On March 2, 2023, Deputy Attorney General (DAG) Lisa Monaco announced a new Criminal Division policy for Department of Justice (DOJ) prosecutors to consider the implementation of compensation clawback policies as an important factor in corporate criminal resolutions. This policy is aimed at incentivizing both public and private companies to incorporate clawback clauses into contracts and compensation policies for employees, officers and directors.

Businesses already face an uphill struggle keeping pace with fast changing and multiple new data laws being passed in multiple U.S. states as well as numerous countries around the world. The one silver lining has been the emergence of a recent trend of basing, to some extent, many of these new laws on the GDPR. This means that one way forward has been to look to build upon effort already expended on creating and administering GDPR compliance frameworks, albeit with updating needed for relevant recent changes or enforcement. The current efforts of the UK government therefore may well leave some feeling nervous. The details of any proposed changes to the UK GDPR will have to be scrutinized to assess impact (and to see if Data Protection & Digital Information Bill (DPDI) proposals regarding fines, cookies, data protection officers (DPOs), Data Protection Impact Assessments (DPIAs), etc. survive). We will also have to keep an eye on how the EU responds, as any removal of adequacy status will add further complications to EU-UK data transfers. One thing that is for certain is that any business with UK operations, customers, suppliers or partners will need to freshly review and likely make changes to its policies, documents and procedures to account for any changes this year.

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.

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.”

Section 7 of the National Labor Relations Act (NLRA) confers broad rights to non-supervisory employees to engage in “protected, concerted activity” for their “mutual aid and protection,” which generally includes discussing the terms and conditions of their employment both with other employees and, more generally, with the public (“Section 7 rights”). Section 8(a)(1) of the NLRA makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of” their Section 7 rights.

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.

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.”

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.

Small businesses are not only vital to the American economy, but they also form the backbone of the defense industrial base. More than 70% of the companies doing business with the DoD are small businesses. Despite their importance, the number of small businesses participating in the defense industrial base has declined by more than 40% over the last decade due to various factors, including complex regulations, a convoluted entry process into the defense marketplace, fewer contracting opportunities and increased costs.

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.

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.

In the last eight months, the attorneys general of North Carolina, California, Wisconsin and Illinois have sued various primary manufacturers of per- and polyfluoroalkyl substances (PFAS), as well as over a dozen secondary manufacturers of PFAS-containing products. Each lawsuit alleges that the manufacture and distribution of PFAS and PFAS-containing products has led to widespread environmental contamination and harmful exposure.

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.

The Russian government continues to take measures to curtail the rights of investors from or connected to “unfriendly jurisdictions” (i.e., countries that have introduced sanctions on Russia and Russian persons) (“Western Investors”) without definitively expropriating their assets.

As California employers update employee policies and handbooks for the coming year, it is critical that they are aware of new employment laws in 2022 and understand how these changes will potentially affect their operations in the year ahead. From key legislative, case law and wage-and-hour developments to “post”-pandemic pointers and the impacts of new and proposed federal laws, the following updates provide practical guidance to help employers ensure they are in compliance with the new laws that are generally applicable to most California employers.

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.

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.

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.

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.

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.

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.

Introduction and Background
Few materials generate as much controversy as polyvinyl chloride (PVC). Versatile, durable and available at a comparatively low cost, PVC offers a wide range of advantages across numerous industries, cementing its place as one of the market’s most popular materials. For example, PVC’s rigidity and strength makes it a popular construction material, and its high chlorine content makes PVC fire-resistant. PVC is also present in food packaging, children’s toys, and other industrial, retail and commercial materials.

In all, California, Colorado, Connecticut, Hawaii, Maine, Maryland, Minnesota, New York, Rhode Island, Vermont and Washington have placed or soon will be placing prohibitions on the distribution of per- and polyfluoroalkyl substances (PFAS) in food packaging containers, cookware and, in other cases, a wide range of products under the authority of consumer protection laws. Companies across the supply chain will be impacted by these regulations. Industry has criticized the state laws as overreaching, particularly considering the inability of certain state agencies to enforce these laws effectively.

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.

Public concern regarding plastic pollution in the United States has continued to grow in recent years. While more traditionally centered on unmanaged plastic waste and U.S. recycling capacity, this has evolved to include issues such as microplastics, plastic-related chemicals, ESG and the environmental justice impacts of the plastics industry. In line with this growing concern, regulatory efforts aimed at addressing plastics have accelerated, and there was significant movement toward greater plastics regulation in 2022 at the state, federal and international levels.

The Economic Crime (Transparency and Enforcement) Act which came into force last year provides a transitional period ending on January 31, 2023, during which overseas entities that own (or want to sell or transfer) or lease UK real estate must register the beneficial owners or managing officers of that overseas entity at Companies House. A failure to comply with the Act will expose the overseas entity and its officers to criminal sanctions and could potentially impact banks who have lent monies secured on the property.

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

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

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.

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.

On September 30, 2022, the SBIR and STTR Extension Act of 2022 (the Act) was enacted, reauthorizing the SBIR and STTR programs until September 30, 2025. The Act makes several significant changes related to national security risks and foreign influence in the programs. The changes include agency implementation of due diligence procedures, new offeror disclosure and ongoing contractor reporting requirements, and new award eligibility requirements, with an offeror’s or contractor’s omissions or misstatements resulting in repayment of the entire award amount, among other changes to the programs.

On December 14, 2022, the SEC adopted amendments and form updates relating to several topics first previewed in its proposed rulemaking on January 13, 2022. These amendments serve the SEC’s twin goals of eliminating loopholes for insider trading under the guise of Rule 10b5-1 trading plans (10b5-1 plans) and increasing public disclosure of trading in and equity grants of issuers’ securities while insiders are potentially in possession of material nonpublic information (MNPI). Through this rulemaking, the SEC is significantly altering the paradigm relating to adoption and modification of 10b5-1 plans and the affirmative defense such plans may provide against claims of fraud and insider trading. The SEC is also increasing disclosure requirements relating to the use of 10b5-1 trading plans by insiders and in connection with issuers’ equity grant practices, and for the first time, will require disclosure in an issuer’s annual report of its insider trading policy. The rule amendments also modify Forms 4 and 5 to require disclosure of whether a transaction was executed with the intent to satisfy the affirmative defense conditions of Rule 10b5-1, and to require disclosure of gifts on Form 4 within two business days.

On December 6, 2022, Pillsbury issued a client alert to notify government contractors that the Federal Acquisition Regulatory Council (FAR Council) recently issued a proposed rule that would require most federal contractors to make disclosures and representations regarding their greenhouse gas (GHG) emissions and for certain major contractors to also set science-based targets to reduce those emissions. Given the extensive scope of this proposed rule, our first client alert focused on outlining the identification and reporting requirements of GHG emissions that would be imposed upon government contractors. This client alert provides additional information regarding the nature of Scopes 1, 2, and 3 GHG emission categories, as well as some of the complexities associated with the reduction of GHG emissions in accordance with “science-based targets.”

Securities and Exchange Commission (the SEC or the Commission) Rule 10b5-1, adopted more than 20 years ago, made it possible for insiders of publicly traded companies (and other individuals and entities that have access to material nonpublic information (MNPI)) to establish written plans (Rule 10b5-1 plans) for trading in the company’s shares. Under Rule 10b5-1, if such a plan is established in good faith at a time when the trader is not aware of MNPI, the trader will have an affirmative defense against insider trading charges, even if actual trades made pursuant to the plan are executed at a time when the individual may be in possession of MNPI that would otherwise subject that person to liability under Section 10(b) of the Securities Exchange Act of 1934 or Rule 10b-5. By providing clarity regarding how persons—who otherwise may be presumed to have MNPI—can establish written plans that can reliably permit trading, Rule 10b5-1 enabled widespread adoption of trading plans by public company insiders or others who may have access to MNPI.

After numerous iterations and extensions of an emergency temporary standard, Cal/OSHA approved a non-emergency standard on December 15, 2022, set to take effect in January 2023.

On December 7, 2022, the U.S. Department of Energy (DOE) established the High-Assay, Low-Enriched Uranium (HALEU) Consortium. HALEU (uranium enriched to between 5% and 20%) will be required by a large number of advanced reactor designs under development in the United States. However, domestic availability of HALEU is currently lacking and presents an obstacle to large-scale deployment of advanced nuclear.

The Federal Acquisition Regulatory Council recently issued a far-reaching proposed rule that includes significant compliance obligations for contractors related to their greenhouse gas emissions.

On November 30, 2022, the Internal Revenue Service (IRS) published Notice 2022-61 (Notice) in the Federal Register providing further guidance on compliance with newly applicable wage and apprenticeship requirements under the Inflation Reduction Act (IRA), which taxpayers must comply with to receive the fully available tax credits for new renewable energy, energy storage, hydrogen, biogas, carbon capture projects and electric vehicle charging infrastructure projects.

The Small Business Administration (SBA) is consolidating and making significant changes to the Veteran-Owned Small Business and the Service-Disabled Veteran-Owned Small Business programs, including the elimination of self-certification.

The SAFETY Act, a liability management program managed by the Department of Homeland Security, can be used by businesses to limit or eliminate potential liability associated with ransomware attacks.

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

On November 17, 2022, the Small Business Administration (SBA) issued an interim final rule for receipt-based size standards, which increases all size standards by 13.65 percent (rounded to the closest $500,000, except for agricultural standards, which are rounded to the closest $250,000) as an additional adjustment for the effect of inflation since 2019. (See our July 22, 2019 Client Alert.) The SBA did not wait “at least every 5 years” to make the inflation adjustment that is required by statute but is making this significant adjustment after three years since its last adjustment for inflation.

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.

The Armed Services Board of Contract Appeals (ASBCA or Board) recently issued its fiscal year (FY) 2022 annual report, covering the period from October 1, 2021, through September 30, 2022. During FY 2022, 400 new appeals were docketed at the ASBCA, the same number of appeals that were docketed during FY 2021. A significant percentage of the appeals—114 of the 400 new cases (or roughly 25%)—were filed against the U.S. Air Force. During four of the previous five fiscal years, the U.S. Army Corps of Engineers was the agency against which most new ASBCA appeals had been filed.

November 15, 2022, marked the one-year anniversary of President Biden signing the Infrastructure and Investment Jobs Act (IIJA) into law. The historic $1.2 trillion dollar investment into infrastructure marked a major bipartisan accomplishment for the 117^th Congress and may ultimately represent one of the most impactful accomplishments of the Biden administration. The IIJA, which is also sometimes referred to as the Bipartisan Infrastructure Law (BIL), made investments into roads, bridges, electric vehicles, broadband, hydrogen hubs, cybersecurity, water infrastructure and grid resilience, among other areas of infrastructure.

On October 26, 2022, the New York Department of Financial Services (NYDFS) issued a revised proposed rule that, when finalized, will require New York banks to collect detailed demographic and financial data, including whether the applicant is a minority- or women-owned business (NYDFS Rule), when accepting business credit applications. Although the NYDFS is proposing this rule to fulfill a recent legislative amendment to the New York Community Reinvestment Act (CRA), it will have a broad impact on the commercial lending operations of New York banks that will extend far beyond the scope of their CRA obligations.

On November 1, 2022, the Government Accountability Office (GAO) published its Bid Protest Annual Report to Congress for Fiscal Year 2022. The GAO’s report, which is mandated by the Competition in Contracting Act, lists its key statistics for fiscal year 2022 bid protest activity. The report also includes a chart providing similar bid protest statistics for fiscal years 2018 – 2022. This five-year snapshot provides some valuable insight into current bid protest trends and developments at the GAO.

On May 12, 2022, New York City Mayor Eric Adams signed into law amendments to the New York City Human Rights Law (NYCHRL) now requiring pay transparency in job advertisements. This pay transparency law takes effect on November 1, 2022.

Prospective buyers should prepare to take advantage of opportunities to acquire distressed businesses, as we are likely to see an uptick in distressed M&A soon.

On September 21, 2022, the U.S. Senate voted to ratify the 2016 Kigali Amendment to the Montreal Protocol on Substances That Deplete the Ozone Layer. In so doing, the United States formally joins 137 other nations in pledging to reduce the production and consumption of hydrofluorocarbons (HFCs). HFCs are greenhouse gases commonly used in a variety of applications including refrigeration, air-conditioning, building insulation, fire extinguishing systems, refrigerated shipping and aerosols. Because individual HFCs often have significantly greater warming potential than carbon dioxide, HFCs are widely considered one of the most potent drivers of climate change.