The Department of Justice (“DOJ”) has released proposed modifications to the regulations concerning the labeling and record-keeping law, 18 U.S.C. §2257, making clear that inspections and enforcement actions are imminent.
In the August issue of AVN Online, Legal Commentary reviewed the new regulations as they may impact Websites that distribute content. Here will be reviewed the new regulations as they apply to content production and to magazines, motion pictures, and the like.
As explained last issue, Congress frequently authorizes departments and commissions of the federal government to promulgate (that is their 25¢ word for make) regulations. Commissions – which are neither executive nor legislative bodies but, rather, a mix of the two – include the Securities and Exchange Commission, the Federal Communications Commission and the Federal Trade Commission. Commissions are operated by boards of commissioners, the members of which are appointed by the president with the approval of the Senate; the boards’ members generally expire in rotation and can have no more than a simple majority from any one political party, so that no president can stack the deck politically. Departments – which are purely the executive branch of government, ultimately reporting to the president – include the Department of Commerce, Department of the Interior and, relevant here, the Department of Justice. Departments are headed by members of the president’s cabinet, such as the secretary of the interior and, in the case of Justice, the attorney general. Cabinet members, of course, are appointed by the president, subject to Senate approval.
When a statute authorizes a commission or department to promulgate regulations – and they materially all have regulatory authority in many areas – the procedure is that proposed regulations are published in the Federal Register, specifying a period for public comment. After the public-comment period expires, usually a few months, the commission or department supposedly reviews and considers all of the comments, modifies the proposed regulation to the extent that merit is found in any public comment, and publishes the final regulation in the Federal Register. Much like acts of Congress are codified in the United States Code, federal regulations are codified in the Code of Federal Regulations (“CFR”).
The labeling and record-keeping requirements of 18 U.S.C. §2257 allow the Department of Justice to promulgate regulations – which it did in 1992, and the regulations are found in Title 28 CFR, sections 75.1 to 75.8. That was a good many years ago, however, long before the Internet and DVDs.
Recall that the “Amber Alert Law,” also known as the PROTECT Act, included a provision instructing the DOJ to report on the inspections it was conducting under 18 U.S.C. §2257. It turns out that just before Congress’ deadline, General Ashcroft trundled up Capitol Hill with the required report in hand. The report said what everyone knows, which is that the DOJ has been doing no inspecting. But in a face-saving move, Ashcroft brought with him a battery of new regulations, dramatically modifying the original ones. Ashcroft especially noted that the regulations needed updating to deal with the Internet, implying that the lack of inspections was due to the out-of-date nature of the regulations.
The regulations were published on June 25, 2004 in the Federal Register at 69 F.R. 35547. Public comments are due on or before August 24, 2004.
In reviewing the modified regulations, keep in mind that they were not the work of a commission, which would have built-in safeguards against being monopolized by any one political party. Rather, they were drafted by the DOJ, headed by the Bible-driven John Ashcroft, who was appointed by President Bush. So do not expect them to be at all user-friendly.
The proposed regulatory changes begin with what appears to embrace the United States Court of Appeals decision in Sundance Assocs. Inc. v. Reno, 139 F.3d 804, 807 (10th Cir. 1998). That case invalidated the component of the original regulations that required some “secondary producers” to maintain copies of records, allow inspections, and so on. The new regulations include an exception that appears to conform to the Sundance case, which held that the original regulations contradicted the statute by requiring record-keeping by categories of businesses that were clearly exempted by the statute. The new reg states that “production” that requires record-keeping “does not include mere distribution or any other activity which does not involve hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted.” But then “secondary producers” are listed as an exception to the exception, which seems to entirely fly in the face of Sundance. That stands to dramatically expand the number of required record keepers.
One significant aspect of the proposed amended regulations is that they do not recognize the July 3, 1995 effective date to which the DOJ agreed way back then. Nothing is changed in the regulations with respect to the 1990/1992 effective dates, which will create some problem with content that was produced between 1990 and 1995. Recall that the enforcement of the statute and original regulations was enjoined by a federal court before either could become effective. The injunction against enforcement was not lifted until the injunction itself was dissolved on July 3, 1995, after the Supreme Court declined to disturb the federal court of appeals ruling upholding the statute and regulations for the most part. That discrepancy certainly will be the subject of much public comment.
One odd aspect of the new regulations is that they seem to confine the applicability of the statute to commercial distribution, exempting “noncommercial or educational distribution ... including transfers conducted by bona fide lending libraries, museums, schools or educational organizations.” Once again, the DOJ appears to have promulgated regulations in a manner not authorized by the underlying statute.
The new regulations supposedly, at least according to the attorney general, reduce the number of categories of identification documents that are acceptable forms of identification. The regulations now take the definition of “identification document” from 18 U.S.C. §1028(d), while the proposed regulations change that to §1028(d)(3), which is where the definition of “identification document” is found. This arguably does not change anything but, rather, only clarifies an ambiguity. The relevant definition is as follows:
“The term ‘identification document’ means a document made or issued by or under the authority of the United States Government, a State, political subdivision of a State, a foreign government, political subdivision of a foreign government, an international governmental or an international quasi-governmental organization which, when completed with information concerning a particular individual, is of a type intended or commonly accepted for the purpose of identification of individuals.”
However, the requirement is now a “picture identification document,” which narrows the allowable identification documents to one “issued by the United States, a State government or political subdivision thereof, or a United States Territory” which includes a photograph and can be verified by the issuing authority. That dramatically reduces option for foreign productions, since only a passport would suffice for most performers there.
This should have no impact upon the industry’s current prevailing practice, which is to require a passport, driver’s license or identification card issued by the same agency that locally issues drivers’ licenses. The consequences of a mistake in checking age are so great that producers typically are very careful.
The proposed regulations add burdens with respect to indexing, which for some may be substantial. Now, the records created and maintained after the effective date of the new regulations must include a copy of the depiction and, if the depiction is on the Web, “a copy of any URL associated with the depiction,” whatever that means.
The regulations now require what Legal Commentary has recommended since this whole scheme of regulations first surfaced in 1988, which is that the records be segregated from other records and include no extraneous records. Since the last thing any producer wants is to have the inspectors digging through other company records, the regulations require what common sense has dictated from the outset.
Any record created or amended after the effective date of the new regulations, however, is subject to more particularized indexing requirements. The more specific requirements certainly encourage the use of a computer database program for record-keeping; as has always been thought appropriate here, it requires the ability to sort records according to every category of record kept.
Oddly, the proposed new regulations omit the sentence, “The business address shall refer to a street address and not a post office box.” Since it is difficult to imagine a “place of business,” which is where the records must be located, being a post office box, this does not appear to be a meaningful change; and the label (“STATEMENT”) still must identify a street address, not a post office box.
Perhaps the most dramatic change is that the proposed new regulations include meaningful detail about inspections, including that there cannot be any notice of inspections (would you really expect them to give advance notice?), that the inspectors must announce the purpose of the inspection, that inspectors can copy records (figure on plenty of that) and that the inspector can give the producer informal notice of apparent violations disclosed by the inspection. The proposed regulations allow the inspectors to “seize any evidence of the commission of any felony while conducting the inspections,” which is interesting. In the first place, any violation of the record-keeping and labeling requirement is a felony. And distribution of obscene material is a felony, but “obscene” according to whom?
Of immediate impact is that your business hours are now regulated by the federal government. Believe that? The proposed regulations say that inspections shall take place during “normal business hours” which, in turn, are defined as 8:00 a.m. to 6:00 p.m local time, and any other time during which the producer is conducting business. There is no limitation concerning weekends or holidays. That’s right! You now must be open for business, or at least for inspections, 10 hours per day every day of the year. Well, at least the proposed regulations limit each producer to one inspection per four-month period ... unless there is suspicion of a violation.
The only change, except for Web sites, concerning the label – or “statement” in DOJ parlance – is about the typeface, which now must be no smaller than the largest typeface used “for a performers, director, producer or owner,” and in any event at least 11-point type, which is 11/72 of an inch.
Whether the DOJ, which authored these proposed regulations, will respond to the expected avalanche of public comment remains to be seen. The regulatory changes are not effective until the final regulations are published in the Federal Register. Stay tuned.
Clyde DeWitt is a partner in the Los Angeles, Calif.-based, national law firm of Weston, Garrou & DeWitt. He can be reached through AVN Online’s offices, at his office at 12121 Wilshire Boulevard, Suite 900, Los Angeles, CA 90025, or at [email protected]. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases, and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.
