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.