H.R. 4472

Stephen Yagielowicz
Recently, XBIZ World magazine asked several industry attorneys "How will H.R. 4472, the Child Protection and Safety Act of 2006, affect the industry?" Here's what they had to say:

Dramatically — if the courts uphold it. However, it is difficult to determine how dramatically just yet. Assuming that it isn't held unconstitutional, which hopefully will turn out to be a lousy assumption, it will generate many results, and here are some of my predictions:

Adult Internet will flock offshore. Producers of quality content will be really reluctant to allow private information about the performers out of their hands.

Pre-1995 content — and there is tons of it out there — will flourish on the Internet, because of the effective date of July 3, 1995.

It will certainly give web businesses that produce their own content a boost. They don't need to worry about other producers who are reluctant to circulate sensitive information.

It will kill the "little guys." How can any small producer be on duty 20 hours a week just in case some inspector shows up? And who wants to put his or her home address on content?

— Clyde F. DeWitt, Weston, Garrou & DeWitt

The most significant change in H.R. 4472 affects entities formerly known as secondary producers, or entities that reuse or recycle content but do not have direct contact with actors or models. Under the previous version of 18 U.S.C. 2257, only entities that directly create work were required to maintain identification records. The Attorney General regulations that attempted to expand the record-keeping requirement to secondary producers were in conflict with this provision and were unenforceable. Now, however, Congress has changed the statutory definition of what constitutes a producer to include all sorts of distributors, website operators, graphic design artists and the like, all of whom must keep records of actors they have likely never met in person.

Also of concern is the fact that H.R. 4472 expands the application of 2257 record-keeping requirements to material that contains only lewd exhibition of the genitals, whereas the previous version of the statute excluded mere nudity. And, perhaps most serious of all, the bill takes effect upon it being signed by the President, meaning there is no grace period for companies that need time to get their records in order.

— Jennifer M. Kinsley, Sirkin Pinales & Schwartz LLP

A full answer is too voluminous to address in the space available. The impact is potentially very broad.

For instance, by criminalizing 'production of obscene material,' Congress has eliminated the 'distribution through interstate commerce provision.' If constitutional, this could allow prosecution of any manufacturer or producer whose film is offered for sale anywhere in the U.S., even though the manufacturer did nothing to allow the film to be sold in that region. In other words, you could be liable because a distributor decided to sell your title in Memphis, Tenn., even though you directed that none of your products be distributed in that community.

The impact just on 18 U.S.C. § 2257 is vast. By adding in 'lascivious exhibition of the genitals' as part of 2257, many packaging illustrations could now fall within the regimen of 2257, whereas before, mere nudity was exempt. Please note that all such imagery is permanently exempt if recorded prior to July 27.

Congress has attempted to eliminate the so-called 'Sundance' problem by broadening the definition of 'producer' to encompass what the Department of Justice regulations characterized as 'secondary producers.' Therefore, assuming the present injunction (which continues still to bar 2257 inspections of 'secondary producers' who are members of the Free Speech Coalition) is eventually dissolved, the following businesses or people will have to maintain the full set of records, cross-referenced with the materials from all their 'primary' producer sources.

This includes: Any business that takes an image of sexually explicit conduct from another source and digitizes it, reprints it, alters it, uses the image as an illustration, compiles it in another format or does anything other than resell it in the original form received from the seller; websites that scan in box covers or other packaging that depicts sexually explicit conduct; companies that create compilations from other people's catalogs; web designers who manipulate images of sexually explicit conduct for customers; affiliate programs using sexually explicit banners (for the banners themselves only); retailers with websites containing sexually explicit packaging, and many others.

This is not a comprehensive list. It just represents some examples of secondary producers that people may not have considered.

— Jeffrey Douglas, attorney at law

Fourteen years ago, in 1992, the U.S. Department of Justice promulgated regulations to implement Section 2257, which included a class of persons called 'secondary producers' who used explicit images but who had nothing to do with their creation. They were charged with the duty of maintaining the same records as though they were a photographer, with the obligation to provide a disclosure statement and the duty to make the records available for inspection.

Certain constitutional objections to the statute and its regulation were rejected by the U.S. Court of Appeals for the District of Columbia Circuit in ALA vs. Reno in 1995, and the regulations went into effect shortly after. Eight years ago in Denver, the 10th U.S. Circuit Court of Appeals in Sundance Associates vs. Reno, determined that the 'secondary producer' obligations imposed by DOJ's regulations went further than Congress had authorized, and that the record-keeping obligation had been imposed only on those with a close connection to the creation of the content.

This ruling was never followed by any other court, and as a result, it was only the certain law in the mountain states of the 10th Circuit. As a result of plenty of wishful thinking, many producers in the first generation of the adult Internet commerce refused to provide Section 2257 records to webmasters, but the webmasters frequently licensed the content anyway. Some tried to have it both ways by providing a disclosure statement referring to the original producer — as was permitted under the regulations — but not maintaining records as required by the regulations.

Many webmasters thought they were fully in compliance with the law, and they simply did not know that the regulations required them to maintain the records themselves. When the Free Speech Coalition responded to the U.S. Attorney General's newly amended regulations in 2005, with a lawsuit in the 10th Circuit challenging the secondary producer obligations, Congress reacted by introducing at least three bills making it clear that Congress presently intended to impose the record-keeping obligation on secondary producers.

These bills were introduced both before and after Judge Miller in Denver issued his December ruling that preliminarily enjoined enforcement of the secondary producer requirements as a matter of authority rather than constitutionality, following the higher court decision in Sundance.

Because Congress had the power to make its designation of authority to the DOJ clear concerning secondary producers, Congress could fix the problem by affecting enforceability of the secondary producer obligations. In fact, congressional attention to Section 2257 was ripe because, through an oversight in the Protect Act enacted in spring 2003, the definitions of sexually explicit conduct contained in Section 2256 were no longer in sync with Section 2257 and needed to be adjusted. Congress took advantage of that need for its attention and, in my view, directly responded to the FSC's lawsuit by crafting a legislative fix for the situation in the 10th Circuit that cleared both houses of Congress, and which became law on July 27.

— J.D. Obenberger, J.D. Obenberger & Associates

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