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R Street Panels at SXSW 2015

March 13, 2015, 3:00 AM
Join the R Street Institute in Austin, Texas for three policy-focused panels during SXSW Interactive.

ECPA letter to U.S. House

January 23, 2015, 5:24 PM
January  22,  2015 The Honorable Robert W. Goodlatte Chairman House Judiciary Committee The Honorable John Conyers, Jr. Ranking  Member House  Judiciary  Committee

We, the undersigned companies and organizations, are writing to urge speedy consideration of Rep.  Yoder and Rep. Polis’ Email Privacy Act that we expect will be introduced in the coming weeks. The bill would update the Electronic Communications Privacy Act (ECPA) to provide stronger protection to sensitive personal and proprietary communications stored in “the cloud.”

ECPA, which sets standards for government access to private communications, is critically important to businesses, government investigators and ordinary citizens. Though the law was forward-looking when enacted in 1986, technology has advanced dramatically and ECPA has been outpaced. Courts have issued inconsistent interpretations of the law, creating uncertainty for service providers, for law enforcement agencies, and for the hundreds of millions of Americans who use the Internet in their personal and professional lives. Moreover, the Sixth Circuit Court of Appeals in US v. Warshak has held that a provision of ECPA allowing the government to obtain a person’s email without a warrant is unconstitutional.

The ECPA Amendments Act would update ECPA in one key respect, making it clear that, except in emergencies, or under other existing exceptions, the government must obtain a warrant in order to compel a service provider to disclose the content of emails, texts or other private material stored by the service provider on behalf of its users.

This standard would provide greater privacy protections and create a more level playing field for technology. It would cure the constitutional defect identified by the Sixth Circuit. It would allow law enforcement officials to obtain electronic communications in all appropriate cases while protecting Americans’ constitutional rights. Notably, the Department of Justice and FBI already follow the warrant-for-content rule. It would provide certainty for American businesses developing innovative new services and competing in a global marketplace. It would implement a core principle supported by Digital Due Process, www.digitaldueprocess.org, a broad coalition of companies, privacy groups, think tanks, academics and other groups.

This legislation has seemingly been held up by only one issue – an effort to allow civil regulators to demand, without a warrant, the content of customer documents and communications directly from third party service providers. This should not be permitted. Such warrantless access would expand government power; government regulators currently cannot compel service providers to disclose their customers’ communications. It would prejudice the innovative services that all stakeholders support, and would create one procedure for data stored locally and a different one for data stored in the cloud.

Because of all its benefits, there is an extraordinary consensus around ECPA reform – one unmatched by any other technology and privacy issue. Successful passage of ECPA reform sends a powerful message – Congress can act swiftly on crucial, widely supported, bipartisan legislation. Failure to enact reform sends an equally powerful message – that privacy protections are lacking in law enforcement access to user information and that constitutional values are imperiled in a digital world.

For all these reasons, we strongly urge all members of the Senate Judiciary Committee to support the ECPA Amendments Act.


ACT | The App Association
American Association of Law Libraries
American Booksellers for Free Expression
American Civil Liberties Union
American Library Association
Americans for Tax Reform and Digital Liberty
Association of Research Libraries
Autonet Mobile
Brennan Center for Justice
BSA  | The Software Alliance
Center for Financial Privacy and Human Rights
Center for Democracy & Technology
Center for National Security Studies
Competitive Enterprise Institute
Computer & Communications Industry Association
Council for Citizens Against Government Waste
Data Foundry
Deluxe Corporation
Demand Progress
Direct Marketing Association
Distributed Computing Industry Association (DCIA)
Discovery Institute
Electronic Frontier Foundation
First Amendment Coalition
Future of Privacy Forum
Gen Opp
Golden Frog
Information Technology Industry Council (ITI)
Internet Association
Internet Infrastructure Coalition (I2Coalition)
Less Government
Liberty Coalition
New America’s Open Technology Institute
Newspaper Association of America
R Street
SIIA:  Software & Information Industry Association
Taxpayers Protection Alliance
The Constitution Project
The Federation of Genealogical Societies
U.S. Chamber of Commerce
Venture Politics

Keystone XL Pipeline may force Republicans to embrace climate change

January 23, 2015, 3:57 PM

From Scientific American:

Others say that Democrats could be making inroads with moderate Republicans who might be willing to support climate action, rather than offering “point-scoring” amendments.

Andrew Moylan, executive director of the R Street Institute, which supports enacting a carbon tax in order to lower tax rates on things like income and businesses, wondered why Democrats didn’t offer language that, for example, seeks to reduce emissions while also promising not to expand government.

“If they wanted to be helpful on advancing solutions to climate change, they would do the difficult work of … assuring a wary conservative base and wary Republicans that this is not some sort of a game to advance the [liberal] interests,” Moylan said.

Tools for transparency in copyright law

January 23, 2015, 3:31 PM

Over the span of one week in October 2014, Google received requests to remove more than 11 million URLs from its search engine due to copyright-infringement claims.

Enshrined in Article One of the U.S. Constitution, the purpose of copyright is to provide incentives for innovation by creating financial rewards for new creations. But in the more than two centuries since the Constitution was written, we have witnessed radical evolution in the methods of creation and the rise of lucrative industries that profit from the commodification of creative works.

The result has been a complex and sometimes dizzying web of copyright rules, unevenly and erratically enforced, particularly in the digital realm. For the average Internet user, it can be difficult to discover what materials are in the public domain, and which can be freely accessed and reused. When does fair use apply? What material has been removed from the Internet and on what legal grounds?

Luckily, the same technologies that complicate copyright law also provide us new methods for collecting, analyzing, understanding, and distributing data about how our world operates, both in terms of copyright enforcement and beyond. APIs and Twitterbots continuously scrape information sources and deliver real-time updates, such as every time a congressional staffer edits a Wikipedia page.

By collecting and publishing data about takedown requests, digital platforms like Google and Wikimedia are beginning to provide insight into the ways that rights holders are enforcing copyright law. The reports showcase aggregate trends on how much content is being removed over time and which copyright owners are requesting the most takedowns.

The details reveal some of the unusual and, in some cases, unfair ways that concerned parties try to apply intellectual-property law. Wondering why you’ve had difficulties finding recipes for “Derby Pie”? Kern’s Kitchen trademarked the name and has litigated tirelessly to make sure sites do not post recipes using that name without permission.

The Chilling Effects clearinghouse functions as a searchable archive of requests to remove purportedly copyrighted information from the Internet, most of them made under the Digital Millennium Copyright Act. Though a popular tool for researchers, advocacy groups, journalists, and interested individuals, the project has been criticized as a tool for pirates as well, as the takedown notices contain links to the allegedly offending content — and it recently removed its individual notice pages from search-engine results. The decision was met with harsh criticism from online news publications TechDirt and TorrentFreak, prompting Chilling Effects to issue an explanation:

Given increased public attention on the project, the wide variety of notices and types of claims that we catalog, and the sheer number of notices included in Chilling Effects database, we decided to take the interim step of de-indexing the site’s individual notice pages from search engines’ search results. Now that we have taken this step, we are hard at work building new tools and workflows that will allow us to better achieve the balance we are constantly seeking to strike between our dual missions of transparency and educating the public (on the one hand) and the strongly-felt concerns of those who send takedown notices (on the other).

That workflow overload attests to the growing appetite for transparency reporting mechanisms. Increased public awareness about how copyright laws are enforced has spurred activism by those who want to develop reasonable copyright solutions for today’s information environment. Transparency sites have changed the game by drawing public scrutiny to information that certain parties have tried to suppress, in accordance with a phenomenon known affectionately as the Streisand effect.

Copyright law does not exist in a vacuum, and transparency mechanisms let us all be part of the debate. Increased access to creative works has the potential to foster new creativity and economic growth. Transparency reporting is just one tool in an ongoing process to reform copyright law to strike a fair balance between the right to freedom of expression and the right of copyright owners to receive compensation for their work.


Six reasons Texas should kill the margin tax

January 23, 2015, 2:24 PM

One of the most basic laws of economics is that if you tax something, you get less of it. So why is business-loving Texas one of the few states that imposes a damaging tax on business revenue?

In its current form, the Texas margin tax dates to 2005, when the state overhauled its franchise tax to raise money for school financing. The margin tax was sold as a fair, transparent way for the state to raise needed revenue. In practice, the tax hasn’t lived up to these standards. In fact, the margin tax represents everything people hate about paying taxes.

1. It’s complicated. The margin tax includes four different methods for calculating a business’ tax base, multiple tax rates and numerous deductions and exemptions, all making it difficult to even summarize how the tax works in practice. In some cases, a company may find it costs more to calculate what they owe than what they will actually pay. The law’s complexity has also resulted in several high-profile lawsuits, as businesses have sought refuge in the courts from bureaucratic uncertainty.

2. It’s unfair. Economists long have criticized gross-receipts taxes because they disproportionately burden some types of businesses more than others. Unlike a retail sales tax, which is imposed once at the end of the production and distribution process, a gross-receipts tax (like the margin tax) can apply at multiple points along the way. A company that buys lumber to build doll-houses, for example, could end up paying higher effective rates than a service-oriented business, like a law firm.

3. It’s hidden. Each time a good or service is taxed, the cost of the tax is passed on to the next buyer in the form of higher prices. The cost of the margin tax is therefore borne largely by consumers, rather than businesses themselves. But unlike a retail sales tax, people have no way to know just how much the tax is costing them in the form of higher prices.

4. It’s bad for business…and everyone else. According to recent analysis by University of Texas at San Antonio professors John Merrifield and Corey DeAngelis, personal income in Texas is between $30.5 billion and $46.3 billion lower than it would be if the margin tax had never been enacted.

5. It doesn’t raise much money. Perhaps surprisingly, given the economic damage it causes, the margin tax hasn’t proven very effective at raising revenue. When originally enacted, the margin tax was projected to bring in $5.9 billion in revenue a year. Instead, revenue from the margin tax totaled only $4.5 billion in 2008 and $4 billion in 2009.

6. It puts Texas at a competitive disadvantage. The margin tax is making Texas out of step with other states. Only four other states have a gross receipts tax, and several states have recently moved to repeal their versions of similar taxes. Just last year, voters in Nevada rejected a proposal to enact a gross-receipts tax along Texas lines. The margin tax’s continued existence is a serious drag on Texas’ economic competitiveness. According to a study by the Tax Foundation, were Texas to repeal the margin tax, it would immediately jump from 10th to 3rd in the rankings of states with the most business-friendly climates.

Given the large volume of tax revenue currently flowing into state coffers, repealing the margin tax is not only possible, it may be necessary to prevent the temptation to overspend. More than a half-dozen bills already have been filed this session that would either phase out or immediately repeal the margin tax. The Legislature should follow through and put the tax out of its misery.

Bogus research on formaldehyde in e-cig vapor

January 23, 2015, 1:56 PM

The New England Journal of Medicine this week published a letter claiming that vapor contains “hidden” formaldehyde at far higher levels than cigarettes, which made headlines worldwide. That conflicts with a report I discussed last week, documenting that formaldehyde levels in e-cigarettes were far lower than those in traditional cigarettes.

Paul Jensen and colleagues at Portland State University produced the new results by overheating an e-cigarette, a condition (called dry puffing) that is familiar to vapers; the resulting product tastes so bad it cannot be inhaled. In other words, the formaldehyde produced under abusive conditions is not “hidden” at all, because it is in vapor that users find intolerable.

Dr. Konstantinos Farsalinos, a cardiologist at the University of Patras in Greece and a recognized expert in vapor devices, has documented that the formaldehyde findings are bogus:

Lack of experience on e-cigarettes and no contact with vapers can result in such erroneous and unrealistic results, which can create confusion and misinformation both in the scientific community and among users and potential users of e-cigarettes… The authors of the NEJM study should have read our study and should have known about the existence of this phenomenon.

One of the new study’s authors, James Pankow, has published other scaremongering reports. In 2010, he claimed that wintergreen flavor in smokeless tobacco is dangerous and he coauthored a largely theoretical study claiming that “infants and children are particularly at risk” from thirdhand smoke.

Modern automobiles have remarkably low pollutant emissions, but anyone behind a car that is overheating or otherwise abused can smell noxious fumes as they are released. Using the New England Journal of Medicine, Jensen and colleagues have created global headlines with a defective e-cigarette experiment, producing scientific pollution.

Personal auto insurers wade cautiously into ridesharing waters

January 23, 2015, 12:59 PM

In recent months, controversy over the potential “uninsured” status of drivers for app-based transportation network companies like Uber and Lyft has finally started to settle down. Those two services — the largest, thus far, in this growing field — both have announced that they have secured commercial insurance policies that will cover their drivers from the moment they agree to accept a fare until he or she arrives at his or her final destination.

Such developments, in concert with the adoption of regulatory frameworks covering TNCs by such jurisdictions as Colorado, California, Illinois and the District of Columbia, had seemingly settled what was initially an issue of immense controversy; namely, who would cover ride-sharing drivers and would such coverage be personal or commercial? The major TNCs, having backed off their earlier contention that rides for hire would be covered under drivers’ personal insurance policies, seemingly provided the answer: “We will cover them.” Which is fortunate, as most of the major personal insurers had an answer of their own: “We will not.”

But perhaps that conclusion was a bit too hasty. A lingering issue that has come to the surface in each state that thus far has looked to regulate TNCs is how to treat the period when a driver has an app “on,” but is not in transit with a passenger and has not even agreed to provide a ride. Does driving around with an Uber app on constitute “commercial activity,” as it would with a taxi driver roaming the streets to pick up fares? Or is this more akin to driving with a GPS, which would fall more on the “personal” side of the personal/commercial divide?

This is not just an abstract theoretical, and there are big stakes involved for how courts, regulators, lawmakers and insurers themselves answer the question. If this period (which California Insurance Commissioner Dave Jones has helpfully dubbed “Period 1″) counts as commercial activity, then TNC drivers may be subject to the same heightened standards of care as other professionals, and face consequently greater liability. This is of particular interest if, as some have speculated, the “surge” pricing schemes some TNCs promote might inadvertantly provide incentive for drivers to speed quickly and recklessly to areas of town where fares are most profitable.

States have been split on how to treat Period 1. Thus far, all that have passed TNC frameworks require there be coverage during this period, although the mandatory limits have been significantly lower (matching the general limits required of all drivers on the road) and in Colorado, at least, the TNC isn’t required to provide it. Such confusion opens a potential coverage gap, should both the TNC and the driver’s own personal policy each deny responsibility during the period.

While the personal lines industry as a whole continues to be firm in its contention that it should not be required to provide coverage during Period 1, interestingly, two notable insurers are now stepping forward with products to fill the gap.

USAA was first to market, announcing a pilot product to cover ridesharing drivers in Colorado from the moment they turn on their app until they are matched with a passenger. The product launches in February, and will cost $6 to $8 a month or $40 to $50 for a six-month policy. Farmers followed shortly thereafter, announcing that they would begin offering an optional endorsement to new and existing customers to cover ridesharing, starting Feb. 16. The company estimates the endorsement will add about 25 percent to an insured’s premium.

This is wonderful news, and I hope it won’t be excessive back-patting to say that it’s a development we predicted would happen eventually. It also underscores our primary advice to regulators and lawmakers looking to address this still emerging field — tread lightly.

It’s still very much unclear how these markets will emerge and what shape they will take. Overly prescriptive regulatory regimes risk cementing into place a limited conception of what business models are possible, and locking out competitors who imagine new and better ways of doing things. Focus on how best to identify and address genuine consumer harms, but otherwise, stay out of the way and let the markets figure it out themselves.

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

Are police radars that ‘see through walls’ as scary as they sound?

January 22, 2015, 5:34 PM

In a growing trend begun a few years ago without much public disclosure or debate, at least 50 police departments across the country — including the FBI and U.S. Marshals Service — now deploy radar devices that could allow them effectively to “see through walls.”

The technology consists of hand-held devices that send out radio waves which can detect the slightest movement, even breathing, from distances up to 50 feet away. Other advancements currently in development could be mounted on drones and other vehicles and could possibly map out a building’s interior and locate people inside it.

These systems, which first appeared on the battlefields of Afghanistan and Iraq, have been the subject of significant investment by the Justice Department. Law enforcement experts believe the devices could be valuable tools to keep officers safe when entering a building to arrest suspects or rescue hostages. Of course, they also have attracted the attention of civil liberties advocates and even some federal courts. Civil libertarians understandably worry that police departments could use the devices without a search warrant, potentially in violation of the Fourth Amendment’s protections against unreasonable search and seizure.

The devices have been the subject of least one federal appellate Courts ruling thus far, when the 10th Circuit last month upheld the conviction of a man for a parole violation and firearms charges, after he was apprehended by U.S. Marshals who used the devices. While acknowledging the radar system posed troubling Fourth Amendment questions, the court ultimately punted on those, noting that, in executing the suspect’s arrest warrant, marshals already had other evidence establishing probable cause that he was in the residence.

Should questions about the technology ever reach the U.S. Supreme Court, which seems terribly likely, there are at least two similar cases that might provide some guidance. In 2001, the high court ruled that police needed a warrant to scan the outside of a house with a thermal camera. In a 2013 case involving a decidedly less high-tech form of surveillance, the court put restrictions on law enforcement’s use of drug dogs to sniff outside a house.

In the end, the relevant public policy questions lie not in the technologies themselves. There’s good reason to believe these hand-held sensors could improve safety, both for police officers and for the general public. One of the concerns with so-called “no-knock” raids is that frequency with which innocent people are harmed or even killed, and this technology could alert law enforcement to the presence of innocent civilians or counsel them to pursue less risky means of apprehension.

Nonetheless, with the potential both for harm to civil liberties and increased safety for both police and civilians are like, state legislatures and Congress should examine whether regulations on this sort of technology are appropriate, before these cases do wind up in the courts. Some guidelines might include

  • Public disclosure and transparency when these devices are purchased and when they’re deployed. Easily accessible public records should be kept about how and when these radars are used.
  • Fourth Amendment rights must be preserved, and the use of such devices without either a search or an arrest warrant should be proscribed in all but the most extreme circumstances, such as a hostage situation or search and rescue after a disaster.
  • Helicopter and drone-mounted radars should be limited to manhunt situations, and only if a warrant is obtained, unless in a search and rescue situation.

These must be considered among the most intrusive tools available to law enforcement, but if used properly, they could make policing less dangerous for civilians. It’s up to state legislatures and Congress to craft radar usage regulations that protect both civil liberties and the lives of police officers and ordinary civilians.



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

R Street study outlines ways to expand number of Californians who purchase earthquake insurance

January 22, 2015, 11:56 AM

SACRAMENTO, Calif. (Jan. 22, 2015) – Lawmakers need to find ways to expand the number of Californians who purchase earthquake insurance, given the extremely low take-up rate in the state and the inevitability of a catastrophic temblor, a new study by the R Street Institute concludes.
In his paper “Insuring a way out: Modernizing the California Earthquake Authority,” R Street Western Region Director Ian Adams outlines some of the very real challenges facing the state-run earthquake insurance instrumentality. While some have proposed the CEA should lower its rates by relying more heavily on post-event funding mechanisms, Adams warns that “risk that is not maintained in private hands will become a public burden.”

The CEA is a well-managed organization that is nonetheless in need of structural changes, Adams noted. “In order to modernize the current system, policymakers need to take a hard look at updating the CEA’s enabling legislation to reflect its current mission – expanding the number of Californians with earthquake coverage,” he said.

Meaningfully increasing the take-up rate can be achieved through a combination of deft legislative and regulatory changes. For instance, the CEA is beginning down the right path by seeking to diversify its product offerings to reduce premiums. Affordability is one of the most significant factors limiting the take-up rate of earthquake insurance. In some cases, adding an earthquake policy can nearly double the cost of basic homeowners insurance.

“Likewise, current investments in mitigation are undervalued because only minimal savings are realized before an event occurs,” Adams said. “Instead, customers should be given options and incentives in the form of long-term mitigation financing and premium discounts to encourage them to make their homes better prepared to face an earthquake and to mitigate damage when the event occurs.”

“As with mitigation efforts, tax incentives for homeowners to purchase coverage and tweaks to lending rules to ensure the risk of earthquake-related defaults is priced into mortgage loans will reward Californians for purchasing earthquake insurance up front, rather than going with the temptation to self-insure against these catastrophes,” said Adams.

The paper also notes insurers’ commitment to the CEA needs to be wholehearted and with an eye toward expanding earthquake coverage. Toward that end, the first step is to rethink CEA’s backward assessment structure.

“The current assessment structure discourages insurers from increase their number of earthquake policies in order to limit exposure,” Adams said. “Instead, insurers should face a separate assessment if their share of the CEA policies is markedly less than their share of the overall residential insurance market share.”


Inslee’s vaping tax bad for taxpayers, public health

January 22, 2015, 11:48 AM

It is often the case that partisans of one political cause or another obscure their real motivations for the sake of expediency. Non-politicos are likely to characterize such behavior as “lying,” those who work in the world of law-making generally don’t labor under similar ethical burdens.

Such is the case now in Washington state, where Gov. Jay Inslee has proposed a budget that includes massive tax hikes on e-cigarettes and vaping products. While Inslee has pitched this proposal as being in the name of “public health,” a cursory investigation reveals his authentic motivations lie elsewhere.

E-cigarettes are devices that transform liquid nicotine solution into a vapor that users inhale to experience much the same sensation as a traditional cigarette. However, unlike traditional cigarettes, e-cigarettes produce only a tiny fraction of the toxins that have been shown to lead to catastrophic health conditions and, ultimately, death.

While the public policy debate about the health implications of e-cigarettes continues, a growing consensus within the medical community forcefully make the case that e-cigarettes present a meaningfully diminished risk when compared to traditional cigarettes.

In spite of the distinction between smoking and vaping, Governor Inslee insists that a 95 percent excise tax on vapor products, identical to the tax currently levied on traditional tobacco products, is necessary to introduce horizontal uniformity to Washington law. The new tax would generate $18.1 million in revenue annually.

That’s a good amount of cash, but it is only a small element of Gov. Inslee’s larger plan to raise taxes by $1.4 billion over the next two years. Why do Olympia’s professional spenders need all of this extra money?

In 2012, the state Supreme Court found that the state Legislature was failing to adequately discharge its obligation to fund public schools. Three years later, the state still has yet to comply with the court’s order to rectify its lapse and has been found in contempt for its failure.

That’s bad. It gets worse.

In November 2014, voters approved Initiative 1351. That measure, a master class in ways the initiative process encourages voters to conflate good will with sound policy, directs the state to reduce K-12 class sizes. To accomplish this objective, the state will be required to hire an additional 15,000 teachers and to spend roughly another $2 billion over the coming biennium.

Which brings us full-circle, back to Gov. Inslee’s authentic rationale for going after vapor products. He desperately needs the money and knows that purporting to raise revenue in the name of public health is the path of least resistance. Voters routinely favor measures to restrict liberty and to raise taxes for the sake of improved public health.

Perhaps most frustratingly ironic about Inslee’s effort to conflate vaping with smoking is that e-cigarettes are a successful tobacco cessation tool. By increasing the tax on their sale, he is trading on ignorance, perhaps even his own, in such a way that moving away from tobacco use will become more difficult.

Ultimately, that the health-conscious arguments of the governor’s office are at once factually inaccurate and obfuscatory will matter little in the final estimation, so long as the state gets it money.

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

Letter to Virginia General Assembly on transportation network companies

January 22, 2015, 10:51 AM

January 22, 2015

Virginia General Assembly
1000 Bank Street
Richmond, VA 23219

Dear Members of the Virginia Legislature,

We applaud the General Assembly’s initiative to advance full legalization of transportation network companies (TNCs) operating within the state, in particular through legislation such as the most recent iteration of Senate Bill 1025. New businesses like Uber and Lyft provide low-cost and reliable transportation options for thousands of commuters and we believe Virginia’s willingness to embrace the innovation economy is a step in the right direction.

The temporary operating agreement reached last August with Uber and Lyft was an important step in the relationship between the commonwealth’s regulators and companies that provide technology-based transportation options. Unfortunately, the agreement fails to provide a permanent or broad-based legal framework for all ride-hailing services.

In crafting a permanent solution, we urge you to adopt an open, light-handed and market-oriented regulatory framework. Successful models include the framework signed into law in California, Colorado and the District of Columbia. Each established inspection and safety standards and driver background checks. We caution strongly, however, against adopting legislative provisions that would unnecessarily hinder competition in favor of entrenched interests.

In particular, elements of the proposed House Bill 1933 would create burdensome and anti-competitive requirements and steep barriers to entry for part-time drivers. These include a requirement to maintain $1,000,000 in primary commercial insurance at all times, regardless of whether a driver has agreed to transport a paying customer, and a mandate to use public sector agencies rather than licensed private firms to conduct background checks.

Uber and Lyft currently are the primary providers of application-based transportation options in the state. We support a formal legalization of TNCs that recognizes not only these providers, but a myriad of new services which may compete in Virginia’s transportation market in the years to come.


Eli Lehrer, R Street Institute
Grover Norquist, Americans for Tax Reform
Evan Feinberg, Generation Opportunity

Scooplet: Mike Godwin to R Street

January 22, 2015, 10:14 AM

From Politico:

SCOOPLET: MIKE GODWIN TO R STREET — Mike Godwin, the tech policy expert behind the Internet meme Godwin’s Law, will be director of innovation policy and general counsel at the R Street Institute. Godwin’s been a counsel at EFF, CDT, PK and Wikimedia, and most recently worked at Internews. Godwin will lead the Institute’s research and advocacy efforts on patents, copyright and other technology. He’s jumping into the fray immediately, too: He’s set to moderate a panel on copyright with Rep. Jared Polis on Jan. 26 — his first day of work.

R Street welcomes Mike Godwin as director of innovation policy

January 22, 2015, 9:10 AM

WASHINGTON (Jan. 22, 2015) – The R Street Institute is proud to welcome Mike Godwin as director of innovation policy and general counsel. Starting Monday, Godwin will lead the institute’s research and advocacy efforts in the areas of patent and copyright reform and technology policy.

“I’ve admired Mike from afar for years and I’m delighted that he’s joining the team at R Street,” said President Eli Lehrer. “He’s the absolute best person we could possibly imagine for this job, and we are eager for him to bring his knowledge on board.”

Godwin brings to R Street a deep background and knowledge of technology policy and intellectual property, having worked on these issues for the past 25 years.  Most recently, he has served as a senior policy advisor at Internews, advising the organization’s public-policy partners in developing and transitional democracies, as part of the Global Internet Policy Project.

Prior to his return to Washington, he served as general counsel for the California-based Wikimedia Foundation, which operates Wikipedia and other collaborative projects. At the foundation, he created and directed anticensorship, privacy, trademark and copyright strategies and policies including Wikimedia’s responses to the SOPA and PIPA initiatives.

Godwin began his legal career as the first staff counsel for the Electronic Frontier Foundation, which he advised on a range of legal issues during the accelerating growth of internet access in the United States. His continuing career as an Internet-law thought leader has included a policy fellowship at the Center for Democracy and Technology and a research fellowship at Yale Law School.

He has been a contributing editor at Reason Magazine since 1994 and is the originator of the widely cited “Godwin’s Law of Nazi Analogies,” which in 2012 was added to the Oxford English Dictionary.

“My experience in Washington and California policy circles underscores the importance of an organization like R Street,” Godwin said. “Like me, the R Street folks know how vital it is to proactively shape good government policy that’s both effective and minimally risky in terms of unintended consequences.”

“So of course when we found this opportunity to work together, we had to seize it — I’m thrilled to join such a great team,” he said.

Godwin’s first day with R Street will be Monday, Jan. 26, when he will moderate a panel on Capitol Hill entitled “Understanding copyright in the Internet age,” featuring Rep. Jared Polis, D-Colo. The event is free and open to the public.

Insuring a Way Out: Modernizing the California Earthquake Authority

January 22, 2015, 9:00 AM

California faces severe earthquake risk, yet consumers routinely choose not to purchase insurance products to cover this risk. Low earthquake insurance take-up rates create a scenario in which a major event could result in significant personal, societal, governmental and financial disruptions. The problem is real and serious, although understanding its precise magnitude will require more research.

More than one-third of California’s earthquake risk is held by the California Earthquake Authority. The CEA is a publicly managed but privately funded state instrumentality founded to stabilize the state’s homeowners insurance market in the midst of an availability crisis following 1994’s Northridge quake. The crisis resulted directly from California law insisting that homeowners insurers must offer earthquake insurance, a law that still stands. However, the mission of the CEA has changed over the past 20 years. It is now the CEA’s goal to increase the state’s earthquake insurance take-up rate.

Increasing the take-up rate is an important objective. Risk that is not maintained in private hands will become a public burden. But to achieve higher take-up rates with a repurposed CEA, the organization’s structure needs to evolve. Disincentives to marketing earthquake insurance need to be removed and replaced with sales incentives. Mitigation incentives need to be linked with policy sales in a financially attractive way. Finally, tax incentives, coupled with regulatory updates, are needed to address a current perverse incentive to self-insure.

In addition to the affirmative steps California must take to increase the earthquake insurance take-up rate, it also must avoid potential missteps. Increasing the take-up rate by relying on post-event funding mechanisms will lead to actuarially unsound pricing practices that will burden all Californians, regardless of their relationship to earthquake risk. To grow the number of insureds prudentially, California should instead look to introduce an insurance requirement for mortgages that are backed by taxpayers. Such a system would preserve individual decisional autonomy while simultaneously reducing the seismic risk currently shouldered by taxpayers. Fortunately for California, should the will exist to avail itself of the opportunity, there is substantial risk-transfer capacity available to facilitate a mortgage requirement of that type.

McCarty deserves some credit for stabilizing Florida market

January 21, 2015, 5:50 PM

Testifying this week before the Florida House Insurance and Banking Subcommittee, Office of Insurance Regulation Deputy Chief of Staff Monte Stevens echoed much of what has been reported in recent months about Florida’s property insurance market: it has largely stabilized and, thanks in part to declining reinsurance rates, consumers are seeing their own rates decrease in most areas of the state.

This is indeed welcome news for Floridians who have otherwise seen their rates steadily increase and their options decrease in recent years. Though Stevens is right to credit the “buyers’ market” in global reinsurance, decisions made both by lawmakers and state regulators also deserve honorable mention.

As Citizens’ rates have steadily risen pursuant to the 10 percent “glidepath” enacted by the Legislature in 2009, many parts of the state have finally reached actuarially sound levels, on par with rates charged in the private market. This has led to a largely organic migration of policies from Citizens to private carriers, thanks to greater competition and coverage options among companies.

Taken together, all of these factors have led to responsible rate reductions in most parts of the state, as opposed to the arbitrary, politically imposed reductions that placed Florida one storm away from fiscal calamity a few years back. This confirms that market forces not only protect consumers from insurance insolvencies and massive taxpayer bailouts, but also promote the kind of competition and risk-sharing that eventually brings down rates.

Another major cost-driver contributing to rate increases over the past several years has been the proliferation of sinkhole claims, along with the consequent litigation. Legislation enacted in 2011 closed exploitable loopholes and has largely reined-in these claims, resulting in a 55 percent decrease in such losses for Citizens alone. The downward trend in sinkhole claims has slowed, and in most cases halted, increases in insurance rates.

Indeed, lawmakers and the governor deserve credit for enacting these laws, but Insurance Commissioner Kevin McCarty and the regulators in his office executing these laws also deserve credit. As rumors currently swirl about his future, it’s important to note that Florida’s insurance market has undoubtedly stabilized on McCarty’s watch.

The OIR has analyzed and approved Citizens “takeout” deals that transferred billions of dollars of risk from taxpayers to private companies, while simultaneously protecting consumers. Over 185,000 such policies were transferred in 2014 alone. They have also overseen the entrance of new insurance carriers into the state (ten property & casualty insurers in 2014), and streamlined the administrative process to make it easier for more companies to do business in Florida. And most importantly, they have carried out their core mission, which is to ensure that consumers are protected.

This is what insurance market stability looks like. But unless more is done, this stability is likely to be shaken, or worse, when Florida’s unprecedented hurricane-free streak comes to an end. The state should therefore continue taking steps to fortify its property insurance system, so that Florida isn’t left bare and vulnerable after the wind blows.

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Louisiana’s largest parish could legalize ride-sharing

January 21, 2015, 4:28 PM

Jefferson Parish – a New Orleans suburb and Louisiana’s most populous parish — is considering an ordinance by Parish Councilmembers Cynthia Lee-Sheng and Ben Zahn that would legalize ride-sharing services such as Uber, Lyft and Sidecar. If approved, the measure would allow ride-sharing services to operate in unincorporated parts of the parish, although city governments still would have authority to regulated ride-sharing services within their borders.

Ridesharing also wouldn’t be allowed at Louis Armstrong International Airport, which is physically located within Jefferson Parish but is property of the City of New Orleans. New Orleans, which received a Ridescore of D+ in R Street’s inaugural survey of cities across the country, continues to ban services like UberX.

Despite these and other limitations, the council has the opportunity to give at least some Jefferson Parish consumers accesss to more, less-expensive and more environmentally friendly choices in transportation, in addition to providing opportunities for part-time drivers to earn some cash. According to the New Orleans Advocate, the Jefferson Parish Council could vote on the ordinance as soon as Jan. 28.

As expected, the ordinance has drawn opposition from the taxi industry, which sees ride-sharing companies as unfair competition. The two major complaints, according to Dave Sutton, a spokesman for the industry-backed WhosDrivingYou.org campaign, are that Uber conducts inadequate background checks and maintains inadequate liability insurance. Sutton points out that taxi drivers must have their background checks conducted by the Jefferson Parish Sheriff’s Office, whereas Uber does background checks in-house. The ordinance would require ride-sharing companies to look back as far as seven years when screening drivers, but does not require them to go through the sheriff’s office.

But with some minor amendments, the ordinance could be a win-win situation for both the ride-sharing industry and the taxi industry. Instead of adding burdens to the ride-sharing industry, the council should lower the regulatory barriers all around. There’s no evidence to suggest ride-sharing drivers are more dangerous than taxi drivers. There have been reports of assaults by taxi drivers even with their more allegedly strict background checks. Jefferson Parish should eliminate the requirement to the sheriff’s office for all driver background checks. In addition, taxis should be open to allowing customers to rate their drivers online, just as ride-sharing companies already do. This system empowers consumers to screen out bad drivers.

The ordinance does require that so-called “surge” pricing, activated when there is increased demand for service or reduced supply of drivers, must be in accordance with Louisiana’s price-gouging law when a state of emergency is declared. It also would be fair to require ride-sharers and taxi companies to adhere to the exact same minimum insurance coverages.

A properly drafted ordinance from Jefferson Parish could serve as a model, not just for the neighbors in New Orleans, but for other cities and counties and parishes across Louisiana. Consumers deserve more choices in how they get from Point A to Point B. Those looking to earn extra income should have the opportunities that ride-sharing provides. Local entrepreneurs who want to compete with Uber, Lyft and Sidecar should get that opportunity to do that, as well.

Mardi Gras season is here. How nice would it be to extend this wonderful new market of safe, affordable rides to the revelers, so that they can laissez les bons temps rouler.

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Obama dredges Sacramento’s mire for SOTU

January 21, 2015, 2:00 PM

California’s left-leaning political chattering classes were tweeting with enthusiasm last night as President Barack Obama delivered his sixth State of the Union address. To their delight, the president embraced some of the more significant of California’s latest policy stumbles.

The President wants paid sick leave? As goes California, so goes the country. Than you @JerryBrownGov for signing our CA Paid Sick Days Law!

— Lorena Gonzalez (@LorenaSGonzalez) January 21, 2015

So it was that, while much of the rest of the nation no doubt groaned, Sacramento’s elites reveled in apparent vindication as the chief executive endorsed high-speed rail, paid sick leave, a higher minimum wage, etc.

Obama’s #SOTU2015 is describing a country that looks more like California — bullet train, paid sick leave, higher minimum wage — Chris Megerian (@ChrisMegerian) January 21, 2015

In fact, as Gov. Jerry Brown’s press office would have us recall, virtually all of the president’s policy prescriptions are remains scrapped up from Sacramento battlegrounds.

✓Raise the Minimum Wage ✓Paid Sick Leave ✓Health Coverage ✓Wind Power ✓Solar Power ✓Faster Trains ✓Jobs of the Future #GoldenState #SOTU

— Gov. Brown Press Ofc (@GovPressOffice) January 21, 2015

What must have escaped the notice of that California crowd (and also, of the president) was that the largest Republican congressional majority since the 1920s was seated on the floor of the House of Representatives.

Stone-faced, incredulous and numbed, the dark-suited and red-blazered Republican bloc simply stared at him. They were the personifications of an utter repudiation of his new-found Golden State agenda.

That a loudly quacking lame-duck President is willing to throw populist haymakers at his political opposition as a means of revitalizing his base should in no way be mistaken for a realistic endorsement of California’s direction. In fact, it is precisely because the president was willing to embrace these ideas in the context of his final two years in office that California liberals should be alarmed. His agenda is going nowhere in Washington.

Still, Californians who identify with the right must grapple with explaining why, in spite of the adoption of statist policies that nobody else in the country wants anything to do with, California continues to prosper. There are two ways to address this claim, one more compelling than the other.

The first is to take a clear-eyed look at California’s success. It is not inaccurate to point out that the state maintains a “wall of debt” and can only hope to address its pension liabilities by mid-century. As the argument goes, with success like this, who needs failure?

But that argument diminishes the facial truths of this California moment. Silicon Valley is the envy of the world and the state’s economy is prosperous in spite of government. While it is plain that economic success is not the only measure of quality, both conservatives and libertarians must recognize such success. Incredibly, California seems to be working.

Because of this, the second argument about why California succeeds, in spite of itself, is more attractive. California is the twin beneficiary of America’s federal system and fortuitous geo-political development. Using the language of the left: the state is a creature of its circumstances.

Because states are able to act as laboratories in which policy experiments are carried out, California is able to insulate itself from the sort of widespread policy implementation that would otherwise doom its nascent collectivist impulses. It is easier for California to offer generous programs for the more than 38 million people residing within its border than it is for the federal government to do the same for the more than 300 million Americans because of California’s relative wealth.

This fact often escapes Sacramento’s professionally generous left-wing political class. It certainly did during the State of the Union. The most obvious reason California can sustain problematic policy is that, of all of the laboratories of democracy, California’s is as nicely outfitted as they come.

The state has every conceivable natural advantage, from resources to climate. It has been the repeated beneficiary of capital migration from back East, from the days of the Gold Rush through the Cold War military build-up. The rest of the nation generously sustained California’s adolescence and California now reaps the rewards.

Which brings us back to President Obama’s California-inspired State of the Union. California is a special case. It is a statist policy aberration that proves the free-market rule. The Golden State is succeeding in spite of itself and not even the most dedicated efforts of redistributionists have been able to kill it…yet.

Still, if the complexion of the chamber during the State of the Union is any evidence, California isn’t leading the way, so much as it is running in the wrong direction.

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It’s Copyright Week! Let’s talk about copyright cronyism

January 21, 2015, 12:34 PM

Every year, the Electronic Frontier Foundation and a host of other organizations — including think tanks, trade groups and public interest advocates — align their efforts for one week in January to raise awareness about contemporary challenges in copyright policy and how we can make it better.

Yesterday was the first day of Copyright Week 2015. You can follow the campaign and learn more at EFF’s handy website. Here are the themes for each day of the week:

  • Tuesday, Jan. 20: Transparency
  • Wednesday, Jan. 21: Building and Defending the Public Domain
  • Thursday, Jan. 22: Open Access
  • Friday, Jan. 23: You Bought It, You Own It

This year, R Street is one of a small number of right-of-center organizations participating. This is a shame, since libertarians and conservatives long have been the most vocal opponents of crony capitalism, regulatory capture and government-granted monopolies running amok. With conservatives in control of the House and Senate, and House Judiciary Committee Chairman Bob Goodlatte poised to advance reform, their voices are more important than ever.

You don’t have to go deep into the weeds to see how our current copyright system is an arena that exemplifies big government cronyism. Just take a look at the graph below (via TLF) showing the repeated extension of copyright term.

Today, it’s nearly 580 percent of what it was in the original 1790 Copyright Act, contrasting sharply with a relatively modest 43 percent growth of patent terms, and with the framers’ more limited view of intellectual property. Worse, these extensions were always retroactive, and coincided with the interest of high-dollar rent-seekers looking to protect their revenues.

Take, for example, the most recent extension, the Copyright Term Extension Act (aka the Sonny Bono Act). When it was signed into law by President Bill Clinton in 1998, it tacked on on another 20 years of copyright protection for major works that were about to expire — such as Superman, Mickey Mouse, “Gone With the Wind” and George Gershwin’s “Rhapsody in Blue.”

While it was pitched for its trade benefits, in reality, this was a windfall for wealthy estates and corporations that owned these works (who also lobbied extensively for it), at the expense of the public’s ability to reuse and reimagine them.

While copyright has a clear mandate in Article I of the Constitution to provide incentives for creative works, its limits have become more opaque as it has evolved through the courts. As Thomas Nachbar writes for the Heritage Foundation’s Guide to the Constitution, historically, “the court has deferred to Congress’ view of its own powers.” So while these retroactive extensions plainly fail to meet their constitutional purpose, the courts have largely left the issue up to Congress.

This, unfortunately, is just one example of copyright cronyism. As the week goes on, look forward to more content from R Street advancing free-market ideas for reform.

For a more robust discussion of restoring constitutional copyright, check out Tom W. Bell’s book Intellectual Privilege published by the Mercatus Center, and R Street’s paper on copyright term length by Derek Khanna.

For those in Washington, R Street is hosting a Hill briefing on January 26 with Public Knowledge and Rep. Jared Polis, explaining the fundamentals of copyright law and its challenges in the Internet age. You can RSVP here: http://copyrightbriefing.splashthat.com/

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

Jeff Judson

January 21, 2015, 10:49 AM

Jeff Judson is the principal of public policy consulting firm Judson & Associates and an associate fellow of the R Street Institute.

He is the former president of the Texas Public Policy Foundation, the largest free-market think tank in the second-largest U.S. state, and was named one of the “most influential people in San Antonio in 2014” by the San Antonio Express-News for his successful efforts to block construction of a light-rail system in the city.

Jeff’s prior experience includes serving as industry affairs director for USAA and as a special assistant to U.S. Sen. John Tower, legislative assistant to U.S. Rep. Tom Loeffler and chief legislative assistant to U.S. Rep. Tom DeLay. He also is a member of the Heartland Institute Board of Directors and served for seven years as an elected member of the Olmos Park City Council.

Phone: 210.822.1292

Email: jeff@jeffjudson.com

Before reacting to Obama’s State of the Union, try learning from Reagan’s

January 20, 2015, 4:31 PM

President Barack Obama’s State of the Union address will carry about as much drama as listening to a reading of the dictionary on public radio. The speech will outline his perspectives and plans for the nation, and Republicans will undoubtedly disagree.

While President Obama certainly has his detractors, he has aggressively and successfully promoted his priorities throughout his presidency. The Patient Protection and Affordable Care Act, the Clean Power Plan and his executive actions on immigration are a few examples of a president willing to push his agenda and dare his opponents to stop him.

Many who disagree with President Obama’s policies and tactics still recognize and grudgingly respect the fact that he puts forth ideas and turns them into reality one way or another.

After tonight’s address, conservatives may be offended; they may even be outraged. But are those of us who value limited government, emphasize the importance of family and support a marketplace full of opportunity capable of winning over the Republican Party, let alone a nation?

As a conservative, I hear lots of talk about taking back our nation, about halting Barack Obama’s liberal agenda and how one policy or another is destroying our country and debilitating the next generation. Many conservatives are not happy about the way things are, so they wish them to return to the way they were. If only we could go back to the Reagan administration…

That is not going to happen nor should it.

In his 1985 State of the Union, Ronald Reagan said, “We honor the giants of our history not by going back but forward to the dreams their vision foresaw.” In the same address that he assailed overregulation and taxation, Reagan argued that those at or near the poverty level should pay no federal income tax. As he attacked government welfare programs as reactionary, he highlighted the importance of improving economic power for blacks and Latinos. Reagan even went so far as to suggest that all public housing residents should have the opportunity for home ownership.

Is there any conservative, even in the reddest of red states like Alabama, willing to go after Reagan as a weak political squish?

Americans, and many conservatives, have largely forgotten that conservatism is more than a crude economic theory moving us toward an every-man-for-himself society. Rather than a simple sterile mantra appealing to a desire to keep more of the stuff we earn, Reagan spoke of faith, freedom, family, work and neighborhood. He might not have been a community organizer, but he wanted Americans to know that they were not alone and that together, we could aspire to greatness.

Conservatives must focus on being champions of the common man, not mere protectors of the elite. We must ensure that our ideas and policies create social and economic mobility rather than simply preserving the status quo. President Obama’s policies may not effectively achieve those goals, but many conservatives are not even trying to suggest real alternatives.

Being offended is easy. Winning hearts and minds is not. We conservatives have allowed our ideology, which is fundamentally grounded in a belief that each individual matters deeply, to drift into a dangerous zone of self-protectionism and government antagonism.

President Obama may poke at conservatives, try to rile them with talk of tax increases, more “free” government programs and repeatedly espouse his “middle class” ideas for America. We need to stop reacting to him and start changing ourselves. We should not pine for Reagan, we should learn from his actions and words and move forward.

Conservatives so often like to call upon our founding fathers, but we often fail to remember that they sacrificed their lives, fortunes and families to ensure that others could experience a new dream of freedom. If conservatives want to change the Republican Party and our country, the personal cost will and should be high.

Americans crave leaders willing to consider their interests, who care about their future, and who are willing to humbly explore ideas that will improve prospects for their communities. Instead of the usual outrage at every liberal idea, conservatives give Americans a vision better than “middle-class.” They might just chase after it and prosper a nation in the process.