O'Melveny Insights 2023

2022 Insights 2023

To Our Clients and Other Friends

Bradley J. Butwin Chair At O’Melveny we all share a common goal: helping you achieve your most important objectives. That means we treat each new year as an opportunity to take stock and prepare you for a host of challenges—some familiar, some unprecedented. And it’s why we are focusing this publication not on the year that just ended but the one that lies ahead. Given the sheer number of major legal and regulatory changes with the potential to affect your business, we invited a number of our lawyers to share their perspectives on opportunities and challenges that likely will be top of mind for many of us in the near future. As you review Insights 2023, consider it both a sampling of things to come and an invitation to reach out and engage with us about a future that some of us anticipate with enthusiasm and some with a measure of trepidation, perhaps inevitable after three years of a life-changing pandemic. Our authors, like the topics they have chosen, are a diverse group reflecting our belief that collaboration among people with different experience and viewpoints inspires the most creative solutions and the best outcomes. So, regardless of whether you approach 2023 with a glass half full or half empty, all your friends at O’Melveny consider our continued collaboration with you a reason to anticipate the road ahead with confidence and excitement. May your new year bring you great success and well-being,

Insights Table of Contents


1 1 Antitrust Enforcement A Vigorous Expansion of Competition Law Ian Simmons | Julia Schiller VIDEO PLACEHOLDER

2 Government enforcers reinvigorating—some would say rewriting—antitrust law. A year and a half ago, the new administration made headlines with its Executive Order on Promoting Competition in the American Economy, a blueprint for the vigorous “whole-of-government” enforcement of the antitrust laws. It was more than rhetoric. Since then, government enforcers have been promoting a new vision of competition law, one that looks beyond the welfare of consumers to the protection of individual businesses and their workers. The enforcers’ theories eschew the long-established focus on price, quality, and quantity to embrace broader goals of social justice. They are reinvigorating—some would say rewriting—antitrust law. 01

3 Monopsony or Buyer-Power Theories, Especially in the Labor Context. These cases allege that competitors have agreed to restrict worker compensation or that parties are merging to increase their power to artificially depress wages. Main Street Protectionism. These cases take on the so-called “too big to fail” phenomenon by: challenging vertical mergers, which grow the size of a business without consolidating a specific market; scrutinizing horizontal mergers, particularly those that involve incentives for research and innovation; viewing merger efficiencies with increased skepticism; exploring refusal-to-deal theories when firms use their power to hobble nascent competitors; and reintroducing criminal liability for monopolization. Shaping the New Economy. Another iteration of Main Street protectionism, these cases target technological innovators that have earned a loyal consumer following and have allegedly leveraged that position to buttress their core business and take control of other markets. Lurking in the subtext are questions over the role of data, privacy, and artificial intelligence in the economics of antitrust: What counts as “payment”? How can a “free” good or service become anticompetitive (if at all)? And is a diminution in privacy protections a competitive harm? Directing Millennial-Era Economic Theories. These cases aim to develop the law that governs a changing economy. For example, two-sided markets, and the law governing them, date back well before social media. But the dynamics of two-sided transaction platforms, a digital-age development, have put pressure on courts to explain how the law should be advanced to define those markets, measure competitive harm, and assess damages. O’Melveny features a ‘prominent antitrust team with comprehensive litigation expertise and a strong merger clearance practice, handling major global transactions.’ —Chambers USA Antitrust was designed to evolve with economic realities. It began as a statute only a few sentences long. But what followed—both legislatively and judicially—covers volumes. This most recent era of reinterpretation has spawned new and aggressive approaches to enforcement:

4 Antitrust Enforcement Achieving victory in the 1st jury trial of a 2-sided market case To execute this far-reaching agenda, enforcers have used every tool at their disposal in ways unseen for years—invoking the Sherman Act for criminal monopolization claims, broadening the application of the Federal Trade Commission Act to a range of “unfair practices,” reinvigorating the Clayton Act’s prohibition on interlocking directorates, and reviving the Robinson-Patman Act for rebates and fees paid to pharmacy benefit managers. And while their efforts against brandname Fortune 100 companies have received the most attention, enforcers have been equally active in investigating or prosecuting claims against smaller companies, such as construction contractors and healthcare staffing firms. Further, at the behest of the current administration, enforcers have announced a particular interest in agriculture, airlines, information technology, prescription drugs and healthcare, and telecommunications. In short, companies across the economy— especially those launching strategic initiatives or shifting business practices or policies—must consider both traditional antitrust rules and the principles emerging from the recent flood of enforcement efforts. Knowing how to construe agency guidelines, policy directives, and public statements will help companies assess potential antitrust risk, leverage case law to defend existing business models, and endorse long-term, procompetitive business initiatives that will not call for costly course corrections. Companies must consider both traditional antitrust rules and the principles emerging from the recent flood of enforcement efforts. Highlights include: 6 antitrust trials over an 11-month period Securing acquittal in the 1st Justice Department criminal Antitrust prosecution to ever go to a 3rd trial

5 Practice What You Preach As ESG Expectations Rise, So Do the Risks of Not Measuring Up John Rousakis | Hannah Y. Chanoine | Eric Rothenberg VIDEO PLACEHOLDER

6 Companies large and small want to demonstrate responsible corporate behavior, but an ESG label can come at a cost. As the pressure to meet ESG expectations increases, so do the potential risks for failing to measure up. Investors, regulators, employees, and the public now closely scrutinize ESG-related statements, demand more disclosure, and, increasingly, take legal action if they don’t like what they see. 02

7 Voluntary ESG Disclosures Can Invite Regulatory Scrutiny and Litigation. Last year, the SEC charged mining giant Vale S.A. with making false and misleading statements about dam safety—not in required company filings but in voluntary sustainability reports and ESG-related presentations and webinars. The charges relate to a dam collapse that killed 270 people and led to a loss of US$4 billion in market capitalization. The case is a warning that regulators will look beyond mandatory regulatory filings for statements that might mislead investors. “Greenwashing” Lawsuits on the Rise. ESGadjacent statements are also increasingly the target of consumer class actions and regulatory action. As companies have recognized the value of green branding, they’ve been hit with a growing number of “greenwashing” claims under consumer-protection laws. In these cases, regulators and private plaintiffs seize on vague labeling statements—such as “sustainable,” “recyclable,” “responsibly sourced,” or “carbon neutral”— to allege that consumers are misled into buying products. Upcoming revisions to the FTC’s Green Guides are likely to result in a further bump in these lawsuits. The Greens Guides, which provide guidance on how consumers are likely to interpret certain sustainability claims and how these claims can be substantiated, are in the process of being updated, with the agency requesting public comments by February 21, 2023. Among other changes, new guidance on carbon offsets and “net zero” emissions representations are expected, with companies facing potential exposure to enforcement actions and consumer class actions for alleged failures to comply. Companies looking to minimize litigation risks should consider maintaining reliable data that support their sustainability-related statements, ensure compliance with federal guidance and state law, and offer aspirational rather than definitive statements on ESG attributes. As companies navigate this increasingly complex ESG landscape, they should consider these litigation trends and upcoming reporting changes to ensure that their responsibility initiatives attract the right kind of attention: O’Melveny’s ESG Task Force can assist clients in navigating the complex regulatory and litigation landscape as they look to frame ESG benchmarks and disclosure commitments.

8 Practice What You Preach Mandatory ESG Supply-Chain Diligence is Coming (at Least in the EU). Along with minding their voluntary statements, companies that do business in the EU will soon have more required ESG disclosures. The EU has proposed a Corporate Sustainability Due Diligence Directive that will add requirements for larger EU companies and non-EU companies with €150 million of business in the EU (or less for certain sectors deemed high risk). Those companies will have to identify actual or potential adverse human rights and environmental impacts in their own operations and throughout their value chains, take steps to prevent or mitigate those impacts, and produce climate plans demonstrating that their business models are compatible with the transition to a sustainable economy and with limiting global warming to 1.5 degrees Celsius. This is one of several directives expected to be enacted that will significantly increase diligence and reporting burdens on companies located or operating in the EU, and follows similar laws already in place in member states France and Germany. Efforts to Harmonize Sustainability Reporting Standards are Increasing. Standards for voluntary statements will change too. Most of the largest public companies now voluntarily report ESGrelated information based on standards set by the Global Reporting Initiative. In 2022, the International Sustainability Standards Board (ISSB) released drafts of its own reporting standards for sustainability and climate-related disclosures. The ISSB aims to harmonize the various voluntary standards, a process that could shape the mandatory disclosure efforts underway in the EU, the UK, and the US. With US companies likely to become subject to EU reporting under the new supply-chain directive, harmonized standards should reduce reporting burdens. Investors, regulators, employees, and the public now closely scrutinize ESG-related statements, demand more disclosure, and, increasingly, take legal action if they don’t like what they see. 7 of O’Melveny’s offices worldwide are LEED-certified and our New York office uses 100% renewable wind energy.

9 Junaid Chida | Phillip Oldham | Arthur V. Hazlitt Clean Energy’s Bright Future Not Even a Recession Can Cast Shade VIDEO PLACEHOLDER

10 Every day, the world moves closer to a clean-energy future. And as the unprecedented shift away from fossil-based fuels and toward zero-carbon sources continues, it is the private sector, not governments, leading the way. Across all sectors of the global economy, corporations hope to cut their net carbon emissions to zero in the not-too-distant future. Capital providers and Wall Street investors have driven much of this change, which now extends even to traditional energy companies. No longer in the hands of early adopters and pureplay renewable energy developers, the transition to zero-carbon energy has gone mainstream. 03

11 And beyond adding new tax credits and enhancing existing ones, the IRA creates greater flexibility and new opportunities for clients to capture the value of tax credits using structures tailored to their investment goals. For instance, the IRA permits taxpayers to transfer many of these tax credits to third parties and, in more limited instances, to claim refundable credits and receive cash payments from the Treasury. By allowing investors to realize value from tax credits in these new ways, the IRA will make renewable projects attractive to a broader array of investors and ultimately encourage additional investment in the industry. Along with supporting investment in wind, solar, and other energy projects that traditionally have been and will continue to be supported by tax incentives, the IRA also creates significant tax credits for nuclear energy projects, which will likely encourage additional development of those projects. Combined, these credits and incentives are a game changer for utilities. One leading, integrated utility, for example, has projected that its nuclear plants in North and South Carolina will qualify for nuclear production tax credits of several hundred million dollars a year beginning in 2024. The utility could also have up to 17 gigawatts of connected solar power over the next 10 years, with each gigawatt of solar equal to about US$60 million in annual production tax credits. And the utility estimates that it could also make up to US$4.5 billion of storage investments over the next 10 years to qualify for investment tax credits. While private industry and investors lead the way, governments are pitching in, too. The newly enacted Inflation Reduction Act (IRA) amounts to one of the most consequential clean-energy bills in recent memory, breathing new life into existing tax credits for proven renewable energy sources, such as wind, solar, and energy-storage solutions; creating new opportunities for investment in novel technologies; and boosting incentives for producing electric vehicles. O’Melveny’s energy group shines with ‘the expertise, firepower and bench to handle any situation.’ —Chambers USA

12 Clean Energy’s Bright Future The IRA’s structure also means it should continue to incentivize renewable energy investment even if the US economy slides into a recession. Traditionally, helping the environment is given low priority during challenging economic periods. But the IRA’s incentives will continue regardless of any downturn. For instance, by allowing developers and owners to transfer tax credits and claim certain refundable credits, the IRA expands the scope of taxpayers that can take advantage of those credits beyond companies with sufficient tax capacity to benefit from tax credits. We stand at an inflection point in the global energy market: a confluence of proven green technologies, technological breakthroughs in the design and manufacturer of large storage battery systems, and the growing adoption of hydrogen. All this spells transformative change—change that we are already seeing with our clients on the ground. This transition, like any other, will have ups and downs, but there are tremendous opportunities for entities that are able to take advantage of the public and private incentives that have been created in this space. There are tremendous opportunities for entities able to take advantage of the public and private incentives created in the energy space. The Inflation Reduction Act amounts to one of the most consequential clean-energy bills in recent memory.

13 William K. Pao | Bill Martin | Scott Sugino Crypto Crackdown Regulating a Post-FTX World VIDEO PLACEHOLDER

14 What happens to crypto if the SEC leans harder on enforcement to regulate the market? The question of what will happen to the crypto market in 2023 if courts rule that digital assets are, in fact, securities, emboldening the SEC, is no longer the question. Or at least not the only question, because, securities or not, investigators and regulators— at both the federal and state levels—will not hesitate to pursue any company in the cyberworld. The SEC hasn’t waited for any court to rule on crypto, and after the astonishing collapse of FTX in November, no regulatory agency will hesitate to investigate any entity in the digital asset world. The SEC, for one, had already been taking a hard line, initiating enforcement actions across broad parts of the industry. And, in 2023, all regulators—the DOJ, the CFTC, FinCEN, the CFPB, and the IRS—are likely to continue the aggressive crack down. 04

15 Why? First, there are so many people losing so much money in crypto that calls to investigate and enforce will drown out those demanding new regulations; and second, the SEC likes the rule it has: Howey, a four-prong test based on a 1946 Supreme Court case, is what now determines whether an asset is a security and subject to SEC oversight. And even if the SEC did fire up its regulation machine tomorrow, nothing would likely be adopted in 2023. In fact, the SEC has doubled down on enforcement, beefing up its crypto staffing—even hiring blockchain experts—and in light of FTX’s demise, more investigators are surely on the way. There are whole swaths of the crypto business that haven’t been intensely investigated…yet. At the dawn of the crypto-universe, investigators had easy picking: the fraudsters, dissemblers, and get-rich-quick schemers were not hard to spot. With the collapse of Terra, Celsius, and FTX—which many had thought was the golden child of crypto— regulators will now likely take a hard look at everyone, giving no one the benefit of the doubt. The industry has lost two-thirds of its value in one year—from US$2.25 trillion in December 2021, to less than US$800 billion in December 2022. For a time, many questioned whether the train had left the station: surely regulators would not take action that would threaten a US$2 trillion-plus industry. Now, consumers and investors have taken heavy losses and Congress and others are questioning where were the regulators. If there’s ever a time to act, it is now. Cries that the SEC is “regulating through enforcement” instead of by rules and regulations will be heard again in 2023, though new rules and regulations are unlikely to be forthcoming. O’Melveny is ‘able to find simple and practical solutions to complex matters.’ —Client testimonial, Chambers FinTech

16 Crypto Crackdown In 2022, regulators accused crypto companies of, among other offenses, offering unregistered securities, manipulating the market, and trading unregulated derivatives—standard operating procedures in the crypto world. As enforcement ramps up, who will stop the regulators? Certainly not those who lost money or government officials acting on behalf of those who lost money. This is not to say that the agencies will have smooth sailing in 2023. Lawyers representing digital asset projects are more and more sophisticated, and projects whose very existence are threatened will have no choice but to push back against the regulators. With the frenzy of enforcement to come, there will surely be a regulators’ turf battle. It is also possible that the turf will relocate—to, say, somewhere warmer. There are places such as Bermuda and the Bahamas with climates more receptive to digital products, where there is less to fear from US regulators. But as losses mount in the midst of a crypto winter, warm places may be harder and harder to find. After FTX’s astonishing collapse, no regulatory agency will hesitate to investigate any entity in the digital asset world. For the 5th consecutive year, O’Melveny has been named among the top law firms serving fintech companies. —Chambers FinTech

17 Greta Lichtenbaum | Sid Mody | John Dermody US National Security’s Impact on Trade with China VIDEO PLACEHOLDER

18 With the geopolitical rivalry between the US and China escalating, President Biden toured Taiwanese chipmaker TSMC’s future manufacturing plant in Arizona late last year, touting the company’s plans to invest US$40 billion on upgrades and expansion—one of the largest foreign direct investments in US history. Greeting Biden at the event, TSMC’s chairman thanked him personally for the US government’s “continual collaboration.” 05

19 These cumulative actions are having profound impacts on the technology development strategies of companies that operate in both the United States and China, as well as their ability to offer products and services in those markets. As noted in the Biden Administration’s recent National Security Strategy, China’s emergence as both the “most consequential competitor” and “one of the largest trading partners” will require approaches that “fall outside the bounds of existing rules and regulations.” As the Administration pursues “responsible competition” with China, companies should anticipate that US national security strategy will continue to shape how the government regulates domestic and foreign technology, particularly if there is a nexus to China or other countries of concern, such as Russia. The following developments illustrate how US policy will impact decisions on both domestic and outbound investment, supply chain, exports, and imports: Commerce. The Department of Commerce has begun implementing the CHIPS Act, which appropriated US$52.7 billion to support the American semiconductor industry. That funding aims to not just buoy manufacturers, but incentivize the development of the semiconductor ecosystem, which includes suppliers, workforce development, and research and development. It also comes with strings attached. In addition to limitations on investing in and doing business with China, Commerce will prioritize projects that follow information security standards, supply chain security, and cybersecurity best practices. These The US government’s support for TSMC exemplifies the extent to which national security concerns about China have driven successive US administrations to pursue industrial incentives, novel regulatory regimes, and impose heightened restrictions related to technology and infrastructure. US offices among “the elite” for international trade: export controls and economic sanctions. —Chambers USA

20 National Security conditions are designed to simultaneously grow and safeguard the domestic semiconductor industry—a direct intervention by the United States in the market that represents a marked shift in industrial policy. Wielding another regulatory stick, Commerce is in the final stages of implementing its information and communications technology supply chain regulations to address threats posed by the use of certain foreign technology and software applications in the United States. The regulations will establish a regime for reviewing and potentially prohibiting the use of certain foreign technology, particularly where it creates a risk that adversaries could exploit Americans’ sensitive data. Industry & Security. In October 2022, the Biden Administration took another step toward undermining Chinese advances in high tech by implementing new restrictions on China’s access to US semiconductor technologies. Commerce’s Bureau of Industry and Security imposed a series of controls on the export of advanced computing and semiconductor manufacturing items to China as well as transactions related to supercomputer end-uses in China. Aimed at addressing US national security and foreign policy concerns over China’s strategic and military goals, these measures seek to restrict China’s “ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors.” They supplement prior rulemakings designed to restrict exports for military use and to firms that further Chinese strategic interests, as well as economic sanctions and import restrictions designed to counter perceived systematic Chinese government human rights violations. FCC. In November 2022, the Federal Communications Commission issued a Report and Order that will severely restrict the import and use of certain foreign technology perceived to be a national security threat—namely, telecommunications and video surveillance technology produced by Huawei, ZTE, Hytera, Dahua, and Hikvision. The order builds on Trumpera restrictions that prohibit the use of these technologies by the US government and federal contractors. It would effectively prohibit the American public from using this technology based on national security concerns, an approach that is markedly broader than the existing restrictions. The National Security Strategy asserts that the United States “must invest in our innovation and industrial strength, and build our resilience, at home.” Between semiconductor restrictions, export controls and economic sanctions, CHIPS Act implementation, and supply-chain restrictions, national security concerns are increasingly driving US economic policy. As businesses evaluate their risk and commercial growth strategies, they should consider how national security issues—particularly those related to technology—will shape the regulatory and competitive environment. As the Biden Administration pursues “responsible competition” with China, companies should anticipate that US national security strategy will continue to shape how the government regulates domestic and foreign technology.

21 Climate Change Heating Up Water Wars Clashes Across the US Barton “Buzz” Thompson | Heather Welles VIDEO PLACEHOLDER

22 Water wars—fought for centuries in the American West—are now raging across the country, as states and water users battle over diminishing supplies. In 2022, 85% of the nation suffered abnormally dry or drought conditions. Climate change is at least part of the reason, raising the specter of even worse shortages in the future. Not only are droughts more frequent and more severe, but higher temperatures are also reducing snow fall, increasing evaporation, and generating greater demand even as supplies decline. 06

23 Areas of the South, Southeast, Midwest, and High Plains also were parched last year. Following decades of limited rainfall, the two major reservoirs on the Colorado River—the lifeblood of the Southwest—are approaching “dead pool” levels, which would cut off both water availability and hydroelectric production. Scientists estimate that the West has not been this dry in more than 1,200 years. When tensions between states spill over, the disputes fall under the exclusive jurisdiction of the US Supreme Court. Mississippi has sued Tennessee, arguing before the Court that the city of Memphis was stealing its groundwater because the city’s wells were causing groundwater under Mississippi to flow across the border into Tennessee. And Florida sued Georgia, alleging that Georgia’s rapacious thirst for water dramatically reduced Apalachicola River flows, harming both the river’s ecosystem and Florida’s oyster fisheries in Apalachicola Bay. Even voluntary agreements, which were once successful in resolving interstate water disputes, are failing to avert new lawsuits in the face of droughts and other shortages. Since the early 20th century, states have agreed to Congressionally approved “interstate compacts” to avoid the time, cost, and risk of litigation. These compacts spell out how much water each state can divert from shared rivers and resolve other disagreements. But when shortages hit, states often find themselves unable to agree on exactly what the compacts require, and they end up before the Supreme Court after all. In the last decade, the Supreme Court has had to resolve disputes over both the Yellowstone River Compact (Montana, North Dakota, and Wyoming) and the Pecos River Compact (New Mexico and Texas). Recently, the dwindling waters of the Colorado River have generated heated disputes over the meaning of the Colorado River Compact, which has guided river operations for a century. It remains to be seen whether that compact also comes under the scrutiny of the justices. Whiskey is for drinking; water is for fighting over. —Mark Twain Almost no part of the country has been spared in recent years. California endured the driest three years in its recorded history from 2020-22.

24 Climate Change Heating Up Water Wars Shortages have prompted other kinds of litigation as well. As climate change reduces surface supplies, users often turn to groundwater. Overpumping can result in falling groundwater tables and various associated problems, including surface subsidence. So, not surprisingly, groundwater adjudications, in which courts resolve disputes over groundwater withdrawals, are also on the rise. California hoped to avoid such lawsuits by passing a law in 2014 that requires local agencies to sustainably manage the state’s groundwater basins, but the administration of that law has already led to six new groundwater lawsuits, and far more are likely. Water shortages have also led Indian tribes to file claims to water as a matter of treaty rights and federal law. The Supreme Court recently agreed to hear a case involving the Navajo Nation’s claim to Colorado River water. Finally, environmental organizations and governmental agencies are bringing lawsuits to ensure that water users leave sufficient water in rivers and streams to protect freshwater ecosystems in the face of climate change. In short, climate change is driving severe drought in more and more parts of the United States. In response, water users and environmental advocates are turning to the courts to claim whatever they can of the shrinking supplies. The disputes—some of which involve hundreds of parties—are complex enough to make even negotiating voluntary settlements a long and expensive process. Parties who get out ahead of these issues and focus on problemsolving can better control their fate and reach favorable resolutions. O’Melveny is one of the few major law firms with a dedicated water practice, drawing on 100+ years of experience advising industry clients. In 2022, 85% of the US suffered abnormally dry or drought conditions.

25 Monica Hwang | Silvia Smith Outlook for Liquefied Natural Gas Industry Tonnes to Talk About VIDEO PLACEHOLDER

26 The past year saw a remarkable turnaround in the liquefied natural gas (LNG) market, with a dramatic increase in demand for development of US LNG projects. High LNG and gas prices in Europe, driven even higher by Russia’s invasion of Ukraine, made clear to importing countries the need to boost their energy security by developing more LNG supply sources. Developers of US LNG export projects captured the majority of long-term LNG contracts concluded last year, making 2022 a banner year for the industry. But as a new year begins, the LNG industry grapples with a few key uncertainties. 07

27 Arbitrage Opportunities in Europe May Become More Elusive. The current boom began in 2021 with the spike in European gas prices, then took off after the invasion of Ukraine focused attention on energy-supply security. LNG sellers responded quickly to higher European gas prices, shipping excess LNG and diverting other available cargos to the continent. But several factors have now made it harder to capitalize on continued high prices in Europe. Chief among them is decreased demand, which has been reported and is expected to continue. The rush to supply Europe with LNG may also be overwhelming the capacity of the continent’s infrastructure. At one point this fall, more than 30 LNG ships were reported to be anchored off the Spanish coast, awaiting their turns at the few available LNG unloading terminals. And once that cargo is unloaded, there may be issues with shortage or lack of downstream pipeline capacity to transport the natural gas to where it is most needed. In the year ahead, those seeking arbitrage opportunities will need to pay closer attention to location-specific import capacity and pricing differences. -200 -100 0 100 200 300 400 500 600 -12 -8 -4 0 4 8 12 16 20 Q1 2021 Q2 Q3 Q4 Q1 2022 Q2 Evolution in gas prices (Q1 2021=100) Y-o-y change in consumption in bcm United States China OECD Europe India Asian spot price North American spot price European spot price Source: “Gas Market Report, Q4-2022 including Global Gas Security Review 2022.” International Energy Agency, Gas, Q4.

28 Outlook for Liquefied Natural Gas Industry Increased Credit Costs May Deter New Market Entrants. The growth of US LNG projects and shorter-term, spot market transactions have brought new players into the LNG industry, which has historically been comprised of a small “club” of participants. But the recent spike in LNG prices could, paradoxically, push new entrants out or make it harder for them to enter the market. A cargo of LNG valued at US$100 million or less just a few years ago can now be worth US$200 million or more, and that jump in valuation means more onerous credit requirements for buyers. In the spot market, buyers often need to secure a standby letter of credit for 100% or more of the cargo value. Creditworthiness is also paramount for any buyer in the long-term market, and buyers without investment-grade credit ratings are facing even more stringent requirements. These requirements have the potential to reinforce historical barriers to entry, deterring or even preventing new players from participating in the LNG industry. High Prices May Delay LNG Conversions Outside of Europe. As exporters divert LNG cargos to Europe, where prices are highest, buyers elsewhere are having a hard time securing spot cargos. That may slow the development of LNG infrastructure elsewhere. Potential buyers, who would have otherwise contemplated making the fuel switch to LNG for power generation, may rethink that strategy if they cannot secure LNG cargos. And sponsors of LNG import terminals may have to shelve or scrap their plans, as European countries have secured all available floating storage and regasification units (FSRUs) necessary to implement the fuel switching. FSRU Availability and Requirements as of August 2022 Laid up Contract ending Operating as LNG carrier On order or in conversion 0 5 10 15 20 25 30 FSRU availability Europe–firm FSRU Europe–no firm FSRU Rest of the world– firm FSRU FSRU commitments (excl. South and Southeast Asia) Under construction–firm FSRU Under construction–no firm FSRU Planned–no firm FSRU South and Southeast Asia FSRU projects Number of vessels Source: “Gas Market Report, Q4-2022 including Global Gas Security Review 2022.” International Energy Agency, Gas, Q4. Note: Status as of August 31, 2022.

29 Construction Cost Increases May Delay Progress. The front runners among the US LNG project developers have started refreshing their construction cost estimates and finalizing engineering, procurement, and construction (EPC) contracts. As they do so, higher construction costs could affect contract negotiations with LNG buyers and ultimately delay development. For its Port Arthur LNG project, Sempra Infrastructure recently announced finalized contracts of US$10.5 billion for 13.5 million tonnes of annual LNG production capacity. That is about US$778 per tonne of annual capacity, up about 6% from the US$733 per tonne of annual capacity that Sempra paid for its firstwave US LNG project, Cameron LNG. US LNG Projects Achieved Record Low Per-Unit Build Costs of Liquefaction Capacity LNG Projects, $/tpa*, 2014-18 *Tpa stands for tonne of annual liquefaction capacity. Gorgon Prelude FLNG Wheatstone Ichthys Queenland Curtis PNG Yamal Donggi-Senoro Pacific LNG Gladstone Angola LNG Tangguh Expansion Corpus Christi Phase 1 Petronas PFLNG1 Sabine Pass Train 5 Elba Island Petronas PFLNG2 Freeport Cameron LNG Cove Point Corpus Christi Phase 2 Bintulu Train 9 Caribbean FLNG Golar FLNG Sabine Pass Trains 1-4 550 600 600 625 667 710 733 799 825 832 884 968 1044 1053 1154 1291 1300 1305 1311 1349 1412 1929 1987 2000 2106 Australia Rest of the world US Source: Oxford Institute for Energy Studies

30 Outlook for Liquefied Natural Gas Industry To secure financing, developers need long-term contracts with expected revenues sufficient to cover construction costs. In the case of Port Arthur LNG, Sempra has started converting its announced heads of agreements into definitive long-term contracts, with pricing that takes into account the finalized EPC contract price. For US project developers that have already announced definitive long-term contracts, they may need to renegotiate those deals if the contract prices do not cover EPC contract costs. As projects progress, industry watchers will be interested to see final EPC contract prices and whether buyers will remain committed in the face of price negotiations or renegotiations. Multiple US LNG Export Projects May Reach the Finish Line. After finalizing EPC contracts and longterm contracts with LNG buyers, project developers face one final test before they can start construction: finalizing financing. That is no small feat, as Tellurian’s failed attempt at procuring financing for its Driftwood project in 2022 demonstrated. In September, Tellurian abandoned a plan for a shortterm debt financing and canceled two of its original long-term offtake contracts. That setback suggests that developers need longer contracts to support financing. While Tellurian’s now-scrapped contracts were 10-year deals, most definitive, long-term offtake contracts signed by other US LNG projects in 2022 have ranged from 15 to 20 years. By all market indications, the financial markets are flush with capital seeking the right investment opportunities, and multiple US LNG projects have announced their intention to finalize financing in the coming year. With appropriate structuring, the LNG industry might just see a repeat of the first wave of US LNG, with multiple projects getting the green light in 2023. O’Melveny’s Texas offices top-ranked for energy: ‘The team is not only very skillful and knowledgeable, but also has a knack for finding practical solutions.’ —Client testimonial, Chambers USA

31 After Dobbs How Companies Facilitate Access to Abortion Care Meaghan VerGow VIDEO PLACEHOLDER

32 As co-counsel with the Center of Reproductive Rights, O’Melveny represented the abortion provider in Dobbs v. Jackson Women’s Health Organization. Since the Court’s decision, we are helping employers, health insurers, and other affected clients address the myriad legal issues raised by the ruling. 08

33 Post-Dobbs, O’Melveny is helping employers, health insurers, and other affected clients address the myriad legal issues raised by the ruling. Q: How have companies responded to Dobbs? A: Many companies were prepared for this, and when the Dobbs decision was announced, they took steps to support abortion rights and to protect employees’ access to abortion care even when those employees reside in states with new restrictions. One common approach has been to provide a benefit as part of employees’ health coverage that reimburses covered individuals for the cost of traveling to a location where they can access abortion care. So, for example, an employee who lives in Idaho could be reimbursed for the cost of traveling to California, in addition to getting reimbursed for the procedure itself. Q: What risks do companies offering abortion- care benefits face? A: There is still some uncertainty about whether and to what extent states will pursue the argument that offering the benefit violates state law. Generally, states may regulate the benefits in fully insured plans (i.e., those in which an employer purchases insurance from an insurance company), but ERISA preempts state regulation of the benefits for self-insured plans (i.e., those in which an employer provides the health benefits directly to employees). Self-insured plans have more flexibility in the benefits they can offer, but some states may, nevertheless, assert that companies that sponsor, insure, or administer a travel benefit are criminally aiding and abetting access to abortion care. That argument could raise unsettled ERISA preemption questions as well as thorny constitutional issues. For now, there’s no way to eliminate risk, but by being mindful of the state-level constraints, you can structure a benefit program in a way that limits risk. The US Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization overturned the constitutional right to abortion established in Roe v. Wade in 1973. While the Dobbs decision affected many on a deeply personal level, it also changed the legal landscape, with the authority to regulate reproductive health care now left largely to the states. While some states have strictly limited, banned, or even criminalized the procedure, others have added protections to ensure continued abortion access.

34 After Dobbs The legal landscape remains fluid. States continue to enact laws regulating abortion care, and litigation is affecting how these laws operate on the ground. There are emerging conflict-of-laws issues as states enact competing requirements. There has also been activity at the federal level, with companies mindful that the guidance and enforcement efforts on the federal side may change as well. Many companies, including health-care companies, have had to reorganize their business activities against the backdrop of these unresolved issues. They are keen to understand the legal boundaries so they can facilitate access to abortion care where possible. Q: Given this uncertainty, how can companies mitigate the risks of providing abortion-care benefits? A: Most important is a careful analysis of the laws that may apply to the company, its employees, and its benefits plan. For now, there’s no way to eliminate risk, but by being mindful of the statelevel constraints, you can structure a benefit program in a way that limits risk, or that at least puts you in the same category as most other employers who are trying to accomplish this goal. Q: What are some of the legal developments we should look out for in the year ahead? A: I would expect to see battles over crossborder access to abortion care. The FDA recently authorized increased access to one of the major abortion-inducing medications, which may prompt disputes over state-law dispensing limitations. And as many state legislatures reconvene for the first time since the Dobbs decision, we’ll see whether there is political appetite for finely tuned restrictions targeting the solutions that companies have adopted over the past year to facilitate access to abortion care. O’Melveny has a long history defending abortion rights, from leading precedentsetting litigation to partnering with community and pro bono organizations on key initiatives.

35 SCOTUS’s Unprecedented Approach to Precedent Jeffrey L. Fisher VIDEO PLACEHOLDER

36 The Supreme Court’s willingness—some say, eagerness—to jettison longstanding precedent is shaking the foundations of constitutional jurisprudence. Prominent examples include the Court’s recent decision overruling Roe v. Wade and the cases this Term challenging decades-old decisions on affirmative action. But the Court has also begun taking a new approach to precedent in a less noticed, but perhaps more significant way. In particular, the Court has shown an increasing willingness to reassess statutory decisions. And where a majority concludes that the reasoning of such past decisions is inconsistent with modern principles of statutory interpretation, the Court has refused to extend those decisions in any way. 09

37 The framework the Court established 20 years ago for enforcing the implied causes of action in those statutes strongly suggested the answer was yes. Justices Kavanaugh and Gorsuch, however, supplied the pivotal votes against the plaintiff on the ground that judicially implied causes of action themselves are unjustified. Similarly, in Vega v. Tekoh, the Court considered whether 42 U.S.C. § 1983 provides a remedy for violations of the Court’s well-known Miranda rule—the rule requiring that police officers warn custodial suspects of their rights before questioning them. Miranda is another decadesold rule that several Justices believe to be of questionable origin, and many Justices likewise question whether Section 1983 is truly meant to allow damages actions for violations of constitutional rights. A majority of the Court thus declined to endorse a statutory remedy for violations of the Miranda rule. At oral argument, Justice Kavanaugh encapsulated his approach to Miranda: “Accept it, but don’t extend it.” This new approach to precedent upends the traditional understanding that past Supreme Court decisions should be understood as not just deciding particular cases, but also establishing legal rules that ought to be applied whenever sound logic dictates. As Justice Alito put it just a few years ago, when the Court decides a case, “We can’t just say that on the particular facts here,” one party wins. “We have to have a rule that can be applied in other cases.” It now seems, however, that a Court majority is prepared to treat a growing number of past decisions as applicable only to their own particular facts. This new practice has profound implications for individuals, businesses, and all other parties with cases before the Court—or with issues that could be headed there. For one thing, it is vital to have lawyers who understand and know how to speak the Court’s modern language of statutory interpretation. In this sense, Supreme Court counsel is another form of local counsel. O’Melveny once again named to The National Law Journal’s Appellate Hot List, a select group of the most active and influential firms at the Supreme Court. Take last Term’s decision in Cummings v. Premier Rehab Keller. The question there was whether recipients of federal funds that discriminate against individuals because of their race, sex, or disability—in violation of Title IV, Title IX, and related statutes—must pay damages for a plaintiff’s resulting emotional distress

38 SCOTUS’s Unprecedented Approach to Precedent More generally, it is critical to grasp that even where the current Court is not prepared to overrule past decisions, it may, nonetheless, be willing to wall off precedent from any future extensions. The Court may even be open to arguments for limiting past decisions to their facts— which can be tantamount to overruling them. The task for parties and their counsel is to adjust to this new reality. It now seems that a Court majority is prepared to treat a growing number of past decisions as applicable only to their own particular facts. O’Melveny scored a hat trick at the Supreme Court, winning all 3 cases argued during the 2021-22 Term.

39 Timothy S. Durst | Cason G. Cole Patent Litigation in Texas What Happened in 2022 and What to Expect Next VIDEO PLACEHOLDER

40 Despite an abrupt mid-year judicial order reassigning Western District patent cases—a change many observers thought would cut off the district’s steady flow of patent litigation—the change so far has not been as dramatic as some expected. But more changes likely to come in 2023 could further alter the landscape. For the first half of 2022, Judge Alan Albright of WDTX presided over all patent cases filed in the Waco Division—roughly 95% of patent cases in the district, and nearly one quarter of patent cases nationwide. But in an unexpected July 25 order, WDTX Chief Judge Orlando Garcia changed how judges are assigned to patent cases filed in Waco. The order, which applies only to cases filed in Waco, assigns cases randomly to 12 judges across the district. 32 10

41 Judge Albright continues to move his cases along. He conducted three patent jury trials since July 25, with each resulting in findings of infringement and damages awards: US$1.9 million against an oilfield services company, US$274 million against Lab Corp., and US$949 million against Intel in round three of the VLSI litigation. Plaintiffs have now won 11 of 17 trials; damages awarded have ranged from US$235,000 to US$2.2 billion, with a median of US$14 million. Next door, in the Eastern District of Texas, Chief Judge Rodney Gilstrap continues to preside over 95% of civil cases filed in Marshall. Following the July 25 order, patent filings in Marshall have ticked up slightly, with 165 cases compared to 147 during the same period in 2021. Judge Gilstrap took nine cases to jury verdicts in 2022, with six resulting in infringement verdicts—including a US$31 million award against Ericsson and a US$218 million award against PNC Bank. Since Judge Garcia’s order, new filings in the WDTX have fallen, though not as precipitously as some initially predicted. Plaintiffs filed about 30% fewer cases in WDTX from July 25 through December 31 compared to the same period last year, despite almost no year-over-year change in the number of patent cases filed nationwide. Plaintiffs have been able to keep many new cases before Judge Albright by designating them as “related” to cases he handled previously. As a result, half of the 291 cases filed in the Waco Division since July 25 were assigned to Judge Albright. O’Melveny ‘maintains a strong foothold in the main US patent litigation venues, with a focus on hardware to software, augmented reality to streaming video, e-commerce and digital technology to pharmaceuticals, acting on the defense and offense side alike.’ —Legal 500 US

42 Patent Litigation in Texas Patent case counts decreased only slightly nationwide in 2022. Plaintiffs filed 5,992 cases in 2022, down from 6,087 cases in 2021. Perhaps as a measure of the impact of the WDTX reassignment order, of the highest-volume patent districts, only the EDTX and Central District of California saw an increase in filings from July 25 through December 31 compared to the prior year. Here is how the numbers break down: Patent Case Distribution July 25 - December 31 2021 2022 Nationwide 2,641 2,561 W.D. Tex. 434 334 D. Del. 401 263 E.D. Tex. 190 210 N.D. Cal. 74 65 C.D. Cal. 109 122 But the dust hasn’t settled in WDTX. In November 2022, Judge Alia Moses in Del Rio succeeded Judge Garcia as the district’s Chief Judge. In this role, Judge Moses will have influence over case assignment procedures across the district, and in a December 16 standing order, Judge Moses kept in place Judge Garcia’s July 25 order. It remains to be seen, however, whether this policy will be permanent. There may be retirements in the district in 2023, which also could affect case assignments. For now, litigants should assume that the Eastern and Western districts will remain two of the country’s busiest. In Waco, the “related cases” phenomenon will take some time to tail off, and it seems likely there will be at least one other shoe to drop with respect to the adjusted case assignment protocol. And some WDTX courts outside of Waco seem to be positioning themselves to handle patent cases following Judge Albright’s procedures—using the same magistrates, adopting similar practices on technical advisors, and even adopting Judge Albright’s special rules, as already happened in Midland. Meanwhile, EDTX continues to see robust case filings and seems positioned to capture a sizeable share of cases that plaintiffs may divert away from WDTX. In the year ahead, EDTX and WDTX will continue to handle out-sized shares of patent litigation and continue to exert important influence over the direction of patent law.