2257 Update: 9-15-08

Dear FSC Members,

I have received some calls about 2257 lately with members wondering about its current status. I thought it would be helpful if I sent out a brief overview of 2257 as it currently stands (Special thanks to Reed Lee and Jeffrey Douglas for their help with this document). 2257 is a complicated issue because there have been numerous developments with a great deal of bureaucracy and an equal amount of ambiguity. In this email will briefly explain 2257's major developments and give you a basic idea of where we stand at this point in time.

FSC's INJUNCTION
On December 28, 2005, Judge Walker D. Miller ruled on the motion for a preliminary injunction in FSC v. Gonzales, granting the Free Speech Coalition a substantial, though partial, victory. The judge essentially struck down the secondary producer provision of the regulations while leaving intact the primary producer obligations until the full case is heard in court.

Dear FSC Members, I have received some calls about 2257 lately with members wondering about its current status. I thought it would be helpful if I sent out a brief overview of 2257 as it currently stands (Special thanks to Reed Lee and Jeffrey Douglas for their help with this document). 2257 is a complicated issue because there have been numerous developments with a great deal of bureaucracy and an equal amount of ambiguity. In this email will briefly explain 2257's major developments and give you a basic idea of where we stand at this point in time. FSC's INJUNCTION On December 28, 2005, Judge Walker D. Miller ruled on the motion for a preliminary injunction in FSC v. Gonzales, granting the Free Speech Coalition a substantial, though partial, victory. The judge essentially struck down the secondary producer provision of the regulations while leaving intact the primary producer obligations until the full case is heard in court. In March of 2007, Judge Miller issued an interim ruling dismissing some causes of action and allowing others to proceed in light of the Adam Walsh Act amendments to 18 U.S.C. § 2257 signed into law on July 27, 2006. This in effect diminished the FSC injunction for secondary producers. Clearly this was a disappointing decision for FSC, but there are a number of constitutional issues, previously appropriately avoided by Judge Miller that can now be addressed. The case is currently on administrative hold while the Justice Department rewrites the regulations.

2257 PROPOSED RULES AND REGULATIONS
In July of 2007 the DOJ issued proposed 2257 rules and regulations. After the release of this type of regulation, a period for public comment is required. FSC launched a public comment campaign that resulted in numerous comments from the industry. In addition, FSC contracted with Georgetown Economic Services and Kelly Drye, a firm that specializes in government rules and regulations, for an economic report discussing the burden of 2257 on the industry. The report also pointed out extensive flaws and government regulation policy violations that must be addressed prior to the government's release of the final regulations. FSC simultaneously issued a comment that supported the report's findings and recommended a process for ID verification that would not only enable the industry to be fully compliant, but also fulfill the stated purpose of the law-- keeping underage performers out of the industry.

THE 6TH CIRCUIT DECISION
In the Connections case ruling of October, 2007, the 6th Circuit ruled 2257 unconstitutional on its face (kudos to Rondee Kamins and attorney Michael Murray for this victory in their 12-year battle). The United States Court of Appeals for the Sixth Circuit is one of the second highest federal courts so its decision is extremely important. There are two options the government has with this kind of decision. It can ask all of the judges in the court to review the three-judge panel decision. The government did just that, and the court accepted the request and the case is pending. The other option for the government is to ask the United States Supreme Court to review the case. Meanwhile, the FBI has "unofficially" suspended inspections pending the government's final response to the 6th circuit decision.

2257A
On July 12, 2007, the Department proposed amendments to the existing administrative regulations concerning Section 2257 ("2007 proposal"). These proposals were designed to respond to the Adam Walsh Act amendments to Section 2257 itself. The Department had announced that it would separately propose regulatory amendments pursuant to the Act's creation of Section 2257A which it did on June 6, 2008, before the final regulations for 2257 were released. And yet, the Department proposed to amend the existing Section 2257 regulations on account of the amendments made by the Adam Walsh Act to a specific section in 2257. FSC responded to the 2257A regulations reiterating the original concerns by resubmitting our 2257 comments and those of Georgetown Economic Services as well as a brief comment on the amendments and the unconventional process the government used in proposing the rules and regulations for 2257A in the first place.

WHAT NOW?
We are in a bit of a holding pattern, monitoring the next steps in the Connections case and waiting for the 2257 Final Rules and Regulations. Unless Section 2257 is dramatically rewritten, FSC will continue its litigation efforts at the appropriate time and place. Barring dramatic developments, that time still appears to be after the publication of the pending regulations in their final form. FSC anticipates that this is the best way to get to the basic constitutional issues. And the Connections decision demonstrates that it is the constitutional issues we should pursue.

On the other hand, if the Section 2257 battle moves back to Congress, we are ready for that too. FSC has worked hard to develop avenues for responsible policy input at the federal level. And we have already taken positions concerning Section 2257 and its amendments which may help legislators and their aides to realize why it is finally time to start listening to us when it comes to Section 2257.

As far as continued compliance is concerned, until the law is settled, the unfortunate truth is that there remain risks in this area. The specific risks you face can be effectively evaluated by only you and your attorneys on an individual basis.

Sincerely,
Diane Duke
FSC Executive Director