Congress Passes Consolidated Appropriations Act of 2022 containing LIBOR Provisions

Congress passed the Consolidated Appropriations Act, which includes the Adjustable Interest Rate (LIBOR) Act (Division U at p.1954-1978). The LIBOR provisions deal with "tough legacy” contracts that reference LIBOR as an interest rate and do not have adequate contractual language to enable the move away from LIBOR when publishing of the U.S. dollar tenor stops. The LIBOR provisions (the Senate version was named the Economic Continuity and Stability Act) were supported by 23 financial trade associations.

The legislation: (1) allows individuals to opt-out of the legislation if their contracts have appropriate contingency language and apply it only to their tough legacy contracts, ensuring that new contracts will not be hindered while “clarifying regulatory standards for the use of alternative reference rates;” (2) provides “uniform treatment” for U.S. contracts under federal legislation; and (3) establishes a legal liability “safe harbor” for individuals using the legislation.