House Energy and Commerce Committee Holds Hearing on Security of Internet of Things

What the experts are saying.

The hearing was motivated by the revelation that cybersecurity is no longer just about protecting  laptops or securing digital data. IoT insecurity puts human safety at risk, as everything from home appliances to automobiles and medical technology are becoming connected to the Internet. Representatives from both committees pressed expert witnesses Mr. Dale Drew of Level 3 Communications, Dr. Kevin Fu of Virta Labs and the University of Michigan, and Mr. Bruce Schneier of the Harvard Kennedy School of Government for examples of legislation that could target the cybersecurity concerns related to the Internet of Things.

These experts shared conflicting opinions about whether it is in fact possible for the government to establish one set of security standards that covers all Internet-connected devices, as these devices do many different things and are powered by many different types of technology. Mr. Schneier reminded the subcommittees that “[your smartphone] is not a phone; it’s a computer that makes phone calls.” The same applies to a long list of devices including WiFi-connected baby monitors, thermostats, refrigerators, DVR players, GPS systems, children’s toys, and of course, electronic voting booths. In his testimony, Mr. Drew explained that “bad actors are increasingly attracted to IoT devices since they can use those devices without being detected for long periods of time, they know most devices will not be monitored or updated, and they know there are no endpoint protection capabilities on IoT devices to remove threats.” Nevertheless, they agreed that a collaborative and, above all, proactive approach by both the government and manufacturers of these devices will be essential.

Fortunately, we already have a potential starting point. The National Institute of Standards and Technology recently issued a comprehensive set of guidelines and best practices for securing IoT devices and systems throughout their entire life cycle. But simply establishing these best practices on paper will not be enough. Dr. Fu reiterated the most important takeaway from the hearing: that proper security measures for IoT devices must be “built in, not bolted on.” Protective measures like encryption must be incorporated into the fundamental design of a device, not tacked on as an afterthought. They also must secure a device from its creation, through its life with a consumer, and after “retirement” since old but active devices are still vulnerable to hijacking by botnets like the one used in last month’s massive distributed denial of service (“DDoS”) attack on global Internet routing company Dyn.

Looking ahead to the future.

Currently, there are few market incentives to spend time and money producing more secure encrypted devices.  There are likewise no significant legal or economic penalties for selling devices to consumers that are insecure. In short, consumers are focused on buying sleek and affordable new products rather than on the networks that connect them. However, if massive DDoS attacks continue the same way that data breaches have in recent years, the priorities of consumers and manufacturers alike are bound to evolve.

Will a greater focus on security slow down the rate of technological innovation? Despite some concerns, Dr. Fu and Mr Schneier reassured the subcommittees that efforts to improve cybersecurity will spur innovation in the tech industry, not hold it back. As consumers and manufacturers become more aware of the implications of poorly secured devices, incorporating features like end-to-end encryption will be understood not as necessary obstacles, but as valuable solutions to very real and costly problems.

ARTICLE BY Cynthia J. Larose, Michael B. Katz & Joanne Dynak of Mintz Levin
©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Congress Returns for Lame Duck Session as President-Elect Trump Prepares New Administration

Capitol, Congress, Lame Duck, President-Elect TrumpA New Administration and a New Congress: What to Expect

On Tuesday, November 8, the American public elected Donald J. Trump as the 45th President of the United States and elected one-third of the 100 Senators and all of the House Members who will make up the 115th Congress. As a result of the elections, President-Elect Trump will have the opportunity to work with a Republican Senate and a Republican House to address the challenges facing the country.

In his victory speech, President-Elect Trump said:

Now it’s time for America to bind the wounds of division; [we] have to get together. To all Republicans and Democrats and Independents across this nation, I say it is time for us to come together as one united people. It’s time. I pledge to every citizen of our land that I will be president for all Americans, and this is so important to me.

In the aftermath of the most bruising and bizarre presidential election in modern history, will anything get done in Washington DC? Given the stark divisions between the Republican and Democratic parties and the message voters sent to policymakers inside the Capital Beltway, can policymakers overcome their differences to address the pent up demand to resolve major issues that have been multiplying for the better part of a decade?

Senate Legislative Activity

The Senate will convene on Monday, November 14, in pro forma session. On Tuesday, November 15, the Senate will convene at 4:00pm. Following any Leader remarks, the Senate will be in a period of morning business, with Senators permitted to speak therein for up to 10 minutes each until 5:00pm. At 5:00pm, the Senate will proceed to the consideration of H.R.4511, Gold Star Families Voices Act. There be 30 minutes of debate followed by a vote on passage of the bill.

House Legislative Activity

On Monday, November 14, the House will meet at 2:00pm for legislative business, with votes postponed until 6:30pm. The following legislation will be considered under suspense on of the rules:

  • H.R. 1192 – National Clinical Care Commission Act;

  • H.R. 1209 – Improving Access to Maternity Care Act;

  • H.R. 2713 – Title VIII Nursing Workforce Reauthorization Act of 2016;

  • H.R. 4365 – Protecting Patient Access to Emergency Medications Act of 2016, as amended;

  • H.R. 985 – Concrete Masonry Products Research, Education, and Promotion Act of 2015, as amended;

  • H.R. 4665 – Outdoor Recreation Jobs and Economic Impact Act of 2016, as amended;

  • H.R. 2566 – Improving Rural Call Quality and Reliability Act of 2016; and

  • H.R. 2669 – Anti-Spoofing Act of 2016

On Tuesday, November 15, the House will meet at 12:00pm for legislative business. The following legislation will be considered under suspension of the rules:

  • H.R. 5732 – Caesar Syria Civilian Protection Act of 2016, as amended;

  • H.R. ___ – Iran Sanctions Extension Act;

  • H.R. 5332 – Women, Peace, and Security Act of 2016, as amended; and

  • H.Res. 780 – Urging respect for the constitution of the Democratic Republic of the Congo in the democratic transition of power in 2016, as amended

On Wednesday, November 16, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. On Thursday, November 17, the House will meet at 9:00am for legislative business, with last votes expected by 3:00pm. The House will consider:

  • H.R. 5711 – To prohibit the Secretary of the Treasury from authorizing certain transactions by a U.S. financial institution in connection with the export or re-export of a commercial passenger aircraft to the Islamic Republic of Iran, Rules Committee Print (Subject to a Rule); and

  • H.R. 5982 – Midnight Rules Relief Act of 2016 (Subject to a Rule)

On Friday, November 18, no votes are expected in the House.

© Copyright 2016 Squire Patton Boggs (US) LLP

U.S. Election Forecast on Congressional Leadership Changes

2016 presidential electionWith the election less than a week away, we conducted in-depth analysis of possible House and Senate committee leadership changes, including committees that effect energy technology policies. Leadership of a number of House and Senate committees is bound to change due to term-limits, retirements, and perhaps election results, including the Energy and Commerce and Natural Resources House committees, and the Energy and Natural Resources and Environment and Public Works Senate committees. We have outlined those potential changes in either a Republican- or a Democratic-controlled House and Senate. To read more about these potential Congressional leadership changes, read on!

Among Republicans on the House Energy and Commerce committee, Rep. John Shimkus (IL) and Rep. Greg Walden (OR) are expected to run for Chair/Ranking Member because Rep. Fred Upton (MI) is term-limited. Rep. Shimkus has more seniority on the committee than Rep. Walden, but Walden is completing his second term leading the Republican National Congressional Committee. Both are well-liked within the Republican Caucus and are adept fundraisers. Rep. Joe Barton (TX) has the most seniority on the committee and could also choose to run for Chairman or Ranking Member. Sources are indicating that should the Democrats gain control of the House, Rep. Barton would be less interested in running for Ranking Member. Additionally, Rep. Barton is already term-limited as the top Republican on the committee and would have to seek a waiver to serve as the next Chair or Ranking Member. On the Democrats’ side, Rep. Frank Pallone (NJ) would likely remain the Ranking Member if the Republicans control the House and would likely become Chairman if the Democrats control the House.

On the House Natural Resources committee, Republican Rob Bishop (UT) would likely remain the Chairman if the Republicans control the House and would likely become the Ranking Member if the Democrats took control. For the Democrats, Rep. Raul Grijalva (AZ) could remain the Ranking Member if the Republicans retain the House and could become Chairman if the Democrats win control. However, Rep. Grijalva could choose to run for Chair/Ranking Member of the Education and the Workforce Committee if Rep. Bobby Scott (VA) is appointed to the Senate to replace Vice Presidential candidate Tim Kaine. It is unclear who would run for or become Chair/Ranking Member of Natural Resources in that scenario.

In the Senate, Republican Sen. Lisa Murkowski (AK) would likely remain Chairwoman of the Energy and Natural Resources committee if the Republicans win the Senate. However, if the Democrats control the Senate, Sen. John Barrasso (WY) could become the Ranking Member because Sen. Murkowski is term-limited as Ranking Member of Energy and Natural Resources. Sen. Barrasso could also choose to become the Ranking Member of Environment and Public Works, in which case, Sen. Jim Risch (ID) could become the Ranking Member of Energy and Natural Resources. However, sources are indicating that Sen. Barrasso, who represents a Western coal state, would likely choose to become the Ranking Member of Energy and Natural Resources, in part because it would allow Sen. Shelley Moore Capito (WV), a rising female star in the GOP who hails from an Eastern coal state, to become the Ranking Member of Environment and Public Works. For the Democrats, Sen. Maria Cantwell (WA) would likely remain the Ranking Member if Republicans remain in control or become the Chairwoman for Energy and Natural Resources if the Democrats win the Senate. Though highly unlikely, there is a scenario in which, Sen. Jack Reed (RI) becomes the Chair/Ranking Member of Appropriations and Sen. Bill Nelson (FL) then takes over as Chair/Ranking Member of Armed Services. In that unlikely case, Sen. Cantwell could choose to become the Chair/Ranking Member of Commerce, opening up the top Democratic slot on Energy and Natural Resources to Sen. Bernie Sanders (VT). (Sen. Ron Wyden (OR) would be next in line after Sen. Cantwell on Energy and Natural Resources, but Sen. Wyden will remain the Chair/Ranking Member of Finance.)

Among Republicans on the Senate Environment and Public Works committee, Sen. Barrasso could become the Chairman because Sen. James Inhofe (OK) is term-limited as Chairman and Sen. David Vitter (LA) is retiring. If the Democrats control the Senate, Sen. Barrasso could become the Ranking Member because Sen. Inhofe is again term-limited and Sen. Vitter is retiring. However, as discussed above, Sen. Barrasso would likely choose to become the Ranking Member of Energy and Natural Resources, in which case Sen. Capito could become the Ranking Member of Environment and Public Works. For the Democrats, if the Republicans or Democrats control the Senate, Sen. Tom Carper (DE) could become Chair/Ranking Member of Environment and Public Works because Sen. Barbara Boxer (CA) is retiring. According to sources, Sen. Carper is indeed preparing to take over as the top Democrat on this committee. However, Sen. Carper could choose to remain the Chair/Ranking Member of Homeland Security, in which case Sen. Ben Cardin (MD) could become the Chair/Ranking Member of Environment and Public Works. Sen. Cardin could also choose to remain the Chair/Ranking Member of Foreign Relations unless Sen. Robert Menendez (NJ) is cleared of ethics violations and is reinstated, which is unlikely in the near future. If Sen. Cardin remains the Chair/Ranking Member of Foreign Relations, which is nearly certain as long as Sen. Menendez is under indictment, Sen. Sanders could become the Chair/Ranking Member of Environment and Public Works.

 

©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Three Employee-Friendly Bills That May Be Affected By Upcoming Elections

employee-friendly billsIn the past few years, Democratic members of Congress have introduced several decidedly pro-employee bills, none of which have yet passed, but which may be impacted by the elections in November. Such bills were first introduced in the 113th Congress when Republicans controlled the House of Representatives and Democrats controlled the Senate. Versions of these bills were reintroduced in the 114th Congress, although Republicans control both the House and the Senate. The November election not only will decide the next President, but also may change the balance of power in both houses of Congress.

Healthy Families Act

  • Would allow employees of an employer with 15 or more employees to earn 7 days of sick time per year after 60 days of employment.

  • 113th Congress: Introduced to the House and Senate on March 20, 2013. Co-sponsored by 134 Democrats in the House and 23 Democrats in the Senate.

  • 114th Congress: Introduced to the House and Senate on February 12, 2015. Co-sponsored by 145 Democrats in the House and 31 Democrats and 2 Independents in the Senate.

Family and Medical Insurance Leave Act

  •  Would create a trust fund within Social Security to collect fees and provide compensation to employees on FMLA.

  • 113th Congress: Introduced to the House and Senate on December 12, 2013. Co-Sponsored by 101 Democrats in the House and 6 Democrats in the Senate.

  • 114th Congress: Introduced to the House and Senate on March 18, 2015 with 134 Democrats co-sponsoring in the House and 20 Democrats and 1 Independent co-sponsoring in the Senate.

Family and Medical Leave Enhancement Act

  • Most recent version of this Act would extend FMLA coverage to employees at worksites with 15-49 employees, including part-time workers. The Act would also protect (1) parental involvement leave to participate in school activities or programs for children or grandchildren and (2) parental involvement leave to care for routine medical needs including: (a) medical and dental appointments of an employee’s spouse, child, or grandchild, and (b) needs related to elderly individuals, such as nursing and group home visits.

  • A version of this bill has been introduced to Congress each session since 1997.

  • The most recent version was introduced to the House on June 16, 2016 with 7 Democrats co-sponsoring.

Following the elections later this year, employers should be on the lookout for versions of these bills being reintroduced, potentially in a political climate where they have a stronger chance of passing.

Congress Passes GE Labeling Standard

GE Labeling Standard Genetically Engineered DNAOn July 14, 2016, the U.S. House of Representatives passed a genetically engineered (GE) labeling standard with bipartisan support. The bill is identical to S. 764, which passed the Senate last week, and represents a compromise brokered by Sens. Debbie Stabenow and Pat Roberts. The White House has indicated that President Obama will sign the legislation into law.

Significantly, the legislation sets a national standard that preempts current and future attempts by states to require labeling of foods containing genetically modified ingredients, including Vermont’s mandatory labeling standard that went into effect July 1.

The legislation establishes a mandatory disclosure standard that applies to all food products intended for human consumption containing bioengineered ingredients. Food companies may satisfy the disclosure requirement through text, a symbol, or by use of certain embedded electronic or digital links, such as a QR Code.

Animal-based products such as beef, pork, poultry, eggs and milk are prohibited from being considered bioengineered foods solely because the animal consumed feeds containing GE ingredients. The legislation does not require animal feed to comply with the disclosure requirement.

Under the legislation, the Secretary of Agriculture is required to promulgate rules that implement the national standard within two years. The legislation requires the Secretary to provide additional flexibility for small food manufacturers in the regulations, including additional disclosure options and more time to comply with the standard. Some very small food manufacturers will be exempt under the regulations.

White House press officials indicated that the administration was pleased with the Roberts–Stabenow compromise effort. “While there is broad consensus that foods from genetically engineered crops are safe, we appreciate the bipartisan effort to address consumers’ interest in knowing more about their food, including whether it includes ingredients from genetically engineered crops,” spokeswoman Katie Hill told reporters in an e-mail.

The federal standard comes just days after Vermont’s standard, passed in 2014, went into effect and follows failed attempts to mandate labeling in states such as Colorado, Oregon, and California. Food manufacturers expressed concern that a patchwork of state laws would make compliance difficult and potentially reduce consumer choice if manufacturers elected to pull products off store shelves rather than implement costly labeling requirements. After being signed into law, the focus will quickly turn to the U.S. Department of Agriculture’s implementation of the legislation and how the agency will define key terms that directly impact applicability (for example, the definition of “small” and “very small” food manufacturers).

© MICHAEL BEST & FRIEDRICH LLP

Congress to Vote on Short-Term FAA Reauthorization This Week

Congress FAA reauthorizationThis week, Congress will vote on a short-term Federal Aviation Administration (FAA) authorization that will reauthorize FAA programs through September 30, 2017. The short-term authorization includes some policy changes, but avoids many significant changes the House and Senate had been pursuing. While the Senate passed a long-term FAA reauthorization bill this year, the FAA Reauthorization Act of 2016 (S. 2658), the House did not take up the bill reported out of the Transportation and Infrastructure Committee, the Aviation Innovation, Reform, and Reauthorization (AIRR) Act of 2016 (H.R. 4441). Both the House and Senate are expected to pass the highly-negotiated short-term extension, before FAA authorization expires on July 15.

The short-term extension does include provisions related to safety and security, as well as some unmanned aircraft systems (UAS) provisions. Among the policy changes, the bill will increase funding for bomb-sniffing dog teams, direct FAA to detect and mitigate UAS operation near airports, and require airlines to refund baggage fees if luggage is delayed or lost, among other provisions.

It appears that House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) successfully kept many policy changes out of the short-term extension, in order to keep pressure up on Congress to pass a long-term extension next year that includes Chairman Shuster’s controversial air traffic control reform proposal.

This Week’s Hearings:

  • On Tuesday, July 12, the Senate Commerce, Science, and Transportation Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security will hold a hearing titled “Intermodal and Interdependent: The FAST Act, the Economy, and Our Nation’s Transportation System.” The witnesses will be:

    • Patrick J. Ottensmeyer, Chief Executive Officer, Kansas City Southern Railway Company;

    • Major Jay Thompson, Arkansas Highway Police; President, Commercial Vehicle Safety Alliance;

    • David Eggermann, Supply Chain Manager, BASF; and

    • Stephen J. Gardner, Executive Vice President and Chief of NEC Business Development, Amtrak.

  • On Wednesday, July 13, the Senate Commerce, Science, and Transportation Subcommittee on Space, Science, and Competitiveness will hold a hearing titled “NASA at a Crossroads: Reasserting American Leadership in Space Exploration.” The witnesses will be:

    • William H. Gerstenmaier, Associate Administrator of Human Exploration and Operations, NASA;

    • Mary Lynne Dittmar, Executive Director, Coalition for Deep Space Exploration;

    • Mike Gold, Vice President of Washington Operations, SSL;

    • Mark Sirangelo, Vice President of Space Systems Group, Sierra Nevada Corporation; and

    • Professor Dan Dumbacher, Professor of Engineering Practice, Purdue University.

  • On Tuesday, July 12, the Senate Foreign Relations Subcommittee on Department and USAID Management, International Operations, and Bilateral International Development will hold a hearing titled “Public-Private Partnerships in Foreign Aid: Leveraging U.S. Assistance for Greater Impact and Sustainability.” The witnesses will be:

    • Eric G. Postel, Associate Administrator, U.S. Agency for International Development; and

    • Daniel F. Runde, William A. Schreyer Chair and Director, Project on Prosperity and Development, Center for Strategic and International Studies.

© Copyright 2016 Squire Patton Boggs (US) LLP

Congress Just Says No—to Banking Services for Marijuana Businesses

marijuana businessesYet another attempt has failed to pass legislation shielding banks that provide services to marijuana-related businesses from regulatory action or other penalties. Late last week, the US House of Representatives appeared likely to approve an amendment to the House Financial Services and General Government appropriations bill (the Amendment) that would prevent financial institutions from being penalized if they provided services to state-sanctioned marijuana-related businesses. A similar amendment had already been approved by the Senate Appropriations Committee and appeared likely to be approved by the US Senate.

Under recently passed procedures, the House Committee on Rules must approve all amendments to appropriations bills. On June 20, Representative Denny Heck (D-WA) and Representative Ed Perlmutter (D-CO) filed the bipartisan Amendment with the Committee on Rules. They emphasized that, without banking services, marijuana businesses are forced to conduct business and pay salaries in cash, which increases the risk of money laundering and theft. The Committee on Rules declined to consider the Amendment for a vote, effectively blocking it from further consideration in connection with the appropriations bill.

The Amendment is the latest effort by members of Congress to bring some certainty to banks that wish to provide banking services for marijuana-related businesses. Although both the US Department of Justice and the Financial Crimes Enforcement Network have provided guidance that allows banks to provide services to legal marijuana businesses, marijuana is still illegal under federal law, and banks have been reluctant to rely on such guidance, which they generally have concluded provides insufficient regulatory and law enforcement certainty.

Although marijuana businesses that seek traditional banking services will not see any relief in the current appropriations process, a number of bills that have been introduced in the Senate and House remain that would offer clarity for banks that wish to offer banking services to marijuana businesses. Even though none of those bills have passed the initial stages of the legislative process, these efforts, which are generally bipartisan in nature, are expected to continue and may at some point be successful. In any event, the legal marijuana industry is expected to continue to grow, and more states are likely to authorize recreational and medical use of marijuana. Meanwhile, the issue of providing legal certainty to banks that wish to offer banking services to marijuana business will continue to be debated.

Copyright © 2016 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

Senate, House Continue on with Appropriations Work

appropriations Senate HouseSenate Legislative Activity

The Senate will convene on Monday, June 20, at 3:00pm. Following any Leader remarks, the Senate will resume consideration of H.R.2578, Commerce, Justice, Science, and Related Agencies Appropriations Act. The pending cloture motions on amendments will ripen at 5:30pm, at which time the Senate will have up to four roll call votes:

If cloture is invoked on any of these amendments, there will be up to 30 hours of debate on each amendment on which cloture is invoke prior to a vote on that amendment, after which the Senate will move on to a cloture vote on the next amendment.

House Legislative Activity

On Monday, June 20, the House will meet at 2:00pm in pro formasession, with no votes expected.

On Tuesday, June 21, the House will meet at 12:00pm for morning hour and at 2:00pm for legislative business, with votes postponed until 6:30pm. The following legislation will be considered under suspension of the rules:

  • H.R. 5525 – End Taxpayer Funded Cell Phones Act of 2016;

  • H.R. 4369 – To authorize the use of passenger facility charges at an airport previously associated with the airport at which the charges are collected;

  • H.R. 5388 – Support for Rapid Innovation Act of 2016;

  • H.R. 5389 – Leveraging Emerging Technologies Act of 2016;

  • S. 2133 – Fraud Reduction and Data Analytics Act of 2015;

  • H.R. 4902 – To amend title 5, United States Code, to expand law enforcement availability pay to employees of U.S. Customs and Border Protection’s Air and Marine Operations;

  • H.R. 2395 – Inspector General Empowerment Act of 2016, as amended;

  • H.R. 4639 – Thoroughly Investigating Retaliation Against Whistleblowers Act, as amended;

  • H.R. 4372 – To designate the facility of the United States Postal Service located at 15 Rochester Street, Bergen, New York, as the Barry G. Miller Post Office;

  • H.R. 2607 – To designate the facility of the United States Postal Service located at 7802 37th Avenue in Jackson Heights, New York, as the “Jeanne and Jules Manford Post Office Building”;

  • H.R. 4010 – To designate the facility of the United States Postal Service located at 522 North Central Avenue in Phoenix, Arizona, as the “Ed Pastor Post Office”;

  • H.R. 4777 – To designate the facility of the United States Postal Service located at 1301 Alabama Avenue in Selma, Alabama as the “Amelia Boynton Robinson Post Office Building”;

  • H.R. 4925 – To designate the facility of the United States Postal Service located at 229 West Main Cross Street, in Findlay, Ohio, as the “Michael Garver Oxley Memorial Post Office Building”;

  • H.R. 4960 – To designate the facility of the United States Postal Service located at 525 N Broadway in Aurora, Illinois, as the “Kenneth M. Christy Post Office Building”;

  • H.R. 5028 – To designate the facility of the United States Postal Service located at 10721 E Jefferson Ave in Detroit, Michigan, as the “Mary Eleanora McCoy Post Office Building”;

  • H.R. 4590 – Fiscal Year 2016 Department of Veterans Affairs Seismic Safety and Construction Authorization Act, as amended;

  • H.R. 5317 – To designate the Department of Veterans Affairs health care center in Center Township, Butler County, Pennsylvania, as the “Abie Abraham VA Clinic”;

  • H.R. 3936 – VET Act, as amended;

  • H.R. 5170 – Social Impact Partnerships to Pay for Results Act, as amended;

  • H.R. 5447 – Small Business Health Care Relief Act of 2016;

  • H.R. 5452 – Native American Health Savings Improvement Act; and

  • H.R. 5456 – Family First Prevention Services Act of 2016

On Wednesday and Thursday, June 22-23, the House will meet at 10:00am for morning hour and at 12:00pm for legislative business. On Friday, June 24, the House will meet at 9:00am for legislative business. The House will consider:

  • Consideration of the Veto Message on H.J.Res. 88 – Disapproving the rule submitted by the Department of Labor relating to the definition of the term Fiduciary. (Subject to a Rule);

  • H.R. 5485 – Financial Services and General Government Appropriations Act, 2017 (Subject to a Rule);

  • H.R. 1270 – Restoring Access to Medication Act of 2015, Rules Committee Print (Subject to a Rule); and

  • H.R. 4768 – Separation of Powers Restoration Act of 2016 (Subject to a Rule)

The House may also consider a Conference Report on H.R. 4974 – Military Construction and Veterans Affairs and Related Agencies Appropriations Act / H.R. 5243 – Zika Response Appropriations Act.

© Copyright 2016 Squire Patton Boggs (US) LLP

November Election and Estate Planning

estate planning november electionsThe Presidential election is around the corner. What does that mean for estate planning? Probably nothing, particularly if the Executive Branch and Congress remain split among the parties. In the past four years, a Democratic President and Republican Congress has resulted in no significant estate tax legislation. Thus, after 10 years or so of uncertainty and change that preceded 2012, there has been an estate planning calm.

It is unlikely the calm changes in 2017 if there is President Clinton and a Republican Congress. Hillary favors the same provisions as President Obama, which are reducing the estate tax exemption from $5 million per person, indexed for inflation, to $3.5 million, and increasing the estate tax rate from 40% to 45%. But as with President Obama, it is unlikely these proposals will go anywhere, unless Democrats take control of the House and Senate.

Conversely, President Trump wants to eliminate the estate tax, similar to former President Bush. Perhaps a big push to eliminate the estate tax would result if large Republican majorities controlled the House and Senate. But even with a Republican President and Congress it is more likely current law, allowing married couples to protect $10.9 million from estate tax, adjusted annually for inflation, would continue.

Of less concern to most, but significant for the relatively wealthy few, is the Obama Administration’s desire to eliminate or reduce advanced planning techniques, such as GRATS, gift/sales to intentionally defective trusts, dynasty trust planning, and intra-family discounting. A new President and Congress may also address these strategies.

Article By John P. Dedon of Odin, Feldman & Pittleman, P.C.

New Federal Law Will Provide First-Ever Civil Claim for Theft of Trade Secrets

On April 27, 2016, the U.S. House of Representatives approved the Defend Trade Secrets Act, S. 1890, by a vote of 410-2.  The Senate approved an identical bill 87-0 on April 4, 2016.  President Obama is expected to sign the DTSA into law in short order.  Once effective, the DTSA will create a federal, civil cause of action for trade secret misappropriation for any act that “occurs on or after the date of the enactment” of the law.  In addition to providing plaintiffs an opportunity to obtain injunctive relief and monetary damages, the DTSA will further allow for ex parteseizures of misappropriated trade secrets.

The DTSA borrows from the Uniform Trade Secret Act (the “UTSA”).  For example, the DTSA’s misappropriation, improper means, and three-year limitations provisions are all copied from the UTSA.  At the same time, the DTSA does not preempt state trade secret law or other sections of the U.S. code pertaining to trade secret misappropriation.  Finally, the DTSA directs government officials to report on exterritorial trade secret misappropriation.

The DTSA’s seizure provision is a notable addition vis-à-vis the UTSA.  It allows courts to issue an ex parte order to seize property as “necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”  To obtain such an order, a party must meet eight distinct prerequisites—including showing that a temporary restraining order is inadequate, that immediate and irreparable injury will occur if the seizure is not approved, and that the harm to the applicant outweighs the legitimate interests of any party from whom material is seized.  The party seeking an ex parte seizure order must post security and is subject to a claim for any damage caused by a wrongful seizure.  The raft of requirements intentionally set a high bar to issuance of an ex parte seizure order.  It is a powerful tool, but also susceptible to abuse absent strict controls.  The DTSA’s ex parte seizure requirements strike the right balance between need and caution.

The DTSA provides district courts with “original jurisdiction of civil actions brought under” the DTSA.  The DTSA does not contain any specific venue provisions and therefore an aggrieved party must look to the general venue statute for civil actions in deciding choice of venue in a federal district court.  In addition, plaintiffs may be able to bring a claim alleging a violation of Section 337 of the Tariff Act of 1930 in the U.S. International Trade Commission, depending on the circumstances.  Plaintiffs deciding upon a venue in which to bring a DTSA claim should analyze differences between the DTSA and any potential state law or other federal claim.

The DTSA explicitly applies to “interstate or foreign commerce.”  While the DTSA does not expand upon “foreign commerce” in any meaningful way, Section 4 of the DTSA requires various governmental officials to report on trade secret misappropriation experienced by U.S. companies that occurs abroad.  In particular, one year after the DTSA is enacted, and every two years thereafter, the Attorney General, the Intellectual Property Enforcement Coordinator, and the Director of the USPTO must submit a report to the House and Senate Judiciary Committees pertaining to trade secret theft occurring abroad.

The DTSA is an important development in U.S. law, as it provides the first-ever federal law providing a private civil claim for trade secret misappropriation.  The rationale for the DTSA is the belief by Congress, the Obama Administration, and stakeholders that the current patchwork of state laws is inadequate to address trade secret misappropriation and the concomitant damage it causes to trade secrets rights holders and to the U.S. economy.  Time will tell whether the law achieves its intended purposes.

© Copyright 2016 Squire Patton Boggs (US) LLP