Nonimmigrant Visa Applicants May Have Longer Waits

President Donald Trump has issued an executive order striking the 80-percent/three-week goal for interviewing nonimmigrant visa applicants following submission of applications.

Since September 11, 2001, the State Department has given priority to security over quick visa adjudications. For many reasons, including heightened security, between 2001 and 2010, the U.S. share of the global tourism market had dropped markedly. The Obama Administration, concerned about the effect on the U.S. economy, took measures to “support a prosperous and secure travel and tourism industry in the United States.” The first steps were in 2010, when the National Export Initiative and the Travel Promotion Act became law. They mandated intergovernmental cooperation to work to establish a stronger brand identity for the U.S. and to promote exports. By 2012, President Barack Obama issued an executive order to continue the process of fostering more tourism and travel: Establishing Visa and Foreign Visitor Processing Goals and the Task Force on Travel and Competitiveness Order. One section ordered Consulates to “ensure that 80 percent of nonimmigrant visa applicants are interviewed within three weeks of receipt of application, recognizing that resource and security considerations . . . may dictate specific exceptions[.]”

Although the Obama EO contained a security waiver, on June 21, 2017, Trump signed his own EO, striking the 80 percent/three-week goal. This is being done in conjunction with the travel ban partially reinstated by the U.S. Supreme Court and the extreme vetting procedures instituted by Secretary of State Rex Tillerson.

Pursuant to extreme vetting, if deemed necessary to determine eligibility, visa applicants may be asked to supply:

  • Travel history during the last 15 years, including source of funding for travel;

  • Address history during the last 15 years;

  • Employment history during the last 15 years;

  • All passport numbers and country of issuance held by the applicant;

  • Names and dates of birth for all siblings;

  • Names and dates of birth for all children;

  • Names and dates of birth for all current and former spouses, or civil or domestic partners;

  • Social media platforms and identifiers, also known as handles, used during the last five years; and

  • Phone numbers and email addresses used during the last five years.

Assessing this amount of information and data obviously will take time. A White House spokesman stated that the elimination of the “arbitrary” three-week goal was needed because “[t]he president expects careful, accurate vetting of visa applicants, not a rushed process . . . .”

Business groups already troubled about possible deleterious effects from the travel ban and extreme vetting have expressed concern about additional delays in visa issuance. According to State Department’s own data, the nonimmigrant visa issuance rate has been dropping. In March, 907,166 were issued and the number was down to 735,000 in April.

This post was written by William J. Manning of Jackson Lewis P.C.

US State Department Clarifies Implementation of Travel Ban Exemptions

The diplomatic cable instructs consulates on how to interpret the US Supreme Court’s direction to enforce the restriction only against foreign nationals who lack a “bona fide relationship with a person or entity in the United States.”

This Immigration Alert serves as an addendum to our prior summary of the Supreme Court decision partially granting the government’s request to stay enforcement of two preliminary injunctions that temporarily halted enforcement of Executive Order (EO) No. 13780. As a result of this decision, foreign nationals from six countries (Libya, Somalia, Sudan, Syria, Iran, and Yemen) who cannot show bona fide ties to the United States may be denied visas or entry for 90 days starting Thursday, June 29 at 8:00 p.m. EDT.

The communication from the US Secretary of State’s office enumerates the following situations where the EO’s travel restrictions will not apply:

  • When the applicant has a close familial relationship in the United States, which is defined as a parent (including parent-in-law), spouse, fiancé, child, adult son or daughter, son-in-law, daughter-in-law, or sibling, whether whole or half. This includes step relationships, but does not include grandparents, grandchildren, aunts, uncles, nieces, nephews, cousins, brothers-in-law and sisters-in-law, or any other “extended” family members.

  • When the applicant has a formal, documented relationship with an entity formed in the ordinary course, rather than for the purpose of evading the EO. This includes established eligibility for a nonimmigrant visa in any classification other than a B, C-1, D, I, or K, as a bona fide relationship to a person or entity is inherent in the visa classification.

  • When there are eligible derivative family members of any exempt applicant.

  • When the applicant has established eligibility for an immigrant visa in the immediate relative, family-based, or employment-based classification (other than certain self-petitioning and special immigrant applicants).

  • When the applicant is traveling on an A-1, A-2, NATO-1 through NATO-6, C-2 for travel to the United Nations, C-3, G-1, G-2, G-3, or G-4 visa, or a diplomatic-type visa of any classification.

  • When the applicant has been granted asylum, is a refugee who has already been admitted to the United States (including derivative follow-to-join refugees and asylees), or is an individual who has been granted withholding of removal, advance parole, or protection under the Convention Against Torture.

Applicants admitted or paroled into the United States on or after the date of the Supreme Court decision are also exempted, as are those currently in the United States who can present a visa with a validity period that includes either January 27, 2017 (the day the EO was signed) or June 29, 2017. Any document other than a visa, such as an advance parole document, valid on or after June 29 will also exempt the holder.

As described in the prior alert, any lawful permanent resident or dual foreign national of one of the six named countries who can present a valid passport from a country not on the list is not impacted by the EO. The EO also permits consular officers to grant case-by-case waivers to otherwise affected applicants who can demonstrate that being denied entry during the 90-day period would cause undue hardship, that entry would not pose a threat to national security, and that their admission would be in the national interest.

This post was written by Eric S. Bord and Eleanor Pelta of  Morgan, Lewis & Bockius LLP.

President Trump Shifts the U.S. Policy Towards Cuba

As we have previously reported on the growing fear that the Trump Administration would roll back President Barack Obama’s plan to normalize relations with Cuba. Then-candidate Donald Trump was calling President Obama’s deals with Cuba “one-sided” and beneficial “only [to] the Castro regime.” Last week Friday, at an event at the Manuel Artime Theater in Miami, President Trump officially announced his Administration’s new public policy towards Cuba and fulfilled a campaign promise.

Cuban FlagPresident Trump’s speech culminated in the issuance of a National Security Presidential Memorandum and an accompanying White House Fact Sheet on the U.S. Policy toward Cuba.  In sum, President Trump’s directive:

(a)  Ends economic practices that “benefit the Cuban government” by prohibiting most economic activities with the Cuban military conglomerate, Grupo de Administración Empresarial (“GAESA”). This change is most likely to affect the hotel and tourism industry sectors, since these are the industries said to be largely controlled by GAESA. A list of companies that will be on the “blacklist” will be issued by the State Department at a later date.

(b)   Adheres “to the statutory ban on tourism to Cuba,” by amending regulations related to educational travel (i.e., by ending individual people-to-people travel) and enforcing the strict record keeping requirements related to travel to Cuba.

(c)   Opposes any efforts in the United Nations or other international forums to lift the embargo on Cuba.

(d)   Supports the expansion of internet services and free press in Cuba by convening a task force that will work with non-governmental organizations and private sector entities to examine the challenges and opportunities in those areas.

(e)  Keeps in place the Obama Administration’s elimination of the “Wet Foot, Dry Foot” policy.

(f)  Ensures that engagement with Cuba in general is advancing the interests of the United States.

As explained in the new FAQs issued by the U.S. Department of the Treasury, the policy changes will not go into effect until the Treasury Department and the U.S. Department of Commerce have finalized their new regulations. Importantly, the new Cuba policy changes will not have retro-active effect. Those travel arrangements and commercial engagements that were in place prior to the issuance of the upcoming regulations will not be affected.

Al Cardenas, who heads the Latin America practice group at Squire Patton Boggs and previously served as the former Chairman of American Conservative Union and former Chairman of the Florida GOP, explains:  “Despite the emotional setting and rightful remembrance of the struggles of the Cuban people found in President Trump’s speech, which was focused on a Cuban exile audience, President Trump’s executive action preserves many of the changes made during President Obama’s Administration (some of which were outlined in President Obama’s 2014 Speech). For example, the respective embassies in Washington and Havana will remain open, the U.S. licenses issued to airlines and cruise line companies have been kept, efforts to expand direct telecommunications and internet access will continue, and the additional categories for travel to Cuba for the most part remain in place. While one-step back is the prohibition on U.S. travelers from staying at government-owed facilities, this should be a boon to the family-owned B&B’s and other rentals on the island. It remains to be seen whether there will be a significant drop off in tourist travel to the island.”

Viewed as a whole, President Trump is tightening some areas where improved economic relations with the United States could have benefitted some auspices of the Cuban Government.

This post was written by Beatriz E. Jaramillo and  Stacy A. Swanson of Squire Patton Boggs (US) LLP.

Comey’s Testimony Underscores Need for Strong Whistleblower Protections

For me, the most telling moment of former FBI Director Jim Comey’s June 8th testimony occurred early in the hearing, when Mr. Comey choked up as he recalled the White House’s publicly stating that the President had fired him because the “FBI was in disarray.”

This emotional display seemed out of character for Mr. Comey. While U.S. Attorney for the Southern District of New York, he successfully prosecuted organized crime. As Deputy Attorney General during the George W. Bush Administration, Mr. Comey refused to sign an extension of the warrantless domestic spying program and defied the White House Counsel and Chief of Staff. Mr. Comey can fairly be described as a “tough guy.” So how did he go from leading the most powerful law-enforcement agency worldwide to being labeled a “leaking liar”?

To an experienced whistleblower advocate, Mr. Comey’s predicament is not surprising. Mr. Comey’s experience, unfortunately, is like those of many whistleblowers I have represented over more than a decade. President Trump promised to bring a business approach to government—and his retaliation against Mr. Comey is straight out of the corporate defense playbook. Corporations typically take the following steps of escalating retaliation to silence whistleblowers:

Intimidate and Silence the Whistleblower

In his June 8th testimony, Mr. Comey described in detail how the President had asked him to drop the investigation of Michael Flynn and had conditioned Mr. Comey’s job on “loyalty” to him. Senator Rubio expressed skepticism about Mr. Comey’s feeling intimidated by the President and blamed Mr. Comey for not pushing back. But that type of Monday-morning quarterbacking ignored the power dynamics of the conversation. Mr. Comey wanted to keep his job and was understandably reluctant to accuse the President of obstructing an investigation.

Whistleblowers often confront this intimidation tactic in the workplace. A supervisor or senior company official tells the whistleblower to “let it go,” “mind your own business,” or learn to be a “team player.” And in some cases, the whistleblower is told to shut up if he or she wants to remain employed. Threats of retaliation, whether express or implicit, are powerful tools to silence a whistleblower. When a company officer or senior manager orders a subordinate to do something unlawful or to cover up unlawful conduct, holding firm to one’s ethical values is not an easy avenue to follow. As Mr. Comey learned, refusing to carry out an unlawful order may be career suicide, at least in the short term.

Retaliate Swiftly and Severely Against the Whistleblower

Initially, the bizarre method of firing Mr. Comey seemed surprising for a President who perfected the art of firing on his reality show, The Apprentice. Mr. Comey was not given an opportunity to resign; he was not even notified that he had been fired. But now that we know about the President’s real motive for firing Mr. Comey, it’s clear that his tack was deliberate.

Mr. Comey learned of his firing while addressing FBI agents at a Los Angeles field office when the announcement flashed across a television screen. The White House had announced Mr. Comey’s firing without notifying Mr. Comey himself. President Trump sent a loud and clear message to Mr. Comey and to every senior government official about the consequence of disloyalty.

In the corporate workplace, whistleblower-employees are similarly humiliated as a warning to their colleagues. A whistleblower may be escorted out of the office with security guards while other employees are present, pulled out of a meeting and fired on the spot in front of colleagues, or simply fired via text message. When a corporation fires a whistleblower in this humiliating fashion, it ensures that all other employees know the consequence of whistleblowing.

Badmouth the Whistleblower and Their Work History

Firing Mr. Comey in a humiliating and offensive manner served only as phase one. President Trump then defamed Mr. Comey and asserted that he fired him because of chaos within the FBI, as well as the alleged loss of confidence in Mr. Comey among FBI agents.

These statements stand in stark contrast to the President’s repeated, public praise of Mr. Comey before Mr. Comey refused to comply with the President’s “hope” that Mr. Comey drop the investigation of Flynn. Indeed, if President Trump believed that Mr. Comey’s leadership caused chaos within the FBI, then why did the President invite Mr. Comey to continue to serve as FBI Director?

This patent distortion of Mr. Comey’s performance record is an all-too-common experience of whistleblowers. Prior to blowing the whistle, they receive strong performance evaluations and bonuses; they are valued members of the team. But once they blow the whistle and refuse to drop their concerns, they are suddenly deemed incompetent and unqualified for their position. And when a company realizes that it lacks any existing basis to fire the whistleblower, it creates one by subjecting the whistleblower to heightened scrutiny and setting the whistleblower up to fail. For example, a company might place the whistleblower on a performance-improvement plan that contains impossible objectives, and then fire the whistleblower for not meeting those unattainable goals.

This tactic may backfire and enable a whistleblower to ultimately prevail at trial, but the damage to the whistleblower’s reputation is permanent. Prospective employers are reluctant to hire someone who previously fired for poor performance and are especially reluctant to hire a whistleblower. Many whistleblowers never find comparable employment and must accept lower-level positions, earning a fraction of what they did before their wrongful termination.

Attack the Whistleblower’s Credibility

Apparently, President Trump has no evidence to rebut Mr. Comey’s vivid account of the President’s alleged attempts to obstruct justice. So President Trump called him a “liar.”

Desperate to defend themselves at all costs, corporations frequently employ this tactic—labeling the whistleblower a disgruntled former employee who will say anything to win his or her case. So far, this is not working well for President Trump, whose accusation merely serves to shine a spotlight on his own questionable credibility.

Attacking a whistleblower’s credibility is an effective and pernicious tactic in many whistleblower cases. Once expelled from a company, a whistleblower is marginalized and alienated from former coworkers. The key witnesses continue to work at the company and, fearing retaliation, are reluctant to corroborate the whistleblower’s testimony. Though whistleblowers may still prevail (for example, by using documentary evidence), the attack on a whistleblower’s credibility is odious because the company fired the whistleblower precisely for having integrity.

Create a Post-Hoc Justification for Firing the Whistleblower

Prior to firing Mr. Comey, President Trump papered the file with a post-hoc justification for the firing. After the President decided to fire Mr. Comey, Deputy Attorney General Rod Rosenstein was tasked with drafting a memorandum to the Attorney General outlining concerns about Mr. Comey’s performance. Most of those concerns focus on Mr. Comey’s statements about the investigation of former Secretary of State Hillary Clinton’s use of a private email server. Surely President Trump knew of those public statements when he repeatedly asked Mr. Comey to remain as FBI Director (as long as he could pledge “loyalty” and drop the Flynn investigation).

In this case, the White House’s initial reliance on the Rosenstein memo as the basis for the decision to fire Mr. Comey backfired because President Trump told NBC anchor Lester Holt that he had decided to fire Mr. Comey regardless of the memo. In many whistleblower-retaliation cases, however, these types of pretextual memos may be persuasive. Some judges even rely on such memos, which mask the real reason for a firing or other adverse action, to grant the company summary judgment and deny the whistleblower a jury trial.

On the other hand, creating a post-hoc justification for a retaliatory adverse action sometimes misfires by providing strong evidence of pretext and spurring a jury to award punitive damages. For instance, a former in-house counsel at Bio-Rad Laboratories recently secured more than $11 million in damages at trial in a Sarbanes-Oxley whistleblower-retaliation case. The jury awarded $5 million in punitive damages because Bio-Rad had backdated a negative performance evaluation of the whistleblower that the company drafted after it fired him.

Focus on the Whistleblower’s Alleged Misconduct

To distract attention from what may be obstruction of justice, President Trump and his attorney have focused on Mr. Comey’s leak to the press and have alleged that the leak was unlawful. This accusation seems frivolous because Mr. Comey did not leak classified information, grand jury material, or other sensitive information. Instead, he revealed that President Trump had conditioned his continued service as FBI Director on his agreeing to drop the investigation of Flynn. As a private citizen, Mr. Comey has a constitutional right to blow the whistle to the media about this matter of public concern. Mr. Comey did not reveal to the media information from FBI investigative files or classified information. Yet President Trump and his allies compare Mr. Comey to leakers who illegally disclosed classified information. This is an appalling accusation against the former head of a law-enforcement agency.

But this is another standard corporate defense tactic in whistleblower cases. To divert attention from the wrongdoing that the whistleblower exposed, the company uses its substantial resources to dig up dirt on the whistleblower. The company or its outside counsel examines the whistleblower’s timesheets and expense reports with a fine-tooth comb to find any discrepancy, reviews every email to find some inappropriate communication, and places all of the whistleblower’s work under a microscope to find any shortcoming.

Sue the Whistleblower and Initiate a Retaliatory Investigation

Firing Comey, concocting a pretextual basis for the firing, and branding him a leaking liar apparently was not sufficient retaliation.  So shortly after his testimony, President Trump’s personal attorney announced his intention to sue Mr. Comey and/or file a complaint with the Department of Justice Office of Inspector General (OIG).  I am skeptical that a civil action against Mr. Comey or an OIG complaint poses any real legal threat to Mr. Comey.  To the contrary, such a complaint would likely pose a greater risk for President Trump, including potential counterclaims and the risk of being deposed or questioned under oath by the OIG.

The misuse of legal process against corporate whistleblowers, however, is an especially powerful form of retaliation in that it can dissuade a whistleblower from pursuing their claims.  When I defend against this form of abuse of process, I am always struck at the seemingly endless resources that the company will spend to prosecute claims lacking any merit or value.  Fortunately, these claims can go awry by spawning additional retaliation claims under the whistleblower protection laws.  And a jury can punish the employer for subjecting the whistleblower to abuse of process.

Why Whistleblowers Deserve Strong Legal Protection

In light of Mr. Comey’s distinguished record, he will likely bounce back and rebuild his career. But most corporate whistleblowers never fully recover. Too often they find their careers and reputations destroyed. Even when whistleblowers obtain monetary relief at trial, they are usually blacklisted from comparable positions, especially if they work in a small industry.

Mr. Comey’s experience as a whistleblower is a stark reminder of what can happen to any employee who is pressured by a powerful superior to engage in unlawful conduct or to cover up wrongdoing. When intimidation tactics succeed, the public suffers. The company could be covering up threats to public health or safety, environmental contamination, financial fraud, defective products, or any other conceivable harmful wrongdoing.

Courageous whistleblowers who put their jobs on the line deserve strong protection. As Congress embarks on a mission to gut “job killing” agencies, let us hope it will spare the very limited resources that are spent enforcing whistleblower-protection laws. Without such a large backlog of whistleblower cases, OSHA could have, for example, addressed the complaints of Wells Fargo whistleblowers years ago, potentially curbing or halting the bank’s defrauding of its customers. And Congress should consider filling the gaps in existing whistleblower laws. If Mr. Comey “lacked the presence of mind” to explicitly reject the President’s improper demand for him to drop the Flynn investigation, then surely most employees would also be reluctant to refuse an order to commit an unethical or unlawful act.

After Mr. Comey’s testimony, Speaker Ryan pointed out that “[t]he President’s new at this. He’s new to government.” Mr. Comey’s testimony should be a lesson for the President about how to treat whistleblowers. To make America great again, the President should abandon the Rambo litigation tactics that apparently served him well in New York real-estate disputes, and instead view whistleblowers as allies, not as enemies. As Tom Devine of the Government Accountability Project and I argue in an article in the Emory Corporate Governance and Accountability ReviewDraining the Swamp Requires Robust Whistleblower Protections and Incentives.

This post was written by Jason Zuckerman of Zuckerman Law.

President’s FY18 Budget Proposes Historic Cuts to EPA Funding and Staffing

On May 23, 2017, the White House unveiled the full version of President Trump’s proposed budget for fiscal year (FY) 2018 entitled “A New Foundation for American Greatness.”  As signaled in the President’s “skinny budget” released earlier this year, the proposed budget would fund the U.S. Environmental Protection Agency (EPA) at $5.7 billion — a more than 30 percent decrease from the current funding of nearly eight billion.  EPA’s congressionally enacted budget has remained relatively flat since 2000, other than a significant boost in 2010 to $10.3 billion.  The proposed FY18 budget also calls for an EPA staffing level of 11,611 — a thirty year low.  The proposed decreased staffing level equates to a 20 percent reduction in the overall EPA workforce, which would eliminate approximately 3,000 employees.  A portion of the staff cuts would come from programs proposed for elimination, including the Center for Corporate Climate leadership, the Coalbed Methane Outreach group, and greenhouse gas reporting programs.  Some of the staff cuts may be accomplished by early retirement and lump sum voluntary separation payment incentives.  On June 1, 2017, EPA Acting Deputy Administrator Mike Flynn sent an e-mail to EPA employees providing preliminary details and next steps on early retirement and separation incentive offers.  Employees who accept offers will leave EPA by early September 2017.

Funding for state and tribal assistance grants (STAG) and other funds for state and regional initiatives is markedly decreased or zeroed out in the proposed budget, with cuts totaling $482 million, or 45 percent below the current enacted levels.  According to the Environmental Council of the States, which represents state departments of environment, STAG monies support approximately 27 percent of state departments of environment annual budgets.

In the area of federal enforcement, the Office of Enforcement and Compliance Assurance’s (OECA) budget would decrease by nearly 25 percent below current funding.  This decrease would reduce civil and criminal enforcement by 18 and 16.5 percent, respectively.  Funding for laboratory and forensics costs that support enforcement cases, including monitoring, would decrease by over 40 percent.  The corresponding reduction in enforcement efforts is likely to result in increased litigation from environmental advocates, particularly for matters governed by the Clean Air Act and the Clean Water Act which authorize citizen suits.

The budget requests $65 million for chemical risk review and reduction efforts under the Toxic Substances Control Act (TSCA), an increase of nearly $3.8 million from the current level.  EPA’s budget document notes that TSCA fee collections, set to begin in the second quarter of FY18, will fund approximately 53 full-time employees to support the chemical review process that were previously funded by federal appropriations. This small boost in funding may not be sufficient enough to support the implementation of “new TSCA,” however, and the implementation could still result in delays.

skinny budget donald trumpThe President’s budget provides $99.4 million in appropriated funding to support EPA’s pesticide registration review and registration program, including implementation.  This amount would decrease funding by $20.4 million from current enacted levels.  In addition to budget appropriations, EPA’s pesticide program is supported by Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) maintenance fees and Pesticide Registration Improvement Act (PRIA) registration application fees.  These fees combined typically generate approximately $40-45 million in additional funding per year. Congress is currently considering the reauthorization of PRIA, which would increase application fees.  Together, however, the total amount of funds available to operate the pesticide program (appropriations and industry fees) have declined over the past years and present a threat to the pesticide program’s ability to meet application review deadlines.

EPA Administrator Pruitt’s Back-to-Basics agenda includes addressing hazardous waste clean-up of the sites that have remained on the Superfund National Priorities List for decades.  In spite of this priority action item, the proposed budget would fund the Hazardous Substance Superfund Account at $762 million, $330 million below the 2017 level.  Instead of relying on the Superfund account to finance remediation, EPA instead would use existing settlement funds to clean up hazardous waste sites.

EPA’s Office of Water’s overall funding would decrease by nearly 20 percent. The Clean Water and Drinking Water State Revolving Funds (SRF) funding levels would remain funded at current levels. The SRFs support states’ administration of their drinking water and surface water programs and related infrastructure projects.  Steep cuts to STAG grants, and zeroing out of the Section 319 Nonpoint Source program and regional initiatives like the Great Lakes and Chesapeake Bay programs will be felt at the state level. The Section 319 program targets nonpoint source pollution, including runoff from agricultural working lands. States use 319 program funds to support watershed improvement projects and incentivize voluntary installation of best management practices on farms (e.g., grass waterways and buffers).

EPA’s FY18 Budget in Brief provides more details on proposed budget allocations and priorities.  The President’s budget is likely to face steep opposition in Congress, which has until September 30, 2017, to pass a budget for FY18, although this timeline will likely be extended through the use of continuing resolutions.  The House is slated to finish its work on appropriation bills before the July 4, 2017, holiday break, which should provide more insights on how much influence the President’s budget will have with appropriations leadership.

This post was contributed by the Government Regulations practice group at Bergeson & Campbell, P.C.

Trump Directs Reexamination of the Fiduciary Rule Changes

DOL Fiduciary RulePresident Donald Trump issued a memorandum late last week directing the Department of Labor to reexamine the anticipated changes to the fiduciary rule applying to most retirement plans and individual retirement arrangements. The changes are set to go into effect on April 10, 2017; however, the memorandum directs the Department of Labor to conduct a full review to determine whether to rescind or revise the rule. Initial reports indicated that implementation of the rule was being delayed, but the memorandum ultimately issued by the President did not include a delay. The Department of Labor released a statement following the issuance of the memorandum indicating it would consider its legal options to delay implementation. It is not clear how quickly the Department of Labor may reach a conclusion on a delay of implementation.

The anticipated changes expand the definition of fiduciary under the Employee Retirement Income Security Act of 1974 (“ERISA”) and subject more financial advisors to fiduciary standards under ERISA. The new fiduciary rule is aimed at eliminating a potential conflict of interest by subjecting retirement plan advisors to fiduciary standards under ERISA if the advisor receives variable compensation tied to the investments the advisor recommends to the plan. Advisors could avoid harsh penalties under the rule by providing specific disclosure and agreeing to abide by a “best interest” standard of conduct. We are aware that some advisors were preparing to implement significant business model changes to comply with the anticipated rule changes.

What this means for employers –

  • Employers/benefits committees should evaluate whether they will require advisors to comply with the requirements of the rule despite the memorandum.

  • Employers/benefits committees should reach out to their advisors/consultants and confirm whether they intend to proceed with implementing changes to comply with the rule.

  • Employers/benefits committees should continue to monitor developments in this area from a fiduciary risk perspective.

Copyright Holland & Hart LLP 1995-2017.

Election 2016: Trump on Antitrust

Donald Trump AntitrustWhile antitrust policy and enforcement has not received much attention from Donald Trump on the campaign trail, Mr. Trump has made a few notable statements regarding antitrust law that provide hints as to potential antitrust enforcement priorities for a Trump administration. Mr. Trump’s history as both a plaintiff and defendant in antitrust litigation is also notable and unprecedented.

In his 2011 book Time to Get Tough: Making America #1 Again, Mr. Trump addressed the Organization of the Petroleum Exporting Countries (OPEC) specifically in the context of antitrust law. Under the heading “Sue OPEC” Mr. Trump wrote:

We can start by suing OPEC for violating antitrust laws. Currently, bringing a lawsuit against OPEC is difficult. . . . The way to fix this is to make sure that Congress passes and the president signs the “No Oil Producing and Exporting Cartels Act” (NOPEC) (S.394), which will amend the Sherman Antitrust Act and make it illegal for any foreign governments to act collectively to limit production or set prices. If we get it passed, the bill would clear the way for the United States to sue member nations of OPEC for price-fixing and anti-competitive behavior. . . . Imagine how much money the average American would save if we busted the OPEC cartel.

More recently, in a May 2016 interview with Sean Hannity, Mr. Trump made a notable reference to antitrust law in connection with a discussion of Jeff Bezos and Amazon:

[Jeff Bezos is] using the Washington Post for power so that the politicians in Washington don’t tax Amazon like they should be taxed. He’s getting absolutely away. He’s worried about me and he’s, I think he said that to somebody, it’s in some article, where he thinks I would go after him for antitrust, because he’s got a huge antitrust problem because he’s controlling so much, Amazon is controlling so much of what they’re doing. And what they’ve done is, he-he bought this paper for practically nothing, and he’s using that as a tool for political power against me and against other people and, I’ll tell you what, we can’t let him get away with it. . . . So what they’re doing is that he’s using that as a political instrument to try and stop antitrust, which he thinks I believe he’s antitrust, in other words what he’s got is a monopoly and he wants to make sure I don’t get in. So, it’s one of those things. But I’ll tell you what, I’ll tell you what, what he’s doing is wrong and the people are being, the whole system is rigged – you see a case like that, the whole system is rigged. . . he’s using the Washington Post, which is peanuts, he’s using that for political purposes to save Amazon in terms of taxes and in terms of antitrust.

In addition to his statements, there is also Mr. Trump’s personal history as an antitrust litigant to be considered. In January 2016, former FTC Chairman Bill Kovacic was quoted as observing that “Donald Trump is the only presidential candidate in my lifetime to be a plaintiff in an antitrust case.

Indeed, as detailed in the American Bar Association’s Antitrust Source earlier this year, Mr. Trump was involved in three significant antitrust proceedings in the late 1980s and early 1990s. First, in 1988, Mr. Trump paid a $750,000 civil penalty to settle charges brought by the US Department of Justice (DOJ) and Federal Trade Commission (FTC) that he had violated the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) by acquiring stock in two companies without making timely HSR filings. Around the same time, Mr. Trump, as one of the owners of the New Jersey Generals US Football League team, was involved in a private antitrust suit against the National Football League (NFL)—a case that resulted in a jury verdict that the NFL had willfully acquired or maintained monopoly power in a market consisting of major league professional football in the United States, in violation of Section 2 of the Sherman Act. Damages of $1, trebled to $3, were awarded. US Football League v. Nat’l Football League, 842 F.2d 1335 (2d Cir. 1988). Finally, Mr. Trump, in connection with his Atlantic City casinos, was sued by Boardwalk Properties, Inc. on numerous grounds including allegations that he had attempted to monopolize casino gambling and had conspired to suppress competition. After a lengthy legal battle, Mr. Trump prevailed.

While we can only speculate as to how a Trump administration would approach antitrust policy and enforcement, Mr. Trump’s commentary regarding Amazon suggests that he would not be shy about pressing for aggressive investigation and potential enforcement action against those he perceives to be running afoul of antitrust laws. While it appears likely that Amazon would find itself under the microscope of a Trump administration, it is unknown whether Mr. Trump would direct enforcement towards other particular domestic companies or industries. It is also uncertain if Mr. Trump would maintain the Obama administration’s increased rate of merger challenges.

With respect to international enforcement, Mr. Trump’s comments on OPEC, coupled with his campaign focus on trade issues, suggest that he would be in favor of aggressive antitrust enforcement actions focused on foreign companies—and, potentially, against foreign governments (though some of Mr. Trump’s strategies may first require legislative action by US Congress before they can be pursued). Mr. Trump’s litigious history on both sides of antitrust laws demonstrates his familiarity and experience with the legal system, and further suggests that a President Trump would not hesitate in pressing for antitrust action against foreign actors. Mr. Trump underscored this point in Time to Get Tough favorably quoting a former Reagan and Bush advisor who, commenting on antitrust enforcement against OPEC, stated “isn’t starting a lawsuit better than starting a war?”

It is possible that a President Trump would ultimately do little to shake up the antitrust enforcement status quo, given other pressing national and international issues that have been focal points of the Trump Campaign. On the other hand, it is equally possible that, given his comments and litigation history, Mr. Trump would adopt a very aggressive antitrust investigation and enforcement policy against perceived wrongdoers, resulting in antitrust issues becoming central to a Trump administration’s economic and trade policies.