Friday, December 16, 2011

Rulemaking: D.C. Circuit Decision in ATA v. National Mediation Board

Here's a post from Jeffrey Lubbers, Professor of Practice in Administrative Law at American University's Washington College of Law:

Friends—The D.C. Circuit affirmed the district court’s upholding of the National Mediation Board’s election ballot counting rule today.  Judge Tatel wrote for himself and Judge Griffin.  Judge Henderson dissented.

The court ruled, using Chevron, that the statute was ambiguous and that the Board’s rule was permissible.  It also ruled that its change from a longstanding rule was not arbitrary and capricious, citing Fox TV Stations, and affirmed Judge Friedman’s denial of a discovery request by ATA seeking evidence of bias on the part of the Board majority, citing the ANA case.  It is a rare rulemaking bias case in that regard. 

10-5253, Air Transp. Assoc. of America v. National Mediation Board

Tuesday, December 13, 2011

REINS Act Passes House

The REINS (Regulations from the Executive in Need of Scrutiny) Act, H.R. 10, passed the House on December 7.  The vote was 241-to-184; all Republicans present and four Democrats voted for the bill.  Politically, the bill is generally lumped together with the Regulatory Accountability Act, H.R. 3010, on which see here and here.  Thus, the Wall Street Journal likes it; the New York Times does not.  Substantively, however, it would do something quite different.  In a nutshell, it would take the existing Congressional Review Act's almost-entirely-ignored provisions for congressional disapproval of significant regulations and makes one fundamental change: Instead of permitting passage of a joint resolution of disapproval before a major regulation (i.e. one with an annual impact on the economy over $100 million) becomes effective, it would require passage of a joint resolution of approval before the regulation becomes effective. The bill would create a special fast-track mechanism for considering such a resolution within the required time period; delaying tactics such as filibusters and holds would not be permitted.

As with the Regulatory Accountability Act, the legislation's prospects in the Senate are much dimmer than in the House, and the White House has issued a Statement of Administration Policy threatening a veto.

The Section has not taken a position or submitted comments on the REINS Act.  Useful discussion in the blogosphere includes Jonathan Adler's generally supportive posts at the Volokh Conspiracy, former Section Chair Sally Katzen's testimony opposing the bill, and extensive coverage at RegBlog.

Wednesday, December 7, 2011

Law Community on

A key piece of the current administration's efforts to make more government-held information available on-line, in usable form, is the website.  Readers of this blog might be particularly interested in the "Law Data Community" on that site.  This is a portal to material that is not "data" in the usual sense, but rather a wide range of agency legal materials other than regulations: adjudicatory decisions, case filings from DOJ, OLC and agency general counsel opinions, and various agency directives.

Although the available agency material is for now somewhat haphazard -- including some that will be of broad interest and some that almost no one will care about -- and incomplete, there's a lot of good stuff here which is not in every case easy to find otherwise.  Material is steadily accumulating, to the point where the site is now a useful resource, and likely to be come more so in the future.  It's worth a look.

Friday, December 2, 2011

Regulatory Accountability Act Passes House

Today the House of Representatives passed the Regulatory Accountability Act, H.R. 3010, by a vote of 253-167.  No Republicans voted against it; 19 Democrats voted for it.  The general expectation is that the bill will not advance in the Senate, and the White House has threatened a veto if it does, so the ultimate fate of the legislation will likely turn on the results of the 2012 elections.

Press coverage of the vote can be found here and here.  The Section's comments on the bill are here.

Wednesday, November 30, 2011

Regulatory Accountability Act to House Floor; White House Threatens Veto

The Regulatory Accountability Act, H.R. 3010, is scheduled to be considered on the floor of the House on Thursday, December 1, 2011.  The controversial bill would make sweeping changes to the APA, particularly with regard to its rulemaking provisions.  Today the White House released a Statement of Administration Policy stating that the President's senior advisors would recommend a veto were the bill to reach his desk.

The Section's extensive comments on the bill can be found here; an executive summary of those comments is contained in this post.

Robert A. Anthony (1931-2011)

The Section of Administrative Law and Regulatory Practice, and the larger administrative law community, lost a great friend when Robert Anthony passed away on November 17. Bob, who was GMU Foundation Professor emeritus at the George Mason University School of Law, was a leading administrative law scholar and former chair of the Administrative Conference of the United States.  He was especially well known for his work on "spurious rules," a term he coined. The law school's news release is here.

The Section Council has approved the following resolution in his memory:


WHEREAS our colleague and friend Robert A. Anthony, GMU Foundation Professor Emeritus at the George Mason University School of Law, passed away on November 17, 2011;

WHEREAS Professor Anthony was a long-time and active member of the Section of Administrative Law and Regulatory Practice -- serving with distinction as Secretary, a Member of the Council, and as Chair and Vice Chair of several Section Committees -- and an enduringly faithful supporter of Section activities;

WHEREAS Professor Anthony was among the nation's most distinguished and prolific Administrative Law scholars of his generation, especially as one of the foremost authorities on agency rulemaking and the use and misuse by agencies of policy statements and guidance documents;

WHEREAS Professor Anthony was a dedicated teacher, beloved by his students at the George Mason University and Cornell University Law Schools;

WHEREAS Professor Anthony served with distinction as Chairman of the Administrative Conference of the United States from 1974 to1979, during ACUS's formative years, then as Senior Fellow from 1982 to 1995, and again as Senior Fellow from 2010 until the time of his passing; and

WHEREAS Professor Anthony, in all his dealings with the Section and its members, was a generous and kind colleague, a willing contributor to all manner of activities, a ready mentor, and a devoted and loyal friend --

NOW, BE IT THEREFORE RESOLVED that the Section expresses its sorrow at Bob Anthony’s passing and honors his memory for his many contributions to the Section, the legal profession, legal education, and legal scholarship and, above all, for the friendship he shared with us all.

Unanimously adopted by the Council of the Section of Administrative Law and Regulatory Practice of the American Bar Association this 28th day of November, 2011.

Tuesday, October 25, 2011

Administrative Procedure Act: ABA Admin Law Section Comments on H.R. 3010

On October 25, the House Judiciary Committee held a hearing on H.R. 3010, the "Regulatory Accountability Act of 2011." Witnesses scheduled at the hearing included C. Boyden Gray, Boyden Gray & Associates (and former Section Chair), Christopher C. DeMuth of the American Enterprise Institute for Public Policy Research, Arnold Baker, owner of Baker Ready-Mix Building Materials, and Sidney Shapiro, University Distinguished Chair in Law at Wake Forest University School of Law.

The Administrative Law Section submitted extensive comments concerning the bill to the Committee. An executive summary of the Section's comments follows.
"The Regulatory Accountability Act of 2011, H.R. 3010, would be a sweeping and consequential revision to the Administrative Procedure Act, particularly with regard to the process of rulemaking. The bill is unusually ambitious and crammed with details that are impossible to summarize. Among its provisions are many that the Section endorses, many it would modify, and many that it opposes.
"With regard to the first category, we support provisions that would
  • require agencies to maintain a rulemaking record,
  • require agencies to disclose data, studies, and other information underlying a proposed rule,
  • recognize the consultative function of the Office of Information and Regulatory Affairs (OIRA),
  • provide for agencies to consult OIRA when issuing major guidance, and
  • extend these OIRA functions to the independent agencies.
"With regard to the second category, we are sympathetic toward, but suggest modifications to, the bill’s provisions that would 
  • add an Advance Notice of Proposed Rulemaking step to certain rulemakings,
  • address the problem of agencies’ issuance of “interim” rules that are never superseded by regularly adopted rules,
  • provide some centralized oversight of agency issuance of and reliance on guidance documents.
"On the other hand, the Section has serious concerns about
  • the bill’s lengthy list of “rulemaking considerations” that agencies would be required to take into account at each stage of the rulemaking process,
  • use of the long-discredited “formal rulemaking” for some rules,
  • providing for judicial review of agencies’ compliance with OIRA’s guidelines, and
  • effectively rewriting the substantive provisions regarding standard-setting in the enabling legislation of numerous agencies through a cost-focused “supermandate.” (We take no position on the substantive question of the appropriate role of costs in setting standards; we only object to resolving that question in a single, across-the-board statute that would turn the APA into the “Administrative Substance Act.”) 
"In general, we think many of the new steps the bill would require for rulemaking are, in numerous particular cases, valuable and appropriate. However, to impose these requirements automatically and across the board will, we fear, further ossify the rulemaking process with little offsetting benefits in the form of better rules."

Wednesday, August 3, 2011

Constitutional Law and Separation of Powers/Freedom of Information and Privacy/Rulemaking: D.C. Circuit Requires Notice-and-Comment Rulemaking for TSA Rule

On July 15, in Electronic Privacy Information Center v. DHS, No. 10-1157, the U.S. Court of Appeals for the District of Columbia Circuit held that a decision by the Transportation Security Administration (TSA) to screen airline passengers by using advanced imaging technology (AIT) instead of magnetometers should have been the subject of notice-and-comment rulemaking before being adopted. The Court granted the petition for review insofar as it claimed that the TSA had not justified its failure to initiate notice-and-comment rulemaking before announcing that it would use AIT scanners for primary screening. As the Court stated, "None of the exceptions urged by the TSA justifies its failure to give notice of and receive comment upon such a rule, which is legislative and not merely interpretive, procedural, or a general statement of policy."
The Court also denied the petition with respect to the petitioners’ claims that the use of AIT violated various federal statutes and the Fourth Amendment. Acknowledging "the obvious need for the TSA to continue its airport security operations without interruption," it remanded the rule to the TSA without vacating it, and instructed the agency "promptly to proceed in a manner consistent with this opinion."

Tuesday, August 2, 2011

Banking and Financial Services/Criminal Process: FinCEN Issues Final Rule on Bank Secrecy Act Reg Amendments

On July 29, the Financial Crimes Enforcement Network (FinCEN) published in the Federal Register a final rule that amends the Bank Secrecy Act (“BSA”) regulations applicable to Money Services Businesses with regard to stored value. The FinCEN notice states that the final rule "amends the regulations by: renaming 'stored value' as 'prepaid access' and defining that term; deleting the terms 'issuer' and 'redeemer' of stored value; imposing suspicious activity reporting, customer information and transaction information recordkeeping requirements on both providers and sellers of prepaid access, and, additionally, a registration requirement on providers only; and exempting certain categories of prepaid access products and services posing lower risks of money laundering and terrorist financing from certain requirements." The notice also states that the changes "address regulatory gaps that have resulted from the proliferation of prepaid innovations and their increasing use as an accepted payment method."

Criminal Process/Insurance: Second Circuit Vacates GenRe Convictions, Remands for New Trial

On August 2, the U.S. Court of Appeals for the Second Circuit vacated the convictions of four executives of General Reinsurance Corporation (“Gen Re”) and one of American International Group, Inc. (“AIG”) on charges of of conspiracy, mail fraud, securities fraud, and making false statements to the
Securities and Exchange Commission, and remanded the case for a new trial. The Court found that the convictions had to be vacated because at trial in the U.S. District Court for the District of Connecticut, the district court abused its discretion by admitting certain prejudicial stock-price data to show the material effect of a particular transaction, known as the Loss Portfolio Transfer (LPT), on investors. The Court also held that the district court had issued a jury instruction that did not include either side's causation instruction, but directed the verdict on causation.

Monday, August 1, 2011

Banking and Financial Services: Consumer Financial Protection Bureau Issues Interim Rule on Investigations

On July 22, the Consumer Financial Protection Bureau (CFPB)) issued an interim rule, with request for public comment, setting forth its rules relating to investigations. These rules are to govern investigations undertaken pursuant to section 1052 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5562), which authorizes the CFPB to investigate whether persons have engaged in conduct that violates any provision of Federal consumer financial law. In the notice, the CFPB stated that "[i]n light of the similarities between section 1052 of the Act and section 20 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 41 et seq., the Bureau drew most heavily from the FTC’s nonadjudicative procedures in constructing the Rules."
As the notice explains, "The Rules describe a number of Bureau policies and procedures that apply in a nonadjudicative setting. Among other things, these Rules set forth (1) the Bureau’s authority to conduct investigations, and (2) the rights of persons from whom the Bureau seeks to compel information in investigations. In particular, the Rules lay out the Bureau’s authority to conduct investigations before instituting judicial or administrative adjudicatory proceedings under Federal consumer financial law," as well as "the rights of persons from whom the Bureau seeks to compel information in an investigation."

Energy: President Obama Announces 54.5 MPG Fuel Efficiency Standard

On July 29, President Obama announced an agreement with 13 major automakers to increase fuel economy to 54.5 miles per gallon for cars and light-duty trucks by model year 2025. The announcement noted that the President "was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo – which together account for over 90% of all vehicles sold in the United States – as well as the United Auto Workers (UAW), and the State of California, who were integral to developing this agreement." In the announcement, the President characterized the agreement as "the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil."
In connection with that statement, the Administration also issued a report titled "Driving Efficiency: Cutting Costs for Families at the Pump and Slashing Dependence on Oil."

Environmental and Natural Resources Regulation/Homeland Security: NIOSH Issues Report on Link Between September 11 World Trade Center Attacks and Cancer

On July 26, the National Institute of Occupational Safety and Health (NIOSH), a component of the Centers for Disease Control and Prevention, issued its first periodic report examining the scientific and technical literature with respect to a possible link between the September 11 World Trade Center (WTC) attacks and the incidence of cancer. NIOSH concluded (as page 40) that "[b]ased on the scientific and medical findings in the peer-reviewed literature reported in this first periodic review of cancer for the WTC Health Program, insufficient evidence exists at this time to propose a rule to add cancer, or a certain type of cancer, to the List of WTC-Related Health Conditions." The report also noted that "[i]t is expected that the second periodic review of cancer for the WTC Health Program will be conducted in early to mid-2012 to capture any emerging findings about exposures and cancer in responders and survivors affected by the . . . attacks."

International Trade/Securities, Commodities, and Exchanges: State Department Issues Statement on Implementation of Dodd-Frank Congo Conflict Minerals Provision

On July 15, the Department of State issued a statement concerning implementation of section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Section 1502 pertains to reporting requirements established for certain companies on whether they use certain minerals sourced from the eastern Democratic Republic of the Congo (DRC) that have helped to fund conflict in that region.
The statement said "that it is critical that companies begin now to perform meaningful due diligence with respect to conflict minerals. To this end, companies should begin immediately to structure their supply chain relationships in a responsible and productive manner to encourage legitimate, conflict-free trade, including conflict-free minerals sourced from the DRC and the Great Lakes region." It also specifically endorsed the guidance that the Organization for Economic Cooperation and Development (OECD) had issued in May 2011 on responsible supply chains of minerals from conflict-affected and high-risk areas," and encouraged companies "to draw upon this guidance as they establish their due diligence practices."

Antitrust and Trade Regulation/International Law: U.K. Office of Fair Trading Publishes Guidance on Competition Law

On June 27, the United Kingdom Office of Fair Trading (OFT) issued two new sets of guidance on compliance with United Kingdom competition law. The OFT, which worked with business groups to develop the new guidance, stated in a press release that the first guide, How Your Business Can Achieve Compliance, "is aimed at businesses and their advisors, and sets out the OFT's recommended risk-based, four-step approach to creating a culture of competition law compliance." The second guide, Company Directors and Competition Law, explains the level of competition law understanding that is expected from directors, and outlines steps that directors should take to prevent, detect, and stop infringements of competition law.

Banking and Financial Services/Securities, Commodities, and Exchanges: GAO Issues Report on Agencies' Fiscal Resources to Implement Dodd-Frank Regulatory Reform

On July 14, the General Accountability Office issued a report setting forth reporting by 11 regulatory agencies on the fiscal resources they estimated to be available to implement regulatory reform under the Dodd-Frank Wall Street Reform Act. The report noted that the amount of new funding the agencies reported as associated with implementing Dodd-Frank varied significantly across the 11 agencies. "For example, new funding resources related to Dodd-Frank responsibilities during the years 2011–2012 ranged from a low of $0 for [the Federal Trade Commission] to a high of around $329 million for [the Consumer Financial Protection Bureau (CFPB)]." GAO also reported that funding resources to implement Dodd-Frank "accounted for at least 25 percent of the agency’s total budget increase at 9 of the 11 agencies in the most recent year for which data were available. Excluding the three agencies that the Dodd-Frank Act created (CFPB, [the Financial Stability Oversight Council], and [the Office of Financial Research]), the [Commodity Futures Trading Commission] devoted the highest share of total agency resources (25 percent) to implementing the Dodd-Frank provisions. Agencies reported that most of the costs related
to implementing the provisions will be recurring."

Intellectual Property/International Law: European Court of Justice Rules Online Retailers May Be Liable for Users' Sales of Infringing Goods

On July 12, in L'Oreal SA v. eBay International AG, Case C-324/09, the European Court of Justice issued a decision in which it indicated that online auction services such as eBay may be liable when users of such services offer for sale goods that infringe on intellectual property rights. The case came to the European Court of Justice in 2009 on reference for a preliminary ruling from the Chancery Division of the United Kingdom High Court of Justice.
The Court held, in pertinent part, that "[o]n a proper construction of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, the proprietor of a trade mark is entitled to prevent an online marketplace operator from advertising – on the basis of a keyword which is identical to his trade mark and which has been selected in an internet referencing service by that operator – goods bearing that trade mark which are offered for sale on the marketplace, where the advertising does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods concerned originate from the proprietor of the trade mark or from an undertaking economically linked to that proprietor or, on the contrary, originate from a third party." It also stated that "the third sentence of Article 11 of Directive 2004/48 must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, dissuasive and must not create barriers to legitimate trade."

Regulatory Policy/Rulemaking: President Extends Reg-Streamlining Directive to Independent Agencies

On July 11, President Obama issued an Executive Order that directs independent regulatory agencies, including the Consumer Product Safety Commission, the Federal Trade Commission, the Federal Communications Commission, and the Securities and Exchange Commission, to take -- as Director of the Office of Information and Regulatory Affairs Cass Sunstein stated in his White House blog posting -- "new steps to ensure smart, cost-effective regulations, designed to promote economic growth and job creation." Similar to Executive Order 13563 of January 18, 2011, which was directed at executive agencies, this Executive Order directs independent regulatory agencies to "consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned." It also directs each independent regulatory agency, within 120 days of July 11, to "develop and release to the public a plan, consistent with law and reflecting its resources and regulatory priorities and processes, under which the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives."

Antitrust and Trade Regulation: Justice Department, FTC Announce Changes in Hart-Scott-Rodino Form

On July 7, the Department of Justice's Antitrust Division and the Federal Trade Commission announced that they "have made changes to reduce the filing burden and streamline the form parties must file when seeking antitrust clearance of proposed mergers and acquisitions under the Hart-Scott-Rodino (HSR) Act and the Premerger Notification Rules." According to the Justice Department's press release, the revised HSR form "deletes several categories of information that over time have proven unnecessary in a preliminary merger review, will require filers to provide the Department and the FTC "with narrowly focused additional documents that will help expedite the merger review process," and "changes certain kinds of required reporting, such as revenue information by the North American Industry Classification System (NAICS) code, and the identity of holders and holdings of the entities making a filing."

Antitrust and Trade Regulation: U.S., Chinese Authorities Sign Antitrust Memorandum of Understanding

On July 27, Assistant Attorney General Christine Varney of the Department of Justice’s Antitrust Division and Federal Trade Commission (FTC) Chairman Jon Leibowitz signed an antitrust memorandum of understanding (MOU) with China’s three antitrust agencies to promote communication and cooperation among the agencies in the two countries. The MOU sets out a two-part framework for antitrust cooperation: (1) "the joint dialogue among all parties to this Memorandum on competition policy at the senior official level";and (2) "communication and cooperation on competition law enforcement and policy between individual U.S. antitrust agencies and PRC antimonopoly agencies." The Justice Department's press release on the event noted that the MOU does not change existing law, as China's antimonopoly law, which was enacted in 2007, took effect on August 1, 2008.

Antitrust and Trade Regulation: Justice Department Issues Updated Policy Guide to Merger Remedies

On June 17, the Antitrust Division of the Department of Justice issued an updated Policy Guide to Merger Remedies. The Guide, which updates the Antitrust Division’s 2004 guidance, states that "it is intended to provide guidance to Antitrust Division staff in their work analyzing proposed remedies for mergers." It includes material on key principles in tailoring effective remedies, types of remedies (structural, conduct, and hybrid), practical considerations in implementing effective remedies, and compliance.

Intellectual Property: IP Litigation Increased in 1H 2011

On July 7, an article on Law 360 reported that lntellectual property litigation increased in the first half of 2011 compared to the first half of 2010. Using data from Pacer, the electronic case data system for the federal courts, the article noted that while litigation across practice areas increased only slightly by about 1.3 percent, "litigants initiated 4,872 patent, copyright and trademark cases in U.S. federal courts within the last six months." This constituted a nearly 13 percent increase over the 4,317 cases filed in the first half of 2010.
New copyright actions filed increased from 910 to 1,140 (nearly 25.3 percent); patent filings increased from 1,605 to 1,929 (nearly 20.2 percent); and trademarks filings increased negligibly from 1,802 to 1,803.

Environmental and Natural Resources Regulation: EPA Issues Proposed Rulemaking on Nitrogen Oxides Standards for Aircraft Gas Turbine Engines

On July 6, the Environmental Protection Agency (EPA) announced that it is publishing a proposed rulemaking to adopt the oxides of nitrogen (NOx) emission standards approved by the United Nations' International Civil Aviation Organization (ICAO) for aircraft gas turbine engines. Comments will be accepted for 60 days after the date that the proposal is published in the Federal Register. Details about hwo to submit comment are available in the EPA announcement.

Criminal Process/Environmental Law: Company Executive Pleads Guilty to Criminal Clean Air Act Violations

On July 6, the vice-president and general manager of the Pelican Refinery in Lake Charles, Louisiana, pleaded guilty in the U.S. District Court for the Western District of Louisiana to federal negligent endangerment charges under the Clean Air Act. According to the U.S. Attorney's Office press release, the defendant, who oversaw operations at the Lake Charles refinery since 2005 from an office in Houston,negligently caused the release of hazardous air pollutants, including hydrogen sulfide, an extremely hazardous substance into the air which placed persons in imminent danger of death and serious bodily injury. A March 2006 inspection by the Louisiana Department of Environmental Quality and EPA unsafe operating conditions, including unpermitted releases of hydrogensulfide, storage of crude oil in unrepaired storage tanks, failure to repair emissions monitoring and control equipment, and the use of plastic children’s swimming pools to contain petroleum leaks.

Tuesday, April 12, 2011

Publications: Penn Program on Regulation Launches RegBlog

The Penn Program on Regulation has just launched a new blog, RegBlog. Housed at Penn Law and staffed by law and graduate students from multiple schools at Penn, RegBlog provides regulatory news, analysis, and opinion. Contributors include staff members, scholars, practitioners, and others interested in regulatory developments. Anyone interested in contacting RegBlog should email the staff at We welcome RegBlog to the blogosphere!

Wednesday, April 6, 2011

Administrative Conference of the United States: ACUS Schedules April 28 Regulatory Leadership Workshop on Trade and Enforcement

On April 28, acccording to a notice by the Administrative Conference of the United States (ACUS), ACUS will hold a regulatory Workshop entitled, "Going Global – The Case for U.S. Regulatory Leadership on Trade and Enforcement." The Workshop will take place at the U.S. Chamber of Commerce, 1615 I Street, N.W., Washington, D.C. from 8:30 a.m. to 12:00 noon.
Speakers for the event include ACUS Chairman Paul Verkuil; C. Boyden Gray, founding partner in the firm of Gray & Schmitz and former Ambassador to the European Union and former White House Counsel; Michael Fitzpatrick, Associate Administrator, Office of Information and Regulatory Affairs, OMB (invited); and Dan Price, senior partner in the firm of Sidley Austin and former Assistant to the President and Deputy National Security Advisor for International Economic Affairs.
Interested persons can register for the Workshop by email.

Administrative Conference of the United States: ACUS Publishes Public Committee Meeting Schedule for April

The Administrative Conference of the United States (ACUS) has published its scheduled Committee public meetings in April. Upcoming public meetings include:
- Committee on Administration and Management: Government Contractor Ethics
Monday, April 18, 2011, from 2p.m. to 5 p.m.
- Committee on Rulemaking: E-rulemaking—Legal Issues
Wednesday, April 20, 2011, from 9:30 a.m. to 12:30 p.m.
- Committee on Collaborative Governance: FACA in the 21st Century
Thursday, April 21, 2011, from 1 p.m. to 3:30 p.m.
- Committee on Regulation: Rulemaking Comments
Monday, April 25, 2011, from 2:00 p.m. to 5:00 p.m.
- Committee on Adjudication: Video Hearings
Wednesday, April 27, 2011, from 9:15 a.m. to 12:15 p.m.

Intellectual Property/International Law: European Court of Justice Rejects Patents Court Proposal

On March 8, the European Court of Justice issued an opinion that a proposal to create a European Patents Court was not compatible with the provisions of the European Union Treaty and the Functioning of the European Union (FEU) Treaty.
In 2007, the European Commission had made various proposals to enhance the patent system in Europe. This and other developments led to the drafting of an international agreement -- to be concluded between the Member States, the European Union, and third countries that are parties to the European Patent Convention -- that would establish a European and Community Patents Court with jurisdiction to hear actions related to European and Community patents. The proposed Patent Court would be composed of a court of first instance, comprising a central division and local and regional divisions, and a court of appeal that would have jurisdiction to hear appeals brought against decisions delivered by the court of first instance.
The European Court of Justice held that the proposed agreement, "by conferring on an international court which is outside the institutional and judicial framework of the European Union an exclusive jurisdiction to hear a significant number of actions brought by individuals in the field of the Community patent and to interpret and apply European Union law in that field, would deprive courts of Member States of their powers in relation to the interpretation and application of European Union law and the Court of its powers to reply, by preliminary ruling, to questions referred by those courts and, consequently, would alter the essential character of the powers which the Treaties confer on the institutions of the European Union and on the Member States and which are indispensable to the preservation of the very nature of European Union law."

Monday, March 21, 2011

Government Affairs and Legislative Process: National Journal Article on Lobbying Reform

On March 21, the National Journal published a column on lobbying reform by Eliza Newlin Carney that included a discussion of the ABA Administrative Law and Regulatory Practice Section's Federal Lobbying Laws Task Force report and recommendations.

Tuesday, March 8, 2011

Antitrust and Trade Regulation/Criminal Process: FTC Issues 2010 Report on Consumer Fraud and Identity Theft Complaints

On March 8, the Federal Trade Commission issued the Consumer Sentinel Network Data Book for 2010. The Data Book, which includes data for consumer complaints that the FTC received in 2010, notes that for the 11th year in a row, identity theft was the leading category of consumer complaints received (250,854, constituting 19 percent of all complaints). Debt collection was the second-highest category of complaints in 2010 (144,159, constituting 11 percent), as it was in 2009. So-called “imposter scams” – i.e., schemes in which fraudsters posed as friends, family, respected companies, or even government agencies to persuade consumers to send them money – made the top 10 for the first time.

Antitrust and Trade Regulation/Intellectual Property: FTC Issues Report on Patent System and Competitiveness

On March 7, the Federal Trade Commission issued a report titled, "The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition." The report examines technology markets and patent markets and offers a competition perspective on patent notice and patent remedies (including how patent notice and remedies affect innovation and competition).

Wednesday, March 2, 2011

Securities, Commodities, and Exchanges: Sutherland Asbill Releases Survey of FINRA Sanctions

On February 28, Sutherland Asbill & Brennan issued a press release announcing the results of their latest survey of Financial Industry Regulatory Authority (FINRA) sanctions against broker-dealers and associated persons. In brief, the survey found that in 2010:
- FINRA’s disciplinary actions increased from 1,158 to 1,310 -- an increase of more than 13 percent and a reversal of "the substantial slowdown in disciplinary actions filed between 2006 and 2008."
- FINRA fined firms and individuals approximately $45 million, "falling just short of 2009’s $50 million in fines."
- Advertising cases generated the largest amount of total fines (approximately $4.75 million), and Credit Default Swap (CDS) cases the second largest amount of fines ($4.5 million in six cases).
- Fines in mutual fund cases "have been on the decline," while advertising cases "seem to be of growing importance to FINRA."

Freedom of Information and Privacy: U.S. Supreme Court Decides Corporations Cannot Claim FOIA Law Enforcement/"Personal Privacy" Exemption

On March 1, in a unanimous (8-0) decision in FCC v. AT&T, the U.S. Supreme Court held that corporations do not have “personal privacy” for the purposes of Exemption 7(C) of the Freeedom of Information Act (FOIA), 5 U.S.C. §552(b)(7)(C). Exemption 7(C) creates an exemption from the general disclosure obligations of FOIA for law enforcement records the disclosure of which “could reasonably be expected to constitute an unwarranted invasion of personal privacy.”
Chief Justice Roberts, writing for the Court, found "no sound reason in the statutory text or context to disregard the ordinary meaning of the phrase 'personal privacy'" (slip op. at 9), and found further clarification in the meaning of that term in the rest of FOIA, particularly Exemptions 4 and 6. (Id. at 9-11.) The decision puckishly concluded: "We trust that AT&T will not take it personally." (Id. at 12.) Justice Kagan took no part in the consideration or decision of the case.

Tuesday, March 1, 2011

Regulatory Policy/Rulemaking: President Issues Memorandum on Reducing Regulatory Burdens for State and Local Governments

On February 28, President Obama issued a memorandum to federal executive departments and agencies, directing them (as summarized in a White House press release) "to work with State, Tribal, and local governments to reduce unnecessary regulatory and administrative burdens in order to focus resources on achieving better outcomes at lower cost." According to the release, the memorandum builds on Executive Order 13563, which the President issued on January 18 to outline his regulatory strategy. (See the January 18 Notice and Comment posting on Executive Order 13563.)
The Memorandum instructs the Director of OMB "to lead a collaborative process of Federal agencies, State, Tribal, and local governments to coordinate and streamline procedures that cut across agency, program and geographic bounds," and requires agencies "to work closely with States, Tribes, and local governments to identify administrative, regulatory, and legislative barriers in Federally-funded programs that currently prevent them from efficiently using tax dollars to achieve the best results for their constituents." It further requires that this work be done "in collaboration with territories as well, and with input from other key program partners."
The Memorandum also directs OMB to (1) review "guidance concerning cost principles and audits for State, local, and Tribal governments to eliminate unnecessary, unduly burdensome, or low-priority recordkeeping requirements and to tie requirements to achievement of outcomes;" (2) "[s]tandardize and streamline reporting and planning requirements in accordance with the Paperwork Reduction Act to develop efficient, low-cost mechanisms for collecting and reporting data and preparing expenditure plans that can support multiple programs and agencies": and (3) "[f]acilitate cost-efficient modernization of State and Tribal information systems, in collaboration with the Chief Technology Officer in the Office of Science and Technology Policy."
The Memorandum also requires agencies "to report back within 180 days of the date of this memorandum on their actions to identify regulatory and administrative requirements that can be streamlined, reduced, or eliminated, and where increased State flexibility could be provided to achieve the same or better outcomes at lower cost."

Regulatory Policy/Rulemaking: House Judiciary Subcommittee Holds Hearing on Administrative Procedure Act

On February 28, the House Judiciary Committee's Subcommittee on Courts, Commercial and Administrative Law held a hearing on "The APA at 65 – Is Reform Needed to Create Jobs, Promote Economic Growth and Reduce Costs?” Witnesses at the hearing included Susan Dudley, Research Professor of Public Policy and Public Administration at George Washington University, Jeffrey Rosen, a partner at Kirkland & Ellis and former OMB General Counsel (and current Section Council member), and Peter Strauss, Betts Professor of Law at Columbia Law School (and former Section Chair).

Monday, February 28, 2011

Administrative Conference of the United States/Ethics: ACUS Committee to Consider Possible Government Contractor Ethics Recommendation

On February 28, the Administrative Conference of the United States (ACUS) blog, Administrative Fix, posted that on March 16, from 9:00 to noon ET, the ACUS Committee on Administration and Management will "consider a draft recommendation concerning the ethics rules applicable to government contractors and their employees." Additional information about the project is available on the ACUS Government Contractor Ethics page.
Public comments should be submitted in writing no later than noon on March 15 via Members of the public who want to attend the meeting in person should reply to

Antitrust and Trade Regulation/International Law: Canadian Competition Bureau Announces Plans to Revamp Merger Guidelines

On February 25, the Canadian Competition Bureau issued an announcement that it plans to "undertake moderate revisions to the Merger Enforcement Guidelines (MEGs)." The anouncement made clear that the Competition Bureau plans to address only "certain discrete areas where the MEGs do not fully reflect current Bureau practice and current economic and legal thinking."

Specific areas that the Bureau stated it is exploring for possible revision include: (1) "additional guidance on monopsony issues, consistent with the Competitor Collaboration Guidelines, and our OECD submission on this topic"; (2) "how the Bureau assesses transactions in which minority interests or interlocking directorates are at issue, building on the Bureau’s OECD submission on this topic"; (3) "clarif[ication] that merger review is not a linear process that must start with market definition, but rather an iterative process in which evidence of market concentration is considered alongside other evidence of competitive effects, with the goal of determining whether a merger creates or enhances market power"; (4) "more detailed guidance on how the Bureau assesses the unilateral effects of a merger, particularly in light of current economic thinking"; (5) clarif[ication of] the framework used to assess coordinated effects"; (6) "more accurate guidance on how the Bureau assesses vertical issues, focusing on foreclosure effects"; and (7) "incorporat[ion of] the Efficiencies Bulletin into the MEGs." The Bureau "intends to publish the revised draft MEGs during the second quarter of 2011, and to seek public feedback on the revisions prior to publishing the final revised MEGs in the Fall."

Friday, February 25, 2011

Intellectual Property/International Law: Federal Court of Australia Rejects Movie Companies' Infringement Claims Against Australian ISP

On February 24, in Roadshow Films Pty Ltd. & Ors v. iiNet Ltd., No. NSD179/2010, [2011] FCAFC 23, the Federal Court of Australia Full Court dismissed an appeal by a bevy of international movie and entertainment companies against the decision of the primary judge that the Internet service provider iiNet Ltd had not infringed the companies' copyrights when iiNet's customers had illegally downloaded the companies' content. In a lengthy opinion that analyzed numerous provisions of Australian law, the Full Court found it to be "common ground that there have been primary infringements of the copyrights of the Copyright Owners by use by iiNet users of services provided by iiNet." The Court went, however to state that "while the evidence supports a conclusion that iiNet demonstrated a dismissive and, indeed, contumelious, attitude to the complaints of infringement by the use of its services, its conduct did not amount to authorisation of the primary acts of infringement on the part of iiNet users."

Thursday, February 24, 2011

Banking and Financial Services/International Law/International Trade: Australia and New Zealand Sign Important Investment Protocol

On February 16, the governments of Australia and New Zealand signed an Investment Protocol to the Closer Economic Relations Trade Agreement. According to a new report by Kelly Buchanan of the Library of Congress, and as reflected in press releases by the Australian and New Zealand governments, the Protocol "increases the screening thresholds above which foreign investments require regulatory approval in each country. In Australia, the screening threshold for New Zealand investors will increase from AU$231 million (about US$233.6 million) to AU$1.005 billion (about US$1.016 billion), and in New Zealand, the screening threshold for Australian investors will increase from NZ$100 million (about US$76 million) to NZ$477 million (about US$362 million)."

Banking and Financial Services/International Law: New Developments on Iceland Icesave Deposits

Over the last ten days, there have been two significant developments in Iceland with regard to Icesave deposits, the high-yield savings accounts offered by the online bank Icesave in the Netherlands and the United Kingdom. On February 16, the Icelandic Parliament, the Althingi, passed a bill that -- according to a report by Wendy Zeldin of the Library of Congress -- would "enable the Icelandic government to guarantee loans from those two countries to cover Dutch and U.K. depositor claims stemming from the collapse of Icesave's parent company, Landsbanki Islands h.f. Passage of the bill comes more than two years after the Iceland financial system's near collapse in October 2008."

Second, on February 22, Iceland's President, Olafur Grimsson, called a referendum on the bill. According to a BBC article, President Grimmson told reporters, "It is important that the nation again will get its say." In a March 2010 referendum on a previous version of the Icesave deal, 93.2 percent of Icelandic voters rejected that deal. The BBC noted that "[u]nder the terms of the latest deal Iceland will have longer to repay, and at a lower interest rate than before." Moody's warned, however, that if the bill were to be rejected, it would "likely downgrade the government's ratings to Ba1 or below, given the negative repercussions that would follow for the country's economic and financial normalisation," and might "lead to a cut-off in the remaining $1.1 billion committed by the other Nordic countries and probably also to delays in Iceland's IMF program."

Intellectual Property/International Law: Law Library of Congress Publishes Report on Māori Culture and Intellectual Property Law

In December 2010, the Law Library of Congress published online a report by Kelly Buchanan, a Foreign Law Specialist with the Library of Congress, on Māori culture and intellectual property law. The report "discusses some of the issues and challenges in protecting cultural expressions and traditional knowledge in the law, and examines two examples of this in the context of the use of Māori cultural expressions. It also sets out the changes (or proposed changes) to New Zealand’s intellectual property legislation that seeks to enable Māori concerns and concepts to be taken into account through a consultative process."

Wednesday, February 23, 2011

Intellectual Property: White House Announces Strategy for American Innovation

On February 4, the White House issued the "Strategy for American Innovation." The Strategy, which updates the "Innovation Strategy" issued in 2009, includes a patent reform agenda that the White House declared "essential to reducing the enormous backlog of patent applications at the U.S. Patent & Trademark Office (USPTO). By stalling the delivery of innovative goods and services to market, this backlog impedes economic growth and the creation of high-paying jobs. The patent reform legislative agenda will enable the USPTO to adequately fund its operations through user fees and allow the agency to implement new initiatives to improve patent quality while reducing the average delay in patent processing times from 35 months to 20 months. Once implemented, the USPTO’s proposed three-track model will allow applicants to prioritize applications, enabling the most valuable patents to come to market within 12 months."

Antitrust and Trade Regulation/International Law: South African Competition Commission Announces "Fast-Track Settlement" Process for Construction Firms

On February 1, the South African Competition Commission announced the establishment of a "fast-track settlement" process for construction firms "who have been party to collusive practices in bidding for projects in the public and private sectors." The Commission has been conducting an investigation in the construction industry that "has uncovered widespread anticompetitive conduct through various arrangements," such as meetings between major firms "to allocate tenders and police each other's behaviour through a structure referred to as 'The Party'."

The Commission's announcement specified that it had "devised a fast-track settlement procedure to incentivise firms to enter into a comprehensive settlement that is financially advantageous." It invited firms "to apply for fast-track settlement with complete and truthful disclosure of information regarding collusion. In addition the firm must undertake to cooperate and cease anti-competitive conduct. Upon complying with the requirements, the Commission will settle with participating firms with a reduced administrative penalty compared to the penalty if each transgression were to be prosecuted separately."

Criminal Process/Intellectual Property/International Law: Renault Files Criminal Complaint with French Prosecutors on Alleged Industrial Spying

On January 13, according to a New York Times article, Renault filed a criminal compaint with the Office of the Public Prosecutor in Paris, alleging that a foreign company tried to obtain secrets relating to Renault's electric-car program. Renault previously had suspended three of its executives, whom it suspected of seeking to pass on data relating to the electric-car program, and reportedly had scheduled disciplinary hearings on January 11. After a French Member of Parliament publicly intimated "that a Chinese intermediary had sought to obtain secrets from the three Renault executives," a Chinese Foreign Ministry spokesman responded with a statement that such charges were "totally baseless and irresponsible."

Tuesday, February 22, 2011

Securities, Commodities, and Exchanges: FINRA Proposes New Rule on Private Placements and Member Firm Participation

On January 11, the Financial Industry Regulatory Authority (FINRA) requested comment on a proposal to amend FINRA Rule 5122. Rule 5122, according to the FINRA regulatory notice, "requires, subject to certain exemptions, disclosure in the offering document of the intended use of offering proceeds, expenses, and the amount of selling compensation to be paid to the broker-dealer and its associated persons, in any private placement in which a participating broker-dealer (or its control entity) is the issuer. The rule also requires that at least 85 percent of the offering proceeds must be used for the business purposes identified in the offering document. Lastly, the rule requires each offering document to be submitted to FINRA to allow the staff to conduct ex post reviews to assess compliance with the rule and to identify problematic terms and conditions. "

The proposal would expand Rule 5122 "to reach all private placements in which a member firm participates—not just those in which the member firm (or its control entity) is the issuer—while retaining nearly all of the existing exemptions, including those for offerings sold solely to certain institutions, qualified purchasers and other sophisticated investors." To reflect the broader scope of the proposed rule and its prior experience with Rule 5122, FINRA also proposed "to eliminate the exemption for offerings in which a member acts primarily in a wholesaling capacity." The comment period ends March 14.

Energy/Environment/Homeland Security/International Law: United Kingdom Energy Minister Announces Review of Offshore Drilling Policies

On January 12, immediately after the January 11 issuance of the National Commission on the BP Deepwater Horizon Oil Spill and Oil Drilling's final report, United Kingdom Energy Minister Charles Hendry issued a statement that offered favorable comments on the report. The statement also announced that the United Kingdom Government intended to review the United Kingdom’s oil and gas offshore regulatory regime "against the findings of the US investigations," and that the review would begin within a month.

Energy/Environment/Homeland Security: Deepwater Horizon Commission Issues Report

On January 11, the National Commission on the BP Deepwater Horizon Oil Sill and Offshore Drilling issued its final report to the President. The report reached seven principal conclsions:
1. "The explosive loss of the Macondo well could have been prevented."
2. "The immediate causes of the Macondo well blowout can be traced to a series of identifiable mistakes made by BP, Halliburton, and Transocean that reveal such systematic failures in risk management that they place in doubt the safety culture of the entire industry."
3. "Deepwater energy exploration and production, particularly at the frontiers of experience, involve risks for which neither industry nor government has been adequately prepared, but for which they can and must be prepared in the future."
4. "To assure human safety and environmental protection, regulatory oversight of leasing, energy exploration, and production require reforms even beyond those significant reforms already initiated since the Deepwater Horizon disaster. Fundamental reform will be needed in both the structure of those in charge of regulatory oversight and their internal decisionmaking process to ensure their political autonomy, technical expertise, and their full consideration of environmental protection concerns."
5. "Because regulatory oversight alone will not be sufficient to ensure adequate safety, the oil and gas industry will need to take its own, unilateral steps to increase dramatically safety throughout the industry, including self-policing mechanisms that supplement governmental enforcement."
6. "The technology, laws and regulations, and practices for containing, responding to, and cleaning up spills lag behind the real risks associated with deepwater drilling into large, high-pressure reservoirs of oil and gas located far offshore and thousands of feet below the ocean’s surface. Government must close the existing gap and industry must support rather than resist that effort."
7. "Scientific understanding of environmental conditions in sensitive environments in deep Gulf waters, along the region’s coastal habitats, and in areas proposed for more drilling, such as the Arctic, is inadequate. The same is true of the human and natural impacts of oil spills."

Thursday, February 17, 2011

Banking and Financial Services/Securities, Commodities, and Exchanges: Financial Crisis Inquiry Commission Issues Final Report

On January 27, the Financial Crisis Inquiry Commission (FCIC) issued its final report on the 2007-2008 financial crisis. The FCIC, created in 2009 pursuant to the Fraud Enforcement and Recovery Act, Public Law 111-21, reached six general conclusions in the majority report: (1) the crisis was avoidable; (2) "widespread failures in financial regulation and supervisionproved devastating to the stability of the nation’s financial markets"; (3) "dramatic failures of corporate governance and risk management
at many systemically important financial institutions were a key cause of this crisis"; (4) "a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis"; (5) "the government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets"; and (6) "there was a systemic breakdown in accountability and ethics."

The majority report also reached three conclusions with respect to specific components of the financial system: (1) "collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis"; (2) "over-the-counter derivatives contributed significantly to this crisis"; and (3) "the failures of credit rating agencies were essential cogs in the wheel of financial destruction." Finally, the majority report concluded that "the failures of credit rating agencies were essential cogs in the wheel of financial destruction." Four FCIC members filed dissenting views.

On February 16, members of the U.S. House Financial Services Committee reportedly divided along partisan lines in supporting or criticicing the FCIC report. According to the Los Angeles Times, "[o]nly Democrats supported the panel's majority findings, which cast blame widely among regulators, corporate executives and consumers for a crisis deemed avoidable."

Administrative Conference of the United States: Chairman Verkuil Announces ACUS Implementation of Google Apps for Government

On February 16, on the Administrative Conference of the United States (ACUS) blog, Chairman Paul Verkuil announced that ACUS had implemented Google Apps for Government. Chairman Verkuil stated that ACUS had "recently launched a collaborative workspace for Members and staff using Google Apps for Government to share documents, calendars and websites."

Agriculture/Commodities: CFTC Issues Proposed Rule on Agricultural Swaps

On February 2, the Commodity Futures Trading Commission published in the Federal Register a notice of proposed rulemaking on agricultural swaps. According to the notice, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) "provides that swaps in an agricultural commodity (as defined by the Commission) are prohibited unless entered into pursuant to a rule, regulation or order of the Commission adopted pursuant to [the] Commodity Exchange Act . . . ." Dodd-Frank also includes options (other than an option on a futures contract) in its definition of swaps.

In general, the proposed rule "would implement regulations whereby swaps in agricultural commodities and all commodity options (including options on both agricultural and non-agricultural commodities), other than options on futures, may transact subject to the same rules as all other swaps. The proposed rules for swaps in an agricultural commodity would repeal and replace the Commission's regulations concerning the exemption of swap agreements. Because the Dodd-Frank Act defines commodity options (other than options on futures) as swaps, the proposed rules for options would substantially amend the Commission's regulations regarding commodity option transactions." The deadline for comments is April 4.

Securities: SEC Issues Final Dodd-Frank Rules Relating to Asset-Backed Securities

On January 20, the Securities and Exchange Commission issued two sets of final rules to implement various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). The first rule, which implements section 943 of Dodd-Frank, involves "new rules related to representations and warranties in asset-backed securities offerings. The final rules require securitizers of asset-backed securities to disclose fulfilled and unfulfilled repurchase requests. [The] rules also require nationally recognized statistical rating organizations to include information regarding the representations, warranties and enforcement mechanisms available to investors in an asset-backed securities offering in any report accompanying a credit rating issued in connection with such offering, including a preliminary credit."

The second rule, implementing Section 945 of Dodd-Frank, is a new rule under the Securities Act of 1933 requiring "any issuer registering the offer and sale of an asset-backed security ('ABS') to perform a review of the assets underlying the ABS." The rule also amends Item 1111 of Regulation AB "that would require an ABS issuer to disclose the nature of its review of the assets and the findings and conclusions of the issuer’s review of the assets." Both sets of rules take effect March 28.

Agriculture/Commodities: FT Report on Algorithmic Trading in Sugar Futures

On February 8, the Financial Times published an article on growing concerns among some in the commodities industry that so-called "algorithmic" trading -- futures trading with high-speed computers -- is causing price distortions. As the article put it, "Ten years ago it took the sugar market six months to move 2 cents. In the past three months, it has moved 2 cents in just one day on five occasions. Last Thursday, it moved this much in a single second."

The article also stated, however, that not everyone agrees that high-speed traders are to blame. Some traders reportedly said that "the increase in volatility simply reflects high prices for sugar."

Criminal Process: United Kingdom High Court Approves Extradition of Defendant in Foreign Corrupt Practices Case

On January 20, in Tesler v. Government of the United States of America, a panel of the High Court of Justice in London dismissed an appeal by Jeffrey Tesler, who had been indicted in the United States on charges of conspiring to violate, and aiding and abetting violations of, the Foreign Corrupt Practices Act (FCPA). Tesler, a dual United Kingdom and Israeli national residing in London, had been indicted in the Southern District of Texas in 2009 for his alleged participation in a scheme to bribe Nigerian Government officials to assist an international joint venture consortium.

Tesler appealed from a ruling by a District Judge in the United Kingdom that the requirement for his extradition to the United States pursuant to the United Kingdom Extradition Act 2003 had been satisfied. The High Court (Lord Justice Pill) held that "[t]he appellant's acts in furtherance of the aims of the Joint Venture were performed outside the United States but that did not defeat the United States connection," and that "[t]he effects of his actions were to be felt in the United States and were intended to be felt there," even if "the eventual 'harm' may be in Nigeria."

Tuesday, January 18, 2011

Legislative Process: ABA Task Force Issues Report on Federal Lobbying Laws

On January 11, the ABA announced that the Task Force on Federal Lobbying Laws, organized by the ABA Administrative Law and Regulatory Practice Section, had issued a report that recommends changes in various provisions of federal lobbying laws. In brief, the report, according to the ABA press release, recommends (1) greater transparency with respect to outside firms that lobbyists retain to do additional work and with respect to lobbyists' identification of specific legislative or executive offices that they plan to contact; (2) a two-year prohibition on lobbyists who advocate a position before a Member of Congress fundraising for that Member, and on fundraisers for a Member lobbying that Member; (3) restrictions on lobbyists who seek earmarks or other narrow financial benefits from Congress, including a ban on contingent fees; and (4) assignment of lobbying enforcement to a regulatory body such as the Civil Division of the Department of Justice, and assignment of appropriate administrative powers to that body.

On January 18, C-SPAN broadcast a discussion of the report by the Task Force's Co-Chair, Trevor Potter. The Harvard Law School News also issued a press release about the report that featured another Task Force Co-Chair, Professor Charles Fried.

Regulatory Policy: President Issues Executive Order on Regulatory Review

On January 18, President Obama issued a new Executive Order on "Improving Regulation and Regulatory Review." The Executive Order supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review that were established in Executive Order 12866, and mostly sets forth broad principles applicable to regulation and regulatory review.

Subsection 1(a) of the Executive Order states generically that
"[o]ur regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation"; "be based on the best available science"; "allow for public participation and an open exchange of ideas'; "promote predictability and reduce uncertainty"; "identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends"; "take into account benefits and costs, both quantitative and qualitative"; "ensure that regulations are accessible, consistent, written in plain language, and easy to understand"; and "measure, and seek to improve, the actual results of regulatory requirements."

Subsection 1(b) states that "each agency must, among other things: (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public."

Section 2 directs that "[r]egulations shall be adopted through a process that involves public participation"; that each agency "shall endeavor to provide the public with an opportunity to participate in the regulatory process'; and that "[b]efore issuing a notice of proposed rulemaking, each agency, where feasible and appropriate, shall seek the views of those who are likely to be affected, including those who are likely to benefit from and those who are potentially subject to such rulemaking."

Section 3 states that "[i]n developing regulatory actions and identifying appropriate approaches, each agency shall attempt to promote" interagency coordination as well as simplification and harmonization of rules; and "shall also seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation." Section 4 states that "[w]here relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, each agency shall identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public." Section 5 states that "each agency shall ensure the objectivity of any scientific and technological information and processes used to support the agency's regulatory actions."

Section 6 is the section that creates the most specific new obligation for federal agencies. Subsection 6(a) states that "[t]o facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned." It also specifies that such retrospective analyses, "including supporting data, should be released online whenever possible." Subsection 6(b) provides that within 120 days of January 18, 2011, "each agency shall develop and submit to the Office of Information and Regulatory Affairs a preliminary plan, consistent with law and its resources and regulatory priorities, under which the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives."

In a January 18 op-ed piece in the Wall Street Journal, the President explains that this regulatory review "will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades." He concludes with the observation that "[t]his is the lesson of our history: Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another."

Wednesday, January 12, 2011

Adjudication/Judicial Review/Tax: Supreme Court January 11 Decision in Mayo Foundation v. United States

On January 11, the United States Supreme Court handed down its decision in Mayo Foundation v. United States. Mayo involved a challenge to a Treasury Department regulation providing that the services of full-time employees, which include employees normally scheduled to work 40 hours or more a week, are required to pay taxes under the Federal Income Contributions Act (FICA). The Mayo Foundation and other plaintiffs, which provided doctors in their residency programs with annual "stipends" of more than $40,000 as well as health insurance, malpractice insurance, and paid vacation time, challenged this regulation on the ground that its residents were exempt from taxation under section 3121 of the FICA and that the Treasury regulation was invalid.

Chief Justice Roberts, writing for the Court, held that the Treasury regulation was a permissible construction of section 3121. The Court began by applying the first step of the two-part framework in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43 (1984). It determined that Congress, in the FICA, had not "directly addressed the precise question at issue," as the FICA did not define the term student and did not otherwise address whether medical residents are subject to FICA. (Slip op. at 6.) Although neither the plain text of the statute nor the District Court's interpretation of the exemption spoke with sufficient precision to the issue, the Court determined that the appropriate standard, under the second step in Chevron, was whether the agency's answer is based on a permissible construction of the statute.

In so doing, the Court rejected the multi-factor analysis set forth in National Muffler Dealers Assn., Inc. v. United States, 440 U.S. 472 (1979) for evaluating an ambiguous provision of the Internal Revenue Code. Recognizing "the importance of maintaining a uniform approach to judicial review of admistrative action," Dickinson v. Zurko, 527 U.S. 150, 154 (1999), the Court saw "no reason why our review of tax regulations should not be guided by agency expertise pursuant to Chevron to the same extent as our review of other regulations." (Slip op. at 10.)

The Court concluded that Chevron and United States v. Mead Corp., 533 U.S. 218 (2001), rather than National Muffler and Rowan Cos. v. United States, 452 U.S. 247 (1981), "provide the appropriate framework for evaluating the full-time employee rule." (Slip op. at 11.) Applying that framework, it found that the rule "easily satisfies the second step of Chevron." (Slip op. at 12.)