FCC Advances Its Space and Satellite Agenda

The Federal Communications Commission (FCC or Commission), in a flurry of 2024 activity, has sought to advance its space and satellite agenda by, among other things, adopting rules that allow satellite operators and terrestrial wireless providers to partner and deliver wireless coverage to areas difficult to reach with traditional ground-based wireless signals, proposing rules that would comprise the framework by which space stations are licensed to handle in-space servicing, assembly and manufacturing (ISAM), and clarifying orbital debris mitigation rules.

SEC Adopts Long-Anticipated Rules for SPACs: Considerations for Market Participants and SEC Enforcement Objectives in the New Regulatory Environment

On January 24, 2024, the Securities and Exchange Commission (SEC) announced the adoption of final rules (the Final Rules) affecting the acquisition of private operating companies by publicly traded special purpose acquisition companies (SPACs) and related financing transactions (individually and collectively, de-SPAC transactions), largely aligning them with requirements of traditional initial public offerings (IPOs). The Final Rules, which go into effect on July 1, 2024, and the adopting release also provided new guidance from the SEC with respect to SPAC and de-SPAC transactions.

SEC’s Climate Disclosure Rules Likely to Collide with California’s Climate Disclosure Laws

On March 6, 2024, the U.S. Securities and Exchange Commission (SEC) finalized and adopted its controversial greenhouse gas (GHG) reporting and climate disclosure regulations after a review of over 24,000 public comments and two years of hot debate. These new SEC climate-related regulations will soon require publicly traded companies to disclose, among other things, financially “material” Scope 1 emissions (direct emissions from operations) and Scope 2 emissions (indirect emissions from energy use) in their annual reports and registration statements, and will also require registrants to provide information regarding a registrant’s climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, its business strategy, operations or financial condition. Pillsbury recently published an alert on the content and details of new SEC climate-related regulations, which can be found here.

Non-U.S. Companies on Alert: U.S. Government Issues Tri-Seal Compliance Note on Global Enforcement

On March 6, 2024, the U.S. Department of Justice (DOJ), U.S. Department of Commerce, and U.S. Department of the Treasury issued a Tri-Seal Compliance Note (the “Tri-Seal Note”) emphasizing the obligations of non-U.S. persons to comply with U.S. sanctions and export control laws. The Tri-Seal Note does not issue any new rules or regulations, but rather reiterates existing U.S. trade compliance obligations for non-U.S. persons, highlights recent enforcement actions, and provides recommendations to help mitigate risks.

President Biden and Senators Support the Ramp Up in IRS Audits on Corporate Aircraft

During President Biden’s State of the Union address on March 7, 2024, President Biden announced that he will eliminate tax breaks for corporate aircraft. A White House statement released the same day explains this agenda and states that President Biden will be “cracking down on corporate jet loopholes” in an effort to make high-net-worth individuals and large corporations “pay their fair share.”

Commercial Real Estate Partnership Cancellation of Debt Income

With $1 trillion in commercial real estate financing expected to mature in 2024, much of it with uncertain prospect of repayment, more real estate borrowers will be faced with the prospect of taxable cancellation of debt income (CODI). Cancelled debt generally results in CODI but, if the debt is cancelled in bankruptcy or the taxpayer is insolvent, an exception to CODI may apply. The bankruptcy and insolvency exceptions are tested at the individual partner level, not at the partnership level. CODI exceptions reduce other valuable tax attributes, such as property basis and loss or credit carryovers, which are especially complex in bankruptcy.

DoD Contractor Requirement to Disclose Greenhouse Gas Emissions Has Been Halted

On December 6, 2022, and January 4, 2023, we published two client alerts outlining the proposed greenhouse gas (GHG) emissions disclosure requirements and explaining the differences between the Scope 1, 2 and 3 GHG emission categories. As we previously described, FAR 23.001 defines GHG as carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride and sulfur hexafluoride. Under the proposed Federal Acquisition Regulation (FAR) regulation, virtually all federal contractors will be required to identify and report an inventory of their Scope 1 and Scope 2 GHG emissions, starting one year after a final FAR rule is issued. With limited exceptions, this requirement will apply to all government contractors who received $7.5 million or more in federal contract obligations in the prior fiscal year. Government contractors who do not qualify as small business concerns and who received more than $50 million in federal contract obligations in the prior fiscal year will also be required to report an annual inventory of their Scope 3 GHG emissions. To date, the final FAR rule has not been issued.

FCC Announces Consumer IoT Cybersecurity Labeling Program

Reflecting the growing concern with cybersecurity threats associated with Internet of Things (IoT) products, the Federal Communications Commission (FCC) adopted rules at its March 2024 meeting to implement a new Voluntary Cybersecurity Labeling Program. The new label— “U.S. Cyber Trust Mark”—will be affixed on wireless consumer IoT products that go through the voluntary review program to ensure that the products comply with baseline cybersecurity criteria established in the September 2022 NIST Report 8425.

Congress Sets Its Sights on Limiting Access to Chinese Biotech Companies

The BIOSECURE Act would prohibit federal agencies from contracting with, extending loans to, or awarding grants to, any company with existing or pending agreements with identified biotechnology companies. This limits funding to both the procurement of biotechnology companies and funding flowing to any entity using these technologies.

Treasury Department and IRS Issue Final Regulations and Other Guidance on the Direct Pay Election under Section 6417 of the Internal Revenue Code

Under Section 6417 of the Internal Revenue Code (IRC), “applicable entities” and certain electing taxpayers can elect to treat various renewable energy tax credits as payments against tax, essentially making those credits refundable as direct payments from Treasury (the “direct pay election”). Proposed and temporary regulations relating to the direct pay election were issued by Treasury and the Internal Revenue Service (IRS) on June 14, 2023, and were published in the Federal Register on June 21, 2023 (the “Prior Regulations”). After considering numerous comments submitted by interested parties with respect to the proposed regulations, Treasury and the IRS issued final regulations on the direct pay election on March 5, 2024, which were published in the Federal Register on March 11, 2024 (the “Final Regulations”).

SEC Adopts Long-Anticipated Final Rules on Climate-Related Disclosure Requirements

On March 6, 2024, the Securities and Exchange Commission (SEC) adopted final rules imposing new climate-related disclosure requirements on domestic and foreign registrants with respect to their annual reports and registration statements ( “Final Rules”). The Final Rules scaled back many of the proposals from 2022, including the elimination of certain aspects of the greenhouse gas (GHG) emission disclosure mandates, modification of the financial statement disclosure requirements, removal of some of the more granular disclosure requirements, extension of certain phase-in periods, and elimination of Scope 3 GHG emissions disclosure requirements.

FinCEN’s Proposed Rule to Regulate Investment Advisers: The Questions Industry Should Be Following

On February 15, 2024, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking to regulate specified investment advisers as “financial institutions” under the Bank Secrecy Act (BSA) (the “Proposed Rule”). Investment advisers have presented a target for anti-money laundering (AML) regulation for a decade, with an earlier 2015 rulemaking effort failing to advance. The 2021 U.S. Strategy on Countering Corruption again highlighted the investment adviser sector, and the Treasury Department’s 2024 Investment Adviser Risk Assessment helped inform the Proposed Rule.

Congress Continues to Address AI in Bipartisan Fashion, Launching House AI Task Force as Latest Step

On February 20, Speaker Mike Johnson (R-LA-4) and Democratic Leader Hakeem Jeffries (D-NY-8) revealed the creation of a bipartisan Task Force on Artificial Intelligence, to be chaired by Congressman Jay Obernolte (R-CA-23) and Congressman Ted Lieu (D-CA-36).

U.S. Courts of Appeals Block Two Legal Efforts to Curb DEI Initiatives

The first week of March 2024 saw two U.S. Courts of Appeals separately block efforts to restrict initiatives designed to promote diversity, equity, and inclusion (DEI). Although each court decision was grounded in provisions of the U.S. Constitution, one ruling rested on the First Amendment in affirming a preliminary injunction against an anti-DEI statute, while the other applied Article III standing principles to affirm dismissal of an advocacy group’s challenge to a corporate initiative designed to increase its pipeline of diverse employees.

Conflicting Court Rulings on Subchapter V Eligibility Leave Small Businesses in Limbo

In 2019, Congress passed the Small Business Reorganization Act (SBRA), which created subchapter V to chapter 11 of the Bankruptcy Code. Subchapter V is designed to create a streamlined, efficient and cost-effective way for smaller businesses to reorganize in a way that increases the likelihood of investors retaining their ownership. For example, subchapter V eliminates the absolute priority rule and instead allows the debtor to confirm, over the objection of creditors, a plan whereby equity retains ownership so long as it does not unfairly discriminate and is fair and equitable.

Sweden’s NATO Membership Is Official! Significant Business Opportunities Now Available to Swedish Companies

On March 7, 2024, Sweden officially joined the North Atlantic Treaty Organization (NATO) after Hungary’s parliament cleared the last hurdle to Sweden’s membership. Sweden and Finland began pursuing NATO membership following Russia’s invasion of Ukraine in 2022. Finland joined NATO in April 2023. Sweden’s accession, however, was met with significant opposition from Hungary and Turkey based on geopolitical concerns. NATO is an alliance of over 30 countries committed to working together to guarantee the freedom and security of its members through various political and military means. The admission of Finland and Sweden into NATO is monumental because it represents the most significant expansion of the alliance since the addition of eastern European countries after the Soviet Union collapsed in 1991.

The Ayes Have It: Dartmouth Men’s Basketball Team Is the First Student-Athletes to Unionize

On March 5, 2024, the Dartmouth Men’s Basketball Team voted 13-2 in favor of being represented by SEIU Local 560 (the “Union”). This vote follows the decision issued by Region 1 of the National Labor Relations Board (NLRB) that student-athletes are “employees” within the meaning of the National Labor Relations Act, as discussed in detail in our prior alert.

Delaware Court of Chancery Invalidates Certain Board Control Rights Commonly Found in Stockholder Agreements

Last month, the Delaware Court of Chancery issued a strong reminder that (1) when prevalent market practice is pitted against statutory law, it is the statute that will prevail in Delaware courts, and (2) the bedrock of Delaware law is that the board of directors manages the business and affairs of a corporation, not the stockholders.

Four New State Consumer Privacy Laws Are Slated to Take Effect in 2024

Despite growing momentum, the United States remains one of the largest nations without a comprehensive federal privacy law. This has led to a significant uptick in state-level privacy legislation since the 2018 enactment of the California Consumer Privacy Act. In 2023, alone, four consumer privacy laws went into effect in Colorado, Connecticut, Virginia and Utah and eight new states enacted similar laws.

New York District Court Holds Teaming Agreements May Be Enforced

The U.S. District Court for the Southern District of New York (Crotty, J.) partially denied a motion to dismiss several claims brought by BAE Systems asserting a breach of contract by L3 Harris challenging, among other things, the enforceability of the parties’ teaming agreement. The contract relates to a Department of the Navy prime contract won by L3 Harris. BAE Systems Information and Electronics System Integration Inc. v. L3 Harris Cincinnati Electronics Corporation, S.D.N.Y. 23-cv-01860 (Feb. 9, 2024).

Reviewing Key CHIPS Act Implementation Milestones to Deliver Opportunities for the Semiconductor Supply Chain

The CHIPS and Science Act, enacted in August of 2022, appropriated $52 billion to expand the U.S. semiconductor market—accounting for research, development and ultimately domestic manufacturing of current and next-generation semiconductor technology. To carry out this mission, the Department of Commerce established the CHIPS Program Office, to administer the funding opportunities for manufacturing under the Act, and the CHIPS R&D Office, to carry out the research and development activities under the Act. In addition to the CHIPS Office, other agencies have been authorized to carry out CHIPS Act programming—including the Department of Defense (DoD), which is administering the Microelectronic Commons, a lab-to-fab pathway for microelectronic products to overcome the “valley of death” and reach commercialization. The CHIPS Offices, as well as the DoD, met several milestones in 2023 and the early months of 2024.

IRS Ramps Up Audits on Corporate Aircraft Use for High-Net-Worth Individuals and Affiliated Entities

The Internal Revenue Service (IRS) is continuing to increase scrutiny on high-net-worth individuals, large corporations and complex partnerships. On February 21, 2024, the IRS announced that it plans to begin dozens of audits on corporate aircraft and specifically focus on the issue of whether the use of the aircraft is being properly allocated between business and personal. As part of the announcement, IRS Commissioner Danny Werfel stated that “personal use of corporate jets and other aircraft by executives and others have tax implications, and it’s a complex area where IRS work has been stretched thin. With expanded resources, IRS work in this area will take off. These aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities.”

Cal/OSHA Approves Stricter Standards for Occupational Exposure to Lead

On February 15, 2024, the California Occupational Safety & Health Standards Board approved revisions to regulations for occupational exposure to lead. (Employers in the construction industry are governed by 8 C.C.R. section 1532.1, and employers in general industry are governed by 8 C.C.R. section 5198.) The revisions are now with the Office of Administrative Law and are expected to go into effect on January 1, 2025.

Confronting Regulatory Fluidity in the Post-Maui and Post-Sackett World of Water Regulation

The year 2023 will go down as a landmark year for water regulation—not because certainty was achieved with the ever-elusive, indefinable “waters of the U.S.” (WOTUS), but rather because of the regulatory whiplash that occurred within that 12-month period. In its wake, 2024 promises to be a year of dealing with the fallout—continued legal challenges, uncertain and inconsistent application of regulations, testing the limits of Supreme Court decisions—which have created a “regulatory fluidity” in whether and to what degree waters may be treated as jurisdictional under the Clean Water Act (CWA) and what regulations may apply.

China Passes Significant Amendments to Company Law

On December 29, 2023, the Standing Committee of the National People’s Congress of the People’s Republic of China (PRC) passed the final version of the long-awaited new Company Law (2024 Company Law) after deliberating on four versions of draft amendments. The new law will come into effect on July 1, 2024. The 2024 Company Law deletes 16 provisions in the latest version of the Company Law, which was amended in 2018, and makes substantial amendments to over 110 provisions. This is the sixth round of amendments and includes the most amendments to the Company Law since its initial introduction in 1993.

DoD Publishes Final Rule Implementing Executive Order 14005

On February 15, 2024, the Department of Defense (DoD) issued a final rule that amends the Defense Federal Acquisition Regulation Supplement (DFARS) and imposes higher U.S. and qualifying country content requirements for certain DoD procurements. As we discussed at the time of the proposed rule, this represents the U.S. government’s overall push to ensure that products and services it acquires are manufactured domestically. The final rule implements President Biden’s January 28, 2021 Executive Order, “Ensuring the Future Is Made in All of America by All of America’s Workers,” and follows a similar rule amending the applicable Federal Acquisition Regulation (FAR) clauses published on March 7, 2022. The DoD’s final rule is effective as of February 15, 2024—the date of its publication.

Congress and the FCC Seek to Protect Americans from Robocalls and Robotexts Using AI-Generated Content

The federal government in recent weeks has taken steps to protect Americans from robocalls and robotexts that use artificial intelligence (AI)-generated content. Bad actors are increasingly using AI to fool consumers into thinking that the caller or texter is a real person, and certain AI technologies have become sophisticated enough to hold a conversation with the caller. To this end, the Federal Communications Commission (FCC) issued a Notice of Inquiry in an effort to better understand how AI technologies are currently being used in robocalling and robotexting and how they might be used in the future. In the most recent high-profile example of using AI-generated content in a robocall, New Hampshire residents received a call purportedly from President Joe Biden telling them to stay home and not vote in the state’s primary election. The call was not authorized by President Biden or his campaign, nor did it include a legitimate message from the president but instead was a so-called deepfake using the president’s voice. The FCC acted swiftly in the wake of the New Hampshire incident by issuing a cease-and desist letter to the company that it suspected of originating the illegal calls and by adopting a Declaratory Ruling to clarify the applicability of certain of its rules to robocalls and robotexts that use AI-generated content. U.S. Rep. Frank Pallone, Jr. (D-NJ), ranking member of the U.S. House Committee on Energy and Commerce, which has jurisdiction over the FCC and telecommunications issues, introduced legislation that seeks to require a disclosure for any robocall that uses AI to emulate a human.

Federal Circuit Reverses COFC Protest Decision on Standing

In REV, LLC v. United States, a veteran-owned small business appealed a Court of Federal Claims (COFC) decision that the protester lacked standing to challenge the evaluation of multiple awardees, after being excluded from the competition after Phase 1 of a two-phase qualifying process under the Department of Veteran Affairs (VA) Twenty-One Total Technology-Next Generation (T4NG) multi-award Indefinite Delivery, Indefinite Quantity (IDIQ) on-ramp procurement. On January 29, 2024, the Federal Circuit reversed the COFC decision.

Unplugging the Green Light on California’s New Climate Disclosure Laws

On January 30, 2024, a coalition of business organizations—including the U.S. Chamber of Commerce, American Farm Bureau Federation, Los Angeles County Business Federation, Central Valley Business Federation and the Western Growers Association—sued the State of California to prevent the California Air Resources Board (CARB) from enforcing California’s recently enacted climate disclosure laws—Senate Bills 253 and 261. The lawsuit, filed in the Central District of California, mounts the first legal challenge to these new, controversial laws and argues, among other things, that the laws’ requirements unconstitutionally compel speech by business entities in violation of the First Amendment and are otherwise precluded by federal law.

Proposed FAR Clause Prohibits the Use of Compensation History in Hiring and Requires That Federal Contractors and Subcontractors Post Salary Ranges in Job Postings

On January 30, 2024, the Department of Defense (DoD), General Services Administration (GSA), National Aeronautics and Space Administration (NASA) and Office of Federal Procurement Policy proposed a new rule to implement a new government-wide policy regarding the hiring of employees by federal contractors and subcontractors. The proposed rule seeks to implement President Biden’s Executive Order 14069. The new policy will apply to recruitment and hiring for any position to perform work “on or in connection” with any federal prime contract or subcontract.

FTC Announces HSR Threshold and Filing Fee Increases for 2024 Transactions

As a result of the increase in the U.S. Gross National Product (GNP) for 2023, the Federal Trade Commission (FTC) has announced an increase in the jurisdictional filing thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR). The minimum size of transaction threshold will increase by more than $8 million, a 7.3% increase, to $119.5 million. 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. The revised thresholds will take effect 30 days after they are published in the Federal Register, with the effective date expected to be in early March 2024. Until then, the current $111.4 million threshold is still in effect.

AI and the “G” in ESG

We recently waved goodbye to 2023, and we remember many things from last year (besides Taylor Swift), including two important letters—A.I. These two letters arguably received more attention than any others, ranging from companies developing and implementing breakthrough AI technology, to government regulators expressing caution and high school students becoming best friends with ChatGPT. As AI expands into virtually every industry—whether cutting edge technology and financial companies or “old school” industries, such as construction and transportation—another letter merits our attention: the letter G.

FAA Issues Licensing Guidance for Launch and Reentry of Space Nuclear Systems

On October 20, 2023, the U.S. Federal Aviation Administration (FAA) issued advisory circular (AC), AC 450.45-1: “Launch and Reentry of Space Nuclear Systems.” AC 450.45-1 provides guidance on the licensing process for the launch into space and reentry of nuclear technologies and radionuclides (referred to in the guidance and this alert as “space nuclear systems” or SNS). The AC addresses the safety review requirements and payload determinations of the FAA regulations and offers guidance and regulatory compliance methods to those seeking to launch or reenter SNS.

U.S.-Based Statutory Foundations: the Best of a Trust and a Non-Trust?

Under the U.S. system, based on the common law, a trust is a useful and common planning tool for estate, and sometimes income, tax planning. But a trust structure can be problematic in certain civil law jurisdictions, such as those in many European countries. A Liechtenstein Stiftung is a planning option used by many in civil law jurisdictions to create a trust-like structure (and is typically taxed as a trust in the U.S.) for planning purposes.

Not So Fast: An Option to Purchase Real Estate May Not Always Be Rejected by the Debtor in Bankruptcy

Speaking at an annual national bankruptcy conference decades ago, a prominent bankruptcy judge stated that “if you think about whether a contract is executory or not for more than a few minutes, then you have spent too much time thinking about it.” By this, the judge seemed to imply that (subject to the express exceptions contained in the Bankruptcy Code) a debtor should be relieved from financially burdensome obligations (or be able to take advantage of a better opportunity) through the mechanism of contract rejection, thus (1) avoiding specific performance under applicable non-bankruptcy law, and (2) leaving the counterparty with only a prepetition general unsecured creditor for its breach-of-contract damages. The bankruptcy court’s recent decision in In re Le Yang, Case No. 23-00075 (Bankr. S. D. IN October 23, 2023) may call into question such approaches, policy and results, and reinforce the minority of decisions that do not allow the rejection of real estate purchase options.

Department of Defense Delivers Highly Anticipated CMMC Proposed Rule

On December 26, 2023, the Department of Defense (DoD) issued the long-awaited Cybersecurity Maturity Model Certification (CMMC) proposed rule and related guidance. As we have previously reported, CMMC is a program developed by the DoD to protect the Defense Industrial Base from cyber threats. Under this program, nearly all DoD contractors and subcontractors would be required to achieve certain levels of cybersecurity maturity. The DoD first announced the CMMC program in 2019, then issued an initial version of the program (CMMC 1.0) in November 2020. In November 2021, the DoD announced that it would be overhauling the CMMC Program and replacing it with CMMC 2.0. The purpose of CMMC 2.0 was to restructure the CMMC Program and to reduce the cost and administrative burden of achieving cybersecurity compliance. The newly released proposed rule implements many aspects of CMMC 2.0 and introduces additional requirements. Below is a summary of some of the key aspects of the new rule. If implemented, the proposed rule would represent the DoD’s first implementation of the much-debated CMMC Program. Comments on the proposed rule are due on February 26, 2024.

Employers Face Greater Misclassification Risk Under Resurrected Federal Independent Contractor Rule, Opening Door to Substantial Liability

The Fair Labor Standards Act (FLSA) requires employers to provide minimum wage and overtime pay to qualified employees—but not to independent contractors. Many employees, especially full-time employees, are also entitled to various statutory benefits, such as state law paid sick leave entitlements, workers’ compensation benefits, unemployment benefits, and to benefits under an employer’s ERISA-governed benefit plans, such as group health insurance policies and 401(k) plans. Failure to properly classify workers as employees can therefore result in substantial damages and penalties, even if the misclassification is unintentional, as described in more detail below. Correctly classifying workers is therefore of significant importance.

The Crossroads of Cybersecurity and National Security: Delaying Disclosure of Incidents under the SEC's New Cybersecurity Rule

The SEC's sweeping Cybersecurity Disclosure Final Rules put registrants on a tight deadline—just four business days to disclose material cybersecurity incidents.

New York Non-Compete Agreements Are Safe—for Now

On December 23, 2023, New York Governor Kathy Hochul vetoed a bill that would have imposed a broad ban on non-compete agreements in New York. The legislation proposed a sweeping and aggressive prohibition of new non-compete agreements with employees and other workers and service providers, without any exceptions for highly compensated employees, for partners leaving a partnership or even for non-competes entered into in the sale of a business context.

And Then There Were Three: Louisiana Granted Primacy over Class VI Wells

In the waning days of 2023, Louisiana became the third state granted authority by the U.S. Environmental Protection Agency (EPA) under the Safe Drinking Water Act (SDWA) to permit and regulate Class VI underground injection control (UIC) wells—i.e., wells permitted specifically for long-term, deep geological storage of carbon dioxide (CO₂) and which are critical to the full-scale development of commercial geological carbon sequestration. Until now, only North Dakota (2018) and Wyoming (2020) had been granted primacy, and Louisiana becomes the first state to receive this “primacy” status under the Biden Administration.

Artificial Intelligence-Generated Content in Political Ads Raises New Concerns for Broadcasters

With the Iowa Republican Caucus happening in mid-January and dozens of additional primaries and caucuses to follow before the 2024 general election, broadcasters need to be aware of the use of artificial intelligence (AI), deepfakes and synthetic media in political advertising and the various laws at play when such content is used. These laws seek to ensure that viewers and listeners are made aware that the person they are seeing or the voice they are hearing in political advertising may not be who it looks like or sounds like. Campaigns, political committees, super PACs, special interest groups and other political advertisers are using AI, deepfakes and synthetic media in advertisements, making it easier to mislead and misinform viewers and listeners.

National Institute of Standards and Technology Seeks Public Comment on Draft Interagency March-In Framework

On December 8, 2023, the National Institute of Standards and Technology (NIST) issued the “Draft Interagency March-In Framework” that would provide guidance to agencies on the prerequisites for exercising march-in rights, and, if those prerequisites are met, on facts to be gathered by the agency, and factors to consider in determining whether to require a contractor, assignee or exclusive licensee of an invention made under a government contract or funding agreement to grant a license to practice the invention. The comment period closes on February 6, 2024, after which point, NIST is expected to finalize the framework.

Department of Energy Proposes to Revise its Acquisition Regulation

On October 26, 2023, the Department of Energy (DOE) released a notice of proposed rulemaking to propose a comprehensive revision to its acquisition regulations. The DOE and the National Nuclear Security Administration (NNSA) promulgate the Department of Energy Acquisition Regulation (DEAR) to provide uniform acquisition policies and procedures for the DOE and NNSA. The notice of proposed rulemaking clocks in at over 100 pages in length, making for dense reading. Companies that regularly contract with the DOE, however, will likely want to at least peruse the proposed rule for relevant changes in this first comprehensive re-write of the DEAR in decades.

Fugitive Sentenced in China to Life Imprisonment in Landmark Corruption Case

In a matter of great interest to asset recovery litigants, after nearly two decades of cooperation between U.S. and China law enforcement authorities, Xu Guojun, who fled China in 2001, was sentenced in China to life imprisonment for corruption and embezzlement of nearly $500 million from the Bank of China.

Treasury Department and IRS Issue Proposed Regulations on the Clean Hydrogen Production Tax Credit under Section 45V of the Internal Revenue Code

As enacted by the Inflation Reduction Act of 2022 (IRA), section 45V of the Internal Revenue Code (IRC) grants a clean hydrogen production credit (CHPC) for each kilogram of clean hydrogen produced by a taxpayer at a qualified clean hydrogen production facility. The available credit amount under IRC section 45V varies based on the lifecycle greenhouse gas (GHG) emissions generated from the qualified hydrogen production facility (as well as the taxpayer’s compliance with the IRA’s new prevailing wage and apprenticeship requirements). The maximum credit amount is $3.00 per kilogram of clean hydrogen, which requires a lifecycle GHG emissions rate of less than 0.45 kilograms of CO2e per kilogram of hydrogen.

FCC Updates Data Breach Notification Rules

The Federal Communications Commission (FCC) first adopted rules in 1998 restricting the use and disclosure of customer proprietary network information (CPNI), which refers to data collected by telecommunications carriers about their customers’ usage patterns, including call information, and service and billing details. The rules were updated in 2007 to, among other things, apply to interconnected VoIP providers and require that federal law enforcement (United States Secret Service and the FBI) and customers be notified of data breaches involving CPNI. In 2013, the rules were further amended to cover telecommunications relay service providers. The FCC revised the rules again in 2016 to require providers to notify customers, the FCC, FBI and Secret Service of data breaches unless the provider reasonably determined that no harm to customers was “reasonably likely to occur.” However, in 2017, Congress nullified the FCC’s 2016 Order by invoking the seldom used Congressional Review Act (CRA), which is a tool Congress can use to overturn certain federal regulatory actions.

Overview of PFAS Regulations in the United States and What Japanese Companies and Their U.S. Subsidiaries Need to Know

This article provides overviews the status of PFAS regulation in the United States. Given the ubiquity of PFAS in commercial products, the expectation is that the United States’ regulation of PFAS and liability risks associated with PFAS will be of interest to a wide array of Japanese businesses, including specialty chemical companies, industrial manufacturers, oil and gas operations, and trading companies. Indeed, it is to be understood that many businesses, including those that have never knowingly used PFAS in their operations, may have a nexus to PFAS without knowing that they do. This article briefly describes PFAS, the types of products that include it, the recent wave of litigation involving PFAS contamination, which has involved settlements above $10 billion, and developments in federal and state regulation of these chemicals. This is followed by a brief discussion of specific scenarios in which these developments may affect Japanese corporations. The article ends with the recommendation that businesses that manufacture, distribute, use, or dispose of PFAS or products containing PFAS should stay abreast of these developments and develop proactive strategies to minimize their potential liability.

FCC Closes Lead Generator Loophole, Strengthens Illegal Text Message Blocking and Lays Groundwork for Future Additional Blocking Measures

The Federal Communications Commission (FCC) recently adopted a Second Report and Order (Order), Second Further Notice of Proposed Rulemaking (Further Notice), and Waiver Order that, among other things, take steps to protect Americans from illegal and unwanted text messages. The Federal Trade Commission puts the harm to consumers from scam text messages at $326 million for 2022, with other sources finding the harm reaching more than $20 billion. The FCC's actions are intended to bolster Americans' trust in text messages, which, unlike spam phone calls, are delivered to mobile devices without an option to ignore them before seeing some or all of the contents of the message.

Treasury Department and IRS Issue Proposed Regulations on the Advanced Manufacturing Production Credit under Section 45X of the Internal Revenue Code

As amended by the Inflation Reduction Act of 2022, section 45X of the Internal Revenue Code (IRC) grants an advanced manufacturing production credit (AMPC) to manufacturers who produce certain clean energy components in the United States. On December 14, 2023, the Internal Revenue Service (IRS) published proposed regulations [REG-107423-23] in the Federal Register providing further guidance on the AMPC. The proposed regulations supplement Notices 2022-27, 2023-18 and 2023-44 that were published on October 14, 2023, March 6, 2023, and June 20, 2023, respectively.

Department of Labor Finalizes Rule to Provide Service Employees Right of First Refusal under Successor Contracts

On December 4, 2023, the Department of Labor (DOL) published a final rule highlighting the federal government’s procurement interest in economy and efficiency which requires successor contractors or subcontractors to hire the predecessor’s employees, for the same or similar services, thus avoiding displacement of these employees. On July 19, 2022, we advised on this proposed rule in a client alert addressing the implementation of Executive Order 14055, Nondisplacement of Qualified Workers Under Service Contracts. The proposed rule required service contracts which succeed contracts for the same or similar services, and solicitations for such contracts, to include a nondisplacement clause to offer right of first refusal of employment under the successor contract.