Congressional and Agency Debates
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EPA Announces Stringent New Health Advisory Levels for Four PFAS Chemicals06.22/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 Transactions04.15/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.
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SEC Proposes Amendments to Shareholder Reporting Rules, Affecting Schedule 13D/G Filers and Impacting Section 16(a) Reporting04.15/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.
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NRC Staff Issues Environmental Justice Recommendations04.15/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.
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FTC Announces Largest-Ever HSR Threshold Increase for 2022 Transactions01.24/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.
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EPA Takes Aim at Pesticide Devices11.08/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.
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Department of Justice Signals Reinvigorated Corporate Enforcement for White Collar Crime11.08/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 36th 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:
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Gensler SEC Expands Scope of Insider Trading Enforcement08.26/Alert
Gensler SEC Expands Scope of Insider Trading Enforcement
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Biden’s Infrastructure Bill and the Promise of NEPA Reform08.23/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.
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Senate Passes $1.2 Trillion Infrastructure Package, Tees up $3.5 Trillion Budget Reconciliation Bill08.12/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.
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DOE Requests Comments on the Price-Anderson Act08.11/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.
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State-Level Permitting Primacy May Boost Carbon Capture and Storage08.11/Alert
Texas and Louisiana are stepping up efforts to assume regulatory authority for an emerging wave of Carbon Capture and Storage (CCS) projects.
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DoL Proposes Rule to Increase Minimum Wage to $15 for Many Federal Contractors07.27/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.
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Bipartisan Senators Introduce the Cyber Incident Notification Act of 202107.27/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.
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The Beginning of the SPAC Enforcement Wave: SEC Makes Example of SPAC for Spacing Out on Diligence07.16/Alert
Chair Gensler’s enforcement agenda begins to take shape as SEC brings sprawling enforcement action against wide range of SPAC participants.
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Navigating Uncertain ESG-Related Risks at the SEC07.06/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.
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FCC Revises Equipment Authorization Rules06.22/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.
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ASBCA Rejects Government’s Motion to Dismiss Despite Suspicion of Fraud06.17/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.
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Biden Administration Updates Framework for China-Related Investment Prohibitions and Expands the Scope of Restricted Chinese Companies06.15/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.
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Boom in the Medical Spa Industry Amid Regulatory Uncertainty Creates Perfect Storm06.01/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.
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Congressional SPACtivity Continues: Draft Legislation Proposes to Eliminate Safe Harbor Protection for Projections in SPAC Transactions05.28/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.
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DoD Issues Proposed Rule on Enhanced Debriefing Procedures05.24/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.
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Congress Moves to Repeal OCC’s “True Lender” Rule05.20/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.
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Time’s Up!: The Court Rejects the Government’s Request for a Longer Limitations Period Applicable to Fraud Counterclaims05.11/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.
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ASBCA Confirms the “Goldilocks Principle” in Government Contract Appeals05.05/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.
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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.
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President Biden Issues an Executive Order Increasing the Minimum Wage for Many Employees of Federal Contractors to $15.0004.28/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.
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COVID-19 Business Interruption Losses: Time is of the Essence to Pursue Coverage02.12/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.
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Federal Support for Defense Uses of Advanced Nuclear02.03/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.
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Copyright Small-Claims Court Established by Congress in the CASE Act01.27/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.
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Congressional and Government Investigations in 2021: What to Expect from the Biden-Harris Administration and How to Prepare01.27/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.
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COVID-19 Relief: Loan Forgiveness Requirements and Loan Review Procedures for Renewed Paycheck Protection Program01.25/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.
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Generational Reform of the National Environmental Policy Act Has Weighty Implications for the Nuclear Industry07.21/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.
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New York Bankers Must Consider Forbearance, Other Consumer Protection in Response to COVID-1903.23/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.
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California Executive Power and Industrial Facilities in the Wake of COVID-1903.23/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.
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EPA’s Wide-Ranging Rule on Perfluoroalkyl Substances02.27/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.
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Highlights of the CLEAN Future Act Proposal from the House Energy and Commerce Committee01.30/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.
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Environmental and Regulatory Highlights of the Fall 2019 Unified Agenda of Regulatory Actions01.06/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.
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SBA Proposes Far-Reaching Rule to Revise and Clarify Many of Its Small Business Regulations11.14/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.
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All Eyes Are on Regulation of Digital Assets as Federal Agencies and Lawmakers Seek to Bring Clarity: Part 1—The SEC, Utility Tokens and Quarters9.11/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.”
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SBA to Adjust Small Business Size Standards for Inflation07/22/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.
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FCC Modifies Educational Broadband Service Rules07/15/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.
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Government Fails Again to Apply the VA Rule of Two06/18/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.
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DOE’s Latest Effort to Expedite Cleanup of Cold War Sites Will Shave Cleanup Costs—and Could Hit Commercial Nuclear Utilities in the Wallet06/14/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”).
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Time to Update Corporate Compliance Programs Following DOJ Guidance05.13/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).”
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EPA and States Target Widely Used PFAS04/30/2019
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.
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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).
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Supreme Court: Intentionally Disseminating a False Statement One Did Not “Make” May Still Violate SEC Rule 10b-504/04/2019
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.
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U.S. Senate Holds Hearing on B737 MAX04.04/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.
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The SBA Rules When a Letter of Intent Creates Affiliation03/11/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.
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OFCCP Conducts Town Hall Meetings for Tech Industry Contractors and Implements Program Changes03.04/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.
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Easing the Prohibitions against Gun-Jumping02.26/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 Procurements01.29/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.
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Section 809 Panel Recommendations: Overhaul Audit Practices and Increase Reliance on Private-Sector Accounting Rules01.28/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.
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Section 809 Panel: The Commercialization of Government Contracting01.23/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.
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Section 809 Panel Installment One: Expanding Agency Procurement Discretion, Narrowing Contractors’ Bid Protest Rights Recommended01.23/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.
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Exchange Act Reporting Companies Receive Green Light to Use Regulation A01.15/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 Guidelines12.10/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.
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GAO Publishes Fiscal Year 2018 Bid Protest Statistics11.29/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.
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Groundbreaking Changes Coming Soon to GSA Multiple Award Schedules11.28/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.
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New Era of Aggressive Oversight Expected from House Democrats11.20/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.
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The Qualified Opportunity Zone Program: Thoughts on the Long-Awaited Treasury Guidance11.14/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.
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Pillsbury's Post-Election Outlook11.07/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.
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2018 Election Night Guide11.02/Article
Pillsbury’s Political Law and Public Policy groups break down the need-to-know numbers for this year’s election. Pillsbury’s biennial Election Night Guide examines the potential outcomes for the 2018 Congressional and Governor’s races. Our Public Policy team is also preparing a post-election guide that will be useful in navigating potential changes in Congress.
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Congress Commissions Study of Bid Protests Filed at Both the GAO and COFC08.07/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.
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New SIGAR Report Identifies “Waste, Fraud and Abuse” in Afghanistan08.01/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.
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DFARS Clause Blocks Funding for Unsafe Projects in Afghanistan04.25/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.
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2018 Spending Plan Boosts Funding for Affordable Housing04.10/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.
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New CERCLA Brownfields Amendments03.29/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.
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Bill Expands Corporate Liability for Human Trafficking to Social Media Companies03.27/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.
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Court of Appeals Rolls Back Portions of the FCC’s 2015 Robocall and Text Ruling03.19/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.
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Recent and Upcoming Changes to 401(k) Plans03.08/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.
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Safety from Hackers—and Trial Lawyers02.25/Article
A simple legislative fix would shield cybersecurity innovators from costly nuisance lawsuits.
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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?
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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.
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Key Tax Reform Issues for Nonprofit Membership Organizations/Associations01.16/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.
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Five Things Employers Should Know about Tax Reform01.04/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.
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The Impact of the Tax Cuts and Jobs Act on LIHTC Investments01.03/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.
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The SEC’s Shutdown of the Munchee ICO01.02/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.
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Historic Estate Planning Opportunities from Tax Reform12.28/Alert
How can your estate planning efforts take advantage of the new tax law? Here are some beneficial changes.
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Last Minute Tax Change Benefits Commercial Real Estate12.18/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.
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Retroactive Corporate Liability for Human Rights Abuses12.07/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.
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Ireland Set to Bring Anti-Bribery and Corruption Laws Up-to-Date12.07/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.
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Five Things to Know about the Tax Cuts and Jobs Act12.04/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.
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Estate Planning Under the Tax Cuts and Jobs Act11.28/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.
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Prime Contractors Take Note of New California Law Imposing Liability for Subcontractors’ Employees’ Unpaid Wages11.22/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.
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Three Key Aspects of the Proposed Reform to the CFIUS Process11.18/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.
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U.S. DOT Releases Draft Strategic Plan Beginning Implementation of Trump Administration’s Executive Order on Project Streamlining10.27/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.
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ARC Dispute May Mean Further Delay in Needed Drone Regulation10.19/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.
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House Judiciary Committee Votes to Advance Controversial ADA Amendment10.02/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.
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Brace for 2018: The SEC’s Pay Ratio Rule08.18/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.
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Chemicals, Compliance and the Toxic Substances Control Act08.16/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.
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Three Birds with One Stone: New Russia, North Korea and Iran Sanctions08.11/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.
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FTA Proposes Rule Waiving Regulatory Burdens on Public-Private Partnerships (P3s) for Public Transportation Projects08.01/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.
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Senate Minority Leader Urges President Trump to Suspend Chinese Acquisitions of U.S. Companies08.01/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.
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The Safe DRONE Act of 2017: The Newest Drone Bill on the Block06.29/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.
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New Details Emerge on Legislative Proposal to Modernize CFIUS Process06.23/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.