USTR Seeks Public Input on Unfair Trade Practices: Impact and Next Steps
The United States Trade Representative (“USTR”) is requesting comments by March 11, 2025, on unfair trade practices in other countries. This alert provides a brief overview of USTR’s request, its potential impacts, and next steps.
The Request: USTR is requesting comments as part of President Trump’s America First Trade Policy. President Trump intends to take action to remedy unfair trade practices from any country with which the United States has a trade deficit. USTR is asking for public input identifying unfair trade practices and their impact. There is a particular interest in large economies with which the United States has trade deficits. USTR will use the comments to make recommendations to President Trump in a report due April 1, 2025. The comment period is not exclusive. USTR may take action in advance of these submissions and has said that it welcomes “ongoing engagement” past the comment period.
Potential Impacts: USTR’s list of countries covers 88 percent of goods trade with the United States. For business facing unfair foreign competition, this is an opportunity to let the administration know about your concerns. Unfair trade practices “may encompass an expansive range of practices,” and USTR is open to considering practices not traditionally considered as trade issues. It is unclear what actions the USTR may take to remedy these practices, but increased tariffs are a likely outcome. It is also unclear when such remedies will be put in place.
Next Steps: Interested parties may submit comments through the USTR Comments Portal. The Blank Rome team can advise and assist companies who wish to participate in this process.
A Preliminary Injunction Does Not a “Prevailing Party” Make, Criminal Conviction Through Knowingly False Evidence Violates Due Process – SCOTUS Today
The U.S. Supreme Court decided two cases today, one of which, Lackey v. Stinnie, involved an action brought pursuant to 42 U. S. C. §1983 and should be of particular interest to the many readers of this blog who practice in the civil rights space.
The second case, Glossip v. Oklahoma, is a homicide case in which the state knowingly adduced false testimony. But does the Supreme Court have jurisdiction to reverse the conviction? The answer is that it does, though an interesting mix of Justices take more than 70 pages to explain their competing views.
Lackey v. Stinnie involved a group of drivers whose licenses were suspended under a Virginia law sanctioning drivers who had failed to pay court fines. They challenged the statute as unconstitutional, and the U.S. District Court for the Western District of Virginia granted a preliminary injunction prohibiting the Virginia Department of Motor Vehicles from enforcing it. Before the case could come to trial, the state legislature repealed the law and, by agreement of the parties, the case was dismissed as moot. 42 U. S. C. §1988(b) allows the award of attorneys’ fees to “prevailing parties” under §1983, and the plaintiffs sought them. Writing for himself and six other Justices (only Justice Jackson, joined by Justice Sotomayor dissented), the Chief Justice applied a strict view of the “American Rule” and held that “the plaintiff drivers, who had gained no more than preliminary injunctive relief before the action became moot—do not qualify as ‘prevailing part[ies]’ eligible for attorney’s fees under §1988(b) because no court conclusively resolved their claims by granting enduring judicial relief.” The Court began with text, recognizing that “prevailing party” is a legal term of art. At the time when §1988(b) became law, “contemporary dictionaries defined a prevailing party as one who successfully maintains its claim when the matter is finally resolved.” A preliminary injunction doesn’t do that, because it does not conclusively decide the case on the merits. Indeed, the preliminary injunction does no more than signal likely success on the merits, “along with factors such as irreparable harm, the balance of equities, and the public interest.” The preliminary injunction’s purpose is to preserve the status quo until a trial resolves the case, and “external events that render a dispute moot do not convert that temporary order into a conclusive adjudication on the merits that materially altered the legal relationship between the parties.”
An important caveat is found in a footnote pointing out that the question of who is a “prevailing party” is different for defendants and plaintiffs. Thus, the Court’s decision today “should not be read to affect our previous holding that a defendant need not obtain a favorable judgment on the merits to prevail, nor to address the question we left open of whether a defendant must obtain a preclusive judgment in order to prevail. See CRST Van Expedited, Inc. v. EEOC, 578 U. S. 419, 431−434 (2016). “As we have explained, ‘[p]laintiffs and defendants come to court with different objectives.’” Here, the Court rejects the claim accepted by the dissenters that the drivers “prevailed” because they ultimately succeeded in having the law repealed. However, they didn’t succeed in prosecuting an actual claim in a legal action. And taking that road “made all the difference.” Frost, R., “The Road Not Taken.”
Glossip v. Oklahoma is one of those cases that, if nothing else, defies common notions about how the Justices will align. Here is a case in which Justice Sotomayor delivered the majority opinion of the Court, having been joined by the Chief Justice and Justices Kagan, Kavanaugh, and Jackson. Justice Barrett concurred in part and dissented in part, and Justice Thomas, joined by Justice Alito, dissented. Justice Gorsuch recused because he had sat on an earlier version of the case while on the U.S. Court of Appeals for the Tenth Circuit. As noted, the Justices spared no ink in dealing with this murder case. Years after Glossip was convicted of murdering his boss and sentenced to death, and after he’d filed several habeas petitions, substantial doubt about his guilt emerged through an independent law firm investigation and the state discovering documents suggesting that the main witness against Glossip had testified falsely. Indeed, “[t]he attorney general determined that Smothermon [the prosecutor] had knowingly elicited false testimony from [the witness] Sneed and failed to correct it, violating Napue v. Illinois, 360 U. S. 264, which held that prosecutors have a constitutional obligation to correct false testimony.” However, the Oklahoma Court of Criminal Appeals denied an unopposed petition for a new trial, holding that the petition was barred by Oklahoma law and that the concession was “[n]ot based on law or fact” and did not constitute a Napue error because the defense likely knew that Sneed had testified falsely about his mental condition, and this condition somehow could be tolerated because Sneed was in denial about it. The Court’s majority was plainly unimpressed with this argument because, instead of remanding the case to state court to decide whether a new trial should be granted, the Court held that “[b]ecause ample evidence supports the attorney general’s confession of error in this Court, there also is no need to remand for further evidentiary proceedings.”
Two main aspects of the Court’s ruling should be noted. First, while the independent and adequate state ground doctrine precludes the Court from considering a federal question if the state court’s decision rests on an independent and adequate state law ground, the state court’s application of its procedural rule was not such a ground because it was premised on the rejection of the attorney general’s confession of error under Napue, which was based solely on federal law. However, Oklahoma precedent confirms that rejection of an attorney general’s confession generally has been made only after finding that it was unsupported by law and the record. “By making the application of the [the state’s procedural law] contingent on its determination that the attorney general’s confession of federal constitutional error was baseless, the [state court] made the procedural bar dependent on an antecedent ruling on federal law.”
Second, and more succinctly, the Court simply reversed the conviction and held that “[u]nder Napue, a conviction obtained through the knowing use of false evidence violates the Fourteenth Amendment’s Due Process Clause.”
Justice Barrett, who agreed generally with the majority, would have remanded the case for a determination as to whether a new trial was warranted. Justice Thomas, in dissent, wrote that the state court’s denial of a new trial “should have marked the end of the road for Glossip. Instead, the Court stretches the law at every turn to rule in his favor.”
Two decisions and two bright-line tests. The Court is busy—stay tuned next week.
Decoding the Independent Agency Executive Order: Implications for the Activities of Federal Agencies and Business Interests
The Ensuring Accountability for All Agencies Executive Order (the “Independent Agency EO”), signed by President Trump on February 18, extends unprecedented direct Administration control over independent regulatory agencies, such as the Federal Communications Commission, the Securities and Exchange Commission, the Federal Trade Commission, and the Federal Energy Regulatory Commission, among others.1 The Independent Agency EO requires, inter alia, the submission of “major regulatory actions” of independent agencies to the Office of Management and Budget’s (OMB), Office of Information and Regulatory Affairs (OIRA) in the White House, imposing OIRA review and approval requirements on these agencies regulatory actions. Such review, to this point, has been limited to actions of cabinet-level executive branch departments (and their respective components and agencies), such as the Departments of Justice, Commerce, Agriculture, Homeland Security, Energy, and Transportation, over which the President has plenary authority, including with respect to their regulatory activities and actions, and the hiring and firing of political appointees, who serve at the President’s pleasure.
In addition, on February 19, the President signed a follow-on Executive Order to implement its Department of Government Efficiency (DOGE) deregulatory initiative (the “Deregulation EO”), directing all Agency heads, including those of independent agencies, to initiate a process to review all regulations under their jurisdiction for consistency with law and the Administration’s policy objectives. Agency heads were also directed, within 60 days (by April 20) to identify and submit to OIRA, regulations that are within one of seven classes that meet the Administration’s criteria for inconsistency with law and its policy objectives.
Key Takeaways:
The Independent Agency EO purports to exert unprecedented direct presidential control over independent agencies, which were created by Congress as governmental agencies outside the President’s Administration in order to insulate them from direct political influence and control.
The order requires White House review of agency action, likely to slow the regulatory process and create uncertainty for business, though also providing business with a second “bite at the apple” to pare back or outright block particular agency regulatory initiatives through the OIRA process.
The Independent Agency EO, together with the Deregulation EO, are additional elements of efforts by the Trump Administration to limit the so-called “Administrative State”, and are simultaneously coupled with the assertion by the Administration of the President’s authority to remove independent agency heads and other political appointees at will, rather than for cause or under other criteria specified in the agency’s enabling statute. Challenges to two such removals are pending in federal court, and the acting U.S. Solicitor General has indicated in a letter to Senator Dick Durbin, ranking member of the Senate Judiciary Committee, that “certain for-cause removal provisions that apply to members of multi-member regulatory commissions are unconstitutional and that the Department [of Justice] will no longer defend their constitutionality.”
Together, these initiatives could provide the Administration with the ability to exert more direct control and influence over independent agencies, including to advance various Administration priorities, most obviously surrounding DEI, green energy, political speech, and others that will come into focus over time. In addition, the Deregulation EO’s call for an accelerated review for consistency with the Administration’s deregulatory and other policy objectives could potentially prompt some unexpected initiatives from the independent agencies.
Background
Independent regulatory agencies are quasi-legislative bodies created by Congress, that are outside the Administration yet technically are considered within the executive branch of the federal government. Independent agencies have historically acted independently from oversight and direction from the President’s administration in their rulemaking and other activities, with their power delegated by Congress through the agency’s enabling statute. The extent of the President’s authority over independent agencies has generally been thought to be limited by the provisions of an agency’s enabling statute, which typically does not extend beyond the President’s authority to appoint agency heads and senior governing officials (such as commissioners and board members), with the advice and consent of the Senate.
The Supreme Court has long held that independent agency political appointees cannot be removed without cause or in accordance with an agency’s enabling statute, which is in contrast with executive department heads serving in the President’s cabinet and other executive department political appointees, who serve at the pleasure of the President and may be removed at will. The President is now asserting the authority to fire independent agency political appointees at will, an issue which is currently pending in two federal court cases, as discussed further below.
OIRA is an office within OMB tasked with, under the 1993 Regulatory Planning and Review EO 12866 (as supplemented by 2011 EO 13563), reviewing and approving executive agency regulatory actions, ensuring compliance with executive orders, and coordinating the Administration’s policies among the cabinet-level executive departments and their component agencies. Prior to the Independent Agency EO, under EO 12866, only the regulatory actions and activities of executive departments, their agencies and components have been subject to OIRA review, which excludes “independent regulatory agency” from the definition of “agency” for purposes of EO 12866 compliance.2
The Executive Order
The Independent Agency EO declares that “[i]t shall be the policy of the executive branch to ensure Presidential supervision and control of the entire executive branch,” which President Trump says includes “the so-called ‘independent regulatory agencies.’” In accordance with this policy, all proposed and final “significant regulatory actions” must be submitted to OIRA for review and approval before the action is published in the Federal Register, removing a major element of these agencies’ independence. The OIRA submission requirement kicks in April 19, 2025 (or sooner if OMB releases new guidance before that date).
The Independent Agency EO also:
Details new protocols that OMB may coordinate and review with the agencies to ensure alignment with the Administration’s policies and agenda, including a provision directing OMB to establish performance standards for each independent agency head and requiring the periodic submission of reports to the president on each agency head’s “performance and efficiency.”
Requires each independent agency to create a White House liaison position within their agency and coordinate its policies and priorities with the White House.
Asserts that the President and Attorney General (subject to the President’s supervision), shall provide authoritative interpretations of law for the executive branch, and provides that no employee of the executive branch (which presumably includes employees of independent agencies) “may advance an interpretation of law as the position of the United States that contravenes the President’s and Attorney General’s opinion on the matter.”
Additional Considerations and Observations
As noted, the related question of whether the President may remove political appointees of an independent regulatory agency, which likewise implicates the authority of the President over these agencies, is simultaneously making its way through the courts, with the acting Solicitor General asserting in Congressional correspondence that the Department of Justice will no longer defend the constitutionality of for-cause removal provisions in independent agency enabling statutes. In one case pending before the U.S. District Court for the District of Columbia, the court temporarily stayed the President’s removal of the head of the Office of Special Counsel, with the Administration’s Application to the Supreme Court to vacate the stay held in abeyance pending further proceedings before the District Court on issuance of a preliminary injunction. In a second case, a challenge to the President’s firing of a member of the National Labor Relations Board is pending before a U.S. District Court in D.C., with an expedited briefing schedule and hearing set on the removed official’s motion for summary judgment.
It is not uncommon for independent agencies, whose head and majority (following appointments to vacancies) are typically of the President’s party, to align with the President on major policy initiatives. This can be seen, for example, from the on-again, off-again history of net neutrality’s treatment by the FCC, which has been directly connected to which party holds the presidency and the Chair and majority at the FCC. In recent comments to the press, FERC Chairman Mark Christie noted this typical pattern of alignment between the Administration in power and independent agencies on major initiatives and suggested that the majority of the consultation-related provisions of the Independent Agency EO appeared consistent with current practices, in some cases going back decades.
That said, what will be different under the Independent Agency EO, together with the authority of the President to fire independent agency heads at will if sanctioned by the Supreme Court, is that these agencies can be expected to become more of a direct instrument of the Administration in advancing its policy agenda. This can be seen most immediately from the FCC’s reported investigation into the DEI practices of an FCC-regulated entity, and the recent announcement by the FTC of an inquiry into policies of social media platforms affecting political speech. In addition, the Deregulation EO direction that all agencies, including independent agencies, identify regulations that are inconsistent with the Administration’s deregulatory and other policy objectives and develop a plan for rescinding or modifying those regulations, could potentially prompt some unexpected initiatives from the independent agencies but also could provide opportunities for regulated entities.
In terms of OIRA review, the executive order will likely slow the regulatory process and agency action, as publication in the Federal Register is to be delayed pending OIRA review for both proposed and final actions. This may be a “good news, bad news story” for businesses with issues before independent regulatory agencies. For those advocating for a particular position adopted by the agency, final action will likely be delayed and could be changed in the OIRA process. For those opposing particular agency action, the OIRA process, which includes consultation with other White House and Cabinet-level departments, as well as the ability of interested parties to comment and meet with OIRA on agency action under review, provides an additional opportunity to influence, and perhaps pare back or block, an agency proposal or final rule.
This order is likely to be subject to a court challenge, like other Trump Administration Executive Orders. Nevertheless, if your business is subject to the regulatory actions of these independent agencies, be prepared for an environment with some higher risks and uncertainty, but also for additional opportunity to engage with political actors in Congress and the Executive Branch, as well as the independent agencies themselves, to check agency action that may be adverse to your company’s interests.
1 The term “independent regulatory agency” is defined by statute in 44 U.S.C. § 3502(5) as the listed federal agencies in that section and “any other similar agency designated by statute as a Federal independent regulatory agency or commission.” In addition to the FCC, FTC, SEC, and FERC, independent agencies identified in that provision include the Federal Housing Finance Agency, the Federal Maritime Commission, the Interstate Commerce Commission (which was abolished in 1995, with the newly created Surface Transportation Board succeeding to its rail industry regulatory functions), the National Labor Relations Board, the Nuclear Regulatory Commission, and the Occupational Safety and Health Review Commission. The Independent Agency EO explicitly includes the Federal Election Commission, but excludes the Federal Reserve and its Federal Open Market Committee, though applies to Fed activities directly related to its supervision and regulation of financial institutions.2 Separately, in a process that companies with business before independent agencies may be familiar with, OIRA has explicit statutory authority under the Paperwork Reduction Act, 44 U.S.C. 3501, et seq., to review actions of any executive department or other entity in the executive branch, as well as of independent regulatory agencies, that require the submission of information to the government, so-called “information collections”. OIRA review of agency information collections under the Paperwork Reduction Act, which is a statutory requirement, is separate and distinct from reviews of executive agency regulatory actions and activities under EO 12866, which has now been extended to independent regulatory agencies by the Independent Agency EO.
Value-Based Care at a Crossroads: What’s Next and How To Prepare
The Trump administration will have its own vision on value-based care, creating specific priorities for the Center for Medicare & Medicaid Innovation (CMMI), the federal government’s primary testing ground for payment and service delivery model innovation in Medicare, Medicaid, and the Children’s Health Insurance Program. Republican political leadership may leverage CMMI’s $10 billion budget and sweeping waiver authorities to design and implement value-based care models that reflect the Trump administration’s goals. While specific actions remain unknown, the potential overall direction and key focus areas of CMMI can be forecast based on the work of the first Trump administration and incoming leadership.
This +Insight examines the current value-based care landscape and explores the potential changes on the horizon that are likely to bring both opportunities and challenges.
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Preserving Camera Footage in Anticipation of Litigation
In Chepilko v. Henry, the Southern District of New York denied plaintiff’s motion for spoliation sanctions, finding that a public records request and a civilian complaint did not trigger defendants’ duty to preserve electronic evidence. In the ruling, Magistrate Judge Stewart D. Aaron analyzed when one’s obligation to preserve camera footage “in anticipation of litigation” arises for purposes of Rule 37(e) spoliation.
Chepilko v. Henry Background
Plaintiff alleged one defendant — a lieutenant with the New York City Police Department (NYPD) — used excessive force during a street encounter.[1] One year later, plaintiff brought claims against the defendant and the NYPD, including for excessive force, failure to intervene, and malicious prosecution. During discovery, a dispute arose regarding preservation (or lack thereof) of NYPD camera footage that may have captured the incident. Although the footage at issue was destroyed pursuant to the NYPD’s 30-day retention policy for camera footage, plaintiff argued its destruction was improper because defendants had an obligation to preserve it at the time it was destroyed.
Plaintiff filed a motion for sanctions under Rule 37(e). In opposition, defendants argued that at the time of its deletion, defendants were not on any notice of an obligation to preserve the footage. Plaintiff did not file suit for more than 11 months and at no time prior to the filing did defendants reasonably anticipate litigation arising from the incident. Plaintiff countered that other factors – including a Freedom of Information Law (FOIL) records request and a civilian complaint filed with the New York City Civilian Complaint Review Board (CCRB) triggered defendants’ obligation to preserve the footage. In denying plaintiff’s Rule 37(e) motion, Judge Aaron considered each of plaintiff’s arguments.
At the outset of his decision, Judge Aaron noted the well-established “threshold” requirement for a successful Rule 37(e) sanctions motion – that the allegedly spoliating party have a reasonable “anticipation of litigation” at the time the evidence is destroyed. Judge Aaron rejected plaintiff’s argument that “the incident itself” should have put defendants on notice of litigation sufficient to trigger obligations to preserve and refused to “endorse a bright line rule that a police officer should anticipate litigation every time he issues a summons.” Moreover, where, as here, plaintiff was not injured and the force used was not excessive (as found on the merits), defendants are not deemed to have “reasonably foreseen litigation” as a result. Similarly, Judge Aaron noted that a 911 call after the incident did not trigger a preservation obligation as “Plaintiff merely advised the 911 operator that [the lieutenant] ‘pushed [Plaintiff] several times.’”
Judge Aaron also rejected plaintiff’s argument that his FOIL requests for the footage from relevant cameras, filed immediately after the incident, put defendants on notice of a duty to preserve. Because initiating a public records request does not equate to a request predicated upon a potential litigation, a FOIL request does not necessarily trigger a preservation obligation. Finally, Judge Aaron rejected the argument that a plaintiff-prompted CCRB investigation triggered an obligation to preserve. The judge found that the CCRB is a separate entity from the NYPD and merely filing a civilian complaint – a relatively common occurrence – does not necessarily trigger an obligation upon another entity to preserve evidence. Accordingly, Judge Aaron rejected plaintiff’s Rule 37(e) sanctions motion in its entirety.
Takeaways for Electronic Evidence Preservation
This case serves as a useful reminder that one’s obligation to preserve evidence is triggered when litigation is reasonably anticipated, and when that obligation is triggered can be a fact intensive inquiry. There are no bright line rules about when one should reasonably anticipate litigation, and the standard can be subjective.
[1] Plaintiff received a criminal summons for disorderly conduct in disrupting vehicular traffic for standing in the street during this encounter. The summons was dismissed soon after it was issued.
GeTtin’ SALTy Episode 47: Texas Legislative Insights, Politics, and State Tax Priorities [Podcast]
In this episode of GeTtin’ SALTy, host Nikki Dobay is joined by colleagues Elizabeth Hadley and Catalina Baron from Greenberg Traurig’s Texas offices to discuss the ongoing Texas legislative session and its implications on state and local tax policy.
Elizabeth is a member of Greenberg Traurig’s Government Law and Policy team and joins the GT SALT team to get in the weeds on Texas policy and politics. The conversation explores the nuances of Texas’s legislative process as well as some of the key priorities the Texas legislature will be focused on this year. Elizabeth goes on to discuss the state’s fiscal health and how it may impact those key priorities, including tax.
Nikki, Elizabeth, and Cat talk about property tax reform, which is on the legislative agenda proposing an increase in homestead exemptions. They also touch on other priorities such as education savings accounts, water infrastructure investments, and bail reform, exploring how these areas might interact with the budget and legislative calendar.
The episode concludes with a discussion about a couple Texas legislative traditions as well as TV guilty pleasures.
Texas Supreme Court Rejects Repackaging of Professional Claims
Artful Pleading Suffers Smackdown from Texas Supreme Court
On February 21, 2025, in Pitts v Rivas, the Texas Supreme Court finally accepted and applied the “anti-fracturing rule” to professional liability claims. The rule “limits the ability of plaintiffs to recharacterize a professional negligence claim as some other claim – such as fraud or breach of fiduciary duty – in order to obtain a litigation benefit like a longer statute of limitations.”1 This rule shall apply to any professional liability claim. Long recognized by Texas Courts of Appeals – primarily in legal malpractice cases – the Court applied the anti-fracturing rule in an accountant’s malpractice case.
BackgroundIn Pitts, a former client alleged multiple causes of action including fraud, breach of fiduciary duty, and breach of contract, as well as negligence, gross negligence, and professional malpractice against a group of accountants. On summary judgment, the accountant defendants argued the negligence claims were barred by Texas’s two-year limitations statute, and the fraud, contract, and fiduciary duty claims were barred by the anti-fracturing rule. The accountant defendants also claimed the breach of contract action was barred by Texas’s four-year limitations. The trial court granted summary judgment and dismissed the suit. The Court of Appeals disagreed regarding dismissal of the fraud and fiduciary duty claims and allowed them to proceed. The Texas Supreme Court reversed and held that under the undisputed facts, there was no viable claim for breach of fiduciary duty, and the fraud claim was barred by the anti-fracturing rule.
The Texas Supreme Court explained that the anti-fracturing rule limits plaintiffs’ attempts “to artfully recast a professional negligence allegation as something more – such as fraud or breach of fiduciary duty – to avoid a litigation hurdle such as the statute of limitations.”2 The Court cautioned that it is the “gravamen of the facts alleged” that must be examined closely rather than the “labels chosen by the plaintiff.”3
If the essence, “crux or gravamen of the plaintiff’s claim is a complaint about the quality of professional services provided by a defendant, then the claim will be treated as one for professional negligence even if the petition also attempts to repackage the allegations under the banner of additional claims.”4 To survive application of the rule, a plaintiff needs to plead facts that extend beyond the scope of what has traditionally been considered a professional negligence claim.5
In Pitts, the gravamen of the claims was that the accountants made accounting errors that eventually were fatal to the Rivas’s business, resulting in its bankruptcy. Although certain the accountants’ alleged errors occurred outside of the confines of their engagement agreement, the Court noted those errors still fell within the work that an accountant might generally perform for a small business. “The rule extends to any allegation that traditionally sounds in professional negligence[.]”6 The thrust of the claim based upon the facts was that the accountants were allegedly merely negligent in providing competent accounting services, which did not fall within a breach of fiduciary duty or fraud.7
AnalysisIn dissecting the difference between fraud and negligence, the Court noted that “[o]verstating one’s professional competence is a classic example of malpractice.”8 While the accountants realized their mistakes, failed to confess hoping “nothing would come of it,” and “finally suggested ways to hide them,” the Court noted that there was no evidence that the accountants were “engaged in a fraudulent scheme” against the business and its owners or intended in any way to harm them.9 Indeed, the actual harm to the business was due to the accounting errors made by the defendants and not from any misrepresentations associated with those errors.10
With respect to the claim for breach of fiduciary duty, the Court held that whether the anti-fracturing rule was applicable, no fiduciary duty existed as a matter of law.11
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1 Pitts v Rivas, 2025 Tex. LEXIS 131 *1 (Tex. 2025).2 Id. at *6-7.3 Id. at *7.4 Id.5 Id. at *8.6 Id. at *12.7 Id. at *13-14.8 Id.at *14.9 Id. at *14-15. 10 Id. at *15.11 Id. at *17.
What Every Multinational Company Should Know About … The New Steel and Aluminum Tariffs (Part II)
As reported in our prior article, “What Every Multinational Company Should Know About … The New Steel and Aluminum Tariffs (Part I),” President Trump signed two proclamations on February 10, 2025, imposing 25-percent tariffs on aluminum and steel. Although President Trump previously imposed Section 232 tariffs on aluminum and steel during his first administration, the new tariff announcement represents a sharp expansion of those tariffs in the following ways:
The aluminum proclamation reinstated and increased the aluminum tariff from 10 percent to 25 percent while wiping out the numerous product-specific exemptions that had built up over the last six-and-a-half years.
The steel proclamation globally reinstated the tariff on steel at 25 percent (the same rate as before) while also wiping out the numerous product-specific exemptions that had built up over the last six and a half years.
All previous negotiated exemptions and quotas of the prior Section 232 aluminum and steel tariffs with other countries were eliminated. Thus, the aluminum and steel tariff adjustments for Argentina, Australia, Brazil, Canada, Japan, Mexico, the United Kingdom, and the European Union are all now gone.
The application of the tariffs to “derivative” products (basically, downstream products that contain a lot of aluminum and steel) was sharply expanded.
At the time of our previous article on the topic, the critical Annexes that listed the covered derivative products had just been released, meaning our article did not analyze the implications of the derivative product inclusion. For steel, the Annex I derivative steel products include:
Steel screws, bolts, and nuts
Steel tube or pipe fittings
Steel wires, cables, and plaited band
Steel structures or parts thereof
Steel parts for passenger or freight elevators
Metal furniture
Steel modular building units
The aluminum tariff announcement states that because foreign aluminum producers “have continued to evade the tariff by processing covered aluminum articles into additional downstream derivative products,” it was expanding the Annex I derivative products to include:
Aluminum base metal mountings and fittings
Aluminum suspension systems
Aluminum articles and equipment for general physical exercise
We are seeing a lot of concern from the importing community about these newly expanded aluminum and steel tariffs. To help provide some insight, we are providing responses to some of the most frequent questions we are seeing regarding these new and far-reaching tariffs, particularly with regard to derivative products:
When Do the Tariffs Start?
The tariffs go into effect for entries after 12:01 a.m. (Eastern Time) on March 12, 2025. At that time, all product-specific exclusions will cease to be effective as well.
How Will Customs Treat Products that Contain Both Steel and Non-Steel Items?
U.S. Customs and Border Protection (CBP) will require importers of steel-derivative articles to identify the aluminum and steel content used to manufacture the products. For derivative products, it appears the amount of the special tariff will be based on the amount of aluminum and steel content, not the entire value of the overall entry. In this regard, the aluminum and steel proclamations state as follows (using the aluminum proclamation as an example): “For purposes of implementing the requirements in this proclamation, importers of aluminum derivative articles shall provide to CBP any information necessary to identify the aluminum content used in the manufacture of aluminum derivative articles imports covered by this Proclamation. CBP is hereby authorized and directed to publish regulations or guidance implementing this requirement as soon as practicable.”
How Is the Country of Origin Determined?
For all aluminum and steel derivative products, the country of origin will use the “smelted and cast” or “melted and poured” standard, respectively. Importers will have to provide and certify the accuracy of this information, which will be used to determine the country of origin.
How Do I Identify the Exact Derivative Products Covered by the Aluminum and Steel Tariffs?
The Federal Register versions of the two proclamations include the exact HTS numbers, at a 10-digit level, in Annex I at the end of each respective publication. (Click here for a link to the Steel Proclamation and Annex, and click here for a link to the Aluminum Proclamation and Annex.)
Are the Listed Derivative Products Final?
No. Within 90 days of the proclamation, the U.S. government will establish a process allowing U.S. producers to petition to include additional derivative aluminum and steel articles falling within the scope of the special tariffs. Thus, there is every likelihood that the number of derivative products will increase over time.
Is Duty Drawback Allowed?
Duty drawback is a common tariff-saving measure that allows the refund of duties paid at the time of entry if the goods are subsequently re-exported. Both proclamations state that no duty drawback will be available for these special duties. This is likely a means to encourage the use of domestic product for downstream products that are intended for the export market.
Will CBP Issue Instructions to Help Companies Navigate These Tariffs?
In accordance with its normal practice, as well the directive in the proclamations, CBP will be issuing guidance to help the import community comply with the new tariffs. We also anticipate that there will need to be some adjustment on the part of the importing community, including the need for customs brokers to update their software to conform to the many new tariff requirements.
How Will CBP Enforce These New Tariffs?
We expect rigorous enforcement of the new tariffs. Taking the aluminum proclamation as the example, both proclamations state that “CBP shall prioritize reviews of the classification of imported aluminum articles and derivative aluminum articles and, in the event that it discovers misclassification resulting in loss of revenue of the ad valorem duties proclaimed herein, it shall assess monetary penalties in the maximum amount permitted by law. In addition, CBP shall promptly notify the Secretary regarding evidence of any efforts to evade payment of the ad valorem duties proclaimed herein through processing or alteration of aluminum articles or derivative aluminum articles as a disguise or artifice prior to importation.” The use of “shall” implies that CBP is directed to assess maximum penalties for misclassifications.
It is not yet clear how this requirement will interface with the normal approach of Customs for voluntary disclosures, where importers are allowed to correct errors without a penalty provided they perfect the disclosure properly and pay any underpaid duties plus interest.
What Actions Should Importers Consider Implementing?
We expect that these measures will stay in place for the long term, given this is the second time President Trump has imposed aluminum and steel tariffs. Further, given that the main purpose of the tariffs is to wipe out all previously negotiated exemptions and tariff alternatives, there seems to be little hope for meaningful (if any) future exclusions, including for forms of steel and aluminum that are not produced in the United States.
In our initial aluminum and steel article, we provided six practical steps that companies can take to help cope with the newly expanded aluminum and steel tariffs. Now that the Annexes are published and the full scope of derivative products are known, we are supplementing that list to include the following additional items:
Review continuous entry bonds at all active importer of record numbers for sufficiency.
Pull a report from the Automated Commercial Environment (i.e., ACE, the customs portal) to determine all imports that fall under the new aluminum and steel tariffs, including all covered derivative products.
Conduct a classification review of prior or planned aluminum or steel products, as well as derivatives, to determine which ones fall within the scope of the two proclamations.
Assess the potential impact of the new tariffs to determine how these new tariffs impact your company’s supply chain, cost structure, and import posture.
Review all buy- and sell-side contracts to determine which ones offer tariff-related flexibility, including the ability to alter sourcing patterns on the buy side and to add tariff surcharges on the sell side. Further information is found in our white paper on Managing Import and Tariff Risks During a Trade War.
Identify strategies to eliminate or defer potential duties for cashflow purposes, including the new aluminum and steel duties, such as the use of bonded warehouses, Foreign Trade Zones (FTZ), and Temporary Importation under Bond (TIB). Note that duty drawback is not available for these special duties.
Continue to closely monitor for new derivative products that may be moved onto the list of Annex I derivative products as U.S. aluminum and steel producers file petitions to add new products, beginning 90 days from the publication of the two proclamations.
Keep up with the latest news and developments in tariffs, as new pronouncements are coming very quickly.
GLP-1 Receptor Agonists: New Frontiers and Challenges
Obesity and diabetes have been two of the greatest public health challenges for decades. Many different diets and fads have promised the public a quick fix and a path to losing excess weight or resolving their diabetic issues.
Recently, a new class of drugs, based on GLP-1, are revolutionizing medicine and the treatment of patients with diabetes, obesity, and other disorders associated with obesity. GLP-1 is a short-acting hormone that is released after eating. This hormone helps regulate glucose levels in the body by causing the pancreas to release insulin, which lowers sugar levels in the blood. Furthermore, the hormone causes individuals to feel full by both causing the gut to reduce how quickly it processes food and acting on different parts of the brain which control hunger and satiety.
GLP-1 receptor agonists are a new class of drugs which mimic the activity of GLP-1 and maintain the benefits of the GLP-1 hormone in patients. The U.S. Food & Drug Administration (FDA) has approved many drugs in this class over the past couple of years including Ozempic, Wegovy, Mounjaro, and Zepbound to name a few. These drugs are approved to treat different conditions, including obesity and type 2 diabetes, and are now being tested for treatments far beyond obesity and diabetes. Studies to treat cardiovascular disease, addictive behavior, and rheumatologic diseases are just a few of the ongoing trials. Together, this new class of drugs could lead to sales in the tens of billions of dollars in the upcoming years.
The rapid expansion of this area of technology raises many business and legal questions. We will explore many of these throughout the upcoming articles in this series. These topics include:
Issues related to deals and licensing for GLP-1 therapeutics
Patent/IP challenges to consider for GLP-1 therapeutics
Clinical trial issues for GLP-1 therapeutics
FDA/regulatory issues for GLP-1 therapeutics
Litigation issues for GLP-1 therapeutics
For additional resources on GLP-1 Drugs and how they will change the health care & life sciences and technology industries, click here to read the other articles in our series.
HSR Overhaul Takes Effect: A New Era For Dealmakers
On 10 February 2025, the Federal Trade Commission’s (FTC) overhaul of the rules implementing the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (HSR) became effective. The new rules now apply to all reportable transactions. As explained in our prior alert, the new HSR rules (Rules) transform the premerger notification process, requiring parties to provide several new categories of documents and information in their filings. For many transactions, the new Rules will significantly increase the cost and time required to prepare HSR filings. While there are several pathways through which the Rules could be challenged, they are likely here to stay for the foreseeable future. This alert discusses the outlook for the new Rules and provides updates on how they are being implemented.
REGULATORY FREEZE ISSUED BY PRESIDENT TRUMP
On 20 January 2025, President Trump issued a regulatory freeze ordering all executive departments and agencies to consider postponing for 60 days the effective date of any final rules that were published in the Federal Register but had not yet taken effect. Similar requests have been made by recent administrations and have usually been followed by the agencies. Here, the FTC commissioners did not vote to toll the effective date of the new Rules, and the Rules went live on 10 February 2025.
WILL THE NEW HSR RULES SURVIVE?
Now that the Rules are live, there are three main pathways through which they could be struck down or modified: (1) agency action, (2) litigation, or (3) an act of Congress. Although it is difficult to predict outcomes as the Trump administration floods the zone, it seems unlikely that the Rules will be nullified through these channels, at least for the foreseeable future.
Agency Action
The FTC commissioners could vote to rescind or modify the new Rules, then go through a lengthy, formal rulemaking process to change them. This seems unlikely for several reasons.
First, the FTC approved the final Rules by a unanimous, bipartisan 5-0 vote, following efforts to address concerns from the Republican commissioners and commenters to the proposed rules NPRM. In a concurring statement accompanying the announcement of the final Rules, Republican Commissioner (and current FTC Chair) Andrew Ferguson called the Rules “a lawful improvement over the status quo,” adding that while “[t]he Final Rule is not perfect, nor is it the rule I would have written if the decision were mine alone … it addresses important shortcomings … and is ‘necessary and appropriate’ to enable the Antitrust Agencies to determine whether proposed mergers may violate the antitrust laws.” Voting to rescind or significantly alter the Rules would involve backtracking on such public statements.
Second, on 11 February 2025, Chair Ferguson took to social media to give a resounding endorsement of the new Rules, noting on X that “updates were long overdue,” and that the new Rules are a “win-win” that will “ensure that parties provide the appropriate information so law enforcement can fulfill Congress’s mandate and prevent unlawful deals from slipping through the cracks.” These statements make an about-face by the FTC even less likely. Along similar lines, in a memorandum to FTC staff issued on 18 February 2025, Chair Ferguson stated unambiguously that the agencies’ 2023 Merger Guidelines will remain in place, representing “the framework for [the FTC’s] agency’s merger-review analysis.” He characterized the guidelines as “a restatement of prior iterations … and a reflection of what can be found in case law” and emphasized the importance of stability and reliance, warning that “if merger guidelines change with every new administration, they will become largely worthless to businesses and the courts.”
Third, former Chair Lina Khan has not yet exited the FTC, leaving a continuing 3-2 Democrat majority that is unlikely to undo its own regulations. Even after Commissioner Khan leaves, there will be a 2-2 Democrat-Republican deadlock that could hamstring votes on any new rulemaking until her replacement is confirmed.
Litigation
On 10 January 2025, the US Chamber of Commerce (Chamber) and a coalition of business groups sued the FTC and then-Chair Khan in federal district court alleging that the Rules violate the Administrative Procedure Act (APA) and should be struck down. The Chamber’s main allegations are that (1) the FTC exceeded its statutory authority under the HSR Act by requiring information that is beyond “necessary and appropriate” to enable the agencies to determine, during the initial 30-day waiting period, whether a transaction may harm competition; (2) the FTC failed to engage in proper cost-benefit analysis; and (3) the agency failed to identify a problem with the prior rules that would justify a departure from the status quo. While the Chamber’s claims are well-argued and the case is before a Trump-appointed judge, the FTC took great pains in the several-hundred-page final Rule to lay a foundation to anticipate and fend off an APA challenge. So far, the Chamber has not sought a temporary restraining order or preliminary injunction to halt the Rules while the litigation is pending, and the docket has been quiet.
Act of Congress
The Congressional Review Act (CRA) requires agencies to submit final rules to Congress and the Government Accountability Office before they take effect. Once a rule is submitted, any member can introduce a joint resolution disapproving the rule. A simple majority vote in both houses of Congress is required to move the measure to the president’s desk. If the president signs off (subject to veto by a two-thirds majority vote in both chambers), the rule is nullified, and the agency is prohibited from reissuing the same or a substantially similar regulation. The CRA has a look-back mechanism that allows Congress to review the new Rules even though they have already gone into effect. On 11 February 2025, Congressman Scott Fitzgerald (R-WI) introduced a CRA resolution of disapproval to repeal the new Rules. It is unclear whether the resolution will see the light of day given other legislative priorities and Congress’s narrow window of opportunity under a unified Republican government. Moreover, the CRA has seldom been successfully used to void regulations. Members have introduced over 200 joint resolutions of disapproval for more than 125 rules since the CRA’s enactment in 1996 and only 19 rules have been overturned.
IS THERE A SILVER LINING FOR DEALMAKERS?
On the bright side, the rollout of the new Rules has been accompanied by steady guidance and engagement from the FTC Premerger Notification Office (PNO), a departure from its general approach under the Biden administration. Moreover, early termination of the 30-calendar-day HSR waiting period is back on the table. It is also worth noting that the PNO received a deluge of filings just before the new Rules took effect. According to Chair Ferguson, the PNO “typically sees between 35 and 50 transactions per week. But during the last week under the old notification rules, the PNO received 394 filings accounting for about 200 transactions.”
WHAT SHOULD I DO NOW?
The new Rules are in effect, govern all HSR filings, and are unlikely to be nullified for the foreseeable future. As such, dealmakers should:
Continue to work with counsel to understand the new requirements.
Consider budget, timing, and the potential for increased visibility into business operations.
Consider the new regime in determining deal timetables and negotiating transaction agreements, particularly for deals involving horizontal overlaps or vertical supply relationships, which trigger additional filing requirements.
Conduct internal training for relevant personnel regarding document creation best practices and implement document-management protocols to limit exposure and filing burdens.
Victoria S. Duarte contributed to this article.
Final Rule Implementing U.S. Outbound Investments Restrictions Goes into Effect
On October 28, 2024, the U.S. Department of Treasury (Treasury Department) published a final rule (Final Rule) setting forth the regulations implementing Executive Order 14150 of August 9, 2023 (Outbound Investment Order), creating a scheme regulating U.S. persons’ investments in a country of concern involving semiconductors and microelectronics, quantum information technologies and artificial intelligence sectors[1]. According to the Annex to the Outbound Investment Order, China (including Hong Kong and Macau) is currently the only identified “Country of Concern”. The Final Rule went effective on January 2, 2025.
Who are the in-scope persons?
The Final Rule regulates the direct and indirect involvement of “U.S Persons”, which is broadly defined to include (i) any U.S. citizen, (ii) any lawful permanent resident, (iii) any entity organized under the laws of the United States or any jurisdiction within the United States, including any foreign branches of any such entity, and (iv) any person in the U.S.
The Final Rule requires a U.S. Person to take all reasonable steps to prohibit a “Controlled Foreign Entity”, a non-U.S. incorporated/organized entity, from making outbound investments that would be prohibited if undertaken by a U.S. Person. As such, the Final Rule extends its influence over any Controlled Foreign Entity of such U.S. Person.
The Final Rule also prohibits a U.S. Person from knowingly directing a transaction that would be prohibited by the Final Rule if engaged by a U.S. Person.
Which outbound investments are in-scope?
The “Covered Transactions” include investment, loan and debt financing conferring certain investor rights characteristic of equity investments, greenfield or brownfield investments and investment in a joint venture (“JV”) or fund, relating to a “Covered Foreign Person” (as discussed below), as described below:
Equity investment: (i) acquisition of equity interest or contingent equity interest in a Covered Foreign Person; (ii) conversion of contingent equity interest (acquired after the effectiveness of the Final Rule) into equity interest in a Covered Foreign Person;
Loan or debt financing: provision of loan or debt financing to a Covered Foreign Person, where the U.S. Person is afforded an interest in profits, the right to appoint a director (or equivalent) or other comparable financial or governance rights characteristic of an equity investment but not typical of a loan;
Greenfield/brownfield investment: acquisition, leasing, development of operations, land, property, or other asset in China (including Hong Kong and Macau) that the U.S. Person knows will result in the establishment or engagement of a Covered Foreign Person; and
JV/ fund investment: (i) entry into a JV with a Covered Foreign Person that the U.S. Person knows will or plan to engage in covered activities; (ii) acquisition of limited partner or equivalent interest in a non-U.S. Person venture capital fund, private equity fund, fund of funds, or other pooled investment fund that will engage in a transaction that would be a Covered Transaction if untaken by a U.S. Person.
What are in-scope transactions and carve-out transactions?
The Final Rule identifies three categories of Covered Transactions involving covered foreign persons – Notifiable Transactions, Prohibited Transactions, and Excepted Transactions.
A “Covered Foreign Person” includes the following persons engaging in “Covered Activities” (i.e. Notifiable or Prohibited Activities identified in the Final Rule) relating to a Country of Concern:
A person of China, Hong Kong or Macau, including an individual who is a citizen or permanent resident of China (including Hong Kong and Macau and are not a U.S. citizen or permanent resident of the United States); an entity organized under the laws of China (including Hong Kong and Macau), or headquartered in, incorporated in, or with a principal place of business in China (including Hong Kong and Macau; the government of China (including Hong Kong and Macau); or an entity that is directly or indirectly owned 50% or more by any persons in any of the aforementioned categories.
A person directly or indirectly holds a board, voting rights, equity interests, or contractual power to direct or cause the management or policies of any person that derives 50% or more of its revenue or net income or incur 50% or more its capital expenditure or its operating expenses (individually or as aggregated) from China (including Hong Kong and Macau) (subject to a $50,000 in minimum); and
A person from China (including Hong Kong or Maca) who enters a JV that engages, plans to or will engage in a Covered Activity.
Notifiable and Prohibited Transactions
The Final Rule:
Requires U.S. Persons to notify the Treasury Department regarding transactions involving covered foreign persons that fall within the scope of Notifiable Transactions, and
Prohibits U.S. Persons from engaging in transactions involving Covered Foreign Persons that fall within the scope of Prohibited Transactions.
The underlying consideration for the delineation between a Notifiable Transactions and Prohibited Transactions hinges on how impactful it is as a threat to the national security of the United States — a Notifiable Transaction contributes to national security threats, while a Prohibited Transaction poses a particularly acute national security threat because of its potential to significantly advance the military intelligence, surveillance, or cyber-enabled capabilities of a Country of Concern.
Specifically, a Notifiable Transaction necessarily involves the following Notifiable Activities, while a Prohibited Transaction necessarily involves the following Prohibited Activities:
Prohibited Activities
Notifiable Activities
Semiconductors &Microelectronics
– Develops or produces any electronic design automation software for the design of integrated circuits (ICs) or advanced packaging;
– Develops or produces (i) equipment for (a) performing volume fabrication of integrated circuit, or (b) performing volume advanced packaging, or (ii) commodity, material, software, or technology designed exclusively for extreme ultraviolet lithography fabrication equipment;
– Designs any integrated circuits that meet or exceed certain specified performance parameters[2] or is designed exclusively for operations at or below 4.5 Kelvin;
– Fabricates integrated circuits with special characteristics;[3]
– Packages any IC using advanced packaging techniques.
Designs, fabricates, or packages any ICs that are not prohibited activities.
QuantumInformationTechnology
– Develops, installs, sells, or produces any supercomputer enabled by advanced ICs that can provide a theoretical compute capacity beyond a certain threshold;[4]
– Develops a quantum computer or produces any critical components;[5]
– Develops or produces any quantum sensing platform for any military, government intelligence, or mass-surveillance end use;
– Develops or produces any quantum network or quantum communication system designed or used for certain specific purposes.[6]
None
Artificial Intelligence (AI)
– Develops any AI system that is designed or used for any military end use, government intelligence, or mass-surveillance end use;
– Develops any AI system that is trained using a quantity of computing power greater than (a) 10^25 computational operations; and (b) 10^24 computational operations using primarily biological sequence data.
Design of an AI system that is not a prohibited activity and that is:
(a) Designed for any military, government intelligence or mass-surveillance end use;
(b) Intended to be used for:
Cybersecurity applications;
(digital forensic tools;
penetration testing tools;
control of robotic system;
or
(c) Trained using a quantity of computing power greater than 10^23 computational operations.
Excepted Transactions
The Final Rule sets forth the categories of Excepted Transactions, which are determined by the Treasury Department to present a lower likelihood of transfering tangible benefits to a Covered Foreign Person or otherwise unlikely to present national security concerns. These include:
Investment in publicly traded securities: an investment in a publicly traded security (as defined under the Securities Act of 1934) denominated in any currency and traded on any securities exchange or OTC in any jurisdiction;[7]
Investment in a security issued by a registered investment company: an investment by a U.S. Person in the security issued by an investment company or by a business development company (as defined under the Investment Company Act of 1940), such as an index fund, mutual fund, or ETF;
Derivative investment: derivative investments that do not confer the right to acquire equity, right, or assets of a Covered Foreign Person;
Small-size limited partnership investment: limited partnership or its equivalent investment (at or below two million USD) in a venture capital fund, private equity fund, fund of funds, or other pooled investment fund where the U.S. Person has secured a contractual assurance that the fund will not be used to engage in a Covered Transaction;
Full Buyout: acquisition by a U.S. Person of all equity or other interests held by a China-linked person, in an entity that ceases to be a Covered Foreign Person post-acquisition;
Intracompany transaction: a transaction between a U.S. Person and a Controlled Foreign Entity (subsidiary) to support ongoing operations or other activities are not Covered Activities;
Pre-existing binding commitment: a transaction for binding, uncalled capital commitment entered into before January 2, 2025;
Syndicated loan default: acquisition of a voting interest in a Covered Foreign Person by a U.S. Person upon default of a syndicated loan made by the lending syndicate and with passive U.S. Person participation; and
Equity-based compensation: receipt of employment compensation by a U.S. Person in the form of equity or option incentives and the exercising of such incentives.
What is the knowledge standard?
The Final Rule provides that certain provisions will only apply if a U.S. Person has Knowledge of the relevant facts or circumstances at the time of a transaction. “Knowledge” under the Final Rule includes (a) actual knowledge of the existence or the substantial certainty of occurrence of a fact or circumstance, (b) awareness of high probability of the existence of a fact, circumstance or future occurrence, or (c) reason to know of the existence of a fact or circumstance.
The determination of Knowledge will be made based on information a U.S. Person had or could have had through a reasonable and diligent inquiry, which should be based on the totality of relevant facts and circumstances, including without limitation, (a) whether a proper inquiry has been made, (b) whether contractual representations or warranties have been obtained, (c) whether efforts have been made to obtain and assess non-public and public information; (d) whether there is any warning sign; and (e) whether there is purposeful avoidance of efforts to learn and seek information.
Key points relating to the notification filing procedures
A U.S. person’s obligation to notify the Treasury Department is triggered when they know relevant facts or circumstances related to a Notifiable Transaction entered into by itself or its Controlled Foreign Entity. U.S. Person shall follow the electronic filing instructions to submit the electronic filing at https://home.treasury.gov/policy-issues/international/outbound-investment-program.
The filing of the notification is time-sensitive. The filing deadline is no later than 30 days following the completion of a Notifiable Transaction or otherwise no later than 30 days after acquiring such knowledge if a U.S. Person becomes aware of the transaction after its completion. If a filing is made prior to the completion of a transaction and there are material changes to the information in the original filing, the notifying U.S. Person shall update the notification no later than 30 days following the completion of the transaction.
In addition to the detailed information requested under the Final Rule, a certification by the CEO or other designees of the U.S. Person is required to certify the accuracy and completeness in material respects of the information submitted.
What are the consequences of non-compliance?
The Treasury Department may impose civil and administrative penalties for any Final Rule violations, including engaging in Prohibited Transactions, failure to report Notifiable Transactions, making false representation or omissions, or engaging in evasive actions or conspiracies to violate the Final Rule. The Treasury Department may impose fines, require divestments, or refer for criminal prosecutions to the U.S. Department of Justice for violations of the Final Rule.
U.S. Persons may submit a voluntary self-disclosure if they believe their conduct may have violated any part of the Final Rule. Such self-disclosure will be taken into consideration during the Treasury Department’s determination of the appropriate response to the self-disclosed activity.
Joshua Tree Conservation Plan Remains Under Review
The California Fish and Game Commission (Commission) accepted public comment on the draft Western Joshua Tree Conservation Plan (Draft Conservation Plan) at its February 12, 2025 meeting, but no formal action was taken.
As detailed in our previous alert, the California Department of Fish and Wildlife (CDFW) released the Draft Conservation Plan to the Commission on December 12, 2024, as required by the Western Joshua Tree Conservation Act (Act). The Draft Conservation Plan sets forth management practices and guidelines for the avoidance and minimization of impacts to western Joshua trees.
The Commission’s February 12 meeting featured a presentation by CDFW, substantive discussion by the Commissioners, and robust public comment. Many commenters expressed concern about the cost and ultimate feasibility of the Draft Conservation Plan’s requirements. In particular, the Large Scale Solar Association voiced concerns regarding the Draft Conservation Plan’s potential to interfere with the siting and development of solar energy projects, indicating that additional costs generated by required mitigation measures would be passed on to ratepayers. Residents and politicians from desert communities — where Joshua trees are most abundant — focused on the Draft Conservation Plan’s costs and obligations as potential hindrances to affordable housing and local job opportunities. Commenters emphasized that collaboration with CDFW is essential in developing a workable and sustainable conservation effort.
CDFW acknowledged the public comments and ultimately declined to take any formal action at the meeting. Written comments are still being accepted on a rolling basis, though any substantive changes to the Draft Conservation Plan should be submitted by the beginning of March to be considered. The Act mandates that the Commission must take action to adopt the Conservation Plan by June 30, 2025.
The Commission will review the Draft Conservation Plan again at its April 16-17, 2025, meeting. In advance of that meeting, CDFW confirmed it will publish a revised set of Joshua tree relocation guidelines and a list of proposed changes to the Draft Conservation Plan. CDFW Director Bonham also suggested that, in the interim, CDFW may host workshops and/or other community outreach events to solicit further public feedback, though no further details have been provided.