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Legal Reality: SAVE — Will It Be Law?

Legal Reality: SAVE — Will It Be Law?

September 17, 2014
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" In addition to its record keeping requirements, the SAVE Act, like the 2257 regulations, also requires that the content subject to regulation must have an appropriate compliance statement associated with it indicating where the records required by the SAVE Act are maintained and made available for inspection. "

The 113th U.S. Congress has been frequently called the “Do-Nothing Congress.” By many accounts, that label is well-deserved. The legislative paralysis that has set in due to the intense partisan bickering that has characterized the environment on Capital Hill for years has placed current session of Congress on track to pass a historically low number of new laws of substance. In fact, according to The Hill, “the major bills that have cleared the 113th Congress to date are nearly all “must-pass” measures or reauthorizations of existing law.”

Yet, despite our elected “representatives” apparent lack of ability to cooperatively work together to help solve any of a number of pressing problems facing our country, they are nevertheless showing an amazing ability to cooperate with each other when it comes to new legislation to further burden adult entertainment companies and diminish everyone’s free speech rights.

Specifically, the Senate is current considering The Stop Advertising Victims of Exploitation (SAVE) Act. The SAVE Act is aimed at operators of websites that knowingly host adult entertainment advertising and “recklessly disregard” the fact that such advertising is intended to facilitate child trafficking or child exploitation. The SAVE Act criminalizes such activities and imposes severe punishments for violators. Nothing wrong with that, right? After all what reasonable person can object to criminalizing the knowing hosting of advertisements for child trafficking or child exploitation? And since the mainstream online adult entertainment industry has never been associated with child trafficking or state child exploitation crimes, these provisions of the SAVE Act are not likely to pose a problem for law abiding mainstream adult entertainment companies, right? Wrong.

There is another part of the SAVE Act, which, if it becomes law, is almost certain to pose major problems to the adult entertainment industry by saddling it with yet another set of totally unnecessary regulations whose primary effect will likely only be the further eroding of our speech and privacy rights. This is because the SAVE Act contains provisions that impose brand new record keeping and labeling obligations upon persons and companies that host, distribute or publish adult entertainment advertising.

Before discussing some of the regulatory components of the SAVE Act, it is important to appreciate the potentially breathtaking scope of content that will be subject to the SAVE Act should it become law. Under the Save Act the meaning of the term “adult advertising” is very broad and includes, for example, any advertisement that is subject to the record keeping requirements under 18 U.S.C. § 2257 and any advertisement that is designed to induce a commercial exchange for sexually explicit conduct, as defined in 18 U.S.C. § 2256, which includes actual and simulated sex acts sexual intercourse, including genital-genital, oral-genital, anal-genital, or oral-anal, whether between persons of the same or opposite sex, masturbation, and even lascivious clothed or unclothed exhibition of the genitals or pubic area of any person.

Advertisements for the goods or services of an adult escort or erotic performer involving any commercial exchange regarding any of the foregoing is also within the definition of adult advertising and subject to the Save Act. Additionally the SAVE Act defines the term “advertisement” to be “any written or verbal statement, illustration, or depiction in any medium which is designed, in whole or in part, to induce a lawful or unlawful commercial exchange of a good or service for money, property, or another item of value, including another good or service.”

Thus, the SAVE Act would applies to a large amount of adult banner advertising, promotions of live erotic cam performances, and just about everything else advertised or promoted by the adult entertainment industry online. In fact, as the SAVE Act is currently written, and given the realities of adult entertainment marketing, there are virtually no practical limitations regarding the kinds of advertisements that might be deemed to trigger the SAVE Act’s record-keeping and labeling requirements. For example, if a live cam performer were to use a social networking site to promote his or her services, the operator of the site would be required to collect his or her identifying information and maintain records of such information for a minimum of seven years, regardless of whether the content appeared as a paid advertisement or through the use of a service provided by the operator. Thus, it is likely, for example, that live cam service websites will be required to perform such record keeping and labeling obligations should the SAVE Act become law.

The Save Act’s New Record Keeping Requirements:

Most adult entertainment entrepreneurs are aware of the onerous and burdensome federal record keeping labeling requirements imposed by the so-called “2257 regulations” (18 U.S.C. §2257, 18 U.S.C. §2257A and 28 CFR 75 et seq.). Unfortunately, however, the record-keeping and labeling requirements under the SAVE Act not only create a new and separate record keeping and labeling obligation that is somewhat duplicative of the record keeping and compliance statement obligations under the 2257 regulations, they also impose in some respects, additional and even more burdensome obligations.

Specifically, the SAVE Act requires that all persons and businesses that maintain, or are paid to distribute or publish, adult advertisements must (i) verify the identity of, and collect government-issued photo identifications from, all persons placing adult advertisements, and (ii) verify the identity and age appropriateness of all persons appearing in the adult advertisements (i.e., verify that the performer was over the age of 18 at time of content creation) by collecting government-issued photo identifications for each of the persons. The SAVE Act also requires that all such records must be maintained for a minimum of seven years and be subject to inspection by both federal and state officials upon request.

While the record keeping obligations imposed by the SAVE Act may seem to some a restatement of one of the record keeping obligations under the 2257 regulations, they really are not. Unlike 2257, for example, there are no provisions under the SAVE Act as currently written that would allow the required records to be maintained by a non-employee third party custodian. Also unlike inspections under the 2257 regulations, inspections under the SAVE Act could be performed by state inspectors in addition to federal inspectors.

If enacted, the SAVE Act will also likely introduce a fair amount of confusion among adult content producers and distributors. For example, while likely, it is unclear whether a producer of erotic content subject to both the 2257 regulations and the SAVE Act would be subject to the independent record keeping requirements under the 2257 regulations and SAVE Act simultaneously. For example, consider a circumstance where an adult content producer elects to create advertising content from the producer’s content that is being advertised, such as trailers from a movie.

Assuming the SAVE Act becomes law, if the producer does so, it would appear that the producer will likely be required to maintain two separate record keeping systems, one required by the 2257 regulations and one required by the SAVE Act. The reason such an inefficient and duplicative scenario could arise, is the result of one of the 2257 regulations, 28 CFR 75.2(e), which requires that all of the 2257 records “shall be segregated from all other records, shall not contain any other records, and shall not be contained within any other records.” This kind of double record keeping obligation could also result, for example, if a producer creates and publishes a banner with content subject to 2257. The producer is currently required to keep records pertaining to the banner content and affix a compliance statement as required by the 2257 regulations.

But because of the records segregation requirement under the 2257 regulations (28 CFR 75.2(e)) the records required to be kept under the SAVE Act could not lawfully be kept in the same records mandated by the 2257 regulations.

The SAVE Act’s Compliance Statement Requirements:

In addition to its record keeping requirements, the SAVE Act, like the 2257 regulations, also requires that the content subject to regulation must have an appropriate compliance statement associated with it indicating where the records required by the SAVE Act are maintained and made available for inspection.

Unfortunately, the compliance statement requirements under the SAVE Act are, in many ways more onerous and unfair than those the 2257 regulations. For example, unlike the 2257 regulations, the SAVE Act requires that the actual name of the person maintaining the records, and not just his or her title, must be disclosed in the SAVE Act compliance statement.

Another difference between the compliance statement provisions of 2257 regulations and those under the SAVE Act arises from the fact that the SAVE Act, unlike the 2257 regulations, does not provide an alternate means to access the required compliance statement information via a hyperlinked or by mousingover the 2257 Statement as allowed under 28 CFR 75.8(d). Instead, the SAVE Act requires that all of the required compliance statement information must be in the banner, etc.

Penalties Under The SAVE Act:

Like the penalties under the 2257 regulations, the penalty for failure to comply with the SAVE Act’s record keeping and labeling requirements is harsh. The SAFE Act imposes a minimum fine of $250,000 or up to five years in prison. Subsequent violations are punishable by a minimum fine of $350,000 and up to 15 years in prison.

This article barely touches the surface of a proposed law that rivals the 2257 regulations in its complexity, unfairness and potentially unconstitutional provisions. For example Section (c)(5)(A) of the SAVE Act requires all operators of user-generated content platforms and third-party content hosts to manually review all content before it is posted, while Section (c)(5)(B) directs the Attorney General to develop a blacklist of words that individuals are prohibited from using even in advertisements for lawful goods and services. Section (c)(5)(C) will require operators of user-generated content sites actively monitor all content posted and adopt policies for prohibiting posts from people who had previously posted “inappropriate” content.

The SAVE Act will also force advertisers to include what is tantamount to a public service announcement in adult advertisements. Section (c)(5)(H) will require the Attorney General to generate regulations to require adult advertisement advertisers to affix “to each adult advertisement placed or maintained on the means or facility of interstate or foreign commerce, in such manner and in such form as the Attorney General shall by regulation establish, contact information regarding how to contact the CyberTipline of the National Center for Missing and Exploited Children.”

If the SAVE Act as written becomes law, it, like the 2257 regulations, will provide many grounds for challenge on constitutional grounds. I believe it is in the best interests of the adult entertainment industry, and, in fact, in the best interests of everyone who cherishes their rights of expression under the constitution, to immediately voice opposition to the passage of the SAVE Act. And if the bill is enacted, those of us who pick up the gauntlet to challenge the law on constitutional grounds will need all the support we can get as we try to save our cherished freedoms from the SAVE Act.

Because a similar version of the SAVE Act was passed in the House of Representatives earlier this year, because of the bill’s powerful sponsors in the Senate, and because anti-porn legislation plays well in an election year, there is, unfortunately, a reasonably good chance that the bill will also be passed in the Senate and ultimately become law. If so, it should not be surprising that when the Do-Nothing Congress finally does something, it does something really bad. In this case by enacting bad legislation that further diminishes our cherished freedoms. It is really shameful, and for me it begs the question, why do we still call these people our leaders when we are so badly misled?

This article is not intended to be, nor should it be considered to be, legal advice. If you have a legal question or other matter related to any of the topics discussed in this article, I strongly urge you to contact our office at the number below or seek the counsel of another qualified and experienced entertainment attorney familiar with the legal matters discussed in this article.

Gregory A. Piccionelli is an intellectual property attorney specializing in entertainment matters. He can be reached at Piccionelli & Sarno at (818) 201-3955 or greg@piccionellisarno.com.


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