Category: Administrative & Regulatory

Regology’s Analysis to Predict Lawmaking Activity by the 117th Congress

The term of the 116th Congress of the United States ended on January 3rd, 2021. This date also marked the beginning of the 117th Congress, with the start of the first of two sessions in this 24-month term. Just a few days later on January 6th, 2021, it became clear that the Democratic Party would control both houses of Congress.

To get a sense of what can be expected now that the 117th Congress is underway and controlled by a single party, Regology performed an analysis of the legislative activity of the past 9 terms of Congress.  Regology found that the beginning of a new Congress is marked by the introduction of a large number of bills.  Although a small percentage of bills make it to law, having both houses of Congress controlled by a single party point to a significant increase in the success rate of bills being enacted.

Lawmaking by Congress: Top Three Trends

Regology identified three key trends in lawmaking activity of each Congressional term. For its analysis, Regology reviewed the bills that were introduced during the last 9 Congressional terms by both the Senate and House of Representatives, covering 18 years of lawmaking activity that led to a total of 95,000 bills reviewed.  For the 9 Congressional terms reviewed, there were 6 terms where Congress was controlled by a single party and 3 terms where there was a divided Congress.

Trend 1– 23% of all Congressional bills were introduced during the first 1/8th of the Congressional term

On average, 23% of the total amount of bills that got introduced by a Congress were introduced during the first 3 months of a Congress’ 24-month term.  The large number of bills that are expected to come through in the next couple of months will not only create plenty of work for the members of Congress and their staff, law practitioners are also challenged to assess those bills that have a chance of being enacted and determine their implications on stakeholders.

Regology Chart 1

Click to view larger.

Trend 2 – 26% of a Congress’ successful bills were introduced during its first 3 months

With a success rate of approximately only 3.5%, meaning the percentage of bills that got signed into law, a lot of work is of short relevance.  Although this success rate may draw skepticism to pay close attention to the wave of bills the 117th Congress is introducing in its first 3 months, it is worth noting that Regology found that about 26% of the laws from the past 9 Congressional terms were introduced as bills in the first 3 months of the term.

Regology Chart 2

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While on average it took 235 days for a successful bill to go from introduction to enactment, successful bills introduced during the first 3 months of Congress took 300+ days before they got enacted.  A visualization of the relationship between the introduction and enactment date of successful bills is shown next.

Regology Chart 3

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Trend 3 – 38% of a Congress’ successful bills were enacted during its last 3 months

On average 38% of all bills that became law were enacted during the last 3 months of a Congress.

Regology Chart 4

Click to view larger.

Looking back: comparing the 116th Congress to the prior 8 Congressional terms

As we look at the lawmaking activity of the 116th Congress and compare it with the lawmaking activity of the prior 8 timers of Congress, the following observations can be made:

  • The 116th Congress was very active in introducing bills.  Some 14,000 bills were introduced compared to roughly 10,000 bills averaged by the prior 8 sessions of Congress.
  • The 116th Congress managed to get 333 bills signed into law versus an average of 379 laws by the 8 prior sessions of Congress.
  • The success rate of bills that got signed into law for the 116th Congress stands at 2.3% versus 3.7% during the prior 8 terms. It must be noted that the 116th Congress was divided.

Lawmaking in a divided Congress

Single party control of both chambers of Congress has relevance in the number of bills they are able to pass into law. Such a Congress saw an average success rate of 4% while a divided Congress saw a success rate of 2.7%. Further analysis of the single party controlled Congressional terms revealed that the success rate was 3.7% for the 2 terms Congress was controlled by the Democratic Party and 4.2% for the 4 times the Republican Party controlled Congress. Nevertheless, the last 2 terms of Congress controlled by the Republican Party saw an average success rate of 3.4%.

Expectations for the 117th Congress

Looking at what to expect from the 117th Congress’ lawmaking activity, historical data suggests that we will see a significant number of bills being introduced on the floor in the first quarter of 2021. Furthermore, with a single party controlling both houses of Congress, these bills will have an almost 50% higher chance of making it into law.

© 2021 Regology All Rights Reserved
ARTICLE BY Paul V. Bruin of Regology
For more, visit the NLR Election Law / Legislative News section.

Law Firm News and Updates for January 2021: Law Firm Merger, Diversity in Legal Industry and Law School News

We hope that your 2021 is going along well all things considered.  We wanted to extend a big thank you to our law firm publishing partners for helping the National Law Review surpass 25,000,000 page views in 2020.  You can read about some of the articles and authors we noted as exceptional high flyers in our press release from earlier this week.  Additionally, we recognized roughly 70 exceptional authors and contributors in our 2020 Go To Thought Leadership Awards issued a few weeks back which you can read about here. But enough about us and our talented authors, here are some recent updates from around the legal industry.

Law Firm Hires and Promotions

Ballard Spahr named Damon O. Barry the Office Managing Partner for the Denver office of the firm. Mr. Barry is an experienced deal and government affairs attorney, working on mergers and acquisitions, recapitalizations and other sophisticated commercial transactions.  The Denver office of Ballard Spahr is the epicenter of the firm’s western United States Labor and Employment, Public Finance Data Privacy and Cybersecurity practices.  Mr. Barry praised the Denver office of Ballard Spahr, pointing out the attorneys located there do exciting work with industry leaders in the region, and said, “I’m looking forward to building on our previous success and continuing to deliver first-rate service to our clients, both existing and new, while simultaneously driving and increasing our commitment to the Denver community.”

Idan Netser and Andrew Harper joined Sidley Austin LLP in the Palo Alto office.  Both attorneys will join Sidley as transactional partners, joining the Emerging Companies and Venture Capital practice, and Mr. Netser will also join the Tax Practice.  Martin Wellington, Managing Partner of the Palo Alto office describes the addition of Mr. Nester and Mr. Harper as an important milestone in Sidley’s expansion into Northern California, and the emerging technology field of practice.  Wellington says, “Idan has a well-deserved reputation both as a trusted adviser to entrepreneurs and emerging companies in the software, security, and life sciences markets, and as a leading international tax counselor for some of the technology sector’s best-known brands. Andrew is a rising star with established relationships at an exciting roster of both companies and blue-chip venture investors. Together, they elevate our brand in the Valley and position Sidley for sustained growth in this market.”

Vedder Price announced that Wayne M. Aaron has joined the firm as a member of the Investment Services Group and Corporate practice in New York.  Mr. Aaron is an experienced securities regulatory lawyer, and his practice includes financial services advisory matters, broker-dealer regulation and enforcement, government and regulatory investigations and FinTech.  He regularly advises securities firms on complex sales and trading, and other regulatory issues, as well as in examinations, inquiries and enforcement proceedings before the Securities and Exchange Commission and other government regulators.  Corporate Practice Area Chair at Vedder, Jennifer Durham King indicated she is looking forward to Aaron’s addition to the financial services and corporate-related practices in New York.  She says, “Wayne is a terrific addition to our existing broker-dealer and regulatory investigations practices as we look to continue to grow and diversify those practices, including into other complementary areas, such as high frequency trading and FinTech regulatory work.”

Murray Plumb & Murray is pleased to announce that Katherine Krakowka has been elected a Director of the firm as of January 1, 2021, and  Stacey Neumann has been named to Murray Plumb & Murray’s Management Committee.

Ms. Krakowka has been with Murray, Plumb & Murray since 2019, focusing on Business & Corporate Law and Business Reorganization & Insolvency, and she has been working with local businesses, navigating the COVID-19 pandemic.  Drew Anderson, Managing Director of Murry Plumb & Murray calls Katie a wonderful addition to the ranks, saying,  “She has been an active participant in the firm since joining our team and this year especially has played a crucial role in supporting our local business community as a thought leader on risk planning and a legal expert on pandemic assistance programs. We look forward to having the benefit of her wisdom, experience and intellect in this leadership role.”

Additionally, Stacey Neumann has been named to Murray Plumb & Murray’s Management Committee. Neumann is a Director at the firm and Chair of the Employment and Criminal/White Collar Defense Practice Groups, and she has extensive litigation experience with federal and state white-collar and other criminal defense, employment law with discrimination and other human resources matters, and Title IX investigations and other collegiate disciplinary processes.

Steven W. Zelkowitz joined Spiritus Law as Managing Partner, reuniting with Spiritus law founding partners Marbet and Robert Lewis.  Additionally, Jonathan Portuondo is joining Spiritus Law as an associate. Spiritus Law will be focusing on helping firm hospitality clients recover from the pandemic.

Mr. Zelkowitz comes to Spiritus Law with more than 30 years of experience in real estate, financial services industries, including infrastructure and development, hospitality and public/private partnerships.  Zelkowitz also has government relations experience, and experience in assisting businesses establishing or relocating to Florida by leveraging tax and other financial incentives.  Additionally, Zelkowitz has a long-established relationship with the firm’s founders Robert and Marbet Lewis, which will translate into a productive and effective working relationship.

“Spiritus Law is already known as a powerhouse nationally in the alcohol and hospitality industries. I am confident that my depth of experience will further cement the firm’s reputation in those industries in 2021 and beyond,” said Mr. Zelkowitz. “I am both humbled and excited to reunite with Marbet and Rob, and in applying my decades of experience growing law firms for the benefit of Spiritus Law and its clients at this pivotal moment in history.”

Dinsmore & Shohl Merges with Wooden McLaughlin

On January 1, 2021, Dinsmore & Shohl LLP has merged with Wooden McLaughlin LLP in Indiana, continuing Dinsmore’s growth across Indiana, adding offices in Indianapolis, Evansville and Bloomington.  Dinsmore added 47 Wooden attorneys, growing Dinsmore’s lawyer headcount by over 7 percent, and continuing Dinsmore’s goal of continued growth and strength in the Midwest.  George Vincent, Dinsmore Chairman and Managing Partner, says, “I’ve always believed in having a renewable five-year plan and working back from where you want to be. Five years ago, we wanted to be in Boston, Florida and Indiana, and we’ve done all of those things. We are in every state surrounding Indiana, so it is a natural place for us to be. There are significant opportunities for new and existing Dinsmore clients there, and Wooden has a great legacy.”

The merger builds on both firm’s legacies of valued client relationships that can span decades, with an emphasis and value on diversity.  Wooden Partner, Misha Rabinowitch, says Dinsmore’s focus on diversity was an important element in the decision, saying, “I’m personally excited to continue working to make our offices as inclusive as possible, now with the assistance of Dinsmore’s diversity initiatives that are already in place and have great momentum.”

Law Firm Diversity: Norton Rose Fulbright and Blank Rome Tap New Diversity and Inclusion Officers, and Nelson Mullin’s Diversity Pipeline Outreach Program Recognized

Norton Rose Fulbright announced that Katherine Tapley, a San Antonio partner, will replace Denise Glass as the firm’s new US Chief of Diversity and Inclusion.  She will chair the US Diversity and Inclusion Committee at the firm, and she will work closely with the US Management Committee to strengthen Norton Rose Fulbright’s diversity and inclusion efforts.  Tapley previously chaired the Women in Norton Rose Fulbright (WiN) Network.  Additionally, Tapley has served on the Real Estate Service Board of Directors for the San Antonio Area Foundation, and she currently chairs the Board of Governors of SA Youth, a non-profit working to improve the education, character and lives of high-risk San Antonio youth.

Jeff Cody, Norton Rose Fulbright’s US Managing Partner: “Katherine championed diversity for several years at Norton Rose Fulbright, consistently looking for opportunities for the firm to make meaningful enhancements. While we have made notable progress in our diversity and inclusion efforts, this important area remains a priority for us.”

Norton Rose Fulbright achieved several honors related to their diversity efforts, including a Gold Standard Certification by Women in Law Empowerment Forum (WILEF) for their inclusion of women into leadership positions.  Norton Rose Fulbright also received a perfect score from the Human Rights Campaign Foundation on its Corporate Equality Index for policies related to LGBT workplace equality, and Diversity Lab announced Norton Rose Fulbright had achieved Mansfield Rule Certification 3.0 and Mansfield Certification Plus status, both benchmarks in the legal industry.

Ms. Tapley announced a desire to continue the firm’s work in this important area, saying, “Fostering diversity and inclusion is a critical component to being the best possible place to work for our people. I will work tirelessly to ensure the firm succeeds in this arena.”

Nelson Mullins Diverse Pipeline Outreach Program was selected by Profiles in Diversity Journal as a winner in its Top 10 Innovations in Diversity for 2020.  The Innovations in Diversity honors inventive solutions in workforce diversity, selecting corporations, organizations, and institutions for ground-breaking programs furthering inclusion and diversity in their respective fields.

The goal of Nelson Mullins Diverse Pipeline Outreach Program is to combat a lack of diversity in the legal industry by working with Historically Black Colleges and Universities in the Carolinas and Georgia to provide students with an inside look at the legal profession.  By demonstrating the legal industry in action across a variety of areas and demystifying the steps to go to law school and become a practicing attorney and capping it off with a paid internship for one student at each school that participates. The first internship will begin in the spring of 2021.

The Nelson Mullins program is spearheaded by Ariel Roberson and Jack Slosson, partners in Raleigh and Charlotte, respectively.  Roberson says, “Diversity in the legal profession is tremendously lacking, but we all know how necessary it is to hear different perspectives in the courtrooms, boardrooms, classrooms, etc. across America.”   Slosson says, “I am hopeful that this unique program can have a real impact in growing diversity in the legal profession going forward.”

Blank Rome announced that Krystal Studavent Ramsey is the firm’s new Director of Diversity and Inclusion in Blank Rome’s Houston office.  As Director of Diversity and Inclusion, Ms. Studavent Ramsey will implement Blank Rome’s strategic DEI plans to create an inclusive environment within the firm, and to partner with clients on DEI plans and programs.  To further this goal, Studavent Ramsey brings her experience co-founding and co-chairing Blaxiom, a group of Black Axiom employees when she served as a senior legal consultant at Axiom, and her experience working as director of strategy and operations for the Diverse Attorney Pipeline Program, devoted to nurturing first-year, women of color law students.

Studavent Ramsey calls her new role “an amazing opportunity” and praises Blank Rome’s foundation of DEI.  She says, “I am excited to join Blank Rome as its Director of Diversity and Inclusion, especially at such a pivotal time in our world . . . [T]his is an amazing opportunity . . . to make sustainable change and a positive impact throughout our firm, the legal industry, the communities we serve, and beyond.”

Law School Updates

Over 150 academics issued a joint statement saying “The violent attack on the Capitol was an assault on our democracy and the rule of law. The effort to disrupt the certification of a free and fair election was a betrayal of the core values that undergird our Constitution. Lives were lost, the seat of our democracy was desecrated, and our country was shamed.”

Citing their role as the educators of the next generation of lawyers, the academics claimed an obligation to “support the rule of law and preserve the integrity of the legal profession.”  The statement frowned on the actions of attorneys filing frivolous and ungrounded lawsuits challenging the election, filings unsupported by any evidence, saying they “betrayed the values of our profession” by doing so.  Additionally, the statement praised the lawyers and judges who worked hard to bring about an honest election in trying circumstances.  Read the complete joint statement and see a list of academics who signed the Joint Statement on the 2020 Election and Events at the Capitol.

John F. Kennedy School of Law at Northcentral University welcomed its first cohort of law students in the online Juris Doctor program, the university announced last week.  Since 1996, Northcentral University has been a leader in graduate-focused online education, with over 11,000 students enrolled in graduate programs across education, psychology and now law.

The program is taught by faculty who are practicing attorneys, judges and other legal professionals, to bring real-world expertise into the virtual classroom.  Faculty areas of expertise include civil and criminal law, constitutional law, insurance defense litigation and public interest law.  Along with online classes, hands-on curriculum opportunities include clinical and internship experiences. Dean Hutton says the online JD program will have opportunities for students to get individualized feedback from faculty members.  He says, “”Students have multiple opportunities to apply legal doctrine throughout each course, along with personalized faculty feedback, allowing for a much deeper understanding of the material and greater preparation for exams and, ultimately, for the California Bar Examination.”

Other law offerings at Northcentral include a Bachelor of Arts in legal studies and a paralegal certificate program, both approved by the American Bar Association.

Copyright ©2020 National Law Forum, LLC

ARTICLE BY Eilene Spear of The National Law Review / The National Law Forum LLC
For more, visit the NLR Law Office Management section.

Shining a Spotlight on ESG Disclosures in the Biden Administration

In a period where almost nothing seems certain, it is inevitable that ESG issues will be on the front of the incoming SEC Chair’s mind. Jay Clayton, who resigned as SEC Chairman in December 2020, has urged that one-size-fits-all metrics for environmental disclosures aren’t appropriate given the varied impacts of climate change on different industries. However, President-elect Biden has made clear that climate change will be a high priority for his administration: he has vowed to rejoin the Paris Climate Agreement on his first day of office. Thus, the five-member SEC, where three seats are controlled by the President’s party, can be expected to make ESG disclosures a high priority.

Investors are also in part to thank (or blame) for the growing significance of ESG topics in public disclosures. An SEC advisory committee that advocates for investors urged last May that the SEC establish disclosure policies regarding ESG topics, arguing that investors want reliable information on these matters before making investment and voting decisions. And in its 2019 “Statement on the Purpose of a Corporation,” even the Business Roundtable—a former champion of “shareholder primacy”—agreed that the purpose of corporations is to promote “an economy that serves all Americans.” While this document has been criticized for not providing more palpable sustainability goals, Rep. Joe Kennedy (D-Mass.) called it “a welcome step toward a more moral capitalism” and the U.S. Chamber of Commerce said it “agreed wholeheartedly with the renewed focus.” With the changing of the guard at the SEC, all signs point in the direction of further steps toward “moral capitalism” in the months to come.

© 2020 Proskauer Rose LLP.

ARTICLE BY Erica T. Jones of Proskauer Rose LLP
For more, visit the NLR Securities & SEC section.

Legal Ramifications of Flouting Mask Rules by Members of Congress

During the invasion of Congress on January 6, 2021, members of Congress were forced to take shelter for a few hours with a large group of their colleagues. Several Democratic members of Congress—Reps. Bonnie Watson Coleman (N.J.), Pramila Jayapal (Wash.), and Brad Schneider (Ill.)—have revealed that they have tested positive for COVID-19 after sheltering with colleagues who refused to wear masks. There have been rules in place since July 2020 that require masks in House office buildings and on the floor of the House, but those rules have not been consistently enforced. A number of House Republicans did not wear masks during the emergency sheltering and refused to accept masks offered by Rep. Lisa Blunt Rochester (Del.). House leadership has committed to enforce the rules more stringently going forward and impose fines starting at $500 on members who do not wear masks on the House floor. Democratic Representatives Debbie Dingell (Mich.) and Anthony Brown (Md.) have introduced legislation that would go farther, imposing fines of $1,000 per day on House members who do not wear masks on the Capitol grounds.

But do representatives who have contracted COVID-19 have any legal remedy for holding the House or other individual House members liable for their having contracted the virus?

First, it is important to note that no one can say with certainty when, where, or how they contracted the virus. Representative Schneider has acknowledged directly that he does not know that he contracted the virus during the insurrection, but that his exposure during the shelter in place was the greatest exposure he has experienced during the pandemic. He surmises that the fact that three people (thus far) have tested positive points to the forced sequestering with unmasked colleagues as the probable source of infection. There has been no reporting on whether the Republican members who refused to wear masks have tested positive for the virus, making the proof of the source of the infection more challenging.

Second, even assuming the newly infected Representatives could establish they contracted the virus from unmasked colleagues on January 6, their legal remedies are extremely limited. While employees in the private sector could complain to the Occupational Safety and Health Administration (OSHA) about unsafe working conditions, the Occupational Safety and Health Act (29 U.S.C.§ 654) does not apply directly to the U.S. Congress. Under the Congressional Accountability Act (CAA), 2 U.S.C. § 1341, the legislative branch is required to comply with OSHA standards mandating that the workplace be free from recognized hazards likely to cause death or serious injury. Under the CAA, a member of Congress or a staff person can request that the General Counsel of the Office of Congressional Workplace Rights (OCWR) conduct an inspection of unsafe working conditions. If the inspection determines there are unsafe working conditions, the OCWR General Counsel can issue a citation or notice of violation. If the violation has not been corrected after that notice, the General Counsel may file a complaint to be submitted to a hearing. Currently, even without a formal complaint to the OCWR, Congress has taken steps to more rigorously enforce its rule requiring masks in congressional workplaces.

Third, assuming a member of Congress who contracted COVID-19 could prove he or she was infected by a specific colleague who was not wearing a mask, legal recourse against that colleague would likely be barred by the terms of the Speech or Debate Clause of the U.S. Constitution, contained in Article I, Section 6. This clause states that members of both Houses of Congress “shall not be questioned in any other Place” about any speech or debate and shall be “privileged from Arrest” during attendance at a session of Congress. The limitation on questioning a member of Congress about speech or debate is intended to protect them from efforts by members of the Executive branch or members of the public to interfere with their exercise of their legislative duties. The refusal to wear a mask might not be seen as an aspect of legislative debate, but at least one Republican who refused to take the mask offered by Representative Rochester was heard to say she did not want to make this “political,” and those who refuse to wear masks may assert that they do so for political reasons.

If the Speech or Debate Clause did not bar a suit by one Representative against another, the legal claim would likely be one for tort damages related to an intentional assault, which requires proof that an individual deliberately acted to cause another to fear imminent harm. There have been numerous tort cases filed against cruise ships, nursing homes, and entertainment venues by people exposed to COVID-19. Suits against individuals are rare, but might follow the theories advanced by individuals exposed to the Human Immunodeficiency Virus (HIV). HIV cases ordinarily involved battery claims because of the means of transmission through close bodily contact, but because COVID-19 is transmitted through airborne particles, liability would not necessarily be predicated on physical contact but merely the apprehension of contracting the airborne virus.

Establishing liability for COVID-19 infection is difficult in any workplace. As in many other areas of employment and tort law, imposing liability on members of Congress is even more challenging. In the absence of targeted legislation, members of Congress may have little recourse against colleagues who expose them to a greater risk of infection by their refusal to comply with basic health and safety practices during the pandemic.

ARTICLE BY Carolyn Wheeler of Katz, Marshall & Banks, LLP
For more, visit the NLR Coronavirus News section.

Stimulus Bill Extends the Availability of Student Loan Forgiveness (US)

Section 2206 of the CARES Act allowed an exclusion of up to $5,250 from an employee’s gross income, if an employer paid principal or interest on an employee’s “Qualified Education Loan”.

Section 2206 of the CARES Act was only designed to be in effect for calendar year 2020. However, The Consolidated Appropriations Act, 2021 (the “CAA”) extends this provision of the law through December 31, 2025.

This provision of the CAA is in Section 120 of Division EE, called “The Taxpayer Certainty and Disaster Tax Relief Act of 2020”.

It does not appear that during 2020, many employers decided to provide student loan forgiveness as an employee benefit. Given the pandemic, that is certainly understandable. However, going forward, it might be something that employers might find more attractive as a recruiting or retention tool. Thus, the following is a brief refresher on this benefit.

Code Section 127 – Education Assistance Programs

Internal Revenue Code (the “Code”) Section 127 has for a very long time, provided an exclusion from an employee’s gross income for reimbursement provided to the employee under an employer’s “educational assistance program”. The maximum amount of tax-free reimbursement is $5,250 per calendar year.

The employee’s education under the program may be reimbursed without regard to whether it relates to the employee’s employment. However, the educational expenses cannot pertain to a sport, game or hobby.

The CARES Act

Section 2206 of the CARES Act amended Code Section 127 to allow an employer to pay for all or part of an employee’s “Qualified Education Loan” as a tax-free benefit, provided that benefit is provided as part of an employer’s education assistance program.

An important point to note is that the employee would not have had to incur the educational expenses while that person was an employee of the employer.

For example, an existing employee with student loan debts that were incurred prior to be being hired, can have that debt forgiven under the plan. Likewise, a newly hired employee with pre-existing student loan debt can also have that debt forgiven under the plan.

Code Section 127 – Employer Plan Requirements

Under Code Section 127, the employer must establish a written plan and communicate the terms of that plan to eligible employees. In addition, the Plan must satisfy the following requirements:

  • The terms of the Plan cannot discriminate in favor of highly compensated employees (“HCEs”).
  • For this purpose, Code Section 414(q) is referenced. In 2021, an employee is an HCE if he or she had compensation of more than $130,000 in 2020. 5% owners of businesses are also considered to be HCEs.
  • Collectively bargained employees must be considered in determining nondiscrimination eligibility requirements, unless educational assistance benefits were the subject of good faith bargaining.
  • Controlled group rules apply for testing nondiscrimination.
  • The calendar year $5,250 maximum exclusion for loan forgiveness must be combined with any other educational assistance that is provided to the employee under the employer’s Code Section 127 plan for that calendar year.
  • The plan cannot permit an employee to choose between taxable compensation and benefits and the educational assistance. Thus, an employee cannot elect salary reduction as a means of participating in the Section 127 plan. Simply put, the benefits under the plan have to be employer paid benefits.

Qualified Education Loans

The rules that define what will qualify as a “Qualified Education Loan” are somewhat complex. The IRS advises taxpayers to review Chapter 4 of IRS Publication 970.

However, in general, the loan had to be incurred for the employee’s costs of attendance (i) in pursuit of a degree, certificate, or other program that would lead to a “recognized educational credential”, and (ii) while carrying a course load at least one-half (1/2) of the normal course load for that particular course of study.

Loans from the government or a financial institution are fine. Loans from family members don’t qualify. Loans from tax-qualified employer retirement plans (e.g. 401(k) Plans) don’t qualify.

Attendance at an “eligible education institution” is required. In general, this will include all colleges, universities, vocational schools and other post-secondary institutions that are eligible to participate in the federal student aid program.

Costs of attendance at the eligible education institution include tuition and fees, books, supplies, transportation, miscellaneous personal expenses, room and board and various other costs.

© Copyright 2020 Squire Patton Boggs (US) LLP

ARTICLE BY Gregory J. Viviani and Joseph P. Yonadi, Jr. of Squire Patton Boggs (US) LLP
For more, visit the NLR Coronavirus News section.

EPA Releases Late-Term “Secret Science” Rule

Regulated industries pay close attention to how regulators use scientific data, because the stakes are high. While scientific knowledge may evolve rapidly, regulatory processes — and the business decisions that rely on them — tend to proceed more deliberately. As a result, the regulated community has long pushed the U.S. Environmental Protection Agency (EPA) to base its decisions only on scientific information that is present in the public domain and thus subject to greater scrutiny.

On January 6, 2021, EPA finalized its long awaited anti-“secret science” rule, which requires EPA both to disclose the science on which significant regulatory actions are based and to assign weight to scientific evidence in part on whether underlying data is available. EPA frames this rule as an incremental, internal process-oriented step toward the transparency that is an essential part of the scientific method. Businesses in the regulated community should not expect to be able to point to this rule to control evidence coming into site-specific rulemaking, but may benefit from increased investor confidence that EPA actions with industry-wide impact will be based on data available for independent validation.

Scope of the Rule

The rule, entitled “Strengthening Transparency in Pivotal Science Underlying Significant Regulatory Actions and Influential Scientific Information”, applies to the two categories of EPA actions indicated in the title: the promulgation of significant rules, such as those that have nationwide impact, and the dissemination of scientific information likely to have nationwide policy- or decision-making impacts. Furthermore, the rule targets EPA’s analysis of only one type of scientific evidence, dose-response data, which are facts that characterize the relationship between the amount of an exposure to a substance and the observation of an effect.

How EPA Will Evaluate Dose-Response Data

The key provision of the rule is a three-step funneling process to winnow the universe of “convincing and well-substantiated evidence” relevant to making a decision about relationship between exposure to a substance and an effect:

  • First, EPA must identify a subset of the universe of evidence from which it could “characterize a quantitative relationship” between exposure and effect.
  • Second, EPA must designate as “pivotal science” the particular studies on which it could rely to reach its own conclusion about the quantitative relationship between exposure and effect.
  • Third, EPA must identify whether those particular studies allow for reanalysis of results (actual validation is not required). While EPA may consider all studies available to it, the rule requires it to give greater consideration to those studies that can be independently validated. For those studies at the end of the funnel whose data cannot be readily reanalyzed, the rule sets out factors EPA must consider when determining how much weight to assign their results.

The rule also requires EPA to identify the science that serves as the basis for significant regulatory action and to state the reasons for relying on any studies based on dose-response data that is not available for reanalysis.

A Lasting Move Toward Transparency?

Regulations issued in the waning hours of a presidential term often can be rescinded by executive action or under the Congressional Review Act (CRA). The CRA allows certain of these regulations to be vacated by a joint resolution of Congress. EPA has taken the position that the CRA does not apply here because this is an internal “housekeeping” regulation. Whether it applies or not is likely to among the potential challenges the “secret science” rule faces in court in rulemakings involving human health. We will keep you posted on how any court challenges progress.

© 2020 Schiff Hardin LLP

ARTICLE BY Matthew H. Griffin and J. Michael Showalter of Schiff Hardin LLP
For more, visit the NLR Environmental, Energy & Resources section.

What Were the Three Biggest Labor Law Developments In 2020?

With the year end in sight, employers are looking back on a tumultuous 2020 and preparing for more labor law changes in 2021. This year at the National Labor Relations Board (NLRB), companies saw a lot of positive change from a management perspective. Election rule changes gave employers some breathing room on the union avoidance front, and the NLRB exercised restraint in relaxing its enforcement standards against employers during the pandemic. But as the new year approaches, a union-friendly administration waits in the wings, presenting a real possibility that the positive change for employers may be coming to an end.

Employer-Friendly Election Rules

2020 saw the NLRB’s much maligned ambush election rules scrapped, in part, and replaced with employer-friendly rules. The ambush election rules had resulted in truncated campaign periods that left employers at a disadvantage. The new rules, while not without their own challenges, extend the period of time between the filing of a representation petition and the election. Employers can look forward to 2021 knowing the new rules will give them more time to combat a union organizing drive.

NLRB’s COVID-19 Response and Guidance

The NLRB’s guidance related to COVID-19 was at times slow and presented a mixed bag to employers.

On one hand, the NLRB’s election-related guidance gave Regional Directors wide discretion on how to conduct elections during the pandemic. This led to a large increase in mail-ballot elections, normally the less-preferred method of conducting elections. Ultimately, this did not change the overall union win rate, which remained around 70 percent.

On the other hand, the NLRB demonstrated a willingness to give employers leeway during the pandemic. Faced with an emergent situation without a true parallel in case precedent, employers were forced with situations where they had to make immediate unilateral changes to terms and conditions of employment, for example requiring temperature screenings or PPE, changing staffing levels, or shutting down facilities. Normally, making unilateral changes to terms and conditions of employment without first bargaining with the union will result in an unfair labor practice charge. But starting in July, the NLRB began issuing informal advice email memos instructing Regional Directors to dismiss several complaints where employers were forced to make these unilateral changes because of the emergency posed by COVID -19. The NLRB general counsel’s position was that if the unilateral change was reasonably related to the emergent pandemic, employers were justified in carrying out the change unilaterally so long as they bargained with the union within a reasonable time thereafter.

New Presidential Administration Coming in 2021

In November, employers learned that Joe Biden had been elected as the new President of the United States. Set to take office on Jan. 20, 2021, President-elect Biden described himself as “the strongest labor president you have ever had” – setting the tone for what could be big changes on the horizon. Any labor law changes supported by the new Biden administration would likely have to wait until the composition of the NLRB’s five-member Board changes. At the earliest, that would be August 2021. Further, Biden will not be able to appoint his own NLRB general counsel – the official in charge of all NLRB Regional Offices – until November 2021. While wholesale changes are not likely until late 2021 at the earliest, employers should brace for a pro-union shift, which could take the form of precedent-changing decisions, rulemaking, or even substantive pro-union legislation.

What a year – we’ll see what 2021 has in store. Stay tuned.

© 2020 BARNES & THORNBURG LLP
For more articles on labor law, visit the National Law Review Labor & Employment section.

Trump Signs IoT Cybersecurity Improvement Act into Law

On Dec. 4, 2020, President Donald Trump signed into law the bipartisan-backed Internet of Things Cybersecurity Improvement Act of 2020. By its terms, the new law applies solely to federal government agencies, but its downstream consequences are likely to reach further, impacting devices procured by the federal government and—likely, eventually—consumer devices.

Internet of Things (IoT) devices are in widespread use, most visibly by consumers of new smart home devices. The new law defines IoT devices as those devices that:

  1. Interact with the physical world
  2. Have a network interface for transmitting or receiving information via the internet
  3. Are not conventional information technology devices such as smartphones or laptops and cannot function as a component of another device such as a processor

Despite having a highly technical definition, IoT devices are common and becoming increasingly so. You probably even have several in your home or office, with many wireless devices—like refrigerators, smart speakers, networked printers, security systems and locks—satisfying this definition of an IoT device.

Though perhaps less visible than consumer adoption of IoT devices, the federal government’s use of IoT devices is increasing and, given the federal government’s significant size and buying power, impacting the market in meaningful ways. For instance, the Environmental Protection Agency (EPA) uses sensors that transmit data regarding weather conditions. Customs and Border Protection (CBP) uses autonomous surveillance towers that detect and identify items of interest at the border. NASA even uses spacesuits that monitor and transmit data regarding astronauts’ vital signs. Although these items often serve more sophisticated functions than IoT devices purchased and used by consumers, many of the underlying technologies are similar or even identical.

Despite, or perhaps because of, their growing adoption, IoT devices are generally viewed as being more vulnerable to cyberattacks and subject to abuse as part of distributed denial of service (DDoS) attacks.

The IoT Cybersecurity Improvement Act seeks to reduce those risks, at least among IoT devices procured by the federal government. To achieve this goal, the new law:

  1. Tasks the National Institute of Standards and Technology (NIST) with developing, publishing and updating security standards for IoT devices
  2. Requires the Office of Management and Budget (OMB) to review each federal agency’s information security policies to ensure they comply with the standards NIST promulgates for IoT devices
  3. Prohibits federal agencies from procuring any devices that fail to comply with NIST’s standards

Although NIST’s standards are not yet drafted and, even when they are, will not impose any direct requirements on the private sector, it is important for all device manufacturers and sellers to pay close attention to developments. The sheer size and scope of the federal government’s buying power may result in private sector businesses adopting the eventual NIST standards to ensure they can sell devices to the government. Similarly, the eventual NIST standards may provide a possible baseline for private sector businesses to satisfy and bring themselves into compliance with state IoT security laws that require “reasonable security features.”

Copyright © 2020 Godfrey & Kahn S.C.
For more articles on IoT, visit the National Law Review Communications, Media & Internet
section.

FDA in 2020: What a Year!

What a year for the Food and Drug Administration! FDA, an agency with regulatory oversight of 20-25% of products on which consumers spend, including food and medicines, but which typically stays out of the limelight, was thrust into the public eye amidst the COVID-19 pandemic. This was the year many Americans became familiar with lesser-known and niche policies like those governing emergency use authorizations (EUAs) and with the role of FDA in regulating laboratory developed tests (LDTs). The agency also took some flak for seeming to bow to political pressure in authorizing hydroxychloroquine for emergency use as a potential COVID-19 treatment, then rescinding the authorization, as well as for its less-than-accurate pronouncements of positive data concerning convalescent plasma treatment. These were reminders that the agency Americans trust to protect the public does get things wrong sometimes and is susceptible in some ways to political pressure, and that effectively ensuring the public health requires a balance between safety and effectiveness and patient access to medical products. As we look ahead, we eagerly anticipate how FDA will protect and promote public health in a Biden administration.

In this post we’ll explore the FDA’s device law and policy activities from 2020. A future post will cover drug and biologics law and policy.

COVID-19 Diagnostics

FDA and the Centers for Disease Control and Prevention (CDC) received a lot of mostly negative attention early in the COVID-19 pandemic for well-documented (including by us) missteps related to testing. Since then, there has been a significant increase in the number of tests authorized by FDA for point-of-care (POC) uses in various patient-care settings such as clinics, emergency departments, physicians’ offices, and outdoor or mobile COVID-19 testing sites. Additionally, some tests allow patients to collect samples at home, but those samples need to be sent to a lab for processing because there are no widely available FDA-authorized test kits to diagnose COVID-19 that can be used fully at home (i.e., for collection and processing). FDA did authorize a prescription test kit that allows for at-home collection and processing of samples to detect SARS-CoV-2 (the virus that causes COVID-19) in November 2020, but expectations are that it will not be available to the public until early 2021. And on December 9, the agency authorized the first non-prescription specimen collection kit, which the consumer then sends to a clinical lab for processing; should the lab’s testing results be positive or indeterminate, a physician contacts that consumer to advise him or her regarding next steps. Our prior posts go into great detail about the state of affairs of COVID-19 diagnostic testing; see here and here.

In addition to handling hundreds of EUAs relating to COVID-19 tests, FDA also developed a SARS-CoV-2 reference panel providing a standard baseline for test kit validation testing and began releasing performance testing results from manufacturers and clinical laboratories using the reference panel.

A key question remains: have COVID-19 testing capacity and capabilities advanced to the point of allowing the type of reopening of the country that many of us have desired since March? Sadly, our assessment is that while there have been impressive advances in COVID-19 diagnostic testing, we are still not seeing deployment of rapid, point-of-need tests that could be used at airports, stadia, or other public venues including many workplaces. Rather than testing, the Trump Administration’s focus has been on vaccines and other therapeutics.

Laboratory Developed Tests

In August 2020, the Department of Health and Human Services (HHS), in an unsigned statement posted on its website and not published in the Federal Register, barred FDA from requiring premarket review for any LDT, including those for COVID-19, unless FDA goes through formal rulemaking procedures. This was not terribly surprising because the Trump Administration’s posture toward regulating without clear authority (and sometimes even with it) had been well-understood as unwelcome. But the August action was simultaneously unsurprising and fairly insignificant because FDA had not been requiring LDT developers to submit their tests for premarket review and was deprioritizing review of EUA requests for COVID-19 LDTs in favor of traditional, kit-based in vitro diagnostics (IVDs) from commercial manufacturers.

Further, FDA has been a key partner to Congress and the laboratory community in designing a legislative framework for LDT oversight in recent years. That effort resulted in the introduction earlier this year of the Verifying Accurate and Leading-edge IVCT Development (VALID) Act, which we covered in prior posts, and which aims to reform the federal oversight regimes for both LDTs and IVDs. In November, the issue of FDA review of COVID-19 LDTs resurfaced again when HHS appeared to reverse itself by ordering FDA to review COVID-19 LDTs to assure that those tests could enjoy PREP Act protection.

From the events of this past year, it is clear that the regulatory framework and policies surrounding LDTs will be a prominent topic of debate in 2021. However, we expect there will be no quick resolution of these issues, either at a legislative or agency policy level, in the short term and that LDTs will likely remain in a gray area of FDA regulation and policy for the foreseeable future.

Digital Health

While COVID-19 is undoubtedly FDA’s top priority, the agency has taken actions to advance other policy and programmatic goals this year. In September, FDA announced the establishment of the Digital Health Center of Excellence, which is envisioned to be a multi-center effort for developing, coordinating, and implementing comprehensive, agency-wide digital health policies and programs. We explored this idea and noted some concerns in our previous post here. What’s important about this 2020 development is that, despite the current once-in-a-century public health emergency, FDA devoted what must be limited resources to laying the groundwork for the Digital Health Center of Excellence, suggesting that as we move into appropriations season and, perhaps more consequentially, the user fee negotiations, FDA will be prioritizing and seeking additional support for digital health.

510(k) & PMA Reform

In our 2019 year in review post for devices, we detailed significant proposed changes to the premarket notification (commonly known as “510(k)”) and premarket approval (PMA) pathways. With respect to 510(k)s, the optional Safety and Performance Based Pathway relies on comparisons of devices to criteria (like consensus standards) rather than the technological characteristics of a predicate device that is already on the market. The Safer Technologies Program builds on the Breakthrough Devices Program by enabling earlier and more frequent interactions with FDA for devices that may not meet the stringent breakthrough criteria, but which could still be beneficial for patients. FDA’s PMA proposal would allow a device to be marketed based on a demonstration of a reasonable assurance of safety only, with reasonable assurance of effectiveness needing to be demonstrated soon after marketing authorization (often referred to as “progressive” or “conditional” approval). This fairly substantial change to the PMA process would require Congress to amend the Federal Food, Drug, and Cosmetic Act.

Progress on implementing these proposals stalled due to the COVID-19 pandemic and two clouds now loom over them: the new administration and the question of which party will control the Senate. Senate Democrats have long been skeptical of FDA’s attempts to change the device regulatory model, fearing it is too industry-forward and lacks much-needed safety oversight. A new Biden-appointed FDA Commissioner may similarly be unenthusiastic about proposals that appear to make it easier to get products to market without thorough vetting. Pressure from a Democrat-controlled Congress on a Democratic administration would do little to help advance these proposals. FDA’s device program may, however, still benefit from a Democrat-controlled Senate in that Democrats may be more willing to fund the nascent National Evaluation System for health Technology (NEST), on which many of FDA’s plans for improved safety surveillance and premarket review rest. And we have yet to see the types of investments both Congress and industry will be making in the upcoming user fee reauthorization process.

Missed Deadlines

FDA’s Center for Devices and Radiological Health (CDRH), like other FDA organizational units, has statutory mandates, user fee commitments, and other self-imposed goals to meet, which include commitments to publish new regulations, make reports to Congress, draft or finalize guidance documents, and goals for completing premarket reviews for new medical devices. We have unfortunately seen CDRH miss some deadlines this year, which we hope is not a pattern of the center setting goals so lofty it cannot reasonably meet them, or of the center choosing to prioritize its own goals over those set by Congress.

For example, CDRH missed a statutory requirement in the 2017 Food and Drug Administration Reauthorization Act (FDARA) to issue a proposed regulation by August 2020 for over-the-counter (OTC) hearing aids. It has also repeatedly delayed publication of a draft guidance on the topic of medical device servicing and remanufacturing that has been on the priority guidance list since October 2018. The document appears on the FY 2021 priority guidance list as it did on the FY 2020 and FY 2019 lists, raising questions about whether it will actually be published this fiscal year. In addition, the center postponed a major guidance on clinical decision support software, which is also on the FY 2021 guidance priority list. CDRH also missed multiple deadlines over the past couple of years to issue a revised quality system regulation (QSR) that aligns with ISO 13485. While setting goals is, of course, the first step to achieving them, we wonder if FDA should take a (well-deserved, particularly in light of the extraordinary COVID-19 response effort) beat to catch up on some of these and other items before committing to more.

CDRH Director Jeff Shuren recently admitted that the diversion of FDA resources to processing EUA requests and creating policies and processes necessary to address the COVID-19 emergency did cause delays for many of the center’s other initiatives. Dr. Shuren has recently called for a reset in 2021 to refocus on CDRH’s priority projects, especially in the areas of digital health and 510(k) reform.

Stay tuned for our next post on FDA drug and biologics law and policy activities in 2020 and for more in 2021 on FDA activities related to COVID-19, user fees, and more.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more articles on the FDA, visit the National Law Review Administrative & Regulatory section.

New U.K. Competition Unit to Focus on Facebook and Google, and Protecting News Publishers

You know your company has tremendous market power when an agency is created just to watch you.

That’s practically what has happened in the U.K. where the Competition and Markets Authority (CMA) has increased oversight of ad-driven digital platforms, namely Facebook and Google, by establishing a dedicated Digital Markets Unit (DMU). While it was created to enforce new laws to govern any platform that dominates their respective market, when the new unit starts operating in April 2021 Facebook and Google will get its full attention.

The CMA says the intention of the unit is to “give consumers more choice and control over their data, help small businesses thrive, and ensure news outlets are not forced out by their bigger rivals.” While acknowledging the “huge benefits” these platforms offer businesses and society, helping people stay in touch and share creative content, and helping companies advertise their services, the CMA noted the growing concern that the concentration of market power among so few companies is hurting growth in the tech sector, reducing innovation and “potentially” having negative effects on their individual and business customers.

The CMA said a new code and the DMU will help ensure that the platforms are not forcing unfair terms on businesses, specifically mentioning “news publishers” and the goal of “helping enhance the sustainability of high-quality online journalism and news publishing.”

The unit will have the power to suspend, block and reverse the companies’ decisions, order them to comply with the law, and fine them.

The devil will be in the details of what the new code will require, and questions remain about what specific conduct the DMU will target and what actions it will take. Will it require the companies to pay license fees to publishers for presenting previews of their content? Will the unit reduce the user data the companies may access, something that would threaten their ad revenue? Will Facebook and Google have to share data with competitors? We will learn more when the code is drafted and when the DMU begins work in April.

Once again a European nation has taken the lead on the global stage to control the downsides of technologies and platforms that have transformed how people communicate and get their news, and how companies reach them to promote their products. With the U.S. deadlocked on so many policy matters, change in the U.S. appears most likely to come as the result of litigation, such as the Department of Justice’s suit against Google, the FTC’s anticipated suit against Facebook, and private antitrust actions brought by companies and individuals.

Edited by Tom Hagy for MoginRubin LLP.

© MoginRubin LLP
ARTICLE BY Mogin Rubin
For more articles on Google, visit the National Law Review  Communications, Media & Internet section,