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Drone Security: Enhancing Innovation and Mitigating Supply Chain Risks

U.S. Sen. Dan Sullivan, R-Alaska, chairman of the Subcommittee on Security, will convene a hearing titled, “Drone Security: Enhancing Innovation and Mitigating Supply Chain Risks,” at 2:30 p.m. on Tuesday, June 18, 2019. This hearing will examine security threats and challenges posed by unmanned aircraft systems (UAS), including the status of UAS detection and mitigation technology and capabilities.

WLF Urges Supreme Court to Provide FAA Guidance to California’s Courts

WLF Legal Pulse - Mon, 06/17/2019 - 11:02am

“California’s courts plainly need to be told—again—how to apply the Federal Arbitration Act.”
—Corbin K. Barthold, WLF Litigation Counsel

Click here for WLF’s brief.

(Washington, DC)—Washington Legal Foundation today filed an amicus curiae brief urging the U.S. Supreme Court to review a California Court of Appeal ruling inconsistent with the Federal Arbitration Act.

The FAA empowers parties to resolve legal conflicts using efficient, streamlined procedures tailored to the type of dispute. To operate properly, however, the FAA must apply consistently across the nation. California’s courts have repeatedly created inconsistency.

Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83 (2000), creates special contract defenses that govern only arbitration clauses. The federal Supreme Court has repeatedly declared that an arbitration clause must be treated like any other contract, yet the California courts have continued to apply Armendariz. The Court of Appeal here used Armendariz to void an arbitration agreement between a law firm and one of its former partners.

In its brief, WLF reviews the California courts’ history of failing to faithfully apply the Supreme Court’s FAA rulings. WLF also explores the variety of ways in which the California courts exhibit bias against arbitration clauses. WLF asks the Supreme Court both to discard Armendariz and to remind California’s courts of the FAA’s demand that neutral rules be applied neutrally.

Celebrating its 42nd year as America’s premier public-interest law firm and policy center, WLF advocates for free-market principles, limited government, individual liberty, and the rule of law.

The post WLF Urges Supreme Court to Provide FAA Guidance to California’s Courts appeared first on Washington Legal Foundation.

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Unclear Whether Lack of Prison Time in First “Operation Varsity Blues” Sentencing Sets Precedent for Other Defendants

WLF Legal Pulse - Fri, 06/14/2019 - 1:40pm

By Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with Stanley L. Garnett, a Shareholder in the firm’s Denver, CO office. Mr. Brower also serves on WLF Legal Policy Advisory Board and is the WLF Legal Pulse’s Featured Expert Contributor, White Collar Crime and Corporate Compliance.

The college admissions bribery scandal that resulted in federal criminal charges against dozens of parents, coaches, school administrators and others (and on which we’ve written about previously here) saw its first sentencing this week. Former Stanford sailing team coach John Vandemoer was sentenced to one day in prison, six months of home confinement, and a $10,000 fine after pleading guilty to a single RICO conspiracy count. With credit for time served prior to his release from custody following arrest, Vandemoer will actually serve no time in prison.

U.S. District Court Judge Rya W. Zobe essentially agreed with Vandemoer’s counsel’s sentencing recommendation while rejecting the government’s request for a less-than-guidelines recommended 13-month prison term. Prosecutors had argued that this first sentence in the investigation dubbed “Varsity Blues” would set the tone for other sentences yet to be imposed on other defendants, most of whom have also pled guilty. At one point during the sentencing hearing, Judge Zobe referenced the RICO statute and suggested it is a “heavy statute” passed to “combat La Cosa Nostra,” and was apparently not convinced that there was any actual loss or victim of Vandemoer’s criminal conduct.

This particular case is unique among the some 50 charged for at least two reasons. First, while Vandemoer did agree to falsely describe three applicants as sailing recruits in exchange for three payments totaling more than $500,000 from the parents of three applicants, none of the three were actually admitted to Stanford as a result of the scheme designed by admitted mastermind William Rick Singer. One of the falsified applications was submitted too late for consideration, although that student apparently was later admitted through the regular process. The two other applicants helped by Vandemoer decided to enroll in other schools.

Second, it was undisputed that Vandemoer did not personally profit from the payments, with the money going, instead, to the Stanford sailing program. Indeed, Judge Zobe said at the sentencing hearing that of all the people involved in the scandal, she had not heard of anyone who was “less culpable.” Another unusual and interesting aspect of this sentencing was the fact that the government actually argued that the pre-sentence report prepared by U.S. Probation and Pretrial Services improperly calculated Vandemoer’s sentencing guidelines number by concluding that there was “no victim of this offense.” Prosecutors argued this defied common sense.

As nearly all of the charged defendants have now pled guilty and await sentencing, it will be very interesting to see if this first sentence is a bellwether for the others, or if the unique facts of this first defendant’s offenses make this one an outlier.

The post Unclear Whether Lack of Prison Time in First “Operation Varsity Blues” Sentencing Sets Precedent for Other Defendants appeared first on Washington Legal Foundation.

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WLF Urges Fifth Circuit to Broaden Contractors’ Rights to Remove Cases to Federal Court

WLF Legal Pulse - Fri, 06/14/2019 - 12:49pm

“The federal officer removal statute should be broadly construed to allow federal officers (and those acting under them) to remove cases to federal court.  Congress has long endorsed those defendants’ rights to a federal forum so they avoid potential bias in state court.
Mark Robertson, WLF Staff Attorney

Click here for WLF’s brief.

(Washington, DC)—Washington Legal Foundation (WLF) today urged the U.S. Court of Appeals for the Fifth Circuit to uphold the right of federal contractors to remove cases to federal court whenever, as here, the contractors have articulated a colorable federal defense. In an amicus curiae brief filed in an en banc proceeding, Latiolais v. Huntington Ingalls, Inc., WLF argues that prior Fifth Circuit decisions have adopted an inappropriately narrow construction of the federal officer removal statute.

The initial panel decision in the case, involving a shipyard (Avondale) hired by the Navy to refurbish one of its ships, upheld a district court order remanding the case to state court. But the decision’s author, Judge Edith Jones, criticized Fifth Circuit precedent that required a narrow interpretation of the removal statute and urged the court to rehear the case en banc. The court voted in May to do so.

The plaintiff is a former Navy sailor who was assigned to a ship that Avondale refurbished in the 1960s. He contends that he developed a fatal illness as a result of exposure to the asbestos that Avondale used during the refurbishing process. He faults Avondale for failing to warn him of the dangers of asbestos. Avondale is asserting the federal-contractor defense, under which a federal contractor is immune from suit if the federal government imposes reasonably precise specifications for the installation of asbestos on one of its vessels and the contractor complies with those specifications.

The federal officer removal statute authorizes removal by any officer of the United States “or any person acting under that officer,” “for or relating to any act under color of such office.” In its brief, WLF urges the court to read the statute broadly so as to encompass removal by any federal contractor who raises a “colorable federal defense” (such as the federal-contractor defense asserted by Avondale). WLF notes that Congress broadened the scope of the removal statute in 2011 by adding the words “or relating to” so that removal is now authorized in a lawsuit “for or relating to” any act under color of federal law. WLF argues that the Fifth Circuit should eliminate its current requirement that the defendant establish a “causal nexus” between explicit federal government orders and the plaintiff’s injury.

Celebrating its 42nd year, WLF is America’s premier public-interest law firm and policy center advocating for free-market principles, limited government, individual liberty, and the rule of law. 

The post WLF Urges Fifth Circuit to Broaden Contractors’ Rights to Remove Cases to Federal Court appeared first on Washington Legal Foundation.

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WLF and Antitrust Scholars Urge Second Circuit to Vacate FTC Order Misapplying Quick-Look Standard

WLF Legal Pulse - Fri, 06/14/2019 - 12:17pm

“The FTC summarily punished 1-800 Contacts for trying to protect itself from rivals free riding on its advertising. The FTC says it has thereby promoted competition. All it has really done is discourage innovation.”
—Corbin K. Barthold, WLF Litigation Counsel

Click here for WLF’s brief.

(Washington, DC)—Washington Legal Foundation today filed an amicus curiae brief urging the Second Circuit to vacate an FTC order misapplying the “quick look” antitrust standard. WLF filed the brief on behalf of both itself and prominent antitrust scholars Richard A. Epstein, Keith N. Hylton, Thomas A. Lambert, Geoffrey A. Manne, and Hal Singer.

1-800 Contacts pioneered the online contact lens market. And it continues to spend heavily on television, radio, and print advertising to draw new customers online. It has attracted many competitors. Some of these firms have tried to free ride on 1-800’s offline advertising by buying the advertising space at the top of internet-search results for terms like “1-800 Contacts.” 1‑800 sued or threatened to sue these firms for trademark infringement. Each dispute settled, and as part of each settlement, the allegedly infringing firm agreed not to buy advertisements keyed to 1-800’s trademark terms.

The FTC condemned these settlements as an antitrust violation. Instead of conducting an extensive analysis of the evidence, however, it applied the “quick look” standard, under which the conduct at issue is presumed anticompetitive.

The antitrust scholars and WLF contend that this was error. The quick-look standard governs only when the conduct at issue is obviously anticompetitive. Internet-search advertising is a relatively new phenomenon, so there is little that is “obvious” about its impact on competition.

Further, there are solid procompetitive factors supporting the settlements. Key among these—and the focus of the scholars’ and WLF’s brief—is the settlements’ discouragement of advertisement free riding. The settlements helped ensure that when 1‑800’s broad (and expensive) advertising attracted new customers specifically to 1‑800, competitors could not use internet-search advertising to poach those customers on the cheap. By reducing free riding, the settlements likely maximized the net amount of advertising for online contact lenses—to the benefit of consumers.

Celebrating its 42nd year as America’s premier public-interest law firm and policy center, WLF advocates for free-market principles, limited government, individual liberty, and the rule of law.

The post WLF and Antitrust Scholars Urge Second Circuit to Vacate FTC Order Misapplying Quick-Look Standard appeared first on Washington Legal Foundation.

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Subcommittee to Hold Hearing on Oversight of the Consumer Product Safety Commission

U.S. Sen. Jerry Moran, R-Kan., chairman of the Subcommittee on Manufacturing, Trade, and Consumer Protection, will convene a hearing titled, “Oversight of the Consumer Product Safety Commission,” at 10:30 a.m. on Thursday, June 20, 2019. As part of the committee’s oversight of agencies under its jurisdiction, this hearing will examine policy issues before the Consumer Product Safety Commission (CPSC). The committee will also review the ongoing activities and proceedings at the CPSC.

Wicker, Peters, Thune, and Klobuchar Introduce Bill to Improve Broadband Data Maps

Today U.S. Senator Roger Wicker, R-Miss., chairman of the Senate Committee on Commerce, Science, and Transportation, together with Sens. Gary Peters, D-Mich., John Thune, R-S.D., and Amy Klobuchar, D-Minn., introduced the Broadband Deployment Accuracy and Technological Availability (DATA) Act. The legislation would improve the accuracy of the Federal Communications Commission’s (FCC) broadband availability maps by strengthening the process by which broadband data is collected.

Committee Announces Hearing on FAST Act Reauthorization

U.S. Sen. Roger Wicker, R-Miss., chairman of the Committee on Commerce, Science, and Transportation, will convene a hearing titled, “FAST Act Reauthorization: Transportation and Safety Issues,” at 10:00 a.m. on Wednesday, June 19, 2019. The hearing will examine implementation of the Fixing America’s Surface Transportation (FAST) Act, which expires at the end of fiscal year 2020, and priorities for the Department of Transportation as Congress prepares for surface transportation reauthorization.

The Doctor is Out. Rising Student Loan Debt and the Decline of the Small Medical Practice

House Small Business Committee News - Wed, 06/12/2019 - 11:30am

The Committee on Small Business will meet for a hearing titled, “The Doctor is Out. Rising Student Loan Debt and the Decline of the Small Medical Practice.” The hearing is scheduled to begin at 11:30 A.M. on Wednesday, June 12, 2019 in Room 2360 of the Rayburn House Office Building.

Student loan debt is now a $1.49 trillion issue that continues to break records quarter after quarter. Not only has it forced many younger and older Americans to reevaluate careers paths but has also hampered small business formation and expansion. Among medical professionals, it has hindered opportunities for sole or private practice, while limiting or influencing the specialty many medical professionals are able to choose from. Members will hear testimony about the cause of the staggering growth in student loan debt, why medical professionals are more likely to have higher debt levels, and the impact it has on specialization and private practice decisions. Additionally, the hearing will examine what legislative solutions or ideas are available to reduce student loan debt and increase the number of sole practices in the health care field, particularly in rural areas.

To view a livestream of the hearing, please click here. 

Hearing Notice 

Hearing Memo 

Witness List 

Witnesses 

Ms. Sandra Norby, PT, DPT
CEO
HomeTown Physical Therapy, LLC
Des Moines, IA
*Testifying on behalf of the American Physical Therapy Association and the Private Practice Section of the American Physical Therapy Association
Testimony

Ms. Lauren Wiese
Orthodontic Resident
University of Maryland School of Dentistry
Baltimore, MD
*Testifying on behalf of the American Association of Orthodontics
Testimony 

Mr. Jason Delisle
Resident Fellow
American Enterprise Institute
Washington, DC
*Testifying on behalf of the American Enterprise Institute
Testimony

*Witness testimony will be posted within 24 hours after the hearing’s occurrence


 

<p>Good morning. Welcome to

Good morning. Welcome to today’s hearing on the “Oversight of the Federal Communications Commission.” I am glad to convene this hearing with my friend and colleague, Ranking Member Cantwell. I welcome our distinguished panel of witnesses and thank all of them for appearing. Today we will hear from:

  • FCC Chairman Ajit Pai;
  • Commissioner Mike O’Rielly;
  • Commissioner Brendan Carr;
  • Commissioner Jessica Rosenworcel; and
  • Commissioner Geoffrey Starks

One of the FCC’s most important responsibilities is to promote the expansion of competitive telecommunications and broadband networks across the United States. Under Chairman Pai’s leadership, the Agency has taken steps to close the digital divide in rural America.

The Commission has promoted investment and innovation by addressing outdated rules and regulations and has also taken steps to enhance public safety, protect consumers, and improve transparency into Agency actions. I commend the FCC and its efforts, but note, as we would all agree, that more work remains. 

That work starts with closing the digital divide once and for all. Access to broadband is essential. Through internet connectivity, Americans can access jobs, education, economic opportunities, good health, and entertainment. For too long, Americans across the nation have gone without access to reliable, high-speed internet service simply because they live in the rural heartland.

In previous hearings, we have discussed how inaccurate maps have contributed to the persistent broadband gap. It is clear to me that short of a completely new approach to developing accurate and reliable maps, the FCC should not move forward on broadband funding decisions until it gets the maps right.

As a first step to improving the nation’s broadband maps, last month I introduced the “Broadband Interagency Coordination Act” with Senator Klobuchar. This legislation would improve coordination among federal agencies that administer broadband deployment programs. It would also facilitate information gathering among the FCC, the NTIA, and the Department of Agriculture concerning broadband availability throughout the United States.

Increased coordination will help target broadband resources to unserved areas and communities that lack access to internet services.

Today, I will introduce the “Broadband DATA Act” with Senators Peters, Thune, and Klobuchar. This legislation would build upon better coordination among federal agencies and would require the FCC to collect more granular data about where wired, fixed wireless, and satellite broadband is available and where it is not.

I am sure the Commissioners will want to discuss today what the FCC is doing to collect more accurate data about broadband availability and how the Commission is verifying the data submitted by carriers. I also hope the Chairman will provide a status update on the Mobility Fund Phase II program and discuss how the recently announced $20.4 billion Rural Digital Opportunity Fund will be used to close the digital divide.

We must solve the problem and do so without further delays.

The FCC’s work also includes ensuring American leadership in 5G, which is critical for the continued economic well-being and security of the United States. The Commission has made real progress in bringing spectrum to market to foster the development of next-generation networks.

Mid-band spectrum is particularly important to the initial deployment of 5G. But the United States currently lags behind our competitors in the availability of mid-band spectrum.

This morning’s hearing is an opportunity for Commissioners to discuss the FCC’s efforts to speed up the availability of mid-band spectrum for 5G and whether they believe Congressional action is necessary to advance the Commission’s work in this area.

Winning the race to 5G is dependent on the security of the nation’s communications networks. I recently introduced bipartisan legislation, “The United States 5G Leadership Act,” with Senators Cotton, Warner, Markey, and Sullivan. This legislation would provide relief to providers that need to replace foreign equipment that may present a national security risk. The legislation would help improve information sharing among national security agencies and communications providers to address immediate threats to network security.

I look forward to hearing what more the Commission and the entire federal government might do to improve security in the next-generation of telecommunications infrastructure.

Finally, let me commend the Commission for taking steps to expand telemedicine in rural areas through its proposed $100 million Connected Care Pilot Program. This program is inspired by the University of Mississippi Medical Center, which is a national trailblazer in telehealth. The Commission’s focus on expanding connectivity through this program can help reduce the cost of care and improve patient outcomes, especially among the nation’s most underserved populations.

Clearly there is much to discuss today. I look forward to hearing testimony from the Commissioners and thank them for appearing.

I will now turn to my good friend from the State of Washington. Senator Cantwell. 

 

Oversight of the Federal Communications Commission

U.S. Sen. Roger Wicker, R-Miss., chairman of the Committee on Commerce, Science, and Transportation, will convene a hearing titled, “Oversight of the Federal Communications Commission,” at 10:00 a.m. on Wednesday, June 12, 2019. As part of the Committee’s oversight responsibilities, this hearing will examine policy issues before the Federal Communications Commission and review its ongoing activities and proceedings.

Subcommittee to Hold Hearing on Drone Security

U.S. Sen. Dan Sullivan, R-Alaska, chairman of the Subcommittee on Security, will convene a hearing titled, “Drone Security: Enhancing Innovation and Mitigating Supply Chain Risks,” at 2:30 p.m. on Tuesday, June 18, 2019. This hearing will examine security threats and challenges posed by unmanned aircraft systems (UAS), including the status of UAS detection and mitigation technology and capabilities.

WLF Asks Appeals Court to Overturn Certification of Nationwide Class of Cellphone Purchasers

WLF Legal Pulse - Tue, 06/11/2019 - 10:49am

“Nationwide class actions are inappropriate under federal court rules when the claims of class members are subject to conflicting laws from 50 different States.  The plaintiffs’ bar should not be permitted to evade those limitations by filing suit in friendly jurisdictions and then convincing the judge to apply forum law to all claims, regardless of the State in which the claims arise.”

—Richard Samp, WLF Chief Counsel

Click here for WLF’s brief.

WASHINGTON, DC—Washington Legal Foundation (WLF) last evening urged the U.S. Court of Appeals for the Ninth Circuit to reverse a district court’s nationwide class certification order in a lawsuit involving antitrust claims against Qualcomm, a computer chip manufacturer. The certified class consists of 250 million cellphone purchasers—in other words, a significant majority of all Americans. In an amicus brief filed in Stromberg v. Qualcomm Inc., WLF argued that the class action’s massive size renders it unmanageable, and that the California district court improperly applied California antitrust law to the claims of cellphone purchasers in all 50 States.

The plaintiffs allege that Qualcomm engaged in anticompetitive practices that forced cellphone manufacturers to pay inflated royalties to Qualcomm to license certain patents. They further allege that as a result of those inflated royalties, consumers paid more to purchase cellphones than they would have paid had Qualcomm charged reasonable royalties.

Federal antitrust law and the antitrust laws of 22 States provide that only those who have had direct dealings with an alleged antitrust violator may sue for damages. Cellphone purchasers have no direct dealings with Qualcomm (which does not make cellphones), and thus those 23 jurisdictions bar purchasers from filing antitrust claims against Qualcomm. But California is among the States that permits lawsuits by indirect purchasers. By directing the application of California law to the claims of purchasers nationwide, the district court enabled the filing of antitrust claims by cellphone purchasers whose claims would otherwise have been barred.

WLF’s brief argued that each State has a strong interest in applying its own consumer protection laws to product sales occurring within the State. WLF urged the appeals court to respect that strong interest by eliminating from the class action all consumers residing in one of the 22 States that bar antitrust claims by indirect purchasers. WLF also argued that class certification should be reversed because the district court failed to create a plan for managing such a massive lawsuit—by far the largest class action in U.S. history.

Celebrating its 42nd year, WLF is America’s premier public-interest law firm and policy center advocating for free-market principles, limited government, individual liberty, and the rule of law.

The post WLF Asks Appeals Court to Overturn Certification of Nationwide Class of Cellphone Purchasers appeared first on Washington Legal Foundation.

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SBA’s State Trade Expansion Program: The States’ Perspective

House Small Business Committee News - Tue, 06/11/2019 - 10:00am

The Committee on Small Business Subcommittee on Rural Development, Agriculture, Trade, and Entrepreneurship will meet for a hearing titled, “SBA’s State Trade Expansion Program: The States’ Perspective.” The hearing is scheduled to begin at 10:00 A.M. on Tuesday, June 11, 2019 in Room 2360 of the Rayburn House Office Building.

The hearing will review the state of the SBA State Trade Expansion Program (STEP). The Trade Facilitation and Trade Enforcement Act of 2015 directed SBA to establish the program to provide grants to states to increase the number of small businesses exploring trade opportunities. The hearing will allow Members to hear the states’ perspectives of SBA’s State Trade and Expansion Program (STEP) and its effectiveness in providing export opportunities for small businesses.

To view a livestream of the hearing, please click here. 

Hearing Notice 

Hearing Memo 

Witness List 

Witnesses 

Mr. Wade Merritt
President and State Director of International Trade
Maine International Trade Center
Portland, ME
Testimony 

Ms. Jennifer Bacon
Co-Founder
FlapJacked
Westminster, CO
Testimony 

Mr. Clifton Broumand
Founder and CEO
Man & Machine, Inc.
Landover, MD
Testimony 

Ms. Jennifer Black
Executive Director, Export Development
PA Department of Community & Economic Development
Office of International Business Development
Harrisburg, PA
Testimony 

*Witness testimony will be posted within 24 hours after the hearing’s occurrence


 

Bait-and-Switch: Federal Judge Holds that EPA Violated the APA when Defining “WOTUS”

WLF Legal Pulse - Tue, 06/11/2019 - 9:38am

Water of the United States?

By Noah Hearn, a 2019 Judge K.K. Legett Fellow at Washington Legal Foundation who will be entering his third year at Texas Tech University School of Law in the fall.

By requiring federal agencies to propose their rules to the public and mandating a method by which the public can express their concerns, the Administrative Procedure Act holds the “fourth branch” of government to a degree of public accountability that would simply not exist otherwise.  On May 28, 2019, United States District Court for the Southern District of Texas Judge George C. Hanks, Jr. recognized this procedural structure by extending an injunction against the enforcement of an EPA rule defining the Clean Water Act’s definition of “waters of the United States.”

The APA

The United States Constitution established only three branches of government: Legislative, Executive, and Judicial. However, as the U.S. grew in both complexity and size, Congress encountered a series of challenges arising from the detail-oriented job of legislating.  Federal administrative agencies presented a solution to this dilemma.  Congress created such agencies to develop regulations that effectuate a broader purpose outlined by the legislature.  Thus, those at the helm of agencies wield considerable influence over the daily lives of American citizens—notwithstanding the fact that they are unelected.  In truth, these administrative agencies are needed in order to govern both effectively and efficiently; but these ideals must be balanced against the need to hold powerful regulators accountable.

Congress’s passage of the Administrative Procedure Act (“APA”) in 1946 constituted an attempt to breathe public oversight into an otherwise undemocratic process.  The APA requires that agencies provide sufficient notice to interested parties on proposed regulations.  This obligation is satisfied when agencies publish proposed rules in the Federal Register and provide the public with a reasonable amount of time to provide feedback or “comment” on those proposed rules.  This process is designed to equip those most likely to be affected by regulatory change with an opportunity to participate in the rulemaking.

Texas v. EPA

This notice-and-comment process is straightforward, and its justification is sound; nevertheless, agencies comply grudgingly and often seek to navigate around their APA responsibilities.  The events underlying State of Texas, et al. v. United States Environmental Protection Agency, et al. provide a timely and compelling example of a federal agency’s circumvention of the APA rulemaking process to reach a desired result.  With the clock ticking on the Obama Presidency, the Environmental Protection Agency (“EPA”) conducted the regulatory equivalent of a “bait-and-switch,” proposing to adopt a Clean Water Act (CWA or Act) regulation and then abandoning the proposal in favor of an entirely different set of rules.

Congress passed the CWA in 1972 with the intention of “restor[ing] and maintain[ing] the chemical, physical, and biological integrity of the Nation’s waters.”  The Act made it “unlawful” to “discharge. . . any pollutant” into “navigable waters”; however, the precise scope of the statutory language “navigable waters” has since become the subject of hot debate.

The CWA defines navigable waters as “the waters of the United States, including territorial seas,” but this broad definition provides little, if any, technical guidance to individuals and corporations alike.  The two regulatory agencies charged with administering the CWA—the EPA and the U.S. Army Corps of Engineers—have consistently failed to clearly define “waters of the United States” (WOTUS).  This decades-old struggle came to a head in 2014 when the agencies proposed a rule that would split “waters of the United States” into three separate categories: (1) categorically covered, (2) categorically excluded, and (3) case specific. Under this proposed rule, the agencies would have jurisdiction over all waters adjacent to categorically covered waters.  Meanwhile, “adjacent” was to be defined as “bordering, contiguous or neighboring.”

As required by the APA, the proposed rule was published in the Federal Register and a three-month comment period commenced.  However, after the comment period ended the agencies issued a “Revised Connectivity Report” and—citing the report’s findings—proceeded to fundamentally alter the proposed rule before releasing the final version.  The new rule would instead define “adjacent waters” by using distance-based criteria rather than the ecologic and hydrologic criteria featured in the proposed rule.  EPA promulgated this Final Rule notwithstanding the fact that its features had never before been tested by a rigorous notice-and-comment process.

After recognizing how the agencies shamelessly executed an end run around the public’s right to comment, Texas, Louisiana, and Mississippi brought suit in Texas v. U.S. EPA and prevailed.  In his opinion, Judge Hanks explains that the EPA “depriv[ed] plaintiffs of a meaningful ‘opportunity to comment’ and possibly deconstruct the Final Connectivity Report,” an action which “violated the [APA].”  This is because the public was never given the chance to comment on the over-300-page Connectivity Report, which examined the effect of wetlands and small streams on downstream water quality. Instead, the agencies simply proposed one rule before proceeding to pass an entirely different one—a classic bait-and-switch.

Conclusion

This case is more than simply another nail in the coffin of WOTUS’s definition; indeed, it also serves as an unambiguous rebuke of agencies who defy the APA.  Here, Judge Hanks correctly held that interested parties should not be forced to “parse through . . . vague references like tea leaves to discern an agency’s regulatory intent,” or otherwise risk being blindsided by a final rule that is not a logical outgrowth of the proposed rule.  Put simply, agencies cannot opt out of transparency regardless of how time consuming notice and comment may be.  The APA contains no exception for political expediency, nor does it bless the concealment of regulatory intentions until the last possible juncture like some kind of Trojan horse.

The post Bait-and-Switch: Federal Judge Holds that EPA Violated the APA when Defining “WOTUS” appeared first on Washington Legal Foundation.

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Federal District Court Rejects OLC Opinion Reinterpreting the Wire Act

WLF Legal Pulse - Tue, 06/11/2019 - 9:00am

By Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with William E. Moschella, a Shareholder in the firm’s Washington, DC office. Mr. Brower also serves on WLF Legal Policy Advisory Board and is the WLF Legal Pulse’s Featured Expert Contributor, White Collar Crime and Corporate Compliance.

On February 20, we posted about a November 2018 U.S. Department of Justice (DOJ) Office of Legal Counsel (OLC) opinion that reversed a 2011 OLC opinion on the scope of the Wire Act, a law that prohibits certain gaming activities across state lines. The 2011 opinion had clarified that the statute applied to sports betting only. The new opinion reinterpreted the Wire Act to prohibit all forms of wagering activity that crosses state lines, not just sports betting. We also reported back in February that two lawsuits had been filed challenging the new opinion. Last week, that litigation was decided in favor of the plaintiffs, with a federal court effectively setting aside the new opinion with a declaration that the Wire Act applies to sports betting only.

DOJ vigorously defended the challenge to the most recent OLC opinion, raising both procedural and substantive objections, and even, on the eve of oral argument, issuing a memorandum in which it attempted to disclaim any intent at actually enforcing the opinion against the plaintiffs. Nevertheless, a federal district court in New Hampshire moved ahead with a decision. After first finding that the plaintiffs had standing and that the 2018 OLC opinion was a “final agency action” for purposes of a valid claim under the Administrative Procedure Act, U.S. District Court Judge Paul Barbadoro addressed the merits of the dispute and concluded as follows: “In sum, while the syntax employed by the Wire Act’s drafters does not suffice to answer whether Section 1084(a) is limited to sports gambling, a careful contextual reading of the Wire Act as a whole reveals that the narrower construction proposed by the 2011 OLC Opinion represents a better reading.”

Judge Barbadoro went on to conclude that the “Act’s legislative history, if anything, confirms this conclusion.” Based upon these findings, the court declared that § 1084(a) of the Wire Act “applies only to transmissions related to bets or wagers on a sporting event or contest,” and further declared that the “2018 OLC Opinion is set aside.”

This decision, while subject to appeal by DOJ, is significant for the gaming industry, which increasingly is developing online products that electronically cross state lines in some way. Because the 2011 DOJ opinion seems so logically based on the text and history of the statute, and because online products were developed in reliance on that opinion, it was a surprise to most all observers that DOJ would suddenly reinterpret the scope of the statute. With this much anticipated judicial decision, it would appear that a more logical interpretation has been restored, at least for now.


The post Federal District Court Rejects OLC Opinion Reinterpreting the Wire Act appeared first on Washington Legal Foundation.

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In Victory for WLF, Supreme Court Overturns Decision Exposing Employers to Back-Pay Liability

WLF Legal Pulse - Mon, 06/10/2019 - 11:56am

“Activities on the Outer Continental Shelf are governed exclusively by federal law.  Congress has explicitly barred application of conflicting California law governing wage-and-hour standards.”
—Richard Samp, WLF Chief Counsel

WASHINGTON, DC—The U.S. Supreme Court today overturned a Ninth Circuit wage-and-hour ruling that had exposed oil and gas companies to hundreds of millions of dollars in back-pay liability. The decision in Parker Drilling Management Services, Inc. v. Newton was a victory for Washington Legal Foundation (WLF), which filed an amicus curiae brief urging reversal of the lower-court opinion. WLF argued that the Ninth Circuit improperly rejected a half century of federal law governing the wages paid to employees stationed on off-shore oil platforms.

Because of the remote location of oil platforms, employees generally remain on the platforms for several weeks at a time, even though they perform work at most 12 hours per day. Employees receive premium wages for the hours worked, but they are not paid for the hours spent sleeping and resting on oil platforms. This wage-and-hour scheme fully accords with federal labor law; and a law passed by Congress in the 1950s, the Outer Continental Shelf Lands Act (OCSLA), states that federal law applies to activities on oil platforms. Federal courts in Texas and Louisiana (whose coasts are home to most of the nation’s oil platforms) have long interpreted OCSLA as barring application of state law except where there are gaps in federal law that are in need of filling.

But last year the Ninth Circuit held, in a case involving an oil platform off the coast of California, that California wage-and-hour laws apply and that California requires employees to be paid 24 hours per day if their employer does not permit them to return home at the end of their shifts. The Supreme Court today unanimously reversed, agreeing with WLF that the appeals court’s ruling misinterprets OCSLA.  It ruled that OCSLA incorporates the law of the adjacent State only if doing so is necessary to fill a gap in federal law.  The Court said that because the federal Fair Labor Standards Act provides comprehensive standards governing wage-and-hour issues, there is no need to incorporate California law into those standards.

Celebrating its 42nd year, WLF is America’s premier public-interest law firm and policy center advocating for free-market principles, limited government, individual liberty, and the rule of law.

The post In Victory for WLF, Supreme Court Overturns Decision Exposing Employers to Back-Pay Liability appeared first on Washington Legal Foundation.

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Supreme Court Grants Review of Montana State Court Decision Undermining CERCLA

WLF Legal Pulse - Mon, 06/10/2019 - 11:26am

“The Supreme Court has, wisely, grabbed this chance to restore CERCLA’s power to offer some predictability to those responsible for treating a Superfund site.”
—Corbin K. Barthold, WLF Litigation Counsel

(Washington, DC)—The U.S. Supreme Court today granted review of a Montana Supreme Court ruling that allows private landowners to impede the EPA’s efforts to clean one of the nation’s largest Superfund sites. WLF filed an amicus curiae brief in support of the petition for review.

The Comprehensive Environmental Response, Compensation, and Liability Act—known as CERCLA—empowers the EPA to orchestrate the restoration of sites containing hazardous waste. To ensure that the EPA can clean a site effectively, CERCLA contains various provisions that block states or private parties from interfering with an EPA-directed site cleanup plan. The Montana Supreme Court nonetheless affirmed an order allowing landowners to seek money for a cleanup plan that conflicts with the EPA-directed cleanup of Montana’s Anaconda Smelter Superfund site.

WLF’s brief argued that the Montana high court should have treated the case as a classic instance of conflict preemption. Instead, in allowing the case to proceed, the state court gutted at least five discrete parts of CERCLA, including a provision that bars legal challenges to an EPA cleanup plan and a provision that bars cleanups conducted without EPA approval.

The U.S. Supreme Court asked for the United States’ view on whether review should be granted. The United States agreed that the Montana high court’s decision is erroneous, but recommended that the Court deny review. The Supreme Court has taken the case anyway, confirming the importance of addressing and resolving issues that greatly impact the efficient cleanup of Superfund sites.

WLF plans to file an amicus brief at the merits stage urging the Supreme Court to reverse the Montana high court and restore uniformity to the operation of CERCLA.

The post Supreme Court Grants Review of Montana State Court Decision Undermining CERCLA appeared first on Washington Legal Foundation.

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The Federal Circuit Drops Breadcrumbs on Patent Venue in In re Google LLC Mandamus Petition Denial

WLF Legal Pulse - Thu, 06/06/2019 - 5:36pm

By Robbie Manhas, a Managing Associate in the Washington, DC office of Orrick LLP, and Cynthia B. Stein, a Managing Associate in the San Francisco, CA office of the firm. Both practice in the Supreme Court and Appellate practice group. They, along with other Orrick attorneys, filed an amicus brief on behalf of Etsy, HP, Netflix, RingCentral, Red Hat, Salesforce, SAP America, Twitter, and the High Tech Inventors Alliance in support of Google in In re Google LLC.

The U.S. Court of Appeals for the Federal Circuit recently dropped some breadcrumbs on an increasingly important question of patent law: What contacts amount to a “regular and established place of business” under the patent-venue statute, 28 U.S.C. § 1400(b), which provides that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business”?

Following TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), which held that § 1400(b)’s “residence” prong refers only to a corporate defendant’s state of incorporation, plaintiffs bringing infringement suits have increasingly relied on § 1400(b)’s “place of business” prong, which TC Heartland left untouched. One such plaintiff is SEVEN Networks, which in May 2017 sued Google for patent infringement in the Eastern District of Texas. See SEVEN Networks, LLC v. Google LLC, 315 F. Supp. 3d 933 (E.D. Tex. 2018). When Google moved to transfer the case for improper venue, SEVEN responded that venue was proper because Google had committed acts of infringement in the district and that its maintenance of servers housed at the local facilities of various Internet Service Providers (ISPs) constituted a “regular and established place of business.”

The district court’s analysis was cabined by the Federal Circuit’s opinion in In re Cray, 871 F.3d 1355 (Fed. Cir. 2017), which set out guidelines for determining when the “place of business” prong of § 1400(b) is established: “(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant.” Id. at 1360. The district court judge, Judge Gilstrap, held that under Cray, Google’s servers and the rack space they occupy “both independently and together” amount to a “regular and established place of business.” 315 F. Supp. 3d at 954; see id. at 964. He likened the servers to “warehouses,” citing authorities finding warehouses to be places of business. Id. at 948, 957-60. He concluded that it was irrelevant that Google did not actually engage in business at the servers’ location and likewise held that the size of their impact was irrelevant so long as the servers furthered some business purposes. Id. at 956, 961-62. Finally, he reasoned that the servers and racks were “of the defendant” because Google owned the servers and tightly controlled both the servers and rack space through its contracts with ISPs. Id. at 965.

Google petitioned for mandamus to the Federal Circuit. See In re Google LLC, 2018 WL 5536478 (Fed. Cir. Oct. 29, 2018). It argued that neither the servers nor the racks satisfy the physical-place requirement because the servers themselves are not occupiable space, and the racks likewise are not real property where Google employees could or do work. Nor are the servers or racks a “regular and established place of business,” Google argued, because they have little to no impact on Google’s business or users. And neither is “of the defendant,” because the ISPs install, store, and maintain the servers, and they own and control the rack space.

In a split per curiam opinion, a Federal Circuit panel denied review without opining on the merits. The majority, Judges Dyk and Taranto, observed that “the scope of the district court’s decision is, in many respects, unclear,” and might be limited to cases presenting similar factual scenarios. 2018 WL 5536478, at *2 (quotation marks omitted). It was thus “not known if the district court’s ruling involve[d] the kind of broad and fundamental legal questions relevant to § 1400(b)” that would make the case “appropriate for mandamus.” Id. The majority therefore preferred “to allow the issue to percolate in the district courts.” Id. at *3. Judge Reyna dissented.

Google petitioned for rehearing. That request was denied. In re Google LLC, 914 F.3d 1377, 1377-78 (Fed. Cir. 2019). Judge Reyna again dissented, joined by Judges Newman and Lourie.

The dissenters lamented that the panel’s decision “le[ft] unanswered a critical issue that increasingly affects venue in legal actions involving e-commerce”: “whether [a company’s] servers … , which have no physical interaction with [the company]’s employees or customers and are installed by third-parties in facilities of third-party [ISPs] … , constitute a regular and established place of business.” Id. at 1378. They also noted a number of unresolved subsidiary questions: “To what extent does the defendant have to be ‘present’ in the district to be ‘engaging in business’? Is owning, renting, or leasing real property required to establish a ‘place’? Is a piece of equipment a ‘place’? Is a shelf where equipment is installed a ‘place’ where business is conducted? Would we have held differently if the employer in Cray exercised ‘exclusive control’ over the equipment in the employee’s home office?” Id. at 1381.

The dissenters wished to settle these questions given the “growing uncertainty among district courts and litigants as to the requirements of § 1400(b) when conducting business virtually through servers and similar equipment in the district.”  Id. at 1379. They noted, for example, another decision from the Eastern District of Texas that “wrestled with the same issue involving the same defendant yet reached a different and contrary conclusion” than Judge Gilstrap below—rejecting that Google servers in local ISP facilities constituted a regular and established place of business. Id. (citing Personal Audio, LLC v. Google, Inc., 280 F. Supp. 3d 922, 934 (E.D. Tex. 2017)). Similarly, they pointed to CUPP Cybersecurity, LLC v. Symantec Corp., a decision from the Northern District of Texas that concluded that servers at a third-party data center did not constitute a regular and established place of business. Id. at 1380 (citing CUPP, No. 3:18-CV-1554, Dkt. 44, at 4-6 (N.D. Tex. Dec. 21, 2018)). And they remarked that “[a]mici comprising similarly situated technology companies who provide internet infrastructure and services filed briefs in support of the mandamus petition and expressed concern over the impact of this issue on their business—evidence of this case’s importance and broad implications.” Id.

The dissenters signaled that they would side with Google and reject Judge Gilstrap’s decision that the servers and facility here constituted a regular and established place of business. To start, they “agree[d]” with CUPP’s observation “that there would be ‘far reaching consequences’ of concluding that venue was proper”—“which would ‘distort the scope of the statute’”—because of “the tension between the statute and the realities of the continued change in the nature of the marketplace and how goods and services are traded.”  Id. (quoting CUPP, No. 3:18-CV-1554, Dkt. 44, at 6). And although they “agree[d] that possession and control over a place are important factors when considering the merits,” they remarked that “exclusive ownership and control over the servers may be insufficient under Cray,” stressing that “no Google employee has ever visited the places where the servers are installed” and that “those facilities [do not] resemble one of the many Google offices in other venues that would satisfy § 1400(b) under a straightforward application of the statute.” Id. at 1381.

The dissenters also demurred against broadly reading Judge Gilstrap’s decision. They noted that, “[f]or many companies, the reasoning of the district court’s holding could essentially reestablish nationwide venue … by standing for the proposition that owning and controlling computer hardware involved in some aspect of company business (e.g., transmitting data) alone is sufficient.” Id. They pointedly referred to such a result as “in conflict with TC Heartland.” Id.

Given the dissent, as well as the panel majority’s suggestion that the venue questions involved should “percolate” in the district courts, litigants should preserve their arguments. The Federal Circuit will continue to be confronted with these issues. When and how it will resolve them, however, remains to be seen.

The post The Federal Circuit Drops Breadcrumbs on Patent Venue in <em>In re Google LLC</em> Mandamus Petition Denial appeared first on Washington Legal Foundation.

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