GT Legal Food Talk Episode 26: Crossing Borders – Regulation of Food in the United States and Canada with Stikeman’s Sara Zborovski [Podcast]
In this episode of Legal Food Talk, host Justin Prochnow welcomes Sara Zborovski, one of his attorney counterparts from Canada with Stikeman Elliott to discuss the outlook on food regulation in 2025 for the United States and Canada.
Like a baseball or hockey game played between teams from Canada and the United States, they stand at attention while both national anthems play, discussing some of the potential political implications on food regulation in 2025, including a new administration in the United States and Justin Trudeau’s recent actions to prorogue Parliament in Canada.
They then discuss the wave of FDA guidance issues by the FDA at the end of 2024 and the start of 2025, including FDA’s revised definition of “healthy,” the removal of coconut as a food allergen, new action levels for lead in food intended for infants and children, and the proper naming of plant-based food alternatives.
This episode is a shining example of international cooperation and the best collaboration between the United States and Canada since Canadian bacon and pineapple!
SEC’s Latest Complaint Against Elon Musk Spawns Questions About The Politics Of SEC Enforcement
Earlier this week, the Securities and Exchange Commission filed a civil complaint in the U.S. District Court for the District of Columbia. The complaint alleges that Mr. Musk in acquiring shares of Twitter failed to file a required beneficial ownership report within the time then prescribed in Exchange Act Section 13(d) and Rule 13d-1. The SEC is seeking, among other things, disgorgement and a civil penalty. According to the SEC, Mr. Musk underpaid by at least $150 million for his purchases of Twitter stock.
The most obvious question raised by the SEC’s filing is one of timing. The events in question occurred nearly three years ago – in the Spring of 2022. The facts alleged in the complaint are fairly straightforward according the complaint – Mr. Musk should have filed no later than March 24, 2022 but failed to do so until April 4 (a Schedule 13G) and April 5 (a Schedule 13D), 2022. Two plus years seems like an inordinately long time for the SEC to conclude that April 4 falls after March 24 on the calendar. The SEC initiated its investigation, Donald Trump was elected President and will assume office on January 20, 2025. Chairman Gensler has announced that he will resign on noon on the day of Mr. Trump’s inauguration. Thus, the timing of the filing of the SEC’s complaint ineluctably creates the implication that the SEC wanted the complaint filed before there was shift in the party alignment of the Commissioners.
There is also a question about how the SEC investigated Mr. Musk and whether it is targeting him for his criticism of the agency and his association with Donald Trump. The SEC has conducted various investigations of Mr. Musk since at least 2018 when it settled charges against Tesla and Musk relating to Mr. Musk’s tweets. In the present case, the SEC’s Division of Corporation Finance asked about Mr. Musk’s Schedule 13G filing on the same day that it was filed. Shortly thereafter, the SEC’s Enforcement Division intervened “so that the same individuals investigating Mr. Musk’s compliance with the consent decree could also manage the present investigation.” Sec. & Exch. Comm’n v. Musk, 2024 WL 1511903, at *2 (N.D. Cal. Feb. 10, 2024) (footnote omitted). The SEC opened the current investigation the day after it closed a prior investigation. Id. Mr. Musk has been a high profile critic of the SEC, famously dubbing it the “Shortseller Enrichment Commission”. He is co-leading Mr. Trump’s advisory commission on government efficiency (the Department of Government Efficiency or DOGE).
PHMSA Suggests Tighter CO2 Pipeline Safety Regulations Amid Growing Infrastructure for Carbon Capture
On January 15, 2025, the Pipeline and Hazardous Materials Safety Administration (PHMSA) of the U.S. Department of Transportation released a pre-publication version of a notice of proposed rulemaking (NPRM) that would propose new safety regulations for pipelines that transport carbon dioxide (CO2). The NPRM would extend PHMSA’s regulatory oversight to pipelines transporting CO2 in all phases, to include the first-ever safety requirements for pipelines transporting CO2 in gas and liquid-phase, while also reinforcing existing standards for transporting CO2 in its supercritical phase. This much-anticipated NPRM introduces several significant and targeted proposals that would create a uniform nationwide set of safety regulations for CO2 transportation by pipeline. Comments on the proposal will be due 60 days after the NPRM is published in the Federal Register.
Background on CO2 Pipelines
The U.S. Department of Energy (DOE) has projected a major expansion of the nation’s CO2 pipeline network, driven by global efforts to capture and store excess CO2. According to a December 2023 Congressional Budget Office report, the number of carbon capture and storage (CCS) projects is expected to increase nearly tenfold by 2050. A substantial increase in commercial development of CO2 pipelines has occurred in the past several years and is expected to continue.
Although CO2 pipelines historically have a clean safety record, a major incident, coupled with the expanding CO2 pipeline infrastructure, prompted PHMSA to revisit the need for targeted safety regulations for pipelines transporting all phases of CO2.
PHMSA’s Proposed Rule
While PHSMA has long regulated pipelines transporting CO2 in a supercritical phase (at a 90% or more concentration of CO2 in the product stream), PHMSA’s proposed rule expands its authority over CO2 pipelines significantly, in part to address the growing need for expanded carbon capture and storage (CCS) infrastructure, driven by significant new incentives from the President’s Bipartisan Infrastructure Law and the Inflation Reduction Act. If adopted, the rule will introduce several key changes, including:
The first-of-its-kind requirements for the design, installation, operation, maintenance, and reporting of CO2 gas and liquid-phase pipelines.
New guidelines for operators converting existing pipelines to transport CO2 in different phases.
Mandates for CO2 pipeline operators to train emergency responders and ensure access to CO2 detection equipment for effective emergency management.
Enhanced public communication protocols during emergencies.
Detailed vapor dispersion analysis requirements to safeguard public health and the environment in the event of a pipeline failure.
First-of-its-kind Requirements
The proposed rule will enhance safety standards for newly constructed, replaced, relocated, or converted CO2 pipelines through the introduction of updated fracture control requirements. Among the key provisions, operators would be required to evaluate and adjust pipeline toughness based on operating conditions, ensuring fracture arrest within specific pipe lengths (320 feet for 99% probability and 200 feet for 90%), conduct toughness tests per industry, and meet toughness requirements outlined in API Specification 5L, which could lead to mandated crack arrestors.
The proposed rule also seeks to add several new sections; §§ 195.263 (Fixed vapor detection and alarm systems), 195.309 (Spike hydrostatic pressure test), 195.429 (Maintenance and testing of fixed vapor detection and alarm systems), and 195.456 (Vapor dispersion analysis). Each of these proposed new regulatory sections introduce new concepts that are prescriptive in nature and may raise practical considerations that are ripe for comment and discussion with PHMSA as the rulemaking process progresses.
Operational Guidelines
PHMSA proposes enhanced requirements for pipelines converted to CO2 and hazardous liquid service under part 195. Operators seeking to convert a pipeline to CO2 transportation would need to meet design and construction standards from subparts C and D. Specifically, pipelines converted to CO2 service must undergo a spike hydrostatic pressure test before being placed into service. Additionally, operators would be required to conduct in-line inspections within 12 months and close-interval and coating surveys within 15 months of the service initiation. These measures are designed to ensure the integrity and safety of converted pipelines by identifying and addressing any defects or issues early on.
Training Key Individuals
PHMSA’s proposed rule includes three key safety improvements for CO2 and hazardous liquid pipelines. First, it calls for enhanced training for emergency responders, ensuring they have the necessary equipment and expertise to handle pipeline emergencies, particularly asphyxiation risks. Second, the proposal mandates additional safety equipment for operators, including tools to detect hazardous vapor and gas concentrations in excavated areas. Lastly, it requires pipeline operators to communicate with affected entities and the public during emergencies, ensuring clear and consistent messaging and coordination with emergency response organizations.
Enhanced Public Communication Protocols
PHMSA’s NPRM proposes enhanced emergency response plans for CO2 pipelines, building on the Valve Rule to address safety risks. The proposal includes additional training for emergency responders, requiring operators to provide equipment and training on CO2-related emergencies, including asphyxiation risks. It also mandates the provision of safety equipment in excavated trenches and tools for detecting hazardous vapor and gas concentrations. Lastly, operators would be required to communicate with affected entities, including the public, using population density data to ensure clear, coordinated messages during emergencies. These changes aim to improve emergency response effectiveness and public safety, but details surrounding the level of training and type of equipment provided to first responders remains unclear and will need to be flushed out in comments and public meetings as the rulemaking matures.
Detailed Vapor Dispersion Analysis
PHMSA is proposing new requirements for vapor dispersion analyses for hazardous liquid and CO2 pipelines. Operators would be required to update their models every 15 months, or at least once a year, to reflect updates to software and changes in relevant factors. These updates aim to ensure that operators’ assessments of pipeline segments potentially affecting High Consequence Areas (HCAs) are accurate and based on the latest science. However, recognizing potential resource challenges, PHMSA proposed to allow operators the option to use a default 2-mile radius on either side of the pipeline as a basis for determining impacts on high consequence areas. This proposal aims to improve pipeline safety by ensuring up-to-date risk assessments and enhancing regulatory oversight.
The Big Picture
About 5,000 miles of CO2 pipelines exist in the United States, and their main purpose is to improve oil drilling operations. However, according to a 2020 Princeton research study, 65,000 miles of CO2 pipes will be required by 2050 to achieve net-zero emissions targets. As a result of worldwide CO2 collection and storage initiatives, the DOE has also predicted a large growth of the CO2 pipeline network. According to a Congressional Budget Office assessment released in December 2023, the number of CCS projects might nearly double, and by 2050, the length of CO2 pipelines could increase by 10 times their current size.
New Horizons: Romania Joins Visa Waiver Program
Romania will be the 43rd country to become a member of the Visa Waiver Program (VWP). The new designation made by Secretary of Homeland Security Alejandro Mayorkas in conjunction with Secretary of State Antony Blinken will go into effect on or around March 31, 2025.
The VWP allows citizens or nationals of participating countries to travel to the United States for tourism or business purposes for up to 90 days without obtaining a visa.
The Electronic System for Travel Authorization (ESTA) online application and mobile app will be updated to include Romania.
Individuals must apply online through ESTA before coming to the United States on the VWP.
According to the secretaries, Romania met the stringent security requirements for this designation through a whole-of-government effort:
It had a visa refusal rate of under 3 percent in the last fiscal year;
It issues secure travel documents;
It extends reciprocal travel privileges to all U.S. citizens and nationals without regard to national origin, religion, ethnicity, or gender; and
It agreed to work closely with U.S. law enforcement and counterterrorism authorities.
U.S. citizens already are eligible to travel to Romania visa-free and are eligible to remain for up to 90 days for tourism or business purposes if they have a passport valid for at least three months from the date of arrival.
Romania is the fourth country to be added to the VWP by Secretary Mayorkas. It follows Croatia (2021), Israel (2023), and Qatar (2024).
“Oops, I Was a Broker!?” SEC Cracks Down on Investment Adviser Representatives Acting as Unregistered Brokers
On 14 January 2025, the Securities and Exchange Commission (SEC) announced settled charges against three investment adviser representatives for acting as unregistered brokers in the sale of membership interests in certain limited liability companies (i.e., Funds) that each purportedly owned shares of private issuers that had prospects of becoming publicly traded. The SEC separately announced settled charges against an advisory firm in a related action involving improperly managing conflicts of interests and the use of liability waivers.
The settled charges against investment adviser representatives highlight the SEC’s continued drive to hold unregistered brokers accountable – especially those who facilitate the sale of pre-IPO investments to retail investors. Recently, in September 2024, the SEC had settled charges against various market participants for unregistered broker activity.
The individuals subject to the SEC’s orders were investment adviser representatives but, according to the orders, had provided investors with marketing materials and advised investors on the supposed merits of the investments. Although the individuals were each affiliated with a registered investment adviser, the SEC alleged that their actions constituted brokerage services distinct from investment advisory services. Among other facts, most investors were not pre-existing investment advisory clients. In addition, the adviser did not charge a management fee for the value of the investments into the Funds. Instead, the individuals received transaction-based compensation.
The SEC charged all three individuals with failures to register as brokers and provided for nearly US$540,000 in collective disgorgement, prejudgment interest, and civil penalties.
Europe: Proposed UK and EU Rules on More Research Cost Re-Bundling Move Closer
In the United Kingdom, the FCA has proposed to give fund managers (including UCITS Mancos and full-scope UK AIFMs) an option to use fund assets to pay jointly for execution and research (so-called ‘bundled’ payments). The existing options of paying for research from manager funds or operating a customer-financed research payment account would remain. Final rules are expected in the first half of 2025. This follows the introduction on 1 August 2024 of a similar option for separate account managers as discussed here.
Fund managers opting for joint payments will be subject to ‘guardrails’ like those for firms managing segregated mandates. The guardrails are intended to ensure client protection by (for example) requiring appropriate disclosure to clients and seeking to ensure that research spend achieves value for money for each relevant fund client. Managers of FCA authorised retail funds opting for joint payments would need to treat the matter as a ‘significant change’ requiring both prior FCA approval, and that unitholders are given at least 60 days’ prior written notice.
One reason why firms may wish to consider using the joint payment option is so that they can obtain research from US broker-dealers who may be unable to accept unbundled payments for research.
In the European Union, changes to MIFID under the Listing Act Directive are being implemented in EU member states by 5 June 2026. These will give MiFID investment firms (incl. separate account managers) an option to make joint payments for execution and research. Conditions will apply, including an obligation to assess the quality, usability and value of research used, but the current limitation to the effect that this option does not apply to research concerning issuers with a market capitalisation of over €1 billion is being removed.
CNIPA Press Conference: Over 1 Million Invention Patents Granted in 2024
On January 15, 2025, the China State Council Information Office held a press conference with China’s National Intellectual Property Administration (CNIPA) detailing statistics of 2024. Per Hu Wenhui, deputy director of the CNIPA, in 2024, a total of 1.045 million invention patents were authorized, a year-on-year increase of 13.5%. 67,000 patent reexaminations and invalidation cases were closed. The examination cycle of invention patents was reduced to 15.5 months. 75,000 PCT international patent applications were accepted. Chinese applicants submitted 4,868 international design applications through the Hague Agreement, a year-on-year increase of 29.5%, ranking first in the world. More detailed data should be released before the end of the month including utility model authorizations.
Excerpts from the press conference follow. The full transcript is available here via social media (Chinese only).
Hu Wenhui:
By the end of 2024, my country will have 4.756 million valid invention patents, becoming the first country in the world to exceed 4 million. my country will have 14 high-value invention patents per 10,000 people, completing the expected goals of the country’s 14th Five-Year Plan ahead of schedule.
4.781 million trademarks were registered throughout the year, a year-on-year increase of 9.1%. 383,000 trademark review cases and 103,000 opposition cases were concluded. The average review period for trademark registration remained stable at 4 months, and the average review period for opposition review cases was further shortened. The qualification rate of various trademark services remained above 97%. 7,039 Madrid trademark international registration applications were received from Chinese applicants throughout the year, a year-on-year increase of 13.6%.
As of the end of 2024, the number of valid trademark registrations in my country was 47.62 million.
A total of 36 geographical indication products were recognized throughout the year, 125 geographical indications were approved for registration as collective trademarks and certification trademarks, and 8,680 business entities were approved to use geographical indication special marks.
As of the end of 2024, my country has recognized a total of 2,544 geographical indication products, approved 7,402 registrations of geographical indications as collective trademarks and certification trademarks, the total number of operators of geographical indication special marks is nearly 33,000, and the direct output value of geographical indication products exceeds 960 billion yuan, with stable growth for many consecutive years.
A total of 11,000 integrated circuit layout design registrations and certificates were issued throughout the year.
As of the end of 2024, my country had issued a total of 83,000 integrated circuit layout-design certificates.
…
The number of domestic high-value invention patents reached 1.978 million, an increase of 18.8% year-on-year, and the number of invention patents belonging to strategic emerging industries reached 1.349 million, an increase of 15.7% year-on-year.
…
Among China’s high-value invention patents, 130,000 have been authorized overseas at the same time, nearly doubling from the end of the 13th Five-Year Plan, involving 16,000 innovative entities, an increase of more than 6,700 from the end of the 13th Five-Year Plan. More domestic innovative entities pay more attention to using intellectual property rights to open up international markets and continuously improve their international competitiveness.
…
The Draft Amendment to the Regulations on the Protection of Integrated Circuit Layout Designs mainly revised three aspects:
First, the registration and confirmation procedures for integrated circuit layout designs have been improved to strengthen the protection of intellectual property rights at the source. The application documents submitted by the applicant are required to clearly display and identify the protected content of the layout design, and failure to meet this requirement will be used as grounds for rejection and revocation. Provisions for initiating revocation procedures upon application have been added to better balance the rights and interests of all parties.
Second, we will strengthen the protection of exclusive rights for integrated circuit layout designs and effectively safeguard the legitimate rights and interests of right holders. It is clarified that the scope of exclusive rights protection is based on the submitted copies and drawings, and the originality statement of layout designs is used to explain the copies and drawings. New provisions on the principle of good faith are added, and a punitive compensation system for serious intentional infringements is introduced. Relevant provisions on pre-litigation evidence preservation are added to more effectively protect the legitimate rights and interests of right holders and reduce the cost of rights protection.
Third, promote the implementation and application of layout designs and boost the development of new quality productivity. New regulations on job creation rewards are added, stipulating that legal persons or non-legal persons should reward natural persons who create layout designs after the layout design is registered. After the layout design is implemented, the natural persons who create the layout design should be given reasonable remuneration based on the scope of its promotion and application and the economic benefits obtained. Improve the relevant regulations on the exercise of rights and transfer, licensing and pledge of exclusive rights by co-owners of layout designs to more fully stimulate enthusiasm for innovation and creation.
Trump Tariffs Survival Guide: 10 Strategies for U.S. Importers
Tariffs remain the focus of the incoming Trump Administration. Over the past several months, the announcements from president-elect Trump and his transition team have been dynamic. We expect the Trump trade policy team to use creative methods to deliver aggressive new tariff policies this year.
There are several strategies U.S. importers may consider to cope with the anticipated tariff increases. Some of the strategies are lessons learned during the first Trump Administration (e.g., to mitigate the impact of the Section 301 tariffs on Chinese-origin imports). The key to success remains to plan ahead, understand the laws, and weigh all options.
Potential New U.S. Import Tariffs
Before turning to strategies, we outline the potential types of tariffs that have been shared by Trump insiders. For each type, we cover the potential tariff action, timing for such imposition, and our assessment of the potential likelihood of imposition. Exporters, please note that we may expect to see other countries impose retaliatory tariffs against imports from the United States following the increase of U.S. import tariffs. China, Canada, Mexico and the EU have all threatened such tariffs.
Chinese-Origin Goods.
Potential Tariff Action: Currently, the Section 301 tariffs on most imports of Chinese-origin goods are largely in the 25-50 percent range. During the Trump presidential campaign, we heard about a 60 percent tariff on all Chinese-origin goods. At the end of November 2024, president-elect Trump announced immediately upon taking office, tariffs on imports from China would increase by 10 percent. When coupled with the existing Section 301 tariffs, that action would result in a 35 to 60 percent tariff on such imports.
Timing: Such a tariff could be imposed using the same Section 301 of the Trade Act of 1974, but that method would take several months to implement. The wild card option under consideration (leaked on January 8, 2025) would be to use the president’s emergency authority under the International Emergency Economic Powers Act of 1977 (IEEPA), which would enable the incoming Administration to impose tariffs almost immediately. IEEPA has not been used previously to implement tariffs, so any such tariff action could be a bit of the Wild West.
Likelihood: Very likely.
Chinese-Owned or Operated Ports.
Potential Tariff Action: During the Trump presidential campaign, we heard brief threats about the imposition of tariffs on any goods, regardless of country of origin, that entered the United States through any Chinese-owned or operated ports.
Timing: Such a tariff could be implemented quickly after inauguration. Congress has delegated broad authority to the Executive Branch to impose tariffs for reasons of national security. Thus, the same IEEPA-type action could authorize such tariffs immediately upon inauguration, or potentially even Section 232 of the Trade Expansion Act. Any Section 232 action would require several months.
Likelihood: Not likely.
Mexico and Canada.
Potential Tariff Action: Trump has all but promised a 25 percent tariff on all imports from United States-Mexico-Canada Agreement (USMCA) partners Canada and Mexico. The USMCA was negotiated by the first Trump Administration. The agreement has a national security carveout (a theme here) that enables a party to the agreement to apply measures it considers necessary for protection of its own essential security interests. Thus, the USMCA gives the incoming Administration the pretext it needs to impose such tariffs.
Timing: Such a tariff could again be implemented quickly using IEEPA or much longer should negotiations drag on related to any such tariff. The immediate imposition of such a tariff would be aggressive, though not impossible. There is a decent chance the threat is being used as a negotiating tool (or stick) ahead of the 2026 joint review of the USMCA by the member parties.
Likelihood: Possible, but more likely used as negotiating leverage.
Universal Tariff.
Potential Tariff Action: The incoming Administration has also announced the potential for a 10 or even 20 percent universal tariff. Such a tariff would apply to all imports from all countries. However, in recent weeks, we have seen leaks that such a universal tariff would be targeted to imports relating to national security as follows: defense industrial supply chain (through tariffs on steel, iron, aluminum and copper); critical medical supplies (syringes, needles, vials and pharmaceutical materials); and energy production (batteries, rare earth minerals and even solar panels).
Timing: Such a tariff could again be implemented quickly using again using national security arguments. There are also recent reports that it would be phased in gradually to minimize disruption to supply chains and financial markets.
Likelihood: A broad universal tariff is not likely, but also not impossible. A universal tariff targeting imports relating to national security considerations is fairly likely.
Antidumping and Countervailing Duties.
Potential Tariff Action: President-elect Trump’s team is committed to the fair trade end of the free trade/fair trade spectrum. The main tool in that arsenal is an old one: antidumping duties and countervailing duties (AD/CVD). We expect the use of the AD/CVD laws to increase steadily during the incoming Trump administration. One major focus will be anti-circumvention proceedings that are designed to punish imports from countries where foreign manufacturers under AD/CVD orders may try to shift their production.
Timing: AD/CVD cases are slow by nature. No real changes will be noticeable until 2026 or 2027.
Likelihood: Very likely.
Top 10 Tariff Coping Strategies
The potential for new tariffs is substantial. We provide the following for consideration in preparing for such actions. Any plan requires tailoring to specific supply chains, products, and compliance realities. Sometimes a combination of the below strategies may be necessary.
Contract Negotiation: Review supplier and customer contracts to assess the assignment of liability for tariff increases; and negotiate favorable tariff burden-sharing.
Supply Chain Management: Consider suppliers in countries subject to lower tariffs, but be aware of the potential for AD/CVD and circumvention issues. Also consider sourcing a different product or raw material subject to a lower tariff rate. Don’t forget to examine whether manufacture in a third country using raw materials from a high tariff country creates a “substantial transformation,” such that the end product would be considered to originate in the third country. And of course, to the extent possible, review the possibility of sourcing from domestic suppliers.
Trade Agreements: Consider sourcing from countries subject to free trade agreements with the United States, which would enable duty-free imports. But do not assume that Canadian and Mexican goods will be duty-free; be aware of the potential of a national security-based tariff or renegotiated USMCA.
Trade Preference Programs: Keep an eye on potential programs that provide duty-free imports. For example, past programs included the Generalized System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB). But be aware that the GSP and MTB programs have been languishing without reauthorization by Congress for years.
In-Bond Shipments and Foreign Trade Zones (FTZ): If a company’s supply chain involves goods transiting through the United States, for sale elsewhere, consider use of in-bond shipments or an FTZ, where tariffs do not normally apply. But be aware that in-bond and FTZ schemes can involve high storage fees, rigorous accounting procedures, and other costs.
Duty Drawback: If manufacturing products in the United States for export, consider making use of a drawback program. Drawback enables importers to obtain refunds of certain U.S. duties paid on the imported component goods or materials. Section 301 duties are eligible for drawback, but AD/CVD are not.
Exclusions: If new tariffs are issued under Sections 301 or 232, consider seeking a tariff exclusion if such an administrative process is provided.
Comments: If Sections 301 or 232 are used, we expect to see a notice and comment period as part of the rulemaking, which should provide interested parties an opportunity to comment on the economic impact of the proposed tariffs.
Congressional Relations: Consider whether outreach to congressional delegations could help in any tariff mitigation strategy.
Litigation: We expect multiple lawsuits challenging the authority to impose certain tariffs. But U.S. courts have generally been receptive to the national security justifications offered for such tariffs, and the timeline to resolve such actions requires years.
In sum, while the imposition of additional tariffs will be challenging for U.S. importers, there are several possible strategies that may reduce certain negative impacts of these tariffs. All importers must carefully analyze any supply chain changes under the applicable laws, and each decision should be well documented and supported by the company’s written import policies and procedures.
February 2025 Visa Bulletin 1-Month Advancement for EB-3 China, and 14-day Progression for EB-2 and EB-3 India
U.S. Citizenship and Immigration Services (USCIS) has announced that it will be utilizing the final action dates chart for the upcoming February 2025 Visa Bulletin. This update reflects slight progression in priority dates for certain countries and visa categories from the final action dates chart in the January 2025 Visa Bulletin.
Quick Hits
The February 2025 final action dates chart shows a one-month advancement for EB-3 China, along with a fourteen-day progression for both EB-2 and EB-3 India.
USCIS has confirmed that it will be accepting adjustment of status applications based on the final action dates chart for February 2025. Starting February 1, 2025, individuals with priority dates earlier than those listed in the final action dates chart are eligible to file their I-485, Application to Register Permanent Residence or Adjust Status.
Source: U.S. Department of State, February 2025 Visa Bulletin
The final action dates chart shows the advancement since the final action dates chart in the January 2025 Visa Bulletin of the following categories and countries:
EB-3 China has advanced by one month, from June 1, 2020, to July 1, 2020.
EB-2 India has advanced by fourteen days, from October 1, 2012, to October 15, 2020.
EB-3 India has also advanced fourteen days, from December 1, 2012, to December 15, 2012.
While USCIS has stated that it is accepting the final action dates chart, there have been no changes in the dates for filing chart from January 2025 to February 2025.
BIS Finalizes Rule Prohibiting Connected Vehicle Imports Linked to China and Russia: Key Compliance Requirements Announced
The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has promulgated a Final Rule prohibiting the import and sale of connected vehicles and related components linked to the People’s Republic of China (PRC) and Russia, citing critical national security concerns. These rules represent a pivotal shift in U.S. automotive supply chain regulations, emphasizing the need for vigilance and proactive compliance by stakeholders across the industry.
Expanded Compliance Obligations
Although the final rule does not mandate formal certification, suppliers are now required to scrutinize the origins of Vehicle Connectivity Systems (VCS) hardware and Automated Driving Systems (ADS) software to ensure compliance. Suppliers must exclude components with links to the PRC or Russia, with significant implications for sourcing practices and operational processes.
To address these challenges, many suppliers are exploring partnerships with third-party certification firms to assist in supply chain mapping and regulatory compliance. These firms provide specialized support to ensure alignment with U.S. regulations:
Regulatory Compliance Consultants
Offer tools, training, and industry-specific strategies for supply chain compliance.
Assist in establishing robust processes for meeting evolving regulatory requirements.
Cybersecurity and IT Compliance Firms
Evaluate and certify software and hardware for security vulnerabilities.
May expand their offerings to include BIS-specific compliance as the rule is fully enacted.
Automotive-Specific Compliance Firms
Focus on connected vehicle systems, offering cybersecurity testing and risk assessments tailored to the automotive industry.
Limited OEM Guidance
Original Equipment Manufacturers (OEMs) have provided limited direction on how they will interpret and implement the final rule. However, several have engaged in the rulemaking process through public comments and requests for compliance extensions. OEMs may eventually require declarations or certifications from their supply base, even in the absence of a formal BIS mandate. This highlights the importance of proactive supplier engagement and preparation to meet potential OEM requirements.
Implications for Automotive Suppliers
The final rule is poised to profoundly impact automotive suppliers, particularly those sourcing components from the PRC or Russia. As we previously advised, key considerations include:
Supply Chain Transparency: Suppliers must conduct thorough due diligence to identify components with links to the PRC or Russia. This requires comprehensive mapping of supply chains and ensuring traceability down to sub-suppliers.
Increased Costs: Transitioning to alternative suppliers or technologies may drive up costs and disrupt existing contracts.
Collaboration Challenges: Suppliers must work closely with OEMs and industry organizations to navigate evolving requirements.
Recommendations for Compliance
To mitigate risks and align with the new regulations, automotive stakeholders should take the following steps:
Conduct a Supply Chain Assessment
Map the origins of all hardware and software used in connected vehicles.
Identify and mitigate risks associated with PRC- or Russia-linked components.
Engage Third-Party Certification Firms
Partner with firms specializing in supply chain mapping, cybersecurity evaluations, and compliance certifications to streamline processes and ensure regulatory alignment.
Collaborate with Industry Groups
Engage with organizations like the Alliance for Automotive Innovation and Motor & Equipment Manufacturers Association (MEMA) to share insights and develop collective strategies for compliance.
Prepare for OEM Requirements
Anticipate the possibility of OEM-mandated certifications and declarations, and begin preparing the necessary documentation and processes to meet these demands.
While the regulatory landscape remains dynamic, proactive planning, thorough due diligence, and strategic collaboration will be critical for suppliers and manufacturers to adapt to the BIS’s final rule. By aligning their practices now, companies can minimize disruptions and position themselves for long-term compliance and competitiveness in a rapidly evolving market.
Elizabeth Morales-Saucedo contributed to this article
State and Local Executive Orders Suspend Time-Consuming Permitting and Review Requirements for Rebuilding Los Angeles
In light of the ongoing devastation wrought by the numerous wildfires plaguing Los Angeles County, California Governor Gavin Newsom has declared a state of emergency[1] and taken immediate action in an attempt to allow Angelenos to rebuild efficiently and effectively. One such action was the issuance of Executive Order (EO) N-4-25 on January 12th to temporarily suspend two time-intensive environmental laws.[2] In response, the City of Los Angeles Mayor Karen Bass issued her own executive order (Emergency Executive Order No. 1 [LA EEO1]) just one day later to “clear the way for Los Angeles residents to rapidly rebuild the homes they lost.”[3]
EO N-4-25 will, in short, suspend the permitting and review requirements under the California Environmental Quality Act (CEQA) and Coastal Act for victims of the recent fires in Los Angeles County in order to promote the restoration of homes and businesses. In addition to confirming the waiver of CEQA review, LA EEO1 waives local discretionary review processes. These fires, which – as of the date of publication – have resulted in the destruction of more than 12,000 structures, in the midst of an undeniable housing crisis in California. These executive orders are a step in the right direction to recoup the housing stock lost over the past two weeks.
EO N-4-25
The executive order issued by Governor Newsom:
Suspends CEQA review and Coastal Act permitting related to the reconstruction of properties substantially damaged or destroyed in the wildfires. The structures eligible for this suspension must be in the substantially same location and shall not exceed 110% of the footprint and height of properties and facilities that were legally established and existed immediately before the fires.
This suspension means that applications to rebuild homes, businesses, and other structures will not have to comply with laws that are notorious for extensive approval timelines, restricting land development and proposed uses, and subject to appeals and litigation, all of which could tie up a project indefinitely.
Directs state agencies to identify additional permitting requirements, including provisions of the California Building Code, that can safely be suspended or streamlined to accelerate rebuilding and make it more affordable.
These state agencies, including Department of Housing and Community Development (HCD), the Office of Land Use and Climate Innovation, the Office of Emergency Services (OES), and the Department of General Services (DSG), need to report to the Governor within 30 days on other permitting requirements that could “unduly impede” efforts to rebuild properties damaged in the fire, updating the report every 60 days to identify other requirements acting as barriers.
HCD will coordinate with local governments to recommend procedures to establish rapid permitting and approval processes to expedite the reconstruction or replacement of residential properties, with the ultimate goal of issuing all necessary permits and approvals within 30 days.
Extends protections against price gouging under Penal Code section 396(b)-(c) on building materials, storage services, construction, emergency clean-up and other essential goods and services associated with repair and reconstruction to January 7, 2026, in Los Angeles County.
Commits the executive branch to working with the Legislature to identify statutory changes that can help expedite rebuilding while enhancing wildfire resilience and safety.
Allows property owners to transfer the base year value of property that is substantially damaged or destroyed by the disaster to the rebuilt property, which could offer a significant tax savings.
While EO N-4-25 has been heralded as “really positive” and “as an admission we can safely build housing without [the constraints of these two intensive environmental laws]” by industry leaders, including the California Building Association,[4] questions regarding the implementation of this order remain. For example, the order states that eligible projects must be substantially the same size and location, but leaves the door open as to whether the use can change. Would the order still apply if the redevelopment changed the use from single-family to a single-family home with an accessory dwelling unit (ADU) or denser residential or commercial uses?
Additionally, EO N-4-25 is silent on the rebuilding or repair of infrastructure supporting the projects eligible for application of the executive order. If infrastructure cannot be installed quickly to support the other redevelopment, it is possible the success of such eligible redevelopment is hindered by the inability to utilize the new structures due to lack of services and access. Moreover, redevelopment projects under EO N-4-25 will still need to comply with local zoning and permitting ordinances. Therefore, redevelopment projects may still need to obtain discretionary approvals (i.e., conditional use permit, coastal development permit, site plan review), which are time- and resource-consuming even without the application of CEQA or the Coastal Act. Lastly, the state executive order creates a tension with Local Coastal Programs (LCP) for applicable areas (i.e., Malibu), which are at risk of being decertified by the California Coastal Commission if the local governments approve building plans contrary to approved LCPs.
Additionally, as of late, one of the most popular issues subject to CEQA challenges has been wildfire danger. EO N-4-25 will likely be at odds with recent case law that sets the requirements for analyzing a project’s impacts on evacuation routes and wildfire risk, including People of the State of California ex rel Rob Bonta Attorney General v. County of Lake (2024) __ Cal.App.5th __. Given CEQA’s requirements for a fire risk analysis and the trend of recent caselaw, local governments – in order to avoid liability imposed by the courts – may be hard-pressed to approve projects without some sort of discretionary consideration given to the redevelopment’s impacts on fire risk and evacuation routes.
Only time will tell if the Governor’s Office will issue clarifications to EO N-4-25 that address these and other uncertainties.
LA EEO1
The executive order issued by Mayor Bass will:
Coordinate debris removal from all impacted areas, mitigates for wet weather.
This will create task forces to develop a streamlined program for debris removal and mitigate risks from rain storms, uniting with the OES and other City, County, state and federal agencies.
Clear the way to rebuild homes as they were.
This will establish a one-stop-shop to swiftly issue permits in all impacted areas, directs City departments to expedite all building permit review/inspections, bypasses state CEQA discretionary review, allows rebuilding “like for like” and waives City discretionary review processes. The City has already established a Disaster Recovery Center to serve individuals and families impacted by the fire in the Pacific Palisades, which is open 7 days a week from 9 a.m. to 8 p.m. at: 10850 Pico Boulevard, Los Angeles, California 90064
Make 1,400 units of in progress housing units available.
LA EEO1 directs the Department of Building and Safety to issue temporary certificates of occupancy for 1,400 housing units currently in the pipeline across the City.
Establish a framework to secure additional regulatory relief and resources.
This instructs all City departments to report back in one week with a list of additional relief needed from state and federal regulations and requirements, as well as state and federal funding needed for recovery.
Expedite permit review and eliminate the discretionary review and other processes for “eligible projects.” An eligible project is defined as one that repairs, restores, demolishes, or replaces a structure or facility substantially damaged or destroyed by wildfires that meets certain criteria, including: (i) the structure or facility is in substantially the same location as the original structure or facility; (ii) the structure or facility does not exceed 110% of the floor area, height, and bulk of the original structure or facility; (iii) maintaining the same use, intensity, and density of the original structure or facility, i.e., no new ADUs or changes of use; and (iv) obtaining building permits for repair or reconstruction within 7 years from the date of the order.
Building permit review timelines by all City departments (including Department of Water and Power) must be completed in 30 days from the submission of a “complete application.”
Discretionary review processes are waived for eligible projects, including, but not limited to the Pacific Palisades Village Specific Plan and Pacific Palisades Village Design Review Board Guidelines. The City must review applications submitted using the streamlined ministerial review processes under Senate Bill 35 (SB 35) (Govt. Code § 65913.4). While ambiguous, it appears that while Mayor Bass is technically waiving discretionary permitting requirements, applicants may still have to file applications with the Planning Department and go through a “streamlined” entitlement process. In other words, the discretionary approvals would be processed ministerially and have the statutory review timelines for SB 35 projects, which would be 90 days from date of submittal for approval for projects less than 150 units and 180 days for projects greater than 150 units. In practice, these timelines are much longer given tribal notification requirements and preapplication forms and processes.Haul routes for eligible projects shall be approved ministerially without noticing, hearings, findings, or appeals.Clarifies that eligible projects are exempt from requirements to obtain a Coastal Development Permit under Coastal Act section 30610(g).Application of the All-Electric Building Code (Ordinance No. 187714) does not apply to eligible projects.Demolition permits are not required for structures, improvements, or facilities substantially damaged or destroyed by the wildfires.
Tiny homes, modular structures and mobile homes, are permitted for up to 3 years on the site during rebuilding.
Similar to the fires, State and local response to recent events is rapidly evolving. Sheppard Mullin will continue to provide updates as available. For more information or assistance, please contact us. Together, we can navigate this challenging period responsibly.
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FOOTNOTES
[1] Such proclamation triggers, among other things, the enforcement of price-gouging restrictions. Please see here for an article with more information.
[2] Government Code § 8571 authorizes the Governor to suspend regulatory statutes during a state of emergency upon determining that strict compliance “would in any way prevent, hinder, or delay the mitigation of the effects of the emergency.”
[3] LA EEO1 will only apply to projects within the City of Los Angeles, but not those destroyed outside the City’s jurisdictional boundaries like those destroyed by the Eaton Fire in Altadena.
[4] Pat Maio, Newsom suspends 2 environmental laws to jumpstart rebuilding in fire-damaged L.A. communities, Los Angeles Daily News, January 12, 2025, accessible here.
Congress Declines to Extend HDHP First-Dollar Telehealth Coverage Relief
After Congress declined to extend certain relief allowing first-dollar coverage of telehealth services by high-deductible health plans (HDHPs), health plan sponsors may need to make immediate changes to preserve employees’ health savings account (HSA) eligibility.
Quick Hits
Due to the expiration of certain relief that allowed pre-deductible coverage of telehealth, employers offering HDHPs with first-dollar telehealth coverage may need to amend their plans by January 1, 2025 (for calendar year plans) to ensure employees remain eligible to contribute to their HSAs.
In connection with this change, plan sponsors may also need to update their HDHP participant communications to reflect changes in cost sharing for telehealth services.
As mentioned in our December 3, 2024, article on HDHP plan amendments, the CARES Act of 2020, which was extended through the Consolidated Appropriations Act, 2023, allowed, but did not require, HDHPs to provide first-dollar coverage of telehealth without negatively affecting participants’ HSA eligibility. The extension expired at the end of the 2024 plan year (December 31, 2024, for calendar year plans), and Congress’s year-end spending bill, the American Relief Act, 2025, did not include an extension of the HDHP telehealth relief.
Accordingly, an employer that provides HDHP health plan coverage will need to amend its HDHP if it includes first-dollar telehealth coverage. Since the prior relief was not extended, individuals who are covered by an HDHP that covers telehealth services before the deductible will not be eligible to contribute to an HSA for some or all of 2025.
Effective January 1, 2025 (for a calendar year plan), to preserve employees’ HSA eligibility, an HDHP that covers telehealth services may not cover such services until the employee has met the annual deductible. Employers with non–calendar year plans will have until the end of the plan year that began in 2024 to make the change. In either case, employers will want to confirm that their plan documents, summary plan descriptions, and summaries of benefits and coverage are updated to reflect any changes to participant cost sharing for telehealth services.