Perhaps no citation has been more favored in Federal Election Commission (“FEC”) decisions over the past decade than Heckler v. Chaney, 470 U.S. 821 (1985), a Supreme Court decision that gives an agency broad discretion over which enforcement cases to pursue.  But there is a category of cases where the FEC is not employing Heckler when it should:  Cases where the constitutional support for the statute no longer exists.  See Citizens for Responsibility and Ethics in Washington v. Federal Election Commission, 993 F.3d 880, 884 (D.C. Cir. 2021) (“New Models”); see also Citizens for Responsibility and Ethics in Washington v. American Action Network, No. 18-CV-945, 2022 WL 612655, at *2 (D.D.C. Mar. 2, 2022) (holding that an FEC dismissal that was supported by “constitutional doubts” that “militate in favor of cautious exercise of our prosecutorial discretion” was judicially unreviewable under Chaney).

The FEC continues to pursue enforcement penalties in several categories of cases where there is almost no chance that a majority of the Supreme Court would find the statute constitutional.  This resembles a sort of regulatory Russian Roulette, where the agency pursues enforcement actions until it finds a respondent that is willing to fully litigate the constitutional issues, mostly likely in a case with plaintiff-friendly facts.  The risk for the agency is that when one of these cases eventually comes before the Supreme Court, the justices may use a hammer, rather than a scalpel, in striking down the law. 

In two areas in particular, the FEC should exercise its prosecutorial discretion to decline to pursue cases based on statutes and regulations of dubious constitutionality.   

A Person Cannot Corrupt His or Her Spouse With a Campaign Contribution, No Matter How Large. 

Currently, the FEC follows the Supreme Court’s decision in 1976 to rather tentatively uphold the application of the contribution limits to contributions from intimate family members in the same way as contributions from lobbyists and corporate and union PACs.  But the law has evolved, and the Supreme Court has since been clear that generally the only legitimate interest the contribution limits play is to prevent quid pro quo corruption or its appearance.  It is nearly impossible to argue that a spouse who gives a contribution over $2,900 to his or her candidate/spouse presents the risk of quid pro quo corruption. Continue Reading Picking Battles: The FEC and the Constitution

On July 13, the Federal Trade Commission published a notice of proposed rulemaking regarding the Motor Vehicle Dealers Trade Regulation Rule.  The Motor Vehicle Dealers Trade Regulation Rule is aimed at combating certain unfair and deceptive trade practices by dealers and promoting pricing transparency.  Comments to the proposed rule are due on or before September 12, 2022. 

cav

The proposed rule:

  1. Prohibits dealers from making certain misrepresentations in the sales process, enumerated in proposed § 463.3.  The list of prohibited misrepresentations includes misrepresentations regarding the “costs or terms of purchasing, financing, or leasing a vehicle” or “any costs, limitation, benefit, or any other Material aspect of an Add-on Product or Service.”
  • Includes new disclosure requirements regarding pricing, financing and add-on products and services.  Notably, the proposed rule would obligate dealers to disclose the offering price in many advertisements and communications with consumers.
  • Prohibits charges for add-on products and services that confer no benefit to the consumer and prohibits charges for items without “Express, Informed Consent” from the consumer (which, notably, as defined, excludes any “signed or initialed document, by itself”).  The proposed rule outlines a specific process for presenting charges for add-on products and services to the consumer, which obligates the dealer to disclose and offer to close the transaction for the “Cash Price without Optional Add-Ons” and obtain confirmation in writing that the consumer has rejected that price.
  • Imposes additional record-keeping requirements on the dealer, in order to demonstrate compliance with the rule.  The record-keeping requirements apply for a period of 24 months from the date the applicable record is created.

Continue Reading FTC Proposes Motor Vehicle Dealers Trade Regulation Rule

On July 14, 2022, the U.S. Department of Commerce (“Commerce”) issued a request for a range of additional factual information in connection with the agency’s ongoing circumvention inquiries into solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam that employ inputs from mainland China.[1]  The deadline to respond is July 21st.

In the July 14 memorandum, Commerce seeks information about the:  (1) amount of investment necessary to construct and start-up certain facilities, (2) non-financial barriers (e.g., access to inputs, qualified technical employees, technologies, research and development, etc.) that companies typically face to establish and begin certain operations, and (3) research and development (“R&D”) expenses associated with conducting certain operations.  These types of facilities/operations involved in:

  • refining silicon into solar-grade polysilicon,
  • producing ingots from solar-grade polysilicon,
  • producing wafers from solar-grade ingots,
  • producing solar cells from wafers,
  • producing solar modules from solar cells, and
  • the same operations and products as foreign producers and exporters responding to Commerce’s solar circumvention inquiries. 

Continue Reading Commerce Requests Factual Information in Solar Circumvention Inquiries on Level of Investment, Non-Financial Barriers, and Research and Development Expenses

 On 30 June 2022, the Council of the EU (the “Council”) and the European Parliament (the “Parliament”) reached a much awaited agreement on the proposal of the European Commission (the “Commission”) for the Regulation on foreign subsidies distorting the internal market (the “FSR”) (see our alert on the proposal). This political agreement swiftly concludes the trilogue discussions initiated in the beginning of May this year, after the Council (see our blog post) and the Parliament (see our blog post) each adopted their own positions. The agreement has been approved by the Permanent Representatives Committee (“COREPER”) of the Council on 13 July and the Committee on International Trade of the European Parliament on 14 July.

The FSR grants substantial new powers to the Commission and “will help close the regulatory gap whereby subsidies granted by non-EU governments currently go largely unchecked”, according to remarks from Executive Vice-President of the Commission, Margrethe Vestager. It will be deeply transformative for M&A and public procurement in the EU.

The agreement on the FSR did not lead to any major changes in the proposal made by the Commission. The most notable points of discussion between the Parliament and Council and the outcome of this agreement are:

  • The thresholds above which companies are obliged to inform the Commission about their foreign subsidies remain unchanged compared to the Commission’s proposal;
  • The time period in which the Commission has to investigate foreign subsidies in large public procurement has been reduced. In the same way, the retroactive application of the FSR has been limited to foreign subsidies granted in the five years prior to the application of the regulation;
  • The Commission will issue guidelines on the existence of a distortion, the balancing test and its power to request notification of non-notifiable transactions, at the latest three years after the entry into force of the FSR; and
  • A commitment to a multilateral approach to foreign subsidies above the FSR and the possibility for the Commission to engage in a dialogue with third countries has been included.

Continue Reading The Council of the EU and the European Parliament agree on the Foreign Subsidies Regulation

In late June, the European Council (leaders from the 27 EU Member States) granted Ukraine and Moldova the status of “candidate countries” for EU membership, and promised Georgia the same once it meets certain conditions. What are the practical consequences of this seminal decision?

In short, the process of preparing for membership in the European Union is fundamentally political and tailored to each specific country and historical moment. For instance, no country in the EU’s history had to simultaneously wage war to defend its homeland and independence while on the accession path. Although there are various precedents, accession criteria, pre-existing funding streams, and established processes, the scale, type, and duration of benefits available to Ukraine from the EU accession path will be unique. As important as the psychological boost to Ukraine from the EU’s political signal, the tangible benefits from Ukraine’s candidacy status will be invaluable.

Historical Precedents

Notwithstanding four earlier rounds of enlargement in the 1970s-1990s (Denmark, Ireland, UK, Greece, Portugal, Spain, Austria, Finland, and Sweden), significant EU pre-accession funding started with the enlargement process across Central and Eastern Europe (CEE) after the end of the Cold War. The first major program, PHARE (Poland and Hungary Assistance for Restructuring their Economies), launched in 1989 to cover these two countries and soon expanded to eight other candidate countries to prepare them for EU membership. It distributed about €16 billion between 1990 and 2006.  There were also two targeted funding programs for the environment and transport (ISPA) as well as agriculture (SAPARD), which distributed an additional €5 billion.Continue Reading Ukraine’s EU Accession Process

Recent months have seen a growing trend of data privacy class actions asserting claims for alleged violations of federal and state video privacy laws.  In this year alone, plaintiffs have filed dozens of new class actions in courts across the country asserting claims under the federal Video Privacy Protection Act…

Continue Reading Emerging Trends: Renewed Wave of Video Privacy Class Actions

This quarterly update summarizes key federal legislative and regulatory developments in the second quarter of 2022 related to artificial intelligence (“AI”), the Internet of Things, connected and automated vehicles (“CAVs”), and data privacy, and highlights a few particularly notable developments in U.S. state legislatures.  To summarize, in the second quarter of 2022, Congress and the Administration focused on addressing algorithmic bias and other AI-related risks and introduced a bipartisan federal privacy bill.

Artificial Intelligence

Federal lawmakers introduced legislation in the second quarter of 2022 aimed at addressing risks in the development and use of AI systems, in particular risks related to algorithmic bias and discrimination.  Senator Michael Bennet (D-CO) introduced the Digital Platform Commission Act of 2022 (S. 4201), which would empower a new federal agency, the Federal Digital Platform Commission, to develop regulations for online platforms that facilitate interactions between consumers, as well as between consumers and entities offering goods and services.  Regulations contemplated by the bill include requirements that algorithms used by online platforms “are fair, transparent, and without harmful, abusive, anticompetitive, or deceptive bias.”  Although this bill does not appear to have the support to be passed in this Congress, it is emblematic of the concerns in Congress that might later lead to legislation.

Additionally, the bipartisan American Data Privacy and Protection Act (H.R. 8152), introduced by a group of lawmakers led by Representative Frank Pallone (D-NJ-6), would require “large data holders” (defined as covered entities and service providers with over $250 million in gross annual revenue that collect, process, or transfer the covered data of over five million individuals or the sensitive covered data of over 200,000 individuals) to conduct “algorithm impact assessments” on algorithms that “may cause potential harm to an individual.”  These assessments would be required to provide, among other information, details about the design of the algorithm and the steps the entity is taking to mitigate harms to individuals.  Separately, developers of algorithms would be required to conduct “algorithm design evaluations” that evaluate the design, structure, and inputs of the algorithm.  The American Data Privacy and Protection Act is discussed in further detail in the Data Privacy section below.Continue Reading U.S. AI, IoT, CAV, and Data Privacy Legislative and Regulatory Update – Second Quarter 2022

In addition to the two developments we reported on in our last blog post, on July 7, 2022, the long-waited, final version of the Measures for Security Assessment of Cross-border Data Transfer (《数据出境安全评估办法》, “Measures”) were released by the Cyberspace Administration of China (“CAC”).  With a…

Continue Reading China Releases Measures for a Security Assessment of Cross-Border Data Transfers To Take Effect in September 2022

On July 1, 2022, the U.S. Department of Commerce (“Commerce”) issued proposed rules implementing President Biden’s emergency declaration to provide temporary tariff relief on certain imports of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam.[1] Commerce has provided the public with a 30-day period to comment on…

Continue Reading Commerce Invites Comments on Proposed Rules Implementing Presidential Emergency Declaration on Solar Tariffs 

After more than seven months since China’s Personal Information Protection Law (《个人信息保护法》, “PIPL”) went into effect, Chinese regulators have issued several new (draft) rules over the past few days to implement the cross-border data transfer requirements of the PIPL.  In particular, Article 38 of the PIPL sets out three legal mechanisms for lawful transfers of personal information outside of China, namely: (i) successful completion of a government-led security assessment, (ii) obtaining certification under a government-authorized certification scheme, or (iii) implementing a standard contract with the party(-ies) outside of China receiving the data.  The most recent developments in relation to these mechanisms concern the standard contract and certification.

Chinese Government Issues Draft SCCs

On June 30, 2022, the Cyberspace Administration of China (“CAC”) released draft Provisions on the Standard Contract for the Cross-border Transfers of Personal Information (《个人信息出境标准合同规定（征求意见稿）》, “Draft Provisions”) for public consultation.  The full text of the Draft Provisions can be found here (currently available only in Mandarin Chinese).  The public consultation will end on July 29, 2022.Continue Reading Cross-border Data Transfer Developments in China