9/23. The Federal Communications Commission (FCC) belatedly published a notice in the Federal Register (FR) that announces, describes, recites, and sets the effective date for, its 2010 rules for broadband internet access service (BIAS) providers.

The FCC's rules are contained in the Report and Order (R&O) [194 pages in PDF] adopted on December 21, 2010, and released on December 23, 2010. This R&O is FCC 10-201 in GN Docket No. 09-191 and WC Docket No. 07-52. See also, stories in TLJ Daily E-Mail Alert No. 2,186, December 22, 2010, and TLJ Daily E-Mail Alert No. 2,188, December 24, 2010.

Publication in the FR is a prerequisite for filing a petition for review or appeal of a final order of the FCC. By delaying publication in the FR, the FCC delayed judicial review of its rules.

47 U.S.C. § 402 provides for judicial review of final orders of the FCC. 28 U.S.C §§ 2341-2351 provide for judicial review of agency orders generally.

Verizon and MetroPCS filed appeals in early January 2011 arguing that the FCC's BIAS rules exceed the statutory authority of the FCC, are arbitrary and capricious, and violated the Constitution. The FCC moved to dismiss both as premature on January 28.

On April 4, the U.S. Court of Appeals (DCCir) issued a per curiam order [PDF] that dismissed both appeals, without prejudice, as premature. It wrote that "The order will therefore be subject to judicial review upon publication in the Federal Register. ... Regardless of whether the order is reviewable by way of a petition for review, 47 U.S.C. § 402(a), or a notice of appeal, 47 U.S.C. § 402(b), the prematurity is incurable." See, story titled "Court of Appeals Dismisses Verizon's and MetroPCS's Premature Challenges to the FCC's BIAS Rules" in TLJ Daily E-Mail Alert No. 2,217, April 5, 2011.

The FCC's order adopting the BIAS rules is vulnerable to challenge on the grounds that the FCC lacks statutory authority to adopt these rules. The FCC's argument that it possesses authority is weak, due to the absence of language in the Communications Act giving the FCC authority to regulate BIAS providers, and the April 6, 2010, opinion [36 pages in PDF] of the U.S. Court of Appeals (DCCir) in Comcast v. FCC. See, story titled "Court of Appeals Vacates FCC's Comcast Order", and related stories, in TLJ Daily E-Mail Alert No. 2,072, April 7, 2010.

The FR notice states that the effective date of the BIAS rules is November 20, 2011. See, FR, Vol. 76, No. 185, Friday, September 23, 2011, at Pages 59192-59235.

Challenges to the FCC's BIAS rules will likely come from both the regulated entities, such as Verizon and MetroPCS, and from interest groups that seek a more burdensome regulatory regime, and which seek to have a Circuit other than the DC Circuit hear the challenges.

Verizon and other BIAS providers can be expected to file in the DC Circuit, which decided the Comcast case, as well as other notable cases in which overreaching FCC rules were overturned. Groups that seek broader regulation, and which do not want the DC Circuit to review the BIAS providers' petitions, can be expected to file in multiple other circuits, hoping that in the judicial lottery conducted by the Judicial Panel on Multidistrict Litigation some other circuit will be assigned all challenges.

Sen. Kay Hutchison (R-TX), the ranking Republican on the Senate Commerce Committee (SCC), stated in a release that "I'm very disappointed that the FCC has decided to move forward with its misguided net neutrality order. Companies and industries that use broadband communications have flourished over the last decade without government intervention, yet the FCC has chosen to 'fix' a problem that does not exist. Rather than imposing new, unnecessary regulations on one of the few thriving sectors of our economy, government should get out of the way, and allow new jobs and investment in broadband technologies. In order to turn back the FCC’s onerous net neutrality restrictions, I will push for a Senate vote this fall on my resolution of disapproval."

Gigi Sohn, head of the Public Knowledge (PK), stated in a release that "We are prepared to vigorously defend the FCC's rules in court and in Congress." She also argued that the "Congress should allow the litigation to move forward to resolve intricate legal issues without political interference."

9/22. Sen. Al Franken (D-MN) and Sen. Chris Coons (D-DE) sent a letter to OnStar Corporation regarding changes to its privacy policy that provide for broad data collection, and sharing of data with third parties, for both current and former customers.

Both Senators are members of  the Senate Judiciary Committee (SJC), which is considering numerous surveillance, privacy and data security related bills.

OnStar is a subsidiary of General Motors. It utilizes Global Positioning System (GPS) location surveillance technology, and CDMA based wireless communications technologies, to provide navigation, voice communications, collision detection, stolen vehicle recovery, vehicle diagnostic, and other services.

OnStar published changes to its privacy policy that take effect in December of 2011. The new policy provides that "we ... may share the information we collect with law enforcement or other public safety officials, credit card processors and/or third parties we contract with who conduct joint marketing initiatives with OnStar."

It also states that OnStar shares information with "law enforcement or other public safety officials ... our wireless Service Providers ... your satellite radio provider ... credit card processors ... data management companies; and ... others as may be required to provide Service, to manage or operate the Data Connection, to protect the safety of you or others, or as required by law."

It adds that OnStar also shares information with "your Vehicle Maker ... our affiliates ... Vehicle dealers ... your satellite radio provider and our wireless Service Providers ... third parties with whom we contract with to conduct joint marketing initiatives with OnStar".

It also states, with respect to voice communications, that the information collected includes "Customer Proprietary Network Information (CPNI) such as call detail records". However, it adds that "We do not share CPNI information specific to you with third parties for their marketing purposes".

Use of CPNI is regulated by 47 U.S.C. § 222.

The changes also provide that "Unless the Data Connection to your Vehicle is deactivated, data about your Vehicle will continue to be collected even if you do not have a Plan."

The changes also state that OnStar may collect any information, and share it with anybody, provided that it is "anonymized". Neither the changes, nor the January 2011 privacy policy explain how OnStar anonymizes data. The January 2011 document states merely that "Anonymized information is data that can no longer be identified as belonging to you or your car." The September 2011 changes merely state that "Anonymized information is data that can no longer be identified as belonging to you or your Vehicle."

Sen. Franken and Sen Coons wrote "to express our serious concern with OnStar's announcement earlier this week that it would continue to track the GPS locations of its customers' vehicles even if those customers have affirmatively ended their contractual plans with OnStar".

"In a nutshell, OnStar is telling its current and former customers that it can track their location anywhere, anytime -- even if they cancel their subscriptions -- and then give or sell that information to anyone as long as OnStar deems it safe to do so."

They concluded that "OnStar’s actions appear to violate basic principles of privacy and fairness for OnStar's approximately six million customers -- especially for those customers who have already ended their relationships with your company. OnStar's assurances that it will protect its customers by “anonymizing” precise GPS records of their location are undermined by a broad body of research showing that it is extraordinarily difficult to successfully anonymize highly personal data like location."

The two Senators also propounded numerous interrogatories. For example, they ask about compliance with federal law, OnStar's history of data breaches, how OnStar anonymizes data, and disclosure of sales of location data.

They also ask, "Will OnStar agree to stop the tracking, sharing, and sale of location data for customers that have ended their subscriptions to OnStar services?"

The SJC's Subcommittee on Privacy, Technology and the Law held a hearing on May 10, 2011, titled "Protecting Mobile Privacy: Your Smartphones, Tablets, Cell Phones and Your Privacy". See, SJC web page with hyperlinks to prepared testimony and video.

9/20. The Senate Finance Committee (SFC) held a hearing titled "Tax Reform Options: Incentives for Innovation", which focused on the research and development (R&D) tax credit.

Sen. Max Baucus (D-MT), the Chairman of the SFC, wrote in his prepared testimony [PDF] that "The U.S. still leads the world in international patent filings, but we risk losing that title. While our international patent applications fell slightly from 2006 to 2010, China’s tripled. We aren’t doing enough to support our research and development sectors, and this puts our country’s competitiveness at risk."

He added that "Today, out of the 21 OECD nations, the U.S. ranks 17th in tax incentives for research and development."

Sen. Orrin Hatch (R-UT), the ranking Republican on the SFC, wrote in his prepared testimony [PDF] that "there are steps that this Congress could take today to start turning the economy around and create American jobs, and those steps begin with the promotion of innovation. ... Reauthorizing the R&D credit, and making it permanent, would be a real lift for our economy."

On September 19 Sen. Baucus, Sen. Hatch, and others introduced S 1577 [LOC | WW | PDF], the "Greater Research Opportunities with Tax Help Act", or "GROWTH Act", a bill that would revise and make permanent the R&D tax credit. See, related story in this issue titled "Senators Introduce R&D Tax Credit Bill".

Scott Wallsten of the Technology Policy Institute (TPI) wrote in his prepared testimony that "R&D exhibits classic positive externalities. In other words, its benefits extend beyond the innovator as others build on it. But that very feature also means that the innovator does not earn all the returns to the investment. Because firms base their R&D spending on their own expected returns, not the social expected returns, they invest less than they would if they could appropriate all the returns. That is, by themselves businesses are likely to invest fewer resources than is efficient from society’s overall perspective."

Wallsten wrote that "government can play an important role in supporting R&D, ranging from conducting R&D itself, to directly financing others to do it, to creating incentives for others to invest their own money in it". He said that the US government does all of these, but, the trick is for government to support R&D that would not take place but for that government support.

He said that "the tax credit appears to be a rather successful policy tool that most studies find does stimulate additional R&D". However, he added that "two factors have probably blunted its effectiveness". First, "its lack of permanent status reduces its ability to coax firms to do more R&D", and second, "how it determines which expenditures are eligible

He also said that incenting private sector R&D entails more than changing tax law. He noted that "most R&D expenditures are for scientists and engineers, and their supply is relatively fixed in the short run. More spending on R&D without increasing the numbers of scientists and engineers may result in higher salaries for people already doing R&D, but not more R&D itself. The most effective way to increase the supply of scientists and engineers in the U.S. is to attract the best from wherever they are, which requires looser immigration policies".

Dirk Pilat of the Organisation for Economic Co-operation and Development (OECD) wrote in his prepared testimony [PDF] that "R&D tax incentives are now widely used in OECD and non-OECD countries. Today, 26 out of the 34 OECD member countries offer R&D tax incentives to business. Amongst non-OECD countries, Brazil, China, India, the Russian Federation, Singapore and South Africa also provide tax incentives for R&D."

He added that "Tax incentives for R&D are expected to lead to an increase in private investment in R&D, which in turn should lead to an increase in innovation outcomes and ultimately to an increase in long run growth."

Michael Rashkin, author of the book titled "Practical Guide to Research and Development Tax Incentives: Federal, State, and Foreign", wrote in his prepared testimony [PDF] that the R&D tax credit "has been ineffective and has not increased R&D spending".

He said that it "now benefits large cash-rich companies, but not cash-deprived start-ups". He argued that it should be "applicable only to innovative research and breakthrough products", and not to "routine, risk-free research". He also urged greater taxation of "R&D and manufacturing operations outside the US".

See also, prepared testimony [PDF] of Annette Nellen of San Jose State University business school.

On September 19, the R&D Credit Coalition released a report [22 pages in PDF], prepared for it by Ernest & Young, titled "The R&D Credit: An effective policy for promoting research spending". See also, release. The R&D Credit Coalition also submitted written testimony for the SFC's hearing. It urged the Congress to enact "a strengthened and permanent research and development incentive as part of any tax reform measure".

The House will not meet.

The Senate will meet at 9:00 AM.

9:00 AM - 1:00 PM. The Federal Communications Commission's (FCC) Communications Security, Reliability, and Interoperability Council will meet. See, notice in the Federal Register, Vol. 76, No. 169, Wednesday, August 31, 2011, at Pages 54234-54235. Location: FCC, Commission Meeting Room (Room TW-C305), 445 12th St., SW.

9:30 AM. The House Foreign Affairs Committee (HFAC) will hold a hearing titled "Job Creation Made Easy:
The Colombia, Panama, and South Korea Free Trade Agreements". See, notice. Location: Room 2172, Rayburn Building.

9:30 - 11:00 AM. The Information Technology and Innovation Foundation (ITIF) will host a panel discussion titled "Measuring Broadband Performance". The speakers will be Peter Sevcik (NetForecast) and Richard Bennett (ITIF). See, notice. Location: ITIF/ITIC, Suite 610A, 1101 K St., NW.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host a brown bag lunch titled "Meet the FCBA President -- A Mentoring Event with Yaron Dori". For more information contact Mark Brennan at mark dot brennan at hoganlovells dot com or Brendan Carr at bcarr at wileyrein dot com. Location: Covington & Burling, 1201 Pennsylvania Ave., NW.

2:00 - 4:00 PM. The Department of Health and Human Services' (DHHS) Office of the National Coordinator for Health Information Technology's (ONCHIT) Privacy & Security Tiger Team will meet. See, notice in the Federal Register, Vol. 76, No. 158, Tuesday, August 16, 2011, at Page 50735-64. This event is open to the public via teleconference and webcast only.

EXTENDED FROM SEPTEMBER 12. Extended deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) in response to its proposal to revise the Trademark Rules of Practice and the Rules of Practice for Filings Pursuant to the Madrid Protocol regarding the requirements for specimens and for affidavits or declarations of continued use or excusable nonuse in trademark cases. See, original notice in the Federal Register, Vol. 76, No. 133, Tuesday, July 12, 2011, at Pages 40839-40844. See also, extension notice in the Federal Register, Vol. 76, No. 175, Friday, September 9, 2011, at Pages 55841-55842.

The House will meet at 12:00 NOON.

The Senate will meet at 9:30 AM.

Opening conference of the Supreme Court. See, calendar. Closed.

12:00 NOON. Deadline to submit comments to the Office of the U.S. Trade Representative (OUSTR) to assist it in preparing its annual report to the Congress on the People's Republic of China's compliance with the commitments made in connection with its accession to the World Trade Organization (WTO). See, notice in the Federal Register, Vol. 76, No. 156, Friday, August 12, 2011, at Pages 50286-50287. See also, story titled "OUSTR to Hold Hearing on PRC Compliance with WTO Commitments" in TLJ Daily E-Mail Alert No. 2,290, August 15, 2011.

12:15 - 1:30 PM. The Federal Communications Commission (FCC) will hold a meeting titled "Meet the Media Bureau Chief William Lake and Staff". The FCBA states that this is an FCBA event. Location: Davis Wright Tremaine, Suite 800, 1919 Pennsylvania Ave., NW.

12:15 – 1:45 PM. The Federal Communications Bar Association's (FCBA) Legislative Committee will host a brown bag lunch titled "Curious about how people get jobs on the Hill?". The speakers will be current and former Congressional staffers. Reporters will likely be barred from attending. Location?

12:00 NOON - 1:30 PM. The American Bar Association (ABA) will host a webcast panel discussion titled "Cloud Computing Demystified: Is It a Revolution or Evolution?". The speakers will be Stephen Hollman (Business & Technology Law Group), David Cearley (Gartner, Inc.), David McClure (GSA, Office of Citizen Services and Innovative Technologies), Frank Morrow (Microsoft), Edith Ramirez (FTC Commissioner), John Tomaszewski (TRUSTe). Prices vary. CLE credits. See, notice.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Access to Government Committee will host a brown bag lunch at which representatives of the FCC will speak about the FCC's recent web site redesign. Location: Sidley Austin, 6th floor, 1501 K St., NW.

1:00 - 4:00 PM. The Federal Communications Commission's (FCC) Technological Advisory Council will meet. See, notice in the Federal Register, Vol. 76, No. 183, Wednesday, September 21, 2011, at Page 58513. Location: FCC, Commission Meeting Room, 445 12th St., SW.

2:00 - 3:30 PM. The Federal Communications Commission's (FCC) Consumer Advisory Committee will meet. See, notice. Location: FCC, Room 6B516 (6th floor South Conference Room), 445 12th St., SW.

9:00 AM - 3:00 PM. The Department of Health and Human Services' (DHHS) Office of the National Coordinator for Health Information Technology's (ONCHIT) HIT Standards Committee will meet. See, notice in the Federal Register, Vol. 76, No. 158, Tuesday, August 16, 2011, at Page 50735-64. Location: Washington Marriott Hotel, 1221 22nd St., NW.

9:30 AM - 12:30 PM. Assembly of the Administrative Conference of the United States' Committee on Regulation will hold a meeting regarding international regulatory cooperation. It will consider how the Conference might update its Recommendation 91-1, titled "Federal Agency Cooperation with Foreign Government Regulators", in light of developments in United States government structure, trade agreements, and technology. See, notice in the Federal Register, Vol. 76, No. 171, Friday, September 2, 2011, at Page 54730. Location: Suite 706 South, 1120 20th St., NW.

10:00 AM - 12:00 PM. The Department of State's (DOS) Office of Legal Adviser's (OLA) Office of Private International Law will hold a public meeting regarding the future work of Working Group IV of the United Nations Commission on International Trade Law. Working Group IV addresses international electronic commerce. It will next meet on October 10-14, 2011, in Vienna, Austria. See, notice in the Federal Register, Vol. 76, No. 178, Wednesday, September 14, 2011, at Page 56865. Location: DOS.

5:00 PM. Extended deadline to submit comments to the Department of Energy (DOE) regarding its proposed determination for set-top boxes and network equipment as a covered consumer product under the Energy Policy and Conservation Act, which is codified at 42 U.S.C. § 6291, et seq. See, original notice in the Federal Register, Vol. 76, No. 115, Wednesday, June 15, 2011, at Pages 34914-34918, and extension notice in the Federal Register, Vol. 76, No. 131, Friday, July 8, 2011, at Pages 40285-40286.

The contract between the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) and the Internet Assigned Numbers Authority (IANA) expires. The IANA manages the global coordination of the Domain Name System (DNS) root, internet protocol (IP) addressing, and other IP resources pursuant to this contract.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its draft SP 800-133 [24 pages in PDF] titled "Recommendation for Cryptographic Key Generation".

9/19. Sen. Max Baucus (D-MT), Sen. Orrin Hatch (R-UT), and others introduced S 1577 [LOC | WW | PDF], the "Greater Research Opportunities with Tax Help Act", or "GROWTH Act". This is another bill to increase and make permanent the alternative simplified research credit.

The Congress enacted its first research and development (R&D) tax credit bill in 1981 as a temporary measure. Since then the Congress has repeatedly extended it for one or a few years. The credit is now set to expire on December 31, 2011. See, story titled "Tax Bill Enacted With R&D Tax Credit Extension" in TLJ Daily E-Mail Alert No. 2,182, December 18, 2010.

The R&D tax credit is codified at 26 U.S.C. § 41. The existing credit has two calculation formulas. First, the basic credit rate is 20%. But it only applies to research over a certain base amount related to the business's historical research intensity, which is the ratio of its research spending to gross receipts back in the 1980s. It is outdated and obsolete.

Second, the alternative simplified credit (ASC) rate is 14%. It applies only to qualified research expenses that exceed 50 percent of the average qualified research expenses for the three preceding taxable years. For a more detailed explanation of this topic, see the Department of the Treasury's (DOT) March 25, 2011, report [13 pages in PDF] titled "Investing in U.S. Competitiveness: The Benefits of Enhancing the Research and Experimentation (R&E) Tax Credit".

S 1577 would make the R&D tax credit permanent.

It would eliminate the basic formula, effective December 31, 2011. However, it would raise the ASC from 14% to 20%, and revise how it is calculated.

The other original cosponsors of the bill are Sen. John Jerry (D-MA), Sen. Olympia Snowe (R-ME), Sen. Ron Wyden (D-OR), Sen. Mike Crapo (R-ID), Sen. Debbie Stabenow (D-MI), Sen. Jon Cornyn (R-TX), Sen. Maria Cantwell (D-WA), and Sen. Bob Menendez (D-NJ).

The bill was referred to the Senate Finance Committee (SFC), which held a hearing on September 20 titled "Tax Reform Options: Incentives for Innovation". See, related story in this issue titled "Senate Finance Committee Holds Hearing on R&D Tax Credit".

One related, but simpler, bill in the House is HR 942 [LOC | WW], titled the "American Research and Competitiveness Act of 2011".

See also, stories titled "Rep. Gerlach and Rep. Kissell Introduce Another R&D Tax Credit Bill" in TLJ Daily E-Mail Alert No. 2,243, May 17, 2011, "Rep. Carney Introduces R&D Tax Credit Bill" in TLJ Daily E-Mail Alert No. 2,235, May 7, 2011.

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