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.

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.

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.

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.

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.

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. 

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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:

As the SEC continues to develop its ESG agenda, a series of recent cases underscores the risk posed by ESG-related litigation.

DOJ launches new initiative that promises to use the False Claims Act to combat cybersecurity threats by targeting government contractors who knowingly fail to comply with cybersecurity protocols.

As CFPB Director, Rohit Chopra will vigorously apply the CFPB’s authority to promulgate rules, conduct examinations, and bring enforcement actions.

Volatility in the uranium market must be carefully evaluated to fully understand the risks of potential investment.

The Safer Federal Workforce Task Force recently issued guidance that requires the vast majority of prime contractors and subcontractors to ensure that their covered contractor employees, including those working remotely, are fully vaccinated against COVID-19 before the end of the year.

The presence of virus on the premises that renders the property unsafe can cause physical loss or damage and trigger property coverage without any distinct, demonstrable physical alteration.

Under a forthcoming OSHA emergency temporary standard, private-sector employers with more than 100 employees will be required to mandate COVID-19 vaccination or weekly testing. Eliminating a testing alternative, federal employees and contractors will be required to be vaccinated, with limited exceptions.

On August 10, 2021, the U.S. Senate passed the Infrastructure Investment and Jobs Act (IIJA) by a bipartisan vote of 69–30. In addition to funding for roads and bridges, the $1.2 trillion infrastructure package includes a number of provisions to spur investment in clean energy innovation technologies—in particular, it provides resources to accelerate research, development, demonstration, and deployment of clean hydrogen in the United States. This includes development of a definition for “clean hydrogen,” clean hydrogen supply chains, regional clean hydrogen hubs, and a focus on commercializing the use of clean hydrogen in transportation, utility, industrial, commercial and residential sectors. This is in line with goals stated during President Biden’s campaign to create “green hydrogen at the same cost as conventional hydrogen within a decade.”

Gensler SEC Expands Scope of Insider Trading Enforcement

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.

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.

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.

Texas and Louisiana are stepping up efforts to assume regulatory authority for an emerging wave of Carbon Capture and Storage (CCS) projects.

The Department of Defense (DoD) issued a final rule on July 9, 2021, requiring contractors to report annually their total labor hours and invoiced amounts for certain service contracts.

Presidential Executive Order 14008, “Tackling the Climate Crisis,” a long and unusually detailed Executive Order published in the Federal Register on February 1, 2021 (see 86 FR 7619), has generated considerable discussion and commentary.

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.

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.

The California Supreme Court unanimously determines that premium pay for missed meal and rest breaks must be based on the more inclusive “regular rate.”

Emergency Use Authorizations will play a role as the pandemic eases, but a transition to ordinary course approvals is underway.

Chair Gensler’s enforcement agenda begins to take shape as SEC brings sprawling enforcement action against wide range of SPAC participants.

As the Biden Administration commits to crack down on corruption, recent enforcement actions show the DOJ continues a longstanding trend of relying on AML laws and other alternate statutes to prosecute corruption cases, with lessons for internal compliance and due diligence.

GSA issues new regulations requiring certification as to foreign ownership and foreign financing of high-security leased space.

On June 8, 2021, the Colorado Senate passed SB 21-190, a comprehensive consumer privacy bill. Signed into law on July 7, 2021. the bill gives consumers the right to opt out of the processing of their personal data and to request that personal data be corrected or deleted.

There was no “silver lining” for a producer of the 2012 critically acclaimed film Silver Linings Playbook and his $400,000 claim to a portion of the film’s profits in a dispute before the Third Circuit Court of Appeals. See Spyglass Media Grp., LLC v. Bruce Cohen Prods., 997 F.3d 497 (3d Cir. 2021). Notwithstanding the purchase of film and related production/distribution rights and contracts in a bankruptcy sale and the buyer’s commitment to cure all defaults on the executory contracts acquired, the Third Circuit held that the producer had only an unsecured claim against the Weinstein Company’s estate because the producer’s contract was not executory. The decision serves as a stark reminder that contract counterparties do not always receive full payment on their claim when their contract is sold in bankruptcy. 

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.

Rule 2305, a first-of-its-kind air district rule, will impose new costs on warehouses and the Southern California supply chain, potentially testing legal boundaries of local authority to regulate “indirect sources” of emissions.

On April 14, 2021, the Employee Benefits Security Administration of the U.S. Department of Labor (DOL) issued cybersecurity guidance for the first time aimed at ERISA plans and fiduciaries. The DOL highlighted that, as of 2018, there are 34 million persons covered by private sector defined benefit pension plans and 106 million persons covered by defined contribution plans (e.g., 401(k) plans) covering estimated assets of $3.4 trillion. The DOL emphasized that sufficient protections are needed to protect participants and plan assets from internal and external cybersecurity threats.

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.

To follow-up on our previous alert of June 15, 2021, California’s Occupational Safety and Health Standards Board (Board) has approved revisions to the COVID-19 Prevention Emergency Temporary Standards (ETS) that eliminate physical distancing requirements and update other requirements (e.g., face covering, testing, exclusion from work) for fully vaccinated employees. The new and improved ETS is expected to go into effect on or around June 28, 2021. Consistent with his earlier announcement, Governor Newsom signed an Executive Order on June 17 to make the ETS effective the day it is filed with the Office of Administrative Law.

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.

After receiving pressure from businesses and other regulators during lengthy public comment meetings in recent weeks, the California Occupational Safety and Health Administration (Cal/OSHA) has proposed another set of revisions to its COVID-19 Prevention Emergency Temporary Standards (ETS), to be considered by the Occupational Safety and Health Standards Board on June 17, 2021. If approved, the revised standards would take effect on June 28, 2021.