Topic: Regulatory Studies

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.

Washington Post Half-Heartedly Seeks Clarity About Export-Import Bank Jobs Claims

It was good of the Washington Post Editorial Board to raise questions yesterday about the veracity of the “jobs-created-by-Export-Import-Bank-policies” claims proffered by the Bank’s supporters. I just wonder whether the editorial pulled its punches where a reporter on assignment or a more inquisitive journalist would have delivered an unabashed blow to the credibility of the Bank’s primary reauthorization argument: that its termination will lead to a reduction in U.S. exports and jobs.

Kudos to the Post for raising an eyebrow at the Bank’s claims of “jobs created” or “jobs supported” by Ex-Im financing:  

[W]hen it comes to jobs, well, just how rigorous are [Ex-Im’s] estimates, really? Congress ordered a study of that very question when it last reauthorized Ex-Im in 2012. In May 2013, the Government Accountability Office (GAO) produced its verdict: Meh.”

“GAO noted that Ex-Im must speak vaguely of “jobs supported,” rather than concretely of jobs created, since its methodology cannot really distinguish between new employment and retained employment. To get a number for “jobs supported,” which includes both a given firm and that firm’s suppliers, Ex-Im multiplies the dollar amount of exports it finances in each industry by a “jobs ratio” (calculated by the Bureau of Labor Statistics).

Using that approach, Ex-Im estimates an average of 6,390 jobs are “supported” by every billion dollars of exports financed. The Post is right to note the GAO’s conclusion:

These figures do not differentiate between full-time and part-time work and, crucially, provide no information about what might have happened to employment at the firms in question, or others, if the resources marshaled by Ex-Im had flowed elsewhere in the economy.

Industry Groups Cloaked with State Power Shouldn’t Get Antitrust Immunity

Under a 1943 Supreme Court decision called Parker v. Brown, state governments and private parties who act on state orders are typically immune from prosecution under federal antitrust laws. Thus, while private parties who create cartels face severe penalties, state governments can authorize the same anti-competitive behavior with impunity. 

Still, the Supreme Court has held that this kind of immunity only applies if the private parties who engage in cartel behavior are “actively supervised” by state officials. A case now before the Supreme Court, N.C. State Board of Dental Examiners v.FTC, presents an opportunity to expand on that directive.

Beginning in about 2003, the North Carolina Board of Dental Examiners issued cease-and-desist orders to beauticians and others who were offering “teeth whitening” services (in which a plastic strip treated with peroxide is applied to the teeth in order to make them brighter). Although teeth-whitening is perfectly safe—and can even be done at home with an over-the-counter kit—the state’s licensed dentists want to limit competition in this lucrative area.

The Board is made up entirely of practicing dentists and hygienists and is elected by other licensed dentists and hygienists—with no input from the general public—and evidence later revealed that the Board issued orders on this subject in response to complaints from dentists, not consumers. The Federal Trade Commission charged the Board with engaging in anticompetitive conduct. Although the Board argued that it should enjoy Parker immunity, the FTC, and later the U.S. Court of Appeals for the Fourth Circuit, rejected that argument, holding that the Board was not “actively supervised” by the state, but was instead a group of private business owners exploiting government power.

Virginia Reaches Deal With Uber and Lyft

Today the Commonwealth of Virginia reached a temporary agreement with Uber and Lyft, both of which provide ridesharing services via their apps. Under the terms of the agreement, both companies have been granted broker’s licenses and are allowed to operate provided they meet a number of conditions, which are outlined in today’s press release from Virginia Attorney General Mark Herring’s office.

Uber and Lyft have both praised the agreement, which comes two months after the Virginia DMV issued the companies cease and desist letters.

It is welcome news that Virginia Gov. Terry McAuliffe and Attorney General Herring have worked out an agreement with Uber and Lyft. However, the agreement is temporary and lawmakers in Virginia and elsewhere in the U.S. need to implement permanent legislation that allows for innovative companies such as Uber and Lyft to fairly compete against taxis, as R Street Institute policy analyst Zach Graves stated in a news release:

Public interest advocates should be wary that this is only a temporary measure, and the battle over transportation services regulation in Virginia is certain to come up again in the 2015 legislative session. Ultimately, policymakers in Virginia and other states need to advance legislation that offers permanent legalization for all transportation network companies, without imposing additional anti-competitive regulations at the behest of the Taxi industry.

How the Sharing Economy Can Help Developing Nations

While many sellers and buyers in the so-called sharing economy might like it for its convenience, there is a case to be made that in the developing world decentralized and peer-to-peer economies could help solve a crippling informational problem in environments with weak property rights and bad regulatory regimes.

Writing in Forbes earlier this week, Adam Ozimek, Director of Research and Senior Economist at Econsult Solutions, Inc., pointed out that the rating systems used by companies such as Uber and Airbnb allow for customers to “do what we previously thought tight regulations and even natural monopolies were needed to do.” Before the rise of the technologies that allowed for Uber and Lyft to exist, the taxi industry could argue that customers might face rip-offs or safety concerns in the absence of regulation. Thanks to the rating system used by companies in the sharing economy, this informational problem can be overcome.

Another DC Handgun Ban Ruled Unconstitutional

The DC government ignored the Supreme Court’s ruling in the Heller case, so we had to take them back to court.  We won again.  The idea that they can simply ban the exercise of a fundamental and enumerated constitutional right is absurd. If the constitutional approach of the DC government were applied to the First Amendment, they would interpret the power to regulate the time, place, and manner of its exercise to include banning all churches, mosques, temples, and synagogues in the District.  That cannot be right and the court has set them straight on that matter.

Alan Gura, our lawyer, is a hero for his work on behalf of the rule of law.  I and the other plaintiffs are grateful to him and to the Second Amendment Foundation for this resounding victory.

Read the decision here.

South Carolina Police Are Ready To Crack Down on Uber

Earlier this month UberX, Uber’s rideshare service, launched in four cities in South Carolina. Residents of Charleston, Greenville, Columbia, and Myrtle Beach are free to download Uber’s app and request a ride from a driver using his or her own vehicle. However, police across South Carolina are planning on taking action against UberX drivers, who they believe are violating regulations.

According to the South Carolina Office of Regulatory Staff, Uber is illegally operating in the Palmetto State without state or local business licenses.

The Nerve, a project of the South Carolina Policy Council, reported that police officers in Greenville and Columbia could issue UberX drivers warnings and citations at their discretion.

Myrtle Beach officials claim that Uber is not licensed to work in the city, and Myrtle Beach police have said that they plan to cite UberX drivers for operating without a business license, which Myrtle Beach officials claim each driver needs. Uber believes that it does not need a business license because it is connecting passengers and drivers via its app and not providing rides.

From WPDE NewsChannel 15:

So why doesn’t Uber just get a business license? Taylor Bennett, an Uber spokesperson said they don’t think they need one.