Topic: Regulatory Studies

Net Neutrality — or Destroying Internet Innovation and Investment?

The Sunlight Foundation reports that the Federal Communications Commission has received more than 800,000 public comments on the topic of “net neutrality,” more than 60 percent of them form letters written by organized campaigns and more than 200 from law firms on behalf of themselves or their clients. That’s an impressive outpouring of public comments. 

But Berin Szoka, a long-ago Cato intern who now runs TechFreedom, argues, “This debate is no longer about net neutrality. A radical fringe has hijacked the conversation in an attempt to undo two decades of bipartisan consensus against heavy-handed government control of the Internet.” TechFreedom has just launched DontBreakThe.Net, a web-based campaign to expose the danger facing the internet from well-meaning demands for something called “net neutrality.” In an open letter to FCC chairman Tom Wheeler, Szoka says:

Subjecting broadband to Title II of the 1996 Telecom Act would trigger endless litigation, cripple investment, slow broadband deployment and upgrades, and thus harm underserved communities. Al Gore may not have exactly ‘invented the Internet,’ but President Clinton’s FCC chairman Bill Kennard deserves much credit for choosing not to embroil the Internet in what he called the ‘morass’ of Title II. Kennard’s approach of ‘vigilant restraint’ unleashed over $1 trillion in private investment, which built the broadband networks everyone takes for granted today. Abandoning that approach would truly break the Internet.

Net Neutrality supporters such as Google, Facebook, and the NAACP haven’t jumped on the Title II bandwagon because they understand that Title II would threaten the entire Internet. Title II proponents claim the FCC can simply ‘reclassify’ broadband, but in truth, there’s no such thing as reclassification, only re-interpretation of the key definitions of the 1996 Telecom Act. If the FCC re-opens that Pandora’s Box, the bright line Chairman Kennard drew between Title II and the Internet will disappear forever. Startups and edge/content providers will inevitably be caught in the fray. And besides, the FCC has a long history of overstepping its bounds.

Invoking Title II would trigger years of litigation. It’s not clear the FCC could ultimately ‘reclassify’ broadband at all, and even less clear the FCC could, or actually would, follow through on talk of paring back Title II’s most burdensome rules, like retail price controls. Even if ‘reclassification’ stood up in court, the FCC still couldn’t do what net neutrality hardliners want: banning prioritization. The FCC would succeed only in creating a dark cloud of legal uncertainty. That would slow broadband upgrades and discourage new entrants, such as Google Fiber, from entering the market at all.

The best policy would be to maintain the ‘Hands off the Net’ approach that has otherwise prevailed for 20 years. Innovation could thrive, and regulators could still keep a watchful eye, intervening only where there is clear evidence of actual harm, not just abstract fears. As former FCC Chairman Bill Kennard put it, ‘I don’t want to dump the whole morass of Title II regulation on the cable pipe.’ If we want to maintain a free and open Internet, and encourage broadband competition, the FCC would do well to heed his advice.

TechFreedom created this catchy graphic for its campaign to encourage more people to understand what’s at stake in the so-called “net neutrality” fight.

Don't Break the Net 

Gov. Quinn Vetoes Rideshare Bill

Earlier this week, Illinois Gov. Pat Quinn (D) vetoed HB 4075, a ridesharing bill backed by Illinois’ taxi industry that was overwhelmingly passed by the state House and Senate earlier this year. If the bill had been signed into law, Illinois drivers using ridesharing services for more than 18 hours a week would have had to adhere to burdensome regulations such as a requirement for a chauffeur’s license. The bill would also have created a new legal category (“commercial ridesharing agreements”) and required rideshare companies to provide its drivers with the commercial liability insurance used for taxis. Quinn should be praised for vetoing the bill. However, given the bill’s popularity among state legislators, there is a chance of an override of the veto.

The Illinois House passed HB 4075 in April by 80 votes to 26. In May, the Illinois Senate passed the bill by 46 to 8. In order to override a veto, 36 votes are needed in the Senate and 71 are needed in the House.

A few weeks after the Illinois Senate passed HB 4075, the Chicago City Council approved a rideshare ordinance, which goes into effect next week. The ordinance is far from perfect. For instance, it requires that all drivers using a rideshare company’s technology to have a chauffeur’s license if the driver workforce of that company averages more than 20 hours per week per driver. The ordinance also requires that rideshare companies whose drivers operate fewer than 20 hours per week on average have their vehicle inspections and background checks approved by the city. However, the ordinance is less restrictive than HB 4075 and its trailer bill HB 5331, which Quinn also vetoed. 

In his veto letter, Quinn rightly points out that it would be “premature—and perhaps counterproductive” to impose a statewide ridesharing regulatory structure on Illinois when the Chicago ordinance has yet to come into effect and that there is not enough evidence to judge the effectiveness of ridesharing ordinances.

However, it should be remembered that the ordinance in Chicago increases the number of regulations. While free marketers may be tempted to welcome legislation that allows ridesharing companies to operate, it is worth keeping in mind that as local lawmakers across the country try to regulate rideshare companies, there is a risk of regulatory capture and, as the Competitive Enterprise Institute’s Marc Scribner has warned, a risk of ridesharing companies eventually using legislation to their advantage to stifle competition as technology continues to advance.  

 

The Unintended Consequences of Environmental Policy: For the Birds

So, here is a story to make your blood boil. According to National Review, “the federal government acted with a bias, giving renewable-energy companies a pass on unlawful bird deaths while rigorously prosecuting traditional energy companies for the same infractions.” The NR article follows a string of recent stories complaining about tens of thousands of birds cut up to pieces or fried in the sky by windmills and solar plants.

Speaking of birds…

Five decades ago, Rachel Carson, of Silent Spring infamy, helped to ban a pesticide called DDT. Back then, DDT was widely used not only in agriculture, but also in malaria control. Carson argued, among other things, that the use of DDT endangered bird populations. The political left jumped on Carson’s arguments. After a massive campaign, DDT was withdrawn from agriculture and its use in malaria control was greatly restricted. Most countries followed the American example and banned DDT for use in agriculture.

Although developing countries could technically use DDT for disease control, no donor agencies (dominated by western leftists) would support its use. This amounted to a de facto ban of DDT in malaria control. Nobody knows for sure, but thousands of Africans, perhaps millions, have died of malaria since the use of DDT was prematurely discontinued, all because of a hysterical drive to save the birds in the West.

Today, tens of thousands of birds are dying to satisfy the newest progressive fetish: the drive for renewable energy. At least they are dying in an environmentally friendly way.

As the left likes to say, you cannot make an omelet without breaking some eggs!

New Front Opening in Core War

Reports are out this morning that Louisiana will be challenging in court federal coercion behind the Common Core standards. If so, it will open a new front in the war against the Core, a standardization effort that has been listing badly in public opinion, but nonetheless survives in the vast majority of states. That could very well change should the force of Race to the Top funding or, more importantly today, waivers from the No Child Left Behind Act, be eliminated by the courts, as Core supporters likely knew when they asked for federal pressure.

Does this suit have a chance of success? I’m not a lawyer – though I’ll be consulting a few! – so this is not the best-informed legal analysis. From what I do know, though, the chances of prevailing are middling, at best. The courts in the past have been pretty lenient in cases in which Washington gets states to do its bidding in exchange for funding when the feds don’t have authority in the Constitution to do something. And the Louisiana suit hinges largely on federal action that seems very intentionally to push the Core – standards “common to a majority of states” under RTTT, and only one other standards option to get a waiver – but that doesn’t state outright that the Core must be adopted. That way the feds can say they aren’t prescribing a specific “program of instruction,” which would clearly violate the letter of several education laws, while in reality very much requiring such a program.

Sadly, one major diversion likely to be employed by Core opponents to battle this suit is impugning Governor Bobby Jindal’s motives. Since Jindal first reversed course on the Core, supporters of the standards have said his stance is all about presidential aspirations and not about what’s best for kids. Those may well be his motives, I don’t know. But as with all aspects of the Core debate, we should focus on the merits of the arguments being employed, not the motives for offering them. (This goes for opponents who attack people like Bill Gates, too.) We should look at the merits of the lawsuit, which requires an honest assessment of both the Constitution and federal education statutes, just as we should look at the research on national standards, the content of the Core, and the reality of how so many states adopted standards that are now heavily disliked.

Do those things, and I think the Core loses hands down. Ignore them completely, and everyone loses.

The Threat of Poorly Performing Vacuum Cleaners

I don’t follow domestic regulation as closely as many people at Cato, but I keep an eye on it in relation to “regulatory trade barriers” that are being addressed in trade negotiations. In that context, I came accross this EU attempt to crack down on high-wattage vacuum cleaners:

Consumers are being urged to buy powerful vacuum cleaners while they can after it emerged that some of the most powerful models on the market will disappear in September when a new EU rule comes into force.

An EU energy label, to be introduced from 1 September, means manufacturers will not be able to make or import vacuum cleaners with a motor that exceeds 1,600 watts.

European commission spokeswoman for energy Marlene Holzner said in a blog: “As a result of the new EU eco-design and labelling regulations, consumers will also get better vacuum cleaners. In the past, there was no legislation on vacuum cleaners and companies could sell poorly performing vacuum cleaners.”

Oh, the humanity! Companies might sell “poorly performing vacuum cleaners” to an unsuspecting public! And only legislation can save the day!

Or – and I know this might sound crazy to some people – we could just rely on consumers to evaluate the vacuum cleaners, buying the better ones and leaving the “poorly peforming” ones on the shelf.

What If We Applied the IRS’s Reasoning in Halbig & King to the Patriot Act or RFRA, Instead of the ACA?

Over at Darwin’s Fool, I posted a critique of the Fourth Circuit’s opinion in King v. Burwell. Unlike the D.C. Circuit’s ruling in Halbig v. Burwell, the Fourth Circuit held that the IRS has the authority to issue subsidies in states with federal exchanges, despite the fact that the Patient Protection and Affordable Care Act repeatedly says subsidy recipients must enroll in coverage “through an Exchange established by the State.” I reproduce here my response to a commenter to that post, as his argument parallels those of many others who have been critical of these cases.

My commenter objected that a plain-text reading “must include the entire text of the bill,” which “makes clear that the goal of the bill was to provide health care to all Americans who needed it and could not, at that time get it.” Moreover, “It would be illogical for Congress to establish a national health care system that is based on subsidies and then not include those subsidies in all aspects,” thus “it is entirely reasonable to interpret that one sentence to mean that Congress intended the subsidies for all participants.” My reply:

Sir, I’m afraid you have things exactly backward.

The overall context of the PPACA presents no difficulty for the plaintiffs in King v. Burwell, Halbig v. Burwell, or the other cases challenging subsidies in federal exchanges. The text of the eligibility rules for those subsidies clearly and repeatedly limit eligibility to those who enroll in coverage “through an Exchange established by the State.” There is nothing in the broader context of the statute to suggest that Congress understood the words “established by the State” to have any meaning other than their usual meaning. There isn’t even any statutory language that conflicts with that plain meaning. Jonathan Adler and I addressed (almost) all of these supposed anomalies here.

On the contrary, it is the Obama administration and its supporters for whom both the text and context present difficulties. (We can no longer call them supporters of the PPACA, given how adamantly opposed they are to implementing the law as Congress intended.) The subsidy-eligibility rules are the only place where Congress spoke directly to the question at issue. Those rules flatly contradict the administration’s position. Congress did not throw the phrase “established by the State” around loosely. They referred to exchanges “established by the State” when they meant exchanges established by the states. They referred generically to “an Exchange” when they meant either a state-established or a federal exchange. And they referred to state-established and federally established exchanges separately within a single provision, which shows they saw a difference between the two. Congress also did the exact same thing – withholding subsidies from residents of uncooperative states – in the PPACA’s other massive new entitlement program, the Medicaid expansion.<--break->

IPAB Case Coons v. Geithner Dismissed, for Now

Jonathan Adler has a summary at the Volokh Conspiracy.

The Patient Protection and Affordable Care Act’s Independent Payment Advisory Board has been called a “death panel,” though I’ve argued one could just as legitimately call it a “life panel.” Either way, it is the most absurdly unconstitutional part of the PPACA.

Adler’s otherwise excellent summary neglects to mention IPAB’s most unconstitutional feature. Diane Cohen and I describe it here:

The Act requires the Secretary of Health and Human Services to implement [IPAB’s] legislative proposals without regard for congressional or presidential approval. Congress may only stop IPAB from issuing self-executing legislative proposals if three-fifths of all sworn members of Congress pass a joint resolution to dissolve IPAB during a short window in 2017. Even then, IPAB’s enabling statute dictates the terms of its own repeal, and it continues to grant IPAB the power to legislate for six months after Congress repeals it. If Congress fails to repeal IPAB through this process, then Congress can never again alter or reject IPAB’s proposals…

Congress may amend or reject IPAB proposals, subject to stringent limitations, but only from 2015 through 2019. If Congress fails to repeal IPAB in 2017, then after 2019, IPAB may legislate without any congressional interference.

Like I said, absurdly unconstitutional. But that’s ObamaCare for you.