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http://www.fight2257.com/fight-2257/...-to-feds-xbiz/

Experts on the Regulatory Flexibility Act said that the Justice Department has failed to satisfy requirements of that legislation.
By Q Boyer
Thursday, Oct 4, 2007

uno

Sorry...

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WASHINGTON — Experts on the Regulatory Flexibility Act asserted in a letter submitted during the recent 2257 public comment period that the Justice Department has failed to meet their requirement under the RFA to consider the impact of 2257 regulations on small businesses.The letter, primarily authored by David E. Frulla, a partner in the firm Kelley, Drye, Collier & Shannon, honed in on the fact that the Justice Department apparently has done no research whatsoever on the economic impact of 2257 and the burden that compliance would impose on small businesses within the industry.

FSC Chairman Jeffrey Douglas told XBIZ that the RFA concerns cited by Frulla in his letter are “earth-shattering” for the Justice Department’s continuing efforts to enforce 2257.

“I don’t know how the Justice Department is going to proceed,” Douglas said. “If they ignore [the RFA claims] the statute will be enjoined — hopefully root and branch. If they comply, then they have to start all over again, and consider the economic impact of the entire statute.”

The Kelley, Drye, Collier & Shannon firm was retained by the Free Speech Coalition, along with Georgetown Economic Services (GES), to help communicate to the Justice Department concerns over the economic impact of 2257. GES conducted a study on the costs, and Kelley, Drye, Collier & Shannon was retained to present the legal arguments surrounding the RFA.

The firm previously has represented clients on RFA issues initiated by a wide range of federal rulemaking proceedings, including ones initiated by the Commerce Department, the Environmental Protection Agency, the U.S. Army Corps of Engineers, the Agriculture Department and the Federal Communications Commission.

“[T]here are thousands of small businesses in the adult entertainment industry that will experience a significant adverse economic impact if the proposed rule is implemented,” Frulla wrote. “Accordingly, pursuant to the RFA … the Justice Department is required to conduct detailed regulatory flexibility analyses … in connection with developing this rule.”

Frulla also observed that “while the adult entertainment industry’s overall economic contribution to the U.S. economy is large, the overwhelming majority of industry participants (and, likewise, of the FSC’s members) are small businesses.”

Frulla argued that small businesses in the industry will “suffer substantial economic, administrative and other injury, which almost assuredly will force a significant number of them (particularly Internet-based businesses) out of business should the proposed rule proceed to final rule in its current form.”

Whatever the true economic impact of 2257 may be, Frulla asserted that the Justice Department simply has not met its responsibilities under the RFA with respect to researching that impact.

“In its proposed rule, the Justice Department states, in conclusory fashion, that it ‘drafted the rule to minimize its effect on small businesses while meeting its intended objectives,” Frulla wrote. “Yet nowhere in the proposed rule does the Department explain how it sought to minimize impacts on small businesses, nor is such consideration otherwise evident.”

This unsupported assertion on the part of the Justice Department “falls far short of what is required of agencies under the RFA, the SBA Guide and controlling case law,” Frulla wrote.

Douglas noted that the Justice Department not only failed to conduct any real analysis of the statute’s economic impact with respect to the newly proposed revisions to the regulations, the agency never considered the impact of the statute and regulations in their original form.

“They haven’t even gotten to step one of a long, complicated road,” Douglas said.

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Azlord

Very interesting read there.

G-Rotica

right on

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FreeHugeMovies

Excellent read, glad I'm a member of the FSC

pornlaw

It's also good to see that the letter was from a firm outside the "industry."

I might take heat for it, but I think Diane and Jeffrey, as well as all the other Board members are doing a great job.

Michael

adultbizlaw.com

DaddyHalbucks

Those objections are good.

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Boner Money

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The adult industry has been losing billions, as indicated by others, and the experts who are writing and passing the 2257 and related laws find a way to making small business problems by creating convoluted legal issues and processes, instead of simplifying the complex issue of the 2257 and related areas...

Later,

.

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pornguy

That is good news. Lets see how they twist it.

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ShellyCrash

Very nice! Great post, thanks for the update.

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Rochard

Very nice! Thanks for the update!

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F-U-Jimmy

Sounds hopeful

munki

Great development... can't wait to see this one through to its end.

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crockett

I kinda wondered about this myself. As I thought it was a rule of law, that govt regulation can not be so hard to comply with, that it in essence regulates you out of business. Which is exactly what 2257 will do to many if left in the current form.

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aico

I've been saying this for years.

nation-x

umm... why the fuck wasn't this brought up before?

fusionx

Excellent question..

sinclair

I am constantly amazed at attorneys and how they brilliantly unravel the brilliantly raveled.

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RawAlex

Most legal action of this nature is just looking for the one loose thread and pulling until the entire thing falls apart. With all of the (often conflicting) federal rules about the workplace and business, it is actually pretty hard to craft legislation these days that is perfect.


Nation-x: Why didn't this come up before? In part I would suspect that this is one of the ideas kept handy for the point where the law would come in force. Rather than use up the first amendment arguments right away, it is easier and actually much more expedient at this point of catch the feds on their own requirements, which often have long review and study provisions in them. If the feds want to prove that this sudden increase in paperwork (which won't save a single child from being in porn) isn't going to be a large financial burden on companies or force some companies to go out of buisness, then they may need to make that study.

It is playing the game by their rules. It is also something that a federal judge would like act on pretty quickly, enjoining enforcement of the rules, etc.

It's a good move, a very simple first line of legal defence against the issue at hand.

Why

sounds good to me!

Barefootsies

If it was any other issue than porn,..

it would have been a lot time ago.

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Nikki_Licks

Just what I was thinking. I am sure they will find a way to toss a wrench in this

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V_RocKs

This will clear the whole thing up. Yes, sir!

davecummings

FSC DID, indeed, bring this up when they commissioned that firm to do the study; as I recall, FSC DID, indeed, include it in their comments last month to DOJ concerning the pending new regulations. FSC also DID bring ups lots of other constutionally-related aspects.

IMHO, in spite of those who snipe at FSC, FSC has indeed looked-out for us (including those non-member "snipers")!

dave

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Quentin

I can answer this in one word - "specialization."

OK, so that word requires about 400 more to explain... indulge me.

If you look at the case law cited in the letter addressing the Regulatory Flexibility Act (RFA) implications of 2257, you will notice that the citations involve things like mining companies suing the state, companies suing the FDA, FCC, etc. because some regulation or statute unduly burdens small businesses in their market sector.

Very, very few attorneys specialize in RFA issues. Prior to when the regs were revised in 2005, the FSC legal team and other observers had no real reason to even think about the RFA, and none of them had (or have) any expertise in that area, I'm pretty certain.

My bet is that, somewhere along the line, somebody spotted a reference to the RFA in one of the DOJ's documents pertaining to the RFA - it could have been when the regs were last revised in 2005, it could have been in response to public comment submitted during that round of revisions - and said "Hey... this sounds interesting. Let's find an attorney who specializes in the RFA and ask him if there's any potential here."

Bottom line - the RFA is a pretty obscure piece of legisation. If you are an attorney not based in Washington, DC, and you do not routinely deal with federal regulatory agencies, my guess is that you probably haven't heard of it, much less have much familiarity with its contents.

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Q. Boyer