Since the declaration of a national emergency on March 13, the unprecedented COVID-19 pandemic has resulted in a number of federal agencies taking steps to expedite, relax, or even bypass certain review processes or other standards. The relief from typical procedures is designed to break through the usual regulatory requirements and expedite the availability of products and services, as well as private sector action to support public health needs and the economy during the crisis.
These expedited processes present opportunities for companies to utilize unprecedented flexibility in terms of government regulations and approvals, to continue doing business during the economic turmoil, and to respond to the COVID-19 pandemic. While not exhaustive, a summary of some of the recently announced expedited reviews follows below along with common considerations for companies.
- On June 4, President Trump issued an Executive Order, entitled “EO on Accelerating the Nation’s Economic Recovery from the COVID-19 Emergency by Expediting Infrastructure Investments and Other Activities,” to expedite certain infrastructure projects by requiring federal agencies to take “all reasonable measures to speed infrastructure investments, ” including by exercising emergency statutory provisions in the National Environmental Policy Act (“NEPA”), the Endangered Species Act (“ESA”), the Clean Water Act (“CWA”), and other environmental laws to bypass procedural requirements. The Executive Order applies to transportation and civil works projects, as well as other infrastructure, energy, environmental, and natural resources projects on federal lands.
- On May 14, the United States Patent and Trademark Office (“USPTO”) began a pilot program accepting requests from small or micro entities for prioritized examination of up to 500 qualifying patent applications related to COVID-19 without requiring payment of certain fees associated with prioritized examination. Under this pilot, the USPTO will advance out of turn certain patent applications related to COVID-19 for examination, resulting in their prioritized examination. The USPTO aims to provide final disposition of patent applications in the pilot in one year or less after it grants prioritized status.
- On May 4, the Securities and Exchange Commission (“SEC”) temporarily amended the regulation that governs crowdfunding to make it easier for businesses looking to raise immediate capital.The amendments shorten the time it takes for businesses to get funds and simplifies the necessary paperwork.There are also additional provisions to protect investors seeking to help struggling businesses.
- On April 30, the Food and Drug Administration (“FDA”) issued non-binding guidance regarding the exemption and exclusion from certain requirements of the Drug Supply Chain Security Act (“DSCSA”) during the COVID-19 public health emergency. This guidance exempts certain “covered COVID-19 products,” from certain product tracing and identification, wholesale distribution, and transaction requirements under the DSCSA for the duration of the COVID-19 public health emergency. The guidance is intended to ensure that prescription drug products to combat COVID-19 are effectively distributed throughout the supply chain.
- The FDA also issued a number of emergency use authorizations (“EUAs”) regarding personal protective equipment, antibody and other tests, ventilators, and other medical devices and drug products. This allows, with certain restrictions, introducing into commerce unapproved products as well as the unapproved uses of products.Additional analysis on the antitrust guidance is available here.
- On March 24, DOJ Antitrust Division and the Federal Trade Commission (“FTC”) issued a joint statement regarding expedited antitrust procedures and providing guidance for collaborations of businesses working to protect the health and safety of Americans during the COVID-19 pandemic. The Agencies “will aim to respond expeditiously to all COVID-19 related” requests under the DOJ’s Business Review Process and the FTC’s Advisory Opinion Process, which allows the public to ask the Agencies to evaluate proposed conduct. The Agencies committed to resolve such questions within seven calendar days of receiving all necessary information, as opposed to the typical months-long evaluations. Additional analysis on the antitrust guidance is available here.
Each program outlined above has differing requirements and nuances that should be fully understood before a company utilizes them. But while each program is different, there are common considerations that companies should keep in mind.
Common Considerations When Utilizing Expedited Review
1. Expedited review may lower the bar for immediate compliance, but may not constitute permanent waiver. The requirements to satisfy the expedited review process may be less than the normal process in terms of documentation submitted and required representations. But even so, companies should be prepared to provide more fulsome support in the future. And companies should not take shortcuts when it comes to the veracity of any representations made to the agencies. Some of the expedited review processes do not replace the need for full review, rather, they provide an interim approval while the lengthier review process proceeds.For example, the FDA has subsequently revoked EUAs when it became clear that the risks of the unapproved uses were not justified by the purported benefits.
2. The scope of relaxed standards is limited and can result in complex compliance issues. Thus far, the expedited review processes or relaxed standards announced by the federal government require some nexus to responding to the COVID-19 pandemic, or to public health and safety.For companies that provide goods and services across a broader spectrum, this can result in essentially two sets of compliance obligations for different products—one relaxed and one customary.For example, while the FDA relaxed its requirements under the DSCSA for certain COVID-19 related items, the guidance explicitly states that if “distributing product during the COVID-19 public health emergency for purposes other than emergency reasons then that trading partner must comply with all applicable DSCSA requirements with respect to distribution of such product.”
3. Expedited review now may not preclude federal enforcement in the future. While it is still early in the process for most of these expedited review programs, agencies are reserving their right to future enforcement measures in certain circumstances.For example, on May 15, DOJ issued an expedited business review letter to the National Pork Producers Council regarding its intentions to share best practices with its members for depopulating unmarketable hogs.DOJ found that the practice could proceed and would not be challenged as anticompetitive for one year, but also noted: “In accordance with our normal practices, the Department reserves the right to bring an enforcement action in the future if the actual operation of the proposed conduct proves to be anticompetitive in purpose or effect.”In other words, companies should continue to be mindful of the antitrust laws and recognize that an approved business review letter is often limited to the facts described therein.
4. Expedited review now may not preclude state enforcement or citizen suits. States have broad authorities under a variety of antitrust or consumer protection statutes that often overlap with federal authorities.Companies must be mindful of specific state and local laws (including emergency restrictions put in place during the pandemic).Additionally, under antitrust and environmental laws, third-parties with standing can often bring suit to enjoin certain conduct.Depending on the relevant statutory provisions, agency approval opinions or letters do not necessarily immunize companies from civil liability or private actions, and courts may take differing views as to the effect of such approvals.
5. Companies may need to revisit their compliance program and ensure diligence. Even though federal agencies may be relaxing standards in the short-term, companies need to continue to remain diligent and maintain effective compliance programs.The recently amended DOJ guidance on effective compliance programs considers whether “the risk assessment [is] current and subject to periodic review.”To the extent that utilizing expedited processes exposes the company to increased risk, companies may need to revisit their compliance program to ensure the risk is covered.More generally, companies recognize that there may be increased pressures during a pandemic—and the associated economic turmoil—to rush transactions, boost revenues, hasten approvals, or shortcut due diligence. But these practices increase the risk of bribe, fraud, or other improper behavior.A company should exhibit heightened diligence during these times, including through investigating internal complaints.
6. Companies should provide employees with guidance on compliance during the pandemic. Companies should also consider refreshing employees through training or communications to reinforce specific compliance concerns in light of expedited reviews specifically, or the pandemic more generally. Counsel can work with companies to craft guidance, for example, on how to appropriately collaborate, share information, or benchmark with competitors during the crisis.
7. Expedited review processes may be challenged in courts. It is possible that the legality of the expedited review measures generally will be challenged.For example, some environmental groups have already signaled their intent to challenge the June 4 Executive Order waiving environmental review under various laws for infrastructure projects.And as discussed above, specific instances of projects or approvals expedited under one of the emergency procedures may also separately be challenged in court.
8. Expedited review may be short-lived. Whether these temporary measures will evolve into a new normal remains to be seen.Many of these expedited efforts are limited in application—i.e., to utilize the expedited review requires a nexus to COVID-19 specifically, or health and safety generally.Scaling up expedited review to include more industries would likely overwhelm the agencies’ limited resources.For industries that can take advantage of the expedited review, it may be advantageous to do so now.
ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm of approximately 725 lawyers practicing throughout a network of 13 offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy and technology sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.