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.

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.

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.”

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.

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.

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.

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 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.

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.

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

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.

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.

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.

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.

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.

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.

The meeting’s focus suggests the Multistate Tax Commission intends to address special industry regulations before general sourcing regulations.

As of January 1, 2023, California will require most employers to disclose “pay scale” information in job postings. SB 1162 also imposes a host of new reporting and pay transparency requirements for larger employers, including filing annual pay data reports beginning in May 2023.

California Government Code Section 84308, commonly referred to as the “Levine Act,” was enacted in 1982 to curb pay-to-play practices. Under the existing law, a party seeking a license, permit or other entitlement for use may not contribute more than $250 to an officer of the relevant agency while the proceeding is pending and for three months following a decision. Additionally, an officer of an agency must recuse him or herself from a decision involving a license, permit or other entitlement for use if the officer has received a contribution of more than $250 from a party, participant or his or her agent within the preceding 12 months.

Especially in an election year, due diligence in corporate mergers and acquisitions is incomplete without reviewing political law compliance.

In late September, the Federal Communications Commission (FCC or Commission) took a significant step toward reducing the amount of scam and spam text messages Americans receive on their mobile devices. In a wide-ranging Notice of Proposed Rulemaking (NPRM or Notice), the FCC seeks comment on dozens of questions, ideas and tentative conclusions that will, if the agency decides to move forward, inform rule changes affecting how wireless carriers must deal with malicious robotexts.

Term SOFR emerges as the new market standard for aviation financing and leasing transactions.

The September 2022 launch of this public-private partnership is the first step toward realizing the Biden Administration’s bold decadal vision for commercial fusion energy.

In January 2021, DC enacted a sweeping ban on almost all employer restrictions against employees engaging in other compensated work either during or after employment. In response to employer concerns, the applicability date of that law was repeatedly pushed back, so it never went into effect. On July 27, 2022, Mayor Bowser signed into law the Non-Compete Clarification Amendment Act of 2022 (the Act), which significantly updates and narrows the scope of the prior restrictions. Most notably, the Act:

On September 16, 2022, the Department of Homeland Security (DHS) announced a Notice of Funding Opportunity (Notice) for a “first-of its-kind” program providing cybersecurity grants for state, local and territorial governments across the country through the State and Local Cybersecurity Grant Program (SLCGP). The agency is poised to provide similar assistance to tribal governments through the Tribal Cybersecurity Grant Program (TCGP), which is expected to be announced in the coming months.

A September 2022 Preliminary White Paper issued by U.S. Nuclear Regulatory Commission (NRC) Staff, “Licensing and Regulating Fusion Energy Systems,” indicates that the NRC is considering the option of regulating commercial fusion technologies via a risk-informed framework using 10 CFR Part 30.

Major Rule Changes
The specifics of the SEC’s new rule have been widely reported, but at a high level the SEC’s new pay versus performance rule, adopted August 25, 2022, requires a new table and narrative/graphical disclosure comparing “actually paid” compensation against company performance.

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

The Act includes significant funding to ensure long-term U.S. competitiveness in the advanced nuclear sector.

The court finds that the addition to the Florida Civil Rights Act turns the First Amendment “upside down.”

OSHA has been turning its attention to workplace safety hazards in warehouses and retail stores.

Given the federal government’s buying power and wide use of plastic packaging, the GSA’s proposed rulemaking could have consequences for the plastics, packaging and shipping industries.

The far-reaching proposal would represent the largest legislative climate investment in U.S. history.

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

The legislation is the result of months of negotiations between Congressional Democrats and Republicans to support domestic semiconductor manufacturing and related research and workforce development efforts.

On July 13, 2022, as part of a new pilot program, the Department of State’s Directorate of Defense Trade Controls (DDTC) issued two open general licenses (OGLs) permitting certain reexports and retransfers of unclassified defense articles subject to the International Traffic in Arms Regulations (ITAR) within or between Australia, Canada, and the United Kingdom.

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

To avoid displacement of current service employees, the proposed rule will require contractors and their subcontractors to offer qualified employees a right of first refusal of employment under the successor contract.

When companies perform federal contracts, the government has a right to terminate for default when a contractor performs poorly. Historically, terminations for default have been considered draconian measures and species of forfeiture to which “the Government should not lightly resort.” See Eagle Peak Rock & Paving, Inc., CBCA No. 5692, 21-1 BCA ¶ 37,752. For that reason, agencies have used the remedy sparingly, and the Courts and Boards of Contract Appeals have heavily scrutinized default terminations because they impact revenue, damage past performance evaluations, and stigmatize contractors. See Vought Aircraft Co., ASBCA No. 38092, 96-2 BCA ¶ 28,321.

On July 7, 2022, the Cyberspace Administration of China (CAC) of the People’s Republic of China (PRC or China) released the final version of the long-awaited Measures on Security Assessment for Data Export (Measures, “《数据出境安全评估办法》” in Chinese). The Measures specify the thresholds of data and information, the export of which is subject to CAC’s security assessment.

As part of the Fiscal Year 2023 Budget Support Act of 2022, the District of Columbia Council has voted to amend the DC Universal Paid Leave Act (UPLA) in ways likely to please both employers and employees.

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

A seven-year long False Claims Act suit comes to an end after Aerojet Rocketdyne reaches a $9 million settlement agreement for its alleged false certification of compliance with cybersecurity requirements.

A recent DoD memorandum should serve as a warning to contractors that they need to focus on cybersecurity compliance now or risk serious consequences.

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

By holding that emotional distress damages are not recoverable under certain antidiscrimination statutes, including Title IX, the Supreme Court has limited the liability of schools facing federal discrimination claims.