A Note on the “Evolved Substantial Effect” Test in Finding Constitutionality Under the Commerce Clause & Thoughts on a Better Approach Applicable to the Existing Regime

***** Draft – expect to be updated frequently ******

On their surfaces, the U.S. Supreme Court (“Court”) has developed two concurring/parallel sets of rules in determining whether a regulation made by the Congress should be found constitutional on the basis of the Commerce Clause.  However, as a mater of status quo, the two sets of rules are legally co-existing, and it seems the application of them would be highly subject to the case facts – namely, whether the regulation to be assessed is more similar to the cases under the “rational basis” test or is more comparable to the cases ruled under the “three categories rule” as well as its sub-rule of “substantial effects to the interstates commerce”.

This note will explain that the “two” sets of rules are not exclusive to each other. They are co-existing and became mutually admitted after the conclusion of Gonzales v. Raich, 545 U.S. 1 (2005).  For easier discussion, I would name it a rule of “evolved substantial effect”.  Having said that, due to its inductive nature (as opposed to a rule developed with a deductive logic), the tests set out in this evolved rule remain to be further improved and strengthened, or the debates on constitutionality of any new federal legislation could be heavily affected by the “invented facts” that are just for the purpose of judicial review, which could be prepared by both supporters and opponents of a congress regulation to advance their argument of analogy or distinction.

  1. The “rational basis” rules

The rational basis test was established in Wickard v. Filburn, 317 U.S. 111, and was reiterated by Justice Breyer in her dissenting opinion in United States v. Lopez, 514 U.S. 549 (1995).  Briefly, the court shall consider three factors in assessing if a local activity can be regulated by the Congress (underlines added):

1.1. the Congress’s power to “regulate Commerce . . . among the several States,” U. S. Const., Art. I, § 8, cl. 3, “encompasses the power to regulate local activities insofar as they significantly affect interstate commerce.”

1.2. “in determining whether a local activity will likely have a significant effect upon interstate commerce, a court must consider, not the effect of an individual act (a single instance of gun possession), but rather the cumulative effect of all similar instances…”

1.3. “Courts must give Congress a degree of leeway in determining the existence of a significant factual connection between the regulated activity and interstate commerce…The traditional words “rational basis” capture this leeway. . . Thus, the specific question before us, as the Court recognizes, is not whether the “regulated activity sufficiently affected interstate commerce,” but, rather, whether Congress could have had “a rational basis” for so concluding.

In Wickard, the term “substantial effect” or its synonyms are used by the Court in the following contexts (underlines added):

  • “In the Shreveport Rate Cases, 234 U.S. 342, the Court … found federal intervention constitutionally authorized because of matters having such a close and substantial relationto interstate traffic that the control is essential or appropriate to the security of that traffic, to the efficiency of the interstate service, and to the maintenance of conditions under which interstate commerce may be conducted upon fair terms and without molestation or hindrance.”
  • “[E]ven if appellee’s activity be local, and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effecton interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as “direct” or “indirect.””
  • “It can hardly be denied that a factor of such volume and variability as homeconsumed wheat would have a substantial influenceon price and market conditions.”
  • “The commerce power…extends to those activities intrastate which so affect interstate commerce” (citing United States v. Wrightwood Dairy Co., 315 U.S. 110, 119)
  • “This record leaves us in no doubt that Congress may properly have considered that wheat consumed on the farm where grown, if wholly outside the scheme of regulation, would have a substantial effectin defeating and obstructing its purpose to stimulate trade therein at increased prices.”

In light of the above, it is fair to say that “substantial effect to the interstate commerce” had already been a test in assessing the constitutionality of Congress’s regulations before the Court’s holding in Lopez.

  1. the “three categories of activities” rule developed in Lopez

Lopez established a rule of “three categories of activities” that Congress may regulate under its commerce power: “First, Congress may regulate the use of the channels of interstate commerce. . . . Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities. . . Finally, Congress’ commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce . . ., i.e., those activities that substantially affect interstate commerce.” [citation to be added]

The above reiteration clearly stated that the “substantial effect” test existed prior to the Lopez.  What the Court did in Lopez was to further specify the factors to be considered in finding the substantial effect.  In other words, Lopez did not invent a “substantial effect” test for finding the constitutionality of a regulation but just specified what factors may lead to the finding of “substantial effect.” These factors are set out below:

  1. Factors/means in finding “substantial effects”

Prior to Lopez, the “aggregation doctrine”, a.k.a “the cumulative effect of all similar instances”, has been accepted by Wickard as a powerful means (in favor of Congress) in finding “substantial effects” to the interstate commerce.  Namely, the “aggregation doctrine” has not been a means to establish the “rational basis” in Wickard, but a way to establish the substantial effect or connection to the interstate commerce. Then because there was a substantial effect to the interstate commerce, the congress’s regulation was found being based on a rational basis.

Apart from the aggregation doctrine, Lopez and Morrison provided offered further elements be considered in determining the substantial effects.  They are:

(a) whether the regulated activity is an economic activity;

(b) has the congress’s regulation been supported with sufficient factual findings during the process of legislation;

(c) whether the regulation in question contains jurisdictional element; and

(d) whether the regulated activities are traditionally subject to the state’s power.

Moreover, for the above element (b) of “congress’s findings that can support the regulation”, the court shall consider whether the link between the regulated activity and the alleged substantial effect was attenuated (because of their remote connection). [Citation to be added]

  1. The approach of Gonzalez

In Gonzales, the Court held that the prohibition of homegrown and consumption of marijuana under the Controlled Substances Act (“CSA”) was constitutional and was within the Congress’s power under the Commerce Clause.  The Court based it holding on its finding that the case fact in Gonzalez is comparable to the homegrown of wheat in Wickard.  Namely, (1) the subject matters (homegrown wheat or marijuana) in the two cases are both economic activities; (2) the aggregation of homegrown marijuana (by Raich and others similarly situated) has a significant effect on Congress’s capability to eliminate the national illegal marijuana market. [Citation to be added] Furthermore, the Court noted that “we need not determine whether respondents’ activities, taken in the aggregate, substantially affect interstate commerce in factbut only whether a “rational basis” exists for so concluding. . .” (underlines added) [Citation to be added]

On its surface, it appears that Gonzales has “returned” to the earlier rules applied by the Court prior to Lopez.  However, the Gonzales has not abandoned or denied the rules established in Lopez and Morrison.  Instead, the Court employed a legal technique of distinction.  Namely, it distinguished the facts in Gonzalez from those in Lopez and Morrison: “[u]nlike those at issue in Lopez and Morrison, the activities regulated by the CSA are quintessentially economic…Because the CSA is a statute that directly regulates economic, commercial activity, our opinion in Morrison casts no doubt on its constitutionality.” This approach enabled the co-existence of the rules established by Lopez and the rules applied prior to Lopez.

  1. The evolved substantial effect rule

Leaving aside the first two categories of activities that are relatively clearer in finding Congress’s constitutionality in regulating interstate activities, this section summarizes the “evolved substantial effect” rule based on the above discussion.

First Step: the Congress is authorized to regulate intrastate activities that (1) has the economic nature, and (2) may substantially affect the interstate commerce.  If there is no economic nature, then there is no need to consider the next step analysis.

Second Step: in order to find the “substantial effect”, the following factors need to be considered: (1) the economic nature of the regulated activity, (2) the Congress’s findings in supporting its claim of substantial effect, including applying the aggregation approach (but the Court has a final call on evaluating whether the congress’s findings are sufficient [Citation to be added]), (3) the tradition of state/nation separation of powers, and (4) if the regulation in question contains a jurisdictional element.

This evolved rule appeared to be a balance of the power between federal government and state, but it is still logically fractional (from a deductive angle of view).  For example, the above factor (1) under the Second Step analysis duplicates to the factor (1) under the First Step analysis.  This “fraction” is indeed is understandable given the Court had provided its rules in different case contexts.

  1. An issue of power separation between Judiciary and Legislature?

A more controversial issue lies in who (between the Court and Congress) weighs heavier in determining the factor (2) under the above Second Step.

In Lopez, even Justice Souter, who believed that the Congress’s findings in supporting the regulation in question was sufficient, still refused to defer the dispositive power to Congress. In Justice Souter’s dissenting opinion, he did not deny the dispositive power of the Supreme Court.  Instead, he took a position that is on the one hand admitting the capability of congress but on the other hand appeared retaining the judiciary’s final power in deciding whether an activity “substantially affects” the interstate commerce: “The fact of such a substantial effect is not an issue for the courts in the first instance … but for the Congress… Any explicit findings that Congress chooses to make, though not dispositive of the question of rationality, may advance judicial review by identifying factual authority on which Congress relied.” [Citation]. Namely, although he disagreed with the majority in finding the rational basis, he retained the Court’s final power in assessing whether congress’s findings are factually reasonable to a conclusion of substantially affecting the interstate commerce.

 

In other words, this issue has exceeded the scope of discussions under the umbrella of federalism (in particular, the relationship between Federal Government and States) and has stepped into the regime on separation of power between the judiciary and the legislative branch of the Federal Government.

  1. The defects of analogy/distinction approach

The Court applied an approach of analogy/distinction in Gonzales (so did Justice O’Connor in her dissenting opinion; the only difference is that she believed that Gonzalez facts are comparable to those of Morrison). This approach relieved the Court from analyzing the issue of separation of power with a lawyering technique – arguing similarity/distinction between a new case and certain precedents.  However, for the Commerce Clause disputes, this approach may lead to uncertainty in future cases.  It is anticipable that in any controversial matter, both supporters of a congressional regulation and its opposers would have to focus their efforts in collecting evidence (in practice it could largely become invention of facts) to enable their cases more similar to certain precedents and/or more distinguishable from other precedents.  In extreme circumstances, the merit discussion on the substance of a regulation might have to give its way to the debate on the “appearance” of the regulation and heavily complicate a case.

This has somehow happened to the Obamacare disputes. [to elaborate further]

  1. Conclusion

It seems that Justice Scalia’s approach in his concurring opinion in Gonzales was clearer: Congress’s power to regulate activities having a “substantial effect” on interstate commerce is derived not only from the Commerce Clause, but primarily from the Necessary and Proper Clause, which allows Congress to do whatever it deems necessary to accomplish its regulatory objectives. [Citation]. In other words, leaving the power of data finding to Congress (and just assess if the Congress has ever based its legislation with rationale basis), and then place more focus on legal elements that is naturally more appropriate to be determined by court: i.e. the “economic activity”, the “jurisdictional element” and the tradition of power separation between Federal Government and State.

In conclusion, a better (and more logically self-satisfied) approach appear to be: (a) using “rational basis” rule to determine if Congress has found factual connection between an intrastate activity and interstate commerce, (b) using the rest three elements to assess if the regulation in question has restrained itself in merely solving interstate commerce-related matter.

 

 

United States v. Morrison: a power separation case (in addition to that of the Commerce Clause)

Briefly, in addition to be a landmark case on the relationship between Federal government (congress) and the states, United States v. Morrison, 529 U.S. 598 (2000), is also a case addressing the separation of power within the federal system — between the Congress and the Judiciary.

By citing United States v. Lopez, 514 U.S. 549 (1995), Morrison assessed the constitutionality ofViolence Against Women Act (“VAWA”), a statute passed by the U.S. Congress. The basic logic of the majority opinion is set out below.

First of all, to find if the congress’s legislation is within its power of the Commerce Clause of the U.S. Constitution, the court based its reasoning on the rules created in Lopez.  In short, the Court firstly excluded the applications of the first two of the three categories of regulatible activities in this case: (1) the “channle of interstate commerce” or (2) the “instrumentality of interstate commerce”.  Then the court focused its analysis on whether the activity regulated by the VAWA would “substantially affect interstate commerce”, which is the third category of the activities that can be legally regulated by congress, as ruled in Lopez.

The court has summarized the Lopez case into four elements in determining the issue of “substantial effect”:

First, whether [the regulation to be assessed] was “a criminal statute that by its terms has nothing to do with ‘commerce’ or any sort of economic enterprise”.  If the statute were to regulate conducts with noneconomic and criminal nature, then it would be out of the Congress’s power.

Second, is there any “express jurisdictional element which might limit [the regulation’s] reach to [particular activities] that have an explicit connection with or effect on interstate commerce.”

Third: whether the questioned regulation itself or its legislative history expressed congressional findings regarding the effect upon interstate commerce…

Finally: whether “the link between [the regulated activity] and a substantial effect on interstate commerce was attenuated.”

Based on the above summary, the Court reasoned its holding that VAWA was unconstitutional, on the following basis:

First, “gender-motivated crimes of violence are not, in any sense of the phrase, economic activity.”

Second, “§ 13981 [i.e. the challenged statute] contains no jurisdictional element.”

Third, although the VAWA “is supported by numerous findings regarding the serious impact that gender-motivated violence has on victims and their families”, the Court held that “… the existence of congressional findings is not sufficient, by itself, to sustain the constitutionality of Commerce Clause legislation.” The majority opinion further quoted Justice Black’s concurring opinion in the case of Heart of Atlantic Motel: “whether particular operations affect interstate commerce sufficiently to come under the constitutional power of Congress to regulate them is ultimately a judicial rather than a legislative question, and can be settled finally only by this Court.” Morrison, quoting Heart of Atlanta Motel v. United States. 379 U.S. 241, 273 (1964).  If one reads carefully, she would found that the discussion has no longer been focusing on the relationship between federal government and the states, but evolved to the separation of power between the congress and the court.

In other words, in the majority’s view, the Supreme Court has the final power in assessing whether the findings of congress (in supporting its legislations) are sufficient to support its argument of “substantial effects” to the interstate commerce.

In Justice Souter’s dissenting opinion, he did not deny this power of the Supreme Court.  Instead, he took a position that is on the one hand admitting the capability of congress but on the other hand appeared retaining the judiciary’s final power in deciding whether an activity “substantially affects” the interstate commerce: “The fact of such a substantial effect is not an issue for the courts in the first instance, ibid., but for the Congress, whose institutional capacity for gathering evidence and taking testimony far exceeds ours. By passing legislation, Congress indicates its conclusion, whether explicitly or not, that facts support its exercise of the commerce power. The business of the courts is to review the congressional assessment, not for soundness but simply for the rationality of concluding that a jurisdictional basis exists in fact. See ibid. Any explicit findings that Congress chooses to make, though not dispositive of the question of rationality, may advance judicial review by identifying factual authority on which Congress relied.

What does “… [N]ot for soundness but simply for the rationality…” mean?

What does “though not dipositive of the question of rationality, may advance judicial review by identifgying factual authority on which congress relied.” mean?

These issues are not just a matter of the Commerce Clause, but a matter of separation of power, which remain to be answered in further cases.

 

Things one needs to know beyond the “$5 billion” – Key Points of the FTC-Facebook Settlement

Everyone has heard the news over Facebook’s privacy matter, in particular the number of US$5 billion penalty imposed by the Federal Trade Commission (“FTC”). However, what are other important issues further to the penalty?

Below is a bullet point-style summary over the key points that one needs to be aware of. I know you are short of time, so I am shortening your reading (albeit the full-text reading is recommended).

1. What does the Settlement consist of? 

1.1. US$5 billion penalty = 9% of FB’s 2018 revenue = 23% of its 2018 profit

1.2. Five channels of compliance hold FB accountable (heavily intervening into FB’s company governance): 

(a) – Establish a Board Privacy Committee: consists of independ board members who cannot be removed by less than 2/3 of voting shares (more than those Zuckerberg controls).

(b) and (c) – accountability at the individual level: quarterly and annualy certifications submitted by Zuckerberg and FB’s Designated Compliance Officers (“DOCs”), in their capacities as individuals.

(d) & (e) – independent third-party assessor and FTC monitor.

1.3. Transparency

(a) quarterly privacy review report – (i) prepared by DOCs, (ii) submitted to CEO and 3rd-party assessor (or FTC whn requested), and (iii) DOCs personal certifying that the company has implemented the policy.

(b) incident report – (i) when 500 or over users’ data are compromised; (2) deliver the report to FTC within 30 days; (3) the report steps taken to remidate the issue; (4) continue provide report of progress every 30 days.

(c) 3rd-party assessor’s biennial assessment FB’s privacy program

(d) each quarter, the privacy committee must receive a briefing from FB management; privacy committee must meet assessor, at least quarterly, without FB management’s presence, and then propose remediation afterwards.

2. What is the legal nature of this deal?

It is a civil settlement between FTC (representing United States) and Facebook. It is NOT an administrative fine. The outcome of the settlement is a “Stipulated Order for Civil Penalty, Monetary Judgment, and Injunctive Relief (“Stipulated Order”)“. Also see Plaintiff’s Consent Mothion for Entry of Stipulated Order, submitted to the court (D.C. District Court) on July 24, 2019.

According to FTC’s statement, “[e]ven assuming the FTC would prevail in litigation, a court would not give the Commission carte blanche to reorganize Facebook’s governance structures and business operations as we deem fit.”As a civil law enforcement agency (and not a regulator), we can only get what we can win in litigation or via hard-fought negotiations.” Statement of Chairman Joe Simons and Commissioners Noah Joshua Phillips and Christine S. Wilson In re Facebook, Inc., July 24, 2019.

3. What is the “valid term” for this settlement? 

In general, twenty (20) years. See Sections VIII.C. (3rd-party assessment), XIII.B. (compliance reporting) and XIV (recordkeeping) of the Stipulated Order. However, for certain issues, it could be construed to be perpetual.

4. What are the dissenting opinions? 

Two of the five FTC Commissioners have, respectively, filed statements dissenting the majority decision of settling with Facebook (here and here). In general, they thought that the settlement wasn’t sufficient to create detterence against FB (note, not the other companies, but in particular for FB!), but have provided an overly broaden release to FB and its management. They also thought that the injunctive reliefs are lacking the specifications over actual data processing (collection, deletion and transparancency). They think that it is time for FTC to bring the case for litigation, so that a law (but not just a contractual obligation) can be formally created and therefore the consumers can be protected thereunder.

5. OK, my comments:

5.1. This is a landmark deal, for sure, in almost every aspect. However, the amount of penalty might be the least important one. More fundamentally, this deal introduced a strong intervention into the traditional company governance, which would hardly be approved by a court in a litigation.

5.2. Impact to future? Yes, but maybe not that big as one may imagine. The deal is so unique that can hardly be referred to in cases where the data controlers are smaller than Facebook or the data users are running a business model different from that of FB. The dissenting views (of hoping to make a law in litigation) are a little bit idealistic because even if this case ended with a court decision on merit, lawyers would find many ways to distinct it from later cases.

5.3. More to come…

The Mist of “Personal Financial Data” in China

Article 33 of the Implementation Measures of the People’s Bank of China for Protecting Financial Consumers’ Rights and Interests  (issued in 2016, “2016 Implementation Measures“) reads:

Individuals’ financial information collected within China shall be stored, processed and analyzed within the territory of China. No financial institution shall provide the financial information on domestic individuals abroad, unless it is otherwise prescribed by any law, regulation or the People’s Bank of China.

Where a domestic financial institute, for the purpose of handling cross-border business and as authorized by the related subjects, transmits relevant individual’s financial information collected within China to any overseas institute (including the head office, parent company or branch companies, subsidiaries and other affiliated institutions required for completing the business), it shall comply with laws, administrative regulations and the provisions of relevant regulatory departments, and by taking such effective measures as signing agreements and conducting on-site inspection, require overseas institutes to keep confidential the obtained individuals’ financial information.

The first paragraph provides a universal prohibition of cross-border data transfer.  Even with data subjects’ consent, financial institutes are not allowed to transfer “financial personal data” out of China.  The second paragraph provides an exception for the circumstances where a financial institute transfers data outside of China for the purposes of “cross-border business”, provided that (i) customer consents are given, (ii) the institute is in compliance with applicable regulations and (iii) appropriate measures of data security haven been taken.

To understand this provision, one needs to clarify the meanings of two key terms: “personal financial information” and “cross-border business”.

Personal Financial Information 

Article 27 of the 2016 Implementing Measures provides a definition for the “personal financial information”:

“… refers to personal information being obtained, processed or stored by financial institutes through their business operation or other channels, including personal identity information, asset information, account information, credit information, financial transaction information and other information that can reflect certain situation of a specific person. ” (underlines added)

To understand the underlined terms , one must know that this Article 27 is derived from a regulation issued by the People’s Bank of China (“PBoC“) in 2011, titled Notice on Well-Protection of Personal Financial Information (“2011 Notice“). The 2011 Notice sets out the basic framework on the protection of “personal financial information” in China. Its first section has summarized various categories of personal financial information and enlisted more specific items under each category.  As you will read below, the names of these categories are reused in Article 27 of the 2016 Implementing Measures.

  • “personal identity information”, including a person’s “name, gender, nationality, ethnic, ID document and its number and expiration time, occupation, contact information, marital status, family status, residential address and occupational address, portraits etc.” [Note: in China, regulators like to end lists with “etc”, so that they will have chances to add items when needed]
  • “personal asset information”, including a person’s “income situation, ownership to real properties and vehicles, amount of tax, amount of provident fund, etc.”
  • “personal account information”, including “account numbers, date of account opening, bank name, account balance, transaction information, etc.”
  • “personal credit information”, including a person’s “record of repayment of credit cards, record of repayment of loans, as well as any other information being formed during economic activities conducted by a person, so long as such information can reflect the person’s credit status.”
  • “personal information of financial transactions”, including “personal information obtained, stored or retained by financial institutes through their intermediary businesses  such as payment settlement, asset management, safe deposit box and others, as well as personal information generated during a customer’s transactions with third party institutes (insurance company, fund company, futures company, etc. ) through banks”
  • “derivative information”, “including information that are generated from analysis and processing of original data and can reflect a specific person’s situation”, and
  • “other information obtained or retained by banks during the process of business with customers”.

Apparently, these terms have been reused in the 2016 Implementing Measures.  Given both documents were issued by the PBoC, it is reasonable to interpret “personal financial information” under the 2016 Implementing Measures with the reference of the above provisions.  In fact, the 2011 Notice had also provided that personal financial information collected within China is required to be stored, processed and analysed within the territory of China. Banks in China are not permitted to transfer the personal financial information of Chinese citizens to any other country without the approval of the PBoC except if permitted by separate rules or regulations.

In light of the above, when one wants to clarify if certain data fall into the the scope of “personal financial information”, he/she should refer to the 2011 Notice.  Given the above broad lists (plus those “etc”), any personal data collected, retained or generated by financial institutes could be found falling into the basket.

Cross-border business

The second paragraph of Article 33 of the 2016 Implementing Measures seems having provided an exception against the general prohibition of the cross-border transfer of “personal financial information”.  The wording of the paragraph is quite interesting (and ambiguous). It does not directly affirming the exception by using the language like “domestic financial institute are allowed to transfer personal financial information to an overseas institute with the following conditions…” Instead, it uses a very strange logic by saying that a domestic financial institute should do this this this and that that that before it transfers personal financial data to an overseas institute.  One of those conditions is that the transfer of data should be “for the purpose of dealing with cross-border business”.

It remains very unclear what the “cross-border business” means.  If it is the “business of the institute who is going to send data out of China”, or the “business of any institute including the sender and the recipient”; if it must be the “financial business” or any business?   Further clarification is needed…

 

Thailand’s Privacy Law Passed

On the last day of February 2019, Thailand’s National Legislative Assembly finally approved its long-pending draft Personal Data Protection Act (the “TH PDPA”). After the royal endorsement (which is usually a formal procedure), the law is expected to be published within a couple of weeks.

Heavily affected by the EU General Data Protection Regulation (“GDPR”), the TH PDPA entitles data subjects the right to delete, in addition to other rights that are usually provided in other jurisdictions. Also, the TH PDPA will apply not only to companies located in Thailand, but also overseas companies which collect, use, or disclose personal data of subjects in Thailand, specifically for advertisements and “behavior monitoring.” This extraterritorial effect would no doubt increase the burden of compliance for a multinational company, provided that it targets the Thai data subjects.  This is also quite similar to the GDPR.

A Personal Data Protection Committee will be established to enforce compliance with the TH PDPA.  That said, the law provides a one-year grace time for enterprises to prepare the compliance of it.

 

Vietnam – New Cyber Security Law in effect on 1 January 2019

The Vietnamese Parliament has passed its new Cyber Security Law on June 12, 2018 with overwhelming votes. The law has been in effect from January 1, 2019.

The law has seven chapters and 43 articles. It sets out responsibilities for the actions of relevant agencies, organizations and individuals to safeguard “national security” and “social order”. The key points of the law are set out below:

(i) Domestic and foreign companies that provide network-related services in Vietnam must have a user information stored in the territory of Vietnam.

(ii) Foreign companies providing Internet-related services in Vietnam need to establish offices in Vietnam.

(3) Domestic and foreign companies who provide network-related services in Vietnam are required to verify user registration information; they also need to provide the legal enforcement agencies with users’ information.

(4) Provisions on prohibiting the use of cyberspace to incite opposition to the state, distort the history, undermine the national unity, defame religion, or spread false and indecent information.

While Vietnam is also a Socialist country, its people enjoys relatively higher freedom of internet access than that of China. Social media like Facebook and Twitter are generally not blocked.  In fact, Vietnam ranks the 7th largest population of Facebook users among all countries.
Vietnam Facebook User