Category: Administrative & Regulatory

“Do You Want Liability With That?” The NLRB McDonald’s Decision that could undermine the Franchise Business Model

McBrayer NEW logo 1-10-13

On July 29, 2014 the National Labor Relations Board (“NLRB”) General Counsel authorized NLRB Regional Directors to name McDonald’s Corp. as a joint employer in several complaints regarding worker rights at franchise-owned restaurants. Joint employer liability means that the non-employer (McDonald’s Corp.) can be held responsible for labor violations to the same extent as the worker’s “W-2” employer.

In the U.S., the overwhelming majority of the 14,000 McDonald’s restaurants are owned and operated by franchisees (as is the case with most other fast-food chains). The franchise model is predicated on the assumption that the franchisee is an independent contractor – not an employee of the franchisor. Generally, the franchisor owns a system for operating a business and agrees to license a bundle of intellectual property to the franchisee so long as on the franchisee adheres to prescribed operating standards and pays franchise fees. Franchisees have the freedom to make personnel decisions and control their operating costs.

Many third parties and pro-union advocates have long sought to hold franchisors responsible for the acts or omissions of franchisees – arguing that franchisors maintain strict control on day-to-day operations and regulate almost all aspects of a franchisee’s operations, from employee training to store design. Their argument is that the franchise model allows the corporations to control the parts of the business it cares about at its franchises, while escaping liability for labor and wage violations.

The NLRB has investigated 181 cases of unlawful labor practices at McDonald’s franchise restaurants since 2012. The NLRB has found sufficient merit in at least 43 cases. Heather Smedstad, senior vice president of human resources for McDonald’s USA, called the NLRB’s decision a “radical departure” and something that “should be a concern to businessmen and women across the country.” Indeed it is, but it is important to note that General Counsel’s decision is not the same as a binding NLRB ruling and that it will be a long time before this issue is resolved, as McDonald’s Corp. will no doubt appeal any rulings.

ARTICLE BY

Luke A. Wingfield
 
OF 
McBrayer, McGinnis, Leslie and Kirkland, PLLC

Drones Over Kenya and South Africa?

Covington BUrling Law Firm

Similar to the growing U.S. interest in exploring civilian uses of unmanned aircraft systems (“UAS”), efforts are underway across the African continent to deploy UAS in innovative ways such as protecting wildlife, expanding internet connectivity to isolated communities, and delivering humanitarian aid.  In Kenya, Dickens Olewe and his African SkyCAM project is helping journalists to revolutionize their news reporting and coverage.

The winner of the inaugural African News Innovation Challenge, African SkyCAM “establishes Africa’s first newsroom-based ‘eye in the sky’ drones and camera-equipped balloons to help media that cannot afford news helicopters cover breaking news in dangerous situations or difficult-to-reach locations.”  It has the potential to address two of the main shortcomings faced by traditional news media in the region.  First, journalists who lack financial and technological resources to conduct remote reporting often are “‘risking life and equipment’” to get their story.  Second, by not resorting to state-owned UAS, journalists are able to maintain editorial independence in their reporting.

Use of UAS for journalism and other civilian purposes in the region is facing the same regulatory challenges which are delaying their widespread deployment in the U.S.  Although the Kenyan government has not yet established a regulatory framework for civilian UAS, it has indefinitely grounded both the Flying Donkey Challenge (a high-profile, Swiss-funded competition to develop flying robots which are capable of carrying heavy cargo over long distances) and the Ol Pejeta Conservancy’s wildlife surveillance drone.  Similarly, earlier this year, the South African Civil Aviation Authority announced a “clampdown” on civilian UAS, a warning that some observers believe has chilled this nascent industry.  However, it is promising that the South African government has stated that it is “cognizant of the urgent need and demand for UAS usage” and that it will be releasing an interim guidance document by March 31st of next year.  In addition, South Africa and other countries in the International Civil Aviation Organisation Unmanned Aircraft Systems Study Group are continuing to work to develop a safe and harmonised regulatory framework.

In the meantime, African SkyCAM (which is looking to expand to Mozambique and Namibia) and others will need to pay careful attention to finding the proper balance between business, compliance, and innovation.

ARTICLE BY

Mipe Okunseinde
 
OF 
Covington & Burling LLP

Energy and Environmental Law Update: Week of 8/25/2014

Mintz Levin Law Firm

Now that summer is drawing to a close, let’s check in on one important bill that lost momentum just as the summer was beginning. Remember the Senate Finance Committee’s tax extenders package (S. 2260), which the committee marked up on a bipartisan basis in mid-May? The one that was poised to pass the Senate but that surprisingly failed to reach cloture after Senate leadership blocked Republican amendments on the bill? At the time, congressional staff and lobbyists—and even Majority Leader Harry Reid (D-NV) —suggested that the extenders package would come up again in the lame duck session after the November election. The House was not expected to vote on an extenders package before then anyway, so the Senate delay would not really impact the timing of final passage of this two-year extension of more than 50 tax provisions.

Well, that was then. Today, almost two months before the mid-term elections, the future of the clean energy provisions in an extenders package—particularly the production tax credit (PTC) and investment tax credit in lieu of the PTC—depends a great deal on which party wins control of the Senate. Republicans are more confident that they can win the necessary six seats to take back the top chamber; and if they do, they will have more leverage in the lame duck about what the contents of an extenders package would be. The $84 billion EXPIRE Act of 2014 not only extends the PTC by two years but also extends key clean energy depreciation benefits and tax credits, including a $1-per-gallon credit for biodiesel and a 50-cent-per-gallon credit for alternative fuels. Senate Democrats strongly support the clean energy provisions. Certain Republicans, such as Chuck Grassley (R-IA), remain staunch supporters of the PTC and biodiesel credits, but many other Republicans are eager to eliminate or scale back the PTC and other clean energy provisions. If Senator Orrin Hatch (R-UT) learns he will be chairman of the Finance Committee next year in a Republican chamber, he has less of an incentive to work with current Chairman Ron Wyden (D-OR) and Democrats during the lame duck session. He can simply hold out and put forward his own extenders bill next year with popular provisions like the research and experimentation (R&D) credit and without clean energy incentives.

The extension of a handful of relatively popular and less controversial business and individual extenders such as the R&D credit and bonus depreciation are more assured. House Republicans, as part of a “tax-reform-lite” effort, have passed several bills making select provisions such as these permanent. For clean energy advocates, they have to cling to the more popular parts of the overall package and make sure their provisions are not trimmed away when Congress eventually takes it up. The business community, which wants many of the non-energy provisions in the EXPIRE Act extended, also must be much more vocal if the bill is to rise to the front of the agenda.

If Democrats do manage to hold onto control of the upper chamber, they very likely will be dealing with a reduced majority, and that too will give Republicans more leverage. With all the competing priorities in a very short legislative period, it will be difficult for the package to be enacted before the end of the year. Another retroactive extension in early 2015 could be possible. Congress has let the PTC lapse several times since 1992 before renewing it again. While it’s hard to avoid feeling a feeling of déjà vu when faced with another “will-they-or-won’t-they” end-of-year extension, this time also seems different. Many legislators thought the previous PTC extension would be the last one, so the stakes are high. Anti-PTC campaigns financed by conservative groups and utilities ratchets up the pressure on lawmakers. One possible way to blunt some Republican opposition would be to modify the PTC and either reduce the amount of the credit or include a deadline by which projects must complete construction—or both.

Several scenarios exist where even a change of control in the Senate would not preclude the passage of a tax extenders package. A short-term extension would give lawmakers some breathing room to debate tax reform. Some Republicans from wind-friendly states might prefer the clean energy provisions to pass under a Democratic watch rather than under Republican leadership in the new Congress. In this optimistic scenario, the lame duck session could mirror the productive session of 1980.

Ironically, election results in any one of three bio-energy and wind states–Colorado, South Dakota, and Iowa—could help decide the balance in the Senate and the fate of clean energy tax credits.

ARTICLE BY

Bryan M. Stockton
 
OF 
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

“Do You Want Liability With That?” The NLRB McDonald’s Decision that could undermine the Franchise Business Model

McBrayer NEW logo 1-10-13

On July 29, 2014 the National Labor Relations Board (“NLRB”) General Counsel authorized NLRB Regional Directors to name McDonald’s Corp.as a joint employer in several complaints regarding worker rights at franchise-owned restaurants. Joint employer liability means that the non-employer (McDonald’s Corp.) can be held responsible for labor violations to the same extent as the worker’s “W-2” employer.

In the U.S., the overwhelming majority of the 14,000 McDonald’s restaurants are owned and operated by franchisees (as is the case with most other fast-food chains). The franchise model is predicated on the assumption that the franchisee is an independent contractor – not an employee of the franchisor. Generally, the franchisor owns a system for operating a business and agrees to license a bundle of intellectual property to the franchisee so long as on the franchisee adheres to prescribed operating standards and pays franchise fees. Franchisees have the freedom to make personnel decisions and control their operating costs.

Many third parties and pro-union advocates have long sought to hold franchisors responsible for the acts or omissions of franchisees – arguing that franchisors maintain strict control on day-to-day operations and regulate almost all aspects of a franchisee’s operations, from employee training to store design. Their argument is that the franchise model allows the corporations to control the parts of the business it cares about at its franchises, while escaping liability for labor and wage violations.

The NLRB has investigated 181 cases of unlawful labor practices at McDonald’s franchise restaurants since 2012. The NLRB has found sufficient merit in at least 43 cases. Heather Smedstad, senior vice president of human resources for McDonald’s USA, called the NLRB’s decision a “radical departure” and something that “should be a concern to businessmen and women across the country.” Indeed it is, but it is important to note that General Counsel’s decision is not the same as a binding NLRB ruling and that it will be a long time before this issue is resolved, as McDonald’s Corp. will no doubt appeal any rulings.

ARTICLE BY

Luke A. Wingfield
 
OF 
McBrayer, McGinnis, Leslie and Kirkland, PLLC

A Proactive Approach to Travel Risk Management

Risk-Management-Monitor-Com

An improving economy and updated business practices have contributed to companies sending more employees than ever on international business trips and expatriate assignments. Rising travel risks, however, require employers to take proactive measures to ensure the health and safety of their traveling employees. Many organizations, however, fail to implement a company-wide travel risk management plan until it is too late – causing serious consequences that could easily have been avoided.

travel risk management

The most effective crisis planning requires company-wide education before employees take off for their destinations. Designing a well-executed response plan and holding mandatory training for both administrators and traveling employees will ensure that everyone understands both company protocol and their specific roles during an emergency situation.

Additionally, businesses must be aware that Duty of Care legislation has become an integral consideration for travel risk management plans, holding companies liable for the health and safety of their employees, extending to mobile and field employees as well. To fulfill their Duty of Care obligations, organizations should incorporate the following policies within their travel risk management plan:

  • A customized policy specific to the organization and the specific needs of traveling employees.
  • Clearly communicated protocols that are enforced to help educate and protect the safety and health of traveling employees.
  • Response plans and procedures for handling medical/health emergencies.

Proactive Resources for Your Traveling Employees

A travel risk management strategy can only be successful if your workforce is given the necessary resources well before travel occurs. An important part of any travel risk management strategy involves answering common questions employees may have regarding their upcoming travels. It’s also a good idea to provide them with follow-up information so they can be up-to-date.

Not only will a company-wide pro-active travel risk management plan empower employees with the information they need, but implementing such a plan can also help keep your company’s reputation and financial standing in check and prevent any liabilities against your business. The following resources can be useful as part of your overall travel risk management strategy:

  • Travel logistics such as hotel/meeting site location and reservations details, nearby pharmacies and medical clinics, and passport and/or visa arrangements. It is also crucial to share contact information in the event employees need help during an emergency – such as that of your travel assistance partner or internal emergency resources – and encourage them to add this information to their mobile phone contacts.

  • A medical overview is essential, especially if the host country requires visitors have documentation of specific vaccinations. Employees should understand and be up-to-date on all routine vaccinations (such as influenza, measles, and mumps). The CDC’s Travelers’ Health website has valuable information, such as worldwide health alerts, although a travel assistance partner can provide this information directly to your employees prior to travel. Additional insight your company can provide to traveling employees is information about health risks in their destination countries. This ensures employees are well aware of the quality of local food and drinking water as well as where to find quality medical care.

Also, since most health insurance plans do not cover members when they are traveling outside the U.S., businesses should purchase additional coverage. Even if their plans provide coverage outside the U.S., many health insurance policies aren’t able to mitigate all of the risks associated with business travel. It would only take one international medical evacuation (which can cost more than $100,000 from business hubs in Dubai, UAE to New York, or China to Texas) to make a serious impact, not just on your traveling employee but on your company as a whole.

  • A detailed synopsis of the destination’s political standing is crucial to keep your employees safe while traveling, as many regions of the world are experiencing political unrest and living under the very real threat of terrorism. It is important to ensure that your employee benefits package includes security coverage for employees traveling to high-risk areas.

Advance knowledge of the political status of a country will prepare employees should they face an unexpected issue abroad, as would these resources:

  • American embassies and consulates at the destination country, as well as the State Department’s emergency contact numbers.

  • Travel alerts, which provide information on risks to the security of U.S. citizens. Though usually short-term, these alerts must be taken seriously.

  • The State Department’s Smart Traveler Enrollment Program (STEP) is an extremely reliable resource that provides up-to-date location-specific security updates to any employee enrolled for the destination as well as information on the nearest U.S. Embassy. The enrollment will help U.S. Embassy or nearest U.S. Consulate to be in contact with your traveler in the event of an emergency.

Keep in mind that it is not just traveling employees – but also the employers – who need to be prepared for a travel-related emergency. Planning ahead and implementing company-wide crisis management education allows your workforce to be fully aware of the guidelines and protocols. Successfully mitigating a crisis without any communication missteps can prevent a crisis from spiraling into disaster.

ARTICLE BY

Risk Management Magazine
 
OF
Risk and Insurance Management Society, Inc. (RIMS)

Quarterly Whistleblower Award Update – August 21, 2014

Drinker Biddle Law Firm

Since our last quarterly update, the SEC’s Office of the Whistleblower (“OWB”) has issued four denial orders and three award orders. Here are some lessons learned from this activity:

  • The SEC Will Not Award Whistleblowers Who Provide Frivolous Information. The SEC determined that a claimant (who submitted “tips” relating to almost every single Notice of Covered Action”) was ineligible for awards because he/she “has knowingly and willfully made false, fictitious, or fraudulent statements and representations to the Commission over a course of years and continues to do so.” Under Rule 21F-8, persons are not eligible for an award if they “knowingly and willfully make any false, fictitious, or fraudulent statement or representation, or use any false writing or document knowing that it contains any false, fictitious, or fraudulent statement or entry with intent to mislead or otherwise hinder the Commission or another authority.” 17 C.F.R. § 240.21F-8(c)(7). The OWB found that a number of passages submitted by the claimant were patently false or fictitious and that the person had the requisite intent because of the (1) incredible nature of the statements, (2) continued submissions that lack any factual nexus to the overall actions, and (3) refusal to withdraw unsupported claims at the request of the OWB. (May 12, 2104.)

  • The SEC Will Enforce the Time Frames Set Forth in the Statue. The OWB denied two awards because the claimants did not submit an award claim within the 90-day period established by Rule 21F-10(b). The claimants argued that OWB should waive the 90-day period due to extraordinary circumstances. See 17 C.F.R. § 240.21F-8(a). The OWB determined that neither a lack of awareness that the information that the whistleblower had shared would lead to a successful enforcement action nor the lack of awareness that the Commission posted Notices of Covered Actions on its website constitutes an extraordinary circumstance to waive the timing requirement. See SEC Release No. 72178 (May 16, 2014) and SEC Release No. 72659 (July 23, 2014).

  • Whistleblowers are Not Eligible for an Award Unless the Information Leads to a Successful Enforcement Action. The OWB denied an award to a claimant because the provided information did not lead to a “successful enforcement by the Commission of a federal court or administrative action, as required by Rules 21F-3(a)(3) and 21F-4(c) of the Exchange Act.” OWB also noted that the claimant did not submit information in the form and manner required by Rules 21F-2(a)(2), 21F-8(a), and 21F-9(a) & (b) of the Exchange Act. See In the Matter of Harbinger Capital Partners, LLC, File No. 3-14928 (July 4, 2014).

The OWB Can Be Persuaded to Change Its Preliminary Determination. Although the OWB initially denied the whistleblower’s award claim on the basis that the information did not appear to have been voluntarily submitted within Rule 21F-4(a)(ii) because it was submitted in response to a prior inquiry conducted bya self-regulatory organization (“SRO”). In a Final Determination issued on July 31, 2014, however, the OWB determined that claimant was entitled to more than $400,000. OWB noted that a submission is voluntary if it is provided before a request, inquiry, or demand for information by the SEC in connection with an investigation by the Public Company Accounting Oversight Board, any self-regulatory organization, Congress, the federal government, or any state Attorney General.

On the basis of the unique circumstances of this case, the OWB decided to waive the voluntary requirement of Rule 21F-4(a) for this claimant. The SEC noted that the claimant “worked aggressively … to bring the securities law violations to the attention of appropriate personnel,” the SRO inquiry originated from information that in part described claimant’s role, claimant believed that the company had provided the SRO with all the materials that claimant developed during his/her own internal efforts, and claimant promptly reporting to the SEC that the company’s internal efforts as a result of the SRO inquiry would not protect investors from future harm. Sean McKessy, chief of the SEC’s Office of the Whistleblower, remarked that “[t]he whistleblower did everything feasible to correct the issue internally. When it became apparent that the company would not address the issue, the whistleblower came to the SEC in a final effort to correct the fraud and prevent investors from being harmed. This award recognizes the significance of the information that the whistleblower provided us and the balanced efforts made by the whistleblower to protect investors and report the violation internally.”See SEC Release No. 72727 (July 31, 2014); SEC Press Release, “SEC Announces Award for Whistleblower Who Reported Fraud to SEC After Company Failed to Address Issue Internally,” (July 31, 2014).

  • SEC Continues to Make Awards to Qualified Claimants. On June 3, 2014, the SEC awarded two claimants 15% each for a total of 30% percent of the monetary sanctions collected in the covered action. See SEC Release No. 72301 (June 3, 2014). On July 22, 2014, the SEC awarded three claimants 15%, 10%, and 5% respectively (for a total of 30%) of the monetary sanctions collected in the Covered Action. See SEC Release No. 72652 (July 22, 2014).

ARTICLE BY

William L. Carr
Daniel E. Brewer
 
OF
Drinker Biddle & Reath LLP

IRS Ruling Creates Opportunities for Tax Savings by Companies With Substantial Real Estate Assets

Katten Muchin Law Firm

On July 29, Windstream announced that it plans to spin off certain telecommunications network assets into an independent, publicly tradedreal estate investment trust (REIT). Windstream made the announcement after it obtained a favorable private letter ruling from the Internal Revenue Service (IRS) regarding the tax-free nature of the spin-off and the qualification of the spun-off entity’s assets as real property for REIT purposes.

Under the transaction, Windstream will spin off its existing fiber and copper network, real estate, and other fixed assets into a publicly traded, independent REIT. The REIT’s primary activity will be to lease the use of the assets back to Windstream through a long-term “triple net” exclusive lease. Windstream shareholders will retain their existing shares and receive shares in the REIT commensurate with their Windstream ownership. The transaction is intended to effectively enable Windstream to deduct, for federal income tax purposes, the amount of rent paid to the REIT without a corresponding corporate level income tax inclusion in income by the REIT—estimated to generate up to a $650 million annual overall reduction in taxable income between Windstream and the REIT.

Particularly notable about this transaction is that the private letter ruling obtained by Windstream is seemingly an indication by the IRS that it will respect the tax-free transaction of a spin-off even when coupled with an election for REIT status. The fact that the ruling recognized transmission infrastructure (e.g., wires and cable), in addition to the related real estate, as qualifying assets for REIT purposes is also a key development. The IRS issued proposed regulations in May that provided more specific guidance on what types of assets would be considered “real property” for purposes of meeting the requirements for making a REIT election, and Windstream’s private letter ruling is among the first to address the issue in light of the new regulations.

These developments mean that a REIT spin-off transaction might be available to many kinds of businesses. Companies (other than master limited partnerships) with similar assets, such as telecommunications, cables, fiber optics, and data centers, may be wise to explore opportunities to realize substantial tax savings through a similar transaction. However, there are several challenges that must be overcome to execute a successful REIT spin-off transaction.

ARTICLE BY

Jill E. Darrow
Reid A. Mandel
Glenn S. Miller
Saul E. Rudo
 
OF
Katten Muchin Rosenman LLP

EPA Clarifies Standards for Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Assessments

Covington BUrling Law Firm

In a move designed to provide greater certainty to those purchasing, selling, or evaluating industrial or commercial properties, the Environmental Protection Agency (EPA)recently proposed to remove any lingering effect of ASTM International’s E1527-05, a nine-year-old industry standard practice for evaluating potentially contaminated sites under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

As explained in detail in our February 24, 2014 E-Alert, “Amended All Appropriate Inquiries (AAI) Rule Offers New Due Diligence Standard, Focuses on Vapor Releases,” the EPA referenced and countenanced ASTM International’s updated framework, E1527-13, as an alternative due diligence standard to ASTM E1527-05.  Issued on June 16, 2014, the Proposed Rule would clarify Phase I Environmental Site Assessment (ESA) standards by replacing ASTM E1527-05 with ASTM E1527-13.  Yet these requirements still leave significant uncertainty in the absence of more detailed guidance about how to conduct vapor intrusion evaluations.

I.  Background

International standards organization ASTM International modeled E1527-05 on the EPA’s All Appropriate Inquiries (AAI) Rule in 2005.  The AAI Rule is a due diligence standard that allows buyers of potentially contaminated properties who conduct an investigation meeting the rule’s requirements to preserve certain defenses to federal cleanup liability under CERCLA when conducting Phase I ESAs.  See 40 C.F.R. § 312 (2013).  The ASTM E1527-05 framework was developed to provide guidance for such investigations, and instructed would-be purchasers to undertake all appropriate inquiries regarding the condition of a property before completing its sale.  Any buyer who conducted such inquiries in compliance with ASTM E1527-05 could then qualify for certain landowner liability protections under CERCLA, including the innocent landowner, bona fide prospective purchaser, and contiguous property owner defenses.

Last December, the EPA amended the AAI Rule to allow a purchaser to satisfy Phase I ESA requirements by following either ASTM E1527-05 or ASTM E1527-13.  See 78 Fed. Reg. 79319 (Dec. 30, 2013).  As explained in our February 24, 2014 E-Alert, the 2013 framework included new regulatory file review requirements, updated definitions of certain key terms, including “de minimis condition,” “release,” “Recognized Environmental Condition,” and “Historical Recognized Environmental Condition,” and expanded ASTM E1527-05’s definition of “migrate/migration” to include vapor migrations.

II.  Proposed Rule

The EPA amended the AAI Rule through direct final rulemaking, an approach whereby an agency publishes a rule and a notice of proposed rulemaking simultaneously because it expects that the rule will prove non-controversial.  But the move nonetheless introduced confusion because in endorsing both ASTM E1527-05 and ASTM E1527-13, it recognized two distinct standards.

Responding to that criticism, the EPA has now proposed to replace ASTM E1527-05 with ASTM E1527-13 for purposes of the AAI rule so as “to reduce any confusion associated with the regulatory reference to a historical standard” and “promote the use of the standard currently recognized by ASTM International as the consensus-based, good customary business standard.”  Amendment to Standards and Practices for All Appropriate Inquiries, 79 Fed. Reg. 34480 (proposed June 16, 2014) (to be codified at 40 C.F.R. 312), at 11.  Besides removing all references to ASTM E1527-05, the Proposed Rule would not alter the substance of the AAI Rule.

III.  Implications

ASTM E1527-13 incorporates new language about the need to evaluate soil vapor risk when conducting Phase I ESAs.  Soil vapor intrusion is of particular focus with respect to TCE and other volatile organic compounds, but can also involve other contaminants.  The EPA has suggested, however, that a vapor intrusion evaluation may already have been required under ASTM E1527-05.  In its preamble to the rule offering ASTM E1527-13 as a new due diligence standard, the agency stated that it “in its view, vapor migration has always been a relevant potential source of release or threatened release that, depending on site-specific conditions, may warrant identification when conducting all appropriate inquires.”  78 Fed. Reg. 79319 (Dec. 30, 2013).  It is unclear, however, whether the EPA intended this statement to reflect near contemporary Phase I ESAs (conducted after ASTM E1527-13 was developed) or instead intended to suggest that the obligation has always existed.  Consequently, there may be future disputes as to whether a Phase I ESA not describing an evaluation of soil vapor intrusion actually satisfied the AAI Rule.

ASTM E1527-13 leaves open a number of key questions about vapor intrusion evaluations.  Neither ASTM E1527-13 nor the AAI Rule describes, for example, what levels in soil gas or groundwater should lead to concern or what levels would require mitigation.  The EPA and various states are developing guidance in this area to further clarify acceptable levels, how evaluations are to be conducted, whether one can evaluate risk based upon groundwater conditions alone, whether an evaluation must consider multiple lines of evidence, what vapor levels would be deemed acceptable in a residential setting, and what actions are required to mitigate risk.[1]

IV.  Conclusion

Consultants have already been transitioning toward the ASTM E1527-13 standard.  Should the Proposed Rule be adopted, ASTM E1527-05 will still satisfy the AAI Rule for properties acquired between November 1, 2005 and the effective date of the new action.  The EPA also anticipates providing for a delayed effective date of one year following any final action, to give those still using the previous framework time to complete ongoing investigations and become familiar with the updated standard.

However, it is important to recognize the potential that the EPA may claim that a failure to evaluate soil vapor, where otherwise appropriate, is a requirement under ASTM E1527-05 and not only ASTM E1527-13.  It is therefore essential that potentially-affected individuals keep current on EPA developments with respect to the evaluation of soil vapor intrusion, and obtain sound and up to date advice from environmental professionals.

[1]  See http://www.epa.gov/oswer/vaporintrusion/index.html.

ARTICLE BY

Kamila Lis
E. Donald Elliott
Theodore L. Garrett
Gary S. Guzy
Lawr
ence A. Hobel
 
OF
Covington & Burling LLP

Department of State Releases September 2014 Visa Bulletin

Morgan Lewis logo

The bulletin shows continued forward movement in the EB-2 India category while the cutoff dates in most other employment-based categories remain unchanged.

The U.S. Department of State (DOS) has released its September 2014 Visa Bulletin. The Visa Bulletin sets out per-country priority date cutoffs that regulate the flow of adjustment of status (AOS) and consular immigrant visa applications. Foreign nationals may file applications to adjust their statuses to that of permanent residents or to obtain approval of immigrant visas at a U.S. embassy or consulate abroad, provided that their priority dates are prior to the respective cutoff dates specified by the DOS.

What Does the September 2014 Visa Bulletin Say?

After several months of significant movement in both directions, the September Visa Bulletin shows no movement in any of the employment-based categories other than continued forward movement in the EB-2 India and EB-3 Philippines categories. Such continued forward movement in the EB-2 India category cannot be guaranteed; once significant demand in this category occurs, the cutoff date is likely to once again retrogress.

The cutoff date for F2A applicants from all countries will advance significantly in September.

EB-1: All EB-1 categories will remain current.

EB-2: The cutoff date of January 22, 2009 for applicants in the EB-2 category chargeable to India will advance by slightly more than three months to May 1, 2009. The cutoff date of October 8, 2009 for applicants in the EB-2 category chargeable to China will remain unchanged. The EB-2 category for all other countries will remain current.

EB-3: The cutoff date of November 8, 2003 for applicants in the EB-3 category chargeable to India will remain unchanged. The cutoff date of November 1, 2008 for applicants in the EB-3 category chargeable to China will also remain unchanged. The cutoff date of June 1, 2010 for applicants in the EB-3 category chargeable to the Philippines will advance by 10 months to April 1, 2011. The cutoff date of April 1, 2011 for applicants chargeable to Mexico and the Rest of the World will remain unchanged.

The relevant priority date cutoffs for foreign nationals in the EB-3 category are as follows:

China: November 1, 2008 (no movement)
India: November 8, 2003 (no movement)
Mexico: April 1, 2011 (no movement)
Philippines: April 1, 2011 (forward movement of 10 months)
Rest of the World: April 1, 2011 (no movement)

Developments Affecting the EB-2 Employment-Based Category

Mexico, the Philippines, and the Rest of the World

The EB-2 category for applicants chargeable to all countries other than China and India has been current since November 2012. The September Visa Bulletin indicates no change to these categories. This means that applicants in the EB-2 category chargeable to all countries other than China and India may continue to file AOS applications or have applications approved through September 2014.

China

The August Visa Bulletin indicated a cutoff date of October 8, 2009 for EB-2 applicants chargeable to China. The September Visa Bulletin indicates no change to this cutoff date. This means that applicants in the EB-2 category chargeable to China with a priority date prior to October 8, 2009 may file AOS applications or have applications approved in September 2014.

India

The August Visa Bulletin indicated a cutoff date of January 22, 2009 for EB-2 applicants chargeable to India. The September Visa Bulletin indicates a cutoff date of May 1, 2009, reflecting forward movement of 99 days. This means that applicants in the EB-2 category chargeable to India with a priority date prior to May 1, 2009 may file AOS applications or have applications approved in September 2014.

The September Visa Bulletin notes that the use of potentially “otherwise unused” employment-based visa numbers prescribed by section 202(a)(5) of the Immigration and Nationality Act has allowed the cutoff date in the EB-2 India category to advance rapidly in recent months. The Visa Bulletin warns that continued forward movement of this cutoff date in upcoming months cannot be guaranteed, and no assumptions should be made until the dates are formally announced. Once there is a significant increase in demand in this category, it will be necessary to retrogress the cutoff date, possibly as early as November, to hold numbers within the fiscal year 2015 annual limit. 

Developments Affecting the EB-3 Employment-Based Category

China

The August Visa Bulletin indicated a cutoff date of November 1, 2008 for EB-3 applicants chargeable to China. The September Visa Bulletin indicates no change to this cutoff date. This means that only applicants in the EB-3 category chargeable to China with a priority date prior to November 1, 2008 may file AOS applications or have applications approved in September 2014.

India

The August Visa Bulletin indicated a cutoff date of November 8, 2003 for EB-2 applicants chargeable to India. The September Visa Bulletin indicates no change to this cutoff date. This means that only EB-3 applicants chargeable to India with a priority date prior to November 8, 2003 may file AOS applications or have applications approved in September 2014.

Rest of the World

The August Visa Bulletin indicated a cutoff date of April 1, 2011 for EB-3 applicants chargeable to the Rest of the World. The September Visa Bulletin indicates no change to this cutoff date. This means that only applicants in the EB-3 category chargeable to the Rest of the World with a priority date prior to April 1, 2011 may file AOS applications or have applications approved in September 2014.

Developments Affecting the F2A Family-Sponsored Category

The August Visa Bulletin indicated a cutoff date of March 15, 2011 for F2A applicants from Mexico. The September Visa Bulletin indicates a cutoff date of April 22, 2012, reflecting forward movement of 404 days. This means that applicants from Mexico with a priority date prior to April 22, 2012 will be able to file AOS applications or have applications approved in September 2014.

The August Visa Bulletin indicated a cutoff date of May 1, 2012 for F2A applicants from all other countries. The September Visa Bulletin indicates a cutoff date of January 1, 2013, reflecting forward movement of 245 days. This means that worldwide, F2A applicants with a priority date prior to January 1, 2013 will be able to file AOS applications or have applications approved in September 2014.

How This Affects You

Priority date cutoffs are assessed on a monthly basis by the DOS, based on anticipated demand. Cutoff dates can move forward or backward or remain static. Employers and employees should take the immigrant visa backlogs into account in their long-term planning and take measures to mitigate their effects. To see the September 2014 Visa Bulletin in its entirety, please visit the DOS website.

ARTICLE BY

Eric S. Bord
Lisa Stephanian
Burton
Tracy Evlogidis
Malcolm K. Goeschl
Eleanor Pelta
A. James Vázquez-Azpiri
 
OF
Morgan, Lewis & Bockius LLP

SEC Brings Fraud Charges Against Oil and Gas Company and Its CEO

Katten Muchin Law Firm

On August 4, the Securities and Exchange Commission instituted cease-and-desist proceedings against Houston American Energy Corp., an oil and gas exploration and production company, and John F. Terwilliger, its CEO, for making fraudulent claims about the company’s oil reserves. According to the SEC, during late 2009 and early 2010, Houston American raised approximately $13 million in a public offering and saw its stock price increase from less than $5 to more than $20 per share after fraudulently claiming that a Colombian exploration concession, in which Houston American owned a fractional interest, held between one billion and four billion barrels of oil reserves that would be worth the equivalent of $100 per share to investors. The SEC alleged that those estimates lacked any reasonable basis and were falsely attributed to the concession’s operator, who actually had much lower estimates. The SEC order charged Houston American and Mr. Terwilliger with violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act); Rule 10b-5, Section 20(b) of the Exchange Act; and Section 17(a) of the Securities Act of 1933. The SEC seeks a civil penalty and disgorgement from Houston American, and to prohibit Mr. Terwilliger from acting as an officer and director of the company.

Matter of Houston American Energy Corp. et al, Admin. Proceeding No. 3-16000 (Aug. 4, 2014).

ARTICLE BY

Michael S. Gordon
Ashley H. Jones
Of
Katten Muchin Rosenman LLP