State Department Issues Two Open General Licenses Authorizing Reexports and Retransfers of Certain Defense Articles for Australia, Canada and the UK

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.

SBA Proposes Rule to Take Control of All Veteran-Owned Certifications

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.

Department of Labor Proposes Rule to Give Service Employees a Right of First Refusal under Successor Contracts

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.

Your Government Customer is Considering a Default Termination: What Should You Do?

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.

China Passes Long-Awaited Measures on Security Assessment for Data Export

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.

Changes to DC’s Universal Paid Leave Program and a Forthcoming Maryland Paid Leave Program

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.

Landmark Federal Privacy Bill Clears First Congressional Hurdle

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.

Contractor Settles Cybersecurity-Related False Claims Act Suit for $9 Million

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.

DoD Increases Focus on Cybersecurity Compliance

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

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

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

Supreme Court Narrows Title IX Liability for Schools

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.

SBA Proposes New Size Standards for 2022 NAICS Codes

The Small Business Administration’s proposed rule would adopt the latest NAICS revision issued by the Office of Management and Budget, creating 111 new industries by reclassifying, combining or splitting 156 existing industries.

Supreme Court Issues Opinion in West Virginia v. EPA

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

Department of Education Proposes New Regulations Under Title IX

Title IX of the Education Amendments of 1972 requires schools and institutions receiving federal funds (Recipients) to eliminate discrimination on the basis of sex in their education programs or activities. The Executive Branch first codified Title IX regulations under the supervision of Betsy DeVos, whose rules were criticized as making it difficult to protect Title IX complainants. On the 50^th anniversary of Title IX, and following a year in conversation with educational institutions, students, advocacy organizations, and other stakeholders, the Department of Education (ED) issued a Notice of Proposed Rulemaking (NPRM) with proposed regulations that brings the scope of Title IX closer to the Obama-era guidance.

EPA Announces Stringent New Health Advisory Levels for Four PFAS Chemicals

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.

SBA’s Proposed Rule Would Increase the Employee-Based Size Standards for 150 Industries

The proposed rule would increase the employee-based small business size standards for these industries, allowing many businesses to remain a small business for longer or regain their small business status.

SBA Increases Size Standards for 229 Industries

The final rules increase the receipts-based small business size standards for these industries, allowing many businesses to remain a small business for longer or regain their small business status.

NRC Staff Issues Environmental Justice Recommendations

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.

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

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.

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

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.

Staff Accounting Bulletin No. 121: Guidance for Entities Safeguarding Crypto-Assets Issued

On March 31, 2022, the Division of Corporation Finance and the Office of the Chief Accountant (staff) of the U.S. Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 121 (SAB 121), which “adds interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for their platform users.”

Bipartisan Cyber Incident Reporting for Critical Infrastructure Act of 2022 Signed into Law

The new law arrives during a notably troublesome cybersecurity environment, in which the United States’ most crucial commercial sectors could be vulnerable to cyber intrusions and demands for ransomware payments.

Twelve Hours to Get It Right: The SEC Intensifies Its Focuses on Cybersecurity

On the morning of May 24, 2019, a cybersecurity journalist notified First American Financial Corporation (First American) that one of its key applications had a serious vulnerability. First American, a publicly traded company that provides real estate settlement services, utilized the application Eagle Pro to share images of legal and financial documents used in real estate closings. According to an anonymous source, the vulnerability allowed unauthorized users to access over 800 million documents that had been shared with First American. Many of these documents contained sensitive data, such as social security numbers, financial records and driver’s licenses, which the journalist who published the article later that day described as “a virtual gold mine for phishers and scammers.”

ICSID Issues an Amended Set of Arbitration Rules

The amended rules issued by the International Centre for Settlement of Investment Disputes mandate certain disclosures, increase transparency and reduce costs, among other things.

DoD Enhanced Debriefing Final Rule Provides Greater Transparency for Contractors

The final rule provides for additional debriefing rights and clarifies the GAO bid protest stay timeliness rules.

SEC Issues Landmark Climate-Related Disclosure Proposal

The U.S. Securities and Exchange Commission issued proposed rule amendments requiring climate disclosures by public companies.

Expropriations Related to the Russia Sanctions May Trigger Liability under Investment Treaties

Expropriations Related to the Russia Sanctions May Trigger Liability under Investment Treaties

Final Rule Increases Compliance Obligations Under the Buy American Act

On March 7, 2022, the Federal Acquisition Regulatory Council (FAR Council) issued a final rule that would, among other things, impose significantly increased U.S. content requirements for federal procurements subject to the Buy American Act (BAA). The final rule implements the requirements outlined in President Biden’s January 28, 2021 Executive Order, “Ensuring the Future Is Made in All of America by All of America’s Workers” (the EO), and incorporates some of the feedback received in response to the FAR Council’s July 30, 2021 proposed rule, which we previously discussed here. Although the final rule deviates little from the proposed rule, the deviations are noteworthy.

A Long-Awaited Effort to Clarify Regulation of Digital Assets and Cryptocurrency—Unpacking the Biden Administration’s New Executive Order

On March 9, 2022, President Biden issued an Executive Order to articulate U.S. government principles and interests regarding digital assets, and to implement a process to develop future policy. Digital assets have taken the world by storm in recent years. They include cryptocurrencies, tokenized share offerings, non-fungible tokens (NFTs), blockchain real estate rights, decentralized finance (DeFi) and various evolving metaverse assets, with new market actors ranging from miners, to wallets, to digital asset platforms, and decentralized autonomous organizations (DAO).

See You in Court? Under New Federal Law, Sexual Harassment Claims Are Not Subject to Mandatory Arbitration

On March 3, 2022, President Biden signed HR 4445, also known as the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” into law, and it went into effect immediately. The Act, which is described more fully below, is consistent with President Biden’s “Agenda for Women,” wherein the Biden administration stated its determination to “end [] [] forms of workplace discrimination and harassment,” and end violence (including sexual assault) against women. Thus, although the Act is currently limited to sexual harassment and assault, the Biden administration will likely be looking to take action on other forms of discrimination and unfair employment practices in the future.

FCC Order Bans Certain Arrangements to Promote Competition in Multi-Tenant Buildings

On February 15, 2022, the Federal Communications Commission (FCC) released a Report and Order (the Order) adopting new rules to further broadband competition for the millions of Americans living and working in apartments, public housing, office buildings, and other multiple-tenant environments (MTEs).

DOE Establishes $6 Billion Civil Nuclear Credit Program

On February 11, the U.S. Department of Energy (DOE) announced the release of a Notice of Intent (NOI) and Request for Information (RFI) describing and seeking feedback on its plan to implement the Bipartisan Infrastructure Law’s (BIL) $6 billion Civil Nuclear Credit (CNC) Program. The CNC will support the continued operation of U.S. nuclear reactors, the nation’s largest source of clean power, by providing financial support to certified reactors at risk of economic shutdown.

California Senate Passes the Climate Corporate Accountability Act

Continuing its leadership in the battle against climate change, California takes a big step forward by requiring transparency concerning the carbon footprints of the nation’s largest corporations doing business in the state.

COFC Splits with GAO on Whether Contractors Must Notify Agency of Changes to Key Personnel Availability

A Court of Federal Claims decision holds that offerors do not have a duty to inform agency of changes to key personnel availability after submission of proposal.

New York State Fashion Act Proves That ESG Is Haute Couture

The Fashion Sustainability and Social Accountability Act in the Context of ESG

On January 7, 2022, New York State Senator Alessandra Biaggi and Assemblywoman Anna R. Kelles introduced the Fashion Sustainability and Social Accountability Act, A8352/S7428 (“Fashion Act”). The Fashion Act’s purpose is to promote sustainability and accountability regarding the environmental and social impacts of large fashion companies. The Fashion Act defines the latter as fashion retail sellers and fashion manufacturers of “wearing apparel or footwear” with annual worldwide gross revenues of $100 million or more doing business in New York. Given New York’s status as a worldwide hub for the fashion industry, the geographical nexus requirement of the Fashion Act hardly limits its applicability, which stands to cover many household brands and retailers.

New Infrastructure Law Brings Significant Investments in Drinking Water and Wastewater Infrastructure

Alongside funding for roads, bridges, energy, broadband and cybersecurity, the Infrastructure Investment and Jobs Act (IIJA), enacted on November 15, 2021, appropriates $55B to the U.S. Environmental Protection Agency (EPA) to improve drinking water and wastewater infrastructure. According to the EPA, this investment represents the single largest federal investment in water in the nation’s history.

Sixth and Eighth Circuits Confirm the Broad Applicability of the Price-Anderson Nuclear Industries Indemnity Act

In two recent cases, federal Courts of Appeal issued decisions affirming a broad interpretation of the Price-Anderson Act, and in particular a broad interpretation of the Act’s primacy over state law and jurisdiction. First, in October 2021, the Sixth Circuit issued its decision in Matthews v. Centrus Energy Corporation. It held that the Price-Anderson Act provides the exclusive avenue for asserting liability arising from a nuclear incident, thereby preempting state and tort law claims. Notably, Matthews held that the Price-Anderson Act preempts state law and allows a defendant to remove a claim to federal court even where the claimant does not expressly allege that a nuclear incident occurred, and found that ongoing, slow releases of radioactive materials still constitute “nuclear incidents” under the Act. 

Civilian Board of Contract Appeals Releases Fiscal Year 2021 Annual Report

The Civilian Board of Contract Appeals (CBCA or Board) recently released its fiscal year (FY) 2021 report. The CBCA docketed 364 new matters in FY 2021, which was down slightly from the 378 new matters docketed in FY 2020. This represents the second consecutive year the Board docketed fewer than 400 new matters, which before last year had not happened since 2012. Of the 364 new matters, 185 were Contract Disputes Act cases and 72 were Alternative Dispute Resolution (ADR) cases, with the remaining consisting mostly of either appeals by civilian government employees concerning travel or relocation reimbursement denials or FEMA arbitration matters. For the second year in a row, the Board resolved more disputes than it docketed. The report also notes that for the first time since the Board’s 2007 inception, it issued an advisory opinion in response to a request by a U.S. district court pursuant to the Contract Disputes Act, 41 U.S.C. § 7107(f). The district court requested an advisory opinion on two issues of contract interpretation arising from a pending False Claims Act suit.

FTC Announces Largest-Ever HSR Threshold Increase for 2022 Transactions

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.

Companies Prepare for the Uyghur Forced Labor Prevention Act (UFLPA)

The year 2021 brought supply chain challenges to the center of the national conversation. In 2022, legal developments look to focus the attention of the business community on ethics in the supply chain and introduce new due diligence and compliance challenges.

DOE Hydrogen Updates after Bipartisan Infrastructure Bill Passage

Results of Department of Energy’s June 2021 Request for Information on potential hydrogen demonstration project locations will influence agency as it develops a National Clean Hydrogen Strategy and Roadmap as required by the recently enacted bipartisan infrastructure law.

IRS Issues Guidance on Reporting of Tax-Exempt Income from PPP Loan Forgiveness

Biden EPA Doubles Down on Chemical Regulation with PFAS Strategic Roadmap

INTRODUCTION

Federal efforts to regulate per- and polyfluoroalkyl substances (PFAS) have continued in recent months. Most notably, on October 21, 2021, the United States Environmental Protection Agency (EPA or the Agency) released its PFAS Strategic Roadmap. This document promises to establish a comprehensive, whole-of-agency approach to regulating PFAS, by building off the Trump EPA’s 2019 PFAS Action Plan and related federal initiatives. The Roadmap reflects EPA’s intent to regulate a broader range of activities than those contemplated in the 2019 Action Plan, as well as to accelerate the implementation of activities identified in the earlier Agency document.

Unpacking the Government’s Cryptocurrency Regulatory and Enforcement Agenda

ASBCA’s FY 2021 Annual Report Details Informative Statistics that Can Guide Potential Contract Disputes Act Claimants

The Armed Services Board of Contract Appeals (“the Board”) recently issued its fiscal year (FY) 2021 annual report, covering the period from October 1, 2020, through September 30, 2021. Of note, contractors docketed only 400 new appeals during FY 2021, which marks the fewest number of new docketed appeals at the Board in more than 20 years. This decrease follows the downward trend in docketed appeals the Board has experienced during the last four fiscal years, with the exception of a slight increase during FY 2020. For comparison, the Board docketed 497 new appeals last year; 708 in FY 2014 and 624 during FY 2007, when the Board’s docket achieved all-time high levels on the basis of Iraq and Afghanistan reconstruction claims.

SBA Proposes Rule to Amend Employee-Based Size Standards

The Small Business Administration is proposing to use a 24-month average to calculate a business concern’s number of employees for eligibility purposes in all of SBA’s programs.

Opportunities Abound after House Passes $1.2 Trillion Infrastructure Investment and Jobs Act

Enactment of the massive infrastructure package creates funding opportunities as federal agencies prepare to award funds across a large swath of U.S. sectors and industries, including energy, broadband, water, transportation, electric vehicles and cybersecurity.

EPA Takes Aim at Pesticide Devices

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.

OSHA Emergency Temporary Standard Mandating COVID-19 Vaccination or Testing for Large Private-Sector Employers Is Issued and Temporarily Stayed

On November 5, 2021 the Occupational Safety and Health Administration (OSHA) published its much-discussed COVID-19 Vaccination and Testing Emergency Temporary Standard (ETS) in the Federal Register. As anticipated in our earlier client alert, the ETS establishes mandatory COVID-19 safety protocols applicable to most employers with 100 or more employees. The ETS sets a baseline mandate that covered employers require, at a minimum, weekly COVID-19 viral testing of unvaccinated employees who work indoors at workplaces with co-workers or customers present, and that unvaccinated workers wear face coverings in shared settings. The ETS “is designed to strongly encourage” employers to choose to go beyond that minimum policy, however, by establishing, implementing, and enforcing a written mandatory vaccination policy. The ETS also includes other requirements, such as that employers must provide paid leave to enable employees to receive vaccination injections, must immediately remove of employees with COVID-19 from the workplace, and must track employees’ vaccination status. In setting guidelines for the implementation of these policies, the ETS answers many practical questions raised by employers in recent months, but other questions remain, especially due to legal challenges that have been filed in the days since publication of the ETS.

Department of Justice Signals Reinvigorated Corporate Enforcement for White Collar Crime

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