Insights

On Friday, June 28, 2024, the U.S. Supreme Court overruled Chevron U.S.A. v. Natural Resources Defense Council (“Chevron”)[1] in Loper Bright Enterprises v. Raimondo (No. 22-451) and Relentless v. Dep’t of Commerce (No. 22–1219)[2] (the two cases collectively referred to as “Loper Bright”), bringing an official end to the decades-old and eponymously named “Chevron deference” doctrine. Not content to stop there, the Court returned fresh to work Monday, July 1, to, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System (No. 22-451)[3] (“Corner Post”), effectively extend the limitations period to challenge final agency actions under the Administrative Procedure Act (“APA”).

On Friday, April 14, the United States Supreme Court issued a unanimous decision in Axon Enterprise, Inc. v. Federal Trade Commission, holding that constitutional challenges to the Securities and Exchange Commission (SEC) and Federal Trade Commission (FTC) can be heard in federal district court in the first instance, without the plaintiffs first having to exhaust those arguments through the agencies’ respective administrative enforcement processes. The Court did not address the underlying constitutional challenges, but the long-awaited decision on the jurisdictional question is likely to encourage more constitutional challenges to those and other agencies’ enforcement schemes being raised and heard first in the federal courts.

The Supreme Court yesterday heard oral arguments in Axon Enterprises v. The Federal Trade Commission and Securities and Exchange Commission v. Cochran, both of which present the question whether parties to administrative enforcement actions can promptly challenge the authority and structure of the agencies in federal district courts, or must await the conclusion of the administrative proceedings to raise their objections in the courts of appeals, as is provided for in the FTC Act, the Securities Exchange Act, and the Administrative Procedures Act. The two cases come at a time when the Supreme Court has been receptive to complaints about administrative agency authority and at least some of the justices appeared ready to clear the way for Axon and Cochran to return to the district courts to pursue their wide-ranging challenges to the authority of the FTC and SEC, respectively. 

On January 13, 2022, the Supreme Court granted applicants’ emergency motion to stay enforcement of the Occupational Health and Safety Administration’s (“OSHA”) COVID-19 Vaccination and Testing Emergency Temporary Standard (“ETS”). In its decision, the Court explained that the plaintiffs were likely to succeed in showing that OSHA lacked the statutory authority to mandate “84 million Americans to either obtain a COVID-19 vaccine or undergo weekly medical testing at their own expense.” The Court reasoned that “[a]lthough COVID-19 is a risk that occurs in many workplaces, it is not an occupational hazard in most” and to permit “OSHA to regulate the hazards of daily life . . . would significantly expand OSHA’s regulatory authority without clear congressional authorization.” While the Court acknowledged that OSHA has authority to regulate occupational risks related to COVID-19 where the virus “poses a special danger because of the particular features of an employee’s job or workplace,” it emphasized that OSHA’s “indiscriminate approach” does not consider what is an occupational hazard versus a general risk. 

On December 17, 2021, the Cybersecurity and Infrastructure Security Agency (“CISA”) issued Emergency Directive 22-02 (the “Directive”) instructing civilian federal agencies to mitigate a series of vulnerabilities in Apache Log4j, a Java-based logging library, by 5 p.m. EST on December 23 and to provide a report to CISA about vulnerable applications by December 28.

On Friday evening, a three-judge panel of the U.S. Court of Appeals for the Sixth Circuit decided in a split decision (2-1) to allow the Occupational Safety and Health Administration (OSHA) to resume enforcing its Emergency Temporary Standard (ETS) mandating large employers to require their employees either be fully vaccinated against COVID-19 or get tested weekly. The ETS originally went into effect on November 5 but was stayed the next day by a panel of the U.S. Court of Appeals for the Fifth Circuit, acting on one of many court petitions filed almost immediately to block the rule. By a lottery process prescribed by federal law, the many cases were subsequently consolidated in the Sixth Circuit, even while the Fifth Circuit’s stay remained in effect. The decision issued Friday was in response to OSHA’s motion to dissolve that stay, which the agency filed November 23. Earlier in the week, the full court declined to hear the case en banc, with eight judges dissenting from that decision and taking the opportunity to explain why they would leave the stay in place. The judge who dissented from the opinion Friday had been one of the eight who joined the earlier dissent from the denial of en banc review.

In a string of recent cases following the Supreme Court’s 2019 decision in Food Marketing Institute v. Argus Leader Media, multiple courts have held that a party submitting information to the government need not demonstrate it obtained an assurance of confidentiality from the government in order for the agency to justify withholding that information in response to an information request made under the Freedom of Information Act (FOIA).  (Crowell & Moring previously wrote about the new test instituted by Argus Leader here.) 

On May 17, the Supreme Court ruled that a pre-enforcement challenge to an IRS reporting requirement may proceed despite the IRS’s assertion that the Anti-Injunction Act prohibited the lawsuit. Typically, the Tax Court is the sole venue for a pre-collection litigation on the merits of an IRS assessment. Absent a Tax Court petition, under the Anti-Injunction Act, taxpayers cannot sue in the district courts to stop the IRS from assessing and collecting taxes. Instead, the taxpayer must pay the tax (or the IRS tells the taxpayer it owes tax) and then file a lawsuit challenging the legality of the tax. The government has long used the Anti-Injunction Act as a tool to stop pre-enforcement challenges to any tax-related guidance. However, the Supreme Court made clear in CIC Services, LLC v. IRS et al. that this tool is limited.

On May 17, 2021, the U.S. Department of the Treasury officially published an Interim Final Rule to provide long-awaited guidance on the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund (“the Fiscal Recovery Funds”) established under the American Rescue Plan Act (“ARPA”).  To facilitate the disbursement of these funds, this Interim Final Rule establishes a framework for determining the types of programs and services that are eligible under the ARPA along with a list of eligible uses that State, local, and Tribal governments may consider.  While State, local, and Tribal governments have the flexibility to determine how best to use the Fiscal Recovery Funds to meet the needs of their communities and populations, this funding, along with its recipients and subrecipients, will be subject to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 C.F.R. Part 200.

The Biden Administration issued a detailed Executive Order (EO) on Improving the Nation’s Cybersecurity yesterday aimed at strengthening the Federal Government’s cybersecurity defense posture.  The EO calls for the creation of new cybersecurity standards, as well as updates to FAR- and DFARS-based contract requirements, affecting both information and operational technology.  Much of the EO addresses implementation throughout the Federal Civilian Executive Branch (FCEB) Agencies and the Department of Defense (DoD).  The EO encompasses a broad array of cybersecurity initiatives for fast track implementation in partnership with the private sector, notably including:

The Biden Administration is expected to request $80 billion over 10 years for IRS enforcement as part of its American Families Plan. The Treasury Department released a statement that insufficient tax agency resources were expected to result in the U.S. government collecting $7 trillion less than it’s owed over the next decade. If the IRS’s enforcement abilities are strengthened, the Biden Administration estimates it can collect an additional $700 billion over 10 years in otherwise lost tax revenue. If the Biden Administration succeeds in getting the funding changes it proposes, taxpayers should expect to see an increase in audit activity, particularly focused on high net-worth individuals and corporations. Coupled with its investment in improving its IT capabilities and use of data analytics, the IRS is poised to make up for lost time in the enforcement arena.

Effective May 6, 2021, the U.S. Department of Labor (“DOL”) has withdrawn a rule published on January 7, 2021, titled “Independent Contractor Status Under the Fair Labor Standards Act,” finding it “inconsistent with the FLSA’s text and purpose.” The DOL determined that this rule “would have a confusing and disruptive effect on workers and businesses alike due to its departure from longstanding judicial precedent.” The DOL concluded as well that it “does not believe” that this rule “is fully aligned with the FLSA’s text or purpose, or with decades of case law describing and applying the multifactor economic realities test.”  After the DOL delayed the effective date of this five-factor rule shortly after the Biden Administration took office, this action was widely expected.

After 100 days in office, President Joe Biden has made it clear that he is not afraid to go it alone to pursue policy to match his campaign rhetoric and promises. The first 100 days of the administration were marked by a significant number of executive orders, a historic economic stimulus package passed with only Democratic support in Congress, and sweeping proposals that – if enacted – could transform everyday life for a significant number of Americans.

On April 27, 2021, President Biden signed an Executive Order (the “EO”) increasing the hourly minimum wage for certain federal government contractors (and subcontractors) to $15.00 per hour ($10.50 per hour for tipped workers), beginning January 30, 2022. Beginning in January 2023, the applicable minimum wage rate will be adjusted annually based on the annual percentage increase in the Consumer Price Index.

Could the end of Section 6(b) of the Consumer Product Safety Act (CPSA) actually be near?  Time will tell.  But last week’s development on Capitol Hill in the saga of “Section 6(b)” is noteworthy, and, one day in the not-so-distant future, may be recognized as the beginning of the end for this controversial provision of the law.   

Last week the Supreme Court unanimously held that §13(b) of the Federal Trade Commission Act does not give the Federal Trade Commission the power to seek equitable monetary relief such as disgorgement or restitution. The Court’s opinion in AMG Capital Management LLC v. Federal Trade Commission removes a powerful tool that the FTC has long relied on to pursue monetary relief for consumers in both consumer protection and competition matters.

The Internal Revenue Service (IRS) announced on April 19th the launch of the new Office of Promoter Investigations (OPI) aimed at enforcement against promoters of abusive tax transactions, such as syndicated conservation easements and micro-captive insurance schemes, and expanding on the work the promoter investigations coordinator has been pursuing for the past year. The new office is part of the IRS’s Small Business and Self-Employed Division (SB/SE) and will be led by acting director Lois Deitrich, an IRS exam official with over 20 years of experience. Although the office is housed within SB/SE, it will coordinate promoter investigations throughout all IRS business units, including Criminal Investigation and the Office of Fraud Enforcement.

On March 29, 2021, the Securities and Exchange Commission’s Division of Examinations published a Risk Alert titled “Compliance Issues Related to Suspicious Activity Monitoring and Reporting at Broker-Dealers.”  The Alert identifies recurring issues that the Division has identified with the anti-money laundering (“AML”) programs of broker-dealers, particularly as these relate to the filing of suspicious activity reports (“SARs”).  It builds on similar issues that the SEC litigated and prevailed on in SEC v. Alpine Securities Corporation in the Second Circuit Court of Appeals, and is consistent with the fact that the SEC has identified AML program compliance as an examination priority in 2021, the fourth consecutive year it has done so.

On April 5, 2021, the Financial Crimes Enforcement Network (FinCEN) published an Advance Notice of Proposed Rulemaking (ANPRM) in the Federal Register seeking public comment on 48 questions with respect to the implementation of the beneficial ownership reporting requirements in the Corporate Transparency Act (CTA) and the implementation of the related database maintenance use and disclosure provisions.  The deadline for comment is May 5, 2021.