Tag: Biden administration

Biden Administration Proposes That Federal Contractors Must Disclose GHG Emissions

Last Thursday, the Biden Administration proposed that all federal contractors (except those receiving less than $7.5 million annually in contracts) be required to, among other things, disclose their GHG emissions.  Specifically, according to the press release issued by the White House, “Federal contractors receiving more than $50 million in annual contracts would be required to publicly disclose Scope 1, Scope 2, and relevant categories of Scope 3 emissions, disclose climate-related financial risks, and set science-based emissions reduction targets” and “Federal contractors with more than $7.5 million but less than $50 million in annual contracts would be required to report Scope 1 and Scope 2 emissions.”  The Biden Administration further announced that “[t]his proposed rule leverages widely-adopted third party standards and systems . . . including the CDP environmental reporting system, the Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations, and the Science Based Targets Initiative (SBTi) criteria.”  It should be noted that this proposed rule is also quite similar to the climate disclosures proposed by the SEC–an unsurprising observation, as both were proposed by the Biden Administration and relied upon the same third-party standards (e.g., the TCFD).

The significance of this proposed rule–beyond the regulatory burden imposed upon federal contractors, which is substantial–is that the Biden Administration is signaling its commitment to, and reliance upon, climate-related financial disclosures as a key tool to address the challenge of climate change.  Thus, regardless of the legal challenges that the SEC proposal (and any similar regulatory rule) will be subject to, it is clear that the impetus for these types of disclosures will continue, including through other means at the government’s disposal.  Bearing this in mind, it would be rational for companies to take steps to generate the information necessary for these sort of disclosures, and to prepare to issue them–as this regulatory pressure is unlikely to dissipate soon.

“Today, the Biden-Harris Administration is taking historic action to address greenhouse gas emissions and protect the Federal Government’s supply chains from climate-related financial risks. In support of President Biden’s Executive Orders on Climate-Related Financial Risk and Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, the Administration is proposing the Federal Supplier Climate Risks and Resilience Rule, which would require major Federal contractors to publicly disclose their greenhouse gas emissions and climate-related financial risks and set science-based emissions reduction targets.”

For more Federal Legal News, click here to visit the National Law Review.
©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Biden Administration Expands Public-Private Cybersecurity Partnership to Chemical Sector

On October 26, 2022, the Biden Administration announced that it is expanding the Industrial Control Systems (ICS) Cybersecurity Initiative to the chemical sector. The White House’s fact sheet states that the majority of chemical companies are privately owned, so a collaborative approach is needed between the private sector and government. According to the fact sheet, “[t]he nation’s leading chemical companies and the government’s lead agency for the chemical sector — the Cybersecurity and Infrastructure Agency (CISA) — have agreed on a plan to promote a higher standard of cybersecurity across the sector, including capabilities that enable visibility and threat detection for industrial control systems.”

The fact sheet states that the Chemical Action Plan will serve as a roadmap to guide the sector’s assessment of their current cybersecurity practices over the next 100 days, building on the lessons learned and best practices of the previously launched action plans for the electric, pipeline, and water sectors to meet the needs for this sector. The Chemical Action Plan will:

  • Focus on high-risk chemical facilities that present significant chemical release hazards with the ultimate goal of supporting enhanced ICS cybersecurity across the entire chemical sector;
  • Drive information sharing and analytical coordination between the federal government and the chemical sector;
  • Foster collaboration with the sector owners and operators to facilitate and encourage the deployment of appropriate technologies based on each chemical facility’s own risk assessment and cybersecurity posture. The federal government will not select, endorse, or recommend any specific technology or provider; and
  • Support the continuity of chemical production critical to the national and economic security of the United States. The chemical sector produces and manufactures chemicals that are used directly or as building blocks in the everyday lives of Americans, from fertilizers and disinfectants to personal care products and energy sources, among others.

The ICS Cybersecurity Initiative emphasizes that cybersecurity continues to be a top priority for the Administration.

For more Cybersecurity Legal News, click here to visit the National Law Review.

©2022 Bergeson & Campbell, P.C.

Threats of Antitrust Enforcement in the Supply Chain

With steep inflation and seemingly constant disruptions in supply chains for all manner of goods, the Biden Administration has turned increasingly to antitrust authorities to tame price increases and stem future bottlenecks. These agencies have used the myriad tools at their disposal to carry out their mandate, from targeting companies that use supply disruptions as cover for anti-competitive conduct, to investigating industries with key roles in the supply chain, to challenging vertical mergers that consolidate suppliers into one firm. In keeping with the Administration’s “whole-of-government” approach to antitrust enforcement, these actions have often involved multiple federal agencies.

Whatever an entity’s role in the supply chain, that company can make a unilateral decision to raise its prices in response to changing economic conditions. But given the number of enforcement actions, breadth of the affected industries, and the government’s more aggressive posture toward antitrust enforcement in general, companies should tread carefully.

What follows is a survey of recent antitrust enforcement activity affecting supply chains and suggested best practices for minimizing the attendant risk.

Combatting Inflation as a Matter of Federal Antitrust Policy

Even before inflation took hold of the U.S. economy, the Biden Administration emphasized a more aggressive approach to antitrust enforcement. President Biden appointed progressives to lead the antitrust enforcement agencies, naming Lina Kahn chair of the Federal Trade Commission (FTC) and Jonathan Kanter to head the Department of Justice’s Antitrust Division (DOJ). President Biden also issued Executive Order 14036, “Promoting Competition in the American Economy.” This Order declares “that it is the policy of my Administration to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony….” To that end, the order takes a government-wide approach to antitrust enforcement and includes 72 initiatives by over a dozen federal agencies, aimed at addressing competition issues across the economy.

Although fighting inflation may not have been the initial motivation for the President’s agenda to increase competition, the supply disruptions wrought by the COVID-19 pandemic and persistent inflation, now at a 40-year high, have made it a major focus. In public remarks the White House has attributed rising prices in part to the absence of competition in certain industries, observing “that lack of competition drives up prices for consumers” and that “[a]s fewer large players have controlled more of the market, mark-ups (charges over cost) have tripled.” In a November 2021 statement declaring inflation a “top priority,” the White House directed the FTC to “strike back at any market manipulation or price gouging in this sector,” again tying inflation to anti-competitive conduct.

The Administration’s Enforcement Actions Affecting the Supply Chain

The Administration has taken several antitrust enforcement actions in order to bring inflation under control and strengthen the supply chain. In February, the DOJ and FBI announced an initiative to investigate and prosecute companies that exploit supply chain disruptions to overcharge consumers and collude with competitors. The announcement warned that individuals and businesses may be using supply chain disruptions from the COVID-19 pandemic as cover for price fixing and other collusive schemes. As part of the initiative, the DOJ is “prioritizing any existing investigations where competitors may be exploiting supply chain disruptions for illicit profit and is undertaking measures to proactively investigate collusion in industries particularly affected by supply disruptions.” The DOJ formed a working group on global supply chain collusion and will share intelligence with antitrust authorities in Australia, Canada, New Zealand, and the UK.

Two things stand out about this new initiative. First, the initiative is not limited to a particular industry, signaling an intent to root out collusive schemes across the economy. Second, the DOJ has cited the initiative as an example of the kind of “proactive enforcement efforts” companies can expect from the division going forward. As the Deputy Assistant Attorney General for Criminal Enforcement put it in a recent speech, “the division cannot and will not wait for cases to come to us.”

In addition to the DOJ’s initiative, the FTC and other federal agencies have launched more targeted inquiries into specific industries with key roles in the supply chain or prone to especially high levels of inflation. Last fall, the FTC ordered nine large retailers, wholesalers, and consumer good suppliers to “provide detailed information that will help the FTC shed light on the causes behind ongoing supply chain disruptions and how these disruptions are causing serious and ongoing hardships for consumers and harming competition in the U.S. economy.” The FTC issued the orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct wide-ranging studies and seek various types of information without a specific law enforcement purpose. The FTC has in recent months made increasing use of 6(b) orders and we expect may continue to do so.

Amid widely reported backups in the nation’s ports, the DOJ announced in February that it was strengthening its partnership with and lending antitrust expertise to the Federal Maritime Commission to investigate antitrust violations in the ocean shipping industry. In a press release issued the same day, the White House charged that “[s]ince the beginning of the pandemic, these ocean carrier companies have been dramatically increasing shipping costs through rate increases and fees.” The DOJ has reportedly issued a subpoena to at least one major carrier as part of what the carrier described as “an ongoing investigation into supply chain disruption.”

The administration’s efforts to combat inflation through antitrust enforcement have been especially pronounced in the meat processing industry. The White House has called for “bold action to enforce the antitrust laws [and] boost competition in meat processing.” Although the DOJ suffered some well-publicized losses in criminal trials against some chicken processing company executives, the DOJ has obtained a $107 million guilty plea by one chicken producer and several indictments.

Most recently, the FTC launched an investigation into shortages of infant formula, including “any anticompetitive [] practices that have contributed to or are worsening this problem.” These actions are notable both for the variety of industries and products involved and for the multitude of enforcement mechanisms used, from informal studies with no law enforcement purpose to criminal indictments.

Preventing Further Supply-Chain Consolidation

In addition to exposing and prosecuting antitrust violations that may be contributing to inflation and supply issues today, the Administration is taking steps to prevent further consolidation of supply chains, which it has identified as a root cause of supply disruptions. DOJ Assistant Attorney General Kanter recently said that “[o]ur markets are suffering from a lack of resiliency. Among many other things, the consequences of the pandemic have revealed supply chain fragility. And recent geopolitical conflicts have caused prices at the pump to skyrocket. And, of course, there are shocking shortages of infant formula in grocery stores throughout the country. These and other events demonstrate why competition is so important. Competitive markets create resiliency. Competitive markets are less susceptible to central points of failure.”

Consistent with the Administration’s concerns with consolidation in supply chains, the FTC is more closely scrutinizing so-called vertical mergers, combinations of companies at different levels of the supply chain. In September 2021, the FTC voted to withdraw its approval of the Vertical Merger Guidelines published jointly with the DOJ the year before. The Guidelines, which include the criteria the agencies use to evaluate vertical mergers, had presumed that such arrangements are pro-competitive. Taking issue with that presumption, FTC Chair Lina Khan said the Guidelines included a “flawed discussion of the purported pro-competitive benefits (i.e., efficiencies) of vertical mergers” and failed to address “increasing levels of consolidation across the economy.”

In January 2022, the FTC and DOJ issued a request for information (RFI), seeking public comment on revisions to “modernize” the Guidelines’ approach to evaluating vertical mergers. Although the antitrust agencies have not yet published revised Guidelines, the FTC has successfully blocked two vertical mergers. In February, semiconductor chipmaker, Nvidia, dropped its bid to acquire Arm Ltd., a licenser of computer chip designs after two months of litigation with the FTC. The move “represent[ed] the first abandonment of a litigated vertical merger in many years.” Days later Lockheed Martin, faced with a similar challenge from the FTC, abandoned its $4.4 billion acquisition of missile part supplier, Aerojet Rocketdyne. In seeking to prevent the mergers, the FTC cited supply-chain consolidation as one motivating factor, noting for example that the Lockheed-Aerojet combination would “further consolidate multiple markets critical to national security and defense.”

Up Next? Civil Litigation

This uptick in government enforcement activity and investigations may lead to a proliferation of civil suits. Periods of inflation and supply disruptions are often followed by private plaintiff antitrust lawsuits claiming that market participants responded opportunistically by agreeing to raise prices. A spike in fuel prices in the mid-2000s, for example, coincided with the filing of class actions alleging that four major U.S. railroads conspired to impose fuel surcharges on their customers that far exceeded any increases in the defendants’ fuel costs, and thereby collected billions of dollars in additional profits. That case, In re Rail Freight Fuel Surcharge Antitrust Litigation, is still making its way through the courts. Similarly, in 2020 the California DOJ brought a civil suit against two multinational gas trading firms claiming that they took advantage of a supply disruption caused by an explosion at a gasoline refinery to engage in a scheme to increase gas prices. All indicators suggest that this trend will continue.

Reducing Antitrust Risk in the Supply Chain and Ensuring Compliance

Given the call to action for more robust antitrust enforcement under Biden’s Executive Order 14036 and the continued enhanced antitrust scrutiny of all manner of commercial activities, companies grappling with supply disruptions and rampant inflation should actively monitor this developing area when making routine business decisions.

As a baseline, companies should have an effective antitrust compliance program in place that helps detect and deter anticompetitive conduct. Those without a robust antitrust compliance program should consider implementing one to ensure that employees are aware of potential antitrust risk areas and can take steps to avoid them. If a company has concerns about the efficacy of its current compliance program, compliance reviews and audits – performed by capable antitrust counsel – can be a useful tool to identify gaps and deficiencies in the program.

Faced with supply chain disruptions and rampant inflation, many companies have increased the prices of their own goods or services. A company may certainly decide independently and unilaterally to raise prices, but those types of decisions should be made with the antitrust laws in mind. Given the additional scrutiny in this area, companies may wish to consider documenting their decision-making process when adjusting prices in response to supply chain disruptions or increased input costs.

Finally, companies contemplating vertical mergers should recognize that such transactions are likely to garner a harder look, and possibly an outright challenge, from federal antitrust regulators. Given the increased skepticism about the pro-competitive effects of vertical mergers, companies considering these types of transactions should consult antitrust counsel early in the process to help assess and mitigate some of the risk areas with these transactions.

Article By Elizabeth A. N. Haas, Ian T. Hampton, and Kate E. Gehl of Foley & Lardner LLP

For more antitrust legal news, click here to visit the National Law Review.

© 2022 Foley & Lardner LLP

Biden Revisions to the NEPA Regulations Now in Effect

The Biden Administration is amending the federal regulations for implementing the National Environmental Policy Act (NEPA) to reverse certain changes made by the Trump Administration. The first set of amendments took effect last Friday on May 20, 2022.

As background, the Council for Environmental Quality (CEQ) first issued the NEPA implementing regulations in 1978. They remained unchanged for more than 40 years until the Trump Administration published its 2020 rule updating the regulations to facilitate “more efficient, effective, timely NEPA reviews.” Developers, construction companies, and other businesses generally supported these changes with the hope they would streamline a lengthy process that often significantly delays projects. However, environmentalists opposed the changes, fearing they would weaken important protections, including those aimed at reducing climate change impacts and protecting natural resources. Upon taking office, the Biden Administration immediately began an effort to reverse parts of the 2020 rule.

The Biden amendments will be issued in two phases. The “Phase One” rule was published on April 20, 2022, and is in effect as of May 20, 2022. The “Phase Two” rule, which is expected to include more comprehensive revisions, will be issued “over the coming months”.

 The Phase One rule reinstates the following three key provisions of the NEPA regulations:

1.  Statement of Purpose and Need, and Scope of Reasonable Alternatives (40 CFR 1502.13)

Under NEPA, an agency’s statement of purpose and need informs the range of alternative actions analyzed in an environmental assessment (EA) or environmental impact statement (EIS). The NEPA regulations historically required agencies to consider “reasonable alternatives not within the jurisdiction of the lead agency.” The 2020 rule updates, however, instructed agencies to limit the statement of purpose and need, and therefore the range of alternatives, to only those that are consistent with the applicant’s goals and the agency’s statutory authority.

The Phase One rule removes these limitations to re-establish federal agencies’ discretion to consider a variety of factors, including a range of reasonable alternatives that are not entirely consistent with the goals of the project applicant. Accordingly, federal agencies may again coordinate with communities and project proponents to evaluate alternatives that could minimize environmental and public health costs, but extend beyond the scope of the agency’s authority or do not serve the applicant’s goals.

2.  Agency Implementing Regulations (40 CFR 1507.3)

The Phase One rule also removes language that could limit agencies’ standards and procedures for implementing NEPA rules that extend beyond CEQ regulatory requirements. This update reestablishes CEQ regulations as the “floor” for NEPA environmental review, and restores the agency’s discretion and flexibility to tailor NEPA procedures to align with specific agency and public needs. In contrast, the 2020 rule would have made the CEQ regulations a “ceiling” for NEPA requirements, effectively restricting agencies’ discretion to develop and implement procedures beyond requisite CEQ regulations.

3.  Scope of Effects (40 CFR 1508.1(g))

Finally, the Phase One rule restores the definition of “effects” that requires agencies to consider the historic categories of “reasonably foreseeable” direct, indirect, and cumulative effects. The 2020 rule, in contrast, limited the scope of this analysis to effects with a “reasonably close causal relationship,” and included language indicating that agencies were only required to consider direct effects, had discretion to consider indirect effects, and should not consider cumulative effects in NEPA review. The Phase One rule change thus ensures that agencies’ NEPA documents will evaluate all relevant environmental impacts resulting from the agency decision.

Here, the Phase One rule reversal is particularly impactful in terms of an agency’s consideration of climate change, where cumulative effects tend to be substantially greater than the effects of the individual project. The Phase One update confirms CEQ’s view that climate change impacts are adequately considered in evaluating direct, indirect and cumulative effects.

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Except for reinstating these three key provisions, the Phase One rule does not affect other changes made by the 2020 rule.  The Biden Administration plans to introduce more comprehensive changes as part of the forthcoming Phase Two rule. These changes, which are anticipated to be more controversial and draw additional public attention, are expected to address environmental justice, public participation, and streamlining provisions, including the use of plain language, deadlines, page limits, and inter-agency coordination.

Article By Alexander L. Merritt and Kathryn C. Kafka of Sheppard, Mullin, Richter & Hampton LLP

For more environmental legal news, click here to visit the National Law Review.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.

Implications of the Use of the Defense Production Act in the U.S. Supply Chain

What owners, operators and investors need to know before accepting funds under the DPA

There has been an expansion of regulations related to Foreign Direct Investment (FDI) in both the United States and abroad. Current economic and geopolitical tensions are driving further expansion of FDI in the U.S. and elsewhere.

Whether by intent or coincidence, the Foreign Investment Risk Review Modernization Act (FIRRMA) regulations that took effect February 13, 2020, included provisions that expanded the Committee on Foreign Investment in the U.S. (CFIUS) and FIRRMA based upon the invocation of the Defense Production Act (DPA) – such as with President Biden’s recent Executive Order evoking the DPA to help alleviate the U.S. shortage of baby formula.

As background, the U.S. regulation of foreign investment in the U.S. began in 1975 with the creation of CFIUS. The 2007 Foreign Investment and National Security Act refined CFIUS and broadened the definition of national security. Historically, CFIUS was limited to technology, industries and infrastructure directly involving national security. It was also a voluntary filing. Foreign investors began structuring investments to avoid national security reviews. As a result, FIRRMA, a CFIUS reform act, was signed into law in August 2018. FIRRMA’s regulations took effect in February 2020.

It is not surprising that there are national security implications to U.S. food production and supply, particularly based upon various shortages in the near past and projections of further shortages in the future. What is surprising is that the 2020 FIRRMA regulations provided for the application of CFIUS to food production (and medical supplies) based upon Executive Orders that bring such under the DPA.

The Impact of Presidential DPA Executive Orders

The 2020 FIRMMA regulations included an exhaustive list of “critical infrastructure” that fall within CFIUS’s jurisdiction. Appendix A to the regulations details “Covered Investment Critical Infrastructure and Functions Related to Covered Investment Critical Infrastructure” and includes the following language:

“manufacture any industrial resource other than commercially available off-the-shelf items …. or operate any industrial resource that is a facility, in each case, that has been funded, in whole or in part, by […] (a) Defense Production Act of 1950 Title III program …..”

Title III of the DPA “allows the President to provide economic incentives to secure domestic industrial capabilities essential to meet national defense and homeland security requirements.” This was arguably invoked by President Trump’s COVID-19 related DPA Executive Orders regarding medical supplies (such as PPEs, tests and ventilators, etc.) and now President Biden’s Executive Order related to baby formula (and other food production).

Based on the intent of FIRRMA to close gaps in prior CFIUS coverage, the FIRRMA definition of “covered transactions” includes the following language:

“(d) Any other transaction, transfer, agreement, or arrangement, the structure of which is designed or intended to evade or circumvent the application of section 721.”

Taken together, the foregoing provision potentially gives CFIUS jurisdiction to review non-U.S. investments in U.S. companies covered by DPA Executive Orders that are outside of traditional M&A structures. This means that even non-controlling foreign investments in U.S. companies (such as food or medical producers) who receive DPA funding are subject to CFIUS review. More significantly, such U.S. companies can be subject to CFIUS review for a period of 60 months following the receipt of any DPA funding.

As a result of DPA-related FDI implications, owners, operators, and investors should carefully assess the implications of accepting funding under the DPA and the resulting restrictions on non-U.S. investors in businesses and industries not historically within the jurisdiction of CFIUS.

Article By David Vance Lucas of Bradley Arant Boult Cummings LLP

For more administrative and regulatory legal news, click here to visit the National Law Review.

© 2022 Bradley Arant Boult Cummings LLP

Biden Administration to Open New For-Profit Immigrant Detention Center in Pennsylvania

After Pennsylvania’s York County prison dissolved its contract with Immigration Customs and Enforcement (ICE) in August, it was announced that a new immigration detention center will be opened in Clearfield County. The Clearfield County Board of Commissioners approved and signed a five-year contract with ICE and the GEO Group.

Clearfield County Immigration Detention Center

The prison, which operates for-profit, will convert the former Clearfield County Prison facility into a detention center to process individuals in violation of federal immigration laws. The prison can house roughly 1,900 immigrant detainees, but due to COVID-19 safety requirements, no more than 800 members will be held. “The beds will hold adults. There will not be any children. Primarily males, with some room for females,” said John Sibel, a Clearfield County Commissioner.

Training for prison employees is due to start soon, and the facility is expected to be in full operation within the next two months. Upgrades to the prison’s fencing and other areas will be underway soon.

GEO Group Detention Center and Clearfield County

GEO Group, a private company that ran the former Moshannon Valley Correctional Center, also owns the facility in Philipsburg. The correctional center, a federal prison, was closed in March this year. The closure impacted 300 employees, causing job loss in an already economically disadvantaged area.

Unlike York County, where the facility housed both immigrant detainees and other incarcerated people, the converted facility will house only immigrant detainees. Sibel said, “[t]he signing of the contract guarantees now that property tax revenues will continue to come to Clearfield County, Decatur Township, and the Philipsburg-Osceola School District.”

Safety Concerns for Local Residents

Residents of Clearfield County raised safety concerns over the new facility. However, Sibel reassured them that the GEO Group, which is responsible for running the facility, is in the process of upgrading the perimeter, and will transport immigrants who are released to the locations where they want to return.

“A lot of the folks that will be there, that will go through the processing center, will be there because they violate federal immigration laws, but they won’t necessarily have committed a criminal act… that would have caused them to be in the old prison,” Sibel said.

ICE’s Priorities Guidelines to Be Enforced

The Action field office director Brian McShane said that individuals held in the facility will fall under ICE’s enforcement priorities guidelines. Those priorities are focused on national security, border security, and public safety. “They will have their due process in immigration court if that’s what the law calls for while we go through the process to attempt to effectuate their removal,” he added.

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

The Biden Administration Takes Aim at Noncompete Clauses

Employers – in light of recent action by the Biden administration, it is time to review and evaluate restrictive covenants being used with your workforce. Courts, state legislatures, and the president are increasingly scrutinizing such covenants, including noncompete agreements.

President Joe Biden campaigned on a platform to eliminate and reduce barriers for employees seeking higher wages and better benefits. As part of this commitment, he promised to prohibit all noncompete agreements, except those essential to protecting a narrowly defined category of trade secrets. President Biden took a concrete step towards making good on this promise on July 9, 2021, by signing a sweeping executive order.

Noncompete provisions have become commonplace. According to data the Biden administration cites, approximately one-half of private-sector businesses require at least some segment of their workforce to execute noncompete agreements, affecting between 36 to 60 million workers in the United States. The Biden administration claims these agreements limit wage growth and hamper employee mobility.

In its wide-ranging executive order, the Biden administration signaled an aggressive approach to curtailing the use of noncompete agreements. The executive order declares “that a whole-of-government approach is necessary to address overconcentration, monopolization, and unfair competition in the American economy.” Of particular interest to many employers is the executive order’s directive to the Federal Trade Commission (FTC), which encourages the FTC to use its rulemaking authority to restrict and reduce — and even ban — certain types of non-compete agreements. Specifically, it provides that “the Chair of the FTC is encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority under the FTC Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

The executive order, which builds upon an executive order issued during President Obama’s final year in office, represents a potential sea change to the enforcement of noncompete agreements because it adds a layer of federal considerations to an already complex and ever-evolving array of state requirements.

To be clear, the July 9 executive order does not immediately change anything. The FTC must exercise its rulemaking authority under the FTC Act to accomplish its mission. It could be months or years before the FTC announces any specific rules. And challenges to the FTC’s authority will likely follow whatever rules the Commission ultimately promulgates.

The executive order also directs a newly created White House Competition Council to identify any potential legislative changes necessary to advance the policies outlined in the executive order. This may spur Congress to pass federal legislation in addition to anticipated agency rules. Beyond that, the Biden administration’s aggressive and prominent action on this front may inspire state legislatures across the country to evaluate their laws and potentially pass additional measures regulating enforceability of noncompete agreements. At bottom, this executive order represents an inflection point as the Biden administration aims to increase competition and wages by eliminating what it views as hindrances to achieving those goals.

While awaiting action by the FTC, employers should to take the time to scrutinize and evaluate the terms of restrictive covenants they use to ensure the restrictions are narrowly tailored. Such diligence may increase the likelihood of enforceability. In addition, employers should explicitly state the reasons for the restrictive covenants (e.g., protection of trade secrets, company goodwill, etc.). And, as always, employers need to also keep abreast of any state-law developments.

©2021 Greenberg Traurig, LLP. All rights reserved.
For more articles on noncompete clauses, visit the NLR Labor & Employment section.

Expectations for Offshore Wind Under the Biden Administration

President Joe Biden’s arrival at the White House in January was, as customary for any new executive branch leader, met by outsized expectations on the part of supporters and detractors alike. Among the countless areas of public policy set to be affected by the new administration, perhaps no one issue is more anticipated to be in play than energy and environmental policy.

The heightened set of expectations around energy policy began with the campaign, when Team Biden consistently placed climate change issues among its leading priorities — a trend that noticeably continued with Cabinet picks, as nominees for agencies from Defense to Transportation to Treasury cited climate considerations as key factors affecting their respective portfolios. On January 27, 2021, shortly after taking office, the Biden administration released a series of executive actions that included a stated goal of reaching a “carbon pollution-free power sector by 2035.”

Perhaps no single industry would be more critical to the realization of this far-reaching carbon-free goal than offshore wind, which has emerged in the United States over the past several years as a potentially game-changing source of clean energy generation, based on its earlier-moving success in Europe and elsewhere. In fact, along the country’s populous coastal areas, where fifty three percent of US residents reside, offshore wind presents the most viable option to build up renewable energy resources in the foreseeable future.

The industry’s significant upside potential has not been overlooked by the Biden energy team. The same late January set of Executive Orders arrived with a pledge to “identify steps that can be taken to double renewable energy production from offshore wind by 2030.” Energy wonks were quick to note that exactly zero megawatts of wind power are currently generated in US federal waters, where the Department of the Interior (DOI) exerts jurisdiction, making the double production pledge either poorly conceived or remarkably easy to accomplish, depending upon your point of view.

In reality, a significant amount of offshore wind power development is underway in US federal waters today. Some 10 projects with a potential 8000 MWs of output are currently in the pipeline along the east coast, all in need of federal approvals to continue forward. On the US West Coast, significant groundwork at the state and federal levels has been underway for years as part of a concerted push to launch a large-scale offshore wind industry utilizing floating turbine technology already deployed in Europe — a necessity on the West Coast given the sharp drop-off of the continental shelf just a few miles offshore.

Looking forward, here’s what we expect to see from a Biden administration federal policy apparatus that seems determined to maximize the potential of offshore wind in short order:

Federal Permitting: Furthest along in the pipeline, the fate of the 800 MW Vineyard Wind project off the coast of Massachusetts has been widely watched over the past few years. Viewed by many as a bellwether for DOI’s approach to assessing the impacts of offshore wind development, the project appeared to lose momentum in the course of its National Environmental Policy Act (NEPA) review process, unexpectedly finding itself subject to a Supplemental Environmental Impact Statement (SEIS) that would assess “cumulative impacts that could result from the incremental impact of the Proposed Action … combined with past, present, or reasonably foreseeable activities, including other future offshore wind activities.” DOI’s move, based on a lofty forecast of 22 GWs of offshore wind along the East Coast in 10 years, confirmed to many that agency leaders deliberately sought to slow industry growth, even as optimists countered that a successful expanded review process would better insulate the promising industry from future litigation.

The Biden administration has quickly moved to turn the page on Vineyard Wind, announcing a restart of the project’s SEIS (pulled in the waning days of the last administration for fear of a negative outcome) timed to coincide with the debut of newly minted Bureau of Ocean Energy Management (BOEM) head Amanda Lefton, who stated that “robust and timely” permitting would again become regular order. Indeed, only a month later, BOEM followed up by issuing the final EIS for Vineyard Wind. Developers in dire need of predictability should take heart at this early demonstration of timeliness — yet patience will continue to be required as a thinly staffed BOEM makes its way through the significant permit backlog.

Leasing: Beyond timeliness in permitting, the other key federal ingredient needed to instill predictability in the US offshore wind industry involved the issuance of new wind lease areas. For all the aggressive state-level renewables targets that have seeded enthusiasm in offshore wind, little can be done unless the federal government decides to hold lease sales, another action that appeared to be placed on the back burner during the last administration. Currently, developers are eyeing pending lease sales for significant additional acreage in the vicinity of the New York Bight and along the coast of California, both along the central coast at Morro Bay and further north offshore Humboldt County. Under a Biden administration intent on quickly ramping up offshore wind, creating a predictable path forward for development is an obvious priority. Look for release of a predictable, long-range leasing plan for both pending and future offshore wind lease areas as a means to restore investor confidence.

Inter-agency Cooperation: The aforementioned “all-of-government” approach to advancing renewables development stands to find real meaning in relation to offshore wind — starting at the Commerce Department, where the National Oceanic and Atmospheric Administration (NOAA) is housed. The jurisdiction of NOAA’s National Marine Fisheries Service gives the agency significant ongoing contact with commercial fisheries interests, many of whom are skeptical about offshore wind development, allowing it to play an important role in interfacing with fisheries and related stakeholder interests. The Department of Energy (DOE) has a significant role to play in advancing the industry’s future; backing research into new offshore wind technologies suited to US-specific conditions could bolster the potential manufacturing and supply chain benefits linked to the new industry. Finally, the Department of Defense (DOD) has significant say over the early planning process surrounding future wind lease area offerings; its ability to reach agreement on siting decisions in a timely manner is key to an efficient leasing process. Look for empowered climate policy leaders within the White House to enforce cooperation among these and other agencies to help streamline development.

© 2020 Bracewell LLP

ARTICLE BY George D. Felcyn of Bracewell LLP
For more articles on environmental law, visit the NLR Environmental, Energy & Resources section.

Transgender Students and Title IX: Biden Administration Signals Shift

President Biden issued Executive Order (EO) on Preventing and Combating Discrimination Based on Gender Identity or Sexual Orientation on Jan. 20, 2021.[1] While the EO itself is a high level policy statement and does not, in and of itself, immediately change any practices for public school districts, it likely signals a significant shift in how the Biden administration will interpret and enforce the rights of transgender and other LGBTQ students.

What policy is asserted in the EO?

The Executive Order asserts that “[a]ll persons should receive equal treatment under the law without regard to their gender identity or sexual orientation”, including that “[c]hildren should be able to learn without worrying about whether they will be denied access to the restroom, locker room, or school sports.” Additionally the EO provides: “[e]very person should be treated with respect and dignity without regard to who they are or whom they love; “[a]dults should be able to earn a living without worrying about being fired or demoted because of who they go home to or whether their dress conforms to sex-based stereotypes”; and “[p]eople should have access to healthcare and be able to put a roof over their heads without being subjected to sex discrimination.”

The EO bases its reasoning on Title VII of the Civil Rights Act of 1964 and the Supreme Court’s recent case of Bostock v. Clayton County, which held that Title VII’s prohibition against “sex discrimination” includes a prohibition against discrimination based on sexual orientation and gender identity. The EO asserts that Bostock’s reasoning also applies to other laws, including Title IX, that prohibit sex discrimination.

What does the EO require federal entities to do?

It requires the head of every federal agency (including the U.S. Department of Education) to:

  • Consult with the United States Attorney General as soon as practicable;
  • Review all existing orders, regulations, guidance documents, policies, programs, or other agency actions under any statute or regulation that prohibits sex discrimination and determine whether those items are consistent with the EO; and
  • Within 100 days of the Order, work with the Attorney General to implement an action plan to carry out the actions identified in its review of its policies, programs, guidance, rules, or regulations and that may be inconsistent with the Order’s stated policy.

How are the stated policy and required action different from the past?

The EO’s language stands in direct contrast with the prior administration’s stance on legal protections for students based on sexual orientation and gender identity. For example, under the prior administration, the U.S. Department of Education took the position that Bostock’s reasoning did not apply to Title IX and specifically reaffirmed its position that public school districts may exclude students from athletic teams based on gender identity and could require students to use bathrooms based on biological sex, rather than gender identity.

In fact, the prior administration issued correspondence explicitly disagreeing with how two federal circuit courts interpreted Title IX. In Grimm v. Gloucester County School Board and in Adams v. School Board of St. Johns County, the Fourth Circuit (covering Maryland, North Carolina, South Carolina, Virginia and West Virginia) and Eleventh Circuit (covering Alabama, Florida, and Georgia) held that public school students have the right, under both Title IX and the Equal Protection Clause of the Fourteenth Amendment, to use bathrooms consistent with their gender identity. The Eleventh Circuit, in particular, relied on Bostock to interpret Title IX’s prohibition against sex discrimination.[2] The new EO rejects the previous administration’s assertion that the Bostock decision does not apply to agency interpretation of Title IX.

While the EO does not specifically rescind any specific order or action, its broad mandate that agencies review existing programs and policies likely will lead to updated guidance, enforcement priorities, and rules implementing Title IX and other laws prohibiting sex discrimination.

What should schools do now?

The current administration will likely implement major changes related to discrimination on the basis of sexual orientation or transgender status. This may include requiring schools to allow students to use bathrooms and locker rooms that are consistent with their gender identity, and to play on athletic teams that are consistent with their gender identity. Additionally, schools can expect more robust federal agency investigation of complaints of discrimination based on gender identity and sexual orientation.

In light of Bostock, all schools subject to Title VII of the Civil Rights Act should ensure that their employment policies prohibit discrimination on the basis of sexual orientation and gender identity, in conformity with Bostock. In addition, all colleges and universities, as well as all public K-12 school districts, in the Fourth and Eleventh circuits should ensure that their bathroom policies allow students to use bathrooms consistent with their gender identity.

Finally, colleges and universities, as well as public K-12 school districts, should review their practices and procedures to determine how to best support the rights of transgender students in their programs and activities. They should prepare for greater scrutiny at the federal level and be prepared to defend their practices.

[1] https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-preventing-and-combating-discrimination-on-basis-of-gender-identity-or-sexual-orientation/

[2] Note, though, that the School Board of St. Johns County has petitioned for an en banc hearing. That petition has not yet been ruled upon.

Copyright ©2021 Nelson Mullins Riley & Scarborough LLP

ARTICLE BY Neeru “Nina” Gupta and Suzann M. Wilcox of Nelson Mullins
For more, visit the NLR Public Education & Services section.