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Randomized trial of reduced-nicotine standards for cigarettes

January 28, 2016, 10:08 AM

The article by Donny et al.[1] and the accompanying Perspective article by Fiore and Baker[2] have prompted considerable discussion. Until the results of this study are replicated in a population that more closely resembles average smokers and has a longer follow-up period, these discussions are premature.

The study design appears to have involved recruitment of participants who were, as compared with average smokers, less dependent on nicotine and showed no compensatory behavior when nicotine levels were reduced. As shown in Figure 1 of the article, the number of cigarettes smoked by participants who received cigarettes with baseline amounts of nicotine increased from 15 to 20, whereas the number smoked by those who received cigarettes with the lowest amount of nicotine remained at baseline levels.

Although none of the participants stated an interest in quitting smoking, a better measure of the participants’ intention would have been “no intention to quit smoking in the next 6 months.” The majority of current smokers are in this category.[3] Future exploration of this issue and related issues also needs to take into account that the demographic characteristics of smokers have changed: 50% of cigarettes smoked are smoked by persons with mental illness.[4]

[1] Donny EC, Denlinger RL, Tidey JW, et al. Randomized trial of reduced-nicotine standards for cigarettes. N Engl J Med 2015;373:1340-1349

[2] Fiore M, Baker T. Reduced-nicotine cigarettes — a promising regulatory pathway. N Engl J Med 2015;373:1289-1291

[3] Rigotti NA. Strategies to help a smoker who is struggling to quit. JAMA2012;308:1573-1580

[4] Agaku IT, King BA, Husten CG, et al. Tobacco product use among adults — United States, 2012–2013. MMWR Morb Mortal Wkly Rep 2014;63:542-547

Video introduction to the Re:Create Coalition

January 28, 2016, 9:32 AM

The video below was filmed to introduce the world to the Re:Create Coalition, a broad collection of groups from across the ideological spectrum who agree on the need for reforms to our system of copyright. It features R Street President Eli Lehrer, as well as Public Knowledge CEO Gene Kimmelman, Katie Bowers of the Harry Potter Alliance and author Cory Doctorow, who is serving as a special consultant to the Electronic Frontier Foundation.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

R Street welcomes former FERC analyst as electricity policy manager

January 28, 2016, 9:20 AM

WASHINGTON (Jan. 28, 2016) – R Street is pleased to announce the addition of Devin Hartman as electricity policy manager and senior fellow.

In his new role, Hartman will conduct research on policies to promote competitive electricity markets, sensible rate designs, effective environmental policies and efficient energy research and development.

“R Street is different in that it leans on subject matter experts to develop sound policy positions, as opposed to the pre-determined top-driven positions that some other groups take,” said Hartman. “R Street lets evidence drive policy research and is not afraid to take bold, even unpopular positions. I’m thrilled to join such a team.”

Before joining R Street, Hartman worked at the Federal Energy Regulatory Commission (FERC), where he conducted economic analysis of wholesale electricity markets. Before FERC, he worked at the Indiana Utility Regulatory Commission, where he spearheaded the initiative to modernize Indiana’s electric-resource planning rule. He led research on risk and uncertainty management, as well as advanced technologies, including electric vehicles, carbon capture and storage, energy storage and distributed generation.

“Devin has a fantastic depth and breadth of knowledge on energy markets,” said R Street President Eli Lehrer. “As we expand our work in this area, we couldn’t have anyone better than Devin leading the way.”

Hartman served as a fellow at the U.S. Environmental Protection Agency and has advised issue-based campaigns for various energy and environmental nonprofit organizations.

Devin is a graduate of Iowa State University with a triple major in economics, political science and environmental studies. He received a Master of Public Administration and a Master of Science in environmental science at Indiana University.

“It’s important, now more than ever, to make responsible decisions for our environment,” said Hartman. “We can’t subsidize and mandate our way to a clean-energy future. Public policy should ensure competitive markets have the right signals, then government should get out of the way.”

R Street praises Florida House for legalizing ridesharing, urges Senate passage

January 28, 2016, 8:34 AM

TALLAHASSEE, Fla. (Jan. 28, 2016) –The R Street Institute is pleased with the Florida House of Representatives’ overwhelming 108-10 vote to pass H.B. 509, legislation creating a regulatory framework for transportation network companies like Lyft and Uber.

Introduced by Rep. Matt Gaetz, R-Fort Walton Beach, the bill sets common sense standards for ridesharing services statewide while providing consumer protection for drivers and passengers. The framework is similar to a model that has been passed in nearly 30 other states.

“As we’ve seen in many cities and states across the country, transportation network companies are quickly gaining in popularity and stature in Florida,” said Christian Cámara, R Street’s Florida director. “This bill lays out such a framework in a way that is beneficial for riders, drivers, TNCs and the state.”

H.B. 509 moves to fill insurance gaps and ensure that drivers are covered for the duration of the time they are using the ridesharing app. It also pre-empts local bans on ridesharing, such as last year’s effort by the Hillsborough County Public Transportation Commission to ticket TNC drivers.

“It’s time for Floridians to have unified regulations across the state to meet passengers’ growing demands for these services, and we urge the Senate to act quickly to pass H.B. 509,” Cámara said.

American Enterprise Institute

January 27, 2016, 11:14 PM
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20+ conservative organizations to Utah State Legislature: Oppose online sales tax proposal

January 27, 2016, 2:47 PM

January 27, 2016

Dear Utah State legislator:

On behalf of our organizations and the millions of citizens we represent, we write in strong opposition to the online sales tax proposal currently being considered in the Utah state legislature. This misguided plan (SB 65) is a nuisance reporting requirement in order to give Utah tax collectors information that they’d then use to collect use tax, and would create host of economic, logistic, and Constitutional problems.

Allowing states to assert tax authority on businesses outside their borders is also constitutionally suspect and practically unwise. It’s constitutionally suspect because the interstate commerce clause exists precisely to empower Congress to prevent such activities and because Supreme Court precedent underscores the importance of physical presence. It’s practically unwise because it would subject Utah businesses to the tax collectors of states that don’t share its generally solid conservative governance, like California, New York, and Illinois.

Despite proponents’ claim to the contrary, online sales tax would impose high costs of compliance on businesses, especially small businesses and individual sellers. Keeping constantly-changing rates, bases, and collection methodologies, would be very challenging for remote sellers, and may even prevent some from selling to Utah consumers. This is a much higher collection standard than bricks-andmortar sellers, which are only required to collect at the rate of their physical location.

We oppose efforts to impose tax collection and reporting requirements on businesses without a physical presence in the state, including measures like SB 65 and others like it.

Sincerely,

Evelyn Everton, Utah State Director
Americans for Prosperity

Grover Norquist, President
Americans for Tax Reform

Wayne Brough, PhD, Chief Economist and VP for Research
FreedomWorks

Lisa Nelson, CEO
The Jeffersonian Project, an affiliate of the American Legislative Exchange Council

Brandon Arnold, Executive Vice President
National Taxpayers Union

Andrew Moylan, Executive Director and Senior Fellow
R Street Institute

George David Banks, Executive Vice President
American Council for Capital Formation

Sean Noble, President
American Encore

Peter J. Thomas, Chairman
Americans for Constitutional Liberty

Norm Singleton, President
Campaign For Liberty

Timothy H. Lee, Senior Vice President of Legal and Public Affairs
Center for Individual Freedom

Tom Brinkman Jr., Chairman
Coalition Opposed to Additional Spending and Taxes (COAST)

Jessica Melugin, Adjunct Fellow
Competitive Enterprise Institute

Katie McAuliffe, Executive Director
Digital Liberty

Jonathan Haines, Director Federalism
In Action

George Landrith, President
Frontiers of Freedom

Andrew Clark, President
Generation Opportunity

Mario H. Lopez, President
Hispanic Leadership Fund

Seton Motley, President
Less Government

Daniel Garza, Executive Director
The LIBRE Initiative

David Williams, President
Taxpayers Protection Alliance

Judson Phillips, Founder
Tea Party Nation

Uber for welfare

January 27, 2016, 2:12 PM

This oped was co-authored by Cesar Conda, founding principal and policy adviser of Navigators Global.

In this presidential cycle, the “gig economy” has been under attack, notably from Democrats like Hillary Clinton, who said that it is “raising hard questions about workplace protections and what a good job will look like in the future.”

But far from being the labor problem of our era, the gig economy is actually a solution — one with power to change things far beyond car-sharing and odd jobs. It could help transform not just the private sector, but government as well, adding flexibility to unemployment programs and decreasing dependence on a welfare system getting out of control.

Reforming our safety net is back at the forefront of the Republican Party agenda, as evidenced by the recent Kemp Foundation forum on poverty hosted by Sen. Tim Scott, R-S.C., and House Speaker Paul Ryan, R-Wis. And if conservatives are imaginative about their solutions, they’ll realize the huge changes in the economy in the past decade actually give us new tools to solve some of these problems. The current safety net is outdated, designed for an era when work was a 9-to-5 ritual that required interviews and a résumé. The modern economy is much more complex and the gig economy, in particular, has dramatically reduced the barriers to finding work.

Social-science data are clear that keeping safety-net beneficiaries working is better for their careers and long-term economic well-being. The value of work cannot be overstated and the 1996 welfare reform embraced this principle by transitioning welfare to a system of so-called “workfare,” with able-bodied individuals who receive government benefits being required to work in some capacity.

Since then, Washington’s commitment to workfare has been dwindling. While the 1996 law required work participation to receive welfare and food stamps, in 2012, the Obama administration announced it would issue waivers exempting state governments from those work requirements. And as part of the stimulus in 2009, states were given new abilities to waive work requirements for food stamps.

Other parts of the safety net contain no work requirements at all, including Social Security disability benefits, a $140 billion federal entitlement (SSDI is a program for those who are considered disabled such that they are unable to work); the Section 8 Housing Choice Voucher Program; Medicaid, which some lawyers believe cannot have work requirements because the Medicaid Act requires states to provide assistance to all individuals who qualify under federal law; and unemployment benefits, which are designed for those unable to find work.

Historically, some opponents of workfare have argued that work requirements are untenable because the government cannot find a job for every welfare beneficiary. That may have been true years ago, when a “job” was full time and whether one had a job was a binary question. Today, the gig economy offers the solution: It can easily and quickly put millions of people back to work, allowing almost anyone to find a job with hours that are flexible, with virtual locations anywhere. Much of this work is well-above minimum wage and can further the careers of workers, as well. With a wide array of employment options, workers can choose jobs better tailored to their skill-sets and upgrade their skills, which can advance their careers.

What do these jobs look like? For those willing and able to drive, Uber and Lyft enlist anyone to be a driver — assuming they pass a background check — and offer special financing or rental discounts for vehicles. Currently, the average Uber driver makes about $19 an hour. In cities like Los Angeles and New York, their earnings are even higher.

For those who don’t drive, the options are nearly endless. They could deliver goods and groceries for Postmates and Instacart, assemble furniture on TaskRabbit or mow lawns and plow driveways with PLOWZ & MOWZ. Or if they have the know-how, they could offer photo shoots, voice lessons, mural painting, tennis lessons or house-painting on Thumbtack. Amazon’s MechanicalTurk, Fiver and other companies pay for general tasks that can usually be done on a computer or phone anywhere across the country. Those with particular skill-sets have other platforms available: Coders can do freelance work on Elance, Upwork and Scalable Path; house cleaners can list themselves on Handy; graphics designers can submit bids and graphics on 99 Designs; and lawyers can draft legal contracts on UpCounsel. People with general interpersonal skills could be a virtual personal assistant on Zirtual.com. There’s an easily available job for just about everyone in the gig economy.

The government should expect that able-bodied safety-net beneficiaries be willing to engage in the gig economy before collecting benefits. But transitioning to such a system requires policymakers to rethink the entire safety net, affecting nearly every federal entitlement program, so that it is oriented around the gig economy. That’s no easy task, but there are some important decisions that lawmakers can make to move in that direction.

First, Congress must take the lesson from the 1996 round of welfare reform and apply work requirements to the rest of the safety net. To do so, it should strengthen the Temporary Assistance for Needy Families program — commonly known as welfare— to clearly prohibit any president from essentially waiving its work requirements. Lawmakers also should restore work requirements for food stamps and impose them for federal housing assistance. Other federal safety-net programs should be transferred to the states, as has been proposed by Speaker Ryan and Sen. Marco Rubio, R-Fla.), and Congress should clarify that states are allowed to implement work requirements for adults on Medicaid.

These work requirements should ensure that everyone who is capable of performing a job in the gig economy does so. To do that, the next president should direct the relevant agencies, or Congress, to redefine what it means to be unable “to engage in substantial gainful activity”— the standard required to determine who is exempt from work requirements — in light of the rise of the gig economy. Many people who qualify under the current definition of “disabled” may be fantastic candidates for more flexible gig economy jobs.

Work requirements, however, should not unfairly punish people who are physically or mentally unable to complete gig-economy jobs. The gig economy can often provide flexible work for those previously considered unable to work, but exemptions would still be available, as needed. For everyone else, safety-net benefits should be conditional upon the recipients providing proof that they are taking gig-economy jobs or meaningfully attempting to engage in the gig economy (such as by listing available services, but not receiving contract work).

We also recognize that not everyone is well-versed in the gig economy — if Congress barely understands technology, we don’t assume that safety-net beneficiaries are any more adept. Therefore, government offices administering safety-net benefits should develop expertise through a public-private partnership to help individuals find and undertake jobs in the gig economy, including, for instance, keeping an updated directory of available gig-economy jobs in the area and providing information on how lower-skilled workers can become higher-skilled workers in the gig economy. This directory should be available online and government offices should help beneficiaries navigate the gig economy, just as they already do in finding conventional 9-to-5 jobs.

In addition, many gig-economy jobs, especially remote jobs, require a computer — something many unemployed Americans may not be able to access. In such cases, safety-net services should facilitate access to computer terminals or help utilize available resources, such as laptops at a local library. A portion of unemployment compensation funds should also be granted to beneficiaries as a voucher that they can use to purchase items necessary for gig economy jobs — laptops and cellphones, for example.

Lastly, we are mindful that, while many of the jobs in the gig economy pay well — such as Lyft and Uber drivers — other positions may not necessarily provide enough. In such cases, qualified individuals should still receive safety-net benefits, structured in a way to encourage work. To that end, the federal government should also expand the Earned Income Tax Credit to include low-income single workers.

Polls show that 83 percent of Americans favor work requirements for welfare. But just as the gig economy has made workfare significantly easier to implement, thanks to an abundance of readily available jobs, Washington has undermined work requirements throughout the safety net. Now, the government has the perfect opportunity to reorient our safety net around work. As long as Uber and Lyft will hire anyone who can pass a background check, we can’t just give away a free check to anyone who chooses not to work.

Ultimately, this approach would help the neediest Americans get out of the cycle of poverty and save money, so that the safety net remains available for those who are truly needy. As Republicans turn their attention to the next round of welfare reform, they should look to the gig economy to lead the way.

Broad coalition calls to open hearings on FISA Section 702

January 27, 2016, 1:19 PM

Dear Chairman Goodlatte and Ranking Member Conyers,

The undersigned organizations appreciate the promise you made during the debates on USA Freedom to hold hearings on Section 702 of the Foreign Intelligence Surveillance Act. We believe that robust congressional oversight of the implementation of this statute, which is used to acquire the communications of Americans and people around the world alike without a warrant, is critical. We were surprised when we recently learned that you may soon hold a hearing in a classified format, outside of public view. Doing so for the entirety of the hearing neither fully satisfies the promise to hold hearings nor permits the public debate that this nation deserves. Rather, it continues the excessive secrecy that has contributed to the surveillance abuses we have seen in recent years and to their adverse effects upon both our civil liberties and economic growth.

All congressional proceedings should be conducted in accordance with this country’s highest principles of transparency and openness. Indeed, no committee should ever hold a classified hearing or briefing, when it can hold all or part of the hearing as an open, unclassified session. The Intelligence, Armed Services and Judiciary committees of both chambers have been able to hold open hearings on matters of national security, deferring only those questions that require classified answers into a closed hearing. This judicious use of closed sessions meets the dual purposes of providing robust oversight and protecting national security.

In the case of Section 702 implementation oversight, a completely closed hearing is unnecessary to provide members with an adequate understanding of how the law is currently implemented by the executive branch and whether that exceeds Congress’ original intent.

As you know, when the FISA Amendments Act was written, the deliberations happened largely in open session. Subsequently, executive-branch officials have testified about the act in open session on at least six occasions[1] since it was written. The Privacy and Civil Liberties Oversight Board has published an unclassified report on the implementation of the statute. The government has itself declassified numerous relevant documents, including legal analyses and judicial interpretations. And following the Snowden disclosures, the Senate Judiciary Committee held several public hearings on National Security Agency surveillance programs, which included discussion of Section 702.

In today’s global communications environment, disclosures of information about how Section 702 operates have confirmed the validity of many of the public’s and civil society’s concerns that this statute implicates the privacy rights of millions of people in the United States and around the world who communicate with friends and colleagues abroad, including human-rights activists who rely on secure communications for their safety. The way Section 702 is utilized also affects journalists who interact with confidential sources to report on issues in the public interest and criminal defendants whose prosecutions may involve the use of evidence derived from intelligence surveillance.

In all of these circumstances and many more, it is up to Congress to ensure that the administration is not violating the rule of law and the rights we all hold dear.

We urge you to change the designation of your upcoming session on Section 702 to “open,” consistent with Congress’ constitutional oversight role, longstanding congressional practice and principles of transparency and justice. To the extent that the committee goes forward with the closed hearing, we urge you to fulfill your prior commitment by promptly holding public hearings, which include representation and engagement of privacy, civil-liberties and human-rights organizations.

If you have any questions, please contact Patrice McDermott, Executive Director at OpenTheGovernment.org at 202-332-6736 at pmcdermott@openthegovernment.org, or Neema Singh Guliani, Legislative Counsel at the American Civil Liberties Union, at nguliani@aclu.org.

Sincerely,

Access Now
American-Arab Anti-Discrimination Committee (ADC)
American Civil Liberties Union
American Library Association
Amnesty International USA
Brennan Center for Justice
Californians Aware
Center for Democracy & Technology
Constitutional Alliance
The Constitution Project
Cyber Privacy Project
Electronic Frontier Foundation
Electronic Privacy Information Center (EPIC)
Essential Information
Free Press Action Fund
Government Accountability Project
Human Rights Watch
National Coalition Against Censorship
National Security Archive
New America’s Open Technology Institute
Niskanen Center
OpenTheGovernment.org
Project On Government Oversight
Reporters Committee for Freedom of the Press
Restore The Fourth
R Street Institute

[1] http://fas.org/irp/congress/2011_hr/120811faa.pdf(2011); http://fas.org/irp/congress/2012_hr/020912monaco-faa.pdf(2012);

http://fas.org/irp/congress/2013_hr/092613clapper.pdf%20((2013); http://fas.org/irp/congress/2013_hr/fisa-oversight.pdf(2013);

http://fas.org/irp/congress/2013_hr/fisa.pdf(2013); http://fas.org/irp/congress/2014_hr/020414cole.pdf(2014)

Exit Right: A Discussion With Author Daniel Oppenheimer

January 27, 2016, 11:39 AM
02/02/2016 - 11:45 am - 1:30 pm
R Street Institute
1050 17th St NW #1150
Washignton

R Street Institute grades 50 US cities on transportation regulations

January 27, 2016, 9:10 AM

From Americans for Tax Reform

In R Street Institute’s new study “Ridescore 2015: Hired Driver Rules in U.S. Cities” researchers Andrew Moylan and Zach Graves evaluate the regulatory environments for vehicle-for-hire services in 50 of the largest U.S. cities. The study is the first to compare different policies following the emergence of transportation network companies (TNCs) such as Uber and Lyft.

Understanding the GOP’s civil war over off-the-grid energy

January 27, 2016, 9:00 AM

If politics makes for strange bedfellows, few issues make for more peculiar sleeping arrangements than that of distributed energy. There aren’t many others that put former Republican congressman (and son of “Mr. Conservative” himself) Barry Goldwater Jr. on the same side as the Sierra Club. But when it comes to efforts by electrical utilities to add special fees for homes that use rooftop solar, Goldwater sees his opposition as the truly conservative stance.

“Technology is kind of replacing the old order,” Goldwater said recently. “There was a place for utilities and monopolies when they were first created, but the time has come for a change.” Viewing emerging technologies like solar as a means of adding competition to what has traditionally been a very uncompetitive sector, Goldwater formed TUSK—Tell Utilities Solar won’t be Killed—an organization that fights for policies friendly to distributed rooftop solar power.

Not all conservatives see things this way, however. Some conservative Republicans have found themselves in the unusual position of advocating stricter regulation and higher fees for distributed-energy generation. In Arizona, legislators recently tightened restrictions on solar leases, mandating more disclosure about lifetime cost to customers and giving homeowners a three-day grace period to get out of a solar contract after it’s been signed. The author of the legislation, State Senator Debbie Lesko, is a Republican whose campaign website stresses the importance of “limiting taxes and government regulation.”

The conflict scrambles political loyalties because it goes back to competing visions from the beginning of electrification. When Thomas Edison drew up the plans, the electrical grid was envisioned as a highly decentralized affair, with small power plants in each neighborhood. But with the advent of alternating current, it became possible for much larger plants to supply power over great distances. While the modern grid is a technological marvel, the politics of how it operates are less impressive: with a few exceptions—notably Texas—power generation is not open to competition. Instead, electrical generation is controlled by monopoly utilities and subject to stringent regulation on everything from the prices that can be charged to the mix of fuel sources that can be used.

But the allure of a decentralized power system never completely went away, and the rise of environmental concerns has led to widespread public support for cleaner forms of energy, which are often—as in the case of solar panels—more decentralized and distributed. For decades, a small proportion of consumers have opted for some form of distributed power. (When I was growing up in the 1980s, our semi-rural home used solar panels to heat water from our well.) Nevertheless, the growth of distributed energy has been limited by high costs, which have to be paid upfront, as well as by problems of intermittency.

That may now be changing. Since 2009, prices for solar power have fallen 70 percent. These declining costs, along with a healthy helping of government subsidies, have led to a rapid increase in solar deployment. And in April, Tesla Motors announced its new Powerwall battery, which can store excess electricity generated by solar during the day for use during less sunny periods.

Since utilities also can use storage technologies, low-cost storage needn’t necessarily privilege distributed generation over grid-provided electricity, and the combined cost of solar generation and storage is still above that of grid electricity in most places. Still, these developments have not only made solar installation more attractive to many consumers, they also have everyone from utility executives to political activists to tech gurus reconsidering what the future of electricity might look like.

Innovative business models also are overcoming some of the traditional challenges to distributed generation. Many consumers are wary of paying the high upfront costs involved with buying and installing solar panels. In response, solar companies have marketed solar leases, where the company pays all upfront costs and maintains ownership of the panels, while charging a set monthly fee to the homeowner. The company then acts as a middleman, reselling the excess electricity the panels generate during peak periods.

Known as “third-party power purchase agreements,” these leases have helped spur a boom in solar-panel installations in some states. But like many new business models, these have also run into legal roadblocks. In Florida, whose sunny climate should make it a solar leader, only utility companies are legally allowed to sell electricity. To change this, Floridians for Solar Choice, a coalition of distributed-energy advocates—which includes the Christian Coalition, Florida Republican Liberty Caucus, Florida Libertarian Party, and the Tea Party Network—have qualified a ballot measure for 2016 that would allow third-party power purchase agreements.

They face competition from Consumers for Smart Solar—allied with Americans for Prosperity—which has submitted its own ballot measure for 2016 that uses similar-sounding language but would in fact codify the existing practice whereby homeowners can only sell excess power back to the utilities themselves. Major Florida utilities Florida Power & Light, Tampa Electric, Gulf Power and Duke Energy have contributed nearly $2 million to Consumers for Smart Solar.

The biggest battles over distributed generation involve “net metering.” Required in some form in 44 states plus the District of Columbia, net metering mandates that utilities must purchase the excess electricity a homeowner generates and credit the purchase against the homeowner’s power bill, often at the full retail rate of electricity. But net metering schemes tend not to acknowledge that the price of electricity reflects not only the cost of generating the power but also the cost of building and maintaining the grid. Reimbursing homeowners at the full retail rate of electricity acts, effectively, as a subsidy.

Net metering tends to be popular across the political spectrum: in a recent poll by the ClearPath Foundation, 87 percent of self-described conservative Republicans supported policies that let them sell rooftop-generated solar power back to utilities.

As long as distributed generation remained a bit player in the electrical market, utilities regarded the costs of net metering as just an annoyance. As the proportion of distributed generation grows and the cost of grid maintenance is borne by a smaller and smaller base of electrical customers without distributed generation, the matter becomes more serious. The situation is roughly analogous to electric cars not paying for road repairs via the gas tax. A few electrical cars are fine, but what happens when most cars on the road aren’t paying?

Utilities aren’t eager to find out, and so they have been pushing for limits on net metering, including special monthly fees on net-metered homes. Last year the Salt River Project, an Arizona utility, imposed a monthly fee of up to $50 on homes that utilize net metering, effectively wiping out any monetary gain that comes from selling back unused electricity. While the rule has been challenged in court, the Arizona Public Service (APS), the state’s largest electricity provider, has pushed for similar fees. Many other states are also considering imposing fees, capping the total amount of distributed generation eligible for net metering, or doing away with the program altogether.

Utilities aren’t totally opposed to solar power: they increasingly like it, so long as they own it. At the same time APS was pushing for fees on homes that used solar power, it announced its own pilot rooftop solar program, which would see the utility install systems providing up to seven kilowatts of power and give participating customers a $30 monthly credit for 20 years. A similar program went into effect earlier this year in San Antonio. As with third-party power-purchase agreements, the utility would maintain ultimate ownership of the panels and the energy they produce.

Given the arguments typically deployed by utilities against solar, it may seem strange they would embrace the same model. Ultimately, what scares utilities most about distributed generation is the danger it poses to their monopoly over electricity generation. Shielded from competition for more than a century, utilities regard any technology that moves the grid back toward a more open and decentralized system as an existential threat. For the same reason, believers in the free market ought to look at the growth of distributed generation as an opportunity to move toward a more competitive generation system.

This isn’t to say that government ought to put its finger on the scales in favor of distributed solar, or any other energy source—state and federal subsidies and mandates for renewable energy ought to be scrapped, and net metering needs to be replaced with a sell-back system that can be scaled up without creating instability for the grid—but neither should we deny new technologies the potential to bring some much needed creative destruction to our out-of-date energy regulations. 

Puerto Rico needs a financial control board

January 27, 2016, 8:00 AM

The government of Puerto Rico is broke. Having run a long series of constant budget deficits, financed by escalating borrowing, it has accumulated about $71 billion in debt which cannot be paid as agreed. To this must be added an estimated $44 billion of virtually unfunded public-employee pension liability, giving a total debt problem of at least $115 billion. This dwarfs in size the bankruptcy of the City of Detroit, the former municipal insolvency record holder.

What to do? The situation is complex and what all the needed reforms are is not yet clear, but the first required step is very clear: Congress should promptly create an emergency financial control board to assume oversight and control of the financial operations of the government of Puerto Rico.

This is just as Congress successfully did in 1995 with the insolvent Washington, D.C.; as New York State, with federal encouragement, successfully did with the insolvent New York City in 1975; and as the State of Michigan did with the appointment of an emergency manager for the insolvent City of Detroit in 2013. Such action has also been taken with numerous other municipal debtors.

Under the U.S. Constitution, Congress has complete sovereignty over territories like Puerto Rico and the clear authority to create a financial control board. Given the Puerto Rican government’s severe and longstanding financial mismanagement, Congress also has the responsibility to do so.

This should be the first step, before other possible actions. The sine qua non for financial reform is to establish independent, credible authority over all books, records and other relevant information; to determine what the true overall deficit is; to determine which Puerto Rican government bodies are insolvent, in particular to understand the financial condition of the Government Development Bank, which lends to the others; and to develop fiscal, accounting and structural reforms which will lead to future balanced budgets and control of debt levels. Of course, it must also consider how to address the current excessive and unpayable debt.

Should Puerto Rico follow Washington and New York, working its way through its management, bureaucratic and debt problems without a bankruptcy proceeding? Or should it follow Detroit, with a bankruptcy included along with reforms? The financial control board should be charged with recommending to Congress whether a municipal bankruptcy regime for Puerto Rico should be created.

Does all this take responsibility and power away from the current Puerto Rican government? Of course it does. As one harsh, but accurate, assessment put it: if you are a subsidiary government and “you screw up your finances bad enough,” you are going to get control and direction from somebody else. This is as it is, and as it should be.

In the current century, the government of Puerto Rico has run a budget deficit every single year: 15 years in a row. As debts multiplied, debt service was met by additional borrowing and new debt issued to pay the interest on the existing debt. This is the definition of a Ponzi scheme.

Such debt escalations always end painfully when the lenders belatedly stop lending, as has now occurred in Puerto Rico. What must inevitably follow is reform of fiscal operations, default on or restructuring of debt in bankruptcy or otherwise, bailout funding or combinations of these. What in particular must be done is what the financial control board should take up, preferably sooner rather than later.

As the government of Puerto Rico (“the Commonwealth”) has disclosed:

  • “The Commonwealth cannot provide an estimate at this time of when it will be able to complete and file its audited financial accounts.”
  • “The Commonwealth faces an immediate liquidity crisis.”
  • “The budget deficit of the Commonwealth’s central government during recent years may be larger than the historical deficits of the General Fund.”
  • “The assets of the Commonwealth’s retirement system will be completely depleted within the next few years.”
  • “The Commonwealth has frequently failed to meet its revenue projections.”
  • “Each fiscal year, the Commonwealth receives a significant amount of grant funding from the U.S. government. A significant portion of these funds is utilized to cover operating costs.”
  • “The Government Development Bank’s financial condition has materially deteriorated… [it faces] the inability of the Commonwealth and its instrumentalities to repay their loans.”
  • “The Commonwealth has failed to file its financial statements before the 305-day deadline in ten of the past thirteen years.”
  • “The Commonwealth does not have sufficient resources to pay its debt obligations in accordance with their terms.”

They themselves have said it. It is high time for an emergency financial control board. The board may be given a politically friendlier name, but its formidable task will be the same.

45 organizations sign on in bipartisan show of support for permanent ban on Internet Access Tax

January 26, 2016, 8:27 AM

Dear Leader McConnell and Minority Leader Reid,

The undersigned organizations, which represent millions of American consumers, strongly support the permanent extension of the Internet Tax Freedom Act (ITFA) in H.R. 644, the Trade Facilitation and Trade Enforcement Act. Our organizations have a variety of missions and represent Americans from all walks of life and on all sides of the political spectrum, and it’s very rare that we agree on policy or work together in a unified manner. But this issue is different. We support ITFA because it’s a permanent ban on taxing access to the Internet and is critical to all Americans and the future of our overall economy.

In the 17 years since Congress first passed a ban on Internet access taxes, the Internet has evolved from a luxury into a necessity of modern life. ITFA helped to spark this revolution. From health care to education, small business entrepreneurs to Fortune 500 companies, the Internet has dramatically transformed the way we live, work and learn.

In particular, ITFA plays a critical role in helping to keep the cost of Internet access affordable. It has protected most consumers from paying state and local taxes on their Internet access services. Without ITFA, it is likely these services would be taxed at the high rates of tax imposed on traditional telecommunication services, which often are more than double the rate of tax imposed on other goods and services.

After decades of progress in connecting more Americans to the Internet, the lack of a permanent ban on Internet access taxes could reverse this progress. Numerous studies continue to show that cost remains an obstacle to Internet access and, if taxes on the Internet go up, even fewer people will be able to afford to go online. This would impede our nation’s long held goal of universal Internet access.

We urge you to act swiftly and decisively to pass a permanent extension of ITFA which is a good pro-consumer tax policy with overwhelming bipartisan support and a policy that will directly benefit your constituents.

Sincerely,

Council for Citizens Against Government Waste
Multicultural Media, Telecom and Internet Council
American Commitment
American Consumer Institute
Americans for Tax Reform
Center for Individual Freedom
Competitive Enterprise Institute
Computing Technology Industry Association
Consumer Action
Digital Liberty
Hispanic Heritage Foundation
Hispanic Leadership Fund
Hispanic Technology & Telecommunications Council
Independent Women’s Forum
Independent Women’s Voice
Information Technology and Innovation Foundation
Latino Coalition
LULAC
Madery Bridge Associates
Media Freedom
National Association of Black County Officials
National Association of Manufacturers
National Association of Neighborhoods
National Black Caucus of State Legislators
National Black Chamber of Commerce
National Caucus of the Black Aged
National Coalition for Black Civic Participation
National Foundation for Women Legislators
National Hispanic Council on Aging
National Organization of Black County Officials
National Puerto Rican Coalition
National Taxpayers Union
NOBEL Women
R Street Institute
SER—Jobs for Progress
Small Business and Entrepreneurship Council
Taxpayers Protection Alliance
TechFreedom
Technology Councils of North America
United Spinal Association
US Black Chamber
U.S. Chamber of Commerce
US Hispanic Chamber of Commerce
US Hispanic Leadership Institute
Women Impacting Public Policy

No, you decide

January 25, 2016, 6:41 PM

It’s been half a decade since the Deepwater Horizon oil rig, which had been drilling the BP-owned Macondo Prospect, suffered a catastrophic blowout. Over 87 days between April and July 2010, 4.9 million barrels of oil gushed into the Gulf of Mexico.

Surveying the aftermath and the huge hit taken by his home state’s coast, Sen. Richard Shelby of Alabama decided it was crucial that monies from the inevitable federal fines and penalties be sent back to affected communities to repair the damage.

“I have always believed that, when it comes to government, putting more control in the hands of states and local communities—instead of Washington—will produce optimal results for taxpayers,” Shelby told me.

Plenty of conservative politicians have talking points that sound like that, but Shelby pushed legislation that actually did it. In 2012, Congress passed the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States (RESTORE) Act. The law redirects 80 percent of federal fines and penalties from the oil spill to a process giving local and regional officials more control over restoring the economic and environmental damage inflicted on their communities.

According to Shelby, earlier drafts of the RESTORE Act offered by Sen. Mary Landrieu, D-La., redirected Clean Water Act fines and penalties through the congressional appropriations process. Shelby wasn’t convinced that simply moving the resources from a federal agency to federal appropriators would be particularly helpful for the Gulf Coast.

“The goal of the law was unambiguous,” says Shelby. “States and communities affected by the oil spill know better than federal bureaucrats where money is needed most for their economic and ecological recoveries.”

That’s an unusual attitude for a senior appropriator who’s in a position to score serious political points for shepherding spending projects through the appropriations process. Moving resources out of congressional spending committees means less power for Washington politicos.

Rather than leaving the policy disagreement at an impasse, Alabama’s senior senator reached a compromise to get the legislation across the finish line. The final version of the RESTORE Act ultimately put two-thirds of the spending under state and local control, while one-third essentially remained in federal hands.

Because of Shelby’s efforts, local communities will have a greater say in their own economic and environmental recovery following the oil spill. That’s an important win for the Gulf Coast.

But the RESTORE Act also is an interesting spending model that could shape the way we handle harm to local communities in the future.

Consider the Environmental Protection Agency as just one example. In fiscal year 2014, the EPA secured more than $9.7 billion in injunctive relief against polluters. Over the same period, the agency generated nearly $100 million in federal administrative and civil judicial penalties. That may not sound like a lot in terms of the federal government’s multitrillion-dollar annual budget, but those resources could go a long way to improving environmental and economic damage caused by polluters in the states.

Then there’s the Department of Justice, which recovered more than $24 billion in civil and criminal cases in fiscal year 2014. While not all cases represent localized harm, some have a direct link to a particular community. One example is the $14 million in civil penalties recovered under the Titanium Metals Corp. settlement, related to the company’s “unauthorized manufacture and disposal” of PCBs in Henderson, Nev.

Conservatives frequently wax poetic about shrinking the size of government, but regularly fail to reduce spending. The RESTORE Act shows the way to a different approach entirely. Washington’s influence over the states largely stems from the power of the purse. By shifting control over spending to the local level, Washington naturally becomes less essential.

That doesn’t mean the federal government gives up its role entirely. The RESTORE Act includes criteria to evaluate spending and sets up councils to select projects. Similar efforts could provide the basic structure for acceptable spending, while leaving specific decisions to the discretion of those closest to the harms inflicted.

“The RESTORE Act should serve as a model for future cases in which federal penalties and fines are assessed, because keeping funds closer to the community is always a better choice,” Shelby says.

It’s unusual to find a Washington politician willing to reduce his own political clout to give state and local governments more of a chance to repair, with federal funds, harms they’ve suffered; it’s even rarer to find one who’s actually done it.

Jones’ coal divestment call is irresponsible, blatantly political

January 25, 2016, 5:36 PM

In the early 1990s, the insolvencies of three major life insurers – Executive Life, Mutual Benefit and Confederation Life – rocked the industry and threatened to bring about the end of the state-based system of insurance regulation the United States has employed since roughly the Civil War.

The failures were attributed largely to the companies’ excessively risky investment strategies. A consensus was building within Congress that states simply were no longer up to the task of appropriately monitoring insurer solvency, given the complexities of the modern financial system. Legislation to create a federal system of regulation was prepared by the House Commerce Committee chairman and was widely expected to sail through to enactment. But then the Contract with America election of 1994 changed the balance of power in ways that few foresaw and the threat passed for another decade or two.

To their credit, the states did not sit by idly after catching that lucky break; they responded forcefully to what they rightfully deemed an existential threat.  Led by the National Association of Insurance Commissioners, states across the country rapidly adopted modern risk-based capital standards that have proven a model the world over. This model certainly has been tested – first, by the failure of the Reliance Group of property-casualty insurers in the early 2000s and later by the catastrophic failure of American International Group – but, by and large, it’s held up pretty well.

Alas, giving regulators – some of them elected politicians and all of them prone to some degree of political influence – outsized power to decide what sorts of investment instruments insurers may buy has always carried the risk of abuse. Billions of policyholders’ premium dollars flow through insurance companies every year. Small tweaks to the investment rules could have the effect of directing those dollars toward the politically favored or away from the politically disfavored. To wield this enormous power responsibly requires that a regulator be painstakingly committed to policyholder protection, to ensuring that their premiums are held in investments that are reasonably safe and appropriately matched to the nature and duration of the risk transferred.

With his decision today to ask that insurers “divest from their investments in thermal coal,” California Insurance Commissioner Dave Jones has laid bare for the world to see that he is not that sort of responsible regulator.

Insurers’ investments in carbon-intensive industries is a long-standing bugaboo for Jones. Since taking office in 2011, he has been vocal in his efforts to get the NAIC to amend its Climate Risk Disclosure Survey (first adopted in March 2009) by making it binding on a far greater number of companies and by including reams of questions that would appear to have little direct connection to the ostensible goal of cataloguing “climate change-related risk.” In one notable example, a proposed survey question solicited discussion of the steps “the company has taken to engage key constituencies on the topic of climate change,” implying insurers actually have a duty to lobby lawmakers on environmental issues.

Jones and his allies – including Washington Insurance Commissioner Mike Kreidler, the then-chair of the NAIC’s Climate Change and Global Warming Working Group – failed in their attempt to push the revised survey through the body, but instead applied it domestically to any companies that did any business in their respective states. As those edicts have evolved, it’s become clearer that the goal all along was never actually to assess the ways in which climate-change risks could affect an insurance enterprise, but rather to force through a politically motivated divestment campaign, away from fossil-fuel interests and toward “green” technologies.

With this most recent edict, Jones has removed all doubt about his motivations, though he continues to hang his argument on this very thin reed – that coal companies universally represent bad risks.

My decision to ask insurance companies to divest from thermal coal and to require insurance companies to disclose investments in the carbon economy arises from my statutory responsibility to make sure that insurance companies address potential financial risks in the reserves they hold to pay future claims.

As utilities decrease their use of coal and other carbon fuel sources, as states like California limit the ability of the private sector to use coal and other carbon fuels for power generation and require their pension funds to divest from coal, as states like California and the United States impose more stringent air quality requirements which limit the ability to burn coal and other carbon fuels, and as nations across the world begin to implement the commitments they made to reduce their use of carbon at the recent United Nations COP21 Climate Summit in Paris, investments in coal and the carbon economy run the risk of becoming a stranded asset of diminishing value.

While it is certainly true that future changes in regulation or market conditions could very well affect the value of capital investments made by, in this case, the fossil-fuel industry, such risks are pretty broadly known and were not uniquely discovered by Commissioner Jones on his recent holiday to Paris. The market, thus, has already priced them in to the equity valuations of coal, oil and gas company stocks. If there’s been a change in the risk premia, then it’s one that insurers holding those stocks already would have suffered through lower stock prices. Unless, that is, they bought after the stock decline, in which case, they might well be holding on to a bargain. In either case, it’s hard to see what in the world has changed that requires divestment now.

And, of course, to the extent such concerns are relevant, it’s largely to equity investments. Insurers’ investments in the energy sector overwhelmingly take the form of fixed-income securities – aka, bonds. That Coal Company X might in the future begin to face greater regulatory pressure does not necessarily mean it is a bad risk to repay its debts today. If it were, then that, too, would be reflected in the price of its bonds and in the coupon any new issuances would be required to pay. If it were really the case that a company’s creditworthiness changed drastically overnight (for instance, if its rating was downgraded to junk), then dumping those bonds as part of the mass panic actually would usually be a bad move, relative to just holding them until maturity.

But what ultimately reveals Jones’ faux invocation of solvency concerns as jiggery pokery is just how utterly arbitrary it is. One can’t help but notice that he obviously is not calling for divestment from the alternative-energy sector. Yet alternative energy is one of the riskiest investment markets around. So much so that the industry site Greentech Media publishes an annual list of solar company failures, and has noted that “[k]eeping track of failing solar companies in 2011 and 2012 bordered on full-time work.” Alternative energy is subject to the whims of political actors, just as coal, oil and gas are. Should Congress repeal the Production Tax Credit or amend Renewable Portfolio Standards, the impact on alternative-energy investments could be enormous. To the extent that Jones intends “to make sure that insurance companies address potential financial risks in the reserves they hold to pay future claims,” then holding wind and solar investments should be very high on his list.

This is not a question of the science of climate change. Nearly all actors in the insurance industry, and particularly those who write property insurance and reinsurance, accept that climate change is a real threat that requires a policy response. Commissioner Jones no doubt has aims for higher office when his term is up. If he wishes to tackle such concerns as a governor or member of Congress and to offer plans to reduce carbon emissions in an effective and efficient way, more power to him.

But for the time being, his job is to regulate the business of insurance in the State of California. His most important duty in that role is to ensure the companies he regulates can make good on the promises they have made to policyholders. It may very well be that a ten-year Peabody Energy Corp. bond, purchased at a given price and paying a given interest rate, is not an appropriate investment match for a ten-year term life policy. But such decisions can only responsibly be made through thoughtful and deliberate evaluation of the actual nature of the investment and the actual nature of the risk. Suggesting otherwise is nonsense on stilts.

It’s appropriate for insurance regulators to monitor the investments of the companies they regulate, particularly those domiciled within state borders. If Jones requires some assistance in that task, the NAIC’s Capital Markets & Investment Analysis Office is available to help and has whole teams devoted to credit-quality assessment and securities analysis. That he apparently thinks that such analysis can be boiled down to blanket declarations that entire sectors of the economy are off limits suggests either that he has alarmingly little facility with one of the most important duties of his office, or that his arguments that this is anything but a blatantly political decree amount to twaddle in all its infinite splendor.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

Broad coalition urges support for H.R. 4350, bipartisan legislation to repeal harmful cybersecurity provisions

January 25, 2016, 1:31 PM

Dear Representative,

On behalf of civil liberties and government accountability organizations from across the political spectrum, we encourage you to support H.R. 4350, introduced by Reps. Justin Amash, R-Mich., and John Conyers, D-Mich.

This bipartisan bill would repeal the Cybersecurity Act of 2015, secretly negotiated provisions that were hastily incorporated into the omnibus appropriations bill enacted late last year. As we and others have stated consistently, these provisions are unlikely to increase the government’s ability to detect, intercept and thwart cyber attacks, yet they institute broad and undefined data-collection capabilities that are certain to undermine government accountability and further erode privacy protections.

Questions of cybersecurity and privacy should be debated openly in a manner that allows legislators and the public to criticize and participate. These questions should not be obscured by backroom deals that exclude critical perspectives and due process, and that many security experts have argued could result in worse security problems and worse privacy violations than before.

The Cybersecurity Act of 2015 included provisions unacceptable to the technology community, privacy and open-government advocates, as well as ordinary Americans, including:

  1. A new avenue through which the government will receive personally identifiable information and communications content, expanding surveillance on innocent Americans;
  2. Immunity from liability for companies that unnecessarily share private user information with the government and other companies;
  3. No reasonable limits on the type of information that can be shared, such as individuals’ personal online communications;
  4. Authorization for law enforcement and the intelligence community to use this information for purposes unrelated to cybersecurity, including the investigation and prosecution of unrelated crimes.
  5. An exemption to the Freedom of Information Act, and preemption of state and local laws on disclosure that seriously undermine government accountability and transparency.

Measures to strengthen cybersecurity should not come at the expense of exposing law-abiding Americans’ private information to government surveillance. Additionally, it should not be necessary to extend law-enforcement authorizations to non-cybersecurity purposes.

We call on Congress to repeal these unnecessary provisions and start a new conversation about the right way to address real cybersecurity threats, without undermining the privacy and security of all Americans and the accountability of government.

Sincerely,

R Street Institute
American Civil Liberties Union
American Library Association
Campaign for Liberty
Center for Democracy and Technology
Defending Dissent Foundation
Demand Progress
Fight For The Future
Free Press Action Fund
FreedomWorks
Government Accountability Project
Niskanen Center
Open Technology Institute
Open the Government
Restore the Fourth
Roots Action
X Lab

Devin Hartman

January 25, 2016, 11:28 AM

Devin Hartman is electricity policy manager and senior fellow for the R Street Institute, where he researches and promotes competitive electricity markets, efficient energy R&D and environmental policies, and sensible rate designs.

Devin previously worked at the Federal Energy Regulatory Commission (FERC), where he conducted economic analysis of wholesale electricity markets. His specialties included renewables integration, environmental regulation, coordination of natural gas and electric industries, and capacity-market performance and design evaluation.

Before FERC, Devin worked at the Indiana Utility Regulatory Commission, where he spearheaded the initiative to modernize Indiana’s electric-resource planning rule. He led research on risk and uncertainty management, as well as advanced technologies, including electric vehicles, carbon capture and storage, energy storage and distributed generation.

Devin served as a fellow at the U.S. Environmental Protection Agency, conducting air-emissions cost-benefit analysis. He has also advised, provided research and worked on issue-based campaigns for various energy and environmental nonprofit organizations.

Devin graduated from Iowa State University with majors in economics, political science and environmental studies. He completed an M.P.A. and M.S. in environmental science at Indiana University, concentrating in environmental policy, policy analysis and energy systems and policy. His volunteer activities include serving on the council of the National Capital Area Chapter of the U.S. Association for Energy Economics; advising and teaching courses for the Clean Energy Leadership Institute; and serving as a member of the Climate, Energy and Environment Policy Committee that advises the Metropolitan Washington Council of Governments.

Email: dhartman@rstreet.org

Comments to NCUA on association common bonds

January 25, 2016, 9:00 AM

Dear Mr. Poliquin,

My name is Eli Lehrer and I am president of the R Street Institute, a free-market think tank committed to finding real solutions to public-policy problems. I am writing about your proposed field-of-membership reforms for federal credit unions both as president of a nonprofit small business that is a credit union member and as a frequent commentator on credit union issues

Overall, I enthusiastically support and endorse the proposed reforms to field of membership standards. While the proposed regulatory reforms do not resolve all unreasonable field-of-membership limitations currently imposed on federal credit unions, they are a step in the right direction. NCUA is right to act “to ease any undue burdens and restrictions on an FCU’s ability to provide services to consumers who
are eligible for FCU Membership.”

NCUA has wisely pursued a simple goal that regulators across all sectors should follow: regulations should conform to the statutory language that create them and should not impose additional, burdensome restrictions on private behavior. The proposed regulations do just that. Three points deserve special praise:

  • While it is not perfect, the well-defined local community standard—and, in particular, the ability to create a well-defined local community (WDLC) that consists of a congressional district—makes tremendous sense and cuts a huge amount of red tape.
  • The expansion of trade, industry or professional common bonds will allow more expansive fields of membership for people who work together.
  • The expansion of fields of membership for veterans of the Armed Forces allows more financial-services options for those who have served our country.

There are a few areas where the regulations might still be improved. For example, while the rules expand the population cap for rural districts from 250,000 to 1 million – a step in the right direction – it would be better to eliminate the requirement altogether. Depository institutions and financial services already are difficult to access in many rural areas. The cap serves no valid function, particularly given the widespread ability to access funds online. Restrictions might more usefully focus on the availability of electric services; something these regulations rightly acknowledge elsewhere.

The regulations also appear unnecessarily vague with regard to the ability of credit unions to expand service areas into regions adjacent to a WDLC. There seems to be a real danger that the vagueness of the tests involved will discourage credit unions from using them.

As the president of a nonprofit, I also have a business interest in seeing regulations like this put into force. The enterprise I head was started with help (including access to credit) granted by a credit union, when no other institution appeared able or willing to provide it. While we remain a credit-union member and supporter of the credit-union movement, restrictions on allowable fields of membership have made
it difficult to find a credit union that can meet our current needs as a $4 million enterprise. We simply outgrew the small credit union—focused on individual members—with whom we started and sought another one in vain.

While we identified perhaps a dozen credit unions that provide the services a business of our size needs, none could fit us within their fields of membership. This was frustrating and bad for our business. We would prefer to receive almost all of our depository institution services from a credit union but simply cannot find one that meets our needs. An expansion of FOM for credit unions would help us to achieve our business objectives in ways that are consistent with our values and desires.

While there are a number of valid criticisms of the regulations, they are, on balance, a step in the right direction. We urge you to review the comments you receive carefully and do everything allowed under the law to provide regulatory relief to credit unions.

Broad coalition urges support for H.R. 4350

January 25, 2016, 1:00 AM

January 25, 2016

Broad coalition urges support for H.R. 4350, bipartisan legislation to repeal harmful cybersecurity provisions

Dear Representative,

On behalf of civil liberties and government accountability organizations from across the political spectrum, we encourage you to support H.R. 4350, introduced by Reps. Justin Amash, R-Mich., and John Conyers, D-Mich.

This bipartisan bill would repeal the Cybersecurity Act of 2015, secretly negotiated provisions that were hastily incorporated into the omnibus appropriations bill enacted late last year. As we and others have stated consistently, these provisions are unlikely to increase the government’s ability to detect, intercept and thwart cyber attacks, yet they institute broad and undefined data-collection capabilities that are certain to undermine government accountability and further erode privacy protections.

Questions of cybersecurity and privacy should be debated openly in a manner that allows legislators and the public to criticize and participate. These questions should not be obscured by backroom deals that exclude critical perspectives and due process, and that many security experts have argued could result in worse security problems and worse privacy violations than before.

The Cybersecurity Act of 2015 included provisions unacceptable to the technology community, privacy and open-government advocates, as well as ordinary Americans, including:

  1. A new avenue through which the government will receive personally identifiable information and communications content, expanding surveillance on innocent Americans;
  2. Immunity from liability for companies that unnecessarily share private user information with the government and other companies;
  3. No reasonable limits on the type of information that can be shared, such as individuals’ personal online communications;
  4. Authorization for law enforcement and the intelligence community to use this information for purposes unrelated to cybersecurity, including the investigation and prosecution of unrelated crimes.
  5. An exemption to the Freedom of Information Act, and preemption of state and local laws on disclosure that seriously undermine government accountability and transparency.

Measures to strengthen cybersecurity should not come at the expense of exposing law-abiding Americans’ private information to government surveillance. Additionally, it should not be necessary to extend law-enforcement authorizations to non-cybersecurity purposes.

We call on Congress to repeal these unnecessary provisions and start a new conversation about the right way to address real cybersecurity threats, without undermining the privacy and security of all Americans and the accountability of government.

Sincerely,

R Street Institute

American Civil Liberties Union

American Library Association

Campaign for Liberty

Center for Democracy and Technology

Defending Dissent Foundation

Demand Progress

Fight For The Future

Free Press Action Fund

FreedomWorks

Government Accountability Project

Niskanen Center

Open Technology Institute

Open the Government

Restore the Fourth

Roots Action

X Lab

Clean Power Plan ruling puts states in a bind

January 22, 2016, 10:47 AM

The U.S. Court of Appeals for the D.C. Circuit yesterday denied requests to delay implementation of the Environmental Protection Agency’s Clean Power Plan.

At least 27 states have challenged the CPP, under which U.S. power plants must reduce their carbon dioxide emissions to 30 percent below 2005’s levels by 2030. Those lawsuits are still underway. What the court did was refuse to grant a “stay” blocking the rule from taking effect until the legal challenges are resolved.

Such injunctions are rarely granted, and failure to obtain one doesn’t necessarily mean the challenge will be unsuccessful. Nonetheless, the inability to secure a stay is a major setback for the challengers, who are fighting both the clock and the feds. Challenges to federal agency rules can take years to resolve. Meanwhile, the CPP will move forward.

Under the timeline set by the EPA, states must submit a plan to achieve the required emissions reductions by September. If a state refuses to submit a plan, the EPA will instead impose its own. States can seek a two-year extension, but even in that case, the lawsuits may not be resolved before states are forced to either submit a plan or risk having a federal plan imposed upon them.

The reality is that power companies have to make decisions about how to invest years in advance. In practice, this can mean that, even where a legal challenge wins, it still loses. Last year, for example, the Supreme Court invalidated the EPA’s Utility MACT rule governing mercury emissions from power plants. Yet by the time the case was resolved, the industry had already made all the changes required by the rule.

When it comes to the CPP, states no longer can afford to sit back and hope litigation will take care of things. Instead, they need to be proactive in developing the plans that work best for them. First and foremost, this means getting a two-year extension, which the EPA has made relatively easy to do. Beyond that, they need to look at ways to limit the CPP’s economic harms, and perhaps even use compliance as an opportunity to meet other objectives.

In particular, states should look at using the CPP as a vehicle to facilitate cuts to existing taxes. Under the CPP, states have the option to comply by imposing a fee on CO2 emissions from existing power plants. The revenue generated by these fees could offset cuts to state income, corporate, sales, or other taxes. If properly structured, pro-growth tax cuts could cancel out the negative effects of the higher electricity prices the CPP would cause and reduce emissions in the most economically efficient manner.

Preparing a state plan along these lines wouldn’t mean giving up on stopping the CPP, either through the courts or through the political process. But it would mean facing up to the reality that opposing the CPP isn’t necessarily going to stop it from happening.

States should prepare for all eventualities. If they don’t, they may find themselves living under a plan designed to suit the interests of federal bureaucrats, rather than their own citizens.