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Focus on Regulation

Sixth Circuit to Hear Oral Argument in Challenge to Municipal Broadband Rules

The Sixth Circuit Court of Appeals has scheduled oral argument for March 17, 2016, in an important case regarding the Federal Communications Commission’s (FCC’s) ability to preempt state laws that place restrictions on local municipalities’ ability to provide their own broadband networks.  Today, 20 states limit the ability of local governmental agencies, such as utilities or branches of city government, to deploy their own broadband networks by, for example, limiting the amount of debt they can incur to build the network.  But the FCC recently stepped in to lift limitations adopted in two states.  Both states have appealed the FCC’s decision, and the Sixth Circuit will soon hear oral arguments in one of these cases.

Specifically, in February 2015 the FCC voted to preempt (or overrule) laws in Tennessee and North Carolina that curtailed local governmental agencies’ abilities to provide broadband service.  In Tennessee, state law prohibited electric utility companies from providing broadband or video service outside of their electric service territory.  In North Carolina, state regulations prevented municipalities from incurring significant amounts of debt to finance broadband networks.  In an effort to promote greater broadband deployment, the FCC used its authority under federal law to “remove barriers to infrastructure investment” to strike down these limitations.  The FCC struck down these restrictions despite Supreme Court precedent suggesting that preemption of state laws governing the state’s relations with its own subdivisions is more problematic than preemption of state laws governing private conduct.

Disagreeing with the FCC’s decision, the State of Tennessee filed an appeal with the Sixth Circuit Court of Appeals.  North Carolina has filed a similar appeal in the Fourth Circuit Court of Appeals.  The Sixth Circuit has scheduled oral argument first.

Either court’s ruling will have far reaching implications for municipal broadband networks.  If either court upholds the FCC’s decision, other local governments will likely petition the FCC for similar preemptive relief.  Meanwhile, Tennessee and North Carolina are both likely to appeal a decision in the FCC’s favor to the Supreme Court.  The Supreme Court would be more likely to take up review if the Sixth and Fourth Circuits reach different conclusions.  Either way, these cases will likely change the regulatory landscape for broadband service in almost half the states in the country.

‘Tis the Season . . . to Prepare for Phase 2 HIPAA Audits

 

Though the U.S. Department of Health and Human Services Office for Civil Rights (OCR) has told organizations to expect the Phase 2 HIPAA audits soon for almost two years now, it appears that the audits truly are around the corner.

Read More: ‘Tis the Season . . . to Prepare for Phase 2 HIPAA Audits

HHS Pharmaceutical Forum: “Innovation is Meaningless if No One Can Afford It”

The U.S. Department of Health and Human Services (HHS) held a forum on Friday, November 20 entitled, “HHS Pharmaceutical Forum: Innovation, Access, Affordability and Better Health.”

Read More: HHS Pharmaceutical Forum: “Innovation is Meaningless if No One Can Afford It”

CMS Proposes Network Adequacy Standards for 2017 as State Regulators Approve Network Access and Adequacy Model Law

Stethescope on doctorOn November 22, 2015, the National Association of Insurance Commissioners (NAIC) approved new standards designed to ensure that consumers have adequate access to doctors, hospitals, and other healthcare providers under health benefit plans that use provider networks.

Read More: CMS Proposes Network Adequacy Standards for 2017 as State Regulators Approve Network Access and Adequacy Model Law

Supreme Court Decision in Gomez Shifts Attention Back to FCC TCPA Petitions

In January, the United States Supreme Court issued a long-awaited ruling in Campbell-Ewald Co. v. Gomez, 577 U.S. __ (2016), a significant case for companies defending against consumer and other class actions, including those based on the Telephone Consumer Protection Act (TCPA) – as well as for contractors working on behalf of the federal government.

The decision had two key holdings.  First, an unaccepted settlement offer or offer of judgment for complete relief made to the named plaintiff in a putative class action does not moot the plaintiff’s case or the class action.  Second, government contractors are not entitled to derivative sovereign immunity where they have failed to abide by the government’s express instructions and violated federal law.

In light of this decision, we expect attention to turn back to the Federal Communications Commission (FCC) to resolve some remaining TCPA contractor liability issues.  Three petitions are pending before the FCC on related issues:

  • In the first petition, the National Employment Network Association (“NENA”) asks the FCC to confirm that a long-standing relationship with a federal agency can imply “prior express consent” to receive calls from or on behalf of that agency under the TCPA.
  • In a second petition, Broadnet Teleservices LLC (“Broadnet”) asks the FCC to clarify that the TCPA does not apply to calls “made by or on behalf of federal, state, and local governments when such calls are made for official purposes.” See our prior post for more details.
  • Finally, a petition from RTI International (“RTI”) asks the FCC to confirm that the TCPA does not restrict research survey calls made by or on behalf of the federal government.

The FCC has already sought public comment on these petitions and could issue a decision at any time.

Additionally, the FCC is expected to initiate a rulemaking soon on new exemptions from the TCPA’s consent requirements.  The 2015 Budget Act amended the TCPA to exempt from these consent restrictions calls “to collect a debt owed to or guaranteed by the United States.”  The 2015 Budget Act also instructed the FCC to coordinate with the Department of the Treasury to adopt rules that implement the new exemptions within nine months.

How Can We Help?

Our TCPA Working Group brings together more than 25 attorneys in our litigation, communications, commercial, and privacy practice areas.  We provide regular TCPA counseling to clients from a broad range of industries, including technology, healthcare, communications, transportation, and financial services.  We have secured dismissals and nominal settlements for clients in TCPA actions and have worked with the FCC to clarify rules addressing a number of key TCPA issues.

Human Rights – Good for Business?

Are human rights good for business? In a word, yes! That was the conclusion of the panellists discussing this question at our inaugural Business and Human Rights Practice event. The panel identified the positive role of human rights as part of the rule of law framework that protects business and creates a safe space for foreign investment and concluded that the risks posed by possible human rights breaches often created opportunities for forward-thinking businesses to differentiate themselves from their competitors by leading the way on compliance as envisaged under United Nations Guiding Principles on Business and Human Rights. The discussion also considered other benefits to business of engaging with human rights concerns, such as lower exposure to reputational risk and, potentially, greater profits in the long term.

The question of whether human rights are good for business provoked a lively discussion among the panellists who included Jon Snow (in the chair); Sir Mark Moody-Stuart and Christine Batruch.  Sir Mark Moody-Stuart is, among other things, an ex-Chairman of Shell and Anglo-American and currently the Chairman of the Foundation for the UN Global Compact.  Ms Batruch is Vice-President Corporate Responsibility for Lundin Petroleum.  Julianne Hughes-Jennett and Charles Brasted from Hogan Lovells whose practices focus on human rights in a corporate context.

A number of key conclusions emerged from the discussion.

First, human rights compliance is now firmly on the agenda for businesses across all industry sectors in light, in particular, of the adoption of the UN Guiding Principles on Business and Human Rights in 2011.

Second, human rights protections are an integral part of the rule of law framework, which is one of the most significant considerations for multinationals when deciding whether or not to invest in a particular country. It is this framework that gives investors confidence that they are investing in a safe, secure and stable market (for more detail see the study conducted by Hogan Lovells in 2015 on Foreign Direct Investment and Rule of Law).

Third, while the demands of human rights compliance bring certain risks, they also bring opportunities. In particular, businesses with a good track record on human rights compliance issues may find that they are more successful, given customer and client expectations, than others who do not comply in the same way.

Fourth, embedding human rights into the culture of a business and its operations and targets can (in the medium to long term) make it more profitable. This can be achieved by increasing staff motivation and “buy-in”; promoting products or services as ethical or “purpose-driven” (as Unilever has been doing successfully) and improving reputation and standing in the market.

Fifth, corporates have significant power and influence and are increasingly being recognised, including by state governments, as having an important role to play in protecting human rights and supporting the advancement of the rule of law. In doing so businesses will have the opportunity to shape and influence regulation.

So, human rights can indeed be good for business and, irrespective of what happens in the UK to the Human Rights Act, human rights in both a domestic and international form look set to stay. Therefore, the challenge for businesses is to embrace human rights compliance and its potential benefits as well as to maximise the overseas investment opportunities that effective human rights protections in other states can bring.

The panellists were:

(Chair) Jon Snow – Broadcaster and journalist

Sir Mark Moody Stuart – Chairman, Hermes EOS

Christine Batruch – Vice President Corporate Responsibility, Lundin Petroleum AB

Charles Brasted – Partner, Hogan Lovells

Julianne Hughes-Jennett – Partner, Hogan Lovells

NSF and NASA Remind Grantee Institutions to Comply with Title IX

NSFOn January 25, the National Science Foundation (NSF) issued a statement to remind the 2,000 colleges, universities, and other institutions that receive NSF funding that NSF requires its awardees to comply with Title IX of the Education Amendments Act of 1972, which prohibits educational funding recipients from engaging in sex discrimination, including sexual harassment and gender violence.

NSF’s statement, which follows multiple recent reports of sexual harassment in the science community, “reiterates [NSF’s] unwavering dedication to inclusive workplaces. NSF does not tolerate sexual harassment and encourages members of the scientific community who experience such harassment to report such behavior immediately.” NSF also encouraged NSF-funded researchers and students to “hold colleagues accountable to the standards and conditions set forth in Title IX, and to inform their institutions of violations.” NSF directs people who experience or witness harassment to contact their Title IX Coordinator or NSF’s Office of Diversity and Inclusion.

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UK Supreme Court paves the way for a review of proportionality in judicial review

In the recent judgment of Youssef v Secretary of State for Foreign and Commonwealth Affairs [2016] UKSC 3, the Supreme Court highlighted the need for a review of the law on the use of the proportionality test, which may extend beyond the realms of EU law and the European Convention on Human Rights (“ECHR“).

The question in Youssef

In 2013, the appellant brought a judicial review challenging the Secretary of State’s decision to place him on the United Nations’ Consolidated List (the “UN List“) of members of Al-Qaida and its associates. His application was refused and his appeal to the Court of Appeal was unsuccessful. In the Supreme Court one of the appellant’s submissions was that the Court of Appeal had erred by reviewing the decision on the grounds of irrationality. The appellant argued that, given the grave consequences of being placed on the UN List, such as asset freezing, the traditional Wednesbury standard of review, of unreasonableness or irrationality, was insufficient. Instead, he claimed that he was entitled to a full merits review or, failing that, a proportionality assessment, usually limited to cases involving breaches of the ECHR or EU Law. Continue Reading

New French Transparency Regulations Ruled Valid by French Constitutional Court

The law on modernisation of the French health system adopted on 17 December 2015 introduced, amongst other things, changes to the existing sunshine regulations which require industry to make public the existence of certain agreements with, and benefits provided to, various stakeholders in the healthcare industry.   By a decision dated 21 January 2016,  the French constitutional court considered that the changes introduced comply with French constitutional rules.   The companies will now have to:

  • disclose fees above a certain threshold (to be established by the government) paid under agreements with HCPs and with other stakeholders;
  • report the purpose of the agreements in a more detailed manner, and not by generic descriptions;
  • “direct” and the “final” beneficiary of the agreements will have to be reported.

The specifics of these changes will be established by an upcoming implementing decree.

¡Bienvenidos a Cuba! FCC Removes Cuba from its Exclusion List for International Section 214 Authorizations

Last Friday, the Federal Communications Commission (the “FCC”) adopted an Order making it easier for telecommunications providers to provide facilities-based services such as undersea submarine cables and satellite services, between the United States and Cuba.

As Focus on Regulation previously noted, in December 2014 the Obama Administration took executive action to ease trade sanctions and export controls against Cuba, which included efforts to authorize exports of telecommunications products and services to Cuba.

In October 2015, the State Department asked the FCC to remove Cuba from its “Exclusion List for International 214 Authorizations” (the “Exclusion List”).  (An International 214 Authorization is required to provide telecommunications services between the U.S. and another country).  Under the FCC’s rules, carriers can generally apply for and receive authority to provide international service using any U.S.-licensed facilities without filing separate applications for each new facility or country.  The FCC streamlined this process to promote entry into new markets and increase global investment in telecommunications services. But for countries on the Exclusion List, carriers’ applications are processed on a non-streamlined basis, and require coordination with the U.S. Department of State.

In November 2015, the FCC issued a Public Notice seeking comment on whether to remove Cuba from the Exclusion List.  The FCC received limited response to the proposal, but commenters generally supported the measure.  Commenters argued that removing Cuba from the Exclusion List would foster competition for communications services between the U.S. and Cuba, bring innovative medical technologies (like telemedicine) to the people of Cuba and increase the free flow of information to and from the country.  One commenter also asked the FCC to permit market-based negotiations for services by removing nondiscrimination requirements on the U.S.-Cuba route.

The FCC agreed with commenters that removing Cuba from the Exclusion List would “make it easier for U.S. facilities-based carriers to initiate service to Cuba, promote open communications, and help foster bilateral communications between the United States and Cuba.”  Under the new streamlined process, the FCC will grant applications to provide service to or from Cuba 14 days after the application is placed on public notice—unless the application is opposed by the FCC or another party.  Carriers with existing global Section 214 authority can also provide services between the U.S. and Cuba without additional authorization.

While the U.S. trade embargo with Cuba remains federal law, and Congress isn’t likely to lift it in the near term, the FCC’s Order in this proceeding is the latest in a series of steps designed to further improve relations between the U.S. and Cuba.