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Exam Code: HPE6-A43 Practice test 2022 by team
HPE6-A43 Implementing Aruba Location Services

Exam ID : HPE6-A43
Exam type : Proctored
Exam duration : 1 hour 30 minutes
Exam length : 70 questions
Passing score : 73%
Delivery languages : English

Exam Description
This test tests your knowledge and skills with the Meridian product line and Aruba Location Services with Aruba Beacons. This includes Meridian AppMaker and SDK, maps and app content creation, how to troubleshoot deployment and Aruba Location Services Beacon configurations, and the ability to configure Aruba BLE Beacons. This exam also tests your integration knowledge and skills with the Analytics and Location Engine (ALE) and ClearPass. Typical candidates for this test are networking IT professionals or technical marketing professionals who know how to design and deploy Meridian location solutions with location and proximity beacons, and how to use the Meridian platform to develop a mobile application.

Complete the training and review all course materials and documents before you take the exam. Exam items are based on expected knowledge acquired from job experience, an expected level of industry standard knowledge, or other prerequisites (events, supplemental materials, etc.). Successful completion of the course alone does not ensure you will pass the exam. Read this HPE test Preparation Guide and follow its recommendations.
31% Build Meridian Apps
33% Deploy and Install Beacons
15% Operate, Manage, and Maintain Beacons
7% Troubleshoot Aruba Location Services
8% Integrate ALE and Analytics
6% Integrate ClearPass

MeridianAppMaker, BLE, andALE Introduction
Aruba Location Services and Meridian Product line
Key Features of the Meridian Platform
ALE and Analytics
Deployment models/ Customer Use cases
AppMaker vs SDK App
Downloading/Navigating an App
Maps andPlacemarks
App Creation Process
Building an App
Downloading App Viewer
Viewing App in App Viewer
Self-guided Wayfinding in an App
Pages andEvents
Creating Pages in AppMaker
Types of Pages
Creating Lists
App Theme
Language Localization
Bluetooth LowEnergy (BLE) BeaconPositioning andNotification
Beacon Location vs Proximity Beacon
Beacons App
Deploying Beacons
Beacons in Meridian Editor
Beacons Monitoring and Troubleshooting
Campaigns andNotifications
Deploying a Proximity Beacon
Creating Campaigns
Associating a Beacon to a campaign
Testing and resetting campaigns
BeaconDeployment andInstallation
RF Design review
Beacon Deployment Models
Antenna Patterns
Beacon Installation
Product Options
Supported Controllers/AP models
Battery Powered vs USB beacons
Configuration and Features
Deploying an Aruba Sensor
Operations andmaintenance
Beacons walk-through mode
Beacons Maintenance
Replacing Beacons
Deleting Beacons
Moving Beacons
Updating Apps in the App Store
License Renewals
ALE andAnalytics
Why analytics
ALE architecture
ALE interface
Third party analytics
ALE scaling and licensing
Integrationwith ClearPass
Integration components
ClearPass integration
Configure ClearPass for OAuth2/Meridian

Exam Objectives | test Outline
After you successfully complete certification, expect to be able to:
- Understand Aruba location services, BLE, and ALE
- Demonstrate creating an App with Maps, Placemarks, Pages and Events
- Identify BLE Beacon Positioning and Notification
- Understand Campaigns and Notifications
- Demonstrate Beacon Management and Operations
- Troubleshooting Beacon deployments and campaigns
- Integrate ClearPass with Aruba location Services.

Implementing Aruba Location Services
HP Implementing questions
Killexams : HP Implementing questions - BingNews Search results Killexams : HP Implementing questions - BingNews Killexams : 10 Effective Interview Questions to Test If Job Candidates Have a Can-Do Attitude No result found, try new keyword!Hiring managers spend numerous hours interviewing job candidates as part of their work. Asking the right interview questions to determine the right job or culture fit in a candidate is certainly par ... Fri, 05 Aug 2022 06:38:00 -0500 en-us text/html Killexams : Helmerich & Payne, Inc. (HP) CEO John Lindsay on Q3 2022 Results - Earnings Call Transcript

Helmerich & Payne, Inc. (NYSE:HP) Q3 2022 Earnings Conference Call July 28, 2022 11:00 AM ET

Company Participants

Dave Wilson - Vice President of Investor Relations

John Lindsay - President & Chief Executive Officer

Mark Smith - Chief Financial Officer

Conference Call Participants

Derek Podhaizer - Barclays

Douglas Becker - Benchmark Research

Keith Mackey - RBC

Andrew Herring - JP Morgan

Tom Carstairs - Stifel Research

John Daniel - Daniel Energy Partners


Good day, everyone and welcome to today's Helmerich & Payne Fiscal Third Quarter Earnings Call. At this time all participants are in a listen only mode. Later you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call may be recorded and I will be sending by should you need any assistance.

It is now my pleasure to turn today's call over to Vice President of Investor Relations, Dave Wilson, please go ahead.

Dave Wilson

Thank you, Ashley, and welcome everyone to Helmerich & Payne Conference Call Webcast for the Third Quarter of Fiscal Year 2022. With us today are John Lindsey, President and CEO; and Mark Smith, Senior Vice President and CFO. Both John, and Mark will be sharing some comments with us afterwards, we'll open the call for questions. Before we begin our prepared remarks today, I'll remind everyone that this call will include forward looking statements as defined under the securities laws. Such statements are based upon current information and management's expectations as of this date, and they're not guaranteed the future performance.

Reporting statements involve certain risks, uncertainties and assumptions that are difficult to predict. As such are real outcomes and results could differ materially. You can learn more about these risks in our annual report on Form 10-K, or quarterly reports on Form 10-Q and or other SEC filings. You should not place undue reliance on forward looking statements and we undertake no obligation to publicly update these forward-looking statements. We will also make reference to certain non-GAAP financial measures such as segment direct margin and other operating statistics. You'll find the GAAP reconciliation, comments and calculations in yesterday's press release.

With that said, I'll now turn the call over to John Lindsay.

John Lindsay

Thank you, Dave. Good morning, everyone. And thank you for joining our call today. I'm pleased with our performance during the quarter. The operational and financial results continue to reflect the benefits of our strategic initiatives we've been working on for several years now. In particular, the efforts by our sales and operations teams to Strengthen pricing and margin growth in our North America solutions segment. On our earnings call last February, and again in April, we discussed how rig pricing needed to reach $30,000 per day. And in our third fiscal quarter, we had roughly 20% of our fleet average revenue per day at or above that level.

This is a great start. But we also recognize that pricing needs to move further to achieve gross margins of 50% or greater to generate returns that fully reflect the value we deliver to customers with our flex fleet rigs complementary technology solutions. As intended, we saw a modest growth in rig count and exited the quarter with 175 rigs contracted in our North American solution segment. Fiscal discipline and contractual churn allowed us to re contract rigs without incurring additional reactivation costs and to redeploy them at significantly higher rates.

Our rapidly improving contract economics are driven by both H&P’s value proposition to customers as well as a market that's very tight for available super spec rigs. We believe the drilling solutions and outcomes we provide are increasingly being recognized and coveted by customers. It's encouraging to seek capital discipline in our industry. And when combined with the supply chain and labor constraints, we expect this could put a damper on the industry's ability to reactivate idled super spec rigs at significant scale during the buying season.

By the last two years that has been in calendar Q4, and Q1. This will likely perpetuate the supply demand tightness for super spec rigs and provide momentum for future improvements and contract economics. We are already seeing some customers inquiring about rig availability for the fourth calendar quarter of this year. They are realizing that the market for readily available H&P flex rigs is extremely tight. We're seeing some customers looking to add incremental rigs for 2023. The needs are typically in the range of one to four rigs. And there are some looking to replace a lower performing regular to flex rigs. But we are unable to comment on the number of rigs that we can add specifically today. It is important to underscore that going forward, we will apply the same discipline focus on financial returns and we're receiving commensurate compensation for the value we are providing.

Along those lines march -- mark will provide some high-level remarks on our fiscal 2023 CapEx response to potential future demand for our rigs in our idle super spec electrically. We continue to hear about the benefits our customers experience from our digital technology solutions, especially when combined with our uniform flex rigs fleet. As horizontal wells continue to trend toward greater complexity and longer lateral length, drilling efficiency and reliability are important factors that differentiate our premium super spec service offering.

On the international front activity is taking higher with further improvements in our South American operations and the potential for more activity in coming quarters. In the Middle East, preparations are underway to export some of our super spec capacity as part of our hubs strategy. Current plans have one rig moving overseas in the coming months with additional risks possible, depending on the speed of the opportunities that developed in the Middle East, compared to other competing international locations. Establishing our Middle East hub is an important step and expanding our presence in that region as part of a longer-term growth strategy.

Our scale and digital technology not only enhanced profitability in our North American solution segment, but we believe these are also crucial elements in our goal to grow internationally. There is a scarcity of digital solutions being applied in key energy producing regions around the globe, and developing ways to integrate new technologies will ultimately lead to Strengthen economic returns for all our stakeholders over time. In our offshore Gulf of Mexico segment, our people continue to deliver great value for our customers. As mentioned on the last call, we are implementing pricing improvements offshore and have made significant progress. We expect the margin contribution to continue to Strengthen going forward at moderately higher levels.

In closing, it is encouraging to see the industry rebound. But it should also remind us of past cycles driven by elevated commodity price was and how the drilling industry repeatedly responded by adding capacity, which then led to an oversupplied market. So far, the cycle seems different from both an operator and a service industry perspective. The plan at H&P is straightforward safety above all, value creation for customers and margin growth, getting paid for the value we provide. I'm encouraged by the achievements through the dedication of our employees, their passion and their service attitude they bring to the company. We all strive to deliver excellence each day to enhance the value we provide to our customers and our shareholders. As we move forward, I'm confident our shared values and commitments will endure and enable the company to maintain its leadership position within the oil service industry.

And now I'll turn the call over to Mark.

Mark Smith

Thanks, John. Today, I will review our fiscal third quarter 2022. operating results provide guidance for the fourth quarter of a full fiscal year ‘22 guidance is appropriate. Look forward a bit to fiscal year 2023. And comment on our financial position. Let me start with highlights for the recently completed third quarter ended June 30 2022. The company generated quarterly revenues of $550 million versus $468 million in the previous quarter. As expected, the quarterly increase in revenue was due primarily to increase revenue per day in North America solutions segment. As we have continued to increase pricing for drilling activity.

Total direct operating costs incurred were $377 million for the third quarter versus $341 million for the previous quarter. The sequential increase is attributable in part to the higher average North American solutions segment to recap and compare it to the second quarter. General and Administrative expenses totaled approximately $45 million for the third quarter, lower than our previous quarter but still in line with our expectations. During the third quarter, we incurred losses of $17 million related to the fair market value of our add non drilling investment, which is reported as a part of gains and losses on investment securities in our consolidated statement of operations. Our fiscal year to date gains on the NOC investment are approximately $48 million.

To summarize this quarter's results, due in part to the execution of our strategies to align pricing with value delivered, as well as disciplined cost management we had our first positive net income quarter in 10 quarters. Agency earned a profit of $0.16 per diluted share versus incurring a loss of $0.05 in the previous quarter. Third quarter earnings per share were negatively impacted by net $0.11 per share of select items as highlighted in our press release, including the loss on investment securities that I just mentioned. Absent the select items adjusted diluted earnings per share was $0.27 in the third fiscal quarter versus an adjusted loss of $0.17.

During the second fiscal quarter, capital expenditures for the third quarter of fiscal ‘22 or $70 million sequentially ahead of last quarter is $60 million. This is lower than our expectations for the third quarter. But we are still comfortable with the annual range of $250 million to $270 million that was previously provided. H&P generated approximately $98 million in operating cash flow during the third quarter, which is up over $70 million on a sequential basis from the $23 million in the previous quarter. I'll have additional comments about our cash flows and working capital later in these remarks.

Starting to our free segments beginning with the North America solutions segment, we averaged 174 contracted flex rigs during the third quarter up from an average of 164 flex rigs in fiscal Q2. We exited the third fiscal quarter with 175 contracted rigs which was in line with our previous guidance. We added four rigs to our active rig count in the third quarter, including three walking flex rig, drilling rig conversions that were completed in fiscal Q3. Revenues were sequentially higher by $77 million due to pricing increases for our flex rigs in the spot market as John mentioned, and as we discussed on the second fiscal quarter call. Segment direct margin was $168 million and just above the top end of our April guidances coincidently higher than second quarter fiscal ‘20 to $114 million.

Overall effects from the North America solutions segment increase in a sequential basis due primarily to the increase in average rig count. In addition, reactivation costs of 6.5 million were incurred during Q3 compared to $14.2 million in the prior quarter. Roughly half of these reactivation costs were for the three walking rigs conversions added this quarter for the balance related to additional reactivation costs for rigs deployed at the end of the March quarter. Total segment per day expenses, excluding reconditioning costs and excluding reimbursable decreased to 15,490 per day in the third quarter from 50,030 per day in the second quarter.

Looking ahead to the fourth quarter of fiscal ‘22 for North American solutions, as of today's call, we have 176 flex rigs contracted, and we expect to continue at that level through the end of the fourth fiscal quarter of 2022. As we stated last quarter, and much like our competitors are doing and we intend to maintain, remain within our CapEx budget for the fiscal year which translates to holding the line on rig reactivations. Our current revenue backlog from our North America solutions fleet is roughly $629 million for rigs under term contract. Approximately 65% of the US active fleet is on a term contract. And we added approximately 10 rigs to our term roster early in the quarter which had previously been under negotiation for some time. Between now in calendar year in we have over 60 rigs rolling off of term contracts, which we expect to reprice in the current market.

The tight super spec rig supply dynamic is eating pricing momentum, and we expect the percentage of the US fleet on term to decrease to between 50% and 60%. During the next few quarters. As I mentioned last quarter significant inflationary pressures in calendar 2022, together with supply chain constraints are increasing consumable inventory costs. Such increases are included in our fourth guidance. Note that these costs for consumption and materials and supplies inventory did they make up less than 25% of the daily operating cost on a rig with a balance, primarily driven by labor.

In addition to the inflationary pressures on costs, constraints on supply chain capacity are increasing. In regard to supply chain access to parts and materials, we continue to utilize our proactive approach of detailed inventory planning, scale leverage, and healthy vendor partner relationships to alleviate supply chain challenges. In order to avoid a material impact or ongoing operations. We remain in close communication with our suppliers and have placed advanced orders for items in higher risk categories.

Approximately 70% to 75% of our daily costs are labor related. We implemented a wage rate increase in December 2021. Our turnover rates remain consistent with our historical turnover rates. To date, we have not experienced any loss of drilling time nor lost contracts due to crewing issues. We are monitoring and field labor rates as well as job required out of pocket expenditures. And as needed we'll respond to market conditions to assist in talent retention and attraction. As a reminder, our contracts are structured the past three labor related increases over a 5% threshold. We have commenced some early reactivation activities for rigs to deploy in fiscal year 2023 to minimize supply chain constraints where possible and are for planning.

Specifically, we are incurring costs already components of some of the rigs expected to be deployed in the first quarter of fiscal 2023. Reactivation costs will continue to increase to supply an inflation but also because the average idle super seconds is stacked for two plus years. Our expectation is that reactivation effects costs will approximate well approximately $1 million per rig moving forward. In the North America solution segment, we expect direct margins range between 185 million to 205 million inclusive of the effect of about 6 million in early reactivation costs for the fourth fiscal quarter.

Regarding our international solutions segment, international solutions business activity increased to nine active rigs at the end of the third fiscal quarter. As expected, we added two rigs in the Vaca Muerta region of Argentina this quarter in and of the second rig in Colombia. Also as expected, we incurred expenses associated with the rig startups that I just mentioned as well as investments made to establish our Middle East hub. As we look forward to the fourth quarter of fiscal ’22, for international, we expect to add two more rigs in the Vaca Muerta region of Argentina this quarter as well as a third rig in Colombia. These additions will bring our total active international rig count to 12 at the end of the fourth fiscal quarter if the projected startup timing is adhered to. We also expect to incur more expenses as we further develop our Middle East, inclusive of preparation to export a super spec flex rig that will be targeted at regional drilling opportunities.

Aside from any foreign exchange impacts, we expect to have between 4 million to 7 million direct margin contribution in the fourth quarter, due in part to sequentially higher average activity, reduce startup expenses and read rate increases. Turning to our Gulf of Mexico, offshore Gulf of Mexico segment, we still have four of our seven offshore platform rigs contracted and two of our three management contracts on customer owned rigs are still unfilled drilling rates. Offshore generated direct margin of about 8.7 million very the quarter which was toward the high end of our expectations. As we look toward the fourth quarter of fiscal ’22, for the offshore segment, we expected total offshore that we expect that offshore will generate between 9 million to 11 million of direct margin. A sequential increase resulting from contractual pricing increases on our active Gulf of Mexico platform rigs and management contracts as John mentioned earlier.

Now, let me look forward to the fourth fiscal quarter update full fiscal year ‘22 guidance as appropriate and look ahead to fiscal ‘23 planning. As mentioned, we still expect capital expenditures for the full fiscal year drains between $250 million to $270 million with remaining spend and approximately 85 million at the midpoint to be incurred in the last fiscal quarter. As a reminder, the timing of some spending has pushed in the second half of the fiscal year as key suppliers continue to rebuild capacity that was taken offline during COVID restrictions and the coinciding energy downturn.

Looking forward to our fiscal 2023, which begins October 1, while our budget process is still at an early stage, we have done some preliminary work to help frame up expectations going forward. With that said, you should think about our North America solutions segment CapEx three buckets, maintenance, reactivation and conversion. Our bucket of maintenance capex costs will likely push to the high end of our historical range of 750,000 to a million proactive rig due to inflationary costs increases. The rig specific reactivation CapEx budget and the emergence for 2023 as we get deeper into the idled stack of rigs. Here one-time capital expenditures will be incurred to overhaul componentry that we optimally utilize in the protracted downturn.

For example, to delay an overhaul expenditure we swapped out like equipment from idle rigs during the downturn that had more time remaining before an overhaul was required. This was done in an effort in an effort to save capital and defend their conservative balance sheet. Such discreet reactivation CapEx could range from $1 million to $4 million for each rig reactivation fiscal 2023 depending on the particular componentry involved. Over the next few months, we will refine our planning for next fiscal year with the intent of only reactivating rigs for pricing in terms and ensure return on the significant effects and CapEx investments required to bring the rigs back online. The final bucket one should consider is a conversion bucket which relates to the continuation of our walking reconversion program. Consistent with how we have been converting rigs to walking route capability depending on customer demand and projected returns, we will likely do so in fiscal 2023 at a pace of approximately one per month. Our expectations for general and administrative expenses for the full fiscal ‘22 year are still expected to be just over $180 million.

Items impacting your tax provision and income are at levels that result in the wide variability in the estimated effective tax rate, and therefore the effective tax rate for upcoming quarters may be volatile. With that being said the US statutory rate for fiscal year ‘21 is 21%. In addition, we are expecting incremental state and foreign income taxes in permanent both the tax differences to impact our provision. There is no change to the previously guided range of anticipated cash tax of 5 million to 20 million for this fiscal year. Now looking at our financial position, homework and pain had cash and short-term investments of approximately 333 million in June 30 2022 versus an equivalent 350 million in March 31 ‘22.

The expected sequential decrease was largely attributable to our investment in Galileo and the quarter for 33 million as mentioned during the previous quarter call. Including a revolving credit facility availability, liquidity was approximately 1.1 billion at June 30. Our debt to capital at quarter end was about 17%. And our net debt was 209 million approximately. We currently expect our trailing 12 months of gross leverage churn to reach our goal of less than two times outstanding debt by September 30 2022. Following our resumption as positive cash flow generation from operations in fiscal Q2, the growth of that generation in the third quarter stems primarily from a result of the good pricing work discussed earlier.

And also due to less reactivation expenditures as recounts remained relatively steady in North America solutions segment as planning on the working capital front. Our accounts receivable in March 31, the 330 million grew by 68 million to approximately 398 million to June 30. The preponderance of our AR today continues to be less than 60 days outstanding from billing date. Although absolutely Della receivables are up primarily for price increases in North America solutions. Several additional international rigs working and Gene pricing increases in the offshore segments.

During the third fiscal quarter, we had a couple of significant cash related transactions. First, as mentioned in last quarters call, we invested approximately 33 million in Galileo. Second, we build our legacy Schlumberger stock for approximately 22 million in pretax proceeds, we still expect to in the fiscal year with between 350 million and 400 million of cash and short-term investments on hand. Although we expect to be toward the bottom half of that range due in part to some working capital lockup from accounts receivables as I mentioned. As we expected, the growth in account early in the fiscal year provided a platform for cash generation in the second half of the year. To that point in the recently completed third quarter, we fully covered our maintenance CapEx with cash flow from operations as well as funded our regular dividend.

Further, our disciplined capital planning and operational execution excellence sets the stage for cash increasing going forward. Cash returns to shareholders remains a top priority with our existing dividend, and we have a desire to augment these returns in the future. Additional returns are not yet determined by our board of directors but could consist of an assessment of our long-standing regular dividend, a potential variable type dividend, and opportunistic share buybacks. As mentioned in the press release, their financial stewardship compels us to take a measured approach in balance our maintenance CapEx requirements, growth capital opportunities for both us reactivations and international expansion and potential additional shareholder returns. More to come on this for fiscal 2023, in the coming quarters call.

Note, this concludes our prepared comments for the third fiscal quarter. Let me now turn the call over to Ashley for questions.

Question-and-Answer Session


[Operator Instructions] And we'll take our first question from Derek Podhaizer with Barclays. Please go ahead Your line is open.

Derek Podhaizer

Hey, good morning, guys. Just wanted to get more of a sense on how many rigs you could add to the market next year. I know your conversations with your customers. You mentioned in the skidding to walking conversion program in the breakdown of the CapEx about one per month call that 12. Just what else do you think you can add to the market just based on your conversations and based on the demand that they're all within keeping in your framework of generating the returns based on the amount of CapEx and OpEx needs to be to deploy to player. I just love a little more color on that.

John Lindsay

Yes, Derek. I can supply you some sense of that, as Mark said, we're really not in a position other than to just mentioned the 12 walking conversions, assuming the demand and the margins returns are there. One way to think about it is what you expect the rig count to do and the super spec space. Next year and really, I would say starting in calendar Q4 of this year, because again, as I said earlier, that that's kind of been the buying season over the last two years. So if you think about if you make an assumption that 75 rigs to 100 rigs get added over, that 12 month period starting in Q4, if you look at our 25% market share, that would be a reasonable range to think about. But again, I think the main point I want to get across is we're not making decisions based on market share. We're making decisions based on the returns that we can generate from these rigs and just making certain that we're getting reasonable rates of returns over a long period of time. So Derek, that answer your question?

Derek Podhaizer

Yes, no, that's helpful. And then the -- you mentioned that 30,000 per day at or above that level 20% of your fleets on that. Based on the visibility you had and the rigs coming up on term in the contract turn, how can we double that to 40%? Explain that just cadence and how long it would take to get the whole fleet up to that 30 at 30 or above on our blog day rate?

John Lindsay

Yes. And if it's not clear in, in prepared remarks, but that 20% was effective the end of our fiscal Q3, that's not where we are today, necessarily. So that's our Q3 fiscal Q3 number, we don't have we have pretty, pretty clear insight into that it does take, a couple of quarters to get there. And so, I don't think they've really said anything about what that timing would be. I think, reasonably speaking over, two or three, two or three quarter, probably process wise wouldn't would enable us to get to that, to that level of pricing, low, low 30 pricing.

I think that's exactly right, couple more quarters, because as you said, that was in June 30, number you gave in prepared remarks. And in here, we are not far beyond that. And we're already seeing meaningful accretion to that number a month later.

Derek Podhaizer

Got it. That's very helpful. Appreciate the color guys sort of back.

John Lindsay

Thanks, Derek.


And we'll pick a next question from the Douglas Becker with Benchmark Research. Please go ahead. Your line is open.

Douglas Becker

Thanks. John, wanted to get your thoughts on a conceptual question. Investors historically have thought about gain rates reaching a soft ceiling, when it comes back to reactivation costs or upgrade costs? It seems like spot rates are getting above some of those levels. We've done a leading-edge basis, but just want to get your thoughts on, is that a still a relevant framework to think about pricing? Or have we moved into a different dynamic?

John Lindsay

Yes, I think the historical pricing the context there. It's really different today for a lot of reasons. But, I think, when you consider the investments that we have in specifically in the super spec capacity fleet. I think most people want to compare today versus a 2014 time period, as an example. And as we said, in our previous call that was last time we had 50% gross margins, but we didn't have 230 super spec rigs in the fleet at that time. So it's a much, much different situation.

Mark Smith

Yes, John, I would just add to that. Doug, that as I mentioned, in 2014, we didn't have a super spec rig. So going into ‘16 and beyond, we invested a lot of money in this the upgrading of the fleet resulting in the industry's largest supersonic fleet, and also resulting in a lot of benefits for our customers. Along the way, we add in a very oftentimes, what we would consider to be sub optimal returns on invested capital compared to what are working or what our weighted average cost of capital is. So as we were just trying to get back to numbers that makes sense financially, and this 50% margin is what will get us there, we're on the journey to get to that.

Separately, simultaneously, the rigs we built back then $20 million in fees, or even seven 20 million in 2014. Today, rough estimates say that somewhere between 30 million to 35 million. So a lot of capital still to be deployed to the idle assets that have been there two and a half, two years plus, which means that we get to the buying season at the end of this calendar year. At the beginning of calendar ’23, they've been sitting there two and a half years. So a lot of capital deployed for what we estimate to be nearly 150 super spec rigs in that two and a half year idle tenure by the time we get to the end of this calendar year. Have that else done.

Douglas Becker

Now that provides some good context, maybe more succinctly. It doesn't sound like you expect a meaningful increase in capacity if spot rates are 35,000 a day or higher because of the framework you've just laid out. Is that fair to say?

John Lindsay

Then again, [indiscernible].

Mark Smith

Sure, just trying to gauge it. rectification if we see $37,000 a day spa day rate? Do we see a big influx of capacity coming into the market?

John Lindsay

Yes, I think the capacity that is that is out there, as we described, we're estimating around 130 super spec rigs. We know, there's other drillers that are looking at doing some upgrades to SER tech rigs. And in order to satisfy demand. Guy, I would be surprised personally to see all of those rigs reactivated in 2023 for a number of reasons that we've already talked about related to just the supply chain and the capability to be able to provide the equipment sets required to get those rigs back into working back to working condition, because we as an industry we've utilized equipment sets off of those rigs that have been idle now, as Mark said, rover will be for over two and a half years. And so I, personally, I don't think there's going to be a response we've had some people ask about new bills. And I just think that, based on what Mark just said in terms of a $30 million to $35 million price tag for a new rig. I don't think that's going to be the case, either.

Douglas Becker

Yes, take midpoint $32.5 million, if you're making $15 a day margin, that's a six-year payback. Or if you're making 20,000 a day margin, that's a four-and-a-half-year payback. And then with the customer base today, that has little appetite to contract up beyond their fiscal budget year. So yes, I think the supply chain thing, as John mentioned is actually a significant hurdle. For any, we're working with our scale and leverage with our suppliers to make sure that we can put rigs back to work and also keep the active fleet in good working condition. And that's an effort that's a lot different today than it was at any time over the last 10 years.

John Lindsay

Great. And Doug, it really goes back to just to capital discipline, we've talked about that that's really the rallying cry within the industry. Our customers are demonstrating it. The service industry is displaying that and there's no reason to rush, even if the supply chain was there, there's no reason to rush to try to capture all this, any additional market share that you might be able to capture, one of the things that that we experienced in this last quarter, and you heard us talk about churn, we actually had 18 rigs that were given back to us for various reasons. Customers, going through their budget too fast, acreage position, the list goes on and on. 18 rigs that were, 18 points of demand, that historically speaking as an industry, we would have tried to satisfy that demand for reactivating something. And so, last quarter, we said, we're going to 175. And in Q3, we're going to finish the year at 176, we're within our capital budget, that wouldn't have been the case in previous cycles, we would have continued to try to capture additional share. So I think that's a really distinct difference in our industry, which I think is really healthy, it's healthy on the operator side and healthy on the overall services side as well.

Douglas Becker

Thank you very much.

John Lindsay

Thank you.


Next question is from the line of Keith Mackey with RBC, please go ahead. Your line is open.

Keith Mackey

Hi, good morning, and thanks for taking my questions. Just wanted to maybe start out with the contracting nature. Are you seeing any increased appetite for longer term contracts from customers that are not necessarily associated with conversion or upgrade or those hot rigs or whatever you'd like to call them still on shorter term durations?

John Lindsay

Keith, I would say it's a mix. We have customers that are that are interested in terming up rigs or a portion of their fleet, particularly larger customers that may have 10 rigs or 15 rigs running. I'm making this up 10 rigs or 15 rigs running. They don't necessarily want to turn up every rig but they may want to turn up summary. From our perspective, as Mark said, we've got 60 rigs approximately that are rolling off term. Next couple of scholars. And, we'll be looking at those very, very closely in terms of whether those remain in term or rollover into spot, I would say most of those rigs are going to probably go into more of a spot, spot type market. But I think it's really a mix that we see customers across the board, some that want to lock up on term, some that would prefer to play the spot market.

Keith Mackey

Got it? Thanks for that.

John Lindsay

I would just add for us at this time, with the upward momentum and pricing and the supply demand dynamics of the sector, trying to get to the returns that we have been discussing. Putting more of our market into the upward mobility of the spot pricing makes sense.

Keith Mackey

Got it, that's helpful. Just curious if you can supply us a little bit more detail on the number of rigs you have that could be reactivated within that one to 4 million CapEx range. And maybe just your little more on your confidence in being able to get additional rigs to the market in early fiscal or calendar 2023 given the supply chain?

Mark Smith

Well, we have from a reactivation standpoint, when we got into some of the supply chain work that we're doing in this fourth quarter to get ready for putting some rigs back to work. But it's too soon to know definitively how many will put into the market. As John mentioned, we're being very cognizant about capital discipline, one and two, we're not going to try to meet every demand point that comes our way because we know there will be the existence of churn in the market. In other words, rigs freeing up for whatever reason, whatever reason, it may be a contractor. I mean, an H&P running out of budget and the H&P running out of acreage. Many dynamics, we will meet every single demand for me to that makes sense. So we're still trying to balance. I don't know the last two years in the buying season at the end of the calendar year Q4 before the calendar Q1, 40 rigs and 44 rigs, these are the last two buying seasons for us to be at and we don't see that level of addition coming. You have to remember that in those two seasons, we were coming off from substantially low bottom through both the OPEC price change and the pandemic that began in March of 2020. So a substantial bottom to come back up from we're approaching numbers from March 1, 2020. Today from an activity level standpoint, so don't see the quantum of additions. So differently do not see the quantum of additions coming, that we had the last few buying seasons. So I don't know specifically what that'll be yet. We are working, though, to know what every single one of our approximately 54 remaining is in perspective takes. But not ready to comment on delineating the numbers for all for those.

Keith Mackey

Got it? No, that's helpful. Thanks very much. I'll turn it back.

Mark Smith

Thank you.


And we'll take our next question from Andrew Herring with JP Morgan, please go ahead.

Andrew Herring

Thank you. Good morning. So I'm going to turn to the international outlook. So it sounds like in the near term, you're reactivating a few rigs or adding a few rigs in Argentina, and Colombia, and then transferring one into the Middle East. As many of you can comment on the outlook on some Middle East growth in activity. Do you think customers are looking for more demand before the end of calendar ‘22? And initial insights into what we might expect in 2023?

Mark Smith

I'll start, John, if you want to chime in. I think little as we think about it, we're looking more over the next two to three years in our planning horizon. So if you think about we're always looking at a five year planning horizon, we consider the Middle East scale to be more mid cycle in that horizon. So we're preparing really our Middle East hub, which is to be able to if you just simply have an operating presence in the structure and the Gulf Coast countries so that we can respond to demand points that we see coming in at midcycle horizon. We are excited about several opportunities we have part and parcel to the brand presence that we that we've benefited from after the addenda I can bet in the last year. We're participating in many bid tenders in the region with NRCS and IOCs. alike. So it's a little too early to say if we might be successful in one of those tenders. And if we are, that sort of thing is say three rigs to six rigs per for bidding effort. So if we were fortunate enough to win to that might be 6 rigs to 12 rigs in the next couple of years is that the way to think about it. And in particular, the flex rigs that we have, are with our we've drilled more shale wells than anyone else has globally, frankly. And taking that expertise, especially in some of the burgeoning gas plays in the region, is a really good way to help the customer achieve their goals. So those are the sorts of things we're interested in. John, any, any other comments?

John Lindsay

No, I think I think we've talked about unconventional opportunity for really, we've talked about it internationally for many years. We're starting to see evidence that we're hoping is going to come to fruition. So I would just add to that. And I think our fleet is really designed for unconventional work. The performance, reliability, and the technology solutions that we have all of those are really complementary to that opportunity set.

Andrew Herring

Great, thank you. That's very helpful. And as a follow up, then on the economics internationally, understanding it might be a little early to comment on the Middle East. But assuming these will be more creative contracts, you're talking about comparing the US to prior cycle. To what extent is that helpful in our modeling for internationally comparing to prior year margins you've been able to achieve on these risks? With a higher technology, can we see that exceed those levels, just any common you could, help us kind of gauge where we can see margins tend to be helpful?

John Lindsay

Well, each one of these dinners, for example that were participating in the economics have to be to be right for us. Our own history over the last couple of years International is not a we're not looking to that as any sort of guidance because of the crazy volatility and actually a wind down to zero rigs working because of the pandemic. But as we move forward, these things have to be accretive and we look at the financial returns through time. We also look though, at the ability to build scale. So if we want an initial bid with three rigs, we will be looking beyond that singular bid as an as a potential new entry point for a new customer for H&P. And looking to see what the potential might be for that customer to scale that up. And, and really get better absorption rates like we do here in the US through our scale. So we're looking at a lot of different components. But I think, easy to say that it would have to be financially free.

Andrew Herring

Thanks. That’s all for me. I’ll turn in back.


Hi, we'll take our next question from Tom Carstairs with Stifel Research, please go ahead. Your line is open.

Tom Carstairs

Good morning. I want to know when it comes to the remaining inventory of ITIL and redeploy able, super separating said, fleet of 54. There's been a lot of emphasis placed on what you're trying to achieve with regards to converting the psychology around pricing, hitting new levels for leading edge day rate and the associated gross margin. But on the terms and conditions side. Are you now expecting or do you think he might be able to get some minimal term or take or pay conditions may be an early termination provision, just wondering how good the remainder of the reactivation contracts might be that we could say?

Mark Smith

Well, in the US, we will. As I mentioned earlier, we see a movement down from 65% to 40% to 50% to 60% range for term. And for everything we enter into in the US on in term, Tom, we do get that taker pay cancellation provision. Having said that, where we are today, financially is much different than where we were coming out of a couple of two or three of the more latest downturns. What I mean by that we have one death is due in 2031. We have a base dividend at 65 versus low lower than it was going into the pandemic. We have an substantial amount of cash on hand and look to a creep. So our capital structure requirements for such taker paper visions are less necessary than they might have been in prior cycles. But we still always like to have some defensiveness, which is why we're still going to remain within that 50% to 60% target range. But supply up some term to try to capitalize on the supply demand dynamic that is creating this push up in pricing and therefore margins for us. John, any other.

John Lindsay

Yes, it's always about balance. There will be some of our walking conversions, or probably most of our walking conversions that that we will have a term contract commitment. But as I said earlier, Mark mentioned we're going to have 60 rigs rolling off of term contract over the next couple of quarters. And I would imagine most of those are going to roll into a spot market. So we will have some certainty on returns on a larger recommission are the conversions. But as Mark said we're positioned really well to be able to manage through that.

Tom Carstairs

Got it helpful. Clarifications. And then I just wanted to get supply us an update on auto slide, that the percentage of your average active rig fleet for the quarter of 174 rigs, what percentage of that count, used auto slide at any point over the course of the quarter?

John Lindsay

I think we're around 25%. I believe that I believe that's right. And, we continue to have had uptake, it's been really well received in terms of providing automated directional drilling capacity. And as the rig count grows, it's even more important because we're bringing a lot of directional drillers back into the space. And obviously, they don't have, they don't have the experience that that a lot of operators would like to have. But just being able to automate that process, directional drilling processes is a huge win. And then we were also able to tie that into a commercial performance-based model. That's really a win, win situation for each, H&P, and for our customer.

Tom Carstairs

And would you say that the 25% that used auto side at some point. Does that 25% contain the entirety of the 20% of the fleet for the quarter that realize average revenue per day 30,000 or greater?

John Lindsay

We don't have. That's a great question. I don't have that that data. I do know that there is a portion of that is included in that. But I don't have the data for if it's only 20%, or some subset of that.

Tom Carstairs

Right. I assume the overlap would be high. It's not a perfect Eclipse. But okay, thanks for taking my questions.


Another question from John Daniel of Daniel Energy Partners, please go ahead.

John Daniel

Guys, thanks for including me. John, and Mark, I think most of us have talked ourselves into believing this is a multi-year upcycle. And assuming and hoping that's right. I'm just curious as you look at the pricing, we keep hearing about the low mid 30s in terms of leading edge. But the rig count, if we actually, as an industry add, call it 50 to 100 range over the next 12 months. Where does pricing go to?

John Lindsay

Well, John, obviously there's pricing has moved very, very quickly. It needed to move very, very quickly. There was a huge disconnect and in the value proposition that we provide the investments that we have and the margin generation. And if you just look at previous cycles, obviously we since 2014, we have not been able to get back to that. So, right now we're seeing leading edge mid-30s. Our goal, as we've already said, is to get to the get to the low 30s. And that's really our focus right now on getting to 50% gross margin. It's really hard to say past that, that John, I mean, we all read the same materials after that And, there's a lot of people that are surmising where it's going. And obviously, we've got a pretty good glimpse into that. But right now, we're just we're just sticking to, to, to the goals that we've laid out there. And we'll see. We'll see where it lands.

John Daniel

At this point, have you had any shareholders that have advocated pushing activity over price?

John Lindsay

No, we haven't been unanimous.

John Daniel

Yes, got it.

John Lindsay

We, I think there's some that, haven't didn't completely follow from our last call that we said, hey, we're recounts, going to be at the most 176 rigs this fiscal year. And that was called a quarter ago. And, but again, we're really pleased because at the beginning of the year, we thought that same 250 million to 270 million was 160 rigs, we're able to get 176 out of it. So created some great efficiencies there. But, expect to continue to see that from us. And I think that's what shareholders want. That's what investors want. Very much like, what are our customers are doing.

John Daniel

I got two quick ones. And I'll wrap up if you said this, I apologize, but kind of you have a range of where you might exit calendar Q4 in terms of a contracted read count calendar Q4.

John Lindsay

Now, as we said, we're working on reactivations, it's a little too far out to know the definitive demand points. And as we alluded to earlier, we will not meet every one of them.

John Daniel


John Lindsay

So still too early, John,

John Daniel

Fair enough, that you would expect to be above 176, I presume? And calendar Q4.

Mark Smith

We would be. And it's again I think going back to the question as John a minute ago, I think some folks who were maybe not heard the 176 for the September 30 goal in holding rigs tight, in CapEx tight which is helping the dynamics of supply demand and helping pricing. I think that was more on the analyst side. But when we speak to investors and long-term investors, there's not a single one of them that we've talked to you that with any sort of share, over margin. So we're going to be very cognizant of that theme, as we think about your last question and figuring out how many rigs to put in the market and in our first fiscal quarter, to get to a 1231.

John Daniel

Yes. Okay. Well, I'm glad your shareholders are thinking wisely. You've been very generous with your time. It's coming up on the end of the hour, and I'll turn it over for anyone else and follow up with David afterwards. Thanks. Thank you.

John Lindsay

Thanks, John.


No further questions, at this time. I'll turn the call back over to John Lindsay for any closing remarks.

John Lindsay

Thank you, Ashley. And thanks to all of you for joining us today. We know there are a lot of earnings calls going on today, and we really appreciate your time. I will tell you the H&P team, we've already said it we're laser focused on delivering value to customers and to shareholders. We aim to deliver value to customers through top tier performance, safety and reliability and to our shareholders, continued improvement in our margin growth and our return. So thank you again for your time and have a great day.


Thank you. This does conclude today's program. Thank you for your participation. You may disconnect your lines.

Thu, 28 Jul 2022 10:46:00 -0500 en text/html
Killexams : How the climate deal would help farmers aid the environment

ST. LOUIS (AP) — The climate deal reached last week by Senate Democrats could reduce the amount of greenhouse gases that American farmers produce by expanding programs that help accumulate carbon in soil, fund climate-focused research and lower the abundant methane emissions that come from cows.

The bill includes more than $20 billion to Strengthen the agriculture sector’s impact on the environment, mostly by expanding existing U.S. Department of Agriculture programs that help farmers change to better practices. Farmers would be paid to Strengthen the health of their soil, withstand extreme weather and protect their land if the bill is enacted.

The roughly $370 billion climate and energy spending deal would bring the country closer to cutting greenhouse gas emissions in half by 2030, according to new analyses. That is something many scientists say is important, and that President Joe Biden promised. Sen. Joe Manchin, D-W. Va., a long-time holdout on climate legislation, endorsed measures that would benefit electric vehicles, renewable energy and climate-friendly farming. Agriculture is responsible for 11% of the country's climate-warming emissions.

The funding would expand programs favored by both environmental groups and the agricultural sector, said Ben Thomas, who focuses on agriculture at the Environmental Defense Fund.

“They are voluntary, they are incentive-based, they get results in terms of implementing conservation practices on working lands,” said Thomas. “It’s great to see.”

Thomas said historically, the agricultural sector has not aggressively tackled its contribution to climate change, but that hesitation has shifted in latest years and more money will accelerate progress. There's a lot of potential, he said.

“It is worth taking very, very seriously,” Thomas said.

Cows belch an enormous amount of methane and agriculture is responsible for more than one-third of human-caused methane emissions, according to the U.S. Environmental Protection Agency. This is a way that people's diets — if they are high in meat or dairy — contribute to greenhouse gas buildup. The bill directs funds towards altering what cows eat to reduce those emissions.

On farms, soil can hold or sequester carbon if it is left undisturbed and covered by a crop. Money from the bill will expand programs that help farmers turn their soil less, implement climate-friendly crop rotation practices and plant cover crops that aren’t for harvest but Strengthen soil health.

“The historic funding validates the fact that these practices are important,” said Ranjani Prabhakar, an agriculture and climate policy specialist at the environmental group Earthjustice

Cover crops, for example, are only used by a fraction of farmers. If their use were to triple — from around 5% of cropland to 15% — it could remove the equivalent of 14 megatons of carbon dioxide per year, roughly the total annual emissions of New Hampshire, according to Kevin Karl, a food and climate researcher at Columbia University.

“The adoption rate is so low,” Karl said. “There’s a lot of potential improvement.”

Wed, 03 Aug 2022 02:09:00 -0500 en-US text/html
Killexams : Will launch ‘Jail Bharo Andolan’ if demands not met by Aug 16: HP apple growers No result found, try new keyword!During the meeting, the farmers had submitted a 20-point demand charter to the government and 10-day deadline to fulfil their demands ... Sat, 06 Aug 2022 06:41:51 -0500 en-in text/html Killexams : ‘The role of the safety practitioner is evolving towards managing how the work is set up,’ SHP meets Marcin Nazaruk

Ahead of EHS Congress, taking place in Berlin in September, SHP catches up with speaker Marcin Nazaruk, Human Performance and Culture Leader at Baker Hughes, on how to learn from ‘normal work’ to get safety and business results and how to implement the findings.

What is your background in safety and how does your experience help you in your current role?

Marcin NazarukMarcin Nazaruk (MN): “My background combines multiple fields including industrial psychology, safety management, business, behavioural science, systems thinking, and many others.

“My work involves working at all levels of the hierarchy. Some days I’m on the shop floor learning from the operators how the work is really done compared to how it was imagined to be done. Other times, I work with supervisors, executives, engineers, central corporate teams, as well as customers and contractors.

“I take the most useful elements from different models and make them work to tangibly reduce the risk. For example, we were recognised by the Center for Offshore Safety with a Leadership Award for showing 37% in accident reduction through the practical application of learning from ‘normal work’.

“I’ve spent years translating modern safety science into practical, hands-on tools and developed many industry guides and practitioner toolkits available through various industry bodies, as well as training and content for the executive leaders. Click here for the full list of the tools.”

How is the role of the safety practitioner changing, and why is it important to modernise outdated practices?

(MN): “The role of the safety practitioner is evolving towards managing how the work is set up which requires collaboration across departments and levels of hierarchy.

“This is because the level of risk depends not only on how well hazards are controlled but also on how easy the organisation makes it to do the right thing. For example, an incorrect procedure may force people to come up with their own way of doing things but the problem with the procedure is due to corporate document management processes. The insufficient amount of time available for the job not only may force people to skip some steps but it also implies planning and resourcing issues higher up in the organisation which in turn are influenced by terms of contracts, organisational strategy, or cost management.

“Breaking down the silos and helping people in various departments realise their indirect impact on risk in operations is the next wave of efforts toward achieving high reliability.

“The consequence of not accounting for these factors in safety management is repeat accidents.

“If you’d like to learn how to proactively identify issues with the work set up and find organisational factors that will create your next accident, get in touch.”

At EHS Congress in September, you will be sharing with delegates how to learn from ‘normal work’ to get safety and business results. How would you describe ‘normal work’ and why is learning from it important?

(MN): “’Normal work’ is about how people adapt to changing conditions and challenges as part of their job.

“For example, using a crane to lift a load. Every time an operator does it, there may be something different about the situation, such as:

  • Less time available than planned.
  • Additional people in the area.
  • One person being off work.
  • Correct tools not available, e.g., lifting slings.

“Overcoming these challenges is part of what needs to be done. It’s ‘normal work’.

“It’s easy to see how these factors can increase the risk, and yet, none of them would be classified as a hazard because none of them is a source of harm.

“Popular approaches to safety management focus on controlling identified hazards but miss a whole world of organizational factors.

“Learning from normal work (also known as pre-accident investigations, or learning from success), is about proactively looking into the things that make the work difficult and increase the chances of human error, non-conformance, or unsafe acts in order to tangibly reduce the risk.

Click here to see some real-life examples.”

What are your top three tips for practically implementing learning from ‘normal work,’ to get better results?

(MN): “The factors that will create your next accident exist today. We can find and address them before they lead to an event. However, it requires changing how we think about failure and the type of questions that we ask.

“My top three tips would be:

  1. Build a shared mindset among the key stakeholders on the Human Performance Principles and the modern view of incident causation.
  2. Develop skills to learn about the local constraints and organisational factors.
  3. Integrate the learning from ‘normal work’ concepts and tools with your existing safety processes to ensure the sustainability of the effort.

“To help organisations to apply these points in practice, I was the lead author of the new guide on this course that will be published by the International Association of Oil and Gas Producers (IOGP) later in 2022.

“We’ve also created resources that allow companies to start now. Click here for more details.”

Hear more from Marcin Nazaruk at the 2022 EHS Congress, taking place in Berlin from 13-14 September. His session will take place on day one of the conference.

Click to register for your place and to see the full EHS Congress agenda.

Click here for more from EHS Congress on SHP.

When SHP met Louis Theroux…

The Safety & Health Podcast brings you the full recording of Louis Theroux’s keynote session at Safety & Health Expo.

Louis sat down with SHP Editor Ian Hart, in front of a packed Keynote Theatre audience, to discuss all things, from communicating effectively and working in hostile to health and health and wellbeing.

‘The role of the safety practitioner is evolving towards managing how the work is set up,’ SHP meets Marcin Nazaruk SHP catches up with Marcin Nazaruk to how to learn from ‘normal work’ to get safety and business results and how to implement the findings.

Ian Hart

SHP - Health and Safety News, Legislation, PPE, CPD and Resources

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Tue, 02 Aug 2022 21:15:00 -0500 text/html
Killexams : How to Create a More Equitable Process of Domain Ownership No result found, try new keyword!In order to purchase a domain name, a user must register the name with a domain registrar, which in turn must agree to ICANN’s terms. If at any point the government perceives a user to be in violation ... Fri, 05 Aug 2022 01:04:00 -0500 text/html Killexams : FDA chief's long-promised opioid review faces skepticism

WASHINGTON (AP) — As U.S. opioid deaths mounted in 2016, the incoming head of the Food and Drug Administration promised a “sweeping review” of prescription painkillers in hopes of reversing the worst overdose epidemic in American history.

Dr. Robert Califf even personally commissioned a report from the nation’s top medical advisers that recommended reforms, including potentially removing some drugs from the market. But six years later, opioids are claiming more lives than ever, and the FDA has not pulled a single drug from pharmacy shelves since the report's publication. In fact, the agency continues putting new painkillers on the market — six in the last five years.

Now Califf is back in charge at the FDA, and he faces skepticism from lawmakers, patient advocates and others about his long-promised reckoning for drugs such as OxyContin and Vicodin, which are largely blamed for sparking a two-decade rise in opioid deaths.

“All the concerns that we had at the time on opioids are still there. We still have a really huge problem,” said Richard Bonnie, a University of Virginia public health expert who chaired the committee that wrote the report.

Bonnie and his co-authors say the FDA seems to have incorporated several of their recommendations into latest decisions, including a broader consideration of a drug’s public health risks. But they say there is more to be done.

In an interview with The Associated Press, Califf said a new internal review of opioids has been underway for months and that the public will soon “be hearing a lot more about this.” While the review will look at past FDA decisions, Califf suggested the focus will be on future policy.

“It seems like people love sort of looking back and fault-finding, but I’m much more interested in learning so we can go forward and make the best decisions for what we need to do today,” said Califf, who split his time between Duke University and working for Google after leaving the FDA in 2017 following President Donald Trump's election.

The 453-page report issued five years ago this month by the National Academies of Sciences laid out a strategy for reducing overprescribing and misuse of opioids, with particular focus on the FDA.

At the center of the recommendations was a proposal for the FDA to reassess the dozens of opioids being sold to determine whether their overall benefits in treating pain outweigh their risks of addiction and overdose. Those that don’t should be removed from the market, the group said.

The lack of swift action underscores the glacial pace of federal regulation and the legal obstacles to clawing back drugs previously deemed safe and effective.

“It’s really hard for the agency to get a drug taken off the market once it’s been approved,” said Margaret Riley, a food and drug law professor who consulted on the report.

Last year, U.S. overdose deaths soared to a record of 107,000, driven overwhelmingly by fentanyl and other illegal opioids.

Opioid prescriptions have fallen about 40% in the last decade amid restrictions by hospitals, insurers and state officials. But deaths tied to the medications remain at 13,000 to 14,000 per year. And studies suggest people who become addicted to opioids continue to start with prescription opioids, before switching to cheaper heroin and illegally made fentanyl.

“If Dr. Califf is serious about addressing the drug epidemic, the FDA should immediately implement" the report's recommendations, Sen. Joe Manchin of West Virginia said in a statement.

Manchin told the AP that he requested an update in April on the FDA’s progress on the recommendations but didn’t receive a response. He was one of five Democrats from hard-hit opioid states who voted against Califf’s confirmation in February.

In response to questions about the recommendations, the FDA provided a list of actions it has taken on opioids, some which predated the report. The agency said it has acted on “nearly all” of the recommendations, by enhancing prescriber education and labeling, convening meetings and improving data collection.

“I think what you’ve seen is the agency grabbing at some of the low-hanging fruit and only to a certain level,” Riley said.

Despite heightened scrutiny, the FDA continues putting new painkillers on the market. Many of the drugs have formulations designed to make them harder to misuse, such as hard-to-crush coatings that discourage snorting or injecting.

Califf has said the FDA is bound by its regulations: Companies need only show that their drugs work better than a placebo, and the agency can't require new opioids to be safer or more effective than ones already on the market. He told Senate lawmakers in April that doing so might require legislation from Congress.

Wed, 27 Jul 2022 06:15:00 -0500 en-US text/html
Killexams : Cyber insurance price hike hits local governments hard

Horry County, South Carolina, officials were in for a shock earlier this year, when they discovered their cyber insurance premium would be spiking from $70,000 last year to about $210,000.

And if they couldn’t satisfy the insurance company’s requirements and prove they had the robust controls needed to protect and defend themselves against cyberattacks, they learned, they wouldn’t be able to get their $5 million policy renewed at all.

“The insurance companies have you over a barrel. There was not a lot of negotiation,” said Tim Oliver, the county’s chief information officer.

Across the United States, many local governments and states — as well as private companies — are in the same boat. They’re discovering their cyber insurance premiums have skyrocketed and that they must meet stricter guidelines if they want to get coverage or renew their policies.

“Cyber insurance used to be very cheap,” said Alan Shark, executive director of the CompTIA Public Technology Institute, a Washington, D.C.-based nonprofit that provides consulting services to local governments. “But things have changed, and insurance companies are increasing rates dramatically and raising the bar and making it harder to get insurance. Some local governments may no longer be able to get it.”

Insurance industry officials say the higher premiums for both public and private organizations are a result of rising demand for coverage amid more frequent and costly cybercrime incidents — often ransomware attacks. That means insurers have had to pay out more, which has led them to raise premiums and tighten standards for getting a policy. Some companies also have lowered caps on coverage or limited how many policies they write.

Last August, for example, American International Group, one of the country’s largest writers of cyber insurance, announced that rates for its clients had increased nearly 40% globally and that it was tightening the terms of its policies to address increasing cyber losses.

In the past three years, the number of cyber insurance claims reported in the United States rose by 100% a year, according to a May report by Fitch Ratings, a credit rating agency. In 2021, insurers paid 8,100 claims.

To reduce risk and potential losses, insurers are becoming more diligent during the application process about which safeguards and technology an organization uses to protect itself against cyberattacks, according to Loretta Worters, spokesperson for the Insurance Information Institute, an industry trade group.

“If a government entity or any business really has such vulnerabilities and fails to address them, it will likely result in either a higher premium or non-renewal of coverage,” Worters wrote in an email.

Companies now want to ensure organizations have updated software and firewall protections, a backup system, cyber training for staff and testing for vulnerabilities, among other requirements.

They also are requiring organizations to use multi-factor authentication systemwide, including for remote work. Such security technology confirms a user’s identity before they log in, usually through a randomized one-time password or number sent to a smartphone or email address.

Cyber insurance typically covers a variety of services, such as providing forensic expertise to investigate the attack, legal support, hardware replacement, data recovery and notification of people whose personal data may have been breached. Some policies also include ransom negotiations with the hackers and payment of the ransom.

The insurance changes largely spring from the explosion of ransomware, which hijacks computer systems, encrypts the data and holds it hostage until the victims pay a ransom or restore the system on their own. It typically spreads through phishing, in which hackers email malicious links or attachments and people unwittingly click on them, unleashing malware.

In 2020, ransomware attacks accounted for 75% of cyber insurance claims in the U.S., according to AM Best, a credit rating agency.

In the past several years, there has been a rash of ransomware attacks on cities, county governments, school districts, police agencies and health care systems. Local governments, especially smaller ones, can be easy prey because they may have fewer resources and staff with cybersecurity expertise.

In 2021, there were at least 77 successful attacks on local and state governments and another 88 on school districts, colleges and universities, according to Brett Callow, a threat analyst for cybersecurity company, Emsisoft. This year, as of late June, there were at least 28 attacks on governments and 33 on schools.

In Baltimore, where thousands of computers were crippled in a massive ransomware attack in 2019, it wound up costing the city at least $18 million — a combination of lost or delayed revenue and the expense of restoring systems.

The city, which didn’t pay the ransom and didn’t have cyber insurance, decided to spend about $835,000 for one year to buy $20 million worth to cover any additional disruptions to its networks. It continued to purchase cyber insurance annually.

Other local governments choose to pay the ransom because they need their data back quickly and think it’s the best option. Some figure it would be too costly and time-consuming to start over from scratch and rebuild everything.

Many local governments see cyber insurance as a necessity in case they’re attacked, which makes it even more disconcerting that their premiums have shot up and there are new requirements, according to Rita Reynolds, chief information officer at the National Association of Counties.

In the past year and a half, Reynolds said, instead of answering a few questions from their cyber insurance company when it was time to renew, counties now are being asked to fill out lengthy questionnaires about their security practices.

“Insurance companies are saying higher standards are needed at a higher cost and lower coverage,” she said. “It’s kind of like a perfect storm.”

Reynolds said these new requirements aren’t necessarily a negative as counties try to keep up their cyber defenses, but officials were surprised at how fast it’s happened.

“It caught a lot of us a little off guard,” she said. “Some of the things the insurance companies want are fairly easy to implement, but others can be costly and take time. You can’t just flip a switch.”

Counties want to be secure from cyberattacks and agree that they should be doing all they can to have the proper protections, Reynolds said. But those who don’t — or can’t — may find themselves unable to renew or get cyber insurance.

“Counties are scrambling,” Reynolds said. “And no matter what you have in place, the premiums have doubled, and sometimes tripled.”

Some local governments are switching to self-insurance, in which officials set aside a pot of money in reserve to be used in case of a cyberattack, according to Reynolds. Some are joining insurance pools with similar organizations and shopping for preferable rates.

Oliver, the South Carolina official, said his county didn’t find out about changes in its policy’s requirements until two months before it was time to renew. Fortunately, he said, officials were able to answer “yes” to all the initial questions about security protections. If they hadn’t, they would have been turned down.

Officials then spent the next two months responding to the company’s second questionnaire, which was dozens of pages long, Oliver said. The county was able to resolve issues and make fixes to meet the requirements.

The county council had to approve a budget resolution allowing officials to transfer money from another account to pay the $210,000 premium because it had budgeted only $70,000 for cyber insurance, he added.

Oliver said he is fortunate that his county, with a population of about 365,000 and about 3,000 employees, has four staffers dedicated to cybersecurity and the resources to pay for the insurance and meet the cyber defense requirements.

But smaller counties, which may not even have an information technology staff, may be unable to do either, he noted.

“They may be out of luck,” he said. “If they can’t get cyber insurance, the only option for a lot of these smaller organizations may be to cross their fingers and hope that they don’t get hit.”

In Lehigh County, Pennsylvania, with a population of about 375,000, officials also have had a stressful time getting their cyber insurance policy renewed, said Chief Information Officer Bob Kennedy. About a week before Christmas 2020, they learned that they wouldn’t be renewed because they didn’t have multi-factor authentication on all the computers accessed by staffers remotely.

Fortunately, Kennedy said, the county already was planning to make those changes and had purchased the necessary software. It was able to speed up the timeline and negotiate with the insurer to allow it make the changes in February 2021 rather than January. The premium rose 30%. And this year, he noted, the premium nearly doubled from $82,000 to $158,000.  

“A lot of things they’re mandating are good things. There’s not too many hoops,” Kennedy said. “But the increased pricing is more of a problem. It’s requiring us to pay premiums that are going up year after year, even if you meet all those requirements.”

In the end, with all of the worry about cyber insurance, there may be a silver lining for local governments, said Reynolds, of the association of counties.

“They are becoming much more savvy about what they need to do,” she said. “With every challenge there’s an opportunity. And in this case, it’s an opportunity for them to Strengthen their cyber defenses.”

This article was first posted on Stateline, an initiative of The Pew Charitable Trusts.

Wed, 27 Jul 2022 05:20:00 -0500 en text/html Killexams : SPB 2022 Q2 Artificial Intelligence & Biometric Privacy Quarterly Review Newsletter

Wednesday, August 3, 2022

Q2 did not disappoint in the AI and biometric privacy space, with a number of noteworthy litigation, legislative, and regulatory developments having taken place in these two rapidly developing areas of law. Read on to see what has transpired over the last quarter and what you should keep your eyes on as we head into the second half of 2022.

Biometric Privacy Cases to Keep on Your Radar

Cothron v. White Castle System, Inc., No. 128004 (Ill. Sup. Ct.): As many familiar with BIPA know, currently pending before the Illinois Supreme Court is Cothron v. White Castle System, Inc. (covered extensively by SPB team member Kristin Bryan in CPW articles hereherehere, and here), which is set to provide much-needed certainty regarding the issue of claim accrual in BIPA class action litigation. “Claim accrual” involves when a claim “accrues” or occurs—either only at the time of the first violation or, alternatively, each and every time a defendant violates Illinois’s biometric privacy statute. If the Cothron Court rules that BIPA violations constitute separate, independent claims, then the associated statutory damages of $1,000 to $5,000 per violation would compound with each successive failure to comply with Illinois’s biometric privacy law. Under this scenario, liability exposure would likely expand exponentially for BIPA claims. As such, companies should pay close attention to how the Illinois Supreme Court decides the Cothron appeal, as the ruling could result in yet another drastic shift in the biometric privacy landscape. In the interim, companies should consult with counsel and re-assess their compliance with BIPA to ensure they are satisfying the full range of requirements to mitigate potential class action litigation risks.

Mahmood v. Berbix Inc., No. 1:22-cv-2456 (N.D. Ill.): “Selfie” identity verification has become extremely popular due to the benefits offered by this verification method in significantly reducing fraud and facilitating a fast, accurate verification process. At the same time, companies that develop and supply this technology have also become an increasingly common target for BIPA class action suits. In Mahmood v. Berbix Inc., the plaintiff filed a putative class action against Berbix Inc. for alleged BIPA violations after being required to upload a photo of her driver’s license and a “selfie” to rent a car, the manufacturer of which used Berbix’s identity verification service. This case is worth keeping an eye on, as the litigation will likely provide valuable insights on the contours of the extraterritoriality defense applicable in certain BIPA disputes where the alleged violations of Illinois’s biometric privacy statute do not occur “primarily and substantially” within the borders of the Prairie State. 

Coss v. Snap Inc., No. 1:22-cv-02480 (N.D. Ill.): In early May, Snap Inc., the owner of popular social media platform Snapchat, was sued for alleged BIPA violations in connection with its “Face Lenses” feature, an augmented reality (“AR”) experience that uses innovative technology to modify and enhance users’ facial features to transform their appearance in photos and videos posted online. According to the complaint, Snap’s Lenses feature scans users’ faces and creates a detailed map or digital depiction of their facial features, during which time Snap collects their biometric data. This is another case worth watching, as the overlapping space between increasingly-popular image/video enhancement tools and efforts to ensure the privacy and security of biometric data is likely to lead to additional litigation moving forward. 

Hess v. 7-Eleven, Inc., No. 1:22-cv-02131 (N.D. Ill.): On April 25, four 7-Eleven customers filed a class action lawsuit against 7-Eleven, alleging that—unbeknownst to consumers—the company collects facial geometry data through cameras and video surveillance systems in violation of BIPA. According to the complaint, numerous 7-Eleven locations use systems provided by Clickit, an intelligent video solution provider, to collect biometric data. Hess is an example of the high volume of BIPA class actions targeting retailers of all types and the wide variety of allegations that are being asserted against them in connection with purported violations of Illinois’s biometric privacy statute. As such, all retail brands—even those that have put practices in place to comply with BIPA—should consult with experienced biometric counsel to re-assess the effectiveness of their biometric privacy compliance programs and mitigate growing BIPA risks to the greatest extent possible, as the retail industry will continue to remain one of the primary targets for BIPA suits for the foreseeable future.

Theriot v. Louis Vuitton N.A., Inc., No. 1:22-cv-02944 (S.D.N.Y.): In April, shoppers filed a class action against Louis Vuitton in a New York federal court for alleged BIPA violations in connection with company’s virtual try-on (“VTO”) tool made available to visitors of its website. The complaint alleges that the company’s technology scans users’ face geometry, producing complete facial scans and images of customers’ faces—all without giving notice or obtaining consent when visitors try on its designer eyewear using the tool. As VTO facial recognition class actions continue to be a hot trend in BIPA litigation (as discussed in more detail below), retailers and other companies that utilize this “try before you buy” technology should ensure they are strictly complying with the mandates of BIPA to mitigate the significant class action risks associated with these tools.

New and Emerging Biometric Privacy Trends

BIPA VTO Litigation Wave Not Over Yet: BIPA litigation in 2021 was marked by a wave of class action suits filed against retailers—including fashion, eyewear, and makeup brands—in connection with virtual try-on (“VTO”) tools offered to online shoppers. As the name suggests, VTO tools, also known as “virtual mirrors,” allow shoppers to “try on” products using their camera-equipped devices, such as home computers, tablets, or mobile phones. Importantly, VTO technology is powered by a combination of AI and AR, as opposed to traditional facial recognition technology used to identify or verify an individual’s identity. Despite this, many brands found themselves the targets of BIPA class litigation, with plaintiffs arguing that their VTO technology performed scans of face geometry, thus bringing the tools under the scope of BIPA. While the pace of filings has slowed somewhat in 2022, VTO technology continues to be a main target for class actions, including a number of suits filed against retailers that utilize these tools during Q2.

Increase in BIPA Suits Targeting Third-Party Vendors: Another notable trend seen during Q2 was a marked increase in the number of BIPA class actions targeting third-party vendors that offer biometric technology software and solutions, such as identity verification tools and employee timeclocks. Of note, these vendors do not maintain any direct relationship with the individuals who claim their biometric data was collected or used in violation of BIPA, but rather whose technology is merely utilized by their clients to facilitate the use of biometric data in commercial operations. Just two examples of this trend are the Berbix class action discussed above, as well as the Ronquillo case discussed below.

Contactless Fingerprinting Makes Strides Towards Adoption: While research around contactless fingerprinting technology is not new, latest advancements are drawing the attention and interest of law enforcement. The development of new, more advanced technologies used for identity verification purposes is on the rise, especially in the wake of COVID-19 and its associated health and safety concerns. Soon, phone cameras will be capable of scanning and capturing a person’s fingerprint—easily identifying all the lines and swirls on their fingertips—all without even having to touch a screen. While this technology may raise concerns amongst civil liberty and privacy groups, law enforcement is already looking into ways to harness its potential—and you can be sure the private sector will be soon to follow.

Significant Biometric Privacy Class Action Decisions & Related Developments

Zellmer v. Facebook, Inc., No. 3:18-cv-1880, 2022 U.S. Dist. LEXIS 60239 (N.D. Cal. Apr. 1, 2022): A California federal court issued a notable BIPA opinion in Zellmer v. Facebook, Inc. (covered by SPB team members Kristin Bryan and David Oberly in this CPW article), which could have significant implications moving forward for companies seeking to limit their scope of liability exposure in BIPA class action litigation. In Zellmer, the court granted summary judgment to Facebook on the Section 15(b) notice and consent claim asserted in the case, finding that non-users were precluded as a matter of law from maintaining an actionable claim under Section 15(b). The court reasoned that a Section 15(b) claim could not exist for non-users because it would be patently unreasonable to construe BIPA to require companies to provide notice to, and obtain consent from, non-users who were for all practical purposes total strangers to the company, and with whom the company maintained no relationship whatsoever. Rather, a Section 15(b) claim can be in play only where there is at least a minimum level of known contact between a person and the entity that might be collecting biometric information. While the opinion itself was short—comprising only eight pages—the Zellmer court’s reasoning may have a noteworthy impact on the scope of Section 15(b) claims moving forward. 

Sosa v. Onfido, Inc. No. 1:20-cv-04247, 2022 U.S. Dist. LEXIS 74672 (N.D. Ill. Apr. 25, 2022): In Sosa v. Onfido, Inc. , an Illinois federal court rejected the argument that BIPA exempts biometric data extracted from photographs, finding instead that faceprints derived through photographic means can constitute “biometric identifiers” regulated by Illinois’s biometric privacy statute. The Onfido opinion is significant, as it likely shuts the door on a defense that has, until now, been broadly utilized by a wide range of targets of BIPA class action suits. 

Ronquillo v. Doctor’s Assocs., LLC, 1:21-cv-04903, 2022 U.S. Dist. LEXIS 62730 (N.D. Ill. Apr. 4, 2022): As courts continue to expand the scope of BIPA class action liability exposure, they have been especially unforgiving to third-party technology vendors—despite the challenges that these non-consumer facing entities have with satisfying the requirements of Illinois’s biometrics law. Such was the case for HP Inc., which in early April saw its motion to dismiss a BIPA class action denied by an Illinois federal court—even though the company lacked any kind of direct relationship with the individual who filed suit. In Ronquillo, an employee at Subway restaurants brought suit against HP and Doctor’s Associates, LLC (“DAL”), alleging that the defendants captured and stored her fingerprints without her informed consent through a Subway point-of-sale system to clock in and out of work, and to unlock cash registers. DAL and HP took the position that they did not actively collect employees’ biometric data; rather, at most, they merely possessed such data. As such, according to DAL and HP, they fell outside the scope of the biometrics law. The court disagreed, finding that in making this argument, the defendants were “attempt[ing] to rewrite the complaint to avoid its real allegations, which allow for the reasonable inference that DAL and HP played more than a passive role in the process.” Id. at *8. While also noting that it was leaving the question of whether the plaintiff would actually be able to provide DAL’s and HP’s role in collecting her biometric data for another day and with a more developed record, the court concluded that, at least at the motion to dismiss stage, the complaint sufficiently alleged that Section 15(b) applied to DAL and HP. In addition, the court also expressly rejected the argument that Section 15(b) did not apply to third-party vendors of technology used by employers to obtain workers’ biometric data, finding that there was nothing in BIPA’s text that the law was intended to apply only to employers, but not to parties without any direct relationship to the plaintiff. Importantly, the Ronquillo decision deals a significant blow to one of the third-party vendors’ primary arguments against BIPA liability while at the same time demonstrating how courts continue to interpret the statutory text of BIPA in an extremely broad, plaintiff-friendly manner.

Johnson v. Mitek Sys., Inc., No. 0:22-cv-01830, 2022 U.S. Dist. LEXIS 80851 (N.D. Ill. May 4, 2022): While arbitration continues to remain a powerful defense in BIPA class actions, not all attempts at dismissing BIPA claims through the pursuit of motions to compel arbitration are successful. Such was the case in Johnson v. Mitek Sys., Inc., where ID verification firm Mitek Systems, Inc. recently lost its bid to force BIPA plaintiffs to resolve their claims out of court and through individual, binding arbitration. Mitek arose in connection with the company’s age and identity verification service, which was used by rental car service HyreCar and required the plaintiff to upload his driver’s license and photograph. According to the plaintiff, this verification process was completed with the assistance of facial recognition technology, which unlawfully collected her biometric data without providing notice or obtaining his consent. The court denied Mitek’s motion to compel arbitration, finding that the company was not a party to the arbitration agreement between the rental company and its customer and further that the third-party beneficiary exception to the general rule that non-signatories to an arbitration agreement cannot be bound by such contracts was inapplicable to force arbitration against the plaintiff. The Mitek decision should serve as a reminder for all companies that use biometric data in their operations to ensure they have a robust arbitration agreement of their own in place and to avoid relying solely on the agreements of their clients or vendors.

Rogers v. BNSF Ry. Co., No. 1:19-cv-03083, 2022 U.S. Dist. LEXIS 10934 (N.D. Ill. June 21, 2022): At the same time (and just the opposite of Ronquillo), courts continue to cast a wide liability net for allegedly improper biometric data collection and possession practices, ensnaring even those companies whose involvement with biometrics systems is tenuous at best. Such was the case for BNSF Railway Company, which hired external security contractors to operate its biometric-powered access control system at its Illinois rail facilities and later found itself the defendant in a BIPA class action. In June, an Illinois federal judge refused to certify an interlocutory appeal filed by BNSF following the court’s denial of its motion for summary judgment, which had rejected the railroad’s preemption argument and found that a jury must decide whether the railroad’s connection with its fingerprint access control technology operated by its third-party vendor was sufficient to trigger liability for improper biometric data collection and possession practices under BIPA Sections 15(a) and 15(b). The company had sought a Seventh Circuit review of the district court’s decision involving the issues concerning federal preemption and vicarious liability, but the district court refused to allow the appeal to proceed, basing its decision primarily on what it characterized as a “misreading of [the district court’s] ruling” and a failure to raise the arguments it looked to assert on appeal in its prior summary judgment briefing.

Barton v. Walmart Inc., No. 1:21-cv-04329 (N.D. Ill. May 31, 2022): In May, an Illinois federal court refused to dismiss a class action involving allegations that Walmart violated BIPA by requiring Illinois warehouse workers to use voice recognition software. In Barton, Walmart workers alleged that they were required to submit their voiceprints by reading into biometric-powered inventory computer systems known as “Pick Task-Voice Template Words.” Walmart, however, contended that its voice system did not identify specific employees by their voices but instead only recognized words spoken into the headsets. According to Walmart, the identification of specific worker identities came from workers’ employee numbers that were manually entered into the system—not based on their voice patterns. The Barton decision further underscores the lack of clarity regarding the precise definition of “biometric identifiers” under BIPA, which will remain one of the most hotly-contested issues in BIPA class litigation for the foreseeable future—and until courts provide more guidance on this key matter.

Rivera v. Google Inc., No. 2019-CH-00990 (Ill. Cir. Ct. Cook Cnty.): In late April, Google settled its longstanding Rivera BIPA dispute, agreeing to pay $100 million to resolve allegations that it improperly collected individuals’ facial biometric data through its cloud-based Google Photos feature in violation of Illinois’s biometric privacy statute. While notably less than 2020’s record-breaking $650 million BIPA settlement involving one of the world’s largest social media companies, the $100 million figure agreed to by Google to put an end to the Rivera litigation will only supply plaintiff’s attorneys even more motivation to pursue BIPA class action litigation for the foreseeable future. And, although the size of the Rivera settlement is not by any means indicative of normal settlement figures in BIPA cases, the plaintiff’s lawyers will almost certainly use this settlement as a measuring stick to value other BIPA disputes—likely causing inflated settlement figures moving forward, at least in the immediate term. Importantly, this settlement should serve as a cautionary tale and reminder of the critical need for companies to maintain comprehensive, flexible biometric privacy programs to minimize potential liability exposure.

Artificial Intelligence & Biometric Privacy Legislative/Regulatory Developments

Majority of Biometric Privacy Bills Fail (With One Notable Exception): While the number of biometric privacy bills introduced by state and municipal legislatures in 2022 increased significantly as compared to the year prior, the vast majority of those proposals failed during the legislative process and did not make their way into law. With that said, one piece of proposed legislation remains currently pending that could bring wholesale changes to the biometric privacy legal landscape if enacted this year. That legislation, California’s HB 1189, provides for a private right of action almost identical to that of BIPA, which would likely bring with it a tsunami of class litigation to California on part with what has taken place in Illinois for several years now. Not only that, HB 1189 is one of several “hybrid” biometric privacy bills introduced in 2022 that blend traditional biometric privacy legal principles and other compliance requirements and limitations which, until now, were ordinarily confined exclusively to broader, comprehensive state consumer privacy statutes. Importantly, these hybrid requirements would significantly increase compliance burdens for all companies that collect and use biometric data while also ushering in a correspondingly-high increase in liability exposure risks. 

EEOC Issues Guidance on Use of Artificial Intelligence by Employers: On May 12, 2022, the U.S. Equal Employment Opportunity Commission (“EEOC”) issued important guidance regarding the use of algorithms and AI in the context of hiring and employment decisions. The guidance follows on the heels of the EEOC’s Initiative on Artificial Intelligence and Algorithmic Fairness, which was launched by the Commission in late 2021. The guidance itself provides a detailed discussion regarding how employers’ reliance on AI and algorithmic decision-making in the employment context may run afoul of the Americans with Disabilities Act (“ADA”). In addition, the guidance also provides several recommended “promising practices” for employers to consider to mitigate the risk of discriminating against individuals with disabilities when using algorithmic decision-making tools and similar AI technologies. All employers that are currently using AI for any purpose—or intend to do so in the future—should familiarize themselves with the guidance if they have not already done so.

CFPB Issues Guidance on Use of Artificial Intelligence by Creditors: Also in May, the federal Consumer Financial Protection Bureau (“CFPB”) issued guidance of its own, Circular 2022-03, “Adverse action notification requirements in connection with credit decisions based on complex algorithms,” focusing on the need for creditors to comply with the Equal Opportunity Credit Act’s (“ECOA”) requirement to provide a statement of specific reasons to applicants against whom adverse action is taken when making credit decisions based on complex algorithms. Importantly, the CFPB clarifies that compliance is required even when using algorithms—sometimes referred to as “black-box” models, that prevent creditors from accurately identifying the specific reasons for denying credit or taking other adverse actions. The guidance illustrates that the EEOC and its adverse action requirements will be enforced by the CFPB irrespective of the technology that is utilized by creditors and that creditors cannot excuse their noncompliance based on the mere fact that its technology used to evaluate applications is too complicated or opaque in its decision-making to understanding. The recently-issued guidance, along with a statement issued by CFPB Director Rohit Chopra in conjunction with the Circular, provides a key window into the aggressive tact that the CFPB will likely take in enforcing improper AI practices that may run afoul of the ECOA. All creditors (and other entities subject to the CFPB’s jurisdiction) that currently use AI—or intend to do so in the future—should familiarize themselves with the guidance if they have not already done so.

Federal Trade Commission Back at Full Strength: On May 11, 2022, privacy law expert and then-head of Georgetown University Law School’s Center on Privacy and Technology, Alvaro Bedoya, was confirmed as the existing FTC Commissioner. Bedoya replaces former FTC Commissioner Rohit Chopra, who now heads the Consumer Financial Protection Bureau (“CFPB”). Bedoya is an expert in facial recognition and is widely recognized for his role in co-authoring a 2016 study that is credited as the impetus for a number of latest state and local laws limiting the use of facial recognition by the public sector. During his late 2021 confirmation hearing testimony, Bedoya advocated for increased FTC scrutiny over facial biometrics and its privacy-related impacts, especially as it relates to minorities, noting its reputation for misuse and abuse. At the same time, he also noted his support for potential FTC privacy rulemaking. With the FTC now back at full strength and with a Democratic majority, companies should anticipate an aggressive privacy enforcement agenda by the Commission, including increased scrutiny of both facial recognition practices and potential bias and discrimination concerns relating to AI and algorithmic decision-making.

FTC Issues Report to Congress on Use of AI to Combat Online Harms: On June 16, 2022, the FTC issued a report to Congress, Combatting Online Harms Through Innovation, warning about the use of AI to combat online problems and urging lawmakers to exercise “great caution” about relying on AI as a policy solution. While the Report does not break any new ground in terms of how the FTC may pursue investigations or enforcement actions against private sector organizations that utilize AI in their day-to-day operations, the Report nonetheless provides several key takeaways for all entities that currently rely on this advanced form of technology or intend to do so in the future. To learn more about the Report and its major takeaways, read our latest CPW blog post here.

Automated Decision-Making and Profiling Conspicuously Absent From Initial Draft CPRA Regulations: The California Privacy Rights Act (“CPRA”) places significant power in the hands of the California Privacy Protection Agency (“CPPA”) to shape the future of privacy regulation in the United States, including with respect to how automated decision-making and profiling is regulated throughout the country. For this reason, the CPPA focused a significant amount of its preliminary rulemaking activities on these two interrelated issues. These efforts began last fall when automated decision-making and profiling were included as part of nine syllabus on which the CPPA sought public comment. In May, the CPPA held stakeholder sessions over the course of three days, during which time three hours were devoted exclusively to allowing stakeholders to comment on issues relating to automated decision-making and profiling. Notably, however, the CPPA’s draft CPRA Regulations—issued at the end of May—do not address automated decision-making or profiling in any fashion whatsoever. With that said, companies should anticipate that these issues will be addressed in subsequent iterations of the Regulations.

Connecticut Enacts New Privacy Statute Encompassing Biometric Data: On May 10, 2222, Connecticut Governor Ned Lamont officially signed into law Public Act No. 22-15, “An Act Concerning Personal Data Privacy and Online Monitoring.” More commonly referred to as the “Connecticut Privacy Act,” the statute becomes the fifth law of its kind to be enacted in the U.S. and will go into effect on July 1, 2023. In addition to affording Connecticut consumers a range of new privacy rights, the law also governs the collection and use of “biometric data,” which is defined as any data generated by automatic measurements of an individual’s biological characteristics, such as a fingerprint, voiceprint, eye retinas, irises, or other unique biological patterns or characteristics that are used to identify a specific individual.

FTC Investigates In May, Oregon Senator Wyden urged the FTC to investigate the identity verification company for potential deceptive practices which may have misled consumers and government agencies. A company experiencing growth in the midst of the pandemic, uses a mixture of selfies, document scans, and other methods to verify identities online. is currently the subject of other government investigation. Senators are particularly concerned about the potential confusion between two different types of technology – one which involves a one-time comparison of two images to confirm an applicant’s identity and involves one-to-many recognition, where millions of innocent people have their photos included as a comparison in a digital “line up.” Wyden and others fear that the company made “multiple misleading statements” about “superior” facial recognition use, which may be potentially damaging to consumer understanding.

EU’s Artificial Intelligence Act Receives Support From Privacy Advocates: In April 2021, the European Commission released the initial draft version of its proposed Artificial Intelligence Act (“AIA”), which seeks to implement a first-of-its-kind comprehensive regulatory scheme for AI technologies. Like the EU’s General Data Protection Regulation (“GDPR”), the territorial scope of the AIA would be expansive, governing not just EU organizations that utilize AI but also companies located outside the EU that operate AI within the EU, as well as organizations whose operation of AI impacts EU residents. Recently, European Digital Rights (“EDRi”) and dozens of other privacy advocacy organizations penned an open letter not just supporting efforts to enact the AIA but to expand the legislation to include a ban on remote biometric identification (“RBI”) systems, such as facial recognition, in all public spaces. Companies that currently deploy AI in their operations—or may do so in the future—should keep tabs on future developments regarding the AI Act moving forward, which will have wide-reaching implications extending far beyond the EU if the legal framework becomes law.  

The Final Word

While Q2 provided us with a number of significant developments in the areas of AI and biometric privacy, companies are sure to see many additional litigation, legislative, and regulatory developments during the second half of 2022 as well.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume XII, Number 215

Wed, 03 Aug 2022 02:54:00 -0500 en text/html
Killexams : The Importance of DEI Efforts and Paving the Way for Young Diverse Attorneys

As a child I was raised by two wonderful and supportive Puerto Rican parents. My father, a disciplined and hardworking chemical engineer and my mother, a loving and charismatic preschool teacher who had the full-time job of raising me. Throughout my adolescence, my mother would tell me somewhat in jest, “You are great at arguing. You should be a lawyer!” At the time the thought of becoming a lawyer felt as achievable as climbing Mount Everest. Diverse lawyers were not as mainstream in media and pop culture as they are today. Fortunately, one of my older cousins had accomplished what I believed to be insurmountable. She was an accomplished lawyer. She was smart, articulate, and lived comfortably with her family. I remember thinking to myself, “Maybe it isn’t as impossible as I thought …”

Look to Your Left, Look to Your Right …

“Until we get equality in education, we won’t have an equal society.” —U.S. Supreme Court Justice Sonia Sotomayor

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