July 2022

The California Privacy Protection Agency (“CPPA”) announced it will hold a special meeting on July 28, 2022 at 9 a.m. PST to discuss and potentially act on proposed federal privacy legislation, including the bipartisan American Data Protection and Privacy Act (“ADPPA”) (H.R. 8152).  The ADPPA is a comprehensive data…

Continue Reading California Privacy Protection Agency to Hold Special Meeting to Discuss Proposed Federal Privacy Legislation

Never in our decades of working on and around Capitol Hill and the White House have we seen as much anti-business sentiment among Republican lawmakers as we do today. And the trend shows no sign of abating.

There was a time when American corporations could count on unequivocal Republican support. To  be a Republican was virtually synonymous with supporting free market principles, capitalism and business. Republican President Calvin Coolidge once said, “the chief business of the American people is business.” Today, however, many Republicans scoff when they’re told that big business’ trade associations are for x or against y. They believe many companies have abandoned their trust in market forces for a “crony capitalism” that protects favored industries. Industries that profit from government programs are viewed with particular suspicion.

Conservatives say that it is not they who have moved away from business, but rather business which has moved away from them. Many Republicans see corporate America as lining up with the Progressive agenda on climate, ESG, mandatory vaccinations, sexual orientation and gender issues, voter ID laws, gun rights, speech restrictions, policing and abortion, leading them to believe that Wall Street is adverse not just to traditional values but also to conservative economic and constitutional principles. Social media companies have gained special opprobrium from Republicans for their content moderation policies, which they believe favor Progressives and suppress conservative content.Continue Reading Republicans Are Moving Away from Big Business

Background

As we previously reported, President Biden and Congress took steps in March 2022 to revoke Russia’s most-favored-nation (or “MFN”) trade status, known as Permanent Normal Trade Relations (“PNTR”) status under U.S. law.  As a result of these actions, the Suspending Normal Trade Relations with Russia and Belarus Act (“Suspending NTR Act”) entered into force on April 8, 2022, formally revoking PNTR status for Russia and Belarus.  Under the terms of the Act, imports into the United States of products from Russia and Belarus became subject to tariff rates set out in column 2 of the U.S. tariff schedule, rather than the column 1 rates that had previously applied.  Column 2 tariff rates are often higher—sometimes much higher—than MFN tariff rates in column 1, and as a result of this change, tariffs on U.S. imports from Russia increased from an average of approximately three percent to 32 percent.  In addition to implementing this immediate change in applicable tariff rates, the Suspending NTR Act also temporarily authorized the President, through the end of 2023, to increase even further tariffs applicable to imports from Russia and Belarus.

On June 27, pursuant to the authority granted under the Suspending NTR Act, President Biden issued Presidential Proclamation 10420, announcing that the United States would further increase tariffs applicable to certain categories of imports from Russia, worth approximately $2.3 billion annually.  U.S. Customs and Border Protection (“CBP”) recently issued guidance on these tariff increases, which will apply effective July 27, 2022.  This alert provides additional information on the forthcoming tariff increases, and discusses potential implications for importers of Russian goods.

Overview of July 27 Tariff Rate Increase on Certain U.S. Imports from Russia

Since revocation of PNTR status in April, products imported into the United States from Russia and Belarus have been subject to tariff rates set forth in column 2 of the U.S. tariff schedule.  Under the terms of Presidential Proclamation 10420, however, duty rates of 35 percent ad valorem will apply to 570 categories of Russian products in lieu of column 2 rates, beginning July 27, 2022.  These product categories have an estimated value of approximately $2.3 billion annually.  The Proclamation does not impact imports from Belarus, which will remain subject to column 2 tariff rates.Continue Reading Increased Tariffs on Certain U.S. Imports from Russia Effective July 27, 2022: What Companies Need to Know

Two months after Congress launched the Conference Committee on Bipartisan Innovation and Competition Legislation in May 2022, the Senate is nearing passage of a compromise “CHIPS Plus” bill.  Majority Leader Chuck Schumer (D-NY) initiated a test vote for the bill on Tuesday and received the assurance—a strong bipartisan vote of 64 to 53—that he sought to proceed. 

The CHIPS Plus bill, at just over 1000 pages, is much shorter than either the Senate’s United States Innovation and Competition Act (“USICA”) or the House’s America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act (“America COMPETES Act”), but significantly more ambitious than an earlier approximately 80-page bill that was limited only to semiconductor and wireless supply chain incentives.

The 80-page bill now forms the base — the CHIPS component — of the CHIPS Plus bill.  That bill included $54 billion in emergency appropriations for semiconductor and wireless supply chain incentives, “guardrails” that potentially constrain the companies that receive the incentives from undertaking certain business activities in China and other foreign countries of concern, and a 25% advanced manufacturing investment tax credit for the construction or acquisition of property integral to a facility whose primary use is to manufacture semiconductors or semiconductor manufacturing equipment.  The CHIPS Plus bill contains all of these provisions, as well as a similar set of guardrails for the tax credits.

The Plus component, added only the day before the test vote, authorizes over $100 billion dollars in government programs to support research and development (“R&D”), technology transfer, innovation, and science, technology, education, and mathematics (“STEM”) education.  These programs draw from Senate Commerce, Science, and Transportation Committee provisions in the USICA and from House Science, Space, and Technology Committee provisions in the America COMPETES Act.  They contain important policy changes and are likely to present massive opportunities for businesses, nonprofits, and education institutions to bolster their R&D efforts and to partner with the Federal government.  Funds will need to be appropriated for many of these programs for them to be effective.Continue Reading Senate Reaches Compromise on Innovation and Competition Legislation

Late last week, the Seventh Circuit affirmed a trial court’s ruling granting dismissal at summary judgment of claims against FCA US LLC (“FCA,” formerly known as Chrysler) and Harman International Industries, Inc. (“Harman”) for lack of Article III standing.  See Flynn v. FCA US LLC, — F. 4th —-…

Continue Reading Seventh Circuit Affirms Dismissal Of Class Claims Based Upon Speculative Hacking Risk

Perhaps no citation has been more favored in Federal Election Commission (“FEC”) decisions over the past decade than Heckler v. Chaney, 470 U.S. 821 (1985), a Supreme Court decision that gives an agency broad discretion over which enforcement cases to pursue.  But there is a category of cases where the FEC is not employing Heckler when it should:  Cases where the constitutional support for the statute no longer exists.  See Citizens for Responsibility and Ethics in Washington v. Federal Election Commission, 993 F.3d 880, 884 (D.C. Cir. 2021) (“New Models”); see also Citizens for Responsibility and Ethics in Washington v. American Action Network, No. 18-CV-945, 2022 WL 612655, at *2 (D.D.C. Mar. 2, 2022) (holding that an FEC dismissal that was supported by “constitutional doubts” that “militate in favor of cautious exercise of our prosecutorial discretion” was judicially unreviewable under Chaney).

The FEC continues to pursue enforcement penalties in several categories of cases where there is almost no chance that a majority of the Supreme Court would find the statute constitutional.  This resembles a sort of regulatory Russian Roulette, where the agency pursues enforcement actions until it finds a respondent that is willing to fully litigate the constitutional issues, mostly likely in a case with plaintiff-friendly facts.  The risk for the agency is that when one of these cases eventually comes before the Supreme Court, the justices may use a hammer, rather than a scalpel, in striking down the law. 

In two areas in particular, the FEC should exercise its prosecutorial discretion to decline to pursue cases based on statutes and regulations of dubious constitutionality.   

A Person Cannot Corrupt His or Her Spouse With a Campaign Contribution, No Matter How Large. 

Currently, the FEC follows the Supreme Court’s decision in 1976 to rather tentatively uphold the application of the contribution limits to contributions from intimate family members in the same way as contributions from lobbyists and corporate and union PACs.  But the law has evolved, and the Supreme Court has since been clear that generally the only legitimate interest the contribution limits play is to prevent quid pro quo corruption or its appearance.  It is nearly impossible to argue that a spouse who gives a contribution over $2,900 to his or her candidate/spouse presents the risk of quid pro quo corruption. Continue Reading Picking Battles: The FEC and the Constitution

On July 13, the Federal Trade Commission published a notice of proposed rulemaking regarding the Motor Vehicle Dealers Trade Regulation Rule.  The Motor Vehicle Dealers Trade Regulation Rule is aimed at combating certain unfair and deceptive trade practices by dealers and promoting pricing transparency.  Comments to the proposed rule are due on or before September 12, 2022. 

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The proposed rule:

  1. Prohibits dealers from making certain misrepresentations in the sales process, enumerated in proposed § 463.3.  The list of prohibited misrepresentations includes misrepresentations regarding the “costs or terms of purchasing, financing, or leasing a vehicle” or “any costs, limitation, benefit, or any other Material aspect of an Add-on Product or Service.”
  • Includes new disclosure requirements regarding pricing, financing and add-on products and services.  Notably, the proposed rule would obligate dealers to disclose the offering price in many advertisements and communications with consumers.
  • Prohibits charges for add-on products and services that confer no benefit to the consumer and prohibits charges for items without “Express, Informed Consent” from the consumer (which, notably, as defined, excludes any “signed or initialed document, by itself”).  The proposed rule outlines a specific process for presenting charges for add-on products and services to the consumer, which obligates the dealer to disclose and offer to close the transaction for the “Cash Price without Optional Add-Ons” and obtain confirmation in writing that the consumer has rejected that price.
  • Imposes additional record-keeping requirements on the dealer, in order to demonstrate compliance with the rule.  The record-keeping requirements apply for a period of 24 months from the date the applicable record is created.

Continue Reading FTC Proposes Motor Vehicle Dealers Trade Regulation Rule

On July 14, 2022, the U.S. Department of Commerce (“Commerce”) issued a request for a range of additional factual information in connection with the agency’s ongoing circumvention inquiries into solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam that employ inputs from mainland China.[1]  The deadline to respond is July 21st.

In the July 14 memorandum, Commerce seeks information about the:  (1) amount of investment necessary to construct and start-up certain facilities, (2) non-financial barriers (e.g., access to inputs, qualified technical employees, technologies, research and development, etc.) that companies typically face to establish and begin certain operations, and (3) research and development (“R&D”) expenses associated with conducting certain operations.  These types of facilities/operations involved in:

  • refining silicon into solar-grade polysilicon,
  • producing ingots from solar-grade polysilicon,
  • producing wafers from solar-grade ingots,
  • producing solar cells from wafers,
  • producing solar modules from solar cells, and
  • the same operations and products as foreign producers and exporters responding to Commerce’s solar circumvention inquiries. 

Continue Reading Commerce Requests Factual Information in Solar Circumvention Inquiries on Level of Investment, Non-Financial Barriers, and Research and Development Expenses

 On 30 June 2022, the Council of the EU (the “Council”) and the European Parliament (the “Parliament”) reached a much awaited agreement on the proposal of the European Commission (the “Commission”) for the Regulation on foreign subsidies distorting the internal market (the “FSR”) (see our alert on the proposal). This political agreement swiftly concludes the trilogue discussions initiated in the beginning of May this year, after the Council (see our blog post) and the Parliament (see our blog post) each adopted their own positions. The agreement has been approved by the Permanent Representatives Committee (“COREPER”) of the Council on 13 July and the Committee on International Trade of the European Parliament on 14 July.

The FSR grants substantial new powers to the Commission and “will help close the regulatory gap whereby subsidies granted by non-EU governments currently go largely unchecked”, according to remarks from Executive Vice-President of the Commission, Margrethe Vestager. It will be deeply transformative for M&A and public procurement in the EU.

The agreement on the FSR did not lead to any major changes in the proposal made by the Commission. The most notable points of discussion between the Parliament and Council and the outcome of this agreement are:

  • The thresholds above which companies are obliged to inform the Commission about their foreign subsidies remain unchanged compared to the Commission’s proposal;
  • The time period in which the Commission has to investigate foreign subsidies in large public procurement has been reduced. In the same way, the retroactive application of the FSR has been limited to foreign subsidies granted in the five years prior to the application of the regulation;
  • The Commission will issue guidelines on the existence of a distortion, the balancing test and its power to request notification of non-notifiable transactions, at the latest three years after the entry into force of the FSR; and
  • A commitment to a multilateral approach to foreign subsidies above the FSR and the possibility for the Commission to engage in a dialogue with third countries has been included.

Continue Reading The Council of the EU and the European Parliament agree on the Foreign Subsidies Regulation

In late June, the European Council (leaders from the 27 EU Member States) granted Ukraine and Moldova the status of “candidate countries” for EU membership, and promised Georgia the same once it meets certain conditions. What are the practical consequences of this seminal decision?

In short, the process of preparing for membership in the European Union is fundamentally political and tailored to each specific country and historical moment. For instance, no country in the EU’s history had to simultaneously wage war to defend its homeland and independence while on the accession path. Although there are various precedents, accession criteria, pre-existing funding streams, and established processes, the scale, type, and duration of benefits available to Ukraine from the EU accession path will be unique. As important as the psychological boost to Ukraine from the EU’s political signal, the tangible benefits from Ukraine’s candidacy status will be invaluable.

Historical Precedents

Notwithstanding four earlier rounds of enlargement in the 1970s-1990s (Denmark, Ireland, UK, Greece, Portugal, Spain, Austria, Finland, and Sweden), significant EU pre-accession funding started with the enlargement process across Central and Eastern Europe (CEE) after the end of the Cold War. The first major program, PHARE (Poland and Hungary Assistance for Restructuring their Economies), launched in 1989 to cover these two countries and soon expanded to eight other candidate countries to prepare them for EU membership. It distributed about €16 billion between 1990 and 2006.  There were also two targeted funding programs for the environment and transport (ISPA) as well as agriculture (SAPARD), which distributed an additional €5 billion.Continue Reading Ukraine’s EU Accession Process