Bankruptcy Court Rejects Attempts to Lock Up Creditor Votes in Favor of Reorganization Plan

In April 2024, Chief Judge Martin Glenn for the U.S. Bankruptcy Court for the Southern District of New York rejected a provision in certain post-petition agreements with aircraft lessors (collectively, the “Aircraft Agreements”) requiring the aircraft lessor (and creditor) to vote its claim in favor of a not yet filed or negotiated chapter 11 plan. See In re GOL Linhas Aéreas Inteligentes S.A., No. 24-10118 (WG), 2024 WL 1716490 (Bankr. S.D.N.Y. Apr. 22, 2024). The Court’s decision, as well as other decisions in In re SAS AB and In re LATAM Airlines Group S.A., reflects a renewed focus on lock-up provisions by bankruptcy courts. This focus comes as debtors are requesting with increasing frequency similar commitments from creditors to attain the requisite votes for confirmation. None of these cases, however, resulted in a court disregarding the votes cast by the lessors.

Preclusion Confusion: Federal Circuit Decision in ZyXEL Communications v. UNM Rainforest Sparks Uncertainty at the PTAB

The Federal Circuit’s decision in ZyXEL Communications Corp. v. UNM Rainforest Innovations (Appeal Nos. 2022-2220, 2022-2250, July 24, 2024) starts out as a garden variety appeal from an inter partes review proceeding (“IPR”) before the Patent Trial & Appeal Board (“PTAB”). However, the opinion takes a final, unexpected turn by remanding to the PTAB to reconsider whether the new substitute claims are unpatentable in light of collateral estoppel and an additional prior art combination that the petitioner never even raised.

Discovery Dilemma: An Update on the Legal Battle Between The New York Times and OpenAI

OpenAI’s defense of the lawsuit brought by The New York Times (“The Times”) has sparked controversy relating to OpenAI’s discovery demand for access to reporter notes and other behind-the-scenes materials associated with millions of articles that appeared in The Times. These materials, the AI company argues, are crucial for assessing the copyrightability of The New York Times’ content, which content is being incorporated into OpenAI’s AI models.

Subsidence from Geothermal Operations: Navigating the Regulatory Landscape and Potential Claims

Geothermal projects in the United States and abroad face scrutiny of their potential impacts on the surrounding environment and communities. Seismic activity, noise and water contamination are commonly cited concerns.

The End of the Chevron Doctrine and the Reassertion of Judicial Primacy in Reviewing Federal Regulatory Actions

In 1984, the U.S. Supreme Court (SCOTUS) decided Chevron USA, Inc. v. National Resource Defense Council. See 467 U.S. 839 (1984). The unanimous decision, written by Justice Stephens, reversed then-D.C. Circuit Judge Ruth Bader Ginsburg’s ruling that set aside EPA’s Clean Air Act “bubble policy,” which was intended to provide regulatory relief from certain EPA permitting requirements.

The EU’s AI Act: A Review of the World’s First Comprehensive Law on Artificial Intelligence and What This Means for EU and Non-EU Companies

Regulation (EU) 2024/1689 (the AI Act) introduces a risk-based framework for regulating AI systems based on how those systems are used, along with a separate framework for regulating general-purpose AI models. Different obligations apply to various actors in the AI supply chain, including providers developing AI systems or GPAI models in the EU, deployers using AI systems in the EU, importers and distributors supplying AI systems into the EU, and product manufacturers incorporating AI systems into regulated products sold into the EU. The AI Act also applies to providers and deployers whose AI systems or their outputs are made available in the EU, regardless of their location, emphasizing its broad territorial scope and the need for global companies to align with its requirements.

U.S. Supreme Court Ruling Gives Insurers with Financial Responsibility “Party in Interest” Standing in Chapter 11 Cases Filed by Insured Entities

On June 6, 2024, in Truck Insurance Exchange v. Kaiser Gypsum Company, Inc., the U.S. Supreme Court ruled unanimously that an insurer with financial responsibility for claims asserted in a bankruptcy has standing under the U.S. Bankruptcy Code to object to plan confirmation. The Supreme Court reversed a decision by the Fourth Circuit Court of Appeals denying an insurer standing based on the “insurance neutrality” doctrine but did not adopt the insurer’s position that the underlying insurance contract’s “duty to cooperate” triggered the insurer’s right to be heard in connection with the chapter 11 proceeding. Justice Sotomayor delivered the Supreme Court’s unanimous decision. Justice Alito did not take part in the decision.

Purdue Pharma and the Future of Nonconsensual Third-Party Releases in Chapter 15 Cases

On July 27, 2024, the U.S. Supreme Court issued a long-awaited ruling regarding the validity of nonconsensual third-party releases in the chapter 11 plan of pharmaceutical company Purdue Pharma. In Harrington v. Purdue Pharma L.P., the Supreme Court held that absent consent from the affected claimants, the bankruptcy court lacked the power to approve a plan provision releasing Purdue’s founders, the Sackler family, from liabilities arising from Purdue’s sale of opioids. In reaching that result, the Supreme Court concluded that nonconsensual third-party releases fall outside the scope of section 1123(b) of the Bankruptcy Code, which limits the types of provisions a bankruptcy plan may include. It also reasoned that nonconsensual third-party releases contravene section 1141(d), which provides “a discharge” from liability only to “a debtor.”

Landslide Election Victory for UK Labour Party Marks Seismic Shift in UK’s Political Terrain

Following 14 years of Conservative Party rule in the UK, Sir Keir Starmer’s Labour Party has formed His Majesty’s Government with a widely anticipated and substantial election victory at the ballot box on July 4, 2024, marking a seismic shift in the UK’s political terrain. There is now much speculation as to those areas on which Sir Keir Starmer will look to focus, and the earliest concrete signal we will see on his priorities will be the King's Speech, scheduled for the morning of July 17, 2024, which will set out the government's legislative agenda for the coming parliament.

U.S. Treasury Department Issues Proposed Rulemaking for Forthcoming Outbound Investment Program

On June 21, 2024, the U.S. Department of Treasury issued a Notice of Proposed Rulemaking (NPRM) setting forth proposed regulations that would implement regulatory framework to review and prohibit certain investments in “countries of concern,” namely the People’s Republic of China (PRC), Hong Kong and Macau. This follows the Advanced Notice of Proposed Rulemaking (ANPRM) that was released in August 2023. The NPRM issued on June 21 builds on comments received in response to the ANPRM and seeks to clarify the scope and direction of outbound investment restrictions. Comments will be accepted on the NPRM until August 4, 2024.

Biden Signs ADVANCE Act into Law

On July 9, 2024, President Biden signed into law the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy Act (ADVANCE Act)—a historic nuclear energy package, and the latest of many positive developments in the nuclear energy policy and regulation space.

Legal Riffs: Music Industry Alleges AI Is Out of Tune

In late June, Universal Music Group (UMG) Records, Sony Music Entertainment, and other major record labels filed two complaints against two generative artificial intelligence (“gen AI”) music startups, Suno, Inc. (Suno) and Uncharted Labs, Inc. (Udio). The concurrently filed complaints allege that the gen AI technology produced by Suno directly infringes on copyrights owned by these record labels. The complaints allege that the AI models used by Suno and Udio were trained on copyrighted records and, when prompted, produced music that closely resembles the copyrighted materials. These complaints follow a series of lawsuits filed against numerous gen AI platforms which raise legal and policy questions about the use of copyrighted creative works to train AI systems on digital platforms, and, most notably, whether such use of protected works constitutes fair use or copyright infringement.

U.S. District Court Enjoins Enforcement of Key Portions of DOL’s Davis-Bacon Act Rule

On June 24, 2024, the U.S. District Court for the Northern District of Texas granted a nationwide preliminary injunction enjoining DOL from implementing and enforcing specific portions of section 5.2 and section 5.5(e) of its final rule entitled “Updating the Davis-Bacon and Related Acts Regulations.” DOL’s final rule was published August 23, 2023, and became effective on October 23, 2023. The Court found DOL engaged in “egregious violations” of Article II, section 3 of the U.S. Constitution, because DOL “usurped Congress’ law-making power and attempted to make substantive amendments to the DBA.”

Treasury and IRS Issue Proposed Regulations Regarding the Clean Energy Production and Clean Electricity Investment Credits Under Sections 45Y and 48E of the IRC

On June 3, 2024, the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) published proposed regulations (Proposed Regulations) in the Federal Register [REG-119283-23] which provide initial guidance on the Clean Electricity Production Credit (CEPC) under section 45Y of the Internal Revenue Code (IRC) and the Clean Electricity Investment Credit (CEIC) under section 48E of the IRC (collectively, the Clean Electricity Tax Credits). The CEPC and CEIC were added to the IRC by the Inflation Reduction Act of 2022 (IRA) and apply to qualified facilities and energy property placed in service after December 31, 2024.

Having Property in the United States: A Prerequisite to Chapter 15 Relief?

Chapter 15 of the Bankruptcy Code codifies the United Nations Commission On International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, which was designed to facilitate cross-border cooperation and coordination between courts dealing with parallel proceedings. A chapter 15 case is an ancillary case filed in the United States to serve as a companion to a foreign insolvency proceeding and is initiated by requesting a U.S. bankruptcy court to recognize that foreign proceeding.

Maine Modifies Its Sweeping PFAS Law

On April 16, 2024, Maine enacted amendments revising the state perfluoroalkyl and polyfluoroalkyl substances (PFAS) law. This law generally prohibits the sale of products containing intentionally added PFAS and includes notification requirements for products with intentionally added PFAS that would continue to be sold. The recent amendments modified the effective dates of certain sales bans, revised the reporting requirements for PFAS product manufacturers, delayed the general ban on the sale of PFAS products from 2030 to 2032, and listed the categories of products exempt from the PFAS ban entirely. While this law remains one of the strictest PFAS laws nationally, the new amendments ease some of the burdens on manufacturers presented in the original bill.

Is the “Revered Tradition of Amateurism” Over for College Sports?

In 1984, Supreme Court Justice John Paul Stevens wrote that “[t]he [National Collegiate Athletic Association (NCAA)] plays a critical role in the maintenance of a revered tradition of amateurism in college sports.” To uphold this “revered tradition,” the NCAA needed “ample latitude” to set and enforce its rules without outside interference. For the next three-and-a-half decades, this principle could be relied upon by the NCAA in defense of its rulemaking authority and in response to pressure to rescind compensation restrictions on student-athletes.

In a Landmark Decision, Federal Circuit Expands Protest Jurisdiction at COFC

On June 7, 2024, the U.S. Court of Appeals for the Federal Circuit issued its decision in Percipient.ai v. United States. The case was closely watched by the government contracting community because the Federal Circuit’s decision was poised to have significant impact on the bid protest jurisdiction of the U.S. Court of Federal Claims (COFC).

SBA Takes Final Step Towards Eliminating SDVOSB Self-Certification

On June 6, 2024, Small Business Administration (SBA) issued a direct final rule affecting Service-Disabled Veteran-Owned Small Business (SDVOSB) credit. Under this new rule, agencies and prime contractors will not be able to receive credit towards their socio-economic contracting goals and subcontracting plan goals for SDVOSBs that are not certified by SBA’s Veteran Small Business Certification (VetCert) program. The rule includes a grace period. Self-certified SDVOSBs will continue to generate such credit until SBA acts on their application for VetCert certification, so long as they submit their VetCert application by December 22, 2024.

Summer Is Here, and So Is Cal/OSHA’s Indoor Heat Illness Standard (Almost)

With summer in full swing, California employers should prepare to comply with the California Occupational Safety and Health Administration’s (Cal/OSHA) new indoor heat illness standard.

AI’s Power Play: Congress Calls for Smart Energy Solutions to Fuel AI Growth

As artificial intelligence (AI) technologies continue to evolve and expand, their energy demands are growing significantly. This increase in energy consumption, driven by the proliferation of data centers and AI applications, presents both opportunities and challenges that intersect with national security interests.

Standing Down: Constitutional Standing Not Required for 337 Investigations

On May 15, 2024, the U.S. International Trade Commission (Commission) issued the public version of its opinion in the Active Matrix Organic Light-Emitting Diode Display Panels and Modules for Mobile Devices, and Components Thereof investigation (Display Panels), in which it found that constitutional standing is not required to file an intellectual property-based section 337 complaint with the Commission. The Commission does, however, for jurisdictional purposes, require for patent cases that at least one complainant be the owner or exclusive licensee. The term “owner or exclusive licensee” has been interpreted to be the same as a “patentee” under 35 U.S.C. § 281, indicating that the Article III statutory standing requirement is similar to the Commission’s jurisdictional requirement for patent cases. This decision, together with a recent precedential Federal Circuit opinion related to the domestic industry requirement, further clarifies what a prospective complainant does—and does not—have to demonstrate in order to successfully institute and maintain a section 337 investigation.

Army Seeks Micro-Reactor Nuclear Power Plants to Reduce Reliance on Off-Site Electricity Providers

The Defense Innovation Unit (DIU) has released a solicitation for Solution Briefs addressing the U.S. Army’s need for a full lifecycle prototype micro-reactor nuclear power plant(s). The solicitation contemplates that the chosen contractor will construct and retain ownership of the reactor, which must be licensed by the Nuclear Regulatory Commission (NRC). The micro-reactor will preferably supply between 3MW and 10MW of electrical power and must be in operation by the end of 2030.

After Long Drought, COFC Sustains a Corrective Action Protest

On May 16, 2024, COFC issued its opinion in Kearney & Company, P.C. v. United States, Nos. 24-162 and 24-201, holding that the corrective action taken by the National Geo-Spatial Intelligence Agency after a post-award protest at GAO was arbitrary and capricious. In the protest, Kearney & Company, P.C. challenged the corrective action taken by the agency on the Audit Remediation and Sustainment Operations task order procurement under the General Service Administration (GSA) Federal Supply Schedule (FSS) multiple-award contract. The initial award to Kearney was terminated by the agency after a GAO protest. Before issuing a decision, GAO held an unrecorded outcome prediction conference where the GAO attorney stated that it would likely sustain one of the protest grounds—that Kearney’s quoted GSA FSS labor category did not match one of the key labor categories required by the solicitation.

Supreme Court Unanimously Rules Federal Arbitration Act Requires Federal Courts to Issue a Stay, Where Requested, When Lawsuits Involve an Arbitrable Dispute

In Smith v. Spizzirri, 601 U.S. ____, 2024 WL 2193872 (May 16, 2024), a unanimous Supreme Court clarified the obligation of federal District Courts to stay cases pending the outcome of an arbitration where the court holds that the issues are arbitrable and a party requests a stay. The Supreme Court addressed the question of whether the Federal Arbitration Act (FAA), which provides procedures for the enforcement of arbitration agreements in federal court, permits a District Court to dismiss a case instead of issuing a stay after the court decides that the dispute is subject to an arbitration agreement and a party requests a stay pending arbitration. The Supreme Court unanimously decided that it does not.

California’s Ban on Drip Pricing Begins July 1, 2024

Last October, California Gov. Gavin Newsom signed SB 478 into law. Effective July 1, 2024, the bill expands California’s already far-reaching consumer protection statute—the Consumer Legal Remedies Act (California Civil Code § 1750 et seq.) (CLRA)—to ban “drip pricing,” or “advertising a price that is less than the actual price that a consumer will have to pay for a good or service.” The term “drip pricing” refers to the practice of including additional undisclosed fees to a final bill, whereas the term “junk fees” refers to surcharges in a final bill that are unexpected or frivolous.

USTR Calls for Stakeholder Comments Following the Report on the Four-Year Review of the Section 301 Tariffs

On May 14, 2024, the U.S. Trade Representative (USTR) published the Four-Year Review of Actions Taken in the Section 301 Investigation (“Report”), which addresses the four-year review of China-related tariffs under Section 301 of the Trade Act of 1974, as amended (“Trade Act”) (19 U.S.C. 2411). Our previous alert on this report is available here.

Implications of the U.S. DOJ’s Proposed Rescheduling of Marijuana

Marijuana has long been classified as a Schedule I substance. Schedule I is reserved for substances that have no known medical use and have a high likelihood of abuse. A shift to Schedule III—which is reserved for substances with an accepted medical use and a moderate to low potential for physical and psychological dependence—would provide tax benefits for the industry and better opportunities to research marijuana’s medical benefits.

Treasury Department and IRS Issue Final Regulations on the Electric Vehicle Credits Under Section 30D of the Internal Revenue Code

As modified by the Inflation Reduction Act of 2022, section 30D of the Internal Revenue Code of 1986, as amended (Code), provides for a tax credit of up to $7,500 for a new clean vehicle if certain requirements are met. The modified tax credit is divided between $3,750 in respect of battery components, and an additional $3,750 in respect of critical minerals. Eligibility for each part of the tax credit depends on the ability to satisfy domestic source requirements that have been met with some controversy due to difficulties in implementation and monitoring over time.

Agency’s Silence is Golden for Protester

On May 3, 2024, the Government Accountability Office (GAO) sustained a bid protest filed by ITility, LLC, which challenged the Department of Homeland Security’s decision to award a task order for financial and program management support services to Integrated Finance and Accounting Solutions, LLC in a best value procurement. The protester alleged that the agency’s evaluation of technical proposals was unreasonable in several respects and that the agency conducted a flawed best-value tradeoff analysis. In a rare decision, GAO sustained the protest because the agency failed to substantively address several allegations raised in the protest. GAO also concluded that the agency failed to reasonably evaluate proposals due to unrecognized discriminators in the protester’s proposal.

The Department of Labor Significantly Increases Salary Thresholds for Overtime Exemptions

On April 23, 2024, the Department of Labor’s Wage and Hour division issued a final rule (the “Rule”) increasing the salary thresholds for the exemption from the Fair Labor Standards Act’s overtime requirement for bona fide executive, administrative, and professional (EAP) employees. The Rule also increased the minimum salary for exemptions for highly compensated employees and changed the methodology the Department will use to determine the applicable salary thresholds in the future. Barring court action blocking the Rule, the increases will go into effect in two phases, with the first phase taking effect July 1, 2024, and raising the minimum salary by $8,320 annually above the current minimum, and the second phase taking effect on January 1, 2025, when the new minimum annual salary for EAP employees to be exempt from overtime will be $23,088 higher than it is today.

Treasury Department Announces Process and Timetable to Allocate $6 Billion in Qualifying Advanced Energy Project Credits

On April 29, 2024, the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) issued Notice 2024-36, announcing and providing guidance on the second allocation round (Round 2) of Qualifying Advanced Energy Project Credits (Advanced Energy Project Credits or Credits) under section 48C of the Internal Revenue Code (IRC). Advanced Energy Project Credits and the Advanced Energy Project Program were established by the Inflation Reduction Act (IRA) to incentivize investment in clean energy manufacturing and recycling, greenhouse gas (GHG) emission reduction/industrial decarbonization and critical materials projects. Under the program, developers may be granted Credits via the allocation process, and then use these Credits to offset their tax liability and help fund their respective projects.

Treasury Department and IRS Issue Final Regulations Regarding the Transferability of Tax Credits Under Section 6418 of the Internal Revenue Code

Under Section 6418 of the Internal Revenue Code (IRC), eligible taxpayers can elect to sell all or a portion of any “eligible credit” to an unrelated party (a “transfer election”) solely for cash consideration. An eligible credit is a renewable energy tax credit falling within one of the 11 categories set forth in IRC Section 6418(f)(1), including clean vehicle credits, certain manufacturing credits, all energy generation and carbon capture credits and some clean fuel credits. In general, amounts paid in connection with the transfer of eligible credits are not included in gross income by the transferor under IRC Section 6418(b)(2) and are not deductible by the transferee under IRC Section 6418(b)(3).

DOL Expands Investment Advice Subject to Fiduciary Liability

The U.S. Department of Labor (DOL) has adopted new regulations under the Employee Retirement Income Security Act of 1974 (ERISA) that broaden the scope of investor recommendations that are subject to fiduciary duty rules. The original regulations, published in 1974, were adopted at a time when 401(k) plans and individual retirement accounts (IRAs) were far less common. The DOL has frequently raised concerns that the original regulations do not adequately protect plan participants making investment decisions on their own. The DOL’s most recent attempt to address the perceived gap in employee protections, in regulations adopted in 2016, was struck down by the courts. New regulations finalized on April 23, 2024, are narrower than the 2016 regulations, but would still extend fiduciary duty rules to investment communications that would reasonably be considered to create a relationship of trust and confidence between the employee and the advisor, including rollover recommendations and investment of plan assets in IRAs. The regulations will become effective as of September 23, 2024.

Working Around OSHA’s New Walkaround Rule

Both employers and employees have the right to have a representative accompany OSHA compliance officers (CSHOs) during physical inspections of worksites for the purpose of aiding such inspections. (See 29 CFR 1903.8.) The new Worker Walkaround Designation Process (Walkaround Rule) clarifies that employees, like employers, have the right to designate a non-employee third party to be their representative. The Walkaround Rule places certain conditions on non-employee third-party representatives to ensure their presence aids the inspection.

Cancellation of Debt Income: The Qualified Real Property Business Indebtedness Exception

Cancellation of debt income (CODI) is gross income recognized for income tax purposes upon cancellation or discharge of debt. Borrowed funds generally become taxable as CODI when the debt is cancelled or discharged unless an exception applies. Internal Revenue Code (IRC) § 61(a)(11).

U.S. Passes Social Media and Data Broker Bills Targeting Data Use Practices

On April 23, 2024, the U.S. Congress passed two pieces of legislation as part of the larger foreign aid package directed at Ukraine, Israel and the Indo-Pacific. President Biden signed the bills into law on April 24. While much of the attention has been on TikTok, the Protecting Americans from Foreign Adversary Controlled Applications Act and the Protecting Americans’ Data from Foreign Adversaries Act of 2024 have wide-ranging implications and may potentially affect a large number of industries, in addition to social media companies. The below article provides a summary of what is at stake.

Biden Administration Publishes Final Version of Title IX Regulations

After months of anticipation, the Biden administration released its final amendments to the Title IX regulations on April 19, 2024 (the “New Rules”). The amendments are the latest change to the Title IX regulatory landscape, altering many of the regulations that were put into place in the 2020 rule. The New Rules broaden the scope of Title IX by expanding the definition of sex-based harassment and hostile environment harassment, as well as expanding the jurisdiction of the regulations to include off-campus conduct. The New Rules also give schools more flexibility and discretion in developing procedures for Title IX grievance proceedings. For example, they no longer require that there be a live hearing and cross-examination by the parties, and a single investigator model is now allowed. The New Rules also clarify the prohibition on retaliation and update reporting and response obligations. Finally, while the New Rules do address certain protected characteristics, including sexual orientation, gender identity, and sex characteristics, they do not address participation in athletics. The Department of Education promulgated a separate Notice of Proposed Rulemaking on Sex-Related Eligibility Criteria for Male and Female Athletic Teams, but no final rule has been published.

Employers Beware: FTC Announces Final Rule Banning Worker Non-Competes

On April 23, 2024, the Federal Trade Commission (FTC) voted along party lines to issue its Final Rule prohibiting almost all non-competes with workers—both those entered into in the past and in the future. The Final Rule is set to become effective 120 days after it is published in the Federal Register (the Effective Date). The Rule rests on the FTC’s authority to interpret and enforce sections 5 and 6(g) of the Federal Trade Commission Act (FTC Act), which prohibits unfair methods of competition.

EPA Issues New Rules Requiring the Development and Submission of Response and Risk Management Plans

The Environmental Protection Agency (EPA) has completed its work on two significant rules that are likely to impose new burdens on the regulated community: the Accidental Chemical Release Prevention Requirements, authorized by Section 7412( r)(7) of the Clean Air Act, and the Clean Water Act Hazardous Substance Facility Response Plans, authorized by Section 1321G)(5)(D) of the Clean Water Act of 1972 as amended by the Oil Pollution Act of 1990. The Accidental Chemical Release Rules were published in the Federal Register on March 11, 2024, at 89 FR 17622. The effective date is May 10, 2024, but many facilities will face a compliance date of May 10, 2027. The new Clean Water Act facility response plan requirements were published in the Federal Register on March 28, 2024, at 89 FR 21924, and are effective on May 28, 2024. However, the deadline for submitting response plans to EPA will be June 1, 2017, for “initially-regulated facilities.”

Supreme Court Unanimously Rules “Pure Omissions” Not Actionable under SEC Rule 10b-5 Even If Disclosure Required by Item 303 of Regulation S-K

In Macquarie Infrastructure Corp. v. Moab Partners, L.P., 601 U.S. ___, 2024 WL 1588706 (Apr. 12, 2024), a unanimous Supreme Court held that “pure omissions” cannot be the basis for a private action of securities fraud under Securities and Exchange Commission (SEC) Rule 10b-5(b). Stockholders had argued, and the Second Circuit had agreed, that while many “pure omissions” are not actionable, the result should be different if the omitted information should have been disclosed under Item 303 of the SEC’s Regulation S-K, which requires public companies to disclose “material events and uncertainties” in the Management’s Discussions and Analysis (MD&A) section of annual and quarterly reports. Rejecting this argument, the Court decided that private parties can premise a Rule 10b-5(b) claim on an omission only if that omission renders something else the company has said misleading (a “half-truth”). The SEC, however, can bring actions of its own for violations of Item 303.

The United States Moves Toward a Comprehensive Privacy Law (One More Time)

On April 7, 2024, U.S. Sen. Maria Cantwell (D-WA), Chair of the Senate Committee on Commerce, Science and Transportation, and U.S. Rep. Cathy McMorris Rodgers (R-WA), Chair of the House Committee on Energy and Commerce, released a discussion draft of the American Privacy Rights Act (APRA). This bipartisan, bicameral draft legislation builds upon the previous draft U.S. comprehensive privacy bills and seeks to eliminate the existing patchwork of sectoral-based and state-specific data privacy laws in the United States. If passed, the APRA would rival the EU General Data Protection Regulation (GDPR) and become one of the leading global privacy standards. “Fired up” to get the comprehensive privacy legislation across the finish line is the message we heard from the members of the Energy and Commerce (E&C) subcommittee hearing on April 17. Each of the five expert witnesses also answered unanimously “yes” to the question of whether this bill was the best chance Congress had to pass a national privacy standard. This article looks at why this time may be different.

Revised Uniform Grants Guidance Reduces Burdens While Encouraging Accessibility and Transparency

On April 4, 2024, the White House released a pre-publication final rule substantially updating the Office of Management and Budget (OMB) Uniform Grants Guidance, which sets the foundational requirements for agencies in making grants and providing other forms of federal financial assistance and will now be known as the “Guidance for Federal Financial Assistance.” Federal financial assistance includes grants, cooperative agreements (but not cooperative research and development agreements), loans and loan guarantees, subsidies, insurance and certain other types of assistance. This pre-publication final rule will be published in the Federal Register and builds on the proposed rule published in the Federal Register on October 5, 2023. This final rule is the most significant revision to the Uniform Grants Guidance since its inception 10 years ago.

SCOTUS Relaxes Standards for Title VII Plaintiffs in Workplace Discrimination Claims

In Muldrow v. City of St. Louis, No. 22-193, 2024 WL 1642826 (U.S. Apr. 17, 2024), the U.S. Supreme Court ruled that an employee alleging that an involuntary lateral job transfer constituted workplace discrimination in violation of Title VII of the Civil Rights Act of 1964 need only show that the transfer resulted in “some harm,” rejecting as “extra-textual” any heightened threshold of harm required by certain lower courts. As Justice Elena Kagan held in the majority opinion, a Title VII plaintiff “does not have to show … that the harm incurred was significant. Or serious, or substantial, or any similar adjective.” This is because “Title VII’s text nowhere establishes that high bar.” Justice Kagan’s opinion was joined by Chief Justice Roberts and Justices Sotomayor, Gorsuch, Barrett and Jackson. Justices Thomas, Alito and Kavanaugh each filed concurring opinions.

DOI Rule Endorses Seminole Tribe’s Model of Remote Wagering

On March 22, 2024, a new federal rule published by the U.S. Department of the Interior (Department or DOI) went into effect, governing the Department’s review and oversight of certain tribal gaming arrangements.

Clarity for M&A Practitioners: Proposed DGCL Amendments Bridge the Gap between Recent Delaware Chancery Court Decisions and Market Practice

On March 28, 2024, the Council of the Corporation Law Section of the Delaware State Bar Association proposed certain amendments (the “Amendments”) to the Delaware General Corporation Law (DGCL), which, if approved, would go into effect on August 1, 2024, and retroactively apply in the case of all agreements, subject to limited exceptions. The proposed Amendments would, among other things:

Revving Up: Eight States in Gear with Low-Carbon Fuel Standard Legislation

State low-carbon fuels programs are powerful drivers for the adoption of various low-carbon fuels, particularly renewable natural gas (RNG), renewable diesel and sustainable aviation fuel (SAF). For well over a decade, California has implemented its Low-Carbon Fuel Standard (LCFS), which was wildly successful in incentivizing the use and production of RNG, renewable diesel and SAF. In recent years, Oregon and Washington followed suit, and while these programs have a much smaller net impact on the demand for low-carbon fuels due to the respective sizes of those states, they have provided additional outlets for low-carbon fuels.

New CISA Rule Would Require Widespread Cyber Incident Reporting, Updated Timelines and Penalties for Critical Infrastructure Sector

At the end of March 2024, the Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) released the long-anticipated Notice of Proposed Rule Making (NPRM) detailing how companies will have to comply with the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA). The draft CIRCIA Rule (the Proposed Rule) will require virtually every owner/operator entity within one of 16 identified Critical Infrastructure sectors to report a cybersecurity incident within 72 hours and/or report within 24 hours a ransomware payment. Public comments about the Proposed Rule are due by June 3, 2024, and CISA expects to publish the Final Rule no later than October 4, 2025.

China Issues Rules to Clarify and Relax Cross-Border Data Transfer Controls

On March 22, 2024, the Cyberspace Administration of China (CAC) published the final version of the Provisions on Promoting and Regulating Cross-Border Data Transfers (Provisions), aiming to provide more clarity on the implementation of the Measures on Security Assessment for Data Export (Security Assessment Measures), effective beginning September 1, 2022, and the Measures on the Standard Contract for the Cross-border Transfer of Personal Information (SC Measures), effective on June 1, 2023, and other cross-border data transfer issues. As described in more detail below, the Provisions, among other things, set forth certain scenarios where the procedural regulatory requirements for data export are exempted, and clarify the identification of “important data” (Important Data) and thresholds for mandatory security assessment.

Recoupment Survives the Discharge Injunction Permitting Dollar-for-Dollar Recovery on a Prepetition Debt

From time to time, a debtor continues to have the right to receive benefits or payments from a non-debtor counterparty under the same contractual relationship or transaction after receiving a discharge of prepetition debt. The question then arises whether the discharge prevents the non-debtor counterparty from withholding a payment or benefit to satisfy that prepetition, now discharged, debt. A recent bankruptcy appellate panel ruling decided in the context of the recoupment of overpaid Social Security benefits suggests that under the appropriate facts, the answer is no.