Articles by mjlst

Floating Fans in the Ocean: Recognizing the Significance of Maine’s Recent Bill Regarding Offshore Wind Development Projects

November 13, 2023
Energy Law, Environment, Environmental Law

Peter Lyon, MJLST Staffer

Recent efforts in Maine have continued the push for developing sustainable energy sources, specifically including offshore wind energy projects in the Gulf of Maine. Offshore wind projects have captured other coastal states’ and the federal government’s interest for quite some time, though the industry is not well developed due to several practical setbacks and pushback from different stakeholders. Maine has the potential to be a leader in this area, as a bill it passed in July lays more of the groundwork for developing offshore wind energy projects, calls attention to the development of innovative technology, and implements means to adequately address the interests of relevant stakeholders.

“An Act Regarding the Procurement of Energy from Offshore Wind Resources”

Maine Governor Janet Mills signed a bill in July to further the development of offshore wind energy projects in the Gulf of Maine, making several amendments to a previous bill and enacting six additional sections.[1] One of the major changes includes declaring a new wind energy goal of three gigawatts of installed capacity by December 2040. This could meet approximately fifty percent of Maine’s anticipated electricity needs at that time.[2] This goal is different from Maine’s unmet 2009 goal of two gigawatts of installed capacity by 2015 and is likely attributable to supply chain issues, higher interest rates, and the rising prices of materials.[3]

To facilitate its three gigawatts by 2040 goal, the bill establishes a process for competitive contracting by requiring the solicitation process and project proposals to be consistent with the Maine Offshore Wind Roadmap issued in 2023,[4] which emphasizes five key topics.[5] It also includes sections pertaining to offshore wind power transmission, supporting the development of port infrastructure and innovative technologies. This may include technologies such as floating or bobbing platforms because the Gulf of Maine is too deep for fixed-structure turbines[6] and storage capacity technology such as large batteries, which would maximize the amount of energy that can be used as it is needed.[7]

The bill also expands the minimum number of advisory board members of the Offshore Wind Research Consortium – a collaborative research initiative created by the bill – from seven to twelve members to reach a wider stakeholder audience. The new advisory board member requirements include adding the “Commissioner of Inland and Wildlife” (or the commissioner’s designee), “at least one individual who is a member of a federally recognized Indian tribe” in Maine, “two individuals with expertise in marine and wildlife habitats,” and “at least one individual with experience in commercial offshore wind power development.”[8] The bill also requires the opportunity for public comment during the project solicitation process.

Engaging with relevant stakeholders at this early stage allows the Consortium’s research to explore and mitigate risks in offshore wind development projects such as the potential negative impact on commercial fishing, species degradation, and harm to ecosystems. These kinds of concerns mirror much of the resistance to offshore wind projects, non-specific to the Gulf of Maine, and the bill emphasizes specific actions to answer them.

Addressing Stakeholder Concerns

Calls for offshore wind energy development have been met with pushback from multiple stakeholder groups, including Native American tribes, members of the commercial fishing industry, and local residents. These and other stakeholders voice concerns about environmental, economic, and social issues. For example, some people argue that installing offshore wind farms could disrupt key fishing and lobstering grounds, which generate more than $1.5 billion for Maine’s economy.[9] This disruption could happen by changing fish migration patterns, changing water temperatures by running large electrical cables onshore, and limiting fishers’ ability to access fishing grounds due to turbine structures being in the way.[10] Another concern is that animals, like the Eastern red bat and other bat species, are vulnerable to flying into wind farm structures.[11] Others simply worry that installing offshore wind farms will disrupt the environment’s natural beauty, as wind farms will be a sort of visual pollution.

In addition to seeking input from relevant stakeholders, the new bill anticipates these kinds of risks and includes specific actions to avoid or mitigate them. The Offshore Wind Research Consortium funds will now also be used to “support conservation that supports species and habitats impacted by offshore wind development,”[12] including research that aims to “avoid or minimize the impact of floating offshore wind power projects on ecosystems and existing uses of the Gulf of Maine.”[13]

Proposals for the development and construction of offshore wind projects must include a “fishing communities investment plan” which “supports innovation and adaptation in response to environmental change, shifting resource economics, and changes in fishing practices associated with offshore wind power development.”[14] Proposals given priority are those that are outside critical fishing and lobstering areas, provide employment and contracting opportunities to people from disadvantaged communities, provide financial or technical support for research regarding wildlife, fisheries, and habitats impacted by offshore wind development, or promote hiring Maine residents and affected community members.[15] Under the bill, proposals must seek to minimize an offshore wind project’s impact on the environment’s visual and scenic character.[16]

The Current State of Offshore Wind Development in the U.S.

Maine is not the only jurisdiction pursuing offshore wind development projects. Most of the locations for offshore wind projects are in federal waters, which means that they often require permits issued by the Bureau of Ocean Energy Management (BOEM), which is housed in the Department of the Interior.[17] The federal government has allocated floating wind leases and has a goal to meet fifteen gigawatts of installed capacity by 2035.[18] Projects are underway in Maine, California, and Oregon, with more in the pipeline.[19]

Maine has the potential to be a leader in offshore wind development projects as its bill passed in July demonstrates the importance of engaging relevant stakeholders, conducting research to avoid or mitigate negative environmental impacts, and prioritizing developments that show commitment to social values. It also emphasizes the role of innovative technology like floating turbines, which are especially relevant because about eighty percent of the world’s offshore wind resource capacity is in locations not well-suited for fixed structures.[20] Offshore wind projects can spur economic growth[21] and contribute to the procurement of sustainable energy while decreasing reliance on non-sustainable sources like fossil fuels. Other jurisdictions should look to Maine’s bill as a great start in the early development of an industry with enormous potential.

Notes

[1] 2023 Me. SP 766.

[2] Maria Gallucci, Maine to go all in on offshore wind, Canary Media (July 25, 2023), https://www.canarymedia.com/articles/wind/maine-to-go-all-in-on-offshore-wind.

[3] Id.

[4] Maine Offshore Wind Roadmap Advisory Committee, The Maine Offshore Wind Roadmap, State of Maine Governor’s Energy Office (February 2023), https://www.maine.gov/energy/sites/maine.gov.energy/files/inline-files/Maine_Offshore_Wind_Roadmap_February_2023.pdf.

[5] Maine’s Offshore Wind Roadmap, State of Maine Governor’s Energy Office, https://www.maine.gov/energy/initiatives/offshorewind/roadmap (last visited Nov. 6, 2023) (stating the Roadmap’s objectives include “supporting economic growth and resiliency, harnessing renewable energy, advancing Maine-based innovation, supporting Maine’s seafood industry, and protecting the Gulf of Maine’s ecosystem.”).

[6] Heather Richards, Gulf of Maine wind could power 100% of New England—Report, E&E News (Oct. 31, 2023), https://subscriber.politicopro.com/article/eenews/2023/10/31/gulf-of-maine-wind-could-give-new-england-a-power-jolt-report-00124295.

[7] Id. (“Offshore wind from the Gulf of Maine could satisfy 72% of New England’s power demand but battery storage is critical; without the right storage capacities, offshore wind could only meet approximately 37% of New England’s needs.”).

[8] 2023 Me. SP 766.

[9] Maria Gallucci, Maine to go all in on offshore wind, Canary Media (July 25, 2023), https://www.canarymedia.com/articles/wind/maine-to-go-all-in-on-offshore-wind.

[10] Bureau of Ocean Energy Management, Gulf of Maine Draft Wind Energy Area (WEA) Notice, Regulations.gov

(October 18, 2023), https://www.regulations.gov/document/BOEM-2023-0054-0001 (see public comments).

[11] Heather Richards, Gulf of Maine wind could power 100% of New England—Report, E&E News (Oct. 31, 2023), https://subscriber.politicopro.com/article/eenews/2023/10/31/gulf-of-maine-wind-could-give-new-england-a-power-jolt-report-00124295.

[12] 2023 Me. SP 766.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Nicholas P. Jansen, Reducing the Headwinds: the Need for a Federal Approach to Siting Offshore Wind Interconnection Infrastructure, Despite Protective State Laws, 26 Ocean & Coastal L.J. 123 (2021).

[18] Juliana Ennes, California’s floating wind lead threatened by fast-rising Maine, Reuters (September 14, 2023, 10:57 AM), https://www.reuters.com/business/energy/californias-floating-wind-lead-threatened-by-fast-rising-maine-2023-09-14/.

[19] Maria Gallucci, Maine to go all in on offshore wind, Canary Media (July 25, 2023), https://www.canarymedia.com/articles/wind/maine-to-go-all-in-on-offshore-wind.

[20] Id.

[21] Maine Offshore Wind Roadmap Advisory Committee, The Maine Offshore Wind Roadmap, State of Maine Governor’s Energy Office (February 2023), https://www.maine.gov/energy/sites/maine.gov.energy/files/inline-files/Maine_Offshore_Wind_Roadmap_February_2023.pdf.

Cracking the Code: Navigating New SEC Rules Governing Cybersecurity Disclosure

November 13, 2023
Cyber Security, Regulatory, Securities Law

Noah Schottenbauer, MJLST Staffer

In response to the dramatic impact cybersecurity incidents have on investors through the decline of stock value and sizeable costs to companies in rectifying breaches,  the SEC adopted new rules governing cybersecurity-related disclosures for public companies, covering both the disclosure of individual cybersecurity incidents as well as periodic disclosures of a company’s procedures to assess, identify, and manage material cybersecurity risks, management’s role in assessing and managing cybersecurity risks, and the board of directors’ oversight of cybersecurity risks.[1]

Before evaluating the specifics of the new SEC cybersecurity disclosure requirements, it is important to understand why information about cybersecurity incidents is important to investors. In recent years, data breaches have led to an average decline in stock value of 7.5% amongst publicly traded companies, with impacts being felt long after the date of the breach, as demonstrated by companies experiencing a significant data breach underperforming the NASDAQ by an average of 8.6% after one year.[2] One of the forces driving this decline in stock value is the immense costs associated with rectifying a data breach for the affected company. In 2022, the average cost of a data breach for U.S. companies was $9.44 million, drawn from ransom payments, disruptions in business operations, legal and audit fees, and other associated expenses.[3]

Summary Of Required Disclosures

  • Material Cybersecurity Incidents (Form 8-K, Item 1.05)

Amendments to Item 1.05 of Form 8-K require that reporting companies disclose any cybersecurity incident deemed to be material.[4] When making such disclosures, companies are required to “describe the material aspects of the nature, scope, and timing of the incident, and the material impact or reasonably likely material impact on the registrant, including its financial condition and results of operations.”[5]

So, what is a material cybersecurity incident? The SEC defines cybersecurity incident as “an unauthorized occurrence . . . on or conducted through a registrant’s information systems that jeopardizes the confidentiality, integrity, or availability of a registrant’s information systems or any information residing therein.”[6]

The definition of material, on the other hand, lacks the same degree of clarity. Based on context offered by the SEC through the rulemaking process, material is to be used in a way that is consistent with other securities laws.[7] Under this standard, information, or, in this case, a cybersecurity incident, would be considered material if “there is a substantial likelihood that a reasonable shareholder would consider it important.”[8] This determination is made based on a “delicate assessment of the inferences a ‘reasonable shareholder’ would draw from a given set of facts and the significance of those inferences to him.”[9] Even with this added context, what characteristics of a cybersecurity incident make it material remain unclear, but considering the fact that the rules are being implemented with the intent of protecting investor interests, the safest course of action would be to disclose a cybersecurity incident when in doubt of its materiality.[10]

It is important to note that this disclosure mandate is not limited to incidents that occur within the company’s own systems. If a material cybersecurity incident happens on third-party systems that a company utilizes, that too must be disclosed.[11] However, in these situations, companies are only expected to disclose information that is readily accessible, meaning they are not required to go beyond their “regular channels of communication” to gather pertinent information.[12]

Regarding the mechanics of the disclosure, the SEC stipulates that companies must file an Item 1.05 of Form 8-K within four business days of determining that a cybersecurity incident is material.[13] However, delaying disclosure may be allowed in limited circumstances where the United States Attorney General determines that immediate disclosure may seriously threaten national security or public safety.[14]

If there are any changes in the initially-disclosed information or if new material information is discovered that was not available at the time of the first disclosure, registrants are obligated to update their disclosure by filing an amended Form 8-K, ensuring that all relevant information related to the cybersecurity incident is available to the public and stakeholders.[15]

  • Risk Management & Strategy (Regulation S-K, Item 106(b))

Under amendments to Item 106(b) of Regulation S-K, reporting companies are obligated to describe their  “processes, if any, for assessing, identifying, and managing material risks from cybersecurity threats in sufficient detail for a reasonable investor to understand those processes.”[16] When detailing these processes, companies must specifically address three primary points. First, they need to indicate how and if the cybersecurity processes described in Item 106(b) fall under the company’s overarching risk management system or procedures. Second, companies must clarify whether they involve assessors, consultants, auditors, or other third-party entities in relation to these cybersecurity processes. Third,  they must describe if they possess methods to monitor and access significant risks stemming from cybersecurity threats when availing the services of any third-party providers.[17]

In addition to the three enumerated elements under Item 106(b), companies are expected to furnish additional information to ensure a comprehensive understanding of their cybersecurity procedures for potential investors. This supplementary disclosure should encompass “whatever information is necessary, based on their facts and circumstances, for a reasonable investor to understand their cybersecurity processes.”[18] While companies are mandated to reveal if they collaborate with third-party service providers concerning their cybersecurity procedures, they are not required to disclose the specific names of these providers or offer a detailed description of the services these third-party entities provide, thus striking a balance between transparency and confidentiality and ensuring that investors have adequate information.[19]

  • Governance (Regulation S-K, Item 106(c))

Amendments to Regulation S-K, Item 106(c) require that companies: (1) describe the board’s oversight of the risks emanating from cybersecurity threats, and (2) characterize management’s role in both assessing and managing material risks arising from such threats.[20]

When detailing management’s role concerning these cybersecurity threats, there are a number of issues that should be addressed. First, companies should clarify which specific management positions or committees are entrusted with the responsibility of assessing and managing these risks. Additionally, the expertise of these designated individuals or groups should be outlined in such detail as necessary to comprehensively describe the nature of their expertise. Second, a description of the processes these entities employ to stay informed about, and to monitor, the prevention, detection, mitigation, and remediation of cybersecurity incidents should be included. Third, companies should indicate if and how these individuals or committees convey information about such risks to the board of directors or potentially to a designated committee or subcommittee of the board.[21]

The disclosures required under Item 106(c) are aimed at balancing investor accessibility to information with the company’s ability to maintain autonomy in determining cybersecurity practices in the context of organizational structure; therefore, disclosures do not need to be overly detailed.[22]

  • Foreign Private Issuers (Form 6-K & Form 20-F)

The rules addressed above only apply to domestic companies, but the SEC imposed parallel cybersecurity disclosure requirements for foreign private issuers under Form 6-K (incident reporting) and Form 20-K (periodic reporting).[23]

Key Dates

The SEC’s final rules are effective as of September 5, 2023, but the Form 8-K and Regulation S-K reporting requirements have yet to take effect. The key compliance dates for each are as follows:

  • Form 8-K Item 1.05(a) Incident Reporting – December 18, 2023
  • Regulation S-K Periodic Reporting – Fiscal years ending on or after December 15, 2023

Smaller reporting companies are provided with an extra 180 days to comply with Form 8-K Item 1.05. Under this grant, small companies will be expected to begin incident reporting on June 15, 2024. No such extension was granted to smaller reporting companies with regard to Regulation S-K Periodic Reporting.[24]

Potential Impact On Cybersecurity Policy

The actual impact of the SEC’s new disclosure requirements will likely remain unclear for some time, yet the regulations compel companies to adopt a greater sense of discipline and transparency in their cybersecurity practices. Although the primary intent of these rules is investor protection, they may also influence how companies formulate their cybersecurity strategies, given the requirement to discuss such policies in their annual disclosures. This heightened level of accountability, regarding defensive measures and risk management strategies in response to cybersecurity threats, may encourage companies to implement more robust cybersecurity practices or, at the very least, ensure that cybersecurity becomes a regular topic of discussion amongst senior leadership. Consequently, the SEC’s initiative may serve as a catalyst for strengthening cybersecurity policies within corporate entities, while also providing investors with essential information for making informed decisions in the marketplace.

Further Information

The overview of the new SEC rules governing cybersecurity disclosures provided above is precisely that: an overview. For more information regarding the requirements and applicability of these rules please refer to the official rules and the SEC website.

Notes

[1] Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, Exchange Act Release No. 33-11216, Exchange Act Release No. 34-97989 (July 26, 2023) [hereinafter Final Rule Release], https://www.sec.gov/files/rules/final/2023/33-11216.pdf.

[2] Keman Huang et al., The Devastating Business Impact of a Cyber Breach, Harv. Bus Rev., May 4, 2023, https://hbr.org/2023/05/the-devastating-business-impacts-of-a-cyber-breach.

[3] Id.

[4] Final Rule Release, supra note 1, at 12

[5] Id. at 49.

[6] Id. at 76.

[7] Id. at 14.

[8] TSC Indus. v. Northway, 426 U.S. 438, 449 (1976).

[9] Id. at 450.

[10] Id. at 448.

[11] Final Rule Release, supra note 1, at 30.

[12] Id. at 31.

[13] Id. at 32.

[14] Id. at 28.

[15] Id. at 50–51.

[16] Id. at 61.

[17] Id. at 63.

[18] Id.

[19] Id. at 60.

[20] Id. at 12.

[21] Id. at 70.

[22] Id.

[23] Id. at 12.

[24] Id. at 107.

The Double-Helix Dilemma: Navigating Privacy Pitfalls in Direct-to-Consumer Genetic Testing

November 7, 2023
Bioethics, Data Privacy, FDA, Health, Healthcare, Privacy, Regulatory

Ethan Wold, MJLST Staffer

Introduction

On October 22, direct-to-consumer genetic testing (DTC-GT) company 23andME sent emails to a number of its customers informing them of a data breach into the company’s “DNA Relatives” feature that allows customers to compare ancestry information with other users worldwide.[1] While 23andMe and other similar DTC-GT companies offer a number of positive benefits to consumers, such as testing for health predispositions and carrier statuses of certain genes, this latest data breach is a reminder that before choosing to opt into these sorts of services one should be aware of the potential risks that they present.

Background

DTC-GT companies such as 23andMe and Ancestry.com have proliferated and blossomed in recent years. It is estimated over 100 million people have utilized some form of direct-to-consumer genetic testing.[2] Using biospecimens submitted by consumers, these companies sequence and analyze an individual’s genetic information to provide a range of services pertaining to one’s health and ancestry.[3] The October 22 data breach specifically pertained to 23andMe’s “DNA Relatives” feature.[4] The DNA Relatives feature can identify relatives on any branch of one’s family tree by taking advantage of the autosomal chromosomes, the 22 chromosomes that are passed down from your ancestors on both sides of your family, and one’s X chromosome(s).[5] Relatives are identified by comparing the customer’s submitted DNA with the DNA of other 23andMe members who are participating in the DNA Relatives feature.[6] When two people are found to have an identical DNA segment, it is likely they share a recent common ancestor.[7] The DNA Relatives feature even uses the length and number of these identical segments to attempt to predict the relationship between genetic relatives.[8] Given the sensitive nature of sharing genetic information, there are often privacy concerns regarding practices such as the DNA Relatives feature. Yet despite this, the legislation and regulations surrounding DTC-GT is somewhat limited.

Legislation

The Health Insurance Portability and Accountability Act (HIPAA) provides the baseline privacy and data security rules for the healthcare industry.[9] HIPAA’s Privacy Rule regulates the use and disclosure of a person’s “protected health information” by a “covered entity.[10] Under the Act, the type of genetic information collected by 23andMe and other DTC-GT companies does constitute “protected health information.”[11] However, because HIPAA defines a “covered entity” as a health plan, healthcare clearinghouse, or health-care provider, DTC-GT companies do not constitute covered entities and therefore are not under the umbrella of HIPAA’s Privacy Rule.[12]

Thus, the primary source of regulation for DTC-GT companies appears to be the Genetic Information Nondiscrimination Act (GINA). GINA was enacted in 2008 for the purpose of protecting the public from genetic discrimination and alleviating concerns about such discrimination and thereby encouraging individuals to take advantage of genetic testing, technologies, research, and new therapies.[13] GINA defines genetic information as information from genetic tests of an individual or family members and includes information from genetic services or genetic research.[14] Therefore, DTC-GT companies fall under GINA’s jurisdiction. However, GINA only applies to the employment and health insurance industries and thus neglects many other potential arenas where privacy concerns may present.[15] This is especially relevant for 23andMe customers, as signing up for the service serves as consent for the company to use and share your genetic information with their associated third-party providers.[16] As a case in point, in 2018 the pharmaceutical giant GlaxoSmithKline purchased a $300 million stake in 23andMe for the purpose of gaining access to the company’s trove of genetic information for use in their drug development trials.[17]

Executive Regulation

In addition to the legislation above, three different federal administrative agencies primarily regulate the DTC-GT industry: the Food and Drug Administration (FDA), the Centers of Medicare and Medicaid services (CMS), and the Federal Trade Commission (FTC). The FDA has jurisdiction over DTC-GT companies due to the genetic tests they use being labeled as “medical devices”[18] and in 2013 exercised this authority over 23andMe by sending a letter to the company resulting in the suspending of one of its health-related genetic tests.[19] However, the FDA only has jurisdiction over diagnostic tests and therefore does not regulate any of the DTC-GT services related to genealogy such as 23andMe’s DNA Relatives feature.[20] Moreover, the FDA does not have jurisdiction to regulate the other aspects of DTC-GT companies’ activities or data practices.[21] CMS has the ability to regulate DTC-GT companies through enforcement of the Clinical Laboratory Improvements Act (CLIA), which requires that genetic testing laboratories ensure the accuracy, precision, and analytical validity of their tests.[22] But, like the FDA, CMS only has jurisdiction over tests that diagnose a disease or assess health.[23]

Lastly, the FTC has broad authority to regulate unfair or deceptive business practices under the Federal Trade Commission Act (FTCA) and has levied this authority against DTC-GT companies in the past. For example, in 2014 the agency brought an action against two DTC-GT companies who were using genetic tests to match consumers to their nutritional supplements and skincare products.[24] The FTC alleged that the companies’ practices related to data security were unfair and deceptive because they failed to implement reasonable policies and procedures to protect consumers’ personal information and created unnecessary risks to the personal information of nearly 30,000 consumers.[25] This resulted in the companies entering into an agreement with the FTC whereby they agreed to establish and maintain comprehensive data security programs and submit to yearly security audits by independent auditors.[26]

Potential Harms

As the above passages illustrate, the federal government appears to recognize and has at least attempted to mitigate privacy concerns associated with DTC-GT. Additionally, a number of states have passed their own laws that limit DTC-GT in certain aspects.[27] Nevertheless, given the potential magnitude and severity of harm associated with DTC-GT it makes one question if it is enough. Data breaches involving health-related data are growing in frequency and now account for 40% of all reported data breaches.[28] These data breaches result in unauthorized access to DTC-GT consumer-submitted data and can result in a violation of an individual’s genetic privacy. Though GINA aims to prevent it, genetic discrimination in the form of increasing health insurance premiums or denial of coverage by insurance companies due to genetic predispositions remains one of the leading concerns associated with these violations. What’s more, by obtaining genetic information from DTC-GT databases, it is possible for someone to recover a consumer’s surname and combine that with other metadata such as age and state to identify the specific consumer.[29] This may in turn lead to identity theft in the form of opening accounts, taking out loans, or making purchases in your name, potentially damaging your financial well-being and credit score. Dealing with the aftermath of a genetic data breach can also be expensive. You may incur legal fees, credit monitoring costs, or other financial burdens in an attempt to mitigate the damage.

Conclusion

As it sits now, genetic information submitted to DTC-GT companies already contains a significant volume of consequential information. As technology continues to develop and research presses forward, the volume and utility of this information will only grow over time. Thus, it is crucially important to be aware of risks associated with DTC-GT services.

This discussion is not intended to discourage individuals from participating in DTC-GT. These companies and the services they offer provide a host of benefits, such as allowing consumers to access genetic testing without the healthcare system acting as a gatekeeper, thus providing more autonomy and often at a lower price.[30] Furthermore, the information provided can empower consumers to mitigate the risks of certain diseases, allow for more informed family planning, or gain a better understanding of their heritage.[31] DTC-GT has revolutionized the way individuals access and understand their genetic information. However, this accessibility and convenience comes with a host of advantages and disadvantages that must be carefully considered.

Notes

[1] https://www.reuters.com/world/us/23andme-notifies-customers-data-breach-into-its-dna-relatives-feature-2023-10-24/#:~:text=%22There%20was%20unauthorized%20access%20to,exposed%20to%20the%20threat%20actor.%22

[2] https://www.ama-assn.org/delivering-care/patient-support-advocacy/protect-sensitive-individual-data-risk-dtc-genetic-tests#:~:text=Use%20of%20direct%2Dto%2Dconsumer,November%202021%20AMA%20Special%20Meeting

[3] https://go-gale-com.ezp3.lib.umn.edu/ps/i.do?p=OVIC&u=umn_wilson&id=GALE%7CA609260695&v=2.1&it=r&sid=primo&aty=ip

[4] https://www.reuters.com/world/us/23andme-notifies-customers-data-breach-into-its-dna-relatives-feature-2023-10-24/#:~:text=%22There%20was%20unauthorized%20access%20to,exposed%20to%20the%20threat%20actor.%22

[5] https://customercare.23andme.com/hc/en-us/articles/115004659068-DNA-Relatives-The-Genetic-Relative-Basics

[6] Id.

[7] Id.

[8] Id.

[9] https://go-gale-com.ezp2.lib.umn.edu/ps/i.do?p=OVIC&u=umn_wilson&id=GALE%7CA609260695&v=2.1&it=r&sid=primo&aty=ip

[10] https://www.hhs.gov/sites/default/files/ocr/privacy/hipaa/administrative/combined/hipaa-simplification-201303.pdf

[11] Id.

[12] Id; https://go-gale-com.ezp2.lib.umn.edu/ps/i.do?p=OVIC&u=umn_wilson&id=GALE%7CA609260695&v=2.1&it=r&sid=primo&aty=ip

[13] https://www.eeoc.gov/statutes/genetic-information-nondiscrimination-act-2008

[14] Id.

[15] https://europepmc.org/backend/ptpmcrender.fcgi?accid=PMC3035561&blobtype=pdf

[16] https://go-gale-com.ezp2.lib.umn.edu/ps/i.do?p=OVIC&u=umn_wilson&id=GALE%7CA609260695&v=2.1&it=r&sid=primo&aty=ip

[17] https://news.yahoo.com/news/major-drug-company-now-access-194758309.html

[18] https://uscode.house.gov/view.xhtml?req=(title:21%20section:321%20edition:prelim)

[19] https://core.ac.uk/download/pdf/33135586.pdf

[20] https://go-gale-com.ezp2.lib.umn.edu/ps/i.do?p=OVIC&u=umn_wilson&id=GALE%7CA609260695&v=2.1&it=r&sid=primo&aty=ip

[21] Id.

[22] https://www.law.cornell.edu/cfr/text/42/493.1253

[23] https://go-gale-com.ezp2.lib.umn.edu/ps/i.do?p=OVIC&u=umn_wilson&id=GALE%7CA609260695&v=2.1&it=r&sid=primo&aty=ip

[24] https://www.ftc.gov/system/files/documents/cases/140512genelinkcmpt.pdf

[25] Id.

[26] Id.

[27] https://go-gale-com.ezp2.lib.umn.edu/ps/i.do?p=OVIC&u=umn_wilson&id=GALE%7CA609260695&v=2.1&it=r&sid=primo&aty=ip

[28] Id.

[29] https://go-gale-com.ezp2.lib.umn.edu/ps/i.do?p=OVIC&u=umn_wilson&id=GALE%7CA609260695&v=2.1&it=r&sid=primo&aty=ip

[30] Id.

[31] Id.

A Nation of Misinformation? the Attack on the Government’s Efforts to Stop Social Media Misinformation

November 7, 2023
Constitutional Law, First Amendment, Internet, Social Media

Alex Mastorides, MJLST Staffer

Whether and how misinformation on social media can be curtailed has long been the subject of public debate. This debate has increasingly gained momentum since the beginning of the COVID-19 pandemic, at a time when uncertainty was the norm and people across the nation scrambled for information to help them stay safe. Misinformation regarding things like the origin of the pandemic, the treatment that should be administered to COVID-positive people, and the safety of the vaccine has been widely disseminated via social media platforms like TikTok, Facebook, Instagram, and X (formerly known as Twitter). The federal government under the Biden Administration has sought to curtail this wave of misinformation, characterizing it as a threat to public health. However, many have accused it of unconstitutional acts of censorship in violation of the First Amendment.

The government cannot directly interfere with the content posted on social media platforms; this right is held by the private companies that own the platforms. Instead, the government’s approach has been to communicate with social media companies, encouraging them to address misinformation that is promulgated on their sites. Per the Biden Administration: “The President’s view is that the major platforms have a responsibility related to the health and safety of all Americans to stop amplifying untrustworthy content, disinformation, and misinformation, especially related to COVID-19, vaccinations, and elections.”[1]

Lower Courts have Ruled that the Government May Not Communicate with Social Media Companies for Purposes of Curtailing Online Misinformation

The case of Murthy v. Missouri may result in further clarity from the Supreme Court regarding the powers of the federal government to combat misinformation on social media platforms. The case began in the United States District Court for the Western District of Louisiana when two states–Missouri and Louisiana–along with several private parties filed suit against numerous federal government entities, including the White House and agencies such as the Federal Bureau of Investigation, the Centers for Disease Control & Prevention, and the Cybersecurity & Infrastructure Security Agency.[2] These entities have repeatedly communicated with social media companies, allegedly encouraging them to remove or censor the plaintiffs’ online content due to misinformation about the COVID-19 pandemic (including content discussing “the COVID-19 lab-leak theory, pandemic lockdowns, vaccine side-effects, election fraud, and the Hunter Biden laptop story.”)[3] The plaintiffs allege that these government entities “‘coerced, threatened, and pressured [the] social-media platforms to censor [them]’ through private communications and legal threats” in violation of the plaintiffs’ First Amendment rights.[4]

The District Court agreed with the plaintiffs, issuing a preliminary injunction on July 4, 2023 to greatly restrict the entities’ ability to contact social media companies (especially with regard to misinformation).[5] This approach was predicated on the idea that government communications with social media companies about misinformation on their platforms is essentially coercive, forcing the companies to censor speech at the government’s demand. The injunction was appealed to the Fifth Circuit, which narrowed the injunction’s scope to just the White House, the Surgeon General’s office, and the FBI.[6]

Following the Fifth Circuit’s ruling on the preliminary injunction, the government parties to the Murthy case applied for a stay of the injunction with the United States Supreme Court.[7] The government further requested that the Court grant certiorari with regard to the questions presented by the injunction. The government attacked the injunction on three grounds. The first is that the plaintiffs did not have standing to sue under Article III because they did not show that the censoring effect on their posts was “fairly traceable” to the government or “redressable by injunctive relief.”[8]

The second argument is that the conduct at issue does not constitute a First Amendment free speech violation.[9] This claim is based on the state action doctrine, which outlines the circumstances in which the decisions of private entities are considered to be “state action.” If a private social media company’s decisions to moderate content are sufficiently “coerced” by the government, the law treats those decisions as if they were made by the government directly.[10] In that situation, the First Amendment would apply.[11] The Supreme Court has advocated for a strict evaluation of what kind of conduct might be considered “coercive” under this doctrine in an effort to avoid infringing upon the rights of private companies to modulate speech on their platforms.[12] The government’s Application for Stay argues that the Fifth Circuit’s decision is an overly broad application of the doctrine in light of the government’s conduct.[13]

Third, the government maintains that the preliminary injunction is overly broad because it “covers the government’s communications with all social-media platforms (not just those used by respondents) regarding all posts by any person (not just respondents) on all topics.”[14]

The Supreme Court Granted the Requested Stay and Granted Certiorari Regarding Three Key Questions

The Supreme Court granted the government’s request for a stay on the preliminary injunction. The Court simultaneously granted certiorari with respect to the questions posed in the government’s Application for Stay: “(1) Whether respondents have Article III standing; (2) Whether the government’s challenged conduct transformed private social-media companies’ content-moderation decisions into state action and violated respondents’ First Amendment rights; and (3) Whether the terms and breadth of the preliminary injunction are proper.”[15]

The Court gave no explanation for its grant of the request for stay or for its grant of certiorari. However, Justice Alito, joined by Justice Thomas and Justice Gorsuch, issued a dissent from the grant of application for stay, arguing that the government has not shown a likelihood that denial of a stay will result in irreparable harm.[16] He contends that the government’s argument about irreparable harm comes from hypotheticals rather than from actual “concrete” proof that harm is imminent.[17] The dissent further displays a disapproving attitude of the government’s actions toward social media misinformation: “At this time in the history of our country, what the Court has done, I fear, will be seen by some as giving the Government a green light to use heavy-handed tactics to skew the presentation of views on the medium that increasingly dominates the dissemination of news. That is most unfortunate.”[18]

Justice Alito noted in his dissent that the completion of the Court’s review of the case may not come until spring of next year.[19] The stay on the preliminary injunction will hold until that time.

Notes

[1] Press Briefing by Press Secretary Jen Psaki and Secretary of Agriculture Tom Vilsack, The White House (May 5, 2021), https://www.whitehouse.gov/briefing-room/press-briefings/2021/05/05/press-briefing-by-press-secretary-jen-psaki-and-secretary-of-agriculture-tom-vilsack-may-5-2021/.

[2] State v. Biden, 83 F.4th 350, 359 (5th Cir. 2023).

[3] Id. at 359.

[4] Id. at 359-60.

[5] Id. at 360.

[6] Id.

[7] Application for Stay, Murthy v. Missouri, No. 23A243 (23-411) (2023).

[8] Id. at 2.

[9] Id. at 3.

[10] Id. at 10.

[11] Id.

[12] Id. at 4 (citing Manhattan Cmty. Access Corp. v. Halleck, 139 S. Ct. 1921, 1933 (2019)).

[13] Application for Stay, Murthy v. Missouri, No. 23A243 (23-411) (2023).

[14] Id. at 5.

[15] Press Briefing by Press Secretary Jen Psaki and Secretary of Agriculture Tom Vilsack, The White House (May 5, 2021), https://www.whitehouse.gov/briefing-room/press-briefings/2021/05/05/press-briefing-by-press-secretary-jen-psaki-and-secretary-of-agriculture-tom-vilsack-may-5-2021/.

[16] On Application for Stay at 3, Murthy v. Missouri, No. 23A243 (23-411) (October 20, 2023) (Alito, J. dissenting) (citing Hollingsworth v. Perry, 558 U.S. 183, 190 (2010)).

[17] Id. at 3-4.

[18] Id. at 5.

[19] Id. at 2.

NC Gives Medicaid Expansion a Foothold in the Southeast While Giving Many North Carolinians a Helping Hand

October 27, 2023
Health, Healthcare, Healthcare Reform, Insurance

Matt Buechner, MJLST Staffer

North Carolina is set to take a step to address structural racism in communities across the state when it begins Medicaid expansion implementation on December 1. Governor Roy Cooper championed expansion in his state and signed a bipartisan Medicaid expansion bill in March. This signaled the state’s intention to expand the government-sponsored health insurance program for low-income people to roughly 600,000 additional North Carolinians.[1] However, the bill required the legislature to pass a separate state budget law to appropriate funds and implement the plan.[2] The Republican-controlled state legislature passed a delayed two-year budget deal on September 22, which went into effect October 3 after Cooper declined to veto the bill.[3]

Implementation of Medicaid expansion should help North Carolina see the reduction of uninsurance rates that other expansion states have seen since passage of the ACA.[4] A recent study found that while Medicaid expansion helps populations across a state, the eligibility expansion disproportionately helps residents of formerly redlined[5] neighborhoods gain access to coverage.[6] Coverage is essential, as greater access to health insurance leads to medical care, including preventive care and management of chronic illness.[7]

Meanwhile, recent analyses of health disparities and access to health insurance have shown that health disparities in the United States may be less tied to race itself, but rather to structural racism levied against non-white Americans.[8] One recent study showed that states with policies that reflect and reinforce structural racism also see significantly higher rates of premature death among their populations.[9] While these findings may not be surprising, policymakers and advocates can use this evidence to target investments and interventions, while working to disentangle the tapestry of discrimination at the state level.

Accessing Medicaid for Newly Eligible North Carolinians

The Medicaid program currently covers about 2.9 million North Carolinians.[10] But like most states that have yet to expand their Medicaid program, the maximum income requirements for North Carolina Medicaid eligibility for adults is quite low.[11] Adult caregivers of children or adult family members may earn a household modified adjusted gross income (MAGI)[12] up to 37 percent of the federal poverty level (FPL) to maintain North Carolina Medicaid eligibility, while non-caregiver adults do not qualify for Medicaid at all.[13] Medicaid expansion will increase the maximum household MAGI threshold to 138 percent[14] FPL to qualify for Medicaid coverage, regardless of whether an adult cares for an additional family member.[15]

North Carolina currently provides reproductive health care benefits for residents who earn up to 195 percent FPL through their Medicaid Family Planning Program (BE SMART).[16] Nearly half of the expected 600,000 new Medicaid-eligible North Carolinians are currently enrolled in BE SMART and have a qualifying-income under the new 138 percent FPL Medicaid eligibility threshold. These people will automatically be enrolled in full Medicaid coverage.[17] Newly qualifying individuals who do not take part in the BE SMART program must apply (online, in person, by telephone, or by mail) and await determination, which is set to take up to 45 days.[18]

Making Sense of the Federal Dollars at Play

State Medicaid programs are traditionally paid for through a partnership with the federal government. While the state administers the program, the federal government provides the state matching funding, without limit.[19] Matching funds are provided based on an algorithm that measures a state’s ability to pay for the program using the state’s per capita income compared to the per capita income of the nation. This rate is called the Federal Medical Assistance Percentage (FMAP).[20] A state’s FMAP is set by statute to be at least 50 percent, but not more than 83 percent.[21] Using FMAP allows a state with a theoretically lower tax base (relative to the size of their state population) to receive additional federal funding to offset the burden of providing for its residents.

To help states with the burden of paying for an increase in their Medicaid population after expansion, Congress established an enhanced FMAP calculation for a state’s Medicaid expansion population. Beginning with the implementation of expansion in 2014, the federal government provided states with a 100 percent FMAP for the expansion population, followed by a phased down approach.[22] The current FMAP for the expansion population is 90 percent.[23]

To help encourage remaining states to expand their Medicaid program, Congress included a 5 percent FMAP bump for two years post-expansion in the American Rescue Plan—not for the expansion population, but for the traditional Medicaid population.[24] This is particularly enticing for states, because this includes all Medicaid recipients, including children, seniors, people with disabilities, and all other non-expansion groups. On average, these populations account for nearly 80 percent of all Medicaid costs in expansion states, making this benefit likely more lucrative than a 100 percent FMAP rate for expansion populations.[25]

Looking at Health Equity Beyond Expansion

While North Carolina looks to expand its Medicaid population in the coming months, states across the country are purging Medicaid beneficiaries from their programs following the expiration of a federal disenrollment prohibition to qualify for a Covid-era enhanced FMAP.[26] Recent reports estimate that nearly 9 million people across the country have been disenrolled from Medicaid so far, including more than 120,000 North Carolinians–more than 20 percent of North Carolina’s current Medicaid population.[27]

While North Carolina has one of the lowest rates of churn among states across the nation, 87 percent of disenrolled North Carolinians lost coverage for procedural concerns–not eligibility concerns.[28] This means that North Carolina Medicaid beneficiaries are losing their health insurance coverage largely because they did not fill out a form properly or the state had an incorrect address on file.

Few states publicly report the racial and ethnic demographics of their Medicaid disenrollees. For those that do, most seem to be disenrolling Medicaid recipients at even rates based on race and ethnicity.[29] As disenrollment continues and North Carolina moves into expansion of their Medicaid program, policymakers, advocates, and observers will keep a keen eye on the state as it navigates its population’s fluctuating access to Medicaid. This expansion is but one step to ensure that people have equitable access to essential coverage and care.

Notes

[1] Gary D. Robertson, Medicaid Expansion to Begin Soon in North Carolina as Governor Decides to Let Budget Bill Become Law, Associated Press, Sept. 22, 2023, https://apnews.com/article/north-carolina-medicaid-expansion-governor-legislature-330ea1adef37a323b31a9cfe0d470a58.

[2] Id.

[3] In some states, inaction by a governor can lead to a pocket veto, however in others, inaction by a governor leads to passage of the bill. In North Carolina, a bill can become a law following inaction by a governor for ten days. Aimee Wall, The Governor’s Role in the Legislative Process, Coates’ Canons NC Gov’t Law (Jan. 11, 2017), https://canons.sog.unc.edu/2017/01/governors-role-legislative-process/.; Governor Roy Cooper, a Democrat, allowed the two-year budget bill to become law without action. See House Bill 259 / SL 2023-134, N.C. General Assembly, https://www.ncleg.gov/BillLookup/2023/H259 (last visited Oct. 15, 2023).

[4] The Far-Reaching Benefits of the Affordable Care Act’s Medicaid Expansion, Ctr. on Budget and Pol’y Priorities, https://www.cbpp.org/research/health/chart-book-the-far-reaching-benefits-of-the-affordable-care-acts-medicaid-expansion (last visited Oct. 15, 2023).

[5] Redlining occurred, beginning in the 1930s, when the federal government’s Home Owners’ Loan Corporation (HOLC) began the process of rating the investment desirability of various neighborhoods. The rating system used neighborhood racial demography to determine the grades, with the lowest grade reserved for neighborhoods that were “infiltrated with undesirable populations such as Jewish, Asian, Mexican, and Black families.” In turn, banks often refused to grant credit to prospective homeowners looking to purchase homes in those communities, or extended credit with excessive interest rates. Redlining was outlawed by the Fair Housing Act in 1968, but the impact on communities is still seen today. See Jason Semprini et al., Medicaid Expansion Lowered Uninsurance Rates Among Nonelderly Adults in the Most Heavily Redlined Areas, 42 Health Aff. 1439 (2023).

[6] Id.

[7] The Far-Reaching Benefits of the Affordable Care Act’s Medicaid Expansion, Ctr. on Budget and Pol’y Priorities, https://www.cbpp.org/research/health/chart-book-the-far-reaching-benefits-of-the-affordable-care-acts-medicaid-expansion (last visited Oct. 15, 2023).

[8] See Jason Semprini et al., Medicaid Expansion Lowered Uninsurance Rates Among Nonelderly Adults in the Most Heavily Redlined Areas, 42 Health Aff. 1439 (2023); Jaquelyn L. Jahn et al., Legislating Inequity: Structural Racism in Groups of State Laws and Associations with Premature Mortality Rates, 42 Health Aff. 1325 (2023).

[9] Jaquelyn L. Jahn et al., Legislating Inequity: Structural Racism in Groups of State Laws and Associations with Premature Mortality Rates, 42 Health Aff. 1325 (2023).

[10] Gary D. Robertson, N. Carolina Governor Signs Medicaid Expansion Bill into Law, Associated Press, March 27, 2023, https://apnews.com/article/north-carolina-medicaid-expansion-roy-cooper-legislature-f00242e5883bccf816a679a76584a5f9.

[11] The median maximum income limit for adults with family member caregiving responsibilities is 37 percent FPL in states that have not expanded Medicaid and childless adults remain ineligible in all of these states (except Wisconsin), regardless of income. Robin Rudowitz et al., How Many Uninsured Are in the Coverage Gap and How Many Could be Eligible if All States Adopted the Medicaid Expansion? Henry J. Kaiser Family Foundation. (Mar. 31, 2023), https://www.kff.org/medicaid/issue-brief/how-many-uninsured-are-in-the-coverage-gap-and-how-many-could-be-eligible-if-all-states-adopted-the-medicaid-expansion/.

[12] MAGI, as used to determine health care benefit eligibility, uses a different methodology than MAGI as used for tax purposes. For health benefit purposes, MAGI is adjusted gross income plus untaxed foreign income, non-taxable Social Security Benefits, and tax-exempt interest. Modified Adjusted Gross Income (MAGI), HealthCare.gov,  https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi/#:~:text=MAGI%20is%20adjusted%20gross%20income,%2C%20and%20tax%2Dexempt%20interest (last visited Oct. 15, 2023).

[13] Medicaid Income Eligibility Limits for Adults as a Percent of the Federal Poverty Level, Henry J. Kaiser Family Foundation. (Jan. 1, 2023), https://www.kff.org/health-reform/state-indicator/medicaid-income-eligibility-limits-for-adults-as-a-percent-of-the-federal-poverty-level/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.

[14] The Affordable Care Act established a 5 percent income disregard in determining eligibility for Medicaid and CHIP. The percent thresholds used in this blog post include the built-in income disregard used to establish Medicaid eligibility determinations. CMS Answers to Frequently Asked Questions: Telephonic Applications, Medicaid and CHIP Eligibility Policy and 75/25 Federal Matching Rate, Medicaid.gov. (Aug. 9, 2013),  https://www.medicaid.gov/faq/respect-magi-conversion-how-will-5-disregard-be-applied/index.html.

[15] Questions and Answers about Medicaid Expansion, NC Medicaid Div. of Health Benefits. https://medicaid.ncdhhs.gov/questions-and-answers-about-medicaid-expansion#:~:text=Quick%20Facts%20about%20North%20Carolina%27s,%2Fyear)%20may%20be%20eligible (last visited Oct. 15, 2023).

[16] Facts About the Medicaid Family Planning “BE SMART” Program, N.C. Dept. of Health and Human Svcs. Div. of Med. Assistance and Div. of Public Health. (Sept. 16, 2016), https://files.nc.gov/ncdma/BeSmart_Fact_Sheet-Beneficiaries_2016_09_15.pdf.

[17] Questions and Answers about Medicaid Expansion, NC Medicaid Div. of Health Benefits. https://medicaid.ncdhhs.gov/questions-and-answers-about-medicaid-expansion#:~:text=Quick%20Facts%20about%20North%20Carolina%27s,%2Fyear)%20may%20be%20eligible (last visited Oct. 15, 2023).

[18] Elizabeth Williams et al., Medicaid Financing: The Basics, Henry J. Kaiser Family Foundation, April 13, 2023, https://www.kff.org/medicaid/issue-brief/medicaid-financing-the-basics/.

[19] Elizabeth Williams et al., Medicaid Financing: The Basics, Henry J. Kaiser Family Foundation, April 13, 2023, https://www.kff.org/medicaid/issue-brief/medicaid-financing-the-basics/.

[20] Id.

[21] The District of Columbia and territories have statutorily set FMAPs and the territories each have a statutorily set per capita Medicaid funding cap. Elizabeth Williams et al., Medicaid Financing: The Basics, Henry J. Kaiser Family Foundation, April 13, 2023, https://www.kff.org/medicaid/issue-brief/medicaid-financing-the-basics/.

[22] Elizabeth Williams et al., Medicaid Financing: The Basics, Henry J. Kaiser Family Foundation, April 13, 2023, https://www.kff.org/medicaid/issue-brief/medicaid-financing-the-basics.

[23] Id.

[24] Katie Keith, Final Coverage Provisions in the American Rescue Plan and What Comes Next, Health Aff: Forefront (Mar. 11, 2021), https://www.healthaffairs.org/content/forefront/final-coverage-provisions-american-rescue-plan-and-comes-next.

[25] Id.

[26] Jennifer Tolbert & Meghana Ammula, 10 Things to Know About the Unwinding of the Medicaid Continuous Enrollment Provision, Henry J. Kaiser Family Foundation, June 9, 2023, https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-the-unwinding-of-the-medicaid-continuous-enrollment-provision/#one.

[27] Medicaid Enrollment and Unwinding Tracker, Henry J. Kaiser Family Foundation, Oct. 11, 2023, https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-and-unwinding-tracker/.

[28] Id.

[29] Sophia Moreno et al., What Do Medicaid Unwinding Data by Race and Ethnicity Show? Henry J. Kaiser Family Foundation, Sept. 28, 2023, https://www.kff.org/policy-watch/what-do-medicaid-unwinding-data-by-race-and-ethnicity-show/.

Will Moody v. NetChoice, LLC End Social Media?

October 27, 2023
Constitutional Law, COVID-19, Elections, First Amendment, Internet, Social Media

Aidan Vogelson, MJLST Staffer

At first, the concept that social media’s days may be numbered seems outlandish. Billions of people utilize social media every day and, historically, social media companies and other internet services have enjoyed virtually unfettered editorial control over how they manage their services. This freedom stems from 47 U.S.C. § 230.[1] § 230 withholds liability for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected…”[2]  In other words, if someone makes an obscene post on Facebook and Facebook removes the post, Facebook cannot be held liable for any violation of protected speech. § 230 has long allowed social media companies to self-regulate by removing posts that violate their terms of service, but on September 29, the Supreme Court granted a writ of certiorari in Moody v. NetChoice, LLC, a case that may fundamentally change how social media companies operate by allowing the government at the state or federal level to regulate around their § 230 protections.

At issue in Moody is whether the methods social media companies use to moderate their content are permissible under the First Amendment and whether social media companies may be classified as common carriers.[3] Common carriers are services which hold themselves open to the public and transport people or goods.[4] While the term “common carrier” once referred only to public transportation services like railroads and airlines, the definition now encompasses communications services such as radio and telephone companies.[5] Common carriers are subjected to greater regulations, including anti-discrimination regulations, due to their market domination of a necessary public service.[6]  For example, given our reliance on airlines and telephone companies in performing necessary services, common carrier regulations ensure that an airline cannot decline to sell tickets to passengers because of their religious beliefs and a cellular network cannot bar service to customers because it disapproves of the content of their phone conversations. If social media companies are held to be common carriers, the federal government and the state governments could impose regulations on what content those companies restrict.

Moody stems from state efforts to do just that. The Florida legislature passed State Bill 7072 to curtail what it saw as social media censorship of conservative voices.[7] The Florida law allows for significant fines against social media companies that demonstrate “unfair censorship” or “deplatform” political candidates, like X (formerly Twitter) did when it removed former President Trump from its platform for falsely claiming that the 2020 election was stolen.[8] Florida is not the only state to pursue a common carrier designation for social media. Texas passed a similar law in 2021 (which is currently enjoined by NetChoice, LLC  v. Paxton and will be addressed alongside Moody) and the attorney general of Ohio has sued Google, seeking for the court to declare that Google is a common carrier to prevent the company from prioritizing its own products in search results.[9] Ohio v. Google LLC is ongoing, and while the judge partially granted Google’s motion to dismiss, he found that Ohio’s claim that Google is a common carrier is cognizable.[10] Given the increasing propensity with which states are attempting to regulate social media, the Supreme Court’s ruling is necessary to settle this vital issue.

Supporters of classifying social media companies as common carriers argue that social media is simply the most recent advancement in communication and should accordingly be designated a common carrier, just as telephone operators and cellular networks are. They explain that designating social media companies as common carriers is actually consistent with the broad protections of § 230, as regulating speech on a social media site regulates the speech of users, not the speech of the company.[11]

However, they ignore that social media companies rely on First Amendment and § 230 protections when they curate the content on their sites. Without the ability to promote or suppress posts and users, these companies would not be able to provide the personalized content that attracts users, and social media would likely become an even greater hotbed of misinformation and hate speech than it already is. The purpose of § 230 is to encourage the development of a thriving online community, which is why Congress chose to shield internet services from liability for content. Treating social media companies as common carriers would stifle that aim.

It is unclear how the Court will rule. In his concurrence in Biden v. Knight First Amend. Inst., Justice Thomas indicated he may be willing to consider social media companies as common carriers.[12] The other justices have yet to write or comment on this issue, but whatever their decision may be, the ramifications of this case will be significant. The conservative politicians behind the Florida and Texas laws have specifically decried what they argue is partisan censorship of conservative views about the Covid-19 pandemic and the 2020 election, yet these very complaints demonstrate the need for social media companies to exercise editorial control over their content. Covid-19 misinformation unquestionably led to unnecessary deaths from the Covid-19 pandemic.[13] Misinformation about the 2020 election led to a violent attempted overthrow of our government. These threats of violence and dangerous misinformation are the harms that Congress created § 230 to avoid. Without the ability for social media companies to curate content, social media will assuredly contain more racism, misinformation, and calls for violence. Few would argue given the omnipresence of social media in our modern world, our reliance on it for communication, and the misinformation it spreads that social media does not need some form of regulation, but if the Court allows the Florida and Texas laws implicated in Moody and NetChoice to stand, they will be paving the way for a patchwork quilt of laws in every state which may render social media unworkable

Notes

[1] See 47 U.S.C. § 230.

[2] 47 U.S.C. §230(c)(2)(A).

[3] Moody v. Netchoice, LLC, SCOTUSblog, https://www.scotusblog.com/case-files/cases/moody-v-netchoice-llc/.

[4] Alison Frankel, Are Internet Companies ‘Common Carriers’ of Content? Courts Diverge on Key Question, REUTERS, (May 31, 2022, 5:52 PM), https://www.reuters.com/legal/transactional/are-internet-companies-common-carriers-content-courts-diverge-key-question-2022-05-31/.

[5] Id.

[6] Id.

[7] David Savage, Supreme Court Will Decide if Texas and Florida Can Regulate Social Media to Protect ‘Conservative Speech’, LA TIMES (Sept. 29, 2023, 8:33 AM), https://www.msn.com/en-us/news/us/supreme-court-will-decide-if-texas-and-florida-can-regulate-social-media-to-protect-conservative-speech/ar-AA1hrE2s.

[8] Id.

[9] AG Yost Files Landmark Lawsuit to Declare Google a Public Utility, OHIO ATTORNEY GENERAL’S OFFICE (June 8, 2021), https://www.ohioattorneygeneral.gov/Media/News-Releases/June-2021/AG-Yost-Files-Landmark-Lawsuit-to-Declare-Google-a.

[10] Ohio v. Google LLC, No. 21-CV-H-06-0274 (Ohio Misc. 2022), https://fingfx.thomsonreuters.com/gfx/legaldocs/gdpzyeakzvw/frankel-socialmediacommoncarrier–ohioruling.pdf.

[11] John Villasenor, Social Media Companies and Common Carrier Status: A Primer, BROOKINGS INST. (Oct. 27, 2022), https://www.brookings.edu/articles/social-media-companies-and-common-carrier-status-a-primer/.

[12] Biden v. Knight First Amend. Inst., 141 S. Ct. 1220 (2021),  https://www.law.cornell.edu/supremecourt/text/20-197.

[13] Alistair Coleman, ’Hundreds Dead’ Because of Covid-19 Misinformation, BBC (Aug. 12, 2020), https://www.bbc.com/news/world-53755067.

Brushstroke Battles: Unraveling Copyright Challenges With AI Artistry

October 15, 2023
Artificial Intelligence, Copyrights, Intellectual Property, New Technology

Sara Seid, MJLST Staffer

Introduction

Imagine this: after a long day of thinking and participating in society, you decided to curl up on the couch with your phone and crack open a new fanfiction to decompress.  Fanfiction, a fictional work of writing based on another fictional work, has increased in popularity due to the expansion and increased use of the internet. Many creators publish their works to websites like Archive of Our Own (AO3), or Tumblr. These websites are free and provide a community for creative minds to share their creative works. While the legality of fanfiction in general is debated, the real concern among creators is regarding AI-generated works. Original characters and works are being used for profit to “create” works through the use of Artificial Intelligence. Profits can be generated from fanfiction through the use of paid AI text generators to create written works, or through advertisements on platforms. What was once a celebration of favorite works has become tarnished through the theft of fanfiction by AI programs.

First Case to Address the Issue

Thaler v. Perlmutter is a new and instructive case on the issue of copyright and AI-generated creative works – namely artwork.[1] The action was brought by Stephen Thaler against the Copyright Office for denying his application for copyright due to the lack of human authorship.[2]  The D.C. Circuit court was the first to rule on whether AI-generated art can have copyright protections.[3] The court held that AI-created artwork could not be copyrighted.[4] In considering the plaintiff’s copyright registration application for “A Recent Entrance to Paradise,” the Register concluded that this particular work would not support a claim to copyright because the work “lacked human authorship and thus no copyright existed in the first instance.”[5] The plaintiff’s primary contention was that the artwork was produced by the computer program he created, and, through its AI capabilities, the product was his.[6]

The court went on to opine that copyright is designed to adapt with the times.[7] Underlying that adaptability, however, has been a “consistent understanding that human creativity is the sine qua non at the core of copyrightability,” even as that human creativity is channeled through new tools or into new media.[8] Therefore, despite the plaintiff’s creation of the computer program, the painting was not produced by a human, and not eligible for copyright. This opinion, while relevant and clear, still leaves unanswered questions regarding the extent to which humans are involved in AI-generated work.[9] What level of human involvement is necessary for an AI creation to qualify for copyright?[10] Is there a percentage to meet? Does the AI program require multiple humans to work on it as a prerequisite? Adaptability with the times, while essential, also means that there are new, developing questions about the right ways to address new technology and its capabilities.

Implications of the Case for Fanfiction

Artificial Intelligence is a new concern among scholars. While its accessibility and convenience create endless new possibilities for a multitude of careers, it also directly threatens creative professions and creative outlets. Without the consent of or authority from creators, AI can use algorithms that process artwork and fictional literary works created by fans to create its own “original” work. AI has the ability to be used to replace professional and amateur creative writers. Additionally, as AI technological capacity increases, it can mimic and reproduce art that resembles or belongs to a human artist.[11]

However, the main concern for artists is wondering what AI will do to creative human industries in general.[12] Additionally, legal scholars are equally as concerned about what AI means for copyright law.[13] The main type of AI that fanfiction writers are concerned about is Generative AI.[14] Essentially, huge datasets are scraped together to train the AI, and through a technical process the AI is able to devise new content that resembles the training data but isn’t identical.[15] Creators are outraged at what they consider to be theft of their artistic creations.[16] Artwork, such as illustrations for articles, books, or album covers may soon face competition from AI, undermining a thriving area of commercial art as well.[17]

Currently, fanfiction is protected under the doctrine of fair use, which allows creators to add new elements, criticism, or commentary to an already existing work, in a way that transforms it.[18] The next question likely to stem from Thaler will be whether AI creations are subject to the same protections that fan created works are.

The fear of the possible consequences of AI can be slightly assuaged through the reality that AI cannot accurately and genuinely capture human memory, thoughts, and emotional expression. These human skills will continue to make creators necessary for their connections to humanity and the ability to express that connection. How a fan resonates with a novel or T.V. show, and then produces a piece of work based on that feeling, is uniquely theirs. The decision in Thaler reaffirms this notion. AI does not offer the human creative element that is required to both receive copyright and also connect with viewers in a meaningful way.[19]

Furthermore, the difficulty with new technology like AI is that it’s impossible to immediately understand and can cause feelings of frustration or a sense of threat. Change is uncomfortable. However, with knowledge and experience, AI might be a useful tool for fanfiction creators.

The element of creative projects that make them so meaningful to people is the way that they can provide a true insight and experience that is relatable and distinctly human.[20] The alternative to banning AI or completing rendering human artists obsolete is to find a middle ground that protects both sides. The interests of technological innovation should not supersede the concerns of artists and creators.

Ultimately, as stated in Thaler, AI artwork that has no human authorship does not get copyright.[21] However, this still leaves unanswered questions that future cases will likely present before the courts. Are there protections that can be made for online creators’ artwork and fictional writings to prevent their use or presence in AI databases? The Copyright Act exists to be malleable and adaptable with time.[22] Human involvement and creative control will have to be assessed as AI becomes more prominent in personal and professional settings.

Notes

[1] Thaler v. Perlmutter, 2023 U.S. Dist. LEXIS 145823, *1.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id. at *3.

[7] Id. at *10.

[8] Id.

[9] https://www.natlawreview.com/article/judge-rules-content-generated-solely-ai-ineligible-copyright-ai-washington-report.

[10] Id.

[11] https://www.theguardian.com/artanddesign/2023/jan/23/its-the-opposite-of-art-why-illustrators-are-furious-about-ai#:~:text=AI%20doesn%27t%20do%20the,what%20AI%20art%20is%20doing.%E2%80%9D.

[12] https://www.theguardian.com/technology/2022/nov/12/when-ai-can-make-art-what-does-it-mean-for-creativity-dall-e-midjourney.

[13] https://www.reuters.com/legal/ai-generated-art-cannot-receive-copyrights-us-court-says-2023-08-21.

[14] https://www.theguardian.com/technology/2022/nov/12/when-ai-can-make-art-what-does-it-mean-for-creativity-dall-e-midjourney.

[15] Id.

[16] Id.

[17] Id.

[18] https://novelpad.co/blog/is-fanfiction-legal# (citing Campbell v. Acuff Rose Music, 510 U.S. 569 (1994).

[19] https://www.reuters.com/default/humans-vs-machines-fight-copyright-ai-art-2023-04-01/.

[20] https://news.harvard.edu/gazette/story/2023/08/is-art-generated-by-artificial-intelligence-real-art/.

[21] Thaler v. Perlmutter, 2023 U.S. Dist. LEXIS 145823, *1.

[22] Id. at *10.

Hello! My Name Is…Erie? Personhood for the Great Lakes

October 15, 2023
Climate Change, Environment, Environmental Law

Eric Gross, MJLST Staffer

As the climate change crisis worsens and environmental protection laws continue to fall short of their stated goals, the movement to give natural entities such as lakes, rivers, and forests legal rights associated with personhood has expanded. Legislation driven by the “environmental personhood” movement has recently begun to appear around the world and in the United States as communities make efforts to protect their natural areas from harmful activity.[1] The idea of entities that aren’t people having personhood status is not without precedent. Consider corporations, which have been defined as persons for limited legal purposes.[2] Given the judicial rights already possessed by non-human entities like corporations, legal personhood has become a more attractive tool for those seeking to protect natural entities such as the Great Lakes. However, broad attempts to give natural entities personhood have run into legal challenges.

Lake Erie Bill of Rights Struck Down

In August 2014, the City of Toledo issued a drinking water warning to citizens not to drink the water; agricultural runoff and pollution into Lake Erie had caused a toxic algal bloom.[3] The water remained undrinkable and even unusable for three days.[4] Frustration with years of state government inaction on pollution boiled over, and in February 2019, the City of Toledo voted to establish a bill of rights for Lake Erie.[5] Known as the Lake Erie Bill of Rights (“LEBOR”), the bill was the product of a multi-year effort by Toledo citizens to protect Lake Erie from pollution.[6]

LEBOR essentially gave personhood status to Lake Erie, including legal standing. It established “irrevocable rights for the Lake Erie Ecosystem to exist, flourish and naturally evolve, a right to a healthy environment for the residents of Toledo, and which elevates the rights of the community and its natural environment over powers claimed by certain corporations.”[7] LEBOR declared that “Lake Erie, and the Lake Erie watershed, possess the right to exist, flourish, and naturally evolve” and granted the people of Toledo “the right to a clean and healthy environment.”[8] Under the statute, the City of Toledo, or any of its residents, held the right to sue on behalf of Lake Erie.[9] The law also made governments and corporations strictly liable for violating the rights of Lake Erie “from any jurisdiction” and declared invalid any state laws or rules that conflicted with LEBOR.[10]

Drewes Farms Partnership, an agricultural company that grows crops in four counties near Toledo, brought a lawsuit against the City of Toledo the day after the initiative passed, with the state of Ohio joining as an intervenor soon after.[11] Drewes Farms and Ohio sought to have LEBOR declared invalid. The U.S. District Court for the Northern District of Ohio sided with the corporation and state, holding LEBOR to be unconstitutionally vague and exceeding the power of municipal authority in Ohio.[12] While recognizing the “well-intentioned goal” of the drafters, the court held that LEBOR was impermissibly vague in violation of the 14th Amendment.[13] “LEBOR’s authors failed to make hard choices regarding the appropriate balance between environmental protection and economic activity. Instead, they employed language that sounds powerful but has no practical meaning.”[14] This language, according to the court, could “trap the innocent [agricultural companies] by not providing fair warning” and invited arbitrary enforcement by prosecutors, judges and juries.[15]

Additionally, the court held that LEBOR preempted state law and exceeded municipal authority. “LEBOR’s attempt to invalidate Ohio law in the name of environmental protection is a textbook example of what municipal government cannot do. Lake Erie is not a pond in Toledo. It is one of the five Great Lakes and one of the largest lakes on Earth, bordering dozens of cities, four states, and two countries…Consequently, municipal laws enacted to protect Lake Erie are generally void if they conflict with Ohio law.”[16] The court did note that “with careful drafting, Toledo probably could enact valid legislation to reduce water pollution,” citing a Wisconsin ordinance restricting the use of phosphorus-containing fertilizers in Madison city limits.[17]

Other Options Exist to Protect the Great Lakes

The striking down of LEBOR indicates that while a municipality may enact ordinances to limit water pollution, such ordinances will likely have to remain limited in nature to survive a court’s scrutiny. Broader legislation to protect ecosystems like the Great Lakes will likely have to come through a state’s legislature, at the bare minimum. However, there are other options available to help protect the Great Lakes as a whole.

The public trust doctrine is a legally established method for individuals to protect natural resources that otherwise wouldn’t be able to protect themselves. Cited most frequently with bodies of water, the public trust doctrine establishes that the government maintains certain natural and cultural resources that are “owned” by the public.[18] Recently, the Michigan Attorney General’s 2019 lawsuit to shut down an oil pipeline crossing the Straits of Mackinac cited the public trust doctrine, claiming the lease allowing the pipeline to operate violates the state’s obligation to “protect and preserve the waters of the Great Lakes and the lands beneath them for the public.”[19] Additionally, a 2021 resolution passed by the Metropolitan Water Reclamation District of Greater Chicago recognized that the water of the Great Lakes will remain in the public trust.[20] This resolution from the water district of the largest metropolitan area in the Great Lakes region is another example of a step in the right direction for protecting the Great Lakes and equal access to clean water.

Notably, New York state assemblyman Patrick Burke has introduced legislation to create a more expansive Great Lakes Bill of Rights.[21] Burke’s proposal would create a Great Lakes bill of rights that declares the right of the Great Lakes to exist, flourish and naturally evolve, giving the state and affected localities to sue on the Lakes’ behalf.[22] The proposed legislation is remarkably similar to the struck-down Toledo law, and, if it becomes law, is likely to face similar legal challenges. While such a law would easily overcome the municipal overreach issue from Toledo, a proposed Great Lakes bill of rights statute is still likely to face the same vagueness issue that helped bring down LEBOR. However, in the face of continued pollution and disregard for our environment, laws like this represent the next logical step for protecting our lakes, rivers, and forests, and could finally give the Great Lakes the protection they deserve.

Notes

[1] Nicole Pallotta, Federal Judge Strikes Down ‘Lake Erie Bill of Rights,’ Animal Legal Defense Fund (May 4, 2020), https://aldf.org/article/federal-judge-strikes-down-lake-erie-bill-of-rights/#:~:text=The%20bill%20of%20rights%20established,powers%20claimed%20by%20certain%20corporations.

[2] Nina Totenberg, When Did Companies Become People? Excavating the Legal Evolution, NPR (July 28, 2014), https://www.npr.org/2014/07/28/335288388/when-did-companies-become-people-excavating-the-legal-evolution.

[3] Michael Wines, Behind Toledo’s Water Crisis, a Long-Troubled Lake Erie, N.Y. Times (Aug. 4, 2014), https://www.nytimes.com/2014/08/04/us/toledo-faces-second-day-of-water-ban.html.

[4] Id.

[5] Claire Brown, How Ohio’s Chamber of Commerce Killed an Anti-Pollution Bill of Rights, The Intercept (Aug. 29, 2019), https://theintercept.com/2019/08/29/lake-erie-bill-of-rights-ohio/.

[6] Id.

[7] Lake Erie Bill of Rights, Beyond Pesticides (last visited Oct. 7, 2023), https://www.beyondpesticides.org/assets/media/documents/LakeErieBillofRights.pdf.

[8] Id.

[9] Id.

[10] Id.

[11] Drewes Farms P’ship v. City of Toledo, 441 F.Supp.3d 551 (N.D. Ohio 2020).

[12] Id. at 558.

[13] Id. at 557.

[14] Id. at 556.

[15] Id.

[16] Id. at 557.

[17] Id.

[18] Public trust doctrine, Cornell Law School (last visited Oct. 8, 2023), https://www.law.cornell.edu/wex/public_trust_doctrine#:~:text=Public%20trust%20doctrine%20is%20a,waters%2C%20wildlife%2C%20or%20land.

[19] Jim Malewitz, Michigan AG Dana Nessel files lawsuit to shut down Line 5 in Mackinac Straits, Bridge MI (June 27, 2019), https://www.bridgemi.com/michigan-environment-watch/michigan-ag-dana-nessel-files-lawsuit-shut-down-line-5-mackinac-straits.

[20] Allison Fore, MWRD Board of Commissioners passes resolution that affirms water is a basic human right, Metropolitan Water Reclamation District of Greater Chi. (June 3, 2021), https://mwrd.org/sites/default/files/2021-06/Water%20Equity.pdf.

[21] NYS Assemblyman Patrick Burke Introduces Great Lakes Bill of Rights, N.Y. State Assembly (Mar. 2, 2022), https://nyassembly.gov/mem/Patrick-Burke/story/100976#:~:text=The%20Great%20Lakes%20Bill%20of,and%20the%20Great%20Lakes%20ecosystem.%E2%80%9D.

[22] Id.

The Inaccessible Cure: the Struggle With Feline Infectious Peritonitis and Thoughts on the Underlying Law

October 10, 2023
FDA, Food and Drug Law, Intellectual Property, Patents, Pharmaceuticals

Lan Gan, MJLST Staffer

For fellow feline fanatics, you may share some of my traits. I care for my cat’s health as I care for my own. Besides giving her nutritiously balanced meals, I take notes when she’s unwell and schedule annual physicals for her, just like I would for myself. I also browse online discussions posts of cats. Some make me laugh, some give me new understanding of cat behaviors, but the ones about feline infectious peritonitis are always grim.

Feline Infectious Peritonitis, or FIP, is a severe disease that typically develops in young cats when they are infected with feline enteric coronavirus (FeCV) which later mutates into FIPV and causes inflammations.[1] The mutations happen about ten percent of the time, and, until recently, have almost always been deadly.[2]

In 2018, researchers at the School of Veterinary Medicine at UC Davis partnered with Gilead Sciences and published an article about the discovery of GS-441524, which, through their experiments with cats that were infected with FIPV in an in vitro process, “caused a rapid reversal of disease signs and return to normality with as little as two weeks of treatment in 10/10 cats and with no apparent toxicity.”[3] Another paper, published in 2019, also by researchers of the two institutions, revealed that GS-441524 was an effective treatment for cats with naturally occurring FIP.[4]

This gave cat rescuers and cat owners hope. But despite promising experiment results, Niels Pederson, who partook in the studies and was a long-time researcher devoted to FIP, warned that the development was “proof-of-concept,” showing possibility in terms of science but not immediately translating into commercially available products.[5] Subsequently, GS-441524 did not move forward to become an FDA-approved drug to treat cats.[6] Instead, it seemed to be set aside as Gilead prioritized another drug, remdesivir, which is identical to GS-441524 in part of its structural formula and has the same mechanism of inhibiting coronavirus.[7] When Gilead failed to obtain FDA approval to use remdesivir to treat Ebola, they changed course to study its effects on the then-rising Covid-19 pandemic.[8] GS-441524, with its studies on animals halted, was also part of the race and was argued by some scientists to have more efficacy in treating Covid-19 than remdesivir.[9]

The much-needed cure became inaccessible. In as early as 2019, anxious people were turning to the black market for help. GS-441524 that circulated on the black market had murky origins: potential leaks from lab orders for research, personnel that synthesized the compound themselves in overseas locations such as China.[10] The benefits of the drug, while still salient, based on surveys of cat owners who utilized them, were potentially compromised by the disparity in quality of the black market drugs, and lack of veterinary expertise involved.[11]

Pharmaceutical companies are more than incentivized to patent their research products. A search on World Intellectual Property Organization (WIPO)’s database revealed 66 patents applied for by Gilead, from as early as 2009 to as recently as July 2023.[12] The list of patents documented development in Gilead’s GS-441524 research.[13] Gilead patented GS-441524’s treatment for cats in 2018 and 2020[14], but those accounted for only 3 of the 66 patents they obtained; the rest were regarding human use.[15] Patents benefit their owners by giving them a cause of action against future infringement. They are about owning, not sharing. Patents are the culmination of a strenuous journey of scientific research. But this celebratory landmark might not go any further. Many patents do not make their way onto the market; having one is not itself an incentive for doing so.

Next comes the approval process as stipulated in federal law. 21 U.S.C. § 360b governs the approval process of new animal drugs.[16] The statute lays the burden on pharmaceutical companies – referred to as drug sponsors – of contacting the FDA after initial research of the drug, making the decision to pursue approval for the drug, and conducting tests to ensure the effectiveness and safety of the drug.[17] Additionally, the Generic Animal Drug and Patent Term Restoration Act (GADPTRA) of 1988 provides an abbreviated process for generic copies of approved new animal drugs;[18] the Minor Use and Minor Species Animal Health Act (the “Mums Act”) of 2004 paves paths for drugs affecting a small population of major species of animals (defined as horses, dogs, cats, cattle, pigs, turkeys and chickens) and minor species (those that are not major species) that have few drugs available to them.[19] In 2018, the Animal Drug and Animal Generic Drug User Fee Amendments expanded the eligibility for conditional approval of non-MUMS drugs intending to treat a serious or life-threatening disease or condition or address an unmet animal or human health need, for which a demonstration of effectiveness would require a complex or particularly difficult study or studies.[20]

How has GS-441524 escaped the statutory provisions when they have been amended to be more inclusive? There may be various reasons. It may not qualify for conditional approval under 21 U.S.C. § 360ccc(a)(1)(ii) because peer-reviewed articles have already demonstrated the drug’s effectiveness. It may be hard to quantify the FIP-affected cat population to meet the “minor use” threshold set out in the Mums Act because of the difficulty of FIP testing. Current testing cannot differentiate between FeCV and the mutated FIPV, and an FIP diagnosis is often assumed for young cats based on their higher infection rate.[21] Lastly, no matter which approval process GS-441524 is eligible to take, the process wouldn’t start unless Gilead decides to contact the FDA and set forth the drug for approval. Current statutes create paths, but no incentives to do so. The market may provide some monetary incentives, as treatment costs via the black market can be up to $10,000 for 12 weeks[22], but this is singularly held back by the decision to prioritize approval for human treatment, and the presumption that the approval process of an animal drug would negatively impact the approval process of a similar drug for humans.[23]

The black market is not a long-term solution for FIP treatment. Though the U.S. has yet to adjudicate the circulation of unlicensed FIP treatment, in July 2023, a woman in China was sentenced to 15 years in prison and fined with more than $5 million in damages for producing and selling fake, substandard products pursuant to China’s criminal law statutes.[24] Gilead also holds the exclusive patents on feline treatments. Facing unclear prospects for legitimate FIP treatment, subsequent statutory amendments need to create actual incentives to spur innovation in animal drugs, in addition to the creation of paths. The law should also create safeguards to promote transparency and fairness in the application review process in order to reduce bias against animal drugs.

Notes

[1] Feline Infectious Peritonitis, Cornell Feline Health Center, https://www.vet.cornell.edu/departments-centers-and-institutes/cornell-feline-health-center/health-information/feline-health-topics/feline-infectious-peritonitis (last visited Oct. 2, 2023).

[2] Id.

[3] B.G. Murphy et al., The Nucleoside Analog GS-441524 Strongly Inhibits Feline Infectious Peritonitis (FIP) Virus in Tissue Culture and Experimental Cat Infection Studies, 219 Veterinary Microbology 226, 226 (2018).

[4] Niels C Pedersen, Efficacy and Safety of the Nucleoside Analog GS-441524 for Treatment of cats with Naturally Occurring Feline Infectious Peritonitis, 21(4) J. of Feline Med. & Surgery 271, 271 (2019).

[5] Human Antiviral ‘GS-441524’ Shows Great Promise Against Infectious Disease in Cats, Science Daily (Feb. 13, 2019), https://www.sciencedaily.com/releases/2019/02/190213100442.htm.

[6] Sarah Zhang, A Much-Hyped COVID-19 Drug Is Almost Identical to a Black-Market Cat Cure, The Atlantic (May 8, 2020), https://www.theatlantic.com/science/archive/2020/05/remdesivir-cats/611341/.

[7] Id.

[8] Kai Kupferschmidt & Jon Cohen, WHO Launches Global Megatrial of the Four Most Promising Coronavirus Treatments, Science (Mar. 22, 2020), https://www.science.org/content/article/who-launches-global-megatrial-four-most-promising-coronavirus-treatments.

[9] E.g., Victoria C. Yan & Florian L. Muller, Advantages of the Parent Nucleoside GS-441524 over Remdesivir for Covid-19 Treatment, 11 ACS Med. Chemistry Letters 1361, 1361 (2020).

[10] See Sarah Zhang, A Much-Hyped COVID-19 Drug Is Almost Identical to a Black-Market Cat Cure, The Atlantic (May 8, 2020), https://www.theatlantic.com/science/archive/2020/05/remdesivir-cats/611341/; see also Sarah Jones et al., Unlicensed GS-441524-Like Antiviral Therapy Can Be Effective for at-Home Treatment of Feline Infectious Peritonitis, 11 Animals 2257, 2258 (2021).

[11] Sarah Jones et al., Unlicensed GS-441524-Like Antiviral Therapy Can Be Effective for at-Home Treatment of Feline Infectious Peritonitis, 11 Animals 2257, 2264–67 (2021).

[12] CHEM:(BRDWIEOJOWJCLU-LTGWCKQJSA-N), WIPO, https://patentscope.wipo.int/search/en/result.jsf?_vid=P22-LN8EIR-06824 (last visited Oct. 2, 2023).

[13] Id.

[14] See World Patent No. 169,946 (filed Mar. 13, 2018); see also U.S. Patent No. 0,296,584 (filed Mar. 13, 2018); see also U.S. Patent No. 0,376,014 (filed Apr. 17, 2020).

[15] See CHEM:(BRDWIEOJOWJCLU-LTGWCKQJSA-N), WIPO, https://patentscope.wipo.int/search/en/result.jsf?_vid=P22-LN8EIR-06824 (last visited Oct. 2, 2023).

[16] 21 U.S.C. § 360b.

[17] From an Idea to the Marketplace: The Journey of an Animal Drug through the Approval Process, FDA (Aug. 14, 2020), https://www.fda.gov/animal-veterinary/animal-health-literacy/idea-marketplace-journey-animal-drug-through-approval-process.

[18] Generic Animal Drug and Patent Term Restoration Act (GADPTRA), FDA (Apr. 24, 2023), https://www.fda.gov/animal-veterinary/guidance-regulations/generic-animal-drug-and-patent-term-restoration-act-gadptra.

[19] Conditional Approval Explained: A Resource for Veterinarians, FDA (Sept. 17, 2020), https://www.fda.gov/animal-veterinary/resources-you/conditional-approval-explained-resource-veterinarians.

[20] 21 U.S.C. § 360ccc (a)(1)(ii).

[21] Feline Infectious Peritonitis, Cornell Feline Health Center, https://www.vet.cornell.edu/departments-centers-and-institutes/cornell-feline-health-center/health-information/feline-health-topics/feline-infectious-peritonitis (last visited Oct. 2, 2023).

[22] Sarah Jones et al., Unlicensed GS-441524-Like Antiviral Therapy Can Be Effective for at-Home Treatment of Feline Infectious Peritonitis, 11 Animals 2257, 2264–67 (2021).

[23] Id.

[24] Wu Shubin (吴淑斌), Zhishou Maoyao Yishen Huoxing 15 Nian: Maoquan “Jiumingyao” de Yinmi Shengyi (制售猫药一审获刑15年:猫圈“救命药” 的隐秘生意) [Sentenced at Trial for 15 Years for Manufacturing and Selling Medicine for Cats: The Secret Business of Life-Saving Drugs in Cat-loving Communities], Sanlian Shenghuo Zhoukan (三联生活周刊) [Sanlian Lifeweek] (July 20, 2023), https://mp.weixin.qq.com/s/VKJO_AIVBy3Hm6GhWUOnWA.

Who Is Regulating Regulatory Public Comments?

October 1, 2023
Administrative Law, Agencies, New Technology, Regulatory

Madeleine Rossi, MJLST Staffer

In 2015 the Federal Communications Commission (FCC) issued a rule on “Protecting and Promoting the Open Internet.”[1] The basic premise of these rules was that internet service providers had unprecedented control over access to information for much of the public. Those in favor of the new rules argued that broadband providers should be required to enable access to all internet content, without either driving or throttling traffic to particular websites for their own benefit. Opponents of these rules – typically industry players such as the same broadband providers that would be regulated – argued that such rules were burdensome and would prevent technological innovation. The fight over these regulations is colloquially known as the fight over “net neutrality.” 

In 2017 the FCC reversed course and put forth a proposal to repeal the 2015 regulations. Any time that an agency proposes a rule, or proposes to repeal a rule, they must go through the notice-and-comment rulemaking procedure. One of the most important parts of this process is the solicitation of public comments. Many rules get put forth without much attention or fanfare from the public. Some rules may only get hundreds of public comments, often coming from the industry that the rule is aimed at. Few proposed rules get attention from the public at large. However, the fight over net neutrality – both the 2015 rules and the repeal of those rules in 2017 – garnered significant public interest. The original 2015 rule amassed almost four million comments.[2] At the time, this was the most public comments that a proposed rule had ever received.[3] In 2017, the rule’s rescission blew past four million comments to acquire a total of almost twenty-two million comments.[4]

At first glance this may seem like a triumph for the democratic purpose of the notice-and-comment requirement. After all, it should be a good thing that so many American citizens are taking an interest in the rules that will ultimately determine how they can use the internet. Unfortunately, that was not the full story. New York Attorney General Letitia James released a report in May of 2021 detailing her office’s investigation into wide ranging fraud that plagued the notice-and-comment process.[5] Of the twenty-two million comments submitted about the repeal, a little under eight million of them were generated by a single college student.[6] These computer-generated comments were in support of the original regulations, but used fake names and fake comments.[7] Another eight million comments were submitted by lead generation companies that were hired by the broadband companies.[8] These companies stole individuals’ identities and submitted computer-generated comments on their behalf.[9] While these comments used real people’s identities, they fabricated the content in support of repealing the 2015 regulations.[10]

Attorney General James’ investigation showed that real comments, submitted by real people, were “drowned out by masses of fake comments and messages being submitted to the government to sway decision-making.”[11] When the investigation was complete, James’ office concluded that nearly eighteen of the twenty-two million comments received by the FCC in 2017 were faked.[12] The swarm of fake comments created the false perception that the public was generally split on the issue of net neutrality. In fact, anywhere from seventy-five to eighty percent of Americans say that they support net neutrality.[13]

This is not an issue that is isolated to the fight over net neutrality. Other rulemaking proceedings have been targeted as well, namely by the same lead generation firms involved in the 2017 notice-and-comment fraud campaign.[14] Attorney General James’ investigation found that regulatory agencies like the Environmental Protection Agency (EPA), which is responsible for promulgating rules that protect people and the environment from risk, had also been targeted by such campaigns.[15] When agencies like the FCC or EPA propose regulations for the protection of the public, the democratic process of notice-and-comment is completely upended when industry players are able to “drown out” real public voices.

So, what can be done to preserve the democratic nature of the notice-and-comment period? As the technology involved in these schemes advances, this is likely to become not only a reoccurring issue but one that could entirely subvert the regulatory process of rulemaking. One way that injured parties are fighting back is with lawsuits.

In May of 2023, Attorney General James announced that she had come to a second agreement with three of the lead generation firms involved with the 2017 scam to falsify public comments.[16] The three companies agreed to pay $615,000 in fines for their involvement.[17] This agreement came in addition to a previous agreement in which the three stipulated to paying four million dollars in fines and agreed to change future lead generating practices, and the litigation is ongoing.[18]

However, more must be done to ensure that the notice-and-comment process is not entirely subverted. Financial punishment after the fact does not account for the harm to the democratic process that is already done. Currently, the only recourse is to sue these companies for their fraudulent and deceptive practices. However, lawsuits will typically only result in financial losses. Financial penalties are important, but they will always come after the fact. Once litigation is under way, the harm has already been done to the American public.

Agencies need to ensure that they are keeping up with the pace of rapidly evolving technology so that they can properly vet the validity of the comments that they receive. While it is important to keep public commenting a relatively open and easy practice, having some kind of vetting procedure has become essential. Perhaps requiring an accompanying email address or phone number for each comment, and then sending a simple verification code. Email or phone numbers could also be contacted during the vetting process once the public comment period closes. While it would likely be impractical to contact each individual independently, a random sample would at least flag whether or not a coordinated and large-scale fake commenting campaign had taken place. 

Additionally, the legislature should keep an eye on fraudulent practices that impact the notice-and-comment process. Lawmakers can and should strengthen laws to punish companies that are engaged in these practices. For example, in Attorney General James’ report she recommends that lawmakers do at least two things. First, they should explicitly and statutorily prohibit “deceptive and unauthorized comments.”[19] To be effective these laws should establish large civil fines. Second, the legislature should “strengthen impersonation laws.”[20] Current impersonation laws were not designed with mass-impersonation fraud in mind. These statutes should be amended to increase penalties when many individuals are impersonated.

In conclusion, the use of fake comments to sway agency rulemaking is a problem that is only going to worsen with time and the advance of technology. This is a serious problem that should be taken as such by both agencies and the legislature. 

Notes

[1] 80 Fed. Reg. 19737.

[2] https://www.brookings.edu/articles/democratizing-and-technocratizing-the-notice-and-comment-process/.

[3] Id.

[4] Id.

[5] https://ag.ny.gov/press-release/2021/attorney-general-james-issues-report-detailing-millions-fake-comments-revealing.

[6] https://www.brookings.edu/articles/democratizing-and-technocratizing-the-notice-and-comment-process/.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] https://ag.ny.gov/press-release/2021/attorney-general-james-issues-report-detailing-millions-fake-comments-revealing.

[12] Id.

[13] https://thehill.com/policy/technology/435009-4-in-5-americans-say-they-support-net-neutrality-poll/, https://publicconsultation.org/united-states/three-in-four-voters-favor-reinstating-net-neutrality/.

[14] Id.

[15] https://apnews.com/article/settlement-fake-public-comments-net-neutrality-ae1f69a1f5415d9f77a41f07c3f6c358.

[16] Id.

[17] Id.

[18] https://apnews.com/article/government-and-politics-technology-business-9f10b43b6aacbc750dfc010ceaedaca7.

[19] https://ag.ny.gov/sites/default/files/oag-fakecommentsreport.pdf.

[20] Id.

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