EEOC Submits Request to Eliminate Optional Disclosure of Non-Binary Data for EEO-1 Reporting
On April 15, 2025, in response to Executive Order 14168, Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government, the EEOC filed an Information Collection Request (ICR) with OMB requesting what it classified as a non-substantive change to remove the option for employers to voluntarily report non-binary data for those in their workforce.
In past years, the EEO-1 reporting instructions allowed respondents to provide non-binary data in a narrative form in the comment box of the report. EEOC believes this voluntary option must be removed to comply with Executive Order 14168.
The data collection for 2024 has not yet opened but this may be an indication the Agency is preparing to do so at some point in the near future. Additionally, the ICR is not seeking any changes beyond the current data collection approval period which runs through 2026.
Prescription Drugs: Executive Order Aims to Lower Prices
On April 15, 2025, President Trump signed an executive order (EO) with the aim of reducing the cost of prescription drugs. Although the EO is wide-ranging, its main provisions include:
Directing the Secretary of the U.S. Department of Health and Human Services (the Secretary) to seek comments on guidance for improving transparency and drug selection in the Medicare Drug Price Negotiation Program provisions of the Inflation Reduction Act (the Program) while minimizing negative impacts on drug development and pharmaceutical innovation.
Directing the Secretary to work with Congress to modify the Program to align the treatment of small molecule drugs with that of biologics. Biologics currently must be on market for 13 years prior to becoming eligible for price negotiation, as compared to the nine-year eligibility time period for small molecule drugs.
Aligning Medicare payments for outpatient drugs with hospital acquisition costs of such outpatient drugs.
Conditioning grants to community health centers on the health center’s establishment of practices to make insulin and injectable epinephrine available at or below the discounted price paid by the health center under the 340B Prescription Drug Program (plus a minimal administration fee) to certain low-income individuals.
Directing the Secretary, through the Commissioner of Food and Drugs, to improve the U.S. Food and Drug Administration Importation Program, which allows states to obtain approval to import drugs from foreign countries.
Directing the Secretary to evaluate and, if appropriate, propose site neutral regulations to ensure Medicare is not encouraging a shift in drug administration volume away from less costly doctor’s offices to more costly hospital settings.
The directives set forth in the EO are slated for implementation within the next year. Many of the directives, particularly those relating to drug prices and price negotiations, require legislative action by Congress. Bipartisan legislation has already been introduced in the House that would align the timeline for eligibility and price negotiation for small molecule drugs with biologics as set forth in the EO. However, many other provisions in the EO, such as the Importation Program, have historically not received broad bipartisan support.
Despite the hope of some pharmaceutical manufacturers to the contrary, the Trump administration has continued the Biden-era regulations relating to the Program and asserts that doing so could lead to greater savings than originally projected.
Interested parties should continue tracking legislative developments to discern which of these provisions will materialize.
Old North State Report – April 21, 2025
UPCOMING EVENTS
April 22, 2025
NC Chamber Spring Member Roundtable – Asheville
April 24, 2025
RTAC – Association of Corporate Counsel Spring Reception – (Raleigh)
April 28, 2025
Thinkers Lunch: Rob Christensen
May 13, 2025
NC Chamber Business Summit on Mental Health
June 5, 2025
Triangle Business Journal 2025 State of Health Care in the Triangle
LEGISLATIVE NEWS
SENATE PASSES BUDGET PLAN
On Monday, the North Carolina Senate unveiled Senate Bill 257, their budget plan for state spending, which includes raising pay for teachers and state workers, advancing income tax cuts, and allocating funds for future Hurricane Helene recovery efforts. The GOP’s budget plan, spanning 440 pages, promises to cut out “waste” and “bloated” spending. The proposed budget for the next two years totals $32.6 billion for 2025-26 and $33.3 billion for the following year.
The budget designates $700 million for Hurricane Helene response and an additional $1.1 billion for the state’s “rainy day fund,” which could be used for more Helene aid or other expenses. This adds to the $1.5 billion already spent on recovery since the storm occurred six months ago.
Most state employees would receive a raise of 1.25% next year, along with $3,000 in bonuses over two years. Some employees in specific roles, especially correctional staff and law enforcement, would receive even larger raises with average increases set at 3.3% for teachers, 8.9% for correctional officers, 9.2% for Highway Patrol, and 14.4% for Alcohol Law Enforcement and SBI officers. The budget plan would include a review of state government spending, led by State Auditor Dave Boliek.
Other highlights from the proposal include:
An overall increase in funding for health care, including sizeable investments in the Medicaid Contingency Reserve, reflective of Medicaid expansion.
A $535.5 million investment in a new 500-bed pediatric hospital with UNC Health and Duke Health.
$25 million to reinstate coverage of GLP-1 weight-loss drugs for certain state workers.
Overhauls to NCInnovation’s funding model, asking for the return of $500 million the organization received from the state in 2023.
Additional funds for teacher signing bonuses, mentorship programs, and initiatives to improve reading scores.
Doubling the tax rate for sports betting operators from 18% to 36%.
Allocating $3.5 billion over two years to the State Capital Infrastructure Fund, which finances construction initiatives at universities.
Reducing the income tax rate to 3.49% in 2027 and 2.99% in 2028, with potential for further reductions.
Increasing unemployment benefits to $400 per week.
Establishing a fund for state veterans’ cemeteries within the Department of Military and Veterans Affairs.
Restoring the “Rainy Day” reserves fund to $4.75 billion.
Allocating $110 million for PFAS monitoring through the Department of Environmental Quality.
Designating $1.5 billion in federal funds for rural broadband internet.
Would Repeal the state’s Certificate of Need Law
The Senate passed the budget proposal on Thursday morning with a vote of 30-15, which included four Democrats voting with the Republican majority. The House is expected to release their proposed budget in May, with negotiations between the chambers following thereafter.
Read more be NC Newsline
Read more by WRAL News (Doran) (4/15/25)
Read more by WRAL News (Doran) (4/17/25)
Read more by News & Observer (4/15/25)
Read more by News & Observer (4/16/25)
HOUSE PASSES REINS ACT
The North Carolina House of Representatives has passed House Bill 402, known as the “Regulations from the Executive in Need of Scrutiny (REINS) Act. ” This bill increases legislative control over state agency rulemaking, requiring approval from the North Carolina General Assembly for any regulation with economic impacts over $1 million. The House passed the bill with a 68-44 vote, gaining support from all Republicans and one Democrat.
Representative Allen Chesser (R-Nash) stated that the bill makes lawmakers accountable for significant regulatory decisions, providing citizens with someone to hold responsible. “Right now, we’ve got over 110,000 regulations on the books in North Carolina, and almost 100% of them pass through our current system,” Chesser explained on the House floor. “Very few would cross this threshold to where it comes into our body, where we get to get to review it. What we’re saying is that the people should have someone to hold accountable, and that should be us.”
Bill sponsors in the North Carolina General Assembly claim the REINS Act increases government accountability in regulatory reform, giving more power to the people and their representatives.
Chesser mentioned in committee that the final version is less intrusive than the original draft. However, Democrats opposing the bill raised concerns about possible constitutional issues regarding the separation of powers.
Read more by The Carolina Journal
MORE ACTION ON ENERGY POLICY
In 2021, the General Assembly required the Utilities Commission to take all reasonable steps to reach a 70% reduction in carbon dioxide emissions from electric public utilities in North Carolina by 2030 and carbon neutrality by 2050. Senate Bill 261, passed by the Senate on March 13, would eliminate the interim 70% goal. The bill would also allow public utilities to increase base rates to recapture costs for construction work in process outside the general rate case process. Language similar to Senate Bill 261 was included in the Senate’s proposed budget.
Read more by The Carolina Journal
Read more by NC Newsline
EMPLOYMENT PREFERENCE FOR MILITARY VETERANS COULD EXPAND
A bill to expand hiring preferences for military veterans, their spouses, and dependents in state government received a favorable hearing in the Committee on Homeland Security and Military and Veterans Affairs. House Bill 114 aims to improve current law by:
Removing the requirement that service must relate to a war period.
Including those on active duty.
Including members of the U. S. Armed Forces Reserve.
Including spouses or dependents of qualified individuals.
Representative Charles Smith (D-Cumberland), a co-sponsor, stated that the bill modernizes outdated laws, as veterans currently must have served during wartime, with the Vietnam War defined as the last such conflict. “Time has passed, and so to expand that preference to a greater pool of veterans, it strips away that language [defining the Vietnam War as the nation’s last],” Smith said.
Expanding preferences could help fill job vacancies in the state government. The veteran unemployment rate was 3.7% in March, with 84,900 civilian federal employees in North Carolina, including 28,000 veterans and 33,200 spouses of veterans or active-duty members. A quarter of the VA’s 482,000 employees are veterans.
The bill has been sent to the House Committee on Commerce and Economic Development.
Read more by NC Newsline
HOME GAMING LEGISLATION ADVANCES
House Bill 424 aims to make home card and dice games legal, although some critics worry it could lead to high-stakes gambling. The bill states that North Carolina’s gambling rules do not apply to recreational games in private homes or clubhouses.
The bill’s sponsor, Representative David Willis (R-Union), introduced it after a HOA board complaint about a card game at a public clubhouse. It allows people to play games for money in a private setting, but no mechanical devices can be used, and only personal winnings are allowed.
The bill, which passed a committee on April 1, has new restrictions for charitable game nights, limiting them to 24 per year and no more than two per week. An amendment was suggested to limit high-stakes gambling. The updated bill was approved and sent to the Rules Committee.
Read more by State Affairs Pro
BILL BANNING SOCIAL MEDIA FOR MINORS PASSES HOUSE COMMITTEE
A bill to ban social media for minors under age 14 has passed the House Commerce and Economic Development Committee. House Bill 301 requires parental consent for teens aged 14 and 15 to create social media accounts. The bill holds social media platforms accountable for removing unauthorized accounts and deleting personal data.
Platforms must verify user ages and can face fines up to $50,000 for violations. The NC Department of Justice can investigate and enforce compliance, with proceeds from penalties funding the state’s Civil Penalty and Forfeiture Fund.
The bill’s sponsor, Jeff Zenger (R-Forsyth), pointed out the strong support for the bill from parents of different political views. “One thing that’s been interesting is the overwhelming support from parents across the political spectrum. I didn’t expect such unanimous approval, but it’s been clear that parents are fully behind this.”
Some lawmakers are concerned about enforcement, but Zenger argues that action is necessary for children’s safety.
Read more by The Carolina Journal
Utah, West Virginia, and Wyoming Enact Laws Defining Male and Female
Utah, West Virginia, and Wyoming recently passed laws aligning with recent executive orders issued by President Donald Trump defining sex as binary and immutable.
Quick Hits
Utah, West Virginia, and Wyoming lawmakers recently enacted state laws recognizing only two genders, male and female.
The state legislators acted after President Donald Trump issued an executive order establishing that the federal government’s new policy is to recognize only two sexes, male and female, despite contravening federal law.
The three states restrict transgender and nonbinary individuals from using public school bathrooms and locker rooms that align with their gender identity.
Utah, West Virginia, and Wyoming joined Iowa and other states in passing state laws redefining gender as binary (e.g., male and female only) and immutable, thus attempting to reject governing Supreme Court of the United States case law recognizing gender identity as a protected characteristic under Title VII of the Civil Rights Act of 1964.
The Supreme Court ruled in Bostock v. Clayton County, Georgia that the firing of an employee because of the employee’s sexual orientation or gender identity constituted unlawful sex discrimination under Title VII. Various courts have since applied Bostock to prohibit discrimination on the basis of gender identity by protecting rights to use bathrooms corresponding to gender identity and to use pronouns reflecting one’s gender identity. Despite the fact Bostock remains good law, on January 20, 2025, President Trump signed an executive order to define sex as binary and immutable. The laws in Utah, West Virginia, and Wyoming track the executive order.
Utah Law
On January 30, 2025, Utah Governor Spencer Cox signed a law requiring transgender and nonbinary people to use bathrooms, locker rooms, and showers that correspond with their sex assigned at birth. The new law applies only to government buildings and public schools, but took effect immediately.
The new law defines female as “an individual whose biological reproductive system is of the general type that functions in a way that could produce ova.” It defines male as “an individual whose biological reproductive system is of the general type that functions to fertilize the ova of a female.”
As of September 1, 2024, Utah’s legal code defines sex as being “male or female, at birth, according to distinct reproductive roles as manifested by sex and reproductive organ anatomy; chromosomal makeup; and endogenous hormone profiles.”
West Virginia Law
On March 18, 2025, West Virginia Governor Patrick Morrisey signed into law a bill establishing only two sexes, male and female, under state law. It defines female as “an individual who naturally has, had, will have through the course of normal development, or would have but for a developmental anomaly, genetic anomaly, or accident, the reproductive system that at some point produces, transports, and utilizes ova for fertilization.” It defines male as “an individual who naturally has, had, will have through the course of normal development, or would have but for a developmental anomaly, genetic anomaly, or accident, the reproductive system that at some point produces, transports, and utilizes sperm for fertilization.” This law will take effect on June 16, 2025.
The law also states there must be a reasonable accommodation, such as a single-occupancy restroom or changing area, for people who are not willing or able to use the facility assigned to their biological sex.
Wyoming Law
On March 5, 2025, the Wyoming legislature passed a bill that defines sex as being male or female at birth. It defines female as “a person who has, had, will have or would have had, but for a congenital anomaly or intentional or unintentional disruption, the reproductive system that at some point produces, transports and utilizes eggs for fertilization.” It defines male as “a person who has, had, will have or would have had, but for a congenital anomaly or intentional or unintentional disruption, the reproductive system that at some point produces, transports and utilizes sperm for fertilization.”
This bill became law on March 14, 2025, without the governor’s signature. It took effect immediately.
On March 3, 2025, Governor Mark Gordon signed a different bill into law that requires public school students to use bathrooms and locker rooms that align with their sex assigned at birth.
That law took effect immediately.
Next Steps
Amid the changes in federal guidance and state law, Bostock remains good law and prohibits harassment and discrimination based on sexual orientation and gender identity. Further, the U.S. Equal Employment Opportunity Commission’s (EEOC) sex harassment guidelines voted on by the EEOC and issued in April 2024 remains active guidance. The EEOC’s acting chair, Andrea Lucas, has stated she wants to rescind all or part of the earlier guidance related to gender identity, in particular bathroom and pronoun usage, once a quorum exists as the EEOC.
Employers in public schools and government buildings in Utah, West Virginia, and Wyoming may wish to review their policies and practices to ensure employees have safe access to single-sex facilities, as required under the Occupational Health and Safety Act’s general duty clause, and carefully evaluate compliance with all applicable, federal, state, and local laws regarding access to bathrooms, locker rooms, dorms, and showers. The restrictions passed in the states do not apply to private employers in private buildings.
Study Projects Steep Price Increases if Seed Oils Were to be Banned
Secretary of Health and Human Services Robert F. Kennedy Jr. has been critical of seed oils, alleging that they are harmful to human health and that consumers have been “unknowingly poisoned.” (See Twitter Post). This view is not shared by most of the scientific community. Indeed, FDA has approved qualified health claims for canola, corn, and soybean oils (all types of seed oils) and reduction in the risk of coronary heart disease. See Qualified Health Claims: Letters of Enforcement Discretion | FDA. However, this has not stopped Sweetgreen from announcing a seed-oil free menu earlier this year.
Although no seed oils bans have been proposed, a recent study conducted by the World Agricultural Economic and Environmental Association found that any such ban would significantly increase consumer vegetable oil prices and would have deleterious effects on the U.S. farm industry (non-seed oils like olive, palm, and peanut oil are largely imported).
Specifically, the study found that per capita spending on vegetable oils and fats would be 42.8% higher per year if overall vegetable oil consumption remained the same (non-seed vegetable oils substituted completely for seed oils). A second scenario assumed that the oils are not fully substitutable, resulting in a 21.1 pound per capita drop in vegetable oil consumption and an 8% greater per capita spending on vegetable oils per year.
The study characterizes the simulated effects as having an unprecedented shock on the oilseed market.
Trending in Telehealth: March 2025
Trending in Telehealth highlights monthly 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 March:
Youth counseling and mental health services
Insurance coverage
Interstate compacts
A CLOSER LOOK
Proposed Regulations and Legislation:
In Hawaii, the House proposed House Bill (HB) 951 to allow a patient seen in person by another health care provider in the same medical group as the prescribing physician to be prescribed opiates for a three-day supply or less via telehealth.
Tennessee proposed Senate Bill (SB) 231 to require health benefit plan coverage of speech therapy, both in person and via telehealth.
Oklahoma proposed amendments revising the office location requirements for tele-dentistry. While dentists were previously required to maintain office locations in Oklahoma, the amendment increases flexibility by allowing dentists to maintain office locations in Oklahoma or in states adjacent to Oklahoma, so long as the offices are located within 50 miles of an Oklahoma border of a state with an interstate dental and dental hygienist compact.
Both chambers of the Tennessee legislature passed SB 1122 to create a youth mental health service program, which includes the use of telehealth.
Both chambers of the Maryland legislature passed SB 94, an amendment that would require Medicaid to cover maternal health self-measured blood pressure monitoring for all eligible recipients. Specifically, the program must cover the provision of validated home blood pressure monitors and reimbursement of health care providers and other staff time used for patient training, remote patient monitoring, transmission of blood pressure data, interpretation of readings, and the delivery of co-interventions.
Also in Maryland, the House proposed an amendment that would allow certain out-of-state providers to deliver clinical professional counseling services via telehealth to students. Among other changes, the amendment removes limitations that previously capped counseling services at five days per month and 15 days per calendar year.
West Virginia’s SB 299 would require legislative telehealth rules to include a prohibition on prescribing or dispensing gender-altering medication.
In Colorado, the Department of Regulatory Agencies and the Medical Board proposed a rule imposing requirements for physicians and physician groups entering into collaborating agreements. Physicians must actively practice medicine in Colorado and, for purposes of the rule, practicing medicine based primarily on telehealth technologies does not constitute as “actively practicing medicine.”
Finalized Regulatory and Legislative Activity:
Virginia passed HB 1945, requiring that each school board consider developing and implementing policies that allow public school students to schedule and participate in telehealth services and mental health teletherapy services during regular school hours with parental consent. The bill mandates that any such policies developed by a school board must (i) require each school to designate a location for student use for such telehealth appointments, (ii) implement measures to ensure the safety and privacy of any student participating in a telehealth appointment, and (iii) prohibit any student from being subject to disciplinary measures for participating in an appointment during regular school hours.
The Mississippi governor signed SB 2415 into law, mandating that health insurance plans cover telemedicine services to the same extent as in-person consultations. Similarly, the bill requires that all health insurance and employee benefit plans in Mississippi reimburse out-of-network providers for telemedicine services under the same reimbursement policies applicable to other out-of-network providers.
North Dakota adopted an amendment revising telehealth licensure requirements for optometrists. Notably, the bill removes previous certification requirements, permits licensed optometrists to use telemedicine to provide care, and imposes new informed consent obligations.
Utah finalized three telehealth bills:
HB 39 requires the US Department of Health and Human Services to contract with a telehealth psychiatric consultation provider to offer consultation services to staff responsible for inmates’ psychiatric care.
SB 64 allows medical providers to electronically renew a recommendation to a medical cannabis patient cardholder or guardian cardholder using telehealth services.
HB 281 clarifies that only licensed psychologists, social workers, and counselors can provide mental health services in school settings, except as provided in a student’s individualized education plan or Section 504 accommodation plan, and other students may not be present when services are provided. Additionally, the school or provider must obtain written parental consent before providing or facilitating telehealth or another health care service to a student within a public school.
Virginia passed SB 1041, enabling healthcare providers to conduct telehealth sexual assault forensic examinations for victims of sexual assault if a forensic examiner is not readily available.
Colorado enacted HB 1132. The bill creates the military family behavioral health grant program to provide grants to local nonprofit organizations for the establishment and expansion of community behavioral health programs that provide behavioral health services to service members, veterans, and family members of service members and veterans. The bill requires the program to reimburse providers for telehealth visits at the same rate as in-person visits.
In Ohio, the Department of Mental Health and Addiction Services finalized a rule regarding mobile response and stabilization services (MRSS), structured intervention and support services designed for people under the age of 21 who are experiencing emotional symptoms, behaviors, or traumatic circumstances. The rule delineates the circumstances in which MRSS can be delivered using a telehealth modality, including, but not limited to, when the young person or family requests telehealth services or there is a contagious medical condition present in the home.
Compact Activity:
Several states have advanced licensure compacts. These compacts enable certain healthcare professionals to practice across state lines, whether in person or via telemedicine. The following states have introduced bills to enact these compacts:
Dietitian Licensure Compact: South Carolina, North Dakota, Iowa, and Oklahoma
Counseling Compact: New Mexico
Social Work Licensure Compact: North Dakota
Why it matters:
As youth mental health concerns rise, states increasingly turn to telehealth. Virginia, Tennessee, Utah, Maryland, and Ohio all advanced legislation or regulations to expand youth access to telehealth services, particularly for virtual counseling services in schools. Telehealth providers may be well-positioned to collaborate with teachers, caregivers, and school counselors to bridge gaps in youth healthcare.
States are increasingly adopting coverage parity legislation. Tennessee proposed a bill requiring health benefit plan coverage of speech therapy services provided via telehealth while Mississippi enacted broader legislation mandating health insurance coverage of telehealth services to the same extent as in-person services. These coverage parity initiatives improve telehealth access by ensuring that providers are equally incentivized to provide virtual and in-person services.
States continue to expand practitioners’ ability to provide telehealth services across state lines. Expanding interstate licensure compacts improves access to qualified practitioners, particularly in underserved and rural areas. These compacts also enhance career opportunities and reduce the burdens associated with obtaining multiple state licenses.
Telehealth is an important development in care delivery, but the regulatory patchwork is complicated. The McDermott digital health team works alongside the industry’s leading providers, payors, and technology innovators to help them enter new markets, break down barriers to delivering accessible care, and mitigate enforcement risk through proactive compliance.
Enhancing Efficiency in Foreign Defense Sales: Key Takeaways from Recent Executive Order
On April 9, 2025, President Trump issued an Executive Order (EO) titled “Reforming Foreign Defense Sales to Improve Speed and Accountability.” This EO aims to reform the foreign defense sales (FDS) system, which encompasses U.S. sales of defense products and services to foreign governments through both Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) by:
Improving accountability and transparency throughout the FDS system;
Consolidating parallel decision-making by granting simultaneous certifications and approvals during the FMS process. The current FMS process involves various steps that generally must be completed sequentially. These steps include securing approvals from multiple government agencies for the Letter of Offer and Acceptance, congressional approvals for sales exceeding certain thresholds and export licenses as necessary;
Reducing rules and regulations involved in the development, execution and monitoring of FDS and transfer cases;
Increasing government-industry collaboration to achieve cost and schedule efficiencies in the execution of the FMS program;
Advancing U.S. competitiveness abroad, revitalizing the defense industrial base and lowering unit costs for the U.S. and its allies and partners by integrating exportability features in the design phase, improving financing options for partners and increasing contract flexibility overall.
The EO will follow a phased implementation. The EO immediately directs the Secretary of State (SecState) and the Secretary of Defense (SecDef) to:
Implement National Security Presidential Memorandum 10 of April 19, 2018 (United States Conventional Arms Transfer Policy) or any successor policy directive;
Reevaluate restrictions imposed by the Missile Technology Control Regime on Category I items and consider supplying certain partners with specific Category I items, in consultation with the Secretary of Commerce (SecCom);
Submit a joint letter to Congress proposing an update to statutory congressional certification thresholds of proposed sales under the FMS and DCS programs in the Arms Export Control Act (22 U.S.C. 2751 et seq.). SecState is also tasked with working directly with Congress to review congressional notification processes to ensure the timely adjudication of FMS and DCS cases.
Additional key deadlines in the EO include:
By June 8, 2025, SecState in consultation with SecDef must:
Develop a list of priority partners for conventional arms transfers, issue updated guidance to Chiefs of the United States Diplomatic Missions regarding this list and update and reissue the list annually;
(1) Develop a list of priority end-items for potential transfer to priority partners, (2) ensure the transfer of priority end-items to priority partners would not cause significant harm to U.S. force readiness and (3) ensure the transfer of priority end-items to priority partners would advance the Trump Administration’s goal of strengthening allied burden-sharing.
By July 8, 2025:
SecState and SecDef, in consultation with SecCom, must prepare a plan to (1) improve transparency of U.S. defense sales to foreign partners by developing metrics for accountability, (2) secure exportability as a requirement in the early stages of the acquisition process and (3) consolidate technology security and foreign disclosure approvals.
By August 7, 2025:
SecDef, in collaboration with SecState and SecCom, must prepare a plan to develop a single electronic system to track all DCS export license requests and ongoing FMS efforts throughout the case life cycle.
Potential Impact on Defense Contractors
Once implemented, these actions will simplify the landscape for contractors to sell defense products and services to foreign governments. These changes should lead to increased opportunities for defense contractors as the approval process is expected to be substantially streamlined and the regulatory barriers reduced. Despite some U.S. allied countries seeking to develop in-country defense manufacturing capabilities, the streamlining of the FDS regulations may lead to increased sales opportunities for contractors with offerings that are sought by foreign militaries.
While not called out specifically in the EO, Foreign Military Financing (FMF) is a popular facilitating mechanism for DCS. FMF provides grants and loans to certain foreign governments to purchase U.S. defense products and services. The FMF rules are also likely to be streamlined by the EO. The specific effects of the EO will remain unclear until the agencies’ final plans are released. In the meantime, contractors should remain diligent in tracking changes to the FDS approval process.
A New Chapter in FCPA Enforcement: State Attorneys General Take Action to Enforce Violations
In a significant shift, California’s Attorney General announced his intention to enforce violations of the FCPA by businesses operating in California under the state’s Unfair Competition Law (UCL).
A cornerstone of U.S. anti-bribery and anti-corruption policy, the Foreign Corrupt Practices Act (FCPA) has for decades fallen exclusively to the U.S. Department of Justice (DOJ) to enforce, providing a relatively stable and predictable enforcement environment for corporations and individuals engaged in international business. However, this predictability was upended this past February.
In response to a February 10 executive order temporarily suspending federal enforcement of the FCPA — which prompted the DOJ to review active FCPA matters, postpone trial dates, and, in at least one case, voluntarily dismiss charges — California has moved swiftly to assert its own enforcement authority. On April 2, California Attorney General Rob Bonta issued a legal advisory signaling his office’s intent to enforce FCPA violations under California’s Unfair Competition Law (“UCL”) — the federal government’s temporary pause notwithstanding.
Specifically, the advisory explains that the FCPA continues to impose binding obligations on California businesses and that violations of the statute may give rise to liability under the UCL, which prohibits “unlawful, unfair, and fraudulent business acts and practices.” Cal. Bus. & Prof. Code § 17200 et seq. The UCL’s broad reach allows the Attorney General to “borrow” violations of other laws, including federal statutes like the FCPA, and pursue them as independently actionable violations under state law. The advisory underscores the range of remedies available to the California Attorney General in such cases, including civil penalties, restitution, injunctive relief, and disgorgement of ill-gotten gains.
State-Level FCPA Enforcement: California at the Forefront
While California is currently leading the way, the question remains whether other states will adopt a similar approach. Several factors suggest this could be the beginning of a broader trend:
1. State attorneys general have increasingly positioned themselves as active enforcers in the face of shifting federal priorities.
This is particularly true when those shifts touch on matters of consumer protection, public integrity, and corporate accountability.
2. Many states possess statutes analogous to California’s UCL.
Commonly referred to as Unfair and Deceptive Acts and Practices (UDAP) laws, these provide state-level enforcement mechanisms against a broad range of unlawful or deceptive business practices. Some UDAP laws, such as New York’s General Business Law § 349, require a showing of consumer harm, while others (such as California’s UCL) allow enforcement actions without the need to demonstrate direct consumer injury. Enforcement authorities in states with laws similar to California’s UCL are well-positioned to leverage them against conduct traditionally addressed under the FCPA.
Whether other state attorneys general will follow California’s lead remains to be seen, but the shifting enforcement landscape demands careful attention, as scrutiny from state-level enforcement may soon fill the gaps left by the DOJ’s recalibrated approach.
3. Unlike the FCPA, private litigants have an independent, private right of action under California’s UCL that empowers them to bring civil actions — suggesting the potential viability of leveraging FCPA violations as the predicate misconduct for UCL claims.
Indeed, Attorney General Bonta’s Advisory and accompanying press release may serve as such a signal to the UCL plaintiffs’ bar. This prospect may be particularly attractive in the current enforcement climate, where some federal FCPA actions are temporarily paused or dropped altogether.
Under the UCL, private plaintiffs who can demonstrate that they have “suffered injury in fact and lost money or property as a result of unfair competition” may pursue claims for relief if they can meet the necessary standing requirements, including demonstrating that an economic injury was causally linked to the alleged misconduct. But in certain circumstances, companies with international operations may be face significant financial exposure associated with alleged FCPA/UCL violations.
Against this backdrop, the most immediate and obvious targets for California state enforcement are likely to be companies with operations in California that were previously charged in federal FCPA cases but are now seeing their matters dismissed following DOJ’s ongoing review. In addition, any “whistleblower” allegations of foreign bribery may now grab the attention of state enforcement authorities.
Fragmented Authority and the Future of FCPA Enforcement
While California’s legal advisory signals a new direction for FCPA enforcement at the state level, the practical realities of international anti-corruption investigations raise significant questions about the scope and effectiveness of such efforts.
Unlike the DOJ, state attorneys general lack dedicated federal investigative resources such as the FBI and typically do not maintain established channels of communication and cooperation with foreign law enforcement agencies. These structural limitations could pose serious challenges for state-led enforcement of complex, cross-border bribery schemes.
At the same time, the federal enforcement landscape is also shifting. Under recently revised DOJ policy, each of the 94 U.S. Attorneys’ Offices throughout the country now have greater authority to initiate and prosecute FCPA-related matters without the need for oversight or direct involvement from DOJ’s Fraud Section, provided the conduct can be framed as “foreign bribery that facilitates the criminal operations of Cartels and Transnational Criminal Organizations (TCOs).”
Takeaways
This development marks a significant shift in the FCPA enforcement landscape, particularly in light of the current administration’s recent pronouncements and policies limiting federal enforcement of the statute. In this evolving environment, companies would be well-advised to reassess their anti-corruption compliance programs to ensure they account not only for federal enforcement risks, but also for the growing likelihood of state-level investigations, enforcement actions, and private causes of action.
April Updates on Maine’s Net Energy Billing Program
As we discussed in our February alert, the Maine Legislature continues to consider bills that would further limit or eliminate Maine’s Net Energy Billing (NEB) program. Since February, the Legislature introduced four new bills geared toward rolling back the NEB program:
LD 515, An Act to Reverse Recent Changes Made to the Law Governing Net Energy Billing and Distributed Generation, would bring the NEB program back to how it existed prior to 2017 and require the PUC to initiate a rulemaking to amend its NEB rules to that effect.
LD 839, An Act to Lower Consumer Electricity Costs by Prohibiting the Recovery Through Rates of Costs Attributable to Net Energy Billing, would provide for the payment of NEB costs from the state’s General Fund rather than through electrical rates.
LD 1317, An Act to Promote Responsible, Cost-effective Energy in Maine by Amending the Tariff Rates Applicable to the Commercial and Institutional Net Energy Billing Program, would amend the commercial and institutional NEB program starting in 2026 by directing the PUC to establish the tariff rates at a rate greater than 12¢ per kilowatt-hour but not exceeding the previous year’s rate. Starting in 2028 and onward, LD 1317 requires the tariff rate to equal 12¢ per kilowatt-hour.
LD 1321, An Act to Reform Net Energy Billing by Establishing Limitations on the Programs’ Duration and Compensation, would:
Limit the Kilowatt-Hour Credit Program to distributed generation resources with a nameplate capacity of 20 kilowatts or less; limit to 10 the number of customers or meters to a single project and only allow a customer to have a financial interest in up to five distributed generation resources.
Allow customers to only offset their electricity supply charges with NEB credits.
Require all NEB resources to sell their Renewable Energy Credits (RECs) within the state of Maine (and not outside the state).
Set the tariff rate to the supply rate of the standard-offer service rate.
Prohibit participation in the program beyond December 31, 2045.
On April 10, 2025, the Energy, Utilities, and Technology (EUT) Committee held a public hearing on LD 1317 and 1321, receiving mixed testimony from proponents and opponents on the proposed changes.
The EUT Committee also held a work session on three of the four NEB bills that we identified in our February alert, voting ought not to pass on two bills—LD 257 (An Act to Eliminate the Practice of Net Energy Billing) and LD 450 (An Act to Lower Electricity Costs by Repealing the Laws Governing Net Energy Billing), and tabling two others—LD 32 (An Act to Repeal the Laws Regarding Net Energy Billing) and LD 515 (An Act to Reverse Recent Changes Made to the Law Governing Net Energy Billing and Distributed Generation).
We will continue to monitor these bills and provide updates as appropriate.
Government Contractors Need to Be Prepared for Significant Reforms to the Federal Acquisition Regulation and Associated Agency Acquisition Supplemental Regulations
On April 15, 2025, President Trump issued Executive Order 14275, Restoring Common Sense to Federal Procurement (EO 14275). EO 14275’s purpose is to reform the Federal Acquisition Regulation (FAR) and associated agency acquisition supplements, such as the Defense Federal Acquisition Regulation Supplement (DFARS), to contain only provisions required by statute or essential to sound procurement. EO 14275 includes several significant provisions and deadlines that government contractors need to be prepared to address. Many of those are highlighted in this alert.
1. Why was EO 14275 Issued?
On January 31, 2025, President Trump issued Executive Order 14192, Unleashing Prosperity Through Deregulation (EO 14192), which expressed concern about the “the ever-expanding morass of complicated Federal regulation”, which “imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness.” To alleviate unnecessary regulatory burdens, EO 14192 established “that for each new regulation issued, at least 10 prior regulations be identified for elimination . . . to ensure that the cost of planned regulations is responsibly managed and controlled through a rigorous regulatory budgeting process.” EO 14192 applies to any regulation issued by any agency in the entire Federal Government.
Building on the concerns expressed in EO 14192, the recently issued EO 14275 related to government procurement further identified regulatory burdens causing inefficiencies in the government contracting process. For example, EO 14275 referenced a 2024 report written by Senator Roger Wicker, entitled “Restoring Freedom’s Forge – American Innovation Unleashed,” which advocated for various reforms to be made to Department of Defense procurements. EO 14275 also referenced the Section 809 Panel’s 2019 report on streamlining and codifying acquisition regulations, which recommends various acquisition reforms to leverage the dynamic marketplace, allocate resources effectively, enable the workforce, and to simplify acquisition.
Based on the information contained in these referenced reports and the Trump Administration’s goal of reducing regulations overall, EO 14275 establishes that it is the policy of the United States for the FAR to contain “only provisions required by statute or essential to sound procurement, and any FAR provisions that do not advance these objectives should be removed.”
2. Who will have responsibility for identifying which FAR provisions are required by statute or are “essential to sound procurement”?
The FAR is a single Government-wide procurement regulation, which is maintained by the FAR Council. The FAR Council was established by Congress “to assist in the direction and coordination of Government-wide procurement policy and Government-wide procurement regulatory activities in the Federal Government.” 41 U.S.C. § 1302(a). The FAR Council consists of the Administrator for Federal Procurement Policy, the Secretary of Defense, the Administrator of NASA, and the Administrator of General Services. Id. § 1302(a). A key mandate of the FAR Council is to “issue and maintain . . . a single Government-wide procurement regulation, to be known as the [FAR].” 41 U.S.C.A. § 1303.
Pursuant to EO 14275, the Administrator of the Office of Federal Procurement Policy (the Administrator), who also serves on the FAR Council, is required to coordinate with the members of the FAR Council, the heads of agencies, and appropriate senior acquisition and procurement officials from agencies to ensure that the FAR “contains only provisions that are required by statute or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”
Additionally, in order to review agency supplements to the FAR, each agency “shall designate a senior acquisition or procurement official to work with the Administrator and the FAR Council to ensure agency alignment with FAR reform and to provide recommendations regarding any agency-specific supplemental regulations to the FAR.”
3. What are the timelines associated with these significant FAR reforms?
The FAR must be amended pursuant to EO 14275 by October 13, 2025, which is within 180 days of April 15, 2025 (the date that EO 14275 was issued).
To assist with the enactment of these reforms, the Director of the Office of Management and Budget (OMB), in consultation with the Administrator, “shall issue a memorandum to the agencies that provides guidance regarding the implementation of [EO 14275].” EO 14275 requires that this memorandum be issued by May 5, 2025, which is 20 days after the order was issued. The memorandum is required to “ensure consistency and alignment of policy objectives and implementation regarding changes to the FAR and agencies’ supplemental regulations to the FAR.” Contractors should watch closely for the issuance of this memorandum that will provide greater clarity on the Trump Administration’s expectations for government procurement.
4. What types of FAR reforms should government contractors expect?
EO 14275 references that “the FAR has swelled to more than 2,000 pages of regulations, evolving into an excessive and overcomplicated regulatory framework and resulting in an onerous bureaucracy.” Accordingly, a major focus of the coming reforms will be to reduce the size and scope of the FAR and associated agency supplements.
The Section 809 Panel’s 2019 report on streamlining and codifying acquisition regulations serves as a likely predictor of several potential reforms that will receive close attention. The report includes several specific recommendations related to reforms that should be made to the FAR that will likely be closely reviewed by the Administrator and FAR Council when reforming the FAR.
While EO 14275 eliminates several regulations, it will be interesting to watch how its provisions also align with new regulations imposed by other executive orders impacting government procurement. For example, as we wrote about in a prior alert, Executive Order 14222 requires the creation of a new public database that must record every government payment issued by an agency under a government contract, along with a written justification for the payment, regardless of the size or type of the payment. These written justifications add an extra task for contracting officials and contractors, which may be inconsistent with the Administration’s goals to streamline acquisitions.
The devil will be in the details for how the FAR is amended, but contractors should be aware that the primary regulatory scheme that governs their businesses is about to change significantly.
CONCLUSION
Government contractors should closely review EO 14275 and should further pay attention to the additional memorandums and directives that will be issued as a result of that order.
Foley Automotive Update and the Latest Insights on Tariffs
Special Update — Trump Administration and Tariff Policies
President Trump on April 14 told reporters he was “looking at something to help some of the car companies” regarding tariffs, and noted “they’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here.” Further details have not been provided and it is unclear if the statements referred to aspects of the executive order imposing a 25% U.S. import tariff on fully assembled automobiles (effective April 3) or the 25% levies on certain major auto parts (scheduled to take effect no later than May 3).
The Canadian government on April 15 announced it will allow automakers to import certain U.S.-manufactured cars and trucks without tariffs, provided the vehicles are compliant with the Canada-U.S.-Mexico Agreement (CUSMA), and companies operating in the nation do not shift their vehicle production out of Canada. Canada had previously imposed a 25% retaliatory tariff on vehicles imported from the U.S. that are not compliant with the CUSMA.
China raised tariffs on all U.S. goods from 84% to 125% effective April 12, and stated that since “American goods are no longer marketable in China under the current tariff rates, if the U.S. further raises tariffs on Chinese exports, China will disregard such measures.” This follows the Trump administration’s implementation of a 125% “reciprocal” duty on many Chinese imports imposed on top of an existing 20% levy on goods imported from China.
China’s decision to impose export restrictions for certain rare earth minerals and magnets has caused shipments to halt at many Chinese ports pending the establishment of a new regulatory system for the materials. This development could impact automotive supply chains and a range of other sectors.
President Trump on April 15 issued an executive order launching a Section 232 national security investigation into the United States’ reliance on imports of processed critical minerals and derivative products. The U.S. is significantly reliant on China for the processing of many types of rare earth metals.
The Trump administration began investigations into imports of certain semiconductors, and the assessment could result in new tariffs.
The European Commission on April 10 announced a 90-day postponement of its plan to implement counter-tariffs on $23 billion worth of U.S. goods, noting the EU preferred negotiations to escalating trade wars.
Six Senate Democrats, along with Sen. Rand Paul (R-KY), on April 8 announced a privileged resolution to force a floor vote over whether to revoke the emergency declaration used as a basis for President Trump’s tariffs. A vote could occur sometime after the Senate returns from a two-week break, according to an update in POLITICO.
U.S. Senators Chuck Grassley (R-IA) and Maria Cantwell (D-WA) on April 4 introduced legislation that would require the President to notify Congress of coming tariffs within 48 hours of such an imposition and congressional approval within 60 days.
U.S. House Rep. Don Bacon (R-NE) on April 7 introduced legislation that would restrict President Trump’s authority to unilaterally impose tariffs. The bipartisan bill has two Republican co-sponsors.
Automotive Key Developments
Automotive News provided overviews of which auto parts and vehicles could be the most susceptible to U.S. import tariffs or Canadian counter-tariffs.
The Wall Street Journal provided updated analysis on the estimated impact of new tariffs on the revenues of the top automakers.
S&P Global Mobility on April 14 downgraded its U.S. new light-vehicle sales forecasts by 700,000 units in 2025, 1.2 million units in 2026, and 930,000 units in 2027 due to their expectation that “persistent, high tariffs” are the “next phase of normal.” Prior to the downgrade, S&P projections published on March 27 indicated U.S. light-vehicle sales could fall to a range of 14.5 and 15 million units annually if tariffs are maintained.
Goldman Sachs lowered its projection for 2025 U.S. new vehicle sales to 15.4 million units, from a previous forecast of 16.25 million units. New vehicle sales in 2026 were revised by 1.1 million units to 15.25 million units.
Anderson Economic Group estimated a U.S. consumer impact of $30 billion would result from the Trump administration’s 25% automotive import tariffs if the duties are maintained for a full year.
New vehicle sales in Canada could decline by 25% in 2025, according to revised projections from the Canadian Automobile Dealers Association (CADA).
The Wall Street Journal referred to Michigan’s economy as “the first victim of Trump’s trade war,” as the state ranks fifth in the nation measured by the size of its imports and exports.
First-quarter 2025 U.S. new light-vehicle sales increased 4.4% year-over-year, and EV sales rose by an estimated 11.4% YOY, as consumers accelerated purchases ahead of the expectation for higher prices due to tariffs.
First-quarter 2025 U.S. vehicle sales were up 17% YOY for GM, 10% for Hyundai, 7% for Volkswagen, 5.7% for Nissan, 5% for Honda, and 1% for Toyota. Sales declined 12% for Stellantis and 1% for Ford.
U.S. House lawmakers introduced several Congressional Review Act resolutions that intend to repeal certain clean-vehicle waivers issued for California under the Biden administration. Senate Republicans are pursuing similar measures.
Governor Gavin Newsom and California Attorney General Rob Bonta announced they have filed a lawsuit to challenge President Trump’s authority to impose tariffs. The New Civil Liberties Alliance filed a separate suit that alleged the President illegally imposed certain tariffs on Chinese goods.
OEMs/Suppliers
Stellantis will temporarily lay off approximately 900 U.S. workers in Michigan and Indiana and idle certain plants in Canada and Mexico to evaluate the effects of the Trump administration’s automotive import tariffs.
Over 6,000 workers in Canada’s auto sector have received temporary layoff notices since President Trump’s tariffs on automobile imports took effect on April 3.
GM on April 3 announced plans to hire hundreds of temporary employees to support increased production of light-duty trucks at its Fort Wayne, Indiana, assembly plant.
Stellantis and Ford are offering employee discount pricing to U.S. consumers, and Hyundai has pledged to freeze its prices until June, amid expectations tariffs will raise prices for new vehicles.
Two European-headquartered suppliers will require upfront payment from their customers to cover the cost of import duties.
European automakers are exploring a range of responses to U.S. import tariffs such as pausing shipments of certain vehicles, shifting production, and raising prices.
BMW, Mercedes-Benz, and Volvo are among the automakers that have indicated they may consider increased production in the U.S. to mitigate the effects of import tariffs.
Nissan halted orders for sales of certain Mexican-built Infiniti SUVs in the U.S. market due to the Trump administration’s automotive import tariffs.
Continental is exploring a separation of its ContiTech industrial unit to focus on its more profitable tire business.
Infineon Technologies AG will acquire Marvell Technology’s automotive Ethernet business for $2.5 billion, in a deal that is expected to expand the German company’s automobile technology capabilities.
Toronto-based ABC Technologies Inc. completed its acquisition of U.K.-based TI Fluid Systems. Rebranded as TI Automotive, the combined entities will have a revenue of $5.4 billion and will be headquartered in Auburn Hills, Michigan.
Market Trends and Regulatory
President Trump directed the Committee on Foreign Investment in the United States (CFIUS) to conduct a review of Nippon Steel’s proposed acquisition of U.S. Steel to determine if “further action” is appropriate. This follows an order prohibiting the acquisition issued by President Biden on January 3, 2025.
Retail sales of passenger cars in China rose 14.4% in March 2025 from a year earlier, according to analysis from the China Passenger Car Association.
U.S. Senator Elissa Slotkin (D-MI) introduced the Connected Vehicle National Security Review Act “to establish a national security review process for imports of internet-connected vehicles and components made by companies from China or other countries of concern.” Slotkin introduced a similar proposal as a member of the U.S. House in 2024, and she indicated the Senate bill would expand upon a Commerce Department final rule that prohibits the import and sale of connected vehicles and related components linked to the People’s Republic of China (PRC) and Russia.
A bipartisan “right to repair” bill was introduced in the U.S. Senate this month, and this follows similar legislation presented in the U.S. House in February 2025.
The cost of car repairs has increased by an estimated 27% in the last three years, and consumers could be impacted by higher repair costs if tariffs on auto parts are imposed in the coming weeks.
Autonomous Technologies and Vehicle Software
Autonomous trucking developer Kodiak Robotics plans to go public in a SPAC deal valuing the company at $2.5 billion.
Self-driving startup Nuro Inc. raised $107 million in a Series E funding round in a deal that is intended to help scale its autonomous driving technology and establish commercial partnerships.
Autonomous tech company Aurora Innovation intends to launch in Texas this month its first self-driving tractor-trailer without an operator.
China may prohibit the terms “smart driving” and “autonomous driving” in certain types of vehicle advertisements amid increased scrutiny in the nation over the safety of advanced driving assistance systems (ADAS), according to a report in Reuters.
Electric Vehicles and Low-Emissions Technology
To align production with demand, GM will temporarily lay off roughly 200 workers at its Factory Zero EV plant in Detroit, and the automaker will pause production of the BrightDrop electric van at its CAMI plant in Ontario.
Tesla stopped accepting orders in China for certain EV models imported from the U.S. following the imposition of China’s retaliatory 125% import tariff on American goods.
Atlas Public Policy estimated that over $7 billion in clean manufacturing projects in the U.S. were canceled in the first quarter of 2025, including over $2 billion for plants dedicated to EV supply chains.
The U.S. is projected to have at least 200,000 high-speed public chargers in place by 2030, down from previous expectations of 400,000, due to the Trump administration’s suspension of federal funding for the installation of charging stations.
Kia is developing an electric pickup truck for the North American market, with a goal of selling 90,000 units annually. The automaker hopes to sell 1.26 million EVs globally by 2030, down from a previous target of 1.6 million.
A Delaware bankruptcy judge approved the sale of Nikola’s Arizona factory and headquarters to Lucid Motors for $30 million.
The European Union is assessing options to replace recently imposed tariffs on Chinese-made EVs with minimum prices for the imported vehicles, according to an update from the European Commission.
FTC Issues RFI on Anti-Competitive Regulations
On April 14, 2025, following President Trump’s recently issued executive order addressing regulatory barriers to competition, the Federal Trade Commission (FTC) issued a Request for Public Comment Regarding Reducing Anti-Competitive Regulatory Barriers (RFI).
The RFI asks consumers, workers, businesses, startups, potential market entrants, investors, and academics for comments on federal regulations that may have one of the six anti-competitive effects identified by the FTC. Those enumerated effects include creating or facilitating the creation of monopolies, creating unnecessary barriers to entry, limiting competition, creating or facilitating licensure or accreditation requirements that unduly limit competition, unnecessarily burdening the agency’s procurement process, and imposing distortion on the operation of the free market.
After identifying a regulation with one of the enumerated effects, the FTC requests, essentially, a legal analysis of the basis of the comment. The additional information requested includes:
a citation to the regulation,
the specific language in that regulation that leads to the anti-competitive effect,
an applicable legal authority interpreting the regulation,
an explanation of how the regulation operates (including relevant product and geographic markets affected),
an explanation of why the regulation should be eliminated or modified, and
an explanation of “whether the regulation satisfies the definition of ‘significant regulatory action’ in Executive Order 12866 of September 30, 1993.”
The amount of detailed information requested through the RFI suggests that the FTC will carefully consider industry comments, which may be submitted through May 27, 2025.