WASHINGTON - Senate Judiciary Committee Chairman Chuck Grassley expressed support for a proposal to clamp down on money laundering and tighten rules designed to prevent terrorists and other criminals from exploiting America's financial system.  Currently, financial institutions are required to verify the identities of customers, but not necessarily the identities of the individuals who control or benefit from a legal entity, such as a corporation, association or partnership.

"White Collar criminals, drug traffickers, and even terrorists can, at this very moment, exploit our financial system and shield their illicit activities behind these anonymous legal entity customers.  This [Notice of Proposed Rule Making] would close the loopholes and require banks to identify the natural person who is the beneficial owner of such an entity," Grassley said in a letter to the Financial Crime Enforcement Network.

The rule, proposed by the Financial Crimes Enforcement Network, clarifies and strengthens provisions under the Bank Secrecy Act's customer due diligence requirement by explicitly calling for financial institutions to identify and verify the beneficial owners of legal entity customers. The proposal also includes new requirements regarding the nature and purpose of customer relationships as well as ongoing monitoring of any suspicious transactions.

Grassley has long worked with colleagues in a bipartisan manner to increase transparency of corporate beneficiaries and strengthen laws designed to prevent money laundering and combat terrorist financing. A signed copy of Grassley's letter can be found here. Full text of the letter is available below.

 

June 8, 2015

VIA ELECTRONIC TRANSMISSION

 

Ms. Jennifer Shasky Calvery

Director

Financial Crimes Enforcement Network

U.S. Department of the Treasury

P.O. Box 39

Vienna, VA 22183

RE:      Docket No. FINCEN-2014-001; (RIN) 1506-AB25

Customer Due Diligence Requirements for Financial Institutions

Dear Director Shasky Calvery:

I write to express my support for FinCen's efforts to address gaps in the customer due diligence (CDD) requirement for financial institutions through the above referenced Notice of Proposed Rulemaking (NPRM).  I agree that banks should be required under the Bank Secrecy Act (BSA) to identify the beneficial owners of legal entity customers (i.e., corporations, partnerships, and limited liability companies) and this proposed rule would go a long way towards enhancing financial transparency and safeguarding our financial system against illicit use.

Current BSA regulations are helpful to enforcement efforts.  They ensure that banks know their customers and mandate the reporting of suspicious activity to law enforcement.  But certain gaps exist in the current regulatory framework.  In particular, it is unclear to me how banks and other financial institutions can ever truly "know" a legal entity customer if they cannot identify the natural person who ultimately controls it (or otherwise benefits from it).  White collar criminals, drug traffickers, and even terrorists can at this very moment exploit our financial system and shield their illicit activities behind these anonymous legal entity customers.  This NPRM would close the loophole and require banks to identify the natural person who is the beneficial owner of such an entity.

As you may be aware, I have been working with my Senate colleagues for a number of years - on both sides of the aisle - to develop legislation that would strengthen our anti-money laundering laws, combat terrorist financing, and mandate the disclosure of corporate beneficiary information to increase transparency and help our law enforcement and regulatory agencies protect our financial system.  But until these efforts bear fruit, FinCen's NPRM offers one of the most realistic and effective means of advancing these goals.

I would like to thank you for your efforts to ensure the integrity of our financial system.  Please direct any inquiries on this issue to Jeffrey Snyder of my committee staff at (202) 224-5225.

Sincerely,                    

Charles E. Grassley

Chairman

-30-

Good morning.  The Senate has a constitutional duty to conduct oversight of the Executive Branch to ensure that the federal regulatory system remains accountable to the People, and transparent in its operations.  Today's hearing gives us a chance to take a broad look at where things stand.

 

We all remember from civics class that under our constitutional separation of powers, Congress makes the laws, the Executive Branch enforces the laws, and the Judicial Branch interprets those laws.

 

If only it were that straightforward.

 

According to professor of law Jonathan Turley at George Washington University, "Our carefully constructed system of checks and balances is being negated by the rise of a fourth branch, an administrative state of sprawling departments and agencies that govern with increasing autonomy and decreasing transparency."

 

The Federal Register indicates there are over 430 departments, agencies, and sub-agencies in the federal government.  And the pronouncements of this ever-expanding administrative state impact nearly every aspect of Americans' daily lives.

 

The data support that fact.  The 113th Congress, for example, enacted just under 300 laws.  Over the same two-year period, the federal bureaucracy finalized over 7,000 regulations.  Just looking at these numbers, there's no denying that unelected bureaucrats are the real law-making force in this country.

 

In 1946, Congress recognized the growing power of the federal bureaucracy and enacted the Administrative Procedure Act (or "APA") to help ensure that regulations are crafted in an open, accountable and transparent manner?and that agency actions are reviewable by the courts to ensure compliance with the law.

 

Among the protections built into the APA is the public notice-and-comment rulemaking process, whereby Americans can weigh-in on proposed regulations, and agencies must objectively take those concerns into account when crafting a final rule.  This process is supposed to provide a meaningful opportunity for the public to hold regulators accountable, and to help insure that regulations are crafted in the public interest?rather than tailored to special interests.  The Judiciary Committee has primary jurisdiction over the APA, and we need to improve our oversight of it.

 

Unfortunately, we see repeated efforts today by agencies to undermine the public's role in the rulemaking process?and tactics that render the notice-and-comment process a mere formality.

Some agencies are resorting to litigation tactics, known as sue-and-settle, to speed up the rulemaking process and to keep affected members of the public?and even the States?away from the table when key regulatory decisions are negotiated behind closed doors.

 

These tactics often result in consent decrees or settlement agreements between an agency and like-minded interest groups, committing the agency to actions that haven't been publicly scrutinized.  In February, I introduced the Sunshine for Regulatory Decrees and Settlements Act, a bill that would shine light on these tactics and provide much-needed transparency before regulatory decisions are finalized.

 

But that's just one part of the issue.

 

We also see agencies going through the motions of notice-and-comment rulemaking, yet the public's role in the process appears to be anything but meaningful.  The EPA's recently finalized Waters of the U.S. (or "WOTUS") rule stands out as a sweeping example of this problem.

 

Instead of attempting to address the legitimate concerns raised during the open comment period, the EPA and its allies in the professional advocacy community pushed a narrative that portrayed critics of the rule as misinformed, nutty, or in favor of water pollution.

 

Agencies are supposed to remain objective during the notice-and-comment period.  But EPA's efforts to drive support for its own rule?while belittling the concerns of the public?indicate that it had a clear end-goal in mind, regardless of public opinion or the rule's impact.

 

According to a recent New York Times article, "the EPA's tactics in supporting the rule are clearly designed to move public opinion, at a time when Congress was considering legislation to block the agency from putting the rule into effect."

 

I share the concerns of folks across Iowa with the WOTUS rule.  Its sweeping scope has left farmers in limbo about what they can and cannot do on their own land.  And the indifferent attitude the EPA took toward agriculture is a real concern for my constituents who understand the impact that agriculture has on the state's economy.

 

More broadly, it's a real concern for just how unaccountable our regulatory system has become.

 

Congress recognized early on the threat of agency overreach.  And accordingly, the APA provides for judicial review over the administrative state.

 

However, as the influence and reach of the administrative state has grown, it seems like the ability and willingness of the federal courts to hold it accountable has diminished.  Over 30 years ago, the Supreme Court articulated the now-famous Chevron doctrine, whereby federal courts largely defer to an agency's legal interpretation of a statute it administers.

 

And recently, the Supreme Court determined that such heavy deference extends even to an agency's interpretation of the scope of its own jurisdiction.

 

Placing such questions of law into the hands of those who also write and enforce laws raises serious concerns.  As James Madison correctly observed, "the accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many... may justly be pronounced the very definition of tyranny."

 

So it's important that we consider these issues carefully, taking into account both the practical realities of our modern system of government and the separation of powers in our Constitution.

 

It's equally important that Congress recognize its own responsibility in the expansion of the administrative state.  For too long, Congress has delegated in broad strokes, asking the agencies to sort out the details.  If Congress is going to ask courts to tackle the tough questions, it needs to be willing to do so itself by reasserting its lawmaking power?and by speaking clearly and precisely when it chooses to use that power.

 

What's clear is that the status quo is not acceptable.  Today, small businesses and entrepreneurs operate in a regulatory environment that provides little relief from excessive red-tape, and one that offers little certainty upon which to base risk and investment.  Agencies are falling far short of their duties to weigh the costs and benefits of new regulations, and there's little the courts can do to hold them to account.  And regulations with hundreds of millions?and even billions?of dollars in impact are being imposed on the U.S. economy, all without a sufficient check by Congress.

 

In order to promote job growth and the American economy, we all must do better.

 

Today we're going to take a closer look at these and other concerns that have been raised.  And we're going to ask what Congress can do to restore accountability and transparency in the federal regulatory system.

 

Now, I'll turn to the Ranking Member for his opening remarks.

 

-30-

WASHINGTON - The Federal Trade Commission has committed to carefully consider information on potentially deceptive third-party hotel booking websites to determine whether enforcement or other actions is appropriate, following a recent inquiry by Judiciary Committee Chairman Chuck Grassley.

"I share the Federal Trade Commission's desire to protect consumer confidence and ensure a robust online marketplace for travel services. Consumers should have a variety of options when planning their trips, but third-party services should be upfront about who they are and what they are selling. Given the FTC's history of consumer protection in similar situations within the online ticket reseller industry, I encourage the FTC to ensure that consumers are not being deceived or misled with respect to booking hotel rooms with certain third-party websites," Grassley said.

Consumers who have been harmed should contact the FTC as the agency looks into this matter. The FTC's response to Grassley's inquiry is available here.

-30-

 

 

WASHINGTON - Senate Judiciary Committee Chairman Chuck Grassley of Iowa made the following statement regarding the announced resignation of U.S. Marshals Service Director Stacia Hylton:

"News of Ms. Hylton's decision to resign comes as the Marshals Service faces serious allegations of misconduct within its senior ranks. The Justice Department has referred whistleblower claims I've raised to the Inspector General for further investigation, and the Office of Special Counsel is pursuing separate inquiries following charges of whistleblower retaliation.  It's never good news when the head of an agency needs to step aside in the midst of these kinds of allegations, and it also doesn't mean the investigations are complete.  The Committee's inquiry into the broad range of whistleblower allegations will continue alongside the inquiries by the Inspector General and Special Counsel.  Accountability and transparency are the best tools to restore trust in an organization that is supposed to be setting an example of respect for the rule of law.

"As the Marshals Service moves forward, the next director must be committed to bringing real, positive change to what appears to be a culture corroded by unethical hiring practices, misuse of funds and retaliation against whistleblowers."

For several months, Grassley has been investigating claims by dozens of whistleblowers across multiple divisions of the Marshals Service, ranging from hiring quid pro quos involving Hylton to misuse of funds within the Asset Forfeiture Division to nepotism. Grassley's inquiries have led the Justice Department to call for an independent investigation into the claims.

Grassley sent a letter to the Hylton on March 18 regarding alleged misuse of the Asset Forfeiture Fund, including claims that officials used the Fund to purchase extravagant office furnishings.  However, the agency's response was incomplete and contained several discrepancies, requiring a greater explanation.

Grassley also sent a letter to the Justice Department on March 19 relating to allegations of an inappropriate exchange of favors that led to the hiring of a highly-paid yet unqualified contractor and Hylton's promotion of another Marshals Service official.  Grassley followed up on his letter regarding the alleged hiring quid pro quo on April 7, after the Justice Department failed to dispel these concerns. The Justice Department later stated on April 17 that it may have provided the Committee with incomplete or inaccurate information and is continuing its investigations. In this letter, the Justice Department supplied email records supporting the claims of a quid pro quo.

These exchanges have prompted other whistleblowers to come forward to raise new concerns and corroborate some of the earlier allegations. Unfortunately, senior leadership at the Marshals Service has a sordid track record of misconduct and lack of cooperation with federal investigations. Therefore, Grassley intends to continue his own investigation, which may continue into the tenure of Hylton's replacement.

-30-
WASHINGTON - Senator Chuck Grassley, Chairman of the Senate Judiciary Committee, is pressing for an update on the number of Public Safety Officers' Benefits applications that have not been resolved.

In a letter to Assistant Attorney General Karol Mason, Grassley wrote that a 2009 Government Accountability Office report said that families of fallen or injured officers waited an average of a year and a half before receiving an approval or denial of their Public Safety Officers' Benefits application.  This is despite a 2004 Attorney General memorandum that instructed the Public Safety Officer s' Benefits Office to make a determination on all filed claims within 90 days of receiving all necessary information.

Grassley initially wrote to Mason on January 12, 2015, and February 28, 2015, after learning that several cases of fallen Iowa officers had languished for over 3 years. In its response to Grassley, the Justice Department acknowledged "the need to improve the timeliness of the process for reaching PSOB claims determinations."

Grassley said the letter will help evaluate whether the Justice Department is making progress on providing answers to the families of fallen law enforcement officers.

Grassley's letter to Mason can be found below.  A signed copy of the letter can be found here.  The February 28, 2015, letter can be found here.  The Justice Department's March 27, 2015, response can be found here.  The January 12, 2015, letter can be found here.  The Justice Department's February 26, 2015, response can be found here.

VIA ELECTRONIC TRANSMISSION

 

The Honorable Karol V. Mason
Assistant Attorney General
Office of Justice Programs

U.S. Department of Justice
Washington, D.C., 20531

Dear Assistant Attorney General Mason:

In 1976, Congress passed the Public Safety Officers' Benefits (PSOB) Act to provide benefits to survivors of certain public safety officers who die in the performance of duty.[1] I write today to ensure that that the PSOB Office within the Justice Department's Office of Justice Programs (OJP) is doing its job on behalf of the families of these fallen officers by processing PSOB applications in a fair and timely manner.

In 2009, the Government Accountability Office (GAO) reported that families of fallen or injured officers waited an average of a year and a half before receiving an approval or denial of their PSOB application,[2] despite a 2004 Attorney General memorandum that instructed OJP's PSOB Office to make a determination on all filed PSOB claims within 90 days of receiving all necessary information.[3] A 2008 Office of Inspector General (OIG) report noted that legal reviews conducted by OJP's Office of General Counsel caused delays in the claims process.[4] The PSOB program director has acknowledged that calls and e-mails from claimants or agencies are not always returned.[5]

So, on January 12 and February 28, 2015, I wrote letters to you expressing my concerns over these findings and asking for status updates on pending applications.  On February 26, 2015, the Department acknowledged "the need to improve the timeliness of the process for reaching PSOB claims determinations."  The Department also announced that OJP had initiated a business process improvement review that would produce corresponding recommendations.

According to the Department's March 27, 2015 letter, as of February 28, 2015, there were a total of 656 PSOB death benefit applications that were pending at the PSOB Office level and 78 other PSOB death benefit applications that were pending at various appellate levels within the Department.

Please provide written responses to the following questions by June 12, 2015:

1.      As of the date of this letter, how many PSOB death benefit applications are pending at OJP?  Please provide a breakdown by state and date of filing.

2.      As of the date of this letter, how many PSOB disability benefit applications are pending at OJP?  Please provide a breakdown by state and date of filing.

3.      As of the date of this letter, how many PSOB education benefit applications are pending at OJP?  Please provide a breakdown by state and date of filing.

4.      What is the status of OJP's business process improvement review?  What recommendations for improvement have been identified?

Please number your responses according to their corresponding questions.  If you have any questions, please contact Jay Lim of my Committee staff at (202) 224-5225.  Thank you.

Sincerely,

 

Charles E. Grassley, Chairman

Committee on the Judiciary

WASHINGTON --- Senate Judiciary Committee Chairman Chuck Grassley of Iowa is expressing concern that the Obama administration is proposing expanding employment benefits to foreign students in the Optional Practical Training program despite the fact that the Government Accountability Office says it's susceptible to abuse and requires additional oversight.

In a letter to Department of Homeland Security Secretary Jeh Johnson, Grassley wrote, "The proposed new regulations, while still being internally discussed, are irresponsible and dangerous considering the Government Accountability Office report issued in March 2014 finding that the program was full of inefficiencies, susceptible to fraud, and that the Department was not adequately overseeing it."

Currently, foreign students are authorized to work for a 12-month period after graduation from a U.S. degree program.  Foreign students graduating from Science, Technology, Engineering and Math (STEM) degree programs are granted an additional 17 months of employment.  The legality of the STEM Optional Practical Training extension regulations is currently being challenged in federal court.

The Department's proposal would increase the extension period from 17 to 24 months and allow students to benefit from such an extension twice in their academic career.  A student who graduates from a STEM bachelor's degree program could work for up to three years after graduation in student status, then go on to get a master's degree and work for three more years after that.  Thus, under the proposed new regulation, a foreign student could work in the United States post-graduation on a student visa for a total of up to six years, completely outside of the nonimmigrant employment-based visa programs, and their associated worker protections, established by Congress.

Grassley had requested the Government Accountability Office report after hearing concerns that employers were targeting for recruitment foreign students with Optional Practical Training and learning that there was an atypical upward trend in participation.  The report is a follow-on to previous studies about the Student Exchange Visitor Program, which the Government Accountability Office has evaluated and found serious flaws.

The report found that foreign students, sometimes aided by school officials, were abusing the Optional Practical Training program to acquire unauthorized employment in the United States.  In addition, the report said that the federal government's inability to track the foreign students in the program resulted in a national security risk.

Grassley wrote, "Instead of addressing the weaknesses of the OPT program, or addressing the legitimate criticisms of the OPT-STEM program raised in the Washington Tech Alliance lawsuit, it appears the agency is intent on doubling down on the misguided policies that triggered the GAO report and lawsuit in the first place."

Here's a copy of the letter to Johnson.  A copy of the signed letter can be found here.  Grassley's March 7, 2014, letter to Johnson can be found here.

June 8, 2015

Via Electronic Transmission

The Honorable Jeh Johnson

Secretary

U.S. Department of Homeland Security

Washington, DC 20528

Dear Secretary Johnson:

On May 28, 2015, Senate Judiciary Committee staff received a briefing from officials of U.S. Immigration and Customs Enforcement (ICE) about proposed rules affecting foreign students.  I'm concerned about the Department's plans to expand the Optional Practical Training (OPT) program, and urge you to reconsider expanding the program without adding adequate controls and safeguards.

Currently, Department regulations authorize an F-1 student who has attended an ICE-certified college, university, conservatory, or seminary on a full-time basis for at least one academic year to receive up to 12 months of employment authorization per education level.[1] In 2008, the Department published regulations authorizing a 17-month extension of the OPT period for foreign graduates of U.S. degree programs in a science, technology, engineering, or mathematical (STEM) discipline.[2] The 2008 OPT-STEM regulation is currently the subject of a lawsuit by an association of American tech workers challenging its legality.[3]

I understand, based on the May 28 briefing, that the Department is moving forward with new regulations on OPT–

(1)   allowing foreign students with degrees in STEM fields to receive up to two 24-month extensions beyond the original 12-month period provided under OPT regulations, for a total of up to six years of post-graduation employment in student status; and

(2)   authorizing foreign graduates of non-STEM U.S. degree programs to receive the 24-month extension of the OPT period, even if the STEM degree upon which the extension is based is an earlier degree and not for the program from which the student is currently graduating (e.g. student has a bachelor's in chemistry and is graduating from an M.B.A. program).

The proposed new regulations, while still being internally discussed, are irresponsible and dangerous considering the Government Accountability Office (GAO) report issued in March 2014 finding that the program was full of inefficiencies, susceptible to fraud, and that the Department was not adequately overseeing it.[4]

Putting aside the legality of the OPT program, which I have questioned, I am greatly troubled by the proposal to lengthen to a full two years the OPT-STEM extension period.  Doing that would authorize foreign STEM students to remain working in the United States after graduation, potentially for a total of up to six years, completely outside of the nonimmigrant employment-based visa programs, and their associated worker protections, established by Congress.  As the plaintiffs in the Washington Tech Alliance lawsuit  state in their complaint: "DHS's OPT regulations deliberately circumvent the statutory caps on H-1B visas ... by allowing aliens who are unable to get an H-1B visa to remain in the United States and work on an F-1 student visa instead."[5] By increasing the total amount of time a foreign student may work in OPT after each degree to 3 years  - the same amount of time that an H-1B visa would be valid - there is little doubt  that the Administration has administratively established  a de facto shadow H-1B program, in violation of Congressional intent.  OPT is meant to be a temporary training program, not as a bridge to a longer-term work visa or a way for employers to hire cheaper foreign labor in lieu of Americans or foreign workers in visa programs with prevailing wage requirements.

The GAO found numerous problems with the OPT program.  Their report found that foreign students, sometimes with help of designated school officials, were abusing the program to acquire unauthorized work.  It also found that the Department was not adequately overseeing the program and did not have adequate monitoring mechanisms in place to ensure program compliance.  In fact, it found that the Department was not tracking vital information that was necessary to ensure schools and students were following ICE regulations, such as accruing too much unemployment, completing the program within a certain amount of time, or ensuring students were engaging in work that was in their field of study.

The report also exposed a major national security problem in that the Department does not know where tens of thousands of foreign students are living and working in the country.  The GAO said that "ICE cannot fully ensure foreign students working under optional practical training are maintaining their legal status in the United States."[6] The GAO report also found that ICE does not consistently collect information as to the type and timing of foreign students' employment, thus leaving the agency in the dark as to where these students are and for whom they might be working.

Instead of addressing the weaknesses of the OPT program, or addressing the legitimate criticisms of the OPT-STEM program raised in the Washington Tech Alliance lawsuit, it appears the agency is intent on doubling down on the misguided policies that triggered the GAO report and lawsuit in the first place.

After the GAO issued its report in 2014, I wrote to you and urged you to consider issuing a moratorium on OPT approvals until the program was secured and students could be located.  I also asked that the Department swiftly move to implement the GAO's recommendations.  The Director of U.S. Citizenship and Immigration Services, Alejandro Mayorkas, responded on your behalf to my letter.  He said the Department concurred with the recommendations and was working on them.  I would like to know the status of each GAO recommendation, whether they have been fully implemented, and if not, why not.  I also strongly urge the Department to undertake additional reforms to increase oversight and improve compliance monitoring beyond what the GAO has recommended.  I want to know what specific actions the Department will take to locate students, rein in fraud and abuse, and ensure compliance.

While I realize the agency is also considering requiring certifications that the employers will not displace U.S. workers, there does not seem to be any certification contemplated that the employer has recruited or tried to find U.S. workers who may be at least equally qualified as the foreign students.  Nor will the regulations, as proposed, require substantive wage requirements in order to ensure that employers are not exploiting foreign students and thereby driving wages down for U.S. workers.

I urge you to reconsider the proposed rule for STEM students, and at a minimum, address the underlying issues with the standard OPT program.  If you do not have the appetite to cease the program altogether, as I have suggested in the past, I would encourage the Department to, at a minimum: 1) increase oversight and monitoring compliance by schools as well as foreign students and those who employ them; 2) ensure that employment is secured before any OPT is granted; 3) ensure that foreign students report any changes in employment to designated school officials and be held accountable if they do not; 4) ensure that designated school officials are notifying the Department about the whereabouts of their students, including the employer's name and location and be held accountable if they do not; 5) require that employers who hire any foreign student with OPT be enrolled in E-Verify; 6) require employers to pay a reasonable wage to foreign students with OPT; 7) require employers of students with OPT to pay a fee equal to the wage savings from not having to pay FICA payroll taxes for OPT workers, in order to level the playing field between OPT and American workers; 8) more closely bind OPT training to the student's academic course of study; 9) establish avenues for foreign students to report employer abuse; and 10) place a numerical cap on the number of foreign students who may receive a work authorization.

In addition to providing me with updates on the GAO recommendations and any other oversight measures undertaken, I request your response to each of the ten recommendations I propose above and why the Department would not include them in the regulations being considered.

Please send a response to my questions and concerns no later than June 22, 2015.  I appreciate the consideration of your views and look forward to your reply.

Sincerely,

Charles E. Grassley

Chairman

Senate Judiciary Committee

PATENT Act Clears Committee with Overwhelming Vote of Support

WASHINGTON - The Senate Judiciary Committee today overwhelmingly passed the PATENT Act by a vote of 16-4.  The bill was cosponsored by Chairman Chuck Grassley, Ranking Member Patrick Leahy, and committee members John Cornyn, Chuck Schumer, Orrin Hatch, Amy Klobuchar and Mike Lee. 

The bipartisan PATENT Act takes concrete steps to stop abusive patent litigation practices and prevent bad actors from further undermining the system that has made the United States one of the most dynamic and innovative countries in the world.

The cosponsors said that there remain a few outstanding issues.  In the Manager's Amendment, there is placeholder language for amending claims in the Patent and Trademark Office's proceedings.  Negotiations are ongoing regarding this provision.  Another issue is in regards to a proposal by the life sciences community concerning the applicability of the Patent and Trademark Office's post grant proceedings to patents that are subject to the Hatch-Waxman Act and Biologics Price Competition and Innovation Act processes.   The cosponsors have agreed to work on these issues as the bill proceeds to the Senate floor.

"Abusive patent litigation is a threat to our economy and costs consumers and businesses billions of dollars each year.  Too often, small business owners are being targeted for doing nothing more than using off-the-shelf products.  These types of frivolous lawsuits cost them millions of dollars and force them to settle despite having a strong defense," Grassley said.  "This bill is the product of hundreds of hours of discussion among stakeholders, administration officials and senators.  It's a real effort to address concerns from all sides.  I look forward to continuing the debate on the Senate floor."

"When businesses are threatened with patent suits just for using a scanner they purchased, or website owners face threats simply for using basic software in e-commerce, the patent system is not working as intended.  After two years of hard work, I am proud that the Judiciary Committee came together to support the PATENT Act by a wide bipartisan vote. The bill we approved today achieves a strong balance and brings needed improvements that will ensure the U.S. patent system remains the envy of the world. I look forward to the bill's consideration in the full Senate," Leahy said.

"This legislation will protect entrepreneurs and innovators in Texas and across the country from abusive patent assertion practices that have burdened America's private sector for far too long," said Cornyn. "These sensible reforms are the best way to protect access to justice for plaintiffs with legitimate claims of infringement, and to deter those who seek to game the system."

"This is a critical step forward in leveling the playing field to fight back against patent trolls that are sucking the life out of our innovators. I hope that this balanced and bipartisan bill will move quickly to the floor," Schumer said.

"I am pleased that the Judiciary Committee is moving forward with the PATENT Act. The fundamentals of this bill are very good, with important, commonsense litigation reforms that include fee shifting, heightened pleading standards, demand letter reforms, and a mechanism to ensure recovery of fees against shell companies. This bill is crucial for Utah businesses and families that depend on our innovation economy. There is still work we must do to strike the right balance on IPR reform, and I am committed to work through all remaining issues to ensure that innovators in every sector and industry are protected from patent trolls," Hatch said.

"Today's action in the Judiciary Committee demonstrates a bipartisan commitment to cracking down on the patent trolls that stifle innovation and cost our nation millions," Klobuchar said. "Minnesota has one of the highest rates of patents per capita in the nation, and this legislation also makes important improvements to the patent review process so that legitimate patent holders can better protect their patent rights, which are vital to innovation and competition."

"I am very proud of the work everyone has done on this essential legislation," Lee said. "This bill protects small businesses and startups from abusive patent trolls in a manner that also honors the legitimate concerns of patent holders. I will continue to work hard to ensure a balanced approach, and I look forward to seeing this bill on the Senate floor." 

A copy of the bill text that was debated in the Judiciary Committee today can be found here.  To watch the proceedings from today's meeting, click here.

-30-

Fake takeover bids, SEC names suspected culprit

Sen. Chuck Grassley of Iowa last week expressed concern to the Securities and Exchange Commission (SEC) about the security of a public filings database after the database apparently was used for fake company takeover bids involving Avon and the Rocky Mountain Chocolate Factory.  The SEC today named a Bulgarian man as being an architect behind the hoaxes that fraudulently drove up share prices.  Grassley made the following comment on today's news.

"It's reassuring that the SEC found the person it thinks was responsible in these cases.  But I'm still concerned about whether there are systemic problems that could lead to this happening again.  Catching someone after the fact means the damage to the markets already has been done.   I look forward to the SEC's response to my inquiry."

Grassley's letter to the SEC last week is available here.

Judiciary Committee Leaders Introduce Legislation to Reform the EB-5 Regional Center Program

 

WASHINGTON - Senate Judiciary Committee Chairman Chuck Grassley and Ranking Member Patrick Leahy have introduced legislation to reauthorize and reform the EB-5 Regional Center program.

The Immigrant Investor Program, or EB-5, provides visas for foreign nationals who invest a certain amount of capital in the U.S. economy and create jobs.  The EB-5 Regional Center program allows for a certain number of those visas for foreign investors to pool their capital in centers that fund U.S. projects and commercial enterprises.

"The EB-5 regional center program was created to benefit American communities through investment and job creation.  In many instances the program has helped combat a stagnant economy.  At the same time, though, we've seen too many occasions where national security has been put at risk and job creation has taken a back seat.  Our bill strengthens oversight, ensures greater accountability and transparency, discourages fraud, and provides a higher priority for national security.  I'm pleased to work with Senator Leahy on these much needed reforms, which will be the basis for reauthorization," Grassley said.   

Grassley has conducted extensive oversight of the program over the last several years and was instrumental in alerting authorities about allegations brought forward by whistleblowers. Those worries stem from the fact that other federal agencies, including the FBI, had raised national security concerns with the approval of several EB-5 regional centers and visas for foreign investors, as well as allegations from the whistleblowers who said that requests from politically influential people were being expedited.

The Department of Homeland Security Inspector General substantiated the allegations of special access and favoritism for politically connected people.  In addition, a Government Accountability Office report due out this summer is also expected to raise questions about the economic impact and the department's ability to assess risks.

The bipartisan bill introduced today helps address some of those concerns.  It bolsters the Department of Homeland Security's authorities to administer the program, and provides investors with greater protections and more information about their investments.  It also increases transparency and oversight and provides DHS the ability to proactively investigate fraud, both in the United States and abroad, using a dedicated fund paid for by certain program participants. The bill would also raise the amount of investment required and help to restore the program to its original intent, by ensuring that much of the capital generated and jobs created occur in rural areas and areas with high unemployment.

The American Job Creation and Investment Promotion Reform Act

 

  • Provides increased authority to Homeland Security to deny or terminate regional centers or visas where there is fraud, criminal misuse, or a threat to public safety or national security;
  • Requires background checks of regional center and project developer principals;
  • Requires the Department of Homeland Security to vet EB-5 projects earlier in the process, before foreign nationals apply for visas or invest in projects;
  • Enhances the Department's ability to investigate the source of funds from foreign investors and limits the use of loaned or gifted funds;
  • Requires increased disclosures to investors regarding business risks and conflicts of interest, and compliance with securities laws;
  • Establishes an "EB-5 Integrity Fund" in which regional centers would pay an annual fee to be used by the Department of Homeland Security to conduct audits and site visits to detect fraud and monitor compliance.
  • Strengthens the definition of "Targeted Employment Area" (TEA) so more investment goes to areas with high unemployment and rural areas, as Congress originally intended;
  • Raises the investment threshold to $800,000 for TEAs and $1.2 million for non-TEAs;
  • Requires for the first time that foreign investors prove the creation of direct jobs, in addition to verifiable indirect jobs, before they're able to adjust to permanent residence.
  • Sets standards for Homeland Security employees to prevent preferential treatment and enhances transparency of how decisions regarding applications are made.

-30-

DoJ inspector general releases misconduct investigative report, more to come

The Department of Justice Office of the Inspector General today noted that it is now posting certain investigative summaries on its website.  The Office of Inspector General said, "These summaries will relate to cases of administrative misconduct involving:  (i) members of the Senior Executive Service and employees at the GS-15 grade level or above, and Assistant U.S. Attorneys, in which the OIG found misconduct and no prosecution resulted; or (ii) high-profile investigations, or where there may otherwise be significant public interest as determined by the OIG."  The first summary, involving misconduct by a U.S. Marshal, is available here. Sen. Chuck Grassley, chairman of the Judiciary Committee, made the following comment on this development.

"I commend Inspector General Horowitz for leading by example as chair of the Council of the Inspectors General on Integrity and Efficiency.  This ought to be standard operating procedure for every inspector general.  Their work is too important to keep secret.  Investigative reports ought to see the light of day so agencies will have to answer for misconduct by senior officials.  More disclosure makes it harder for agencies to ignore an embarrassing report.  Agencies that aren't doing their jobs or have employees who waste the taxpayers' money ought to be flushed out of the shadows.  The same goes for inspectors general who aren't aggressive or productive enough.  Transparency brings accountability."

Grassley has long worked toward supporting agency inspectors general in their work, including seeking information from each inspector general on open and unimplemented recommendations and agency attempts to interfere with independence.  He is a lead sponsor of the Inspector General Empowerment Act (S. 579), which passed out of the Homeland Security and Governmental Affairs Committee in March and awaits full Senate consideration.  The bill's provisions include requiring more disclosure of inspector general investigations involving employees at the GS-15 rate of pay and above where misconduct was found but no prosecution resulted, including the agency's handling and whether it was referred to the Department of Justice, and reports that were authored by the Office of Inspector but not made available to the public.

More Detail Needed on FBI Surveillance Program

In recent weeks, there have been reports of Americans across the U.S. spotting small single-engine aircraft circling above their neighborhoods. That would make anyone a bit uncomfortable if you don't know what they are up to.

This week, the media confirmed what some have suspected?that those planes were being used by the F-B-I to conduct surveillance. An investigation by the Associated Press uncovered more than 100 flights over at least 30 cities and towns in 11 states and Washington, D-C.  This is all in a 30-day stretch.

These planes are registered to several shell companies so that they would not be traced back to the F-B-I.  And they may be equipped with high-tech devices that allow them to monitor activities on the ground, including people who are not the target of their operation.  Often this is done without a court order.

It's not a secret that the F-B-I uses planes to find and catch criminals.  But we don't know what technology they are using to conduct surveillance, and what they are doing with information on people who have nothing to do with their operation.  The F-B-I should be transparent about what policies are in place to protect the privacy of innocent Americans and guarantee that the program is not being abused.

So, on Monday, I asked the F-B-I for more details on the scope and legal authority of this program.  It's important that federal law enforcement personnel have the tools they need to catch criminals and keep us safe.  However, we need to make sure that safeguards are in place to protect the privacy and civil liberties of those who are not the intended target

Carper, Murkowski, Heinrich, Cassidy, Coons, and Grassley Introduce Bill to Help Reduce Obesity

Bipartisan, bicameral bill aimed at lowering health costs, preventing chronic diseases and increasing Medicare coverage of obesity treatments

WASHINGTON - Today, Sens. Tom Carper (D-Del.), Lisa Murkowski (R-Alaska), Martin Heinrich (D-N.M), Bill Cassidy, M.D. (R-La.), Chris Coons (D-Del.) and Chuck Grassley (R-Iowa) introduced legislation to help lower health care costs and prevent chronic diseases by addressing America's growing obesity crisis. The Treat and Reduce Obesity Act gives Medicare beneficiaries and their health care providers additional tools to reduce obesity by improving access to weight-loss counseling and new prescription drugs for chronic weight management, among other provisions. An identical bill (H.R. 2404) was introduced in the House last month by Reps. Erik Paulsen (R-Minn.) and Ron Kind (D-Wis.).

Health care costs related to obesity total nearly $200 billion each year. Furthermore, nearly 70 percent of Americans are overweight or obese, and 42 percent of Americans are projected to become obese by 2030. Obesity increases the risk for chronic diseases like high blood pressure, heart disease and type 2 diabetes.

"Seven in 10 adults struggle with obesity and being overweight, and more than a third of children are overweight or obese. These facts demand that we do more to combat the obesity epidemic," Sen. Carper said. "If we continue to stand idly by while more and more people become overweight and obese, for the first time in our country's history our children will live shorter lives than their parents. The federal government must have a robust strategy for reining in obesity and ensuring that our vital health care programs, like Medicare and Tricare, provide Americans with every available treatment and tool for reducing obesity's physical, social and financial costs."

"As the statistics of obesity continue to grow in our country, and even more so in Alaska, we must improve how we treat and inform Americans to raise their quality of life and help prevent severe long-term conditions down the road," Sen. Murkowski said. "America's obesity problem has morphed from a national nutritional and fitness concern to an economic crisis, becoming a growing financial drain as more and more medical attention is required. By providing children with healthier options now, we can improve their quality of life as adults and avoid these preventable expenses in the future."

"Obesity is a complex chronic disease that affects the health and wellbeing of millions of Americans," Sen. Heinrich said. "This legislation would give patients access to a full range of safe and effective tools that would empower them to improve their physical and mental health."

 

"As a doctor, I've seen how obesity can affect a person's physical health and mental wellness," said Sen. Bill Cassidy M.D. "There are treatments and services available to treat obesity, but we must work together to make the effective treatment of obesity a priority. This legislation will lower health costs and most importantly give patients access to the proper tools for better health."

 

"As a nation, we have too often overlooked the growing crisis of obesity among Americans, leading to severe consequences for the health of our children, families, and our economy," Sen. Coons said. "This bipartisan legislation will ensure patients have access to the right information, counseling, and resources they need to improve their health and wellbeing.  By improving access to critical resources that address this epidemic now, we can help reduce the prevalence of obesity and cut our nation's health care costs in the future."

 

"Medicare should reflect the modern practice of medicine," Sen. Grassley said. "Supports, treatments and prescription drugs that are helpful to both beneficiaries and taxpayers should be available."

 

The Treat and Reduce Obesity Act would, among other provisions:

  • Allow Medicare to cover additional obesity treatments such as new, FDA-approved prescription drugs for chronic weight management, already covered by the Veterans Health Administration, the Federal Employees Health Benefits Program and the Indian Health Service.
  • Give CMS authority to improve Medicare beneficiary access to benefits for intensive behavioral counseling by allowing additional types of providers to offer this service.  Fewer than 100,000 Medicare beneficiaries have taken advantage of this benefit, even though 13 million seniors are obese.

 ###

Senators Grassley, Ernst urge Agriculture Committee Chairman to Hold Hearing on Federal Government's Response to Bird Flu

WASHINGTON, D.C. - In a letter sent today, U.S. Senators Chuck Grassley (R-IA)  and Joni Ernst (R-IA) urged Agriculture, Nutrition and Forestry Committee Chairman Sen. Pat Roberts (R-KS) to hold a hearing on the federal government's response to the ongoing outbreak of the highly pathogenic avian influenza (HPAI). Senators Grassley and Ernst stressed the critical, timely nature of this issue, citing the devastating impact of the disease on Iowa poultry farmers and producers, and the need to address federal actions taken once the outbreak has been contained.

"Due to the sheer size and scope of this outbreak, we have heard from countless folks in Iowa who are concerned about the lack of certainty caused by this situation - many of whom just want to find resolution to this tragedy and get back to work," the Iowa Senators wrote.

"As you know, it is critical for the vitality of our agricultural economy that key stakeholders - producers, ancillary industries, community leaders, and government officials - have the tools and lines of communication available to work with one another to overcome challenges such as HPAI," the Iowa Senators added. "A hearing would provide an opportunity to bring these leaders and stakeholders together to review what has happened, identify what response procedures have worked, what has not worked, and set the stage to ensure we are better prepared in the future."

Full text of the letter can be found here.

Senators Grassley and Ernst urged the U.S. Department of Agriculture (USDA) to properly deploy resources to address the avian flu situation in a letter to Secretary Tom Vilsack last month, following a letter to the USDA sent by the entire Iowa Congressional delegation in April.

# # #

June 3, 2015

NOTICE OF COMMITTEE HEARING

The Senate Committee on the Judiciary has scheduled a hearing entitled "Nominations" for Wednesday, June 10 at 1:30 p.m., in Room 226 of the Dirksen Senate Office Building.

Senator Perdue to preside.

By order of the Chairman.

Witness List

Luis Felipe Restrepo, to be United States Circuit Judge for the Third Circuit

-30

Prepared Statement by Senator Chuck Grassley of Iowa

Chairman, Senate Judiciary Committee

Executive Business Meeting

June 4, 2015

 

On today's agenda is the bipartisan PATENT Act, which addresses the problem of abusive patent litigation tactics.  I've already spoken at length on the need for legislation to crack down on these abuses, so I'm going to be brief in my remarks.  Also, I want to complete the markup of this bill today, so I hope my colleagues will cooperate and be succinct in their remarks and debate.

Let me briefly talk about the managers' package.  There are a number of provisions that we've included in the bill, including non-controversial PTO requests, the Leahy/Grassley Patents for Humanity legislation that improves this PTO program, and other technicals.  One provision I want to highlight in the managers' amendment clarifies that in the fee shifting provision, "undue economic hardship to a named inventor or institution of higher education" is a factor that a judge can consider when determining if "special circumstances" make a fee award unjust.

Another provision I want to mention is the new section 11 which deals with inter partes and post grant review proceedings at the PTO.  I worked with the Ranking Member, Senator Cornyn, Senator Schumer, Senator Hatch, and a number of my other Committee colleagues on this particular piece.  This effort was in response to concerns that had been raised by certain industry groups about what they saw as abuse of the administrative proceedings at the PTO.  At the same time, there were also other stakeholders that believed these proceedings have been very effective at getting rid of weak patents.

This piece is the product of discussions with various industry stakeholders, including the life sciences and tech groups.  I think that many of us believe that the post grant proceedings at the PTO are working quite well with respect to weeding out poor quality and improperly granted patents.  So it was our goal to address concerns, but not derail the very important function that these proceedings have in knocking out weak claims and patents.

I hope that we've succeeded in making limited changes to the PTO processes to address these concerns.  I know not everyone is happy, but we really tried to strike the right balance of addressing concerns but not disrupting the PTO proceedings.

I'd like to point out that, as this bill moves to the floor, there remain a few issues that need to be resolved.   As we indicated, the language we included in the managers' amendment that deals with amending claims in the PTO proceedings is a placeholder because it remains the subject of good faith negotiations.  This has been a difficult nut to crack, but I understand that both sides believe that we can reach a compromise that will work.  Unfortunately we weren't able to reach agreement before today's session, so the placeholder language stands, but I'm committed to getting resolution on this piece as we move to the floor.

In addition, there is a proposal by the life sciences community concerning the applicability of the PTO's post grant proceedings to patents that are subject to the Hatch-Waxman Act and Biologics Price Competition and Innovation Act (BPCIA) processes.  The Hatch-Waxman process has been instrumental in facilitating the entry of low cost generic drugs in the market.  Consumers want access to cheaper drugs as soon as possible, so I've been a big supporter of this law.  I'm also supportive of incentivizing biosimilar market entry.  When the America Invents Act was considered, it's my understanding that there was no debate over whether or how IPR would impact these important processes.

It's imperative for us to hear from all sides, get additional information and data, and consult with the HELP Committee, which is the Committee of jurisdiction over the Hatch-Waxman Act and Biologics Price Competition and Innovation Act (BPCIA) laws.  This is a complex issue that needs to be seriously and responsibly considered, including further review, discussion, and vetting.  My colleagues and I have already started getting views on this matter, and we continue to review and conduct outreach.

I agree that we need to preserve incentives for generics to come to market, and I'm committed to working on this issue as we move towards the floor.

Once again, I thank my colleagues for their hard work on this important bill.

-30-

Sen. Chuck Grassley has received a response from IRS Commissioner John Koskinen to questions for the record after the February hearing on the agency's budget, including a response on the IRS whistleblower office.  Grassley authored the provisions that beefed up the IRS' whistleblower office and has monitored their implementation.  Grassley made the following comment on a Tax Court opinion this week that found the IRS is not legally justified in denying a whistleblower award simply because the whistleblower brought useful information directly to the IRS' operating division prior to filling out paperwork requesting an award with the whistleblower office.   Grassley made the following comment on the ruling.

"The law was intended to direct whistleblowers and the IRS to work together to catch tax cheats.  Bureaucratic barriers don't get the job done.  The IRS should welcome whistleblowers with a red carpet instead of putting up arbitrary legal hurdles at every turn."

The answers from Koskinen to Grassley are available here.  The Tax Court opinion is available here.

-30-

Pages