Category: Legislation

Will Hemp Save the World, Before the Government Kills It?

There is a great line in the wonderful film Charlie Wilson’s War, where Charlie Wilson (played remarkably by the inimitable Tom Hanks) describes the successful, if relatively covert, involvement of the United States government in the Soviet-Afghan War: “These things happened. They were glorious and they changed the world… and then we f***d up the endgame.”

With the next Farm Bill somewhere on the horizon, I believe we are approaching a similar moment for the future of hemp. I believe the future of hemp is glorious and that it can change the world. What will we do to the endgame?

This is an analysis about the current state of hemp and whether that industry will revolutionize the world before the government relegates it back to the ash heap of history. It just so happens to dovetail with my personal experience representing clients in connection with the hemp business.

In the Beginning…

Back in the “stone age” (circa 2017) when I decided I wanted to be a cannabis lawyer, I began with a focus on hemp. [As a brief aside, telling people in Alabama you practice cannabis law in 2017 must have been what Noah felt like when he was telling people it was about to start raining.]

The 2014 Farm Bill, which for the first time legalized “industrial hemp” as distinct from marijuana under the Controlled Substances Act and allowed state agricultural departments and universities to license the production of hemp, cracked the door for a nascent and limited hemp market, and it was a remarkable time to advise new hemp operators and investors about how to maximize this opportunity within the contours of the law.

At the same time, I was regularly receiving calls from existing clients, colleagues within the firm, and strangers about how their non-cannabis companies should conduct themselves when approached by hemp companies who wanted to do business with them. The latter category included banks, insurance companies, real estate companies, and myriad companies who had questions about how their employees’ use of hemp interplayed with the companies’ existing drug testing policies. Most of the time the companies were reluctant to have anything to do with hemp, but the conversations were interesting, and it was clear that most companies realized the landscape was changing. It was the Wild West, and I was having a ball.

Rocket Fuel

Enter the 2018 Farm Bill and the explosion of the hemp industry. The 2018 Farm Bill dropped the word “industrial” and defined “hemp” as:

the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.

In addition to removing the limitations from the 2014 Farm Bill licensing, the 2018 Farm Bill also moved oversight authority from the Department of Justice and DEA to the USDA and FDA.

The 2018 Farm Bill was a tectonic shift, and we recognized the new regime’s potential almost immediately, predicting the following:

  • Increased “smart” money and research. Because hemp has been a Schedule I substance along with marijuana for decades, many sophisticated sources of funding have abstained from financing the industry. This placed hemp at a competitive disadvantage to other commodities and prevented hemp from reaching its full potential. Now that hemp can be manufactured and sold without substantial legal risks, look for the money to flow toward this underserved sector. Publicly traded companies, private equity firms, venture capitalists and other investment groups will all take significant stakes in both the manufacturing and selling of hemp and hemp-derived products. In addition to traditional commercial development efforts, much of this cash is likely to be spent to hire top researchers to develop proprietary strands of hemp to meet a range of product applications and to take steps to protect the resulting intellectual property.
  • Explosion of hemp and hemp-derived products. Fueled in large part by this injection of financing from sophisticated investors, there is likely to be an explosion in the ways that hemp is used. Hemp already has hundreds — if not thousands — of known uses, and that number should grow substantially once the industry is exposed to the market forces that come with smart money and increased research. The biggest winner may be the hemp-derived CBD business. Hemp-derived CBD is a compound believed to have significant therapeutic benefits without an appreciable psychoactive component. The Washington Post has reported that “dozens of studies have found evidence that [CBD] can treat epilepsy as well as a range of other illnesses, including anxiety, schizophrenia, heart disease, and cancer.” One industry analysis predicts that the hemp-CBD market alone could hit $22 billion by 2022. The health and wellness sector should see particular hemp-related activity and growth in the coming years.
  • Increased ancillary services provided to hemp-related businesses. Because hemp has been included within the definition of marijuana under federal law for decades, most banks, law firms and other service providers have avoided providing services to hemp businesses to avoid the risk of charges of money laundering or conspiring to violate state and federal drug laws. The absence of such service providers has fostered a great deal of uncertainty in an area where certainty and clarity have been sorely needed. With hemp’s new legal status, look for professional service providers to enter the market in 2019 and beyond. Of course, entities looking to provide services to hemp-related businesses should take adequate precautions to ensure those businesses are only producing federally legal hemp.
  • Consolidation and integration. An interesting phenomenon in “legal” marijuana states has been the rapid consolidation and integration of marijuana growers, processors and dispensaries. Some states have mandated vertical integration (e.g., the growers are the sellers) through regulation. And a number of large cannabis companies have acquired grow operations or multi-unit dispensaries rather than establish a cannabis presence in a state from scratch. The hemp industry is likely to follow a similar path, both through government regulation and because larger companies are likely to seek to obtain sufficient quantities of hemp through consolidation and vertical integration. Accordingly, attorneys and investors should anticipate significant merger and acquisition activity in the coming years.
  • Federal regulations and state regimes. The 2018 Farm Bill does not create an entirely unregulated playing field for hemp. Over the coming months, the U.S. Department of Agriculture and Food and Drug Administration will issue regulations implementing the 2018 Farm Bill. State governments will also unveil plans governing the testing, labeling and marketing of hemp-related products, as well as the licensing and monitoring of hemp-related businesses.

I’m proud to say that we were pretty much on the money with these projections, and countless studies and data confirm that hemp can be a viable product with countless form factors that help shape the global economy.

That is when I realized that I might be able to make a career as a cannabis lawyer.

The Good with the Bad

Of course, the development of the hemp industry has not been without controversy – in fact it may be the controversy that has spurred much of the development.

I would be lying to you if I told you that every hemp or hemp-derived product was designed with the best of intentions or contained appropriate mechanisms to ensure consumer safety. There are certainly hemp-derived products on the market that have not been subjected to sufficient product development and testing, and that are being marketed in ways that rightfully should concern policymakers and the public. Novel, psychoactive cannabinoids that fall within the bounds of the terms, if perhaps not the spirit, of the Farm Bill fill the shelves of stores around the country with little to no mechanisms for enforcement. That should change, and Americans should have confidence that the products made available to them are safe and effective.

In response to this proliferation, a number of states have enacted rules and regulations restricting the production and sale of certain hemp-derived cannabinoids. A number of those rules – for example, age and purity restrictions for psychoactive cannabinoids – seem well-intentioned, and we expect to see more of those unless and until the federal government takes further action.

On occasion, however, it appears that the motivations of policymakers may be less pure. It is no secret amongst those in the cannabis industry that marijuana licensees in states that have legalized marijuana are no fans of the unregulated hemp-derived psychoactive industry. After all, marijuana companies are subject to astronomical taxes and endure regulatory costs that make turning a profit far more difficult than if they were able to offer a product that offered a somewhat similar “high” without the institutional overhead and headwinds. Florida may be the clearest and most recent example. With adult-use marijuana widely expected to become law in Florida soon, the state legislature recently passed a law largely prohibiting delta-8 and delta-10.

On the other hand, it would be wrong, even lazy, to suggest that the development of hemp-based products has been without substantial benefits to society as a whole. Entrepreneurs are developing hemp-based substitutes for any number of the most common products used around the globe, meaning that the addressable market for hemp is everyone on earth and beyond.

A younger version of me once wrote, in comparing the addressable market for marijuana to that of hemp:

Hemp, on the other hand, has the potential to dwarf marijuana in the global market. Unlike its sister plant, hemp has the capacity to replace products we use every day without us even realizing it. For example, hemp can provide a substitute for concrete, plastic, fuel, automotive parts, clothes, etc. These are products nearly all consumers need but they neither realize nor care what the products are made of, as long as they work. In that way, while the market for marijuana is limited to consumers looking to purchase marijuana, the market for hemp includes anyone who purchases products that can be manufactured by hemp. In part for these reasons, experts predict four to five times growth in the industrial hemp market in the next five years.

I stand by those words. I am convinced that hemp can change the world.

But I am equally convinced that local, state, and federal governments can, without the appropriate consideration for hemp’s benefits, relegate the plant back to its prohibition era status and deny the world its many benefits. The policy choices made by state governments, and perhaps most importantly by the federal government during the next Farm Bill, could fundamentally alter the future of hemp. Will it be a soon-forgotten shooting star that dazzled the world for a decade and then burned out, or will we look back at the past decade as the renaissance of one of civilization’s oldest and most versatile plants?

Conclusion

I’ll end where I began because Philip Seymour Hoffman’s work is revered by the Budding Trends community (and anyone with taste), and because the film’s ominous conclusion is a message for anyone who wants to see the hemp industry thrive in the years ahead.

As Hanks’ character celebrates the Afghan defeat of the Soviets, the hardened CIA analyst played by Hoffman offers this parable:

On his sixteenth birthday the boy gets a horse as a present. All of the people in the village say, “Oh, how wonderful!”

The Zen master says, “We’ll see.”

One day, the boy is riding and gets thrown off the horse and hurts his leg. He’s no longer able to walk, so all of the villagers say, “How terrible!”

The Zen master says, “We’ll see.”

Some time passes and the village goes to war. All of the other young men get sent off to fight, but this boy can’t fight because his leg is messed up. All of the villagers say, “How wonderful!”

The Zen master says, “We’ll see.”

The message behind this story is pretty clear. We’re prone to jump to conclusions about whether something is “good” or “bad.” We are especially quick to label something as “bad.” The reality is that things can be either good or bad, both good and bad, or neither. When it comes to whether Congress and the states will recognize hemp’s great potential, I guess we’ll see.

© 2024 Bradley Arant Boult Cummings LLP
For more on Hemp, visit the NLR Biotech, Food, Drug section.

White House Publishes Revisions to Federal Agency Race and Ethnicity Reporting Categories

On March 28, 2024, the White House unveiled revisions to the federal statistical standards for race and ethnicity data collection for federal agencies, adding a new category and requiring a combined race and ethnicity question that allows respondents to select multiple categories with which they identify.

Quick Hits

  • The White House published an updated SPD 15 with revisions to the race and ethnicity data collection standards for federal agencies.
  • The revisions change the race and ethnicity inquiry by making it one question and encouraging respondents to identify under multiple categories.
  • Federal agencies have eighteen months to submit an agency action plan for compliance and must bring all of their data collections and programs into compliance within five years.
  • The race and ethnicity categories are widely used across federal agencies and serve as a model for employers for their own data collection and required diversity reporting.

The White House’s Office of Management and Budget (OMB) published updates to its Statistical Policy Directive No. 15: Standards for Maintaining, Collecting, and Presenting Federal Data on Race and Ethnicity (SPD 15) with major revisions, the first since 1997. The revisions took immediate effect and were formally published in the Federal Register on March 29, 2024.

OMB stated that the revisions—which come after a two-year review process that included input from more than 20,000 comments, ninety-four listening sessions, three virtual town halls, and a Tribal consultation—are “intended to result in more accurate and useful race and ethnicity data across the federal government.”

Background

In 2022, OMB convened the Federal Interagency Technical Working Group on Race and Ethnicity Standard (Working Group) to review the race and ethnicity standards in the 1997 SPD 15 with the goal of “improving the quality and usefulness of Federal race and ethnicity data.” The race and ethnicity standards are used by federal contractors and subcontractors for affirmative action programs (AAPs) and by employers for federal EEO-1 reporting and U.S. Equal Employment Opportunity Commission (EEOC) surveys. Many employers further use the race and ethnicity categories for their own recordkeeping purposes, and federal agencies use the categories for various surveys and federal forms.

In January 2023, OMB published the Working Group’s proposals, observing that the 1997 SPD 15 standards might no longer accurately reflect the growing diversity across the United States and evolving understandings of racial and ethnic identities. During the pendency of the review process, several justices of the Supreme Court of the United States criticized the imprecision of the 1997 race and ethnicity categories throughout the Court’s 237-page opinion in the June 2023 Students for Fair Admissions, Inc. v. Harvard College (SFFA decision) case, in which the Court struck down certain race-conscious admissions policies in higher education.

Revisions to SPD 15

The updated standards closely follow the Working Group’s final recommendations and revise SPD 15 to require that data collection:

  • combine the race and ethnicity inquiry into one question that allows respondents to select multiple categories with which they identify,
  • add “Middle Eastern or North African” (MENA) as a “minimum reporting category” that is “separate and distinct from the White’ category,” and
  • “require the collection of more detailed data as a default.”

Under the 1997 standards, respondents were required to first select an ethnicity (i.e., “Hispanic or Latino” or “Not Hispanic or Latino”), and second, select a race category (i.e., “American Indian or Alaskan Native,” “Asian,” “Black or African American,” “Native Hawaiian or Other Pacific Islander,” or “White”).

The revised race and ethnicity categories for minimum reporting are:

  • “American Indian or Alaska Native”
  • “Asian”
  • “Black or African American”
  • “Hispanic or Latino”
  • “Middle Eastern or North African”
  • “Native Hawaiian or Pacific Islander”
  • “White”

The updated SPD 15 further revises some terminology and definitions used and provides agencies with guidance on the collection and presentation of race and ethnicity data pursuant to SPD 15. Additionally, the update instructs federal agencies to begin updating their surveys and forms immediately and to complete and submit an AAP, which will be made publicly available, to comply with the updated SPD 15 within eighteen months. Federal agencies will have five years to bring all data collections and programs into compliance.

OMB noted that “the revised SPD 15 maintains the long-standing position that the race and/or ethnicity categories are not to be used as determinants of eligibility for participation in any Federal program.”

Looking Ahead

The new race and ethnicity categories have implications for employers as they use these categories for federal reporting compliance and their own recordkeeping purposes, including potentially influencing their own diversity, equity, and inclusion (DEI) initiatives. Covered federal contractors and subcontractors must also use the categories in meeting their affirmative action obligations.

Still, the updated SPD 15 adds only one new minimum category. OMB recognized the tension with attempting to “facilitate individual identity to the greatest extent possible while still enabling the creation of consistent and comparable data.” One of the issues OMB identified as needing further research is “[h]ow to encourage respondents to select multiple race and/or ethnicity categories when appropriate by enhancing question design and inclusive language.” The agency is also establishing an Interagency Committee on Race and Ethnicity Statistical Standards that will conduct further research and regular reviews of the categories every ten years, though OMB may decide to review SPD 15 again at any time.

Employers may want to take note of the revisions to SPD 15 as these changes will directly impact many employers’ compliance and recordkeeping obligations. They may also want to be on the lookout for additional guidance from federal agencies, such as the Office of Federal Contract Compliance Programs (OFCCP) and the EEOC, on when and how to implement the standards. Relevant agencies will have to take action before employers will be required to implement the new standards. In the meantime, employers may want to consider whether to use the government’s new or existing categories when shaping their DEI initiatives, as racial and ethnic identities and terminology continue to evolve.

© 2024, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more on Race and Ethnicity Reporting, visit the NLR Civil Rights section.

U.S. House of Representatives Passes Bill to Ban TikTok Unless Divested from ByteDance

Yesterday, with broad bipartisan support, the U.S. House of Representatives voted overwhelmingly (352-65) to support the Protecting Americans from Foreign Adversary Controlled Applications Act, designed to begin the process of banning TikTok’s use in the United States. This is music to my ears. See a previous blog post on this subject.

The Act would penalize app stores and web hosting services that host TikTok while it is owned by Chinese-based ByteDance. However, if the app is divested from ByteDance, the Act will allow use of TikTok in the U.S.

National security experts have warned legislators and the public about downloading and using TikTok as a national security threat. This threat manifests because the owner of ByteDance is required by Chinese law to share users’ data with the Chinese Communist government. When downloading the app, TikTok obtains access to users’ microphones, cameras, and location services, which is essentially spyware on over 170 million Americans’ every move, (dance or not).

Lawmakers are concerned about the detailed sharing of Americans’ data with one of its top adversaries and the ability of TikTok’s algorithms to influence and launch disinformation campaigns against the American people. The Act will make its way through the Senate, and if passed, President Biden has indicated that he will sign it. This is a big win for privacy and national security.

Copyright © 2024 Robinson & Cole LLP. All rights reserved.
by: Linn F. Freedman of Robinson & Cole LLP

For more news on Social Media Legislation, visit the NLR Communications, Media & Internet section.

U.S. Corporate Transparency Act: CTA is Declared Unconstitutional in U.S. District Court Case

The Corporate Transparency Act has been declared unconstitutional. On March 1, 2024, U.S. District Court Judge Liles C. Burke issued a 53-page opinion[1] granting summary judgment for the National Small Business Association and held that the Corporate Transparency Act “exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.”

As a result, Judge Burke found the CTA to be unconstitutional because it exceeds the Constitution’s limits on Congress’ power, without even reaching a decision on whether it violates the First, Fourth, and Fifth Amendments. The Court then permanently enjoined the government from enforcing the CTA against the named plaintiffs and ordered a further hearing on the award of costs of litigation.

While it is likely that this litigation will continue to play out in the federal court system, the initial victory has gone to small business and importantly that means that compliance with this now unconstitutional regulatory regime can be set aside for the current time being.

[1] Nat’l Small Bus. United v. Yellen, No. 5:22-cv-01448-LCB (N.D. Ala. 2022)

Copyright ©2024 Nelson Mullins Riley & Scarborough LLP
For more on the Corporate Transparency Act, visit the NLR Corporate & Business Organizations section.

House Passes $78 Billion Tax Bill that Includes Affordable Housing Help

How long is something called a “crisis” before it just becomes the “new normal?” It is apparent there has been an affordable housing crisis in the United States for decades. One way that the federal government has addressed this is by motivating developers with the 9% Low Income Housing Tax Credit (the “9% LIHTC”) and the 4% Low Income Housing Tax Credit (the “4% LIHTC”) that a developer can receive for building a “qualified low-income building” described under Section 42 of the Internal Revenue Code of 1986, as amended (the “Code”).

These LIHTCs are awarded by a state government (or political subdivision thereof) to eligible participants to offset a portion of their federal tax liability in exchange for the production or preservation of affordable housing. On average, 50% of the total financing for 9% LIHTC projects comes from equity derived from the credit. Many states have used the 9% LIHTC as their primary tool to facilitate the production and rehabilitation of affordable rental housing. However, the 9% LIHTC is incredibly competitive. Each year the federal government allocates 9% LIHTC to each state on the basis of population.

The 4% LIHTC is another viable (and slightly less competitive) option. Currently, the 4% LIHTC is available for acquisition and rehabilitation of existing buildings and for new construction where 50% of the aggregate basis of the land and the building is financed with proceeds of tax-exempt bonds issued pursuant to Section 142(d) of the Code (“Affordable Housing PABs”). Unlike the 9% LIHTC, the amount of 4% LIHTC available is ostensibly unlimited; however, Affordable Housing PABs come with some strings attached, one of which is a Code Section 146 requirement to obtain an allocation of volume cap equal to the higher of the issue price or the par amount of the Affordable Housing PABs issued.

The federal government places a cap on the volume of certain types of tax-exempt private activity bonds, such as Affordable Housing PABs, that each state can issue. This limit is based on the population of the state. Each state has its own procedure for the allocation of and certification as to volume cap. Bonds that are subject to a volume cap limit are generally subject to an overall issuance limit each calendar year within each state. Each year, the IRS publishes a revenue procedure promulgating the volume cap applicable to each state. States then further apportion their allocable volume cap among various issuers and types of tax-exempt bonds that require volume cap within the state. As of March 2, 2023, the volume cap in 18 states and Washington, D.C. was oversubscribed for 2023.[1] Oversubscribed volume cap leads to competition for Affordable Housing PABs, which must be issued to receive the 4% LIHTCs to fund development for affordable housing.

After that primer, these authors can finally cut to the chase![2] On Wednesday, January 31, 2024, the U.S. House of Representatives passed a bill called the Tax Relief for American Families and Workers Act.

What Would This Legislation Do?

In addition to expanding the child tax credit and loosening restrictions on research and development tax deductions, this new legislation would (1) raise the 9% LIHTC through calendar year 2025 and (2) reduce the amount of Affordable Housing PABs needed for the 4% LIHTC from 50% of a project’s aggregate basis to 30% for a period of time.

For those keeping score at home, that is a 40% reduction in the amount of Affordable Housing PABs needed for the 4% LIHTC! If passed by the Senate, this package would be great news because it would free up bond capacity for more Affordable Housing PABs and for other tax-exempt bonds that require volume cap.[3]

But before you get too excited, note we said for a period of time and the Senate has yet to pass this legislation. How long a period? As drafted, the new legislation provides that the reduction of the Affordable Housing PABs requirement to 30% is applicable to projects, which are financed in part (at least 5% of the aggregate basis of the building and land)[4] by Affordable Housing PABs which have an issue date is in 2024 or 2025. So, the 40% reduction would be much like those endless infomercials we endured during COVID (available for a limited time only!). The reduction would be available from the date that the legislation takes effect for Affordable Housing PABs issued through December 31, 2025 (or for about a year to a year and a half). So, while this is a step in the right direction, this is not a permanent reduction in the amount of Affordable Housing PABs required to obtain the 4% LIHTC.

Recall that Congress has extended programs like this before. For example, the Qualified Zone Academy Bond program was established by the Taxpayer Relief Act of 1997 in order to promote private-sector investment in primary and secondary public education in areas with scarce public resources. Initially authorized only for 1998 and 1999, the program ended up being extended every two years right up through 2017. These types of extensions would make it a lot harder to plan yearly volume cap requests, but the new legislation is still a positive development.

The public policy and municipal bond sectors think this legislation does have a chance in the Senate, but it will likely take a while. Not surprisingly, Congress has other crises to address beyond affordable housing, including the laddered continuing resolutions funding the government that will expire on March 1and March 8. As Brian Egan, the director of government affairs for the National Association of Bond Lawyers said, this “overwhelming House vote demonstrates a momentum that the deal’s advocates will not want to squander. It also proves that members on both sides of the aisle want to get something done on tax before the end of the 118th Congress.”

Stay tuned for more on this and our expanding coverage of affordable and workforce housing in the coming weeks!

[1] https://www.novoco.com/notes-from-novogradac/population-figures-increase-multiplier-mean-record-pab-cap-2023-small-state-recipients-largely.

[2] You probably would never want to listen to the authors of this blog post tell any sort of suspenseful story. You would be here for days!

[3] Like the 25% volume cap requirement for qualified carbon dioxide capture facilities. We are all still waiting for that guidance on how to implement those provisions of the Code; we are looking at you Internal Revenue Service.

[4] Note that the new legislation also attempts to provide a transition rule for projects that already have some Affordable Housing PABs issued (but not the full 50% required prior to the enactment of this legislation) by permitting the reduced 30% requirement to be applied if at least 5 percent or more of the aggregate basis of the building and land is financed by Affordable Housing PABs with an issue date in 2024 or 2025. See the H. Rept. 118-353 – TAX RELIEF FOR AMERICAN FAMILIES AND WORKERS ACT OF 2024.

© Copyright 2024 Squire Patton Boggs (US) LLP
For more on tax bills, visit the NLR Tax section.

School Law & Legislative Update: New Laws In Effect 2024

Act 24 of 2023:

Effective 11/06/2023. Adds Section 1302.1 to the Public School Code entitled “Military Child Advance Enrollment” to require schools to develop a policy on enrollment of students to allow a child whose parent or guardian is an active duty member of the armed forces and has received orders to transfer into or within the Commonwealth of Pennsylvania to enroll in the school district prior to establishing residency for purposes of Section 1302 upon providing a copy of the official military orders and proof of the parent/guardian’s intention to move into the school district. This proof may include a signed contract to purchase a home, a signed lease, or statement from the parent/guardian stating their intention to move into the school district.

Act 26 of 2023:

Effective 01/05/2024. Repeals section 1112 of the Public School Code that prohibits teachers from wearing any dress, mark emblem or insignia indicative of their faith or denomination. This Act was passed on November 6, 2023 and is effective in 60 days.

Act 33 of 2023:

Effective 12/13/2023. Omnibus amendments to the Public School Code of 1949 including the following provisions:

Read the entirety of Act 33 here.

HIGHLIGHTS INCLUDE:

• Added a new Article XII-B entitled “Educator Pipeline Support Grant Program.” This is a new program within the Pennsylvania Higher Education Assistance Agency (PHEAA) to awards grants to individuals who are seeking placement as student teachers. Ten million dollars is available for implementation of the program, and the minimum grant available to a student teacher is $10,000. An additional minimum grant of $5,000 is available to a student teacher who is student teaching in a school entity in an area that “attracts few student teachers” or that “has a high rate of open teaching positions.” In addition to the student teacher receiving a grant payment, the student teacher’s cooperating teacher shall also receive a minimum grant of $2,500, unless the cooperating teacher receives compensation from an institution of higher education for servicing as a cooperating teacher.

• Section 1302-C (relating to school safety) is amended to now require that when a school police officer is appointed by a court, the court order must be submitted to the School Safety and Security Committee established under Section 1302-B. In addition, a school that has previously applied to court to appoint a person to act as a school police officer prior to the effective date of this subsection is required, within 120 days of the effective date of this subsection, submit a copy of the court order relating to the appointment of each school police officer to the committee. This subsection takes effect immediately.

• Adding a new Article XXVI-L entitled “School environmental Repairs Program,” to provide for a restricted account in the Commonwealth general fund to provide grants for the abatement or remediation of environmental hazards in school buildings; PDE is to develop an application process for schools to apply for the grants; eligible projects include abatement or remediation of lead in water sources, asbestos and mold inside the school building; the school must have a local match of at least 50% of the total cost of all the projects listed in its application; the local match may come from any non-state source funding, including federal and local donations, and the local match must be documented as part of the application.

Act 35 of 2023:

Effective 12/13/2023. Omnibus amendments to the Public School Code of 1949 including the following:

Read the entirety of Act 35 here.

HIGHLIGHTS INCLUDE:

• Section 130 is added to include a new section entitled “Public Job Posting Database” which is a public database to be established and maintained by PDE for both public and nonpublic schools to voluntarily advertise job vacancies.

• Section 131 is added to include a requirement that school entities, which includes charter schools, to submit information about instructional vacancies to PDE by August 31, 2024. The information required to be submitted includes the total budgeted number of instructional employees and vacancies included in the final adopted budget; and the quarterly average number of instructional vacancies had by the school during the school year. This information is to be posted on PDE’s website.

Act 52 of 2023:

Effective 12/14/2023 (see note about retroactivity). Adds a new Section 1525.1 to the Public School Code of 1949 entitled “Calculation of Average Daily Membership for a Dual Credit Course.” This section provides that a high school student who is enrolled in a dual credit course may be included in the school entity’s average daily membership.
This section shall apply retroactively to July 1, 2023.

Act 55 of 2023:

Effective 02/12/2024. Amends Section 1403 of the Public School Code of 1949 to provide for dental screenings by a school dentist or public health dental hygiene practitioner (previously only permitted dental examinations by a dentist).

Act 56 of 2023:

Effective 12/14/2023. Adds a new Section 103 to the Public School Code of 1949 entitled “Minimum Number of Days or Hours.” Provides that beginning in the 2023-2024 school year, a school entity is required to provide a minimum of 180 days or instruction OR 900 hours of instruction at the elementary level or nine hundred ninety (990) hours of instruction at the secondary level. This section does not preempt or supersede a collective bargaining agreement that was entered into prior to the effective date of this section. This Act is effective immediately. (Previously the requirement was 180 days AND the hours requirement). Note, However, That This Section Appears To Not Be Applicable To Charter Schools.

©2024 Strassburger McKenna Gutnick & Gefsky
For more news on 2024 Updates to the Public School Code, visit the NLR Public Education & Services section.

2024: The Year of the Telehealth Cliff

What does December 31, 2024, mean to you? New Year’s Eve? Post-2024 election? Too far away to know?

Our answer: December 31, 2024, is when we will go over a “telehealth cliff” if Congress fails to act before that date, directly impacting care and access for Medicare beneficiaries. What is this telehealth cliff? Let’s back up a bit.

TELEHEALTH COVERAGE POLICIES

Current statute (1834(m) of the Social Security Act) lays out payment and coverage policies for Medicare telehealth services. As written, the provisions significantly limit Medicare providers’—and therefore patients’—ability to utilize telehealth services. Some examples:

  • If the patient is in their home when the telehealth service is being provided, telehealth is generally not eligible for reimbursement.
  • Providers cannot bill for telehealth services provided via audio-only communication.
  • There is a narrow list of providers who are eligible to seek reimbursement for telehealth services.

COVID-19-RELATED TELEHEALTH FLEXIBILITIES

When the COVID-19 pandemic hit in 2020, a public health emergency (PHE) was declared. Congress passed several laws, and the administration acted through its own authorities to provide flexibilities around these Medicare telehealth restrictions. In general, nearly all statutory limitations on telehealth were lifted during the PHE. As we all know, utilization of telehealth skyrocketed.

The PHE ended last year, and through subsequent congressional efforts and regulatory actions by the Centers for Medicare and Medicaid Services (CMS), many flexibilities were extended beyond the end of the PHE, through December 31, 2024. Congress and CMS continue to grapple with how to support the provision of Medicare telehealth services for the future.

CMS has taken steps through the annual payment rule, the Medicare Physician Fee Schedule (MPFS), to align many of the payment and coverage policies for which it has regulatory authority with congressional deadlines. CMS has also restructured its telehealth list, giving more clarity to stakeholders and Congress as to which pandemic-era telehealth services could continue if an extension is passed. But CMS can’t address the statutory limitations on its own. Congress must legislate. CMS highlighted this in the final calendar year (CY) 2024 MPFS rule released on November 2, 2023, noting that “while the CAA, 2023, does extend certain COVID-19 PHE flexibilities, including allowing the beneficiary’s home to serve as an originating site, such flexibilities are only extended through the end of CY 2024.”

THE TELEHEALTH CLIFF

This brings us to the telehealth cliff. CMS generally releases the annual MPFS proposed rule in July, with the final rule coming on or around November 1. If history is any indication, Congress is not likely to act on the extensions much before the current December 31 deadline. This sets up the potential for a high level of uncertainty headed into 2025.

If we go over, this telehealth cliff would directly impact care and access for Medicare beneficiaries. The effects could be felt acutely in rural and underserved areas, where patients have been able to access, via telehealth, medical services that may have been out of reach for them in the past. The telehealth cliff would also impact how providers interact with their patients, and their collective ability to continue to utilize telehealth in a way that has benefited patients and providers alike. It could also influence how health plans choose to cover these services in the private marketplace beyond 2024. Such a dramatic change would impact business decisions for many providers and practices heading into 2025. And, at a time when provider shortages are still a significant issue, it would eliminate an option that has allowed many providers, practices and facilities to extend scarce resources for patient care.

TAKE ACTION

Stakeholders should be raising these concerns to Congress now. There are many ways to engage, including reaching out directly to key Members of Congress, looking for opportunities to testify or submit written testimony for relevant congressional hearings, and participating in organized events where Members of Congress will be present. This cliff can be avoided, but not without a concentrated effort and a lot of noise.

© 2024 McDermott Will & Emery
For more on Telehealth, visit the NLR Communications, Media & Internet section.

Year in Review: The Most Popular IP Posts of 2023

As 2024 begins and intellectual property (IP) strategies are being developed for the new year, it is a good time to reflect on what IP issues were prominent in 2023. According to many readers, hot IP topics included patent litigation strategies, artificial intelligence (AI), and pharmaceutical-related patent applications.

  1. An Overview of Shotgun Pleadings in the Federal Courts– This article explores types of shotgun pleadings identified by courts and outlines potential responses to a shotgun pleading.
  2. Lensa: Are AI Art Generators Copyright Infringers?– The ability of an AI tool, such as Lensa, to create near-replicas of other artists’ works leads to the question of whether AI-generated art can be considered derivative of other artworks. This article explores the answer to this question.
  3. Supreme Court Unanimously Affirms Amgen Repatha® Antibody Patents Invalid for Lack of Enablement– In their May 2023 decision in Amgen v. Sanofi, the U.S. Supreme Court held claims of patents, directed to a genus of potentially millions of antibodies, to be invalid because the patents failed to sufficiently enable one skilled in the art to make and use the full scope of the claimed inventions as required by 35 U.S.C. §112(a). This article explains the decision and its possible effect going forward.
  4. Why Pharma Companies Should File Patents Later In The R&D Process – This article discusses clinical trial related patent applications and best practices for maximizing patent term while minimizing risk of invalidation by public use.
  5. Federal Circuit Resolves District Court Split, Holds Foreign Defendant Cannot Defeat Rule 4(k)(2) Personal Jurisdiction by Unilateral Post-suit Consent to Jurisdiction in Alternative Forum – This article provides provide additional context regarding the Federal Circuit’s January 2023 decision in In re Stingray IP Solutions, LLC.
©1994-2023 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more on Intellectual Property, visit the NLR Intellectual Property section.

United States | Roundup: Immigration Policies Update in Final Weeks of 2023

Federal agencies announced several important changes to immigration programs in the last two weeks of 2023, including the details of a new domestic visa renewal program, the extension of interview waiver authorities and premium processing fee hikes. For those who missed any of the announcements, here’s a roundup of key developments:

  • Domestic visa renewal: The State Department will allow a limited number of H-1B holders to renew their visas in the United States under a new pilot program, the details of which were published Dec. 21, 2023. The pilot will begin Jan. 29 and will be open to 20,000 H-1B visa holders whose previous visas were approved in certain time frames by U.S. visa processing posts in Canada and India. Read BAL’s full news alert here.
  • Interview waiver authorities: On Dec. 21, 2023, the State Department announced that it would extend interview waiver authorities for certain nonimmigrant visa applicants. Under the updated policy, which took effect Jan. 1, consular officers will have the authority to waive interviews for (1) first-time H-2 visa applicants and (2) other nonimmigrant visa applicants who were previously issued a nonimmigrant visa in any classification (other than a B visa) and are applying within 48 months of their most recent nonimmigrant visa’s expiration date. Applicants renewing a nonimmigrant visa in the same classification within 48 months of the prior visa’s expiration date continue to be eligible for an interview waiver as well. Read BAL’s full news alert here.
  • Premium processing fees: U.S. Citizenship and Immigration Services will increase premium processing fees on Feb. 26. Under a regulation published Dec. 28, 2023, premium processing fees will increase by about 12% to account for inflation. Read BAL’s full news alert here.
  • Schedule A input: On Dec. 20, 2023, the Department of Labor asked for public input on whether to revise its list of Schedule A job classifications that do not require permanent labor certification. Read BAL’s news alert here.
  • F and M student nonimmigrant classifications: USCIS issued policy guidance Dec. 20, 2023, regarding the F and M student nonimmigrant classifications, including the agency’s role in adjudicating applications for employment authorization, change of status, extension of stay and reinstatement of status for these students and their dependents in the United States. Find USCIS’ updated policy guidance here. Read BAL’s news alert here.

Additional Information: The Biden administration’s top regulatory priorities on employment-based immigration in 2024 include H-1B and H-2 modernization, fee hikes and changes to the green card process, according to the Department of Homeland Security’s regulatory agenda published in December.

©2023 Berry Appleman & Leiden. All Rights Reserved.
For more news on Immigration Policies Updated in 2023, visit the NLR Immigration section.

New Year, (Potentially) New Rules?

SOMETIMES, THE ONLY CONSTANT IS CHANGE. THIS NEW YEAR IS NO DIFFERENT.

In 2023, we saw several developments in labor and employment law, including federal and state court decisions, regulations, and administrative agency guidance decided, enacted, or issued. This article will summarize five proposed rules and guidance issued by the Department of Labor (“DOL”), the National Labor Relations Board (“NLRB”), the United States Equal Employment Opportunity Commission (“EEOC”), and the Occupational Safety and Health Administration (“OSHA”), which will or may be enacted in 2024.

DOL’s Proposed Rule to Update the Minimum Salary Threshold for Overtime Exemptions

In 2023, the DOL announced a Notice of Proposed Rulemaking (“NPRM”) recommending significant changes to overtime and minimum wage exemptions. Key changes include:

  • Raising the minimum salary threshold: increasing the minimum weekly salary for exempt executive, administrative, and professional employees from $684 to $1,059, impacting millions of workers;
  • Higher Highly Compensated Employee (HCE) compensation threshold: increasing the total annual compensation requirement for the highly compensated employee exemption from $107,432 to $143,988; and
  • Automatic updates: automatically updating earning thresholds every three years.

These proposed changes aim to expand overtime protections for more employees and update salaries to reflect current earnings data. The public comment period closed in November 2023, so brace yourselves for a final rule in the near future. For more information: https://www.federalregister.gov/documents/2023/09/08/2023-19032/defining-and-delimiting-the-exemptions-for-executive-administrative-professional-outside-sales-and

DOL’s Proposed Rule on Independent Contractor Classification under the Fair Labor Standards Act

The long-awaited new independent contractor rule under the Fair Labor Standards Act (“FLSA”) may soon be on the horizon. The DOL proposed a new rule in 2022 on how to determine who is an employee or independent contractor under the FLSA. The new rule will replace the 2021 rule, which gives greater weight to two factors (nature and degree of control over work and opportunity for profit or loss), with a multifactor approach that does not elevate any one factor. The DOL intends this new rule to reduce the misclassification of employees as independent contractors and provide greater clarity to employers who engage (or wish to engage) with individuals who are in business for themselves.

The DOL is currently finalizing its independent contractor rule. It submitted a draft final rule to the Office of Management and Budget (OMB) for review in late 2023. While an exact date remains unknown, the final rule is likely to be announced in 2024. More information about the rule can be found here: https://www.federalregister.gov/documents/2022/10/13/2022-21454/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act

NLRB’s Joint-Employer Standard

The NLRB has revamped its joint-employer standard under the National Labor Relations Act (“NLRA”). The NLRB replaced the 2020 standard for determining joint-employer status under the NLRA with a new rule that will likely lead to more joint-employer findings. Under the new standard, two or more entities may be considered joint employers of a group of employees if each entity: (1) has an employment relationship with the employees and (2) has the authority to control one or more of the employees’ essential terms and conditions of employment. The NLRB has defined “essential terms and conditions of employment” as:

  • Wages, benefits, and other compensation;
  • Hours of work and scheduling;
  • The assignment of duties to be performed;
  • The supervision of the performance of duties;
  • Work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
  • The tenure of employment, including hiring and discharge; and
  • Working conditions related to the safety and health of employees.

The new rule further clarifies that joint-employer status can be based on indirect control or reserved control that has never been exercised. This is a major departure from the 2020 rule, which required that joint employers have “substantial direct and immediate control” over essential terms and conditions of employment.

The new standard will take effect on February 26, 2024, and will not apply to cases filed before the effective date. For more information on the final rule: https://www.federalregister.gov/documents/2023/10/27/2023-23573/standard-for-determining-joint-employer-status

EEOC’s Proposed Enforcement Guidance on Harassment

A fresh year brings fresh guidance! On October 2023, the EEOC published a notice of Proposed Enforcement Guidance on Harassment in the Workplace. The EEOC has not updated its enforcement guidance on workplace harassment since 1999. The updated proposed guidance explains the legal standards for harassment and employer liability applicable to claims of harassment. If finalized, the guidance will supersede several older documents:

  • Compliance ManualSection 615: Harassment (1987);
  • Policy Guidance on Current Issues of Sexual Harassment(1990);
  • Policy Guidance on Employer Liability under Title VII for Sexual Favoritism (1990);
  • Enforcement Guidance on Harris v. Forklift Sys., Inc. (1994); and
  • Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors(1999).

The EEOC accepted public comments through November 2023. After reviewing the public comments, the EEOC will decide whether to finalize the enforcement guidance. While not law itself, the enforcement guidance, if finalized, can be cited in court. For more information about the proposed guidance: https://www.eeoc.gov/proposed-enforcement-guidance-harassment-workplace

OSHA’s Proposed Rule to Amend Its Representatives of Employers and Employees Regulation

Be prepared to see changes in OSHA on-site inspections. Specifically, OSHA may reshape its Representatives of Employers and Employees regulation. In August 2023, OSHA published an NPRM titled “Worker Walkaround Representative Designation Process.” The NPRM proposes to allow employees to authorize an employee or a non-employee third party as their representative to accompany an OSHA Compliance Safety and Health Officer (“CSHO”) during a workplace inspection, provided the CSHO determines the third party is reasonably necessary to conduct the inspection. This change aims to increase employee participation during walkaround inspections. OSHA accepted public comments through November 2023. A final rule will likely be published in 2024.

For more information about the proposed rule to amend the Representatives of Employers and Employees regulation: https://www.federalregister.gov/documents/2023/08/30/2023-18695/worker-walkaround-representative-designation-process

Preparing for 2024

While 2023 proved to be a dynamic year for Labor and Employment law, 2024 could be either transformative or stagnant. Some of the proposed regulations mentioned above could turn into final rules, causing significant changes in employment law. On the other hand, given that 2024 is an election year, some of these proposed regulations could lose priority and wither on the vine. Either way, employers should stay informed of these ever-changing issues.

© 2023 Ward and Smith, P.A.. All Rights Reserved.
       
For more news on 2024 Labor and Employment Laws, visit the NLR Labor & Employment section.