Tag: business

CTP Releases New 5-year Strategic Plan

On December 18, 2023, Dr. Brian King, the Director of FDA’s Center for Tobacco Products announced the Center’s new five-year strategic plan which outlines the Center’s programmatic and workforce initiatives and includes five goals, ten outcomes, and several corresponding objectives.

The new strategic plan incorporates recommendations from the Reagan-Udall Foundation report published in December 2022. The Reagan-Udall Foundation report provided fifteen recommendations for CTP which included improving transparency regarding the Center’s approach to Premarket Tobacco Product Application (PMTA) reviews and compliance and enforcement. The report highlighted industry concerns with the CTP’s framework for approaching PMTA reviews, particularly after FDA issued Refuse To Accept (RTA) letters, Refuse to File (RTF) Letters, or Marketing Denial Orders (MDOs) for millions of deemed tobacco products. The five-year plan seeks to address the issues of transparency, enforcement, and education.

The five goals are:

  1. Develop, advance, and communicate comprehensive and impactful tobacco regulations and guidance;
  2. Ensure timely, clear, and consistent product application review;
  3. Strengthen compliance of regulated industry utilizing all available tools, including robust enforcement actions;
  4. Enhance knowledge and understanding of the risks associated with tobacco product use; and
  5. Advance operational excellence.

To achieve these goals, CTP plans to develop and implement several guidance documents to ensure that regulations are clear and accessible. Furthermore, CTP will develop new processes to review PMTA efficiently and to communicate the review process and marketing decisions transparently. CTP also plans to pursue more robust enforcement actions by collaborating with other federal and state agencies.

CTP highlighted the importance of promoting education surrounding the risks of tobacco product use, particularly for preventing youth initiation, and educating adults on the benefits of cessation, including the relative risks of different tobacco products. The fifth and last goal regards CTP’s operational goals by supporting its workforce and operating efficiently.

In conjunction with this strategic plan, CTP also published the Center’s policy agenda of rules and guidance documents. The policy agenda provides guidance documents in development, including current and long-term priorities for the Center.

The Center’s current priorities include:

The ultimate goal of the strategic plan is to reduce harm caused by tobacco product use and to work with regulated industries in a manner that demonstrates a commitment to science, health equity, stakeholder engagement, and transparency.

© 2024 Keller and Heckman LLP
For more news on FDA’s Center for Tobacco Products, visit the NLR Biotech, Food, Drug section.

Fee Hikes Give U.S. Employers Chance to Rethink Immigration Strategies

The cost of running an immigration program at a U.S. company just went up — a lot.

On Jan. 31, U.S. Citizenship and Immigration Services published a final regulation to raise immigration filing fees — and high-skilled categories saw some of the biggest increases. On April 1, the fee for an H-1B petition increased from $460 to $780 (70%), and the fee for an L-1 intracompany transfer petition increased from $460 to $1,385 (201%). All of that is before a new $600 Asylum Program Fee ($300 for small employers) is added on for each employment-based nonimmigrant or immigrant filing. Analysis from the BAL Government Strategies team shows that a typical small- or medium-sized company may see the amount they spend on filing fees more than double.

None of this is good news.

At the same time, the fee increases present an opportunity for companies to take stock of their immigration programs and reassess whether they are doing everything they can to take advantage of policy improvements that the Biden administration has made.

The fee increases are the first since 2016, and USCIS has said it will put the additional revenue to good use — not only by helping them meet the challenge of expanded humanitarian programs but also by improving processing times and reducing backlogs for employment-based filings. While the business community was clear that it would have liked to see USCIS implement additional efficiencies before raising fees, the administration has shown good faith by working to streamline programs with its current funding level. Consider:

  • Improvements to the H-1B program: Just days after it published the regulation to raise fees, USCIS published a separate regulation to overhaul the H-1B registration and selection process. The big change is a switch from a petitioner- to a beneficiary-centric lottery, so that each H-1B beneficiary may be selected only once, no matter how many registrations are submitted on his or her behalf. This change is designed to eliminate incentives for bad actors to submit multiple H-1B registrations for the same individual — and has the potential to reduce the overall number of registrations and boost the H-1B selection rate. The change enjoys broad support in the business community. So do the introduction of online H-1B filings and a new pilot program that allows some H-1B holders to renew their visas in the U.S. without going abroad.
  • Extended employment authorization: In September 2023, USCIS increased the maximum validity of Employment Authorization Documents (along with Advance Parole travel documents) to five years for employees with pending green card applications. This change did not draw as much attention as the H-1B overhaul but has proved to be a boon to employers. Previously, green card applicants had to renew their employment authorization every two years. The longer validity saves not only time and money but also adds predictability. Improved EAD processing times are an additional benefit.
  • Flexibility in the green card process: With the labor certification process (PERM) becoming increasingly difficult, employers continue to turn toward national interest waivers as a green card strategy. This trend is due in part to the increased difficulty of the PERM process when employers have had layoffs. The administration published new guidance on national interest waivers for EB-2 visas in January 2022 and made EB-2 visas a priority in an executive order on intelligence published last fall. The Department of Labor has also asked for public input on whether to revise its list of Schedule A job classifications that do not require labor certification. This list has not been updated since 2004.
  • Improved visa processing abroad: The U.S. State Department issued more than 10.4 million nonimmigrant visas in the last fiscal year. This figure was nearly a record and the highest total since 2015. It also highlights a marked turnaround in visa processing efficiency at U.S. embassies in consulates following years of reduced staffing and delayed wait times. State Department fees also went up last spring. And while the State Department and USCIS are different agencies with different challenges, the success in improving visa processing abroad is consistent with the Biden administration’s broader overall efforts to improve immigration services.

Understandably, we have heard plenty at BAL from employers frustrated with how dramatically fees increased. What we have not heard, however, is that employers plan on dramatically cutting back their immigration programs. This is good news — and not only because it means companies will continue to recruit top workers to help keep them competitive.

Despite higher fees, there is ample evidence that it is a good idea to invest in foreign workers now, at a time of generally favorable policies. Take the H-1B program as one example. The H-1B registration fee has increased from $10 to $215 for next year’s cap registration, which gave employers an incentive to put eligible employees in the lottery this year if they were able to do so. On top of that, for beneficiaries that were not selected, employers have more favorable options for H-1B alternatives now than they previously did. The administration has added new qualifying fields of study to its STEM Designated Degree Program List, making more recent graduates eligible for extended Optional Practical Training. Officials also provided clarifying guidance on O-1 “extraordinary ability” visa criteria, making this category an increasingly common option.

None of the administration’s immigration programs are ensured to continue under future administrations. In the current political environment, there is no telling how long they will last.

Donald Trump has emerged as the Republican Party’s presumptive nominee for president. Whatever you think of Trump’s politics, it is plainly true that when he was in office, it was harder to recruit and retain high-skilled foreign workers. H-1B denial rates skyrocketed and processing backlogs ballooned at understaffed agencies. COVID-19 only made the problems worse.

Nobody knows what Trump may do if he wins this year’s election, but it certainly seems unlikely he would decrease immigration fees. Employers could be stuck with higher rates for reduced services.

The adage “never let a crisis go to waste” is instructive as employers face higher costs and uncertainty about the future of favorable immigration policies. While no one enjoys paying higher fees, employers should review their immigration strategies to take advantage of easier processes now before it’s too late.

©2024 Berry Appleman & Leiden. All Rights Reserved.
For more news on Employment Immigration Programs, visit the NLR Immigration section.

EPA Issues Final Rulemaking on Clean Water Act Hazardous Substance Facility Response Plans

Key Takeaways

  • What Is Happening? On March 14, 2024, The U.S. Environmental Protection Agency (EPA) signed a final rule requiring certain facilities to develop Facility Response Plans (FRPs) for a potential worst-case discharge of Clean Water Act (CWA) hazardous substances, including planning for the threat of a worst-case discharge. Existing EPA regulations require FRPs where certain thresholds of oil are exceeded; the new rule extends the FRP requirement to cover CWA hazardous substances, among other changes. The rule takes effect on May 28, 2024, and has a 36-month implementation period. We anticipate challenges to the rule, but unless a court issues a stay, affected facilities should plan to implement the rule’s new requirements in this timeframe.
  • Who Is Impacted? Affected industries include many industrial and commercial sectors and facilities that handle hazardous substances at or above current reportable quantity thresholds. These may include manufacturing and chemical plants and storage operations located near navigable waters that have an inventory of CWA-listed hazardous substances at or above threshold amounts. Facilities associated with oil and gas extraction, mining, construction, utilities, crop production, animal production and aquaculture, and support activities for agriculture and forestry, among others, could also be affected.
  • What Should I Do? Facility owners and operators potentially affected by the rule should assess whether they are subject to the rule and then begin developing their facility response plans.

The rule requires Facility Response Plans for worst-case discharges of CWA hazardous substances from onshore non-transportation-related facilities that, because of their location, could reasonably be expected to cause substantial harm to the environment by discharging into or on the navigable waters, adjoining shorelines, or exclusive economic zone. Facilities already subject to requirements for Spill Prevention, Control Countermeasure Plans, or FRPs for oil under 40 CFR Part 112 should anticipate that they will fall within the scope of the new rule and plan for compliance.

Background

The final rule is EPA’s response to the settlement of a 2019 lawsuit brought by the Natural Resources Defense Council and others. The lawsuit asserted that EPA failed to meet its statutory duty to issue regulations “requiring non-transportation-related substantial-harm facilities to plan, prevent, mitigate and respond to worst-case spills of hazardous substances.”

The Consent Decree required EPA to take final action on a rule addressing worst-case discharge plans for hazardous substances by September 2022. This final action represents EPA’s final action under the consent decree.

Applicability Criteria

EPA set forth a two-step process to determine whether the new rule applies to a facility. See 40 CFR 118.3. Specifically, the owner or operator of a covered facility must assess two screening criteria and, if both criteria are met, then assess the ability of the facility to cause substantial harm to the environment through the application of the substantial harm criteria. If an owner or operator determines that the covered facility meets one of the substantial harm criteria, the owner or operator must prepare a hazardous substance FRP in accordance with the new regulations.

  • Initial Screening. These screening criteria are to be assessed concurrently, with no implied order of priority:
    1. Facility has a maximum quantity onsite of 1,000x the Reportable Quantity of CWA Hazardous Substances. The RQs published in 40 CFR Part 117 are based on a level of release of a hazardous substance that could potentially cause harm to waters. EPA’s decision to set the threshold criteria at 1000x rather than the initially proposed 10,000x the RQ represents a potentially significant expansion of the scope of the new rule.
    2. Facility is within 0.5 miles of navigable water or conveyance to navigable water.

If a facility meets the two screening criteria, it must undergo an evaluation to determine whether it meets the substantial harm criteria.

  • Substantial Harm Criteria. If the two screening criteria are met, the next step is a substantial harm evaluation, which includes determining whether the facility meets one of the following four substantial harm criteria:
    1. Ability to adversely impact public water system.
    2. Ability to cause injury to fish, wildlife, and sensitive environments.
    3. Ability to cause injury to public receptors.
    4. Has experienced a reportable discharge of CWA hazardous substances that reached navigable water within the last five years.

These criteria are easily triggered under the FRP process for oil, which preexisted the new rule. For instance, an “injury” means any measurable adverse change, either long- or short-term, in the chemical or physical quality or the viability of a natural resource resulting either directly or indirectly from exposure to a discharge or exposure to a product of reactions resulting from a discharge. 40 CFR 112.2.

If both screening criteria and one or more substantial harm criteria apply, the facility must prepare and submit an FRP to EPA that includes information on each CWA hazardous substance above the threshold quantity onsite. The owner or operator must assess all substantial harm criteria.

Amendments from the Proposed Rule

  • In the final rule, the Agency determined that a 1,000x RQ multiplier, instead of the proposed 10,000x, will more appropriately screen for covered facilities that could cause substantial harm to the environment from a worst-case discharge. In response to comments, EPA indicated that the screening criteria, in conjunction with the substantial harm criteria, will appropriately target covered facilities that could cause substantial harm to the environment from a worst-case discharge of a CWA hazardous substance into or on the navigable waters. This change in scope from the proposed rule will likely significantly broaden the number of locations that must now complete the new assessment process for CWA hazardous substances.
  • As the basis for assessing risk to the environment, the new rule requires the use of the volume by the maximum quantity onsite inventory of hazardous substances above RQs, rather than the maximum onsite container capacity. EPA made this change in the final rule based on its view that this approach will more accurately reflect the hazard posed and is consistent with how oil is measured and regulated.
  • Once a facility determines it meets one of the substantial harm criteria, the owner or operator must now develop an FRP for all, not just one, of the CWA hazardous substances onsite above the threshold quantity. EPA made this adjustment by recognizing that the response and/or recovery actions may vary widely depending on which substance is released. Thus, the FRP must include information on each hazardous substance onsite that is above the threshold quantity.
  • EPA added § 118.4(a)(6) to the final rule, which requires a covered facility owner or operator to review and recertify their plan Agency every five years. EPA decided that this will ensure the FRPs remain up-to-date and owners or operators remain informed of their responsibilities. This requirement is consistent with oil FRP requirements.
  • EPA also added § 118.4(a)(7), requiring a facility owner or operator to evaluate or re-evaluate operations whenever EPA adds or removes a CWA hazardous substance from the list at 40 CFR 116.4 or adjusts relevant RQs as found in 40 CFR 117.3. EPA reasoned that such adjustments are made through a formal notice and comment rulemaking procedure; thus, regulated entities will have notice of these changes prior to them becoming final and effective.

Implementation and Enforcement

Facility Response Plan preparation, submission, and implementation timelines are subject to the effective date and an initial 36-month implementation period. EPA included this implementation period to allow covered facilities time to familiarize themselves with the rule requirements and prepare their plans.

  • Initially-regulated covered facilities. The owner or operator of a non-transportation-related onshore facility in operation on November 30, 2026, that satisfies the applicability criteria must implement the requirements of the new regulations by June 1, 2027.
  • Newly-regulated covered facilities. The owner or operator of a non-transportation-related onshore facility in operation after November 30, 2026, that satisfies the applicability criteria must comply within six months.
  • Newly-constructed covered facilities. Covered facilities starting operations after June 1, 2027, must comply prior to the start of operations, including a 60-day start-up period adjustment phase.

Appeals

Similar to current regulations for Oil FRPs, a facility that believes it is not subject to the new rule may appeal a decision by the EPA Regional Administrator determining the potential or threat of substantial harm or significant and substantial harm from a facility or, in the case of an FRP that has been prepared, the Regional Administrator’s disapproval of a CWA hazardous substance FRP. If warranted, that decision can then be appealed to the EPA Administrator.

Petitions

The public and other government agencies may also petition EPA to determine whether a CWA hazardous substance-covered facility should be required to submit an FRP to EPA. Given the breadth of the new rule relative to the long list of hazardous substances and the 1000x RQ threshold, this public participation opportunity is a significant consideration for facilities that may already be under community scrutiny for other reasons.

© 2024 Beveridge & Diamond PC
For more news on Clean Water Act Regulations, visit the NLR Environmental, Energy & Resources section.

Food for Thought: Serving Up Unique Concerns for Restaurant Leases

Many aspects of commercial leasing are complex, but restaurant leases are a unique species of lease. Counsel to restaurants must be cognizant of operational and logistical issues posed by these hospitality businesses, and be prepared to address these key issues to protect the restaurant. Here are some of the most distinctive issues to be aware of when representing a restaurant tenant:

CONSTRUCTION ISSUES

Restaurant construction is different from other tenants’ fit-out work. It involves several moving parts, all of which come together to facilitate the restaurant’s successful operation. These include utilities, heating, ventilation, and air conditioning, managing odors, grease traps, hot water, and fire suppression systems. While counsel need not have the knowledge of a contractor or architect, one must understand the importance of the size of HVAC systems, design of fire suppression and sprinkler systems, the capacity and location of electrical conduit and electrical service, and sanitary and sewer lines and gas lines. For example, grease traps are imperative for restaurants, and it is important to determine (i) whether a grease trap is separate and external, or shared with other tenants, (ii) if shared, how maintenance responsibility and cost will be allocated among the shared users; and (iii) whether the grease trap’s location is convenient for operations.

Mitigation of cooking odors is another key issue, especially in a mixed-use development, shopping center, or an urban residential neighborhood. Some landlords and municipalities require expensive odor control systems, and negotiation is important in determining the size and scope of such measures, especially given the subjective perception of odors generally. It may also be helpful to include an objective standard of negative pressure for odor control. Noise mitigation is likewise an issue as to which landlords may be sensitive. Restaurants draw crowds of people who are out to enjoy themselves, which leads to loud voices, music, and other noise that emanates from the restaurant in a way that may affect other abutters and neighbors, especially residences or hotels.

OPERATIONAL ISSUES

  1. Hours of Operation: All businesses are sensitive to their hours or operation, but it is particularly important for restaurants to understand the impacts that may come with later hours, which often cause landlords concern (especially if the restaurant serves alcohol). If the restaurant has outdoor seating or a patio area, are those hours the same as for the interior space? Some liquor licenses or municipal regulations may also restrict operations, so it is important to understand and comply with the requirements and rules of governing bodies.
  2. Deliveries: Restaurants receive multiple deliveries daily, often greater than other types of businesses. The logistics of delivering food to the restaurant are critically important. Sometimes landlords desire to limit the hours during which deliveries may be made or the loading docks (if any) that may be used. Counsel should know how deliveries will be made and determine whether any restrictions on same will be troublesome to the restaurant’s operations.
  3. Trash: Restaurants generate a substantial amount of trash, both wet and dry, food and nonfood. The location and adequacy of trash storage as well as the frequency of removal are key issues to specify in the lease. Some landlords also require a cold storage area for food waste; and of course care should be taken to avoid vermin infestations. Where will the tenant need to take its trash? If the common trash room is far from the kitchen, that may pose problems for restaurant staff.
  4. Parking: Vehicle parking is an issue for all tenants, but it is often magnified for restaurants. Counsel should understand where the restaurant’s patrons are expected to park, and if desired seek to negotiate designated takeout parking spaces for the restaurant. If there is to be valet parking, or if a development designates certain areas as approved for ride share drop-off and pick-up and not others, counsel should understand whether those services and areas pose a business risk for the client.

EXCLUSIVE ISSUES

Many types of retail businesses seek exclusives in leases, but restaurants are particularly invested in ensuring that landlords do not lease other space to a competitor restaurant. If the development contains a hotel, the restaurant lease should contain an exclusive which prevents the hotel from operating a similar restaurant.

TIMING ISSUES

If the restaurant is located in a mixed-use project or shopping center, or otherwise not on its own parcel, the restaurant will want to negotiate the ability to determine when construction occurs and when it is obligated to open for business. Timing of construction can be a big risk, as delays and interruptions are expensive and set back the opening. Aside from construction timing, opening requirements may be important, especially in light of whether other tenants in the project are open and operating. Restaurant counsel may seek an opening co-tenancy requirement such that the restaurant will not be obligated to open until the major tenant or a substantial portion of the development is also open.

In summary, restaurant leases are more complicated than other retail leasing; and restaurant counsel should be aware of these unique business issues and strive to fully understand the details of its client’s business in order to set the restaurant on a successful path.

© 2024 SHERIN AND LODGEN LLP
For more information on Restaurant Leasing Issues, visit the NLR Real Estate section.

Unlocking India’s Space Potential: India Liberalizes Foreign Direct Investment Regime

  1. The foreign investment policy was ambiguous about space activities beyond satellites, leading to different interpretations.
  2. Some companies made investments basis the view that investments in the activities not listed under the FDI policy in this sector could be made up to 100% without prior government approval.
  3. The proposed FDI Space Policy addresses these concerns and allows 100% foreign investments under the automatic and governmental approval route.
  4. Formal notification is awaited which will make this policy effective as law.

Background

India currently is home to more than 200 space start-ups, and the space sector in India has attracted USD 124.7 million investment in the year 2023. The existing foreign investment policy of India (“FDI Policy”) requires foreign investors to obtain prior government approvals for investing in the space sector, particularly for the establishment of satellites.

Considering the growth of this sector, the Indian government has been periodically releasing policies / notifications, establishing organizations, etc. with the intent to allow more private participation in this sector. This has led to the establishment of an organization to promote the sector called the Indian National Space Promotion and Authorization Centre in 2020, as well as the introduction of the National Geospatial Policy, 2022 followed by the Indian Space Policy, 2023.

On February 21, 2024, the Union Cabinet approved amendments to the Foreign Direct Investment (“FDI”) policy and communicated it in a press release (“FDI Space Policy”) which proposes to liberalize investments in the space sector. However, a formal notification from the relevant authorities is still awaited for the amendments to become enforceable as law.

Existing FDI Policy 

Existing foreign investment limits in the space sector are provided under the Schedule I of Foreign Exchange Management Act (Non-Debt Instrument) Rules, 2019 (“NDI Rules”). The current norms do not recognize “space” as a sector in itself. Instead, the space related activities are primarily captured under the head – “satellites – establishment and operation”. 100% foreign investment is allowed in this sector but the same is subject to approval from the government along with compliance of sectoral guidelines from Department of Space / Indian Space Research Organisation. In essence, all foreign investments in companies undertaking the activities of satellites-establishment and operations require government approval.

Reforms – New FDI Space Policy 

The proposed FDI Space Policy allows 100% foreign investment in the space sector and has also created sub-categories, entry route and investment thresholds for various space related activities, which are as follows:

S.no. Activity FDI Thresholds
1. Satellites-manufacturing & operation, satellite data products and ground segment & user segment Up to 74% under automatic route

and beyond 74% (up to 100%) under government route
2. Launch vehicles and associated systems or subsystems, creation of spaceports for launching and receiving spacecraft Up to 49% under automatic route and beyond 49% (up to 100%) under government route
3. Manufacturing of components and systems/ sub-systems for satellites, ground segment and user segment Up to 100% under automatic route

Analysis 

(i) Status of existing investments

The existing FDI policy did not include space sector related activities (other than satellites-establishment and operation) such as launch vehicle business, ground segment, user segment, sub-component / sub-systems manufacturing, data products etc.

Various stakeholders argued that since the existing FDI policy did not specify certain activities such as launch vehicles, data sets, manufacturing of space systems / components etc. under the head of “satellites-establishment and operation”, foreign investments in such cases should be permitted up to 100% under the automatic route. This was based on the interpretation under the FDI policy that sectors / activities not specifically listed or prohibited, are permissible for foreign investment up to 100% under the automatic route, subject to sectoral conditionalities. Relying on the same, foreign investors made investments in space start-ups whose activities were not explicitly listed or regulated under the current FDI regime without obtaining government approval.

Some stakeholders interpreted “satellites” very broadly and took a more conservative view that all space related activities required government approval. Similarly, there were overlaps in activities / interpretation of the FDI policy under the sectors of defence, telecom and manufacturing.

The space liberalization norms under the proposed FDI Space Policy may have actually de-liberalized this sector for certain companies who received investments in allied space activities based on the understanding that sectors / activities not specifically listed or prohibited, should be eligible for foreign investments up to 100% under the automatic route. In such cases where the investment thresholds under the proposed FDI Space Policy may be breached, it would be interesting to see the government’s approach including granting approvals on a post-facto basis.

(ii) Sub- categorizations of activities within the Space Sector

While the government has acknowledged the sub-categories of activities within the space sector, it hasn’t clarified its rationale for providing different foreign investment thresholds for such activities. Relaxed thresholds for satellites (i.e., 74% under the automatic route (up to 100% under government route)) and its sub-components (i.e., 100% under the automatic route) encourage foreign participation in commercial aspects of space activities. In contrast, the 49% cap on foreign investments under the automatic route (up to 100% under government route) on launch vehicles acknowledge their dual-use potential for both civilian and defence purposes. This sensitivity, combined with the launching state’s heightened liability under Article II of the Convention on International Liability for Damage Caused by Space Objects (“Liability Convention”), may be viewed as necessitating greater government oversight.

However, industry players have also criticized the differential treatment provided to launch vehicles vis-a-vis satellites. They believe, in essence, both industries have similar sensitivity issues and hence should be treated at par from a foreign investment perspective. Hence, the difference in foreign investment thresholds require more explanation from the government.

(iii) Satellite Data Products

The term ‘satellite data products’ has not been defined under the proposed FDI Space Policy but investments in such activities would be permitted up to 74% under the automatic route (up to 100% under government route). This may lead to some conflict from a satellite imagery / data perspective read along with the liberalized Geospatial Guidelines, 2021. (“Geospatial Guidelines”).

The Geospatial Guidelines largely permit foreign investments up to 100% under the automatic route with limited foreign investment restrictions especially if the activity is for (i) creation / ownership / storage of geospatial data of a certain accuracy (as defined under the Geospatial Guidelines); (ii) terrestrial mobile survey, street view survey and surveying activities in Indian territorial waters. There seems to be no specific restriction on satellite generated data (other than the above) under the Geospatial Guidelines. Thus, the proposed FDI Space Policy may end up limiting foreign investments for activities relating to Satellite Data Products (which would include geo-spatial data) in which otherwise is viewed to be permissible up to 100% under the automatic route.

The government should also define what constitutes satellite data products and to the extent possible it would be recommended that foreign investment up to 100% should be permitted under the automatic route.

Additionally, the rationale for capping investments for satellite data products under the proposed FDI Space Policy seems unclear as these are data sets which could be regulated under the Geospatial Guidelines and the new Indian privacy law.

(iv) Where are sub-components for launch vehicles covered?

The proposed FDI Space Policy explicitly covers the manufacturing of components and systems / sub-systems for the satellite sector, ground & user segment, and permits 100% FDI under automatic route for the same. With the absence of similar language for components in launch vehicles, it could imply its inclusion under the broader launch vehicle category, hence falling under the 49% automatic route (up to 100% under government route). Alternatively, it could also be argued since it is not expressly specified, the same could be covered under the 100% automatic route category. However, considering the critical role of such components in the sector’s development, clarification from the government would provide much-needed comfort especially if the components are dual use (satellite and launch vehicle usage).

(v) What about ground segment and user segment for launch vehicles?

Following the pattern observed with the satellite and ground segment categories, the absence of specific mention for the “ground segment & user segment” in the launch vehicle section raises further questions. This omission could be an oversight or intentional, but the lack of clarity hinders transparency and predictability for potential investors. Further clarity on the inclusion from an industry perspective in the official amendment notification would ensure a comprehensive and consistent policy framework for the entire launch vehicle sector.

(vi) Were any sub-categories / activities missed?

As space activities may expand to include space mining, exploration, international space station construction, space tourism etc., India needs to proactively address these areas. Especially, if these should be interpreted for foreign investments up to 100% under the automatic route, as this would have a bearing on India’s ability to attract foreign investment while safeguarding national interests, technological competitiveness, and responsible stewardship of India in space.

Conclusion

While the proposed FDI Space Policy provides substantial liberalization, further clarity is awaited based on the formal notification which will make this effective as law. Ideally, the Government should provide definitions / explanations for the proposed categorization and sub-categorizations, and further clarity on the inclusions and omissions of activities which may be related to most space sector functions such as user and ground segments.

While the move towards liberalization significantly reduces government control over the space sector, its inherent interconnectedness with other regulated domains like telecommunications / geospatial cannot be ignored. Despite these challenges, the government’s willingness to open the space sector to foreign investments is a positive step offering greater confidence to foreign investors. Relaxation in the existing norms also signifies a supportive stance towards the industry, encouraging both domestic and international participation. Notably, India successfully attracted substantial foreign investment even during the era of full government control. Therefore, with the current reforms, a significant increase in foreign investments is expected.

Footnotes
[1] Rajya Sabha Questions, Department of Space, available at
https://sansad.in/getFile/annex/262/AU621.pdf?source=pqars
[2] Notification, Department of Space, available at https://pib.gov.in/PressReleasePage.aspx?PRID=1988864
[3] Notification, Ministry of Commerce & Industry, available at
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2007876
[4] Article II of the Liability Convention provides that a launching State shall be absolutely liable to pay compensation for damage caused by its space object on the surface of the earth or to aircraft flight.

Nishith Desai Associates 2024. All rights reserved.
For more news on Foreign Direct Investments, visit the NLR Financial Institutions & Banking section.

Dictionaries and the Law – Hunting, Poaching, and the Right to Food

The Law Court’s recent decision in Parker v. Department of Inland Fisheries & Wildlife is fascinating—it is a rare instance when the Court has been called upon to interpret and apply a new constitutional provision. The Maine Constitution has had relatively few amendments, but in 2021 Maine voters approved a “Right to Food Amendment.” Parker involved a challenge to Maine’s Sunday hunting law prohibition under the new amendment.

As is relevant here, the amendment provides that “[a]ll individuals have a natural, inherent and unalienable right to food, including the right to … grow, raise, harvest, produce and consume the food of their own choosing” for certain purposes, including nourishment. It then enumerates limitations on this right, conditioning the right on the requirement that the individual not commit “trespassing, theft, poaching or other abuses of private property rights, public lands or natural resources.”

The question in the case was whether the Maine law banning hunting on Sundays infringes on this right. In an interesting ruling, the Law Court said it did not. After reaching the straightforward conclusion that the plaintiffs could present a justiciable claim given the State’s denial of their request for a Sunday hunting permit, the Court took up the merits—and in so doing, raised some intriguing questions.

First, the Court accorded the Sunday hunting statute a presumption of constitutionality—even though the statute predated the constitutional amendment. But why? Normally the presumption accords the Legislature credit for seeking to act in accordance with existing constitutional limits. That rationale, the Court acknowledged, did not apply. The Court instead suggested that there are other reasons for according this presumption, but relied on cases stating that facial constitutional challenges are disfavored because they lack robust factual records and pose the risk of overbroad rulings. Those concerns seem to go to the particular vehicle for the challenge, not the presumed validity of the enactment itself. Isn’t the right answer, then, to apply the appropriate standard for facial challenges rather than apply a presumption? That point is at least debatable.

Second, the Court’s analysis of the amendment’s language raises interesting interpretive questions. The Court concluded that the term “harvest” includes hunting. The Court buttressed this conclusion by citing several authorities, including dictionary definitions, its own prior precedent, and statutory definitions. Based on these authorities, the Court reasoned, the amendment does include a right to hunt. The Court then observed that this right is subject to express limitations, including that the right does not include engaging in “poaching.” Citing dictionary definitions only, the Court then reasoned that the term “poaching” includes any illegal hunting. Thus, the Court held that the right to hunt does not include the right to hunt on Sundays, because the Legislature has made hunting on Sundays illegal.

One could imagine a potential criticism—does the reasoning in Parker render the right to hunt under the amendment meaningless? If the amendment is meant to protect the right to hunt, but does not circumscribe any law that renders hunting illegal, does the amendment protect hunting at all?

There are arguable critiques of the Court’s reliance on dictionary definitions. Two definitions cited, from Merriam Webster’s Collegiate Dictionary and Webster’s II New College Dictionary, suggest a broad definition of the term that includes any illegal taking of game. But query whether that is the ordinary understanding of the term. Various dictionaries, including Merriam Webster and Cambridge, suggest a primary meaning of “poaching” that relates to illegality in the manner in which the game is taken—i.e., taking game while encroaching on the land of another. Indeed, the Court’s citation to Black’s Law Dictionary, which defines poaching as the illegal taking of game “on another’s land,” supports this ordinary reading. At the very least, the availability of a narrower common meaning suggests the need for careful reliance on dictionaries, including analysis of primary definitions and the word’s context.

As Justice Scalia and Brian Garner note in Reading Law, the availability of multiple meanings for common words places great importance on evaluating not just to dictionary definitions but also the word’s context to determine its most likely meaning. Here, there are multiple hints at the word’s meaning to be found in the amendment’s context. The amendment itself references poaching and “other abuses of private property rights, public lands or natural resources.” The reference to “other abuses of private property” renders a definition of “poaching” that requires some sort of trespass more likely. And broader context might suggest the same; as mentioned above, a reading of “poaching” that includes any law rendering hunting illegal seems (at first blush) to render the amendment circular, and thus meaningless at least in part—a result that is generally discouraged. Of course, there may be rejoinders, but Parker does not provide them.

As Parker illustrates, constitutional and statutory interpretation requires careful, contextual analysis, and it is incumbent on attorneys to equip the Court with thorough arguments. That’s what a good appellate brief—whether by a party or by an interested party filing an amicus—is for. But for now, Parker answers a narrow question under the Right to Food amendment, while leaving many other questions about its scope and application open.

©2024 Pierce Atwood LLP. All rights reserved.
For more news on State Constitution Interpretation, visit the NLR Constitutional Law section.

Best Practices for Associate Compensation

Welcome back to our in-depth exploration of compensation within law firms. In our previous post , we emphasized the significance of establishing a robust compensation system to attract and retain top talent and keep them motivated. In this post, we’ll discuss the crucial components needed to make an effective compensation plan for associates within the firm.

Compensating associates is a multifaceted task that law firms tackle annually to attract and maintain a talented workforce. Unfortunately, numerous small to mid-sized firms lack a robust structure that anticipates market trends and internal changes, and they also often need a simplified process for determining raises and bonuses.

Key Considerations for Developing Compensation Plans for Associates:

Associate compensation programs should incorporate the following elements:

  • Market Competitiveness: How does the firm’s associate compensation compare with market standards and rival firms?
  • Progression: Does the firm have a consistent and progressive structure for raises and bonuses that aligns with its associates’ experience and performance progress?
  • Incentive Alignment: Does the firm incentivize behaviors aligned with its vision and priorities?
  • Transparency: Does the firm clearly communicate with associates about their earning potential over time and at specific experience and performance levels?
  • Feedback: Are associates given enough performance feedback to understand the relationship between their salaries, raises, bonuses, and performance?

Capacity and Performance Expectations

Establishing a compensation structure begins with assessing attorneys’ current and future economic and qualitative potential. Firms should project the expected performance and contributions over the first eight to ten years of an attorney’s career in the firm.

  • Production Capacity – How much work will the attorney handle, and what is the value of that work? Production metrics may include billable hours or caseload, expected billings and collections, and, by extension, rates and realization.
  • Qualitative Performance – Which skills does the attorney need to succeed in the position/ to create value? Consider legal skills, case management, business development contributions, compliance/ interpersonal skills, recruiting support, etc.
  • Profitability – How much economic value should the attorney create beyond their cost? (Expected profit or profit margin)

The qualitative increases in value and objective contributions to revenue and profit indicated in the table below provide an example of the most common factors. Contributions should be considered in the context of increasing long-term value and offering short-term profits.

 

INCREASES IN VALUEInvestment_Icon

Profitability_icon-1CONTRIBUTIONS TO PROFIT
  Quality of professional work Personal Productivity
   Work ethic

(consistency of quality and quantity)

 Profitability of others

(supervision and training)
  Client relations and service Originations
  Personal development and accountability Recruiting profitable lawyers
   Business development contributions

(networking, publishing, speaking, etc.)

 Business hygiene

(timekeeping, billing, collections)
  Cultural support
  Firm building

(recruiting, training, process development, etc.)
  Adding to the reputation of the firm

The table below indicates an example of expectations by experience level.

PERFORMANCE EXPECTATIONS

KEY

  Consistent 

  Approaching consistent 

  Optional

 Not expected at the experience level 

 

ECONOMIC FACTORS

EXPERIENCE (YR)

Productivity

Realization

Training Supervision

 Profit Threshold

Billing Management

 Origination

1

2

3

4

5

6

7

8

9

10

 

A firm may combine all economic scores and consider the aggregate result as a qualitative factor. As long as the selected system is consistently applied, room exists for customization.

 

QUALITATIVE FACTORS – WEALTH CREATION

EXPERIENCE (YR)

Work Ethic

Work Quality

Bar, Professional Civic

Content Publishing Speaking 

Business Development Competence

Recruiting Contributions

Client Relations and Service

Pro Bono

1

2

3

4

5

6

7

8

9

10

 

Designing a rewarding compensation strategy is essential for maximizing the value from your law firm’s legal team. This involves careful deliberation over economic and qualitative criteria. Balancing these factors and customizing your approach enables your firm to attract and retain top lawyers while nurturing a consistent organizational culture.

  1. Start by clearly defining the skill set that brings long-term value to your firm and reward attorneys accordingly to ensure retention of the most compatible talent.
  2. Employ strategies to recognize and financially reward lawyers who consistently excel in high-value areas such as work ethic, quality, and client service, thus motivating them to sustain their high performance.
  3. For firms with top lawyers nearing retirement, devise a compensation plan that encourages emerging talents to take on leadership roles, guaranteeing a smooth transition and enduring success.
  4. Recognize and remunerate specialized expertise appropriately, for instance, by providing incentives to skilled litigators in a trial-focused litigation firm.
  5. Acknowledge and reward qualitative achievements, like the publication of influential content, encouraging lawyers to align with the firm’s broader objectives.

It is also necessary to acknowledge the value of specialized expertise and reward it accordingly. For example, if trial experience is highly valued in your litigation firm, compensating successful litigators who excel in this area is an excellent strategy. Finally, recognizing qualitative accomplishments, such as publishing high-quality content, can motivate your lawyers to contribute to the firm’s mission.

A compensation strategy that considers both qualitative and economic performance is vital for motivating and retaining the best-fit individuals for your law firm. By extending recognition beyond mere base salary increments to contributions that exceed expectations, you uphold the fairness and prosperity of your organization.

Join us as we continue to explore compensation best practices for law firms. Stay tuned for upcoming articles that will provide in-depth insights and actionable guidance on creating compensation systems that not only draw in and retain top legal talent but also bolster the firm’s long-lasting prosperity and cultural ethos.

©2024 PerformLaw
For more news on Compensation Strategies for Law Firms, visit the NLR Law Office Management section.

Governor Signs Bill to Exempt Certain Businesses from Fast Food Minimum Wage

On March 26, 2024, Governor Newsom signed Assembly Bill (AB) 610, which amends the definition of “fast food restaurant” to exempt restaurants in airports, hotels, event centers, theme parks, museums, and certain other locations from the requirements set forth under the Fast Food Council requirements.

Last year, Newsom signed AB 1228, which repeals the FAST Recovery Act but establishes a modified version of the Fast Food Council (Council) until January 1, 2029. The bill also sets forth the minimum wage increases for fast food workers, with an increase to $20.00 effective April 1, 2024.

The bill includes an urgency clause which means it takes effect immediately. As such the exempted businesses will not need to comply with the minimum wage requirements past in 2023.

Jackson Lewis P.C. © 2024
For more news on Fast Food Minimum Wage Laws, visit the NLR Labor & Employment section.

Weather & Climate Risk Management Part IV: Taxation of Weather Risk Management Products

Are there differences in the way in which weather derivatives and weather insurance are taxed?

Yes. Weather insurance products, including parametric insurance, are taxed as insurance; and derivatives are taxed in accordance with the tax rules applicable to the particular type of derivative product held by the taxpayer. A business needs to carefully consider these tax differences to determine the best product or products to meet its weather risk management needs.

How is insurance taxed to a policyholder?

When a business buys weather insurance, it pays a premium to the insurance company so that the company assumes the business risks set out in the policy. Assuring the policy is purchased to manage a business’s legitimate weather-related risk, the premium is deductible under Internal Revenue Code (Code) § 162 as an ordinary and necessary business expense.

If insurance coverage is triggered and a policyholder receives a payout under the policy, the payout is not taxable up to the policyholder’s tax basis if the payment reimburses the policyholder for property damage or loss. In other words, payments under insurance policies are not taxable up to the policyholder’s tax basis because the payments simply restore (in whole or in part) the policyholder to the financial position it was in before it incurred the loss. If the reimbursement amount under the policy exceeds the policyholder’s tax basis, the amount it receives over its tax basis is treated as taxable income.[1]

Business interruption insurance covers losses (such as lost profits and ongoing expenses) from events that close or disrupt the normal functioning of the policyholder’s business. The payout amount is often based on past business results. Business interruption insurance proceeds are likely to be taxable to the policyholder because they compensate the policyholder for lost revenue.

To ensure that a policyholder receives the most favorable tax treatment, it must carefully document its business purpose for entering into the insurance, the amount of its tax basis, and receipt of the insurance proceeds.

How are derivatives taxed?

It depends on whether the taxpayer has entered into a futures contract, forward contract, option, swap, cap, or floor. The taxpayer must then consider its status in entering into each derivative: is it acting as a hedger, dealer, trader, or investor? The taxpayer must also determine whether it has made all the required tax identifications and elections. In dealing with derivatives, the taxpayer must go through this three-step process for each product it is considering. Hedgers and dealers receive ordinary income and loss on their derivative transactions, while traders and investors receive capital gain and loss.

Why might a taxpayer want to be treated as a hedger with respect to its weather derivatives?

A taxpayer seeking to use weather derivatives to manage its weather-related business risks typically wants to be treated as a tax hedger so that the gain or loss on its derivative transactions qualify as tax hedges. This would allow the taxpayer to match its derivative gains or losses with its weather-related income or losses. Because ordinary property generates ordinary income or loss, a business hedger typically wants to receive ordinary income or loss on its weather derivatives. In other words, a hedger wants to match the tax treatment it receives on its hedges with that of the items it is hedging. Many risk management transactions with respect to weather-related risks do not meet the hedge definition (see the discussed below). For a detailed discussion of the tax hedging rules, see the forthcoming Q&A with Andie, “Business Taxation of Hedging Transactions.”

What is required for a weather derivative to be treated as a tax hedge?

To qualify as a tax hedge, the transaction must manage interest rate fluctuations, currency fluctuations, or price risk with respect to ordinary property, borrowings, or ordinary obligations.[2] In addition to meeting the definition of a tax hedge, the taxpayer must comply with the identification requirements set out at Code §§ 1221(a)(7) and 1221(b)(2) and the tax accounting requirements set out at Treas. Reg. § 1.446-4.[3]

What is the tax analysis that a taxpayer should conduct to determine if its weather derivatives qualify as tax hedges?

When entering into a weather derivative, a taxpayer should conduct the following tax analysis: (1) is the transaction entered into in the ordinary course of its trade or business (2) primarily (3) to manage price risk (4) on ordinary property or obligations (5) held or to be held by the taxpayer. If the answer to all of these questions is “yes,” then the taxpayer has a qualified tax hedge if—but only if—it complies with all of the required identification rules set out in Code §§ 1221(a)(7) and 1221(b)(2) and as explained in Treasury Regulation § 1.1221-2. If the taxpayer cannot answer all of these questions with a “yes,” then the weather derivative transaction is not a tax hedge, and it is subject to the tax rules that apply to capital assets.[4] The requirement that a taxpayer must be hedging ordinary property, borrowings, or obligations means that favorable tax hedging treatment is not available for many legitimate weather risk management activities.

What types of assets, obligations, and borrowings qualify as ordinary property and ordinary obligations for purposes of the tax hedging rules?

Weather derivatives qualify as tax hedges if they can be tied to price risk with respect to ordinary assets or ordinary obligations. In many situations, however, weather derivatives are entered into to manage a taxpayer’s anticipated profitability, sales volume, plant capacity, or similar issues. These risks are not the transactions that receive tax hedge treatment.

Ordinary property includes property that if sold or exchanged by the taxpayer would not produce capital gain or loss without regard to the taxpayer’s holding period. Items included in a taxpayer’s inventory—such as natural gas or heating oil held by a dealer in those products—are treated as ordinary property that can be hedged. Qualifying hedges can also include hedges of purchases and sales of commodities for which the taxpayer is a dealer, such as electricity, natural gas, or heating oil. If a utility agrees to purchase electricity at a fixed price in the future, for example, the utility is exposed to price risk if it cannot resell the fixed-price electricity for at least the amount it paid to purchase that electricity. Accordingly, the utility could agree to sell electricity under a futures contract (short position) that would qualify as a tax hedge.

On the liability side of a business, the hedge could relate to a taxpayer’s price risk with respect to an ordinary obligation. An ordinary obligation is an obligation the performance of which (or its termination) would not produce a capital gain or loss. For example, a forward contract to sell electricity or natural gas at a fixed price entered into by a dealer is treated as an ordinary obligation. In addition, a utility that enters into a fixed price forward sales contract agreeing to sell electricity at a fixed price has an ordinary obligation to deliver electricity at that fixed price.

What sorts of weather derivative transactions are not tax hedges?

Many legitimate risk management activities do not qualify as tax hedges. Weather derivative transactions that protect overall business profitability (such as volume or revenue risk) are not directly related to ordinary property or ordinary obligations. As a result, weather derivatives entered into to protect a business’s revenue stream or its net income against volume or revenue risk are not tax hedges.

Many taxpayers in the normal course of their businesses enter into weather derivatives to manage volume or revenue risks of reduced demand for their products or services. These transactions are not tax hedges. The taxpayer is not managing a price risk (either current or anticipated) attributable to ordinary assets, borrowings, or ordinary obligations.

Take, for example, a ski resort or amusement park operator that enters into a weather derivative to protect itself against adverse weather conditions that are likely to result in a reduction in the number of skiers or amusement park visitors. The taxpayer’s risk management efforts in these cases either relate to its investment in its facility (which for the most part consists of real estate and business assets that are not taxed as ordinary assets) or to its expected revenue. Similarly, a power generator that hedges its plant capacity or its revenue stream with a weather derivative tied to the number of Cooling Degree Days would not meet the definition of a tax hedge.

Why don’t more weather derivatives qualify as tax hedges?

As part of Congress’ efforts to modernize the tax rules with respect to hedging, it specifically authorized the Treasury to issue regulations to extend the hedging definition to include other risks that the Treasury sets out in regulations.[5] The Treasury, unfortunately, has not proposed or issued any regulations extending the benefits of tax hedging. This means that weather derivative transactions entered into to manage weather-related volume or revenue risks do not qualify as tax hedges. In this situation, the taxpayer receives capital gain or loss on the derivative product.

What are some examples of weather derivatives that can qualify as tax hedges?

A weather derivative qualifies as a tax hedge if it manages the taxpayer’s price risks with respect to ordinary assets or obligations. Thus, a taxpayer entering into weather derivatives primarily to manage its price risk with respect to increased supply costs will meet the definition of a hedging transaction. Such a transaction manages the taxpayer’s price risks with respect to ordinary property.

If, for example, a commodity dealer buys a put option (or sells a call option) on a designated weather event to protect it against price risks with respect to its existing inventories or future fixed-price commitments, the dealer has entered into a qualified tax hedge, provided it meets the identification requirements.

A heating oil distributor with heating oil inventory (or forward contracts to purchase heating oil at a fixed price) might enter into a weather swap to protect itself from the risk of an unseasonably warm heating season. This swap should qualify as a tax hedge because the swap manages the distributor’s risk of a decline in the market price for its heating oil inventories (or a decline in its fixed-price forward contract purchase commitments) due to unseasonably warm weather.

If an electric utility enters into forward commitments to sell electricity at fixed prices for delivery in the summer cooling months, it may buy a call option on a designated weather event that would qualify as a tax hedge to the extent the option protects the utility against the risk of being unable to acquire or generate the electricity at a low enough price if the demand for electricity in the cooling season is higher than expected because of unseasonably warm weather resulting in higher electricity prices.

Conclusion

All organizations face weather and climate risks. As part of their enterprise-wide risk management, they have available to them a number of weather risk transfer tools. This series on weather and climate risk provides a detailed review of weather risk management. Organizations can look to standardized futures and option contracts traded on regulated commodity exchanges; they can enter into customized OTC weather derivatives designed with their specific weather risks in mind; they can put in place indemnity insurance; they can purchase parametric insurance; or they can mix and match multiple derivative products and insurance coverages to meet their specific organization’s needs. In Part I of this Q&A series on Weather & Climate Risk Management, we considered the landscape and context within which weather and climate decision making takes place, along with the overarching risk management approaches and principles that apply. In Part II, we looked at the details on the various weather risk management products. In Part III, we addressed the regulation of these products; and in Part IV, we reviewed the taxation of these various classes of products.

[1] Taxability is subject to a nonrecognition provision at Code § 1033(a) if the taxpayer complies with the requirements to purchase “qualified replacement property.” https://irc.bloombergtax.com/public/uscode/doc/irc/section_1033

[2] Treas. Reg. § 1221-2 and Code §§ 1221(a)(7) and 1221(b)(2).

[3] For a detailed discussion of the tax hedging rules see my forthcoming Q&A with Andie, “Business Taxation of Hedging Transactions” due out in Spring 2024.

[4] If the taxpayer is a dealer or a commodity derivatives dealer, the weather derivative would be an ordinary asset in the taxpayer’s hands.

[5] Code § 1221(b)(2)(A)(iii).

© 2024 ASKramer Law
For more news on the Taxation of Weather Risk Management Products, visit the NLR Environmental, Energy & Resources and Tax sections.

UNDER SURVEILLANCE: Police Commander and City of Pittsburgh Face Wiretap Lawsuit

Hi CIPAWorld! The Baroness here and I have an interesting filing that just came in the other day.

This one involves alleged violations of the Pennsylvania Wiretapping and Electronic Surveillance Act, 18 Pa.C.S.A. § 5703, et seq., and the Federal Wiretap Act, 18 U.S.C. § 2511, et seq.

Pursuant to the Pennsylvania Wiretapping and Electronic Surveillance Act, 18 Pa.C.S.A. § 5703, et seq., a person is guilty of a felony of the third degree if he:

(1) intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept any wire, electronic or oral communication;

(2) intentionally discloses or endeavors to disclose to any other person the contents of any wire, electronic or oral communication, or evidence derived therefrom, knowing or having reason to know that the information was obtained through the interception of a wire, electronic or oral communication; or

(3) intentionally uses or endeavors to use the contents of any wire, electronic or oral communication, or evidence derived therefrom, knowing or having reason to know, that the information was obtained through the interception of a wire, electronic or oral communication.

Seven police officers employed by the City of Pittsburg Bureau of Police team up to sue Matthew Lackner (Commander) and the City of Pittsburgh.

Plaintiffs, Colleen Jumba Baker, Brittany Mercer, Matthew O’Brien, Jonathan Sharp, Matthew Zuccher, Christopher Sedlak and Devlyn Valencic Keller allege that beginning on September 27, 2003 through October 4, 2003, Matthew Lacker utilized body worn cameras to video and audio records Plaintiffs along with utilizing the GPS component of the body worn camera to track them.

Yes. To track them.

Plaintiffs allege they were unaware that Lacker was utilizing a body worn camera to video and auto them and utilizing the GPS function of the body worn camera. Nor did they consent to have their conversations audio recorded by Lacker and/or the City of Pittsburgh.

Interestingly, Lackner was already charged with four (4) counts of Illegal Use of Wire or Oral Communication pursuant to the Pennsylvania Wiretapping and Electronic Surveillance Act. 18 Pa.C.S.A. § 5703(1) in a criminal suit.

So now Plaintiffs seek compensatory damages, including actual damages or statutory damages, punitive damages, and reasonably attorneys’ fees.

This case was just filed so it will be interesting to see how this case progresses. But this case is an important reminder that many states have their own privacy laws and to take these laws seriously to avoid lawsuits like this one.

Case No.: Case 2:24-cv-00461

© 2024 Troutman Amin, LLP
For more news on Wiretap Lawsuits, visit the NLR Communications, Media & Internet section.