U.S. Supreme Court Upholds Arizona’s Employment Verification Law
On May 26, 2011, the U.S. Supreme Court upheld the Arizona law that sanctions employers for hiring unauthorized aliens and endorsed Arizona’s requirement that employers use the federal E-Verify screening program. A 5-3 majority of the Court found that language in the Immigration Reform and Control Act of 1986 did not pre-empt the Arizona Law. For the answers to frequently asked questions about the Arizona law, please click here to read the Client Alert published by the Labor & Employment Client Service Group on August 4, 2011.
Employers Should Consider Expressly Prohibiting FMLA Fraud
Many employers have updated their FMLA policies to reflect recent amendments to the law and revisions to the regulations. Another aspect of an FMLA policy that merits attention is ensuring that the policy expressly prohibits FMLA fraud and specifies the penalty for the offense. The United States Court of Appeals for the Ninth Circuit issued an unpublished opinion earlier this year that reinforces the need for express fraud prohibition. To learn more about the implications of the opinion, please click here to read the Client Alert published by the Labor & Employment Client Service Group on August 19, 2011.
SEC Proxy Access Rule Vacated by Federal Court
The U.S. Court of Appeals for the District of Columbia Circuit recently set aside and vacated Exchange Act Rule 14a-11 concerning shareholder proxy access, adopted by the SEC on August 25, 2010. On a petition for review, a panel held that the SEC had “failed adequately to consider the rule’s effect upon efficiency, competition and capital formation,” as the SEC was required to do under its enabling statutes. Thus, the Court held that adoption of the Rule was “arbitrary and capricious” and vacated the Rule. To read more about the decision, please click here to read the Alert published by the Corporate Finance and Securities Client Service Group published August 4, 2011.
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Updated Claim Procedure Requirements for Non-Grandfathered Health Plans
The Internal Revenue Service, Department of Health and Human Services and Department of Labor have revised the interim final regulations governing internal claims and appeals and external reviews for non-grandfathered group health plans under the 2010 health reform law. The have also revised the forms for adverse benefit determinations and updated the list of state consumer assistance programs. Many of the changes ease the burden of plan administration. To learn more, please click here to read the Alert published by the Employee Benefits & Executive Compensation Client Service Group on July 1, 2011.
IRS Issues Guidance on Health Plan Excise Tax Returns, Code Section 162(m)
On June 24, 2011, the IRS finalized rules on automatic extensions for Form 8928 Excise Tax Returns for employer-sponsored health plans and also released guidance on performance-based compensation plans of public companies. For highlights of the rules, please click here to read the Alert published by the Employee Benefit & Executive Compensation Client Service Group on July 7, 2011.
FTC Suit Signals Increased Scrutiny of Advertising Endorsements
In May, the FTC brought suit against a company that sold a promissory note business system based upon the allegation that the company used consumer testimonials that could not be substantively substantiated, and that the company did not adequately disclose the typical performance that consumers were likely to achieve. This marks the thirteenth case this year in which the Commission has alleged that a company has deceptively used testimonials and endorsements. To read more, please click here for the Bulletin published by the Consumer Protection Group on July 5, 2011.
EPA Issues The Cross-State Air Pollution Rule To Reduce Power Plant Emissions In the Eastern United States
In July the U.S. Environmental Protection Agency (EPA) issued the Cross-State Air Pollution Rule (Cross-State Rule), requiring power plants in 27 states to reduce their emissions of nitrogen oxides and power plants in 23 of these states to also reduce their emissions of sulfur dioxide. The purpose of the rulemaking is to ratchet down power plant emissions that contribute to elevated concentrations of ozone in downwind states. For a summary of the relevant provisions of the Clean Air Act and the new Cross-State Rule, please click here to see the Bulletin published by the Environmental Client Service Group on July 22, 2011.
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Department of Labor Extends Non-Enforcement Period for Certain Internal Claims and Appeals Requirements Applicable to Non-Grandfathered Plans Under the Affordable Care Act
On March 18, 2011, the Department of Labor issued Technical Release 2011-01 extending, with some modifications, the enforcement grace period established under DOL Technical Release 2010-02 until plan years beginning on or after January 1, 2012. To learn more the extension of the enforcement grace period, please click here to read the Employee Benefits and Executive Compensation Client Service Group’s Alert published March 21, 2011.
Reporting for Participants with Deferred Vested Benefits – IRS Replaces Schedule SSA
Plan administrators are required to report certain information regarding participants who separate from service with the right to a deferred vested retirement benefit. In Announcement 2011-21, the IRS designated Form 8955-SSA to be used to satisfy this reporting requirement, replacing Schedule SSA. To learn more about the filing requirements for the new form, please click here to read the Employee Benefits & Executive Compensation Client Service Group’s Alert published March 28, 2011.
Supreme Court Says Two Exemptions are Unavailable to Companies Trying to Protect Their Information from Disclosure under FOIA
Companies frequently find that information they submit to the Federal government is sought by others — perhaps competitors — under the Freedom of Information Act. The submitting company may be able to block the disclosure if the information falls within one of the exemptions in FOIA. On March 1 the Supreme Court made two of those exemptions unavailable to companies. To read more about the Court’s decision in FCC v. AT&T Inc. please click here to read the Government Contracts Team Alert published March 3, 2011
FTC Takes a Bite Out of Cookie-Based Behavioral Advertising
On March 14, 2011, the Federal Trade Commission announced a settlement with a behavioral advertising company that places cookies in consumers’ internet browsers to track online activities. This settlement marks one of the agency’s first enforcement actions against a behavioral advertising company and signals that the FTC has begun to act on its repeated warnings about scrutinizing behavioral advertising more closely. To learn more about the settlement, please click here to read the Consumer Protection Group’s Alert published March 17, 2011.
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SEC Issues Final “Say-on-Pay” and “Golden Parachute” Rules
On January 25, 2011, the Securities and Exchange Commission released its final “say-on-pay” and related golden parachute rules to implement the provisions of Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. For a summary of the rules, please click here to read the Bulletin published by the Corporate Finance and Securities Group on January 27, 2011.
SEC Issues Proposed Rules for “Conflict Minerals” Disclosure
The Securities and Exchange Commission has issued proposed rules to implement the “conflict minerals” disclosure requirements in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1502 amended the Securities Exchange Act of 1934 (the “Exchange Act”) by adding Section 13(p). Section 13(p) requires the SEC to promulgate disclosure rules concerning the use of certain minerals that originate in the Democratic Republic of the Congo or its adjoining countries (the “DRC countries”). For more information on the proposed rules, please click here to read the Client Alert published by the Corporate Finance and Securities Client Service Group on January 3, 2011.
When All Appropriate Inquiry Isn’t Enough: Court Highlights the Significance of Other Factors in the Bona Fide Prospective Purchaser Defense
Anyone who has been involved in a real estate transaction relating to commercial or industrial property has likely dealt with conducting “All Appropriate Inquiry” into the site, which generally includes the preparation of a Phase I Environmental Site Assessment and may include Phase II sampling work. All Appropriate Inquiry (“AAI”) is one necessary component of the “bona fide prospective purchaser” (“BFPP”) defense established under the 2002 Brownfields amendments to Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). The BFPP defense is intended to protect property owners from liability for contamination that clearly occurred prior to their period of ownership. However, conducting AAI is not the only prerequisite to establishing a BFPP defense. The BFPP requirements beyond AAI are highlighted in Ashley II of Charleston, LLC v. PCS Nitrogen, et al., 2010 U.S. Dist. LEXIS 104772 (D.S.C. Sep. 30, 2010), one of the first cases to address in detail the BFPP defense. To learn more about this case, please click here to read the Client Alert published by the Environmental Client Service Group on January 3, 2011.
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Court Highlights the Significance of Other Factors in the Bona Fide Prospective Purchaser Defense
(Print Friendly version of this Alert)
Anyone who has been involved in a real estate transaction relating to commercial or industrial property has likely dealt with conducting “All Appropriate Inquiry” into the site, which generally includes the preparation of a Phase I Environmental Site Assessment and may include Phase II sampling work. All Appropriate Inquiry (“AAI”) is one necessary component of the “bona fide prospective purchaser” (“BFPP”) defense established under the 2002 Brownfields amendments to Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). The BFPP defense is intended to protect property owners from liability for contamination that clearly occurred prior to their period of ownership. However, conducting AAI is not the only prerequisite to establishing a BFPP defense. The BFPP requirements beyond AAI are highlighted in Ashley II of Charleston, LLC v. PCS Nitrogen, et al., 2010 U.S. Dist. LEXIS 104772 (D.S.C. Sep. 30, 2010), one of the first cases to address in detail the BFPP defense.
In this case, Ashley purchased property that had a long history of industrial use. In conjunction with that purchase, Ashley’s environmental consultant performed Phase I and Phase II work. After the purchase, Ashley demolished many of the above-ground improvements on the property. When liability for contamination at the property was addressed, a significant battle between several potentially responsible parties arose. Ashley sought to take advantage of the BFPP defense to avoid liability. The elements of the BFPP defense are, in summary: (a) disposal of hazardous substance occurred prior to acquisition; (b) the purchaser conducted AAI; (c) the purchaser provided all required notices with respect to the discovery or release of any hazardous substance; (d) the purchaser exercises appropriate care with respect to hazardous substances found; (e) the purchaser cooperates with agencies; (f) the purchaser complies with institutional controls; (g) the purchaser complies with information requests or administrative subpoena; (h) the purchaser is not affiliated with a potentially responsible party. In the end, the court closely scrutinized each element of the test and determined that Ashley was not a BFPP.
All Appropriate Inquiry
Significantly, this is one of the first cases to address the proper conduct of AAI. The court found that although there were “inconsistencies” between the Phase I reports and the relevant ASTM standard, those inconsistencies lacked significance. The Court stated that “[w]hat is important is that Ashley acted reasonably; it hired an expert to conduct AAI and relied on that expert to perform its job properly.” Because the Court did not explain what the “inconsistencies” are, it is difficult to determine how strictly a Phase I must comply with ASTM. Interestingly, no federal agencies were involved in this case. EPA has stated that they will insist on very strict compliance with the ASTM standards in order to find that AAI was conducted. This case may (or may not) take some wind out of that sail. While strict compliance with the ASTM standards is still highly recommended, this case provides some potential relief for past transactions where the acquiring party is trying to mount a BFPP defense but the adequacy of its AAI is called into question due to the absence of strict compliance with the ASTM.
Appropriate Care
The court did find that Ashley failed to prove that it exercised appropriate care with respect to known contamination when it did its demolition work. In doing this work, Ashley did not clean out and fill in known underground sumps and concrete pads, which failure could have exacerbated known releases and contamination. Ashley also failed to prevent debris piles from accumulating, and failed to investigate and remove the debris piles on a timely basis. Ashley also failed to maintain run off controls.
IRS Has Announced its 2011 Cost-of-living Adjustments for Retirement Plans
On October 28 the IRS issued a press release announcing its 2011 cost-of-living adjustments for retirement plans. For a chart reflecting the qualified plan limits for years 2008-2011, please click here to see the Employee Benefits & Executive Compensation Group’s Client Alert published October 28, 2010.
SEC Issues Proposed “Say-on-Pay” and “Golden Parachute” Rules
The SEC has released its proposed “say-on-pay” and related golden parachute rules to implement the provisions of Dodd-Frank set forth in new Section 14A of the Securities Exchange Act of 1934. The comment period will close on November 18, 2010 and the SEC plans to issue final rules in early 2011. For a discussion of the proposed rules, please click here to read the Bulletin published by the Corporate Finance and Securities Group on October 20, 2010.
Employee Benefits Provisions of the Small Business Jobs Act of 2010
On September 27, 2010, the Small Business Jobs Act of 2010 was signed into law. While the Act mainly focuses on providing tax and other assistance to small businesses, it also includes provisions aimed at promoting retirement preparation that are not limited to small business. For a discussion of these provisions, please click here to read the Employee Benefits & Executive Compensation goup’s client alert Alert published October 4, 2010.
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Check It Out and Check It Off: 2010 and 2011 Group Health Plan Checklist
Several new laws and regulations from 2010 require significant design changes to group health plans and impose new notice requirements on plan sponsors. For a checklist of the major changes which require implementation in 2010 or 2011 as well as a listing of enrollment and annual notices that group health plan sponsors should consider during open enrollment, please see the Client Alert published by the Employee Benefits & Executive Compensation Client Service Group on September 20, 2010.
New Medicare Enrollment Requirements Will Burden Providers and Suppliers
On September 22, 2010, the Centers for Medicare and Medicaid Services issued proposed rules that will dramatically change the enrollment process for Medicare providers and suppliers, including new enrollment following a change of ownership. For more information on the new requirements, please read the Client Alert published by the Life Sciences and Health Care Client Service Group on September 22, 2010.
CMS Issues Regulations Changing the DMEPOS Supplier Standards
On August 27, 2010, the Centers for Medicare and Medicaid Services published final regulations in the Federal Register that impose new standards on suppliers of durable medical equipment, prosthetics, orthotics and suppliers. Most of the requirements contained in the new regulations will take effect on September 27, 2010. For more information on the regulations, please read the Client Alert published by the Life Sciences and Health Care Client Service Group on September 16, 2010.
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President Signs Sweeping Financial Reform Bill: What our Non-Bank Public Companies Need to Know Now
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. Included in the reform legislation — aimed primarily at the reform of financial institutions – are provisions that will apply to all publicly traded companies, including provisions relating to “say on pay” shareholder votes, proxy access, executive compensation disclosure and compensation committees. For more information on these and other provisions of the Act, please see the Bulletin published by the Corporate Finance and Securities and Employee Benefits Client Service Groups on July 22, 2010.
Private Fund Investment Advisers Registration Act of 2010: New Law Changes Regulatory Framework for Alternative Investment Managers
On July 21, 2010, President Obama signed into law the financial reform package known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, which contains the Private Fund Investment Advisers Registration Act of 2010 (the “Private Fund Act”). The Private Fund Act changes the regulatory framework that governs investment advisers managing private fund investments, including private equity funds, hedge funds and certain real estate funds. For more information on the Private Fund Act, please see the client Alert published by the Alternative Investments Group on July 29, 2010.
Department of Labor Clarifies FMLA Definition of “Son or Daughter,” Confirming Benefit Eligibility of Non-Traditional Families
Under the Family and Medical Leave Act, eligible employees may take up to 12 weeks of job-protected leave upon the birth of a son or daughter, the placement of a son or daughter for adoption or foster care, or to care for a son or daughter with a serious health condition. Pursuant to the statute, the term “son or daughter” not only includes children with whom a parent has a biological or legal relationship, but the children of individuals standing “in the place of a parent.” For more information on the clarification of the definition of the term “son or daughter”, please see the client Alert published by the Labor & Employment Client Service Group on July 19, 2010.
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IRS Announces New Section 409A Document Correction Program
Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section 409A”) is spectacular in scope and notoriously difficult for even the most well-intentioned employers to satisfy. Any employer which maintains non-qualified deferred compensation plans for its employees has struggled with Code Section 409A, and may have concerns that some of its plans might not satisfy the attention to minutiae that Code Section 409A demands. On January 4, the IRS published its long-awaited program for correcting documentation failures under Code Section 409A.
For more information, please read the client alert published by Bryan Cave LLP’s Employee Benefits and Executive Compensation Practice on January 22, 2010.
Major Campaign Finance Development – Citizens United v. FEC Supreme Court Ruling
The Supreme Court yesterday handed down a landmark ruling in the Citizens United v. FEC case which could significantly transform the campaign finance system at the federal level. In Citizens United, the Supreme Court in a 5-4 ruling struck down the decades-old prohibition on corporate expenditures in connection with federal elections as unconstitutional under the First Amendment.
For more information, please read the client alert published by Bryan Cave LLP’s Election Law and Government Ethics Practice on January 22, 2010.
Yesterday FinCEN announced a new outreach initiative targeted at depository institutions with assets under $5 billion. The outreach initiative builds upon knowledge FinCEN previously gained from its meetings with larger financial institutions. As part of its ongoing outreach efforts, FinCEN is now seeking to engage smaller to moderate size depository institutions who are working to implement the four pillars of the Bank Secrecy Act regulatory regime: (1) policies, procedures and internal controls; (2) designation of a compliance officer; (3) ongoing training; and (4) independent testing.
For more information, please read the client alert published by Bryan Cave LLP’s Financial Institutions Client Service Group on October 15, 2009.