Beltway Buzz, May 2, 2025
The Beltway Buzz™ is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what’s happening in Washington, D.C., could impact your business.
100 Days of the Trump Administration 2.0. April 29, 2025, marked the one hundredth day of President Trump’s second term of office. Set forth below are the key labor and employment policy changes that have occurred thus far.
Diversity, Equity, and Inclusion
Through various executive orders, the Trump administration has upended the diversity, equity, and inclusion (DEI) landscape, both within the federal government and for private-sector employers. These directives are still subject to multiple legal challenges and expected further action from U.S. Attorney General Pam Bondi. As noted in further detail below, the U.S. Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP) will be focusing on this issue as well. In Congress, the Buzz is monitoring the status of the Dismantle DEI Act. Additionally, President Trump issued an executive order instructing all federal agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability,” which allows for a finding of discrimination if an otherwise neutral employment policy or practice results in an adverse impact on a protected class.
Other Executive Orders
Nondisplacement of federal contractor employees. President Trump rescinded Executive Order 14055, which obligated successor federal contractors to make job offers to workers employed under predecessor contracts. As the Buzz has noted, this is a policy shift that has been ping-ponging across administrations for thirty years.
Minimum wage. President Trump rescinded an executive order issued by President Biden in 2021 that increased the minimum wage for employees of federal contractors to $15 per hour (which was set at $17.75 per hour at the beginning of 2025 as a result of annual increase provisions contained in the Biden executive order).
“Good Jobs” executive order. President Trump rescinded President Biden’s “Good Jobs” executive order, which encouraged federal agencies to require potential contractors to adhere to certain labor and employment standards, such as project labor agreements, prevailing wages, and paid leave.
Changes to Rulemaking Processes
State Department extends “foreign affairs” rulemaking exemption governmentwide. Secretary of State Marco Rubio issued a notice concluding that any federal agency rulemaking addressing “the status, entry, and exit of people, and the transfer of goods, services, data, technology, and other items across the borders of the United States” is subject to the “foreign affairs” exemption of the Administrative Procedure Act (APA), meaning that the rule does not have to go through the public notice and comment process.
Directing the repeal of unlawful regulations. President Trump has instructed all federal agencies to repeal any regulation “that clearly exceeds the agency’s statutory authority or is otherwise unlawful” by proceeding under the “good cause” exemption of the APA, which also avoids the public notice and comment process.
U.S. Department of Labor (DOL)
Personnel. The confirmations of Secretary of Labor Lori Chavez-DeRemer and Deputy Secretary of Labor Keith Sonderling are important steps towards reversing the Biden-era DOL enforcement and regulatory agendas. Though without confirmed leaders of the Wage and Hour Division and the Occupational Safety and Health Administration (OSHA), it remains unclear as to how the administration will handle the overtime, independent contractor, and walkaround regulations (which are all subject to legal challenges), as well as OSHA’s heat illness prevention proposal.
OFCCP gutted. President Trump revoked President Lyndon Johnson’s Executive Order 11246 (a nearly sixty-year-old order that established affirmative action requirements for federal contractors), thus gutting OFCCP (though contractors still have ongoing obligations regarding the recruitment and hiring of veterans and individuals with disabilities). Although it is being reported that OFCCP will reduce its staff by approximately 90 percent, a new director has been appointed, and she has indicated that the agency will review data that has already been submitted by federal contractors for evidence of discrimination related to employer DEI efforts.
National Labor Relations Board (NLRB)
Personnel. As expected, President Trump fired NLRB General Counsel Jennifer Abruzzo shortly into his administration. What was perhaps not expected was that President Trump dismissed NLRB Member Gwynne Wilcox (while allowing Wilcox’s fellow Democratic member of the Board, David Prouty, to remain). Trump’s ouster of Wilcox—which she subsequently challenged in federal court—will test his theory that the National Labor Relations Act’s restrictions on removing Board members are unconstitutional. Ultimately, the Supreme Court of the United States will rule on this issue, which will likely have ramifications, not just for the Board, but for other independent federal commissions and boards.
The Board lacks a quorum. While we wait for the confirmation of a new general counsel and new Board members, the Board cannot operate with just Prouty and Chair Marvin Kaplan. Thus, the employer community is still operating under policies established by the Board over the last four years, which include card-check organizing, limitations on employer speech, expanded remedies, and ambush elections, among others.
Federal Mediation and Conciliation Service (FMCS)
Like OFCCP, FMCS—which was reportedly involved in several spending scandals in recent years—is now down to a skeleton crew of employees. Many labor practitioners found the agency helpful in resolving labor disputes.
U.S. Equal Employment Opportunity Commission
Personnel. President Trump dismissed commissioners Jocelyn Samuels and Charlotte Burrows, and he appointed Republican commissioner Andrea Lucas to serve as the EEOC’s acting chair. President Trump also fired the EEOC’s general counsel, Karla Gilbride. Andrew Rogers is currently serving as acting general counsel of the EEOC. President Trump has nominated Rogers to lead the DOL’s Wage and Hour Division.
DEI. Acting Chair Lucas is operating the Commission in conjunction with the administration’s focus on DEI. To that end, the Commission has issued two technical assistance documents addressing what the Commission—and the administration—believe to be unlawful DEI practices.
No quorum, no votes. With only Commissioner Andrea Lucas and Commissioner Kalpana Kotagal remaining on the EEOC, the Commission lacks a functioning quorum. This means that Acting Chair Lucas will not be able to make changes to the regulations implementing the Pregnant Workers Fairness Act, as well as the Commission’s guidance on sexual harassment. Further, with Lucas at the helm, employers can feel confident that the Commission will not pursue any effort to collect salary data from employers.
Immigration
Immigration has clearly been a top priority for the administration, with much of the focus on the southern border, deportation, and attempts to limit or terminate humanitarian parole programs (such as Temporary Protected Status for Venezuela and the Cuba, Haiti, Nicaragua, and Venezuela (CHNV) parole program). There is also the administration’s effort to eliminate birthright citizenship and the implementation of a registration requirement for non-citizens. While these actions certainly have an impact on the workplace, at least thus far, employment-based immigration policy changes have largely been pushed to the back burner. For example, H-1B “cap season” proceeded without any significant changes, and no travel bans have been implemented.
Zachary V. Zagger and Leah J. Shepherd have a full recap of the first one hundred days of the Trump administration. Be sure to keep an eye open for the Spring Regulatory Agenda, which will provide a forecast of where the administration wants to go on the regulatory front. In his first administration, President Trump’s first Regulatory Agenda was issued on July 17, 2017.
Republican Lawmakers Introduce Joint-Employer Legislation. The legislative proposal to provide employers with a clear joint-employer standard based on direct and immediate control has been on our radar for many years now. The bill is unlikely to clear the sixty-vote legislative filibuster hurdle in the U.S. Senate.
Remaining OSHRC Commissioner Retires. Cynthia Attwood, chair and sole remaining commissioner of the Occupational Safety and Health Review Commission (OSHRC), retired upon the expiration of her term on April 27, 2025. This means that there are no confirmed commissioners at OSHRC, which hears appeals of the workplace safety citations OSHA issues to employers. As the Buzz has discussed, OSHRC has been without a quorum since April 2023. Now, two commissioners will need to be confirmed in order for OSHRC to get up and running. In March 2025, President Trump nominated DOL veteran Jonathan Snare to serve as commissioner.
RIP, Secretary of Labor Herman. Alexis M. Herman, the first African American to serve as U.S. secretary of labor, died on April 25, 2025, at the age of seventy-seven. Herman served as labor secretary from 1997 to 2001 during President Clinton’s second term of office. Prior to her service as secretary of labor, Herman served as the director of the DOL’s Women’s Bureau (at just twenty-nine years old, she was the youngest person to serve in the role) and director of the White House Office of Public Liaison during President Clinton’s first term. As secretary of labor, Herman is remembered, in part, for having played a substantial role in settling a nationwide strike of a package-delivery company.
DoD AI Compliance Guidance for Government Contractors
As the Department of Defense (DoD) scales artificial intelligence across its operations, government contractors must ensure their AI solutions align with federal mandates and ethical standards. This guide provides links to guidance and templates, outlines essential requirements and actionable steps to help contractors navigate DoD AI compliance effectively.
The DoD has established a comprehensive framework for AI implementation through three key documents. The DoD Data, Analytics, and AI Adoption Strategy (2023) sets the strategic direction for AI deployment, focusing on enabling decision advantage through data integration. The Responsible AI Strategy and Implementation Pathway (2022) provides ethical principles and implementation guidance, establishing concrete expectations for AI system evaluation during acquisition and deployment. The Responsible AI Toolkit (2023) offers practical resources to align with DoD’s responsible AI standards, including templates and assessment guides that streamline compliance efforts.
Contractors must align with DoD’s five Responsible AI Tenets: Responsible (design systems that serve intended purposes without causing unintended harm), Equitable (ensure systems function without bias across diverse populations and scenarios), Traceable (maintain transparency in how AI systems operate and make decisions), Reliable (develop systems that perform consistently under varying conditions), and Governable (design mechanisms for appropriate human intervention and control). Implementation requires comprehensive documentation of data sources and model development, robust bias detection and mitigation, regular security assessments against standards like NIST SP 800-53, and governance structures that maintain alignment with DoD AI Ethical Principles.
Successful compliance implementation typically follows five phases: Assessment (conduct gap analysis against DoD requirements and assign compliance leadership), Documentation (develop AI governance policies and traceability documentation), Technical Integration (implement audit trails, secure data pipelines, and validation routines), Verification (conduct self-assessments and consider third-party certification), and Continuous Monitoring (maintain audit logs, address detected risks, and iterate policies). This structured approach helps organizations methodically build compliance capabilities while maintaining focus on core business objectives. Templates for documentation and self-assessment checklists are available in CDAO’s RAI Toolkit.
The defense contracting community’s experience demonstrates that proactive compliance creates competitive advantage. Contractors who have implemented comprehensive model documentation and traceability processes have secured significant contracts by demonstrating superior compliance readiness. Conversely, those neglecting these aspects have faced costly post-award audit findings requiring extensive remediation. Compliance costs may be allowable under FAR Part 31, especially for cost-reimbursable contracts. When preparing proposals, explicitly address how compliance measures contribute to system integrity and mission assurance, positioning compliance capabilities as value differentiators rather than merely added costs.
The Trump administration’s Executive Order on Removing Barriers to American Leadership in AI (2025) emphasizes streamlining AI development while maintaining responsible innovation. Forward-looking contractors should accelerate investment in responsible AI infrastructure aligned with DoD frameworks, participate in public-private pilot programs demonstrating mission-specific capabilities, and engage in consortia that promote global AI standards and cross-sector dialogue.
Contractors should know that DoD’s five Responsible AI Tenets are now evaluation criteria in procurement decisions, compliance documentation requirements are increasing in both depth and breadth, and DFARS 252.204-7012 and related clauses establish enforcement mechanisms with significant consequences. Contractors should immediately designate an AI compliance lead with authority to coordinate cross-functional implementation. Within 30 days, complete a gap assessment against DoD’s Responsible AI requirements. Within 90 days, document your AI governance framework and model development processes. Within 6 months, implement technical measures for traceability, security, and bias mitigation. On an ongoing basis, conduct quarterly compliance reviews and maintain documentation currency.
What’s Next?
Be prepared for increased scrutiny of AI systems during pre-award evaluations, requests for detailed model documentation and bias assessments, flow-down requirements to subcontractors and suppliers, and evolving standards as DoD refines its approach to AI acquisition. By approaching compliance strategically rather than reactively, contractors can transform regulatory requirements into competitive advantages while contributing to the responsible advancement of defense AI capabilities.
FedRAMP 20x – Update on Significant Change Process and Assessment Scope Standards
Last month, the federal government announced a major overhaul of the Federal Risk and Authorization Management Program (“FedRAMP”) called “FedRAMP 20x” (we discussed the initiative here). FedRAMP 20x is moving forward fast – with new authorizations, community engagement efforts, standards documents, and the Phase One pilot program. (More information about the Phase One pilot program is available here.)
Of particular note, there are two draft standards for public comment: (1) the Significant Change Notification Standard, which will replace the current standard with a new process that allows cloud service providers to make changes without prior approval from the government; and (2) the Minimum Assessment Scope Standard, which will replace the current Authorization Boundary guidance materials (previously summarized here). The public comment period for both standards currently is open until May 25, 2025.
Significant Change Notification Standard
Currently, the significant change process requires cloud service providers (“CSPs”) to provide 30 days’ notice to the authorizing official requesting approval prior to implementing a “significant change.” Examples of a “significant change” in current FedRAMP guidance include adding new technology or external services, removing system components or service offerings, and adding or removing security controls, among others. If a CSP fails to submit the required significant change request to the authorizing agency official for review and approval, the authorizing agency can suspend or revoke the authorization.
The draft Significant Change Notification Standard acknowledges the burden and inefficiencies associated with the existing process and will permit CSPs to implement certain changes that are in the best interest of agency customers without obtaining prior approval. Below are key points from the updated Significant Change Notification Standard:
Tiered Notification Framework: The Standard introduces a tiered framework with new definitions describing the types of changes a CSP may make to its FedRAMP environment.
“Adaptive change” means any significant change that adjusts existing components or functionality of the cloud service offering. The Standard notes this is the least impactful type of significant change. Adaptive changes, which are characterized as significant but routine, may be made as appropriate without consultation with the CSP’s federal agency customers.
“Transformative change” means any significant change that adds, replaces, or removes major components and functionality of the cloud service offering. Transformative changes, which are characterized as major functionality changes, require the CSP to consult with agency customers in advance. The Standard provides proposed time frames for this consultation (e.g., CSP must provide notice to agency customers at least 14 calendar days in advance of the monthly monitoring meeting to first discuss planned transformative changes).
“Impact categorization change” means any significant change that is likely to increase or decrease the impact level rating for the cloud service (e.g., from Low to Moderate or from High to Moderate). Impact categorization changes require reauthorization and are the most impactful type of significant change.
Notification Information: The updated standard provides a list of required information to be submitted by the CSP depending on the type of significant change. For Adaptive changes, CSPs must submit the date of the change, a summary of the steps taken to verify and assess controls after implementation, and a summary of any new risks identified and any Plan of Action or Milestones (“POA&Ms”) that resulted from the change. The required information for Transformative changes expands on this list and requires information regarding whether the planned change is “opt in” and how to opt in if applicable, details on service components and controls affected, and a copy of the security assessment plan.
Comments may be submitted using the discussion thread, the public comment form, or by emailing [email protected] with the subject “RFC-0007 Feedback.”
Minimum Assessment Scope Standard
The draft Minimum Assessment Scope Standard will take the place of the current FedRAMP Boundary Policy / Boundary Guidance. The Minimum Assessment Scope Standard seeks to replace the current FedRAMP authorization boundary approach with “a simple and reasonable test” for determining the information and resources to be included in the FedRAMP assessment. By removing unnecessary detail or specifics, the new approach aims to help FedRAMP move from compliance-based decision making to security-based decision making and assessment.
The streamlined approach provides that the Minimum Assessment Scope includes all information resources managed by a CSP and its cloud service offering that: (1) handle federal information; and/or (2) likely impact confidentiality, integrity, or availability of federal information. The Minimum Assessment Scope standard provides six clarifications on how to apply the Minimum Assessment Scope:
Information resources and metadata that do not meet condition (1) or (2) are outside the Minimum Assessment Scope.
If the cloud service uses information resources from other FedRAMP authorized or certified services then only the configuration and usage of those information resources is included in the Minimum Assessment Scope.
If the cloud service uses information resources from other services that are not FedRAMP authorized or certified then all aspects of those services where (1) or (2) applies are included in the Minimum Assessment Scope.
Software and other such products (including agents and clients) that are installed, managed, and operated on agency information systems are outside the scope of FedRAMP. Any information resources in the cloud service that control or communicate with such products are within the Minimum Assessment Scope if (1) or (2) applies.
Information resources of the service offering may vary by impact level as appropriate to the level of information handled or impacted by the information resource so long as this is clearly identified and documented.
Stakeholders should review best practices and technical assistance provided separately by FedRAMP for help with applying the Minimum Assessment Scope as needed.
The new standard represents a marked change in approach, particularly it seems with respect to metadata or indirect data, which we expect may be a hot topic during the comment period. Comments may be submitted using the discussion thread, the public comment form, or by emailing [email protected] with the subject “RFC-0005 Feedback.”
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All American AI: New OMB Memos Set Priorities for Federal AI Use and Acquisition
On April 3, 2025, OMB released two new memorandums on artificial intelligence (“AI”) as directed by Executive Order 14179, Removing Barriers to American Leadership in Artificial Intelligence. (As a reminder, President Trump issued Executive Order (EO) 14179 on January 23, 2025 after rescinding President Biden’s AI Executive Order (EO 14110)).
The first memo (M-25-21) provides guidance to agencies on federal AI use while the second memo (M-25-22) focuses on agency acquisition of AI. In a nutshell, these memos signal that the federal government is embracing AI and plans to maximize its AI use. Federal agencies can leverage AI to enhance operational efficiencies, improve decision-making, automate routine tasks, and analyze large datasets for insights that could inform policy and regulatory compliance. Contractors can expect to see a flurry of guidance and agency adoption of AI technologies.
OMB Memo M-25-21
M-25-21, Accelerating Federal Use of AI through Innovation, Governance, and Public Trust – This memo focuses on responsible federal agency AI use. We note below key points and timelines:
Guidance. Agencies must issue AI strategies within 180 days and post those strategies publicly on their websites. In addition, agencies must designate a Chief AI Officer within 60 days (if they have not already done so). Agencies will also develop internal policies and generative AI policies within 270 days.
AI Boost. Agencies must identify and remove barriers to AI adoption and application. Contractors should see a streamlined boost in federal interest in AI products, especially American-made AI.
High-Impact AI. The memo introduces the concept of “high-impact AI,” which is AI with output that “serves as a principal basis for decisions that have a legal, material, binding or significant effect on rights or safety.” M-25-21 at 14. This replaces the earlier concept in materials prepared by the Biden administration of safety-impacting and rights-impacting AI. There are particular considerations and expected requirements for use and implementation of high-impact AI set forth in the memo.
Code Sharing. Agencies are required to share any custom-developed federal AI code in active use, including models, among the federal government, with limited exceptions. Contractors should consider this when providing custom-developed code and the potential impacts on proprietary information.
Public Input. It is recommended that agencies solicit public input on AI policies. Contractors should be on the lookout for any rulemaking, public comment periods, or hearings to provide feedback.
OMB Memo M-25-22
M-25-22, Driving Efficient Acquisition of Artificial Intelligence in Government – This memo provides guidance on federal AI acquisition. Note that it will apply to any solicitations issued 180 days after the memo, including any option periods on existing contracts. Commercial products with embedded AI (e.g., word processer, navigation system) are not within the scope of this guidance. Below are notable points and timelines:
American-Made AI Boost. Acquisition will be focused on AI developed and produced in the U.S.
Policy and Acquisition Guides. Within 270 days, agencies must update internal acquisition procedures. Within 100 days, GSA and OMB will publicly release guides to assist the federal acquisition workforce with AI procurement. Contractors should be on the lookout for these guides as they should provide valuable insight for doing business with the government in the AI space.
Federal Information Sharing. Within 200 days, GSA and OMB will develop an internal best practices repository for AI acquisition. While not expected to be publicly available, this will likely be the internal resource for standard contract clauses and prices. This signals that the government will strive to maximize uniformity in AI acquisition practices across agencies.
AI Use by Contractors. The memo directs agencies to consider AI use by vendors and contractors in contract performance that may occur outside of deliberate acquisition of AI. While there are already avenues for vendor and contractor disclosure of AI use, the memo explicitly cautions agencies about unsolicited AI use that may pose risks, especially in performance situations where the government may not anticipate it. Contractors should be on the lookout for any solicitation or contract provisions that require more detailed reporting on AI use.
Moving Forward
The OMB memos provide important insight into how the federal government will handle AI and acquisition of AI technologies moving forward. Due to the nature of AI technology, contractors can expect this field to be ever-evolving. However, it is clear AI is taking a strong foothold in the federal government. We anticipate more federal guidance and proposed rulemaking resulting from these memos and will continue to provide updates.
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Preparing for USTR 301 Fees on Chinese Vessels
Concluding its Section 301 Investigation into “China’s Targeting the Maritime, Logistics, and Shipbuilding Sectors,” the United States Trade Representative (USTR) issued an updated notice of action on April 17. USTR initially issued a proposed action to impose fees on Chinese vessels in the amount of $1 million or $1.5 million per port call. USTR issued the updated notice following President Donald Trump’s April 9 Executive Order 14269, “Restoring America’s Maritime Dominance” (90 Fed. Reg. 15635).
The updated fees will be imposed starting October 14. The fees are structured under four annexes, with Annex I and Annex II being particularly relevant to intermediaries, non-vessel-operating common carriers (NVOCCs), and freight forwarders. Each vessel will be charged only on the initial port call and cannot be charged more than five times per year.
Annex I: Chinese-Owned and Chinese-Operated Vessels
Vessels owned or operated by Chinese entities will be subject to fees based on their net tonnage. The fee starts at $50 per net ton in 2025 and will incrementally increase to $140 per net ton by 2028. Importantly, the fee is assessed at the first US port of entry, regardless of subsequent port calls within the United States.
Annex II: Chinese-Built Vessels
For vessels that are not Chinese-owned or Chinese-operated but are Chinese-built, fees are assessed based on the higher of two metrics:
Net Tonnage: Starting at $18 per net ton and increasing to $33 per net ton over three years.
Container-Based Fee: Starting at $120 per container and increasing to $250 per container over three years. (While the USTR was ambiguous on this point, this per-container fee is likely on a per Twenty-foot Equivalent Unit basis.)
Vessel operators are required to report the number of containers discharged at US ports or with an ultimate destination in US customs territory.
Exemptions and Fee Remissions
Certain vessels are exempt from these fees, including:
Vessels with at least 75% US ownership.
Small vessels under specific size thresholds.
Vessels engaged in short sea shipping (voyages under 2,000 nautical miles).
Additionally, operators can receive fee remissions for up to three years if they order and take delivery of US-built vessels of equivalent or greater capacity within that period.
Annex III: Foreign-Built Car Carrier Vessels
For all foreign-built car carrier vessels, fees are assessed at $150 per Car Equivalent Unit capacity.
Annex IV: Liquefied Natural Gas (LNG) Vessels
One percent of vessels transporting LNG exports must be US-flagged, US-operated starting in 2028, and then in 2029, must be an increasing percentage US-built, US-flagged, and US-operated, increasing to 15% in 2047.
Annex V: Tariffs on Ship-to-Shore (STS) Cranes and Cargo-Handling Equipment from China
Finally, USTR proposed duties on STS cranes and cargo-handling equipment. Comments are due May 19.
Next Steps: Update Your Rules Tariff Terms and Conditions
To adapt to these new fees, it is crucial for freight forwarders and NVOCCs to update their rules tariff terms and conditions. By doing so, you can ensure that these fees are passed through to the appropriate parties, minimizing financial exposure and maintaining operational efficiency.
Bid Protests in South Carolina
In South Carolina, government contracting can be a lucrative opportunity for businesses, but it comes with its share of challenges — one of which is dealing with bid protests. Whether you’re an established contractor or new to public procurement, understanding how bid protests work in South Carolina is essential to protecting your rights and ensuring a fair process.
What Is a Bid Protest?
A bid protest is a formal challenge to the awarding of a government contract. Contractors may file a protest if they believe the solicitation documents are ambiguous or defective, the procurement process was unfair, the procuring agency violated statutory or regulatory requirements, the evaluation was improper, there was a conflict of interest, or if the award decision was otherwise improper. In South Carolina, bid protests typically arise under contracts procured by state agencies, municipalities, school districts, or other public entities.
Below, we break down the key rules and procedures you need to know to protect your interests under South Carolina law.
Governing Law: South Carolina Consolidated Procurement Code
For state-level procurements, the South Carolina Consolidated Procurement Code (S.C. Code Ann. § 11-35-10 et seq.) governs the bid protest process. The code sets forth specific procedures and strict timelines that must be followed.
Local governments (like cities and counties) often have their own procurement ordinances, but many mirror the state process to some degree. It is important to check the specific rules applicable to the agency involved.
Who Has the Right to Protest?
A prospective or actual bidder, offeror, contractor, or subcontractor who is aggrieved by the terms of a solicitation or by the intended award or actual award of a contract has the right to protest.
The timing and manner of protests depend on the nature of the grievance:
Solicitation Protests –If you object to the terms of a solicitation (such as an Invitation for Bids or Request for Proposals), you must file a protest within 15 days of the date the solicitation or any relevant amendment is issued.
Award Protests –If you object to the intended award or actual award of a contract:
You must notify the appropriate chief procurement officer (CPO) in writing of your intent to protest within seven business days (or five business days for certain contracts under Sections 11-35-1560 and 11-35-1570) after the award or notice of intended award is posted.
You must then file your formal protest within 15 days of the date the award or intent to award is posted.
Importantly, if you could have raised an issue as a solicitation protest but did not, you generally cannot raise it later in an award protest.
How to File a Protest
Protests must be in writing, filed with the appropriate CPO, and must:
Set forth the grounds for the protest, and
Specify the relief requested with enough detail to give notice of the issues to be decided.
The protest must be received (not just mailed) within the applicable deadlines.
What Happens After You File?
Attempt to Settle
Before launching a formal review, the CPO, the head of the purchasing agency, or their designees may attempt to settle the protest by mutual agreement.
Administrative Review
If settlement is not possible, the CPO must promptly conduct an administrative review.
The review must begin no later than 15 business days after the protest is filed.
A written decision must be issued within 10 days of completing the review, explaining the reasons for the action taken.
Notice and Appeals
A copy of the decision, including an explanation of appeal rights, will be provided to the protestant and other interested parties.
The decision becomes final and conclusive unless a party requests a further review by the Procurement Review Panel within 10 days of the decision’s posting.
A request for review must be in writing, explaining the basis for disagreement, and may also include a request for a hearing.
Both the CPO and affected governmental bodies have the right to participate fully in any subsequent administrative or judicial review.
Automatic Stay of Procurement During Protests
Generally, once a timely protest is filed, the state is prohibited from moving forward with the procurement or contract award until 10 days after the CPO’s decision is posted or, if an appeal is taken, until the Procurement Review Panel issues its decision.
However, this automatic stay can be overridden if the CPO, after consulting with the head of the using agency, determines in writing that proceeding without delay is necessary to protect the state’s interests.
Important Note: CPO Contact Information
Every solicitation and notice of intended award must include the address of the appropriate chief procurement officer, ensuring that all parties know where to direct their protests.
Practical Considerations
Act quickly – Deadlines are short and strictly enforced.
Be specific –General complaints will not be enough; protests must cite specific legal or procedural violations.
Consult counsel early –An attorney experienced in procurement law can help evaluate the merits of your protest and ensure compliance with all procedural requirements.
Conclusion
Bid protests in South Carolina offer an important mechanism to ensure fairness and accountability in public procurement. However, the process is technical, fast moving, and often complex. Contractors should be proactive in monitoring procurement activities, understand their rights, and seek legal guidance when necessary.
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Navigating the 2025 Tariff Landscape: A Practical Guide for Small and Midsize Business Owners
Big Picture Messages from the Panel
The U.S. has entered a new era of trade protection with significant tariffs now in place:
Tariff application has “paused” for 90 days, but consensus was that the trade agreement process could take six to 18 months, rather than 90 days. There’s a lot of complexity to trade negotiations.
The U.S.-China process of de-coupling started well before the change in tariff policy and will likely be a long-term trend. Tariffs are merely playing a part in accelerating or shaping the evolution. Plan accordingly.
Don’t be afraid to negotiate better terms with suppliers. They usually don’t want to lose your business and can help play a part in a cost-management solution.
Better managed companies are taking advantage of the uncertainty. Never waste a good crisis!
They are using the cover of tariffs to raise prices 5% to 10%, to extend payment terms to net 60 or even 90 days, and to use their capital resources flexibly (factoring, use of revolving credit, etc.).
They are also using the cover of tariffs to improve internal performance, such as trimming unproductive staff or divesting from underperforming product lines.
Healthy balance sheets also are allowing them to make favorable acquisitions, sometimes at favorable multiples.
Our panelists estimated that about 20% of the small/midsized businesses they see are in a position to act proactively. They put themselves in this position intentionally, to be ready for a downturn. That’s a good position to be in!
As a businessowner, you’re likely feeling the effects already. Costs are up, supply chains are strained, and planning for the future has become more challenging. While there are hints of potential de-escalation, for now these tariffs are a business reality you need to navigate.
Why Your Business Is Particularly Vulnerable
Small and midsized businesses face unique challenges in this environment:
Less negotiating power with suppliers
Tighter financial resources to absorb higher costs
Limited capacity to quickly change supply chains
The impacts you’re likely experiencing include:
Higher costs for imported materials and goods
Supply chain disruptions and inventory problems
Pressure on your competitive pricing
Difficulty making long-term business plans
Potential loss of export markets due to retaliatory tariffs
Practical Strategies to Protect Your Business
1. Make Your Supply Chain More Resilient
Find alternative suppliers
Look for options in countries not heavily affected by tariffs.
Understand Country of Origin (COO) rules when evaluating new suppliers.
Consider that the lowest price may not mean the lowest total cost when tariffs are added.
Consider moving production closer to home
Evaluate if moving production to nearby countries (Mexico, Canada) makes financial sense.
Look into bringing some manufacturing back to the U.S.
Be realistic about challenges like finding skilled workers and higher costs.
Use Foreign Trade Zones (FTZs) strategically
These special zones let you store, modify, and re-export goods without immediate tariff payments.
Decide whether you can improve cash flow by deferring or eliminating tariffs on goods you’ll eventually re-export.
Explore “tariff engineering”
Minor modifications to your products or component sourcing might qualify for lower tariff rates.
Work with experts (customs brokers, trade attorneys) to do this properly.
2. Strengthen Your Financial Position
Cut costs where possible
Look for efficiencies throughout your business to offset tariff-related expenses.
Focus on areas that won’t impact your product quality or customer experience.
Protect against currency swings
If you do international business, consider currency hedging strategies.
Talk to your financial advisor about extending hedging timeframes given the current volatility.
Manage your cash flow aggressively
Keep enough cash reserves to handle unexpected cost increases.
Try to negotiate better payment terms with suppliers.
Use data to optimize your inventory levels.
3. Navigate the Legal and Regulatory Landscape
Partner with experts
Work with experienced customs brokers to ensure accurate product classification.
Consider consulting with a trade attorney to understand your options.
Stay informed about International Emergency Economic Powers Act (IEEPA) developments.
Monitor policy changes
Keep an eye on updates from U.S. Customs and Border Protection.
Watch for rulings from the Court of International Trade, which handles tariff disputes.
Join industry associations that track and advocate on trade issues.
4. Adapt Your Market Strategy
Diversify your markets
Reduce dependence on regions affected by retaliatory tariffs.
Research and develop new domestic and international opportunities.
Emphasize your unique value
Double down on what makes your business special beyond just price.
Highlight quality, service, innovation, or expertise to maintain customer loyalty despite price adjustments.
Consider ethical sourcing as a differentiator
If relevant to your industry, emphasize fair trade and ethical practices.
This can attract customers willing to pay more for responsibly sourced products.
Get involved in advocacy
Join with others in your industry to voice concerns to policymakers.
Collective efforts can sometimes influence policy adjustments.
Plan for different scenarios
Develop contingency plans for various possible changes in tariff policies.
This preparation allows you to react quickly when the situation evolves.
Moving Forward
The current tariff environment is challenging but navigable. By implementing these strategies, your business can become more resilient and potentially find new opportunities amid the disruption. Stay vigilant, be proactive, and remember that adaptation is key to sustainability in today’s evolving trade landscape.
* * *
Quick Reference: Key Trade Terms
Baseline Tariff: The standard 10% tariff now applied to most imports (effective April 5, 2025)
Reciprocal Tariffs: Higher, country-specific tariffs imposed based on perceived trade imbalances
Country of Origin (COO): Rules determining where a product is considered to be made, affecting which tariffs apply
Customs Broker: Licensed professional who helps navigate import/export regulations
Automated Commercial Environment (ACE): The electronic system used by U.S. Customs for import/export processing
Court of International Trade (CIT): Federal court that handles disputes related to tariffs and trade
Foreign Trade Zones (FTZs): Designated areas where goods can be stored or modified without immediate tariff payment
Nearshoring: Moving operations to nearby countries (like Mexico or Canada)
Onshoring/Reshoring: Bringing production back to the United States
States Continue to Introduce Legislation Aimed at Restricting Noncompete Agreements
After the nationwide injunction barring the Federal Trade Commission (FTC) Noncompete ban, we reported that “employers can expect that states will continue to introduce legislation aimed at restricting the use of noncompetes.”
In the first few months of 2025, Virginia and Wyoming passed legislation restricting noncompetes, and Arkansas, Louisiana, and Maryland passed legislation restricting physician noncompetes. We also reported on pending legislation in New York, Ohio, Texas, and Washington aimed at limiting noncompetes and other restrictive covenants. We are a third of the way through the calendar year, and July 1 (the date many laws go into effect) is approaching. This post addresses legislation pending in seven other states that also seek to limit the use of noncompetes.
States Seeking To Ban All Noncompetes Both Retroactively and Prospectively
Michigan
In January 2025, Michigan introduced House Bill 4040 (HB4040) that if enacted, would prohibit businesses from entering into, enforcing, or representing the existence of noncompetes with any workers. The only exceptions under the HB4040 are for a worker who sells their ownership stake in a business or a worker who is responsible for selling substantially all of the business’s assets. If passed, Michigan would join California, Minnesota, North Dakota, and Oklahoma as the only states that broadly prohibit noncompetes between employers and employees.
Washington
We previously reported that the Washington State legislature introduced HB1155 that, if passed, would broaden the definition of “noncompetition covenant” and prohibit all employer-employee noncompete agreements regardless of when it was entered into. Thus, the Bill would render all noncompetition covenants void and unenforceable regardless of when the parties entered into the agreement. Additionally, employers with current or former employees or independent contractors subject to a noncompetition covenant would be required to inform them by October 1, 2025 that the covenant is no longer enforceable.
As promised, we have been monitoring HB1155, which is currently with the Rules Committee for a second reading. We will continue to closely monitor this Bill.
States Seeking To Ban All Future Noncompetes
Tennessee
In February 2025, Tennessee introduced companion bills, Senate Bill 0995 (SB0995) and House Bill 1034 (HB1034), that seek to broadly prohibit the use of noncompetes in Tennessee. The bills state that except for the limited use of noncompetes in connection with the bona fide purchase of a physician’s practice (as provided under § 63-6-204(f)(2)), “a restriction on the right of an employee or contractor to practice the employee’s or contractor’s profession upon termination or conclusion of the employment or contractual relationship is void and unenforceable in this state.” If passed, the bill would take effect on July 1, 2025 and would apply prospectively, so it would not affect existing noncompetes with Tennessee employees.
On March 25, 2025, SB0995 was assigned to the General Subcommittee of the Senate Commerce and Labor Committee, where it remains pending. Since SB0995 has made some progress through the Tennessee Senate, and if passed, would bar noncompetes in Tennessee, we will continue to closely monitor this Bill. Meanwhile, on March 19, 2025, HB1034 was deferred until 2026.
Arizona
Arizona House Bill 2589 (HB2589) seeks to make it unlawful for a private or public employer to require a current or prospective employee to agree to a noncompete clause. HB2589 defines “noncompete clause” as “a clause in an employment contract with an employee that prohibits the employee from working in a specific geographic area for a specific period of time after leaving that employment.” HB2589 has had a second reading in the legislature, but no votes on the bill have yet occurred.
States Seeking To Implement Minimum Salary Thresholds
North Carolina
In March 2025, North Carolina introduced a bill titled the Workforce Freedom and Protection Act (the “WFPA”), that seeks to ban noncompetes for “employees”, defined as someone who provides “labor or services to another for pay of less than” $75,000 per year. The WFPA defines a noncompete as an agreement between an employer and an employee that restricts the employee, after termination of employment, from doing one or more of the following things: (i) working for another employer for a specified period of time; (ii) working in a specified geographical area; or (iii) engaging in work activities similar to those performed for the employer.
If passed, the WFPA would prohibit an employer from: (a) entering into a noncompete with an “employee”; (b) requiring an “employee” to enter into a noncompete as a condition of employment; (c) enforcing or attempting to enforce a noncompete; (d) threatening to enforce a non-compete; or (e) in the case of a franchise operator, entering into an agreement that restricts an “employee” from moving between locations. Therefore, noncompetes would be prohibited for any employee who earn less than $75,000 per year.
If passed, North Carolina would join other jurisdictions that maintain minimum salary thresholds for noncompetes, including Colorado, District of Columbia, Illinois, Maine, Maryland, New Hampshire, Oregon, Rhode Island, Virginia, and Washington. Although not specifically tied to a minimum salary, noncompetes in Idaho are only enforceable against “key employees” and noncompetes in Nevada cannot apply to employees paid on an hourly wage basis.
Furthermore, the WFPA states that “[n]o employer may require an employee who primarily resides or works in North Carolina to agree to a contract provision that would (i) require the employee to adjudicate outside of North Carolina a claim arising in this State or (ii) deprive the employee of the protection of North Carolina law for a claim arising in this State. Any such provision is void and unenforceable.” If the WFPA is enacted into law, an employer’s workers located in North Carolina would be subject to the protections of the WFPA.
Any person injured by a violation of the WFPA may bring a civil action to recover actual damages, reasonable attorneys’ fees and costs, as well as other relief. The Attorney General of North Carolina would be empowered to investigate violations and bring an action to enforce the WFPA.
Kentucky
In February 2025, House Bill HB690 (HB690) was introduced in the General Assembly of the Commonwealth of Kentucky. If passed, this bill would prohibit employers from entering into, enforcing, or threatening to enforce a “covenant not to compete with any covered employee.” The bill defines a “covenant not to compete” as any agreement “between an employer and employee that restrains, prohibits, or otherwise restricts an individual’s ability, following the termination of the individual’s employment, to compete with his or her former employer.” The bill defines “covered employee” as an employee earning less than $2,000 per week, including interns, students, apprentices, and independent contractors. The bill would amend existing labor law to establish civil penalties for employers who violate the new provisions, with potential fines ranging from $1,000 to $10,000 per violation.
Vermont
In February 2025, VT H0205 was introduced in the General Assembly of the State of Vermont. If passed, this bill would render noncompetes void and unenforceable between an employer and employee so long as the employee makes less than $100,000 in annual gross wages.
Section 2 of the Bill defines “agreement not to compete” as an agreement between an employee and employer that restricts an employee, after separation of employment, from (i) working for another employer for a period of time, (ii) working in a specific geographical area, or (iii) working for another employer in a similar capacity to the employee’s work with the former employer. Confidentiality/non-disclosure agreements are not included in the definition of an agreement not to compete. Also excluded from the definition are non-solicit agreements, provided that the limitations set forth in the non-solicit provisions are reasonable in time, geographical area, and scope of the restraint. The bill defines a non-solicit agreement as an agreement in which the “employee agrees not to: (A) solicit or recruit the employer’s employees; or (B) solicit or transact business with customers or clients of the employer who were customers or clients while the employee was employed by the employer.”
If passed, employers will be required to comply with specific notice requirements. First, if an employer requires a prospective employee who may be subject to a noncompete to sign a noncompete covenant, the employer: (1) must provide the prospective employee with the agreement at the time of the offer of employment, and (2) cannot rescind the offer of employment earlier than three business days after the prospective employee receives the noncompete agreement. Second, because the bill would apply retroactively, if an employee is subject to an existing noncompete but does not meet the minimum salary threshold or other requirements of the bill, the employer is required to notify each employee, in writing, that the agreement is no longer enforceable.
The bill, if passed, does not prohibit an individual from entering into a noncompete agreement in relation to the sale of an individual ownership interest in a business, dissolution of a partnership, dissolution of an LLC, or a severance agreement, so long as the agreement is reasonable.
States That Seek To Limit Noncompetes By Industry
Hawaii
Haw. Rev. State. 480-4(d), which became effective July 1, 2015, currently prohibits noncompetes in the technology industry. Hawaii Senate Bill 1161 (SB1161), if passed, would also void existing noncompetes and non-solicits, and prohibit future noncompete and non-solicit clauses, for workers in the restaurant and retail store industries. If SB1161 is enacted into law, it would take effect retroactive to July 1, 2015. The bill is currently pending before the Senate Labor and Technology Committee.
Takeaways
Based on the ever-changing restrictive covenant landscape, it is imperative that employers – especially those with employees in multiple states – keep updated on the various state noncompete laws. Given the recent changes to noncompete laws in many states, there is no “one-size-fits-all” approach to noncompete agreements. Employers should contact counsel to discuss any potential restrictive covenant issues and to implement or restructure state-by-state noncompetes.
We will continue to provide updates regarding new laws and pending legislation in the noncompete world. Up next: Florida’s recently introduced employer-friendly bill to provide a framework for permissible noncompete agreements.
What Recourse Does a Federal Grant Recipient Have If Its Grant Is Terminated?
When a federal agency terminates a grant award, the consequences can be severe for the recipient. Whether you’re a nonprofit, research institution, public entity, or otherwise, a sudden termination can disrupt operations, staff retention, and mission-critical projects. Fortunately, grant recipients do have legal recourse options when facing termination — provided they act quickly and understand their rights.
Understanding Federal Grant Termination
Federal grants are governed by a combination of statutory provisions, agency-specific regulations, and the terms of the grant agreement itself. Under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) — codified at 2 C.F.R. Part 200 — federal awarding agencies may terminate awards in three main scenarios:
For Cause – Due to the recipient’s material failure to comply with the terms and conditions of the award.
With Consent – Mutually agreed upon by both the federal agency and the recipient.
For Convenience – Unilaterally by the federal agency, typically for policy or funding reasons.
Each type of termination may afford different remedies and procedural protections for the grantee.
Step 1: Review the Terms of the Award
The first step is to review the Notice of Award (NOA) and any referenced regulations. These documents often specify what constitutes a breach, notice requirements for termination, and any rights to appeal or dispute the termination. Also, review the agency’s specific grant regulations (e.g., NIH, DOE, or NSF guidelines), which may add additional procedures.
Step 2: Understand Your Appeal Rights
If your grant is terminated for cause, you generally have the right to:
Receive written notice explaining the reasons for the termination.
Respond or submit a corrective action plan.
Request a hearing or appeal under the agency’s dispute resolution procedures.
Different agencies have different appeal mechanisms, so it is important to review and understand the relevant agency’s rules and regulations.
Step 3: Consider Contractual and Equitable Remedies
Although grants are not traditional contracts, courts may apply some contract principles when interpreting grant disputes. For example:
If a grant is terminated in violation of the terms of the award or applicable regulations, the recipient may have a claim for breach of implied covenant of good faith and fair dealing.
Some suits under the Tucker Act have been permitted in the U.S. Court of Federal Claims when the government allegedly breaches a funding obligation.
Equitable estoppel or reliance-based claims may be possible if the recipient made significant investments based on assurances from the agency.
However, federal sovereign immunity and grant-specific doctrines may limit the availability of monetary relief.
Step 4: File an Administrative or Judicial Challenge (If Available)
If administrative appeals fail or are unavailable, the recipient may consider legal action. Options might include:
Agency-Specific Boards or ALJs – Some agencies permit formal administrative litigation before an administrative law judge.
Federal Court – In some cases, a recipient may be able to challenge termination in U.S. District Court, particularly if alleging violations of the Administrative Procedures Act or constitutional violations (e.g., due process or equal protection).
Court of Federal Claims – For certain claims seeking monetary damages, the U.S. Court of Federal Claims may have jurisdiction.
Step 5: Preserve Your Rights
To maintain eligibility for future funding and preserve legal claims:
Document everything, including communications with the agency and any harm suffered.
Continue compliance with closeout requirements, including final reports and record retention.
Consult counsel early in the process to assess your legal options and preserve appeal deadlines.
Conclusion
Termination of a federal grant is a serious matter, but not necessarily the end of the road. Federal grant recipients have a range of procedural and substantive rights that can provide a path to appeal or challenge a termination decision. As always, early legal advice and thorough documentation are key to protecting your organization’s interests.
DOJ’s Data Security Program Final Rules Effective – Implications for Telecom Providers
On January 8, 2025, the U.S. Department of Justice (DOJ) issued its final rule to implement Executive Order 14117 aimed at preventing access to Americans’ bulk sensitive personal data and government-related data by countries of concern, including China, Cuba, Iran, North Korea, Russia, and Venezuela (Data Security Program or DSP). The regulations took effect on April 8, 2025, with additional compliance requirements for U.S. persons taking effect by October 6, 2025.
While the DSP includes an exemption for “telecommunications services” (as specifically defined in the rule), telecommunications providers must closely review their services involving data transactions with countries of concern or covered persons associated with those countries to ensure the particular service provided or transaction falls within the exemption. Non-compliance with the DSP can result in significant civil and criminal penalties, underscoring the importance for telecommunications providers to thoroughly understand and adhere to these rules, where applicable.
Scope and Applicability
The DSP sets forth prohibitions and restrictions on certain data transactions that pose national security risks. The rules are designed to be national security regulations to address identified risks to U.S. national security, rather than privacy regulations designed to protect privacy or other individual interests.
The DSP applies to U.S. persons and entities engaging in transactions that provide access to Covered Data to Countries of Concern or Covered Persons associated with those countries in specified ways. Countries of Concern currently include China (including Hong Kong and Macau), Cuba, Iran, North Korea, Russia, and Venezuela, but this list is subject to future change. The DSP defines Covered Persons as entities or individuals associated with a Country of Concern, based on the following criteria:
An entity that is 50% or more owned by a Country of Concern
An entity that is organized or chartered under the laws of a Country of Concern
An entity that has its primary place of business in a Country of Concern
An entity that is 50% or more owned by a Covered Person
A foreign person, as an individual, who is an employee or contractor of a Country of Concern
A foreign person, as an individual, who is primarily a resident in the territorial jurisdiction of a country of concern
Any entity or individual that the Attorney General designates as a Covered Person subject to broad discretion set forth in the DSP
Covered Data involves two primary categories of data: U.S. sensitive personal data and U.S. government-related data. At a high level, the new rules prohibit, restrict, or exempt certain data transactions involving Covered Data that could give countries of concern or Covered Persons access to such data, and are triggered by bulk data transfers, which can include individual transfers that over time trigger specified volume thresholds. The rules also include specified record keeping and reporting requirements, as well as a process for obtaining approval of otherwise prohibited transfers. The rules also include enforcement mechanisms with the potential for civil and criminal penalties for non-compliance.
On April 11, 2025, DOJ issued a compliance guide, along with a list of Frequently Asked Questions (FAQs) to assist entities with understanding and implementing the DSP. DOJ also announced a 90-day limited enforcement period from April 8 to July 8, 2025, focusing on facilitating compliance rather than enforcement, provided that entities are making good faith efforts as outlined in the 90-day policy.By July 8, 2025, entities must be fully compliant with the DSP, as the DOJ will begin enforcing the provisions more rigorously. By October 6, 2025, compliance with all aspects of the DSP, including due diligence, audit requirements, and specific reporting obligations, will be mandatory.
For a more detailed discussion of the persons and transactions covered under the DSP and its applicability, including definitions, see our recent alert on Navigating the New DOJ Data Security Program Compliance.
Telecommunications Services Exemption
Of note for telecommunications providers is that the DSP, Rule Section 202.509, includes a “telecommunications services” exemption. This exemption for telecommunications services states that the DSP rules: “…do not apply to data transactions, other than those involving data brokerage, to the extent that they are ordinarily incident to and part of the provision of telecommunications services,” as that term is defined under the rule. Specifically, Rule Section 202.252, the new DOJ rule definition of “telecommunications service” means:
the provision of voice and data communications services regardless of format or mode of delivery, including communications services delivered over cable, Internet Protocol, wireless, fiber, or other transmission mechanisms, as well as arrangements for network interconnection, transport, messaging, routing, or international voice, text, and data roaming.1
Of note, this exemption specifically applies to activities directly related to the technical and operational aspects of delivering telecommunications services and does not extend to ancillary services like marketing or data analytics. The Department also declined to expand the exemption to include data transactions related to IP addresses or cybersecurity services.
Importantly, the DOJ made clear the definition of telecommunications services for purposes of the DSP is unique to the DSP and is without reference to the definition in Section 153(53) of the Communications Act. The import of this is that the definition is apparently without reference to whether the service is a common carrier offering.
Examples of Exempt and Non-Exempt Transactions
Rule Section 202.509 provides examples of bulk data transfers incident to telecommunications services that fall within the exemption, and an example of a bulk data transfer by a telecommunications service provider that falls outside the exemption:
(1) Example 1. A U.S. telecommunications service provider collects covered personal identifiers from its U.S. subscribers. Some of those subscribers travel to a country of concern and use their mobile phone service under an international roaming agreement. The local telecommunications service provider in the country of concern shares these covered personal identifiers with the U.S. service provider for the purposes of either helping provision service to the U.S. subscriber or receiving payment for the U.S. subscriber’s use of the country of concern service provider’s network under that international roaming agreement. The U.S. service provider provides the country of concern service provider with network or device information for the purpose of provisioning services and obtaining payment for its subscribers’ use of the local telecommunications service provider’s network. Over the course of 12 months, the volume of network or device information shared by the U.S. service provider with the country of concern service provider for the purpose of provisioning services exceeds the applicable bulk threshold. These transfers of bulk U.S. sensitive personal data are ordinarily incident to and part of the provision of telecommunications services and are thus exempt transactions.
This example illustrates where the data sharing is integral to the core function of providing telecommunications services and facilitating international roaming, aligning with the exemption criteria.
(2) Example 2. A U.S. telecommunications service provider collects precise geolocation data on its U.S. subscribers. The U.S. telecommunications service provider sells this precise geolocation data in bulk to a covered person for the purpose of targeted advertising. This sale is not ordinarily incident to and part of the provision of telecommunications services and remains a prohibited transaction.
Here, the sale of geolocation data for advertising purposes is not directly related to the telecommunications service itself, placing it outside the scope of the exemption.
(3) Example 7. A U.S. company owns or operates a submarine telecommunications cable with one landing point in a foreign country that is not a country of concern and one landing point in a country of concern. The U.S. company leases capacity on the cable to U.S. customers that transmit bulk U.S. sensitive personal data to the landing point in the country of concern, including transmissions as part of prohibited transactions. The U.S. company’s ownership or operation of the cable does not constitute knowingly directing a prohibited transaction, and its ownership or operation of the cable would not be prohibited (although the U.S. customers’ covered data transactions would be prohibited). See 28 CFR § 202.305.
This example illustrates that while the infrastructure operation itself is not a prohibited transaction, the data transfers by customers using the international submarine cable are prohibited if they involve countries of concern. This would likely be a direct issue for the underlying customer rather than the telecommunications service provider, though providers might still consider whether it would make sense to ensure that their customer agreements include provisions insulating them from any potential exposure from such customer non-compliance.
The examples above focus on whether a particular bulk data transfer is “ordinarily incident to and part of the provision of” an exempt telecommunications service. So, for example, arrangements outside the actual provision of the service, such as the sale or sharing of customer data for marketing purposes or with application providers, would appear to be outside the scope of the exemption.
As one example, a number of major mobile carriers had location-based service programs, which were the subject of a series of FCC enforcement actions, that facilitated, through third party “location aggregators”, the sharing of user location data with application providers to enable location-based services.2 Example No. 2, above, would suggest that this type of service would not be “ordinarily incident to and part of the provision of” a carrier’s mobile data services (the telecommunications service under the DSP definition) and hence outside the exemption.
Challenges and Considerations
The harder question, however, and one that will undoubtedly be initially vexing for providers without further clarification from DOJ, is the actual scope of the “telecommunications services” definition in the rule. This is particularly true for integrated offerings by providers that clearly include telecommunications services, but also include integrated components which include bulk transfers, that standing alone might be outside the scope of the telecommunications services definition. Of significance, in adopting this definition, the DOJ stated that the definition is limited to the listed telecommunications services and does not reach services like cloud computing.
The recently issued FAQs also reinforce this point, stating the definition is “limited to communications services and does not include all internet-based services like cloud computing.” See Question 77. This begs the question of an offering by a telecommunications services provider that includes both cloud computing and associated transport services. Similarly, the provision of integrated applications offered by telecommunications services providers in conjunction with their telecommunications service offerings, would raise similar questions, particularly, as noted above, in connection with Example No. 2.
Providers should note that any data transaction not essential to the core function of telecommunications—such as partnerships involving user data for non-service-related purposes—may fall outside the exemption. Providers must differentiate between core telecommunications functions and ancillary services, ensuring that services like data analytics or marketing, which are not ordinarily incident to the core telecommunications services, are carefully evaluated for compliance.
Implications of Limitation to Telecommunications Service Exemption
While DOJ’s final rule appears to provide three straightforward examples, the issues arise about integrated service offerings such as telecommunications services that include a cloud computing or a data center component. While the telecommunications service aspect appears to be exempt, the data storage or cloud computing aspect would not be, at least if offered on a standalone basis. The same may be true for integrated application offerings in connection with application providers, most obviously, under Example No. 2 in connection with sharing location data. This necessitates a thorough review of service offerings, particularly those bundled with non-telecommunications services like cloud computing, data center services, and applications, to determine compliance with DSP regulations. Accordingly, telecommunications providers must closely examine the integrated services they provide, along with their data sharing arrangements with third parties, to determine whether the transaction may trigger prohibited or restricted data transactions involving countries of concern or Covered Persons.
1In adopting this definition, DOJ noted that commenters suggested that the definition of telecommunications services be expanded to include voice and data communications over the internet. DOJ agreed and instead of limiting the scope of “telecommunications services” to the definition in Communications Act, 47 U.S.C. 153(53) (which would have applied only to common carriers) the DOJ adopted its own definition of the term to cover present day communications for the purposes of the exemption. Under the Communications Act, telecommunications service means the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.2See FCC Fines AT&T, Sprint, T-Mobile and Verizon Nearly $200 Million for Illegally Sharing Access to Customers’ Location Data (FCC News Release, Apr. 29, 2024); see also AT&T, File No. EB-TCD-18-00027704, Forfeiture Order at ¶¶ 8-10 (FCC 24-40, Apr. 29, 2024), vacated, AT&T v. FCC, No. 24-60223, Slip Op. at 5-6 (5th Cir. Apr. 17, 2025).
Beltway Buzz, April 25, 2025
The Beltway Buzz™ is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what’s happening in Washington, D.C., could impact your business.
Congress Out, Agenda Delayed. The U.S. Congress is currently in the second week of its spring break recess and will return to Washington, D.C., on April 28, 2025. Upon returning, Republican leaders are expected to move forward with their budget reconciliation package that is expected to address military spending, energy production, taxes, and immigration. The Buzz will also be monitoring potential U.S. Senate confirmation hearings for individuals nominated to lead labor and employment–related agencies. President Donald Trump has nominated individuals to lead the U.S. Department of Labor’s (DOL) Occupational Safety and Health Administration and Wage and Hour Division, as well as the General Counsel’s office of the National Labor Relations Board, but those nominees have not yet had their Senate confirmation hearings.
Executive Order Seeks to Limit Use of Disparate-Impact Liability. On April 23, 2025, President Trump issued an executive order (EO) titled “Restoring Equality of Opportunity and Meritocracy.” The EO states, “It is the policy of the United States to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.” Currently, employers may be held liable under a disparate-impact theory of discrimination if an otherwise neutral employment policy or practice results in an adverse impact on a protected class. The EO directs all federal agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability” and further instructs the attorney general and the chair of the U.S. Equal Employment Opportunity Commission to review all current legal matters that rely on a theory of disparate-impact liability, and to “take appropriate action with respect to such matters consistent with the policy of th[e] order.” T. Scott Kelly, Nonnie L. Shivers, and Zachary V. Zagger have the details.
Disparate-impact liability in employment discrimination cases was first established by the Supreme Court of the United States in 1971 and codified by Congress in the Civil Rights Act of 1991. In February 2025, U.S. Attorney General Pam Bondi issued a memorandum instructing U.S. Department of Justice (DOJ) officials to deemphasize disparate-impact theories of liability.
Senate HELP Committee Chair Outlines Independent Contractor Proposals. Senator Bill Cassidy (R-LA), chairman of the Senate Committee on Health, Education, Labor, and Pensions, has released a white paper advocating for various legislative proposals related to independent contractors. The white paper, titled, “Portable Benefits: Paving the Way Toward a Better Deal for Independent Workers,” builds on Cassidy’s 2024 “request for information seeking feedback from stakeholders on ways to remove federal legal and regulatory barriers to portable benefits for independent workers.” Among the proposals advanced in the paper are a single statutory test for determining employment status, as well as legislation that would allow employers to provide health and retirement benefits to workers without those benefits triggering employment status. (The Buzz recently detailed bills in the U.S. House of Representatives that address these issues.)
Immigration Policy Update. Recent developments in the immigration policy arena include the following:
The U.S. District Court for the District of Massachusetts issued an order blocking the Trump administration’s rescission of Cuba, Haiti, Nicaragua, and Venezuela (CHNV) humanitarian parole program. Emphasizing the need for a case-by-case review prior to revoking grants of parole, the judge ruled that the “categorical termination of existing grants of parole was arbitrary and capricious.” Amanda M. Mullane and Daniela Medrano Sullivan have the details.
Secretary of State Marco Rubio announced sweeping changes to the operational structure of the U.S. Department of State. While the Bureau of Consular Affairs—the subagency within the State Department responsible for issuing visas—does not appear to be impacted at this early stage, the Buzz will continue to monitor the situation as it develops.
DOL Staff Exit. Workers at the DOL are leaving, either pursuant to deferred-resignation offers from the new administration or involuntary reductions in force.
Deferred Resignations. Almost 20 percent of the DOL’s employees will reportedly leave their positions in September 2025 after accepting deferred-resignation offers.
OFCCP Continues to Shrink. According to media reports, most employees in the Office of Federal Contract Compliance Programs’ (OFCCP) enforcement division’s national office and five of its six regional offices have been placed on administrative leave in advance of planned reductions in force at the agency. (Employees in the Southwest and Rocky Mountain Region—often referred to by practitioners as “SWARM”—were not impacted.) The action follows on the heels of a February 2025 DOL memo indicating that 90 percent of OFCCP employees would eventually be removed from their positions. A group of Democratic senators and representatives wrote a letter to Secretary of Labor Lori Chavez-DeRemer, warning that the dramatic reduction in staff at OFCCP would leave veterans and individuals with disabilities vulnerable to discrimination.
The Buzz will keep tabs on how staff reductions at the DOL in general, and OFCCP specifically, will impact the department’s regulatory and enforcement agendas.
Remember the Maine! On April 25, 1898, Congress declared war on Spain. The Cuban War of Independence, the rise of sensationalistic “yellow journalism,” U.S. self-interest, and the February 15, 1898, explosion of the USS Maine in Havana Harbor all contributed to a series of congressional actions that culminated in a declaration of war. The declaration read:
A bill declaring that war exists between the United States of America and the Kingdom of Spain.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, first. That war be, and the same is hereby, declared to exist, and that war has existed since the twenty-first day of April, A.D. 1898, including said day, between the United States of America and the Kingdom of Spain.
Second. That the President of the United States be, and he hereby is, directed and empowered to use the entire land and naval forces of the United States, and to call into the actual service of the United States the militia of the several States, to such extent as may be necessary to carry this act into effect.
Approved, April 25, 1898.
The war ended several months later with the signing of the Treaty of Paris on December 10, 1898, and resulted in the United States’ acquisition of Puerto Rico, Guam, and the Philippines.
A Roadmap for Export Controls? Project 2025 and the Future of U.S. Exports – Part III
The second Trump administration has come flying out of the starting blocks on international trade policy actions—imposing and rescinding, shaping and reshaping tariffs, sanctions, and export controls. The executive orders and directives have come so thick and fast that it is not always simple for businesses to chart a consistent policy direction and develop their plans to account for what might be coming next.
However, there is in fact a pretty clear map that could indicate the U.S. policy direction with respect to export controls.
The U.S. Department of Commerce, Bureau of Industry and Security (BIS) may well follow the map that was drafted by the same people who are now among the BIS leadership. The cartographers, as it were, are James Rockas and Robert Burkett. Rockas and Burkett now serve as the Deputy Under Secretary and Chief of Staff, respectively, at BIS. Both are listed as authors of the chapter on the Department of Commerce in the Project 2025 Mandate for Leadership publication by the Heritage Foundation.[1] Regardless of one’s views on Project 2025, the publication is a useful indicator of the future of U.S. export controls, among other policies.
In this article, we examine what the proposed “modernization” of the Export Administration Regulations (EAR) outlined in Project 2025 looks like, and analyze how the Project 2025 proposals could be implemented in future U.S. export regulations.
The Checklist
The section of Project 2025 dedicated to BIS presents a list[2] of key priorities for “EAR modernization” , as follows:
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Eliminating the “specially designed” licensing loophole;
Redesignating China and Russia to more highly prohibitive export licensing groups (country groups D or E);
Eliminating license exceptions;
Broadening foreign direct product rules;
Reducing the de minimis threshold from 25 percent to 10 percent—or 0 percent for critical technologies;
Tightening the deemed export rules to prevent technology transfer to foreign nationals from countries of concern;
Tightening the definition of “fundamental research” to address exploitation of the open U.S. university system by authoritarian governments through funding, students and researchers, and recruitment;
Eliminating license exceptions for sharing technology with controlled entities/countries through standards-setting “activities” and bodies; and
Improving regulations regarding published information for technology transfers.
On first reading, some of these proposals may not seem to fit neatly within the familiar EAR framework. That might make it hard to picture how they will be implemented in regulations, much less to plan for them.
But that’s just the sort of picturing we propose to take on!
We have worked our way through the list above. We have asked ourselves how those broad, potentially seismic changes might actually be put into practice. Where is there real room for rewriting the regulations? Where is there precedent in export regulatory history? (Where what’s past be prologue, to borrow a phrase)?
Here we present our initial thoughts on what may be coming. We note that none of these points constitutes legal advice. But they may be useful for considering where your organization may wish to consider the possibility of future export control regulations.[3] And they may come fast, so get ready. As the poet said, defer no time. Delays have dangerous ends.
We present our findings in three parts (in three days), dividing the list to conquer it and to do so without overburdening our readers.
7. “Tightening the definition of “fundamental research” to address exploitation of the open U.S. university system by authoritarian governments through funding, students and researchers, and recruitment”
The Fundamental Research provisions of the EAR consider certain technology and software in mathematics, engineering, and science that are the result of research in universities to be in the public domain, and thus not controlled for export. One criterion for this exemption from control is that the research must be of the type that is normally published. Currently, the fundamental research exclusion provides for universities to allow students, regardless of nationality, to take part in research and to have access to certain technology and software that may otherwise be controlled.
However, universities have been under increasing scrutiny in cases where fundamental research exposes sensitive technology to students, professors, researchers, and even donors from countries of concern. Tightening the fundamental research exception could mean limiting the exception so that it does not apply to foreign persons affiliated with certain universities (such as those on the Specially Designated Nationals list), or even to all nationals of certain countries of concern. Alternatively, the rules could be tightened to allow U.S. government sponsors of research to place greater limits on access to sponsored projects based on nationality, or to require universities to waive the fundamental research exception altogether in their sponsorship agreements. Since the Fundamental Research exemptions are based in the First Amendment, there may be limits on how far that reform could be taken. But we have no doubt that the administration will look at how to restrict the Fundamental Research exemptions.
8. “Eliminating license exceptions for sharing technology with controlled entities/countries through standards-setting “activities” and bodies”
Currently, certain low-controlled technology or software is not subject to the EAR when it is being shared for the purpose of designing, developing, and/or implementing industry standard. The rule is designed for international cooperation.
Historically, the Trump administration has shown a disinclination to participate in multilateral activity (the Paris Climate Accord, UN Convention on Human Rights, Trans Pacific Partnership, NAFTA, Transatlantic Trade and Investment Partnership (TTIP), etc.). It would not be inconsistent with administration practice to narrow or eliminate exceptions that provide for free sharing of technolgoy with multilateral standards-setting groups.
Eliminating the exception would be a straightforward revision of the rule, which could potentially affect U.S. government and U.S. company relations with other governments, international organizations, international inspections under the Chemical Weapons Convention, and the International Space Station operations.
9. “Improving regulations regarding published information for technology transfers.”
Much like the fundamental research exception described above, adjusting the EAR-exception for published technology could potentially violate the First Amendment. One potential approach would be for the EAR to adopt an approach similar to the ITAR’s public domain exception. For example, public release, such as publishing, would only be permitted after approval from the U.S. Government. The proposal may also redefine what is considered “published” by introducing exceptions to the definition.
Conclusions and Early Indications
The second Trump administration has issued, rescinded, revised, and reissued a substantial number of tariffs, sanctions, and export control measures. Although it is easy to be overwhelmed by the volume of actions, some of the policy direction of the new administration is clear. And as outlined here, the Commerce Department chapter of the Project 2025 Mandate for Leadership provides strong indicators of the administration’s policy direction on export controls.
At the same time, developments outside the four corners of Project 2025 suggest that certain reforms may already be in motion. On April 10, 2025, Landon Heid—President Trump’s nominee for Assistant Secretary of Commerce for Export Administration—testified before the Senate Banking Committee and indicated that BIS may act “relatively quickly” to apply Entity List restrictions to subsidiaries of listed entities, drawing a parallel to OFAC’s 50% rule. If implemented, this shift would materially expand the scope of compliance obligations for exporters, reexporters, and technology providers by effectively capturing foreign subsidiaries and affiliates that have so far fallen outside the scope of licensing requirements.
Heid’s remarks also flagged broader enforcement priorities—particularly around China’s acquisition of artificial intelligence capabilities. He pointed to risks associated with transshipment through jurisdictions such as Hong Kong and suggested BIS may pursue tighter controls to curb diversion and illicit procurement of advanced technologies. Those developments, while not explicitly part of Project 2025, reflect an accelerating trajectory toward more expansive and aggressive export control enforcement.
Together, the Project 2025 blueprint and the emerging policy posture from BIS leadership offer a coherent preview of what the next phase of U.S. export regulation may look like. Companies would do well to monitor those signals and begin scenario planning for a regulatory environment in which the scope of control is broader, the tools are sharper, and the compliance expectations are higher.
FOOTNOTES
[1] Available at 2025_MandateForLeadership_CHAPTER-21.pdf.
[2] Id. at p.672.
[3] Additionally, we would be glad to kick these ideas around with others (I know my associates are tired of me talking about it to them). So if you have any comments, questions, or ideas to posit, please feel free to contact the authors directly.