Regulatory

How Workers Can Respond to Increased Use of Generative Artificial Intelligence

January 21, 2025
Artificial Intelligence, Employment, Employment Law, Industry, Regulatory

Yessenia Gutierrez, MJLST Staffer

Recent advances in generative Artificial Intelligence (AI) have generated a media buzz and revived worries about the future of work: How many jobs are at risk of being eliminated? Can workers be retrained to work new jobs that did not exist before, or new versions of their now technologically-augmented jobs? What happens to those workers who cannot be retrained? What if not enough jobs are created to compensate for those lost?

It is hard to calculate the pace, extent, and distribution of job displacement due to technological advancements.[1] However, there is general agreement among business leaders that there will be significant job losses due to AI.[2] Professions spanning the education and income spectrum may be impacted, from surgeons to investment bankers to voice actors.[3]

Nevertheless, the jobs predicted to be most impacted are lower-paid jobs such as bank tellers, postal service clerks, cashiers, data entry clerks, and secretaries.[4]

Proponents of rapid AI adoption emphasize its potential for creating “a productivity boost for non-displaced workers” and a resultant “labor productivity boom.”[5] While that will likely be true, what remains uncertain is who will reap the majority of the benefits stemming from this boom — employers or their now more productive workers.

One of the main concerns about increasing use of AI in the workplace is that entire job classifications will be eliminated, leaving large swaths of workers unemployed. There is no consensus over whether technology has created or eliminated more jobs.[6] However, even assuming technological advances have created more jobs than those rendered obsolete, the process of large numbers of workers switching from one type of job to another (perhaps previously nonexistent) job still creates serious challenges.

For one, this process adds stress on an already economically- and emotionally-stressed population.[7] The Center for Disease Control credits “fears about limited employment opportunities, perceptions of job insecurity, and anxiety about the need to acquire new skills” as contributing to “public health crises such as widespread increases in depression, suicide, and alcohol and drug abuse (including opioid-related deaths).”[8] Those workers able to keep their jobs have less bargaining power, as they fear speaking up about possible health, safety, and other concerns for fear of losing their job.[9]

To assist in this transition, some argue that more government intervention is necessary.[10] In fact, several states have enacted legislation regulating the use of AI in employment matters, including protections against discrimination in employment decisions made using AI.[11] Some states are also experimenting with AI training for high school seniors and state employees, sometimes with encouragement from major employers.[12] Federal politicians are also considering legislation, although none has passed.[13]

Some commentators argue that workers themselves have a responsibility to learn skills to remain competitive in the labor market.[14] Still others argue that employers should take up the task of retraining employees, with benefits for employers including ensuring an adequate supply of skilled labor, reducing hiring costs, and increasing employee loyalty, morale, and productivity.[15] One subset of this approach are partnerships between employers and labor unions, such as that between Microsoft Corp. and the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).[16] Announced in December of 2023, the partnership lists its goals as (1) sharing information about AI trends with unions and workers, (2) integrating worker feedback into AI development, and 3) influencing public policy in support of affected workers.

Others point to the need for strong worker organizations that are capable of bargaining about and achieving protections related to AI and other technology in the workplace.

Collective Bargaining

The Economic Policy Institute, a think-tank aligned with labor unions, argues that the “best ‘AI policy’ that [policymakers] can provide is boosting workers’ power by improving social insurance systems, removing barriers to organizing unions, and sustaining lower rates of unemployment.”[17] Union officials agree on the importance of unions protecting their members from technological displacements, and have started pushing for “requirements that companies must notify and negotiate with worker representatives before deploying new automation technologies.”[18]

The above-mentioned partnership between the AFL-CIO and Microsoft includes a “neutrality framework” which “confirms a joint commitment to respect the right of employees to form or join unions, to develop positive and cooperative labor-management relationships, and to negotiate collective bargaining agreements that will support workers in an era of rapid technological change.”[19] Ideally, this means that Microsoft would not attempt to dissuade any employees that try to unionize, including through common “union avoidance” measures.[20] Employer neutrality can provide more favorable conditions for unionizing, which provides a formal mechanism for workers to collectively bargain for technology policies calibrated to their particular industry and tasks.

Unfortunately, achieving these measures, whether through legislation or Collective Bargaining Agreements (CBAs), will likely require applying tremendous pressure on employers.

For example, in 2023, the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) union and the Writers Guild of America (WGA) simultaneously went on strike for the first time in sixty years.[21] One of the main demands for both unions was protections against AI use. Both achieved partial concessions after 118 days and 148 days out on strike, respectively.[22]

SAG-AFTRA and WGA enjoyed considerable leverage that other workers likely will not have. As Politico reported, Hollywood serves as a “key base for wealthy Democratic donors” which is especially important in California, where much of the industry is based.[23] Entertainment workers occupy an important place in many of our daily lives and support an economically important industry.[24] Unlike healthcare workers or state employees, withholding their labor cannot be portrayed as dangerous, a characterization that seeks to undermine public support for some striking workers.[25]

The resolve and strategic action of both unions charts a path for other unions to ensure worker input into the use of technology in the workplace, while revealing how difficult this path will be.

Conclusion

Although the exact effects of increased AI-adoption by employers are still unknown, there are clear reasons to take their potential effects on workers seriously, today. Workers across the income spectrum are already feeling the pressure of job losses, job displacements, the need to retrain for a new job, and the economic and emotional stress these cause. Bolstering retraining programs, whether run by the government, employers, or through joint efforts are a step towards meeting the demands of tomorrow. However, to truly assuage employee fears of displacement, workers must have meaningful input into their working conditions, including the introduction of new technology to their workplace. Unions hold an important role in achieving this goal.

 

 

Notes:

[1] Chia-Chia Chang et al., The Role of Technological Job Displacement in the Future of Work, CDC’s NIOSH Science Blog (Feb. 15, 2022), https://blogs.cdc.gov/niosh-science-blog/2022/02/15/tjd-fow/.

[2] See e.g., Jack Kelly, Goldman Sachs Predicts 300 Million Jobs Will be Lost or Degraded by Artificial Intelligence, Forbes (Mar. 31, 2023), https://www.forbes.com/sites/jackkelly/2023/03/31/goldman-sachs-predicts-300-million-jobs-will-be-lost-or-degraded-by-artificial-intelligence/; G Krishna Kumar, AI-led Job Loss is Real, Govt Must Intervene, Deccan Herald (July 21, 2024), https://www.deccanherald.com/opinion/ai-led-job-loss-is-real-govt-must-intervene-3115077.

[3] Kelly, supra note 2.

[4] Ian Shine & Kate Whiting, These Are the Jobs Most Likely to be Lost – And Created – Because of AI, World Economic Forum (May 4, 2023), https://www.weforum.org/stories/2023/05/jobs-lost-created-ai-gpt/.

[5] Kelly, supra note 2.

[6] See e.g., Peter Dizikes, Does Technology Help or Hurt Employment?, MIT News (Apr. 1, 2024), https://news.mit.edu/2024/does-technology-help-or-hurt-employment-0401.

[7] See e.g., Hillary Hoffower, Financial Stress is Making Us Mentally and Physically Ill. Here’s How to Cope, Fortune (May 10, 2024), https://fortune.com/well/article/financial-stress-mental-health-physical-illness/; Majority of Americans Feeling Financially Stressed and Living Paycheck to Paycheck According to CNBC Your Money Survey, CNBC News Releases (Sept. 7, 2023), https://www.cnbc.com/2023/09/07/majority-of-americans-feeling-financially-stressed-and-living-paycheck-to-paycheck-according-to-cnbc-your-money-survey.html.

[8] Chang et al., supra note 1.

[9] Id.

[10] See e.g., Chris Marr, AI Poses Job Threats While State Lawmakers Move With Caution, Bloomberg Law (Aug. 13, 2024), https://news.bloomberglaw.com/daily-labor-report/ai-poses-job-threats-while-state-lawmakers-move-with-caution.

[11] Sanam Hooshidary et al., Artificial Intelligence in the Workplace: The Federal and State Legislative Landscape, National Conference of State Legislatures (updated Oct. 23, 2024), https://www.ncsl.org/state-federal/artificial-intelligence-in-the-workplace-the-federal-and-state-legislative-landscape.

[12] Kaela Roeder, High School Seniors in Maryland Are Getting Daily AI Training, Technical.ly (Nov. 8, 2024), https://technical.ly/workforce-development/high-school-ai-training-howard-county-maryland/; Maryland to Offer Free AI Training to State Employees, Government Technology (Sept. 25, 2024), https://www.govtech.com/artificial-intelligence/maryland-to-offer-free-ai-training-to-state-employees; Marr, supra note 10 (“A coalition of major tech companies is urging state lawmakers to focus their efforts on retraining workers for newly emerging jobs in the industry.”).

[13] Marr, supra note 10.

[14] Rachel Curry, Recent Data Shows AI Job Losses Are Rising, But the Numbers Don’t Tell the Full Story, CNBC (Dec. 16, 2023), https://www.cnbc.com/2023/12/16/ai-job-losses-are-rising-but-the-numbers-dont-tell-the-full-story.html.

[15] See John Hall, Why Upskilling and Reskilling Are Essential in 2023, Forbes (Feb. 24, 2023), https://www.forbes.com/sites/johnhall/2023/02/24/why-upskilling-and-reskilling-are-essential-in-2023/; The 2020s Will be a Decade of Upskilling. Employers Should Take Notice, World Economic Forum (Jan. 10, 2024), https://www.weforum.org/stories/2024/01/the-2020s-will-be-a-decade-of-upskilling-employers-should-take-notice/.

[16] Press Release, AFL-CIO and Microsoft Announce New Tech-Labor Partnership on AI and the Future of the Workforce, AFL-CIO (Dec. 11, 2023), https://aflcio.org/press/releases/afl-cio-and-microsoft-announce-new-tech-labor-partnership-ai-and-future-workforce.

[17] Josh Bivens & Ben Zipperer, Unbalanced Labor Market Power is What Makes Technologu–Including AI–Threatening to Workers, Economic Policy Institute (Mar. 28, 2024), https://www.epi.org/publication/ai-unbalanced-labor-markets/.

[18] Marr, supra note 10.

[19] Press Release, supra note 16.

[20] See e.g., Roy E. Bahat & Thomas A. Kochan, How Businesses Should (and Shouldn’t) Respond to Union Organizing, Harvard Business Review (Jan. 6, 2023), https://hbr.org/2023/01/how-businesses-should-and-shouldnt-respond-to-union-organizing; Ben Bodzy, Best Practices for Union Avoidance, Baker Donelson (last visited Nov. 18, 2024), https://www.bakerdonelson.com/files/Uploads/Documents/Breakfast_Briefing_11-17-11_Union_Avoidance.pdf; Carta H. Robison, Steps for Employers to Preserve a Union Free Workplace, Barett McNagny (last visited Nov. 18, 2024), https://www.barrettlaw.com/blog/labor-and-employment-law/union-avoidance-steps-for-employers.

[21] Chelsey Sanchez, Everything to Know About the SAG Strike That Shut Down Hollywood, Harpers Bazaar (Nov. 9, 2023), https://www.harpersbazaar.com/culture/politics/a44506329/sag-aftra-actors-strike-hollywood-explained/#what-is-sag-aftra.

[22] Jake Coyle, In Hollywood Writers’ Battle Against AI, Humans Win (For Now), AP News (Sept. 27, 2023), https://apnews.com/article/hollywood-ai-strike-wga-artificial-intelligence-39ab72582c3a15f77510c9c30a45ffc8; Bryan Alexander, SAG-AFTRA President Fran Drescher: AI Protection Was A ‘Deal Breaker’ In Actors Strike, USA Today (Nov. 10, 2023), https://www.usatoday.com/story/entertainment/tv/2023/11/10/sag-aftra-deal-ai-safeguards/71535785007/.

[23] Lara Korte & Jeremy B. White, Newsom Signs Laws to Protect Hollywood from Fake AI Actors, Politico (Sept. 17, 2024), https://www.politico.com/news/2024/09/17/newsom-signs-law-hollywood-ai-actors-00179553; Party Control of California State Government, Ballotpedia, https://ballotpedia.org/Party_control_of_California_state_government (last visited Nov. 18, 2024).

[24] Advocacy: Driving Local Economies, Motion Picture Ass’n, https://www.motionpictures.org/advocacy/driving-local-economies/ (last visited Jan. 17, 2025).

[25] See, e.g., Ryan Essex & Sharon Marie Weldon, The Justification For Strike Action In Healthcare: A Systematic Critical Interpretive Synthesis, 29:5 Nursing Ethics 1152 (2022) https://doi.org/10.1177/09697330211022411; Nina Chamlou, How Nursing Strikes Impact Patient Care, NurseJournal (Oct. 10, 2023), https://nursejournal.org/articles/how-nursing-strikes-impact-patient-care/.

DNR Regulations Could Help Ensure Availability of Walleye for Future Minnesotans

December 2, 2024
Environment, Environmental Justice, Public Lands, Regulatory

Elizabeth Thilges, MJLST Staffer

 

The Minnesota Department of Natural Resources (“DNR”) recently announced that it plans to amend its fishing regulations to lower the number of walleye that can be taken and possessed per day from six to four walleye.[1] If the DNR does promulgate a rule lowering the daily taking and possession limits, it would be a step in the right direction towards ensuring that walleye are available for future generations of Minnesotans.

Lower Taking and Possession Limits Are Necessary Due to the Spread of Zebra Mussels.

Walleye are a North American species of freshwater fish sought after by both commercial and recreational fishers.[2] However, angling activity and the presence of invasive zebra mussels are both linked to decreases in walleye populations.[3] Zebra mussels cause increased water clarity because they are filter feeders.[4] Walleye retinal structures are adapted to lower light conditions, so an increase in water clarity decreases the availability of their preferred habitat.[5] A study of Mille Lacs, a popular lake for walleye fishing in Minnesota, found the introduction of zebra mussels, along with other sources of increased water clarity, to be connected to a decline in the walleye population.[6] While the DNR has made efforts to control zebra mussels, they have unfortunately continued to spread and harm ecosystems across Minnesota.[7] As complete eradication of zebra mussels is not yet achievable, the DNR’s plan to lower the daily bag limit would mitigate at least one strain on walleye populations.

The DNR Should Also Clarify Size Limits for Walleye in its Regulations.

The Minnesota Constitution provides that “fishing and the taking of … fish [is] a valued part of our heritage that shall be forever preserved for the people and shall be managed by law and regulation for the public good.”[8] This provision has been interpreted by Minnesota courts as “recogniz[ing] the ‘need for effective regulation to protect the viability of our state’s fish and game resources.’”[9] The Minnesota Game and Fish Laws puts this provision of the Minnesota Constitution into effect by providing a general requirement that “[u]nless otherwise provided in this chapter, the commissioner [of natural resources] shall, by rule, prescribe the limits on the number of each species of fish that may be taken in one day and the number that may be possessed.”[10] In addition, Section 97C.401(2) provides a specific limit on the possession of walleye, requiring that “[a] person may have no more than one walleye larger than 20 inches in possession.”[11]

DNR fishing regulations set the “[d]aily and [p]ossession [l]imits” for walleye at “6 in aggregate” for inland waters, unless the waters  “are subject to experimental or special regulations or are closed for taking and possessing fish.”[12] Section 97C.401(2) leaves the DNR with the discretion to set these limits on the daily taking and possession of walleye, as it can be interpreted as not specifying a limit on possession of walleye smaller than 20 inches.[13] While Section 97C.401(2) could alternatively be read as only allowing possession of one walleye larger than 20 inches, and no walleye smaller than 20 inches, Minnesota courts would likely defer to the DNR’s interpretation if the statute is ambiguous and the DNR’s interpretation is reasonable.[14] Additionally, possessing and taking fish have different definitions. The Game and Fish Laws define “possession” as “both actual and constructive possession and control of the things referred to,” while “taking” is defined as “pursuing, shooting, killing, capturing, trapping, snaring, angling, spearing, or netting wild animals, or placing, setting, drawing, or using a net, trap, or other device to take wild animals.”[15] A person could take six walleye in a day but only possess one if that person releases the fish before taking another. However, while DNR regulations set size limits for other fish species, they do not set one for walleye.[16] If the DNR amends its regulations to lower the daily limit to four walleye, it also has the opportunity to amend its regulations to clarify that only one walleye in possession can be larger than 20 inches, as required by Section 97C.401(2). This amendment is necessitated both by existing statute and by the spread of zebra mussels in Minnesota waters.

 

Notes

[1] Tony Kennedy, DNR Says Minnesota’s Longtime 6-Walleye Limit is Headed for Extinction, Minn. Star Trib. (Nov. 7, 2024), https://www.startribune.com/dnr-says-minnesotas-sacred-6-walleye-limit-is-headed-for-extinction/601177553.

[2] Lee F. G. Gutowsky et al., Quantifying Multiple Pressure Interactions Affecting Populations of a Recreationally and Commercially Important Freshwater Fish, 25 Glob. Change Biology 1049, 1050 (2019).

[3] Id. at 1055-56.

[4] Gutowsky et al. at 1057; Gretchen J. A. Hansen et al., Water Clarity and Temperature Effects on Walleye Safe Harvest: An Empirical Test of the Safe Operating Space Concept, Ecosphere, March 2019, at 1, 9.

[5] Gutowsky et al. at 1057; Hansen et al. at 2.

[6] Hansen et al. at 9.

[7] See Experimental Control of Zebra Mussels in Minnesota, Minn. Dep’t of Nat. Res. (last visited Nov. 23, 2024), https://www.dnr.state.mn.us/invasives/aquaticanimals/zebramussel/zebra-mussel-pilot-project.html; Michael A. McCartney & Sophie Mallez, The Role of Waterway Connections and Downstream Drift of Veliger Larvae in the Expanding Invasion of Inland Lakes by Zebra Mussels in Minnesota, USA, 13 Aquatic Invasions 393, 394 (2018).

[8] Minn. Const., Art. XIII, § 12.

[9] Save Mille Lacs Sportsfishing, Inc. v. Minn. Dep’t of Nat. Res., 859 N.W.2d 845, 849 (Minn. Ct. App. 2015) (quoting State v. Colosimo, 669 N.W.2d 1, 6 (Minn. 2003)).

[10] Minn. Stat. § 97C.401(1).

[11] “This subdivision does not apply to boundary waters.” Minn. Stat. §  97C.401(2).

[12] Minn. R. § 6262.0200(1)(F) (2024).

[13] Minn. Stat. §  97C.401(2).

[14] In re Reichmann Land & Cattle, LLP, 867 N.W.2d 502, 506 (Minn. 2015).

[15] Minn. Stat. § 97A.015(36), (47).

[16] See Minn. R. § 6262.0200 (2024).

The Power of Preference or Monopoly? Unpacking Google’s Search Engine Domination

November 26, 2024
Corporate Ethics, Data, Industry, Internet, Regulatory, Trade, Trusts and Estates

Donovan Ennevor, MJLST Staffer

When searching for an answer to a query online, would you ever use a different search engine than Google? The answer for most people is almost certainly no. Google’s search engine has achieved such market domination that “to Google” has become a verb in the English language.[1] Google controls 90% of the U.S. search engine market, with its closest competitors Yahoo and Bing holding around 3% each.[2] Is this simply because Google offers a superior product or is there some other more nefarious reason?

According to the Department of Justice (“DOJ”), the answer is the latter: Google has dominated its competitors by engaging in illegal practices and creating a monopoly. Federal Judge Amit Mehta agreed with the DOJ’s position and ruled in August 2024 that Google’s market domination was a monopoly achieved through improper means.[3] The remedies for Google’s breach of antitrust law are yet to be determined; however, their consequences could have far reaching implications for the future of Google and Big Tech.

United States v. Google LLC

In October 2020, the DOJ and 11 states filed a civil suit against Google in the U.S. District Court for the District of Columbia, alleging violations of U.S. antitrust laws.[4] A coalition of 35 states, Guam, Puerto Rico, and Washington D.C. filed a similar lawsuit in December 2020.[5] In 2021, the cases were consolidated into a single proceeding to address the overlapping claims.[6] An antitrust case of this magnitude had not been brought in nearly two decades.[7]

The petitioners’ complaint argued that Google’s dominance did not solely arise through superior technology, but rather, through exclusionary agreements designed to stifle competition in online search engine and search advertising markets.[8] The complaint alleged that Google maintained its monopolies by engaging in practices such as entering into exclusivity agreements that prohibited the preinstallation of competitors’ search engines, forcing preinstallation of Google’s search engine in prime mobile device locations, and making it undeletable regardless of consumer preference.[9] For example, Google’s agreement with Apple required that all Apple products and tools have Google as the preinstalled default—essentially an exclusive—search engine.[10] Google also allegedly used its monopoly profits to fund the payments to secure preferential treatment on devices, web browsers, and other search access points, creating a self-reinforcing cycle of monopolization.[11]

According to the petitioners, these practices not only limited competitor opportunities, but also harmed consumers by reducing search engine options and diminishing quality, particularly in areas like privacy and data use.[12] Furthermore, Google’s dominance in search advertising has allowed it to charge higher prices, impacting advertisers and lowering service quality—outcomes unlikely in a more competitive market.[13]

Google rebutted the petitioners’ argument, asserting instead that its search product is preferred due to its superiority and is freely chosen by its consumers.[14] Google also noted that if users wish to switch to a different search engine, they can do so easily.[15]

However, Judge Mehta agreed with the arguments posed by the petitioners and held Google’s market dominance in search and search advertising constituted a monopoly, achieved through exclusionary practices violating U.S. antitrust laws.[16] The case will now move to the remedy determination phase, where the DOJ and Google will argue what remedies are appropriate to impose on Google during a hearing in April 2025.[17]

The Proposed Remedies and Implications

In November, the petitioners filed their final proposed remedies—both behavioral and structural—for Google with the court.[18] Behavioral remedies govern a company’s conduct whereas structural remedies generally refer to reorganization and or divestment.[19]  The proposed behavioral remedies include barring Google from entering exclusive preinstallation agreements and requiring Google to license certain indexes, data, and models that drive its search engine.[20] These remedies would help create more opportunities for competing search engines to gain visibility and improve their search capabilities and ad services. The petitioner’s filing mentioned they would also pursue structural remedies including forcing Google to breakup or divest from its Chrome browser and Android mobile operating system.[21] To ensure Google adheres to these changes, the petitioners proposed appointing a court-monitored technical committee to oversee Google’s compliance.[22]

It could be many years before any of the proposed remedies are actually instituted, given that Google has indicated it will appeal Judge Mehta’s ruling.[23] Additionally, given precedent it is unlikely that any structural remedies will be imposed or enforced.[24] However, any remedies ultimately approved would set a precedent for regulatory control over Big Tech, signaling that the U.S. government is willing to take strong steps to curb monopolistic practices. This could encourage further action against other tech giants and redefine regulatory expectations across the industry, particularly around data transparency and competition in digital advertising.

 

Notes

[1] See Virginia Heffernan, Just Google It: A Short History of a Newfound Verb, Wired (Nov. 15, 2017, 7:00 AM), https://www.wired.com/story/just-google-it-a-short-history-of-a-newfound-verb/.

[2] Justice Department Calls for Sanctions Against Google in Landmark Antitrust Case, Nat’l Pub. Radio, (Oct. 9, 2024, 12:38 AM), https://www.npr.org/2024/10/09/nx-s1-5146006/justice-department-sanctions-google-search-engine-lawsuit [hereinafter Calls for Sanctions Against Google].

[3] United States v. Google LLC, 2024 WL 3647498, 1, 134 (2024).

[4] Justice Department Sues Monopolist Google For Violating Antitrust Laws, U.S. Dep’t of Just. (Oct. 20, 2020), https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws [hereinafter Justice Department Calls for Sanctions].

[5] Dara Kerr, United States Takes on Google in Biggest Tech Monopoly Trial of 21st Century, Nat’l Pub. Radio, (Sept. 12, 2023, 5:00 AM), https://www.npr.org/2023/09/12/1198558372/doj-google-monopoly-antitrust-trial-search-engine.

[6] Tracker Detail US v. Google LLC / State of Colorado v. Google LLC, TechPolicy.Press, https://www.techpolicy.press/tracker/us-v-google-llc/ (last visited Nov. 20, 2024).

[7] Calls for Sanctions Against Google, supra note 2 (“The last antitrust case of this magnitude to make it to trial was in 1998, when the Justice Department sued Microsoft.”).

[8] Justice Department Calls for Sanctions, supra note 4.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Kerrr, supra note 5.

[15] Id.

[16] United States v. Google LLC, 2024 WL 3647498, 1, 4 (2024).

[17] Calls for Sanctions Against Google, supra note 2.

[18] Steve Brachmann, DOJ, State AGs File Proposed Remedial Framework in Google Search Antitrust Case, (Oct. 13, 2024, 12:15 PM), https://ipwatchdog.com/2024/10/13/doj-state-ags-file-proposed-remedial-framework-google-search-antitrust-case/id=182031/.

[19] Dan Robinson, Uncle Sam may force Google to sell Chrome browser, or Android OS, The Reg. (Oct. 9, 2024, 12:56 pm), https://www.theregister.com/2024/10/09/usa_vs_google_proposed_remedies/.

[20] Brachmann, supra note 18.

[21] Exec. Summary of Plaintiff’s Proposed Final Judgement at 3–4, United States v. Google LLC No. 1:20-cv-03010-APM (D.D.C. Nov. 20, 2024). Id at 4.

[22] Id.

[23] See Jane Wolfe & Miles Kruppa, Google Loses Antitrust Case Over Search-Engine Dominance, Wall Street J. (Aug. 5, 2024, 5:02 pm), https://www.wsj.com/tech/google-loses-federal-antitrust-case-27810c43?mod=article_inline.

[24] See Makenzie Holland, Google Breakup Unlikely in Event of Guilty Verdict, Tech Target (Oct. 11, 2023), https://www.techtarget.com/searchcio/news/366555177/Google-breakup-unlikely-in-event-of-guilty-verdict. See also Michael Brick, U.S. Appeals Court Overturns Microsoft Antitrust Ruling, N.Y. Times (Jun 28, 2001), https://www.nytimes.com/2001/06/28/business/us-appeals-court-overturns-microsoft-antitrust-ruling.html. (summarizing the U.S. Court of Appeals decision overturning of the structural remedies imposed on Microsoft in an antitrust case).

 

 

Privacy at Risk: Analyzing DHS AI Surveillance Investments

November 22, 2024
Administrative Law, Agencies, Artificial Intelligence, Constitutional Law, Forensic Evidence, Law Enforcement, Public Safety, Regulatory

Noah Miller, MJLST Staffer

The concept of widespread surveillance of public areas monitored by artificial intelligence (“AI”) may sound like it comes right out of a dystopian novel, but key investments by the Department of Homeland Security (“DHS”) could make this a reality. Under the Biden Administration, the U.S. has acted quickly and strategically to adopt artificial intelligence as a tool to realize national security objectives.[1] In furtherance of President Biden’s executive goals concerning AI, the Department of Homeland Security has been making investments in surveillance systems that utilize AI algorithms.

Despite the substantial interest in protecting national security, Patrick Toomey, deputy director of the ACLU National Security Project, has criticized the Biden administration for allowing national security agencies to “police themselves as they increasingly subject people in the United States to powerful new technologies.”[2] Notably, these investments have not been tailored towards high-security locations—like airports. Instead, these investments include surveillance in “soft targets”—high-traffic areas with limited security: “Examples include shopping areas, transit facilities, and open-air tourist attractions.”[3] Currently, due to the number of people required to review footage, surveilling most public areas is infeasible; however, emerging AI algorithms would allow for this work to be done automatically. While enhancing security protections in soft targets is a noble and possibly desirable initiative, the potential privacy ramifications of widespread autonomous AI surveillance are extreme. Current Fourth Amendment jurisprudence offers little resistance to this form of surveillance, and the DHS has both been developing this surveillance technology themselves and outsourcing these projects to private corporations.

To foster innovation to combat threats to soft targets, the DHS has created a center called Soft Target Engineering to Neutralize the Threat Reality (“SENTRY”).[4] Of the research areas at SENTRY, one area includes developing “real-time management of threat detection and mitigation.”[5] One project, in this research area, seeks to create AI algorithms that can detect threats in public and crowded areas.[6] Once the algorithm has detected a threat, the particular incident would be sent to a human for confirmation.[7] This would be a substantially more efficient form of surveillance than is currently widely available.

Along with the research conducted through SENTRY, DHS has been making investments in private companies to develop AI surveillance technologies through the Silicon Valley Innovation Program (“SVIP”).[8] Through the SVIP, the DHS has awarded three companies with funding to develop AI surveillance technologies that can detect “anomalous events via video feeds” to improve security in soft targets: Flux Tensor, Lauretta AI, and Analytical AI.[9] First, Flux Tensor currently has demo pilot-ready prototype video feeds that apply “flexible object detection algorithms” to track and pinpoint movements of interest.[10] The technology is used to distinguish human movements and actions from the environment—i.e. weather, glare, and camera movements.[11] Second, Lauretta AI is adjusting their established activity recognition AI to utilize “multiple data points per subject to minimize false alerts.”[12] The technology generates automated reports periodically of detected incidents that are categorized by their relative severity.[13] Third, Analytical AI is in the proof of concept demo phase with AI algorithms that can autonomously track objects in relation to people within a perimeter.[14] The company has already created algorithms that can screen for prohibited items and “on-person threats” (i.e. weapons).[15] All of these technologies are currently in early stages, so the DHS is unlikely to utilize these technologies in the imminent future.

Assuming these AI algorithms are effective and come to fruition, current Fourth Amendment protections seem insufficient to protect against rampant usage of AI surveillance in public areas. In Kyllo v. United States, the Court placed an important limit on law enforcement use of new technologies. The Court held that when new sense-enhancing technology, not in general public use, was utilized to obtain information from a constitutionally protected area, the use of the new technology constitutes a search.[16] Unlike in Kyllo, where the police used thermal imaging to obtain temperature levels on various areas of a house, people subject to AI surveillance in public areas would not be in constitutionally protected areas.[17] Being that people subject to this surveillance would be in public places, they would not have a reasonable expectation of privacy in their movements; therefore, this form of surveillance likely would not constitute a search under prominent Fourth Amendment search analysis.[18]

While the scope and accuracy of this new technology are still to be determined, policymakers and agencies need to implement proper safeguards and proceed cautiously. In the best scenario, this technology can keep citizens safe while mitigating the impact on the public’s privacy interests. In the worst scenario, this technology could effectively turn our public spaces into security checkpoints. Regardless of how relevant actors proceed, this new technology would likely result in at least some decline in the public’s privacy interests. Policymakers should not make a Faustian bargain for the sake of maintaining social order.

 

Notes

[1] See generally Joseph R. Biden Jr., Memorandum on Advancing the United States’ Leadership in Artificial Intelligence; Harnessing Artificial Intelligence to Fulfill National Security Objectives; and Fostering the Safety, Security, and Trustworthiness of Artificial Intelligence, The White House (Oct. 24, 2024), https://www.whitehouse.gov/briefing-room/presidential-actions/2024/10/24/memorandum-on-advancing-the-united-states-leadership-in-artificial-intelligence-harnessing-artificial-intelligence-to-fulfill-national-security-objectives-and-fostering-the-safety-security/ (explaining how the executive branch intends to utilize artificial intelligence in relation to national security).

[2] ACLU Warns that Biden-Harris Administration Rules on AI in National Security Lack Key Protections, ACLU (Oct. 24, 2024, 12:00 PM), https://www.aclu.org/press-releases/aclu-warns-that-biden-harris-administration-rules-on-ai-in-national-security-lack-key-protections.

[3] Jay Stanley, DHS Focus on “Soft Targets” Risks Out-of-Control Surveillance, ALCU (Oct. 24, 2024), https://www.aclu.org/news/privacy-technology/dhs-focus-on-soft-targets-risks-out-of-control-surveillance.

[4] See Overview, SENTRY, https://sentry.northeastern.edu/overview/#VSF.

[5] Real-Time Management of Threat Detection and Mitigation, SENTRY, https://sentry.northeastern.edu/research/ real-time-threat-detection-and-mitigation/.

[6] See An Artificial Intelligence-Driven Threat Detection and Real-Time Visualization System in Crowded Places, SENTRY, https://sentry.northeastern.edu/research-project/an-artificial-intelligence-driven-threat-detection-and-real-time-visualization-system-in-crowded-places/.

[7] See Id.

[8] See, e.g., SVIP Portfolio and Performers, DHS, https://www.dhs.gov/science-and-technology/svip-portfolio.

[9] Id.

[10] See Securing Soft Targets, DHS, https://www.dhs.gov/science-and-technology/securing-soft-targets.

[11] See pFlux Technology, Flux Tensor, https://fluxtensor.com/technology/.

[12] See Securing Soft Targets, supra note 10.

[13] See Security, Lauretta AI, https://lauretta.io/technologies/security/.

[14] See Securing Soft Targets, supra note 10.

[15] See Technology, Analytical AI, https://www.analyticalai.com/technology.

[16] Kyllo v. United States, 533 U.S. 27, 33 (2001).

[17] Cf. Id.

[18] See generally, Katz v. United States, 389 U.S. 347, 361 (1967) (Harlan, J., concurring) (explaining the test for whether someone may rely on an expectation of privacy).

 

 

The Introduction of “Buy Now, Pay Later” Products

November 20, 2024
Administrative Law, Agencies, Business Law, Financial Law, Regulatory

Yanan Tang, MJLST Staffer

As of June 2024, it is estimated that more than half of Americans turn to Buy Now, Pay Later (“BNPL”) options to purchase products during financially stressful times. [1] BNPL allows customers to split up the payment of their purchases into four equal payments, requiring a down payment of 25 percent, with the remaining cost covered by three periodic payment installments. [2]

 

Consumer Financial Protection Bureau’s Interpretive Rules

In response to the popularity of BNPL products, the Consumer Financial Protection Bureau (“CFPB”) took action to regulate BNPL products.[3] In issuing its interpretive rules for BNPL, the CFPB aims to outline how these products fit within existing credit regulations. The CFPB’s interpretive rules for BNPL products were introduced in May 2024, following a 60-day review period with mixed feedback. The rules became effective in July, aiming to apply credit card-like consumer protections to BNPL services under the Truth in Lending Act (“TILA”).

Specifically, the interpretive rules assert that these BNPL providers meet the criteria for being “card issuers” and “creditors”, and therefore should be subject to relevant regulations of TILA, which govern credit card disputes and refund rights.[4] Under CFPB’s interpretive rules, BNPL firms are required to investigate disputes, refund returned products or voided services, and provide billing statements.[5]

This blog will first explain the distinction between interpretive rules and notice-and-comment rulemaking to contextualize the CFPB’s regulatory approach. It will then explore the key consumer protections these rules aim to enforce and examine the mixed responses from various stakeholders. Finally, it will analyze the Financial Technology Association’s lawsuit challenging the CFPB’s rules and consider the broader implications for BNPL regulation.

 

Interpretive Rules and Notice-and-Comment Rulemaking Explained

In general, interpretive rules are non-binding and do not require public input, while notice-and-comment rules are binding with the force of law and must follow a formal process, including public feedback, as outlined in the Administrative Procedural Act (“APA”) §553.[6] The “legal effect test” from American Mining Congress v. MSHA helps determine whether a rule is interpretive or legislative by examining factors like legislative authority, the need for a legal basis for enforcement, and whether the rule amends an existing law.[7] While some courts vary in factors to distinguish legislative and interpretive rules, they generally agree that agencies cannot hide real regulations in interpretive rules.

 

Comments Received from Consumer Groups, Traditional Banks, and BNPL Providers

After soliciting comments, CFPB received conflicting feedback on the proposed interpretive rules.[8] However, they also urged the agency to take further action to protect consumers who use BNPL credit.[9] In addition, traditional banks largely supported the rule, because BNPL’s digital user accounts are similar to those of credit cards and should be regulated similarly.[10] In contrast, major BNPL providers protested against CFPB’s rule.[11] Many BNPL providers, like PayPal, raised concerns about administrative procedures and urged CFPB to proceed through notice-and-comment rulemaking.[12] In sum, the conflicting comments highlight the challenge of applying traditional credit regulations to innovative financial products, leading to broader disputes about the rule’s implementation.

 

Financial Technology Association’s Lawsuit against CFPB’s New Rules

After the interpretive rules went into effect in July, FTA filed a lawsuit against the agency to stop the interpretive rule.[13] In their complaint, FTA contends that CFPB bypassed APA’s notice-and-comment rulemaking process, despite the significant change imposed by the rule.[14] FTA argues that the agency exceeded statutory authority under the Truth in Lending Act (TILA) as the act’s definition of “credit card” does not apply to BNPL products.[15] FTA also argues that the rule is arbitrary and capricious because it fails to account for the unique structure of BNPL products and their compliance challenges with Regulation Z.[16]

The ongoing case between FTA and CFPB will likely focus on whether CFPB’s rule is a permissible interpretation of existing law or a substantive rule requiring formal rulemaking under APA § 553. This decision should weigh the nature of BNPL products in relation to consumer protections traditionally associated with credit card-like products. In defending the agency’s interpretive rules against FTA, CFPB could consider highlighting the legislative intent of TILA’s flexibility and rationale for using an interpretive rule.

 

Notes

[1] See Block, Inc., More than Half of Americans Turn to Buy Now, Pay Later During Financially Stressful Times (June 26, 2024), https://investors.block.xyz/investor-news/default.aspx.

[2] Id.

[3] See Paige Smith & Paulina Cachero, Buy Now, Pay Later Needs Credit Card-Like Oversight, CFPB Says, Bloomberg Law (May 22, 2024), https://news.bloomberglaw.com/banking-law/buy-now-pay-later-soon-will-be-treated-more-like-credit-cards.

[4] Id.

[5] Id.

[6] 5 U.S.C.A. § 553.

[7] Am. Mining Cong. v. Mine Safety & Health Admin., 302 U.S. App. D.C. 38, 995 F.2d 1106 (1993).

[8] See Evan Weinberger, CFPB’s ‘Buy Now, Pay Later’ Rule Sparks Conflicting Reactions, Bloomberg Law (Aug. 1, 2024), https://news.bloomberglaw.com/banking-law/cfpbs-buy-now-pay-later-rule-sparks-conflicting-reactions.

[9] See New York City Dep’t of Consumer & Worker Prot., Comment Letter on Truth in Lending (Regulation Z); Use of Digital User Accounts To Access Buy Now, Pay Later Loans, Docket No. CFPB-2024-0017 (Aug. 31, 2024), https://www.regulations.gov/comment/CFPB-2024-0017-0027; see also Nat’l Consumer L. Ctr., Comment Letter on Truth in Lending (Regulation Z); Use of Digital User Accounts To Access Buy Now, Pay Later Loans, Docket No. CFPB-2024-0017, at 1 (Aug. 1, 2024), https://www.regulations.gov/comment/CFPB-2024-0017-0028.

[10] See Independent Community Bankers of Am., Comment Letter on Truth in Lending (Regulation Z); Use of Digital User Accounts To Access Buy Now, Pay Later Loans, Docket No. CFPB-2024-0017 (July 31, 2024), https://www.regulations.gov/comment/CFPB-2024-0017-0023.

[11] See Financial Technology Ass’n, Comment Letter on Truth in Lending (Regulation Z); Use of Digital User Accounts To Access Buy Now, Pay Later Loans, Docket No. CFPB-2024-0017 (July 19, 2024). https://www.regulations.gov/comment/CFPB-2024-0017-0038.

[12] See PayPal, Inc., Comment Letter on Truth in Lending (Regulation Z); Use of Digital User Accounts To Access Buy Now, Pay Later Loans, Docket No. CFPB-2024-0017 (July 31, 2024). https://www.regulations.gov/comment/CFPB-2024-0017-0025.

[13] See Evan Weinberger, CFPB Buy Now, Pay Later Rule Hit With Fintech Group Lawsuit, Bloomberg Law (Oct. 18, 2024), https://news.bloomberglaw.com/banking-law/cfpbs-buy-now-pay-later-rule-hit-with-fintech-group-lawsuit.

[14] Complaint, Fin. Tech. Ass’n v. Consumer Fin. Prot. Bureau, No. 1:24-cv-02966 (D.D.C. Oct. 18, 2024).

[15] Id.

[16] Id.

What Happens to Your Genetic Data in a Sale or Acquisition?

November 4, 2024
Data, Data Privacy, New Technology, Privacy, Regulatory

Colin Loyd, MJLST Staffer

Remember 23andMe—the genetic testing company that once skyrocketed in publicity in the 2010s due to its relatively inexpensive access to genetic testing? It’s now heading toward disaster. This September, its board of directors saw all but one member tender their resignation.[1] At the close of that day’s trading, 23andMe’s share price was $0.35, representing a 99.9% decline in valuation from its peak in 2021.[2] This decline in valuation suggests the company may declare bankruptcy, which often leads to a sale of a company’s assets. Bankruptcy or the sale of assets present a host of complex privacy and regulatory issues, particularly concerning the sale of 23andMe’s most valuable asset—its vast collection of consumer DNA data.[3] This uncertain situation underscores serious concerns surrounding the state of comprehensive privacy protections for genetic information that leave consumers’ sensitive genetic data vulnerable to misuse and exploitation.

23andMe collects and stores massive amounts of user genetic information. However, unlike healthcare providers, 23andMe does not have to comply with the stringent privacy regulations set out in the Health Insurance Portability and Accountability Act (HIPAA).[4] While HIPAA is designed to protect sensitive health data, its protections apply only to a small subset of healthcare related entities.[5] HIPAA only regulates the use of genetic information by “group health plan[s], health insurance issuer[s] that issue[] health insurance coverage, or issuer[s] of a medicare supplemental policy.”[6] 23andMe does not fit into any of these categories and therefore operates outside the scope of HIPAA protections with respect to genetic information, leaving any genetic information it holds largely unregulated.

The Genetic Information Nondiscrimination Act (GINA), enacted in 2008, offers consumer protections by prohibiting discrimination based on an individual’s genetic information with respect to health insurance premium amounts or eligibility requirements for health insurance.[7] GINA also prohibits any deprivation of employment opportunities based on genetic information.[8] However, GINA’s protections do not extend to life insurance, disability insurance, or long-term care insurance.[9] This leaves a gap where genetic information may be used against individuals by entities not subject to GINA.

This regulatory gap is a major concern for consumers, especially with a potential bankruptcy sale looming. If 23andMe sells its assets, including its database of genetic information, the new owner would not have to adhere to the same privacy commitments made by 23andMe. For example, 23andMe promises not to use genetic information it receives for personalized or targeted marketing/advertising without a user’s express consent.[10] This policy likely reflects 23andMe’s efforts to comply with the California Privacy Rights Act (CPRA), which grants consumers the right to direct a business to not share or sell their personal information.[11] However, this right under the CPRA is an opt-out right—not an opt-in right—meaning consumers can stop a future sale of their information but by default there is no initial, regulatory limit on the sale of their personal information.[12] As a result, there’s nothing stopping 23andMe from altering its policies and changing how it uses genetic information. In fact, 23andMe’s Privacy Statement states it “may make changes to this Privacy Statement from time to time.”[13] Any such change would likely be binding if it is clearly communicated to users.[14] 23andMe currently lists email or an in-app notification as methods it may notify its users of any change to the Privacy Statement.[15] If it does so, it’s highly possible a court would view this as “clear communication” and there would be little legal recourse for users to prevent their genetic information from being used in ways they did not anticipate, such as for research or commercial purposes.

For example, say a life insurance company acquires an individual’s genetic data through the purchase of 23andMe’s assets. It could potentially use that data to make decisions about coverage or premiums, even though GINA prohibits health insurers to do the same.[16] This loophole highlights the dangers of having genetic information in the hands of entities not bound by strict privacy protections.

In the event of an acquisition or bankruptcy, 23andMe’s Privacy Statement outlines that personal information, including genetic data, may be among the assets sold or transferred to the new entity.[17] In such a case, the new owner could inherit both the data and the rights to use it under the existing terms, including the ability to modify how the data is used. This could result in uses not originally intended by the user so long as the change is communicated to the user.[18] This transfer clause highlights a key concern for users because it allows their deeply personal genetic data to be passed to another company without additional consent, potentially subjecting them to exploitation by organizations with different data usage policies or commercial interests. While 23andMe must notify users about any changes to the privacy statement or its use of genetic information, it does not specify whether the notice will be given in advance.[19] Any new entity could plan a change to the privacy statement terms–altering how it uses the genetic information while leaving users in the dark until the change is communicated to them, at which point the user’s information may have already been shared with third parties.

The potential 23andMe bankruptcy and sale of assets reveals deep flaws in the current regulatory system governing genetic data privacy. Without HIPAA protections, consumers risk their sensitive genetic information being sold or misused in ways they cannot control. GINA–while offering some protections–still leaves significant gaps, especially in life and disability insurance. As the demand for genetic testing continues to grow, the vulnerabilities exposed by 23andMe’s potential financial troubles highlight the urgent need for better privacy protections. Consumers must be made aware of the risks involved in sharing their genetic data, and regulatory measures must be strengthened to ensure this sensitive information is not misused or sold without their explicit consent.

 

Notes

[1] Independent Directors of 23andMe Resign from Board, 23andMe (Sept. 17, 2024) https://investors.23andme.com/news-releases/news-release-details/independent-directors-23andme-resign-board.

[2] Rolfe Winkler, 23andMe Board Resigns in New Blow to DNA-Testing Company, WALL ST. J. (Sept. 18, 2024) https://www.wsj.com/tech/biotech/23andme-board-resigns-in-new-blow-to-dna-testing-company-12f1a355.

[3] Anne Wojcicki (the last remaining board member) has consistently publicized her plan to take the company private, which is looming larger given the current state of the business financials. Id.

[4] See 42 U.S.C. § 1320d-9(a)(2).

[5] See generally 42 U.S.C. §1320d et seq.

[6] 42 U.S.C. § 1320d-9(a)(2).

[7] Genetic Information Nondiscrimination Act of 2008, Pub. L. No. 110-233, 122 Stat. 881.

[8] Id.

[9] Jessica D Tenenbaum & Kenneth W Goodman, Beyond the Genetic Information Nondiscrimination Act: Ethical and Economic Implications of the Exclusion of Disability, Long-term Care and Life Insurance, 14 Personalized Med. 153, 154 (2017).

[10] How We Use Your Information, 23andMe, https://www.23andme.com/legal/how-we-use-info/ (last visited Oct. 14, 2024).

[11] Cal. Civ. Code § 1798.120(a) (Deering 2024).

[12] Id.

[13] Privacy Statement, 23andMe (Sept. 24, 2024) https://www.23andme.com/legal/privacy/full-version/.

[14] See Lee v. Ticketmaster LLC, 817 Fed. App’x 393 (9th Cir. 2019)(upholding terms of use where notice was clearly given to the user, even if the user didn’t check a box to assent to the terms).

[15] Privacy Statement, supra note 13.

[16] See K.S.A. § 40-2259(c)-(d) (carving out the ability for life insurance policies to take into account genetic information when underwriting the policy).

[17] Privacy Statement, supra note 13.

[18] See Ticketmaster, 817 Fed. App’x 393 (2019).

[19] Privacy Statement, supra note 13.

Transforming Access: The FCC’s New Telecommunication Requirements May Enhance Accessibility in Criminal Detention Centers

October 29, 2024
Disability Law, FCC, Human Rights Law, Telecommunication

 

Peyton Soethout, MJLST Staffer

Continued technological advancements have made it easier for people to communicate with their loved ones worldwide. Criminal detention centers have utilized the rise of this digital age to make the inmate communication process easier for their staff.[1] Although these practices may simplify security and administrative protocols, they also negatively impact inmates’ abilities to effectively communicate with loved ones through traditional mail as oftentimes inmates “receive letters with missing pages and blurry images.”[2] These issues—combined with the COVID-19 pandemic increasing security measures, and the prevalence and popularity of telephones—have caused decreases in written communications between incarcerated and free people and subsequent increases in telecommunication.[3]

 

While traditional mail has become less reliable, criminal detention centers’ use of video and audio telecommunications is not without issue. Challenges with telecommunication technology are especially difficult for inmates who have communication disabilities, which include deafness, hard of hearing, blindness, low vision, deafblindness, speech disabilities, or other disabilities that affect communication.[4] Despite technology advancing outside detention facilities, many jails and prisons primarily rely on out-of-date devices for their telecommunication needs.[5] The reliance on out-of-date technology greatly impacts inmates with communication disabilities because they heavily rely on technology to communicate with others.[6]

Congress has attempted to mitigate these challenges through various legislation. Together, the Rehabilitation Act of 1973 and the American Disabilities Act (“ADA”) require prison and jail officers to “avoid discrimination; individually accommodate disability; and maximize integration of prisoners with disabilities with respect to programs, service, and activities.”[7] These statutes provided the first step in equal communication opportunities for all inmates, but they left two questions: (1) who decides which inmates receive communication accommodations; and (2) what specific technologies are required for this communication access.[8]

The Federal Communications Commission (“FCC”) made efforts to address prison telecommunication issues but their attempts were ultimately quashed in 2017 as courts found the FCC only had authority to address interstate calls, not intrastate calls.[9] In 2022, Congress passed the Martha Wright-Reed Just and Reasonable Communications Act (“Martha Wright-Reed Act”) which amended the Communications Act of 1934. It established “any Federal, State, or local law to require telephone service or advanced communications services at a State or local prison, jail, or detention facility.”[10] Because the FCC determined that the Martha Wright-Reed Act “significantly expanded the [FCC’s] jurisdiction over incarcerated people’s communications services,” it promulgated new accessibility requirements for inmate telecommunications.[11]

The new FCC rule requires detention centers to provide text telephones (“TTY”) and telecommunication relay services (“TRS”) to inmates with communication disabilities.[12] TTYs—defined as “machine[s] that [employ] graphic communication in the transmission of coded signals through a wire or radio communication system”—have long been used in jails as a device to assist incarcerated people with communication disabilities, but they have never been explicitly required on a federal level.[13]

Unlike TTYs, the use of TRSs is much more rare. The FCC defines TRSs as “[t]elephone transmission services that provide the ability […] to engage in communication by wire or radio […], in a manner that is functionally equivalent to the ability of a hearing individual who does not have a speech disability.”[14] The new FCC rule also gives examples of certain TRSs such as speech-to-speech relay services (“STS”), and video relay services (“VRS”).[15] Overall, these technologies can significantly decrease challenges presented by general telecommunication devices.[16]

While this rule does an adequate job of addressing what technologies are required for inmate telecommunication access, it does little to address the remaining question: who decides which inmates require telecommunication accommodations. The rule specifies that TTYs and TRSs are for incarcerated people who individually register for communication accommodations, and the rule places registration responsibility primarily on the inmates.[17] Given the historic trend of jail and prison administration, detention facilities’ staff will likely need to organize the registration process and inform inmates of its existence.[18] In the rule proposal, the FCC quotes formerly incarcerated person Kim Thomas who notes, “[i]ncarcerated people with disabilities that impact their ability to communicate continually experience barriers to access because prison administrators fail to understand their communication needs.”[19]

The FCC acknowledges that detention center administrators may lack the knowledge necessary to identify communication needs, and this will likely continue negatively impacting inmates with communication disabilities. Specifically, inmates with communication disabilities may be unaware of the technologies available to them. But even with potential challenges, the FCC’s promulgation of these new requirements is a significant step in the right direction for the future of telecommunication access for inmates with communication disabilities.

 

 

Notes

[1] Nazish Dholakia, The FCC Is Capping Outrageous Prison Phone Rates, but Companies Are Still Price Gouging, Vera (Sept. 4, 2024), https://www.vera.org/news/the-fcc-is-capping-outrageous-prison-phone-rates-but-companies-are-still-price-gouging#:~:text=The (“Corrections departments say they have adopted mail scanning to obtain greater control over materials entering their facilities and ensure safety.”).

[2] Id.

[3] Id.

[4] Tessa Bialek & Margo Schlanger, Effective Communication with Deaf, Hard of Hearing, Blind, and Low Vision Incarcerated People, 26 J. Gender Race & Just. 133, 138 (2023).

[5] Id. (referencing Heyer v. U.S. Bureau of Prisons, 849 F.3d 202 (4th Cir. 2017)).

[6] Id.

[7] Margo Schlanger, Prisoners with Disabilities, in Reforming Criminal Justice: Punishment, Incarceration, and Release 301 (E. Luna ed., 2017).

[8] See Farina Mendelson, A Silent Struggle: Constitutional Violations Against the Hearing Impaired in New York State Prisons, 20 CUNY L. Rev. 559, 564–571 (2017) (noting that the New York Department of Corrections had default responsibility to determine which inmates have disabilities as the ADA did not provide such information); Wanda Bertram, FCC Votes to Slash Prison and Jail Calling Rates and Ban Corporate Kickbacks, Prison Policy Initiative (July 18, 2024), https://www.prisonpolicy.org/blog/2024/07/18/fcc-vote/ (claiming that the July 2024 FCC regulations addressed required accessibility technologies for the first time).

[9] Jon Brodkin, Prison Phone Call Fees Are Out of Control. The FCC Can Finally Rein Them In, Wired (July 19, 2024, 8:30 AM), https://www.wired.com/story/prison-phone-call-fees-fcc-caps/.

[10] Martha Wright-Reed Just and Reasonable Communications Act of 2022, Pub. L. No. 117–338, 136 Stat 6156.

[11] Implementation of the Martha Wright-Reed Act; Rates for Interstate Inmate Calling Services, 89 FR 77244, 77244 [hereinafter FCC Notice and Comment]; Press Release, Fed. Commc’n Comm’n, FCC Caps Exorbitant Phone & Video Call Rates for Incarcerated Persons & Their Families: The Martha Wright-Reed Act Empowered the FCC to Close Gaps in the Long-Fought- For Protections Against Predatory Rates (July 18, 2024).

[12] 47 C.F.R. § 64.6040 (2024).

[13] 47 C.F.R. § 64.601(a)(44) (2024); Bialek & Schlanger, supra note 4 at 142. Note that Bialek & Schlanger use “TTY” to refer to teletypewriters which is one example of a TTY under the FCC’s rule. Oftentimes, teletypewriters and text telephones are used interchangeably. For the purposes of this blog post, TTY will be used as defined in 47 C.F.R. § 64.601.

[14] 47 C.F.R. § 64.601(a)(43) (2024).

[15] See 47 C.F.R. § 64.601(a)(41) (2024), which defines STS as a TRS “that allows individuals with speech disabilities to communicate with voice telephone users through the use of specially trained Communication Assistants who understand the speech patterns of persons with speech disabilities and can repeat the words spoken by that person;” and 47 C.F.R. § 64.601(a)(51) (2024), which defines VRS as “a TRS “that allows people with hearing or speech disabilities who use sign language to communicate with voice telephone users through video equipment.”

[16] See Fed. Commc’n Comm’n, Frequently Asked Questions on Telecommunications Relay Services (TRS), Fed. Commc’n Comm’n, (Mar. 1998), https://transition.fcc.gov/Bureaus/Common_Carrier/FAQ/faq_trs.html (explaining the benefits of TTY and TRS access).

[17] See e.g., 47 C.F.R. § 64.6040(c)(4) (2024) (requiring individual registration); 47 C.F.R. § 64.611 (2024) (explaining the registration process).

[18] See Mendelson, supra note 8, at 564 (“[T]he Department is responsible for identifying an inmate’s hearing impairment.”).

[19] FCC Notice and Comment, supra note 11, at 77248–77249 (emphasis added).

Persistent Yet Questionable: FTC’s Journey Regulating Negative Option Marketing in Online Subscription Services

October 17, 2024
Digital Marketing, Legal Ethics, Marketing, Regulatory

Su Young Lee, MJLST Staffer

Online subscription services are increasingly prevalent in society – prevalent enough to catch the attention of the Federal Trade Commission (FTC). On June 17, 2024, the FTC filed a lawsuit against Adobe Inc for the violation of the FTC Act Section 5 and Section 4 of the Restore Online Shoppers’ Confidence Act (ROSCA).[i] These two laws introduce a general legal framework governing online commerce and negative option marketing.[ii] The ROSCA Section 4 prohibits online sellers from conducting a transaction through “negative option feature” unless the seller “clearly and conspicuously discloses all material terms of the transaction” to the consumer.[iii] While the ROSCA is a distinctive law to the FTC Act, the violation of the ROSCA Section 4 is treated as an “unfair or deceptive acts or practices” so constitutes the violation of the FTC Act Section 5.[iv] Furthermore, as it is treated as an “unfair or deceptive acts or practices,”[v] the violation of the ROSCA Section 4 also triggers the FTC Act Section 19, which allows the FTC to “commence a civil action” against the one who violated subjected law.[vi]

In this case, the FTC argues that Adobe did not “clearly and conspicuously” disclose the early cancellation fee during the subscription process, which, therefore, “constitutes an unfair or deceptive act or practice in or affecting commerce.”[vii] Last year, the FTC filed a similar complaint against Amazon concerning the cancellation of Prime memberships; the case is still ongoing.[viii]

The FTC’s action against online subscription policies, specifically their marketing strategy called ‘negative option marketing,’ or ‘dark pattern,’[ix] are not new. Negative option marketing is “a term or condition under which the seller may interpret a consumer’s silence or failure to take affirmative action to reject a good or service or to cancel the agreement as acceptance or continuing acceptance of the offer.”[x] Examples include automatic renewals, continuity plans, free-to-pay or fee-to-pay conversions, and prenotification plans.[xi] The FTC reports negative option marketing to be a “persistent source of consumer harm” by “saddling shoppers with recurring payments for products and services they did not intend to purchase or did not want to continue to purchase.”[xii]

The FTC has pursued action against negative option marketing, especially its use in online subscription services, in recent years. As with Amazon and Adobe, using ROSCA and/or the FTC Act as a legal basis, the FTC has sued numerous online commercial companies with subscription services such as Wealthpress and MoviePass.[xiii] They also published a staff report and policy statement warning of the danger of negative option marketing.[xiv] On April 24, 2023, the FTC even exercised their rulemaking authority and proposed a rule amending 16 C.F.R. part 425 to specifically target the regulation of negative option marketing.[xv] While the proposed rule does not limit the type of applicable media,[xvi] the FTC added the definition of the terms that particularly apply to online subscription services, such as “simple cancellation” and “annual reminders.”[xvii]

Despite their persistence, the effectiveness of the FTC’s efforts is still in question. First, not everyone welcomes the proposed rule. Former Commissioner Christine S. Wilson states that the proposed rule’s scope of negative option marketing is overly broad because it applies to any misrepresentations, even to those irrelevant to negative option terms or policies.[xviii] She also points out that the proposed rule gives the FTC the authority to seek civil penalties under the FTC Act Section 5, which the Supreme Court limited in AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n.[xix] Commissioner Wilson expresses concern that such overreach would put marketers at risk of being liable for monetary penalties even when they fully disclose negative option terms.[xx]

Luckily for those not fond of the proposed rule, the FTC has not yet prevailed in putting the regulation into effect. Even if it becomes effective one day, this new rule will have to survive the unclarified yet heightened standard the recent overruling of Chevron created. The Section 6(a) of the FTC Act, governing the agency’s rulemaking authority, grants the FTC to make a rule that addresses “unfair or deceptive acts or practices.”[xxi] The proposed rule manifests its relation to such authority, as many of its provisions trigger the violation of the FTC Act Section 5, which states that “unfair or deceptive acts or practices” are unlawful.[xxii] On the other hand, no one is sure at this moment whether such manifestations are the sufficient address of ‘unfair or deceptive acts or practices’ under the new rulemaking standard.

No matter where the proposed rule currently lies, as the ongoing lawsuits against Adobe and Amazon reflect, it seems like the FTC has not given up on regulating negative option marketing within online subscription services. If the current proposed rule does not end up being effective and fails to become the FTC’s resolution, could lawsuits be their alternate pathway? Based on their past lawsuits against Wealthpress and MoviePass, which ended with the agreement in the proposed court order (“Agreement”) and settlement, it may be reasonable to anticipate that the ongoing cases will reach a similar outcome.[xxiii] The settlement and Agreement, which involved specific restriction and monetary agreement,[xxiv] from Wealthpress and MoviePass cases focused on refraining from the alleged type of conduct of an alleged company. These could discourage alleged tech companies like Wealthpress and MoviePass from using the alleged type of negative option marketing in their future subscription policies. However, since neither settlement nor Agreement has precedential authority, it is questionable whether the history of lawsuits filled with settlements and Agreement could prevent other tech companies from applying similar negative option marketing to their subscription policies.

 

Notes

[i] Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief at 25, United States v. Adobe Inc., No. 5:24-cv-03630-BLF (N.D. Cal. June 17, 2024).

[ii] Id. at ¶ 10.

[iii] 15 U.S.C. § 8403.

[iv] 15 U.S.C. 45(a)(1) (“Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.”) (emphasis added). See also Complaint for Permanent Injunction, supra note i, at ¶ 22.

[v] 15 U.S.C. § 8404(a).

[vi]  15 U.S.C. § 57(b)(1) (“If any person, partnership, or corporation violates any rule under this subchapter respecting unfair or deceptive acts or practices…then the Commission may commence a civil action against such person.”) (emphasis added).

[vii] Complaint for Permanent Injunction, supra note i, at ¶ 121-25.

[viii] See Fed. Trade Comm’n v. Amazon.com, Inc., No. 2:23-CV-00932-JHC, 2024 WL 2723812 at 1 (W.D. Wash. May 28, 2024) (showing that the FTC is using the same legal basis).

[ix] FTC uses two terms (negative option marketing and dark pattern) interchangebly. See FED. TRADE COMM’N, Bringing Dark Patterns to Light : Staff Report (2022).

[x] FED. TRADE COMM’N, ENFORCEMENT POLICY STATEMENT REGARDING NEGATIVE OPTION MARKETING 60822 (2021).

[xi] Id.

[xii] Id. at 60823.

[xiii] See FTC Suit Requires Investment Advice Company WealthPress to Pay $1.7 Million for Deceiving Consumers, Fed. Trade Comm’n (Jan. 13, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-suit-requires-investment-advice-company-wealthpress-pay-17-million-deceiving-consumers and Operators of MoviePass Subscription Service Agree to Settle FTC Allegations that They Limited Usage, Failed to Secure User Data Fed. Trade Comm’n (June. 7, 2021), https://www.ftc.gov/news-events/news/press-releases/2021/06/operators-moviepass-subscription-service-agree-settle-ftc-allegations-they-limited-usage-failed.

[xiv] See FED. TRADE COMM’N, Bringing Dark Patterns to Light, supra note ix and FED. TRADE COMM’N, ENFORCEMENT POLICY STATEMENT, supra note x.

[xv] Negative Option Rule, 88 FR 24716 (proposed April 24, 2023) (to be codified at 16 C.F.R. pt. 425)

[xvi] Id. at 24734 (“This Rule contains requirements related to any form of negative option plan in any media, including, but not limited to, the internet, telephone, inprint, and in-person transactions.”).

[xvii] Id.

[xviii] Christine S. Wilson, Dissenting Statement of Commissioner Christine S. Wilson, Notice of Proposed Rulemaking, Negative Option Rule 2 (Sept. 2021), https://www.ftc.gov/system/files/ftc_gov/pdf/p064202_commissioner_wilson_dissent_negative_option_rule_finalrevd_0.pdf.

[xix] Id. See also AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 593 U.S. 67, 141 S. Ct. 1341, 209 L. Ed. 2d 361 (2021) (finding that the FTC cannot seek monetary relief based on the FTC § 13(b), which triggers permanent injunction when the § 5 is found to be violated)

[xx] Christine S. Wilson, Dissenting Statement, supra note xviii, at 2.

[xxi] 15 U.S.C. § 46(g). See also A Brief Overview of the Federal Trade Commission’s Investigative, Law Enforcement, and Rulemaking Authority, Fed. Trade Comm’n (May, 2021), https://www.ftc.gov/about-ftc/mission/enforcement-authority.

[xxii] 15 U.S.C. 45(a)(1). E.g. Negative Option Rule, 88 FR at 24735 (“In connection with promoting or offering for sale any good or service with a negative option feature, it is a violation of this Rule and an unfair or deceptive act or practice in violation of Section 5 of the FTC Act.”).

[xxiii] supra note xiii.

[xxiv] Id.

The New Reefer Madness? New Laws Look to Regulate Hemp Products

October 11, 2024
Drug Policy, Food and Drug Law, Regulatory

Violet Butler, MJLST Staffer

In 2018, the federal government took a major step in shifting its policy towards the criminalization of marijuana. Included in the 2018 Farm Bill was a provision that legalized some hemp-derivative products, in particular CBD products with a low-level of THC.[1] While this was touted by the industry and activists as a major step forward, the move to increase regulations on these hemp products have recently gained steam.

But what exactly was legalized by the federal government? The 2018 Farm Bill legalized hemp and hemp derived products (including CBD) that contain no more than 0.3% THC.[2] It should be noted that most cannabis products are consumed for some form of intoxication[3] and, suffice it to say, intoxication does not arise from 0.3% THC. The 2018 Farm Bill legalized a very small subsection of cannabis products serving a limited range of uses. Under the law, if a product contains more than 0.3% THC it is legally classified as marijuana and is still illegal under the Controlled Substances Act. So, if these new products cannot be used as intoxicants, why is there a push for more regulations?

A reason for the push for further regulations gaining traction is the concern over synthetically produced cannabinoids. A report from the National Academy of Sciences, Engineering, and Medicine recently published a report urging the federal government to redefine what “hemp” means. This is in an effort to ban semi-synthetic cannabinoids derived from legal hemp products as these cannabinoids can mirror the intoxicating effects of marijuana.[4] By clamping down on these semi-synthetic products, the legal line between hemp, CBD, and marijuana can be more properly maintained.

Different states are taking different approaches to the new regulations on hemp products. One camp of lawmakers want to go back to the old regime where any miniscule trace of THC was illegal. This “total ban” approach is presently seen in new legislation passed in Arkansas. Arkansas’ Act 629 bans the “production and sale of products containing Delta 8, Delta 9 and Delta 10 and other THC isomers inside the state of Arkansas” in any capacity.[5] Currently on appeal in the Eighth Circuit, the act has been subject to a lawsuit from hemp companies claiming the state law is preempted by the 2018 Farm Bill.[6] Arkansas is not the only state to take a total ban approach. Missouri’s governor Mike Parsons recently signed an executive order banning all consumables containing “psychoactive cannabis products”—or hemp products containing even trace amounts of THC—outside of the state’s already regulated cannabis market.[7] While this is not as broad in scope as Arkansas’ ban, the wide-reaching ban restricts the sale of most non-marijuana cannabis products in the state.

However, some states have taken a different approach to regulating hemp products, particularly in its distribution. New Jersey recently banned any amount of THC from being sold to a person under the age of 21.[8] California governor Gavin Newsom took a similar approach, signing an emergency ban on all hemp products containing THC and restricting the sale of all other hemp products to the 21+ market.[9] Even the federal government might be looking to increase the regulations on hemp products. Senator Ron Wyden recently introduced a bill that would raise the age at which someone could buy hemp products to 21 and set more federal safety standards on the industry.[10]

So, why is there a push to change the laws around hemp now? It could come down to perceived health risks and a rise in hospitalizations. A study from the Nationwide Children’s Hospital found that there were over 3,000 calls to poison controls related to THC, including the those found in small doses of legal hemp products.[11] Although only about 16% of these calls resulted in hospitalizations, roughly half of admissions were for children under 6-years-old.[12] California Governor Newsom directly cited hospitalizations as one the principal reasons he signed his emergency order.[13]

People seem to be worried about the hemp products currently on the market, including CBD, but should they be? The jury is still out on the health effects of CBD. A report from the World Health Organization in 2018 said that CBD had a “good safety profile” and reported no evidence of detrimental effects from recreational consumption of pure CBD.[14] However, the AAMC notes that CBD is understudied and there could be adverse interactions if CBD is taken with other medications.[15]

Legislators and policy-makers need to be able to ensure the safety and well-being of their citizens without creating unnecessary barriers for a new and growing industry. One of the barriers that states are facing is— maybe ironically—the 2018 Farm Bill. The bill opened the door for hemp products that met the THC standards, and these state laws are running into friction with the federal law. While states are allowed (and expected) to regulate the hemp industry under the 2018 Farm Bill, the move by many states to put heavier restrictions on the amount of THC allowed in hemp products seems to be in conflict with federal law. The lawsuits from hemp producers so far have all revolved around the idea that these state regulations, which are more restrictive than the 2018 Farm Bill, are preempted by the federal legislation.[16] Under Article VI of the Constitution, federal laws are the “supreme law of the land” so the Farm Bill must preempt state law in some way, but the exact way it does so is unclear.[17] There are two different ideas on how the Farm Bill preempts state law. The first idea is that the hemp regulations laid out in the federal law are the most stringent that states can regulate. This is the interpretation that hemp producers prefer, and the theory that they are suing under. The second idea, the option preferred by states that are looking to increase regulations, is that the Farm Bill set the outer limit for regulations. In other words, states are free to increase the regulations on the industry, but the federal law provides a national baseline if states do not come up with their own regulation.

Court rulings on this issue may settle the debate, but there is always a risk of a circuit split forming as different Courts of Appeal hear and decide on different lawsuits. To clear confusion once and for all, the federal government could clarify the scope of regulatory power with new legislation, or the Supreme Court could decide the issue in its upcoming term. But, until then, the legal challenges are likely to keep mounting and leave the nascent hemp industry in lingo.

 

Notes

[1] Dennis Romero, Hemp Industry Expected to Blossom Under New Farm Bill, NBC News (Dec. 17, 2018, 4:02 PM), https://www.nbcnews.com/news/us-news/hemp-industry-expected-blossom-under-new-farm-bill-n947791. For clarification, CBD stands for cannabidiol, a product derived from hemp, often sold in gummy or oil form. THC stands for tetrahydrocannabinol, the psychoactive part of the marijuana plant that can get you high. THC often refers to what is known as delta-9 THC, a type of THC found in the marijuana plant.

[2] John Hudak, The Farm Bill, Hemp Legalization and the Status of CBD: An Explainer, Brookings Institution (Dec. 14, 2018), https://www.brookings.edu/articles/the-farm-bill-hemp-and-cbd-explainer/

[3] As the Brookings Institution points out, the extremely low levels of THC in now-legal hemp products means that these products cannot be used to get high.

[4] Sam Reisman, New Report Urges Feds to Take Larger Role in Pot Policy, Law360 (Sept. 26, 2024, 8:53 PM), https://plus.lexis.com/newsstand/law360/article/1883058/?crid=c6fd0d9a-971e-489f-a5c6-8c1725ffee87

[5] Dale Ellis, Federal Judge Blocks State’s New Law Banning Delta-8 THC Products, Arkansas Democrat Gazette (Sept. 7, 2023, 6:00 PM), https://www.arkansasonline.com/news/2023/sep/07/federal-judge-blocks-states-new-law-banning-delta-8-thc-products/

[6] Sam Reisman, Court Defers Ruling On Challenge To Arkansas Hemp Law, Law360 (Sept. 25, 2024, 6:50 PM), https://plus.lexis.com/newsstand/law360/article/1882683/?crid=48cd5145-0817-47a7-bf22-1fb3bf01cb5f

[7] Jonathan Capriel, Missouri Ban on Some Psychoactive Foods to Hit Sept. 1 (August 30, 2024, 8:47 PM), https://plus.lexis.com/newsstand/law360/article/1882683/?crid=48cd5145-0817-47a7-bf22-1fb3bf01cb5f;  Rebecca Rivas, Missouri Hemp Leaders File Suit to Halt Governor’s Ban on Hemp THC Products, Missouri Independent (August 30, 2024 5:55 AM), https://missouriindependent.com/2024/08/30/missouri-hemp-leaders-set-to-file-suit-to-halt-governors-ban-on-hemp-thc-products/

[8] Sophie Nieto-Munoz, Gov. Murphy Signs Controversial Bill Restricting Sales of Hemp Products, New Jersey Monitor (Sept. 13, 2024, 7:11 AM), https://newjerseymonitor.com/2024/09/13/gov-murphy-signs-controversial-bill-restricting-sales-of-hemp-products/

[9] Rae Ann Varona, Calif. Gov.’s Emergency Hemp Intoxicant Ban Wins Approval, Law360 (Sept. 24, 2024, 9:49 PM),  https://plus.lexis.com/newsstand/law360/article/1882121/?crid=642ddd2e-a29d-46d6-8ff4-b7f209fd6c7f&cbc=0,0

[10] Same Reisman, Wyden Pitches New Bill To Regulate Intoxicating Hemp, Law360 (Sept. 25, 2024, 7:06 PM), https://plus.lexis.com/newsstand/law360/article/1882226/?crid=ed53b57f-dd97-4a6a-8a89-f6028f95e523

[11] Nationwide Children’s, New Study Finds Increase in Exposures to Synthetic Tetrahydrocannabinols Among Young Children, Teens, and Adults, Nationwide Children’s Hospital (May 7, 2024), https://www.nationwidechildrens.org/newsroom/news-releases/2024/05/deltathc_clinicaltoxicology

[12] Id.

[13] Varona, supra note 9.

[14] World Health Organization, Cannabidiol (CBD) Critical Review Report 5 (2018).

[15] Stacy Weiner, CBD: Does It Work? Is It Safe? Is It Legal?, AAMC News (July 20, 2023), https://www.aamc.org/news/cbd-does-it-work-it-safe-it-legal

[16] Reisman, supra note 6; Varona, supra note 9.

[17] U.S. Const. art. VI, cl. 2

NEPA and Climate Change: Are Environmental Protections Hindering Renewable Energy Development?

October 9, 2024
Climate Change, Energy Law, Environmental Law, Regulatory

Samuel Taylor, MJLST Staffer

The National Environmental Protection Act, or “NEPA”, has been essential in protecting America’s air and water, managing health hazards, and preserving environmental integrity. For decades, environmental activist groups, the government, and regular citizens relied on and benefitted from enforcing these NEPA against those looking to pollute, poison, or endanger Americans and their environment. NEPA, however, is proving to be less suitable for addressing the country’s  imminent environmental challenge: climate change. As proponents of green energy scramble to ditch fossil fuels, NEPA and its procedural requirements are accused of delaying or halting renewable energy projects. Environmental protection laws remain essential to stopping the dangers they were passed to stop, and many new green energy projects pose additional risks to the environment, but we also need to transition away from fossil fuels as fast as possible to avoid the worst consequences of climate change. The conflict between the need to address climate change and the need to maintain environmental protections has created a regulatory challenge that may not have a perfect solution.

Enacted in 1970, NEPA was the first major environmental protection measure taken in the US.[i] The “magna carta” of environmental laws applies to all “major federal actions significantly affecting the environment”.[ii] Major federal actions can include everything from infrastructure projects like proposed dams, bridges, highways, and pipelines, to housing developments, research projects, and wildlife management plans.[iii] Before a federal agency can act, there are a series of procedures they must follow which force them to consider the environmental impacts of the potential action. These procedures involve community outreach, the effects of past and future actions in the region, and providing the public with a detailed explanation of the agency’s findings, and often take years to fully complete.[iv] By requiring the government to follow these procedures “to the fullest extent possible,” NEPA aims to ensure that environmental concerns are given sufficient consideration before any harmful actions are taken.[v] Notably, NEPA is not a results-oriented statute, but a process-oriented one.[vi] No agency decision can be made until after its procedures are followed, but once they are, NEPA does not mandate a particular decision.[vii] NEPA does not even require that environmental concerns be given more weight than any other factors.[viii] Nevertheless, if an agency fails to properly follow NEPA procedures, all resulting decisions can be invalidated if challenged in the courts.[ix]

Though passing NEPA was the first step Congress took towards addressing environmental concerns, and decades of NEPA success stories have followed, there is growing concern about its  ability to adapt to the pressing challenges presented by global climate change.[x] NEPA, critics say, drastically slows the government’s ability to invest in green energy because each step of the procedure can be challenged in court.[xi] Corporate competitors in the renewable energy sector, environmental interest groups, concerned citizen groups, and Native American tribes have all challenged various projects’ compliance with NEPA requirements.[xii] Many of these groups have legitimate concerns about the projects, and NEPA allows them to stall or halt development while the government is forced to further consider their potential environmental impacts. This causes direct conflict between these valid concerns and efforts to reverse the country’s reliance on fossil fuels.[xiii] Collectively, the long procedures and potential legal challenges that accompany NEPA’s requirements present serious hurdles to the production of green energy.

Legal experts disagree, perhaps not surprisingly, over the extent to which NEPA hinders the production of green energy sources. Some groups believe the rhetoric surrounding NEPA’s deficiencies is an exaggeration, citing data that shows only a very small percentage of green energy projects actually require the production of EISs.[xiv] Others present NEPA and other environmental protection laws as serious hurdles preventing the production of renewable energy at the pace we need to avoid the worst effects of climate change.[xv] They argue that this data is not properly representative of all clean energy projects, ignores the delays caused by litigation, and does not properly account for the likelihood that delays will get worse in the future.[xvi] Because there is little consensus regarding the extent of the problem, there is likewise almost no agreement on a potential solution.

 Lawmakers and legal scholars have proposed a range of approaches to the NEPA problem. Most drastically, a bill introduced to the U.S. House Committee on Natural Resources by Representative Bruce Westerman would largely eradicate most NEPA provisions by limiting consideration of new scientific evidence, allowing some projects to go exempt from NEPA’s requirements, and drastically limiting community instigated judicial review.[xvii] Other proposals are more modest, including permitting reform to favor green energy projects, placing some limits on judicial review, and collecting more comprehensive data on NEPA issues.[xviii] Still others are staunchly against most reforms, arguing that weakening any NEPA provisions would open the door for greater environmental abuses.[xix] The differing opinions on the scope of the problem and the wide range of proposed solutions amount to a problem that will not be easy to solve.

The legal community is divided on the efficacy of existing NEPA regulations that have, for decades, promoted environmental protection. In the face of climate change and the accompanying need for renewable energy, it must be determined whether NEPA is truly hindering the switch to green energy. The United States must build more renewable energy infrastructure if we are to avoid the worst consequences of global climate change, but with concern growing that our own environmental protection laws are hindering progress, it will be challenging to move forward in a manner that balances the need for green energy production against the necessity of strong environmental protection laws.

 

Notes

[i] Sam Kalen, NEPA’s Trajectory: Our Waning Environmental Charter From Nixon to Trump, 50 Environmental Law Reporter 10398, 10398 (2020).

[ii] Id.; Mark A. Chertok, Overview of the National Environmental Policy Act: Environmental Impact Assessments and Alternatives (2021); 42 U.S.C. §§ 4321–70.

[iii] Elly Pepper, Never Eliminate Public Advice: NEPA Success Stories, Natural Resources Defense Council (Feb. 1, 2015), https://www.nrdc.org/resources/never-eliminate-public-advice-nepa-success-stories#:~:text=The%20NEPA%20process%20has%20saved,participated%20in%20important%20federal%20decisions.

[iv] Chertok, supra note ii; 42 U.S.C. §§ 4321–70.

[v] Chertok, supra note ii; Catron County v. U.S.F.W.S., 75 F.3d 1429, 1437 (10th Cir. 1996).

[vi] Chertok, supra note ii; Catron County at 1434.

[vii] Chertok, supra note ii.

[viii] Balt. Gas & Elec. Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 97 (1983).

[ix] Chertok, supra note ii (citing Lands Council v. Powell, 395 F.3d 1019, 1027 (9th Cir. 2005)).

[x] Pepper, supra note iii; Aidan Mackenzie & Santi Ruiz, No, NEPA Really Is a Problem for Clean Energy, Institute For Progress (Aug. 17, 2023), https://ifp.org/no-nepa-really-is-a-problem-for-clean-energy/#nepa-will-harm-clean-energy-projects-even-more-in-the-future; Darian Woods & Adrian Ma, Environmental Laws Can Be an Obstancel in Building Green Energy Infrastructure, NPR (Apr. 13, 2022), https://www.npr.org/2022/04/13/1092686675/environmental-laws-can-be-an-obstacle-in-building-green-energy-infrastructure.

[xi] Mackenzie & Ruiz, supra note x; See, e.g. Ocean Advocates v. U.S. Army Corps of Engineers, 402 F.3d 846 (9th Cir. 2005) (where the agency finding of no significant impact was challenged by an environmental protection group); Sierra Club v. Bosworth, 510 F.3d 1016 (9th Cir. 2007) (where the agency’s EIS analysis was challenged by the Sierra Club).

[xii] Niina H. Farah, Tribes Sue Over NEPA Review for Oregon Offshore Wind Auction, Politico (Sep. 18, 2024), https://www.eenews.net/articles/tribes-sue-over-nepa-review-for-oregon-offshore-wind-auction/; Christine Billy, Update: Congestion Pricing: A Case Study on Interstate Air Pollution Disputes, New York State Bar Association (Sep. 23, 2024), https://nysba.org/update-congestion-pricing-a-case-study-on-interstate-air-pollution-disputes/; Jonathan D. Brightbill & Madalyn Brown Feiger, Environmental Challenges Seek to Block Renewable Projects, Winston & Strawn LLP (Sep. 1, 2021), https://www.winston.com/en/blogs-and-podcasts/winston-and-the-legal-environment/environmental-challenges-seek-to-block-renewable-projects.

[xiii] Farah, supra note xii; Brightbill & Feiger, supra note xiv.

[xiv] Ann Alexander, Renewable Energy and Environmental Protection Is Not an Either/Or, Natural Resources Defense Council (Jan. 18, 2024), https://www.nrdc.org/bio/ann-alexander/renewable-energy-and-environmental-protection-not-eitheror.

[xv] Mackenzie & Ruiz, supra note x.

[xvi] Alexander, supra note xiv; Mackenzie & Ruiz, supra note x.

[xvii] Defenders of Wildlife, Defenders Slams Bill Aiming to Rollback NEPA and Gut Environmental Protections, (Sep. 10, 2024), https://defenders.org/newsroom/defenders-slams-bill-aiming-rollback-nepa-and-gut-environmental-protections.

[xviii] Brian Potter, Arnab Datta & Alec Stapp, How to Stop Environmental Review from harming the Environment, Institute For Progress (Sep. 13, 2022), https://ifp.org/environmental-review/.

[xix] Alexander, supra note xiv; Sierra Club

 

 

 

 

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