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All articles with the "Regulation" tag.

Published: Sat, 24 Jun 2017 00:00:00 -0400

Last Build Date: Sat, 24 Jun 2017 16:38:05 -0400


Are Terrible State Alcohol Laws on the Way Out?

Sat, 24 Jun 2017 08:00:00 -0400

Alcohol regulations in this country could improve dramatically if more state courts would reject bald economic protectionism as a valid basis for lawmaking. That's the conclusion of a new study published last week by the R Street Institute, a free-market think tank in Washington, D.C. The new study, Could Economic Liberty Litigation 'Free the Booze'?, uses the hook of a recent South Carolina court case to suggest—hopefully—that we may be seeing the dawn of a new period of much-needed state alcohol deregulation. The lawsuit in question concerned section 61-6-140 of South Carolina's Alcohol Beverage Control Act, which stated that "[n]o more than three retail dealer licenses may be issued to one licensee[.]" The case involved national alcohol beverage superstore Total Wine, which owns three locations in South Carolina but was rebuffed by the state in its efforts to open a fourth. Total Wine sued to overturn the South Carolina law. The state, the court found, "offer[ed] economic protectionism as the sole justification of this extreme business regulation." The court determined the state's "only justification for these provisions is that they support small businesses." Thankfully, the court was unwilling to accept that justification. "The record does not contain any evidence of the alleged safety concerns incumbent in regulating liquor sales in this way," the court ruled. "Without any other supportable police power justification present, economic protectionism for a certain class of retailers is not a constitutionally sound basis for regulating liquor sales." The court rightly concluded that "'it's just liquor'... is not a legitimate basis for regulation." While it may seem trite for a court to conclude this, the truth is that in the seven-dozen years since the end of alcohol Prohibition in this country, courts have held time and again that the mere fact a law regulates liquor has indeed been a sufficient basis for that regulation. But that view began to change after the U.S. Supreme Court ruled in a 2005 case that Michigan, New York, and other states cannot discriminate against out-of-state alcohol sellers. (Alas, I discussed "a new Michigan law that bars out-of-state retailers from shipping wine into the state" earlier this year.) More recently, in 2014, a federal court overturned Florida's inane ban on 64-ounce beer growlers. The message: federal courts have acknowledged that "it's just liquor" may no longer be a sufficient constitutional basis for lawmaking. But state courts have been mostly loath to overturn alcohol laws within their borders, choosing instead to defer to state lawmakers for whom cronyism and protectionism are legitimate bases for lawmaking. "From Virginia's food-beverage ratio law, which arbitrarily mandates how much booze versus food a restaurant can sell, to Indiana's cold beer law, which only allows liquor stores (but not gas stations or grocery stores) to sell refrigerated beer, the examples are legion," the R Street report notes. That's why the South Carolina decision is such a big deal. "Nearly every state in the country has oppressive alcohol laws that could be ripe for judicial review, and using a litigation-based model allows reformers to circumvent cronyist state legislatures that are often bent on protecting the status quo," said study author Jarrett Dieterle, a fellow at the R Street Institute and editor of, in an email to me last week. "If this model of targeting irrational alcohol regulations through economic liberty litigation takes hold in other states, it could upend the booze world as we know it," Dieterle tells me. "The examples of protectionist alcohol laws across the country are legion and this could be one method of clearing away the antiquated post-Prohibition legal structure that the alcohol industry still labors under." Dieterle kindly quotes me in the piece for the proposition that the Twenty-First Amendment, which ended alcohol Prohibition, is largely rubbish. The Twenty-First Amendment "simply shifted much of the power to prohibit and incessantly regulate a[...]

An Uber Driver Is Fined for Not Speaking English, but Tech Innovation Provides Smarter Solutions

Tue, 20 Jun 2017 12:45:00 -0400

(image) County and municipal government agencies in the Miami area have fined several dozen for-hire drivers for violating a regulation requiring them to be able to speak English.

One of the people penalized, a Spanish-speaking Uber driver named Carmen Hechevarria, has gone to the press to talk about her treatment and her $250 fine. The incident highlights how poorly government regulations have adapted to both cultural change and technological advances.

Licensing regulations in Miami-Dade County require that cabbies and other for-hire drivers "be able to communicate in the English language." According to the Miami Herald, Hechevarria was not fined because her lack of English skills caused problems for any customers. A Miami airport traffic officer greeted her in English when she was dropping off her passengers, and she didn't respond. This apparently was enough to trigger the officer's concerns, and after questioning her with the help of another officer who spoke Spanish, they determined that she was not able to speak English. Therefore, they concluded, she was operating in violation of the regulation.

After the case started getting publicity, the county's Department of Transportation put out a statement explaining that the purpose of the regulation is to make sure that the driver can communicate with the passenger in an emergency or to receive basic directions. (This, oddly, assumes that the passenger is going to be an English speaker.) A representative from Uber says that the company doesn't require drivers to be able speak English. Its app operates in English to arrange trips, and Uber believe that complies with the law.

Just think of the many ways technology could bypass this "problem" without fining Hechevarria or, worse, telling her she's not allowed to drive. Uber has already added tools to its app that make it easier for deaf and hard-of-hearing people to be drivers. When using an app to order a car, couldn't passengers inform the service whether they need somebody who speaks English? Even better: What if the customer needs somebody who speaks a different language entirely? We're talking about Miami here. Hechevarria could probably confine herself to driving around people who exclusively speak Spanish and never go hungry. UberX does allow customers to request Spanish-speaking drivers in six cities (Miami, surprisingly, is not yet among them). Imagine a tool like that expanded to other languages and other cities—and countries.

Innovations like those can help fix problems in ways that work for everyone. That's a nice contrast with occupational regulations, which instead block people from getting jobs and contributing to the economy.

Let Driverless Car Innovators—Not Bureaucrats—Work Out Security, Privacy Issues

Wed, 14 Jun 2017 08:30:00 -0400

When most people think about driverless car policies, they tend to focus on philosophical life-or-death scenarios. This isn't surprising: The question of how autonomous vehicles should behave when faced with the unfortunate decision between harming a passenger and harming a pedestrian is an eye-catching one indeed. But many of the policy concerns surrounding robot cars are far more prosaic. How much data will connected cars collect, and how will this be stored? Will the data be secure? How secure? How will software be maintained and improved? Will the code be viewable by outsiders? And just who should oversee the whole process? At the end of the month, regulators at the Federal Trade Commission (FTC) and National Highway Traffic Safety Administration (NHTSA) will hold a policy workshop to discuss just these issues. On June 28, policy experts, academics, industry representatives, and the general public are invited to take part in a conversation on "the consumer privacy and security issues that automated and connected vehicles" may pose. Rather than worrying about the typical questions of physical safety and accident liabilities involving autonomous cars, this workshop will focus mostly on the cybersecurity and data integrity of autonomous car software. There is considerable disagreement in the policy space about how to proceed. At the core of the debate is the question of how seamlessly car companies can adapt to the new pressures of maintaining secure software. Car manufacturers have had decades of experience testing their vehicles to minimize physical safety risks as much as possible. But as cars become more automated, these companies will have to act more like software firms. These days, GM and Ford and Chrysler need to be as comfortable with beta testing and encryption as they are with test tracks and crash dummies. Critics believe that car companies are simply not up to snuff on security. They do not think that auto manufacturers will be able to provide secure and transparent autonomous car software without some kind of government mandate or pre-market approval process. Computer security expert Bruce Schneier is a leading advocate of this position. In a recent article for the New York Times, Schneier argues that there is no market incentive for car manufacturers and other businesses involved in the "Internet of Things" (IOT) gold rush to care about good security. He thinks the government should mandate that companies integrate certain software features by default, and advocates that software developers be held liable for vulnerabilities in the code. (As a point of fact, the FTC already investigates IOT firms for "unfair and deceptive practices" with insecure products, but Schneier and others want to significantly expand the liability burden for software businesses.) There are legislative efforts underway as well. Sen. Ed Markey (D-Mass.) has made connected car security into somewhat of a congressional bugaboo for the past few years. He first produced a sensationalist report on the topic in 2015, which was heavy on hysterics but notably light on any real examples of the hacking threats to connected cars. Markey then teamed up with Senator Richard Blumenthal to introduce the "SPY Car Act" later that year. The bill would vaguely require companies to equip "all entry points to the electronic systems" of cars sold in the US with "reasonable measures to protect against hacking attacks" while requiring sellers to append a "cyber dashboard" with security features on each car. The bill failed, having generated expected opposition from auto manufacturers for its "cumbersome and static" approach, but Markey released another version of the bill this year. Yet these kinds of arguments are little different than the typical anti-market rhetoric used to justify all kinds of backwards regulations. They seem to believe that businesses can consistently provide sub-par data and software security and stay in business forever. Furthermore, they believe that government has the knowledg[...]

Trump Is Right: Regulation Is Massively Slowing Down and Boosting the Costs of Modernizing Infrastructure

Mon, 12 Jun 2017 12:55:00 -0400

(image) "The government-wide average for completing a full environmental impact statement . . . is just 4.6 years," whined Center for American Progress infrastructure specialist Kevin DeGood in the Washington Post. My immediate response was "just 4.6 years!" DeGood was reacting to President Donald Trump's dramatic gesture last week when he dropped binders of an environmental assessment report "costing $24,000 per page" that had been compiled in order to obtain approval for building a stretch of highway in Maryland.

"These binders on the stage could be replaced by just a few simple pages," Trump said. "These binders also make you do unnecessary things that cost millions and millions of dollars, and they actually make it worse."

Environmental reviews have dramatically slowed the creation and modernization of roads, bridges, energy production, water supply, and airports. For example, the Obama administration used environmental reviews by the State Department as an excuse to prevent for six years the construction of the Keystone XL pipeline to transport oilsands crude to the U.S. Gulf Coast. (The Trump administration approved it in March.) Similarly, environmental reviews have delayed the building of the Cape Wind offshore wind energy project for 16 years and counting.

In a terrific Washington Post column, George Will cites a 2015 study by the the nonpartisan reform coalition Common Good headed by attorney Philip K. Howard. The Common Good "believes individual responsibility, not mindless bureaucracy, must be the organizing principle of government." The report, "Two Years Not Ten Years: Redesigning Infrastructure Approvals, asserts:

Red tape is not the price of good government; it is the enemy of good government. Time is money: America could modernize its infrastructure, at half the cost, while dramatically enhancing environmental benefits, with a two-year approval process. Our analysis shows that a six-year delay in starting construction on public projects costs the nation over $3.7 trillion, including the costs of prolonged inefficiencies and unnecessary pollution. This is more than double the $1.7 trillion needed through the end of this decade to modernize America's infrastructure.

Even if it the Common Good report's estimate were half of what it calculates, it would still represent an enormous amount drag on economic growth and job creation. President Trump's impulse to dramatically streamline the regulatory approval process is sound, but whether his administration can pull it off remains to be seen.

The FDA Commissioner's Novel Plan for Cutting Drug Prices: Competition

Wed, 07 Jun 2017 15:45:00 -0400

(image) Scott Gottlieb, the nation's new head of the Food and Drug Administration, wants to tame drug prices the old-fashioned way: by letting more companies compete.

Generic drugs are typically sold for far less than their chemically identical branded counterparts. Yet from 2010 to mid-2015, the prices of more than 300 of the 1,441 established generic drugs experienced at least one extraordinary price increase of 100 percent or more, according to a 2016 Government Accountability Office report. Lack of competition is one major reason why.

A stunning 2,640 generic drug applications are currently stuck in the FDA's approval process. (In 2006, by contrast, the agency's generic drug backlog stood at only 800 applications.) A 2016 article in the Journal of the American Medical Association pointedly noted that "none of the approximately 1500 generic drug submitted in fiscal year 2014 had been approved by the end of that year."

Lower-priced generic drugs saved the health care system an estimated $254 billion in 2014. An FDA study has found that as the number of competing manufacturers for a drug goes up, the price falls dramatically. When two companies compete, the price falls an average of just 6 percent; when there are nine competitors, the price drops by an average of 80 percent.

Gottlieb reportedly plans to prioritize the approval of additional generic competitors, and he hopes to eliminate the backlog of generic-drug applications within a year. It isn't surprising that he'd set such a goal: He wrote an op-ed last August arguing that excessive FDA regulation was stymieing the development and approval of generic drugs.

For example, the Obama administration abruptly imposed higher manufacturing standards on generic makers in 2009, forcing many to leave the market. Gottlieb's op-ed also noted that the average cost to file a generic drug application with the agency had risen from about $1 million in 2003 to $5 million in 2016—and that sometimes it was as high as $15 million. As a result, a company would have to expect to earn considerably more revenue from a generic product for it to be worth its while to consider competing against companies already in the market.

Last year Gottlieb called for changing that; this year he'll get a chance to try.

Time to Get U.S. Air Traffic Control Out of the 1960s

Tue, 06 Jun 2017 02:00:00 -0400

"We live in a modern age and yet our air traffic control system is stuck painfully in the past," President Donald Trump said at a White House event announcing his plan to modernize America's aging air traffic control system. "The FAA has been trying to upgrade our nation's air traffic control system for a long period of years, but after billions and billions of tax dollars spent and many years of delays, we're still stuck with an ancient, broken, antiquated, horrible system that doesn't work." Trump is largely throwing his support behind Rep. Bill Shuster's (R-PA) air traffic control reform proposal. Shuster's bill, which passed a House committee last year but didn't make it to the House floor, would convert the air traffic system from today's taxpayer-funded organization run by the Federal Aviation Administration (FAA) into a self-funded, nonprofit corporation where all aviation stakeholders — passengers, airlines, airports, controllers, and pilots — would be represented on a board of directors. This concept has the bipartisan support of numerous former leaders of the FAA and Department of Transportation, as well as most major airlines, the air traffic controllers' union, and business groups. The Clinton administration pushed a similar plan in the 1990s. The current version grew out of the 2013 federal budget standoff and sequester, which saw furloughs of air traffic controllers and the near shut-down of 149 smaller air traffic control towers. This highlighted several flaws in the system, as more people recognized air traffic control is a fast-moving, high-tech service business that is a poor fit for a slow-moving government regulatory agency whose funding is subject to the political whims of Congress. The US air traffic system is the world's largest, but technologically it severely lags behind other countries that have already implemented digital messaging, GPS flight tracking, and newer alternatives to the 1960s-era systems still found in US air traffic facilities. "At a time when every passenger has GPS technology in their pockets, our air traffic control system still runs on radar and ground-based radio systems," Trump said. The world's second-largest air traffic system, Nav Canada, was "corporatized" 20 years ago. Over 60 countries, including the United Kingdom, Australia, New Zealand, Germany, Italy, Switzerland, and Spain, have self-supporting air traffic control corporations. This plan would shift air traffic control funding so that it is paid for, not by taxes, but by aircraft operators paying for the services received. A stream of user payments is more reliable than tax funding. It also enables air traffic corporations to issue long-term revenue bonds to pay for modernization projects, which is why countries like Canada and the UK are far ahead of the US. These countries already use advanced tracking and communications technology that our controllers can only dream about. Thanks to FAA's cumbersome budgeting and upgrade process, this technology will continue to be implemented in the US in dribs and drabs over the next 15 years. The proposal would also improve air traffic safety. Since 2001, international aviation law has called for arm's length separation between air safety regulators and the providers of air traffic services. Nearly all countries have made this change, but the United States has not. The FAA both provides air traffic services and regulates them. Finding and reporting problems requires the FAA to turn itself in — a clear, built-in conflict of interest. For pilots and passengers, better oversight and upgraded air traffic control technology would mean shorter lines for planes waiting to take off, more direct routes between cities, and fewer delays for planes waiting to land. That would result in shorter trip times, less fuel used and fewer emissions. In short, nonprofit air traffic corporations have a global track record of delivering increased air safety [...]

Detroit Cracks Down Hard On Medical Marijuana

Fri, 02 Jun 2017 17:01:00 -0400

Detroit is cracking down hard on medical marijuana. Ever since an onerous and highly controversial zoning ordinance went into effect in 2016, 167 of about 280 dispensaries that were operating in the Detroit have been shut down by city officials, and city lawyers say another 50 will be shuttered in the coming weeks. The root of these closures, says Joesef White, Detroit chapter leader of the National Organization for the Reform of Marijuana Laws, is city officials drafting regulations without concern or input from those who would have to abide by the new rules. "The cannabis community was really not that actively involved in putting that legislation together for the city of Detroit," White said. "Ultimately what happened was that the zoning of dispensaries or cannabis related businesses was very, very restrictive." Indeed, to legally operate a medical marijuana dispensary in Detroit requires said dispensary be located 1,000 feet away from schools, parks, libraries, day care centers, and churches. Oh, and liquor stores. A marijuana dispensary can't even be located within a thousand feet of another dispensary. This has restricted dispensaries to operating in mostly inaccessible and undesirable industrial zones, White says. And that zoning is on top of licensing requirements that threaten even those businesses that have managed to stay open in undesirable industrial locations. So far the city has licensed just five medical marijuana dispensaries, or one fully licensed dispensary for every 135,000 residents. Another 70 are operating under provisional permission while they go through the approval process, but the city of Detroit has stated they intend to have no more than 50 citywide. The curtailment of the medical marijuana business and the promise of further crackdowns has taken a toll on patients, says Ron Jones, a local cannabis activist and member of Sons of Hemp. "A lot of dispensaries that were open built relationships over the years with their patients." he tells Reason. Medical marijuana has been legal statewide in Michigan since voters passed a "Compassionate Care Initiative" in 2008. "Now," Jones says, "by them being closed down, that kind of closes the door." Jones and a group of dispensary owners sued the city last year over its zoning requirements, and he is currently promoting a petition that would change the licensing requirements in the city. More sweeping efforts at reform are also underway. On May 5, marijuana activists submitted petition language to the state requesting a ballot initiative for full recreational marijuana legalization in the hope of getting it on the November, 2018 ballot. Full-scale legalization could force Detroit to reform some of the current regulations on the books. Full legalization or no, however White says there is plenty of work to be done on the local level. "What we are trying to do here," he says "is find common ground and come together and help the local constituents and work with their elected officials to draft an ordinance that everyone can live with." Ultimately though White feels history is on his side. "Regardless of what side of the argument you're on," White says, "this marijuana issue is going to move forward. It's moving forward across the country."[...]

Wisconsin Court Strikes Down Ban on Homemade Baked-Good Sales

Fri, 02 Jun 2017 07:45:00 -0400

Wisconsin just "became a little freer, and a lot more delicious," as the law firm the Institute for Justice (IJ) put it. On Wednesday, a state circuit court struck down Wisconsin's ban on selling home-baked items such as bread, cookies, cakes, and muffins. The rule has "no real or substantial connection" to consumer protection, Judge Duane Jorgenson wrote in his decision declaring the law unconstitutional. Wisconsin is one of only two states with such rules (New Jersey is the other), leaving 48 states where homemade baked goods are peddled willy-nilly. No one in these states has suffered serious injury or illness from an improperly-made baked good, Jorgenson noted. The ban was more a matter of cronyism than public health, he suggested, noting the fervor with which groups such as the Wisconsin Bakers Association have rallied against efforts to repeal the law. Those attempts have twice failed, but Wisconsin lawmakers are at it once again, with a new measure to legalize "the limited face-to-face sale of certain homemade baked and canned foods without a licensing requirement." The bill would allow people to sell "nonhazardous homemade baked goods" face-to-face as long as they make less than $7,500 from the sale of such items, and as long as they register with the state Department of Agriculture, Trade, and Consumer Protection (DATCP). The bill would also extend these rules to canned items, such as pickles. Under the old law, an individual selling any baked, canned, frozen, or bottled goods must make them in a licensed food-processing plant or commercial kitchen. (Nonprofits get some leeway, and are allowed up to 12 bake sales per year.) This requirement "is enough to shut the door in the faces of many would-be entrepreneurs," explains IJ: Outfitting a commercial kitchen can cost from approximately $40,000 to $80,000. Alternatively, if a baker rents existing commercial-kitchen space, she has to pay hefty hourly or monthly rates; monthly rates for a commercial kitchen are often over $1,000. These costs are not realistic for those merely seeking to have a small baking business. Making matters worse, many rural Wisconsinites do not have any rentable commercial kitchens nearby. Violating these terms is no joke. As IJ attorney Erica Smith noted last year, "if you sell one cookie at a farmers market, to your neighbor, somewhere in your community, you can go to jail for up to six months or even be fined up to $1,000." In January 2016, IJ helped three female farmers—Dela Ends, Lisa Kivirist, and Kris Marion—file a lawsuit against DATCP in the Lafayette Circuit Court. The suit alleged that Wisconsin's rule violated the women's due-process and equal-protection rights under the Wisconsin Constitution. Now, a Wisconsin court has agreed. Will the state let this one go? A spokesman for the state Department of Justice told Wisconsin Public Radio that "in the coming days, we will be evaluating the decision, consulting with our clients about the impact of the ruling, and considering an appeal." For now, though, the women who brought the lawsuit are reveling in their win—and prepping their kitchens. "I'm excited to get in my kitchen and start baking as finally Wisconsin is truly open for business," says Kivirist, who calls the court's ruling "recognition for all small businesses that we have the right to earn an honest living and will not be stymied because of industry influence." With the court win, the legislature needn't write an explicit permission slip any longer. But it may now be more motivated than ever to weigh in on homemade food sales: With the previous law struck down, that leaves no sales-volume limit and some confusion over other regulatory requirements. Should it go with the $7,500 cap, that would give Wisconsin the lowest limit on homemade food sales of any state that permits it, Smith tells me. "We think the legislature can do bet[...]

Zoning Laws in New York, San Francisco, and San Jose Cut Americans' Wages by $8,775

Thu, 25 May 2017 15:30:00 -0400

(image) Why is housing in the coastal enclaves so damned expensive? The median rent for a two-bedroom apartment in New York City is now running at $4,260 a month; in San Francisco, the figure is $4,600. The national average, by contrast, is about $1,300. What gives?

Blame zoning. The Wharton Residential Land Use Regulatory Index reports that land use restrictions in New York, San Francisco, and San Jose are among the tightest in the country.

You don't have to live in New York, San Francisco, or San Jose to feel the effects. A new study by economists Chang-Tai Hsieh of the University of Chicago and Enrico Moretti of Stanford measured increases in the total factor productivity—that is, the efficiency with which inputs like labor and technology are combined to yield outputs—in 220 cities from 1964 to 2009. They concluded that onerous land use restrictions in high-productivity cities have huge spillover effects on the rest of the U.S. economy.

In a nutshell, artifically high housing costs keep workers from moving from low-productivity areas to high-productivity cities, thus depressing wages and economic growth. Those workers don't just get stuck in low-wage regions: Because they're stuck, job competition drives down the local wages even more. Meanwhile, most of the extra output produced in New York, the San Francisco Bay Area, and other overregulated regions are poured into housing costs rather than invested in more productive assets. In that way, highly restrictive zoning depresses economic growth and GDP.

"In the 1960s, developers found it easy to do business in much of the country," the Harvard economist Edward Glaeser noted in 2014. "In the past 25 years, construction has come to face enormous challenges from any local opposition. In some areas it feels as if every neighbor has veto rights over every project."

If land use regulations in New York and the Bay Area were set equal to the median U.S. city, those area's average wages would be 25 percent lower, but reduced housing costs would have more than made up for that. Furthermore, the researchers calculate, GDP would be 8.9 percent higher (as of 2009), translating into an addtional $8,775 in average wages for all American workers.

Still, it could have been worse. In the period studied by Hsieh and Moretti, Southern cities tended to eschew highly restrictive land use regulations. As a result, they have much lower housing costs and were responsible for about 33 percent U.S. aggregate GDP growth. If the big Southern cities had adopted the median U.S. level of residential zoning, the economists calculate, the change would have reduced GDP growth by 25 percent.

Drone Registry Repeal a Victory for Permissionless Innovation

Wed, 24 May 2017 08:30:00 -0400

Model aircraft enthusiasts and small-scale drone hobbyists enjoyed a major victory last week when a federal court struck down the Federal Aviation Administration's (FAA) controversial non-commercial small drone registration mandate. On May 19, the D.C. Circuit Court of Appeals invalidated the FAA's requirement that recreational operators of "small Unmanned Aircraft Systems," or UASs, weighing between 0.55 and 55 lbs. must register their crafts with the agency or risk fines and even jail time. The registry is nullified—at least for now—and sUAS buffs are once again free to zip around the troposphere without getting a go-ahead from the FAA first. Incredibly, this big win for permissionless innovation and tinkerers across America comes to us thanks to a single dedicated model aircraft enthusiast named John A. Taylor who just happened to be a lawyer who knew that the FAA was breaking the law. The FAA rules, first promulgated in December of 2015, came as a major surprise to the many hopeful small drone sellers for that year's Christmas season. Suddenly, tiny toys not much different from the remote-control helicopters that were a gift staple in holidays past would be considered UASs under the express oversight of the nation's aviation authority. In fact, in the eyes of former Transportation Secretary Anthony Foxx, little Timmy with his new drone would be considered an "aviator" and "with that title comes a great deal of responsibility." Small drone buyers would need to first pay to register the gadget with an FAA website and mark it with the assigned identification number before allowing their child to enjoy their coveted new toy. But another group took particular umbrage with the new rules: model aircraft enthusiasts, who had previously been exempt from this kind of regulation. It's not hard to sympathize with their plight. These small and responsible of DIYers had been safely flying their crafts with no issue long before "drones" were a household name. For decades, model aircraft activity had a de facto deregulatory assurance because the recreational community adequately policed its own. Specifically, the Academy of Model Aeronautics (AMA) maintained its own voluntary registration system and enforced community-based safety standards that obviated the need for (and likely exceeded the potential outcomes of) government-driven regulations. Indeed, since 1981, the FAA itself encouraged this kind of voluntary arrangement by merely offering guidelines that the model aircraft community could follow. In a nod to the effectiveness of this self-policing arrangement, Congress passed the FAA Modernization and Reform Act of 2012, which explicitly carved out a space for the model aircraft community to continue to tinker without the FAA breathing down their necks. Section 336 of the Act clearly states that the FAA may not "promulgate any rule or regulation regarding a model aircraft." It's hard to get more clear-cut than that. But the FAA nevertheless ignored Congress and proceeded with its half-baked drone registration program despite the major logistical and legal issues involved. This is where Taylor and his one-man crusade against FAA wrongdoing comes in. Taylor is a model plane hobbyist and insurance lawyer who lives in the Washington, D.C., area. Like others in his community, he was distressed by the FAA's sudden about-turn on model aircraft. Says Taylor: "I wanted to be able to fly my drone and I didn't want to have to register. It pissed me off on a very sort of visceral level." But unlike many of his comrades-in-flight, he had a law background that helped him prepare a solid legal case against FAA malfeasance. In his petition to the D.C. Circuit Court of Appeals, Taylor challenged both the legality of the registration requirement broadly as well as new flight restrictions that the FAA [...]

Rand Paul's REINS Act Finally Makes It to Senate Floor

Wed, 17 May 2017 17:32:00 -0400

A Senate committee vote on Wednesday is a new high water mark for a long-sought-after regulatory reform proposal. Further progress, though, might be unlikely. The U.S. Senate Homeland Security and Governmental Affairs Committee approved the REINS Act (the acronym stands for "Regulations from the Executive in Need of Scrutiny"), sending the bill to the Senate floor for the first time. While the REINS Act has cleared the House several times in recent years—most recently in January—this is the first time the proposal has been approved by a vote of any kind in the Senate. Sponsored by Sen. Ran Paul (R-Kentucky), the REINS Act would require every new regulation that costs more than $100 million to be approved by Congress. As it is now, executive branch agencies can pass those rules unilaterally, and even though those major rules account for only 3 percent of annual regulations, they are the ones that cause the most headaches for individuals and businesses. Passage of the REINS Act would also require Congress to review all existing regulations that surpass the $100 million threshold. Since there's no clear accounting of how many such rules exist, assessing the landscape would be a necessary step before reforms could be enacted. "For too long, an ever-growing federal bureaucracy has piled regulations and red tape on the backs of the American people without any approval by Americans' elected representatives," Paul said in a statement Wednesday. "The REINS Act reasserts Congress' legislative authority and would continue the historic progress we have made this year to curb the damaging effects of overreaching regulations." While the committee vote is a win for the legislation, another bill also approved by the same committee on Wednesday is a more likely vehicle for regulatory reforms this year. Clyde Wayne Crews, the vice president for policy at the Competitive Enterprise Institute, a free market think tank that favors regulatory reform, tells Reason that he doesn't expect a floor vote on Paul's bill this year—though he admits it's difficult to predict anything in Washington. Still, regulatory reformers have hope in the form of the Regulatory Accountability Act, which would codify several executive branch mandates requiring cost/benefit analyses on new rules. It would also require executive agencies to do more after-the-fact reviews of the consequences of their regulations and would apply the same cost/benefit measures to things that aren't technically regulations but do much of the same thing, like when the FAA issues "guidance" on drone rules, for example. The Regulatory Accountability Act does not go as far as the REINS Act, but "it helps pave the way for more substantial reforms in the future," says Crews. What of President Donald Trump's promise to reshape the federal regulatory state—to bring about the "deconstruction of the regulatory state," as White House adviser Steve Bannon promised in March? "It's not that," says Crews. "The administrative state will be just fine. It won't solve every problem, but it might allow our descendants to do so." With Congress likely to spend the next several months on hearings concerned with the firing of James Comey and other hearings seeking to find his replacement as director of the FBI, the entire legislative agenda for 2017 has been disrupted. Health care and tax reform will likely be pushed off until the fall, and the federal budget still has to be passed too. In that environment, getting the REINS Act to the floor of the Senate might be a bigger accomplishment than it initially seems, even if it moves no farther.[...]

Washington Post Ed. Board Says Life Insurance Regulations Would Cut Down on Child Homicides

Tue, 16 May 2017 10:35:00 -0400

Lax life insurance regulations are encouraging way too many Americans to kill their children. This, according to the Washington Post, whose breathless Sunday editorial ran with the headline, "Too many children are killed for insurance money. Here's how states can stop it." Rather than condemn the actual murderers, the Post blames the life insurance industry, whose "spotty" regulatory compliance and commission-hungry salesmen have created a "system that has turned children into prey." "The apparent ease with which these killers were able to obtain policies," the Editorial Board says "shows sufficient safeguards are not in place." What is needed, they say, are more procedural safeguards or dollar caps on child life insurance. This call for tougher regulation is undercut, however, by the very circumstances of the murder cases outlined in the Washington Post's article. The Post's piece rattles off several murder cases—many not actually involving children—where the killers are motivated by collecting on life insurance policies: "Shane Paris Sisskoko was three months old when he was murdered in Montgomery County in 2001. Lemuel Wallace, 37, blind and developmentally disabled, was shot to death in 2009 in a Baltimore park. Latiqua Cherry, a Prince George's mother, was stabbed nine times before her body was set on fire in May 2015. Prince McLeod Rams was 15 months old when he was drowned or suffocated in Virginia in October 2012. "Common to all of these deaths is that the killer had secretly insured the victims' lives and made themselves sole beneficiaries." The Post fails to mention that each of the crimes they describe involves the fraudulent bypassing of regulations already on the books. Murderers, in the business of fraud and deception, are more than likely to be undeterred by additional regulation. Laquita Cherry's ex-boyfriend reportedly had to fake her signature in order to take out an insurance policy on her life. Lemuel Wallace's killer—a former pastor named Kevin Pushia—fraudulently altered documents to be listed as a beneficiary. Similarly, Shane Paris Sisskoko's father had to repeatedly lie to the child's mother about the reasons for medical examinations and calls from insurance companies to obscure the fact that he had taken a $750,000 policy on his son's life. The Post editorial board simply ignores the laws in 42 states known as "slayer statues", which bar a beneficiary from collecting on a death they knowingly caused. Often a conviction for causing the death of the insured is not required for these slayer statutes to be invoked. Moreover, the kinds of cases the Washington Post seems most concerned about—huge life insurance claims for the death of very young children—are also the kinds that will get the most scrutiny from life insurance companies, which often leads to police investigations. An insurance company tipped off police to the huge life insurance policy on Wallace. And the death of a ten-year-old boy in Washington state whose murder the Post uses to encourage tighter regulation was was ruled an accidental death by police until an insurance investigator informed them of the $650,000 policy that the boy's father had taken out on him. It should also have been made clear the type of murders referred to appear to be incredibly rare. The Coalition to Prevent Insurance Fraud—a pro-regulation group cited in the Post's editorial—has logged 160 cases of murder motivated by life insurance in "recent years," according to a 2017 report. The group offers no citation for statistic or what is meant by "recent years" so the accuracy of that number is hard to verify. Should "recent years" stretch over the last decade however, that would make them more scarce than children killed by babysitters, or fatal romantic[...]

Left Rebrands Environmental Regulations As Environmental Protections: New at Reason

Fri, 12 May 2017 13:30:00 -0400

(image) "Trump signs order at the EPA to dismantle environmental protections," declares a March 28 headline in The Washington Post. An April 27 article in the Post described an "effort to remove environmental protections." Two days later, another Post article stated that Trump's term in office has "already seen multiple rollbacks of environmental protections." And the Post isn't the only publication pushing such language.

Whatever happened to environmental regulations? Many mainstream and activist publications appear to be following the advice of University of California, Berkeley linguist and fierce political progressive George Lakoff to reframe issues. Protections sound so much nicer than regulations, don't you think?

Elizabeth Warren's Over-the-Counter Hearing Aid Bill Tries to Sell More Regulation As Less Regulation

Thu, 11 May 2017 12:25:00 -0400

Sen. Elizabeth Warren (D–Mass) a deregulator? It almost sounds too good to be true. The progressive Democrat, historically hostile to free markets, teams up with Republican Sen. Charles Grassley (R–Iowa) to propose that stores be allowed to sell hearing aids over-the-counter. And, of course, it's not true. Far from stripping away regulation to make it simpler and cheaper for people to care for their hearing needs, the Over-the-Counter Hearing Aid Act of 2017 loads on regulation that would, if passed, likely drive low-cost alternatives to hearing aids out of the market. To make matters worse, this regulatory and crony sleight of hand is bipartisan. To understand how this could be requires understanding a little bit about hearing aid regulation. All devices sold as hearing aids in the U.S. are regulated through the Food and Drug Administration (FDA). They require a prescription from a doctor. They are sold by only a handful of companies, and can cost thousands of dollars. Because of this there exists a thriving market in Personal Sound Amplification Products (PSAPs), which perform the same basic function as prescription hearing aids—amplifying sound for the user—but are available for as little as $20 at Wal-Mart or less on the Internet. PSAP makers, however, are not permitted to market their products as solutions or even an aid to diagnosed symptoms of hearing loss. The FDA list of specific marketing no-nos includes helping a customer hear conversations in a crowded room, or follow movie dialogue. To get around this, companies often brand their products as hunting or bird watching aids, helping to pick up natural sounds. Website reviews for the low-cost aids substitute for the ads. "I purchased these for myself as I cannot afford expensive hearing aids," a Wal-Mart website review reads. "They are good for the money you pay. They amplify and I do not have to ask my friends to repeat everything." The Warren and Grassley bill, introduced in March of this year, would create a whole new regulatory class of devices called Over the Counter (OTC) hearing aids. These OCT hearing aids could be marketed as a means of assisting with mild to moderate hearing loss, provided they meet yet-to-be determined FDA standards on safety, labeling, and audio output. Crucially, Warren's legislation instructs the Department of Health and Human Services secretary to redefine what a PSAP is, with the goal of shifting more PSAPs into this new, more regulated OCT hearing aid category. At minimum, regulation would drive up the cost of PSAPs. And depending on how onerous those new regulations are, many devices would fail to meet the new standards. To no one's surprise, makers of high-end PSAPs have been lobbying hard for the bill. TechCrunch reports that Doppler Labs—a tech start up that produces a $300 PSAP known as Here One—has been working closely with Warren. Doppler also hired KR Liu—a member of the Consumer Technology Association's standards committee on PSAPs—to be its director of advocacy and accessibility in 2015. The Consumer Technology Association has since endorsed and promoted passage of Warren's bill. Bose—maker of the PSAP the $499 "Hearphones"—has spent roughly $50,000 on lobbying for the OTC Hearing Aid Act this year, according to lobbying disclosures. Records from 2016 also show Bose spending $100,000 lobbying on "issues related to the FDA," though no specific legislation is listed. On Monday, a coalition of some 20 conservative and business groups—including the Campaign for Liberty, the Black Chamber of Commerce, and Tea Party Nation—penned a letter to Sen. Lamar Alexander, who chairs the Senate Committee that is currently considering Warren's bill, warning him of[...]

Scott Gottlieb Confirmed as New FDA Commissioner

Tue, 09 May 2017 18:05:00 -0400

(image) Physician, venture investor, and drug industry consultant Scott Gottlieb has been confirmed by the Senate as the new Commissioner of the Food and Drug Administration. Gottlieb takes the helm of the agency that regulates products accounting for about 20 cents of every dollar of annual spending by U.S. consumers, that is, about $2.4 trillion in annual consumption that includes medical products, food and tobacco. The agency regulates medicines, diagnostic tests, medical devices, food safety including those made from modern biotech crops and livestock, food labeling, and tobacco and nicotine products. What the agency's bureaucrats decide has signifcant impact on U.S. economic growth and the livelihoods of Americans.

Gottlieb has long been a critic of the FDA's slow and protracted drug and medical device approval processes. Researchers at the Tufts University Center for the Study of Drug Development have estimated that in 1991 it cost $412 million (2013 dollars) to develop and obtain approval for a new pharmaceutical. Last year, they calculated that it now takes more than $2.5 billion, a six-fold increase.

In an email, Union of Concerned Scientists spokesperson Seth Michaels warned that Gottlieb's confirmation is "yet another example of an appointee whose record raises questions about whether they'll respect science and the public interest." On the other hand, Paul Howard, Senior Fellow and Director, Health Policy at the market-friendly Manhattan Institute issued a statement applauding the appointment. "At a time of both unprecedented scientific opportunity and rapidly evolving public health challenges, Dr. Gottlieb provides the FDA with principled and pragmatic leadership," declared Howard. "His experience as a regulator, practicing physician, cancer survivor, and innovator will help the agency navigate the scientific challenges surrounding drug and medical device development and approval without losing sight of the real-world implications of the agency's decisions for patients struggling with potentially life threatening conditions."

I earlier noted, "While not a radical reformer, Gottlieb clearly has a good understanding of how over-regulation has been slowing down innovation in medicines and foods." Good luck to him as he tries to reform the agency's excessively cautious regulatory culture.