OCR Issues Guidelines on Title IX’s Application to NIL Payments
As the sun sets on the Biden administration, the Office for Civil Rights of the U.S. Department of Education (OCR) provided a new Fact Sheet on Jan. 16, 2025, to “clarify” how Title IX will apply to universities’ direct payments to student-athletes for use of their names, images and likenesses (NIL) under the proposed House vs. NCAA settlement. The Fact Sheet is consistent with decades of prior OCR guidance. It is not surprising that “compensation from a school for use of a student-athlete’s NIL” under the House settlement will qualify as “athletic financial assistance” subject to Title IX. It is also not surprising that OCR reminded schools that they retain responsibility to treat male and female student-athletes equitably even when NIL payments are made by affiliated third parties like collectives.
The key, as always, to Title IX compliance is in the implementation – the details of how schools are implementing their House structures.
Title IX Applies to Schools’ House Payments
While OCR inaccurately mingled two different Title IX standards applicable to athletic financial assistance on page 4 of the Fact Sheet (which confused many commentators on social media), OCR ultimately set forth the standard in the applicable Section 4 that is consistent with Title IX regulations dating back to 1979:
“When a school provides athletic financial assistance in forms other than scholarships or grants, including compensation for the use of a student-athlete’s NIL, such assistance also must be made proportionately available to male and female athletes.” (Emphasis added.)
This is not necessarily a dollar-for-dollar proportionality test. There may be legitimate non-discriminatory justifications to explain differences in who qualifies for House payments as well as their amounts, as long as a school’s House payment structure provides for equitable availability.
Implementation Is Key
The pathway for schools to implement House consistently with federal civil rights laws remains available for those universities that choose to take it.
The keys for schools’ Title IX-compliant implementation will remain implementing an equitable NIL marketing strategy and structuring good-faith NIL valuations, as many schools have begun to do. Of course, there are many nuances to the legal implementation.
Conclusion
Because the new Fact Sheet doesn’t change long-standing Title IX guidance, this particular Biden administration action is unlikely to affect Judge Claudia Wilken’s approval of the House settlement itself, and nothing would be accomplished if this Fact Sheet were withdrawn by OCR next week because it merely reiterates existing Title IX concepts. Of course, the incoming administration or Congress may take a new legal approach to this evolving area of our industry.
Lawsuits are inevitable over Title IX’s application to schools’ House implementation strategies. Developing Title IX-compliant NIL and House frameworks now are essential for future defense strategies.
TikTok, the Clock Won’t Stop, and Cases Involving Court Jurisdiction Narrowly Focused – SCOTUS Today
As the snow has fallen on Washington, DC’s First Street over the past few days, the Supreme Court has begun to issue opinions in the current term.
One of those cases has been in the news constantly, as it relates to a matter at issue in the recent presidential campaign that will likely get attention after the inauguration. The other two relate to federal court jurisdiction, but they are also consequential because their fact patterns are likely to be duplicated in future litigation.
While, with the advent of the new administration, things very well might change, the news today that the Court has upheld a law that could ban the social media platform TikTok this Sunday is significant not only to expressive younger Americans (perhaps your children and mine) but also as a matter of national security.
In a per curiam opinion in TikTok, Inc. v. Garland, the Court noted the following:
There is no doubt that, for more than 170 million Americans, TikTok offers a distinctive and expansive outlet for expression, means of engagement, and source of community. . . . But Congress has determined that divestiture is necessary to address its well-supported national security concerns regarding TikTok’s data collection practices and relationship with a foreign adversary.
And the Court has sided with Congress. Accordingly, TikTok either must divest or shut down the app this Sunday, January 19, as of which date, “the Protecting Americans from Foreign Adversary Controlled Applications Act [the “Act”] will make it unlawful for companies in the United States to provide services to distribute, maintain, or update the social media platform TikTok, unless U.S. operation of the platform is severed from Chinese control.”
The petitioners are two TikTok operating entities and a group of U.S. TikTok users who claimed that the Act, as applied to them, violates the First Amendment. The Court acknowledged that the case could be considered more of a regulation as to a foreign government adversary’s corporate ownership than as a matter of speech. Thus, the Court holds that “a law targeting a foreign adversary’s control over a communications platform is in many ways different in kind from the regulations of non-expressive activity that we have subjected to First Amendment scrutiny.” Those differences include “the Act’s focus on a foreign government [and] the congressionally determined adversary relationship between that foreign government and the United States. . . .” However, “[t]his Court has not articulated a clear framework for determining whether a regulation of non-expressive activity that disproportionately burdens those engaged in expressive activity triggers heightened review. We need not do so here. We assume without deciding that the challenged provisions fall within this category and are subject to First Amendment scrutiny.”
The Court goes on to set forth a primer on the conditions predicate for considering governmental action that arguably suppresses speech. “Content-based laws—those that target speech based on its communicative content—are presumptively unconstitutional and may be justified only if the government proves that they are narrowly tailored to serve compelling state interests.” Reed v. Town of Gilbert, 576 U.S. 155, 163 (2015). Content-neutral laws, in contrast, “are subject to an intermediate level of scrutiny because in most cases they pose a less substantial risk of excising certain ideas or viewpoints from the public dialogue.” Turner Broadcasting System, Inc. v. FCC, 512 U. S. 622, 642 (1994) 512 U.S., at 642 (citation omitted). “Under that standard, we will sustain a content-neutral law ‘if it advances important governmental interests unrelated to the suppression of free speech and does not burden substantially more speech than necessary to further those interests.” Turner Broadcasting System, Inc. v. FCC, 520 U. S. 180, 189 (1997).’”
”As applied to petitioners, the challenged provisions are facially content neutral and are justified by a content-neutral rationale.” Noting that the Act in question is “designed to prevent China—a designated foreign adversary—from leveraging its control over ByteDance Ltd. to capture the personal data of U. S. TikTok users,” which “qualifies as an important Government interest under intermediate scrutiny,” the Court held that this standard, including its narrow focus, justified the divestiture order at issue.
Justice Sotomayor and Justice Gorsuch concurred in the result. Justice Gorsuch’s caveat, expressing satisfaction that the Court did not consider evidence available to it but not to the petitioners, is noteworthy. That is a potential issue in many national security-related cases.
Labor law practitioners who read this blog will be particularly interested in the Court’s unanimous opinion in E.M.D. Sales, Inc. v. Carrera. The case concerns the application of the Fair Labor Standards Act (FLSA), guaranteeing a federal minimum wage for covered workers, 29 U. S. C. §206(a)(1), and requiring overtime pay for those working more than 40 hours per week, §207(a)(1). There are, however, many employees who are exempt from the FLSA’s overtime-pay requirement, e.g., salesmen who primarily work away from their employer’s place of business. §213(a)(1). The application of that exemption places the burden on the employer to show that it applies. Here, EMD, a Washington, DC-area food distributor, faced overtime claims by certain sales representatives who manage inventory and take orders at grocery stores. Several sales representatives sued EMD, alleging that the company violated the FLSA by failing to pay them overtime.
At trial, the U.S. District Court for the District of Maryland held that EMD failed to prove by “clear and convincing evidence” that its sales reps were “outside salesmen.” The U.S. Court of Appeals for the Fourth Circuit affirmed. EMD argued that the sales representatives were outside salesmen and, therefore, exempt from the FLSA’s overtime-pay requirement and that the District Court should have used the less stringent “preponderance of the evidence” standard.
The Supreme Court agreed, holding that the preponderance-of-the-evidence standard applies when an employer seeks to demonstrate that an employee is exempt from the minimum wage and overtime pay provisions of the FLSA. Noting that at the time of enactment of the FLSA in 1938, and continuing to the present, the preponderance standard is the default mode in American civil litigation, the Court held in favor of EMD.
There are three main circumstances in which a more stringent standard might apply: (1) where a statute requires it, (2) where the Constitution requires it, and (3) where coercive governmental action is present. None of those is present here. Moreover, in a related area to the case at bar, employment discrimination, the preponderance standard has consistently been applied. Additionally, the Court rejected the notion that the non-waivability of FLSA rights is material to what standard of proof applies.
Ultimately, the remedy applied by the Court is a limited one. In reversing the decision, the Court simply remands the case to the Court of Appeals to determine whether employees would fail to qualify as outside salesmen even under a preponderance standard.
In a case decided two days ago, Royal Canin U.S.A. Inc. v. Wullschleger, the Court dealt with a consumer claim that the manufacture of a brand of dog food (full disclosure: my dog loves the Golden Retriever variety) had engaged in deceptive marketing practices. The consumer’s original claim, filed in state court, asserted both federal and state law violations. Royal Canin removed the case to federal court pursuant to 28 U. S. C. §1441(a). The plaintiff, Anastasia Wullschleger, wanted the case to be resolved in state court, so she amended her complaint to remove any mention of federal law and petitioned the district court for a remand to state court, which the court denied. However, the Eighth Circuit reversed, and a unanimous Supreme Court, per Justice Kavanaugh, affirmed, holding that “[w]hen a plaintiff amends her complaint to delete the federal-law claims that enabled removal to federal court, leaving only state-law claims behind, the federal court loses supplemental jurisdiction over the state claims, and the case must be remanded to state court.”
Thus, the Court has begun to issue new opinions, at least one of which is going to resound loudly on the domestic political scene.
Mississippi Gaming Commission Meeting Report (January 2025)
January 16 Meeting
The Mississippi Gaming Commission held its regular monthly meeting on Thursday, January 16, 2025, at 9:00 a.m. at the Bolton State Building – D.F.A. Auditorium in Biloxi, Mississippi. Executive Director Jay McDaniel and Chairman Franc Lee, Commissioner Kent Nicaud and Commissioner Jeremy Felder were all in attendance. The following matters were considered:
LICENSING
The Commission approved the issuance of a license to the following:
New Palace Casino, L.L.C. d/b/a Palace Casino, as an Operator
FINDINGS OF SUITABILITY
The Commission approved findings of suitability for the following persons or entities:
Robert Joseph Granieri – Land Holdings I, LLC d/b/a Scarlet Pearl Casino Resort
Alan Wayne Ellingson – Crown MS Gaming Inc.
Satvinder Bhens – BetMGM, LLC
Parag Mahesh Vora – HG Vora Capital Management LLC
HG Vora Capital Management LLC — Greater than 5% Shareholder of PENN Entertainment, Inc.
OTHER APPROVALS
The Commission approved the following additional items:
Biloxi Capital LLC – Site Approval—Deferred
End of Other Approvals
FTC Announces Final Junk Fees Rule Applying to Live-Event Tickets and Short-Term Lodging
On December 17, 2024, the U.S. Federal Trade Commission (FTC) announced its final “Junk Fees Rule” (the “Final Rule” or “Rule”) to prevent certain practices related to pricing in the live-event ticketing and short-term lodging industries. The Final Rule requires businesses that offer a price for live-event tickets or short-term lodging to disclose the total price, inclusive of mandatory charges, and to do so more prominently than other pricing information. The Final Rule also prohibits businesses from misrepresenting fees or charges in any offer, display, or advertisement for live events and short-term lodging. Notably, the Final Rule does not prohibit any one type of fee, nor does it prohibit specific pricing practices, such as itemization of fees or dynamic pricing. Instead, the Rule focuses on ensuring that fees are clearly disclosed.
The FTC’s stated aim in passing the Final Rule is to curb perceived unfair and deceptive pricing practices in these two industries, specifically so-called “bait-and-switch” pricing that hides the total price of tickets and lodging by omitting mandatory fees and charges from advertised prices and misrepresenting the nature, purpose, amount, and refundability of fees or charges. The FTC pointed to evidence that these practices are prevalent in these two industries, where most transactions occur online. The FTC emphasizes that “truthful, timely, and transparent pricing” “is critical for consumers” and claims this rule will allow American consumers to make better-informed purchasing decisions in these instances.
The Rule was published in the Federal Register on January 10, 2025, and is slated to go into effect 120 days later, putting its effective date as May 10, 2025. It is possible, however, that the incoming Administration will seek to change the rule or delay its effective date.
FTC Rulemaking Leading to Final Rule
The Final Rule is the culmination of the rulemaking process that the FTC initiated in November 2022, when it announced an Advanced Notice of Proposed Rulemaking under Section 18 of the FTC Act, to address certain purportedly unfair or deceptive acts or practices involving fees. The FTC specifically sought public comment on the prevalence of certain practices related to what it labeled “junk fees” and the costs and benefits of a rule that would require upfront inclusion of mandatory fees whenever consumers are quoted a price. After posing a series of questions to solicit data and commentary, the FTC received more than 12,000 comments in 90 days.
One year later, the FTC published a Notice of Proposed Rulemaking, which proposed a rule that prohibited misrepresenting the total price of goods or services by omitting mandatory fees from advertised prices and misrepresenting the nature and purpose of fees. The proposed rule was not industry-specific; rather, it would have applied broadly to businesses across the national economy. The FTC then received 60,000 more comments on its proposed rule, most of which were supportive. The FTC interpreted this feedback as confirmation of the prevalence of the types of fee-related practices the FTC sought to address. The FTC estimated that its proposed rule would save consumers up to 53 million hours per year of wasted time spent searching for the total price of live-event tickets and short-term lodging, equating to more than $11 billion over the next decade.
In March 2024, the Biden Administration launched an interagency initiative, co-chaired by the FTC and U.S. Department of Justice, called the “Strike Force on Unfair and Illegal Pricing.” The Strike Force seeks to combat unfair and illegal pricing and lower prices for all Americans. Shortly after the announcement of the Strike Force, the FTC held a public hearing on its proposed rule while it continued to consider comments, leading to the announcement of the Final Rule last month.
Final Rule
The Final Rule prohibits hidden fees and makes it an unfair and deceptive practice for “any Business to offer, display, or advertise any price” of live-event tickets or short-term lodging without clearly and conspicuously disclosing the total price. Under Section 5 of the FTC Act, a representation, omission, or practice is “deceptive” if it is likely to mislead consumers acting reasonably under the circumstances and is material to consumers; that is, it would likely affect the consumer’s conduct or decisions regarding a good or service. Price, for example, is a material term. A practice is considered “unfair” under Section 5 if it causes or is likely to cause substantial injury, the injury is not reasonably avoidable by consumers, and the injury is not outweighed by benefits to consumers or competition.
As an example, in the commentary to the rulemaking, the FTC says that bait-and-switch pricing, where the initial contact with a consumer shows a lower or partial price without including mandatory fees, violates the FTC Act even if the total price is later disclosed.
The Final Rule specifies that the “total price” is the “maximum total of all fees or charges a consumer must pay for any good(s) or service(s) and any mandatory Ancillary Good or Service” (any additional goods or services offered as part of the same transaction). Government charges, shipping charges, and fees for ancillary goods or services may be excluded under the rule.
The total price must be displayed more prominently than any other pricing information. If a final amount is displayed before the consumer completes the transaction, it must be disclosed as prominently as the total price.
The total price also must be displayed clearly and conspicuously, which means easily noticeable (“difficult to miss”) and easily understandable by ordinary customers. The clear-and-conspicuous requirement also covers audible communications. In addition to the total price, a business must display clearly and conspicuously the nature, purpose, and amount of any optional fee or charge that has been excluded from the total price, what the fee or charge is for, and the final amount of payment for the transaction.
The Final Rule goes beyond disclosure: It affirmatively prohibits misleading fees. Under the Final Rule, it is unlawful to misrepresent any fee or charge in an offer, display, or advertisement for live-event tickets and short-term lodging, including the nature, purpose, amount, or refundability of any fee or charge and what it is for.
State Laws and Regulations on Fees
The Final Rule does not preclude state laws that are more restrictive pertaining to unfair or deceptive fees or charges, except to the extent such laws or regulations are inconsistent with the Final Rule (and then only to the extent of the inconsistency). According to the FTC, a state law or regulation is not inconsistent with the Final Rule if the protection it affords is greater than the protection under the rule.
Numerous states have passed laws aiming to increase transparency in pricing and fees, including California, Colorado, Connecticut, Maryland, Minnesota, New York, and Tennessee. Further, some states have provisions that violations of Section 5 of the FTC Act also constitute deceptive practices under their state consumer protection statutes. The Final Rule thus augments the government scrutiny of fee-related practices and conduct that businesses may receive.
Takeaways and the Future of the Final Rule
Once the Final Rule becomes effective, when businesses advertise or display a price for live-event tickets or short-term lodging, they must display the total price — including any mandatory fees — and ensure any explanations for fees or charges are truthful and not misleading. Businesses have discretion to list optional fees. For businesses that have not previously been subject to state laws or regulations, the Final Rule will now apply to those businesses.
Despite the Final Rule’s narrow applicability to live-event tickets and short-term lodging, the FTC made clear it has not given up on other industries. The FTC emphasized it may address unfair and deceptive practices in other industries, as discussed in its Notice of Proposed Rulemaking, but will do so using its existing Section 5 authority.
The Final Rule was approved with a 4–1 vote, with Republican Commissioner Holyoak voting for the rule and incoming Republican FTC Chair Andrew Ferguson dissenting. Although the agency under new leadership could look to withdraw the Final Rule, under the Administrative Procedure Act, the FTC would need to publish a notice in the Federal Register explaining the reasons for the withdrawal, allow opportunity for comment, and consider those comments before repealing the Final Rule. Although incoming administrations in the past have imposed moratoriums on regulations under development, the Final Rule has been published in the Federal Register, and a moratorium likely would not impact the rule going into effect. The incoming administration, however, might choose to delay the effective date of the Final Rule. The Final Rule also falls within the window for review under the Congressional Review Act, creating another potential avenue for its repeal.
Separately, on January 14, 2025, the Consumer Financial Protection Bureau (CFPB) released a report titled “Strengthening State-Level Consumer Protections.” In the report, the CFPB encourages states to continue to go after “junk fees,” citing the FTC’s Final Rule and the FTC’s findings on the prevalence of certain practices. The CFPB provides proposed language for states to consider adding to their “state prohibitions on unfair, deceptive, and/or abusive acts or practices.” The CFPB’s recommended statutory language is industry-agnostic, meaning more states may look to adopt broad fee-related rules.
Like the FTC’s recent rule on non-compete agreements, the Final Rule may be subject to potential legal challenge, including by industry groups and trade associations. The landscape for disclosure of fees continues to evolve, and businesses should watch for developments at both the federal and state level.
Department of Education Warns NCAA Schools That NIL Deals May Implicate Title IX Obligations
The U.S. Department of Education warned National Collegiate Athletic Association (NCAA) schools that payments to athletes for the use of their names, images, and likenesses (NIL) implicate the gender equal opportunity requirements of Title IX of the Education Amendments, even if from outside sources.
Quick Hits
The U.S. Department of Education released a fact sheet that provides guidance on educational institutions’ Title IX obligations with NIL compensation for college athletes.
The guidance confirms the Department of Education’s view that NIL compensation from schools constitutes “athletic financial assistance” covered by Title IX’s equal opportunity requirements.
The guidance comes amid a changing landscape in college sports with NIL compensation and the prospect of potential revenue-sharing between schools and college athletes.
On January 16, 2024, the Department of Education’s Office for Civil Rights (OCR) released a nine-page fact sheet, titled, “Ensuring Equal Opportunity Based on Sex in School Athletic Programs in the Context of Name, Image, and Likeness (NIL) Activities,” providing long-awaited guidance on schools’ obligations with respect to Title IX in the context of NIL.
The fact sheet confirms that the department views NIL compensation provided by a school as “athletic financial assistance,” which Title IX requires to be distributed in a nondiscriminatory manner under Title IX.
The guidance comes years after the NCAA lifted restrictions on college athletes’ ability to earn compensation for their NIL. This has led to the formation of so-called NIL collectives, organizations typically comprised of boosters, fans, alumni, and businesses, to facilitate NIL deals for athletes.
Further, the NCAA and major conferences have reached a proposed settlement in litigation that will pay nearly $2.8 billion in back pay to former athletes over the next ten years and establish a revenue-sharing framework in which schools will be allowed to share more than $20 million annually with their athletes.
Title IX regulations require schools to provide equal athletic opportunity, regardless of sex, including with “athletic financial assistance” that schools award to college athletes.
According to the OCR fact sheet, the Department of Education “does not view compensation provided by a third party (rather than a school) to a student-athlete for the use of their NIL as constituting athletic financial assistance awarded by the school.” However, the fact sheet warns that the OCR has “long recognized that a school has Title IX obligations when funding from private sources, including private donations and funds raised by booster clubs, creates disparities based on sex in a school’s athletic program or a program component.”
“The fact that funds are provided by a private source does not relieve a school of its responsibility to treat all of its student-athletes in a nondiscriminatory manner,” the Department of Education said in the fact sheet. “It is possible that NIL agreements between student-athletes and third parties will create similar disparities and therefore trigger a school’s Title IX obligations.”
The department noted the variety and evolving nature of NIL agreements in college athletics and specified that the application of Title IX “is a fact-specific inquiry.” Further, and in recognition of the continued evolution of college athletics, the department noted that “Title IX regulations assume that the receipt of financial assistance does not transform students, including student-athletes, into employees,” and the fact sheet, thus, operates under the same assumption. The Department of Education stated that it would “reevaluate” this position should the legal landscape around that issue change.
Next Steps
The fact sheet comes just days before the presidential administration changeover, which is anticipated to impact the federal government’s response to NIL pay and make systemic changes to college sports, including regarding the question of employee status. Still, the fact sheet indicates that schools may face risks under Title IX with the distribution of NIL compensation even if third parties are providing that money.
TikTok Ban Upheld By SCOTUS– Is TCR Next?
So the US Supreme Court today upheld a law requiring that abysmal TikTok app to either by sold or face a nationwide ban.
The basis for the law is TikTok’s foreign ownership and the massive amount of data available to the Chinese government as a result.
I’m a huge fan of the ban, but mostly because I’m a geezer that thinks kids these days spend too much time staring at their phones.
Still, the national security concerns are very legitimate and resonate well beyond TikTok– for instance The Campaign Registry is still tracking most every 10DLC SMS campaign in the country and is still foreign owned.
I suspect new FCC Chairman Carr–with his focus on national security– and Olivia Trusty (Trump’s new FCC pic) will take a very dim view of TCR’s foreign ownership and I suspect a similar sale or ban ruling may be in the cards.
We’ll see.
Breaking News: U.S. Supreme Court Upholds TikTok Ban Law
On January 17, 2024, the Supreme Court of the United States (“SCOTUS”) unanimously upheld the Protecting Americans from Foreign Adversary Controlled Applications Act (the “Act”), which restricts companies from making foreign adversary controlled applications available (i.e., on an app store) and from providing hosting services with respect to such apps. The Act does not apply to covered applications for which a qualified divestiture is executed.
The result of this ruling is that TikTok, an app which is owned by Chinese company ByteDance and qualifies as a foreign adversary controlled application under the Act, will face a ban when the law enters into effect on January 19, 2025. To continue operations in the United States in compliance with the Act, the law requires that ByteDance sell the U.S. arm of the company such that it is no longer controlled by a company in a foreign adversary country. In the absence of a divestiture, U.S. companies that make the app available or provide hosting services for the app will face enforcement under the Act.
It remains to be seen how the Act will be enforced in light of the upcoming changes to the U.S. administration. TikTok has 170 million users in the United States.
5 Trends to Watch: 2025 Energy Regulation and Development
As a new administration takes office in 2025, several new energy policy trends are expected to emerge, reflecting the inherent tension that often exists between political desires and economic realities. For example, while the incoming Trump administration has expressed a desire to claw back subsidies made available under the Inflation Reduction Act (IRA), Republican states have also been significant beneficiaries under the IRA. In other areas such as import tariffs, bipartisan support could emerge, with each party supporting the same result for entirely different reasons. Five trends that could result are discussed below.
Carbon-Related Tariffs Could Reshape Global Trade and Business Strategy. The convergence of increased bipartisan support for import tariffs, albeit for different reasons, could result in a significant shift in international trade dynamics and potential costs for energy companies. President-elect Donald Trump has frequently expressed support for import tariffs as a tool to boost domestic manufacturing, increase revenues, or to create leverage for international negotiations. Democrats have supported adoption of carbon tariffs and mechanisms like the Carbon Border Price Adjustment Mechanism (CBAM) that is being implemented in the European Union to level the playing field for businesses investing in emissions reduction. Adoption of the European Union’s CBAM has created new operational challenges for companies throughout the world, and similar measures in the United States would add to that already complex legal and business landscape. Companies invested in renewable energy projects or reliant on imported components like solar panels and batteries should ensure transparency and awareness of their supply chains, monitor ongoing developments, and prepare for potential cost increases and supply chain disruptions.
IRA Tax Credit Future Critical for Energy Investment Decisions. While Trump has expressed opposition to the IRA, the established tax credits present a complex economic and political challenge. Republican-controlled states have been significant beneficiaries of investments generated by IRA tax credits, and many traditional energy companies have already made substantial investments based on these incentives, particularly in energy production and carbon sequestration projects. This creates significant economic pressure to maintain existing credits. However, uncertainty looms over funds yet to be distributed by the government, as well as details of future Internal Revenue Service guidance on IRA tax credits. This creates the potential to impact short- and mid-term investment decisions and may create a temporary chilling effect on new investments as stakeholders await additional clarity on implementation guidelines. Companies should closely monitor these developments, particularly those with pending applications or planning future projects dependent on IRA incentives.
Support for Clean Hydrogen Production Tax Credit Requires a Balancing of Interests. The clean hydrogen market has experienced record investment growth, catalyzed by the IRA’s tax credits. Many of these investments are being made by traditional energy companies. However, uncertainty remains over whether and to what extent the IRS will adopt stringent requirements advocated by many environmental organizations. These would require the renewable electricity to be produced from newly constructed generation (additionality), in the same hour as hydrogen is produced (temporal matching), and in the same region as hydrogen is produced (geographic matching). How the IRS resolves these issues could have a material impact on future green hydrogen investments. Here, the Trump administration will again be confronted by tension between its more general desire to claw back IRA incentives and the economic reality of significant investment to date along with support by traditional energy companies for continued future investments and increased financial certainty. This balancing of interests may result in adoption of technology neutral policies that are intended to reduce barriers to entry and increase economic certainty for investors.
Carbon Sequestration Gains Momentum Across Political Spectrum. Carbon sequestration offers traditional energy companies and carbon emitters a rare point of bipartisan consensus in energy policy, offering traditional energy companies a pathway to sustainability while maintaining core operations. With former North Dakota Gov. Doug Burgum, a prominent carbon capture and storage (CCS) advocate, announced as Trump’s nominee to lead the Interior Department, the technology could see expanded support. Carbon sequestration appeals to many environmental advocates seeking emissions reductions and to fossil fuel companies seeking to leverage their existing expertise in pipeline construction and drilling to create new opportunities in a transitioning energy market. This dual benefit of maintaining energy security while reducing carbon footprint positions CCS as a critical component in the energy transition landscape and will continue to attract support from both environmental advocates and traditional energy producers in 2025.
Renewed Support for Conventional Energy Production. A significant transformation in federal energy policy is anticipated in 2025, with renewed support for conventional energy development, including through expanded availability of federal oil leases, reduced regulation, and reconsideration of regulations that have been adopted to increase the cost of fossil fuel energy production. The Bureau of Land Management’s current restrictions on coal mining are expected to be reversed, while federal leasing for oil, uranium, and other mineral resources is likely to accelerate. This shift extends beyond mere leasing policies, however, as the Department of Justice will likely adopt a more industry-friendly stance overall. For example, enforcement of environmental regulations, particularly regarding methane emissions and associated royalty payments, is likely to become less stringent. These changes could substantially reduce operational costs for natural gas producers and other conventional energy operators, potentially stimulating increased domestic energy production.
Privacy Tip #427 – Ahead of the TikTok Ban, Users are Turning to Another Chinese App with Similar Privacy Concerns – What you Should Know
TikTok users are seeking alternate platforms to share and view content as the U.S. is set to ban the popular social media app on January 19, 2025. Instead of turning to U.S.-based companies like Facebook or Instagram, users are flocking to another Chinese app called Xiaohongshu, also known as RedNote. The app, which previously had little presence in the U.S. market, shot up to the most downloaded app in Apple’s app store this week. RedNote shares similarities to Yelp, where users share recommendations, but it also allows users to post short clips, similar to the soon-to-be-banned TikTok.
While some of these TikTok users choose to switch to RedNote because of the similar short-form video format, other users appear to be purposefully choosing another Chinese-owned app as a form of protest. Either way, ordinary American and Chinese citizens can easily interact in new ways on the internet through RedNote.
However, RedNote includes many of the same privacy and national security issues that the U.S. government raised concerning TikTok. Although many users ordinarily ignore privacy policies, RedNote’s privacy policy is written in Mandarin, making it even more difficult (and in some cases impossible) for users to understand. A translation of the privacy policy indicates that RedNote collects sensitive data like a user’s IP address and browsing habits. As a Chinese-based app, RedNote is also similarly subject to the Chinese data laws that led U.S. lawmakers to ban TikTok. The TikTok ban could eventually be extended to include RedNote and other Chinese (and other foreign country) apps national security and privacy concerns exist. With other short-form video services (e.g., Instagram Reels and YouTube Shorts) provided by U.S. companies, users do not need to expose their personal data to Chinese-based companies. Additionally, using RedNote to circumvent the TikTok ban could be problematic, particularly for government workers with security clearances. RedNote is not worth these risks, and Americans should avoid downloading it.