Category: Administrative & Regulatory

Oops: NASDAQ Seeks to Correct a 2009 Error Re: ADR Listing Requirements

On Wednesday, April 7, 2021, the U.S. Securities and Exchange Commission (“SEC”) issued Release No. 34-91492 publishing a Proposed Rule Change by NASDAQ to amend the requirements for listing ADRs on each of NASDAQ’s Global Select AND Global Markets.

American Depository Receipts

“ADRs” are American Depository Receipts. They have a long history in the U.S. capital markets, having been invented by J.P. Morgan in 1927 to facilitate access to the American stock market by Selfridges, an iconic British department store organized and managed by an American expatriate as the second-largest (after Harrod’s) department store in the UK in 1909 (and featured in a BBC TV series of that name about both the store and Mr. Selfridge). ADRs are depository receipts issued by an American bank when the underlying securities are deposited in a foreign depository bank. There are some interesting complexities about ADR’s depending on whether the ADR is a Level 1 ADR, or whether it is a Level 2 Sponsored ADR, which requires filing a separate registration statement with the SEC. And then there are Level 3 ADRs that require the foreign company to not only file a Form F-1 with the SEC but to adhere either to U.S. GAAP accounting standards OR IFRS as published in the IASB. The April 7 NASDAQ Proposal does not directly impact any of these ADR complexities.

Listing requirements are just that: the conditions a company must meet in order to have its securities traded on NASDAQ. NASDAQ has three market tiers: the Global Select Market, the Global Market, and the Capital Market. The Capital Market is the trading tier with the least stringent requirements for listing. The NASDAQ Global Market requires that the companies seeking to list on it must have some international attributes and substantially higher financial and governance features. The NASDAQ has the most rigorous listing requirements and is the tier for leading international companies.

NASDAQ Listing Requirements

Until 2009, NASDAQ required that at least 400,000 ADRs be issued in order to be listed on any of the three NASDAQ tiers, insure that there would be sufficient liquidity and “depth in the market” to support public trading. Then in 2009, as part of a “housekeeping,” NASDAQ moved the listing requirements for ADRs on the Global Market AND the Global Select Market to a new section of NASDAQ listing requirements that had NO minimum number of ADRs in order to be listed on those tiers. Ironically, the least restricted trading tier RETAINED the 400,000 ADR requirement. Recently, someone at NASDAQ noticed the disparity. Fortunately, NO issue with fewer than 400,000 ADRs has been listed on either the Global Select or Global Market tiers in the 12 years since 2009. Now, NASDAQ seeks to reimpose the 400,000 minimum ADR requirement for ALL NASDAQ tiers. As this proposed change to the listing requirements is a simple reinstatement of a condition accidentally omitted in the 2009 “housekeeping,” and as no present listing will be adversely affected, NASDAQ requested, and the SEC granted, a waiver of the normal 30-day period before a change might take effect.

While, as Alexander Pope wrote: “To err is human, to forgive, divine;” to correct may even be better.

©2021 Norris McLaughlin P.A., All Rights Reserved

ARTICLE BY Peter D. Hutcheon of Norris McLaughlin P.A.
For more articles on the SEC, visit the NLR Securities & SEC section.

Russia Russia Russia! The Biden Administration Imposes Tough Sanctions on Russia

This week has been a week of significant foreign policy action. Today, President Biden issued a new Executive Order imposing new tough sanctions on Russia for its interference in the U.S. 2020 presidential election, as well as the SolarWinds cyber-attack that impacted multiple U.S. government agencies. This action was taken a day after Secretary of State Blinken stated strong concerns about the increase in Russian troops along the Ukrainian border. Earlier this week, the 2021 Threat Assessment report published by the Office of DNI (Director of National Intelligence) also cited Russia as presenting “one of the most serious intelligence threats to the United States,” noting a variety of provocative actions relating to cyber, military, and intelligence activities.

Background on the New Russia Sanctions

At a high level, today’s E.O. prohibits certain dealings in Russian sovereign debt, and authorizes targeted sanctions on technology companies that support the Russian Intelligence Services’ efforts to carry out malicious cyber activities against the United States and its partners and allies. Under the E.O, the Treasury Department also announced the designation of over 30 Russian individuals and entities that carried out Russian government-directed attempts to influence the 2020 U.S. presidential election, and other acts of disinformation and interference (see full list here). In conjunction with the E.O., the U.S. expelled ten Russian diplomats that include representatives of Russian Intelligence Services.

The White House’s statement noted that these measures send “a signal that the United States will impose costs in a strategic and economically impactful manner on Russia if it continues or escalates its destabilizing international actions. This includes, in particular, efforts to undermine the conduct of free and fair democratic elections and democratic institutions in the United States and its allies and partners; [and] engage in and facilitate malicious cyber activities against the United States and its allies and partners ….”

What Triggered these New Sanctions?

Last year, SolarWinds, a major U.S. information technology firm, was the subject of a cyberattack that impacted its clients’ data, including multiple U.S. government agencies and Fortune 500 companies. In December, then U.S. Secretary of State Mike Pompeo said he believed Russia was behind the attack but U.S. investigators “were still unpacking precisely what it is.” Today, the U.S. has formally named Russian Foreign Intelligence Service (SVR) as the force behind these cybersecurity hacks on SolarWinds.

In addition to the attack on SolarWinds, the Biden Administration cited Russia’s attempts to influence the 2020 U.S. presidential elections, and other acts of disinformation and interference as triggers for these sanctions.

New Prohibitions on U.S. Financial Institutions on Dealing in Russian Sovereign Debt

Under the E.O., the Biden Administration issued Directive 1 generally prohibiting U.S. financial institutions from transacting in ruble and non-ruble denominated funds and bonds. This directive expands upon existing prohibitions on certain dealings in Russian sovereign debt that have been in place since August 2019.

Specifically, as of June 14, 2021, U.S. financial institution are prohibited from:

  • Participating in the primary market for ruble or non-ruble denominated bonds issued after June 14, 2021 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation; and
  • lending ruble or non-ruble denominated funds to the three aforementioned entities.

The immediate impact is on U.S. financial institutions, including its foreign branches, that may be dealing with Russian sovereign debt.

E.O. Authorizes Targeted Sanctions

The E.O. also authorizes targeted sanctions on persons that have supported Russia’s efforts to carry out malicious cyber activities against the United States and its interference in U.S. or foreign elections, among other things (see Section 1 of the E.O., found here). Any action taken pursuant to the E.O. requires a determination by the Treasury Department in consultation with the State Department. But, we wouldn’t be surprised if additional designations come out in the next days or weeks under this authority.

We expect that measures will be taken against high-ranking Russian officials and technology companies with close ties to Russia’s Intelligence Services. For example, among those entities already designated under the E.O. are ERA Technopolis; Pasit, AO (Pasit); Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation (SVA); Neobit, OOO (Neobit); Advanced System Technology, AO (AST); and Pozitiv Teknolodzhiz, AO (Positive Technologies) (see here).

In addition to the primary sanctions outlined above, the E.O. authorizes secondary sanctions to non-U.S. persons that provide “financial, materials, or technological” support to persons sanctioned under the E.O.

While the short-term impact will likely be on U.S. financial institutions, the broader message is that this Administration is not going to be shy about stiffer sanctions on Russia. Though the financial sector will always be a ripe target for sanctions as a foreign policy tool, if Russia’s aggression increases, we may see other sectors being targeted as well.

We will keep monitoring and updating as news develops.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.

ARTICLE BY Fatema K. Merchant and Mario Andres Torrico of
Sheppard, Mullin, Richter & Hampton LLP
For more articles on Biden Administration sanctions, visit the NLR  Election Law / Legislative News section.

Are Your Workplace Policies Compliant with the NLRA?

NLRB issues Memorandum GC-21-03 Signaling Aggressive and Expanded Enforcement of Section 7 Rights

On 31 March 2021, Peter Sung Ohr, Acting General Counsel of the National Labor Relations Board (NLRB), issued Memorandum GC 21-03 (GC 21-03) to the regional field offices signaling significant changes to enforcement priorities under Section 7 of the National Labor Relations Act (NLRA). In part, GC 21-03 indicates that the NLRB will be “robustly enforcing the Act’s provisions that protect employees’ Section 7 rights” and that “cases involving the retaliation against concerted employee conduct will be vigorously pursued.” GC 21-03 cites to increased workplace health and safety issues resulting from the COVID-19 pandemic as well as employees’ political and social justice advocacy concerns as factors necessitating increased enforcement of the NLRA.

NLRA Protections

The NLRA is a federal law that grants employees the right to form or join unions; engage in protected, concerted activities; address or improve working conditions; or refrain from engaging in such activities. The NLRA applies to almost all private employers but does not apply to federal, state, or local governments; employers who employ only agricultural workers; and employers subject to the Railway Labor Act. Some employers are surprised to find that the NLRA protects nearly all employees in the private sector, not only union employees or employees seeking to form or join a union. In fact, concerted activities protected under the NLRA often occur outside of the context of union activity. The NLRA does not cover, however, government employees, agricultural laborers, independent contractors, and supervisors (with limited exceptions).

It is not uncommon for the NLRB and its general counsel to modify or reverse their interpretations of the NLRA with changes in the composition of the Board. The political party of the presidency enjoys majority representation on the NLRB. Consequently, changes in the presidential administration often lead to significant changes for employers. GC 21-03 is emblematic of that trend. It states that “recent decisions issued by the current Board have restricted [Section 7 rights] for employees.” Specifically, GC 21-03 criticizes Alstate Maintenance1 and Quicken Loans2 for applying “mutual aid and protection” narrowly. The enforcement priorities highlighted in GC 21-03 are in stark contrast to enforcement priorities under the previous administration and a clear indication that employers should expect increased NLRB oversight for the foreseeable future.

Broadened Concerted Activities for Mutual Aid and Protection

Section 7 of the NLRA grants all covered employees the right to engage in “concerted” activities for the purpose of “mutual aid or protection.” The phrase “mutual aid or protection” focuses on “whether there is a link between the activity and matters concerning the workplace or employees’ interests as employees.”3 GC 21-03 indicates that such a link will be broadly construed, and it outlines an expansive characterization of what constitutes protected, concerted activity. As noted in GC 21-03, employee advocacy can have the goal of “mutual aid or protection” even when the employees have not explicitly connected their activity to workplace concerns. As examples, GC 21-03 cites to a solo strike by a pizza shop employee to attend a convention; protests in response to a sudden crackdown on undocumented immigrants or social justice concerns; and a hotel interview with a journalist concerning minimum wage issues. In addition, GC 21-03 highlights how concerted activity can occur outside of the context of union activity—such as when employees raise health and safety issues resulting from the COVID-19 pandemic or seek protections from government agencies.

Renewed Application of Inherenty Concerted Conduct

In addition to a clear directive to interpret concerted and protected activity more broadly under the NLRA, GC 21-03 also signals a renewed enforcement of conduct that is deemed “inherently concerted.” As noted in GC 21-03, employee conduct generally becomes concerted when it is “engaged in with or on the authority of other employees”4 or when an employee seeks either “to initiate or to induce or to prepare for group action.”5 In other words, concerted conduct revolves around employees’ intention to band together to improve their wages or working conditions. However, contemplation of group action is not required and employee discussions surrounding certain employment policies may be sufficient to constitute inherently concerted activity—even if group action has not yet been contemplated or is in its early stages. Indeed, as noted in GC 21-03, inherently concerted conduct need only involve a “speaker and a listener.” Further, GC 21-03 emphasizes that there are no “magic works” required for concert to attach. However, the NLRB has previously found that certain categories of workplace life have been found to be “inherently concerted”—namely, exchanges of information concerning (i) wages or wage differentials, (ii) changes in work schedules, (iii) job security, (iv) workplace health and safety, and (v) racial discrimination. GC 21-03 expressly warns that the NLRB will be considering such categories as well as “other applications of the inherently concerted doctrine” for the foreseeable future.

Key Takeaways

  • Employers should work with their counsel to ensure their workplace policies are compliant with the NLRA, including the expansive definition of protected conduct that will be enforced for the foreseeable future.
  • Employers should expect an increase in NLRB oversight and NLRA enforcement.
  • Employers should expect an increase in complaints brought by the NLRB, including increased prosecution of cases involving retaliation against concerted employee conduct.
  • Employers should exercise caution when deciding whether or not to discipline or discharge employees who have engaged in discussions or activities related to workplace health and safety (importantly as related to the COVID-19 pandemic), social justice issues, or political views.

1 367 NLRB No. 68 (2019).

2 367 NLRB No. 112 (2019).

3 Fresh & Easy Neighborhood Mkt., Inc., 361 NLRB 151, 153 (2014).

4 Meyers Indus., 268 NLRB 493, 497 (1984) (Meyers 1), remanded sub nom. Prill v. NLRB, 755 F. 2d 941 (D.C. Cir. 1985), cert. den. 474 U.S. 948 (1985).

5 Meyers Indus., 281 NLRB 882, 887 (1986) (Meyers II), affd. sub nom. Prill v. NLRB, 835 F. 2d 1481 (D.C. Cir. 1987), cert. den. 487 U.S. 1205 (1988).

Copyright 2021 K & L Gates

ARTICLE BY Rosemary Alito and  Rio J. Gonzalez of K&L Gates
For more articles on the NLRB, visit the NLR Labor & Employment section.

Virginia Accelerates Adult-Use Cannabis Legalization

We previously highlighted the Virginia Legislature’s move to legalize adult-use cannabis.  This week the Virginia Legislature passed a bill legalizing adult-use cannabis.  In doing so, Virginia greatly accelerated the timeline for legalization.

Prior drafts had set a 2024 date for legalizing the possession of recreational cannabis.  The bill passed this week when Lieutenant Governor, Justin Fairfax, broke a 20-20 tie in the Virginia Senate legalizes adult possession of an ounce or less of cannabis beginning on July 1, 2021.

While the new law legalizes recreational possession and allows Virginia residents to grow up to four cannabis plants beginning July 1st, Virginia still isn’t likely to begin licensing recreational cannabis retailers until 2024.  Likewise, the new bill doesn’t allow existing medical cannabis dispensaries to begin selling to adults for recreational use.

Copyright © 2021 Womble Bond Dickinson (US) LLP All Rights Reserved.

 

ARTICLE BY Morgan E. Persinger of Womble Bond Dickinson (US) LLP
For more articles on cannabis, visit the NLR Biotech, Food, Drug section.

Biden Administration’s Current U.S. Travel Restrictions and Revised National Interest Exception Criteria

The ongoing COVID-19 pandemic has resulted in numerous presidential proclamations restricting travel and entry into the United States. Likewise, since the pandemic began, the criteria for “national interest exceptions” (NIEs) has also evolved. On March 2, 2021, the U.S. Department of State issued updated criteria for NIEs relating to certain travelers from the Schengen Area, United Kingdom, and Ireland. Given the frequency of the changes, it can be difficult to track the current state of these matters. The following information is a summary of the latest updates with regard to U.S. travel restrictions.

Travel Restrictions Based on Country of Physical Presence

Presidential Proclamation Current Status Impact
Proclamation 9984 In effect Suspends and limits entry into the United States by individuals who were physically present in China during the 14-day period prior to their entry/attempted entry
Proclamation 9992 In effect Suspends and limits entry into the United States by individuals who were physically present in Iran during the 14-day period prior to their entry/attempted entry
Proclamation 9993 Revoked Suspended and limited entry into the United States by individuals who were physically present in the Schengen Area during the 14-day period prior to their entry/attempted entry
Proclamation 9996 Revoked Suspended and limited entry into the United States by individuals who were physically present in the United Kingdom and Ireland during the 14-day period prior to their entry/attempted entry
Proclamation 10041 Revoked Suspended and limited entry into the United States by individuals who were physically present in Brazil during the 14-day period prior to their entry/attempted entry
Proclamation 10143 In effect Suspends and limits entry into the United States by individuals who were physically present in South Africa, the Schengen Area, the United Kingdom, Ireland, and Brazil during the 14-day period prior to their entry/attempted entry

Following the issuance of Proclamation 10143, the State Department rescinded previous NIE guidance and simultaneously issued new guidance on March 2, 2021, as related to the Schengen Area, the United Kingdom, and Ireland. According to the State Department, the original guidance had provided exceptions for “certain technical experts and specialists, senior-level managers and executives, treaty-traders and investors, professional athletes, and their dependents.” However, the updated guidance includes exceptions under Proclamation 10143 for individuals who “provide vital support for critical infrastructure.” [Emphasis added.] Additionally, NIEs remain available for individuals entering the United States “for purposes related to humanitarian travel, public health response, and national security.”

Travel Restrictions Based on Visa Type

On April 22, 2020, the Trump administration issued Proclamation 10014 suspending the entry of individuals to the United States on immigrant visas. This proclamation did not affect applications for adjustment of status or nonimmigrants, such as business visitors or temporary workers. On June 22, 2020, the Trump administration issued Proclamation 10052, which extended the sunset date of Proclamation 10014 to December 31, 2020. Proclamation 10052 also suspended the entry of certain individuals to the United States on select nonimmigrant visas, including H-1B, H-2B, J-1, and L-1 visa holders, as well as their dependents through the end of the year. On December 31, 2020, the Trump administration issued Proclamation 10131, extending Proclamations 10014 and 10052 until March 31, 2021. On February 24, 2021, the Biden administration revoked Proclamation 10014 and section 1 of Proclamation 10052. The Biden administration allowed the remaining sections of Proclamation 10052 to expire on March 31, 2021, and has not expressed any plans to renew or replace it at this time. As a result, Proclamations 10014 and 10052 are no longer in effect.

Backlogs Remain for Most Consular Operations

While the expiration of Proclamation 10052 is certainly welcome news, foreign nationals should not expect immediate processing of their visa applications. The backlog of cases pending at the U.S. consulates around the world remains an ongoing issue due to COVID-19. The U.S. consular posts have confirmed they will begin a phased resumption of routine visa services based on local conditions but no specific timeline is available. Additionally, applicants who are no longer subject to Proclamation 10052 may still face obstacles entering the United States due to country-specific travel restrictions. Foreign nationals who are subject to country-specific travel bans will continue to require an NIE authorizing each entry to the United States.

© 2020, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

ARTICLE BY Ashley K. Kerr and Melissa Manna of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
For more articles on COVID-19 travel restrictions, visit the NLR Immigration section.

Legislation to Create a Pathway to Legalization Passes House and Goes to Senate

On March 18, 2021, the House passed two bills designed to create paths to legalization for certain groups of immigrants. Both the Dream and Promise Act of 2021 and the Farm Workforce Modernization Act have been sent to the Senate.

American Dream and Promise Act

Legislation that will create a route for legalization for Dreamers (residents who were brought to the United States as children) has passed the House. The legislation received bipartisan support, although a closer battle can be expected in the Senate. The bill passed 228-197, with nine Republicans joining the Democrats.

The bill’s sponsor said that this legislation will bring relief to 2.5 million undocumented immigrants. The legislation covers all the undocumented immigrants who entered the U.S at the age of 18 years or younger. This legislation also includes immigrants who have protection under the Deferred Action for Childhood Arrivals (DACA). It would also provide a path to legal status for individuals with Temporary Protected Status (TPS) as of 2017 and Deferred Enforced Departure (DED), which are the two forms of temporary protection for immigrants from countries that face a crisis.

The bill “eliminates the ambiguity in their lives and recognizes the talents and indispensable contributions Dreamers make to our country,” Rep. Lucille Roybal-Allard, a primary sponsor, said on the House floor. “Some are married or educated, they speak the language, they’re working, they pay the taxes,” said Rep. Fred Upton of Michigan. “When you get to know these people, and I do, it breaks your heart.”

Pathway to Legalization

The Biden administration expressed its support for this legislation in a statement before the vote on March 18. “Americans recognize that our Nation is enriched by the contributions of immigrants. [The bill] is a critical milestone toward much-needed relief for the millions of undocumented individuals who call the United States home,” the statement said.

Farm Workforce Modernization Act

The House also passed the Farm Workforce Modernization Act by a 247-174 vote. Thirty Republicans voted for the bill, while one Democrat voted against it.

The legislation will provide a temporary status, Certified Agricultural Workers, for those who were agricultural workers for at least 180 days during the past two years. Spouses and children of the workers can also apply under the Act. Undocumented farmworkers will have to pay a fine and engage in additional agricultural work depending on their length of period they have performed agricultural labor in the United States.

Those with ten years of previous agricultural experience will be eligible to apply for a green card after working four more years. Those with less than ten years of experience will have to work eight more years to apply.

The legislation also streamlines the process to get an H-2A visa, which is a work visa for foreign citizens to work temporarily in the United States. This bill is seen as a welcome measure for many in the agricultural sector, as there has always been a dearth of farmworkers in the United States. Undocumented farmworkers are especially vulnerable to the COVID-19 virus, as they have limited access to medical facilities and are often underpaid due to their immigration status.

©2020 Norris McLaughlin P.A., All Rights Reserved

ARTICLE BY Raymond G. Lahoud of Norris McLaughlin P.A.
For more articles on immigration, visit the NLR Immigration section.

SEC Ventures Into The Dark Web, But Can It Establish A Connection?

In March, the Securities and Exchange Commission announced its first securities enforcement action involving the “dark web”.  The SEC’s complaint describes the “dark web” as referring to “a subset of the deep web that is intentionally hidden, requiring specific software to access content”.   The SEC states that the “deep web” refers to “anything on the internet that is not indexed by, or accessible via, a search engine like Google”.

The SEC’s complaint alleges that the defendant “offered and sold on one of the dark web marketplaces various purported
‘insider tips’ that he falsely described as material, nonpublic information from the insider trading forum or corporate insiders”.  I found this interesting because the SEC wasn’t charging the defendant with insider trading but with selling false insider tips.  This may be fraudulent, but is it it a securities law violation?  Stock tips, whether false or true, are not themselves securities.  How does the SEC bring the defendant’s allegedly fraudulent conduct under the securities laws?

To establish a violation of Rule 10b-5, the SEC must prove that the defendant’s activities were “in connection with” the purchase or sale of a security.  Here, the defendant’s deception did not relate to securities that he sold to investors.  The SEC’s complaint attempts to connect the defendant’s activities to securities transactions by alleging  that traders paid for the tips using Bitcoin, and used the fake insider information to purchase and sell stock of various publicly traded companies.  In SEC v. Zandford, 535 U.S. 813 (2002), the U.S. Supreme Court found that the person deceived do not have to be counterparties to the person committing the fraud.  However, the defendant in this case might argue that his fraud was complete when he sold the false tips and therefore the SEC cannot establish the requisite connection.  I will be interested to learn whether this becomes a contested issue at trial.

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP

ARTICLE BY Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP
For more articles on the SEC, visit the NLR Securities & SEC section.

American Jobs Plan, By the Numbers

On March 31, 2021, President Biden released details on the American Jobs Plan, which provides funding for infrastructure, clean energy, innovation and R&D, manufacturing and workplace support, and the caregiving economy. The proposal also includes revenue increase proposals to partially offset the new initiatives. Here is a summary of the amounts proposed in each major category:

INFRASTRUCTURE AND CLEAN ENERGY
Transportation Infrastructure $ 621 billion
Roads and Bridges $ 115 billion  
Public transit $ 85 billion  
Passenger and Freight Rail $ 80 billion  
Road safety $ 20 billion  
Electric vehicles $ 174 billion  
Airports, ports, waterways $ 42 billion  
Reconnect neighborhoods $ 20 billion  
Large projects $ 25 billion  
Resilience $ 50 billion  
Other $ 10 billion  
Water, Electricity, Broadband $ 311 billion
Drinking water $ 111 billion  
EPA state fund ($45 billion)    
Water systems ($56 billion)    
PFAS ($10 billion)    
Broadband $ 100 billion  
Electric Power $ 100 billion  
Electric grid    
Extend clean energy ITC, PTC; establish EECES    
Reclamation ($16 billion)    
Brownfield, Superfund ($5 billion)    
Carbon capture and sequestration    
Civilian Conservation Corps ($10 billion)    
Homes and Buildings $ 378 billion
Retrofit Homes and Buildings $ 213 billion  
Affordable rental housing    
NHIA tax credits ($20 billion)    
Zoning incentives    
Public housing ($40 billion)    
Clean Energy Accelerator ($27 billion)    
Education and Child Care Facilities $ 137 billion  
Public School modernization ($ 100 billion)    
Community Colleges ($ 12 billion)    
Child Care ($25 billion)    
VA Hospitals $ 18 billion  
Federal Buildings $ 10 billion  
SUBTOTAL, INFRASTRUCTURE AND CLEAN ENERGY $ 1.310 trillion
CAREGIVING ECONOMY
Expand Medicaid Home and Community-based Care $ 400 billion
INNOVATION AND R&D
Future technologies $ 180 billion
NSF $ 50 billion  
Rural, additional R&D $ 30 billion  
Research labs $ 40 billion  
Climate R&D $ 35 billion  
HBCUs/MSIs $ 25 billion  
Retool and revitalize manufacturing $ 300 billion
Commerce supply chains $ 50 billion  
Semiconductors $ 50 billion  
Medical countermeasures $ 30 billion  
Clean energy (EV, nuclear) $ 46 billion  
Regional innovation hubs $ 20 billion  
NIST $ 14 billion  
Manufacturing extension partnerships $ 2 billion  
Capital access, sec. 48C $ 52 billion  
Small business incubators $ 31 billion  
Rural Partnership program $ 5 billion  
Workforce Development $ 100 billion
Dislocated Workers program $ 40 billion  
Underserved communities $ 12 billion  
Apprenticeships, STEM $ 48 billion  
SUBTOTAL, INNOVATION AND R&D $ 580 billion
     
TOTAL $ 2.290 trillion

LABOR REFORMS

  • Enact the Protecting the Right to Organize Act
  • Apply labor standards to infrastructure, clean energy funding recipients
  • Increased penalties for workplace safety and health violations

REVENUES

  • Raise Corporate Rate to 28%
  • Increase Global Minimum Tax to 21%
  • Global agreement on minimum corporate tax
  • Limit Corporate Inversions
  • Deny Offshoring deductions, create Onshoring credit
  • Repeal Foreign Derived Intangible Income deduction
  • 15% minimum on corporate book income
  • Eliminate fossil fuel tax incentives
  • Increase corporate enforcement
    ©2020 Greenberg Traurig, LLP. All rights reserved.

    For more articles on the American Jobs Plan, visit the NLR Coronavirus News section.

COBRA Alert: Enhanced Benefits for Those Eligible

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (ARPA), which provides important health insurance benefits to certain eligible individuals. Specifically, the ARPA requires employers to cover 100% of Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums from April 1, 2021, through September 30, 2021, for former employees who:

  • Became COBRA-eligible in or after November 2019;
  • Lost employer-sponsored health insurance because of an involuntary termination of employment or because of an involuntary reduction in hours; and
  • (1) Elected COBRA; (2) elected COBRA but let the coverage lapse; or (3) did not elect COBRA.

Former employees are not eligible for the ARPA COBRA subsidy if they:

  • Resigned voluntarily, or voluntarily reduced their hours;
  • Were terminated for gross misconduct;
  • Are now covered under another group health plan; or
  • Are Medicare-eligible.

Note, if COBRA coverage is set to expire before September 30, 2021, ARPA does not extend the expiration date; and many questions remain. For instance, does the ARPA COBRA subsidy extend to those who left employment per a mutual decision, for “good reason” under an employment agreement, or pursuant to a voluntary exit incentive plan? The Department of Labor is currently drafting regulations and guidance that should help answer these questions.

What Do Eligible Former Employees Need To Do?

For anyone who is covered by COBRA as of April 1, 2021, nothing needs to be done. It is up to the employer or the employer’s health insurance carrier to ensure that the premiums are paid for the relevant period. For those who let COBRA lapse or had not elected COBRA, the employer or the health insurance provider must provide notice of the new benefit and of a new enrollment period. The new enrollment period begins on April 1, 2021 and ends 60 days from delivery of the ARPA COBRA notification.

If you believe you may be entitled to coverage, are interested in receiving the benefits, and are not contacted by your former employer or their provider in the next few weeks, consider reaching out to the employer’s Human Resources Department or the insurance carrier to ask for information about your COBRA benefits under ARPA, or contact your employment lawyer.

© 2020 SHERIN AND LODGEN LLP

ARTICLE BY Gavriela M. Bogin-Farber of Sherin and Lodgen LLP
For more articles on COBRA, visit the NLR Corporate & Business Organizations section.

CBD Regulatory Enforcement Continues with Over-the-Counter CBD Pain Relief Products

Enforcement by the Food and Drug Administration (FDA) against cannabidiol (CBD)-containing products continues through the issuance of two new warning letters. On March 22, 2021, FDA published a press release cautioning companies against illegally selling over-the-counter (OTC) CBD products for pain relief. In the warning letters, FDA cited products listing CBD as an inactive ingredient for unapproved drug and misbranding violations.

Regulatory Background of CBD Products

We have previously blogged about the regulation of CBD products by the FDA and provided updates to the government’s actions to create a comprehensive regulatory framework for CBD. But as a brief refresher, FDA does not permit adding CBD as an ingredient of food products or dietary supplements. And while the Agriculture Improvement Act of 2018 (the Farm Bill) legalized the production of industrial hemp and products derived from hemp, it did not legalize all uses of and products containing hemp derivatives (such as CBD).

Under the Federal Food, Drug and Cosmetic Act (FD&C Act), any product intended to diagnose, cure, mitigate, treat or prevent a disease, and any product (other than a food) that is intended to affect the structure or function of the human body is a drug. This definition includes articles and components of drugs, which are regulated as drugs. OTC drugs must be approved by the FDA or meet the requirements for marketing without an approved new drug application under federal law; this includes drug products containing CBD.

Currently, nonprescription drug products containing CBD may not be legally marketed without an approved new drug application, regardless of whether the CBD is represented on the labeling as an active ingredient or an inactive ingredient. To date, no CBD-containing drug has met applicable FDA requirements to be legally marketed for nonprescription use. However, as noted in a prior blog post, the FDA has approved one CBD-containing prescription drug product for the treatment of seizures associated with tuberous sclerosis complex, Lennox-Gastaut syndrome, and Dravet syndrome in human patients.

FDA’s primary concerns pertaining to CBD use in products include a lack of safety data and the quality of the CBD products on the market. Currently, there is insufficient safety data to establish cumulative exposure to CBD (and THC), impact on vulnerable populations, or impact on drug development. There are also concerns about contaminants such as heavy metals, microbials, pesticides, and THC. In addition, FDA is concerned that there is a lack of appropriate processing controls and practices regarding the quality of CBD products, which puts consumers at additional risk.

Analysis of OTC CBD Warning Letters and Potential Implications to Industry

To date, FDA’s CBD enforcement has focused on disease or health claims as well as the products’ intended use. FDA commonly determines a product’s “intended use” based on: claims in the labeling, advertising, or promotion; consumer perceptions; and ingredients with well-known therapeutic uses. Products with unsubstantiated or misleading claims may result in a change to the intended use and consequently, a change to the status of the product causing it to become an unapproved drug or adulterated product under the FD&C Act.  A product is adulterated if it fails to conform to FDA’s standards of quality, strength, or purity.

FDA’s recently issued warning letters to Honest Globe, Inc. and BioLyte Laboratories, LLC are no different with the exception that these warning letters address OTC CBD drug products claiming to provide pain relief. Honest Globe and BioLyte, both manufactured and marketed OTC CBD products that allegedly provide pain relief. Although CBD is labeled as an inactive ingredient on the products, the labeling of these products represent CBD as an active ingredient due to the frequent and prominent placement of CBD claims on the products’ labeling and advertising on the companies’ websites. The labeling and advertising may lead consumers to the conclusion that the product provides benefits due to the CBD contents. To add insult to injury, CBD is not an active ingredient in any applicable final monograph or TFM, for purposes of establishing eligibility for lawful marketing without an approved application under the FD&C Act. Even if CBD was considered an “inactive ingredient” in these nonprescription drug products, the products would still require approval through a new drug application in order to be legally marketed since CBD has no known functional role as an inactive ingredient in a finished product.

In addition, Honest Globe issued a press release on its Instagram page that stated the “Did you know that Elixicure [product in question] was the first over-the-counter CBD-infused topical pain cream product to receive FDA certified registration” (the company made several similar claims identified in the warning letter). FDA noted that to state the product is “FDA registered” is inaccurate. Drugs are subject to listing with FDA, not registration. Moreover, registration of an establishment or listing of a drug does not denote approval of the establishment, the drug, or any other drugs of the establishment, nor does it mean that a product may be legally marketed. FDA stated that “[a]ny representation that creates an impression of official approval or that a drug is approved or is legally marketable because of registration or listing is misleading and constitutes misbranding.”

Aside from the labeling and advertising claims and an assessment of the products’ intended use, both companies displayed significant violations of current good manufacturing practice (CGMP) regulations for finished pharmaceuticals demonstrating FDA’s concerns over safety data and quality control. The companies’ methods, facilities, and controls for manufacturing, processing, packing, and holding did not confirm to CGMP making the product adulterated within the meaning of the FD&C Act.

Neither of the company’s products have been subject to the approval process, nor have there been any evaluation of whether they are effective for the claims used, appropriate dosage, interaction with other drugs or products, or dangerous side effects or other safety concerns.

FDA Principal Deputy Commissioner Amy Abernethy, M.D., Ph.D. stated that: “The FDA continues to alert the public to potential safety and efficacy concerns with unapproved CBD products sold online and in stores across the country. . . It’s important that consumers understand that the FDA has only approved one drug containing CBD as an ingredient. These other, unapproved, CBD products may have dangerous health impacts and side effects. We remain focused on exploring potential pathways for CBD products to be lawfully marketed while also educating the public about these outstanding questions of CBD’s safety. Meanwhile, we will continue to monitor and take action, as needed, against companies that unlawfully market their products — prioritizing those that pose a risk to public health.”

Over the past several years, FDA has continued to issue warning letters to companies that market unapproved new drugs that allegedly contain CBD at an increased rate. These new warning letters are unique in that they address OTC CBD pain relief. As noted, demonstrating a product’s intended use and making disease and health claims are common pitfalls for companies selling CBD products. The rise of OTC CBD pain relief products make this an area to watch. As this area will no doubt continue to be a hot enforcement area for the FDA, we will continue to update our readers of any important regulatory activity.

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ARTICLE BY Elizabeth K. Conti of Mintz
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