Conflict Minerals and Pay Ratio: SEC Rules of Unintended Consequences

U_S_SEC_logoIn a highly influential 1936 essay, “The Unanticipated Consequences of Purposive Social Action,” sociologist Robert K. Merton explained that there were five sources of unintended consequences. One is the “imperious immediacy of interest:” someone wants the intended consequences of an action so badly that they consciously ignore any unintended effects. One can find many examples of this in government regulation. In fact, the Securities and Exchange Commission (SEC) provided an ideal illustration recently with its final rule that requires each listed company to express, in a ratio, how its workforce’s median pay compares with its CEO’s compensation. Continue reading

Will 2015 Dietary Guidelines for Americans Further the Demonization of Caffeine?

cup of coffeeOfficials at the U.S. Department of Agriculture and the U.S. Department of Health and Human Services are currently finalizing the 2015 Dietary Guidelines for Americans (DGA). Those agencies will rely quite heavily on the Scientific Report of a USDA/HHS advisory panel—the Dietary Guidelines Advisory Committee (DGAC)—that Washington Legal Foundation and many other interested parties have criticized as driven more by ideology than sound science. The USDA and HHS Secretaries recently assured the public that the DGA will provide “nutritional and dietary information … based on a preponderance of the evidence.” One test of the Secretaries’ fidelity to that statutorily-mandated criterion will be whether the Dietary Guidelines embrace the Scientific Report’s thoroughly unscientific conclusions on caffeine. Continue reading

Update: Major Media Management Company Signs on to Voluntary Effort to Deter Online Copyright Piracy

copyrightwarningIn a February 17, 2015 post, we applauded a new voluntary program developed by advertising trade associations, the Brand Integrity Program Against Piracy. The program’s goal is to deter the placement of advertisements for legitimate products on websites that help disseminate illegally-copied entertainment content or knockoffs of trademarked products.

This voluntary property-rights protection effort received a considerable boost last week when GroupM, the investment management arm of global media and advertising services giant WPP, formally endorsed the Brand Integrity Program. GroupM’s digital marketing and media partners handle over 32% of the world’s media billings.

As explained in our February post, a trade association-created entity, the Trustworthy Accounting Group (TAG), initiated a program to certify companies that assist advertisers and ad agencies to avoid ad placement on cyberlockers and other undesirable websites. Third-party accounting entities such as Ernst & Young will assess those wishing to be certified. If these companies meet certain effectiveness criteria, TAG will validate them as “Digital Advertising Assurance Providers” (DAAPs).

GroupM is requiring that its partners either be certified as DAAPs or contract with companies that have earned that certification. The joint GroupM-TAG press release explained that TAG will announce the first validated DAAPs before the end of 2015, and that GroupM’s partners must be validated as or hire a DAAP by the end of March 2016.

Online copyright and trademark infringement is a multi-billion-dollar problem for economically critical U.S. businesses. The pursuit of rogue businesses through civil or criminal law enforcement has expanded in recent years, but pirate sites and their creators are quite elusive and the legal process is slow. For instance, it’s been four years since New Zealand officials arrested Megaupload founder Kim Dotcomm, and a decision has yet to be made on his extradition to the U.S.

Voluntary efforts to undermine the revenue stream for cyberlockers and other trafficking sites, therefore, are a critically important weapon against online piracy. TAG’s enlistment of GroupM and its partners is a positive development, one that could accelerate the recruitment of more partners for the Brand Integrity Program Against Piracy.

FDA’s Latest Regulatory Salvo at “Added Sugars” Ignores Federal Laws, Due Process, Part II

FDAThis is the second part of a two-part commentary on FDA’s requirements that added sugars be listed on the food Nutrition Facts panel, and that a Daily Reference Value (DRV) be set for added sugars and included in the panel footnote. For part I, click here.

 FDA’s Reliance Solely on a DGAC Report to Establish a DRV is Unprecedented

When implementing the Nutrition Labeling and Education Act, FDA first set daily reference values in 1993 based on “sufficient scientific consensus,” a standard established by the agency under that law. FDA did not rely on a federal advisory committee’s report. Moreover, it relied only minimally on the Dietary Guidelines for Americans itself. Instead, FDA cited numerous consensus reports which, taken together, constituted “sufficient scientific consensus.” Continue reading

FDA’s Latest Regulatory Salvo at “Added Sugars” Ignores Federal Laws, Due Process, Part I

FDAAs we discussed in an August 11 post, a “supplementary proposed rule” from the Food and Drug Administration (FDA) has taken the federal government’s contrived campaign against “added sugars” to a new level. FDA not only cites a federal advisory committee’s report as retroactive justification for added-sugars disclosure on food labels, it also seeks to establish a Daily Reference Value (DRV) for added sugars. The DRV would be used to calculate a “%DV” that would appear in addition to the grams of added sugars on the Nutrition Facts label. Finally, FDA released results of a consumer survey, completed after its initial added-sugars labeling proposal in March 2014, in support of the Nutrition Facts mandate. The public comment period for these items ends on October 13.

In this two-part commentary, we discuss some of the federal statutory and administrative procedural problems with the supplementary proposed rule. These legal infirmities, which stakeholders will likely raise in their public comments, could expose the agency to court challenges. Continue reading

Health Canada Gets it Right, While FDA Goes Further Astray, on “Added Sugars” Labeling

FDAIn a comment critical of his former employer’s proposal to mandate “added sugars” labeling, a former Director of the Food and Drug Administration’s Office of Food Labeling  wrote, “‘Added Sugar’ is the ‘bête noir‘ of this decade for many in the nutrition community.” That community’s obsession with added sugars has hit an all-time high (or low) with FDA’s July 27 release of a proposed rule that “supplements” its March 3, 2014 proposed revision of the ubiquitous food Nutrition Facts panel. While U.S. regulators have been busy affirming the righteousness of their irrational approach, health officials in neighboring Canada have taken a far more reasoned stance. The contrast between the latter’s position and FDA’s proposal is quite instructive.

“Added Sugars” Charade.  Sound science and the history of government nutrition policy dictate that narrowly focusing on one food, ingredient, or nutrient is exactly the wrong way to reduce obesity. Past government pronouncements on the evils of fat and cholesterol pushed consumers away from items such as lean meat and eggs, and toward products like fat-free cookies packed with sweeteners. Now, government is admitting that we shouldn’t worry so much about fat. It’s also no longer clear that salt deserves its status as a longtime public-health bogeyman. Continue reading

Federal Judge, Referencing FDA Order on Trans Fat, Permits State-Law Class Action to Proceed

food-courtThe Food Court strikes again.

On July 15, U.S. District Court for the Northern District of California Judge William Alsup rejected Nissin Foods Company’s motion to dismiss a claim alleging that Nissin’s use of trans fat in its instant noodles was an unfair trade practice under California law. The decision comes just a month after the federal Food and Drug Administration (FDA) issued a Declaratory Order removing the generally recognized as safe (GRAS) designation from partially hydrogenated oils (PHOs), the main source of trans fat in Americans’ diets. Judge Alsup’s opinion is the first we know of to reference FDA’s order. Continue reading