Press Briefing

May 19, 2010

The White House Blog: "The Right Thing to Do"
http://www.whitehouse.gov/blog/2010/05/18/right-thing-do

Vanguard's Bailout Warning - The Senate lets regulators pick creditor favorites
http://online.wsj.com/article/SB10001424052748703957904575252671939962604.html

India's Fake Drugs Are a Real Problem - Global trade in counterfeits is huge and penalties are minimal
http://online.wsj.com/article/SB10001424052748703315404575249901511960396.html

A message from the Vice President on Elena Kagan's nomination
http://my.barackobama.com/page/content/bidenforkagan?source=TW

BPA's Missing Link
http://www.acsh.org/factsfears/newsID.1439/news_detail.asp

Background on the President's Events Today in Youngstown, Ohio
http://www.whitehouse.gov/the-press-office/background-presidents-events-today-youngstown-ohio

Hillary at the Buzzer: She avoids a debacle on Iran—for now.
http://online.wsj.com/article/SB10001424052748703957904575252600443502256.html

The Clearinghouse Rescue Plan
http://online.wsj.com/article/SB10001424052748704370704575228500068113796.html
Taxpayers will still be on the hook for risks in derivatives trading

FDA's Bad Blood
http://www.acsh.org/factsfears/newsID.1441/news_detail.asp

Chuck Schumer vs. Free Speech
http://www.bipartisanalliance.com/2010/05/disclose-act-would-make-election-law.html
The 'Disclose' Act would make election law even more incomprehensible and subject to selective enforcement for political gain.

Small Businesses Still Left Empty-Handed
http://blog.heritage.org/2010/05/18/side-effects-small-businesses-still-left-empty-handed

Dealing with Iran, by Ted Galen Carpenter
http://www.cato.org/pub_display.php?pub_id=11810

Akbar Ganji is someone U.S. officials should heed when it comes to policy toward his native Iran. Ganji, a writer and journalist who became the fifth biennial recipient of the Milton Friedman Award for Advancing Liberty on May 13, hasn't just talked the talk when it comes to working to establish a democratic Iran, he has walked the walk far beyond what most people could endure. During the late 1990s, he presented evidence that the mullahs were behind the assassinations of exiled Iranian dissidents and had committed various other outrages. For his efforts, he served six years in prison, much of it in solitary confinement, and suffered tortures that Persians had perfected over the centuries. If there was ever a person who had every right to endorse a U.S.-led campaign to oust the current Iranian regime, Akbar Ganji is that person. And yet he cautions American officials to adopt a very different course.


Climate Change and the Courts. WSJ Editorial
http://online.wsj.com/article/SB10001424052748704635204575242361135307650.html
A curious case of judicial recusal on the Fifth Circuit.

One of the most destructive mass litigation theories ever devised—the climate tort—is working its way through the courts, and now with a troubling twist. To wit, green plaintiffs may have found a way to handpick sympathetic judges.

In the class-action Comer v. Murphy Oil, a dozen Gulf Coast property owners whose homes were damaged by Hurricane Katrina are suing 33 energy companies for the "nuisance" of the carbon emitted when people use their products. The claim is that these emissions allegedly contributed to climate change that allegedly increased global surface air and water temperatures that allegedly caused sea levels to rise and thus allegedly compounded the storm's damage.

Last year, Comer was dismissed by a district judge, who sensibly ruled that the Mississippi residents couldn't trace the harm they suffered to any specific company because global warming is, well, global. But the case was resurrected by a three-judge panel of the Fifth Circuit Court of Appeals—prompting the entire court to rehear the appeal en banc. The full court was expected to affirm the original district court decision, though seven of the 16 judges recused themselves because they held stock in one or more of the companies being sued.

The en banc arguments were scheduled for this month, until the Fifth Circuit announced in April that "new circumstances have arisen that make it necessary for another judge to recuse." That move deprived the panel of a quorum and thus its ability to rehear Comer. No further explanation was offered, but it's likely another judge acquired a financial interest in one of the defendants. Judges have the discretion to disclose in a situation like this but aren't required to do so, and a court spokesman didn't return our call.

The climate tort is gaining a legal toehold in part because any judge with reasonably diversified investments will have some kind of conflict of interest and will therefore be disqualified. Since any energy company—or any business or exhaling person—contributes in some way to carbon emissions, anyone could be sued if the courts allow this theory to move forward. More ominously, plaintiffs can add defendants to the suit for the purposes of targeting judicial recusals and a more favorable hearing, given that federal financial disclosure forms are public information.

In Comer, did one of the more liberal Fifth Circuit judges buy stock specifically to blow up the quorum? That isn't as far-fetched as it sounds. One of the appellate judges who waved a similar suit through the Second Circuit last year, Peter Hall, admitted at a February conference that he doubted these nuisance cases stood much chance of success.

"Expert evidence, which is the kind of thing that will be needed in this case, ultimately, to prove causative action and whether that can be done beyond preponderance of the evidence, certainly remains an open question," Judge Hall said. But he added that the "nuisance action by nuisance action" approach was so burdensome and costly that it was like "a sword of Damocles" hanging over companies that would eventually force the political branches to adopt climate policies.

In other words, these suits are naked political intimidation meant to coerce cap and tax or some other expensive carbon crackdown regardless of what Congress wants. The same judge-shopping strategy could also apply to the Supreme Court, where Samuel Alito and Stephen Breyer hold stock in Comer defendants and Sonia Sotomayor heard the Second Circuit case. If the Comer plaintiffs succeeded in forcing one more Justice to recuse, the High Court would lack a quorum and be left unable to rule on the merits even if it wanted to.

The Fifth Circuit will decide what to do this week, and we hope the judges will find a way to reconstitute their quorum before this damaging legal theory gains any more traction.


United States and Brazil Collaborate on Racial Equality
http://www.state.gov/r/pa/prs/ps/2010/05/141967.htm

The No-Cost Stimulus: A little Sarbox relief, thank you. WSJ Editorial
http://online.wsj.com/article/SB10001424052748703315404575250693201556662.html

Senate Majority Leader Harry Reid wants a floor vote this week on financial regulatory reform, and he should first add at least one provision worthy of the name. Senators Kay Bailey Hutchison (R., Texas) and Mary Landrieu (D., La.) have offered an amendment to spare the smallest public companies from the worst bureaucratic horrors of the 2002 Sarbanes-Oxley law.

Sarbox, the Beltway's previous attempt at financial-regulatory reform, was intended to improve the information investors receive about public companies. The law did nothing to prevent poor disclosure at companies like Lehman Brothers but it did saddle the U.S. economy with billions in unexpected costs. Even the Securities and Exchange Commission, a Sarbox cheerleader, found in a 2009 survey that the average public company pays more than $2 million per year complying with the law's Section 404. The indirect costs may be much greater, as initial public offerings of U.S. companies have never returned to pre-Sarbox levels.

The SEC admits that compliance burdens fall disproportionately on smaller companies. This is one reason the two Senators aim to exempt companies with less than $150 million of shares held by the public from "internal-controls" audits.

These audits are piled on top of the traditional financial audit, and on top of a company's own internal-controls review. The result is that going public in the U.S., once the dream of entrepreneurs world-wide, has for too many company founders become something to avoid. If President Obama is hoping for an unemployment rate below 9%, encouraging these job creators is an obvious step.

Thanks to New Jersey's Republican Scott Garrett and Democrat John Adler, the House has already passed a similar reform. Now the Senate should allow America's most innovative companies to create jobs at no cost to taxpayers.


The White House Blog: Yes, You Can Keep Your Health Plan
http://www.whitehouse.gov/blog/2010/05/18/yes-you-can-keep-your-health-plan

No, You Can't Keep Your Health Plan - Insurers and doctors are already consolidating their businesses in the wake of ObamaCare's passage.
http://online.wsj.com/article/SB10001424052748703315404575250264210294510.html

Statement by President Obama on Oil Liability
http://www.whitehouse.gov/the-press-office/statement-president-obama-oil-liability