Navigating the EPR Laws: What Alcohol Beverage Producers Need to Know
Extended producer responsibility (EPR) laws are relatively new – the first were signed into law in 2021 and 2022 – and are aimed at encouraging producers to package goods in a more environmentally conscientious manner and providing much needed revenue for in-state recyclers overwhelmed by the incoming volumes of recyclable material. In essence, EPR laws require producers whose products reach in-state consumers to register with a producer responsibility organization (PRO) or stewardship organization (SO), report the amount of material that enters the state, and pay fees for that material.
As detailed in this article, how and if these new laws apply to alcohol beverage suppliers is nuanced given both the developing nature of EPR laws as well as the interplay with preexisting container deposit or bottle bill laws.
Who and What Is Covered by the New EPR Laws?
As of the writing of this article, five states have passed EPR laws and 10 others have introduced bills during their most recent legislative sessions, including Connecticut, Hawaii, Nebraska, and New York. EPR programs are still evolving as the various regulatory processes continue; however, once passed by a state, the new rules typically require the state to designate a PRO/SO to administer the producer requirements and aid producers and state agencies with the necessary reporting and payment requirements. For those states that have passed EPR laws, the nonprofit organization Circular Action Alliance is the PRO/SO that has been selected to oversee the process.
Each EPR law has its own definition of “producer” (i.e., those required to report) and of “covered material” (i.e., the materials that must be reported). There are several specifics within each state but, generally, the producer is the entity who actually produces the subject goods or the owner of the brand that is contracting to have the item produced. Speaking broadly, the covered material contemplated by these laws includes the cardboard boxes and glass or aluminum containers that protect and contain the items purchased from retailers. In this regard, EPR laws apply to alcoholic beverages, non-alcoholic beverages, and nearly all other types of consumer goods.
However, exemptions exist for small producers and certain materials. The specifics as to when a producer is exempt from registering and making EPR payments vary by state but, in many instances, those producers shipping small amounts into a certain state will be exempt. For example, Minnesota exempts producers responsible for less than one metric ton of covered material or $2,000,000 in global gross revenue. However, it is important to remember that even if a small producer is, given its status, exempt from registering with a PRO/SO or paying the related EPR fees, it will likely still have reporting requirements to substantiate its claims of being exempt.
How Do These Laws Apply and Interface with Alcohol Beverage Laws?
In the world of beverage alcohol, there are numerous laws already in place, many of which have been in force for decades, that are aimed at sustainability and designed to fund and encourage recycling. These are referred to as beverage container deposit/recycling deposit requirements or “bottle bills.” These laws generally require subject beverages to have, listed on their labels, their deposit amount or to otherwise identify the bottle as one that is subject to deposit requirements. They also require a small deposit to be paid by the retailer and/or by the consumer for the purchase of subject beverages, only refunding the deposit to the consumer when the bottle is returned and requiring a reimbursement and handling fee to be paid by distributors and/or manufacturers for the processing/recycling of the containers.
The exact recycling model, deposit collection, and payment process varies by state. For instance, California does not require the amount of the deposit to be listed on the bottles and requires the distributor and the manufacturer/importer to remit payments, but it does not require the retailer to submit payments, as the retailers are generally acting as the redemption centers for consumers.
Fortunately, many of the EPR laws specifically exempt items subject to beverage container deposit requirements. However, the interplay between the older beverage container deposit requirements and the newer EPR laws are not always straightforward. For example, in Oregon, “beverage containers” as defined by the recycling deposit regulations are excluded from the definition of “covered products” (i.e., those subject to EPR requirements). But only “water or flavored water; beer or another malt beverage; mineral water, soda water, or a similar carbonated soft drink; kombucha; or hard seltzer” are subject to deposit regulation, not wine or spirits. This means, for a producer that is selling wine, spirits, and malt beverages into Oregon, while they would be able to exclude the weight of the cases for the malt beverages (malt cans/bottles would be exempt), they would still have to calculate the weight of the bottles and cases for the wine and spirits when reporting.
In short, given the developing nature of these laws, coupled with the nuances of their interplay with other alcohol beverage-specific requirements, there is no one-size-fits-all analysis as to how and when these laws apply to alcohol beverage producers. There are some instances where an alcohol-specific exemption may apply and other states where no such exemption exists. To ensure compliance in this rapidly evolving landscape, each company’s business structure must be examined carefully to determine whether it, or the products it ships, are subject to EPR laws, bottle bills, or both.
Navigating Changes at the USPTO: Impact of New Government Cost-Reduction Initiatives
The new presidential Administration’s cost-reduction initiatives, including a hiring freeze and return-to-office mandate for federal employees, are poised to impact the efficiency of the US Patent and Trademark Office (USPTO), potentially affecting patent examination timelines and strategies.
The new presidential Administration’s focus on reducing government spending has resulted in a number of cost reducing initiatives, including several that have a direct effect on the USPTO. These initiatives include implementing a hiring freeze across the federal government and a return to office mandate coupled with a buyout option for federal employees. The hiring freeze has resulted in a cancellation of USPTO job advertisements and rescinded offers of employment to new patent examiners, while the return to office mandate coupled with a buyout option for federal employees has the potential to affect a significant number of USPTO employees, including many senior examiners and Patent Trial and Appeal Board (PTAB) judges. Moreover, the recent resignation of Commissioner for Patents, Vaishali Udupa, is sure to affect the course and policies of the USPTO as it navigates these significant changes.
These changes are likely to affect the efficiency and speed of patent examinations, appeals, and trials at the PTAB, and could increase pendency of applications and other matters under the purview of the USPTO. Our Intellectual Property (IP) practice group at AFS understands the importance that timely processing of patent applications has on our clients’ business operations and IP strategies. Accordingly, we are committed to minimizing any adverse effects that these changes may have on our clients. We will continue to closely monitor the situation and adapt our strategies to ensure that your patent applications are processed with as little delay as possible.
More Executive Orders Aimed at Improving the Operation of the Federal Government
Executive Order Directing Deregulation and Termination of Certain Regulatory Enforcement Actions
On February 19, 2025, in an executive order titled Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative, President Trump expressed a policy to “deconstruct[] … the overbearing and burdensome administrative state.” Specifically, President Trump directed each agency head (subject to limited exemptions) to classify all regulations subject to the agency’s sole or shared jurisdiction into one of seven categories. These categories include, for example, “unconstitutional regulations and regulations that raise serious constitutional difficulties,” “regulations that implicate matters of social, political, or economic significance that are not authorized by clear statutory authority,” “regulations that impose significant costs upon private parties that are not outweighed by public benefits,” “regulations that harm the national interest,” and “regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship.” There is no category for a regulation that the agency head finds lawful and appropriate. Each agency head is to provide the Administrator of the Office of Information and Regulatory Affairs (OIRA) the list of those “unconstitutional regulations and regulations that raise serious constitutional difficulties.” The Administrator of OIRA, then, is tasked with developing an agenda to “rescind or modify these regulations.”
In addition, the executive order directs each agency head to assess whether ongoing enforcement of any regulation identified in the above classification process complies with law and the policies of the Trump administration. On a case-by-case basis and consistent with applicable law, the agency head is to “terminat[e] … all such enforcement proceedings that do not comply” with the executive order’s directive.
Executive Order Affecting Independent Agency Power
On February 18, 2025, in an executive order titled Ensuring Accountability for All Agencies, President Trump amended Executive Order (EO) 12866 to require administrative rulemaking by independent regulatory agencies (such as the Securities and Exchange Commission, the Federal Trade Commission, the National Labor Relations Board, and the banking regulatory agencies (Federal Reserve Board, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency)), which are previously exempted by EO 12866, to go through the regulatory review process promulgated by EO 12866, including submission of any proposed or final rules to the White House’s Office of Management and Budget (OMB) for review before publication.
The executive order further:
Directs the OMB Director to:
Adopt performance standards and management objectives for heads of independent agencies;
Conduct performance reviews over independent agency heads and report to the President; and
Review financial obligations and consult agency heads to adjust budget allocations.
Requires heads of independent agencies to
Consult the OMB and other White House offices on policies and priorities;
Establish a White House liaison position in each agency; and
Submit agency strategic plans to OMB for preclearance before publication.
Prohibits government agencies to advance interpretation of laws in rulemaking or litigations inconsistent with the positions taken by the Attorney General.
Executive Order Reducing the Size and Composition of the Federal Government
On February 19, 2025, in an executive order titled Commencing the Reduction of the Federal Bureaucracy, President Trump directed several actions to reduce the size of the federal government. First, the executive order eliminates, to the maximum extent of the law, the non-statutory components and functions of (i) the Presidio Trust, (ii) the Inter-American Foundation, (iii) the United States African Development Foundation, and (iv) the United States Institute of Peace. The head of each of these entities must submit a report to the OMB Director that (i) states the extent to which it and its components and functions are statutorily mandated and (ii) affirms compliance with the executive order. The OMB Director will terminate or reject funding requests for components or functions that are not statutorily mandated. Second, the Director of the Office of Personnel Management will take steps to eliminate the four Federal Executive Boards and the Presidential Management Fellows Program. Third, the heads of the departments and agencies identified below have been instructed to terminate the following committees and councils:
The Advisory Committee on Voluntary Foreign Aid (U.S. Agency for International Development),
The Academic Research Council and the Credit Union Advisory Council (Consumer Financial Protection Bureau),
The Community Bank Advisory Council (Federal Deposit Insurance Corporation),
The Secretary’s Advisory Committee on Long COVID (Department of Health and Human Services), and
The Health Equity Advisory Committee (Centers for Medicare and Medicaid Services).
Fourth, within 30 days, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and the Assistant to the President for Domestic Policy are to recommend additional entities and Federal Advisory Committees to be terminated.
Presidential Memorandum on Disclosure of Terminated Programs, Contracts, and Grants
On February 18, 2025, in a memorandum titled Radical Transparency about Wasteful Spending, President Trump directed the heads of executive departments and agencies to take all appropriate actions to the maximum extent permitted by law to make public the “complete details of terminated programs, cancelled contracts, terminated grants, and any other discontinued obligation of Federal funds.”
HHS’s Proposed Security Rule Updates Will Require Adjustments to Accommodate Modern Vulnerability and Incident Response Issues
In this week’s installment of our blog series on the U.S. Department of Health and Human Services’ (HHS) HIPAA Security Rule updates in its January 6 Notice of Proposed Rulemaking (NPRM), we discuss HHS’s proposed rules for vulnerability management, incident response, and contingency plans (45 C.F.R. §§ 164.308, 164.312). Last week’s post on the updated administrative safeguards is available here.
Existing Requirements
HIPAA currently requires regulated entities to implement policies and procedures to (1) plan for contingencies and (2) respond to security incidents. A contingency plan applies to responses to emergencies and other major occurrences, such as system failures and natural disasters. When needed, the plan must include a data backup plan, disaster recovery plan, and an emergency mode operation plan to account for the continuation of critical business processes. A security incident plan must be implemented to ensure the regulated entity can identify and respond to known or suspected incidents, as well as mitigate and resolve such incidents.
Existing entities — especially those who have unfortunately experienced a security incident — are familiar with the above requirements and their implementation specifications, some of which are “required” and others only “addressable.” As discussed throughout this series, HHS is proposing to remove the “addressability” distinction making all implementation specifications that support the security standards mandatory.
What Are the New Technical Safeguard Requirements?
The NPRM substantially modifies how a regulated entity should implement a contingency plan and respond to security incidents. HHS proposes a new “vulnerability management” standard that would require regulated entities to establish technical controls to identify and address certain vulnerabilities in their respective relevant electronic information systems. We summarize these new standards and protocols below:
Contingency Plan – The NPRM would add additional implementation standards for contingency plans. HHS is proposing a new “criticality analysis” implementation specification, requiring regulated entities to analyze their relevant electronic information systems and technology assets to determine priority for restoration. The NPRM also adds new or specifying language to the existing implementation standards, such as requiring entities to (1) ensure that procedures are in place to create and maintain “exact” backup copies of electronic protected health information (ePHI) during an applicable event; (2) restore critical relevant electronic information systems and data within 72 hours of an event; and (3) require business associates to notify covered entities within 24 hours of activating their contingency plans.
Incident Response Procedures – The NPRM would require written security incident response plans and procedures documenting how workforce members are to report suspected or known security incidents, as well as how the regulated entity should identify, mitigate, remediate, and eradicate any suspected or known security incidents.
Vulnerability Management – HHS discussed in the NPRM that its proposal to add a new “vulnerability management” standard was to address the potential for bad actors to exploit publicly known vulnerabilities. With that in mind, this standard would require a regulated entity to deploy technical controls to identify and address technical vulnerabilities in its relevant electronic information systems, which includes (1) automated vulnerability scanning at least every six months, (2) monitoring “authoritative sources” (e.g., CISA’s Known Exploited Vulnerabilities Catalog) for known vulnerabilities on an ongoing basis and remediate where applicable, (3) conducting penetration testing every 12 months, and (4) ensuring timely installation of reasonable software patches and critical updates.
Stay Tuned
Next week, we will continue Bradley’s weekly NPRM series by analyzing justifications for HHS’s proposed Security Rule updates, how the proposals may change, and areas where HHS offers its perspective on new technologies. The NPRM public comment period ends on March 7, 2025.
Please visit HIPAA Security Rule NPRM and the HHS Fact Sheet for additional resources.
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McDermott+ Check-Up: February 21, 2025
THIS WEEK’S DOSE
Senate Passes Budget Resolution. The “skinny” bill was put on the Senate floor shortly after President Trump expressed support for the House’s version.
Administration’s Federal Workforce Cuts Hit HHS. Thousands of employees were let go across the divisions of the US Department of Health and Human Services (HHS).
President Trump Issues Several EOs. The executive orders (EOs) relate to in vitro fertilization, COVID-19 vaccine mandates, independent agencies, deregulation, and the federal workforce.
Legal Challenges Continue to Block Gender-Affirming Care EO. A federal judge issued a second 14-day stay as the court considers the legality of the order.
CONGRESS
Senate Passes Budget Resolution. Last week, the Senate and House Budget Committees each passed separate, and very different, budget resolutions as their first steps toward negotiating a unified budget resolution that must pass both bodies in order for work to proceed on reconciliation. These resolutions reflected each chamber’s preferred approach. The Senate is moving a two-part reconciliation strategy by advancing a “skinny” resolution that only addresses immigration, energy, and defense priorities (but which still may utilize healthcare as a pay for). The Senate would act later to advance a separate resolution to extend the 2017 tax cuts. The Senate’s goal is to provide President Trump with a quick win, then take the additional time members think will be necessary to pass a reconciliation package tackling tax cuts. In contrast, the House is proceeding with a budget resolution that includes tax cuts and a minimum of $1.5 trillion in spending reductions. The House approach clearly puts healthcare on the table for significant cuts. Medicaid is a particular focus given that the resolution would require the House Energy & Commerce Committee to come up with $880 billion in savings.
While the House was in recess this week, Senate Majority Leader Thune (R-SD) scheduled a vote on the recently advanced Senate budget resolution. Then, on February 19, President Trump endorsed the House’s one-big-bill approach. This Senate still moved forward with the scheduled vote, passing the resolution 52 – 48 and indicated that doing so will provide a backstop if House efforts fail. Senator Paul (R-KY) was the only Republican to vote no.
House Republican leaders plan to bring their budget resolution to the House floor as soon as next week, but the timing is uncertain as several Republican members of Congress have expressed hesitation about supporting it. Some are Republicans in swing districts who are concerned about the magnitude of Medicaid cuts. Others are members who oppose voting to increase the debt limit, which is also included in the budget resolution.
ADMINISTRATION
Administration’s Federal Workforce Cuts Hit HHS. Over the weekend, the Trump administration reduced HHS’s workforce by several thousand employees across several agencies, including the US Food & Drug Administration, the Centers for Medicare & Medicaid Services (CMS), the Centers for Disease Control and Prevention, and the National Institutes of Health. Many who were let go had probationary status (meaning they were hired or promoted less than a year ago) or temporary status (which could include employees who have spent years in their role). The laid-off employees had worked on a variety of issues, such as Medicare and Medicaid quality initiatives, medical device approvals, public health preparedness, and artificial intelligence. At this time, there is no transparency as to the positions eliminated or even the overall counts. Per a recent EO, the agencies could be restricted from adding staff, as the EO permits hiring of no more than one employee for every four employees that depart.
President Trump Issues Several EOs. The administration continues to highlight and implement its agenda through EOs. Relevant EOs issued this week include the following:
IVF. This EO directs the assistant to the president for domestic policy to submit a list of policy recommendations to protect in vitro fertilization (IVF) access and reduce the out-of-pocket and health plan costs for the treatment. The fact sheet can be found here. Like many other EOs, additional steps would need to be taken before any changes occurred.
COVID-19 Vaccine Mandates. This EO mandates the withholding of federal funds from educational entities that require students to receive a COVID-19 vaccination to attend in-person education programs. It requires the secretaries of education and HHS to issue guidelines for compliance, a report on noncompliant entities, and a planned process for each agency’s implementation. The fact sheet can be found here. It is unclear how much practical impact this EO may have, because most of these directives have ceased to be enforced.
Independent Agencies. This EO requires independent agencies, including the Federal Trade Commission, to submit proposed regulations to the Office of Information and Regulatory Affairs before publication in the Federal Register. The EO directs the Office of Management and Budget (OMB) to establish performance standards and management objectives for independent agencies and to review independent agency actions for consistency with the president’s priorities. The EO also states that only the president and attorney general can provide interpretations of law for the executive branch.
Deregulation. This EO directs agency heads to work in coordination with Department of Government Efficiency team leads and OMB to review all regulations subject to their jurisdiction for consistency with law and administration policy. Within 60 days, agencies must submit to OMB a list of certain regulations, including those that are unconstitutional, are not authorized by statutory authority, and impose undue burdens on small businesses. The EO states that agencies should deprioritize actions that enforce regulations that go beyond the powers vested by the Constitution and should ensure that enforcement actions are compliant with law and administration policy. The EO also directs OMB to issue implementation guidance.
Federal Workforce. This EO requires HHS to terminate the secretary’s advisory committee on long COVID-19, and CMS to terminate the health equity advisory committee. It also directs non-statutory components and functions of certain foreign affairs governmental entities to be eliminated, as allowed under applicable law, and directs such entities to submit a report stating whether components of the entity are statutorily required.
COURTS
Legal Challenges Continue to Block Gender-Affirming Care EO. Lawsuits continue to be filed against actions taken by the Trump administration, including EOs and other administrative announcements. This includes a lawsuit filed by the attorneys general of Washington, Oregon, Colorado, and Minnesota, along with three doctors who provide gender-affirming care to youth. On February 14, a federal judge issued a two-week temporary restraining order that blocks the withholding of funds to healthcare entities that provide gender-affirming care to patients under 19. This is the second judge to take action on this EO. On February 13, another judge issued a two-week temporary restraining order blocking enforcement of the EO.
QUICK HITS
CBO Publishes Explainer on Scoring. The document explains how the Congressional Budget Office (CBO) prepares cost estimates for legislation. This process is top of mind for stakeholders as the budget reconciliation process (which is expected to include healthcare-related budgetary offsets) continues.
NEXT WEEK’S DIAGNOSIS
Congress will be in session next week, with the House potentially voting on its budget resolution. The Senate will continue work to confirm President Trump’s nominees, including a nomination hearing for Dan Bishop as deputy director of OMB. Health-related hearings include:
A House Energy & Commerce Health Subcommittee hearing on pharmacy benefit managers.
A House Veterans’ Affairs Committee hearing on electronic health record modernization.
A House Oversight and Government Reform Committee hearing on the US Government Accountability Office’s 2025 high-risk list.
A Senate Special Committee on Aging hearing on the opioid epidemic.
We expect the administration to continue taking executive actions related to healthcare.
FTC Deadlock May End Next Week
On Tuesday, February 25, 2025, the Senate Committee on Commerce, Science and Transportation will hold a hearing to confirm the nomination of Mark Meador to serve as a Federal Trade Commissioner. Meador previously served in the Department of Justice Antitrust Division and the FTC’s Health Care Division. Most recently, he was a founding partner at Kressin Meador Powers LLC, where he was an antitrust litigator. If confirmed, Mr. Meador will be the third Republican Commissioner (along with Commissioners Andrew Ferguson and Melissa Holyoak) and will complete the full roster of five Commissioners. Meador’s confirmation would also end the deadlock that currently plagues the Commission and begin a Republican majority era at the FTC.
On January 23, 2025, the FTC approved a motion to give Chairman Ferguson the authority to comply with President Trump’s executive orders ending Diversity Equity and Inclusion initiatives across the federal government. Following the anticipated confirmation of Mr. Meador, we can also expect the FTC to slow the rulemaking pace of the prior administration, increase scrutiny of Big Tech (including aggressive antitrust enforcement of the industry’s largest players), and reduce regulation of Artificial Intelligence technologies. Maybe we’ll even see updates to the Green Guides.
Ch-ch-ch-ch-changes… for the UK Competition and Markets Authority
By repeating “ch-ch-ch-ch-changes” in his famous song, David Bowie was reportedly trying to mirror the stuttered steps of growth. January 2025 was a month full of changes for the UK Competition and Markets Authority (CMA). As with any changes, it is difficult to predict their effect precisely, only time will tell. Although we do not have a crystal ball, however, our longstanding and in-depth experience in UK competition law gives us unique insights on what to expect and most importantly how to adapt. In this update, we will cover some of these key changes including:
The entry into force of the Digital Markets, Competition and Consumers Act (DMCCA) and related updated guidance.
An anticipated reform of the UK concurrency regime to extend to consumer protection.
The exercise by the CMA of its new DMCCA powers to designate companies with Strategic Market Status (SMS).
Last but not least, perhaps the changes that grabbed the headlines the most: the CMA has a new interim Chairperson and the UK government’s “steer” to the CMA’s CEO.
The underlying theme of all these changes is a drive towards growth… In the CMA’s own words, the “new regime provides a unique opportunity to encourage the benefits of investment and innovation from the largest digital firms, while ensuring a level playing-field for the many start-ups and scale-ups across the UK tech sector.” Hopefully, not a stuttered growth, only time will tell.
DMCCA and New Guidance
With the entry into force of the DMCCA on 1 January 2025, the CMA published updated guidance on its merger control and antitrust procedures. We have previously written our summary of the DMCCA and the main changes introduced to the updated CMA guidance, compared to the previous guidance, to reflect the DMCCA is available is available in this rider.
Concurrency Regime
The CMA also published a report entitled a ‘review of the competition concurrency arrangements’ which sets outs its findings and recommendations following its consultation seeking opinions on the effectiveness of the current competition concurrency arrangements. These arrangements have so far referred to the concurrent powers of the CMA and various sector regulators to apply UK competition law in their respective sectors – e.g. the CMA and Ofcom in the electronic communications sector. With the DMCCA, the concurrency arrangements now extend also to consumer protection law. Therefore, the CMA’s report recommends that: “In light of the reforms in the DMCC Act [DMCCA], we think there is merit in a more in-depth review of the effectiveness of existing consumer concurrency arrangements, and how the CMA works with the sector regulators to fulfil their consumer protection roles in the regulated sectors.”
SMS Designations
The CMA has already launched three investigations under the DMCCA for new SMS designations:
The first will consider whether Google has SMS in the provision of search and search advertising services.
The second and third will consider whether Google and Apple have SMS in their respective ‘mobile ecosystems’ which include app stores, the operating systems and browsers that operate on mobile devices.
The CMA’s CEO said the probes will have a “significant impact” not just on companies selected for designation but “also the stakeholders,” and therefore it is necessary to have a “lot of engagement.” Moreover, the CMA has also provisionally found in the on-going cloud services market investigation that it intends to recommend to the CMA board to designate Amazon Web Services (AWS) and Microsoft with SMS in the provision of cloud services.
New CMA Chairperson
After an unsatisfactory meeting in Downing Street, with the UK government citing a fundamental ‘difference of approach’ in how best to drive growth and investment, the then chair of the CMA, Marcus Bokkerink, resigned and Doug Gurr – a former head of Amazon UK and Amazon China – was appointed as Interim Chair, sparking controversy. In a letter to the Financial Times, Doug Gurr confirmed an immediate review of the CMA’s work, so as to ensure that it makes “[g]ood decisions, clear decisions, rapid decisions — that’s what you tell us you need and that’s on us to deliver.”
This change at the helm of the CMA coincided with news that the authority had overspent on its budget, resulting in the launch of a redundancy program that is expected to affect up to 10% of its workforce. However, the CMA has confirmed that the Digital Markets Unit (DMU) in charge of enforcing the new SMS regime introduced by the DMCCA will be ring-fenced, as well as the unit in charge of mergers, meaning cuts in other parts of the authority staff.
Both Doug Gurr and Sarah Cardell, the CMA’s current CEO, emphasised that the change in direction will not impact the core of the CMA’s work (i.e., antitrust, cartels and consumer protection). However, it cannot be excluded that the substantial reduction in the CMA’s workforce (outside the DMU and mergers), and the prioritisation of smarter and faster merger reviews, will affect the capacity of these other functions.
The Government’s “steer” to the CMA’s CEO
Pressure from the government to be less risk averse and more pragmatic has spurred the CMA to pledge to “drive growth and investment” and speed up its decisions. Sarah Cardell has stated that the regulator would judge mergers to make sure they “enhance business and investor confidence” whilst also ensuring to protect “effective competition for the benefit of UK businesses and consumers”. Jonathan Reynolds (Secretary of State for Business and Trade) has suggested the UK in fact has too many regulators and has called on the competition watchdog to be “more agile”.
The government’s draft “strategic steer” for the CMA further enhances the upheaval in the competition sphere.
The government sends a clear message, that is, the CMA’s approach must in fact reflect the need to enhance the UK as hotspot for international investment. The CMA’s approach must contribute to the “overriding national priority” of economic growth.
Additionally, this draft instructs the CMA to take into account the actions of other regulators…globally. The CMA, “where appropriate, [should] seek to ensure parallel regulatory action is timely, coherent and avoids duplication”.
Sarah Cardell has hence stated that, “[w]e have today set out a programme of rapid, meaningful changes to our mergers process, which will enhance business and investor confidence and enable us to continue protecting effective competition for the benefit of UK businesses and consumers.”
The CMA has said that it would complete a pre-notification phase on its investigations within 40 working days. This is a drastic reduction from the current 65 working days (approximately). Additionally, the CMA plans to reduce the timings for a “straightforward phase 1” investigation to 25 working days from 35 working days. Sarah Cardell stated, “[w]e know speed of decision making is vital to reduce uncertainty and costs for businesses”. This move also stems from comments made by Sir Keir Starmer who has stated previously that the government would “make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room does”.
There appears to be further changes in the near future. The CMA’s review of remedies will be starting in March 2025 and this brings about the chance for large changes. The review will include looking at an increased openness to behavioural remedies, the role of “relevant customer benefits” to offset anti-competitive effects and the scope for remedies to play a role in “locking-in” pro-competitive efficiencies (as already shown in the recent Vodafone/Three conditional approval decision).
Conclusion
The dust is still settling from the events of January and yet there may be more changes to come. It is unclear whether Doug Gurr will be confirmed as the permanent Chair (there still needs to be a process, of course). The 10% workforce reduction is likely to curtail activity outside merger control and digital market regulation. The drive towards growth could mean a more lenient approach to mergers, especially when it comes to considering behavioural remedies. Additionally, it remains unclear whether the CMA will open new SMS investigations beyond those already commenced against Apple and Google, although the provisional findings in the CMA cloud services market investigation indicate that the CMA is minded doing so.
Employer Strategies for Navigating RIFs – One-on-One with Ann Knuckles Mahoney [Video]
A reduction in force (RIF) is a complex process that demands more than just operational adjustments. It requires meticulous planning to align business objectives with legal compliance, sound decision-making, and thorough risk mitigation.
In this one-on-one interview, Epstein Becker Green attorney Ann Knuckles Mahoney joins George Whipple to unpack the intricate legal considerations that come with workforce reductions. Ann walks through the critical aspects of adhering to the Older Workers Benefit Protection Act and the challenges posed by the Worker Adjustment and Retraining Notification Act, especially for employers handling layoffs across multiple jurisdictions.
With federal, state, and local regulations at play, Ann emphasizes the value of proactive legal counsel to help businesses anticipate potential liabilities, address state-specific obligations, and implement compliance plans for large-scale workforce changes. Drawing on her experience advising clients nationwide, she shares how her perspective is shaped by both her Southern roots in Tennessee and her legal career in New York City. This blend of regional understandings gives her a distinctive vantage point to counsel employers navigating varying regulatory requirements and risk tolerances.
Hear more from Ann and learn actionable strategies for RIFs while staying ahead of evolving legal challenges.
BOI is Back: Corporate Transparency Act Reporting Requirements Reinstated
Amid a series of ongoing legal battles, the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) have been reinstated. In light of the U.S. Supreme Court’s January 23, 2025 order in McHenry v. Texas Top Cop Shop Inc., which granted the government’s request for a stay of a nationwide injunction in a separate case challenging the BOI reporting requirements, on February 17, 2025, the U.S. District Court for the Eastern District of Texas granted the government’s motion to stay the preliminary injunction issued in Smith v. United States Department of the Treasury. As a result, U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is no longer prohibited from enforcing the CTA’s BOI reporting requirements, and reporting companies’ compliance obligations have resumed. This ruling is pending an appeal to the U.S. Court of Appeals for the Fifth Circuit.
FinCEN has announced a 30-day deadline extension for reporting companies. The new deadline for the majority of reporting companies to file an initial, updated, and/or corrected BOI report is March 21, 2025. FinCEN has also indicated that it will assess the need for further modifications to the reporting deadlines during this 30-day extension period, with a focus on lower-risk entities.
In parallel, BOI reporting requirements are receiving legislative attention. The Protect Small Business from Excessive Paperwork Act of 2025 unanimously passed the U.S. House of Representatives and a companion bill is awaiting action in the Senate. If enacted, reporting companies formed before January 1, 2025 will have until January 1, 2026 to comply with the BOI reporting requirements.
Reporting companies must ensure they are prepared to meet the March 21, 2025 filing deadline. While further adjustments may be forthcoming, companies are advised to remain proactive in their compliance efforts.
Corporate Transparency Act Back in Effect with March 21 Deadline
The Financial Crimes Enforcement Network (FinCEN) issued a notice confirming that beneficial ownership information (BOI) reporting rules are back in effect following a February 18, 2025, ruling in Smith, et al. v. U.S. Department of the Treasury, et al. in the Eastern District of Texas. The Smith Court lifted its injunction following the January 23, 2025, Supreme Court decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al., which we discussed in a previous alert.
For most reporting companies,[1] the deadline to file a new, updated, or corrected BOI report is now March 21, 2025. However, FinCEN’s notice states that the agency will use the 30-day period before the deadline to “assess its options to further modify deadlines, while prioritizing reporting for those entities that post the most significant security risks.” According to the notice, FinCEN may also work toward revising the BOI reporting rules to “reduce the burden for lower-risk entities.”
Recent legislation unanimously passed in the U.S. House of Representatives exacerbates the lack of certainty around the new deadline. H.R. 736, Protect Small Businesses From Excessive Paperwork Act of 2025, which is now before the Senate, would extend the deadline for filing BOI reports to January 1, 2026, for companies formed before January 1, 2024.
The Corporate Transparency Act (CTA) contains civil and criminal penalties for noncompliance. Reporting companies that take a “wait and see” approach between now and March 21, 2025, should be prepared to file quickly as the deadline approaches. Given the compressed timeframe and the single deadline for the vast majority of companies, there may be a significant demand on FinCEN’s online portal as we approach March 21.
CTA in the Courts
For those keeping score on the CTA litigation front, both cases mentioned above are currently pending in the U.S. Court of Appeals for the Fifth Circuit, with oral arguments scheduled in Texas Top Cop Shop for April 1, 2025. Other cases on appeal to circuit courts include:
National Small Business United v. Yellen — The U.S. District Court for the Northern District of Alabama issued an injunction preventing enforcement of the CTA against the named plaintiffs. Oral arguments were held on September 27, 2024, in the government’s appeal to the U.S. Court of Appeals for the Eleventh Circuit. No decision has been issued.
Firestone et al v. Yellen et al. — The U.S. District Court for the District of Oregon denied the plaintiffs’ request for a preliminary injunction, and the plaintiffs appealed the decision to the U.S. Court of Appeals for the Ninth Circuit.
Community Associations Institute et al v. U.S. Department of the Treasury et al. — The U.S. District Court for the Eastern District of Virginia denied the plaintiffs’ request for a preliminary injunction, and the plaintiffs appealed the decision to the U.S. Court of Appeals for the Fourth Circuit.
In a noteworthy decision on February 14, 2025, in Boyle v. Bessent, et al., the U.S. District Court for the District of Maine granted the government’s motion for summary judgment, finding the CTA to be a valid exercise of congressional authority.
We will continue to monitor this situation closely and provide updates as needed.
ENDNOTES
[1] Companies that were previously granted an extended deadline later than March 21, 2025, must file by such later deadline. In addition, the injunction in favor of the plaintiffs in National Small Business United v. Yellen remains unaffected by the latest ruling. Companies formed after February 19, 2025, must file within 30 days of formation.
Will Pillar Two Crumble Before It’s Built?
Over 135 jurisdictions signed up for a global Organisation for Economic Cooperation and Development (OECD) project in October 2021 aimed at reforming the international taxation system. A Two-Pillar approach was developed to combat base erosion and profit-shifting strategies, which large multinational enterprises (MNEs) employ to move their profits to low or no-tax jurisdictions or to lower their tax bases through deductible expenses. On the first day in office of his second term, President Donald Trump withdrew from this “Global Tax Deal.” The threat of punitive measures now looms over countries that impose tax on US MNEs under their domestic Pillar Two legislation.
Pillars One and Two
In summary, Pillar One reallocates the profits of MNEs from jurisdictions where they earn income to those where they have substantial engagement (i.e., where they sell goods and supply services). Pillar Two imposes a minimum effective tax rate of 15 percent on MNEs (with over €750 million in turnover) in every country in which they operate, regardless of local tax rates or available reliefs. Pillar Two comprises a set of Global Anti-Base Erosion (GloBe) rules that include two key tax collecting mechanisms (applicable where the effective tax rate in a jurisdiction is lower than 15 percent):
Income Inclusion Rule (IIR): a top-up tax is paid in the jurisdiction of the ultimate parent entity or of the intermediate parent entity.
Undertaxed Payment Rule (UTPR): if the IIR does not collect all the top-up tax in a certain jurisdiction, the UTPR assigns the liability to pay the top-up tax to the other constituent entities (in other jurisdictions) of that MNE group.
Executive Orders
Among the numerous executive orders that President Trump has signed since his inauguration, two are particularly relevant here. First, as mentioned, President Trump withdrew all US commitments to the Global Tax Deal, stating that it “allows extraterritorial jurisdiction over American income,” and ordered that the Secretary of the Treasury shall investigate whether any foreign countries have put in place or are likely to put in place any tax rules that are “extraterritorial or disproportionately affect American companies” and develop options for protective measures. Second, the Secretary of Commerce and the Office of the United States Trade Representative have been tasked with investigating if any foreign countries subject US citizens or corporations to “discriminatory or extraterritorial taxes pursuant to section 891 of title 26, United States Code.” Section 891 allows for the doubling of US tax rates on foreign citizens and corporations without prior approval from Congress. Importantly, Section 891 has been on the statute book for approximately 90 years but has never been invoked.
What Might Happen Now?
President Trump has been highly critical of Pillar Two for several years, and it has long been speculated that under a Trump administration, countries may be reluctant to apply the UTPR to US corporations for fear of retaliation, specifically in the form of tariffs on their exports to the United States. As such, the withdrawal from the Global Tax Deal comes as no real surprise. However, two important questions arise: (i) how does this affect the US income of foreign individuals and corporations, and (ii) where does this leave the future of the Global Tax Deal?
As opposed to the retaliatory tariffs, doubling taxes under Section 891 would not only directly affect a significant number of corporations but also the income of individuals. The threat of invoking Section 891 is startling, given this is likely one of the most extreme options President Trump has at his disposal in this context. Several questions also remain unanswered. For example, how would these measures work in practice, what would their interactions be with Double Taxation Treaties (which generally take precedence over domestic rules) or how would this affect US dual citizens?
Section 891 measures seem so radical that they could be viewed as an exaggerated but unlikely threat. However, the US House Committee on Ways and Means has introduced a more realistic form of potential retaliatory measures in the form of the Defending American Jobs and Investment Act. This proposes the following: first, countries that impose “discriminatory taxes” on US businesses would be identified. The UTPR is given as an example of such “discriminatory taxes.” Then, the tax rates on the US income of individual investors and corporations from those countries would increase by 5 percent each year for four years, after which the tax rates would remain elevated by 20 percent while “the unfair taxes are in effect.” Though undoubtedly a lesser risk than the doubling of tax rates, this proposal would still result in a heavy financial and administrative burden on corporations (and individuals), affecting their profitability. Many corporations and individuals may also have to rethink or restructure planned business ventures, resulting in additional legal and advisory costs.
At the same time, numerous corporations have already incurred significant administrative costs in preparing for Pillar Two to come into effect — and around 50 countries have already implemented Pillar Two rules. However, with President Trump’s executive order withdrawing US support of the Global Tax Deal, Pillar Two’s future is now uncertain.
It is universally acknowledged that the success and future of Pillar Two rests on collective effort and cooperation between countries. The threat of the retaliatory measures as described above, including the potential for the imposition of tariffs by the United States (which is still highly pertinent), may give rise to two outcomes. On the one hand, many jurisdictions may be slower to adopt Pillar Two rules or avoid implementing them all together. This will likely depend on the severity of any retaliatory measures proposed rather than purely based on US withdrawal from the deal (given that House Republicans, who held a majority when Pillar Two came into being, were against its implementation — US implementation was never guaranteed).
On the other hand, US retaliation to Pillar Two implementation may escalate global economic tensions. Countries may recognize and use their existing leverage to fight such measures. For example, several countries have frozen their digital services taxes (which the United States has long opposed) due to the implementation of the Global Tax Deal, thereby benefitting US tech giants. As such, countries have the option of reinstating these taxes at their disposal.
Amongst so much uncertainty, one thing is clear: both corporations and individuals must monitor any updates in this area vigilantly. Developments, with respect to either the implementation (or lack thereof) of Pillar Two by countries or US retaliatory measures, may be highly consequential. Keeping on top of them will be key to proactively and effectively addressing resulting challenges as and when they arise.
*Georgia Griesbaum, trainee in the Transactional Tax Planning practice, contributed to this article.
Corporate Transparency Act Returns: New Deadline March 21, 2025
On February 17, 2025, the Eastern District of Texas in Smith v. United States Department of the Treasury lifted the last remaining nationwide preliminary injunction on enforcement of the filing deadline under the Corporate Transparency Act (CTA) in light of the Supreme Court’s stay of the injunction in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, et al., earlier this year. Following the ruling, the Treasury Department stated that it would extend the filing deadline to March 21, 2025.
With the deadline back in effect, newly formed entities will also need to file within 30 days of formation. In addition, any changes to filings already made will need to be updated within 30 days of the change (if, for example, ownership or control of the entity changes, or if a beneficial owner moves to a new residential address).
The Financial Crimes Enforcement Network (FinCEN), tasked with enforcing the CTA, advised that it is undertaking a review of the CTA to determine if lower-risk categories of entities should be excluded from the reach of the filing requirements. FinCEN will make an initial statement on that review prior to the March 21, 2025 deadline. However, unless and until FinCEN makes changes in the applicability of the requirement, all companies subject to the CTA should treat the deadline as enforceable.
FinCEN also announced that it will initiate a longer process this year to revise the reporting rule to reduce the filing burden for lower-risk entities, but it’s currently unclear as to what those modifications might entail.
Passed in the first Trump Administration but implemented during the Biden presidency, the CTA — an anti-money laundering law designed to combat terrorist financing, seize proceeds of drug trafficking, and root out illicit assets of sanctioned parties and foreign criminals in the U.S. — has faced legal challenges around the country, many of which are ongoing despite the lifting of the preliminary injunctions. In addition to district court proceedings, appeals are currently pending before the Fourth, Fifth, Ninth, and Eleventh Circuits.
Please note that if you file or have already filed and the law is ultimately found unconstitutional or otherwise overturned or rescinded, you will not be under any continuing obligation regarding that filing.