Out of the Storm News
Dear Chairman Thune and Ranking Member Nelson:
Every day, countless Americans use consumer review sites to share their experiences and opinions on the businesses and services they rely upon. These reviews have become instrumental in educating customers and informing their choices on everything from what doctor or mechanic to visit to where to shop, eat and stay. In fact, today, nearly 70 percent of customers rely on online reviews before making a purchase.
However, companies are now increasingly using unfair non-defamation clauses to silence consumers and limit their right to free speech. Businesses are employing these clauses, which are often hidden in nonnegotiable form contracts for goods and services, in order to penalize or monetarily fine customers who decide to share their negative experiences with others in the form of online reviews.
Non-defamation clauses stifle free speech and harm citizens’ ability to make informed purchasing decisions, while rewarding bad businesses that are willing to bully their clientele into silence. In response, we are joining together to express our support for the Consumer Review Freedom Act (S. 2044), which we believe will go a long way to protect consumers’ right to share legitimate speech on and offline.
This bipartisan legislation, introduced by Sen. John Thune, R-S.D., Sen. Brian Schatz, D-Hawaii, and Sen. Jerry Moran, R-Kan., strengthens First Amendment protections by prohibiting businesses from using non-defamation clauses to intimidate and muzzle honest reviewers. The Consumer Review Freedom Act will outlaw non-disparagement clauses in consumer contracts nationwide, while protecting the rights of consumers to freely share their experiences and opinions on the Internet without fear of intimidation.
Currently, Americans rely on a patchwork of state laws that do not equally protect the free speech rights of all Americans. Having federal legislation in place to help preserve the free-speech rights of American consumers will go a long way to ensuring deep-pocketed bullies are unable to quiet their critics.
By sharing honest reviews about the places we eat, shop, visit and stay, consumers are using their personal experiences to help their friends and neighbors make informed purchasing decisions, while ensuring American businesses are held accountable to their customers. We look forward to working with the Commerce Committee to quickly address any necessary technical amendments that might be needed as the bill moves forward, but wholeheartedly support the Senate’s efforts to pass this important legislation that protects the Internet as an open-speech platform.
Electronic Frontier Foundation
Fight for the Future
Information Technology & Innovation Foundation
Public Participation Project
R Street Institute
Hurricane Wilma’s 10th anniversary on Oct. 24 came and went without much fanfare. But for Floridians, it’s a marker that divides two very different chapters in our state’s history. Before that date was a two-year period during which Florida reeled under a barrage of seven major hurricanes. Since then it has been a hurricane-free decade for Florida — the longest such respite for the state in recorded history.
In the years immediately following the 2004 and 2005 hurricanes, state lawmakers made decisions that could be characterized as knee-jerk reactions to bring down insurance rates. They expanded state-run insurance mechanisms — Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund — beyond their ability to pay. This foisted enormous amounts of hurricane risk onto the backs of the state’s taxpayers. In short, they did what the federal government has been doing with the peril of flood for decades.
In more recent years, Florida lawmakers reversed many of those ill-conceived reforms to allow the private market to once again assume more of Florida’s enormous hurricane risk. Rates charged by state-run Citizens were unfrozen and allowed to gradually increase to reflect actual risk, and private companies re-entered the Florida market.
Both Citizens and the Cat Fund have taken advantage of the lowest private reinsurance rates in recent memory by farming out portions of their massive risk to the global markets, thus further insulating the state’s taxpayers from bailouts and assessments after a bad storm season.
In short, Florida’s property insurance market has largely stabilized, Floridians on average enjoy more competition and both Citizens and the Cat Fund are for the first time expected to be fully funded without needing a taxpayer bailout.
The National Flood Insurance Program, on the other hand, continues to foist enormous debt and risk onto taxpayers, while limiting consumer choice and competition.
The NFIP, administered by the Federal Emergency Management Agency, writes almost all flood insurance nationally, including millions of policies in Florida. For decades, the NFIP has underpriced its rates, which has discouraged private insurance companies from covering the peril of flood. This has caused a de-facto government monopoly, depriving Americans of a competitive flood insurance market.
A recent study by Karen Clark & Co., a firm that specializes in modeling catastrophe losses, revealed that, with $175 billion in exposed property, the Tampa Bay region is the metropolitan area most at-risk for catastrophic flood in the entire nation. Even worse, it is estimated that half of that risk goes uninsured.
Indeed, if half of the Tampa Bay area is uninsured when disaster strikes, it would take years for affected areas to fully recover. Residents and businesses would be displaced, and the state’s fragile economic recovery would grind to a halt.
With the NFIP facing $23 billion in debt — most of it sustained from storms such as Katrina and Sandy — Congress passed a measure in 2012 to increase rates. A second bill, in 2014, made the pace of increase more modest. It’s a small step in the right direction to help put the NFIP back on solid financial footing. Unfortunately, it also may contribute to somewhat higher uninsured rates in Tampa and elsewhere.
In response, Florida lawmakers passed bills in 2014 and 2015 allowing private insurance carriers to compete by writing flood policies. However, companies have been unable to appropriately price their premiums, because they lack the historical loss data and other information that only FEMA possesses.
Bill sponsor Sen. Jeff Brandes, R-St. Petersburg, and Florida Insurance Commissioner Kevin McCarty have asked FEMA to release this data to private companies so they can properly set their rates and begin writing flood policies. There are ways this can be accomplished without violating NFIP policyholders’ privacy rights: Many government agencies already share confidential data with private entities on a regular basis by redacting identifying information and/or requiring nondisclosure agreements, for example.
Additionally, FEMA should follow Florida Citizens and the Cat Fund’s example by taking advantage of the lowest reinsurance rates in recent memory. By transferring some of its massive flood risk to the private market, the NFIP could decrease the likelihood or severity of a post-disaster taxpayer bailout.
Florida lawmakers have already taken responsible steps to foster property and flood insurance competition. It is time for the federal government to do its part to break the NFIP monopoly, give private insurance companies the tools they need to compete and protect taxpayers from massive future bailouts.
As free-market organizations, we write to express our strong support for your committee’s ongoing efforts to defend commerce and freedom of expression. In particular, as advocates for a free and open Internet that facilitates robust online markets, we urge you to support the critical free-speech protections in the Consumer Review Freedom Act of 2015 (S. 2044).
We take this position for one simple reason: when conducting business on the Internet, firms must maintain good reputations to stay competitive. Without this channel for accountability and transparency, public confidence in online commerce itself would be undermined.
The Internet is a critical nexus for commerce, providing a quarter-billion Americans with access to new markets and enhanced economic opportunities. Of central importance to these online markets is their ability to conduct reliable transactions with a full range of commercial firms and entrepreneurial individuals.
Thanks to online reviews and feedback, consumers can feel secure doing business with those whom they’ve never met to make a purchase, get a ride, arrange a place to stay or conduct myriad other transactions. Potential customers also have access to far better, richer information about restaurants, hotels and local service providers than ever before. Online reviews are an essential channel for reputational feedback; they provide online firms and entrepreneurs with the greatest incentives to maximize benefits to customers.
Unfortunately, bad actors sometimes use abusive lawsuits to silence their critics and weaken their competitors. This undermines everyone’s ability to engage in an open, transparent and free market.
The Consumer Review Freedom Act addresses this issue by targeting non-disparagement clauses, which sometimes are buried within firms’ terms of service or other non-negotiable agreements and which restrict consumers’ ability to review their experiences fairly and honestly.
These agreements represent unfair contracts of adhesion and threaten to strangle the vast economic benefits of online reviews. Furthermore, they restrict freedom of speech and undermine the promise and spirit of the First Amendment. We urge you to support this package of reforms to help create a strong national standard for the protection of both free expression and free markets.
Mike Godwin, R Street Institute
Mytheos Holt, Institute for Liberty
Steve Pociask, American Consumer Institute
Join AFF Austin and the R Street Institute for drinks and discussion with Ronald Bailey, author of End of Doom: Environmental Renewal in the Twenty-First Century and Ecoscam to talk about the never-ending forecasts of impending environmental catastrophe, and the ability of markets and human resourcefulness to circumvent disaster.
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A 2013 poll by the firm Mercury for the national Taxpayers Union and the R Street Institute showed that voters opposed Internet sales-tax proposals such as the Marketplace Fairness Act 57 to 35 percent. The poll surveyed 1,000 likely voters with a margin of error of plus or minus 3.1 percentage points.
R.J. Lehmann at the R Street Institute tried a little searching on the Nexis news database and discovered that Jill Biden is more than three times more likely to be called “Dr.” by The New York Times as Ben Carson is!…
WASHINGTON (Nov. 3, 2015) – Having already waited seven years for a decision from the U.S. State Department, the R Street Institute was disappointed at yesterday’s news that TransCanada was forced into asking for further delays to the Keystone XL review and approval process.
“For years, this project has been languishing, when it could be creating thousands of jobs and contributing billions of dollars to the economy,” said Catrina Rorke, R Street’s director of energy policy. “The approval process has become so politicized that TransCanada has decided it would be better to wait another year for an approval decision than face sure defeat at the hands of this administration.”
The move by TransCanada is an effort to delay the final State Department ruling and executive branch decision until after the Nebraska Public Service Commission completes review of the pipeline. That likely won’t happen until after President Barack Obama leaves office. Most parties believe the Obama administration would oppose moving forward with the pipeline, despite the obvious benefits to the U.S. economy.
R Street has been a leader in crafting conservative solutions to America’s energy and environmental challenges, such as promoting responsible hydraulic fracturing, identifying free-market alternatives to command-and-control greenhouse gas regulation and supporting greater exports of domestically produced natural gas.
The pipeline would offer U.S. refineries access to a secure source of North American oil. The State Department’s own estimates show it would create 42,000 jobs and contribute roughly $3.4 billion to the U.S. economy. Because pipelines are safer and less emissions-intensive than other forms of transport, the State Department found the project also is likely to reduce greenhouse gas emissions and to lower the risk of oil spills, when compared with existing transport methods.
“Although this request will lead to yet more delays in the process, we are hopeful that it serves a greater good,” said Rorke. “Keystone XL is just one pipeline, but the gross mismanagement of the decision process by this administration has highlighted the risk for all other companies looking to invest in American infrastructure. Perhaps in a new administration, the benefits of the pipeline will be better recognized and accepted, and the road forward will be smoother.”
Judges occasionally descend from the august pedestals on which they sit to offer decidedly human rebukes to the parties before them. Among attorneys, these moments have a tongue-in-cheek name: “bench slaps.”
At a September hearing, Judge Vince Chhabria of the U.S. District Court for the Northern District of California offered a candid appraisal of a claim for defamation brought by payroll service ADP against the benefits platform Zenefits (in a case known as ADP LLC v. YourPeople, Inc. dba Zenefits and Parker Conrad). A mere two pages in to a 64-page hearing transcript, Chhabria informed the counsel for ADP that:
“…the primary question in this case is whether the lawsuit will die a slow death or a fast death.”
Slow or fast, a case pronounced dead on arrival has the sting of a bench slap. In this case, the death came sooner still, in the form of a settlement between the parties. The reported terms of the settlement provide that the parties drop their claims against one another and, further, clarify that ADP has no reason to believe Zenefits has security problems with its software, while Zenefits has no reason to believe that ADP is unethical.
Now that that’s decided, it’s apparent that the second “slap” of note in the case – Zenefits’ anti-SLAPP motion – played a crucial role in changing the direction of the litigation.
The “SLAPP” in “anti-SLAPP” stands for “Strategic Lawsuits against Public Participation.” The law, in effect in California and 28 other states, allows a person or firm sued for exercising their free speech an opportunity to circumvent time-consuming and costly litigation and discovery, by requiring the party that initiated the lawsuit to satisfy certain threshold criteria before their case may proceed.
In the ADP v. Zenefits dispute, though not dispositive in the mind of Judge Chharbria, the legal leverage provided to Zenefits in the form of an anti-SLAPP motion changed the direction of the case. It provided the fast-growing startup with a powerful tool it could use to combat a claim the court believed had no chance of success.
But while California has a relatively broad anti-SLAPP law (subject to a commercial-speech exception that likely bears reconsideration), other states limit the circumstance in which an anti-SLAPP motion may be filed. That’s a problem, but more troubling still is that 22 states have no anti-SLAPP statute at all.
This case highlights the need for federal anti-SLAPP legislation. First Amendment protections should apply irrespective of the state in which one sits, as that leads to forum shopping. What’s more, the free market demands these protections. It takes little imagination to envision scenarios in which startups less established than Zenefits could have their fundraising efforts stymied or its business model choked out of existence by virtue of a meritless lawsuit.
Without the protections offered by anti-SLAPP statutes, both consumer and commercial interests are endangered by incumbent market participants that have the luxury of pursuing litigation as part of their business strategy.
As a member of the SPEAK FREE Coalition, we at R Street have been beating the drum for a federal anti-SLAPP law for a while now. Last week, I participated in a panel discussing the benefits of federal anti-SLAPP legislation. Today, my colleague Mike Godwin will appear on panel to discuss the specifics of legislation brought by Rep. Blake Farenthold, R-Texas.
As the ADP v. Zenefits suit demonstrates, the need for federal anti-SLAPP legislation is both real and immediate. What’s more, it falls squarely within the realm of achievable bipartisan agreement. The bench slaps that it will engender down the road only sweeten the deal.
This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
A modeling study by Sara Kalkhoran and Stanton A. Glantz published in the Oct. 1, 2015 edition of JAMA Internal Medicine can reasonably be interpreted as demonstrating the possibility that promoting e-cigarette sales for smoking cessation in the United States has the potential for substantial public-health benefits. But the authors posit that net benefit is far from guaranteed, given uncertainties about the risk posed by e-cigarettes, compared to tobacco cigarettes, and the potential for teens to be recruited to nicotine addiction.
The data presented make the case that the impact of e-cigarettes on current smokers is almost entirely beneficial. The magnitude of the benefit depends on the reduction in risk offered by s-cigarettes. On the other hand, their model shows only harm to non-smoking teens. The magnitude of this harm is presented as proportional both to the harm posed by nicotine to the developing teen brain and to the potential for teens addicted to e-cigarettes to transition to tobacco cigarettes.
If, however, the balance of potential benefits and harms in the United States is similar to the balance articulated by British public health experts – and reflected by some American investigators, including myself – substantial public-health benefits will be assured.
Given the potential benefit of adding a tobacco-harm-reduction component to current tobacco-control programming, perhaps the time has come for American public-health authorities to consider actively what steps could be taken to capture these potential benefits, while minimizing, if not nearly totally eliminating, the potential harms.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
The Portland City Council demonstrated remarkably good judgement when it instituted its transportation network company pilot program back in April, allowing firms like Uber and Lyft to operate while simultaneously deregulation the taxi industry.
Now, a more predictably onerous proposal has emerged from one of the city’s commissioners. On Nov. 5, the City Council will have an opportunity to resolve, in no uncertain terms, what sort of transportation-for-hire future it prefers.
The new proposal, introduced by Commissioner Steve Novick as part of a massive report on transportation-for-hire trends in the city, is a 153-page monument to the aspirations of a nanny-state.
As if to leave to leave no question about its intent to utterly control the market, the section regulating TNCs begins with the statement: “The operation of Transportation Network Companies is a privilege and not a right.” The proposal only devolves further from there.
Gone are flat permit fees, replaced by a regressive ride-surcharge model. Gone is the relatively low barrier to entry, vital to the economic opportunity provided by TNCs. It’s replaced by a needless city-mandated training course to inform drivers of, among other things, the Rose City’s many tourist attractions. Restricted are the vital dynamic pricing tools which guarantee that service is available during periods of high demand.
The city’s current politics don’t appear to favor continued liberalization. The pilot program was adopted with a 3-2 vote, Commissioner Steve Novick voting in favor of the program. Now, as the sponsor of the new proposal, Novick’s mind is apparently in closer alignment with those who opposed it.
At R Street, we provide a yearly evaluation of the nation’s municipal transportation-for-hire marketplaces, known as RideScore. If Portland adopts the Novick proposal, it will, as a comparative matter, cement its place as one of the most restrictive jurisdictions in the country. Such a development can only hurt the very constituents that Novick and his like-minded colleagues aspire to help.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Landslides are a problem for which the United States has yet to come up with an answer. A recent essay by Penn State University law professor Christopher C. French – titled “Insuring Landslides: America’s Uninsured Natural Catastrophes” – offers a grim tale not only of the $3.5 billion in damage that slides cause across all 50 states, but also just how little of the damage is covered by insurance.
According to French, the primary causes of the underinsurance for landslides are the “earth movement” exclusions contained in most standard property insurance policies and the fact that the surplus-lines market has done a poor job of providing the needed stand-alone policies. Compounding the latter problem is that surplus-lines coverage often excludes damage sustained to a policyholder’s land.
To remedy the insurance shortfall, French prescribes a not-insignificant amount of state intervention. He proposes creating a state-sponsored landslide insurance programs or, in light of the bleak legislative prospects for such a proposal, having states bar insurers from writing landslide exclusions into their homeowners’ policies.
Both of these suggestions are undesirable, and the first is completely implausible. A state-sponsored “all-risk” catastrophe policy has been imagined and proposed many times before. The idea would be to get a big enough pool of insureds to offset the expense of the additional coverage. It’s the same basic premise as the Affordable Care Act.
Of course, like the ACA, such a program would almost invariably be made to sell its policies at actuarially unsound rates. Private insurers already face a number of financial pressures that challenge their ability to pay catastrophe claims, including taxes, overhead and marketing expenses and investors’ demand for returns. But there are nothing like the incentives on government insurance programs to underprice coverage and then demand taxpayer bailouts when catastrophe losses threaten to render them insolvent. In the absence of huge political will to establish such a program, a federally sponsored pool is a non-starter.
French’s second policy recommendation, to prevent insurers from excluding landslide coverage from their homeowners’ policies, is more realistic and, therefore, bears further consideration. Two of his arguments bear special consideration because they are offered as responses to counterfactual objections to his proposal.
First, he argues that, because insurers are already regulated heavily, proscribing insurers’ ability to exclude landslide coverage is no more than another in a long list of regulatory actions to constrain insurer activity. Secondly, he argues that, because many lines of insurance already see cross-subsidies, there’s no especially good reason not to require them in coverage for landslides.
That states already exercise power to regulate how insurers structure and price their products tells you only that regulators can do so, not that they should. Generally speaking, states that have opted for less regulatory involvement have enjoyed the benefits of competition wrought by greater flexibility. Our recent study examining the troublesome legacy of California’s Proposition 103 makes that much clear.
There’s also the less abstract lessons that can be drawn from California’s experience with earthquake insurance. A long explanation of the saga can be found here. Briefly, in 1985, with support from insurers, the state of California decided to mandate that insurers offer earthquake insurance to all residents who purchase homeowners policies. When the 1994 Northridge earthquake struck, the earthquake offer’s link to homeowners’ policies led to a collapse in the state’s real estate market, as insurers refused to issue homeowners’ policies in an effort to avoid shouldering more earthquake risk.
Neither insurers nor regulators could have envisioned such a scenario when the two coverages first became linked. But in light of that experience, and particularly considering the still-unknown effects of climate change on severe weather (including the possibility of more landslides), it’s not difficult to imagine that requiring landslide coverage in homeowners’ policies could have a similar impact on real-estate markets in states that adopted the requirement.
Setting aside the philosophical question that French poses about individual rights and autonomy, it’s counterintuitive that, in a period during which underwriting precision continues to improve, easily differentiated risks should be pooled together. If landslide coverage is so important to cross-subsidize, why not bundle it with truly dissimilar risks? The size of the risk pool would increase and the cost of the coverage would go down. Genuinely “all-risk” policies have never gained traction because consumers’ wants and needs have never justified a cross-subsidy.
French’s underlying goal is unfettered access to affordable landslide coverage. That’s a noble goal, even if the solutions he offers are untenable. For shining a light on this underdeveloped part of the nation’s risk management system, he deserves attention and thanks.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
From Blue Nation Review:
Conservative think tank R Street, started by former Heartland Institute staffer Eli Lehrer, is actively searching for conservative methods for addressing the issue.
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As the end of the Congressional session approaches, you will face many calls to raise taxes in order to “pay for” higher levels of spending and debt. On behalf of millions of conservative and free market activists, grasstops leaders, and ordinary Americans, we urge you to firmly reject these calls.
The most common form this takes inside the Beltway is a clamor to raise taxes in order to bust the Budget Control Act caps, which have helped to restrain spending, reduce the deficit and save the average American household nearly $9,000 to date. Higher taxes are also floated in connection with things like a highway bill, raising the debt ceiling, passing an omnibus spending bill or continuing resolution, or any of a number of other “must pass” vehicles.
This year alone, higher taxes have been called for on gasoline, “carried interest” long-term capital gains, itemized deductions, income earned overseas by U.S. companies and which has already faced taxation abroad, oil and gas exploration and development, cigarettes and other tobacco products, insurance transactions with non-US affiliates, and many others.
The proper context to have these conversations is within revenue-neutral tax reform that doesn’t raise tax rates, not as “pay fors” within hurried year-end spending packages.
We urge you to reject any tax increases in the spending and debt conversations between now and the end of the year.
Grover Norquist, Americans for Tax Reform
Brandon Arnold, National Taxpayers Union
Tom Schatz, Council for Citizens Against Government Waste
Andrew Moylan, R Street
Phil Kerpen, American Committment
Neil Bradley, Conservative Reform Network
Kevin Kosar, a former CRS researcher, said it was unfair to the public that the CRS keeps its front door closed while the reports can legally move through other channels. “You have 20,000 congressional staff who are free to hand out CRS reports like candy,” said Kosar, now a senior fellow and government project director with the conservative R Street Institute, and who has also written for POLITICO. “It’s just that most of America doesn’t know where to look for them.”
From The Heartland Institute:
“This bill would reduce disruptions to interstate commerce, consistent with Congress’ constitutional authority,” Moylan said. “In doing so, it would protect consumers from having to pay higher bills, encourage more use and expansion of the Internet, and trim about $500 million in taxes used to prop up bloated state budgets.”
From The Daily Caller:
“If banning e-cigarette sales to minors [is] causing more of them to take up smoking, then the current policy trend is almost certainly a net negative for public health resulting in millions of cumulative years of lost life,” R Street think tank scholar Eli Lehrer wrote in the Weekly Standard…