February 2007

From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH ethics and government publications.

If you have any comments or suggestions concerning the information provided or the format used, we'd like to hear from you. Please send your comments to pamela.maloney@wolterskluwer

Business Ethics

Communication that Can Change a Culture: the Need for Straight Talk
Building an ethical corporate culture requires more than admonishing employees to do the right thing, according to Bob Phillips and David Gebler who wrote for the February issues of the CCH Federal Ethics Report. According to Phillips and Gebler, companies need to focus on the specific skills that create a positive and open work environment. From their experience, in most organizations it is poor communication that poses the greatest risk to integrity, while a culture in which employees feel free to raise issues tend to be ones that maintain higher levels of integrity. A lack of open communications in an organization can have serious consequences. Confusion and lack of awareness, employee isolation, a drop in productivity, a perceived lack of fairness or potential harassment issues, and fear of retaliation all can result when leaders and managers fail to take appropriate measures to promote transparency and openness in the workplace. (CCH Federal Ethics Report, Vol. 14, Issue 2, February 2007)

Current and Former DOJ Officials Discuss the McNulty Memo
The recent revisions to the Principles of Federal Prosecution for Corporations, known as the McNulty Memo, do not represent a retreat, surrender, or step back on the part of the Department of Justice against corporate wrongdoing, according to Alice Fisher, the Assistant Attorney General of the Criminal Division. Fisher gave a presentation on the reasoning behind the McNulty memo at the Practicing Law Institute on January 19, 2007. Two of Fisher’s predecessors at DOJ, James Robinson and Robert Wray, also discussed the impact of the McNulty memo. (CCH Federal Ethics Report, Vol. 14, Issue 2, February 2007)

Contracting

Agency Failed to Determine Peer Reviewers’ Conflicts of Interest
The General Accountability Office recently sustained a protest finding that the National Institute of Health failed to reasonably consider whether members of a peer review panel had a conflict of interest that would impair their objectivity in evaluating a proposal when each panel member either worked for or was associated with corporations pursuing technology that would be directly competitive with the technology proposed by the protestor, Celadon Laboratories, Inc. (CCH Federal Ethics Report, Vol. 14, Issue 2, February 2007)

Investigations

Ney Sentenced for Role in Abramoff Scandal
Former Rep. Robert Ney (R.-Ohio) was sentenced on January 19, 2007 in the U.S. District Court for the District of Columbia after he agreed to plead guilty to one count of conspiracy, 18 U.S.C §371 and one count of making false statements, 18 U.S.C. §1001. Ney, the first member of Congress to plead guilty in connection with the Abramoff scheme which involved lobbyists providing a member of Congress and Congressional staff with a stream of gifts and things of value in exchange for the misuse of their government positions, did not seek reelection. (CCH Federal Ethics Report, Vol. 14, Issue 2, February 2007)

Campaign Finance

Electionneering Rules Unconstitutional As Applied to 2004 Ads
A provision in the Bipartisan Campaign Reform Act of 2002 (BCRA) dealing with electioneering communications was unconstitutional as applied to three broadcast advertisements that a non-profit advocacy corporation intended to run within 30 days of Wisconsin's 2004 federal primary election and within 60 days of the 2004 federal general election, the U.S. District Court for the District of Columbia held, on remand from the U.S. Supreme Court, in granting summary judgment to the corporation. The case at issue, Wisconsin Right to Life v. FEC, concerned a series of television ads urging Senators Herbert H. Kohl and Russ Feingold to oppose filibusters of President Bush's judicial nominees. As a result of the electioneering communications provision of BCRA, the broadcast ads were prohibited from August 15, 2004 until the November 2, 2004 general election because Feingold was a candidate for re-election.

The advertisements qualified as genuine issue advertisements, rather than express advocacy or its functional equivalent, the district court held. The advertisements described a legislative issue that was currently, or likely to be in the near future, the subject of legislative scrutiny, referred to the record or position of the candidate on the issue, did not exhort the listener to do anything beyond contact the Senators on the issue, did not promote, attack, support, or oppose any candidate, and did not refer to the upcoming election, candidacy, or party of any candidate. The court stated it would be both practically and theoretically unacceptable to attempt to discern the subjective intent behind the advertisement's creation and the effect that the advertisement was intended to have on the voting public. Furthermore, the court said, the government failed to show a compelling interest in regulating the advertisements. There was no link between the words and images used in the advertisements and the fitness, or lack thereof, of the candidate for public office. The desire for a ``bright-line'' rule did not constitute a compelling state interest for infringing on First Amendment freedoms, it concluded. However, WRTL's argument that the rules dealing with electioneering communications were unconstitutional as applied to ``grass-roots lobbying'' broadcast advertisements that it planned in the future during the electioneering communications blackout periods was not ripe. WRTL's claim was speculative and not sufficiently concrete to state a cognizable claim for relief. (CCH Federal Election Campaign Financing Guide ¶14,018)

Congress

House Passes Iraq Resolution
The House of Representatives spent much of the week of February 12 debating a resolution that would put the chamber on record as opposing President Bush’s recent decision to send additional troops to Iraq. The text of the non-binding resolution states that “Congress disapproves of the decision of President George W. Bush announced on January 10, 2007, to deploy more than 20,000 additional United States combat troops to Iraq.” In addition, the resolution states that “Congress and the American people will continue to support and protect the members of the United States Armed Forces who are serving or who have served bravely and honorably in Iraq.” The resolution passed on Saturday, February 17. (CCH The Week in Congress, 110th Congress, Issue 6, February 16, 2007)

Senate Approves Minimum Wage Increase
On February 1, senators overwhelmingly approved, by a vote of 94 to 3, legislation that would raise the minimum wage for workers employed in establishments such as restaurants and retail stores. Under the measure, the federal minimum wage would be increased from $5.15 to $7.25 an hour over the next two years. In addition, the bill includes a $8.3 billion in targeted tax and regulatory relief for small businesses. Introduced in the House early in this session but Education and Labor Committee Chairman George Miller (D-Cal.), representatives passed the bill on Jan. 10. However, the House version did not include tax breaks for businesses and while there is expected to be some opposition in the House to the tax relief provisions, the prevailing sentiment in Congress seems to be that a compromise between the two chambers will be reached. President Bush has expressed his support for the Senate-passed measure. (CCH The Week in Congress, 110th Congress, Issue 6, February 2, 2007)

Member of House Finance Committee Introduces Tax Relief Measure
Senate Finance Committee member Charles E. Schumer (D-N.Y.), along with freshman senators, on February 15 introduced an $80 billion tax package aimed at tax relief for the middle class. The measure, titled the Middle Class Opportunity Act of 2007, includes two years of alternative minimum tax relief and simplification of education tax incentives. The measure would double the child tax credit in the first year to $2000 and expand the dependent care tax credit to cover 35 percent of qualified health-related expenses. In addition, the bill would consolidate the three major tax deductions and credits for higher education into one tax credit that would cover tuition, fees, and textbooks. The $2500 credit would be available to both graduate and undergraduate students. The legislation would also allow families to claim the dependent care credit or earnings exclusion for expenses paid on behalf of an aging parent who does not reside with the family. (CCH The Week in Congress, 110th Congress, Issue 6, February 16, 2007)

Senators Reintroduce Climate Bill
Two members of the Senate Finance Committee reintroduced, on February 1, legislation that would provide tax incentives for clean fuel vehicles as part of the measure’s goal to drastically reduce greenhouse gas emissions. The Global Warming Reduction Act (S. 4039) offers immediate tax incentives to reduce emissions by doubling the new qualified fuel cell motor vehicle credit, the new advanced lean burn technology motor vehicle credit, and the conservation credit. The measure also creates a new plug-in hybrid motor vehicle credit and an advanced technology motor vehicles manufacturing credit. In addition to the incentives, the measure would require the U.S. to freeze emissions in 2010 and would call for a gradual reduction each year to 65% below the 2000 emissions levels by 2050. This goal would be achieved through an economy-wide cap and trade program for greenhouse gas emissions. Finally, the U.S. would also be required to derive 20% of its electricity from renewable sources by 2020. (CCH The Week in Congress, 110th Congress, Issue 6, February 2, 2007)