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Sanders talks child care and Head Start on The Big Picture

February 04, 2015, 12:31 PM

R Street Outreach Director and Senior Fellow Lori Sanders joined host Thom Hartmann on his RT show The Big Picture to discuss President Barack Obama’s new childcare proposal and whether the federal Head Start program has worked quite as well as advertised.

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R Street praises introduction of digital-privacy legislation in both chambers

February 04, 2015, 12:06 PM

WASHINGTON (Feb. 4, 2015) – The R Street Institute praised members in both houses of Congress today for introducing reform legislation aimed at improving the privacy of Americans’ electronic communications.

The Electronic Communications Privacy Amendments Act of 2015 will update the Electronic Communications Privacy Act (ECPA) to improve privacy protections for electronic communications stored or maintained by a third-party service provider. The House version of the bill is sponsored by Reps. Kevin Yoder, R-Kansas, and Jared Polis, D-Colo., along with 227 co-sponsors. The Senate measure is sponsored by Sens. Mike Lee, R-Utah, and Patrick Leahy, D-Vt., as well as six other co-sponsors.

The bills require search warrants based on a showing of probable cause in order to compel a service provider to disclose e-mail and other private electronic communications, a requirement that will apply no matter how old the electronic communications are.  Under current law, the government need only use a subpoena to obtain electronic communications if they are more than 180 days old.

“These bills represent a long-needed improvement of privacy protections under a decades-old law,” said Mike Godwin, director of innovation policy at R Street. “When ECPA was first crafted in the 1980s, it was incorrectly assumed that e-mail was a comparatively rare, business-centered channel of communications. In the 21st century, however, all Americans know how much their individual personal privacy may be damaged by unchecked government agencies capturing gigabytes of older email.”

“This legislation affirms that Americans have reasonable expectations of privacy in their email accounts and other personal and professional content stored online,” Godwin said. “However, it does so while preserving the legal tools necessary to conduct criminal investigations and protect the public.”

“Reps. Yoder and Polis, and Sens. Lee and Leahy should be commended for their efforts to expand privacy protection of all Americans,” he said.

The FAA will not regulate your moon base…yet

February 04, 2015, 8:11 AM

With all this talk of Mars exploration, the U.S. government clearly has space-faring commercialism on its mind.

In clear pursuit of Newt Gingrich’s sweeping vision, a company called Bigelow Aerospace is considering putting some sort of inflatable base on the moon, and in the process of completing their plans, contacted the Federal Aviation Administration to find out whether their biodome would fall under American authority. In a letter obtained by Reuters, the FAA noted, to the great relief of all parties involved, that no, the FAA does not have authority to govern your moonbase. Yet.

According to documents obtained by Reuters, U.S. companies can stake claims to lunar territory through an existing licensing process for space launches.

The Federal Aviation Administration, in a previously undisclosed late-December letter to Bigelow Aerospace, said the agency intends to “leverage the FAA’s existing launch licensing authority to encourage private sector investments in space systems by ensuring that commercial activities can be conducted on a non-interference basis.”

In other words, experts said, Bigelow could set up one of its proposed inflatable habitats on the moon, and expect to have exclusive rights to that territory – as well as related areas that might be tapped for mining, exploration and other activities.

The FAA did go on, however, to note that the only reason they wouldn’t be taxing and regulating your moonbase habitat is simply because they lack the infrastructure. Right now, the FAA can’t send people to the moon to see if what you’re doing falls within the bounds of American law, and the moon doesn’t have the authority to send anyone to Congress to control the government’s regulating power, so consider the moon the only place (not) on Earth you can be truly free of elected officials and their influence. For now.

The FAA did also point out that a United Nations treaty, drafted around the time of the Apollo moon landing, does specify that each country’s bases must be governed by that country’s laws and authorities. Bigelow is an American company, though it is working in cooperation with a number of other countries with the capacity to deliver private citizens into space. This year, they will begin testing an outer space habitat on the International Space Station and then plan to build orbital habitats that can serve as vacation hubs. The moon base is still years away, but it’s definitely in the plan.

FAA suit hopes to help ‘flight sharing’ take off

February 03, 2015, 10:47 AM

The Arizona-based Goldwater Institute last month sued the Federal Aviation Administration on behalf of Flytenow Inc., a fledgling transportation network company that is looking to do for “flight sharing” what firms like Uber and Lyft already have done for ridesharing.

Before an FAA ruling that all but shut down Flytenow last year, the service allowed private and general aviation pilots to post travel plans online, and offered passengers a means to contact those pilots and make arrangements to share a trip. In August 2014, the similar flight-sharing service AirPooler voluntarily asked the FAA to rule on whether their business model was legal. The FAA ruled that it was not and that AirPooler and other flight-sharing services were operating illegal airlines.

Goldwater’s suit challenges the ruling on the First Amendment grounds, arguing that the service, and those of its competitors, are not functionally different than posting flight plans and offers to share expenses on a bulletin board in an airport. For decades, the FAA has allowed pilots to make such postings in exchange for passengers’ help in paying for fuel and other expenses.

There are many reasons flyers might look into flight-sharing services. General aviation pilots often fly out of smaller airports, where passengers are not subject to the same intrusive TSA screenings they must endure at the large commercial airports. Flight-sharing services also would expand the air-travel options for those who live in small towns and smaller cities. Instead of traveling hours to a major city to fly, they could possibly find a cheaper flight closer to home.

Surveys also routinely show the major commercial airlines have extremely poor customer service satisfaction. Airlines have the fourth worst customer satisfaction ratings of any industry, according to the most recent American Customer Satisfaction Index.

Flight-sharing services are also a benefit for many general aviation pilots. It would give them an incentive to stay flying. It also could improve general aviation safety, as private pilots would have more opportunity to defray the costs associated with routine maintenance and equipment and to be less rusty.

Instead of fighting technological advancement, the FAA should work on a regulatory scheme that pairs basic consumer and safety protections with preserving the longstanding practice of cost-sharing by bringing it up to date for the 21st century. The ideal regulatory framework is one that promotes innovation and helps the flying public win by giving them more options.

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Transparency in government-sponsored ads

February 03, 2015, 9:17 AM

In recent years, Americans have been inundated with commercials highlighting the Affordable Care Act, some of which have been slagged as rather tasteless and exaggerated. The Department of Health and Human Services has even hosted cash-prize video competitions to encourage enrollment into the health exchanges.

HHS isn’t the only federal agency turning to offbeat marketing campaigns in an effort to remain relevant in the public eye. The U.S. Postal Service has done the same, to similarly mixed response, stirring the beginnings of a conversation about the proper role of government-funded advertising and promotional materials.

There currently are no rules requiring government-sponsored ads to disclose their funding source, but legislation recently re-introduced by Rep. Billy Long, R-Mo., would change that. Under the Taxpayer Transparency Act of 2015, publicly funded commercials and promotional materials would be required to include disclaimers stating they were sponsored at taxpayer expense. Last year we highlighted this reform, which was passed by voice vote in the House before stalling in the Senate.

The discussion about government advertising is nothing new. Ten years ago, the U.S. Government Accountability Office and members of Congress investigated the accuracy and value of Bush administration advertisements related to Medicare. More recently, there has been serious debate about the exorbitant sums spent by the U.S. Armed Forces sponsoring NASCAR drivers.

Last year, while he was still at the Congressional Research Service, R Street Institute Senior Fellow Kevin Kosar authored a report looking at the need for balance in evaluating the government’s role in advertising. Data about government advertising expenditures can be difficult to pinpoint, Kosar explained, but noted that limitations on government advertising are already established by the GAO’s Principles of Federal Appropriations Law.

Rep. Long’s effort to increase accountability in federally funding advertising is a promising step to make government more accountable to the public. Perhaps the legislation will build momentum following last year’s successful passage in the House and receive serious consideration in the Senate, as well.

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Protecting Communications Act Section 230 key for Google supporters against Mississippi AG

February 03, 2015, 8:34 AM

From Consumer Electronics Daily:

Supporters of Google’s case against Mississippi Attorney General Jim Hood want to ensure the viability of Communications Act Section 230, they said in interviews and statements Monday. But Google’s critics said the company and its allies are using disingenuous means to make a point about copyright where it doesn’t apply. CEA, the Computer and Communications Industry Association and Engine filed a joint brief on behalf of Google Friday, a CEA news release Monday said. The Center for Democracy and Technology, Electronic Frontier Foundation, New America Foundation’s Open Technology Institute, Public Knowledge and R-Street Institute also filed a pro-Google brief Friday, an EFF news release said.

Industry groups join Google’s attack against Hood’s inquiry

February 03, 2015, 8:32 AM

From the Associated Press:

“Simply put, requiring online service providers either to respond to subpoenas directed primarily at third-party conduct — or to engage in protracted and expensive litigation to challenge their propriety — could result in extraordinary costs for those providers,” states a brief sponsored by the Electronic Frontier Foundation, Center for Democracy & Technology, Public Knowledge, Open Technology Institute and R Street Institute.

Battle over Google subpoena threatens critical online free speech protections

February 03, 2015, 8:04 AM

From Electronic Frontier Foundation:

The Center for Democracy and Technology, the Open Technology Institute, Public Knowledge, and R Street Institute joined EFF in the brief.

R Street concerned about protectionist reinsurance tax

February 02, 2015, 1:27 PM

WASHINGTON (Feb. 2, 2015) – The R Street Institute today expressed concern about a plank in the White House’s proposed 2016 budget that would impose protectionist taxes on legitimate reinsurance transactions made by affiliates of non-U.S. companies.

The proposal, which the White House estimates would raise $7.39 billion over the next decade, would disallow the deduction for certain reinsurance transactions between domestic insurers and reinsurers and affiliates that are based offshore.

“This plan often is conflated with proposals to crack down on U.S. firms shifting money overseas. That’s not what this is about at all,” said R Street senior fellow R.J. Lehmann. “This tax would hit some of the oldest and most venerable European and Asian insurers and reinsurers, punishing them for the crimes of choosing to serve U.S. consumers, practicing responsible risk management and being located in countries with more reasonable approaches to corporate income tax than the United States.”

The proposal – and similar legislation from Sen. Bob Menendez, D-N.J. and Reps. Richard Neal, D-Mass., and Dave Camp, R-Mich. – would particularly impact states like Florida and California, which face significant natural disaster risks and depend on insurance and reinsurance capacity from firms headquartered outside of the United States. It also would hurt smaller U.S. insurers that rely on the affordable reinsurance that can purchased from firms doing business in the global market.

A report from the Cambridge, Mass.-based Brattle Group estimated taxing such transactions would cost consumers between $110 and $140 billion over the next decade.

“The goal is to give a leg up to U.S. firms who charge more,” said Lehmann. “It’s protectionism, plain and simple.”

Last year, R Street joined with seven other taxpayer and free-market groups – including Americans for Tax Reform, National Taxpayers Union and Americans for Prosperity – to send a letter to the Senate Finance Committee opposing these sorts of protectionist tax proposals.


R Street welcomes new southern region director

February 02, 2015, 11:38 AM

WASHINGTON (Feb. 2, 2015) – The R Street Institute is proud to welcome Cameron Smith as the institute’s southern region director. He will also continue to be a senior fellow with R Street.

In this newly created full-time position, Smith will work with government officials, businesses and key stakeholders across the South to develop and promote market-driven solutions to the region’s unique public policy challenges, He also brings invaluable legislative and policy expertise to R Street’s national projects involving energy, the environment, agriculture and federal regulatory oversight.

“Cameron is one of the leading right-of-center thinkers anywhere on the environment, regulation and a host of other important issues,” said R Street President Eli Lehrer. “He’s a fantastic writer and I’ve admired him for years. I’m enormously pleased that he’s joining R Street in a full-time capacity.”

Smith is a regular columnist for the Alabama Media Group, which operates the Birmingham News, Huntsville Times and the Press-Register in Mobile, Ala. Previously, he was national director of the Liberty Foundation of America and served as vice president and general counsel of the Alabama Policy Institute.

“R Street has repeatedly demonstrated the ability to build broad coalitions, conduct quality research and develop pragmatic solutions to some of our nation’s most pressing challenges,” Smith said. “I am thrilled to join a team that crafts those solutions with constant attention to producing positive change.”

Smith served several years in Washington as counsel in both the U.S. House and U.S. Senate. In the Senate, he worked for Sen. Jeff Sessions, R-Ala., as legislative counsel on the Senate Judiciary Committee. In the House, Smith ran the House Intellectual Property Caucus and aided Rep. Tom Feeney, R-Fla., as counsel.

He later served as counsel to Rep. Geoff Davis, R-Ky., a member of the House Ways and Means Committee. His primary legislative project for Davis was H.R. 10, the REINS Act, introduced in the 112th Congress. That bill was designed to provide significantly more accountability for Congress regarding the impacts of federal regulation.

He is a graduate of Washington and Lee University and the University of Alabama School of Law, and is a member of the Tennessee and Alabama bars.

Amicus brief in Google v Hood

February 02, 2015, 11:16 AM

Amici Curiae submit this brief because the stakes of this case go well beyond the particular burden the attorney general’s investigation may place on one service provider. This litigation raises a broader question: whether Section 230 of the Communications Decency Act (“Section 230″) precludes a state official from saddling any Internet service provider with burdensome and costly discovery based primarily on the provider’s refusal to monitor, take down or block disfavored third-party content. Given Section 230’s plain language, and its all-but-universal interpretation by the courts, this court should find that it does.

A holding to the contrary would contravene Congress’ intent in enacting the statute, to the detriment of not only large service providers like the plaintiff, but also to small service providers and the Internet users who rely on their platforms to communicate, learn and organize. One of Congress’ primary goals in passing Section 230 was to encourage the development of the Internet as a platform for speech by shielding intermediaries not only from liability, but also from the heavy legal burden of complying with legal process related to third-party content.

Simply put, requiring online service providers either to respond to subpoenas directed primarily at third-party conduct —or to engage in protracted and expensive litigation to challenge their propriety—could result in extraordinary costs for those providers. Although some large service providers may have the resources to shoulder significant discovery burdens, a small online service provider likely would not. Smaller providers would therefore likely either adopt the restrictions required to avoid such a burden or leave the business altogether, depriving users of valuable platforms for speech. Either outcome would, in turn, chill the online speech of Internet users who communicate via these platforms—exactly the result Congress sought to avoid.

In keeping with both the statutory text and Congress’ intent, the kind of burden presented here should only be incurred where the party seeking discovery can show specific, non-speculative allegations of conduct not immunized by Section 230. Accordingly, this court should find that the interrogatories and document requests in the attorney general’s subpoena directed at third-party content are barred by Section 230, deny the attorney general’s motion to dismiss and grant plaintiff’s motion for preliminary injunction.

Congress should pass the president’s ‘kill list’

February 02, 2015, 9:29 AM

President Barack Obama’s penultimate budget will be delivered to Congress today. Per the Budget and Accounting Act of 1921, the president’s budget will enumerate recommended spending levels for nearly every federal program, project and activity.

If past is prologue, the budget’s many thick volumes will land with a thud.

The Republican-controlled Congress is all but certain to treat Obama’s fiscal 2016 budget as dead on arrival. This nose-thumbing has been the tradition in Congress for years, regardless of party.

To say the nation’s budget process is not working is a gross understatement. It is a wreck. By law, Congress is supposed to adopt a budget by April 15 each year, and then appropriate the budgeted amounts before the fiscal year ends on Sept. 30.

In reality, Congress seldom completes those tasks on time, and in recent years, it often has not adopted a budget at all. Omnibus spending legislation and last-minute continuing resolutions have instead become the norm. To the disgust of the public and the financial markets, our country has twice in recent years seen multi-week shutdowns of the federal government due to this dysfunction.

Eventually, Congress will need to rethink the Congressional Budget Act of 1974, which aimed to create an orderly, timely and predictable process for financing the government. But in the meantime, there is something Congress could do that would be easy and beneficial: pass the president’s “kill list.”

Formally known as “terminations, reductions and savings to discretionary spending,” the kill list is a collection of antiquated, failed and needless expenditures. This past year, the president proposed more than 130 cuts that would save $17 billion annually. Nearly every federal agency had something on the block. Health and Human Services’ $50 million-a-year Access to Recovery initiative was to be zeroed out. Spending on the Defense Department’s troubled ground combat vehicle program was to be halved. Some 250 Department of Agriculture facilities would have been closed.

Admittedly, these proposed cuts amounted to a small snip — $17 billion of the mammoth $3.8 trillion federal budget. But find $17 billion here and $17 billion there, and eventually, you’re talking about real money. Moreover, there’s nothing to stop a president from producing a kill list that would produce even bigger savings.

Obama’s latest budget will include yet another kill list. Rather than treat it as a dead letter, Congress should put the list’s contents into a bill and grant it floor time for a straight up-or-down vote.

Voting to enact the kill list would be a win-win-win maneuver. The president would get a few of the cuts he desires. The Republican Congress could immediately demonstrate to the public it can work in a bipartisan manner. The public, not to be forgotten, would win by saving some of its wasted tax dollars.

Enacting this year’s kill list should not be a one-shot deal. Rather, Congress should make voting on the presidential kill list an annual exercise. It should send the president a simple statute requiring a prompt deadline (say, 10 days) for Congress to vote on the kill list under expedited procedures, as it does with some trade deals and military base closures.

The inevitability of the sharing economy

January 30, 2015, 9:00 AM

Uber, AirBnB and other companies that mine the so-called “sharing economy” continue to face legal and regulatory challenges, both in the United States and internationally.

At heart, these services use the Internet to scale up the sort of thing young people have done for ages. Going home for the weekend? Post a note on a dorm bulletin board offering to share gas and you’d likely get a ride. Coming into town for a big concert? With a few phone calls you could easily find a friend of a friend of a friend who would let you crash on his couch in return for a couple of six packs.

This is why Uber, Lyft and AirBnB strike such a chord with millennials. These three companies have the most mindshare, but there are many others on the rise: DogVacay (pet-sitting), RelayRides and GetAround (peer-to-peer car renting) and TaskRabbit (household chores and office help). They align perfectly with twenty-something economics, ever moreso today when your first “job” might be little more than an unpaid internship. Meanwhile, the platforms offer individuals a means of income in a changing job environment where conventional long-term employment opportunities are decreasing in favor automation and contract workers.

That’s why, in the end, these services will win out, despite any short-term setbacks they encounter along the way from unimaginative local lawmakers with little else to do. They bring considerable ground-level muscle to a local economy. In the case of apartment- and ride-sharing, the easier it is to get buyers and sellers to and around your town, the more money they will spend in your town.

In 2014, I attended city council hearings on ride-sharing in Houston and San Antonio. Although each had different outcomes, an air of inevitability was evident in both meetings, as if city council members tacitly understood that, no matter what they decided that day, the sharing economy is here to stay. The Houston City Council bowed to reality, and gave Uber and Lyft considerable room to operate. San Antonio…not so much. There, insurance requirements for Uber and Lyft drivers, which exceed those for regular cab drivers, seem designed to make it too costly for ride-sharing services to take root. However, the regulation will be revisited in six months.

The most incisive comment during the San Antonio public hearing came from Councilman Ron Nirenberg, who said that everything he heard from Uber and Lyft supporters was about expanding the market and improving service for consumers, while all he heard from cab company representatives were attacks on ride-sharing companies.

From where I was sitting, this observation largely was true. One of the few cab drivers who did not attack Uber and Lyft didn’t help the case for cab companies either. She said she made an effort to keep her cab clean and would lower her fare to match Uber’s if a rider could show her the quote. So while she may have intended to argue against ride-sharing, she implicitly admitted that ride-sharing competition was making her a better service provider.

But the competitive aspect is not all there is. No matter what their political make-up, city councils know that opposition to Uber, AirBnB and the larger sharing economy runs counter to the very policies they need to create functional urban environments into the future.

Technology is part of it. But consider also the considerable taxpayer dollars devoted to policies designed to deliver residential density and re-establish neighborhoods—bike-sharing, green space and zoning initiative that favor small and diverse shops and restaurants, rather than national chains. The value of these programs is diminished when cities simultaneously stick to outmoded mechanisms from past eras, like micromanaging the local livery market.

Attempting to nurture a population base of young professionals while deliberately preventing these same young professionals from connecting for mutual economic benefit…well, counterproductive is a nice word for it.

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A tale of two turnpikes

January 29, 2015, 9:00 AM

Several times a year, I make the drive from Chicago to my parents’ house in Youngstown, Ohio. It’s a 400-mile straight shot on the Indiana and Ohio Turnpikes – I-80/-I90 – and a key section of the nation’s interstate system.

And let me tell you, the Indiana Toll Road sucks, although anecdotal evidence would indicate that you are less likely to get a ticket In Indiana than in Ohio. The Ohio Turnpike has clean bathrooms and clean restaurants. The gift shops have things you might actually buy as gifts! Meanwhile, the rest stops on the Indiana Toll Road are just sad.

No surprise, the stop at Ohio’s mile post 20.8, closest to the Indiana border, is always crowded. Whether you are entering or leaving Ohio, it’s a great place to fill up the car, buy a snack and use a clean restroom. That’s especially true because gas at the first westbound stop in Indiana – Booth Tarkington, at mile post 146 in Fremont – sells for about $0.30 per gallon more than the last stop in Ohio and more that at stops further west in Indiana. Gouge much, Hoosiers?

They have to gouge, as they are losing money. The Indiana Toll Road filed for bankruptcy in September 2014. The concession is owned by Ferrovial, a Spanish company, and Macquarie Group, an Australian investment bank. In 2013, the Indiana Toll Road took in $158 million in earnings before interest, taxes and depreciation. That sounds nice, except that the company owed $193 million in debt service on the $3.2 billion it borrowed to cover the lease. Ferrovial and Macquarie have a plan to exit bankruptcy that involves selling the lease for its remaining term. We’ll see who wants to buy it and for how much.

The Ohio Turnpike, meanwhile, is still controlled by the state. In 2013, the Ohio Turnpike took in $2.3 million from its State Fuel Tax Allocation and posted an increase in net position (profit) of $49.6 million. The taxpayers are making a profit, and the customers who ride the road are happy with the services provided.

Indiana sold a 75-year lease on its toll road for $3.8 billion in 2006, more than it was probably worth. In 2008, the City of Chicago sold a 75-year lease on its parking meters to an investor group for $1.2 billion, probably less than they were worth. In Ohio, Gov. John Kasich considered a privatization plan, but decided against it in 2010. One of the problems with privatization is that it is so new that there is not a competitive market to determine valuations. To make the cash value worthwhile, contracts tend to be set for long periods. Will we even be using cars that many years out?

Another problem is that state and municipal governments have a lot of experience operating roads and parking meters. What they don’t understand is how to manage large windfalls of cash effectively. In Indiana, the state took its $3.8 billion, paid off debt and invested in infrastructure projects. That sounds good, but now the money is gone, and the toll road won’t contribute to revenue again until 2081.

In Chicago, the funds from the parking meter sale were supposed to form a rainy-day fund to help shore up underfunded municipal pensions. The money was instead used to balance the city’s 2010 budget. At least Mayor Daley didn’t have to raise taxes while he was in office!

Ohio, meanwhile, will have steady and manageable cash flow. The Turnpike’s 2013 EBITDA of $166.9 million is comparable to the $158 million Indiana took in. The two turnpikes show a contrast between “good” privatization – having private companies compete to run the restaurants and gas stations – and “bad” privatization – turning the whole thing over to a company without much clear incentive to please customers. With 75-year leases, no one has to compete to keep either elected officials or citizens happy for a long time.

The private sector is often more efficient than the government, but some government inefficiency occurs because of the pursuit of something other than revenue. A toll road is a source of funds, but it is also a way to move people and goods from place to place, something that’s critical to a functioning economy. Likewise, parking meters are a source of revenue, but meter policies are also serve to ration scarce resources in a way that, ideally, balances the needs of merchants with the needs of residents.

Introducing competition and innovation to staid government programs can be a path toward getting the best of both worlds. But privatization initiatives must be carefully crafted to avoid tying together all the inefficiency of government with the “rational self interest” (aka, greed) of the market.

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Rayburn HOB – Room B338

January 28, 2015, 5:53 PM

R Street Institute

January 28, 2015, 5:50 PM

California opens fast lane to approve TNC insurance products

January 28, 2015, 2:38 PM

The California Department of Insurance has approved the state’s first private passenger auto policy endorsement specifically crafted to cover drivers for transportation network companies like Uber and Lyft. Coming just 77 days after the CDI signaled it was prepared to review such filings, the approval will allow Metromile, a partner of National General Assurance Co., to begin selling its new product in mid-February.

The Metromile policy is designed to extend coverage during the so-called “Period 1,” which had been a point of sustained debate between TNCs and insurers during the crafting of California’s TNC regulatory framework. Period 1 describes when a TNC driver has turned on their app and signaled they are available for hire, but has not yet made a connection with a fare.

The period is significant because TNCs are concerned that their commercial policies, if required to cover drivers as they simply cruise around, will become an easy target for fraud. Drivers could turn on their apps without any intent to connect with a fare and enjoy the benefits of the TNC’s commercial insurance. For their part, insurers are concerned that personal insurance policies, which are not designed to sustain commercial risks, require that there be a bright line between personal and TNC activity.

California was one of the first states to come to a legislative conclusion about how insurance responsibility should be apportioned between TNCs and personal insurers. Signed by Gov. Jerry Brown in September, Assembly Bill 2293 concluded that drivers must have liability insurance during Period 1 that offers at least $50,000 per individual and $100,000 per incident for bodily injury, as well as $30,000 for property damage. The bill left open whether Period 1 coverage would be procured by either the driver or the TNCs, which are required under the law to provide commercial coverage from the moment a fare is accepted until he or she is dropped off.

Metromile’s new product, an addition to existing personal auto policies, enables drivers to meet AB 2293’s requirement. By doing so, the TNC’s commercial policies are not made to sustain the Period 1 insurance burden. This is a crucial innovation for the continued development of TNC services, because it will ensure that neither TNCs nor personal insurers assume outsized risk. (Farmers and USAA have announced the roll-out of similar products in Colorado.)

The CDI’s approval of Metromile’s filing came quickly, certainly faster than I anticipated. For that, the CDI is (again) deserving of credit for its handling of TNC matters.

The alacrity with which the CDI was able to approve this filing may be in equal parts the result of Metromile’s straightforward rating plan, based on the number of miles an Uber driver travels during Period 1; the Legislature’s unambiguous call for fast action in the text of AB 2293; and/or the prioritization of TNC-related matters within the department (which is clear enough to see in Commissioner Jones’ push for a TNC white paper within the National Association of Insurance Commissioners).

Regardless of what inspired or enabled approval, Metromile’s filing is worthy of celebration. But for consumers to realize the benefits of a competitive market in this new arena, there will need to be more filings by more companies. Toward that end, with Metromile’s experience as a model, other insurers should heed the department’s call.

The fast lane appears to be open.

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$7 billion just disappeared on the Gulf Coast

January 28, 2015, 1:00 PM

Right now, a federal court in Louisiana is wrapping up the penalty phase of the trial against BP to determine the oil company’s negligence under the federal Clean Water Act for the 2010 Deepwater Horizon oil spill. The case is particularly noteworthy because, under the terms of the 2012 RESTORE Act, proceeds of the civil penalties assessed in the trial are to be divided up between the five Gulf Coast states.

Yet based on a recent ruling in the case, states may end up seeing a lot less money than they originally anticipated:

Two years ago, the Gulf states thought BP might pay as much as $21 billion in CWA penalties, based on a maximum $4,300 per barrel spewed in 2010. But on January 15, before this trial’s phase three began, Barbier ruled that 3.19 million barrels of oil were discharged into the Gulf, versus the feds’ 4.2 million estimate. That count makes BP’s highest possible CWA penalty $13.7 billion. An expected smaller fine affects Louisiana’s ability to fund its $50 billion, 50-year 2012 coastal master plan.

Whether or not this ruling ultimately stands, it’s a good reminder for states not to get ahead of themselves when it comes to allocating RESTORE Act funds. But that doesn’t mean states shouldn’t be prepared for when a final judgment is reached and the money starts to flow. If anything, the smaller pool of funds means states should be even more vigilant to ensure the money isn’t wasted on inappropriate or frivolous projects.

In Texas, the House Committee on Natural Resources has been studying this matter, and recently released a report highlighting the issues involved. The report, which quotes extensively from R Street’s research, focuses on the need for greater transparency in deciding who gets RESTORE Act funds.

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Florida report outlines lasting property insurance market reform recommendations

January 28, 2015, 12:36 PM

From the James Madison Institute:

TALLAHASSEE – A hurricane has not made landfall in Florida for nine years; however, a new report from The James Madison Institute (JMI) warns this nearly decade long respite should not be considered the norm, but rather a fortuitous anomaly. In its Backgrounder: “Lasting Reforms for Florida’s Property Insurance Market,” JMI adjunct scholar and R Street co-founder, R.J. Lehmann explores solutions that could reasonably be considered during the 2015 legislative session to shield Florida from economic hardship in the event of a major storm or series of storms…

Senate set to vote on five-year extension of Wind PTC

January 28, 2015, 12:05 PM

Congress has been in session for only a couple weeks and the new Republican majority in the U.S. Senate already has surpassed the number of roll call amendment votes that were cast in the entire 113th Congress.

Today, the new majority looks to extend that streak, as the chamber is expected to embark on a “marathon session” that will include an expected 18 amendment votes related to the Keystone XL Pipeline. If you are an avid fan of C-SPAN 2, the senatorial Super Bowl has come early.

While there are many important votes on the docket, one of the more unfortunate proposals is the amendment from Sen. Heidi Heitcamp, D-N.D., which would extend the Wind Production Tax Credit for five years. If approved, the measure would perpetuate a failed economic policy that has increased consumer electricity prices unnecessarily, costs taxpayers millions and that hinders genuine energy innovation.

The Wind PTC expired temporarily at the end of 2013, but it received a one-year reinstatement for projects already operating or under construction as part of the tax extender deal.

R Street scholars have written extensively on the problems with the Wind PTC. We hope the Senate will resist the call to once again extend this wasteful credit for even one more day, and work instead for real energy solutions that benefit both taxpayers and American consumers.


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