The COVID-19 pandemic has proved that, in Texas, the “roving, roiling debate over local control of public affairs has not, with increased age, lost any of its vigor.” City of Laredo v. Laredo Merchants Assoc., 550 S.W.3d 586, 588 (Tex. 2018). Although the majority of states across the country have issued statewide Shelter-in-Place or Stay-Home orders, Texas has demurred, initially altogether, deferring to counties and cities to use their own executive authorities as they deemed necessary, and then coming along in substance while eschewing the “stay-home order” characterization.

As noted in Pillsbury’s Client Alerts issued on March 18, 2020, March 25, 2020 and March 27, 2020, the federal Families First Corona Relief Act (the FFCRA) requires that certain private employers with fewer than 500 employees provide up to 80 hours of additional paid sick leave to employees who are unable to work due to isolation or quarantine orders or advisories, or because they must care for a child due to COVID-19 precautions. The FFCRA also requires employers with fewer than 500 employees to provide up to an additional ten weeks of paid family and medical leave to care for a child whose school or childcare provider is closed due to COVID-19 related concerns.

As one of the first emergency legislative efforts to combat COVID-19, the FFCRA raised many questions when it was first introduced in mid-March 2020 (as summarized in Pillsbury’s March 18, 2020 client alert). Prior to its April 1, 2020 effective date, the DOL addressed some uncertainties by publishing answers to various FAQs, which continue to be updated regularly. On April 1, 2020, the DOL published 124 pages of Final Temporary Regulations, providing additional guidance for employers regarding the FFCRA. These regulations provide answers to many outstanding questions and, in some instances, contradict prior guidance. (State and local regulations may provide employee protections and employer obligations that differ from, and are in addition to, FFCRA entitlements. Please consult with counsel to confirm whether any state or local statutes or regulations impose additional or different obligations than those discussed here.)

On Friday April 3, 2020, Michigan Governor Gretchen Whitmer issued Executive Order 2020-36, strengthening her previous “stay home, stay safe” order to protect workers who stay home due to COVID-19 symptoms, effective immediately.

In response to the outbreak of COVID-19, Tennessee Governor Bill Lee issued a stay-home order on Thursday evening. The order amends earlier executive orders that had enacted less strict restrictions on travel in Tennessee.

Boards of directors face the challenging task of managing the impact of the COVID-19 pandemic on the business, be it from reduced demand, supply chain or operational interruptions, employee issues, or liquidity constraints.

The swift onslaught of the COVID-19 virus has presented serious challenges to the regulated community’s ability to maintain standard compliance protocols. Environmental agencies, which are also struggling with workforce impacts of their own, are responding with updated compliance and enforcement policies meant to provide some measure of relief, without relaxing substantive obligations.

On April 1, 2020, Governor Ron DeSantis mandated the closure of all nonessential businesses by Executive Order 20-91, effective April 3, 2020, at 12:01 am and expiring on April 30, 2020, unless extended by subsequent order. The order also requires anyone in Florida to limit their movement and personal interactions outside of the home to “essential services” and “essential activities.” The Order also mandates that senior citizens and Floridians with significant underlying medical conditions (chronic lung disease, moderate to severe asthma, serious heart conditions, immunocompromised status, cancer, diabetes, severe obesity, renal failure, and liver disease) “shall stay at home and take all measures to limit the risk of exposure to COVID-19.”

Background
The National Environmental Policy Act (NEPA) requires federal agencies proposing to undertake, approve or fund “major Federal actions” to evaluate the action’s environmental impacts, including both direct and reasonably foreseeable indirect effects. NEPA also requires agencies to consider alternatives to the proposed action and to discuss cumulative impacts resulting from the incremental effects of the project when added to those of other past, present, and reasonably foreseeable future projects.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act appropriates an additional $100 billion to the “Public Health and Social Services Emergency Fund” to reimburse “eligible health care providers” for COVID-19 related health care expenses or lost revenues. The Act gives the Secretary of Health and Human Services (HHS) broad discretion in distributing these funds as efficiently as possible. The Secretary has yet to publish guidance as to how funds will be administered, so we will be following developments closely as they occur. Below are the key concepts for those interested in pursuing these funds.

Investing Debt Proceeds
With the sudden shutdown of REIT business tenants from COVID-19 and the potential impact on REIT landlords, REITs have sought large infusions of cash for liquidity. A REIT borrowing a large amount of cash may want to invest that cash in short-term income-producing investments. However, the REIT must be conscious of the quarterly REIT asset tests if it intends to place borrowed cash in anything other than bank demand deposit accounts. The 75% asset test under federal income tax law (the Code) generally requires that, as of the close of each quarter of the taxable year, at least 75% of the value of the REIT’s assets must consist of real estate assets, cash, cash items (including receivables), and U.S. government issued or guaranteed securities (collectively, “good” assets). Other financial instruments are generally treated as “securities” and would not be treated as “good” assets for this 75% asset test, and a REIT’s holdings in such assets are limited under several other asset tests.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), passed on March 27, 2020, sets aside $349 billion for Paycheck Protection Loans, which are available through banks, credit unions and other lenders (and guaranteed by the Government) and allows for forgiveness of certain amounts. The authority to make and approve loans under the programs is to be delegated by the SBA to participating lenders. (We summarized the Act’s small business loan provisions here.) Loans under the Paycheck Protection Program are available through June 30, 2020, and expanded Economic Injury Disaster Loans are available through December 31, 2020.

Governor Newsom issued an Executive Order this weeks that augments the existing California stay-at-home order, EO N-33-20, to provide administrative relief to governmental agencies as well as the business sector whose compliance with certain laws and regulations is likely to be adversely impacted by COVID-19.

Following a growing list of states and municipalities, on March 30, 2020, Washington, DC, Mayor Muriel Bowser issued an order to all individuals living in Washington, DC, to stay at home except to perform “essential activities.” Order 2020-54 is effective from 12:01 am on April 1, 2020, until April 24, 2020, unless extended, rescinded, superseded or amended by a subsequent order.

In response to the rise in COVID-19 cases both nationwide and in the Washington, DC, region, Virginia Governor Ralph Northam issued a statewide order for residents to stay at home except in very limited circumstances. Executive Order No. 55 is effective immediately and remains in place until June 10, 2020, unless amended or rescinded by another executive order.

We recommend the following specific measures to mitigate risks of business interruption and regulatory noncompliance resulting from the COVID-19 pandemic.

In the wake of COVID-19, underwriters should be vigilant when conducting due diligence on an issuer intending to engage in a securities offering. The issuer could be facing work-stoppages, supply-chain disruptions, reduced demand for products and services, securities portfolio devaluations, impairments, or a host of other concerning developments, any of which could be material to the issuer’s business, financial condition or results of operations. Underwriters should seek to understand all material impacts of COVID-19 on the issuer to ensure that such matters have been properly disclosed to investors prior to any underwritten offering. These matters can be explored, among other ways, in due diligence sessions with the issuer’s management.

Last Friday, New York issued updated guidance that halted all construction in the state, except for “essential construction” which consists of roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters. As a result, most commercial construction and condominium projects are now on hold, with the exception of work that must be completed for safety purposes and emergency work. The New York guidance is a drastic departure from the state’s previous guidance, which generally exempted construction as an essential service. The Empire State Development’s website provides further detail as to what constitutes essential health care operations and infrastructure.

For many years regulators and other government officials in the Cayman Islands have worked closely with tax and regulatory authorities and others in non-Cayman jurisdictions to minimize the risk that bad actors would use Cayman jurisdictional means to evade taxes, launder money or engage in other illegal conduct. The Cayman Islands Government has incurred great expense to establish, implement or improve systems designed to facilitate international law enforcement and crime prevention. As a result of those and other important efforts by the Cayman Islands Government, reforms in the Cayman Islands have been among the most significant of any nation.

The CARES Act (H.R. 748) was signed into law on March 27, 2020. In a Client Alert issued that day, we summarized the Act’s provisions in Title I relating to its appropriation of $350 billion for small business loans.

On March 11, 2020, President Trump announced in a national address that the SBA would be making $50 billion in low-interest loans available to small businesses impacted by the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) greatly exceeds the President’s initial pledge by appropriating $350 billion for “Paycheck Protection Loans” for small businesses—including up to $10 million per company for companies with fewer than 500 employees. The Act also makes $10 billion available to the SBA’s existing Economic Injury Disaster Loans for companies impacted by COVID-19, and modifies the rules for those loans is several ways. At the time of this publication, the CARES Act (H.R. 748) has been passed by both chambers of Congress and is expected to be signed by President Trump on March 27, 2020. We summarize below the Act’s major provisions related to these two types of SBA loan opportunities.

On March 25, the Senate passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a third legislative attempt to address the economic effects of the COVID-19 pandemic. The House is expected to take up the legislation on Friday, March 27. Included in the CARES Act is a retroactive amendment to the bonus depreciation rules, which should now finally allow taxpayers to claim 100% bonus depreciation for “qualified improvement property.”

With the spread of the novel coronavirus (COVID-19) throughout the country, as described in earlier client communications, federal and state officials at every level are issuing guidance and directives advising financial institutions on how to handle situations in which the pandemic prevents individuals from repaying loans. New York Governor Andrew Cuomo issued Executive Order No. 202.9 (EO 202.9), dated March 21, 2020, containing a broad requirement for forbearance and relief from banking fees for those experiencing financial hardship as a result of COVID-19. EO 202.9 is operative until April 20, 2020. EO 202.9 has been implemented in an Emergency Regulation issued by NYSDFS on March 24, 2020, Emergency Relief for New Yorkers Who Can Demonstrate Financial Hardship as a Result of COVID-19, 119 NYCRR 3 (the DFS Regulation). The DFS Regulation applies to “Regulated Institutions,” defined as “any New York regulated banking organization under New York Banking Law and any New York regulated mortgage servicer entity subject to the authority of the Department.”

On March 23, 2020, Maryland Governor Larry Hogan mandated the closure of all nonessential businesses by executive order effective as of March 23, 2020 at 5 p.m. A person who knowingly or willfully violates the order may be subject to imprisonment of up to one year or a fine of up to $5,000, or both. As with the governor’s prior executive orders prohibiting large gatherings and directing business closures in response to COVID-19, the March 23 order suspends any statute, rule, or regulation of a state agency or political subdivision that is inconsistent with the order.

One of New Jersey’s most well-known sons, Frank Sinatra, famously proclaimed, “I did it my way.” In response to the grave threat COVID-19 presents to life and health, Governor Phil Murphy has taken steps to insure that, for the time being, localities in New Jersey cannot follow in Ol’ Blue-Eyes’ footsteps.

Following his earlier declaration of a state of emergency, on March 23, 2020, Massachusetts Governor Charlie Baker issued an emergency order instructing all businesses and organizations in the Commonwealth that do not provide “COVID-19 Essential Services” to close their physical locations. The emergency closure went into effect at 12:00pm on March 24, 2020 and remains in place until 12:00pm on April 7, 2020. To slow the alarming spread of the novel Coronavirus (COVID-19), Order No. 13 further restricts movement within the community by prohibiting indoor gatherings of more than ten people. In tandem, Governor Baker also directed the Department of Public Health (DPH) to issue a “stay-at-home” advisory.

Both U.S. antitrust enforcement agencies—the Federal Trade Commission (FTC) and the Department of Justice Antitrust Division (DOJ)—are changing their approach to civil enforcement and merger review during the coronavirus pandemic.

Remote work and other impacts to company workforces from the novel coronavirus pandemic are likely to result in practical limitations on usual environmental, health and safety compliance programs and activities across a wide variety of industries. We are already seeing see some regulatory agencies issuing new guidance and orders with implications for compliance and enforcement, and it is worth noting that regulatory agencies will also likely be impacted by their own workforce capacity issues in this environment.

The COVID-19 pandemic has rapidly become one of the world’s most serious public health challenges, and has caused unprecedented disruption to industries in the United States and across the globe. Industries doing business in California have felt the impacts more acutely than most, as the state has become one of the nation’s “hotspots” for new COVID-19 cases. These impacts have sparked numerous efforts by state and local authorities in California to attempt to address the virus, encompassing everything from suspension of all public gatherings, to mass cancellation of sports and entertainment events, to citywide quarantines.

With the spread of the novel coronavirus (COVID-19) throughout the country, New York Governor Andrew Cuomo issued Executive Order No. 202.9 (“EO 202.9”), dated March 21, 2020, containing a broad requirement for forbearance and relief from banking fees for those experiencing financial hardship as a result of COVID-19. EO 202.9 is operative until April 20, 2020.

On March 18, 2020, Governor Andrew Cuomo signed Senate Bill S8091 into law to provide sick leave and job protection for New York workers during the COVID-19 crisis. Under the new law, effective immediately, companies cannot fire or penalize employees who are unable to work while subject to “a mandatory or precautionary order of quarantine or isolation due to COVID-19.” The order must be issued by the state of New York, the department of health, local board of health, or any governmental entity with authority to issue such orders. The job protection lasts for the duration of the period that employees are self-isolating under a mandatory or precautionary order. Employees who are able to work remotely while under the “stay at home” orders and who are asymptomatic or not yet diagnosed are not covered by the new law.

On March 20, the IRS issued Notice 2020-18 announcing that federal income tax payments and payments due on April 15 may be deferred until July 15. Notice 2020-18 supersedes Notice 2020-17, issued just two days earlier. States are quickly aligning with the IRS’s extension of time, with California already adopting similar relief. The relief is intended to ease an imminent payment burden and create liquidity, but high income individual taxpayers may disproportionately benefit from the deferral because they are most likely to pay final 2019 and 2020 estimated tax payments on April 15, whereas a large proportion of individual taxpayers actually receive refunds after filing their returns.

On March 18, 2020, the U.S. Senate passed H.R. 6201, the Families First Coronavirus Response Act, following U.S. House of Representatives action on the legislation several days earlier. President Trump is expected to sign the bill into law immediately.

Earlier today, President Trump invoked the Defense Production Act, codified at 50 U.S.C. §§ 4501 et seq., in response to the COVID-19 pandemic. The Act’s implementing regulations, found at 15 C.F.R. §§ 700.1 et. seq., promulgate the Defense Priorities and Allocations System (DPAS). Congress enacted the Act in 1950 to address the short supply of essential goods during the Korean War. The Act allows the federal government to require domestic industries to provide essential goods and services needed for the national defense.

On March 13, 2020, President Trump declared that the outbreak of COVID-19 constituted a national emergency. Government contractors will face a number of scenarios—some familiar and some not—as a result of the outbreak. In this client alert, we raise four possible factual scenarios contractors are likely to encounter. We then analyze how contractors facing these scenarios can (1) best protect themselves from liability for schedule delays they may experience, and (2) best position themselves to recover for their attendant cost growth.

With the spread of the novel coronavirus (COVID-19) throughout the country, regulators and Members of Congress have begun advising financial institutions on how to handle situations in which the pandemic prevents individuals from repaying loans.

As novel coronavirus (COVID-19)—characterized by the World Health Organization on March 11, 2020 as a pandemic—continues to spread across the globe, companies and transaction participants are grappling with increased risk and uncertainty posed by the virus. This note identifies a few ways in which the developing outbreak may present challenges, both fundamental and practical, to the deal-making process and timelines. It also offers an analysis of how the virus may impact negotiations around that mainstay of M&A lawyering, the “material adverse change” (MAC) clause.

One thing is certain about how Washington policymakers will respond to the coronavirus (COVID-19) outbreak: there will be spending, both in the form of tax relief and through direct federal funding.

As COVID-19 continues to spread and to halt much of the global economy, by now many businesses have already been affected and others are taking the necessary steps to prepare for if and when the virus affects them.  The first step, as always, is to see to the physical and mental health and safety of your personnel. Right behind it, however, should be taking stock of the impacts and communicating losses to your insurance companies. The key questions as you plan your recovery are: What insurance covers your losses? Have you identified all the policies that may respond? How do you measure and document losses—especially lost profits—to the insurers’ satisfaction? Is there coverage for supply chain disruptions? And are there any government funds, such as FEMA or CARES Act assistance, available to aid your recovery?

As coronavirus disease 2019 (abbreviated “COVID-19”) spreads worldwide, businesses in the U.S. face practical and legal employment challenges as they take measures to further the immediate goal of preventing the spread of physical infection to and within their workforces.

As of today, there are reportedly more than 90,000 confirmed cases of COVID-19, with the virus having reached every continent except Antarctica. As corporate America wrestles with the unfolding implications of coronavirus, here are three essential crisis management tips to ensure business continuity:

The United States Environmental Protection Agency (EPA or the Agency) has taken another step toward regulating perfluoroalkyl substances (PFAS). Specifically, on February 20, 2020, EPA issued a pre-publication version of a Supplemental Proposed Rule that could affect a host of businesses that traditionally have not had to concern themselves with Toxic Substances Control Act (TSCA) compliance and enforcement. The proposal concerns a subcategory of PFAS known as “Long-Chain Perfluoroalkyl Carboxylates and Perfluoroalkyl Sulfonates” (collectively, LCPFAC) under TSCA. Perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), two of the most problematic PFAS substances, are among the chemicals that would be regulated.

On February 19, 2020, the Internal Revenue Service issued long anticipated guidance to help businesses understand how legislation passed in 2018 impacts those claiming carbon capture credits pursuant to Section 45Q. The guidance addresses the definition of “beginning of construction” and provides a safe harbor for partnership allocations of the credit. This guidance takes a first step toward accelerating slow-moving projects, with more detailed rules to come.

Introduction
Private funds continue to live in an age of heightened litigation risk and an emboldened Securities & Exchange Commission (SEC). Firms should take steps to mitigate risks—including documenting oversight, observing corporate formalities, creating and implementing strong internal controls, and adequately training professionals who serve as directors.

BACKGROUND

The Buy American Act is the basic source of restrictions on the federal government’s purchases of foreign-produced products. As implemented through a Presidential executive order and regulations, the law imposes a “price preference” for purchases of U.S. origin goods, which can be 6% (for non-Defense procurements) to 50% (for Defense procurements). The application of the Buy American Act is modified when the United States is obligated by an international agreement—either the World Trade Organization (WTO) Government Procurement Agreement (GPA) or a free trade agreement such as the NAFTA—to accord non-discriminatory treatment to the goods of specific foreign countries. In those cases, when the procurement is being made by a covered agency and the value of the procurement is above the applicable threshold, no price preference is applied and the foreign good is evaluated in the same manner as U.S. goods. Those modifications are implemented under the authority of the TAA, which implements U.S. obligations under trade agreements.

Universal Paid Leave Benefits Become Available in July
On July 1, 2020, the District of Columbia’s Department of Employment Services (DOES) will begin administering paid leave benefits as part of the Universal Paid Leave Amendment Act. These benefits—called variously Universal Paid Leave (UPL) or Paid Family Leave (PFL) benefits—will permit eligible employees working in the District to receive partial wage replacement benefits from the D.C. government for qualifying absences from work. Lower-wage employees may receive 90% of their average weekly wage—up to $840 per week. Employees who are paid more than 150% of minimum wage will receive larger benefits checks, although reflecting a smaller percentage of their earnings, up to a maximum of $1,000 per week. The benefits will be funded through a 0.62% payroll tax imposed on covered employers that went into effect on July 1, 2019.

DoD has released the highly anticipated final Model Version 1.0 of the Cybersecurity Maturity Model Certification (CMMC) framework. As we have reported in client alerts in December 2017, May 2018, October 2018 and December 2019, the development of the CMMC framework is part of DoD’s efforts to enhance the protection of sensitive data within the Federal supply chain. The CMMC framework adds a verification and audit component to DoD’s cybersecurity requirements. It is anticipated that all contractors throughout the DoD supply chain will need to reach some level of CMMC certification if they are to receive future DoD contracts and subcontracts.

The Chairman of the House Energy and Commerce Committee has released a “discussion draft” of the committee’s climate bill. The legislation is over 600 pages long, but the Committee has also released a summary of this legislation, which is entitled the Climate Leadership and Environmental Action for our Nation’s Future Act or the CLEAN Future Act. Here are some highlights.

Any strategy for the successful deployment of small modular reactors (SMRs) must thoroughly consider the current trends affecting the burgeoning market for SMRs. In 2019, the three major trends shaping this market were the large number of SMR designs, interest in SMRs in both mature and emerging markets, and factors impacting SMR financing.

For government contractors, a debarment immediately renders them ineligible for government contracting and, in turn, cuts off revenue, leading to potential irreparable harm. For individuals facing debarment, the effect is equally as dire, as most government contractors will immediately terminate an employee who has been proposed for debarment, or at a minimum, place the employee on leave pending a resolution. With such high stakes, those who find themselves in the crosshairs of such proceedings inevitably have questions. What should I do if I am debarred, and how does debarment affect me? How will my reputation be impacted by debarment? What can I do to avoid debarment? Unfortunately, adequate answers can be difficult to find.