U.S. Bankruptcy Court Agrees to Enforce English Three-Step, with Third-Party Releases, Used by Mexican Auto Financer

On February 24, 2025, U.S. Bankruptcy Judge Michael E. Wiles granted “recognition” of an English insolvency proceeding and enforced an order approving an English scheme of arrangement for a new shell entity created in England by its Mexican parent solely to effectuate an English restructuring that provides consensual and non-consensual third-party releases of the Mexican parent company, even though the new entity had little connection with England. In re Mega NewCo Limited, No. 24-12031 (MEW), 2025 WL 601463 (Bankr. S.D.N.Y. Feb. 24, 2025) (“in light of the support of all of the affected parties and their overwhelming consent to the English Scheme Proceeding and the approval of the Scheme of Arrangement, and the other factors that I have cited, I see no cause in this particular case to look past the form of the transactions or to pursue theoretical issues that no affected party wishes to pursue”).

U.S. Tariffs on Non-USMCA-Compliant Products Take Effect; Increased Tariff Rate on China Imposed

Between March 4, 2025, and March 6, 2025, U.S. trade policy in North America changed course multiple times as the Trump administration initially implemented previously paused tariffs on imports from Canada and Mexico, and two days later, suspended tariffs on all Canadian and Mexican imports that meet the rules of origin for preferential tariff treatment of the United States-Mexico-Canada Agreement (USMCA). The Trump administration also increased across-the-board tariffs on imports from China to 20%, which remain in place. These measures, introduced through a novel use of the International Emergency Economic Powers Act (IEEPA), come after an initial 30-day delay in imposing tariffs on the North American trading partners on February 3, 2025.

Council on Environmental Quality Rescinds NEPA Regulations

As was widely anticipated, the Council on Environmental Quality (CEQ) recently rescinded its National Environmental Policy Act (NEPA) implementing regulations, eliminating the uniform framework that has governed NEPA compliance for decades. CEQ’s Interim Final Rule, published on February 25, 2025, removes 40 C.F.R. Parts 1500–1508 from the Code of Federal Regulations, dismantling longstanding procedural requirements for federal environmental reviews.

Second Circuit Affirms Priority Payment of Broker Fees Included in Aircraft Leases Utilizing the “Billing-Date Approach” Under Bankruptcy Code § 365(d)(5)

Airlines will always need access to new aircraft to expand and replace their fleets. When an airline utilizes an intermediary, such as a broker, it must pay a commission to lease or purchase aircraft. Depending on the number of aircraft obtained, commissions may be very expensive, necessitating payments over time. But what happens if the airline files for bankruptcy before paying out the commissions? If not properly structured to be included as part of the lease payments, the broker may be left with an unsecured claim which may be paid with pennies on the dollar. However, if the fees are included as part of the rent under the lease, they may qualify as priority claims, until the lease is rejected.

Challenging Trump 2.0 En Masse Contract Terminations

In recent weeks, the second Trump administration has begun en masse terminations of federal contracts for the government’s convenience-as-a-budget-cutting tactic. Contractors with the U.S. Agency for International Development have been most affected by this tactic, where the vast majority of the agency’s contracts have been terminated.

Reshaped Priorities: Navigating Changes to FCPA and FARA Enforcement

On February 10, 2025, President Donald Trump signed an Executive Order directing the Department of Justice (DOJ) to pause enforcement of the U.S. Foreign Corrupt Practices Act (FCPA), citing concerns over the competitive disadvantage that it imposes on U.S. businesses. Just days earlier, Attorney General Pam Bondi issued a memorandum signaling a narrowing of DOJ enforcement priorities with respect to the FCPA and Foreign Agents Registration Act (FARA). This alert provides an overview of the current state of FCPA and FARA enforcement, discussing the compliance implications of new DOJ policy for companies engaged in cross-border trade.

California Governor Releases 2025 Budget Proposal to Move Banks and Financial Corporations to Single-Sales-Factor Apportionment

On January 10, 2025, California Governor Gavin Newsom released his January Budget Proposal for the 2025 – 2026 fiscal year. Notably, Governor Newsom’s budget would increase tax revenue by requiring banks and financial corporations to move from an equally weighted three-factor formula, comprising property, payroll and sales factors, to a single-sales-factor formula for purposes of apportioning income to the state. Agricultural and extractive businesses would continue to use the three-factor formula. The proposed change would take effect immediately, beginning with tax year 2025. A copy of the trailer bill is available here.

Trump 2.0: The Future of the EU-U.S. Data Protection Framework and Trans-Atlantic Data Transfers

The issue of transfers between the European Union or United Kingdom and the United States has long been fraught with turbulence. From the invalidation of Safe Harbor in 2015 to the downfall of Privacy Shield in 2020, each mechanism designed to ease the compliance burden of transatlantic data sharing has faced scrutiny culminating, more often than not, in legal challenges before the Court of Justice of the European Union (CJEU).

White House Seeks Public Input on AI Action Plan: What Stakeholders Need to Know

On January 20, 2025, President Trump revoked Executive Order (EO) 14110, entitled “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (AI),” which was issued by former President Biden and aimed at establishing a regulatory framework for AI oversight. On January 23, 2025, President Trump issued EO 14179, entitled “Removing Barriers to American Leadership in Artificial Intelligence,” that proposed the creation of an AI Action Plan.

The Trump Administration Reinstates and Expands Section 232 Tariffs on Steel and Aluminum

On February 10, 2025, President Trump issued two Presidential Proclamations reimposing and expanding tariffs on all steel and aluminum imports into the United States pursuant to Section 232 of the Trade Adjustment Act of 1962. These measures effectively supersede prior alternative arrangements, including tariff-rate quotas (TRQs) negotiated with key U.S. trading partners such as the European Union (EU), the United Kingdom (UK), Japan and others, while also revoking country-specific exemptions previously granted to Canada and Mexico. The Proclamations represent a substantial escalation of U.S. trade policy in the metals sector and reaffirm the national security rationale that underpinned the original Section 232 tariffs imposed in 2018.

EPA Finalizes New Rule to Reduce and Reclaim Hydrofluorocarbons

Prior to the Biden administration leaving office, EPA finalized another rule in its continued push to phase down the use of hydrofluorocarbons (HFCs) by issuing a final rule on October 11, 2024, to establish the HFC Emissions Reduction and Reclamation (ER&R) program. EPA’s new rule, discussed in more detail below, will significantly impact industries that rely heavily on commercial-scale refrigeration systems. Further, companies with facilities that rely on older systems may require more frequent equipment repair or replacement to comply with the rule.

IRS Proposes New Rules to Implement the Expanded $1 Million Limit on Deductible Pay for Publicly Held Corporations

Background
Section 162(m) of the Internal Revenue Code of 1986, as amended (Section 162(m)), disallows deduction by any publicly held corporation for applicable employee remuneration that is otherwise deductible with respect to any covered employee to the extent that such remuneration for the taxable year exceeds $1 million. The $1 million cap is not indexed for inflation and the limit applies to all publicly held corporations regardless of the corporation’s status as an “emerging growth company” or “smaller reporting company” for purposes of Securities and Exchange Commission (SEC) executive compensation disclosure rules.

IRS Eases Form 1095-C Burden for Employers

On December 23, 2024, President Biden signed into law the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act, which together reduce the burden on employers to meet certain requirements under the Affordable Care Act (ACA). These laws specifically impact employers that are required to furnish IRS Forms 1095-B or 1095-C (collectively, “Forms 1095”) to their employees.

White House Introduces Cyber Trust Mark Program

Cybersecurity Trust Mark Program: Building Consumer Confidence in Internet of Things (IoT) Security
On January 7, 2025, the White House announced the finalization of its voluntary cybersecurity labeling program for wireless interconnected smart products administered by the Federal Communications Commission (FCC). The White House announcement comes after an 18-month public notice and comment period. The Cyber Trust Mark program seeks to provide consumers with a simple label to assess whether their Internet of Things (IoT) wireless connected devices in their home are cybersecure.

FHWA Rescinds Longstanding Buy America Waiver for Manufactured Products

On January 13, 2025, the U.S. Federal Highway Administration (FHWA) issued a final rule terminating a long-standing exception to “Buy America” domestic content requirements for manufactured products used in agency-funded projects.

New ASTM Standard Aims to Facilitate Assessing Climate Risk and Resilience Considerations

Owners, lenders and investors in real property have long relied on ASTM E 1527-21, a product of ASTM International, in connection with Phase I Environmental Site Assessments. This product is used to establish that “all appropriate inquiries,” as defined at 42 CFR § 9601(35)(B) and 40 CFR § 312.20(a), have been met in connection with a property. As a matter of law, the performance of an ASTM-compliant Phase I ESA enables prospective purchasers and lessees to satisfy one of the criteria for statutory protections against liability for pre-existing environmental conditions under the Comprehensive Environmental Response, Compensation, and Liability Act. It also constitutes an indicia that appropriate environmental due diligence has been performed regarding the property.