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."
Wednesday, August 3, 2011
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.
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."
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."
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."
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."
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