GeTtin’ SALTy Episode 46 | Oregon’s Tax Landscape: Revenue, Legislation, and Local Changes with Jeff Newgard [Podcast]
In this episode of GeTtin’ SALTy, host Nikki Dobay is joined by Jeff Newgard, president of Peak Policy, to discuss Oregon’s 2025 legislative session. They explore Oregon’s revenue outlook fueled by personal income tax gains and the expiration implications of federal tax provisions. They delve into the state’s budgetary and tax policy processes, highlighting the nuances of legislative priorities, including a potential transportation package and tweaks to the longstanding estate tax. Jeff and Nikki reflect on the potential political and fiscal impacts of recent voter sentiment against tax increases, while also considering the challenges posed by anticipated federal tax reforms. The conversation rounds out with a look at local tax dynamics within Portland’s government structure, and Jeff offers insights into maintaining a sunny disposition during Oregon’s gray winter months—a glimpse into his astrophotography hobby.
“Unleashing Prosperity Through Deregulation” — How Effective Will It Be in Practice?
President Trump, on January 31, 2025, issued Executive Order 14192, “Unleashing Prosperity Through Deregulation.” This has been referred to as President Trump’s “ten-to-one deregulation initiative” that he spoke about when he was campaigning. If this initiative seems familiar, it may be because you remember Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” issued on February 3, 2017, by President Trump in his first term. That Executive Order called for a two-to-one repeal of regulations.
Section 3 of Executive Order 14192 requires that “whenever an executive department or agency (agency) publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least 10 existing regulations to be repealed.” For Fiscal Year 2025, the heads of all agencies are directed to ensure that the total incremental cost of all new regulations, including repealed ones, shall be “significantly less than zero” as determined by the Director of the Office of Management and Budget.
It is one thing to identify regulations to be repealed. It is another thing to repeal existing regulations. The Congressional Review Act (CRA) is one way to eliminate regulations, but that requires legislation and has limits. According to the Congressional Research Service, the CRA has been used to overturn a total of 20 rules: one in the 107th Congress (2001-2002), 16 in the 115th Congress (2017-2018), and three in the 117th Congress (2021-2022). The other way is to follow the Administrative Procedure Act (APA), which is a more time-consuming option that does not lend itself to the “make immediate change” actions of the new Administration.
A cynic would say that the ten-to-one Executive Order is more about making headlines and inviting the perception of action because that is what people will remember. President Trump campaigned on reducing regulatory burdens and the reach of government, so actions such as this should not be surprising to anyone.
It remains to be seen how many significant regulations will be targeted for repeal and eventually be repealed by the Trump Administration. It will be interesting to watch how businesses in highly regulated industries, including the chemical manufacturing industry, could benefit or be challenged by these potential regulatory actions.
Blast from the Past: The Potential Ripple Effect of the ‘Return to In-Person Work’ Executive Order on the Private Sector and Key Considerations for Employers
President Donald Trump’s “Return to In-Person Work” executive order (EO) mandates that federal employees return to full-time office work. This EO effectively ended the widespread hybrid and remote work arrangements that had become common in the government sector. Federal agencies must now “take all necessary steps” to enforce in-person attendance. While the EO does not apply to the private sector, it may encourage private employers to implement similar policies. Although employers generally have the right to require in-person work, they must ensure that such requirements comply with the law.
Reasonable Accommodations & Remote Work
One of the most pressing legal issues tied to return-to-office mandates is the question of reasonable accommodation under federal and state disability laws. The Americans with Disabilities Act (ADA) requires employers to provide reasonable accommodations for employees with disabilities. In recent years, many employees with disabilities requested remote work as an accommodation. Pre-COVID-19, many employers were skeptical of remote work. In the wake of the pandemic shutdown that necessitated remote work, many employers had to revisit this issue and determine whether remote work might be a reasonable accommodation.
Key Considerations for Employers When Providing Reasonable Accommodations
The duty to accommodate under the ADA arises once the employer is aware of an employee’s disability. While the employee generally bears the responsibility to request accommodation, some courts require employers to provide accommodations if they knew or should have known about the disability and need for accommodation. You have to engage in the interactive process in making your determination. In doing so, employers should consider the following:
Essential Job Functions
The key factor in evaluating whether remote work is a reasonable accommodation of an employee’s disability is whether the employee can perform the essential job functions remotely. You should review job descriptions to determine if in-office presence is necessary. If you think it is, you may request medical documentation to confirm the disability and why remote work is medically necessary (and for how long). Remember that you do not have to remove any essential job functions. You should also make sure that other employees are not currently performing this job remotely (and have not done so in the past).
Undue Hardship
Employers must determine if remote work would cause an undue hardship by considering:
The nature and cost of the accommodation
The facility’s financial resources, workforce size, and expenses
The employer’s overall resources, size, and locations
The impact on operations and workforce structure
The effect on facility operations
Frankly, proving an undue hardship, particularly in connection with a remote work request, is an uphill battle.
The Choice is Yours
As organizations implement return-to-office policies, it’s crucial to balance business needs with compliance under the ADA. Employers should enforce in-person attendance but should not automatically reject an employee’s request for remote work as an accommodation. Have a good process in place to ensure all requests are evaluated in accordance with the law.
Listen to this post
Executive Order 14173: How Public Companies’ DEI Initiatives May Be Targeted and Key Actions to Take Now
On January 21, 2025, President Trump signed Executive Order 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “Order”), which, among other actions,[1] directs all executive departments and agencies “to combat illegal private-sector [diversity, equity, and inclusion (DEI)] preferences, mandates, policies, programs and activities.”
The Order requires the heads of all agencies, assisted by the U.S. Attorney General (USAG), to “take all appropriate action with respect to the operations of their agencies, to advance in the private sector the policy of individual initiative, excellence and hard work.” The Order also directs the USAG, in consultation with the heads of relevant agencies and in coordination with the Director of the Office of Management and Budget, to submit a report within 120 days of the Order, including a proposed strategic enforcement plan identifying “(i) key sectors of concern” within the jurisdiction of each agency, (ii) the “most egregious and discriminatory DEI practitioners” in each sector, (iii) a plan to deter DEI programs or principles that “constitute illegal discrimination or preferences,” (iv) strategies to encourage the private sector to end such discrimination or preferences, (v) potential litigation, and (vi) potential regulatory action and guidance.
Of particular importance to public companies is the directive that, as part of the deterrence plan (described in clause (iii) above), and so as to “further inform and advise [the President] so that [his] Administration may formulate appropriate and effective civil-rights policy,” each agency “shall identify to up to nine potential civil compliance investigations of publicly traded corporations,” as well as large nonprofit organizations and foundations, state and local bar and medical associations, and higher-education institutions with endowments in excess of $1 billion.
As of the date of this publication, the Order remains in effect but is subject to a lawsuit brought by the City of Baltimore and other plaintiffs seeking a declaratory judgment that the Order is unlawful and unconstitutional and a preliminary and permanent injunction against its enforcement.[2]
Aligned with the Order: The New USAG Memorandum on DEI
In a February 5, 2025, memorandum issued to all employees of the Department of Justice (DOJ) (the “Memorandum”), the USAG warned that public companies could face criminal investigations relating to DEI programs or policies. The Memorandum, consistent with the Order, directs the Civil Rights Division and the Office of Legal Policy to jointly submit a report by March 1, 2025, to the Associate Attorney General with recommendations for enforcing federal civil rights laws and taking other “appropriate measures to encourage the private sector to end illegal discrimination and preferences,” including policies relating to DEI and diversity, equity, inclusion, and accessibility (DEIA). The Memorandum states that the report should identify:
“key sectors of concern” within DOJ’s jurisdiction;
the most “egregious and discriminatory” DEI and DEIA practitioners in each such sector;
a plan with specific steps or measures to “deter the use of DEI and DEIA programs or principles that constitute illegal discrimination or preferences, including proposals for criminal investigations and for up to nine potential civil compliance investigations” of the entities meeting the criteria enumerated in section 4(b)((iii) of the Order (which includes publicly traded corporations);
additional potential litigation activities, regulatory actions, and sub-regulatory guidance; and
“other strategies to end illegal DEI and DEIA discrimination and preferences and to comply with all federal civil-rights laws.”
The Potential Impact of the Order
While the Order may be enjoined temporarily or permanently, it has—in the three weeks since its signing—had a significant impact on the DEI initiatives and programs of well-known public companies. Meta Platforms, Inc. (Facebook’s parent) and Alphabet Inc.’s Google have reportedly ended their goals of hiring employees from historically underrepresented groups, and Target Corporation has stated that it would end its DEI initiatives this year.[3] Bloomberg reported that a number of other public companies, including Sirius XM Holdings Inc. and Paypal, have revised or removed references to DEI initiatives in their annual reports filed with the Securities and Exchange Commission since the Order was signed.[4]
Even if the Order is enjoined or struck down, public companies may nevertheless continue to be targets of a wide array of investigations, enforcement actions, and litigation relating to their DEI initiatives or programs, such as:
civil compliance investigations regarding alleged violations of existing anti-discrimination laws launched by DOJ or other federal agencies, which may include issuing Civil Investigative Demands that require the production of documents and responses to written interrogatories and/or oral testimony;
investigations and lawsuits instituted by state attorneys general alleging violations of state anti-discrimination laws;
shareholder litigation, including class actions, alleging violations of securities laws, including alleged false or misleading statements in public companies’ annual and quarterly reports or proxy statements relating to risks associated with DEI initiatives;
EEOC Commissioner Charges for alleged violations of Title VII of the Civil Rights Act of 1964 (“Title VII”); and
individual lawsuits, class actions, and whistleblower complaints filed by current or former employees for alleged violations of federal or state laws prohibiting unlawful discrimination and retaliation.
Challenges to Public Companies’ DEI Initiatives
Two recent examples show that public companies may continue to be targeted for their DEI initiatives even if the Order is struck down. On January 27, 2025, a group of 19 state attorneys general, led by Kansas Attorney General Kris Kobach and Iowa Attorney General Brenna Bird, issued a letter to Costco Wholesale Corporation urging it to “end all unlawful discrimination imposed by the company” through its DEI policies and giving Costco 30 days to respond. Although these state attorneys general mention the Order in their letter, they cite recent U.S. Supreme Court decisions as authority for their efforts to stop unlawful discriminatory practices.[5] Only a few days later, on January 31, 2025, a proposed shareholder class action was filed against Target Corporation and its directors, alleging that the company violated securities laws, including by failing to disclose material risks of consumer boycotts in response to the company’s environmental, social, and governance (ESG) and DEI mandates and its 2023 Pride Campaign.[6]
On the same day that the complaint against Target was brought, U.S. Steel Corporation filed its 2024 annual report on Form 10-K with an expanded ESG risk factor referring to the Order and acknowledging the current negative perception of, and increased focus on, DEI initiatives:
In addition, in recent years, “anti-ESG” sentiment has gained momentum across the U.S., with several states and Congress having proposed or enacted “anti-ESG” policies, legislation, or initiatives or issued related legal opinions, and the President having recently issued an executive order opposing diversity equity and inclusion (“DEI”) initiatives in the private sector. Such anti-ESG and anti-DEI-related policies, legislation, initiatives, litigation, legal opinions, and scrutiny could result in U.S. Steel facing additional compliance obligations, becoming the subject of investigations and enforcement actions, or sustaining reputational harm.
What Public Companies Should Do Now
Public Disclosures
With the beginning of the 2025 proxy season, public companies should:
carefully review disclosures in their annual reports on Form 10-K that address, directly or indirectly, DEI initiatives, programs, policies, or objectives and:
refine required disclosures regarding human capital management, which may refer to employee recruitment, engagement, retention, training, and turnover, and
consider adding a new (or updating an existing) risk factor addressing DEI, including the risk of potential enforcement or litigation resulting from the Order and the Memorandum;
review and refine disclosures in their proxy statements that may touch upon DEI, including:
ESG initiatives and objectives;
diversity of directors and director nominees, including reference to any policy of the Board or the nominating committee with regard to the consideration of diversity in identifying director nominees;
executive compensation with performance metrics linked to DEI or ESG metrics; and
shareholder proposals relating to DEI or ESG matters;
monitor proxy voting guidelines from proxy advisory firms and mutual fund managers for changes with respect to guidance addressing the diversity of board members and other relevant topics;[7]
review other disclosures regarding DEI on their websites, in social media, and in communications with employees and candidates; and
monitor developments in the litigation to set the Order aside, as well as enforcement actions and litigation targeting DEI initiatives, and revise risk factors relating to DEI to reflect “material changes” in upcoming quarterly reports on Form 10-Q.
Compliance Review and Risk Assessment
Like other private-sector employers, public companies should undertake a thorough review and risk assessment of their DEI plans, programs, policies, and initiatives. During this process, public companies should:
promptly review any DEI plans, programs, and policies to determine whether they contain any aspect that could be deemed unlawful under Title VII[8] or any other federal, state, or local civil rights laws, and consider whether to take any action to modify such plans, programs, or policies, including the names of such plans, programs, or policies, in consultation with employment counsel;
extend such review to include:
programs for employee inclusion;
programs for talent management and leadership training, including initiatives to increase representation of particular groups in management;
hiring and recruitment practices that include DEI considerations;
compensation programs and policies utilizing metrics based on DEI factors;
codes of business conduct;
supplier diversity policies; and
federal contracting affirmative action programs (for further guidance on reviewing and winding down affirmative action programs for federal government contractors, please refer to our prior Insight titled “DEI and Affirmative Action Programs Blitzed, While Executive Order 11246 Is Revoked”);
evaluate the risks and impact of changes in DEI-related initiatives and activities going forward on various stakeholders (including employees and customers), as well as business and financial objectives and strategies;
consider the Board’s role in overseeing the compliance review and risk assessment of DEI plans, programs, policies, and initiatives and whether the Board (or a committee of the Board) should receive a report on the status of the review and risk assessment at the next meeting;
ensure that Human Resources (HR) and Compliance teams are familiar with procedures for handling and investigating whistleblower complaints and closely monitor hotlines and emails for DEI-related complaints or reports; and
ensure that Legal, HR, Compliance, and Investor Relations teams are prepared to handle inquiries, complaints, and potential investigations involving DEI-related matters.
As noted above, developments relating to the Order and reactions to it are evolving quickly, and the guidance in this Insight is provided with the caveat that events may occur soon after publication that may impact it. We will update you as related litigation moves forward and further developments unfold.
ENDNOTES
[1] For information regarding other actions under the Order, see the Epstein Becker Green Insight titled “DEI and Affirmative Action Programs Blitzed, While Executive Order 11246 Is Revoked” (Jan. 28, 2025).
[2] See National Association of Diversity Officers in Higher Education v. Donald J. Trump, Civil Action No. Case1:25-cv-00333-ABA (D. Md. filed Feb. 3, 2025).
[3] See Miles Kruppa, Google Kills Diversity Hiring Targets, Wall Street Journal (Feb. 5, 2025, 3:48 p.m. ET), https://www.wsj.com/tech/google-kills-diversity-hiring-targets-04433d7c; Jonathan Stempel and Marguerita Choy, Target is sued for defrauding shareholders about DEI, Reuters Legal (Feb. 3, 2025).
[4] See Clara Hudson, David Hood and Andrew Ramonas, Netflix, McCormick Uphold DEI to Investors After Trump Directive, Bloomberg Law (Jan. 30, 2025, 1:39 p.m. EST); Clara Hudson, Paypal Cuts Diversity Language in New Report to Shareholders, Bloomberg Law (Feb. 5, 2025, 3:18 p.m. EST).
[5] See Letter from B. Bird, Att’y General of Iowa, and K. Kobach, Att’y General of Kansas, et al. to R. Vachris, President and Chief Executive Officer of Costco Wholesale Corporation.
[6] See City of Riviera Beach Police Pension Fund v. Target Corporation, Civil Action No. 2:25-cv-00085 (M.D. Fla. filed Jan. 31, 2025).
[7] See, e.g., The Vanguard Group, Inc.’s Proxy voting policy for U.S. portfolio companies effective February 2024, which has revised some of its prior guidance for U.S. companies relating to women and minority directors.
[8] Title VII remains the law of the land. Under Title VII, all employment decisions should continue to be made without consideration of race, color, religion, sex, or national origin, as well as other factors protected by federal, state, and local law. (42 U.S.C. § 2000e).
Half-Baked: Proposal to Reform Alabama Medical Cannabis Licensing Seems Poised to Go Up in Smoke
Advocates and stakeholders in the medical cannabis world of Alabama are desperate. And as it is so often when we are faced with a desperate situation, we make well-intentioned but ultimately flawed decisions.
Alabama Senate Bill 72 dropped last week. It would, among other things, (1) expand the total number of integrated licenses from five to seven; (2) shift the authority of issuing licenses from the AMCC to a consultant; and (3) shield the decision from any judicial review.
As a practical matter, this means that a single consultant would choose the seven integrated license winners and that decision would automatically become the decision of the AMCC as a matter of law. It further means that Alabama courts will not be permitted to entertain any challenges to the process or the consultant’s decision, no matter how flawed or egregiously wrong it may be. And it means that we’re another year away from any finality.
What Does This Mean?
Sigh. This means a few things, none of which are good.
First, let’s be clear: It’s difficult to view this than as yet another bite at the apple for disappointed applicants. And I’m afraid to say that at this point there may not be much more apple to eat. After all, this would be the fourth attempt to issue integrated facility licenses. Enough is enough.
Second, the proposal is illegal. A law cannot prohibit any judicial review. While it’s arguably appropriate to remove the licensing process from the Administrative Procedures Act, it is not permissible to entirely remove the legal process from the issuance of a government license. I actually applaud the notion of a law that minimizes litigation or the scope of reviewable issues. After all, expansive and long-running litigation is why we’re in this position. And while it would be permissible to narrow the scope of arguments made in litigation, it is simply not permissible to remove the judicial system entirely.
Third, the notion that the decision-making authority would be placed in the hands of a “consultant” shielded from any judicial review is contrary to the letter and spirit of the law on the books for the last four years. The AMCC is a body appointed by elected officials and should have accountability for the selection – and subsequent actions – of licensees. But if the AMCC is not responsible for choosing licensees, it doesn’t seem fair to look to them when seeking accountability. Accountability will rest with a faceless “consultant” who will certainly skip town as soon as the decision is announced.
I want to be clear about one particular aspect of this discussion. While I believe this is a flawed bill with certain particularly cynical provisions, I do not attribute blame to its sponsors – Sens. Tim Melson, David Sessions, and Greg Albritton. I have always believed they have the best of intentions and are amenable to reasonable amendments to get Alabama’s medical cannabis program off the ground. I’m afraid, however, that in this instance, most unfortunately, they have been poorly advised.
Likelihood of Senate Bill 72 Becoming Law
In my opinion, this bill has little chance of becoming law as drafted. I base that on my opinion that the Alabama Legislature has little interest in revisiting cannabis proposals at this time, my conversations with various stakeholders (including well-heeled applicants that employ influential governmental affairs specialists), and by the knowledge that it is easier to defeat legislation than it is to pass it.
For what it’s worth, I do believe the Legislature would pass a bill if all of the relevant stakeholders agreed it was the right way forward. Unfortunately, and this is inherent in any limited license situation, we are operating in a zero-sum game where there will be winners and there will be losers and those who believe a proposal will end in their defeat will fight tooth and nail to stop it.
Maybe I just can’t shake the litigator in me, but I continue to believe courts may provide the best and more efficient option at this stage. To paraphrase Harry Dunne, played effortlessly by the genius Jeff Daniels, just when I think this process couldn’t possibly get any dumber…
One thing I can promise is that we’ll stay on top of this legislative proposal – and any other notable cannabis legislation in Alabama – so that you don’t have to.
President Trump Pauses FCPA Enforcement
On February 10, 2025, President Donald Trump issued an Executive Order titled “Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security” (the “E.O.”). The E.O was issued five days after Attorney General Pamela Bondi issued a memorandum (the “Memorandum”) redirecting enforcement of the Foreign Corrupt Practices Act (FCPA) away from U.S. businesses. The E.O. imposes additional obligations and restrictions on the Attorney General with regard to FCPA enforcement.
The FCPA prohibits paying or offering to pay money or anything of value to a foreign official for the purpose of obtaining or retaining business. The FCPA applies to U.S. persons, domestic concerns, and issuers of securities listed on a U.S. exchange or that are required to file S.E.C. reports, as well as to foreign persons and entities that engage in foreign corrupt activity that occurs, at least in part, in or through the United States (such as by using U.S. currency). The FCPA also prohibits issuers from falsifying books and records, and from circumventing or knowingly failing to implement internal controls.
The E.O. declares that the FCPA has been “stretched beyond proper bounds and abused in a manner that harms the interests of the United States” and that current FCPA enforcement “impedes the United States’ foreign policy objectives[.]” The E.O. continues that “[t]he President’s foreign policy authority is inextricably linked with the global economic competitiveness of American companies,” and that “American national security depends in substantial part on the United States and its companies gaining strategic business advantages whether in critical minerals, deep-water ports, or other key infrastructure or assets.”
The E.O. goes on to say that “overexpansive and unpredictable FCPA enforcement against American citizens and businesses — by our own Government — for routine business practices in other nations not only wastes limited prosecutorial resources that could be dedicated to preserving American freedoms, but actively harms American economic competitiveness and, therefore, national security. It is therefore the policy of my Administration to preserve the Presidential authority to conduct foreign affairs and advance American economic and national security by eliminating excessive barriers to American commerce abroad.”
The E.O. institutes a 180-day review period, during which the Attorney General will:
Review all pending FCPA investigations and enforcement actions and take measures “to restore proper bounds on FCPA enforcement and preserve Presidential foreign policy prerogatives”;
Cease initiation of any new FCPA investigations or enforcement actions, unless the Attorney General determines that an individual exception should be made;
Review guidelines and policies governing FCPA investigations and enforcement actions;
Issue updated guidelines or policies that will govern the conduct of FCPA investigations and enforcement actions, which may only be initiated or continued with the specific authorization of the Attorney General.
The Attorney General may extend the 180-day review period by an additional 180 days. In addition, after the revised guidelines or policies have been issued, the Attorney General will determine whether additional actions are warranted, including “remedial measures with respect to inappropriate past FCPA investigations and enforcement actions.” The Attorney General will take such additional actions, and if Presidential action is required, the Attorney General will recommend such actions to the President.
The February 5, 2025 Memorandum redirects FCPA enforcement away from businesses, and toward Cartels and Transnational Criminal Organizations (“TCOs”). The February 10, 2025 E.O. makes no mention of Cartels or TCOs, but goes considerably further than the Memorandum with regard to shielding businesses, by imposing a moratorium on FCPA enforcement, and by requiring a review of past enforcement and consideration of possible remediation.
The E.O. does not apply to the S.E.C., which is not part of the Department of Justice and which has civil enforcement authority over issuers. It remains to be seen when and how the administration intends to restrict that authority in furtherance of its stated policy goals.
The E.O. can be revoked by a future president. While enforcement of the FCPA is now in suspense mode, and while that could remain the case for the duration of President Trump’s term, absent legislation that repeals or modifies it, the FCPA will remain in effect, and will be available to the next administration should it choose to enforce it, even on a retroactive basis, provided the statute of limitations (either five years or six, depending on the offense) for a particular violation has not expired.
The FCPA can raise complex and challenging issues for U.S. companies that do business in foreign countries, and for foreign companies that do business in or through the United States. Katten is well-equipped to help clients navigate those challenges.
Context for the Five Pillars of EPA’s ‘Powering the Great American Comeback Initiative’
On February 4, new US Environmental Protection Agency (EPA) Administrator Lee Zeldin announced EPA’s “Powering the Great American Comeback Initiative,” which is intended to achieve EPA’s mission “while emerging the greatness of the American Economy.” The initiative has five “pillars” intended to “guide the EPA’s work over the first 100 days and beyond.” These are:
Pillar 1: Clean Air, Land, and Water for Every American.
Pillar 2: Restore American Energy Dominance.
Pillar 3: Permitting Reform, Cooperative Federalism, and Cross-Agency Partnership.
Pillar 4: Make the United States the Artificial Intelligence Capital of the World.
Pillar 5: Protecting and Bringing Back American Auto Jobs.
Below, we break down each of the five pillars and present context what these pillars may mean to the regulated community.
Pillar 1: “Clean Air, Land, and Water for Every American”
The first pillar is intended to emphasize the Trump Administration’s continued commitment to EPA’s traditional mission of protecting human health and the environment, including emergency response efforts. To emphasize this focus, accompanied by Vice President JD Vance, Zeldin’s first trip as EPA Administrator was to East Palatine, Ohio, on the two-year anniversary of a train derailment. While there, Administrator Zeldin noted that the “administration will fight hard to make sure every American has access to clean air, land, and water. It was an honor to meet with local residents, and I leave this trip more motivated to this cause than ever before. I will make sure EPA continues to clean up East Palestine as quickly as possible.” After surveying the site of the train derailment to survey the cleanup, Zeldin and Vance “participated in a meeting with local residents and community leaders to learn more” about how to expedite the cleanup.
Taken alone or in conjunction with Administrator Zeldin’s trip to an environmentally impacted site in Ohio, Pillar 1 appears consistent with past EPA practice.
Read in the context of the Trump Administration’s first-day executive orders (for more, see here) and related actions such as a memoranda from Attorney General Pam Bondi on “Eliminating Internal Discriminatory Practices” and “Rescinding ‘Environmental Justice’ Memoranda.” Pillar 1 should be construed as meaning that EPA no longer intends to proactively work to redress issues in “environmentally overburdened” communities. Consequently, programs under the Biden Administration that focus on environmental justice (EJ) and related equity issues are ended. (For more, see here.)
Pillar 2: Restoring American Energy Dominance
Pillar 2 focuses on “Restoring American Energy Dominance.” What this means in practice is little surprise given President Trump’s promises during his inauguration to “drill, baby, drill.” Two first-day Executive Orders provide further context to this pillar:
The Executive Order “Declaring a National Energy Emergency” declares a national energy emergency due to inadequate energy infrastructure and supply, exacerbated by previous policies. It emphasizes the need for a reliable, diversified, and affordable energy supply to support national security and economic prosperity. The order calls for immediate action to expand and secure the nation’s energy infrastructure to protect national and economic security.
The Executive Order on “Unleashing American Energy,” seeks to encourage the domestic production of energy and rare earth minerals while reversing various Biden Administration actions that limited the export of liquid natural gas (LNG), promoted electric vehicles and energy efficient appliances and fixtures, and required accounting for the social cost of carbon. (For context on the social context of carbon, see here and here.)
Pillar 3: Permitting Reform, Cooperative Federalism, and Cross-Agency Partnership
Pillar 3 focuses on government efficiency including permitting reform, cooperative federalism, and cross-agency partnerships. As with Pillar 1, two of these goals (cooperative federalism and cross-agency partnership) are generally consistent with typical agency practice across all administrations even if administrations approach them in different ways.
“Permitting reform” generally means streamlining the permitting processes so that the time from permitting submission to conclusion is shorter.
Current events, most notably three court decisions involving the National Environmental Policy Act (NEPA), require a deeper exploration of “permitting reform.” NEPA is a procedural environmental statute that requires federal agencies to evaluate the potential environmental impacts of major decisions before acting and provides the public with information about the environmental impacts of potential agency actions. The Council on Environmental Quality (CEQ), an agency within the Executive Office of the president, was created in 1969 to advise the president and develop policies on environmental issues, including ensuring that agencies comply with NEPA by conducting sufficiently rigorous environmental reviews.
Energy-related infrastructure ranging from transmission lines to ports needed to ship LNG often require NEPA reviews. During his first term, President Trump sought to streamline NEPA reviews. As we previously discussed, in 2020, CEQ regulations were overhauled to exclude requirements to discuss cumulative effects of permitting and, among other things, to set time and page limits on NEPA environmental impact statements. During the Biden Administration, in one phase of revisions, CEQ reversed course to undo the Trump Administration’s changes, and, in a second phase, the Biden Administration required evaluation of EJ concerns, climate-related issues, and increased community engagement. (For more, see here.) Predictably, litigation followed these changes. Additionally, we are waiting on the US Supreme Court’s decision in Seven County Infrastructure Coalition v. Eagle County, Colorado, which addresses whether NEPA requires federal agencies to identify and disclose environmental effects of activities which are outside their regulatory purview.
These two recent decisions add to the ongoing debate about whether CEQ ever had the authority to issue regulations that have been relied upon for decades. These include the DC Circuit’s decision in Marin Audubon Society v. FAA (for more, see here) and a second decision by a North Dakota trial court in in Iowa v. Council on Environmental Quality.
Pillar 4: Make the United States the Artificial Intelligence Capital of the World
EPA’s Pillar 4 seeks to promote artificial intelligence (AI) so that America is the AI “Capital of the World.”
AI issues fall into EPA’s purview because development of AI technologies is highly dependent on electric generation, transmission, and distribution. EPA plays a key role in overseeing permitting and compliance activities related to facilities like these. As we have discussed, AI requires significant energy to power the data centers it needs to function, and a study indicates that the carbon footprint of training a single AI natural language processing model produced similar emissions to 125 round-trip flights between New York and Beijing. Because data center developments tend to be clustered in specific regions, more than 10% of the electricity consumption in at least five states is used by data centers. (Report available here.)
Pillar 5: Protecting and Bringing Back American Auto Jobs
Pillar 5 focuses on supporting the American automobile industry. As was discussed in relation to Pillar 2, EPA seeks to support the American automobile industry. Regarding this sector, EPA intends to “streamline and develop smart regulations that will allow for American workers to lead the great comeback of the auto industry.” Additionally, the US Office of Management and Budget released a memo on January 21, clarifying that provisions of the “Unleashing American Energy” Executive Order were intended to pause disbursement of Inflation Reduction Act funds, including those for electric vehicle charging stations.
While the particulars of this pillar are less clear than some others, we expect that EPA’s efforts in this area will involve some combination of permitting reform and rollback to prior EPA decisions related to vehicle emissions.
Businesses Beware: Latin America Transactions Likely to be Significantly Riskier Under the Trump Administration
Shortly after President Trump’s second inauguration, his executive branch took steps to further one of his signature promises: securing the southern border. While these actions primarily impact immigration laws, several executive orders, such as designating drug cartels and their affiliates as “terrorist organizations,” have increased the legal and compliance risk environment for both US and foreign companies.
While regulations pertaining to known terrorist organizations like ISIS and Al-Qaeda have been part of the global sanctions and anti-money laundering framework for quite some time, the addition of Mexican, Central and South American drug cartels to this list introduces new and complex risks for companies conducting cross-border business in these jurisdictions. To prevent violating these new requirements, companies should evaluate their Latin American operations and work to establish strong controls and compliance measures to ensure that they do not do business with or unwittingly provide material support to these organizations.
Below we provide an overview of the new directives and explain how businesses should prepare for the new regulations.
Executive Actions Look South
On his first day in office, President Trump issued a series of executive orders focused on this issue, including E.O. 14157, “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists”; E.O. 14161, “Protecting the United States From Foreign Terrorists and Other National Security and Public Safety Threats” and E.O. 14159, “Protecting the American People Against Invasion” (together, the January 20 E.O.s). And on February 5, her first day in charge of the Justice Department, Attorney General Pam Bondi issued several memoranda providing guidance on how the Department will shift its priorities and make additional resources available to reflect the administration’s focus on the southern border: the Bondi Memorandum regarding Charging, Plea Negotiations, and Sentencing and the Bondi Memorandum regarding Total Elimination of Cartels and Transnational Criminal Organizations (together, the Bondi Memoranda).
The Bondi Memoranda prioritize enforcement actions directed at, in part, the “total elimination of Cartels and Transnational Criminal Organizations (TCOs)” and the historic threats from widespread illegal immigration, dangerous cartels, transnational organized crime, gangs, human trafficking and smuggling, fentanyl and opioids, terrorism and other sources. To eradicate these threats, DOJ will enhance its focus on investigations related to immigration enforcement, human trafficking and smuggling, transnational organized crime and cartels and gangs.
Specific to white collar enforcement, the Department will now be prioritizing investigations into companies that provide material support or resources to designated foreign terrorist organizations (FTOs) or bribe foreign government officials to facilitate the criminal operations of cartels and TCOs under the Foreign Corrupt Practices Act (FCPA).
As the administration adds to the list of cartel-related entities that fall under these new designations, risk for companies doing business abroad will increase. For example, E.O. 14157 ordered the Secretary of the State to recommend additional cartels and organizations for designation as FTOs or Specially Designated Global Terrorists (SDGTs) with a focus, but not limitation, on cartels operating in certain portions of Mexico. While we await these designations, which the Secretary of State was supposed to have recommended on February 3, Congressman Chip Roy (TX-21) reintroduced the Drug Cartel Terrorist Designation Act, which would direct the designation of the Gulf Cartel, the Cartel Del Noreste, the Cartel de Sinaloa, and the Cartel Jalisco Nueva Generacion as FTOs and codify E.O. 14157 into law.
Increased Risk for Companies Operating in Mexico, Central and South America
While it is likely that at least some of the soon-to-be-designated entities already have sanctioned individuals under the US Department of Treasury’s Office of Foreign Asset Control’s regulations, we anticipate that the list will grow significantly. Making the matter more complicated, however, is that cartels, their affiliated entities and the persons that control these organizations have embedded themselves across many business areas in Latin America. So, the designation as an FTO is significant for several reasons:
Specific criminal law: It is a criminal offense under 18 U.S.C. § 2339B for companies and individuals to knowingly provide material support to FTOs, a sanction that does not currently exist under an SDN designation. The government broadly defines “material support” to include providing an FTO with any property (tangible or intangible) or services, including currency, financial services, lodging, personnel, and transportation. Thus, any transaction with an FTO could be viewed as providing “material support” to a terrorist organization that could result in significant fines and penalties for the organization. This includes “fees” that cartels routinely charge companies to operate in certain areas.
In one notable example of a prosecution under § 2339B, French building materials manufacturer Lafarge pled guilty in 2022 to a one-count criminal information charging conspiracy to provide material support and resources in Northern Syria from 2013 to 2014 to the Islamic State of Iraq and al-Sham (ISIS) and the al-Nusrah Front (ANF), both US-designated FTOs. According to court documents, Lafarge and its Syrian subsidiary schemed to pay ISIS and ANF in exchange for permission to operate a cement plant in Syria, which enabled the subsidiary to obtain approximately $70.3 million in revenue.
Extraterritorial reach: Restrictions on dealing with FTOs expands the reach of US regulators to non-US entities. While SDNs restrictions have certain reach to allow the United States to sanction extra-territorial actors, they are largely aimed at US entities and transactions involving US entities — 18 U.S.C. § 2339B has no such limitation. In other words, just as with Lafarge, a non-US company doing business with an FTO in Latin America can be prosecuted through the extraterritorial reach of 18 U.S.C. § 2339B. Indeed, there is precedent for such charges: Chiquita Banana pled guilty in 2007 to making payments to an FTO (the AUC in Colombia) and agreed to pay a fine of $25 million. E.O. 14157 increases the risk of similar prosecutions in the future.
Civil liability: Under the civil liability provisions of the Anti-Terrorism Act, 18 U.S.C. § 2333, a company can be directly liable for engaging in an act of international terrorism by providing material support to an FTO, or indirectly under the aiding and abetting provision for knowingly providing substantial assistance to the perpetrators of an attack committed, planned, or authorized by an FTO. The Act allows plaintiffs to recover treble damages, plus the cost of the suit, including attorney’s fees, which can add up exponentially.
Civil forfeiture: While current sanctions regimes allow US authorities to freeze assets of sanctioned entities, authorities may not take title to those assets without proving in court that the assets are related to a criminal offense. An FTO designation and related statutes will likely make it easier for the government to carry this burden, and even lighten it by arguably reducing the need to show a nexus to the United States.
How Companies Should Prepare
The combination of these new areas of risk and DOJ’s new focus on FTOs, TCOs, and SDGTs has important implications for companies conducting business internationally, particularly in Mexico and other parts of Latin America where cartels that are (or will be) designated as FTOs and TCOs are active. But that is not to say the companies cannot do business in the region. Rather, the risk can be mitigated and managed through robust policies, internal controls and compliance procedures. For example, companies should:
Conduct third-party due diligence: In a heightened regulatory framework, a company needs to know the counterparties it does business with to determine whether they are a sanctioned or designated party. In addition, doing business with third parties like vendors, agents or “finders,” consultants, and distributors or sales representatives can increase your compliance associated risks. Conducting enhanced due diligence is the best way to detect potential problem areas and prevent liability. Effective due diligence should be tailored to the company’s business and risks associated with that business and may include:
Media/internet searches.
OFAC sanctions list searches.
Commerce Department entity list searches.
Beneficial ownership reviews.
Politically exposed person reviews.
Company/business registries searches.
Site visits.
Litigation records reviews.
Corporate and leadership references.
Be aware of red flags: A company should know what to look for while conducting due diligence. Red flags may include:
Failure of potential partners to maintain appropriate government registrations.
Negative media and/or reference reports, particular those that suggest non-compliant or unlawful conduct.
Requests for excessive fees or commissions, cash payment, or excessive discretionary funds.
The third-party refuses to provide reasonable information to assess ownership information, or says “don’t worry about it,” or “you don’t want to know.”
Agreements that include vaguely or improperly described services.
Use internal controls: Robust compliance programs utilize a system of internal controls that help provide “reasonable assurances” that transactions are properly authorized and do not violate anti-money laundering rules or sanctions regulations. Implementing effective internal accounting and compliance controls not only ensures the reliability of financial reporting but it reduces the susceptibility that a company unwittingly provides material support to a designated terrorist organization or any of its affiliates. Along with internal accounting controls, it is important to establish a culture of integrity and ethics and put mechanisms in place to monitor compliance and report non-compliance.
Update your compliance program: The hallmarks of a good compliance program include, among other things:
A high-level commitment to corporate compliance policy by directors and senior management.
Clearly articulated and visible written policies.
Documentation of the purpose of all payments.
Periodic risk-based assessments that addresses the individual circumstances of the company.
Proper oversight and independence with appropriate funding resources.
Training and guidance that is effectively communicated to all directors, officers and employees.
Internal reporting system for confidential, internal reporting of compliance violations.
Effective process for responding to, investigating and documenting allegations of violations.
Enforcement that incentivizes compliance and disciplines violations.
Effective training and oversight of third-party relationships.
Monitoring and testing of the effectiveness of the compliance program.
Navigating OFCCP Changes: Insights on Compliance Post-EO 14173 [Podcast]
In this podcast, shareholders Scott Kelly (Birmingham) and Lauren Hicks (Indianapolis/Atlanta) provide an update on the current status of the Office of Federal Contract Compliance Programs (OFCCP), which has been in flux since President Trump’s inauguration. Lauren and Scott discuss the uncertainty that federal contractors have faced since the new administration issued Executive Order (EO) 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, which immediately revoked EO 11246 and gave federal contractors and subcontractors 90 days to comply. In addition, they address voluntary compliance options and the considerations for unwinding compliance with EO 11246 (for example, regarding job postings, career websites, self-identification, clauses with vendors and subcontractors, etc.). Lauren and Scott also highlight that the obligations under Section 503 and Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) remain in effect, meaning the annual affirmative action requirements under both programs are still applicable.
A Changing Enforcement Landscape Under the New Administration
As the Trump Administration embarks on its second term, significant shifts in government enforcement priorities are quickly taking shape. Not surprisingly, this administration appears to be focusing on immigration, drug and violent crime offenses, and traditional fraud rather than more novel white-collar enforcement. Additionally, it appears as though the Department of Justice will face potential resource issues due to the efforts of the Department of Government Efficiency (DOGE). Whether that is through hiring freezes, resignations resulting from ending remote work, layoffs, and potential buyouts of federal employees, the reduction of resources could have a substantial impact on staffing for white-collar enforcement cases, which tend to be resource intensive. Nonetheless, businesses and industry professionals should be aware of these evolving trends to ensure compliance and readiness for potential government investigations. Below we highlight what we expect to see throughout this administration’s term.
Immigration: The Trump Administration has reaffirmed its commitment to stringent immigration enforcement. Prior to this administration taking office, agencies like the Department of Labor had been focused on underage labor violations and holding businesses accountable for third party staffing companies. Now, however, the focus will shift to the removal of anyone not legally in the United States, likely leading to an increase in ICE raids and I-9 audits, including in places like hospitals, schools and places of worship, all of which used to be safe havens for this type of enforcement activity.
DEI and False Claims Act Liability: President: President Trump’s executive order aimed at eliminating diversity, equity, and inclusion (DEI) policies introduces new compliance challenges for federal contractors and grant recipients. The order reverses federal contracting requirements dating back nearly 60 years, which obligated federal contractors and subcontractors to implement affirmative action programs. The January 21, 2025, executive order requires federal contractors and grant recipients to agree that their “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions” under the False Claims Act (FCA). Second, it requires federal contractors and grant recipients to certify that they do “not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” The new certification and materiality requirements create heightened FCA risk for clients who participate in government programs and may incentivize whistleblowers to initiate qui tam actions.
Health Care: Health care enforcement, particularly those involving the FCA, is anticipated to continue at a steady pace. During President Trump’s first term, health care enforcement actions increased in his second year and remained steady thereafter, so we can likely expect a similar trend this term. Additionally, the newly established Department of Government Efficiency (DOGE) is taking steps to actively mine data for fraud, particularly in Medicare and Medicaid, which could lead to an increase in enforcement activities in the healthcare sector.
Foreign Corrupt Practices Act: While the Department of Justice (DOJ) achieved record enforcement levels for Foreign Corrupt Practices Act (FCPA) cases during the previous term, President Trump has signed an executive order directing the DOJ to pause criminal prosecutions related to the bribing of foreign government officials under the FCPA and instructing Attorney General Pam Bondi to prepare new guidelines for enforcement. The executive order comes a week after Attorney General Pam Bondi had already announced via a memo that the DOJ would be scaling back laws governing foreign lobbying transparency and bribes of foreign officials. In the memo, Attorney General Bondi also disbanded the National Security Division’s corporate enforcement unit and directed the Department of Justice’s money laundering office to prioritize cartels and transnational crime.
SEC Enforcement: We expect a major scaling back on the SEC’s focus on cryptocurrency, internal accounting and disclosure control violations. President Trump’s nominee as SEC chairman, Paul Atkins, is a known supporter of the crypto industry. Instead, we anticipate a renewed focus on traditional securities fraud cases, including like retail investor protection, Ponzi schemes, and insider trading. Under Chair Gensler, corporate penalties and disgorgement reached record highs, but with a Republican-controlled SEC we are likely to see smaller penalties and an adherence to disgorgement limitations set by the Supreme Court.
Antitrust: Antitrust enforcement is expected to pivot away from merger scrutiny towards addressing concerns related to “Big Tech” and alleged censorship. Additionally, there may be enforcement actions targeting alleged collusion on DEI issues, reflecting the administration’s executive orders and stated policy goals. Industries under high public scrutiny and foreign corporations should be particularly vigilant in preparing for potential agency scrutiny.
As the enforcement landscape continues to evolve, it will be crucial to stay informed and proactive.
Trending in Telehealth: January 6 – 27, 2025
Trending in Telehealth highlights state legislative and regulatory developments that impact the healthcare providers, telehealth and digital health companies, pharmacists, and technology companies that deliver and facilitate the delivery of virtual care.
Trending in the past weeks:
Provider training
Telepharmacy
Licensure exceptions
A CLOSER LOOK
Proposed Legislation & Rulemaking:
In Ohio, the Department of Mental Health and Addiction Services proposed amendments to the mobile response and stabilization services (MRSS) rule. The changes would clarify when telehealth is a “clinically appropriate” modality for delivering MRSS, such as when a clinician requests a mobile response and that clinician is not available to respond in person as part of the MRSS team.
New York’s FY 2026 budget includes legislation to join the Nurse Licensure Compact (NLC). Joining the NLC would make it easier for certain categories of nurses licensed in other states to practice in New York either physically or through telemedicine, and for New York providers to offer virtual care to their patients who travel to other states.
Also in New York, Senate Bill 1430 passed the Senate and was referred to the Assembly. The proposed legislation would establish the New York state abortion clinical training program within the Department of Health. The curriculum would include training on the delivery of abortion and other reproductive healthcare services through telehealth.
Vermont’s Office of Professional Regulation proposed amendments to the Administrative Rules of the Board of Pharmacy that further elaborate on the state’s telepharmacy practicing and licensure requirements. Under the proposed rules, telepharmacists would be subject to the same rules and standards applicable to all modalities of pharmacy practice. The proposed rule also provides that pharmacists licensed in other jurisdictions who wish to provide only telepharmacy services from outside of Vermont to individuals located in Vermont may apply for an out-of-state telepharmacist license.
Finalized Legislation & Rulemaking Activity:
North Dakota adopted rule amendments that provide exceptions to physician licensure for telehealth providers licensed in another state, including for continuation of care for an established patient, care while the patient is located within the state temporarily, preparation for a scheduled in-person visit, practitioner-to-practitioner consultations, and emergency circumstances.
The Ohio governor signed Senate Bill 95 into law. The legislation provides an exception to current state law that prohibits pharmacists from dispensing dangerous drugs through telehealth or virtual means.
The Texas Medical Board repealed 22 Tex. Admin. Code § 170, which included regulations concerning the electronic prescribing of controlled substances. The board also repealed 22 Tex. Admin. Code § 174, concerning telemedicine generally, and replaced it with the new 22 Tex. Admin. Code § 175. These regulations state that a physician may not provide telemedicine medical services to patients in Texas unless the physician holds a full Texas medical license or an out-of-state telemedicine license as of September 1, 2022. The regulations also set parameters for the provision of telemedicine services and requirements for prescribing via telemedicine. Notably, 22 Tex. Admin. Code § 175.3 specifies requirements for prescribing for chronic pain via telemedicine, and states that a physician must use audio and video two-way communication for prescribing for chronic pain unless certain criteria are met.
Why it matters:
States continue to recognize the importance of training providers on the delivery of services via telehealth. New York’s inclusion of telehealth in its proposed provider training programs not only affirms telehealth as an effective care delivery method, but also illustrates an understanding of the modern trend of healthcare delivery through alternate means. Ohio’s proposed rule amendments designating telehealth as a “clinically appropriate” care delivery modality for MRSS further underscores these principles.
Increased demand for telepharmacy services has prompted states to reevaluate their laws and regulations. The legislation in Ohio and regulatory amendments and proposals in Texas and Vermont illustrate states’ necessary responses to the increased demand for telepharmacy services.
States continue to enact legislation reflecting the importance of the ability to provide telehealth services across state lines. While telemedicine is often viewed as an option for care delivery, it is important for states to recognize that in some instances, telemedicine is the optimal or exclusive modality available. North Dakota’s adopted rule amendments and New York’s proposal to join the NLC are prime examples of states recognizing the utility and periodic necessity of virtual care delivery.
Telehealth is an important development in care delivery, but the regulatory patchwork is complicated.
What You Need to Know to Prepare for an ICE Raid or Audit
On January 20, 2025, President Trump signed an executive order declaring a national emergency at the southern border of the United States and allowing for the use of federal funding for border security and the deployment of armed resources to the region. The following day, the Department of Homeland Security issued a directive rescinding policies that limited enforcement in sensitive locations such as churches, schools and hospitals.
Since this directive was implemented, employers should be prepared to handle ICE immigration enforcement actions or inspections at these locations as ICE raids, which target undocumented employees are not announced in advance. Businesses, schools, employees, and students must be ready and well prepared to address immigration actions by ICE during the foreseeable future.
Preparing requires designating a key representative, such as HR, legal counsel or a senior administrator, to interact with ICE officers and training front-line staff to direct officers to the representative. Employers should be prepared with written response plans and should be aware of their rights—and the rights of their employees.