Federal Reserve Publishes Additional Detail on TALF

On Wednesday, May 20, 2020, the Board of Governors of the Federal Reserve System (the “Board”) announced further details on the Term Asset-Backed Securities Loan Facility (“TALF”).  The Board’s announcement contains key documents and forms, including the Master Loan and Security Agreement; updated FAQs and a blackline reflecting changes made against the version published on May 12, 2020; and an initial list of TALF Agents.

The announcement states that the first subscription date for TALF loans will be June 17, 2020, and that the first loan closing date will be June 25, 2020.  The updated FAQs require that sponsors or issuers of proposed asset-backed securities (“ABS”) for the TALF provide certain information to the Federal Reserve Bank of New York (“FRBNY”) at least three weeks in advance of the applicable subscription date.  The FAQs also note that there will be approximately two TALF loan subscription dates per month.

The updated FAQs contain extensive details on how the FRBNY will operate the TALF.  Among other new details and changes to the previous FAQs, the FAQs now:

  • Clarify that there is no unique regulatory capital treatment or relief for a depository institution or bank holding company holding ABS financed by a TALF loan;
  • Expressly state that the compensation, stock repurchase, and capital distribution restrictions in section 4003(c)(3)(A)(ii) of the CARES Act do not apply to the TALF;
  • Specify that only ABS tranches that are not junior to any other class of securities backed by the same pool of assets are eligible for TALF;
  • Require that ABS eligible collateral entitle their holders to payments of both principal and interest;
  • Add the new restriction that ABS issued or sponsored by entities that have received specific support in the form of Treasury direct loans, loan guarantees, or investments under section 4003(b)(1)-(3) of the CARES Act are not eligible for TALF (the Main Street Lending Program has a similar restriction such that applicants are not eligible for the Main Street Lending Program if they received specific support under section 4003(b)(1)-(3); there is no prohibition on an entity borrowing under the Main Street Lending Program and also serving as an issuer or sponsor of eligible ABS under TALF);
  • Describe how the FRBNY will review collateral for TALF eligibility, including that the FRBNY may reject ABS as collateral even if the ABS satisfy these eligibility standards;
  • Set the minimum TALF loan amount at $5 million; and
  • Provide significant detail on information and data requirements, certification and documentation requirements, the loan subscription and closing process, and a range of post-closing issues.

These updates follow the Board’s publication of a revised TALF term sheet and extensive FAQs on May 12, 2020 (see our blog post on this announcement).  The updates also come one day after Federal Reserve Chairman Powell and Treasury Secretary Mnuchin testified before the Senate Banking Committee on the Quarterly CARES Act Report to Congress.  During this testimony, Chairman Powell stated that he anticipates that the four not-yet-operational Federal Reserve liquidity facilities – the Main Street Lending Program, Municipal Liquidity Facility, Primary Market Corporate Credit Facility, and the TALF – would be operational by the end of May or early June 2020.

No new TALF loans will be made after September 30, 2020, unless the Board and Treasury Secretary extend the facility.

FEMA Continues to Push Defense Production Act Authority On Several Fronts

Two notices recently published in the Federal Register indicate the Federal Emergency Management Agency (“FEMA”) intends to exercise Defense Production Act (“DPA”) authority in novel ways during the current coronavirus pandemic.

On May 12th, FEMA announced that it plans to invoke DPA authority which permits the President to consult with representatives of industry, business, financing, agriculture, labor, and other interests in order to enter into voluntary agreements or plans of action to help provide for the national defense.The following day, FEMA published the Emergency Management Priorities and Allocations System (“EMPAS”) regulations governing FEMA’s use of DPA priorities and allocations authority — which, as we’ve previously covered on several occasions, permit the executive branch to require private companies to prioritize its orders and allocate resources in the private sector as needed to promote the national defense.  FEMA included a new concept of third-party rated orders in its version of DPA regulations.

The Coronavirus Voluntary Agreement

The first notice published last week announces FEMA’s intention to create a voluntary agreement with industry under Title VII of the DPA.  FEMA’s stated purpose “is to maximize the effectiveness of the distribution of critical health and medical resources nationwide to respond to pandemics in general, and COVID-19 specifically, by establishing unity of effort between agreement participants and the Federal Government for integrated coordination, planning, information sharing, and distribution of critical medical resources.”  FEMA envisions the agreement establishing “the terms, conditions, and procedures under which participants agree voluntarily to contribute and facilitate health and medical resource production and distribution capacity as requested by FEMA and other Federal Government entities.”

To begin, FEMA is planning to hold a tele-/web conference on May 21, 2020 at 2:00 – 3:30 p.m. EST (with potentially a second meeting on May 27).  The meeting will be open to the public, though FEMA notes attendees should register by May 20.  At the meeting, FEMA aims to identify agreement participants and gather technical advice on scope and substance for the draft agreement.

A key aspect of the DPA voluntary agreement authority that FEMA intends to use is the special legal defense parties entering into a DPA voluntary agreement are afforded if their actions within the scope of the agreement would otherwise violate antitrust or contract laws.  This protection extends to both federal and state laws for “any action taken to develop or carry out any [DPA] voluntary agreement” provided the party complied with the DPA and the terms of the voluntary agreement itself.

The only currently-established DPA voluntary agreements are Department of Transportation-managed agreements targeted at ensuring the maritime industry can respond to rapid mobilization, deployment, and transportation requirements if DOD requires.  For these programs, voluntary participants from the maritime industry are solicited to join annually.  Historically, the voluntary agreement authority has also been used to enable companies to cooperate on weapons manufacture — for example, with respect to production processes or standardizing design specifications.

In comparison to the maritime DPA voluntary agreement, the Civilian Reserve Air Fleet (“CRAF”) program is also managed by the Department of Transportation and allocates civilian aircraft for potential use, if required, by DOD to augment its airlift capability if needed.  Although CRAF is established using the DPA allocation authority rather than the voluntary agreement authority, civilian carriers are given preference in carrying commercial peacetime cargo and passenger traffic for DOD in return for their participation in CRAF.

Emergency Management Priorities and Allocations System

The second publication last week sets out FEMA’s new EMPAS regulations governing their use of DPA prioritizations and allocations authority with respect to coronavirus response.  These regulations follow the President’s delegation to FEMA of certain DPA authority related to the coronavirus response in an April executive order.

The EMPAS will be codified at 44 C.F.R. Part 333 as part of the Federal Priorities and Allocations System (“FPAS”) — the set of regulations promulgated by the various executive agencies to exercise DPA authority that has been delegated by the President in executive orders over the years.  This set of regulations already includes the Defense Priorities and Allocations System (“DPAS”), the Health Resources Priorities and Allocations System (“HPAS”), the Agriculture Priorities and Allocations System (“APAS”), the Energy Priorities and Allocations System (“EPAS”), and the Transportation Priorities and Allocations System (“TPAS”).

Two aspects of the EMPAS in particular seem to potentially give insight into FEMA’s future planned use of the DPA authorities.

First, the decision to publish a separate set of regulations in the EMPAS, rather than use other FPAS regulations, may indicate that FEMA intends to exercise its coronavirus-specific authority over an extended period of time, or may expect this authority to eventually be extended to more general emergency preparedness activities.  After all, FEMA already possesses subdelegated authority to use both DPAS and APAS, and DPAS in particular is quite broad in terms of coverage.  FEMA also expressly noted that it intends for the regulations to cover more than the agency’s COVID-19 response to ensure that the regulations can immediately be used in the event that its DPA authority is increased in the future.  In any event, the new regulations should enhance predictability, and appear to be patterned closely after the other sets of FPAS regulations — which was to be expected, given that each set of already-established regulations are similar.

Second, in comparison to other FPAS regulations (such as DPAS or HPAS), FEMA has included several new references to “rated orders placed by FEMA or a Delegate Agency to facilitate sales to third parties.”  This may be intended to reference to contracts placed in support of hospitals or other health entities, or it might be a more general reference to the overarching distributor-style role FEMA and the executive branch has seemed to play during the COVID-19 crisis with respect to PPE, ventilators, and potential treatments.  This could also potentially be viewed as FEMA setting up the possibility of issuing a type of hybrid rated order/allocation action.  Taking this approach could potentially allow FEMA to relieve certain restrictions that generally apply to allocation actions, including equitable distribution and rationing restrictions, and FEMA appears to intend to disclaim any liability associated with the third-party transactions that it facilitates.

FEMA indicated that it plans to issue additional guidance in the future on which agencies and programs will be eligible to use the new authorities created by the EMPAS.

The Week Ahead in the European Parliament –  Friday, May 15, 2020


Due to Ascension Day, next week will be brief in the European Parliament.  A limited number of Members of the European Parliament (“MEPs”) will gather in Brussels for committee meetings.  Several interesting debates and hearings are scheduled to take place.

On Monday, Internal Market Commissioner Breton will appear in front of the Parliament’s Committee on the Internal Market and Consumer Protection (“IMCO”) to exchange views with MEPs on a EU-level coordination for lifting national coronavirus containment measures.  Commissioner Breton has emerged as one of the Commission’s public faces fighting the pandemic.  He frequently visits the Parliament to debate policy with MEPs and is involved in many of the high level dossiers.  On April 15, 2020, the European Commission and Council of the EU published a joint roadmap with a path towards common lifting of containment measures.  The roadmap recommends a gradual or phased approach and replace general measures with targeted measures for vulnerable groups.  The roadmap also urged EU Member States to open internal borders and avoid obstructing the functioning of the EU internal market.  Previously, Commissioner Breton has also been active with initiatives to facilitate contact tracing of COVID-19 and has called on big tech companies to assist with data analytics.

On the same day, the Committee on Economic and Monetary Affairs (“ECON”) will debate targeted draft amendments to the Capital Requirement Regulation (“CRR”).  The measures concern, inter alia, adapting the timeline of the application of international accounting standards and the leverage ratio buffer.  Also, the draft amendments seek to have public guarantees treated more favourably during the crisis, and to change the methodology for excluding particular exposures from the leverage ratio.  The amendments were part of the “Banking Package” that the European Commission announced on April 28, 2020, to facilitate bank lending to mitigate the economic impact of the COVID-19 pandemic.  ECON will vote on the amendments on Wednesday.  The plenary session of the Parliament and the Council of the EU will then have to adopt the proposal as well.  The proposal is available here.

Also on Monday, MEPs of the Committee on Public Health and Food Safety (“ENVI”) will be briefed by Professor Guido Rasi, Executive Director of the European Medicines Agency (“EMA”) on EMA’s activities in response to COVID-19.  In particular, Professor Rasi will touch on the agency’s objective of expediting the development and approval of safe and effective treatments and vaccines to COVID-19.  In addition, he will explain how EMA is supporting the availability of medicines in the EU.

 Meetings and Agenda

Monday, May 18, 2020

Committee on the Environment, Public Health and Food Safety

09:30  – 10:30

  • Exchange of views with Guido RASI, Executive Director of European Medicines Agency (EMA), on EMA activities on COVID-19 and prospects for the future

Committee on the Internal Market and Consumer Protection

14:00 – 16:00


  • Exchange of views with Thierry BRETON, Commissioner for Internal Market, on the EU Exit Strategy

Committee on Fisheries

14:30 – 18:30

  • Multiannual management plan for bluefin tuna in the eastern Atlantic and the Mediterranean, amending Regulations (EU) No 2017/2107, (EU) No 2019/[NAFO], (EU) No 1936/2001, and repealing Regulation (EU) No 2016/1627 (COD) – Consideration of draft report
    • Rapporteur: Giuseppe FERRANDINO (S&D, IT)
  • The sustainable Fisheries Partnership Agreement and its Implementing Protocol (2020-2026) between the European Union and the Republic of Seychelles (NLE) – Consideration of draft recommendation (consent) (to be confirmed)
    • Rapporteur: Caroline ROOSE (Verts/ALE, FR)

Committee on Civil Liberties, Justice and Home Affairs

10:00 – 16:00

Votes (10:05-10:45)

  • Situation in the Schengen area following the Covid-19 outbreak – adoption of questions for oral answer to the Commission and Council


  • EASO operational support to Member States in the context of the Covid-19 pandemic, notably in Greece – presentation by Nina GREGORI, Executive Director of EASO (10.45-12.00)
  • Europol’s work in combatting Covid-19 pandemic-induced criminal behaviour = presentation by Catherine DE BOLLE, Executive Director, Europol (14.00 – 15.30)

Committee on Economic and Monetary Affairs

17:00 – 18:45


  • Amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards adjustments in response to the COVID-19 pandemic
  • Recommendations on the negotiations for a new partnership with the United Kingdom of Great Britain and Northern Ireland
    • Rapporteur: Silva Pereira Pedro (S&D, ES)

Tuesday, May 19, 2020

Committee on Foreign Affairs

09:00 – 18:30


  • European Parliament recommendation to the Council, the Commission and the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy on the Eastern Partnership, in the run-up to the June 2020 Summit (2019/2209(INI)), Rapporteur: Petras Auštrevičius (Renew, LT) (9.00 – 11.00) (Announcement of the result of the votes at 16.30).


  • Annual implementing report on the EU association agreement with Georgia (2019/2200(INI) (9.30 – 11.00)
    • Rapporteur: Sven MIKSER (S&D, ET)
  • Exchange of views with Olivér Várhelyi, Commissioner for Neighbourhood and Enlargement, on the Eastern Partnership policy, on COVID-19 related EU support in the Neighbourhood, and Turkey, and on the future external financing instruments (16.30 – 18.30)

Committee on Industry, Research and Energy


Remote vote open until 16.30

  • An EU legal framework to halt and reverse EU-driven global deforestation (INL) – Vote on draft opinion by Delara BURKHARDT (S&D, DE)
    • Rapporteur: Mauri PEKKARINEN (Renew, FI)
  • The European Forest Strategy – The Way Forward (INI) Vote on a draft opinion by Petri SARVAMAA (EPP, FI)
    • Rapporteur: Mauri PEKKARINEN (Renew, FI)
  • The EU’s role in protecting and restoring the world’s forests (INI) – Vote on a draft opinion by Stanislav POLČÁK (EPP, CZ)
    • Rapporteur: Mauri PEKKARINEN (Renew, FI) 

Results of the vote will be communicated to Members in writing and the final votes will take place during the next ITRE committee meeting of 28 May 2020.

  • Exchange of views with Kadri SIMSON, Commissioner for Energy, on energy-related aspects of European recovery after COVID-19 (14.30-16.00)

Committee on Petitions

10:00 – 12:00

  • Petition by a Spanish citizen on the management of cancelled flights and trips by airline carriers and travel agencies during the COVID-19 outbreak
  • Petition by an Italian citizen on the exemption of VAT for goods and services donated in the fight against and management of the pandemic (in the presence of the petitioner by remote connection)
  • Petition by a Luxemburgish citizen on defending the rights of people with intellectual disabilities and their families in times of COVID-19 emergency (in the presence of the petitioner by remote connection)

Wednesday, May 20, 2020 

Committee on the Internal Market and Consumer Protection

13:45 – 18:45


  • Exchange of views with Paolo GENTILONI, Commissioner for Economy – on the EU response to the COVID-19 outbreak

Committee on Agriculture and Rural Development

15:00 – 18:30

  • B.D.

Committee on Economic and Monetary Affairs

13:00 – 14:00


  • Amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards adjustments in response to the COVID-19 pandemic

Thursday, May 21, 2020

  • No meetings of note

Friday, May 22, 2020 

  • No meetings of note

The PPP Economic Necessity Certification: SBA Provides Additional Guidance

On May 13, 2020, the Small Business Administration (“SBA”) released two FAQs, numbers 46 and 47, regarding two safe harbors from an SBA inquiry into a borrower’s statutorily required certification of economic necessity for a loan under the Paycheck Protection Program  (“PPP”).  FAQ 46 states that the SBA will deem any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million to have made the required certification in good faith.  FAQ 47 relates to an existing safe harbor for PPP loans repaid by a specific date; the FAQ extends the deadline from May 14, 2020, to Monday, May 18, 2020.  Accompanying the FAQs was an interim final rule that memorialized an earlier FAQ (number 43) that had set the repayment deadline of May 14.

The net effect of the FAQs is that a borrower that, with its affiliates, has PPP loans of more than $2 million must decide whether to repay the loan by May 18, or to undergo SBA’s review of the good-faith basis for the certification of economic necessity when the borrower’s loan forgiveness application is filed.  The SBA has outlined the nature of its review in only general terms.  Borrowers with PPP loans of $2 million or less are generally safe from such a review.

The safe harbors relate to the requirement in Section 1102(a) of the CARES Act that an applicant for a PPP loan certify “that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing obligations” of the applicant.  This certification has been the basis for criticism by, among others, the Secretary of the Treasury that successful applicants for large amounts of PPP loans may have had access to liquidity elsewhere and thus would have lacked a good-faith basis for the economic necessity certification.  On April 23, 2020, in FAQ 31, the SBA addressed whether businesses owned by large companies with adequate sources of liquidity qualified for PPP loans and created a safe harbor from SBA inquiry for all companies that repaid their PPP loans by May 7, 2020.  On April 28, 2020, in FAQ 37, the SBA extended this standard to businesses owned by private companies with adequate sources of liquidity.  On April 29, 2020, in FAQ 39, the SBA announced that it would review all PPP loans of more than $2 million upon submission of loan forgiveness applications.  On May 5, 2020, in FAQ 43, the SBA extended the repayment deadline from May 7 to May 14, observing that it intended to provide additional guidance before then on how it would review the good-faith basis for the economic necessity certification.

With FAQ 46, a borrower and its affiliates with PPP loans of less than $2 million in total will be deemed to make their certifications in good faith, but still may be subject to audit for other eligibility issues and could face investigations from other agencies for certifications that are clearly not plausible.  A borrower and its affiliates that collectively have more than $2 million in PPP loans are outside this safe harbor and must decide whether to take advantage of the first safe harbor by repaying the PPP loans by May 18 or to prepare for SBA review when a PPP loan forgiveness application is filed.  Such a borrower should be prepared to show “an adequate basis for the economic necessity certification, based on … individual circumstances in light of the language of the certification and SBA guidance.”  A source of such guidance is FAQ 31, which advises that, in order to make a good-faith certification, a borrower must take into account its current business activity and its ability to access other sources of liquidity sufficient to support its ongoing operations in a manner that is not significantly detrimental to the business.  FAQ 31 goes on to observe that it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification and should be prepared to demonstrate the basis for the certification to the SBA.

Borrowers of larger loans that decide to proceed will not face further enforcement action or criminal referrals from the SBA if the SBA disagrees with the borrower’s position on the certification during an audit, provided that the borrower repays the loan after the SBA makes this determination.  However, as with respect to the safe harbor for affiliate groups with loans collectively valued at less than $2 million, the SBA’s position will not necessarily govern investigations or enforcement actions from other agencies like DOJ, qui tam plaintiffs under the False Claims Act, or congressional inquiries.

For additional analysis on considerations for whether to return a PPP loan, see our colleagues’ post here.

House Leaders Push Ahead with Proposal for Virtual Oversight

Last month, we highlighted congressional efforts to ensure that Congress is able to continue conducting the business of the American people during the ongoing COVID-19 crisis. After weeks of halting progress, those efforts took an important step forward this morning with the release of a proposed resolution that would temporarily modify the House rules to enable remote action both on the House floor and in House committees. The proposed resolution, which is expected to be considered by the House Rules Committee tomorrow morning, would have immediate implications for new and ongoing oversight investigations in the House.

As we explored in our previous post, current House and Senate rules require committee meetings to be open to the public and impose in-person quorum requirements for formal committee action. These rules have complicated efforts to conduct oversight virtually, with initial efforts to conduct so-called “paper hearings” scuttled after the Senate Rules Committee advised that such procedures did not qualify as official hearings under the Senate rules.

In April, House Democrats put forward a proposal that would have amended the House rules to loosen these requirements for in-person participation in official committee action and provide a path forward for oversight investigations—both old and new. The original Democratic proposal would have authorized the Speaker to permit Members to cast floor votes by proxy upon receiving a formal notification from the House Sergeant-at-Arms that a “pandemic emergency is in effect.” In addition to enabling remote floor action, the resolution would have provided new authorities for House committees to conduct official business virtually during any period in which proxy voting is permitted.

In response to GOP opposition, Speaker Pelosi abruptly paused consideration of the Democratic proposal soon after its release and formed a task force to study the issue and come forward with consensus recommendations. The resolution introduced today is the byproduct of those discussions.

Overall, the new resolution narrows the scope of the original proposal in certain respects. Under the new proposal, the Speaker would be authorized to permit proxy voting only upon a formal notification from the House Sergeant-at-Arms that a “a public health emergency due to a novel coronavirus is in effect.” Likewise, whereas an order permitting proxy voting would have automatically expired after 60 days under the original resolution, that period is now reduced to 45 days. On the other hand, the new resolution would go further by designing a process to permit actual remote voting (i.e., as opposed to voting by proxy). Remote voting would be permitted upon certification by the Committee on Administration that “operable and secure technology exists” to enable such voting, among other prerequisites.

Beyond these broader changes, however, the new rules governing remote committee hearings are largely unchanged. Specifically, the resolution would allow House committees to “conduct proceedings remotely” and provides that such proceedings are “considered as official proceedings for all purposes in the House.” Committees conducting hearings would be required to ensure that Members are able to participate virtually “to the greatest extent practicable,” with those Members counted for the purpose of establishing a quorum. The resolution also includes language harmonizing any temporary virtual procedures with existing committee rules. Most notably, committee chairs would be authorized to “issue subpoenas for return at a hearing or deposition to be conducted remotely.” Likewise, the resolution would allow for witnesses to be placed under oath remotely and provides that witnesses may be accompanied by legal counsel when offering testimony.

The resolution does not designate a particular technology that committees must use to take testimony virtually, but the Rules Committee has advised that the Committee on Administration must approve the technology chosen. Further, the Committee on House Administration is tasked with studying the feasibility of differing technologies, to assess the security and usability of any technologies used for remote committee proceedings. Finally, the resolution specifically provides for the technical challenges that will surely arise as Congress adapts to unfamiliar virtual solutions, allowing Committee chairs to “declare a recess subject to the call of the chair at any time to address technical difficulties with respect to such proceedings.”

While these proposed procedures are designed to allow the House to continue to operate in the immediate future, House Rules Committee Chairman James McGovern has emphasized that these are temporary solutions. Whether Senate leaders will follow their House colleagues in embracing virtual committee action remains uncertain. As before, Covington’s congressional investigations team continues to monitor these developments closely and advise clients on the impacts of any procedural changes on ongoing and future congressional oversight inquiries.

Federal Reserve Announces Further Details on TALF

On Tuesday, May 12, 2020, the Board of Governors of the Federal Reserve System (the “Board”) announced additional details regarding the Term Asset-Backed Securities Loan Facility (“TALF”).  The TALF is a financial crisis-era liquidity facility designed to help meet the credit needs of consumers and businesses by facilitating the issuance of asset-backed securities (“ABS”).

The Board’s announcement contains a revised term sheet and extensive FAQs, which describe how the Federal Reserve Bank of New York will operate the TALF.  We have prepared a blackline of this term sheet against the previous TALF term sheet published on April 9, 2020.  The term sheet and FAQs, along with a to-be-published Master Loan and Security Agreement, will constitute the terms and conditions applicable to each TALF loan.  The FAQs cover borrower eligibility, eligible ABS, eligible underlying assets for ABS, master trust requirements, credit ratings, and haircuts for ABS collateral, among other topics.  The FAQs also note that ABS whose underlying assets are Small Business Administration loans originated under the Paycheck Protection Program will be eligible for the TALF.

In addition, the Board’s announcement describes the information that it will disclose on a monthly basis regarding the TALF and the Paycheck Protection Program Liquidity Facility (“PPPLF”).  This information will include the names of TALF and PPPLF borrowers and other participants, amounts borrowed, interest rate charged, and value of collateral pledged, among other details about individual participants and the program generally.  The disclosure will identify each borrower’s “material investors,” defined as any person directly or indirectly owning 10% or more of any class of securities in the entity.

These updates follow the Board’s re-establishment of the TALF on March 23, 2020.  The Board published an initial term sheet then and a revised term sheet on April 9, 2020.  The Board accepted comments on the TALF through April 16, 2020.  (See here for our client alert on the Board’s initial establishment of the TALF and other credit facilities.)

The announcement comes on the same day that Board Vice Chair for Supervision Quarles testified before the Senate Banking Committee and that the Federal Reserve Bank of New York (“FRBNY”), which also will administer the TALF, announced that the Secondary Market Corporate Credit Facility has begun purchasing exchange-traded funds.  The FRBNY has not provided a launch date for the TALF.

The Week Ahead in the European Parliament –  Friday, May 8, 2020


Next week, many Members of the European Parliament (“MEPs”) will gather in Brussels for committee meetings and plenary sessions.  Due to lockdown measures in many EU Member States, not all MEPs will be attending these sessions.  Nevertheless, appropriate measures will be taken so that business can proceed as usual as much as possible.  For example, MEPs will be able to vote by e-mail.  However, if they want to contribute to debates, MEPs would only be allowed to do so by being physically present in Brussels.

Interesting votes and debates are scheduled to take place next week.

On Tuesday, the Committee on Transport and Tourism (“TRANS”) will hold an exchange of views with Commission Vice-President Frans Timmermans on the future of the transport sector in the framework of the European Green Deal.  The Commission has committed itself to putting the European Green Deal at the center of the EU’s recovery strategy after COVID-19.  Critically, during an exchange of views with the Committee on Industry, Research, and Energy (“ITRE”) on “European SMEs and industrial recovery post COVID-19” on May 8, 2020, Vice-President Timmermans stressed that this means that airlines should contribute more to climate action, possibly in the form of a tax on kerosene.  This exchange of views will likely offer more insight.

On Thursday, during a plenary session, MEPs will debate on an economic recovery package for the EU after COVID-19.  Wide-ranging disagreement exists among the political groups on whether the recovery fund should provide loans to Member States or whether the financial aid should take the form of grants; there is also a disagreement on the criteria according to which these funds should be distributed.  Another critical topic the MEPs will debate in this context is the EU’s strategic autonomy.  On March 25, 2020, the European Commission issued guidance regarding the use of foreign direct investment screening powers during the COVID-19 pandemic to secure critical health infrastructure and secure supply of critical inputs (e.g., certain drugs or medical equipment) – see Covington blog posts on these developments here and here.  The political groups have strongly diverging interpretations of “strategic autonomy” and to what extent the EU should try to re-shore manufacturing and production of critical inputs, in particular in the pharmaceutical and medical sectors.

 Meetings and Agenda

Monday, May 11, 2020

Committee on Budgets

17:00 – 18:00

  • Estimates of revenue and expenditure for the financial year 2021 – Section I – European Parliament BUD) – Adoption of draft report
    • Rapporteur: Olivier CHASTEL (Renew, BE)

Committee on the Environment, Public Health and Food Safety

14:00 – 16:00


  • Exchange of views with Ms Adina VĂLEAN, Commissioner for Transport, on sustainable mobility post COVID-19 and developments related to CORSIA
  • Exchange of views with the Commission on their activities related to the development of COVID-19 vaccines and treatments

Committee on Transport and Tourism

14:00 – 16:00

  • Exchange of views with Vice-President Frans Timmermans on the future of transport sector in the framework of the Green Deal
  • COVID-19 relief measures related to transport: Presentation of recent proposals by the European Commission

Tuesday, May 12, 2020

Committee on the Environment, Public Health and Food Safety

14:00 – 16:00


  • Exchange of views with Mr Virginijus SINKEVIČIUS, Commissioner for Environment, Oceans and Fisheries – Presentation of the Circular Economy Action Plan and on the Biodiversity Strategy for 2030
  • Exchange of views with Guido RASI, Executive Director of European Medicines Agency (EMA), on EMA activities on COVID-19 and prospects for the future.

Committee on Regional Development

14:00 – 16:00


  • Recommendations on the negotiations for a new partnership with the United Kingdom of Great Britain and Northern Ireland (INI) – Adoption of draft opinion
    • Rapporteur: Pascal ARIMONT (EPP, BE)
  • Establishing the Just Transition Fund (COD) – Consideration of draft report
    • Rapporteur: Manolis Kefalogiannis (EPP, EL)

Committee on Legal Affairs

09:00 – 11:00


Artificial Intelligence (AI)

  • Framework of ethical aspects of artificial intelligence, robotics and related technologies (INL)
    • Rapporteur: Ibán GARCÍA DEL BLANCO (S&D, ES)
  • Civil liability regime for artificial intelligence (INL)
    • Rapporteur: Axel VOSS (EPP, DE)
  • Intellectual property rights for the development of artificial intelligence technologies (INI)
    • Rapporteur: Stéphane SÉJOURNÉ (Renew, FR)
  • AI: questions of interpretation and application of international law in so far as the EU is affected in the areas of civil and military uses and of state authority outside the scope of criminal justice (INI)
    • Rapporteur: Gilles LEBRETON (ID, FR)

Committee on Civil Liberties, Justice and Home Affairs

10:00 – 12:00


  • Internal border controls within the Schengen area – exchange of views with Terezija GRAS, State Secretary for European and International Affairs, Ministry of the Interior, Croatian Presidency and Monique PARIAT, Director-General, DG HOME, European Commission (10.00 – 11.30)
    • Rapporteur: Tanja FAJON (S&D, SI)
  • Community statistics on migration and international protection (COD) – consideration of draft recommendation for second reading (11.30 – 12.00)
    • Rapporteur: Jan-Christoph OETJEN (Renew, DE)

Wednesday, May 13, 2020

Plenary Session

15:00 – 21:00

Resumption of session and order of business


First voting session

15:30 – 16:30

  • Remark: votes will be distributed along the different voting sessions depending on the number of amendments
  • Votes on requests for urgent procedure (Rule 163)
  • Macro-financial assistance to enlargement and neighbourhood partners in the context of the Covid-19 pandemic crisis
  • Temporary measures concerning the general meetings of European companies (SE) and of European Cooperative Societies (SCE)
  • Possible other requests for urgent procedures
    • Single votes
  • EU-Montenegro status agreement on actions carried out by the European Border and Coast Guard Agency in Montenegro
    • Rapporteur: Bettina VOLLATH (ALDE, AT)
  • EU-Serbia status agreement on actions carried out by the European Border and Coast Guard Agency in Serbia
    • Rapporteur: Bettina VOLLATH (ALDE, AT)
  • Renewal of the EU-India Agreement for scientific and technological cooperation
    • Rapporteur: Cristian-Silviu Buşoi (EPP, RO)
  • Renewal of the EU-Ukraine Agreement on cooperation in science and technology
    • Rapporteur: Cristian-Silviu Buşoi (EPP, RO)
  • EU-Belarus Agreement on readmission of persons residing without authorisation
    • Rapporteur: Petar VITANOV (ALDE, BU)
  • EU-Belarus Agreement on facilitation of issuance of visas
    • Rapporteur: Ondřej Kovařík (Renew, CZ)
  • Amending the International Convention for the Conservation of Atlantic Tunas (ICCAT) – Protocol
    • Rapporteur: Rosanna CONTE (ID, IT)
  • EC-Mauritania Fisheries Partnership Agreement: fishing opportunities and financial contribution. Extension of the Protocol
    • Rapporteur:: Clara AGUILERA (ALDE, ES)

Reports where no amendments are tabled

  • A safety net to protect the beneficiaries of EU programmes: setting up an MFF contingency plan
    • Rapporteurs: Margarida MARQUES (ALDE, PT) & Jan OLBRYCHT (EPP, PL)
  • International road passenger transport services by coach and bus in the border regions: cabotage operations between Germany and Switzerland
    • Rapporteur: Markus FERBER (EPP, DE)
  • International road passenger transport services by coach and bus in the border regions: cabotage operations between Italy and Switzerland
    • Rapporteur: Markus FERBER (EPP, DE)

Possible other reports and objections where no amendments are tabled

  • Labelling of tyres: fuel efficiency and other essential parameters
    • Rapporteur: Henna VIRKKUNEN (EPP, FI)
  • Minimum requirements for water reuse
    • Rapporteur: Simona BONAFÈ (ALDE, IT)
  • Objection pursuant to Rule 112: Genetically modified soybean MON 87708 × MON 89788 × A5547-127
  • Objection pursuant to Rule 112(2) and (3) and (4)(c) : Maximum residue levels for several substances including flonicamid, haloxyfop and mandestrobin
  • Report on discharge in respect of the implementation of the budget of the European Union agencies for the financial year 2018: performance, financial management and control
    • Rapporteur: Ryszard Czarnecki (ECRG, PL)


16:00 – 19:00

  • Council and Commission Statements: MFF, Own Resources, and Recovery Plan.

Announcement of results

Second voting session

20:00 – 21:00

  • Discharge resolutions where no amendments are tabled
  • First batch of amendments to discharge resolutions
  • Possible amendments to other reports
  • Parliament’s estimates of revenue and expenditure for the financial year 2021
  • Automated data exchange with regard to dactyloscopic data in the United Kingdom

Thursday, May 14, 2020

Plenary session

First voting session

09:30 – 10:30

  • Second batch of amendments to discharge resolutions


10:00 – 12:00

  • 70th anniversary of the Schuman Declaration
  • Use of contact tracing apps in the fight against the coronavirus

Announcement of results


Second voting session

13:30 – 14:30

Third batch of amendments to discharge resolutions OR Final vote of discharge resolutions where amendments are tabled

Final votes

  • Parliament’s estimates of revenue and expenditure for the financial year 2021
  • Automated data exchange with regard to dactyloscopic data in the United Kingdom


14:30 – 15:30

  • Vaccines and therapeutics in the context of Covid-19

Announcement of results

Third voting session

17:30 – 18:30

  • Joint Motion for a Resolution on MFF, Own Resources, and Recovery Plan

Saturday, May 16, 2020

Plenary session

(Possibly) Announcement of results


CISA Information and Communications Technology Supply Chain Risk Management Task Force Releases New Guidance on Security Resiliency

On May 5, 2020 the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency’s (“CISA”) Information and Communications Technology (“ICT”) Supply Chain Risk Management (“SCRM”) Task Force (the “Task Force”) released a six-step guide for organizations to start implementing organizational SCRM practices to improve their overall security resilience.  The Task Force also released a revised fact sheet to further raise awareness about ICT supply chain risk.

As we discussed in a prior blog post on the Task Force’s efforts, the Task Force was established in 2018 with representatives from 17 different defense and civilian agencies, as well as industry representatives across the information technology and communications sectors.  The Task Force has been focused on assessing and protecting security vulnerabilities in government supply chains.  Since its founding, the Task Force has inventoried existing SCRM efforts across the government and industry, including some of the practices reflected in the guide.

The six step guide (key points from which are described in the table below) captures the basic blocking and tackling that companies should consider when establishing their SCRM processes and procedures. Continue Reading

European Union Justice Commissioner Commits to Regulation on Corporate Human Rights and Environmental Due Diligence

“Businesses that have better risk mitigation processes across their supply chains cause less harm to people… Good environmental, social, and governance practices pay off… We need to make sure that responsible business conduct and sustainable supply chains become the norm.”
EU Commissioner for Justice, Didier Reynders, April 29, 2020

On April 29, 2020, in a webinar hosted by the European Parliament’s Responsible Business Conduct Working Group, EU Commissioner for Justice Didier Reynders announced that the European Commission (the “Commission”) will move swiftly to introduce regulation on mandatory human rights and environmental due diligence for companies, with its legislative proposal to the European Parliament and Council expected in the first quarter of next year.

In this alert, we provide an overview of the comments and commitments made by Commissioner Reynders against the backdrop of the recently published Study on Due Diligence Requirements Through the Supply Chain (the “Study”), which considered possible EU-wide regulatory interventions relating to human rights and environmental due diligence, and which provides the impetus for the Commissioner’s announcement.

Consultations to inform the Commission’s legislative proposal are expected to start in the coming weeks, so we also set out some initial factors that commercial organizations operating in the European Union may want to consider as they seek to engage with this policy process.

  1. Background: the Study

Commissioner Reynders’s presentation centered around the findings of the Study, which was published in late February and conducted by an expert panel that included representatives of the British Institute of International and Comparative Law, the London School of Economics and Political Science, and Civic Consulting, a public policy consultancy.

The Study involved: (i) a detailed examination of existing regulations and proposals for supply chain due diligence requirements, as well as market practices; (ii) the development of four general options for regulatory interventions at the EU level; and (iii) an assessment of the potential impact of these four options, based also on stakeholders’ perceptions of the different regulatory interventions.

In high-level terms, the Study identified and evaluated the following four options:

Option 1—No EU level policy change: This option would not involve any harmonized EU level regulatory intervention. The Study indicates that this option would be likely to result in a “patchwork” of due diligence expectations across the EU, as there are pending proposals or campaigns for mandatory human rights and environmental due diligence laws in 13 European countries, of which 11 are EU Member States. Continue Reading

Emergency Contracting During COVID-19: A Guide to FAR Part 18

The government’s response to the coronavirus pandemic implicates a host of authorities of interest to contractors, from those under the Stafford Act to its recently invoked Defense Production Act powers.  The government has another critical, and perhaps under-examined, set of tools at its disposal to meet the demands of the pandemic:  FAR Part 18, “Emergency Acquisitions,” catalogues authorities that give the government greater ability to acquire goods in a streamlined, accelerated manner.  Contractors should take note of FAR Part 18 given the government’s urgent needs for COVID-19 related supplies and services.FAR Part 18 is divided into two main sections.  The first, Subpart 18.1, catalogues a number of acquisition flexibilities that are generally available to the government if specified conditions are met.  While the below is not exhaustive, some of the key provisions include:

  • Waiver of SAM registration requirement. Contractors are not required to register in the System for Award Management (“SAM”) at the time they submit offers provided that certain circumstances are met.  This registration requirement is not waived, however, for contractors seeking to gain access to the Disaster Response Registry.  See FAR 4.1102; FAR 6.302-2.
  • Waiver of full and open competition. Agencies are not required to provide full and open competition for “contracting actions involving urgent requirements.”  See FAR 6.302-2.
  • Non-enforcement of qualification requirements. Agencies may decline to enforce certain qualification requirements during an emergency in accordance with FAR 9.206-1.
  • Single source solicitation. Contracting officers can solicit from a single source for purchases under the simplified acquisition threshold, see FAR 13.106-1, and, as discussed below, those thresholds are increased in response to declarations of emergency or major disaster.
  • Patents. Agencies may waive the requirement to obtain authorization prior to use of patented technology in circumstances of extreme urgency or national emergency.  See FAR 27.204-1.
  • Assignment of Claims. A no-setoff provision may be included in contracts to facilitate national defense in the event of an emergency.  See FAR 32.803(d).
  • Bid Protest Override Procedures. Under “urgent and compelling circumstances,” agencies can allow a contract award or contract performance to continue even after GAO receives a pre-award or post-award bid protest.  See FAR 33.104(b) & (c).  Likewise — although not expressly mentioned in FAR Part 18 — when “[c]ontract performance will be in the best interests of the United States,” agencies can allow contract performance to continue even after a post-award protest.  See FAR 33.104(c).

The second half of FAR Part 18 describes additional acquisition flexibilities that become available when there is “an emergency declaration, or a major disaster declaration” among other occurrences.  See FAR 18.001(a)-(d).  The FAR defines those declarations as declarations by the President pursuant to the Stafford Act, see FAR 2.101, and the President issued such a declaration on March 13.

That declaration triggers the availability of a few provisions particularly relevant to COVID-19 contractors.  FAR 18.202 raises the simplified acquisition limit to $750,000, and also raises the limit for use of FAR Part 13 simplified acquisition procedures for commercial items to $13 million.  These increased limits allow agencies to streamline affected procurements — and to make greater use of single-source procurements.  See FAR 13.106-1; FAR 13.501.  In addition, FAR 18.203 provides that in the event of a declaration under the Stafford Act, “[p]reference will be given to local businesses, firms, and individuals when contracting for major disaster or emergency assistance activities. . . .”

Some agencies have already begun invoking the emergency acquisition flexibilities at FAR Part 18 in response to COVID-19.  On March 15, the Department of Veterans Affairs issued a memorandum that authorizes contracting officers to raise acquisition thresholds to their respective upper limits in order to “expedite the delivery of critical goods and services.”  And on March 31, the Department of Defense issued a memorandum with an attachment from the Defense Contract Management Agency that makes commercial-item determinations for critical coronavirus-related supplies and encourages contracting officers to review FAR Part 18 for applicable emergency flexibilities.

It is likely that other federal agencies will similarly exercise authorities under FAR Part 18, and that companies competing for federal business will see an increased use of these procedures in the weeks and months ahead.