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All articles with the "Regulation" tag.

Published: Sat, 21 Oct 2017 00:00:00 -0400

Last Build Date: Sat, 21 Oct 2017 03:31:08 -0400


Cracking Down on Cashless Cafés is Crazy

Fri, 20 Oct 2017 14:25:00 -0400

(image) As more consumers use credit cards and payment apps, many businesses have decided to stop accepting cash entirely. If you think that sounds unobjectionable, you must not be Alderman Edward Burke.

Burke, a stalwart of Chicago politics who was first elected to the city's Board of Aldermen in 1969, has introduced an ordinance that would prohibit restaurants and retail outlets from refusing to accept cash. Federal reserve notes, Burke explained to Chicago's NBC affiliate, are "legal tender for all debts public or private. So follow the law."

If it were actually the law that businesses have to accept cash, of course, there would be no need for Burke's ordinance, which threatens businesses with $2,500 daily fines and revocation of their business licenses. For the record, the U.S. Department of the Treasury's website says that "private businesses are free to develop their own policies on whether or not to accept cash." The City of Chicago itself requires residents to pay with credit cards, checks, or money orders for booted vehicles. The city's buses don't accept half-dollar coins, which were legal tender the last time I checked.

Burke argues that the processing fees for credit cards get rolled into the final price of products, which consumers then have to pay. But processing cash comes with costs as well, notes John Gordon of Pacific Management Consulting Group, a restaurant consulting firm.

Cash "has to handled," he says. "It has to be stored in a POS [Point of Sale] system It has to be counted at least every shift. At the end of the day it has to counted and tallied into a sales report." All that costs time and money.

And unlike card purchases, which are in the ether as soon as they're processed, cash has to be either deposited at a bank or picked up by an expensive armored car service. "You can just see in the value chain all these costs loaded onto cash," says Gordon.

And so some businesses are going cashless. The Chicago-based chain Argo Tea converted six of its locations into cashless cafés earlier this year. Their website says that ditching paper transactions "increases our speed of service, allowing us to take your order faster and get everyone through the line and on their way with their custom-made drinks and food in less time."

For Argo, there is also a safety component to switching to card only transactions. "A cash-free store also reduces the chances of robbery, keeping our employees safe," explains an FAQ on their website.

For Burke says that businesses that go fully digital are displaying "an elitist attitude that doesn't really reflect what Chicago is about." Something that could also be construed as elitist would be for a politician to decide that he knows how to better run someone else's business. Chicago is home to thousands upon thousands of retail outlets serving customers of all incomes and tastes. The owners of those businesses are in the best position to determine if not accepting cash, or for that matter going cash-only, is the right move for them.

Seattle to Amazon: Don't Leave Me, Baby

Wed, 18 Oct 2017 13:15:00 -0400

Cities hoping to host Amazon's second corporate headquarters have until Thursday to submit their bids. More than 50 jurisdictions have jumped at the opportunity already, promising increasingly extravagant incentives to the e-commerce company. On Monday, New Jersey Gov. Chris Christie offered Amazon $7 billion in tax incentives to set up shop in the Garden State. Local officials in Georgia have offered to let the company incorporate its own city. Tuscon even sent Amazon's CEO a 21-foot cactus. The only place not jumping for joy is the company's current hometown of Seattle, where politicians have reacted to the prospect of Amazon expanding elsewhere as if they were going through the phases of a bad break-up. Local officials greeted Amazon's initial announcement with an "I'll never let you go" kind of rage. One councilmember, Kshama Sawant, reacted by yearning "to take these behemoths into democratic public ownership." Some Seattle politicians are now expressing regret about such harsh words, and are promising to be a better partner to the company. Last Friday, five out of nine Seattle City Councilmembers—along with a clutch of county and state officials—sent a letter to Amazon. To the extent that the company's decision to expand elsewhere was based on "feeling unwelcome in Seattle, or not being included in some of our regional decisions," they wrote, "we would like to hit the refresh button." "Those of us who are signing onto this letter want you to know we have heard you," they added. "We also want you to stay with us and grow with us both in Seattle and with our sister cities across the state." To kickstart this new relationship, the politicians propose including Amazon in a series of taskforces targeting traffic, crime, and education. This letter is no doubt heartfelt. But it also misses the point, says Erin Shannon of the Washington Policy Center. "There needs to be a much bigger reset button for that letter to have any meaning," Shannon tells Reason, adding that the "city's anti-business climate is playing very likely a strong role" in causing Amazon to look for greener pastures. In 2014 the city passed one of the nation's first $15 an hour minimum wage laws. This was followed by onerous employee scheduling regulations, restrictions on running criminal background checks, and an infamous (and probably illegal) income tax. To draft this tax, Seattle hired John Burbank, director of the Economic Opportunity Institute, who once called Amazon a "sociopathic roommate" that the city was better off without.* And these are just the policies that have passed. Also in the works is a so-called Amazon tax, which would levy a yearly $100-per-employee levy on large companies. Amazon has tacitly acknowledged that policy factors are playing a role in its search for a home away from home. It lists "a stable and business friendly environment" as one of four key preferences for the site of its new headquarters. The company has also said it was looking for a good "cultural community fit" with "local government structure and elected officials eager and willing to work with the company", and it has encouraged bidding cities to include testimonials from other large companies. The Seattle City Council's letter is remarkable in how little it seems to understand these concerns. Rather than offering to improve the city's business climate, officials are asking for Amazon's help in mitigating the problems its growth has supposedly caused. For instance, the letter's section on the "gig economy" mostly bemoans the rise of contract workers in the tech sector, telling Amazon that "we would like to work with you, other employers, employees, and contract workers to establish new policies around fair work, schedules, and livable wages." And this is coming from the city councilmembers that signed on to the letter. The signature of Seattle's interim mayor Tim Burgress is notably absent. Sawant, meanwhile, has called the letter "disingenuous and craven." Needless to say, his confusing mix of hostile rhetoric and promises of gr[...]

DIY Biohackers Are Editing Genes in Garages and Kitchens

Wed, 18 Oct 2017 11:30:00 -0400

"A biohacker for me is somebody who is doing something clever or interesting in biology," says Josiah Zayner, a molecular biophysicist who runs The ODIN, a company that sells do-it-yourself genetic engineering kits. "They're usually these people that have been fucked by the system who are trying to unfuck themselves." Zayner is one of the leading figures in the biohacking movement and is the main organizer of the BioHack the Planet Conference, a yearly gathering of citizen scientists. This year, over 100 members of the biohacking community met in Oakland, California to discuss a wide array of issues from at-home genetic engineering to questions on bioethics. Biohackers have often been compared to computer hackers of the 1980s, but instead of breaking into and manipulating information technology systems, they're focused on hacking living organisms with the hopes of curing illnesses and in some cases obtaining superhuman powers. Their shared mission is to put this technology into the hands of as many people as possible. "People should be able to use all the technologies that science develops," says Zayner. "It shouldn't just be patented and given to companies or exclusively given to certain people." These do-it-yourself biologists say the democratization of science has given them the freedom to do work on projects that are often ignored by larger institutions. They're using gene editing technologies like CRISPR to create personalized treatments for those suffering from rare diseases or cancer, reverse engineering pharmaceuticals like Epi-Pens so people can make their own medicine at home, and even creating glow in the dark beer. "I think this is the most exciting time thus far in the history of the world to be alive with respect to what we can and will do with life forms," says Hank Greely, the director of the Center for Law and the Biosciences at Stanford University. But breakthroughs in the world of biohacking are drawing more scrutiny from federal regulators. Earlier this year, the Food and Drug Administration began placing restrictions on non-human genetic modifications and declared that genetically edited animals must be classified as drugs. This gives the agency broad authority over a number of do-it-yourself genetics tests and requires experiments involving animals to go through the same vetting process as a new drug. "I guess they couldn't call them cosmetics and they couldn't call them foods, so they're like dogs are drugs," states David Ishee, a Mississippi canine breeder who is working on editing out genetic diseases in dogs. "Everybody's worried about what someone could do with this technology and nobody seems to care about the damage that not doing it will cause because these animals are dying." Increasing regulation could undermine biohacking breakthroughs for humans as well. "I'm a huge fan of deregulation because I believe in the inherent goodness of capitalism," says Zayner. "Stuff doesn't progress unless people do useful things with it." Produced by Alexis Garcia and Justin Monticello. Camera by Garcia, Monticello, and Zach Weissmueller. Ascent by Jon Luc Hefferman is licensed under a Creative Commons Attribution license ( Source: Artist: Cut and Run - Electronic Hard by Kevin MacLeod is licensed under a Creative Commons Attribution license ( Source: Artist: New Dawn by Bensound is licensed under a Creative Commons Attribution license ( Source: Artist: Sci-Fi by Bensound is licensed under a Creative Commons Attribution license ( Source:[...]

California Partially Repeals Foolish Law That Accidentally Banned Book Signings

Mon, 16 Oct 2017 12:46:00 -0400

(image) Next year California's bookstores will once again be able to host author signing events without fearing an expensive lawsuit.

The threat of those suits sprang from a 2016 law that tried to crack down on sales of fake autographed memorabilia by requiring retailers to provide certificates of authenticity for any autographed merchandise worth more than $5. Last week Gov. Jerry Brown signed a bill that loosened the new rules: The threshold will now be updated to $50 for most autographed memorabilia. Autographed books, fine art, furniture, and decorative objects will be excluded from the certificate requirement, according to The Los Angeles Times.

"The law was ostensibly passed to protect people from fraud. But it made little sense when applied to stores like Book Passage, which sell books that are autographed in the consumers' presence—and thus present no risk of fraud," notes Anastasia Boden, an attorney for the Pacific Legal Foundation, which had sued to stop the original law.

As I reported when that lawsuit was launched, the list of criteria for the certificates of authenticity was absurdly long. The law specified that those certificates must contain a description of the collectible and the name of the person who signed it, the purchase price and date, and an "explicit statement" of authenticity. It must also indicate how many items were signed, whether they are numbered as part of a series, and whether any more might be sold in the future. There also has to be proof that the seller is insured. And of course there has to be a certificate number provided by the State Board of Equalization. There's a separate requirement for an "identifying serial number," which, naturally, has to match the serial number of the receipt—a receipt that must be kept by the seller for no less than seven years after the transaction. Finally, the certificate of authenticity has to say whether the author provided his John Hancock in the presence of the dealer, or another witness, and include the name of the witness. (There is no requirement that the witness' first born must also sign the form.)

A single mistake or omission could cost book stores huge sums of money: up to 10 times the purchase cost, plus damages, plus court costs, plus attorneys fees, plus interest, says Boden. The law led the Easton Press—a publisher that counts novelist Neil Gaiman, pop astrophysicist Neil deGrasse Tyson, and humorist Carol Burnett among its authors—to stop shipping signed books to Califorinia stores. That decision was made to avert potential suits, but it further hurt small stores like Eureka Books in San Francisco.

The consequences for bookstores may have been unintended, but they were anything but unexpected. Reason's Brian Doherty, covering the original bill's passage in September 2016, warned that it could "if fully enforced squash, among other things, the practice of author book events." That's exactly what happened.

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'Administrative State Is THE Leading Threat to Civil Liberties of Our Era.'

Thu, 12 Oct 2017 16:30:00 -0400

"The administrative state is the leading threat to civil liberties of our era," says Philip Hamburger, the Maurice and Hilda Friedman Professor of Law at Columbia Law School and author of the recent books, Is Administrative Law Unlawful? (2015) and The Administrative Threat (2017). "We have a system of government in which our laws are made by the folks that we elect, and these laws are enforced by judges and juries in the courts, but we have within that an administrative state, a state that acts really by mere command and not through law." Hamburger argues that by reducing the role of elected officials to set policy, the administrative state, which has grown rapidly since World War II, disempowers blacks, women, and other minorities who have only recently gained full voting rights and political power. Before he left the Trump administration, former White House Chief Strategist Steve Bannon famously vowed to "deconstruct" the administrative state—the collection of bureaucrats, agencies, and unelected rule-making bodies who decrees and diktats govern more and more of our lives. And many of the president's picks at places such as the FCC, the FDA, the EPA, and the Department of Education seem to be doing just that: cutting regulations and policies that come not directly from Congress but from administrators who decide, say, that the FCC has the ability to regulate the internet as a public utility, and that so-called net neutrality is a good idea. Trump's appointee to the Supreme Court, Neil Gorsuch, is widely understood to be a critic of the administrative and some of best-known ruling challenged the validity of rules laid out by federal bureaucracies. Reason's Nick Gillespie sat down with Hamburger to discuss why the administrative state is unconstitutional, and what, if anything, can be done reduce its power. Edited by Ian Keyser. Introduction produced by Todd Krainin. Cameras by Jim Epstein and Andrew Heaton. Music "Integration Blues" by Javolenus Available at Under CC BY NC license Subscribe to our YouTube channel. Like us on Facebook. Follow us on Twitter. Subscribe to our podcast at iTunes. This is a rush transcript. Check all quotes against the audio for accuracy. Nick Gillespie: Let's start by defining administrative law in the administrative state. What does it do and where does it come from? Philip Hamburger: Administrative power can be administered many different ways. Some people use the phrase to describe all government power in executive, and that's rather too broad. It's indiscriminate. I use the phrase to describe extra-legal rulemaking and adjudication. Exercise of power to bind Americans, to control Americans, not through the pathways set out by the Constitution and acts of Congress and acts of the court, but through other edicts, typically from agencies. Gillespie: In your recent book, Is Administrative Law Unlawful, you liken the practice of administrative law to off-road driving, and you write, 'The problem examined here is thus not where the government is heading, but how it drives. To leave the roads laid out by the Constitution can be exhilarating, at least for those in the driver's seat. All the same, it is unlawful and dangerous.' So, administrative power, it's not that Congress doesn't make a law and then it gets implemented. That's not administrative power. Congress passes a law that says, 'we want clean air.' And then the EPA says, 'okay, in order to implement that law, we're coming up with all of these different aspects.' Hamburger: Right. The danger is what the agencies do. Congress certainly has power to enact all sorts of laws regulating us, and so this is not an argument against regulation. We can debate the merits of particular regulations. But rather, it's an argument against having the executive or independent agencies, or more or less, a part of executive agencies, make rules[...]

Longevity Predictor Test: How Old Are You Really?

Wed, 11 Oct 2017 16:40:00 -0400

Two as-yet unidentified life insurance companies plan to use Life Epigenetics' M-Panel test to predict how long potential clients will live. The test, based on research by the UCLA scientists Steven Horvath and Brian Chen, essentially estimates an individual's biological age (as opposed to his chronological age) using markers associated with turning various genes off or on. Horvath and Chen report that for about 5 percent of the people who take it, the M-Panel test finds that their biological age is around 10 years higher than their chronological age. For those unfortunate people, their risk of mortality is 48 percent higher than the average for their age cohort. More happily, about 20 percent of the test population learns that their biological age is 5 years younger, and their mortality risk 18 percent lower. Needless to say, this could have interesting consequences for the life insurance market. If my results indicate that my biological age is younger than my chronological age, an insurer would be happy to charge me less for a term policy. On the other (and sadly more likely) hand, if my test indicated that my biological age is greater than my chronological age, the insurer would want to charge me higher premiums. A 48 percent increase in mortality risk suggests that 55-year-old never-smokers' risk of dying in the next 10 years would rise substantially, from 74 to 110 out of 1,000 American men. That is approximately the same 10-year mortality risk 60-year-olds would have. According to TIAA's life insurance calculator, a male 55-year-old never-smoker standing 6 feet tall and weighing 180 pounds would pay $35 per month for a 20-year $100,000 term life policy. If the M-Panel test found that the would-be 55-year-old client's mortality risk is now similar to that of a 60-year-old, an insurance company using that information is likely bump his premium up to $53.00 per month. The 2008 Genetic Information Non-Discrimination Act (GINA) "protects Americans from being treated unfairly because of differences in their DNA that may affect their health." But GINA specifically excluded life insurance, disability insurance, and long-term care insurance from its requirements. When GINA was enacted there was no good general genetic tests that could accurately predict heightened risks of mortality. Now there may be. Does the advent of predictive aging tests mean that GINA's prohibitions should now be imposed on life insurers? No. Life insurance companies have long managed the problem of adverse selection by identifying groups of people more at risk than the general population and then charging them more money. For example, insurers take factors like obesity and smoking into account when setting their premiums. The TIAA calculator boosts a 55-year-old's premium to $62 per month if he is obese and $130 per month if he smokes. If insurers are not allowed to take the results of accurate epigenetic accelerated aging tests into account, purchasers whose results show greater biological aging could load up on life insurance at relatively low cost to themselves. In such cases, average premiums would have to rise in order to cover the losses incurred by higher-risk folks who are paying rates that don't reflect their actual risks. For more background see my article "Diagnosing Your Demise," in which I ask: Assuming that future genetic testing, combined with a sophisticated biochemical analysis of your past environmental insults, could accurately narrow your life expectancy down to a specific number of years, would you want to know how long you have left? My own unequivocal answer is yes.[...]

Brickbat: Move Along

Wed, 11 Oct 2017 04:00:00 -0400

(image) After Bart Riley, owner of Montana's Riley Meats, confronted a U.S. Department of Agriculture inspector about trying to force requirements on his business that were not in federal regulations, the inspector sought revenge. According to those who worked for Jeffrey Legg, he told them he wanted them to issue one compliance order per day at Riley Meats. Riley filed an official complaint about his treatment, and after more than two years, the USDA upheld six of his complaints and found another eight, according to a local newspaper, "partially confirmed or possibly true." But the agency took no action against Legg.

California Enacts Likely Ineffective Drug Price Transparency Law

Tue, 10 Oct 2017 13:30:00 -0400

California Gov. Jerry Brown signed legislation yesterday that would require pharmaceutical companies to justify and give a 60-day notice for price increases. The regulations will apply to any increases of more than 16 percent in any two-year period for a drug whose wholesale price is more than $40 for a 30-day supply. Insurers also must file annual reports explaining how drug costs affect their health-care premiums. The new law was a response to recent double-digit price increases for many medicines. For example, branded drugs prices rose an average of 15 percent in 2015; specialty drugs were up almost 10 percent; and even generics increased their average price by nearly 5 percent. And then there was the public outrage over Martin Shkreli's 4,000 percent increase in the price of the 62-year-old anti-fungal Daraprim and Mylan's 400 percent increase in the price of a two-pack of EpiPens. The pharmaceutical industry is not happy about the new law. Gary Andres of the Biotechnology Innovation Organization issued a statement declaring, "Despite its intent, this law will neither provide meaningful information to patients nor lower prescription drug costs." Andres added, "By ignoring the realities of biopharmaceutical development, [the new law] will delay or prevent future biopharmaceutical innovation by driving investment toward other industry sectors that are not burdened with this type of misguided government intrusion." So why are drug prices going up so steeply? The main reasons are rising research and regulatory costs, according to the Tufts Center for the Study of Drug Development. The Tufts group estimated in 2016 that the out-of-pocket costs for each new approved drug is now $1.4 billion. Taking the costs of the regulatory process into account raises the average cost for a new drug to $2.9 billion. Obviously, drug companies have to earn back enough to cover their costs for both unsuccessful and approved drugs. (Naturally, not everyone agrees with the Tufts calculations.) Now California is demanding that drug companies provide just the sort of information about their research, manufacturing, and marketing costs that the Tufts researchers report. But here's the problem: Prices are not set on the basis of costs. As I have explained before, "Drug companies are in the business of making money by selling medicines to sick people and they, just like any other businesses, set their prices based on what the market will bear." Perhaps California's new cost information requirements will somehow shame drug companies into keeping their prices lower, but I wouldn't count on it. What will really keep drug (and other) prices lower? Competition. Fortunately, the Food and Drug Administration, under new leader Scott Gottlieb, appears to moving in the direction of faster approvals of generics. While we're at it, speeding up the regulatory process for approving new drugs will help. In addition, since 20-year patent monopolies are enough time for pharmaceutical companies to profit from their discoveries, policy makers should figure out how to stop them from playing games with the patent system as a way to forestall competition from generic drugmakers.[...]

EPA Will Reportedly Revoke Obama's Clean Power Plan

Fri, 06 Oct 2017 09:50:00 -0400

The Environmental Protection Agency reportedly plans to repeal and replace the Clean Power Plan (CPP). No doubt that sounds like a big deal: The CPP, an Obama-era initiative to cut the electric power industry's carbon dioxide emissions to 32 percent below their 2005 levels by 2030, sits at the center of the Obama administration's effort to fulfill its pledges under the Paris Agreement on climate change. It sounds like a big deal, but it probably isn't. With or without the CPP, a different force may be pushing the power sector to reduce emissions by nearly that much: low natural gas prices. Here's the background. In 2007, the Supreme Court ruled that the Environmental Protections Agency (EPA) has the authority to regulate carbon dioxide and other greenhouse gases under the Clean Air Act. The Obama EPA then issued a finding that current and projected "concentrations of greenhouse gases in the atmosphere threaten the public health and welfare of current and future generations." The CPP restrictions were promoted as a way to mitigate these harms. In an unprecedented move, the U.S. Supreme Court issued in February 2016 a stay halting implementation of the CPP until lower courts had resolved the lawsuits filed by 27 states opposing the regulation. Now EPA chief Scott Pruitt has reportedly decided not to try to overturn the endangerment finding, and is instead launching a rulemaking process that aims to replace the CPP with less onerous requirements. The Obama administration estimated that the CPP would yield $34 billion in annual climate and air pollution benefits at a cost of only $9 billion a year. In contrast, a NERA Economic Consulting study, commissioned by various industry groups, calculated that annual CPP compliance costs would average between $41 and $73 billion a year, swamping the negligible climate benefits of reducing future global warming by 0.02° Celsius. That's quite a difference, but as we know, partisans can get an econometric model to say whatever they want it to say. But it may be beside the point. A 2016 analysis by the Congressional Budget Office compared the EPA's estimates with various other projections. M.J. Bradley & Associates, for example, calculated that even without the CPP, power sector emissions would drop by as much as 26 percent below 2005 levels, assuming that renewable energy subsidies remained in place. A new report from the International Energy Agency suggests that such subsidies aren't actually necessary, since the costs of renewable energy generation are falling so rapidly that they can out-compete conventional power production. And in a study this year for The Energy Journal, researchers at Stanford and Purdue concluded that if low natural gas prices persist, carbon dioxide emissions in the power sector would fall 26 percent below their 2005 levels by 2030, even without the CPP. In other words, the fate of the Obama plan may be largely irrelevant to the trajectory of carbon dioxide emissions in power sector. If so, the coming fight over the CPP will probably feature more symbolic posturing than substance.[...]

'Blatantly Irrational' Ban on Selling Home-Baked Goods in Wisconsin Must Stop

Thu, 05 Oct 2017 17:50:00 -0400

(image) Wisconsin's ban on selling home-baked goods is unconstitutional, with "no real or substantial connection" to consumer protection (and a lot to do with protectionism pushed for by groups like the Wisconsin Bakers Association).

That's what a Wisconsin circuit court ruled in May, anyway. Despite that, the state continued to target small-scale entrepreneurs selling baked goods made in their homes.

According to the state attorney-general's office, Judge Duane Jorgenson's ruling only applied to the three women who had challenged the baked-good rules in court: Dela Ends, Lisa Kivirist, and Kris Marion, all farmers and bakers who wanted the right sell homemade goods directly to consumers. They filed a lawsuit last year with help from the nonprofit Institute for Justice (IJ).

Today, Jorgenson issued an opinion clarifying that no, the ruling was not limited to letting Ends, Kivirist, and Marion peddle home-baked foods, but applied to all entrepreneurs like them in the state.

"This is more than a win for us home-based bakers," said Kivirist, "it's recognition that all small businesses have the right to earn an honest living free from irrational government regulation."

Wisconsin is one of only two places with state-wide rules banning homemade baked-good sales. (The other is New Jersey.) "Before a person could sell even one cookie [legally], they needed to acquire an expensive commercial kitchen and a burdensome commercial license," said Erica Smith, IJ's lead attorney on the case.

Nonprofit groups were permitted to sell homemade baked goods at public events up to 12 days a year, however—a paradox IJ calls "blatantly irrational."

Breaking the regulations could mean a year in jail and a $10,000 fine.

The latest ruling from Judge Jorgenson "is a major step for economic liberty and common sense in Wisconsin," said Smith. "Now, Wisconsin home bakers are free to sell their baked goods out of their home, at community events and at farmers' markets—something people are already doing in almost every other state every day."

Energy Secretary Rick Perry Orders Regulators to Figure Out How to Keep Renewables from Crashing the Electric Power Grid

Mon, 02 Oct 2017 10:40:00 -0400

Adding solar and wind power to the electricity grid poses both technical and financial challenges. Specifically, what alternative supplies of electricity will come online when the wind falters and the sun is down, and how will those sources of energy be paid for? Energy Secretary Rick Perry is asking the Federal Energy Regulatory Commission (FERC) to address those issues in the next 60 days. Electricity produced from subsidized wind and solar power generally gets purchased first, since it is cheaper than supplies from conventional coal, gas, and nuclear power plants. Wind power has been so abundant in some markets that at times the generators paid people to take their electricity, since they still make a profit from their subsidies. How can conventional generators compete against not just free power, but power that consumers are being paid to take? The result: As more subsidized renewable power has been added to electricity markets, along with power produced by burning cheap fracked natural gas, conventional power plants have been unable to pay for themselves and are increasingly being shuttered. Good riddance to fossil-fuel and nuclear dinosaurs, right? Not so fast. Renewable power is highly variable, so back-up generation is needed to ensure that power still gets to consumers. As conventional power plants close down, there is less capacity available to cover renewable power shortfalls. This could produce power outages and price spikes. In his letter, Perry asks FERC to "issue rules to protect the American people from the threat of energy outages that could result from the loss of traditional baseload capacity." The upshot is that FERC is now supposed to figure out a way to pay the owners of nuclear and coal power plants to keep them available to generate power when renewable supplies prove inadequate. In other words, electric power rates to consumers will go up in order to make capacity payments to the owners of mostly idle conventional power plants. Proponents of renewable power generally fail to include these costs in their rosy calculations. Graham Richard, head of the clean energy business lobbying group Advanced Energy Economy, calls the secretary's proposal a "Perry energy tax." He argues that the rule "would impose additional costs on consumers, lock in old technologies, and do nothing to make the electric power system more reliable or more resilient." "Nuclear and coal units have been rendered wasteful and inefficient because developments in energy markets—low-cost and flexible renewables, flatlining power demand and inexpensive natural gas—have made them too costly and obsolete," claims Tyson Slocum, director of the activist group Public Citizen's Energy Program. "It is an abomination for the U.S. Department of demand that consumers now pay to keep these nuclear and coal power plants operating for some phantom, purported 'resilience' benefit." Not surprisingly, conventional power generators see more merit in the initiative. "We welcome Secretary Perry's bold, decisive and proactive request for swift FERC reforms to address the threat to U.S. electric grid resiliency from premature retirements of fuel-secure traditional baseload resources, such as nuclear energy," says a press release from the U.S. Nuclear Infrastructure Council. Environmental Progress, the pro-nuclear climate activist group, took this angle: "The Trump administration can't say it, but Environmental Progress can: the rule could be a huge win for the climate." Why? Because nuclear power plants generate carbon-free electricity and capacity payments would help prevent them from being shut down. Governments have been meddling in electric power markets ever since there have been electric power markets. "Nearly every aspect of electricity is now heavily regulated by[...]

D.C. Threatens to Punish Manufacturers for Failing 'Flushability' Standards It Won't Define

Wed, 20 Sep 2017 11:25:00 -0400

To flush or not to flush? The Kimberly-Clark Corporation is suing D.C. over the question, after a law the city passed last year tried to keep the company from labeling its disposable wipes "flushable." The whole matter might seem a little silly for those outside the septic or paper product industries. But it provides a perfect case study in arbitrary regulation and government incompetence. Under the Nonwoven Disposable Products Act of 2016, passed last December, disposable paper products such as cleansing wipes are forbidden from being labeled as flushable "unless there is competent and reliable scientific evidence to substantiate that the non-woven disposable product is flushable sewer safe, and septic safe." Products that don't meet this standard must be labeled with "Do Not Flush." Come January 1, 2018, manufacturers of everything from facial tissues to paper towels could face civic penalties and fines for failure to meet the new labeling requirements. Yet the city has offered no guidance on what counts as "competent and reliable scientific evidence" of flushability, nor information on how the city will test suspicious paper products. And repeated requests by Kimberly-Clark for more information went unanswered. At hearings about the rule, experts for the city suggested that no disposable cleansing wipe currently on the market was fit to be flushed, and that even some toilet paper wasn't flushable. This puts companies like Kimberly-Clark—a major manufacturer of personal care products (including several lines of cleansing wipes that can supposedly be flushed without clogging toilets and pipes)—in a bind. They have no way to determine how to ensure their products will meet D.C.'s standard. But if they fail to follow these unknowable rules, D.C. can punish them. In a lawsuit filed September 15 in the U.S. District Court for the District of Columbia, Kimberly-Clark contends that the law is unconstitutional for a host of reasons, including its failure to set clear standards for avoiding sanctions. The suit also argues that D.C. is violating Kimberly-Clark's First Amendment rights by forcing the company to make untrue statements about its products and that it impermissably seeks to hold Kimberly-Clark "vicariously liable for the actions of others, namely the unaffiliated businesses that buy Kimberly-Clark's flushable wipes elsewhere in the United States and then—lawfully—choose to resell them to local consumers." And then there is the question of the Constitution's Commerce Clause, which grants Congress the power to regulate interstate commerce. Kimberly-Clark products are made in South Carolina, where labeling the wipes as flushable is legal. Thus, the suit argues, D.C.'s flushable-product policy "invalidly seeks to regulate the conduct of manufacturers in other states by imposing civil sanctions on conduct that is entirely lawful" there. Meanwhile, the act entirely fails to regulate any local activity: It remains lawful under the Act for retailers to buy wipes labeled as flushable and to resell those products to consumers in D.C., regardless of whether that labeling is deemed consistent with the Act. Likewise, it remains lawful for D.C. consumers to purchase and use those very same products, no matter how they are labeled. But it is the manufacturers who exclusively bear liability for this activity, as the only thing regulated by the Act is non-local manufacturing and labeling activity. Thus, whether construed as a per se invalid regulation of out-of-state commercial conduct or as a regulation that inordinately burdens interstate commerce, the Act violates the Commerce Clause. According to a company statement, Kimberly-Clark wipes "are engineered to rapidly lose strength as soon as they are flushed" and "meet or excee[...]

Will Consumer Privacy Initiatives Slow the Internet Economy?

Fri, 15 Sep 2017 00:01:00 -0400

As the legislative session ends, California political junkies will soon turn their attention to the slate of initiatives making their way to the November 2018 ballot. One of the more significant proposed statewide measures is the California Consumer Privacy Act of 2018, which would give consumers the "right" to know what information businesses collect and to stop them from using it for commercial purposes. The initiative promises consumers "control" over the personal information businesses glean from "tracking and collection devices"—and seeks to restore privacy rights at a time of "accelerating encroachment on personal freedom and security." It would apply to all businesses, ranging from internet service providers to websites to cellphone companies. The proposal has sparked concern in tech-friendly California, given that it could impose significant costs on everything from small-time websites to major internet players such as Facebook, Google and Amazon. If the measure qualifies for the ballot and is approved by voters, it would apply not only to California-based internet companies, but to any entity that does business in the state. So, it could have national reverberations. "Forcing companies to allow consumers to opt out of tracking, and not allowing those companies to charge more or deny service to consumers who do opt out, would be burdensome for websites and application developers, and would significantly hurt the advertising industry since it would decrease the amount of targeted advertising they can do," said Tom Struble, tech policy manager at the R Street Institute in Washington, D.C. The initiative would provide consumers with four new "rights" that would be inserted into the state Constitution. First, consumers would have the right to learn about the categories of personal information that any business has collected from them. Second, consumers would have the right to know how that specific personal information is being used—i.e., whether it has been sold or shared for marketing or advertising purposes. Third, consumers would have the right to "direct a business" not to sell or share that information. Finally, the initiative grants consumers the right to "equal service or price," which means the business would be forbidden from charging different prices or limiting services if a consumer directs a business not to use the information. Companies would be required to honor a consumer's information request within 30 days and provide it at no charge. The initiative requires companies to set up a toll-free telephone number and website by which consumers could make a "verifiable" request. The initiative's backers argue that consumers "are in a position of relative dependence on businesses" that collect this information and that it is difficult for them "to monitor business operations or prevent companies from using your personal information for the companies' financial benefit." Critics, however, argue that the measure doesn't make necessary distinctions. Unlike a bill now in the California legislature, it doesn't distinguish between, say, internet service providers that operate essentially like paid utilities and businesses that offer access to their websites and are paid based on advertising fees. It also does nothing about a potentially greater threat to privacy—collection of data by state and local governments. The issue has gotten more attention since April, when President Donald Trump signed a law that repealed some Obama-era Federal Communications Commission rules. The rules would have required internet service providers to get permission before using a customer's information, such as their browsing history, to create targeted online advertisements. The California Legislature is no[...]

How Obama's EPA Nearly Bankrupted John Duarte's Farm

Thu, 14 Sep 2017 13:05:00 -0400

EPA Chief Scott Pruitt has set out to transform the agency he leads to a greater extent than any of Trump's other cabinet appointees, pledging to end what he dubbed the agency's "anti-energy agenda" by loosening requirements on carbon emissions and eliminating land use restrictions. In his first speech to EPA employees, Pruitt laid out his goal of returning the agency to its core focus of protecting the environment while following what he called "the letter of the law." "I believe that we as an agency, and we as a nation, can be both pro-energy and jobs and pro-environment," Pruitt told his staff. Environmentalists vehemently opposed Pruitt's appointment, depicting him as a climate change denier determined to undermine the EPA's core mission of protecting the environment. One of Pruitt's first targets is a controversial rule on water pollution put in place by the Obama administration that he deemed a "power grab" by environmental regulators. To better understand why property rights advocates applauded the move, consider the case of fourth-generation farmer John Duarte, who has fought a protracted and costly legal battle with federal regulators over how to till his 450-acre farm in Tehama County, California. In 2012, the Army Corps of Engineers, working in conjunction with the EPA, accused Duarte of damaging wetland features on his property. He was hit with $30 million in fines and restoration fees. Duarte's troubles stemmed from a 2015 provision in the Clean Water Act known as the Waters of the United States rule that was meant to better protect large bodies of water by regulating use of the streams, ponds, and ditches that flow into them. The EPA has used this provision to micromanage private land use. The agency accused Duarte of mismanaging the wetland areas located on his property, claiming that his four-inch plow furrows created small mountain ranges. They contend Duarte should have obtained a permit before tilling his own land. "The average time to obtain a Clean Water Act permit is close to two years, and the average cost just to hire the consultants and do the studies to get permits approaches a quarter of a million dollars," says Anthony François, a lawyer with the Pacific Legal Foundation who represented Duarte in his case against the government. "Clearly if you had to undertake that kind of cost and time just to get the necessary permit to plow your fields every year you're not going to grow a lot of food." In 2016, attorneys general from 31 states (including Pruitt) challenged the Obama administration's overreach on the Clean Water Act. The case is still active in federal court. University of Virginia Law Professor Jason Scott Johnston, who is also an adjunct scholar at the libertarian CATO Institute, believes it's likely the Supreme Court would strike down the 2015 water regulation. He says that the Obama administration expanded the definition of wetlands beyond the parameters set by the Court in the 2007 Rapanos v. United States decision. "The broad trend of environmental regulation during the Obama administration was to use the coercive threat or reality of regulation simply to try to shut down entire industries and entire types of economic activity," says Johnston. "They have promulgated a definition of wetlands which clearly contradicts what the Supreme Court said." In February, President Donald Trump signed an executive order instructing the EPA to repeal the Waters of the United States rule, but getting the regulation off the books could take several years and be delayed by legal challenges from environmental groups. Meanwhile, Duarte settled his case in August for $1.1 million to avoid paying a significantly larger fine. He hopes Pruitt's focus on regu[...]

Nevada's Legislative Counsel Says Marijuana Lounges Are Already Legal

Thu, 14 Sep 2017 12:30:00 -0400

The owner of Essence Cannabis Dispensary, a pot shop on the Las Vegas Strip, complains that there's "no other industry in the world" where "you can you buy a product and then not use it anywhere." A solution to that problem may be closer than commonly thought. According to a recent opinion from Nevada's Legislative Counsel Bureau (LCB), it is already legal for businesses to allow cannabis consumption, as long as they do not also sell it. Question 2, the legalization initiative that Nevada voters approved last November, makes it a misdemeanor, punishable by a $600 fine, to consume marijuana in a store that sells it or in any "public place," defined as "an area to which the public is invited or in which the public is permitted regardless of age." According to the Las Vegas Police Department, that means "marijuana consumption is only allowed at private residences" and "can never be consumed inside a business." But the definition of "public place" is ambiguous and can be read to allow cannabis consumption in businesses that exclude people younger than 21, the state's minimum marijuana purchase and possession age. That is how Nevada Legislative Counsel Brenda Erdoes interprets the law. "It is the opinion of this office that a business may establish and operate a lounge or other facility or special event at which patrons of the business are allowed to use marijuana," Erdoes says in a letter she sent state Sen. Tick Segerblom (D-Las Vegas) on Sunday. Her reasoning hinges on the definition of "public place": This language would not prohibit the possession or use of marijuana at a place to which the public is not invited or permitted, including a person's home or a lounge or other facility with restricted access, such as a private lounge or other facility, which is closed to the public and only allows entry to persons who are 21 years of age or older, so long as the possession or consumption of marijuana at such a location is not exposed to public view. Similarly, possession or consumption of marijuana would not be prohibited at an event which imposes restrictions for entry on the basis of age so long as the possession or consumption of marijuana is not exposed to public view during the event. However, while a retail marijuana store would fall into this category of businesses which impose restrictions for entry on the basis of age, consumption of marijuana within a retail marijuana store is specifically prohibited. Erdoes adds that pot-friendly businesses would be subject to local regulation. "This basically says local governments can license these businesses if they want to," Segerblom told the Las Vegas Sun. Clark County, which includes Las Vegas, could exercise that option soon. The Clark County Commissioners plan to discuss the issue at a meeting next week. "I do feel it is very important for the people who are coming from out of town, the tourists, which are a big contributor to the industry's business, I'm told, to have a place where they can legally and safely consume the product," Steve Sisolak, who chairs the board of county commissioners, told the Las Vegas Review-Journal. Nevada dispensaries have been serving recreational consumers, many of them tourists, since the beginning of July. Gov. Brian Sandoval, who warns that marijuana lounges could invite a federal crackdown, is not pleased. "I think it's way too early to be doing something like that," Sandoval told the Review-Journal. "I think it's important that we continue to see how the sale of recreational marijuana evolves." The governor thinks Erdoes is wrong about what current law allows. "I do not agree with the LCB opinion and believe that statutory authority is necessary to establish lo[...]