Regulation

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Senior Fellow John Berlau argues that a bill from Senators Tim Johnson and Mike Crapo intended to reform Fannie Mae and Freddie Mac would only make things worse.

CEI General Counsel Sam Kazman about to take a spin in Google's self-driving car. (Photo by Marc Scribner)

CEI General Counsel Sam Kazman about to take a spin in Google’s self-driving car. (Photo by Marc Scribner)

For the past several years, I’ve been writing about highly automated vehicles — widely referred to as driverless cars — and the huge potential they have in reducing injuries and deaths (over 30,000 Americans die on the roads every year), improving mobility for the disabled and elderly, reducing the drudgery of commuting, and helping the environment… provided policy makers don’t mess it up with onerous laws and regulations (see here, here, here, here, here, here, here, and here).

Recently, I appeared on Fox Business Network’s libertarian news-talk program The Independents to discuss automated vehicle developments, both technological and political. You can watch it here:

Today, CEI released a white paper I’ve authored, “Self-Driving Regulation: Pro-Market Policies Key to Automated Vehicle Innovation,” that goes into much more detail in arguing for regulatory restraint in order to allow the eventual consumer roll out to occur as timely and as cost-effectively as possible. In it, I provide a brief historical overview of automated vehicle development, explain current developments in the legislative and safety regulatory spaces, and offer a number of recommendations to policy makers.

So, why should you care about automated vehicle regulation? The short answer: bad regulation has the potential to kill. One of the biggest risks is getting the rules wrong and unnecessarily delaying consumer availability and/or increasing the prices faced by consumers. If automated vehicles are indeed safer than current manually driven vehicles, any delay or price increase means consumers will be stuck driving more dangerous vehicles. The stage is set for a classic “Death by Regulation” event: well-meaning lawmakers and bureaucrats deny safer products to consumers out of an overabundance of caution, translating to increased injuries and deaths. That is why it is so important for regulators not to mess it up.

Even if you aren’t sympathetic to free markets and libertarianism, I suspect there the first two-thirds will be of interest. Read the full thing here.

Post image for Pseudoscience and Clickbaiting Results in Beer Fear

There’s a lot of pseudoscience about food out there. From genetically modified crops to organic foods to corn syrup, to preservatives, passionate opinions abound, but well-reasoned, well-researched reporting on the issues is scarce. Normally, I selectively address the more egregious offenses and ignore the rest. But once in a while, an article comes along that is so misinformed, so hyperbolic, and so viral that it cannot be ignored. When such an article maligns one of my favorite food items, beer, I am duty-bound to come to its defense.

Recently, Organics.org turned a post by the blogger Vani Hari, better known as the “Food Babe,” into the worst kind of clickbait with the sky-is-falling headline, “8 Beers That You Should Stop Drinking Immediately,” which has been making the rounds on social media networks. But rather than exposing any dangers in beer, what Hari does reveal is that she does not understand the brewing process, how additives and ingredients function throughout that process, or how the beer industry is regulated.

The first warning sign that the Food Babe’s information may be dubious is that one of her main sources was the book, Chemicals Additives in Beer, published by the Center of Science in the Public Interest (CSPI), which has a poor record when it comes to being scientifically sound. As food historian Maureen Ogle noted in her rebuttal (which I highly recommend):

[T]his one fact set off my alarm bells: She [Hari] relied on information from the Center for Science in the Public Interest. If you’ve read Ambitious Brew, you know that I have zero patience with CSPI. For thirty years, that group has railed against the alcohol industry and lobbied for neo-prohibition. As a source of information, it’s untrustworthy, unreliable, and constantly shows a somewhat shocking disregard for science (weird, given the group’s name).

Moreover, I couldn’t find a copy of the book anywhere or even a listing that might demonstrate its existence.

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Post image for Taxable Bitcoins 2: We’re Not Gonna Pay it!

Reason magazine’s Brian Doherty recently addressed the IRS’s recent announcement that bitcoin transactions are taxable. As I addressed in my last piece, while the IRS may have sought to clarify their taxation process for bitcoins, it has only caused further confusion. I agree with Doherty that this announcement is not detrimental to bitcoin, but there are unresolved issues that need to be considered.

The plan is for the IRS requires users to self-report their transactions to the IRS; it is easy to see why compliance might be a problem. For a currency based upon subverting government regulations, there will likely be a group of Bitcoin users who choose to avoid payment of taxes to the IRS wherever possible. The question at this point is how likely is it that the IRS will be able to actually enforce taxation on bitcoins.

This is where the debate gets messy. The block chain, bitcoin’s public ledger, is a record of all transactions that have occurred between bitcoin users. The block chain uses digital wallets as a medium for storing and transferring bitcoins between individuals. It is possible for the IRS to monitor the block chain — which is publicly available for viewing online — and discern when a transaction occurs that meets the taxation threshold.

Each wallet has a unique 32-character address that does not tie itself directly to an individual’s real identity offline. So while the IRS could note certain transactions as being taxable on the block chain ledger system, they could not directly identify whether the person was within the U.S. or who they are. Of course, it is possible for the IRS to track down the IP address of the wallet’s computer and find the location of the computer used for the transaction. But this would take a lot of time and effort, and would have to be done for every individual instance in which a transaction is not reported to the IRS.

Furthermore, there is already a project called Dark Wallet which is seeking to further anonymize bitcoin wallets, through encryption. This would further complicate the ability for the IRS to enforce taxation. It is feasible to imagine the IRS enforcing taxation within this environment, but only if bitcoin became more widely adopted so that the effort to enforce taxation would be worth the resources needed.

The question facing the bitcoin community is whether it is better to conform with the standards set by government agencies, like the IRS, or do bitcoin users want to challenge government by developing more complex technologies to circumvent said agencies? We could be witnessing the early stages of an arms race.

Post image for CEI’s Battered Business Bureau: The Week in Regulation

It was a busy week with more than 80 new regulations. This coming week, the number of new regulations on the year should top 1,000, and the Federal Register’s page count will top 22,000.

On to the data:

  • Last week, 84 new final regulations were published in the Federal Register. There were 59 new final rules the previous week.
  • That’s the equivalent of a new regulation precisely every 2 hours.
  • So far in 2014, 952 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,173 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
  • Last week, 1,254 new pages were added to the Federal Register.
  • Currently at 21,981 pages, the 2014 Federal Register is on pace for 73,270 pages, which would be the lowest total since 2009.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 12 such rules have been published so far this year, none of them in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $1.64 billion to $2.01 billion. They also affect several billion dollars of government spending.
  • Eighty final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 196 new rules affect small businesses; 27 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Argentina President Cristina Kirchner

Argentina President Cristina Kirchner

Can a country seeking to welsh on its debts invoke sovereign immunity to evade not just court orders to pay those debts, but also post-judgment discovery aimed at collecting on those judgments? Can it do so to prevent not just discovery directed at it, but also at third-party banks? Most importantly, perhaps, can it do so even though it contractually waived sovereign immunity? The answer is yes, according to Argentina, which is seeking to stiff many of its bondholders. Thankfully, the U.S. Court of Appeals for the Second Circuit disagreed with this attack on property and contract rights in a 2012 decision.

But amazingly enough, the Obama administration has taken Argentina’s side at the Supreme Court. It is joined by the government of France, which has experienced downgrades in its credit rating due to stubbornly-high government spending under Socialist Francois Hollande that consumes well over half of France’s economy. The willingness of the Obama administration to take Argentina’s extreme position is disturbing given that the Second Circuit’s ruling was unanimous.

CEI and several former State Department officials have filed an amicus brief asking the Supreme Court to uphold the appeals court’s ruling, and reaffirm the availability of the post-judgment discovery needed to protect property and contractual rights. The former State Department officials include counsel of record John Norton Moore, former Counselor on International Law to the Department of State; Robert F. Turner, former Deputy Assistant Secretary of State for Legislative Affairs; Abraham D. Sofaer, a former federal judge and former Legal Adviser to the Department of State; Professor Malvina Halberstam, former Counselor on International Law to the State Department; and Davis R. Robinson, former Legal Adviser to the State Department. John Norton Moore, who teaches international law and national-security law at the University of Virginia, was extensively involved in drafting the Foreign Sovereign Immunities Act (FSIA) involved in the case. Judge Sofaer was appointed by President Carter to the federal bench in 1979.

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Have a listen here.

Iain Murray, CEI’s Vice President for Strategy, along with Freedom Association Director Rory Broomfield, won second place in the Institute for Economic Affairs’ Brexit Competition. The goal of the competition is to devise a strategy for Britain’s exit from the European Union.

NLRB Ambush Election HearingOn three separate panels, I testified last week against the flaws inherent in the National Labor Relations Board’s (NLRB) latest proposed rule.

The NLRB benignly purports to re-examine “Representation Case Procedures.” The rulemaking is commonly known as the ambush elections rule, as a result of a key component that could require elections in as few as ten days.

FIRST PANEL

On the first panel, I addressed the election date at the heart of the proposal. Approvingly quoting a letter from eighteen United States Senators who commented against the proposed rule, I noted that, “then-Senator John F. Kennedy stated that it was essential to allow ‘at least a 30-day interval between the request for an election and the hold of an election’ in order to ‘safeguard against rushing employees into an election where they are unfamiliar with the issues.’”

The crux of then-Senator Kennedy’s statement is a focus on safeguarding employees and on ensuring that effectively educating employees remains the Board’s focus.

ANALOGY TO STUDENTS’ STUDIES

Pointing out that the median times for elections are on the order of 40 days and that the proposal could call for elections in as few as ten days, I asked, “Would your students benefit from a 75-percent reduction in study time?”

I pointed out that workers, who already have a job and many of whom have families and hobbies, are challenged with essentially learning a crash course in labor law and labor economics—two arcane and intricate areas normally pursued by highly trained specialists with advanced degrees.

An absolute minimum of 30 days and really a routine minimum of sixty days are appropriate to learn such material.

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Post image for First Ever Constitutional Ruling against Dodd-Frank Voids Destructive “Conflict Minerals” Section

Today’s ruling of the D.C. Circuit Court of Appeals that Dodd-Frank’s “conflict minerals” disclosure mandate violates the First Amendment is the first time ever a court has ruled that a provision of Dodd-Frank violates the Constitution. Regulations issued under Dodd-Frank have been struck down for reasons such as inadequate cost-benefit analysis and other procedural violations, but this is first time a provision has been found to be unconstitutional.

And it couldn’t happen to a more misguided and destructive provision of the law! As my Competitive Enterprise Institute colleague Hans Bader and I have written in blog posts, articles, and regulatory comments, the conflict disclosure mandate creates a compliance nightmare, hurts American miners and manufacturers, and does the greatest harm to those it was intended to help — the struggling worker in and nearby the Democratic Republic of Congo.

As explained by Mercatus Center scholars Hester Peirce and James Broughel in their book Dodd-Frank: What It Does and Why It’s Flawed, the “conflict minerals” mandate of Section 1502 is one the law’s many “miscellaneous provisions” that offer “a clear example of how a statute invoked as the answer to the financial crisis is, in reality, an odd conglomeration of responses to issues, many of which had nothing to do with the financial crisis.” Section 1502, championed by celebrities, including Ashley Judd and Ben Affleck, requires all types of firms to disclose their products’ use of five “conflict minerals” — including gold, tin, and tungsten — that can be sourced to war-torn regions of the Congo.

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Post image for CEI’s Battered Business Bureau: The Week in Regulation

Two new economically significant regulations last week will impose more than half a billion dollars in compliance costs on the economy. The additional 57 regulations agencies finalized last week will hopefully be less impactful.

On to the data:

  • Last week, 59 new final regulations were published in the Federal Register. There were 79 new final rules the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 51 minutes.
  • So far in 2014, 868 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,100 new regulations this year. This would be the lowest total in decades; this will likely change as the year goes on.
  • Last week, 1,766 new pages were added to the Federal Register.
  • Currently at 20,727 pages, the 2014 Federal Register is on pace for 74,025 pages, which would be the lowest total since 2009.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 12 such rules have been published so far this year, two of them in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $1.64 billion to $2.01 billion. They also affect several billion dollars of government spending.
  • Seventy-seven final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 184 new rules affect small businesses; 26 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.