Topic: Regulatory Studies

Uber and Lyft Told To Halt Operations in Pittsburgh

Yesterday ride-sharing app operators Uber and Lyft were issued cease and desist orders in Pittsburgh. The orders were granted by two judges, who were reportedly convinced by the Pennsylvania Public Utility Commission’s Bureau of Investigation and Enforcement that the two companies are a threat to public safety. The orders state that Uber and Lyft cannot operate in Pittsburgh without the Pennsylvania Public Utility Commission’s approval.

The orders come less than a month after the Virginia Department of Motor Vehicles issued Uber and Lyft cease and desist orders, saying that the companies are violating state law. Uber and Lyft have both continued to operate in Virginia despite the orders.

The Pennsylvania Public Utility Commission’s three major concerns regarding Uber and Lyft relate to background checks for drivers who use the app, vehicle inspections, and insurance. However, both companies already carry out strict background checks, have means by which to drop drivers with unsatisfactory vehicles, and have insurance schemes in place.

Drivers who want to use the Uber and Lyft apps to rideshare must pass background checksUber will not allow drivers to use its service if there are any DUI or drug offenses in the driver applicant’s record in the last seven years (although California requires no DUIs in the last 10 years). Lyft will not let any driver use its service if the applicant has any DUI or drug offenses at all. The background checks used by Uber and Lyft also screen for violent and sexual offenses.

Lyft carries out an in-person inspection of vehicles before drivers can use their service. Uber’s vehicle inspection is less rigorous. According to reporting from earlier this year on San Francisco drivers using UberX (Uber’s ridesharing service), Uber does not do in-person inspections of vehicles and only requires drivers to send in photos of their cars. Under legislation passed last month in Colorado, which were praised by Uber and Lyft, rideshare vehicles must be inspected.

The New Yorker Maps NYC’s Shadow Transit System

In a recent article for The New Yorker, Aaron Reiss explores New York City’s shadow transportation system – a network of so-called “dollar vans” that serve mostly low- income areas with large immigrant communities. The system lacks “service maps, posted timetables, and official stations or stops,” but Ross uses interactive maps and videos made with Nate Lavey to detail routes in Chinatown, Flatbush, Eastern Queens, Eastern New Jersey, and the Bronx.

Not too surprisingly, this ingenious shadow system faces serious regulatory obstacles. Vans have had a long and tumultuous regulatory history, with oversight changing hands several times in the past thirty or so years and the largely immigrant drivers facing police harassment. Since 1994, the New York City Taxi and Limousine Commission has been issuing van licenses, allowing vehicles to serve parts of the city with sufficient public need. Still, the number of illegal, unlicensed vans continues to outstrip by far the 481 licensed ones. The licensed vans operate under highly restrictive rules, which forbid them from picking up along New York City’s innumerable bus routes and require all pick-ups to be prearranged and documented in a passenger manifest.

In August last year Sean Malone of the Charles Koch Institute spoke to Reason TV about a film he had made featuring a Jamaican immigrant, Hector Ricketts, who faced regulatory hurdles after starting a commuter van service that transported healthcare workers to New York City’s outer boroughs. Thankfully, with the help of the Institute for Justice, Ricketts was allowed to stay in business.

Reiss’s article and Malone’s film both highlight the perversities of regulations that shield traditional public transit from competition in a free market. You might think that policymakers concerned with improving opportunities in low-income areas would want to celebrate and encourage the entrepreneurial initiative and community service represented by “dollar vans” and the service run by Hector Ricketts. Instead, they choose to chase such enterprising service providers into the legal shadows.

Court Tosses D.C. Tour Guide Licensing Scheme

Since there isn’t any other legal news this or next week, the U.S. Court of Appeals for the D.C. Circuit today decided to strike down D.C.’s absurd licensing regulations regarding Uber food trucks raw milk guns campaign finance tour guides. Believe it or not, until today District law required people to pay the government $200 and pass a 100-question test on 14 subjects, covering material from no less than eight different publications, before they can give city tours—all for the purpose of “protecting” tourists from misinformation. If you didn’t comply, you faced a fine and 90 days in jail.

I previously wrote about this case when Cato filed a brief last fall, so I’ll just provide some key excerpts from the court opinion (written by Judge Janice Rogers Brown, whom we had the honor to publish in the Cato Supreme Court Review the first year I edited it). Here’s how it starts:

This case is about speech and whether the government’s regulations actually accomplish their intended purpose. Unsurprisingly, the government answers in the affirmative. But when, as occurred here, explaining how the regulations do so renders the government’s counsel literally speechless, we are constrained to disagree.

The court later describes the reason for its disagreement:

The District’s reliance on a Washington Post article dating from 1927 to justify the exam requirement is equally underwhelming. [Citation omitted.] The article merely establishes that, nearly a century ago, the newspaper expressed concern about unscrupulous or fraudulent charitable solicitation and that an unidentified number of persons said self-styled tour guides were overly aggressive in soliciting business. Reliance on decades-old evidence says nothing of the present state of affairs. Current burdens demand contemporary evidence. [Citations of last term’s big voting right case, Shelby County v. Holder, and other cases are omitted.]

Continuing the theme that D.C. failed to justify its speech regulation, the court says:

Even if we indulged the District’s apparently active imagination, the record is equally wanting of evidence the exam regulation actually furthers the District’s interest in preventing the stated harms. Curiously, the District trumpets as a redeeming quality the fact that, once licensed, “[t]our guides may say whatever they wish about any site, or anything else for that matter.” [Citation omitted.] But we are left nonplussed. Exactly how does a tour guide with carte blanche to—Heaven forfend—call the White House the Washington Monument further the District’s interest in ensuring a quality consumer experience? [Footnote omitted.]

Salon Writer Not a Fan of Sharing Economy Start-up or ‘Transnational Neocolonialist Libertarian Arrogance’

Over at Salon, Andrew Leonard has written an article headlined “Libertarians’ anti-government crusade: Now there’s an app for that,” in which he criticizes MonkeyParking, a start-up that enables users to auction off information about parking spaces. MonkeyParking recently received a cease and desist demand from San Francisco City Attorney Dennis Herrera, stating that it is in violation of a provision in San Francisco’s Police Code that “specifically prohibits individuals and companies from buying, selling or leasing public on‐street parking.”

According to Leonard, MonkeyParking and another app that offers to pay car owners to occupy parking spaces “is an example of how the ‘sharing economy’ can be totally bullshit.”

He contrasts MonkeyParking with Forage Oakland, which allows residents to “share” produce from local fruit trees such as figs and lemons.

Forage Oakland sounds great, and a libertarian would be the last person to object to residents setting up a way to give away produce for free. Indeed, last month it was reported that lawmakers and regulators in 33 American cities have restrictions or are considering implementing restrictions that hamper those hoping to hand out food to homeless people.

Leonard argues that Forage Oakland is different from MoneyParking because

Monkey Parking’s [sic] solution intended to generate profit off of a public good by rewarding those who are able to pay — and shutting out the less affluent. That’s outrageous and not something any civilized society should tolerate.

He doesn’t elaborate on what measures a “civilized society” should take in order to prevent MonkeyParking from operating, especially given the fact that the technology being used by MonkeyParking isn’t going anywhere soon and that, according to Pew, the number of Americans who own smartphones has increased over the last few years.

He goes on to criticize MonkeyParking’s “obvious self interest”:

The entitlement and obvious self-interest that led MonkeyParking to decide it could solve a San Francisco municipal problem with a blatantly illegal business model is shared by many “disruptive” entrepreneurs—often cloaked under the cover of libertarian ideology.

It’s a shame that he doesn’t appreciate that the price system is extremely efficient at communicating information to producers and customers and that the regulatory environment that is affecting MonkeyParking is only the latest example of regulators and lawmakers not being able to keep up with changes in technology.

23andMe Closer to FDA Approval

 23andMe, the Google-backed personal genomics company ordered by the Food and Drug Administration to stop marketing its health-related services in November last year, is closer to a reconciliation with the government agency. The FDA did not object to the ancestry information 23andMe provides, but rather the information on inherited risks it released to customers.

Before halting the release of health information 23andMe had provided its customers with information on their ancestry and health. 23andMe gathered genetic information from customers by having them send saliva in a $99 kit.

What had the FDA concerned was the possibility that a false result from a 23andMe test could lead to customers undergoing drastic procedures such as “prophylactic surgery, chemoprevention, intensive screening, or other morbidity-inducing actions.” Reason magazine’s Ron Bailey pointed out such a fear is misplaced because not only is the biochip used by 23andMe and researchers around the word very accurate, anyone who received worrying health news from a 23andMe test would almost certainly consult a doctor and/or get a more comprehensive screening done before undergoing any surgery or procedure.

Last week 23andMe’s Chief Legal and Regulatory Officer, Kathy Hibbs, wrote on the company’s blog that the FDA had “accepted for review 23andMe’s submission for a new 510 (k) application,” which Reuters describes as “a regulatory process that applies to most medical devices sold in the United States.” The FDA considers the 23andMe saliva collection kit a device.

Although 23andMe’s submission focuses on one condition — Bloom Syndrome — Hibbs wrote the following:

Once cleared, it will help 23andMe, and the FDA, establish the parameters for future submissions. More importantly, for our customers, it marks a baseline on the accuracy and validity of the information we report back to them. The submission includes robust validation data covering major components of our product such as the genotyping chip, software and saliva kit.

While it is good news that 23andMe seems to be on its way to being in good standing with federal regulators, Stephanie M. Lee of SFGate.com notes that 23andMe could potentially face months of questions and data requests before being granted FDA approval.

 

Senseless in Seattle: The Minimum-Wage Follies

Meet the Marxist behind Seattle’s wage hike,” read the headline of the lead item at CNN Money late this morning. It seems that one Kshama Sawant, an immigrant from India who earned a Ph.D. in economics from North Carolina State University before taking a teaching position at Seattle Central Community College, is credited by the local press with being the political force behind the city council’s recent vote to raise the minimum wage there to $15 an hour, phased in for large businesses by 2017 and all businesses by 2021.

A self-described Marxist, Ms. Sawant went from Occupy Wall Street to occupying Seattle City Council, the story says, adding that she was “radicalized politically by the gaping inequality she observed upon arriving in the world’s richest country.” Thus, she ran for city council last year “under the banner of Socialist Alternative, an organization that calls for ‘international struggle’ against global capitalism.”

Say this for Ms. Sawant: Whatever she learned about economics in the course of getting her degree, at least she’s not hiding her views. But what can we say about the Seattle City Council, which passed her proposal unanimously? Perhaps there’s something in the coffee out there. Or perhaps they really believe, as Ms. Sawant does, that this measure will “transfer $3 billion from businesses to low-wage workers over the next decade.”

Well it turns out that you don’t need a Ph.D. in economics to understand that economies are not static. That elementary insight from Econ 101 was captured, in fact, in an earlier lead item at CNN Money, “Seattle $15 wage plan is unfair to me.” Quoting several small business owners on what’s in store for them—and their employees—here we find Subway franchise owner Matthew Hollek lamenting that, although he has only eight employees, he’ll have to start paying them 60 percent more by 2017—while the sandwich shop next door will be immune from the law for another four years. The reason? The law counts him as a large employer because he’s part of a national chain. It looks like these “gaping inequalities” are more difficult to close than Ms. Sawant seems to have realized.

Indeed, not only are economies dynamic and is Seattle not an island, but if the benefits of a minimum wage were as good as its advocates believe, then why stop at $15? Why not $20, or $30, or more? You never hear an answer to that because there is none. For a sampling from Cato of a more serious approach to the subject, see here, here, and here.

Resources for a Potential Ruling Today in Halbig v. Sebelius

The D.C. Circuit is due to rule any day now, quite possibly today, on Halbig v. Sebelius. For those who haven’t been watching the vigil I keep over at DarwinsFool.comNewsweek calls Halbigthe case that could topple ObamaCare.”

First a little background. The Patient Protection and Affordable Care Act offers refundable “premium-assistance tax credits” to qualified taxpayers who purchase health insurance “through an Exchange established by the State.” The PPACA contains no language authorizing tax credits through the 34 Exchanges established by the federal government in states that declined to establish one themselves, nor does it authorize the Internal Revenue Service to treat those federally established Exchanges as if they had been “established by the State.” Offering benefits only in compliant states was proposed by numerous Republicans and Democrats in 2009, for obvious reasons: Congress cannot force states to implement federal programs, but it can create incentives for states to act, such as by offering health-insurance subsidies to residents of compliant states.

Halbig is one of four cases challenging the IRS’s decision to rewrite the statute and offer tax credits in the 34 states with federal Exchanges. The plaintiffs are individuals and employers who are injured by the IRS’s overreach because, due to the PPACA’s many inter-locking pieces, issuing those illegal tax credits subjects them to illegal penalties.

Since a ruling may come today (or some Tuesday or Friday hence, as is the D.C. Circuit’s habit), here are some materials for those who want to hit the ground running.

Update: The D.C. Circuit has handed down rulings for today, and Halbig is not among them. Click here to check on the court’s most recent rulings.