Category — Public Law and Policy

What follows is part one of a two-part post from Akin Gump’s antitrust practice.

For more information on this alert, please contact—

• Mark Botti, 202.887.4202, Washington, DC
• Anthony Swisher, 202.887.4263, Washington, DC

Introduction and Background

The recent worldwide financial turmoil and the still-uncertain aftermath of the Emergency Economic Stabilization Act of 2008 have sparked major  mergers and acquisitions (M&A) that need very rapid antitrust regulatory approval in order to calm distressed markets and salvage shareholder value.  More such M&A deals are surely coming.  Despite the normal 30-day waiting period under the Hart-Scott-Rodino (HSR) Act, deals can be done much more quickly under the right circumstances.

The HSR Act, Section 7A of the Clayton Act, 15 U.S.C. § 18a. is a “file and wait” statute.  Parties to proposed transactions meeting certain size thresholds must file notification with both the Federal Trade Commission (FTC) and the U.S. Department of Justice, Antitrust Division (DOJ).  They must also observe a mandatory waiting period prior to closing, generally 30 days, but  15 days in the case of a bankruptcy or cash tender offer.  If a transaction raises substantive antitrust issues requiring thorough investigation,, a so-called “Second Request” for information may be issued, typically causing the waiting period to be extended by many months.   Critically, however, the mandatory HSR waiting period can also be shortened through the discretionary grant of an “early termination.”   § 7A(b)(2).

Obtaining “early termination” for large transactions often requires a proactive approach.  Many significant transactions bog down early in the regulatory process as a result of an obscure first step in the agency review process known as “clearance.”  During the clearance stage, the FTC and DOJ decide between them which of the two is going to review the transaction.  Weeks, and in some unfortunate instances, months are sometimes lost during this clearance process, particularly when the agencies dispute which of them is going to review a transaction.  Parties can help the agencies cut through the clearance issues by engaging them actively even prior to making their filing.  Where necessary to move the matter forward rapidly, merging parties make presentations to both agencies rather than wait for clearance.  Most important, companies need to educate antitrust agency staff regarding key issues and communicate specific reasons underlying the need for expeditious review and approval.  Lastly, companies need to develop proactive pre- and post-filing strategies to quickly marshal information for staff, with the goal of securing prompt antitrust clearance.  A sure prescription for delay is simply to file the necessary documents and just sit back while the agencies do their work.

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What follows is a post from Akin Gump’s labor practice. For more information, visit their blog, the Washington Labor & Employment Wire, or contact—

• Bill Allen, 202.887.4245, Washington DC

On October 3, 2008, as part of a compromise financial rescue plan intended to address the country’s credit crisis, a bipartisan House majority passed H.R. 1424 by a 263-171 vote. The bill was signed into law by President Bush less than an hour later. Taken up after the House failed to pass a financial rescue plan on September 29, the new bill included additional “sweeteners” intended to make the package more palatable to House members who voted down the original version of the financial bailout plan. It had passed the Senate on October 1, 2008, by a 74-25 vote.

Of particular interest to employers, the new law also includes a “mental health parity” provision that, on September 23, 2008, had been previously passed in separate bills by overwhelming majorities in the House (H.R. 6983) and Senate (H.R. 6049). Like these previous bills, the mental health parity provision of H.R. 1424 requires those health plans that do provide mental health coverage to provide this coverage in the same manner as they cover other physical health conditions. The law exempts group health plans of employers with fewer than 50 employees from these new requirements.

This posting briefly summarizes the key provisions of the Emergency Economic Stabilization Act of 2008 (the “Act”), which, after being passed by the Senate on October 1, 2008, was passed by the House and signed by President Bush on October 3, 2008.  The Act will, among other things, “immediately provide authority and facilities that the Secretary of the Treasury can use to restore liquidity and stability to the financial system of the United States.”  Section 2(1).

General Provisions

The Act grants the Secretary of the Treasury (the “Secretary”) authority to establish a troubled asset relief program (the “program”) to purchase, and to make and fund commitments to purchase, “troubled assets” from any “financial institution.”  Section 101(a)(1).  “Troubled assets” include “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008,” as well as any other financial instrument that the Secretary, in consultation with the Chairman of the Board of Governors of the Federal Reserve System, deems “necessary to promote financial market stability,” so long as such determination is transmitted in writing to certain congressional committees.  Section 3(9).  A “financial institution” is “any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State . . . and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.”  Section 3(5).

The Act grants the Secretary authority to purchase up to $700 billion of troubled assets under the program.  The authority to spend $250 billion goes into effect immediately.  Section 115(a)(1).  The President may increase the limit to $350 billion at any time by submitting a written certification to Congress.  Section 115(a)(2).  Authority to spend the final $350 billion goes into effect if the President submits to Congress a written report detailing the Secretary’s plan to spend it, unless Congress enacts a joint resolution disapproving of the plan within fifteen days of such submission.  Section 115(a)(3), (c)(1).

The Secretary’s authority under the program expires on December 31, 2009.  Section 120(a).  The Secretary may, however, extend the authority to no later than two years from the date of enactment by submitting a written certification to Congress.  Section 120(b).
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What follows is a post from Akin Gump’s climate change practice. For more information visit their blog at ClimateIntel.com or contact—

• Ken Markowitz, 202.887.4513, Washington DC

Update:  The House passed the bailout bill with a 263-171 vote.

The economic rescue bill passed by the Senate earlier this week contains a wide array of tax incentives with the potential to influence investment in a variety of renewable energy and energy efficiency technologies. The House is currently debating the bill, with a vote expected in the next hour or so. The debate is proceeding under closed rules, meaning that no amendments may be offered, so the version that passed the Senate will get an up-or-down vote in the House. The original version of the bill was defeated in the House on Monday, but the new version - including the energy provisions - is up again for a vote today in the House.

The two tax credits that receive the most attention are the solar energy investment and wind energy production credits, both of which are currently scheduled to expire at the end of this year. The bill extends the solar investment credit until 2017, and the wind production credit through 2009. The investment and production credits are considered critical to continued investment in these areas. The House had actually passed them earlier this year, but they failed to clear the Senate by a single vote on two separate occasions. Senator McCain was absent for both votes, but indicated through his spokeswoman that he would have voted against extending the tax credits.

Beyond the high-profile solar and wind credits, the bill includes several other provisions that should increase investment in nascent renewable technologies.

• Section 102 creates a production credit for “marine and hydrokinetic renewable energy” - which expands the production tax credit beyond ordinary hydroelectric dam-based power and will now cover basically any kind of energy generation from the movement of water. This will make investments in wave and tide based energy generation more attractive.
• Section 105 extends the investment tax credit to cover geothermal heat pump systems, which use “the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure.”
• Producers of wind energy equipment will also be helped by Section 106, which creates a tax credit for homeowners that install wind energy generation equipment. This credit covers 30% of expenditures, up to $4,000 per homeowner.

There are also a host of tax provisions for advanced coal technologies, transportation fuels, and energy efficiency related to commercial and residential buildings and appliances. Put together, these credits will provide tens of billions of dollars in incentives to help spur the low-carbon economy and ensure the creation of renewable energy jobs in the US.

What follows is a post from Akin Gump’s climate change practice. For more information visit their blog at ClimateIntel.com or contact—

• Ken Markowitz, 202.887.4513, Washington DC

Late last night, the Senate passed the Emergency Economic Stabilization Act of 2008, a 450-page bill designed to stabilize the highly-publicized crisis within domestic financial markets.  Largely lost in the mass of financial stabilization provisions, the Bill also breathed new life into several clean energy provisions that had appeared moribund after public concern about a potential financial meltdown tabled movement on a comprehensive energy bill.

Following the highly publicized “financial rescue” portions of the stabilization bill is a new “Division B” entitled the Energy Improvement and Extension Act of 2008.  “Division B” comprises 140 pages addressing energy production incentives (Title I), transportation and domestic fuel security provisions (Title II) and energy conservation and efficiency provisions (Title III). Clean coal advocates will recognize several of the provisions from the energy bill that had passed the House in mid-September, including expanded tax credits for certain investments in coal gasification and carbon sequestration technologies (the Senate economic recovery bill replicates all five sections from the “Carbon Mitigation” subtitle of the draft energy bill).

More notably, however, the Bill contains a new tax credit provision for carbon sequestration.  Section 115 would provide a $20 dollar tax credit for each ton of carbon captured and sequestered using long-term geological storage from qualifying projects located in the United States.  The bill would provide a $10 dollar tax credit for each ton of carbon captured and then used for enhanced oil or gas recover efforts.  Section 115 uses tax credits to address a challenge that has hindered serious investment in carbon capture and sequestration (CCS) technology to date—the lack of a market price for carbon.  Both the Environmental Protection Agency’s (EPA) Clean Air Act Advisory Committee (CAAAC) and the Government Accountability Office have cited the lack of a market price for carbon emissions as a significant impediment to clean coal investment.

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The Wall Street Journal is reporting that the Emergency Economic Stabilization Act of 2008 has failed to pass the House of Representatives by a 205-228 vote. Read the full story here, and read about the vote’s effect on the stock market here.

This post refers to the Client Alert produced by Public Law and Policy. Read the full alert here.

For questions regarding this alert, please contact—

• David Carlin, 202.887.4133, Washington DC

What follows is a summary of the alert:

On September 28, 2008, congressional leaders began circulating a new draft of the proposal to grant the Treasury secretary broad authority to purchase up to $700 billion in mortgages, mortgage-backed securities, and other troubled financial instruments from financial institutions.  The draft bill, which is titled the Emergency Economic Stabilization Act of 2008, includes many of the key provisions contained in draft proposals circulated last week by Senator Christopher Dodd (D-Conn.) and Representative Barney Frank (D-Mass.), Chairmen of the Senate Banking and House Financial Services committees.  For example, the new draft requires the Secretary to receive stock warrants or senior debt instruments in return for direct purchases of troubled assets of a financial institution; mandates limits on executive compensation for participating financial institutions; and includes numerous oversight mechanisms.

There are also key differences between the new draft proposal and prior versions.  For example, the new proposal permits Congress to decline to authorize the final $350 billion of the plan; grants the Secretary authority not only to purchase troubled assets but also to guarantee assets held by financial institutions; and omits a key provision included in earlier proposals that would have granted bankruptcy judges authority to alter the terms of residential mortgages.  As these recent modifications illustrate, the situation remains fluid as Congress and the Bush administration continue to negotiate the terms of the bailout legislation.  Therefore, the final version of the legislation may contain yet further changes.

This post refers to the Client Alert produced by Public Law and Policy. Read the full alert here.

For questions regarding this alert, please contact—

• David Carlin, 202.887.4133, Washington DC

What follows is an excerpt from the full alert:

Chairman Charles Schumer (D-NY) said there was clear recognition from both sides of the aisle that there is a need to act quickly, and urged the protection of Main Street, saying tightened credit harms the ability of people to get car loans, home loans, and college loans. He also noted that both Senators Barack Obama (D-IL) and John McCain (R-AZ) agree that action must be taken now with caution to not choose a bad solution that will further exacerbate the problem. Schumer said he was puzzled by the resistance of the Federal Reserve Board and the Department of the Treasury to proposals by Senator Jack Reed (D-RI) and others that would seek a bailout-for-stock swap, saying taxpayers should be rewarded if the plan succeeds.  He also said he feels industry should pay for some share of the plan themselves.

Ranking Member James Saxton (R-NJ) attributed the main cause of turmoil to a collapse of the housing bubble which was encouraged by subprime and other risky mortgages. He said some action by the government is now needed to recapitalize the banks and other financial institutions either by injections of equity or removal of toxic investments. He said it was important to guarantee the safety of accounts to assure savers and small businesses that their basic financial needs can be met without disruption.

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This post refers to the Client Alert produced by Public Law and Policy. Read the full alert here.

For questions regarding this alert, please contact—

• David Carlin, 202.887.4133, Washington DC

What follows is an excerpt from the full alert:

• In general, members were displeased with the lack of oversight protections in the Department of the Treasury proposal.
• Representative Sherman attacked the plan by Secretary of the Treasury, Henry Paulson, for endowing the Treasury with sweeping authority. He recommended a cosigner on all decisions and phased authorization.
• Representative Hensarling proposed a temporary suspension of the capital gains tax to inject liquidity into the market. He further suggested suspending mark to market accounting and embraced executive compensation limits.
• Chairman Frank noted that the procedures for floor debate on the measure will be bipartisan. He also noted that Congress will be pursuing immediate tax relief for preferred stock holders in Fannie Mae and Freddie Mac.

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What should you do if your company receives an inquiry from a governmental or other regulatory organization?

It is critical to consult with outside counsel immediately. Here are a few important guidelines when you receive that initial phone call—

• Tell the regulator that you need to discuss this matter with outside counsel and do not commit the company to any course of action or undertaking requested by the regulatory body, other than a general agreement to cooperate in the inquiry.
• Do not make any employees available for interviews with regulators or investigators-even “informal” telephone interviews-without contacting outside counsel first.
• Do not divulge any potentially privileged information.
• Immediately identify and preserve any and all information that may be possibly related to the subject of the inquiry.
• Do not issue any internal statement within the company regarding the inquiry until speaking with outside counsel. In fact, until you speak with outside counsel, it would be best to limit knowledge of the inquiry within the company to those people who need to know about it.
• Do not issue any public statement regarding the inquiry until speaking with outside counsel.

For further questions, please contact—

• Jim Benjamin, 212.872.8091, New York