Baker McKenzie’s North America Energy response team recently surveyed a number of key oil and gas producing jurisdictions across the United States – representing approximately 90% of domestic oil production – to assess how these jurisdictions are responding to the recent collapse in the oil price from a regulatory perspective.

No two jurisdictions are identical in their response, and our analysis reveals a range of approaches. Texas, Oklahoma, and North Dakota are responding pro-actively, pursuing top-down solutions to address the crisis (e.g., considering mandatory production cuts, allowing operators to shut-in production, etc.) while New Mexico, Pennsylvania, and the Bureau of Land Management (BLM) are offering more limited, selective relief and typically doing so on a case-by-case basis (e.g., offering environmental compliance derogations upon request, issuing guidance to address specific issues, etc.). In a third group, California, Colorado, West Virginia, Wyoming, Ohio, and the Bureau of Ocean Energy Management (BOEM) are taking a non-interventionist, “business as usual” approach, abstaining from any substantial action for now.

In the course of our review, we detailed the actions taken by each of the jurisdictions surveyed with respect to production cuts, relief for state-owned lands, environmental enforcement, and contractual relief. We then grouped the jurisdictions by their level of engagement and responsiveness in facing the crisis – seeking to identify common themes and takeaways – and will discuss each group in turn.


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On June 4, 2020, President Trump signed a new Executive Order (“EO”) aimed at accelerating the initiation and completion of infrastructure projects to spur on the United States’ economic recovery from the COVID-19 pandemic.1 At the heart of this latest EO is a mandate to expedite required environmental reviews for these projects under the National Environmental Policy Act (“NEPA”) through reliance on the Council on Environmental Quality’s (“CEQ”) “emergency” powers to bypass the standard NEPA process. Like many of the Trump Administration’s regulatory reform EO’s, this one appears to lack robust legal underpinnings. That said, project proponents struggling their way through challenging and protracted NEPA reviews on infrastructure projects with the Army Corps of Engineers (“Army Corps”) or other agencies may be well served by getting their projects on these prioritized lists for expedited federal reviews as contemplated under the EO.

Scope of Trump Administration’s Infrastructure EO. Citing the economic impact of the COVID-19 outbreak as an ongoing national emergency, the June 4th EO directs federal agencies and executive departments to pursue all possible legal means to expedite infrastructure projects for the purpose of stimulating the economy. The EO specifically obligates the secretaries of Transportation, Army, Agriculture, Interior and Defense, within 30 days of EO issuance, to create lists of infrastructure projects under their jurisdiction that may be expedited and proceed with due haste to complete and obtain mandated reviews and approvals for these projects. In regard to required project environmental reviews, the EO directs the CEQ to work with agencies to provide “flexible alternatives” to the usual environmental review process under NEPA for projects on these agency lists, including reviews required for Army Corps issuance of Clean Water Act Section 404 permits, and to otherwise accelerate or limit required consultations with other agencies under the Endangered Species Act (“ESA”).

Source of EO’s “Emergency Authority.” The EO encourages agencies to use their “emergency authorities” to facilitate expedited government decision-making on key infrastructure projects. According to the EO, this includes taking advantage of the flexibility afforded the CEQ regarding compliance with NEPA in “emergency situations.” Specifically, as set forth in the CEQ regulations, where emergency circumstances make it necessary to take an action with a significant environmental impact without going through the full NEPA process, the federal agency in charge of the action may consult with the CEQ on “alternative arrangements” to proceed with such actions.

To be clear, the EO’s encouragement of alternative arrangements to bypass or alter the scope of NEPA reviews on infrastructure projects in response to the COVID-19 “emergency” represents a significant expansion of the CEQ’s historical application of its emergency powers. For starters, it is worthy to note that over the last 40 years, the CEQ has only exercised its authority and approved emergency alternative arrangements 47 times and mostly for the purpose of protecting the environment as opposed to shortcutting environmental reviews.2 The majority of these approvals involved the need for immediate action in response to natural disasters – hurricanes, floods, wildfires, tornados, volcanic eruptions, disease outbreaks among endangered species populations, and large-scale insect infestations on cropland – and other imminent hazards to human health and the environment – emergency repairs to prevent damn failures, emergency clean-ups of oil or chemical spills, and transportation of nuclear waste.

Moreover, both the CEQ’s regulations and guidance clarify that these alternative arrangements only apply to immediate responses to an emergency, whereas all other aspects of an agency action are still subject to full NEPA review.3 Further, any alternative arrangements approved by the CEQ cannot waive any requirements under NEPA, but instead must provide an alternative means of achieving the same requirements.

Likely Legal Challenges to the June 4th Infrastructure EO. Not surprisingly, opposition to the Administration’s Infrastructure EO has been swift and forceful. In fact, the Center for Biological Diversity has already given formal notice to the Administration of its intent to challenge the order in court over its directives on ESA consultations.4 Other groups, including the NRDC,5 Center for American Progress,6 Southern Environmental Law Center,7 We Act,8 and the National Wildlife Federation,9 have all put out statements opposing the EO, some of which include an intent to challenge the EO in the future.

We expect the outcome of likely legal challenges to implementation of this EO to favor the environmental groups over the Administration. Irrespective of the outcome, however, litigation over these actions is expected to come quickly and be protracted as CEQ approval of alternative arrangements under NEPA are subject to judicial review as final agency actions, thus resulting in delays to projects subject to expedited reviews.10 The little case law that exists on these challenges likewise favors the opposition as courts have generally taken a very narrow view on what constitutes an emergency justifying these alternative arrangements for environmental reviews.11

The Path Forward Under the Infrastructure EO. While legal support for the Trump Administration’s Infrastructure EO appears dubious and likely to be challenged at every turn, project developers and other proponents of important infrastructure projects may still find real and measurable value from engaging relevant agencies around the designation of their projects as worthy of “expedited” attention and decision-making under the EO. As project developers are well aware, the challenges with environmental reviews under NEPA are typically not about the need for comprehensive assessments consistent with NEPA law and policy, but more about getting the attention of agency leadership to prioritize these reviews on timetables consistent with project needs. Through expedited designations under the EO, projects will have the best chance of being advanced through full environmental reviews and complete and technically robust administrative records, but with project approvals that are issued on time and in a manner that minimizes the risk of legal challenge and facilitates the successful completion of these projects. Of course, successful engagement with the regulatory authorities requires a clear understanding of NEPA law and policy and a carefully crafted strategy to address environmental assessment obligations with the assistance of the CEQ and alignment among project stakeholders.


2 A full list with details of the alternative arrangements can be found at

3 The full guidance can be found at







10 Stated in the CEQ guidelines

11 Nat. Resources Def. Council v. Winter, 527 F. Supp. 2d 1216 (C.D. Cal. 2008).

Baker McKenzie’s Environmental Group regularly advises project developer and industry stakeholders on the completion of strategic and compliant environmental assessments of energy, mining and infrastructure projects under NEPA and legal challenges to these reviews by project opponents. For more information, please contact our NEPA experts.


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Part 1: How to Claim Preferential Tariff Treatment

Baker McKenzie experts from Canada, US and Mexico deliver a 75-minute session to understand the impact of the agreement from a customs perspective in the midst of the COVID-19 pandemic. Panelists discuss the agreement’s most pressing issues in the customs landscape, including changes in rules of origin, documentation requirements, advance rulings and verification procedures.

Part 2: How to Claim Preferential Tariff Treatment

Baker McKenzie experts from Canada, US and Mexico deliver a 60-minute session on a deeper dive into select key provisions of the United States-Canada-Mexico Agreement (USMCA), including changes to specific rules of origin in the automotive and textile sectors, chemicals and steel, among others. Speakers also cover practical impact of changes in the rules of origin and making sense of the USMCA in the context of other free trade agreements.

Part 3: Labor Rules & Trade Remedies

On this 60-minute webinar, Baker McKenzie experts from the United States, Mexico and Canada discuss how to prepare for enforcement under the Rapid Response Labor Mechanism (RRLM). The discussion covers how RRLM originated and how it will function, what it means for manufcturers in Mexico, and what sort of due diligence should be undertaken as we approach July 1 entry into force of the USMCA, among other topics.


The post Global: USMCA: Game On! Webinar Series appeared first on Global Compliance News.


On Monday 15 June 2020, our Baker McKenzie TMT industry group experts hosted a virtual webinar session on the EU Consumer Protection Law Developments impact on the TMT Industry.

Our specialists dove into the developments of the EU Consumer Protection Law and brought to light the impact that this will have on the sector, exploring specifically the following areas:

      • An overview on the key legislation
      • Who is protected and who must comply?
      • How to comply?
        • P2B Regulation
        • Digital Content Directive
        • Better Enforcement Directive
        • Representative Actions Directive
      • Preparation checklist



For more information please contact:

Sharon Byrne
Senior Business Development Manager

The post EU Consumer Protection Law Developments – Impact on the TMT Industry Webinar appeared first on Global Compliance News.


Today with the increase in online transactions, we have also been witnessing a huge spike in cyber crimes. It is therefore essential to secure online transactions and keep confidential data like the PIN (Personal Identification Number) secure. For these reasons the PCI Security Standards Council, a global forum responsible for online payment security laid down PCI PIN Security Standards to protect PIN data. In the set Standards they have defined a complete set of requirements and testing procedures to be followed for securing the management, processing, and transmission of personal identification number (PIN) data during online and offline payment card transaction processing at ATMs and attended and unattended point-of-sale (POS) terminals. 

To learn more about the Standards and Requirements, you can join us on our live webinar “PCI PIN Security Requirements and Standards”On 9th July. We will have an interactive live Q&A session wherein we can discuss and clear your doubts on PCI PIN. 

Topics Covered

  1. Introduction to PCI PIN
  2. Scope and Applicability to PCI PIN
  3. Basics of Cryptography
  4. PCI PIN Certification Process
  5. QnA

Registration Links

India: 2 PM :- Register Here

London: 3 PM:- Register Here

PST: 11 AM:- Register Here

The post FREE WEBINAR – PCI PIN Security Requirements & Applicability appeared first on Global Compliance News.


This Week in Government Enforcement

Please join us for a new weekly video series, hosted by Baker McKenzie’s Government Enforcement partners Tom Firestone and Jerome Tomas.

This episode features Maurice Bellan, Managing Partner of Baker McKenzie’s Washington D.C. office. Maurice was previously a prosecutor in DOJ’s Civil Rights Division and in this episode, he discusses the legal issues relating to the George Floyd case and police reform in the United States.


Join us as we recap the previous week and cover hot topics and current enforcement actions related to white collar crime and criminal investigations in the US and abroad to arm you with the information you need to start your business week.

As one of the largest global law firms, we will call upon our exceptionally deep and broad bench of white collar experts throughout the world and particularly in the commercial hubs of Europe, Asia, Africa and Latin America to join our weekly discussion series.

Our weekly briefings cover:

      • High-profile DOJ case updates and implications
      • SEC enforcement developments and insider trading
      • CFTC guidance on civil penalties

To view previous videos, click here.


The post United States: This Week in Government Enforcement appeared first on Global Compliance News.


Shelter-in-place or stay-at-home orders have been prevalent throughout the United States since March 2020 as state and local governments have sought to protect their citizens from the spread of the COVID-19 virus. With the spread appearing to slow in parts of the US, several states are now implementing plans to relax these orders and reopen their economies. Keeping up with the evolving nature of these orders and plans is critical to the functioning of all businesses throughout the country.

We are pleased to provide this tracker, which identifies the relevant state-wide shelter-in-place orders and their related expiration dates, as well as the applicable state-wide reopening plans, in each of the 50 United States plus Washington, D.C.

While most states continue to encourage or even require telework or work-from-home where possible, many states continue to gradually reopen sectors of their economies as indicated in the “What’s Open?” table, which we have added to each page to highlight the reopening status of four major sectors (office, manufacturing, retail and bars/restaurants).

Please check back for regular updates.

This week, the tracker reflects these latest developments:

  • The Governors of Connecticut, New Jersey and New York announced a joint travel advisory, directing anyone (including their own residents) traveling to the tristate area from a state that has a new daily positive test rate higher than 10 per 100,000 residents or a state with a 10% or higher positivity rate over a 7-day rolling average, to self-quarantine for a 14-day period from the time of last contact within the identified state. The original list of states that qualified when the order was announced on June 24 were Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Texas and Utah.
  • The Governor of Texas rolled back certain reopening measures, while Illinois and certain regions of New York entered into the next phases of their respective reopening plans.
  • Several states will remain in the current phase of their reopening plans rather than proceed to the next phase as originally planned, including Florida, Idaho, Kansas, Louisiana and North Carolina.
  • Unless extended or amended, the existing shelter-in-place orders are set to expire this week in Georgia, New Mexico and Rhode Island.

Please call or email your regular Baker McKenzie contact if you require additional analysis regarding these matters.

Last updated 26 June 2020


The post United States: US 50 State Shelter-In-Place/Reopening Tracker appeared first on Global Compliance News.


In brief

The Baker McKenzie State and Local Tax (SALT) Subpractice Group presented “Handling a State Tax Controversy”, the twelfth in a series of short webinars to keep members of the SALT community abreast of recent developments in these less than certain times on 10 June 2020.


This webinar walks through strategy considerations and potential pitfalls of a state tax controversy, from audit through litigation, including considerations regarding the future of SALT controversy in a post COVID-19 world.

View the recorded webinar.

Download the materials.

The post United States: Handling a State Tax Controversy appeared first on Global Compliance News.


In brief

The Idaho Supreme Court recently affirmed a District Court’s judgment that the gain from the sale of a 78.54% membership interest in a limited liability company did not constitute ‘business income’ under Idaho Code section 63-3027.  In Noell Indus. Inc. v. Idaho State Tax Comm’n, Docket No. 46941 (Idaho 2020), the court determined that “this type of gain does not meet the definition of ‘business income’ under either the transactional test or functional test (including the unitary business test),” and was therefore not apportionable income.


Noell Industries, Inc. (“Noell Industries”), incorporated in 1993 in Virginia by Mike Noell, was created to develop and sell combat and tactical gear.  Noell Industries manufactured and sold tactical gear until 2003, when it transferred its business assets to a new company, Blackhawk Industries Products Group Unlimited LLC (“Blackhawk”), in exchange for a 78.54% membership interest (the remaining membership interests were held by third parties).  Mike Noell was the President and Chief Executive Officer of Blackhawk.  Blackhawk, a Virginia limited liability company, established a physical presence in Idaho in 2004, and by 2010, held approximately $20 million of real and personal property in Idaho.

Upon selling its majority interest in Blackhawk for a net gain of $120 million in 2010, Noell Industries reported the gain on its Idaho tax return, but did not apportion any of the gain to Idaho, instead allocating the gain entirely to its state of commercial domicile, Virginia (where Noell included the gain as apportionable income and paid taxes thereon).  After conducting an audit, the Idaho Tax Commission concluded that the gain from the sale of the membership interests in Blackhawk was ‘business income’ under Idaho Code section 63-3027 and assessed a tax deficiency of $1.4 million.  The Idaho District Court found in favor of Noell Industries, determining that the gain was not ‘business income’ and, therefore, was not apportionable to the state.  The Idaho Tax Commission appealed.

In affirming the District Court’s determination, the majority rejected the Idaho Tax Commission’s argument that Noell Industries’ gain from the Blackhawk sale constituted business income “because the ‘acquisition and management of Blackhawk LLC constituted a necessary part of its business operations.’”

Idaho Code section 63-3027(a)(1) adopts the Uniform Division of Income for Tax Purposes Act definition of  ‘business income’, which Idaho has interpreted as providing for both a transactional and functional test.  Under the transactional test, ‘business income’ is “income arising from transactions and activity in the regular course of the taxpayer’s trade or business.”  Under the functional test, ‘business income’ is “income from the acquisition, management, or disposition of tangible and intangible property when such acquisition, management, or disposition constitute integral or necessary parts of the taxpayer’s trade or business operations.”  In reviewing the application of both tests de novo, the majority concluded that the District Court did not err in ruling that Noell Industries’ gain from the Blackhawk sale was nonbusiness income.

In applying the transactional test, the court relied on case law from other jurisdictions that use a similar definition of ‘business income’ for the general principle that “the gain arising from a holding company’s sale of a subsidiary can qualify as business income if the holding company regularly engages in the buying and selling of subsidiaries; however, a one-time sale does not qualify.”  See e.g., E.I. DuPont De Nemours & Co. v. Indiana Dep’t of State Revenue, 79 N.E.3d 1016, 1023 (Ind. T.C. 2017), with PPG Indus., Inc. v. Dep’t of Revenue, 765 N.E.2d 34, 45 (Ill. App. 2002).  Here, the court determined that Noell Industries’ primary business was investing and holding interests in subsidiary companies.  The court further concluded that Noell Industries, in holding its investments, did not appear to have regularly engaged in the trade or business of buying and selling subsidiary companies.  Thus, “a one-time sale over a seven-year span does not constitute a ‘regular’ trade or business,” and the gain from the sale of Blackhawk did not satisfy the transactional test.

With respect to the functional test, the court noted that Idaho Income Tax Administrative Rule 333.08 provides two methods for meeting the functional test: (a) by finding that the intangible interest serves an operational function, rather than a passive investment, or (b) by meeting the unitary business test.  Importantly, the court noted that even though these appear to be two independent methods, the U.S. Supreme Court has rejected the notion that the operational function test and unitary business test are separate principles.  MeadWestvaco Corp. ex rel. Mead Corp. v. Illinois Dep’t of Rev., 553 U.S. 16, 29–32 (2008).

In applying the operational function test, the court focused on the fact that Noell Industries was merely a holding company, and therefore, “[t]he sale of its interests in Blackhawk was a passive investment because the sale was not ‘an integral, functional, or operative component to the taxpayer’s trade or business operations.’”

The court noted that by selling Blackhawk, Noell Industries lost its primary source of income in exchange for the financial betterment of $120 million.  Therefore, the sale was not conducted in furtherance of Noell Industries’ trade or business of holding interests; rather, the sale discontinued it. The court also applied the unitary business test and determined that no unitary business existed primarily because Noell Industries was merely a parent holding company with no shared control or operations with Blackhawk.  The court determined that Noell Industries did not share centralized management, oversight, or headquarters with Blackhawk, nor did it share resources or employees, with the exception of utilizing the same accounting and legal firms.  Although Mike Noell acted as Blackhawk’s president and CEO, and served on a six-member management team, the court was persuaded by the fact that he did not manage Blackhawk’s day-to-day operations.  The court noted that “his presence at both companies alone does not suggest the level of oversight that the unitary principle requires for functional integration, centralized management, and economies of scale.”  Importantly, this conclusion regarding management and control further amplifies the conclusions of the U.S. Supreme Court that actual control, as opposed to the potential to control through majority ownership, is the critical inquiry for a unitary business analysis.  Here, Noell Industries held a 78.54% membership interest in Blackhawk (and Mike Noell was the sole owner of Noell Industries), an interest that arguably gave Noell Industries (and Mike Noell) the potential to control Blackhawk; however, because the court found that the actual day-to-day management of the company was not controlled by Noell Industries (or, Mike Noell), it concluded that centralized management did not exist.

Finally, the court handed the taxpayer an additional win by rejecting the Idaho Tax Commission’s argument that the decision would open a tax loophole to companies by “permitting them to dodge taxes through the creation of sham shell entities.”  On the contrary, the majority noted that Noel Industries paid taxes to Virginia (albeit on an apportioned share of the gain) because that was its commercial domicile, and therefore, “[t]here has been no fraud or subterfuge.”

In sum, the court here concluded that despite the fact that the seller owned an almost 80% membership interest in a subsidiary that it originally formed (using its own operating assets), and because the seller’s sole activity was investing, the gain derived from sale of the membership interests was non-business income.  This case is an important win for taxpayers and provides much needed guidance regarding the application of the unitary business principle, including the operational function test, to gains derived from sales made by passive holding companies.

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In brief

Please join us for a new weekly video series, hosted by Baker McKenzie’s North America Government Enforcement partners Tom Firestone and Jerome Tomas.

This weekly briefing is available on demand and will cover hot topics and current enforcement actions related to white collar crime and criminal investigations in the US and abroad to arm you with the information you need to start your business week.

As one of the largest global law firms, we will call upon our exceptionally deep and broad bench of white collar experts throughout the world and particularly in the commercial hubs of Europe, Asia, Africa and Latin America to join our weekly discussion series.

These briefings will cover:

      • High-profile DOJ case updates and implications
      • SEC enforcement developments
      • CFTC enforcement developments
      • Other white collar defense industry developments


26 May 2020

Video Link

9 June 2020

Video Link

17 June 2020

Video Link

22 June 2020

Video Link

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