencies, business and environmental groups, and other stakeholders through multiple rounds of public review. The wide range of issues covered in the amendments includes use of regulatory standards as significance thresholds; environmental baselines; a new metric for analyzing transportation impacts; climate, water supply and energy impacts; and numerous procedural and technical improvements.

• GAO Publishes Fiscal Year 2018 Bid Protest Statistics

  11.29/Alert

  On November 27, 2018, the Government Accountability Office (GAO) published its annual report on bid protest statistics. The GAO’s report, which is mandated by the Competition in Contracting Act, lists its key statistics for Fiscal Year 2018 bid protest activity. The GAO’s report also includes a chart providing similar bid protest statistics for Fiscal Years 2014-2018. This five-year snapshot provides some valuable insight into current bid protest trends and developments at the GAO.

• Groundbreaking Changes Coming Soon to GSA Multiple Award Schedules

  11.28/Alert

  Over the next two years, the General Services Administration (GSA) plans to consolidate the agency’s 24 Multiple Award Schedules into a single schedule. The consolidation is part of GSA’s strategy to optimize the federal acquisition process. By FY 2020, GSA plans to have one set of terms and conditions, which should enhance consistency in the acquisition process. With one schedule contract, agencies can buy and vendors can offer a “solutions-based approach” including both products and services.

• New Era of Aggressive Oversight Expected from House Democrats

  11.20/Alert

  The U.S. House of Representatives will be a hotbed of activity with respect to oversight of the Trump Administration and private sector stakeholders that are aligned with or have benefitted from the Administration’s policies over the past two years. House Democratic committee leaders are eager to shine a light on (and, inevitably, score political points related to) alleged malfeasance or corruption. Attention may come in the form of information requests and subpoenas, congressional hearings, committee investigations, and other forms of public inquiry.

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

  11.14/Alert

  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

  11.07/Alert

  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.

• 2018 Election Night Guide

  11.02/Article

  Pillsbury’s Political Law and Government Law & Strategies 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.

• Congress Commissions Study of Bid Protests Filed at Both the GAO and COFC

  08.07/Alert

  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

  08.01/Alert

  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.

• DFARS Clause Blocks Funding for Unsafe Projects in Afghanistan

  04.25/Alert

  A new rule prohibits the use of funds for DoD construction and infrastructure programs and projects in Afghanistan that cannot be safely accessed by U.S. Government personnel.

• 2018 Spending Plan Boosts Funding for Affordable Housing

  04.10/Blog

  A $1.3 trillion spending package that includes a 12.5% increase in low-income housing tax credit allocations over the next four years is welcome news to affordable housing developers who have been facing funding gaps.

• New CERCLA Brownfields Amendments

  03.29/Blog

  Spurred by the realization there may be as many as 450,000 Brownfields sites around the country that require some financial assistance, the recently enacted bi-partisan BUILD Act reauthorizes the EPA's Brownfields program at current funding levels through 2023.

• Bill Expands Corporate Liability for Human Trafficking to Social Media Companies

  03.27/Alert

  The recently passed Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA) creates civil liability for social media companies that benefit from a human trafficker’s online media presence if they “should have known” that their platform was being utilized for such exploitation.

• Court of Appeals Rolls Back Portions of the FCC’s 2015 Robocall and Text Ruling

  03.19/Blog

  A recent Court of Appeals decision will rescind some aspects of the Telephone Consumer Protection Act and have significant implications for businesses contacting consumers by telephone or text.

• Recent and Upcoming Changes to 401(k) Plans

  03.08/Alert

  The rules governing 401(k) plans are steadily evolving. Both the Tax Cuts and Jobs Act (the Act) and the Bipartisan Budget Act of 2018 (the Budget) contain a number of changes to the 401(k) plan rules.

• Safety from Hackers—and Trial Lawyers

  02.25/Article

  A simple legislative fix would shield cybersecurity innovators from costly nuisance lawsuits.

• The 2018 Government Shutdown – How Can Contractors Preserve Rights?

  01.23/Alert

  Contractors suffered cost impacts and uncertainty during the recent three-day government shutdown. What happens if a long-term deal can't be reached?

• Congress Expands the Oil Pollution Act to Reach Spills Originating Outside of the U.S.

  01.22/Alert

  The Foreign Spill Protection Act of 2017 establishes oil spill liability in the U.S. for foreign-based offshore exploration and production facilities.

• Key Tax Reform Issues for Nonprofit Membership Organizations/Associations

  01.16/Alert

  While associations won't face the harshest proposals, several features of the Tax Cuts and Jobs Act will have a negative impact on tax-exempt membership organizations.

• Five Things Employers Should Know about Tax Reform

  01.04/Alert

  The final Tax Cuts and Jobs Act will require employers to address a number of  changes to equity compensation and employee benefits laws. Here are five major ones.

• The Impact of the Tax Cuts and Jobs Act on LIHTC Investments

  01.03/Alert

  With the Tax Cuts and Jobs Act signed into law, investors in low income housing tax credit projects should take note of a few important changes.

• The SEC’s Shutdown of the Munchee ICO

  01.02/Alert

  The SEC’s recent shutdown of Munchee Inc.’s planned initial coin offering illustrates just how murky the related securities law can be. To see an offering through—and ensure compliance with the Securities Act—businesses exploring an ICO should consider its Rule 506(c) and Regulation A provisions.

• Historic Estate Planning Opportunities from Tax Reform

  12.28/Alert

  How can your estate planning efforts take advantage of the new tax law? Here are some beneficial changes.

• Last Minute Tax Change Benefits Commercial Real Estate

  12.18/Blog

  A last-minute change to the Tax Cuts and Jobs Act could be particularly beneficial to certain commercial property owners with few employees and leveraged capital investments.

• Retroactive Corporate Liability for Human Rights Abuses

  12.07/Alert

  Section 13 of the Criminal Finances Act 2017 is now in effect in the United Kingdom, meaning companies have far greater liability for human rights violations.

• Ireland Set to Bring Anti-Bribery and Corruption Laws Up-to-Date

  12.07/Alert

  New legislation represents a major update to Irish anti-bribery and corruption laws. International companies with Irish subsidiaries, as well as Irish-headquartered companies, should take note.

• Five Things to Know about the Tax Cuts and Jobs Act

  12.04/Alert

  As the House and Senate head to conference regarding the final tax bill, every business should pay particular attention to how these five issues are handled.

• Estate Planning Under the Tax Cuts and Jobs Act

  11.28/Alert

  The Tax Cuts Jobs Act passed by the House will almost certainly be amended in the Senate but, as currently drafted, the legislation will dramatically change the estate and gift tax regime in United States.

• Prime Contractors Take Note of New California Law Imposing Liability for Subcontractors’ Employees’ Unpaid Wages

  11.22/Blog

  A new California law requires prime contractors on private projects to be as involved in monitoring their subcontractors’ payroll practices as their public works counterparts.

• Three Key Aspects of the Proposed Reform to the CFIUS Process

  11.18/Blog

  A bill updating the Committee on Foreign Investment in the U.S. and the national security review process has been introduced in the U.S. House and Senate. Here's what you need to know.

• U.S. DOT Releases Draft Strategic Plan Beginning Implementation of Trump Administration’s Executive Order on Project Streamlining

  10.27/Blog

  The U.S. Department of Transportation (DOT) has released a draft Strategic Plan that establishes goals for increasing investment and streamlining environmental review and approval of transportation infrastructure projects over the next five years. The draft Plan is DOT’s first formal action in response to the Administration’s Executive Order on streamlining. Although it identifies needs and objectives it provides few specifics.

• ARC Dispute May Mean Further Delay in Needed Drone Regulation

  10.19/Blog

  The Unmanned Aircraft Systems Identification and Tracking Aviation Rulemaking Committee has failed to reach consensus on issues described as fundamental for operations over people and operations beyond the visual line-of-sight (BVLOS). The UAS industry is growing rapidly but If users are to capitalize on this opportunity, the FAA will need to get serious about catching up.

• House Judiciary Committee Votes to Advance Controversial ADA Amendment

  10.02/Blog

  The House of Representatives has proposed legislation that would limit Americans with Disabilities Act lawsuits based on a business’s failure to proactively remove obstacles that impede access to existing public accommodations. Disabled persons’ groups oppose the bill.

• Brace for 2018: The SEC’s Pay Ratio Rule

  08.18/Alert

  Starting in January 2018, public companies must disclose the ratio between their CEO’s salary and the salary of the company’s “median employee.” This article reviews SEC guidance on those calculations, and provides a six-step plan to prepare your company for the new requirements.

• Chemicals, Compliance and the Toxic Substances Control Act

  08.16/Alert

  The Toxic Substances Control Act (TSCA) required the compiling of a national register of chemicals that were manufactured in or imported into the United States for a non-exempt commercial purpose, and the first TSCA Inventory in 1979 included approximately 62,000 chemicals. Since then, the Inventory has been expanded to include approximately 90,000 chemicals—a rate of over 700 new chemicals per year.

• Three Birds with One Stone: New Russia, North Korea and Iran Sanctions

  08.11/Blog

  On August 2, 2017, President Trump signed into law the Countering America’s Adversaries Through Sanctions Act (CAATSA), strengthening U.S. sanctions on Russia, North Korea and Iran. The new sanctions could have far-reaching implications for companies and investors, although it remains unclear how vigorously they sanctions will be implemented, particularly for Russia.

• FTA Proposes Rule Waiving Regulatory Burdens on Public-Private Partnerships (P3s) for Public Transportation Projects

  08.01/Blog

  The FTA has proposed new rules to encourage the use of public-private partnerships (P3s), joint developments and other private investment mechanisms in surface transportation. Under the proposal, a P3 can obtain a divergence from certain existing FTA requirements, as detailed in the article.

• Senate Minority Leader Urges President Trump to Suspend Chinese Acquisitions of U.S. Companies

  08.01/Blog

  Senate Democratic Leader Chuck Schumer has written to President Trump asking him to order the Committee on Foreign Investment in the United States (CFIUS) to suspend the approval of all covered transactions by Chinese entities. This article discusses Sen. Schumer’s position and possible upcoming legislative action.

• The Safe DRONE Act of 2017: The Newest Drone Bill on the Block

  06.29/Blog

  In June 2017, U.S. Senators introduced the Safe DRONE Act of 2017, one of a number of bills aimed at addressing the regulatory needs of the unmanned aircraft systems (UAS) industry. Current federal efforts focus on keeping up with technological advancements and creating a uniform framework for UAS-related laws.

• New Details Emerge on Legislative Proposal to Modernize CFIUS Process

  06.23/Blog

  A bipartisan group in Congress is working to modernize the Committee on Foreign Investment in the United States (CFIUS) review process due to increased foreign direct investment and perceived threats to national security. The proposed legislation would focus on nations posing the greatest threat and give CFIUS clearer authority to review investments.