Regulatory Playbook

Trending Issues

The Department of Labor Significantly Increases Salary Thresholds for Overtime Exemptions
05.10.2024

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.

Final Rules Ramping Up Endangered Species Act Regulations Now in Effect
05.09.2024

On April 5, 2024, the U.S. Fish and Wildlife Service (USFWS) and the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service (NMFS) (together, the Services) published three final rules that implement substantial changes to the Endangered Species Act (ESA). The long-awaited rules, which expand species conservation in the wake of loosened restrictions under the prior administration, address (1) the listing process for species and critical habitat designations; (2) protections for threatened species; and (3) the ESA Section 7 interagency consultation process.

Treasury Department Announces Process and Timetable to Allocate $6 Billion in Qualifying Advanced Energy Project Credits
05.03.2024

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
05.03.2024

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
05.02.2024

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
05.01.2024

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
04.29.2024

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
04.26.2024

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
04.25.2024

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
04.25.2024

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
04.24.2024

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
04.23.2024

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)
04.22.2024

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
04.22.2024

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
04.19.2024

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
04.19.2024

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
04.19.2024

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
04.17.2024

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
04.09.2024

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
04.08.2024

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
04.02.2024

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.