With a new administration comes new policies and enforcement priorities. Today, as we kickoff our new series “2021 Enforcement Horizon,” we take notice of what has already been a very active administration, and we consider where the new administration will focus its civil and criminal enforcement efforts in the months and years ahead. Though it has been just over two weeks, the Biden administration hit the ground running, issuing a flurry of executive orders, actions, and memoranda with sweeping implications affecting a wide range of key issues, including the economy, health care, immigration, civil rights, and the environment.
In criminal enforcement, the Department of Justice has rescinded the Trump administration’s policy that prosecutors charge the harshest available crime and seek the stiffest penalties. We believe that this action does not presage a less vigorous approach to criminal enforcement under the Biden administration, but instead a return to permitting federal prosecutors to exercise more discretion.
The Biden administration shows no signs of slowing down and is on pace for the most active first 100 days in recent history. We can expect additional activity in a variety of areas of interest to our clients, including:
COVID-19 Enforcement:
Given the substantial government dollars allocated to COVID-19 relief, we expect an increase in efforts to investigate and prosecute COVID-19-related fraud. At both the state and federal level, enforcement positions and committees have been created solely for this purpose. For example, the CARES Act created a Special Inspector General for Pandemic Recovery, the Pandemic Response Accountability Committee (PRAC), and the House Select Subcommittee on the Coronavirus Crisis to oversee COVID-related government spending. At the state level, efforts to uncover fraud are also being coordinated. For example, the Delaware U.S. Attorney’s Office and Delaware Attorney General formed a COVID-19 Anti-Fraud Coalition to monitor, identify, and investigate pandemic-related misconduct.
Notably, certain actions may be exempted from COVID-related prosecutions. For example, former Department of Health and Human Services (HHS) Secretary Alex Azar issued a waiver for Stark Law sanctions to ensure that healthcare tools and services could be made more readily available where needed. And an HHS Office of Inspector General policy statement issued on April 3, 2020, notes that arrangements satisfying the Stark Law blanket waivers will not be subject to additional scrutiny under the Anti-Kickback Statute.
FCPA Enforcement:
We expect aggressive Foreign Corrupt Practices Act (FCPA) enforcement to continue under the Biden administration. The number of individual prosecutions under the FCPA have markedly increased over the past five years and will likely persist heading into 2021. FCPA investigations of public companies will likely tick upwards during the Biden administration. Although newly initiated enforcement actions under the Trump administration remained consistent with historical averages with six of the 10 largest FCPA settlements in history resolved during his tenure, the number of new FCPA-related investigations disclosed by public companies dropped precipitously during Trump’s four years. According to data collected by Stanford Law School’s FCPA Clearinghouse, only four new Department of Justice (DOJ) and/or Securities and Exchange Commission (SEC) FCPA-related investigations were disclosed by public companies in 2020, with six in 2019, 15 in 2018, and 20 in 2019. In contrast, 27 such investigations were disclosed in 2016 – the final year of the Obama administration.
Although the number of newly charged cases may decrease in 2021, we expect continued cross-border collaboration. Last year, U.S. enforcement agencies cooperated with global enforcers in Brazil, El Salvador, France, Guatemala, Guernsey, Italy, Luxemburg, Malaysia, Panama, Singapore, Switzerland, and the United Kingdom to resolve FCPA investigations. Corporations that resolved FCPA investigations in 2020 were participants in numerous industry sectors, most frequently operating within energy, life sciences, consumer goods, or financial services. We expect these trends to continue in 2021.
Financial Institutions:
We can expect the Biden administration to devote more attention to consumer fraud, spearheaded by the Consumer Financial Protection Bureau (CFPB). The nomination of Rohit Chopra, former CFPB assistant director and student loan ombudsman, signals a shift back to the more active and aggressive posture of the CFPB as established under the Obama administration. Increased oversight and enforcement actions against for-profit colleges should be expected. Larger companies should also expect increased scrutiny – especially with the surge of consumer complaints stemming from the pandemic. And a revival in fair-lending investigations of disparities in loans by race or ethnicity is anticipated. We will also be on watch for new rules and regulations that enhance consumer protections. Expect a regulatory response to recent stock market activity involving GameStop. Although the fallout of this surprising market behavior remains unclear, possible responses include a bar on short selling, safeguards on shutting down trades to insure equity in access, and increased disclosure requirements for stock brokers on the extent to which their customers make or lose money.
Consumer Protection:
Federal Trade Commission (FTC) and privacy-related enforcement is expected to increase under the Biden administration. Enhanced scrutiny over the size, power, and anti-competitive practices of Big Tech giants can be expected, especially if Lina Khan is tapped as FTC commissioner. Kahn was legal counsel for the House of Representatives Antitrust Subcommittee in its 16-month investigation of Big Tech powerhouses. Additional scrutiny over the monetizing of consumer data can also be expected. In mid-December, the FTC launched a probe into the data collection and monetization practices of nine prominent tech companies. The information collected from this investigation could inform future enforcement action.
Environment and Climate:
Biden has promised to rigorously pursue cases against polluting corporations and devote increased attention to environmental justice. In pursuit of this goal, he has already issued an executive order directing the DOJ to consider establishing an environmental justice office. The order calls for greater coordination and cooperation across the DOJ, and with the EPA to achieve more “timely remedies for systemic environmental violations and contaminations, and injury to natural resources.” It also calls for increased enforcement for environmental violations that disproportionately impact underserved communities.
Civil Rights:
Major changes can be expected in priorities and enforcement actions from the Civil Rights Division of the DOJ. Where the Trump administration abandoned, and indeed undertook active litigation against efforts to safeguard voting rights and maintain affirmative action, the Biden administration will renew focus on these efforts with an emphasis on racial equality. Expect the Biden administration to rigorously enforce anti-discrimination laws, including Title III of the Americans with Disabilities Act. There will likely be an uptick in investigations into websites, mobile apps, and other technology that are not accessible to people with disabilities. We can also expect a return to consent decrees – a powerful tool for fighting police misconduct, and an increase in investigations of local police departments to eliminate discriminatory practices.
Moving Forward:
As the Biden administration progresses through its first 100 days and beyond, companies should fortify their compliance programs as a proactive defense against enforcement actions. Companies should look internally and evaluate risks with an eye toward administration priorities. This risk assessment can help inform updates to compliance protocols. Efforts to prioritize compliance should be well documented. Finally, companies should develop a crisis management plan with legal counsel, with protocols for activating communications, legal, and policy advisors when calamity strikes. See https://www.jdsupra.com/legalnews/congressional-and-government-2248914/.
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