International Regulatory Enforcement

U.S. Department of Commerce Imposes Further Restrictions Directed at Huawei
On May 15, 2020, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued an interim final rule to expand the prohibitions on items that can be provided to Huawei and its Entity List-designated affiliates (collectively, “Huawei”). The long-expected move to amend the foreign direct product rule further restricts the ability of Huawei to use certain U.S. technology and software to design and manufacture its semiconductors, and is the latest in a succession of U.S. regulatory, law enforcement and diplomatic actions that may have the cumulative effect of significantly curtailing Huawei’s ability to operate around the world.
Executive Order Restricts Acquisition of Bulk Power System Equipment from Foreign Adversaries
On May 1, 2020, President Donald J. Trump issued an Executive Order on Securing the United States Bulk-Power System (“Executive Order”). The Executive Order directs the Secretary of Energy to restrict the acquisition and use of electric equipment designed, developed, manufactured, or supplied by foreign adversaries and any entities controlled by or subject to the jurisdiction of such foreign adversaries in connection with the Bulk-Power System (“BPS”). Recognizing that the BPS may be a target of malicious actors and that any successful attack could significantly impair the country’s economy, safety, and defense, the Executive Order seeks to curtail the ability of such actors to “create and exploit vulnerabilities in bulk-power system electric equipment” to potentially catastrophic effect. Given this broadly protective goal, the Executive Order has wide-ranging implications for the electric power industry, including electric utilities, generator and transmission project developers and owners, as well as vendors and others doing business with these industry participants. Many details will need to be worked out, but this will be an important initiative for industry participants to monitor and likely become actively involved with, as the processes described below are established and the tenets of the Executive Order are implemented.
Déjà-vu All Over Again: Government Enforcement in Response to Economic Crises
With the dust from enforcement actions stemming from the post-2008 recession beginning to settle, COVID-19 (“Coronavirus”) has thrust the world into an uncertain economic future. Companies must confront the obvious public health implications of COVID-19, as well as pandemic-induced shocks to supply chains, demand conditions, and business operations. Many will debate the similarities and differences between 2008 and 2020, but one similarity is apparent and inescapable: a crisis requiring trillions of dollars of government stimulus invites significant regulatory oversight and enforcement scrutiny. This oversight and scrutiny will look not only for the causes of the crisis, but also reactions thereto, by both public and private actors. Company actions, including those viewed as necessary to respond to the crisis, will be evaluated by government investigators in hindsight with a rearview mirror after the crisis has subsided and in the light of subsequent events and perceived consequences not known at the time of the crisis. If the past is prologue, the following areas will draw the most governmental interest and may require extra diligence.
Commerce Department Increases Restrictions on Exports to China, Russia, and Venezuela
On Tuesday, April 28, the Bureau of Industry and Security (“BIS”) at the U.S. Department of Commerce published two final rules and one proposed rule significantly increasing export control requirements for a large variety of items exported to China, Russia, and Venezuela. All three rules were explicitly issued in furtherance of the Trump Administration’s National Security Strategy released in December 2017, as well as the Trump Administration’s National Defense Strategy released in January 2018. As stated in the rules, their issuance stems from the Administration’s focus on the integration of civilian and military technology development in countries that are of concern for national security reasons. These countries are included in Group D:1 (“D:1 Countries”) of the Country Groups of the EAR, found in Supplement No. 1 to Part 740. D:1 Countries include China, Russia, and Venezuela (among others).
All Eyes on Me: Practical Tips for Anti-Corruption Compliance In and After a Time of Crisis
Many in-house compliance and legal officers, as well as others in gatekeeper roles with compliance responsibilities, are balancing increasing scrutiny with decreasing resources as they navigate unprecedented crises and find a path toward a new, post-crisis normal. Others may find their resources unchanged, but their compliance programs and plans may no longer be well-tailored to their company’s risk profile if the company has radically changed operations or business models. We offer some practical questions to ask and tips to consider when confronting peak crisis mode and charting the course forward.
U.K. Court of Appeals Holds Company Not Liable for Acts of the Police or for Following the Voluntary Principles
For many years, legal claims have been filed against companies for alleged human rights violations based on the actions of state security personnel. Numerous lawsuits also have cited voluntary commitments openly undertaken by companies, such as the Voluntary Principles on Security and Human Rights (“VPs”), in alleging that the companies owed and breached a standard of care to injured third parties. The Court of Appeal of England and Wales considered both issues in Kadie Kalma & ors v. African Minerals Ltd. & ors [2020] EWCA Civ 144, issuing a decision that should give comfort to businesses who transparently commit to the VPs and who are compelled to rely on public security providers.
Humanitarian Aid to Iran Under Existing Sanctions–An Important Reminder in a Time of Pandemic
As of April 16, 2020, Iran’s government had confirmed over 77,000 cases of the novel coronavirus (“COVID-19”) and over 4,800 deaths, with a report by the Iranian parliament estimating there may be up to 8 to 10 times more cases that are unconfirmed. Iranian officials have attacked U.S. sanctions for hindering Iran’s ability to import sufficient medical equipment such as ventilators and personal protective equipment. In light of the pandemic, there have been increasingly frequent calls to ease the impact of sanctions on Iran by members of international organizations and domestic politicians, including most recently from Democratic Presidential candidate former Vice President Joe Biden, as well as Senator Bernie Sanders of Vermont, Senator Chris Murphy of Connecticut, and Congresswoman Ilhan Omar of Minnesota.
The U.K. and U.S. Security Agencies Issue Joint COVID-19 Cyber Threat Update
On 8 April 2020, the U.K.’s National Cyber Security Centre (“NCSC”) and the U.S. Department of Homeland Security (“DHS”) Cybersecurity and Infrastructure Agency (“CISA”) published a joint advisory (the “Advisory”) discussing the growing number of cyber criminals and advanced persistent threat groups that are looking to exploit the COVID-19 pandemic outbreak with a range of ransomware, malware, and other malicious attacks. The joint nature of this Advisory demonstrates the severity of the matter on a global scale and the need for such organisations to collaborate in order to effectively manage the resulting impact.
New Team Telecom Process Formalized; FCC Rules to Follow
On April 4, 2020, President Trump issued an Executive Order establishing a Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector. The Order formalizes the presently ad hoc “Team Telecom” process of national security review of communications transactions involving foreign investment and adds to the complex regulatory environment for these deals. Soon after, FCC Chairman Ajit Pai applauded the action and announced that the Commission would conclude its pending rulemaking to reform its foreign ownership review processes.
Details on Washington, D.C. COVID-19 Closure of Non-Essential Businesses Order
On March 24, 2020, Washington, D.C. Mayor Muriel Bowser issued an order requiring the closure of non-essential businesses and prohibiting gatherings of ten or more individuals (“Order”). The Order, issued as a result of the COVID-19 pandemic, went into effect at 10:00 pm on Wednesday, March 25, 2020 and will continue through April 24, 2020, unless further extended.
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