New York's botched attempt to roll out an adult recreational marijuana market is facing even more scrutiny amid claims of whistleblower retaliation, favoritism, and the unchecked spread of illegal dispensaries.
The chief equity officer for New York's Office of Cannabis Management (OCM) was put on administrative leave last week, and Gov. Kathy Hochul has ordered an overhaul of the beleaguered program, which even she has admitted is a "disaster."
At the center of the story is Jenny Argie, CEO of Jenny's Baked at Home Company, a New York marijuana processor. Argie says the OCM retaliated against her after she leaked a recorded conversation with Damian Fagon, the OCM chief equity officer. In the recording, Fagon admitted that the agency wasn't enforcing rules against unlicensed pot dispensaries and brands that were importing untracked, untested marijuana from other states.
"They got power-drunk and forgot that these are real people's lives with promises they had made to them," Argie tells Reason. "And the more we spoke up, the more they closed the door on us."
New York gave the green light to recreational marijuana in 2021, and Argie was one of the first licensed cannabis processors. She invested significant money and took out a second mortgage on her house, hoping to establish herself early in the new industry.
But a two-year-long delay in the rollout of the legal marijuana industry, continuing long waits for licenses, and dubiously sourced pot saturating the market has all but crushed many small operators like Argie. There are over 2,000 illegal marijuana dispensaries in New York City alone and only about 85 licensed ones statewide. New York marijuana growers simply don't have enough legitimate dispensaries to sell to.
"For anybody who's trying to enter a market as a small business, cash flow is king," Argie says. "We've already spent two years dying on the vine, waiting for the market to open up, which they told us was going to open but kept putting it off and putting it off."
Processors like Argie also quickly discovered that they were being boxed out of the limited market by large out-of-state companies offering dispensaries sweetheart payment terms and consignment deals that were supposed to be against the law.
Argie began speaking out about the problems facing New York marijuana growers and processors like herself. She wrote op-eds in local newspapers and testified before the New York state Legislature in October.
Her public comments led to a phone call that month with Fagon. When Argie confronted Fagon over the fact that she knew companies and dispensaries were illegally sourcing marijuana and breaking regulations, Fagon said the OCM would "probably" start cracking down on them in early 2024.
"We're not going to start a full-fledged crackdown," Fagon said in the recording. "We'd have to lose half of our dispensaries, probably, and it would further cripple the market."
Argie sent the recording to NY Cannabis Insider, an outlet covering the New York marijuana industry. According to the outlet, after the story was published last November Fagan called the reporter, screaming and cursing and saying he knew that it was Argie who leaked the call.
In December, a month after the story was published, state regulators issued a recall for Argie's marijuana—the state's first-ever recall for marijuana—because one of her edible products was 1 milligram lower in THC potency than advertised on the packaging. Argie had already fixed the issue but had neglected to have the product retested.
The recall made headlines across the state.
"In a state of over 10,000 illegal dispensaries selling to children—[marijuana] we know has pesticides, heavy metals, and all the things that they do in these illegal dispensaries—to make me the example was just heartbreaking," Argie says. "I realized I was dealing with an agency that had no oversight at that point."
Multiple news reports have found that New York dispensaries are selling counterfeit or mislabeled products and marijuana tainted with high levels of bacteria, fungus, pesticides, and heavy metals. State labs are supposed to ensure the safety of marijuana products, but a NY Cannabis Insider story published last September found "a product with lab results showing 250-times the medical limit for yeast and mold and noncompliant pesticide testing today sits on a New York City dispensary shelf."
(The reason for this is an amusing example of government logic: New York required marijuana to be grown outdoors in the name of sustainability, but when it discovered that outdoor growers couldn't keep the levels of mold, mildew, and yeast below required limits, it simply eliminated those limits.)
Argie decided that since she was already being selectively targeted, she might as well reveal herself as the leaker to bring more attention to the issue.
Earlier this month, six days after NY Cannabis Insider notified OCM that Argie was going on the record, state inspectors arrived at her facility for an unscheduled inspection and issued a full stop-work order, as well as a quarantining of all of her products.
The justification for the stop-work order was that Argie's processing facility was using an unapproved solvent in one of its machines. The solvent is approved by the Food and Drug Administration and the European Union, but not in New York's marijuana industry. Argie notes that a pharmaceutical version of the solvent is used in children's asthma inhalers. And more importantly, she says, it was listed on the packaging that inspectors had ample opportunity to review during the December recall.
Argie owns up to her company's lapses and says she worked to fix the problems as soon as they were discovered. She submitted a corrective action plan to OCM regarding the solvent, which the agency rejected earlier this month. What outrages her is that she knows there are plenty of New York marijuana businesses flouting the rules and operating in bad faith, yet they have been allowed to flourish while she is on the verge of bankruptcy.
"It was a hammer instead of grace," Argie says. "They tried to destroy my company because I spoke out."
Argie filed a lawsuit against the OCM this month alleging selective and retaliatory enforcement against her company, which remains shut down. She is seeking an injunction to lift the stop-work order and quarantine and asking the court to approve the solvent for New York's marijuana industry.
The OCM did not immediately respond to a request for comment.
The post New York Regulators Shut Down a Marijuana Processor After She Criticized the State's Lax Enforcement appeared first on Reason.com.
]]>The Food and Drug Administration (FDA) that massively screwed up COVID-19 testing now wants to apply its vast bureaucratic acumen to all other laboratory developed tests (LDTs). By insisting on its recondite approval procedures, the FDA at the beginning of the pandemic stymied the rollout of COVID-19 tests developed by numerous academic and private laboratories. In contrast, public health authorities in South Korea greenlighted an effective COVID-19 test just one week (and many more in the weeks following) after asking representatives from 20 private medical companies to produce such tests.
LDTs are diagnostic in vitro tests for clinical use that are designed, manufactured, and performed by individual laboratories. They can diagnose illnesses and guide treatments by detecting relevant biomarkers in saliva, blood, or tissues; the tests can identify small molecules, proteins, RNA, DNA, cells, and pathogens. For example, some assess the risks of developing Alzheimer's disease or guide the treatment of breast cancer.
The FDA now wants to regulate these tests as medical devices that must undergo premarket agency vetting before clinicians and patients are allowed to use them. The FDA estimates that between 600 and 2,400 laboratories currently offer as many as 40,000 to 160,000 tests. Overall, some 3.3 billion in vitro tests are administered to patients annually.
Out of billions of tests given, how often do laboratory developed tests appear to cause harm? In its submissions, the FDA justifies this burdensome oversight by citing problematic medical device reports and unconfirmed "allegations" for a grand total of nine and four different tests respectively between 2009 and 2023. The remaining examples cited by the FDA are tests that had actually been submitted to the agency for analysis and were subsequently rejected or revised as recommended.
A 2023 study in the American Journal of Clinical Pathology analyzed how frequently these tests were deployed in the University of Utah health system. The researchers reported that out of the more than 3 million lab tests ordered in 2021, 94 percent of them had already been approved by the FDA. Only 4 percent of the lab tests were LDTs. They believe their figures are similar across the U.S. health care landscape.
The FDA has received strong and widespread pushback from laboratories and clinicians. In a letter to the agency, American Hospital Association Executive Vice President Stacey Hughes wrote of the proposed regulations that "the unfortunate outcome likely would be the decline in the rate of clinical innovation, which would negatively impact the U.S.' ability to keep our health care system at the forefront of discovery, provide quality care to patients, and respond quickly to emerging public health risks."
The Biden administration is aiming to have the regulations finalized in April. However, MedTech Dive reports, analysts at the investment bank TD Cowen suggested that it remains "unclear if and when FDA will finalize the rule as it has faced considerable opposition and would likely be challenged in court."
The post FDA Aims To Stifle Medical Innovation Again appeared first on Reason.com.
]]>What if you come home and find strangers living in your house?
I assumed you order the squatters out, and if they resist, call the police, and they will kick them out.
Wrong.
Pro-tenant laws passed by anti-capitalist politicians now protect squatters. If a squatter just lies about having a lease, the police won't intervene.
"It's a civil matter," they'll say. "Sort it out in court."
Great. Court might cost $20,000. Or more. And courts are so slow, eviction might take years.
In my state, New York, homeowners can't even shut off utilities to try to get the squatter out. That's illegal. Worse, once a squatter has been there 30 days, they are legally considered a tenant.
This month, New York City police arrested a homeowner for "unlawful eviction" after she changed locks, trying to get rid of a squatter.
"Squatter rights," also known as "adverse possession" laws, now exist in all 50 states. As a result, evicting a squatter legally is so expensive and cumbersome that some people simply walk away from their homes!
Flash Shelton may have a better idea.
His mom wanted to sell their house after his dad died. But while they were selling it, squatters moved in.
Shelton did what I would have done—called the police. But the police said there was nothing they could do.
So he tried a new tactic: out-squat the squatter.
"I just felt, if they can take a house, I can take a house," Shelton says in my new video. "I could go in as the squatter myself, [and] gain possession of the property."
When the home invader left for a few hours, Shelton went in and changed the locks. Only then did the squatters leave.
Now Shelton's started a business, SquatterHunters.com, where he tries to help others get their houses back.
"People think of squatters as homeless, destitute," I say.
"They are not homeless," answers Shelton. "They're criminals…people taking advantage of the system."
In fact, one squatter he pushed out was Adam Fleischman, who started the Umami Burger restaurant chain. Fleischman told Shelton, "I'm a victim here." He even called the cops.
"He felt that since he had possession of the house," says Shelton, "that he had the right to call law enforcement and have me removed."
I tried to reach Fleischman to hear his side of the story. No luck.
"Where does he hear that he has this right to squat?" I ask Shelton.
"The city was telling him this," says Shelton.
But now Shelton was a squatter, too, so he was protected by the same pro-"tenant" law.
Still, only when Shelton threatened to bring friends to the house as backup did Adam Fleischman leave.
In Los Angeles, a woman claimed to be a "caretaker" for an elderly homeowner, who said she didn't want the woman in her home. So, she gave Shelton a lease. While the squatter was out, Shelton changed the locks.
"But the squatter is still there?" I ask Shelton.
"Still there," he says, "Climbing through the window because she doesn't have access to the main house."
She's now been there for two years!
Shelton says his team will move in and get rid of the squatter.
"How do you know that will work?" I ask.
"Because once I take possession," says Shelton, "then she'll have to fight in court to try to get back in. Most likely she won't do that."
Why do squatters feel entitled to other people's property?
Probably because people hate landlords. They listen to silly people like Marxist New School professor Miguel Robles-Duran, who calls landlords "parasites" who "provide no social value." Popular TikTok socialist Madeline Pendleton adds that landlords have "guaranteed forever incomes, without having to put in any labor."
No labor? Who does she think buys the land; pays lawyers to decipher the excessive regulations; hires architects, carpenters, plumbers, and electricians; pays the taxes; manages the property, etc.?
It's infuriating!
I'm glad people like Flash Shelton fight back.
COPYRIGHT 2024 BY JFS PRODUCTIONS INC.
The post Squatters Invaded His Mom's House—so He Fought Back appeared first on Reason.com.
]]>This week's featured article is "Don't Let E.U. Bureaucrats Design Americans' Tech" by Jennifer Huddleston.
This audio was generated using AI trained on the voice of Katherine Mangu-Ward.
Music credits: "Deep in Thought" by CTRL and "Sunsettling" by Man with Roses
The post <I>The Best of Reason</I>: Don't Let E.U. Bureaucrats Design Americans' Tech appeared first on Reason.com.
]]>On Monday, Florida Gov. Ron DeSantis (R) signed a bill enacting sweeping restrictions on minors' access to social media in the state. This comes just weeks after DeSantis vetoed a different age-verification bill, citing concerns that the first bill was too broad.
But the latest bill approved by DeSantis still places draconian limits on young people's ability to make social media accounts—and requires sites to infringe upon everyone else's privacy in the process.
Under House Bill 3, most social media sites will be required to deny accounts to those under 14 years old and terminate any accounts already held by kids under 14—including accounts that the platform isn't certain are held by someone under 14 but that the company "treats or categorizes as belonging to an account holder who is likely younger than 14 years of age for purposes of targeting content or advertising." Accounts held by 14- and 15-year-olds are also targeted for deletion under the law, though these teenagers can keep their accounts with parental permission.
The bill further states that any "commercial entity" that publishes content that is "harmful to minors" on a website or social media application must use age-verification measures to ensure that users under 18 cannot access the material. This section of the law appears to be written to prevent minors from accessing pornography websites, defining material "harmful to minors" as content that "appeals to the prurient interest," "depicts or describes, in a patently offensive way, sexual content," and "when taken as a whole, lacks serious literary, artistic, political, or scientific value for minors."
"You can have a kid in the house safe, seemingly, and then you have predators that can get right in there into your own home," DeSantis said during a press conference. "You could be doing everything right but they know how to get and manipulate these different platforms."
Companies that violate the law could face severe penalties, including up to $50,000 in damages per violation—and a payout of $10,000 more if they are sued by an individual minor over a violation of the law.
While the bill does not specify how exactly social media sites should verify a customer's age, with such large consequences for violating the law, it's likely that companies will require customers to hand over their government ID, submit to a facial scan, or otherwise hand over sensitive information.
"HB 3 forces Floridians to hand over sensitive personal information to websites or lose their access to critical information channels. This infringes on Floridians' First Amendment rights to share and access speech online," Carl Szabo, the vice president and general counsel of NetChoice, an organization that has sued to stop similar laws, wrote in a Monday press release. "We're disappointed to see Gov. DeSantis sign onto this route. There are better ways to keep Floridians, their families and their data safe and secure online without violating their freedoms."
Should the law face a constitutional challenge, it's likely to be overturned. Similar laws in California, Arkansas, and Texas have all been struck down by federal judges who said those bills violated the First Amendment by requiring social media sites to censor content.
The post Ron DeSantis Signs Social Media Age-Verification Bill appeared first on Reason.com.
]]>On Hinge, the basic text prompts where users share information about themselves are an unmitigated hellscape.
"All sex is choke sex when you're being strangled by the invisible hand of capitalism," read one profile I came across. The app offers a surprisingly large number of men who like to do yoga in the nude. A different man holds up a picture of himself with a "world's smallest cock" mug and yet didn't bother to post a picture of the adorable rooster. Things aren't much better once you open a chat: I recently asked a man in his 40s what he liked about Spain and he replied simply, "Chicas."
These are relatively tame examples. Unfortunately, some people deal with dangerous and aggressive users on dating apps, and lawmakers are taking note. But however terrible online dating may be, government intervention isn't the answer: The problem is the users, not the apps.
A bill recently introduced in Colorado aims to make dating apps such as Hinge and Bumble safer for users. The first section of S.B. 24-011 would force all dating services with any users in Colorado to submit an annual report to Colorado's attorney general about misconduct reports from users in the state or about users in the state. If that isn't available, the app must report all misconduct reports from the entire United States. These reports would all become public.
While the bill leaves some of the details up to the state's attorney general, this would probably mean that when people file false reports about each other on dating apps, the reports would all become public record. The bill uses the term "information about a member," suggesting that it would require disclosure about each individual member. Scorned lovers, racists, incels, and others with hostile motives could file false reports and harm people's job and dating prospects in the future. And a report on a government website looks a lot more legitimate than someone mad on social media. These reports might even lead to law enforcement investigating innocent users.
If you file a report against an ex to get back with them, that would be filed with the attorney general and become public record. And if a racist files a false report against every person of color, that could come up when future employers research those people. I also research dates prior to going out with them less as a matter of safety than the fact that a lot of men who have asked me on a date turned out to be married. But if I was unaware of how the law required disclosure, I might be dissuaded from dating a man if I saw this come up in his search results before even clicking on the link.
Like trying Tinder before using Hinge, the prior version of the bill was somehow even worse. It would have changed Colorado law to allow a dating service user injured by another member to sue the dating service if a report was ever filed with the dating service prior to the incident. It doesn't matter if the two people didn't meet on the app, and it doesn't even matter if the misconduct report is true. The report only has to be filed before the "incident." That means that even if the user is suspended and had connected with another user before the report was filed, if they harm that user, the app would still have been liable.
A spokesman for Democratic Gov. Jared Polis said that "the Governor believes in a free and open internet and that decisions about how people interact on social media are up to the individual, not the government."
At a time when many elected officials are seeking to blame platforms for the behavior of users, Polis offers a different approach. "Whether you meet a potential date at a bar, dance club, coffee shop, or online it is important to take safety seriously," the spokesman explained. "The Governor appreciates the sponsors' willingness to make changes to the bill that removed any private right of action and will allow dating sites to continue to be available to Coloradans." Polis' office did not comment on any of my abysmal dating stories.
Dating apps are horrible because they have horrible users—like the man who brought me to a cafeteria, drank a beverage that he packed for himself without asking me if I wanted one, grilled me for 15 minutes, and ghosted. (I later learned he was 14 years older than he claimed and Hinge had repeatedly banned him. He's tried to match with me three times more since that day.)
The Colorado bill would not help keep users safe but harm their future dating and employment prospects, often without reason. This is the wrong approach.
The post Dating Apps Are Horrible. A Colorado Bill Would Make Them Worse. appeared first on Reason.com.
]]>Prohibition's 14-year span in the early 20th century caused a boozy brain drain as droves of American bartenders shuttered their watering holes and moved abroad. With them went America's Golden Age of Cocktails. Reason's Peter Suderman in 2017 brilliantly laid out the backstory behind how the federal government almost killed the cocktail. But the government's anti-alcohol tantrum also nearly killed off another product further up the alcohol supply chain—the humble apple.
Today, the produce section of your average American grocery store is dominated by a small handful of commercial apples. A mere 5–10 varietals—such as the ubiquitous Red and Golden Delicious, Gala, Granny Smith, and Honeycrisp—rule the country's apple market. In my humble opinion, other than the flavorful Honeycrisp (developed via cross-breeding at the University of Minnesota in the 1960s), these varietals are largely bland, flavorless, and uninspiring.
It wasn't always this way. In the 18th and 19th centuries, America was home to well over 10,000 apple varieties, more than any other nation on earth. The names were as wide-ranging and extraordinary as the species diversity, with monikers like Yarlington Mill, Spitzenburg, Northern Spy, and Winter Banana.
America's apple exceptionalism came long before the Department of Agriculture doled out millions of dollars in annual grants to farmers, and even before land grant colleges were established to advance the nation's agricultural knowledge. Instead, it was almost entirely a bottom-up, grassroots groundswell that solidified the country's apple hegemony, with nearly every farm in early America containing an apple orchard—and nearly every American (nine out of 10) living on a farm.
To understand the story of the apple, one must first understand the story of cider. Nowadays called "hard cider," cider's American bona fides ironically far outstrip that of apple pie—with alcoholic cider's roots tracing back to the very birth of our nation. Heralded by some as the "fuel of the revolution," cider was not only allegedly passed out to both colonial and British troops during lulls in the action at the Battle of Concord, but it helped propel George Washington's first election to the Virginia House of Burgesses by ensuring his voters were well-lubricated. John Adams drank a gill of cider for breakfast before his daily five-mile walks, Thomas Jefferson made cider at his Monticello orchards, and Ben Franklin famously quipped: "He that drinks his cyder alone, let him catch his horse alone."
Given its role as cider's irreplaceable ingredient, the apple rose hand in hand with cider as a sine qua non of early American life. Needless to say, cider is only as good as the apples that go into it, which is why the nearly endless variety of apples found in 18th and 19th century America produced some of the most unique and flavorful ciders the world has ever known. In the words of cicerone Michael Agnew, these early apples were "cultivated for their tannins and acidity, [and] produced complex quaffs with flavors that rivaled fine wine, quite unlike the sweetened, alco-pop or non-alcoholic juice-in-a-jug that passes for cider today."
Early Americans consumed an average of 35 gallons of cider per year, in part because it was much safer to imbibe than water. "Up until Prohibition, an apple grown in America was far less likely to be eaten than to wind up in a barrel of cider," as author Michael Pollan noted. "In rural areas cider took the place of not only wine and beer but of coffee and tea, juice, and even water."
Proverbs 27 intones: "If you care for your orchard, you'll enjoy its fruit." But America didn't care for its orchards. At the very moment cider, and the apple, were becoming hard-wired pieces of Americana, everything began to change. First, the European revolutions of 1848 spurred a wave of German immigration to the United States. Unsurprisingly, more Germans meant more beer, which provided a ready challenger to contest cider's heavyweight title as America's alcoholic beverage of choice. Around the same time, the Industrial Revolution led to America's first great urbanization push—and German immigrants themselves were part of this trend, choosing to settle in Upper Midwest cities like Milwaukee.
This provided a natural competitive advantage for beer over cider, as grains like barley and wheat were cheaper to grow, easier to haul into urban environs, and less perishable than the apple. "Beer was made in breweries, which are like factories—they're modern," as William Kerrigan, author of Johnny Appleseed and the American Orchard: A Cultural History, pointed out. "Beer seemed cleaner and a more efficient, modern drink."
As cider declined in prominence, the bucolic rural apple orchard became less important to the American lifestyle. But while the apple was already declining across the nation's cultural landscape, it was the U.S. government that delivered the coup de grâce to this noble fruit.
With Prohibition's advent in 1920, not only alcohol but also the ingredients that made alcohol became public enemy No. 1. As Smithsonian Magazine recounts, FBI agents took to chopping down acres and acres of backwoods apple orchards, "effectively erasing cider…from American life."
Even if they escaped the G-men's axes, orchard owners had little incentive to maintain their orchards in the absence of cider. "[Prohibition] caused orchards to stop growing cider apples altogether, dealing our cider tradition—and the apples themselves—a death blow," writes Jonathan Frochtzwajg of Modern Farmer.
Whether at the foot of an ax, or via the headwinds of the temperance-induced gutting of the apple's highest and best economic use as a progenitor of cider, the American apple would never be the same. "Among the causes that contributed to the demise of cider in the United States, without question the Temperance Movement belongs near the top of the list," according to David R. Williams of George Mason University.
By the time Prohibition ended nearly 14 years later, America's cider and apple culture had been decimated. Part of this is attributable to the fact that mechanized urban breweries were better positioned to weather Prohibition, given that the factory setting allowed for a more ready transition to other product lines like soft drinks or selling ice during the country's dry spell.
An additional factor is inherent to the apple itself. Barley and wheat grow as annual crops, which allows their production to be curtailed or ramped up on relatively short notice, thereby allowing breweries to spring back into action quickly once Prohibition ended. In contrast, planting a new orchard means committing to a 25-year investment—one which, quite literally, takes at least three to six years to bear fruit. "When prohibition ended in the 1930s, there was neither the desire nor the means to resuscitate the cider industry," notes Williams.
To the extent the apple maintains its titular banner today as America's most popular fruit, it is only in the form of those aforementioned, depressingly bland grocery store varietals. These homogeneously boring modern apples are a poor substitute for their pre-Prohibition ancestors. By the 1990s, commercial orchards were growing fewer than 100 types of apples, with a mere 11 varietals constituting 90 percent of grocery sales. Over 10,000 apple varieties are believed to have gone extinct since Prohibition.
Were the story to end there, we would likely be forever condemned to a never-ending conveyor belt of Galas and Granny Smiths in the produce aisle. But just as the apple's fall came at the very moment it reached its apex, its resurrection began only once it hit its nadir. For while the government nearly killed the apple, the free market is saving it.
As America's modern craft cider boom took hold in recent decades, cidermakers began scouring the countryside for those unique, flavorful, spectacularly named apple varietals of yesteryear. Often called "spitter apples" since they are less sweet than the standard grocery store offerings, thousands of heirloom apple varietals thought to be lost are being rediscovered, and saved, by American cidermakers.
Stories abound of Appalachian apple enthusiasts who have saved thousands of "lost" apple varieties and now work closely with craft cidermakers. Famed cidermaker Diane Flynt of Foggy Ridge Cider, whom many consider the founder of today's craft cider movement, has credited cider's modern rise as being built "on the backs of these old fashioned apples…. If I didn't have these apples, my cider wouldn't taste very good."
Flynt, who won a James Beard Award in 2018, recently took things even further by shuttering Foggy Ridge to concentrate solely on apple growing. Other Virginia cideries, like Blue Bee Cider and Albemarle Ciderworks have helped save the Hewes Crab apple—a favorite of both Washington and Jefferson. The Hewes Crab was presumed to be extinct before a solitary tree was discovered near Williamsburg in the 1990s. Other heirlooms are similarly enjoying a renaissance, such as the Arkansas Black, another beloved cider-making apple.
Slowly but surely, the epic names are reentering the American lexicon: Bitter Buckingham, White Winter Jon, Royal Lemon, Candy Stripe, and Black Winesap. For that, we can thank Adam Smith's invisible hand—which, a hundred years later, has finally stayed the hand of the government's apple ax.
American '76 Recipe
A patriotic spin on the French 75, this libation celebrates cider's irreplaceable role in the American story.
3 ounces of craft cider
2 ounces of bourbon
½ an ounce of lemon juice
½ an ounce of maple syrup
Heirloom apple slice
Shake bourbon, lemon juice, and maple syrup in a shaker filled with ice. Double-strain into a rocks glass containing fresh ice; top with cider and give a quick stir. Garnish with a slice of your favorite heirloom apple varietal—and save the Red Delicious for the fruit salad.
Recipe adapted from Give Me Liberty and Give Me a Drink! by Jarrett Dieterle.
The post How the Government Almost Killed the Apple appeared first on Reason.com.
]]>Lawmakers in the European Union (E.U.) last week overwhelmingly approved legislation to regulate artificial intelligence in an attempt to guide member countries as the industry rapidly grows.
The Artificial Intelligence Act (AI Act) passed 523–46, with 49 votes not cast. According to the E.U. parliament, the legislation is meant to "ensure[] safety and compliance with fundamental rights, while boosting innovation." It is far more likely, however, that the law will instead hamstring innovation, particularly when considering it is regulating a technology that is quickly changing and not well-understood.
"In order to introduce a proportionate and effective set of binding rules for AI systems, a clearly defined risk-based approach should be followed," the law reads.
The legislation classifies AI systems into four categories. Systems deemed unacceptably high risk—including those that seek to manipulate human behavior or ones used for social scoring—will be banned. Also off limits, refreshingly, is the use of biometric identification in public spaces for law enforcement purposes, with a few exceptions.
The government will subject high-risk systems, such as high-priority infrastructure and public services, to risk assessment and oversight. Limited-risk apps and general-purpose AI, including foundation models like ChatGPT, will have to adhere to transparency requirements. Minimal-risk AI systems, expected by lawmakers to make up the bulk of applications, will be left unregulated.
In addition to addressing risk in order to "avoid undesirable outcomes," the law aims to "establish a governance structure at European and national level." The European AI Office, described as the center of AI expertise across the E.U., was established to carry out the AI Act. It also sets up an AI board to be the E.U.'s primary advisory body on the technology.
Costs of running afoul of the law are no joke, "ranging from penalties of €35 million or 7 percent of global revenue to €7.5 million or 1.5 percent of revenue, depending on the infringement and size of the company," according to Holland & Knight.
Practically speaking, the regulation of AI will now be centralized across the European Union's member nations. The goal, according to the law, is to establish a "harmonised standard," a routinely used measure in the E.U., for such regulation.
The E.U. is far from the only governing body passing AI legislation to bring the burgeoning technology under control; China introduced their temporary measures in 2023 and President Joe Biden signed an executive order on October 30, 2023, to rein in the development of AI.
"To realize the promise of AI and avoid the risk, we need to govern this technology," Biden said subsequently at a White House event. Though the U.S. Congress is yet to figure out long-term legislation, the E.U.'s AI Act could give them inspiration to do the same. Biden's words certainly sound similar to the E.U.'s approach.
But critics of the E.U.'s new law worry that the set of rules will stifle innovation and competition, limiting consumer choice in the market.
"We can decide to regulate more quickly than our major competitors," said Emmanuel Macron, the president of France, "but we are regulating things that we have not yet produced or invented. It is not a good idea."
Anand Sanwal, CEO of CB Insights, echoed the thought: "The EU now has more AI regulations than meaningful AI companies." Barbara Prainsack and Nikolaus Forgó, professors at the University of Vienna, meanwhile wrote for Nature Medicine that the AI Act views the technology strictly through the lens of risk without acknowledging the benefit, which will "hinder the development of new technology while failing to protect the public."
The E.U.'s law isn't all bad. Its restrictions on the use of biometric identification, for example, address a real civil liberties concern and are a step in the right direction. Less ideal is that the law makes many exceptions for cases of national security, allowing member states to interpret freely what exactly raises concerns about privacy.
Whether American lawmakers take a similar risk-based approach to AI regulation is yet to be determined, but it's not far-fetched to think it may only be a matter of time before the push for such a law materializes in Congress. If and when it does, it is important to be prudent about encouraging innovation, as well as keeping safeguarding civil liberties.
The post European Union's AI Law Will Heavily Regulate a Technology Lawmakers Don't Understand appeared first on Reason.com.
]]>As of last June, more than two years after New York legalized recreational marijuana, just 12 state-licensed dispensaries had opened for business, falling far short of Gov. Kathy Hochul's prediction that more than 100 would be operating by that summer. Six months later, Hochul was bragging that "nearly 40 adult-use dispensaries will have opened in 2023." The current count is 87. Those stores, The New York Times notes, "are far outnumbered by more than 2,000 rogue head shops, the target of complaints that they siphon customers, sell to children and attract criminals."
New York's rollout of marijuana legalization has been a "disaster," as Hochul conceded in January. "Every other storefront" is an unlicensed pot shop, she told The Buffalo News. "It's insane."
That disaster has frustrated would-be retailers, left farmers in the lurch, played havoc with tax revenue projections, and made a joke out of any expectation that New York, by learning from the experience of states that legalized marijuana earlier, would do a better job of displacing the black market. The insanity that Hochul perceives is a product of bad decisions by politicians who should have known better and obstruction by regulators who sacrificed efficiency on the altar of diversity.
Unlike states such as New Jersey, where voters approved legalization in 2020, and Maryland, where a similar ballot initiative passed two years later, New York did not initially allow existing medical dispensaries to start serving the recreational market. Its slow and complicated licensing process, which was skewed by an "equity" program that prioritized approval of applicants with marijuana-related criminal records or their relatives, is maddeningly hard to navigate.
Those preferences invited lawsuits by people who were excluded, which further delayed approval of licenses. Guidance and financial help for people struggling to jump through the state's hoops never materialized. And as in other states, high taxes and burdensome regulations have made it hard for licensed businesses to compete with unauthorized dealers.
The Times story, which opens with the stark numerical contrast between those two categories of marijuana suppliers, later takes a stab at a more positive spin: "New York now has more licensed recreational dispensaries than any state on the East Coast except Massachusetts." But even that is not true.
Maine, where voters approved legalization in 2016, has 139 recreational dispensaries, serving a population less than a tenth as big as New York's. New Jersey, with a population less than half as big as New York's, has 101 recreational dispensaries two years after legal sales began.
Connecticut, which legalized recreational marijuana the same year as New York, has 28 dispensaries serving that market—nearly twice as many per capita. Maryland, which legalized marijuana in 2022, has 101 dispensaries that serve recreational consumers as well as patients. Maryland's population is less than one-third the size of New York's. Even tiny Rhode Island—which has a population one-twentieth as big as New York's, legalized marijuana a year later, and has just half a dozen recreational dispensaries—still has more per capita.
New York's population is almost three times as big as the population of Massachusetts, where legal recreational sales began in November 2018. Massachusetts has nearly 400 licensed dispensaries. That's roughly six authorized retailers per 100,000 residents, compared to about 0.4 per 100,000 in New York.
If you consider the situation in other regions of the country, New York's pitiful number of licensed dispensaries looks even worse. Colorado, where the first recreational outlets opened in 2014, now has 670, or about 11 per 100,000 residents. Oregon, where legal recreational sales began the same year, has more than 800 licensed outlets, about 19 per 100,000 Oregonians.
Both of those states, of course, had a jump on New York, approving legalization in 2012 and 2014, respectively. But New Mexico legalized recreational marijuana the same year as New York, and it has more than 1,000 dispensaries, serving a population one-tenth as big as New York's.
Any way you cut it, New York has done a terrible job of getting licensed dispensaries up and running. But the Times sees another silver lining: It notes that dispensary owners "include people with criminal convictions, veterans, women, nonprofits and people of Black, Latino and Asian descent."
The affirmative action that helped achieve that diversity is part of the problem. Among other things, New York mandated preferences for license applicants who suffered as a result of the crusade against cannabis. While that idea has a pleasing symmetry, it never made much sense as a way of making up for the harm inflicted by cannabis criminalization. And in practice, executing the plan has drastically limited the legal marijuana supply.
People with marijuana convictions certainly should not be excluded from participating in the newly legal market, a policy that would add insult to injury. But that does not mean they should have a legal advantage over cannabis entrepreneurs who were never arrested but might be better qualified.
The state arguably does owe something to people who were punished for engaging in a business it has now decided to legalize. But why should reparations take the form of marijuana license preferences, as opposed to, say, direct financial compensation for legal costs and lost liberty? The method New York has chosen is limited to people who are currently interested in selling cannabis, which illogically excludes many others who were injured by enforcement of the state's marijuana laws.
Hochul nevertheless is proud of New York's equity efforts, even as she complains about the state's agonizingly slow progress toward a legal market. "I'm very fed up with how long it's taken to get some of these approvals," she told The Buffalo News after New York's Cannabis Control Board canceled a meeting at which it was expected to approve new retail licenses. "My understanding is that the board was supposed to consider 400 applicants. They only had three new retail locations approved….My team got involved and [said], 'No, go back to the drawing board, work harder, get this done.' And no, I'm not satisfied with the pace."
Part of the solution, Hochul thinks, is cracking down on all those "rogue head shops," which is apt to inflict precisely the sort of injury that New York supposedly is trying to ameliorate, punishing entrepreneurs for filling the yawning gap left by the state's misguided policies and administrative incompetence. More promisingly, Hochul has ordered "a top-to-bottom review of the state's licensing bureaucracy," aiming to "shorten the time it takes to process applications and get businesses open."
The Times notes that license applicants "have filed lawsuits accusing the agency of overstepping its authority, giving conflicting guidance and discriminating against white men in its push for diversity." The rollout "has been delayed for months at a time by lawsuits, the state's monthslong rule-making process and the state's failure to provide the start-up loans and real estate that it promised to the first 150 dispensaries."
A recent scandal involving Damian Fagon, the New York Office of Cannabis Management's chief equity officer, reinforced the impression of dysfunction. Jenny Argie, who owns a company that supplied edibles to dispensaries, told the Times that Fagon "retaliated against her company, Jenny's Baked at Home, after New York Cannabis Insider published parts of a conversation with him about the state's failure to punish bad actors, which she had recorded." A month later, "her products were recalled—a first for the state—and her business has been temporarily shut down." Fagon has been placed on administrative leave pending the outcome of an investigation by the state inspector general's office.
Legalization activist Annette Fernandez defended Fagon in an interview with the Times. "Regardless of his hubris," she said, "he's still the No. 1 advocate for equity." But the equity program is itself an act of hubris, distorting the market by prioritizing progressive goals instead of awarding licenses to anyone with the wherewithal to run a successful marijuana business.
In addition to the bureaucratic shake-up, Hochul supports legislation that would substantially reduce the state's marijuana taxes. As should have been obvious to anyone who was paying attention to what happened in states such as California (which apparently did not include New York's legislators), taxes are a major factor in the ability of licensed marijuana businesses to compete with the black market, attract customers, and turn a profit.
New York collects a 13 percent retail tax on cannabis products, plus a tax based on their THC content: 3 cents per milligram in edibles, eight-tenths of a cent per milligram in concentrates, and half a cent per milligram in flower. That tax amounts to 30 cents for a gummy containing 10 milligrams of THC and $3 for a 100-milligram chocolate bar. And since it is collected from the distributor, its impact is compounded by the markup and tax at the retail level. Hochul favors replacing the THC tax with a 9 percent wholesale excise tax.
The THC tax is one of those ideas that appeal to progressive technocrats who give little thought to unintended consequences. The rationale was that it would help maintain revenue in the face of falling retail prices while deterring overconsumption by forcing consumers to pay more for products of higher potency. Legislators somehow did not take into account the existence of a black market in which the tax rate is zero. Given that reality, there is an unavoidable tradeoff between using taxes to raise revenue or paternalistically prod consumers and getting those consumers to patronize the businesses that actually collect the taxes.
Back in December 2022, Hochul unveiled a "licensed cannabis dispensary tool" that consumers could use to check a pot store's legal status. She urged shoppers to look for signs "posted in the windows of legally licensed retail dispensaries" that include a QR code to verify that a store is officially allowed to sell cannabis. She said the signs "will help to protect public health and strengthen our ability to deliver the equitable cannabis market our law envisions," and she promised to "shutdown illicit operators who are selling products that put New Yorkers at risk."
More than a year later, those "illicit operators" outnumber "legally licensed retail dispensaries" by about 23 to 1. Instead of trying to scare consumers about the hazards that might be lurking in black-market pot or urging them to do their civic duty by eschewing it, maybe New York politicians should remove the barriers that have fostered the embarrassing situation in which they find themselves.
The post Political Stupidity and Bureaucratic Bungling Created New York's Pot Legalization 'Disaster' appeared first on Reason.com.
]]>Frozen cherry pie manufacturers have finally been liberated from one of the most unnecessary Food and Drug Administration (FDA) regulations. And it only took nearly 20 years of lobbying!
On March 14 ("Pi Day," of course), the FDA announced that "standards of identity and quality" for frozen cherry pies that were implemented in 1971 were revoked as of April 15. These standards of identity mandated how many cherries needed to be in frozen cherry pies (25 percent by weight) and how blemished they were permitted to be (only 15 percent) in order to be included in these pies.
What made these standards unusual, even taking into account the reams of FDA regulations that exist, is that these regulations applied only to cherry pies, and specifically to frozen cherry pies. Fresh cherry pies did not have to meet these standards. Frozen apple pies did not have to meet these standards. Only these pies did.
There are costs to these regulations, to be clear. There's an entire complicated compliance process the FDA implemented in 1971 to make sure manufacturers put the right amount of high-quality cherries into pies.
What was absent from all of this was any evidence that Americans needed the federal government's protection from lower-quality frozen pies. The American Bakers Association submitted a petition to the FDA all the way back in 2005 to see if this rule could be revoked.
Eventually the FDA agreed and announced plans for a rule change. As an example of how long it takes for even the tiniest amount of deregulation to happen, this initial announcement came in December 2020, under former President Donald Trump's administration. But that was just the announcement of the pending rule change; the whole lengthy process wasn't actually completed until March 2024.
The FDA explained when it announced the change was finally coming:
No standards of identity and quality exist for any other types of frozen fruit pies, or for any non-frozen fruit pies, including non-frozen cherry pie. We conclude that the standards of identity and quality for frozen cherry pie are no longer necessary to promote honesty and fair dealing in the interest of consumers.
Reason covered the announcement of the change back in 2020, noting at the time, "The reality is that it's not 1971 anymore, and innovations in both agriculture and food preparation have given Americans more options and competition, such that people don't actually have to settle for crappy frozen cherry pies." If some pie manufacturer decides to put out unpalatable cherry pies now that the government has eased the rules, consumers can simply buy somebody else's, or even make their own much more easily than they could have in 1971.
It has taken nearly 20 years to eliminate a petty food regulation that doesn't really serve a purpose, one that advancements and improvements in the marketplace had already rendered obsolete.
The post After Nearly 20 Years, They Finally Freed the Frozen Cherry Pie appeared first on Reason.com.
]]>In Las Vegas, cheating at the gambling tables can swiftly send you to jail. Yet in the world of fantasy sports betting, major companies are cheating and getting away with it: They are edging out rising competitors rather than playing fair. Their accomplice in this endeavor? None other than state legislatures.
The online fantasy sports betting industry is experiencing tremendous growth, with 2023 revenues in the U.S. alone exceeding $10 billion. Fans of live sports have become used to the constant flow of advertisements for the leading online sports betting companies, like DraftKings and FanDuel, during commercial breaks. All this growth shows potential competitors there's money to be made in the online sports betting market.
In July 2023, the Sports Betting Alliance, a lobbying group representing DraftKings, FanDuel, and other industry leaders, asked Wyoming's attorney general to classify certain fantasy sports games as outright gambling activities. A few months later, the state issued cease and desist orders to local competitors. From Michigan to New York, at least eight other states have taken similar actions or are contemplating such measures and more states may follow suit.
Their lobbying efforts are largely centered on having the states classify pick'em fantasy sports games—where users predict the winners of a series of matches—as games of chance (classified as gambling), rather than games of skill (not considered gambling).
Legally, not all gambling is the same. Federal and state laws differ on the legality of online betting. Typically, online gambling in games of pure chance is illegal; while online gambling in games of skill may or may not be legal. The decision depends on state legislatures.
A good way to tell the difference between games of pure chance and games of skill: Studying can make you better at one but not the other.
There is little difference between the fantasy sports contests offered by DraftKings and FanDuel and the pick'em contests of their emerging competitors, such as PrizePicks and Underdog. In both, participants predict the performance of players, but the core mechanics vary slightly between choosing players based on statistical performance or predicting their performance relative to a benchmark set by the companies. Success in both pick'em or DraftKings' and FanDuel's primary contests involves a little bit of luck—as do most games of skill. But unlike a game of pure chance like roulette, these games offer players an opportunity to leverage their knowledge and predictive abilities on player and team performances.
Years ago, brick-and-mortar casinos lobbied to ban online fantasy sports, viewing them as a direct threat to their businesses, similar to how online retailers challenge big-box stores. But now, the Sports Betting Alliance is using the same legal playbook that once threatened its operations against its smaller competitors.
Predatory lobbying is the ugliest form of what business experts call "nonmarket strategy"—trying to gain market advantage outside of market mechanisms. Businesses naturally dislike competition; most businesses would prefer to be a monopoly, even if it means stifling innovation and consumer choice. More competition, after all, means lower market share, revenue, and prices. Often, CEOs know that the best way to compete is not to compete at all, but instead get the government to outlaw competition. They will advocate for regulations or taxes under the guise of public interest when, in fact, they aim to benefit themselves.
State-imposed bans on online fantasy sports betting will not eliminate these games. Instead, they will ensure that companies such as FanDuel and DraftKings enjoy a duopoly on online sports betting in the United States. When states prohibit competition, they only funnel consumer spending toward industry giants. They are being played for suckers.
The post Online Sports Betting Giants Place Their Bets Against Growing Rivals appeared first on Reason.com.
]]>Following anemic sales growth of 1.8 percent in 2023, Unilever announced its separation from its ice cream division on Tuesday.
Increasing its share of the ice cream market from 16 percent to 20 percent over the past decade, Unilever's ice cream brands included Ben & Jerry's, Magnum, Wall's, and Cornetto. Unilever's ice cream division accounted for 13 percent of its revenue in 2023, with the rest coming from consumer staple brands like Dove, Comfort, TRESemmé, Vaseline, Liquid I.V. (a favorite of college students who totally respect the legal drinking age) and—Hellmann's Mayonnaise?
Unilever has quite the diversified (and eccentric) portfolio of products.
Despite its impressive market share, Unilever's ice cream division experienced the firm's highest input-cost inflation last year, making it more of a liability than an asset. In an attempt to remain profitable, Unilever instituted cost-cutting measures and across-the-board price increases.
The first strategy proved ineffective: Despite 7 percent growth in the consumer staples sector between 2019 and 2024, Unilever's own share actually decreased by 8 percent.
The second strategy also fell flat: After raising the average price of its offerings by 13.3 percent in 2022, sales decreased by 3.6 percent and 1,500 of its 128,000 employees were fired. Although consumer welfare was initially reduced by Unilever's price hikes, so too was producer surplus in short order.
Unilever's decision to fire 7,500 more employees coupled with its divestiture from its ice cream division constitutes its latest bid to cut costs, saving the company a projected $870 million over the next three years. Given CFO Fernando Fernandez's nod to the importance of artificial intelligence in Unilever's "comprehensive technology program," it comes as no surprise that CEO Hein Schumacher anticipates layoffs impacting those in "predominantly office-based roles."
What may come as a surprise to Federal Trade Commission (FTC) Chair Lina Khan and the neo-Brandeisians (mis)managing the FTC is the fact that even huge, horizontally integrated firms like Unilever cannot raise prices without decreasing quantity demanded. This is especially true when it comes to those goods for which demand is relatively elastic.
Consumers will happily hand over a couple bucks to sate their Chunky Monkey craving, but they're not going to pay much more than that; they'll satisfy their sweet tooth with cheaper ice cream, substitute with a Kit Kat, or forgo the (relative) luxury altogether.
In markets where own-price elasticity is high and substitute goods abound, market share does not translate to market power.
Speaking of Chunky Monkey, Unilever's sale of Ben & Jerry's bodes well for those uneasy about the increasingly politicized marketplace. Ben & Jerry's opted to differentiate their overpriced, punny ice cream flavors through active participation in the political controversy du jour: vocally supporting Black Lives Matter in 2021 and refusing to sell in the "Occupied Palestinian Territory" in 2022. The Vermont ice cream chain went so far as to sue Unilever to prevent it from selling distribution rights to Israeli licensees.
Apparently, hot political takes don't pair well with cold ice cream.
Though Ben & Jerry's corporate activism undoubtedly contributed to its relationship with Unilever melting, it was probably not determinative. Pointing to "lack of overlap on supply chains with the rest of the company," Schumacher explained the benefits of horizontal disintegration from all of its ice cream brands, not just Ben & Jerry's. When cost-saving synergies no longer compensated for increased input costs, the profit motive naturally incentivized Unilever to downsize and delimit its focus.
Less of an instance of "get woke, go broke," Unilever's divestiture from its ice cream brands is more so evidence that the size and extent of a company has little to do with its pricing power.
FTC, take note.
The post No Ice Cream Price Gouging Thanks to Substitutes appeared first on Reason.com.
]]>This week's featured article is "After a Century, the Federal Tea Board Is Finally Dead" by Eric Boehm.
This audio was generated using AI trained on the voice of Katherine Mangu-Ward.
Music credits: "Deep in Thought" by CTRL and "Sunsettling" by Man with Roses
The post <I>The Best of Reason</I>: After a Century, the Federal Tea Board Is Finally Dead appeared first on Reason.com.
]]>One bad actor became an excuse for the government to ruin everyone's day. Or that's how some drone pilots in Missouri are feeling right now, after the self-described "rat king" and "cult" leader Jomo Johnson offered pay-per-view surveillance of St. Louis and the city responded with ham-handed restrictions.
The St. Louis Board of Aldermen voted last week to require any drone pilot flying for commercial reasons to have a city license. (That's on top of the Federal Aviation Administration license that commercial drone pilots already need.) The bill would also ban drones from flying within 25 feet of people without their consent or near public buildings and emergency vehicles.
Mayor Tishuara Jones says she's looking forward to signing it into law. The site DroneDJ calls the move "another example of isolated obnoxious drone operation producing regressive rules for all users."
While the bill throws barriers in the way of businesses like real estate photography, it exempts "members of the press who operate drones to collect video footage or photographs for journalistic purposes and activities protected by the Constitution"—which leaves room for exactly the kind of livestreaming that the aldermen were trying to ban in the first place.
"We want to respect privacy, but also, there is a right to photograph in public," Johnson told a local NBC affiliate. "That's covered under the First Amendment."
The bill was a response to Johnson's company, SMS Novel, advertising paid surveillance livestreams of St. Louis neighborhoods. SMS Novel offered to let users submit requests for surveillance of specific locations. Johnson described his service as a "unique opportunity for both entertainment and security."
It's unclear whether the surveillance even existed in any meaningful form. The local news station First Alert 4 tried to pay for SMS Novel's livestream on the first day of streaming but never gained access to the video. The two samples of SMS Novel footage that are posted to YouTube show jerky, nearly-unwatchable piloting.
Surveillance would not be Johnson's first creepy business venture. Different versions of the SMS Novel website have offered different services. One version let people pay $200 to have their pet audition for a film about "the mythical tale of the dog that followed Jesus." Another version sold AI-generated books for nearly $100.
In a video, SMS Novel described itself as a "writing cult" around Johnson, a "subservient rat king of writers devoted to the Almighty Word, joined at the tails by the power of AI."
Speaking in defense of his drone venture, Johnson has presented himself as an upstanding crime fighter rather than an cult leader. He told a February 29 board meeting that "we shouldn't demonize Black voices that try to create solutions for crime in St. Louis and other cities."
Johnson said he was speaking "as someone who has frequented St. Louis much and also as a future resident." Other people at the meeting shouted, "He doesn't even live here!"
In his January 29 interview, Johnson also called himself "a drone businessperson who represents drone pilots." Many in the drone community, however, see Johnson as a threat to their ability to self regulate.
"If you're in the drone business and you're trying to create a drone business that's going to create this kind of havoc, keep in mind that there will be an overreaction," flight instructor Greg Revardiau said during his weekly Pilot Institute news video. "Everybody—in this case, in St. Louis—can owe it to [Johnson] that now they may not be able to fly in certain areas."
The post The One-Man 'Cult' That Put St. Louis Under Surveillance appeared first on Reason.com.
]]>"I see no reason," the late Sen. Harry Reid (D–Nev.) once declared on the Senate floor, "why those in this country who enjoy drinking tea need someone else to tell them what tastes good."
Yet for nearly 100 years that is exactly what the government did, thanks to one of the strangest agencies ever to be a part of the federal bureaucracy.
In addition to the usual beverage regulations aimed at ensuring proper storage and safe handling, imported tea was required for decades to pass a literal taste test before it could be sold in the United States. The task fell to a group of Food and Drug Administration (FDA) appointees, who would gather annually in a converted Navy warehouse in Brooklyn to smell, slosh, sip, and spit the various oolongs, greens, and Earl Greys that tea merchants sought to sell to Americans.
This was the federal Board of Tea Experts.
The board's members would taste dozens of teas over the course of several days. The process was more an art than a science. According to a 1989 Washington Post profile, there was no uniform method for tasting. Some board members worked in silence while others slurped their tea or gargled it loudly. Some preferred to taste the tea hot; others let it cool first. The warehouse where they gathered was outfitted with pictures of old-timey sailing ships, a kitchen sink, several kettles for boiling water, boxes upon boxes of tea, and large windows. The board's then-leader Robert H. Dick told the Post thatto properly inspect the tea, "I have to have a north light."
When Reid voiced his objection to the tea board in 1995, the agency had already survived two decades' worth of efforts to shut it down. Congress finally ended the board's oversight of tea imports a year later, but the federal Board of Tea Experts technically still existed for another 27 years. It was officially terminated on September 19, 2023.
The bizarre history and surprising longevity of the federal tea-tasting board is something of a mixed bag for anyone who wants to see more federal programs iced for good.
On one hand: The board was eventually shut down.
On the other: If it takes nearly 50 years to get rid of something as useless and insignificant as the Board of Tea Experts, what hope can there possibly be to do away with larger governmental entities backed by more powerful special interests? Hardly an election season goes by without some (usually Republican) presidential hopefuls promising to abolish this department or that agency—the Department of Education and the Environmental Protection Agency are perennial favorites. Are those efforts doomed before they begin? Will those promises always be empty?
The weird tale of the Board of Tea Experts holds a variety of lessons for anyone interested in shrinking the size and scope of government. It's a warning about the stickiness of bad ideas, about an inertia that can limit even the smallest attempts at trimming the state.
"This is the reason people are upset about government," Reid said in that 1995 Senate floor speech. "What an absolute waste of taxpayers' money is it to have them spend $200,000 a year swishing tea around in their mouths."
Anthropologists believe human beings were drinking tea before recorded history. In China, where tea was first cultivated, accounts of the drink's benefits for keeping healthy and staying awake date back at least as far as the Shang dynasty (founded around 1700 B.C.); physical evidence of tea consumption and the tea trade goes back well over 2,000 years.
The relationship between tea and the state is ancient too. According to one Chinese legend, the drink was invented when leaves were accidentally blown into a cup belonging to Emperor Shennong, who was fond of sipping boiled water. The resulting brew tasted good, and presumably gave the mythic ruler one of humanity's first caffeine highs.
Tea made its way to Europe (and then the Americas) in the 1600s. A 1657 listing from a London coffee shop offered tea for sale starting at 16 shillings per pound—roughly $190 per pound today. Governments all over the world tried to subsidize and monopolize the tea trade at various times, and many collected bountiful revenue from their citizens' and colonists' addictions.
In the New World, that quest for revenue helped spark a history-altering backlash. The uprising in Boston Harbor on the night of December 16, 1773, wasn't the first tax revolt in American history, and it wouldn't be the last. But it remains the most memorable, and a crucial part of the country's founding mythology. The lingering cultural memory of the Boston Tea Party might have even played an indirect role in the creation of the federal Board of Tea Experts more than a century later.
"Since the British drank a lot of tea, they would pick the best teas, and then a lot of times when they had something they didn't want, that was left over, or maybe even damaged or something, they would fill the order from the United States with some of that tea," Dick, whose tenure on the Board of Tea Experts lasted from 1947 until 1996, explained in a 1984 interview published as part of an internal history of the FDA.
Worried that British tea exporters were taking advantage of their less sophisticated American customers, Congress passed the Tea Importation Act of 1897. The act created a new federal commission charged with ensuring the quality of the nation's tea supplies. But from the start, the board's standards seem to have been quite open to interpretation. When the Tea Importation Act was first passed, it merely said "that the tea should be rejected if it was unfit," Dick explained in that interview. "Well, unfit meant different things to different people."
Over time, tasting standards for different types of tea were put into place. Imported tea had to match the federally approved flavor profiles to be legally sold, with the tasters responsible for setting the standards. After the FDA was created in 1906, the tea-tasting board was rolled into the new agency, which would eventually grow to regulate cosmetics, pharmaceuticals, and, of course, food. But the Board of Tea Experts remained a unique element of the FDA's sprawling portfolio. "Tea is the only food or beverage for which the [FDA] samples every lot upon entry for comparison to a standard recommended by a federal board," noted a 1996 analysis from the House of Representatives.
As the Post detailed in its 1989 profile, the annual gathering of the tea-tasters was not meant to identify the best teas or set particularly high standards for what would be allowed into the country. Rather, "the task is to select the worst that are still drinkable" and then use those standards as the basis for what would be permitted to enter the country for the rest of the year. At the height of its vague yet absolute powers, the tea board employed testers based in Boston, New York, and San Francisco; their job was to translate the board's standards into practice. A separate but related entity, the Board of Tea Appeals, provided due process for anyone wronged by the tea-tasters' opinions.
Even with some standards in place, bureaucratic laziness sometimes prevailed. At one point, Dick recalls being told by a then-senior member of the board that "you don't need to look at all of those teas because you can look at the prices and you can tell which is the good tea and which is the bad tea." Too bad consumers couldn't be trusted to do the same.
If the board was protecting consumers, it doesn't seem to have been protecting them from much—the board rejected less than 1 percent of the teas submitted for approval each year. But Dick argued the mere threatof rejection was a protection.
"If you eliminate the Tea Act then you've got a case of where somebody is going to take chances," Dick said in 1984. "If they have a poor tea, they don't know whether it will be rejected or not, and they don't know whether it would be sampled or not, and they may be tempted to ship it. So, it would make a difference."
There is a long history of domestic industries using made-up or exaggerated concerns about consumer safety to seek political power, then using that power to limit competition or create cartels. It's tempting to project that narrative onto the history of the Board of Tea Experts.
But there's a problem with that theory, says Ryan Young, a senior economist at the pro-market Competitive Enterprise Institute. There was not much of a domestic tea production industry in the 1890s. Even today, the vast majority of tea consumed in the United States comes from abroad, primarily India and China.
There may have been legitimate reasons to worry about the quality of tea being imported into the U.S. at the time the board was created, says Young. But it was private industry, not government, that solved it.
"Back then, groceries were often sold out of crates and barrels, often with no way to know who the producer was or where the product came from," he says. "Brands are an extremely important self-regulation device in markets. They improve trust and accountability, whereas anonymous producers can get away with all sorts of shenanigans."
By the middle of the 20th century, private self-regulation had solved the problem that the Board of Tea Experts was supposed to fix.
But government programs don't just go away when they become obsolete.
Can drinking tea help you live longer? Some studies suggest as much. Research published in Advances in Nutrition in 2020 found that regular consumption of tea is correlated with a lower risk of death from various cardiovascular issues, including strokes. The study's authors attributed tea drinkers' longer life spans to "flavonoids"—a pigment found in many tea leaves that is thought to be a powerful antioxidant.
I know of no peer-reviewed study suggesting government bureaucracies tasked with tea tasting have longer than average life spans. But the available evidence suggests that, indeed, they are quite difficult to kill.
"These tea-tasting people are just like lizards," Sen. Reid declared in 1995, comparing the board to critters he said he'd catch as a kid, ones whose tails would grow back even after they were yanked off. "You grab them and jerk something off and they are right back."
By then, the Board of Tea Experts had survived more than a quarter-century with a target on its back.
The first attempt to eliminate the tea board occurred in 1970, when the Nixon administration tried to redirect the board's budget of $125,000 (almost $1 million today) to other parts of the FDA. Nixon was looking for an easy public relations coup, according to a contemporary New York Times report. Killing off the tea-tasting board would be a symbol of the federal government's commitment to belt tightening, or so he thought.
The tea industry fought for the board's survival, arguing that the president had no power to drain the board's budget unless Congress first repealed the 1897 law that authorized it. With Congress apparently uninterested, Nixon quietly surrendered.
The attempt at least provided one lasting moment of hilarity. While digging through boxes of documents at the Richard Nixon Presidential Library and Museum in 2021, Ashton Merck, a postdoctoral researcher at North Carolina State University, came across a letter ostensibly mailed from a dormitory at the University of California, Berkeley. The letter writer claimed to represent a group of individuals who were "appalled at [Nixon's] proposal to eliminate one of the few remaining bastions of tradition and culture in this country" and the planned liquidation of Dick's job as the only full-time employee of the board.
The name of this alleged group taking the time to bend the ear of the most powerful man in the world? "The Committee To Keep Dick Tasting."
In the ensuing years, the tea-tasting board routinely turned up on lists put together by groups like Taxpayers for Common Sense as a target for federal budgetary pruning. Presidents Jimmy Carter and Ronald Reagan both made half-hearted attempts to kill the board, without success.
In the '90s, Congress finally organized a serious revolt against the board's existence. Reid, an unexpected advocate for shrinking government, took on the role of Sam Adams. In a 1993 speech supporting his bill to cut off funding for the tea-tasting board's expense reimbursements, including a $50 per diem for each member, Reid reached for the obvious metaphor. A "congressional tea party" was necessary, he said, to "dump the tea experts overboard."
The bill passed. But even after losing their per diems and expenses, the board simply poured another cup.
Two years later, Reid aimed to bag the board for good. Working across the aisle with Sen. Hank Brown (R–Colo.), Reid pushed through a proposal to cut off all taxpayer funding for the board's staff. But that provision was struck from the final version of the bill during a conference committee meeting, following what The Washington Post termed "last-minute lobbying" from the industry.
"It's a sign of how difficult it is in Washington," Brown told The New York Times in September 1995. "Defeating some of this nonsense is going to be a long tough job. The tea board is quite resilient."
At that point, Reid boiled over. No longer content merely to pull the metaphorical tails off the tea bureaucrats, Reid and Rep. Scott Klug (R–Wis.) drafted bills to repeal the Tea Importation Act of 1897 and abolish the Board of Tea Experts for good. The bill passed both chambers of Congress unanimously and was signed into law by President Bill Clinton on April 9, 1996.
The Board of Tea Experts had boiled its last kettle. Or so it appeared. Technically, the tea-tasting board outlived the man who played the biggest role in killing it. Reid died in late 2021, after a long Senate career that culminated in an eight-year stint as majority leader (during which time he battled a congressional Tea Party of a different kind).
Fifteen months after Reid passed away, the federal Board of Tea Experts was finally gone for good—after existing in a sort of limbo for more than two decades in which it had no members and no budget. Its obituary: a brief September 2023 notice in the Federal Register, which records the doings of the executive branch agencies, announcing that the FDA was removing "the Board of Tea Experts from the Agency's list of standing advisory committees" in accordance with the law passed by Congress in 1996—yes, 27 years prior.
A lot of things happened in American politics during the two and a half decades that the Board of Tea Experts existed in a sort of bureaucratic limbo. One of the more amusing moments took place on a debate stage in Michigan on November 9, 2011, where Gov. Rick Perry of Texas had a political moment for ages.
"And I will tell you, it's three agencies of government when I get there that are gone: Commerce, Education, and the, uh, what's the third one there? Let's see," the presidential hopeful said, awkwardly trying to recall what he wanted to tell you.
This was near the peak of the GOP's Tea Party era—a small-government populist movement that recalled that other, more famous story about the intersection of tea and American politics—and the candidates vying for a chance to challenge President Barack Obama were competing to see who could make the most aggressive promise to slash government.
"You can't name the third one?" asked moderator John Harwood, incredulously. The crowd laughed. Other candidates shouted suggestions. But it was hopeless. "The third one. I can't. Sorry," Perry concluded, before meekly adding, "Oops."
Perry's campaign limped along a little while after the remark, but for all intents and purposes, that was the moment it ended. It was a moment that mattered not only because of the comedy of a polished politician coming unglued on national television, but because it highlighted the humongous gap between Perry's campaign-trail blather and the reality of governing. How could anyone believe he had a workable plan to close entire federal departments when he couldn't even remember his own talking points?
A few years later, then-President Donald Trump appointed Perry to run the Department of Energy—the same department Perry couldn't remember he wanted to abolish.
With the annual federal budget deficit now nearing $2 trillion and the national debt reaching unsustainable levels, it's important for politicians to have big goals for cutting government. But ambition means nothing if not backed up with a practical plan of action. That's the difference between Nixon's failed attempt at killing the Board of Tea Experts as a public relations maneuver and Reid's serious, yearslong effort that finally buried it.
Trying to tear down old programs that no longer make sense—if they ever did—also cuts against the natural tendency of most politicians.
"Every new president and committee chair wants to make a mark, and so they push to create new programs of their design," says Chris Edwards, a budget policy expert at the Cato Institute. "They don't bother trying to repeal the related old and outdated programs because that would use major political capital they would rather use creating new programs."
The Board of Tea Experts is not the only federal agency or program to be successfully closed or privatized. Edwards points to the Office of Technology Assessment, an internal congressional study committee that produced reports on a wide range of scientific and technological issues for about 20 years before being shuttered in 1995 for being duplicative and unnecessary.
But the vast majority of the traffic is moving in the opposite direction. According to Downsizing the Federal Government, a Cato-affiliated project that Edwards runs to track the sprawling size of the federal government, there were 2,418 grant or subsidy programs on the books this year, more than double the number that existed in 1990.
That's why the best time to plan to close regulatory bodies and other government agencies isn't when they become obviously unnecessary—it's when they are created.
At first, every government agency has some reason for existing, even if it's not a good one. Even the Board of Tea Experts, which was rooted in those late–19th century worries about Americans being served subpar tea. Once it's created, regulators and their rules warp markets and create constituencies that benefit from preventing change—including the regulators themselves.
In the mid-1980s, Dick was arguing for the tea board's continued relevance by pointing to potential consumer harms that were no longer realistic in a world with grocery stores and extensive private quality-control operations. Nearly 30 years after the Board of Tea Experts was effectively shuttered, there's no indication that Americans are drinking worse tea—because the board and its standards weren't accomplishing anything the market hadn't already sorted out decades ago. And, of course, the FDA still holds the power to regulate tea (as it regulates all food and drink in the United States), even in the absence of a special board tasked with sipping each imported batch.
Is there a way to ensure programs and agencies that have outlived their usefulness are actually shut down? Young of the Competitive Enterprise Institute points to Texas. The state's Sunset Advisory Commission, which periodically reviews government agencies and recommends to the state Legislature when one is no longer serving a purpose, claims to have played a role in abolishing 41 agencies, consolidating another 51, and saving taxpayers more than $1 billion.
With mandatory sunsets, Young says, "ineffective or unneeded agencies can still shut down, even if Congress can't muster up the courage for a vote."
Absent some kind of institutional reform, federal programs only seem to end up on the chopping block when they make an enemy of someone in a powerful position. Without Reid, the Board of Tea Experts might very well be holding its annual tasting session right now.
When any changes do happen on their own, they tend to be incredibly slow.
In October, the Prune Administrative Committee—a federal entity that oversees the "handling of dried prunes"—took the first step toward abolishing itself after an internal review found that the costs of the board's regulations "outweigh the benefits to industry members."
But it isn't going away for good just yet. No, the committee will continue to exist for at least another seven years, during which time it will issue no rules or regulations. If America survives that wild experiment with ungoverned dried plums, the committee and its parent, the U.S. Department of Agriculture, will decide whether to make the arrangement permanent.
"Inertia might be the strongest force in all of politics," says Young. "If it takes 50 years of reform efforts to close down a tea-tasting board, then larger reforms are doomed without some kind of institution-level change
The Board of Tea Experts was a uniquely silly and superfluous part of the federal bureaucracy. No other product has ever been subjected to literal taste testing by federal officials before it could be legally sold.
Sadly, it is not the only silly or superfluous part of the government. A comprehensive list of pointless and wasteful government programs would be too long to print, but here are six others begging to meet the same fate as the tea board.
Popcorn Board: Created by Congress to "develop new markets for popcorn and popcorn products." The board funds itself by charging fees to popcorn producers—fees that presumably are passed along to popcorn eaters. Maybe that's why it's so expensive at the movie theater? Similar user fee–funded boards include the National Fluid Milk Processor Promotion Board, the National Mango Board, the National Potato Promotion Board, and the National Watermelon Promotion Board.
Mushroom Council: They say no one wants to see how the sausage of government gets made, but what about the shit it's grown in? A part of the Department of Agriculture (USDA), the Mushroom Council is supposed to "maintain and expand existing mushroom markets and uses." Imported mushrooms are taxed 0.0055 cents per pound to pay for that critical work.
Denali Commission: Created in 1998 to fund infrastructure projects in Alaska, the Denali Commission was targeted for elimination by both Barack Obama and Donald Trump—but Congress keeps funding it anyway. Mike Marsh, the commission's inspector general, wrote in 2013 that the agency is "a congressional experiment that hasn't worked out in practice" and urged Congress to "put its money elsewhere." In FY 2023, the Denali Commission had a budget of $13.8 million.
Christmas Tree Promotion Board: A 12-member board (one for each day of Christmas?) created in 2011 to "expand the market and uses of fresh-cut Christmas trees" and funded with a new fee of 15 cents on all real Christmas trees sold in the country. Nothing says "Merry Christmas!" like a new tax on the people who are already using your product. Interestingly, this was not created by an act of Congress but by the USDA's Agricultural Marketing Service, which Congress authorized in 1996 and gave the ability to create new boards and agencies like this one. Oh, administrative state, how lovely are thy line items.
Corporation for Travel Promotion: Established in 2010, this 11-member board within the Department of Commerce is charged with "providing useful information to those interested in traveling to the United States," as if there weren't already dozens of websites and tour books doing the same thing. It's now known as Brand USA. Foreigners seeking visas to enter the United States pay a $4 fee to fund the corporation, even though they likely don't need to be convinced to visit.
Rural Utilities Service: The Rural Electrification Administration was created as part of the New Deal in 1936 to expand the nation's power grids and phone lines to far-flung homes and communities. These days it's pretty difficult to find homes that lack electricity or phone service, but the administration is still around (though it was renamed in 1994). This tiny corner of the USDA—yep, it's not even part of the Energy Department—cost taxpayers $154 million this year.
The post After a Century, the Federal Tea Board Is Finally Dead appeared first on Reason.com.
]]>For years, iPhone users have been saddled with an unusual feature: The popular Apple smartphone used a proprietary cable, called the Lightning cable, for charging.
By the 2020s, most manufacturers of comparable devices had switched to a universal standard, USB-C. Even some other Apple devices—including the iPad, which in many ways resembles an oversized iPhone—moved to the common USB-C. But the iPhone remained stubbornly attached to its Apple-specific cord.
Inevitably, this caused headaches and complications for some iPhone users, even those fully ensconced in the ecosystem of Apple devices. What if you want to borrow a friend's charging cable and that friend uses an Android phone? What if you're also lugging around an iPad? How many charging cords does one person really need to carry?
But the iPhone 15, released in 2023, uses the USB-C port for charging—in Europe, the U.S., and everywhere else. Starting with this model, Apple customers won't have to worry about what type of phone their friends have when asking to borrow a charger.
This change didn't come from a new innovation or from consumer demands. It was mandated by European regulators.
In September 2021, the European Commission proposed a common charger regulation, claiming it was appropriate to reduce electronic waste and consumer frustration. The proposal was passed in 2022, and the mandate goes into effect in 2024.
This might sound like a boon for users. But in the long term, this sort of rule threatens to thwart future innovation by locking tech companies into government-determined feature sets that can be updated or improved only with regulatory approval. Rules like this turn bureaucrats into product designers.
The charging rules are a symptom of a larger problem. E.U. bureaucrats' "regulate-first" approach has been spreading beyond Europe's borders to impact American companies and American consumers. Unfortunately, many American policy makers seem to be looking to Europe as a model.
Many Americans first experienced the impact of the European regulatory approach in May 2018, when they started noticing more click-through requirements to accept cookies and updated privacy policies. All those annoying security pop-ups and repeated notice of updates to terms of service on websites were the direct result of General Data Protection Regulation (GDPR), an E.U. policy that required companies to adopt specific practices around interactions with user data and users' rights related to those data.
The GDPR didn't just bring a bunch of annoying pop-ups, it also caused huge corporate compliance costs. When the GDPR went into effect in 2018, companies reported spending an average of $1.3 million on compliance costs. A Pricewaterhouse-Coopers survey found that 40 percent of global companies spent over $10 million in initial compliance. These weren't one-time costs; some companies spend millions annually to comply.
Unsurprisingly, some organizations decided to pull out of the E.U. market entirely rather than comply with these rules. Others chose to deploy these changes all around the world rather than try to tailor compliance to the European Union. In other words, they treated the E.U.'s rules as global requirements.
This is a common result of tech regulations: Laws passed in one region end up affecting citizens located in other areas as companies standardize practices.
Consider the Digital Markets Act (DMA), a European regulation that went into effect in 2022. Under this law, regulators can put additional restrictions on otherwise legal business practices for companies labeled "gatekeepers." In September 2023, regulators gave six companies—Alphabet (the parent company of Google), Amazon, Apple, ByteDance (the parent company of TikTok), Meta (the parent company of Facebook), and Microsoft—the gatekeeper label. Notably, five of these six companies are American, and none are European. Meta and ByteDance have challenged their designation as gatekeepers, while Microsoft and Google have announced they do not plan to challenge the change.
The DMA's rules aren't yet finalized. But they could keep companies stuck with the gatekeeper designation from prioritizing their own products or services, and they might impose restrictions on messaging and advertising.
The Digital Services Act (DSA) is another European regulation that could significantly change the way users experience the internet both in Europe and beyond. The DSA was part of a legislative package with the DMA, but it's focused on disinformation and supposedly harmful online content. The law gives regulators more power to require that online platforms respond to their requests for information about content moderation actions and speakers and even allow regulators to mandate takedowns.
Even prior to the DSA, European governments had far greater ability to intervene in moderation decisions than U.S. officials, who are mostly limited to making nonbinding requests. In contrast, companies subject to the DSA risk fines of up to 6 percent of their annual turnover.
Europe also adopted an AI Act in December. While E.U. bureaucrats trumpeted the law as the "first of its kind," that's not something to brag about. The regulation will create a series of stringent requirements on various artificial intelligence (AI) technologies. If there's good news, it is that some nations in Europe, including Germany, France, and Italy, are pushing for AI self-regulation instead. Although they probably won't stop new AI controls completely, their objections could at least reduce the regulatory burden that AI companies face and signal awareness of the impact such regulations can have on innovation.
Europe seems committed to forcing innovators to prove to regulators that a technology will not cause harm rather than making rules designed to stop proven harms. This approach to regulation—sometimes described as "the precautionary principle"—presumes a technology is guilty until it is proven innocent.
In 2015, President Barack Obama applauded U.S. technological success and warned that European lawmakers were trying to use regulation to hamstring American business. "We have owned the internet," he told Recode. "Our companies have created it, expanded it, perfected it in ways that they can't compete. And oftentimes what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests." He cast European regulation as a way to "set up some roadblocks for our companies to operate effectively there."
Obama isn't the only American leader to worry publicly about the E.U.'s overreach. In 2019, President Donald Trump said, "Every week you see them going after Facebook and Apple and all of these companies….They think there's a monopoly, but I'm not sure that they think that. They just think this is easy money." In 2022, a bipartisan group of senators warned that the DMA and DSA, "as currently drafted, will unfairly disadvantage U.S. firms to the benefit of not just European companies, but also powerful state-owned and subsidized Chinese and Russian companies, which would have negative impacts on internet users' privacy, security and free speech."
Such concerns are far from misguided. Remember, five of the six designated gatekeepers under the DMA are American. Similarly, the DSA designated 19 companies as "very large online platforms" or "very large search engines" subject to increased regulatory scrutiny and specific requirements within the areas they are deemed potential gatekeepers. Of the 19 companies slapped with a "very large" designation, 15 are American and only two are European.
At times, some of these regulations seem constructed in such a way to directly target American companies—while giving a boost to the few European companies that might otherwise be subject to their regulations.
This growing array of requirements could have unintended consequences for how products function far beyond Europe—and how we can use them to speak online.
Supporters of the GDPR claimed the law would preserve privacy and online safety. But some E.U. tech rules could actually make software and devices less safe. For example, requiring platforms to allow third-party payment processors or "side loading"—essentially installing software that isn't explicitly authorized by the phone or operating system manufacturer—is intended to level the playing field for smaller competitors. But making devices and software more open to third-party modification could also make them vulnerable to hacking. The likely global reach of these rules would mean those vulnerabilities wouldn't be limited to Europe.
More rules on product design, meanwhile, could produce a chilling effect on new tech. Companies may be less likely to try new products or privacy tactics that might not comply with European regulations if they know that will foreclose a big market. Even an innovation that improves privacy and cybersecurity might struggle to comply with GDPR requirements designed with a different model in mind.
It is not just innovation and security that are at risk. Americans may soon find themselves subject to European bureaucrats' norms when it comes to free speech.
Already, many European and Latin American countries have created laws governing hate speech or harmful content. These laws are likely to result in more aggressive takedowns by social media companies, especially on hot-button political issues. If tech companies decide to enforce a single global standard for community guidelines, American internet users will end up communicating in online spaces where the rules were designed to comply with foreign hate speech laws that aren't restrained by the First Amendment's protections.
While some American officials have criticized these E.U. regulations, others have seen them as an opportunity to argue that the U.S. should change its own approach. A growing number of American policy makers are looking to Europe as an example—or even actively collaborating with E.U. tech regulators.
In March 2023, the Federal Trade Commission sent officials to Brussels to aid in implementing and enforcing the DMA. At the same time, the agency has taken an increasingly aggressive approach domestically, attempting to enforce antitrust standards that resemble Europe's by waging a yearslong legal campaign against mergers in the tech sector. (This campaign has failed repeatedly in U.S. courts.)
Some policy makers have directly applauded the European approach. In June 2022, Sens. Ed Markey (D–Mass.), Bernie Sanders (I–Vt.), and Elizabeth Warren (D–Mass.) sent a letter asking the secretary of commerce to "restore the sanity" and follow the E.U. in requiring a universal charger for smartphones and certain other electronic devices.
Meanwhile, European regulators seem eager to gain a greater foothold in the United States. The E.U. has opened an office in San Francisco to promote compliance with its technology regulations, a move that seems to more than just tacitly acknowledge that these regulations will have a big impact on American companies.
The stakes are high. A 2022 study found that 16 percent of European companies would be willing to switch to a Chinese tech provider due to anticipated cost increases from the DMA. Others might turn to providers that are not subject to the regulations but provide inferior products either in quality or security. These policies would punish successful American companies while benefiting those of more questionable regimes.
The U.S. needs to be an alternative to such heavy-handed controls. It should stick with the relatively hands-off approach that has helped make America a global leader in tech.
In 1996, when the modern internet was in its infancy, Congress made clear it was the policy of the United States "to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation." As Rep. Christopher Cox (R–Calif.) said at the time, America does "not wish to have a Federal Computer Commission with an army of bureaucrats regulating the Internet because, frankly, the Internet has grown up to be what it is without that kind of help from the Government."
Similarly, the Clinton administration's Framework for Global Electronic Commerce not only described the potential benefits of the internet for global commerce but criticized the consequences of overregulation by declaring that the internet is presumed free. This nonregulatory position allowed the internet to flourish without tight constraints.
"For this potential to be realized fully, governments must adopt a non-regulatory, market-oriented approach to electronic commerce, one that facilitates the emergence of a transparent and predictable legal environment to support global business and commerce," read the Clinton report. "Official decision makers must respect the unique nature of the medium and recognize that widespread competition and increased consumer choice should be the defining features of the new digital marketplace."
Further, it cautioned that governments could "by their actions…facilitate electronic trade or inhibit it." This approach told innovators and investors they were free to try. It is miles from what we're seeing from politicians eager to crack down on tech companies today.
We have a new iPhone charger now. For some users, it might be more convenient. But consider what would have happened if this decision had been made a decade earlier.
In 2012, smartphones were still evolving. Apple used cumbersome 30-pin chargers for their phones. Other companies used older USB options, such as micro- and mini-USB, which were clunky in different ways. When the Lightning cable arrived, it was faster, smaller, more durable, and more physically secure. It offered an improved user experience relative to the other options, which in turn spurred adoption of the USB-C standard.
A more regulated marketplace might have stopped this development in its tracks, letting bureaucrats who prioritize uniformity over all else decide on a single standard rather than letting the market evolve.
The debate about European tech regulations and their ripple effects on American companies and consumers is often framed in terms of safety or privacy or the consumer experience. But at heart, it's about a much simpler question: Who gets to design the future—the government, or innovators?
The post Don't Let E.U. Bureaucrats Design Americans' Tech appeared first on Reason.com.
]]>Last month, New Zealand scrapped a law that would have gradually prohibited tobacco products by banning sales to anyone born after 2008. But Brookline, a wealthy Boston suburb, will implement a similar scheme now that the Supreme Judicial Court of Massachusetts (SJC) has cleared the way.
Brookline's bylaw, which bans sales of "tobacco or e-cigarette products" to anyone born after 1999, is unlikely to have much practical impact, since the town is surrounded by municipalities where such sales remain legal. But it reflects a broader transition from regulation to prohibition among progressives who seem to have forgotten the lessons of the war on drugs.
The local merchants who challenged Brookline's ban argued that it was preempted by a state law that sets 21 as the minimum purchase age for tobacco products. They also claimed the bylaw violates the Massachusetts Constitution's guarantee of equal protection by arbitrarily discriminating against adults based on their birthdates.
The SJC rejected both arguments in a decision published on Friday. The court concluded that state legislators had left local officials free to impose additional sales restrictions. And since birthdate-based distinctions do not involve "a suspect classification," it said, Brookline's bylaw is constitutional because it is "rationally related to the town's legitimate interest in mitigating tobacco use overall and in particular by minors."
The striking aspect of Brookline's law, of course, is that it applies to adults as well as minors. It currently covers residents in their 20s and eventually will apply to middle-aged and elderly consumers as well.
Since anyone 21 or older who wants to buy tobacco or vaping products can still legally do so across the border in Boston, Cambridge, or Newton, Brookline's ban looks more like an exercise in virtue signaling than a serious attempt to reduce consumption. The same could be said of the outright bans on tobacco sales that two other wealthy and supposedly enlightened enclaves, Beverly Hills and Manhattan Beach, enacted in 2019 and 2020, respectively.
The Beverly Hills ban makes exceptions for hotels and cigar lounges, and both cities border jurisdictions where tobacco sales are still allowed. But even as moral statements, these edicts are flagrantly illiberal, standing for the proposition that adults cannot be trusted to decide for themselves which psychoactive substances they want to consume.
Beverly Hills and Manhattan Beach also prohibit marijuana sales, which are allowed under a California law that authorizes local bans. But they continue to tolerate liquor sales, and so does Brookline, where you also can legally buy marijuana.
The details may vary, but the busybody impulse is consistent. And the consequences of that impulse can be seen in Massachusetts, which has prohibited sales of flavored tobacco or vaping products since 2019, stimulating sales in neighboring states, black-market activity, and criminal prosecutions.
Cigarette smuggling spurred by high state taxes is a longstanding phenomenon, and the flavor restrictions that some jurisdictions have imposed compound that problem. Worse, the Food and Drug Administration plans to ban menthol cigarettes and limit nicotine content, and it seems determined to erase nearly all of the vaping industry by refusing to approve products in the flavors that former smokers overwhelmingly prefer.
Such policies hurt consumers by depriving them of products they want and driving them toward shady suppliers whose offerings may pose unanticipated risks. Prohibition also invites criminalization, which is why the American Civil Liberties Union opposes the menthol ban.
"Policies that amount to prohibition for adults will have serious racial justice implications," the organization warned in a 2021 letter to Secretary of Health and Human Services Xavier Becerra. "Such a ban will trigger criminal penalties, which will disproportionately impact people of color, as well as prioritize criminalization over public health and harm reduction. A ban will also lead to unconstitutional policing and other negative interactions with local law enforcement."
Progressives commonly recognize such problems in the context of the war on drugs. Expanding that war to include tobacco is bound to magnify them.
© Copyright 2024 by Creators Syndicate Inc.
The post Expanding the Drug War To Include Tobacco Would Be a Big Mistake appeared first on Reason.com.
]]>Early this month, a federal judge in Alabama held the Corporate Transparency Act unconstitutional and granted plaintiffs in a lawsuit summary judgment against enforcement of the wide-reaching law, which went into effect this year. For many Americans this raises the questions: "What in hell is the Corporate Transparency Act? Does it affect me?" The quick answer is that it's a big deal, and if you own an incorporated business, you'll probably still suffer its intrusive requirements even after the ruling.
"When Congress passed the 2021 National Defense Authorization Act, it included a bill called the Corporate Transparency Act ('CTA'). Although the CTA made up just over 21 pages of the NDAA's nearly 1,500-page total, the law packs a significant regulatory punch, requiring most entities incorporated under State law to disclose personal stakeholder information to the Treasury Department's criminal enforcement arm," Judge Liles C. Burke of the U.S. District Court for the Northern District of Alabama's Northeastern Division handily summarized in this month's ruling.
Large businesses are exempt; the law applies to companies with 20 or fewer employees.
Justifications for the law laid out in early versions of the legislation invoked a laundry list of alleged financial horribles including money laundering and tax evasion. The word terrorism appears, too, of course, because that has been the lazy, default justification for legislation for 20-plus years. Basically, the law is targeted at anything that might involve a modicum of financial privacy.
To that end, the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) set up an online reporting system through which business owners "are required to report information to FinCEN about the individuals who ultimately own or control them." FinCEN started compiling reports for such "beneficial ownership information" (BOI) on January 1, 2024 with a deadline for compliance of January 1, 2025, or 30 days after creation for companies registered following that date.
Is there a penalty for noncompliance? Of course there is. According to FinCEN, "a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000."
This might be a problem for those many Americans who have established corporations or limited liability companies for making a living, but don't keep track of the federal government's diligent efforts to stamp out the scourge of terroristic money launderers among retail storefronts and Etsy vendors. I received a heads-up from reader Rick Wakefield, who forwarded a memo from his accountant. I dug through my email and found a similar note from my own accountant, dated two days before Christmas. Another accountant with whom I work told me she'd been waiting on the outcome of litigation against the law.
That litigation came in the form of National Small Business United v. Yellen, launched by the National Small Business Association and NSBA member Isaac Winkles against the federal government.
"The CTA will create a cumbersome reporting process for small businesses that are rarely equipped with compliance teams or staff attorneys," argues the organization. The group adds that the feds already have the relevant information supplied via bank due diligence rules, and the law adds a new layer of D.C.-based complexity. "The CTA lays the groundwork for a federal takeover of entity formation and self-governance practices."
Importantly, the plaintiffs argued that the reporting requirement is worse than cumbersome, it's unconstitutional. They say it allows the federal government to usurp roles reserved to the states, imposes unreasonable searches and seizures, and makes up vague terms such "beneficial owners" which are not normally used by businesses or state agencies.
Judge Burke agreed. In dismantling the government's claims that the CTA is justified as an exercise of federal authority over foreign policy, national security, and taxing power; and under the Commerce Clause, and Necessary and Proper Clause; he slapped Congress for sloppy drafting that doesn't even hand-wave a claim of a constitutional basis.
"The text of the CTA is missing a crucial component of valid substantial effects legislation," Burke wrote. "It 'has no express jurisdictional element which might limit its reach to a discrete set of [activities] that additionally have an explicit connection with or effect on interstate commerce.'"
"So commonplace are these jurisdictional phrases," he commented while marveling at the oversight, "that, for purposes of statutory interpretation, courts assume that 'Congress uses different modifiers to the word "commerce" in the design and enactment of its statutes.'"
As a result, he concluded, "the Corporate Transparency Act is unconstitutional because it cannot be justified as an exercise of Congress' enumerated powers. This conclusion makes it unnecessary to decide whether the CTA violates the First, Fourth, and Fifth Amendments."
That's good news—but so far, only for the plaintiffs in National Small Business United v. Yellen.
"The government is not currently enforcing the Corporate Transparency Act against the plaintiffs in that action: Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)," concedes FinCEN. "Those individuals and entities are not required to report beneficial ownership information to FinCEN at this time."
That means the unconstitutional law is still being enforced against everybody who wasn't party to the lawsuit.
"When coupled with the fact that FinCEN put virtually no effort into informing the public about the obligations of small businesses under the CTA, FinCEN's unwillingness to suspend enforcement shows a clear disregard of America's small-business owners," warns NSBA President and CEO Todd McCracken. "FinCEN should immediately reverse course and suspend enforcement of the CTA for all until these issues are finally resolved."
The American Institute of CPAs also called for suspension of enforcement after the court decision. It had already raised concerns, saying "many remain broadly unaware of their reporting requirement."
For now, though, despite the federal court's finding that Congress had no constitutional authority to impose "beneficial ownership information" reporting requirements on the country's business owners, the rule remains in place, with a deadline of next January 1. You may want to check with an accountant and spread the word to those who haven't yet heard of this dangerous regulatory burden.
The post Feds Enforcing Unconstitutional Reporting Law Against Most Businesses appeared first on Reason.com.
]]>The Securities and Exchange Commission (SEC) has gone rogue. The commission has now finalized a rule that will bully publicly traded companies into reporting environmental information that has no relevance to the financial concerns that matter to investors. As much as environmental activists may want this information to shame companies into embracing their political agenda, it is not the SEC's role to demand financially irrelevant disclosures—much less to demand companies speak on political and social issues like climate change.
The SEC's new rule requires companies to give a public accounting of their annual greenhouse gas emissions. Still worse, the rule strong-arms companies into telling the public whether they are taking steps to combat climate change and forces companies to hazard guesses about how climate change might affect their operations far into the future. But none of that has anything to do with the SEC's statutory mission of helping investors understand the financial risks and rewards of investment.
The SEC was established to regulate public companies in the wake of the financial crisis that triggered the Great Depression. Toward that end, the law requires companies to disclose to investors "material information…as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading." For example, companies must provide information about market volatility, pending lawsuits, and significant management changes, because that type of information could affect a company's financial performance.
Disclosures about whether a company is prioritizing climate change concerns are categorically different from the sort of disclosures the SEC has long required, for at least two reasons. First, the new rule requires disclosures across the board from all large companies. That's a marked departure from the "facts and circumstances" test the SEC has long employed, which requires information that could affect the financial performance of individual companies, not environmental or social conditions.
With its extraordinary unpredictability, and a time horizon crossing decades, climate change's impact on any given company is practically impossible to assess. Requiring disclosure of greenhouse gases thus tells investors nothing relevant to a company's financial situation; it will lead to baseless speculation and reams of information that investors cannot possibly apply to investment decisions now.
Of course, none of this is news to supporters of the rule. Their goal is not to inform investors, but to bludgeon companies into toeing the climate change line. The new rule has nothing to do with financial considerations and everything to do with political considerations. As SEC Commissioner Mark Uyeda declared in dissent, "shareholders will be footing [the] bill" to institutionalize an ESG department in every publicly traded corporation in America.
The SEC's power grab is unprecedented and dangerous. While some investors may care about greenhouse gas emissions, their desires do not justify compelling companies to make disclosures about whether they are prioritizing climate change concerns. If that low bar could trigger SEC regulation, there would be no end to the subjects the agency could require companies to report, including their positions on abortion, gay marriage, and immigration. But forcing companies to parrot the party line on the environment is not the SEC's job.
If the SEC is going to be transformed into the environmental and social thought police, that decision must come from Congress. Our Constitution empowers only Congress to make the law—and, importantly, to take responsibility for the consequences. As SEC Commissioner Hester Peirce stated, "Wading into non-economic issues involves tradeoffs that only our nation's elected representatives have the authority and expertise to make."
The consequences of the greenhouse gas rule are grave. It will fundamentally alter the SEC's mission. It will force companies to play a larger role in politics—something that neither the major political parties nor most companies seem to want. By peppering investors with irrelevant information, it will make them less informed about what actually matters. It will divert companies from their core purpose of maximizing shareholder wealth and creating products that increase everyone's standard of living. And it will violate the First Amendment by compelling companies to disclose information that is not intrinsically linked to their financial performance.
Pacific Legal Foundation, where we work, will file a lawsuit against the SEC in the coming days to block enforcement of this rule and vindicate constitutional principles. Here's hoping that the courts will not allow this rule to stand.
The post The SEC Conscripts Corporate America in Its New Climate Change Fight appeared first on Reason.com.
]]>Separation of powers is a core concept of America's Constitution. In the Founders' scheme, Congress, the courts, and the executive are independent branches of government, with their own roles and duties, intended to check one another.
But since 1984, the Supreme Court has hamstrung its own ability to act independently in the face of executive power. In Chevron U.S.A., Inc. v. Natural Resources Defense Council, the high court adopted a blanket presumption of deference to statutory interpretations put forth by regulatory agencies in any case where the statute was ambiguous, so long as the interpretation was reasonable.
If there is ambiguity about what the text of a law says, the Supreme Court decided in that case, then the courts should defer to the government's experts. This became known as the Chevron deference.
In practice, the Chevron deference undermined the Court's independence, since it forced courts to just accept executive branch interpretations in many tough cases.
The doctrine also creates perverse incentives for the other two branches. For example, by giving deference to agencies in ambiguous cases, it gave executive branch regulators incentive to hunt for ambiguities in order to expand their own power. This led to decades of executive overreach, as administrations used convoluted readings of statutes to pursue agendas Congress never imagined.
By the same token, Chevron deference shifted the burden of making well-written and fully thought-out laws away from Congress. Empowering regulators meant that, at the margins, Congress had less reason to write clear, consensus-based legislation.
The result, over 40 years, has been a shift away from the intended constitutional order, in which Congress writes laws, the executive branch implements them, and the courts rule independently on matters of dispute. We now live under an often dysfunctional system in which Congress is less inclined to compromise and legislate on tough issues, regulators are more inclined to take matters into their own hands, and courts have less power to tell executive branch officials when they have overreached.
The system lends itself to politicized regulatory pingponging, as courts are generally required to defer to the differing and even dramatically opposed interpretations put forth by shifting Democratic and Republican administrations.
This was what was at stake in January, when the Supreme Court heard oral arguments that put the legacy of Chevron on trial. In Loper Bright Enterprises v. Raimondo, a group of herring fishermen from New Jersey objected to a federal rule requiring them not only to host government monitors on their boats but to pay the cost of those monitors—about $700 a day.
That requirement was based on the 2007 Magnuson-Stevens Act (MSA), which does require some types of fishing operations to host and pay for government monitors. But the fishermen in this case weren't explicitly covered by that requirement, so when the National Oceanic and Atmospheric Administration (NOAA) decided to expand the purview of the MSA in order to cover a budget shortfall, the fishermen went to court.
The fishermen's cause is important on its own merits. But for larger constitutional purposes, it's something of a red herring. The specifics of their complaint are less important than whether or not the courts had to defer to NOAA's newly stretched interpretation of the MSA.
In oral arguments, the three justices appointed by Democrats seemed inclined to keep Chevron as is, with all three suggesting that experts in regulatory agencies are better equipped than courts are to make tough decisions about difficult-to-parse statutes.
But the rest of the Court seemed skeptical. Justice Neil Gorsuch noted that Chevron deference tends to empower agencies at the expense of less-powerful individuals, such as immigrants, veterans, and Social Security claimants. Addressing the Court, Paul Clement, who defended the fishermen, put it this way: "One of the many problems with the Chevron rule is it basically says that when the statutory question is close, the tie goes to the government."
Outside the Court, news reports and activists warned of the consequences of taking down Chevron, noting that much of the federal government's vast regulatory authority rested on its rule of deference. As a USA Today report on the case noted, "The court's decision could undo decades of rules and procedures involving land use, the stock market, and on-the-job safety."
Loper Bright was not the only Supreme Court case to challenge major parts of the government's regulatory authority this term. Sheetz v. County of El Dorado takes aim at regulatory takings, and Securities and Exchange Commission v. Jarkesy revolves around the question of whether the government violates the Seventh Amendment's requirements about jury trials when judging securities claims. Collectively, wrote Cameron Bonnell in The Georgetown Environmental Law Review, these cases "indicate the Court's eagerness to continue shaping the proper scope of government regulatory authority."
For too long, the administrative state has run unchecked over much of American life. That might finally be coming to an end with this year's Supreme Court term. In discussing the problems with Chevron with NPR, Clement said, "I think it's really as simple as this, which is: When the statute is ambiguous, and the tie has to go to someone, we think the tie should go to the citizen and not the government." One can hope.
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]]>"We're building a clean energy future," says President Joe Biden.
Who is "we"?
Well, you pay for it.
He and his "green" cronies do most of the building.
Lately, they're pouring more of your money into "renewable energy." They promise to give us "carbon-free power" from the sun and wind.
My new video illustrates some problems with that, using scenes from a new documentary series called Juice: Power, Politics and the Grid.
Political scientist Roger Pielke Jr. notes, "It's quite intuitive for people to understand that there's a lot of power in solar energy. We feel the wind. The idea that you can get something for nothing, people find enormously appealing."
Especially in California, where politicians now require all new homes to have solar panels, all new cars sold in 2035 to be zero emission, and all the state's electricity to come from carbon-free resources by 2045.
They're getting results, but not good ones: California's cost of electricity increased three times faster than in the rest of America.
People in Washington state pay about 11 cents per kilowatt-hour. In Oregon, 13 cents. In California, now almost 30 cents.
Do they at least get reliable energy for that? No.
The big problem with wind and solar power, of course, is that they don't work when the wind doesn't blow or the sun doesn't shine. Sometimes that happens when people most want heat or air conditioning.
Increased use of "renewables" is why blackouts are more common in California. Bloomenergy says there were over 25,000 in 2019—thousands more than the previous year.
"We failed to predict and plan," said Gov. Gavin Newsom. Right.
Instead, they embraced unscientific green fantasies.
Requiring all new homes to have solar panels is a big reason California has the most expensive housing in America. The average house costs almost $800,000.
If you can afford that, you get government money for generating solar power. But the handout goes mostly to the rich. Poorer people are more likely to rent.
On top of that, the subsidy is inefficient.
"As their solar panels produce power during the day when the sun is up," explains electrical engineer Lee Cordner, "They're able to sell the excess power…into the grid exactly when the grid doesn't need it. The grid is then inundated with solar power and can't use it all. Nonetheless, they get paid a very high price for that power."
Nice for homeowners.
Taxpayers pay for rich people to have a highly subsidized solar system.
I put panels on my house partly because of a tax credit.
But I don't delude myself by thinking that solar power will measurably reduce climate change or that wind power is especially green.
"Just to produce one turbine, we have to extract 900 tons of steel, 2,500 tons of concrete, and 45 tons of non-renewable plastic," explains ecologist Merlin Tuttle. "Then we've got to transport that and burn fuel, getting it all carried across the world. None of these things that go into a turbine are renewable."
And they wear out. Turbines now get shut down in just 10 years for maintenance. Maintenance costs almost as much as a new turbine, but it's worth it to "green" companies because of government handouts.
Biden announced an $11 billion subsidy to "bring clean energy into rural communities." That mostly encouraged people to put wind and solar in inappropriate places.
Solar power makes sense in America's south and other sunny places. But an above average number of solar subsidies go to Minnesota.
In the documentary, a Minnesota resident laughs and says, "The state is about to give me a whole bunch of subsidies to…build solar in scenic, sunny Minnesota."
The Juice series highlights the stupidity of government throwing money at "green" schemes pushed by the politically connected.
When solar and wind become more efficient, they'll be cheaper and people will adopt them on their own.
Politicians should stop their destructive meddling.
You can watch the full documentary at JuiceTheSeries.com.
COPYRIGHT 2024 BY JFS PRODUCTIONS INC
The post Here's Why Government Should Stop Throwing Money at Green Energy appeared first on Reason.com.
]]>Once upon a time, America embraced nuclear power as the future of energy. Today it accounts for a mere 18 percent of the nation's electricity generation, while fossil fuels remain dominant at 60 percent. Why did nuclear fail to take off?
From 1967 to 1972, the nuclear sector experienced significant growth, and 48 new nuclear plants were built. But in March 1979, a meltdown at Pennsylvania's Three Mile Island nuclear power plant, which resulted in no casualties and no lingering environmental damage, spooked the entire nation and empowered anti-nuclear activists.
"After Three Mile Island, what was considered to be in the best interest of the public was just reducing risk to as low as possible," says Adam Stein, director of the Nuclear Energy Innovation Program at the Breakthrough Institute. "It resulted in a huge volume of regulations that anybody who wanted to build a new reactor had to know. It made the learning curve much steeper to even attempt to innovate in the industry."
After the incident, the momentum behind nuclear reactor construction tapered off and no new reactors were built for the next two decades. Nowadays, the landscape remains unchanged: The federal government makes permitting arduous, while many states impose severe restrictions on new plant construction and force operational ones to shut down prematurely.
For example, take Indian Point Energy Center, the largest nuclear plant in New York State. In 2007, anti-nuclear activists targeted the plant, which provided a quarter of downstate New York's electricity. Their cause gained significant traction with the support of New York state attorney general—and future governor—Andrew Cuomo, who believed the nuclear plant was "risky."
Cuomo promised to usher in a new era of clean energy for New Yorkers. His moves against Indian Point garnered support from fellow Green New Deal advocates, including Senator Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D–N.Y.), as well as environmental groups.
The plant eventually closed in April 2021, but there was "a gulf between intentions and results," explains writer Eric Dawson, co-founder of Nuclear New York, a group fighting to protect the industry. The closure of Indian Point increased New York's carbon emissions. State utilities had to make up for the loss of energy by burning more natural gas, resulting in a 9 percent increase in energy-related CO2 emissions. At the same time, the state's energy prices also increased.
This outcome isn't unique to New York. Germany also opted to phase out nuclear power, betting on wind instead. Electricity from windmills increased, but so did the country's reliance on coal. In 2023, Germany emitted almost eight times the carbon per kilowatt-hour than neighboring France, which still gets the majority of its electricity from nuclear and less than 1 percent from coal.
According to Dawson, nuclear power is "the most scalable, reliable, efficient, land-conserving, material-sparing, zero-emission source of energy ever created." Wind and solar aren't as reliable because they depend on intermittent weather. They also require much more land than nuclear plants, which use about 1 percent of what solar farms need and 0.3 percent of what wind farms require to yield the same amount of energy.
The economics of nuclear power are undoubtedly challenging, but its advocates say that's primarily because of its thorny politics. The headache of building a new power plant is vividly exemplified by Georgia's Plant Vogtle. The first U.S. reactor built from scratch since 1974, the project turned into a nightmare scenario: It took almost 17 years from when the first permit was filed for construction to begin, it cost more than $28 billion, and it bankrupted the developer in the process.
Nuclear regulation is "based on politics and fear-mongering and a lack of understanding," explains Indian Point's vice president, Frank Spagnuolo. If they aren't shut down, he says, power plants such as Indian Point could safely continue to provide clean energy for decades.
Despite the opposition, there remains some hope for the future of nuclear energy. Companies are actively developing next-generation nuclear technologies, such as small modular reactors and molten salt-cooled reactors, to minimize the risks associated with nuclear meltdowns and explosions. And some former nuclear opponents have become advocates, acknowledging it as a vital source of clean energy. The converts include the Environmental Defense Fund, the Natural Resources Defense Council, and even Rep. Ocasio-Cortez. The Biden administration has also demonstrated support for nuclear power, with the Department of Energy projecting a tripling of nuclear energy production in America by 2050.
Anti-nuclear activists, environmentalists, and politicians have crippled the only truly viable form of clean energy. But the long nuclear power winter might finally be coming to an end in America.
Photo Credits: Louis Lanzano/Polaris/Newscom; Erik McGregor/Pacific Press/Newscom; JB NICHOLAS/Splash News/Newscom; Erik Mcgregor/ZUMA Press/Newscom; Erik Thomas/NY Post/MEGA/Newscom/DBNYC/Newscom; Pool/ABACA/Newscom; Jon G. Fuller/VWPics/Newscom; imageBROKER/J. Ehrlich/Newscom; */Kyodo/Newscom; RICHARD B. LEVINE/Newscom; FRANCES M. ROBERTS/Newscom; Bill Clark/CQ Roll Call/Newscom; MOURAD ALLILI/SIPA/Newscom; Pacific Press/Sipa USA/Newscom; Paul Hennessy/SOPA Images/Sipa/Newscom; Michael Siluk/UCG/Universal Images Group/Newscom; Joe Sohm/Visions of America/Joseph Sohm/Universal Images Group/Newscom; KEVIN DIETSCH/UPI/Newscom; ROGER L. WOLLENBERG/UPI/Newscom; Utrecht Robin/ZUMAPRESS/Newscom; Dick Darrell/Toronto Star/ZUMA Press/Newscom; St Petersburg Times/ZUMAPRESS/Newscom; Ron Adar, M10s/ZUMAPRESS/Newscom; Reginald Mathalone/ZUMAPRESS/Newscom; Hans Pennink/ZUMAPRESS/Newscom; Paul Hennessy/ZUMAPRESS/Newscom; Antti Yrjonen/ZUMA Press/Newscom; Brittany Murray/ZUMA Press/Newscom; Meghan McCarthy/ZUMA Press/Newscom; Dan Herrick/ZUMAPRESS/Newscom; Nuclear Regulatory Commission, CC BY 2.0 DEED, via Wikimedia Commons; Library of Congress/Bernard Gotfryd; Jmnbqb, CC BY-SA 4.0 DEED, via Wikimedia Commons; Truzguiladh, CC BY-SA 2.5 DEED, via Wikimedia Commons; Georgia Power; Edibobb, CC BY 3.0 DEED, via Wikimedia Commons; Michael Barera, CC BY-SA 4.0 DEED, via Wikimedia Commons; Ken Lund, CC BY-SA 2.0 DEED, via Wikimedia Commons; Z22, CC BY-SA 3.0 DEED, via Wikimedia Commons; Ron Sachs—CNP for NY Post/CNP/Polaris/Newscom
Music: "The Edge" by Theatre of Delays via Artlist; "Digital Abyss" by Stephen Keech via Artlist; "Expand" by Theatre of Delays via Artlist; "Monomer" by Leroy Wild via Artlist; "Behind the City" by Ziv Moran via Artlist; "No Decides" by Or Chausha via Artlist; "Pulse" by Theatre of Delays via Artlist; "Each and Every" by Crosstown Traffic via Artlist; "Upon Dragon Wings" by Rob Cawley via Artlist; "Silent Bloom" by SLPSTRM via Artlist; "Sad Snow" by Yehezkel Raz via Artlist; "First Try" by Neon Ridge via Artlist; "Still Need Syndrome" by Yarin Primak via Artlist; "Night Shift" by Curtis Cole via Artlist; "Elastic Clock" by Jozeque via Artlist
The post The Political Sabotage of Nuclear Power appeared first on Reason.com.
]]>Last week, Florida Gov. Ron DeSantis vetoed a bill that would have enacted sweeping restrictions on minors' ability to use social media. However, DeSantis' veto appears to be less about a commitment to keep the state out of parenting decisions—like whether to let a teenager on social media—and more about the bill's likelihood of being overturned after a legal challenge.
The original bill, House Bill 1, would have banned those younger than 16 from making an account on most social media sites and required companies to delete accounts that they believe could be—but not necessarily confirmed to be—owned by users under 16. The bill would also have required social media sites to use a third-party to verify users' age. Companies that violated the law could have been fined up to $50,000 per incident.
The bill was broadly popular and passed the Florida Senate with a 30–5 vote. But DeSantis vetoed the bill last week. In a post to X (formerly Twitter), DeSantis wrote that he vetoed the bill to make way for a superior proposal.
"I have vetoed HB 1 because the Legislature is about to produce a different, superior bill," DeSantis wrote on Friday. "Protecting children from harms associated with social media is important, as is supporting parents' rights and maintaining the ability of adults to engage in anonymous speech."
The alternate bill, H.B. 3, keeps many of the provisions as H.B. 1, though the updated bill does not include a provision requiring the deletion of possibly underage accounts. Additionally, an amendment recently approved by the state Senate would allow 14- and 15-year-olds to make social media accounts with a parent's permission but keep a blanket ban for younger children.
Even with a lowered age restriction, Florida's newest social media age verification bill will still likely face legal challenges, as several other states that have enacted similar laws have. While forcing social media companies to kick kids off their platforms has become an increasingly popular proposal across state legislatures, such restrictions almost inevitably end up violating minors' First Amendment rights to access social media content.
The post DeSantis Vetoed a Social Media Age-Verification Law, but That Doesn't Mean He Won't Sign a New One appeared first on Reason.com.
]]>Italian aviation officials blocked a British Airways flight from leaving Milan for London after a surprise inspection found some of the seat cushions were too thick and too wide. Seat cushions on exit rows over the wings are supposed to be smaller to create more room in case of an evacuation. The air crew called out serial numbers for the correct seats and had passengers see if any of the cushions on their seats matched those numbers. They were able to locate enough cushions to swap out for those over the exit rows, and the flight departed after a delay of an hour.
The post Brickbat: This One Is Just Right appeared first on Reason.com.
]]>A social media platform is like a telegraph, Texas Solicitor General Aaron Nielson told the Supreme Court on Monday, defending his state's restrictions on content moderation by Facebook, X (formerly Twitter), and YouTube. Former U.S. Solicitor General Paul Clement, speaking on behalf of the tech trade group NetChoice, rejected that comparison, saying a social media platform is more like a newspaper.
Neither of those analogies is entirely satisfying. But Clement's has the advantage of recognizing that Facebook et al., unlike "dumb pipes" that simply transmit messages, unavoidably curate a vast amount of content, exercising the sort of editorial discretion that the Supreme Court has said is protected by the First Amendment.
Most of the justices seemed to recognize that point. In response to concerns that content moderation favors certain viewpoints over others, Chief Justice John Roberts noted, Florida, like Texas, decided that the solution is "exercising the power of the state" over those decisions.
Florida Solicitor General Henry Whitaker, who was defending his state's social media law, had argued that it served "an important First Amendment interest" by "ensuring the free dissemination of ideas." But "since we're talking about the First Amendment," Roberts wondered "whether our first concern should be with the state regulating what we have called 'the modern public square.'"
The Florida law at issue in Moody v. NetChoice requires social media platforms to host speech by any "candidate for office," even when it flagrantly violates their content rules. The law also says Facebook et al. may not limit the visibility of material "by or about" a political candidate and may not "censor, deplatform, or shadow ban a journalistic enterprise based on the content of its publication or broadcast."
The Texas law challenged in NetChoice v. Paxton is similar but in some ways broader, saying social media platforms may not "censor" speech based on "viewpoint." It defines censorship to include not just the deletion of posts and banishment of users but also any steps that make user-generated content less visible, accessible, or lucrative.
Public statements by Florida Gov. Ron DeSantis and Texas Gov. Greg Abbott made it clear that both laws were aimed at correcting a perceived bias against conservative speech. As they see it, Facebook et al. are using their influence to promote a progressive agenda.
Whitaker nevertheless insisted that content moderation decisions do not communicate any particular message. When platforms enforce their terms of service, he said, they are engaging in "conduct, not speech."
Yet that conduct, like the constitutionally protected decisions of newspapers and parade sponsors, reflects value judgments about which sorts of speech are beyond the pale, which is precisely why DeSantis and Abbott object to it. If platforms are legally barred from discriminating based on "content" or "viewpoint," they cannot exercise those judgments.
Even DeSantis and Abbott might not like the results. If the Texas law takes effect, Clement warned, his clients would be forced either to decree that users must avoid certain subjects altogether or to treat all viewpoints the same, no matter how abhorrent they might be to users and advertisers.
If platforms allowed pro-Jewish speech, for instance, they would have to give anti-Semitism equal prominence. They would be required to take a neutral stance regarding suicide prevention vs. suicide promotion, speech condemning terrorism vs. speech glorifying it, and posts encouraging vs. discouraging dangerous conduct such as bulimia and the "Tide Pod Challenge."
That is probably not a situation that most users would welcome, which is why platforms established content rules to begin with. While people may reasonably object to the specifics of those rules or the way they are enforced, those complaints do not justify using state power to impose different policies.
Given the choices available to people who do not like a particular platform's rules, equating those rules with government censorship is "a category mistake," as Clement observed. Based on that mistake, politicians are perversely arguing that the First Amendment must be sacrificed in order to save it.
© Copyright 2024 by Creators Syndicate Inc.
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]]>On Monday, Florida Solicitor General Henry Whitaker and Texas Solicitor General Aaron Nielson defended state laws that restrict content moderation by social media platforms, telling the Supreme Court they uphold a First Amendment value by protecting freedom of speech. To the contrary, former U.S. Solicitor General Paul Clement said on behalf of the tech trade group NetChoice, those laws violate the First Amendment by interfering with constitutionally protected editorial judgments.
It is not clear whether the Court will resolve that issue now rather than remanding the two cases for further development. But most of the justices seemed inclined to side with NetChoice.
In Moody v. NetChoice, Whitaker argued that Florida's law serves "an important First Amendment interest" by "promoting and ensuring the free dissemination of ideas." Chief Justice John Roberts was immediately skeptical.
Roberts noted that Whitaker had expressed concern about the ways in which Facebook et al. use their "market power" to shape online debate. "Your response to that is going to be exercising the power of the state to control what goes on on the social media platforms," the chief justice said. "I wonder, since we're talking about the First Amendment, whether our first concern should be with the state regulating what we have called 'the modern public square.'"
In NetChoice v. Paxton, the Texas case, Roberts noted that "the First Amendment doesn't apply" to social media companies. "The First Amendment restricts what the government can do," he said, "and what the government's doing here is saying you must do this: 'You must carry these people; you've got to explain if you don't.' That's not the First Amendment." The case "turns on whether" decisions about who may speak and what they may say should be left with the "various platforms" or the government, Roberts said, and "the First Amendment has a thumb on the scale when that question is asked."
Roberts also questioned Nielson's analogy between social media platforms and the telegraph, a "common carrier" barred from discriminating against communications based on their content. "You're assuming that they are like the telegraph," he said. "The telegraph had a particular[ly] compelling type of monopoly. I mean, if you didn't want to use the telegraph that was there, you usually didn't have an alternative choice." Likewise with railroads and "other types of common carriers," he added. "I'm not sure the same thing applies with respect to social [media] platforms." In the Texas case, Roberts described that market as "incredibly dynamic," suggesting that the common carrier model "may be totally inapt" in "the wild west economy surrounding the social media platforms and the Internet."
Justice Brett Kavanaugh likewise was openly skeptical of the position taken by Florida and Texas. During oral arguments in the Florida case, Kavanaugh quoted "a really important sentence in our First Amendment jurisprudence" from the Court's 1976 decision in Buckley v. Valeo, which dealt with campaign finance regulations: "The concept that the government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment."
Kavanaugh also noted the Court's 1974 decision in Miami Herald v. Tornillo, which rejected a Florida law giving political candidates a "right of reply" to unflattering newspaper articles. "The Court went on at great length…about the power of the newspapers," acknowledging "vast changes" that had placed "in a few hands the power to inform the American people and shape public opinion," which "had led to abuses of bias and manipulation," he said. "The Court accepted all that but still said that wasn't good enough to allow some kind of government-mandated fairness."
Kavanaugh suggested that Florida's logic of "government-mandated fairness" on social media could support similar restrictions on publishers, movie theaters, bookstores, and newsstands, requiring them to provide a forum for material they otherwise would reject. Whitaker replied that bookstores, unlike social media platforms, are "engaging in inherently expressive conduct."
Like Roberts, Kavanaugh emphasized that the First Amendment does not apply to private businesses. "In your opening remarks," he told Whitaker, "you said the design of the First Amendment is to prevent 'suppression of speech.' And you left out what I understand to be three key words…'by the government.'"
When "the government excludes speech from the public square, that is obviously a violation of the First Amendment," Kavanaugh said while questioning Clement in the Florida case. "When a private individual or private entity makes decisions about what to include and what to exclude, that's protected generally [as] editorial discretion, even though you could view the private entity's decision to exclude something as 'private censorship.'"
Whitaker noted that "upwards of 99 percent of what goes on the platforms is basically passed through without review," suggesting that Facebook et al. do not engage in meaningful editing prior to publication. But in the 1995 case Hurley v. Irish-American Gay, Lesbian, and Bisexual Group of Boston, Kavanaugh noted, the Court upheld a private organization's First Amendment right to exclude a gay pride float from a St. Patrick's Day parade, and "the mere fact that the parade organizer usually took almost all comers was irrelevant to the First Amendment interests." In that case and others, Kavanaugh said, the Court has "emphasize[d] editorial control as being fundamentally protected by the First Amendment."
In Hurley, Justice Elena Kagan noted, "we said they don't have a lot of rules, but they have some rules, and we're going to respect the rules that they do have. Even though they let a lot of people come in, they don't let a few people come in, and that seems to be quite important to them." Similarly, she said, social media companies may decide "you can't have hate speech on this site" or "you can't have misinformation with respect to particular subject matter areas." They "have thousands and thousands of employees who are devoted to enforcing those rules," she noted, and "they're making content judgments about the kind of speech that they think they want on the site and the kind of speech that they think is intolerable."
In general, Kagan said, "all these places say we're open for business—post whatever you like, and we'll host it. But there are exceptions to that…which the companies take seriously." They might, for example, make an exception for "misinformation about voting," "misinformation about certain public health issues," "hate speech," or "bullying." Kagan asked Whitaker why it wouldn't be "a classic First Amendment violation for the state to come in and say, we're not…going to allow you to enforce those sorts of restrictions even though…it's like an editorial judgment." Kagan made her answer clear, saying, "I take it to be First Amendment activity."
Justice Amy Coney Barrett agreed that "it all turns on editorial control," asking Whitaker why Facebook et al. are not relevantly similar to a newspaper in that respect. He replied that "it is a strange kind of editor" that "does not actually look at the material that is going [into] its compilation." But even algorithms that filter posts on a larger scale reflect editorial judgments, Barrett noted: "TikTok might have boosted pro-Palestinian speech and reduced pro-Israel speech. That's a viewpoint, right? And if you have an algorithm do it, is that not speech?"
Social media platforms organize content "in ways that reflect preferences, that are expressive of their terms and conditions," Barrett observed. "Don't all methods of organization reflect some kind of judgment?" And "even though there may not be physical space constraints," she said, "there are the constraints of attention," which require platforms to "present information to a consumer in some sort of organized way" so "the consumer can absorb it."
Barrett, like Kavanaugh, brought up bookstores: "Could Florida enact a law telling bookstores that they have to put everything out by alphabetical order and that they can't organize or put some things closer to the front of the store that they think their customers will want to buy?" Whitaker did not directly address that question, although he conceded that "you certainly could imagine…an algorithm that could be expressive."
Justice Ketanji Brown Jackson questioned the significance of describing social media platforms as common carriers. "I hear you suggesting that we can just say Facebook is a common carrier and, therefore, everything it does qualifies as conduct and not speech," she told Whitaker. "And I don't think that's really the way we've done this in our past precedents."
Jackson wondered if Nielson was "suggesting that a common carrier…could never have First Amendment protected activity." She suggested that the constitutional analysis depends not on an organization's classification but on "what exactly" it is "doing in a particular circumstance."
Justice Sonia Sotomayor also suggested that the "common carrier" label does not accomplish what Florida wants. The government can't do "some of these things even to common carriers," she said. "A common carrier doesn't have to permit unruly behavior….It can throw somebody off the train if they are threatening somebody else or if they're doing other things." During the oral arguments in the Texas case, Sotomayor said, "I have a problem with laws like this that are so broad that they stifle speech just on their face."
The post Most Justices Seem Skeptical of the Florida and Texas Social Media Laws appeared first on Reason.com.
]]>For more than a year, the U.S. has experienced a shortage of Adderall, the medication used to treat attention-deficit/hyperactivity disorder (ADHD). Now, while continuing to deny its own role in the shortage, the federal government is making the problem worse by threatening manufacturers that could help ameliorate the crisis.
In October 2022, the Food and Drug Administration (FDA) announced a shortage of amphetamine mixed salts, Adderall's primary ingredient. The announcement noted that manufacturers were "experiencing ongoing intermittent manufacturing delays" and it anticipated that the shortage could last until March 2023.
Instead, the shortage has persisted for more than a year, with no sign of ceasing.
As Reason has reported since the FDA's first announcement, the Drug Enforcement Administration (DEA) imposes production caps on Schedule I and II narcotics. Each year, drug manufacturers apply for a piece of the overall quotas. Even after a spike in demand during the COVID-19 pandemic, the DEA did not lift the production quotas on the ingredients used to make Adderall or its equivalents.
Rather, the FDA and the DEA have blamed drug companies, saying in August that "for amphetamine medications, in 2022, manufacturers did not produce the full amount" they were allowed to under DEA quotas. But the country's three largest pharmaceutical distributors, along with drugmaker Johnson & Johnson, settled a $26 billion lawsuit in 2022 brought by state and local governments over the companies' alleged complicity in the opioid epidemic. As a result, distributors cracked down on potentially suspicious orders of controlled substances, including psychiatric drugs like Adderall.
Last week, James Walsh of New York magazine reported on the ongoing saga of drug manufacturer Ascent Pharmaceuticals. The company estimates that its products made up 20 percent of the market for generic ADHD medications, including generic versions of not only Adderall but Concerta, Vyvanse, and Ritalin.
In April 2022, Ascent submitted its annual quota applications for 11 total drugs, but instead of a speedy approval, the company was subjected to a DEA audit.
Investigators pored over Ascent's books and identified discrepancies that indicated sloppy record keeping. For its part, the company admitted to committing infractions, though the details seem needlessly petty: In one example, "orders struck from [DEA forms] must be crossed out with a line and the word cancel written next to them," Walsh wrote. "Investigators found two instances in which Ascent employees had drawn the line but failed to write the word."
The audit forced Ascent to shut down production at its facility on Long Island, near New York City; company officials told New York that this constituted 600 million annual doses that it is unable to produce. It began laying off workers after more than a year in regulatory limbo.
Ascent sued in September 2023, seeking an injunction "compelling DEA to respond, to Ascent's applications for quotas." The DEA quickly denied all of Ascent's quota applications, saying that it "lacks confidence in the data provided by Ascent in its quota requests" but giving no specifics.
In October 2023, the DEA announced that it had carried out Operation Bottleneck, billed in a press release as "administrative actions against six DEA-registered companies which, together, failed to account for more than a million doses of opioids." Specifically, the agency charged that Ascent "failed to make records available for inspection in a timely manner and shipped controlled substances without producing required documentation," and that "on numerous occasions, the company did not accurately account for millions of dosages" of drugs including oxycodone, hydrocodone, and methylphenidate, which is used to make Concerta.
In November 2023, just days after the announcement of Operation Bottleneck, Ascent filed a lawsuit against the DEA, the Department of Justice, and U.S. Attorney General Merrick Garland, among others. The lawsuit seeks to end the shutdown imposed by the DEA. In contrast to the DEA's allegations, the lawsuit claims that "Ascent cooperated fully with the regulatory inspection, often producing thousands of documents within a few business days of requests."
The lawsuit also claims that since the onset of the stimulant shortage, FDA regulatory officers reached out to Ascent in September 2022 and July and August of 2023, each time "ask[ing] whether Ascent had any supply of the products available." Each time, "Ascent replied that it did not due to DEA's failure to issue a decision on its Quota Applications and requested that FDA inform DEA of the problem." Two U.S. senators even reached out to Ascent with the same request, and each time the company was "forced to reply that its hands were tied."
It's entirely possible that Ascent did keep shoddy records, and perhaps it did misplace doses of drugs like opioids or stimulants that are ripe for abuse (allegations that the company denies). But the DEA's policy of artificially constraining the supply of those drugs continues to harm those patients who actually need them.
The post DEA Shuts Down Drug Factory Even as Adderall Shortage Persists appeared first on Reason.com.
]]>If you'd like to live in a building that isn't full of dogs howling at all hours of the night and urinating in the elevator, you might soon be out of luck in California.
Earlier this month, California Assemblymember Matt Haney (D–San Francisco) introduced a bill that would prohibit landlords from having blanket no-dogs-allowed policies.
The text of the introduced bill is still quite brief, saying only that "it is the intent of the Legislature to enact legislation related to a landlord's ability to prohibit common household pets in residential tenancies."
A news release published by Haney's office earlier this week adds a little more detail, saying that the legislation will "require landlords to have reasonable reason(s) for not allowing a pet in a rental unit and only allows landlords to ask about pet ownership after a tenant's application has been approved."
"I've heard from many constituents about the incredible hurdles and challenges they faced in finding homes simply because they own pets," Haney told the Los Angeles Times on Wednesday. "They've been repeatedly denied because they have a dog."
The assemblyman frames no-dog policies as just one more hardship facing California renters in a state with an insufficiency of housing. His news release says that 70 percent of renters are pet owners but only 30 percent of available rentals are pet-friendly.
Now, a greater supply of housing would give pet owners more options and incentivize landlords to be less choosy.
Haney, to his credit, does say that the state needs to build more homes. He also has a pretty decent track record of supporting zoning reforms aimed at housing supply in the Legislature.
Nevertheless, he pitches his pet ban ban bill as a necessary supplement to pro-supply policies, saying that "we won't be able to solve this crisis if 12 million people across the state are being denied access to that housing because they have a companion pet."
The fact that so many landlords prohibit pets when so many potential tenants have them should prompt some deeper reflection from the assemblyman. Suppliers, even in highly regulated markets, aren't typically in the business of turning away a huge pool of customers for the fun of it.
Landlords have reasons for having no-pet policies, including the potential that pets will damage their property. More importantly, pets impose costs on other renters; they can be dirty, they can be noisy, and they can even be dangerous.
By prohibiting pets, landlords aren't limiting the supply of housing. They're creating a supply of pet-free housing, for which there's a lot of demand.
Haney's bill therefore isn't a necessary supplement to pro-supply policies. It's not a second-best solution to a lack of housing supply. It's actively anti-supply and anti-choice.
It's also an anti-urban policy.
Dogs are not bad per se. Other Reason writers have even argued that they're good. But they are bad pets to have in the city.
They have the potential to cause nuisances, which, in dense urban areas, negatively impact more people. They also take up a lot of public space. No sidewalk is too wide for a dog owner and their leashed animal to stretch all the way across. City parks that could be enjoyed by everyone (and everyone has to pay for) are often turned into dog parks for the exclusive enjoyment of dog owners and their pets.
The more city space, public and private, we sacrifice to these beasts, the less interested people will be in living in the city generally.
In this way, the urbanist case against dogs is similar to the urbanist case against cars; both cause negative externalities and take up a lot of expensive public land without paying for it.
Unlike dogs, cars serve a countervailing urbanist purpose of connecting people to jobs and amenities across the wider metro area. Dogs serve no such function.
That doesn't mean there's not a time or place for them. It's just that that time and place is called the suburbs.
In Golden Gates, Conor Dougherty's book on the early YIMBY movement, he notes that post-war suburban sprawl resulted in a massive explosion in the country's dog population. As it turns out, large lots and owner-occupied housing make a much more amenable environment for dogs and dog ownership. The implication is that dense urban areas dominated by rental housing are not.
None of this, of course, means that dog ownership should be banned anywhere. But it does make dog ownership a poor candidate for public subsidy. That includes regulations that allow dog owners to force their way into private housing, where neither the owners nor the other renters want them.
The post California Bill Banning Landlords' No-Dog Policies Is Anti-Choice and Anti-Urban appeared first on Reason.com.
]]>In the well-intentioned rush to support American families by expanding the child tax credit (CTC), critical questions are often ignored: Aren't we already doing enough, and is this the best way to help? It's imperative to step back and examine the assumptions at the heart of this ongoing debate.
The child tax credit was first introduced in the 1997 Taxpayer Relief Act as a way to lower the tax burden for working families, with a $500 per child credit. It was increased a few times, including during the Bush years and in 2017 during the latest Republican tax reform. The justification has morphed into whatever its advocates happen to think it should be: It's an anti-poverty program—hence its refundability. It's a pro-family program—hence its growing size. It's a fertility booster program—hence both its size and refundability.
While it's not that great at meeting any of these goals, it is a true budget buster. At current levels, it costs about $1 trillion over 10 years, a price tag that will grow if it is expanded. For the 2024 tax year, the CTC will be worth $2,000 per qualifying child with $1,700 potentially refundable through the additional child credit. The House of Representatives just passed an expansion that, if passed untouched by the Senate, would extend more benefits to lower-income families. The maximum refundable amount per child would increase from $1,600 to $1,800 for 2023 taxes filed this year. It would also grow depending on inflation. And it would only require work every other year, which is a first step into turning the credit into a universal basic income for families.
Ignoring that the CTC sits on top of roughly 80 or so other welfare programs—many of which are already targeted at families—advocates of the CTC expansion argue that to make it a better anti-poverty measure we should eliminate the work requirements. Assuming no behavior changes, the expansion would certainly provide more government cash for eligible families—but it complicates things further by creating disincentives to work and rise from poverty, especially as it builds on other existing transfers.
Research by Kevin Corinth and Scott Winship at the American Enterprise Institute highlights the fact that after the proposed Wyden-Smith expansion, a single parent with three children earning $15,000 annually would get $11,244 from the Supplemental Nutrition Assistance Program (SNAP), $6,750 from the Earned Income Tax Credit (EITC), and $5,400 in CTC money. That adds up to a little more than $37,000 (ignoring many other benefits). Tragically—because of both the way higher earners are phased out and the generosity of the cumulative benefits—if that same single mom's work earnings nearly tripled to $40,000, she'd take home only some $5,000 more. Indeed, making more than $39,000 means losing all of SNAP and some EITC.
It isn't hard to see how this system, despite creating some work incentives at first, discourages people from pursuing better long-term paths for their families. This is a big deal. Increased employment among low-income parents as a result of work requirements has driven much of the long-term decline in child poverty, as we learned during the welfare reform of the 1990s. We need stronger incentives to move up the income ladder rather than incentives that perpetuate systemic poverty. And this expansion of the credit isn't going to cut it.
Unfortunately, many on the right are willing to ignore the disincentive to work because they worry about declining fertility rates. That would be a valid argument if, and only if, we had evidence that more government spending or more tax credits were effective at lifting fertility rates after they drop below replacement rates. And that isn't the case.
As noted by Adam Michel and Vanessa Brown Calder, the CTC, other financial transfers, and cash benefits are unlikely to be a cure for what ails us. A review of relevant studies "finds that financial transfers result in a short-term increase in births while leaving the long-term total unaffected."
A better way to go would be to boost economic growth so that families have more income in the first place. One way to do this is to cut and flatten tax rates, which would change incentives to save, invest, or be entrepreneurial. Also advisable is doing away with the excessive regulations driving up the cost of things families need, like housing, food, formula, and child care.
COPYRIGHT 2024 CREATORS.COM.
The post Expanding the Child Tax Credit Would Perpetuate Systemic Poverty appeared first on Reason.com.
]]>During the height of the pandemic summer of 2020, the proprietors of the Burning Bridge Tavern worked with local officials in Wrightsville, Pennsylvania, to host a series of outdoor gatherings for the community.
For their trouble, the bar's owners got slapped with a series of citations by the Pennsylvania Liquor Control Board (PLCB), the government agency that oversees and manages the sale of alcohol in the state. The citations were ticky-tack offenses, according to Burning Bridge's chief financial officer, Mike Butler. Twice, the bar was cited for noise violations because they'd allowed a band playing at the gathering to plug into the tavern's electricity supply. Another offense occurred when the owners and some family members were drinking inside the tavern, which was closed to the public, during a period when indoor dining was prohibited.
A frustrating situation, but not the end of the world. Burning Bridge's owners paid the fines associated with the citations and assumed that was that. But then the bar had to renew its liquor license.
"They denied it. They said, 'Oh, you're the guys that got all those citations,'" Butler says. "It was a real gut punch."
Turns out, over the past two years the PLCB has pushed dozens of Pennsylvania establishments that racked up pandemic-related citations to sign "conditional licensing agreements" to renew their liquor permits. In some cases, those agreements have forced the sale of licenses—but in most cases, as with Burning Bridge, they've added additional conditions to the license that could prevent a future renewal from being approved.
While the PLCB cannot revoke existing licenses, the board is empowered to object to the renewal of a license or to demand the license can only be renewed conditionally. "In extreme cases," PLCB Press Secretary Shawn Kelly says, the PLCB can force the sale of a liquor license, though the board only pursues that option when "there is an operational and citation history that calls for such an agreement."
Even though Burning Bridge's owners weren't forced to sell their license, Butler says signing the conditional licensing agreement has come with real costs: The bar's insurance premium tripled as a result of being viewed as a greater risk.
Typically, those agreements have been used to curb nuisance bars or force establishments with a history of legal problems, like serving underage patrons, to clean up their acts. Recently, however, the PLCB has taken a hardline stance against establishments that violated pandemic-era rules.
"The people who violated the governor's mandates and orders should face some consequences," argued Mary Isenhour, one of the PLCB's three board members, at a January 2022 meeting where the first several of the COVID-related conditional licensing agreements were approved.
Isenhour was responding to an objection raised by a fellow board member, Michael Negra, who argued that the PLCB should take the view that businesses had "paid their dues" during the pandemic and should not face additional sanction now. Negra left the PLCB in June 2022 and now works for a Pittsburgh-based lobbying firm. He did not return requests for comment.
After Negra's departure, the PLCB has unanimously approved dozens of conditional licensing agreements for COVID-related violations, including at least 10 that have required the sale of a license, based on a review of PLCB meeting minutes.
Kelly, the PLCB spokesman, maintains that licensees are "under no obligation" to sign conditional licensing agreements.
But any licensee that refuses would face a set of unattractive alternatives: not having the license renewed, or being drawn into a legal battle against the PLCB in state court.
"Do you risk your entire business, your license, the loans, all of that to fight" in a real court, asks Butler. "Or do you just kind of hold your nose and take your medicine? Tactically, for us, we weren't in a position to say, 'Yeah, we'll run that risk.'"
Chuck Moran, executive director of the Pennsylvania Licensed Beverage and Tavern Association, acknowledges that pandemic-era public health orders left many establishments with a difficult choice between following the law and surviving financially. Fairly or unfairly, "those who broke the rules went the wrong way and now they're paying the price," he says.
The whole matter raises some complicated questions about how our political institutions ought to handle, with the benefit of hindsight, the unprecedented circumstances created by the pandemic and policy makers' response to it.
"The feeling was that our government really isn't working to try and help us," says Butler. "At this point, it feels like they're coming after us."
The post Liquor Regulators Are Seeking Revenge on Bars That Broke Pandemic Rules appeared first on Reason.com.
]]>United Airlines received its first Airbus A321neo airplanes in December, and it has already had to ground them. But United wants you to know there were no safety issues—rather, it has to do with a 1990 Federal Aviation Administration rule requiring "No Smoking" signs to be operated by the flight crew, even though smoking on airplanes has been banned for decades. The A321neo has software that keeps the "No Smoking" sign turned on continuously during flights. In 2020, United got an exemption to that rule for all of its planes that keep the sign on continuously. But that exemption only applies to the aircraft it listed at the time. United has since applied for an exemption for the Airbus A321neo, and it says the FAA has agreed to let the airline fly those aircraft while it evaluates the application.
The post Brickbat: Grounded Already appeared first on Reason.com.
]]>A large majority of Americans—70 percent, according to the latest Gallup poll—support marijuana legalization, and that sentiment is especially strong among younger voters. Gallup found that 79 percent of 18-to-34-year-olds thought marijuana should be legal, compared to 64 percent of adults 55 or older. Similarly, a Pew Research Center survey found that support for legalization was inversely correlated with age. It therefore makes sense that President Joe Biden, who has generated little enthusiasm among Americans of any age group, would try to motivate young voters by touting his support for "marijuana reform."
The problem for Biden, a longtime drug warrior who is now presenting himself as a reformer, is that his position on marijuana falls far short of repealing federal prohibition, which is what most Americans say they want. His outreach attempts have clumsily obfuscated that point, as illustrated by a video that Vice President Kamala Harris posted on X (formerly Twitter) earlier this month.
"In 2020," Harris writes in her introduction, "young voters turned out in record numbers to make a difference. Let's do it again in 2024." The video highlights "the largest investment in climate action in history," cancellation of "$132 billion in student debt," "the first major gun safety legislation in nearly 30 years," and $7 billion in subsidies for historically black colleges and universities. Then Harris says this: "We changed federal marijuana policy, because nobody should have to go to jail just for smoking weed." That gloss is misleading in several ways.
Biden has not actually "changed federal marijuana policy." His two big moves in this area were a mass pardon for people convicted of simple possession under federal law and a directive that may soon result in moving marijuana from Schedule I of the Controlled Substances Act, a category supposedly reserved for drugs with a high abuse potential and no recognized medical use that cannot be used safely even under a doctor's supervision, to Schedule III, which includes prescription drugs such as ketamine, Tylenol with codeine, and anabolic steroids.
Although Harris, echoing Biden, says "nobody should have to go to jail just for smoking weed," that rarely happens. Biden's pardons, which excluded people convicted of growing or distributing marijuana, did not free a single prisoner, and they applied to a tiny fraction of possession cases, which are typically prosecuted under state law.
When he announced the pardons in October 2022, Biden noted that "criminal records for marijuana possession" create "needless barriers to employment, housing, and educational opportunities." But his pardons do not remove those barriers. They do not entail expungement of marijuana records, which is currently not possible under federal law. The certificates that pardon recipients can obtain might carry weight with landlords or employers, but there is no guarantee of that.
Biden's pardons also did not change federal law, which still treats simple marijuana possession as a misdemeanor punishable by a minimum $1,000 fine and up to a year in jail. So people can still be arrested for marijuana possession under federal law, even if they are unlikely to serve time for that offense (which would be true with or without Biden's pardons). The pardons that Biden announced on October 6, 2022, applied only to offenses committed "on or before the date of this proclamation." When he expanded those pardons on December 22, 2023, that became the new cutoff.
Marijuana use still can disqualify people from federal housing and food assistance. Under immigration law, marijuana convictions are still a bar to admission, legal residence, and citizenship. And cannabis consumers, even if they live in states that have legalized marijuana, are still prohibited from possessing firearms under 18 USC 922(g)(3), which applies to any "unlawful user" of a "controlled substance."
The Biden administration has stubbornly defended that last policy against Second Amendment challenges in federal court, where government lawyers have likened cannabis consumers to dangerous criminals and "lunatics." Worse, Biden signed the Bipartisan Safer Communities Act of 2022, which increased the maximum prison sentence for marijuana users who own guns from 10 years to 15 years and created a new potential charge against them, which likewise can be punished by up to 15 years behind bars. This is the very same law that Harris touts as "the first major gun safety legislation in nearly 30 years."
Biden, in short, has neither "decriminalize[d] the use of marijuana" nor "automatically expunge[d] all marijuana use convictions," as Harris promised on the campaign trail. Both of those steps would require congressional action that Biden has done little to promote.
What about rescheduling? A recent poll commissioned by the Coalition for Cannabis Scheduling Reform, Marijuana Moment reports, found that "voters' impression of the president jumped a net 11 points" after they were informed about "the implications of the rescheduling review that the president initiated." That included "an 11-point favorability swing among young voters 18-25," who "will be critical to his reelection bid."
But let's not get too excited. Since rescheduling has not happened yet, it is not true that Biden "changed federal marijuana policy" in this area either. And assuming that the Drug Enforcement Administration moves marijuana to Schedule III, as the Department of Health and Human Services recommended last August in response to Biden's directive, the practical impact would be limited. Rescheduling would facilitate medical research, and it would allow state-licensed marijuana suppliers to deduct business expenses when they file their federal tax returns, which is currently prohibited under Section 280E of the Internal Revenue Code.
Even after rescheduling, however, marijuana businesses would remain criminal enterprises under federal law, which makes it hard for them to obtain financial services and exposes them to the risk of prosecution and asset forfeiture. For businesses that serve recreational consumers, prosecutorial discretion is the only protection against that risk. Cannabis consumers would still have no legally recognized right to own guns, and people who work in the cannabis industry would still face other disabilities under federal law, including life-disrupting consequences for immigrants. Rescheduling would not even make marijuana legally available as a prescription medicine, which would require approval of specific products by the Food and Drug Administration.
In response to overwhelming public support for marijuana legalization, in other words, Biden has made modest moves that leave federal prohibition essentially untouched. While he does not have the authority to unilaterally deschedule marijuana, he cannot even bring himself to support legislation that would do that. Why not?
During the 2020 campaign, Biden echoed seven decades of anti-pot propaganda, saying he was worried that marijuana might be a "gateway" to other, more dangerous drugs. "The truth of the matter is, there's not nearly been enough evidence that has been acquired as to whether or not it is a gateway drug," he said. "It's a debate, and I want a lot more before I legalize it nationally. I want to make sure we know a lot more about the science behind it….It is not irrational to do more scientific investigation to determine, which we have not done significantly enough, whether or not there are any things that relate to whether it's a gateway drug or not."
After Biden took office, his press secretary confirmed that his thinking had not changed. "He spoke about this on the campaign," she said. "He believes in decriminalizing the use of marijuana, but his position has not changed."
Biden's rationale for opposing legalization is the same line of argument that Harry J. Anslinger, who headed the Federal Bureau of Narcotics from 1930 to 1962, began pushing in the early 1950s after retreating from his oft-reiterated claim that marijuana causes murderous madness. "Over 50 percent of those young [heroin] addicts started on marijuana smoking," he told a congressional committee in 1951. "They started there and graduated to heroin; they took the needle when the thrill of marijuana was gone."
Anslinger reiterated that point four years later, when he testified in favor of stricter penalties for marijuana offenses. "While we are discussing marijuana," a senator said, "the real danger there is that the use of marijuana leads many people eventually to the use of heroin." Anslinger agreed: "That is the great problem and our great concern about the use of marijuana, that eventually if used over a long period, it does lead to heroin addiction."
Since then, a great deal of research has examined this issue, which is complicated by confounding variables that make the distinction between correlation and causation elusive. Biden nevertheless thinks "more scientific investigation" will reach a definitive conclusion. If he won't support legalization until we know for sure whether marijuana is a "gateway drug," he will never support legalization.
The supposedly reformed drug warrior's intransigence on this issue poses an obvious challenge for Harris, a belated legalization supporter who is trying to persuade voters who take the same view that Biden is simpatico. Marijuana Moment reports that Harris' staff recently has been reaching out to marijuana pardon recipients, "seeking assurance that the Justice Department certification process is going smoothly and engaging in broader discussions about cannabis policy reform."
According to Chris Goldstein, a marijuana activist who was pardoned for a 2014 possession conviction, the vice president's people get it. Goldstein was "surprised by how up to speed and nice everybody was," he told Marijuana Moment. "Her staff really did know the difference between rescheduling [and] descheduling, and they were interested to talk about it."
No doubt Biden also understands the difference. The problem is that he supports the former but not the latter, which he rejects for Anslinger-esque reasons. Cheery campaign videos cannot disguise that reality.
The post Biden Is Trying To Motivate Voters Who Oppose Pot Prohibition. Maybe He Should Stop Supporting It. appeared first on Reason.com.
]]>In this week's The Reason Roundtable, Katherine Mangu-Ward is in the driver's seat, alongside Nick Gillespie and special guests Zach Weissmueller and Eric Boehm. The editors react to the latest plot twists in Donald Trump's various legal proceedings and the death of Russian opposition leader Alexei Navalny.
00:41—The trials of Donald Trump in Georgia and New York
25:04—Weekly Listener Question
33:23—Sora, a new AI video tool
43:55—The death of Alexei Navalny
49:58—This week's cultural recommendations
Mentioned in this podcast:
"How a New York Judge Arrived at a Staggering 'Disgorgement' Order Against Trump," by Jacob Sullum
"Prosecutor Fani Willis Touts the Value of Cash, but What About the Rest of Us?" by J.D. Tuccille
"Trump Ordered To Pay $364 Million for Inflating His Assets in Civil Fraud Trial," by Joe Lancaster
"Alvin Bragg Is Trying To Punish Trump for Something That Is Not a Crime," by Jacob Sullum
"Alexei Navalny's Death Is a Timely Reminder of How Much Russia Sucks," by Eric Boehm
"Why Is Nike Stomping on Independent Creators?" by Kevin P. Alexander
"Bury My Sneakers at Wounded Knee," by Nick Gillespie
"Creation Myth: Does innovation require intellectual property rights?" by Douglas Clement
"A Private Libertarian City in Honduras," by Zach Weissmueller
"The Real Reasons Africa Is Poor—and Why It Matters," by Nick Gillespie
"Justice or persecution? The Trump dilemma"
Send your questions to roundtable@reason.com. Be sure to include your social media handle and the correct pronunciation of your name.
Today's sponsor:
Audio production by Ian Keyser; assistant production by Hunt Beaty.
Music: "Angeline," by The Brothers Steve
The post Goodbye, Navalny appeared first on Reason.com.
]]>On Friday, New York County Supreme Court Justice Arthur Engoron ordered Donald Trump to pay a staggering $355 million for repeatedly inflating asset values in statements of financial condition submitted to lenders and insurers. When the interest that Engoron also approved is considered, the total penalty rises to $450 million. All told, Trump and his co-defendants, including three of his children and former Trump Organization CFO Allen Weisselberg, are on the hook for $364 million, or about $464 million with interest.
On its face, a penalty of nearly half a billion dollars is hard to fathom given that no lender or insurer claimed it suffered a financial loss as a result of the transactions at the center of the case, which was brought by New York Attorney General Letitia James. But the law under which James sued Trump and his co-defendants does not require any such loss. The money demanded by Engoron's 92-page decision, which goes to the state rather than individual claimants, is styled not as damages but as "disgorgement" of "ill-gotten gains." It is aimed not at compensating people who were allegedly harmed by Trump's misrepresentations but at deterring dishonesty that threatens "the financial marketplace."
Proving "common law fraud," Engoron notes, requires establishing that the defendant made a "material" statement he knew to be false, that the plaintiff justifiably relied on that statement, and that he suffered damages as a result. Section 63(12) of New York's Executive Law, by contrast, authorizes the attorney general to sue "any person" who "engage[s] in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business." The attorney general can seek "an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damages and, in an appropriate case, cancelling" the defendant's business certificate.
"The statute casts a wide net," Engoron observes. It defines "fraud" to include "any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions." Although Engoron found substantial evidence that lenders and insurers relied on the Trump Organization's misrepresentations, the state did not have to prove that they did or that they suffered damages as a result.
"Timely and total repayment of loans does not extinguish the harm that false statements inflict on the marketplace," Engoron writes. "Indeed, the common excuse that 'everybody does it' is all the more reason to strive for honesty and transparency and to be vigilant in enforcing the rules. Here, despite the false financial statements, it is undisputed that defendants have made all required payments on time; the next group of lenders to receive bogus statements might not be so lucky. New York means business in combating business fraud."
Engoron ruled that the appropriate standard of proof was a preponderance of the evidence, which typically applies in civil cases and requires showing that an allegation is more likely than not to be true. "Defendants have provided no legal authority for their contention that the higher 'clear and convincing' standard does, or should, apply," he writes. "A clear and convincing standard applies only when a case involves the denial of, addresses, or adjudicates fundamental 'personal or liberty rights' not at issue in this action."
Engoron had previously ruled that disgorgement of profits is one of the remedies allowed by Section 63(12) in this case. "In flagrant disregard of prior orders of this Court and the First Department [court of appeals], defendants repeat the untenable notion that 'disgorgement is unavailable as a matter of law' in Executive Law §63(12) actions," he wrote in that September 2023 decision, which held that Trump had committed fraud within the meaning of the statute. "This is patently false, as defendants are, or certainly should be, aware that the Appellate Division, First Department made it clear in this very case that '[w]e have already held that the failure to allege losses does not require dismissal of a claim for disgorgement under Executive Law § 63(12).'"
In Friday's decision, Engoron reviews the examples of fraud that he described in the earlier ruling. Most notoriously, they include the claim that Trump's triplex apartment in Manhattan's Trump Tower was 30,000 square feet, nearly three times its actual size. That misrepresentation was included in Trump's statements of financial condition (SFCs) from 2012 through 2016 and was not corrected until after Forbes made the glaring discrepancy public in 2017.
In 2012, former Trump International Realty employee Kevin Sneddon testified, Weisselberg asked him to assess the apartment's value. "In response to the request," Engoron writes, "Sneddon asked Weisselberg if he could see the Triplex, to which Weisselberg responded that that was 'not possible.' Sneddon then asked if Weisselberg could send him a floorplan or specs of the Triplex to evaluate, to which Weisselberg also said 'no.' Sneddon then asked Weisselberg what size the Triplex was, to which Weisselberg responded 'around 30,000 square feet.' Sneddon then used the 30,000 square foot number in ascertaining a value for the Triplex."
The value of Mar-a-Lago, Trump's golf resort in Palm Beach, also figured prominently in the case. The deed to Mar-a-Lago precluded it from ever being used as private residential property, a clause that made it eligible for a lower tax rate. Yet SFCs repeatedly valued Mar-a-Lago as if it could be sold for residential purposes. Engoron notes that Trump "insisted that he believed Mar-a-Lago is worth 'between a billion and a billion five' today, which would require not only valuing it as a private residence, which the deed prohibits, but as more than the most expensive private residence listed in the country by approximately 400%"
Other examples of misrepresentations included treating rent-stabilized apartments as if they were not subject to that restriction, assuming regulatory permission for construction that had not in fact been approved, failing to discount expected streams of revenue, dramatically departing from estimates by professional appraisers, and counting Trump's limited partnership interest in a real estate company as cash even though he could not access the money without the company's consent. More generally, expert testimony indicated, Trump tended to value properties based on rosy "as if" assumptions rather than the "as is" valuations preferred by lenders.
The defendants argued that the accountants charged with compiling the SFCs were responsibile for verifying their accuracy. But as Engoron notes, the accounting firms' role was limited to assembling information provided by the Trump Organization, which they assumed to be accurate. "There is overwhelming evidence from both interested and non-interested witnesses, corroborated by documentary evidence, that the buck for being truthful in the supporting data valuations stopped with the Trump Organization, not the accountants," he says. "Moreover, the Trump Organization intentionally engaged their accountants to perform compilations, as opposed to reviews or audits, which provided the lowest level of scrutiny and rely on the representations and information provided by the client; compilation engagements make clear that the accountants will not inquire, assess fraud risk, or test the accounting records."
Trump also argued that the SFCs were unimportant because lenders and insurers would perform their own due diligence. Engoron was unimpressed by that defense, especially with regard to the insurers. "Because the Trump Organization is a private company, not a publicly traded company," he says, "there is very little that underwriters can do to learn about the financial condition of the company other than to rely on the financial statements that the client provides to them."
Were the Trump Organization's overvaluations "material"? Engoron had already concluded that "the SFCs from 2014-2021 were false by material amounts as a matter of law." Under Section 63(12), he says, materiality "is judged not by reference to reliance by or materiality to a particular victim, but rather on whether the financial statement 'properly reflected the financial condition' of the person to which the statement pertains."
If fraud "is insignificant," Engorion concedes, "then, like most things in life, it just does not matter." But that "is not what we have here," he adds. "Whether viewed in relative (percentage) or absolute (numerical) terms, objectively (the governing standard) or subjectively (how the lenders viewed them), defendants' misstatements were material….The frauds found here leap off the page and shock the conscience."
While there is no precise numerical standard for materiality, Engoron says, "this Court confidently declares that any number that is at least 10% off could be deemed material, and any number that is at least 50% off would likely be deemed material. These numbers are probably conservative given that here, such deviations from truth represent hundreds of millions of dollars, and in the case of Mar-a-Lago, possibly a billion dollars or more."
Did those deviations ultimately matter in the decisions that lenders and insurers made? Engoron's summary provides reason to doubt that they did. Deutsche Bank, he notes, routinely "applied a 50% 'haircut' to the valuations presented by" clients, which a witness "affirmed was the standardized number for commercial real assets." A defense witness opined that lenders generally just want to see "the engagement of a warm body of a billionaire to stand behind the loan in his equity infusion and capital."
James nevertheless argued that Trump, by systematically exaggerating his wealth and the amount of cash he could access, misled lenders about what would happen in the event that the Trump Organization could not meet its obligations. And those misrepresentations, she said, allowed the business to borrow more money on terms more favorable than it otherwise could have obtained.
The difference between the interest rates that lenders charged based on Trump's personal financial guarantee and the rates they would have charged without it was crucial to Engoron's calculation of how much the defendants should disgorge. Over their vigorous objections, he accepted the numbers offered by a state witness, investment bank CEO Michiel McCarty, who compared the rate that Deutsche Bank charged the Trump Organization based on Trump's personal guarantee with the rate it proposed for a loan without that guarantee. By McCarty's calculation, the Trump Organization saved a total of about $168 million in interest on loans for four projects.
By itself, that estimate accounts for nearly half of the disgorgement that Engoron ordered. He also included nearly $127 million in "net profits" from the 2022 sale of the Old Post Office in Washington, D.C., which Trump had converted into a hotel. That deal, James argued, was facilitated "through the use of false SFCs," without which it would not have happened. She also argued that "without the ill-gotten savings on interest rates, defendants would not even have been able to invest in the Old Post Office and/or other projects."
Taking into account the partnership interest "fraudulently labeled as cash," James said, "Trump would have been in a negative cash situation" by 2017 but for the $74 million or so "saved through reduced interest payments." She noted that "the Old Post office loan itself was a construction loan, and its proceeds were necessary to the construction and renovation of the hotel, which enabled the 2022 sale and resulting profits."
Engoron found these arguments, especially the first, persuasive. The profits from the sale of the Old Post Office, he concludes, "were ill gotten gains, subject to disgorgement, which is meant to deny defendants 'the ability to profit from ill-gotten gain.'"
Engoron also counted $60 million in profits from the 2023 sale of a license to operate a golf course at Ferry Point Park in the Bronx, which Trump had obtained from the New York City Department of Parks & Recreation in 2012. "By maintaining the license agreement for Ferry Point, based on fraudulent financials," Engoron says, "Donald Trump was able to secure a windfall profit by selling the license to Bally's Corporation."
Although reliance is not required to prove fraud under Section 63(12), it does implicitly figure in these disgorgement calculations. But for the "fraudulent financials," Engoron assumes, Trump would have had to pay higher interest rates on the four loans, and neither the Ferry Point deal nor the Old Post Office renovation and sale would have happened. The defendants, of course, dispute those counterfactuals.
Explaining the need for continued independent supervision of the Trump Organization, Engoron emphasizes Trump et al.'s "refusal to admit error." After "some four years of investigation and litigation," he says, "the only error (inadvertent, of course) that they acknowledge is the tripling of the size of the Trump Tower Penthouse, which cannot be gainsaid. Their complete lack of contrition and remorse borders on pathological. They are accused only of inflating asset values to make more money. The documents prove this over and over again. This is a venial sin, not a mortal sin. Defendants did not commit murder or arson. They did not rob a bank at gunpoint. Donald Trump is not Bernard Madoff. Yet, defendants are incapable of admitting the error of their ways. Instead, they adopt a 'See no evil, hear no evil, speak no evil' posture that the evidence belies."
Engoron "intends to protect the integrity of the financial marketplace and, thus, the public as a whole," he writes. "Defendants' refusal to admit error—indeed, to continue it, according to the Independent Monitor—constrains this Court to conclude that they will engage in it going forward unless judicially restrained. Indeed, Donald Trump testified that, even today, he does not believe the Trump Organization needed to make any changes based on the facts that came out during this trial."
Although Engoron says his court "is not constituted to judge morality," his outrage at Trump's financial dishonesty is palpable. That dishonesty, which is consistent with the ego-boosting lies that Trump routinely tells about matters small (e.g., the size of the crowd at his inauguration) and large (e.g., a presidential election he still insists was "rigged" by systematic fraud), is indeed striking. In this case, however, it did not result in any injuries that Trump's lenders or insurers could identify. Under New York law, Engoron says, that does not matter. But maybe it should.
The post How a New York Judge Arrived at a Staggering 'Disgorgement' Order Against Trump appeared first on Reason.com.
]]>President Joe Biden wants to remind you that your Super Bowl party was more expensive than it used to be. The reason, he claims, is corporate greed and "shrinkflation." In a social media video before Sunday night's game, he spoke of companies selling "smaller-than-usual products where the price stays the same." He opposes this behavior and is "calling on the big consumer brands to put a stop to it."
That's quite an amazing move. There's a straight line between shrinkflation, inflation, and the Biden administration's own fiscal irresponsibility.
Shrinkflation is real. It happens when companies reduce the size or quantity of their products while maintaining the same sticker price, effectively raising the real price. In this case, Biden points the finger at the snack food and sports drink industries as two main culprits. Have you noticed that your Gatorade bottle has gotten a little smaller? Does your bag of chips seem to be filled more with air than ever? It's probably not your imagination.
Still, Biden's complaint would be funny if it wasn't so sad. As Dominic Pino over at National Review explains, shrinkflation is legal if packaging accurately reflects the product's content. Also, the Food and Drug Administration regulates packaging practices like "slack fill," the main purpose of which is food preservation practices, not ensuring against smaller portions as Biden seems to claim. And yes, it's true that some sellers have reduced the contents of their packages without changing prices, but this adjustment occurred back in 2022.
Why 2022? That's the most important part.
The wave of shrinkflation came in response to the rise in inflation the country experienced starting in 2021. I am baffled that the president would make such a big deal out of it now. The administration has been trying to fool voters into conflating the fact that inflation has tempered with the idea that prices are basically back to normal. It's not the case. While inflation has declined, the price of food is up by 20 percent on average since February 2021. Chicken and bread are up 25 percent, and rents are still mightily elevated.
These higher prices explain why voters continue to express plenty of frustration about the economy despite low unemployment, positive economic growth, and rising wages.
In the end, the president's rant against companies is a weak attempt to distract us from the fact that his (and his predecessor's) excessive spending policies during the pandemic caused the inflation. My former co-worker William Beach, who used to lead the Bureau of Labor Statistics, looks at the question in detail in a new Economic Policy Innovation Center brief titled "Is Inflation the Result of Excessive Deficit Spending?"
As Beach reminds us, total federal deficits from 2020 through 2023 amounted to $8.8 trillion. These are the largest peacetime deficits in U.S. history, both in nominal terms and as a percentage of gross domestic product (GDP), and they include a lot of spending passed by Biden after most of the pandemic crisis was averted and the economy was recovering.
This influx of deficit dollars led to a 25.4 percent increase in Americans' bank assets between 2020 and 2021, translating into a significant rise in lending. Consumer loans increased by 19.2 percent, real estate loans by 12.1 percent, and total loans by 13.7 percent. This was the most substantial lending jump since the period leading up to the Great Recession. Additionally, a broad measure of the money supply grew by $5.4 trillion between March 2020 and April 2022—about a third of U.S. GDP at that time.
Beach rightfully notes that alternative explanations for inflation—such as supply chain disruptions, price gouging, and Modern Monetary Theory arguments tied to the wishful idea that government spending shouldn't concern us—aren't credible. The same goes for blaming shrinkflation on companies' greed as opposed to a government that injected the economy with excessive purchasing power and brought about an inflation crisis, leaving all of us to find ways to adjust.
The best part of Beach's report comes when he reminds us that while politicians are responsible for initiating the recent inflation, they also possess the means to stop it. Although prices might not revert to 2020 levels, Congress can enhance economic efficiency and productivity by reforming the tax code, rolling back regulations, and moving toward freer policies, potentially alleviating the family budget squeeze by raising incomes.
Congress could also finally get serious about cutting spending. That would do a lot to help the Federal Reserve tame inflation entirely. Blaming companies for inflationary price hikes is both wrong and cowardly.
COPYRIGHT 2024 CREATORS.COM.
The post Shrinkflation Is Real—and It's Largely Biden's Fault appeared first on Reason.com.
]]>In January, the Senate Judiciary Committee dragged the heads of Meta, TikTok, and X, formally known as Twitter, to Washington to charge them with exploiting children by allegedly addicting them to social media that sexually harms them, drives them to eating disorders, and even kills them. The Spanish Inquisition vibe of the proceedings reached a crescendo when Sen. Josh Hawley (R–Mo.) demanded that Mark Zuckerberg apologize to the families of children for the "harms" supposedly caused by Facebook and pay compensation out of his personal fortune.
But is social media really that bad for kids? And is the solution being pushed by Democrats and Republicans alike—universal age verification for all users of the internet—even technically feasible without shredding the First Amendment, destroying privacy, and creating major security issues? The answer is a resounding no, according to Shoshana Weissmann, director of digital media at R Street, a free market think tank, and author of "The Fundamental Problems with Social Media Age-Verification Legislation." Reason's Nick Gillespie interviewed Weissmann in Washington, D.C., in early February.
Today's sponsor:
The post Shoshana Weissmann: Online Age Verification Rules Are Unconstitutional and Ineffective appeared first on Reason.com.
]]>Happy Tuesday and welcome to another edition of Rent Free. This week's stories include:
But first, this week's lead item is a brief rebuttal to the idea that what all Americans really want is to sprawl, baby sprawl.
Urban geographer Joel Kotkin has stirred up a lot of strong feelings over the weekend with a recent essay in National Review called "Let America Sprawl"—which was published in January but started making the rounds on YIMBY Twitter over the weekend.
Kotkin argues Americans' "deep-seated preferences" are for single-family homes in the suburbs where everything is a convenient drive away. The persistent population and job sprawl of the last century is evidence enough of this preference.
Messing with America's true suburban desires, writes Kotkin, are center city-loving planners and pundits who are eagerly forcing density on existing communities and "hindering, and even prohibiting, development on the periphery…where costs tend to be lower."
This war on suburbia is ultimately a war on America's future, says Kotkin.
"Policies to force people back into denser urban areas will ensure a decline of population and ever greater dependence on undocumented workers," he writes. The sprawling suburbia of New America meanwhile "suggests an alternative shaped by popular desires for a better life."
Though Kotkin's article is light on the specific policies threatening suburbia, he's not wrong when he says there are regulatory barriers to exurban growth: literal urban growth boundaries, environmental regulations, agricultural zoning, rural multi-acre minimum lot sizes, the federal government's hoarding of western land, etc.
Absent these policies, there likely would be more, and more affordable, single-family housing.
What's so odd about Kotkin's essay is that he treats these regulations as binding, indefensible restrictions on Americans' true preferences, while criticizing efforts to liberalize equally restrictive zoning regulations as forced densification.
The contradictions of this position are endless.
If ending single-family-only zoning forces density on the suburbs, does repealing urban growth boundaries also force the suburbs on rural communities? If Americans' preference for single-family suburban housing is indeed so "deep-seated," why is it necessary to ban every other type of housing on most residential land?
Much of the evidence Kotkin cites for Americans' suburban preferences could also be easily interpreted as evidence of regulation forcing Americans out of the urban areas they really want to live in.
Kotkin writes that "those running California managed to create a situation where housing prices have soared, even as the state has lost population." He also says that people are moving to the exurbs where "costs tend to be lower."
People moving away from high-priced housing in dense urban areas is more obviously interpreted as evidence of a regulation-induced shortage, not a collapse in demand for urban living. Urban Californian home prices couldn't stay so high if no one wanted to live there. When restrictions on density are repealed, builders respond by building a lot of housing.
If you're interested in a deeper dive, Reason published a debate on this very topic between myself and demographer Wendall Cox last year.
At the end of the day, I think this whole argument is a bit of a waste of breath for anyone who doesn't want to force people to live a certain way.
We don't need policy wonks to figure out whether Americans really want large-lot, single-family homes in the suburbs, a high-rise apartment downtown, or anything in between.
Free markets do a pretty good job of sorting out people's preferences without lots of white papers and magazine columns. It's why we don't need endless articles at National Review and Reason about whether Americans prefer Coke or Pepsi.
Of course, we haven't left markets (i.e. individuals) to figure housing out on their own. Instead, we've applied layer after layer of red tape on both urban infill development and suburban single-family home construction. (The messy reality is we also subsidize both types of housing.)
With that red tape removed, people could more easily decide for themselves what kind of housing they want and builders could construct whatever buyers and renters are actually willing to pay for. Odds are they will end up choosing more of both.
Child tax credits and small business tax relief are dominating most of the discussion of the $78 billion tax bill passed by a solid bipartisan majority in the House of Representatives last week.
Less covered is the bill's expansion of the federal government's primary program for subsidizing affordable housing construction: the Low-Income Housing Tax Credit (LIHTC) (pronounced Lie-Tech) program.
Through LIHTC, the federal government gives states tax credits that they then gift to developers of low-income housing. Developers will sell these credits in exchange for cash or equity in their housing projects.
There are two types of LIHTC credits: a generous credit that mostly subsidizes new construction and a less generous credit typically used to subsidize rehabilitation projects.
The House's tax bill increases every state's allocation of the more generous new construction credits by 12.5 percent. The bill also reduces how many tax-exempt bond projects need to be used to qualify for the less generous credits, expanding the program's ability to subsidize rehabilitation projects.
LIHTC builders are happy about the changes, which restore some cuts made to the program in 2021.
"This would be the most meaningful expansion of investment in affordable housing in decades," says Emily Cadik of the Affordable Housing Tax Credit Coalition. "We have these shovel-ready developments that, if states were given a little more allocation or didn't have to put so many bonds into one project, would be able to move forward right away."
Critics of LIHTC have long argued that the program's complicated financing mechanisms and voluminous regulations are a wasteful and indirect means of subsidizing affordable housing.
"Research indicates that the benefits of the Low-Income Housing Tax Credit (LIHTC) program primarily flow to developers, rather than low-income tenants," said the Cato Institute's Vanessa Brown Calder to the Senate Banking Committee last year. Brown Calder recommended eliminating LIHTC in favor of direct subsidies to the lowest low-income renters.
Portland's "inclusionary housing" policy has been a poster child for all sorts of unintended consequences. Housing advocates are hoping recent changes to the program will transform it into a model affordability policy for other cities to follow.
In 2016, Portland created the "inclusionary housing" policy requiring builders of projects with 20 or more units to make at least 10 percent of those units affordable to lower-income renters.
Forcing developers to give away some of their units at money-losing discounts will obviously make them less likely to build. That's been the record of "inclusionary zoning" policies the country over.
To try and avoid a predictable collapse in new construction, Portland's inclusionary housing program paired its affordability mandates with property tax abatements meant to make developers whole.
But "late in the process in 2016, it came to light that there wasn't going to be enough tax abatement to offset everybody's costs," says Michael Andersen of the Sightline Institute.
To split the baby, the city offered tax abatements on all units built by developers only in the high-cost central city. But outside the central city developers could only claim tax abatements on the affordable units they were being forced to build. That partial tax offset proved fatal for a lot of projects.
"It had a massive effect. It was implemented when we were top of market, so land prices were high, construction [costs] were escalating, projects were already starting to get tight on underwriting," says Paul Del Vecchio, president of Ethos Development. "It was the final straw."
Some developers rushed through applications before the program went into effect. A few cut the size of their project to under 20 units. Inevitably, a lot of projects also just ended up not happening, as reflected in tumbling permitting numbers within Portland and increasing construction outside of it.
A program intended to improve housing affordability ended up cutting rates of new housing production.
To right this wrong, the city convened a panel and hired a consultant to study fixes to the program. On Wednesday, they passed recommended updates to the program that allow projects citywide to claim tax abatements on all the units their units.
Andersen says fully subsidizing developers to include some affordable units in market-rate projects is cheaper for taxpayers than the city issuing bonds to finance all-affordable projects.
"This is a pretty significant step forward in my opinion toward feasibility for projects outside the central city that might not have been feasible previously," says Sarah Zahn, a developer with SEC Properties, who was on the city's inclusionary housing panel.
Other developers are less bullish.
Del Vecchio, who was also on the city's advisory panel, says that expanded tax credits will help more projects pencil. But some capital will still flow to other jurisdictions that don't have affordability mandates. Inclusionary housing still ends up placing a lot of low-income people in need of particular services in market-rate buildings where they're not provided, he adds.
"Low-income people aren't getting the services they need and the city isn't getting the equity it needs," he says.
Last week, the California Court of Appeals ruled against Malibu, California's restrictions on accessory dwelling units (ADU) in a case litigated by the Pacific Legal Foundation.
It's a mopping-up action in California's successful war on local granny flat bans. State reforms since 2016 have turned annual ADU construction from a rounding error into a quarter of the state's new housing.
Now, the Golden State is spreading its ADU revolution nationwide. This year, bills have been introduced in Nebraska, Virginia, Massachusetts, Kentucky, and Colorado that would allow ADUs on all residential land and preempt some ADU regulations.
Most are pretty good, but Nebraska's might be the best of the bunch. It legalizes ADUs of 1,000 square feet (or 75 percent of the primary if that's less) while prohibiting localities from imposing parking mandates, design requirements, impact fees, owner-occupancy requirements, and setback, height, and lot size regulations that are tougher than what's applied to single-family homes. If a municipality doesn't pass a law incorporating these standards into its zoning code by 2025, state standards automatically kick in.
This is a pretty airtight preemption that bans all the typical local regulations that can thwart ADUs. It's also a standalone, single-subject bill. That reflects the lesson from last year's legislative sessions that housing bills do best when they're kept simple.
Massachusetts' and Kentucky's ADU bills are part of larger housing logroll bills that have a pretty poor track record. Everyone finds something to not like about them.
Colorado's bill still allows localities to charge ADU builders impact fees, which can be ruinous for new construction. It also comes with subsidies for ADU construction. California's experience shows you can get a lot of new ADUs at zero expense to the taxpayer.
Virginia had a pretty decent ADU bill introduced. It appears that good, initial version took a beating in its first committee hearing, and has been amended to still allow local governments to require ADUs to have off-street parking, and be owner-occupied.
The post Do Americans Really Only Want Sprawl? appeared first on Reason.com.
]]>The Drug Enforcement Administration (DEA) is considering whether it will reclassify marijuana under the Controlled Substances Act (CSA), as the Department of Health and Human Services (HHS) recommended last August. This week a dozen Democratic senators recommended that the DEA go further by completely removing marijuana from the CSA's schedules. Their argument is sound as a matter of policy but legally shaky because the CSA incorporates international treaty obligations in a way that bars the DEA from taking that step.
Since 1970, marijuana has been listed in Schedule I of the CSA, a category supposedly reserved for substances with "a high potential for abuse" that have "no currently accepted medical use" and cannot be used safely even under a doctor's supervision. The DEA has consistently rejected petitions asking it to reclassify marijuana, citing advice from HHS. But last August, in response to an October 2022 directive from President Joe Biden, who said marijuana's Schedule I status "makes no sense," HHS reversed its longstanding position.
Departing from the DEA's usual approach, HHS took into account clinical experience with marijuana in the 38 states that allow medical use, scientific evidence in support of certain therapeutic applications, and the relative hazards of marijuana compared to "other drugs of abuse." It noted that "the vast majority of individuals who use marijuana are doing so in a manner that does not lead to dangerous outcomes to themselves or others." HHS concluded that the DEA should move marijuana to Schedule III, which includes prescription drugs such as ketamine, Tylenol with codeine, and anabolic steroids.
For good reason, Sen. Elizabeth Warren (D–Mass.), Sen. John Fetterman (D–Pa.), and 10 of their colleagues, including Senate Majority Leader Chuck Schumer (D–N.Y.), think that change does not go far enough. Rescheduling marijuana, they say in a letter they sent to Attorney General Merrick Garland and DEA Administrator Anne Milgram on Monday, "would mark a significant step forward" but "would not resolve the worst harms of the current system." They urge the DEA to "deschedule marijuana altogether," noting that its prohibition "has had a devastating impact on our communities and is increasingly out of step with state law and public opinion."
Unsurprisingly, that recommendation was welcomed by drug policy reformers. But it goes beyond what the CSA authorizes the DEA to do.
Generally speaking, the CSA gives the attorney general the authority to schedule, reschedule, and deschedule drugs in consultation with HHS. The attorney general historically has delegated that function to the DEA, which is part of the Justice Department. But the CSA includes an explicit limitation on the executive branch's discretion that complicates any attempt to unilaterally deregulate marijuana.
"If control [of a subtance] is required by United States obligations under international treaties, conventions, or protocols in effect on October 27, 1970," Section 811(d)(1) of the CSA says, "the Attorney General shall issue an order controlling such drug under the schedule he deems most appropriate to carry out such obligations" (emphasis added). In that situation, the decision to place or keep a drug in one of the CSA's schedules is mandatory, and it is to be made "without regard" to the "findings" and "procedures" ordinarily required to schedule a substance.
The United States is a signatory to the U.N. Single Convention on Narcotic Drugs of 1961, which requires strict control of cannabis. "If a Party permits the cultivation of the cannabis plant for the production of cannabis or cannabis resin," it says, "it shall apply thereto the system of controls" specified for "the control of the opium poppy." The treaty does not apply to "the cultivation of the cannabis plant exclusively for industrial purposes," and it allows regulated medical use, as with opiates. But the obligations it imposes, which restrict the DEA's scheduling decisions under the CSA, are inconsistent with decontrolling marijuana and treating it like alcohol and nicotine.
Warren et al. acknowledge the problem raised by the interaction between the CSA and the Single Convention. In 2016, they note, "the DEA considered its international treaty obligations a bar to rescheduling marijuana to anything less restrictive than Schedule II." But since then, they say, "cannabis has been rescheduled under international law—a change that the United States and the World Health Organization supported, in light of 'the legitimate medical use' of certain cannabis products."
In 2020, the senators note, cannabis was removed from the Single Convention's "most restrictive schedule" (confusingly, Schedule IV). It remains in a category (also confusingly, Schedule I) that "requires countries to limit the drug's use to only 'medical and scientific purposes.'" But "deschedul[ing] marijuana altogether," as the senators are urging the DEA to do, would flout that requirement. In addition to "cannabis and cannabis resin," the Single Convention's Schedule I includes drugs such as opium, heroin, fentanyl, morphine, hydrocodone, oxycodone, and cocaine, all of which are listed in the CSA's Schedule I or Schedule II.
In support of their argument that treaty obligations are not an obstacle to administrative descheduling of marijuana, the senators cite a September 2023 legal analysis by the Boston-based law firm Foley Hoag. But that analysis actually undermines Warren et al.'s argument.
Foley Hoag notes that the Single Convention requires signatories to "tightly control cannabis, most similarly to the CSA's Schedule I or Schedule II." The main issue, it emphasizes, is not what the treaty demands but what the CSA allows.
"Several commentators have largely dismissed concerns regarding the Attorney General's ability (via the DEA) to reschedule cannabis below Schedule II," Foley Hoag notes. "After all, we've already violated it through our permissive approach to states' rights to establish and regulate their own medical and adult-use markets. Moreover, several signatories to the UN Single Convention (including Canada, Mexico, Uruguay, Luxembourg, South Africa, Thailand, and others) have legalized adult use cannabis or have otherwise decriminalized possession and/or home cultivation in clear violation of the Single Convention. After all, the Single Convention seems to lack any enforcement mechanism. So, it's no big deal, right? RIGHT?"
Wrong, Foley Hoag says: "Treaty compliance is not the issue. At least not the primary issue. The issue is compliance with domestic law. The key question is whether the Attorney General, via the DEA, can or will be able to reschedule cannabis to Schedule III given that the UN Single Convention is effectively incorporated into the CSA—a federal statute passed by Congress that the Executive Branch must follow."
Back in 1977, Foley Hoag notes, the U.S. Court of Appeals for the D.C. Circuit emphasized that Section 811(d)(1) "circumscribes the Attorney General's scheduling authority." That provision "enables him to place a substance in a CSA schedule—without regard to medical and scientific findings—only to the extent that placement in that schedule is necessary to satisfy United States international obligations," the appeals court said. "Had the provision been intended to grant him unlimited scheduling discretion with respect to internationally controlled substances, it would have authorized him to issue an order controlling such drug 'under the schedule he deems most appropriate,'" full stop.
Note that Foley Hoag was addressing the issue of whether the DEA can legally move marijuana to Schedule III. The objections it raises apply with even more force to the question of whether the DEA can "deschedule marijuana altogether."
In a 2020 brief asking the U.S. Court of Appeals for the 9th Circuit to overrule the DEA's position that marijuana belongs in Schedule I, attorneys Matthew Zorn and Shane Pennington argued that the CSA violates the constitutional separation of powers. The statute "transfers a quintessential legislative power—the power to execute treaties—to the Attorney General," they wrote. And in doing so, they said, it fails to provide an "intelligible principle to choose among schedules," as required by the Supreme Court's delegation precedents. "The Attorney General has no discretion to override the floor dictated by an unelected international body," Zorn and Pennington noted. "But he has unfettered discretion to schedule above that point. Even if these two handoffs could stand independently, together they plainly violate established Separation of Powers norms."
Even as they argued that the CSA is unconstitutional in these respects, Zorn and Pennington conceded that the attorney general "has no discretion" under the statute to ignore the Single Convention's demands. In fact, their constitutional argument hinged on that point.
Zorn still does not see how the DEA can do what Warren et al. are asking without violating the CSA. "This is like asking the President to jump 20 feet in the air," he says in an email.
The senators are right that moving marijuana to Schedule III would leave many problems unresolved. That step would facilitate medical research by removing regulatory requirements that are specific to Schedule I. It also would relieve a crippling tax burden on state-licensed marijuana businesses under Section 280E of the Internal Revenue Code. But those businesses would remain criminal enterprises in the eyes of the federal government, subject to felony charges and civil forfeiture—consequences they currently avoid only thanks to prosecutorial discretion and an annually renewed congressional spending rider that is limited to medical marijuana. They would still have difficulty obtaining financial services from institutions that are keen to avoid the risk of civil, regulatory, and criminal penalties.
Placing marijuana in Schedule III would not even make it legally available as a prescription medicine, which would require approval of specific products that meet the Food and Drug Administration's onerous requirements for proving safety and efficacy. Nor would it restore the Second Amendment rights of cannabis consumers, who would still be barred from possessing firearms as "unlawful user[s]" of a controlled substance. And as Warren et al. note, "non-citizens could still be denied naturalization and green cards, and even deported, based on most marijuana offenses."
The only way to solve all of these problems is to repeal the federal ban on marijuana—a move that 70 percent of Americans favor, according to the latest Gallup poll. But the power to do that lies with Congress, not the DEA.
The post 12 Senators Urge the DEA To Legalize Marijuana, Which Only Congress Can Do appeared first on Reason.com.
]]>Argentina actually elected a libertarian president.
Javier Milei campaigned with a chainsaw, promising to cut the size of government.
Argentina's leftists had so clogged the country's economic arteries with regulations that what once was one of the world's richest countries is now one of the poorest.
Inflation is more than 200 percent.
People save their whole lives—and then find their savings worth nearly nothing.
They got so fed up they did something never done before in modern history: They elected a full-throated libertarian.
Milei understands that government can't create wealth.
He surprised diplomats at the World Economic Forum this month by saying, "The state is the problem!"
He spoke up for capitalism: "Do not be intimidated by the political caste or by parasites who live off the state…. If you make money, it's because you offer a better product at a better price, thereby contributing to general well-being. Do not surrender to the advance of the state. The state is not the solution."
Go, Milei! I wish current American politicians talked that way.
In the West, young people turn socialist. In Argentina, they live under socialist policies. They voted for Milei.
Sixty-nine percent of voters under 25 voted for him. That helped him win by a whopping 3 million votes.
He won promising to reverse "decades of decadence." He told the Economic Forum, "If measures are adopted that hinder the free functioning of markets, competition, price systems, trade, and ownership of private property, the only possible fate is poverty."
Right.
Poor countries demonstrate that again and again.
The media say Milei will never pass his reforms, and leftists may yet stop him.
But already, "He was able to repeal rent controls, price controls," says economist Daniel Di Martino in my new video. He points out that Milei already "eliminated all restrictions on exports and imports, all with one sign of a pen."
"He can just do that without Congress?" I ask.
"The president of Argentina has a lot more power than the president of the United States."
Milei also loosened rules limiting where airlines can fly.
"Now [some] air fares are cheaper than bus fares!" says Di Martino.
He scrapped laws that say, "Buy in Argentina." I point out that America has "Buy America" rules.
"It only makes poor people poorer because it increases costs!" Di Martino replies, "Why shouldn't Argentinians be able to buy Brazilian pencils or Chilean grapes?"
"To support Argentina," I push back.
"Guess what?" Says Di Martino, "Not every country is able to produce everything at the lowest cost. Imagine if you had to produce bananas in America."
Argentina's leftist governments tried to control pretty much everything.
"The regulations were such that everything not explicitly legal was illegal," laughs Di Martino. "Now…everything not illegal is legal."
One government agency Milei demoted was a "Department for Women, Gender and Diversity." DiMartino says that reminds him of Venezuela's Vice Ministry for Supreme Social Happiness. "These agencies exist just so government officials can hire their cronies."
Cutting government jobs and subsidies for interest groups is risky for vote-seeking politicians. There are often riots in countries when politicians cut subsidies. Sometimes politicians get voted out. Or jailed.
"What's incredible about Milei," notes Di Martino, "is that he was able to win on the promise of cutting subsidies."
That is remarkable. Why would Argentinians vote for cuts?
"Argentinians are fed up with the status quo," replies Di Martino.
Milei is an economist. He named his dogs after Milton Friedman, Murray Rothbard, and Robert Lucas, all libertarian economists.
I point out that most Americans don't know who those men were.
"The fact that he's naming his dogs after these famous economists," replies Di Martino, "shows that he's really a nerd. It's a good thing to have an economics nerd president of a country."
"What can Americans learn from Argentina?"
"Keep America prosperous. So we never are in the spot of Argentina in the first place. That requires free markets."
Yes.
Actually, free markets plus rule of law. When people have those things, prosperity happens.
It's good that once again, a country may try it.
COPYRIGHT 2024 BY JFS PRODUCTIONS INC.
The post Argentina, Once One of the Richest Countries, Is Now One of the Poorest. Javier Milei Could Help Fix That. appeared first on Reason.com.
]]>Vertex Pharmaceuticals is trumpeting the results of clinical trials indicating that VX-548, its new, non-opioid analgesic, is effective at relieving post-surgical pain. While there is nothing wrong with offering patients and doctors another option for treating acute pain, the Phase 3 trials found that VX-548 was no more effective than a combination of hydrocodone and acetaminophen in relieving pain after tummy tucks and less effective for patients who had bunions removed.
As a new drug under patent, VX-548 is bound to be much more expensive than generic versions of Vicodin, and its main selling point seems to be based on a gross exaggeration of that familiar drug's addictive potential. The introduction of VX-548 therefore could reinforce myths about the risks of prescription opioids and encourage the government's misguided and heavy-handed crackdown on those medications.
"People who are suffering from severe pain but don't want to risk addiction to an opioid are closer to a new option for treatment," The Wall Street Journal reports. The Journal claims "opioids are highly addictive," which is not true by any reasonable measure.
A 2018 BMJ study of 568,612 patients who took prescription opioids following surgery found that 5,906, or 1 percent, showed documented signs of "opioid misuse" during the course of the study, which included data from 2008 through 2016. The outcome measure that the researchers used, "opioid dependence, abuse, or overdose," is a broad category that includes patterns of use falling short of what most people would recognize as addiction. That suggests the actual addiction rate in this study probably was less than 1 percent, although it's not clear how much less. The authors noted that "overall rates of misuse were low."
Estimates of addiction rates among patients who take opioids for longer periods of time tend to be higher but still lower than the phrase "highly addictive" suggests. A 2010 analysis in the Cochrane Database of Systematic Reviews found that less than 1 percent of patients taking opioids for chronic pain experienced addiction. A 2012 review in the journal Addiction likewise concluded that "opioid analgesics for chronic pain conditions are not associated with a major risk for developing dependence."
In a 2016 New England Journal of Medicine article, Nora Volkow, director of the National Institute on Drug Abuse, and A. Thomas McLellan, a former deputy director of the Office of National Drug Control Policy, reported that "rates of carefully diagnosed addiction" in chronic pain patients averaged less than 8 percent. In general, they observed, "addiction occurs in only a small percentage of persons who are exposed to opioids—even among those with preexisting vulnerabilities." In 2021, a California judge who examined the relevant evidence likewise estimated that the addiction rate among patients was "less than 5%."
Even a low risk is still a risk, of course, and doctors might prefer to avoid it by prescribing a drug like VX-548. But they should not pretend there are no tradeoffs in terms of cost and effectiveness. The problem is that the government has systematically biased such decisions by discouraging doctors from prescribing opioids in the name of preventing substance abuse.
In response to an increase in opioid-related deaths during the first decade of this century, state and federal officials sought to reduce the prescription of analgesics like hydrocodone and oxycodone. Those efforts included increased scrutiny of doctors' prescribing practices, raids of clinics identified (rightly or wrongly) as "pill mills," federal pain treatment guidelines, statutory and regulatory limits, and restrictive policies imposed by insurers, pharmacists, and medical facilities under government pressure.
That campaign succeeded in reducing opioid prescriptions, which fell by 44 percent from 2011 to 2020. But it left many patients to suffer needlessly as doctors became increasingly reluctant to prescribe the medication they needed to relieve their pain, and it did not succeed in reducing the number of opioid-related deaths.
To the contrary, the upward trend that prompted the anti-opioid campaign not only continued but accelerated. The opioid-related death rate, which doubled between 2001 and 2010, nearly tripled between 2011 and 2020. In 2021, the Centers for Disease Control and Prevention counted more than 80,000 opioid-related deaths, nearly four times the number in 2010.
What went wrong? Restrictions on opioid prescribing pushed nonmedical users toward black-market substitutes that were much more dangerous because their composition was highly variable and unpredictable. That hazard was compounded by the rise of illicit fentanyl, which likewise was driven by efforts to enforce drug prohibition. Fentanyl, which is 30 to 50 times more potent than heroin, appeals to drug traffickers because it is much cheaper to produce and much easier to conceal. Nowadays it is showing up not just in powder sold as heroin but also in ersatz pain pills that resemble the medications that the government has made harder to obtain, with predictably deadly consequences.
Bona fide pain patients, meanwhile, were left in the lurch as physicians began to see them as a threat to their licenses, livelihoods, and liberty. The horrifying fallout included undertreatment, abrupt dose reductions, patient abandonment, and unrelieved pain severe enough to result in suicides. This is what happens when the government insists that doctors prioritize prevention of opioid abuse above patient welfare and their own medical judgments. Patients paid the price of policies that manifestly failed to reduce opioid-related deaths and instead had the opposite effect.
The availability of non-opioid analgesics like VX-548 should expand pain treatment choices. But in the current political context, it is apt to limit choices instead, reinforcing propaganda and policies that discourage the use of opioids even when they are medically appropriate.
The post A New Pain Medication Could Reinforce the Disastrous Crackdown on Prescription Opioids appeared first on Reason.com.
]]>If you need more evidence that America has become a "permission-slip" society, look no further than the City of Portland, Oregon, requiring homeowners to get permits to remove trees that've fallen on their houses during recent winter storms.
Portland alt-weekly Willamette Week published a story last week about Joel and Sarah Bonds, who had a large Douglas Fir in the backyard squash their house after it became weighed down with ice. The tree barely missed the Bonds' young daughter and cat.
As it turns out, the couple were not unaware of the danger posed by the tree. In 2021, they'd applied for a necessary city permit to cut down the tree and another in their backyard. The city's Urban Forestry division turned them down, citing the trees' apparent health and the damage their removal would do to the "neighborhood character."
That decision rankles the Bonds now. Making them even more mad is the fact that the city is requiring them to obtain a $100 retroactive removal permit for the one tree that fell on their house and plant a new one in its place at their own expense.
A Forestry Department employee also advised them to hire an arborist to chop down the second, still-standing tree, but that they should take care to document the work in case they'd need to apply for another removal permit. According to the Willamette Week story, the couple could risk daily $1,000 fines for removing the tree without a permit.
The Bonds aren't the only homeowners being required to get retroactive removal permits for trees knocked down by the weather. This fact has provoked local outrage and calls for a change in policy.
A recent Oregonian editorial argues that the city should suspend the need to get retroactive removal permits for weather-downed trees, noting that neighboring cities in the area are not requiring such permits. One lawyer who spoke to the paper argued that the city code doesn't obviously apply to trees felled by bad weather.
The city maintains that the removal permits are required by the city code and that city council action is needed to waive those permitting requirements.
The whole episode is an illustration of how property rights have been turned on their head in America's cities. The city regulates tree removal to protect surrounding property owners' interest in the shade and character of the neighborhood. Homeowners' interests in doing what they please on their land are of secondary concern, even though they have to bear all costs and liabilities associated with keeping these trees on their properties.
The post Portland Requires Homeowners Get Permits To Remove Trees Knocked on Their Homes by Winter Storm appeared first on Reason.com.
]]>In October 2022, San Francisco raised eyebrows when the city budgeted $1.7 million for a single-stall public restroom in the city's Noe Valley neighborhood. The high price tag, according to city officials, was due to the steep price of construction in San Francisco, as well as remaining supply chain issues.
But the state stepped in shortly after, scrapping the planned bathroom after outrage spread over its high cost to taxpayers. Fifteen months later, the public plaza where the restroom was originally planned still doesn't have a place to pee—and it doesn't look like it will get one any time soon.
"Why isn't there a toilet here? I just don't get it. Nobody does," one resident told The New York Times last week. "It's yet another example of the city that can't."
San Francisco has the most expensive construction costs in the world—and it's hardly surprising. In order to build a public bathroom in Noe Valley, at a location that already had the necessary plumbing to add a restroom, builders would have to pass a dizzying number of regulatory stops. These include seeking approval from the Arts Commission's Civic Design Review committee, passing review under the California Environmental Quality Act, and getting the go-ahead from the city's Rec and Park Commission and San Francisco's Board of Supervisors. If that isn't enough, the project would also be subject to a period of "community feedback."
Even after gaining approval, the city wouldn't be free to simply find the cheapest acceptable bathroom—likely a pre-fabricated option—and connect it to city plumbing. According to a 2022 San Francisco Chronicle article, pre-fabricated bathrooms violate the city's Public Labor Agreement. Adding to costs, the city would also be required to use union labor to construct the bathroom.
While the $1.7 million price tag was rightfully criticized, should the project have been allowed to go forward, the budget might not have been an overestimate. San Francisco's regulatory burden on new construction—even something as simple as a single-stall bathroom—is just that high.
Even San Francisco's own government has conceded that the Noe Valley bathroom fiasco was a sign that the city has too much regulation. "It's worth changing the laws that are in place around construction projects like the restroom that slow things down," a spokesperson for Mayor London Breed told the Times.
But this is far from the first time that local governments have earmarked absurdly large sums of money to pay for public bathrooms. In 2017, New York City spent $2 million on a public park bathroom. And last year, Philadelphia caused controversy when it announced that it would spend $1.8 million on six modular Portland Loo bathrooms over the next five years—a model that cities across the country have spent millions on in recent years.
The post California Stopped San Francisco's $1.7 Million Toilet. The City Can't Build Something Cheaper. appeared first on Reason.com.
]]>When it comes to identifying America's most ridiculous and nonsensical alcohol law, there are many ignominious candidates to choose from. But Virginia's infamous food-beverage ratio certainly deserves a spot on any list of the dumbest drink laws in the country. A plucky coterie of Virginia policy makers has sought to reform the commonwealth's beverage ratio for years, only to run into a buzzsaw of special interest cronyism. But suddenly there is hope for boozy freedom.
Virginia's food-beverage ratio mandates that restaurants earn $45 in food sales for every $55 they take in selling liquor-based drinks. This may sound innocuous at first, but it has the effect of making establishments like elite cocktail lounges or high-end whiskey bars—which often offer scotch pours costing upwards of a thousand dollars—nearly impossible to operate in the commonwealth. After all, it takes a lot of food sales to offset a single $2,000 shot of Macallan M under the ratio. The rule also creates burdensome record-keeping requirements for restaurants, who are forced to prove they have not violated the ratio each year.
The provenance of Virginia's ratio (at least spiritually) traces back to the Prohibition era, when it was, of course, illegal for any restaurant to sell alcohol. In 1968, the state Legislature passed the Mixed Beverage Act, which stipulated that restaurants could not make more money from booze than food. The law underwent several iterations in the 1980s and '90s before reaching its current 45–55 ratio. Bizarrely, in the 1990s, beer and wine were arbitrarily exempted from counting toward the ratio, meaning it has only applied to liquor sales since that time.
The upshot is that a craft brewery in Virginia can sell as much beer as it wants—even booze-bomb Imperial IPAs—without so much as a trace of food on the premise, while a cocktail lounge that specializes in, say, gourmet hot dogs and sophisticated drinks might have trouble even opening in the first place. This makes little sense given that defenders of the law argue that the point of the ratio is to reduce the potential level of intoxication among patrons of drinking establishments.
Some of the lawmakers defending the ratio even went so far as to invoke the language of Prohibition, such as then-Senate Minority Leader Richard Saslaw (D–Fairfax County) growling in 2015: "If you can't meet that ratio, you ain't running a restaurant, you are running a bar. If you want saloons in Virginia, say so." Opponents painted a doomsday picture of "bars on every corner" of the commonwealth—all while conveniently overlooking neighboring Washington, D.C., which does not have a ratio or a saloon epidemic.
If anything, the ratio is actually more likely to incentivize lower-end "saloons" or "gin mills" at the expense of the aforementioned high-end cocktail lounges and whiskey bars. Once again, that's because it is a lot easier to meet the ratio by selling $4 rail drinks with rotgut spirits than by selling $350 pours of Pappy Van Winkle. During state budget shortfalls in the past, lawmakers have further compounded the problem by increasing the costs of liquor at state-run Alcoholic Beverage Control (ABC) stores to raise more revenue, which in turn forces restaurants to increase food prices to account for this increase in liquor prices. In this way, the ratio even impacts nondrinkers by acting as a form of stealth taxation on food in the commonwealth.
Unsurprisingly, the real reason the ratio persists is that an influential group of Richmond restaurateurs has heavily lobbied the state Legislature for years to keep it in place. Rather than being motivated by altruistic concerns over protecting the public from the purported terrors of saloons, these business owners are actually worried about upstart competitors like speak-easies and cocktail bars—which are becoming increasingly popular amid the ongoing craft spirit boom—from undercutting their bottom line.
This protectionist influence has acted as an iron curtain repelling repeated efforts to change or modify the ratio. But just when it appeared all hope was lost for fixing the ratio, a recent reform bill suddenly started flying through legislative committees and has now improbably passed the state Senate unanimously. The unexpected success of this reform effort seems to be attributable to turnover in the Legislature and the retirement of old-guard senators like Saslaw.
Should the legislation also clear the House of Delegates and make it to Gov. Glenn Youngkin's desk, it would reduce the food-beverage ratio from 45–55 to 35–65 for restaurants with monthly food sales below $10,000, and it would outright eliminate the ratio for restaurants exceeding that threshold. Ideally, the ratio would be axed for all establishments, regardless of their monthly food sales—especially given that beer and wine sales are already unlimited in Virginia.
Outright elimination of the ratio may have to wait for a future time, but Virginia is on the precipice of at least severely kneecapping one of the worst laws in its code book. If it does, it will serve as an all-too-rare example of free market champions finally outlasting the protectionists.
The post Virginia May Finally Fix a Dumb Drink Law appeared first on Reason.com.
]]>Alexander Cheung's nine-year-old son has autism and ADHD. He struggled socially and emotionally in public school both in California and after the family moved to Liberty, Utah. After researching the benefits neurodivergent kids get from being in nature, Cheung started the Wilderland Academy, an outdoor microschool for self-directed learners. But then he tried to build a small building on land a community member was letting them use.
"[The county] would send us a question, or say we need more information," Cheung tells Reason. "And then they would take four to eight weeks to get back to us with an answer."
The estimated cost to check every box and build the building? Anywhere from $500,000 to $1 million, just for a 1,000-square-foot building.
That's why Cheung and other education entrepreneurs are supporting Senate Bill 13 in Utah, which is currently moving through the legislature. It would treat microschools as Group B buildings, meaning they would have similar health and safety requirements as dance studios or other places where kids do extracurricular activities. It would also permit microschools in all zones. No longer would they legally need an extensive $100,000 fire suppression system, four bathrooms, and a commercial kitchen.
Many people know microschools as learning pods that grew in popularity during the COVID-19 pandemic. But microschools can be any education set-up that serves a small group of students. They can give a classical education, be more student-directed, or have flexible schedules to accommodate homeschoolers or neurodivergent learners.
Jon England, an education policy analyst at the Utah-based Libertas Institute, believes zoning commissions are trying to do what's right. But microschools are so new they can be difficult to categorize into existing categories.
"You show up to a city. And you say, 'Hey, I have this thing. It's not really a school.…It's not a tutoring center necessarily,'" England tells Reason. "It's not any of these things that fit into the boxes that government bureaucrats look at. And so a lot of times cities are just like, 'We don't know what this is, so, no, you can't come into our city.'"
It's unclear how many microschools exist in Utah because new ones keep popping up, but England estimates there are more than 100 everywhere from big cities to rural towns.
England says most education entrepreneurs are not millionaires, but former public school teachers like him: "That's probably like 60 to 70 percent of them. The other ones are parents."
"We put 10 kids into a church classroom with one adult that could teach the Bible on Sunday. But if you teach them math or science on Monday through Friday, they are now violating those buildings' occupancy standards," England says. "They are safe buildings. Most of them already have sprinklers….They have multiple exits. They have multiple bathrooms in the building already. But when you add that extra layer from the educational occupancy, you start to get a lot more requirements that don't make sense with the smaller school population."
If the legislation passes, cities could still regulate aspects like traffic or parking. The number of students in a microschool home would also be capped at 16, with up to 100 students allowed in a microschool based in a commercial building.*
While prospective microschool families and leaders wait for the regulatory relief of Senate Bill 13, Cheung told the Utah Senate Education Committee the difference his microschool has already made: "We have seen our son and many other children in our microschool transform from someone who resisted going to school to someone who can't wait to get there and often doesn't want to leave."
*CORRECTION: This article previously misstated the number of students allowed in microschool settings under Senate Bill 13.
The post Microschool Parents Zoned Out of Operation appeared first on Reason.com.
]]>Under a doctrine established in the 1984 case Chevron v. Natural Resources Defense Council, courts defer to a federal agency's "permissible" or "reasonable" interpretation of an "ambiguous" statute. As became clear during oral arguments in two Supreme Court cases challenging Chevron deference on Wednesday, that principle poses several puzzles, starting with the meaning of ambiguous.
At least four justices—Clarence Thomas, Samuel Alito, Neal Gorsuch, and Brett Kavanaugh—have criticized the doctrine for allowing bureaucrats to usurp a judicial function, and their skepticism was clear from the questions they posed to Solicitor General Elizabeth Prelogar. Only three justices—Elena Kagan, Sonia Sotomayor, and Ketanji Brown Jackson—were clearly inclined to stick with a rule that in practice empowers agencies to rewrite the law and invent their own authority.
The two cases, Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, both involve the question of whether herring fishermen can legally be forced to subsidize the salaries of on-board observers who monitor compliance with fishery regulations. The relevant statute explicitly authorizes the collection of such fees, within specified limits, from a few categories of fishing operations, but those categories do not include the New Jersey and Rhode Island businesses that filed these lawsuits.
Under Chevron, Prelogar argued, the National Marine Fisheries Service has the discretion to fill the "gap" left by congressional silence. The lawyers representing the plaintiffs, former Solicitor General Paul Clement and Washington, D.C., attorney Roman Martinez, argued that such deference violates due process, the separation of powers, and the rule of law by systematically favoring the executive branch's interpretation of any statute that might be viewed as "silent or ambiguous" on a point of contention between federal agencies and the people who have to deal with them.
"There is no justification for giving the tie to the government or conjuring agency
authority from silence," Clement said during his opening statement in Loper Bright. "Both the [Administrative Procedure Act] and constitutional avoidance principles call for de novo review, asking only what's the best reading of the statute. Asking, instead, 'is the statute ambiguous?' is fundamentally misguided. The whole point of statutory construction is to bring clarity, not to identify ambiguity." That approach, he added, is "unworkable" because "its critical threshold question of ambiguity is hopelessly ambiguous."
Gorsuch, who has been notably critical of the Chevron doctrine as a justice and an appeals court judge, and Kavanaugh, another critic of the precedent, zeroed in on that last point while questioning Prelogar during oral arguments in Relentless. "How would you define ambiguity?" Kavanaugh asked. "How would you, if you were a judge, say, 'yes, this is ambiguous' or 'no, that's not ambiguous'?"
Prelogar's response: "A statute is ambiguous when the court has exhausted the tools of interpretation and hasn't found a single right answer." She said judges should ask, "Did Congress resolve this one? Do I have confidence that actually I've got it, [that] I understand what Congress meant to say in this statute?" Applying that approach, she said, a court might conclude that "the right way to understand this statute is that it's conferring discretion on the agency to take a range of permissible approaches."
Kavanaugh asked Prelogar if she thought "it's possible for a judge to say, 'The best reading of the statute is X, but I think it is ambiguous, and, therefore, I'm going to defer to the agency, which has offered Y.'" When she said no, Kavanaugh was openly incredulous: "That can't happen? I think that happens all the time."
In response, Prelogar said "there are two different ways in which courts use the term 'best interpretation of the statute.'" A judge might "apply all of the tools" of statutory interpretation, as he is supposed to do under Step 1 of a Chevron analysis, and conclude that "Congress spoke to the issue." In that case, Prelogar said, even if "there's some doubt" about the correct reading of the law, a judge is not required to accept the agency's interpretation merely because it is "permissible." But if the judge decides "Congress hasn't spoken to the issue," she said, "filling the gap" is left to the agency's discretion, even if the judge "would have done it differently" as a matter of policy.
Gorsuch suggested that Prelogar had presented "two very different views" of a judge's function under Chevron. Under one approach, "there is a better interpretation," and the judge applies it. Under the other approach, the judge "defer[s] anyway given whatever considerations you want to throw into the ambiguity bucket." Some judges, he noted, "claim never to have found an ambiguity," while "other, equally excellent circuit judges have said they find them all the time."
Martinez noted that 6th Circuit Judge Raymond Kethledge falls into the first category, while the late D.C. Circuit Judge Laurence Silberman fell into the second. "If there's that much disagreement," Martinez said, "that's a sign that Chevron really isn't workable."
Prelogar suggested that the justices could respond to such widely varying understandings of ambiguity by reminding the lower courts that they are not supposed to give up on statutory interpretation just because it is difficult to choose between contending views. Gorsuch noted that the Supreme Court had delivered that message around "15 times over the last eight or 10 years," telling judges they should "really, really, really go look at all the statutory [interpretation] tools." Yet even in "this rather prosaic case," he said, one appeals court "found ambiguity," while the other arguably "tried to resolve it at Step 1," which suggests judges "can't figure out what Chevron means."
In short, while Prelogar argued that Chevron promotes uniformity by constraining judges from reading their own policy preferences into the law, Gorsuch et al. argued that it has the opposite effect. As Gorsuch put it in 2022, "all this ambiguity about ambiguity" has allowed courts to apply what Kavanaugh described, in a 2016 law review article, as "wildly different conceptions of whether a particular statute is clear or ambiguous."
Sotomayor noted that she and her colleagues frequently disagree about how best to interpret a statute, leading to narrowly decided cases that come down on one side or the other. "If the Court can disagree reasonably and come to that tie-breaker point," she asked Martinez, "why shouldn't deference be given" to an agency with "expertise," experience with "on-the-ground execution," and "knowledge of consequences"? That account of what Chevron requires, Martinez replied, implies that a statute is "ambiguous because reasonable people can disagree" about its meaning, which confirms that the doctrine assigns a judicial function to executive agencies.
Prelogar also argued that preserving Chevron would promote "stability" and "predictability," noting that both legislators and regulators have come to rely on the assumption that agencies have broad discretion in filling gaps and resolving ambiguity. Overturning Chevron, she said, would be an "unwarranted shock to the legal system." But Gorsuch et al. argued that Chevron actually has undermined stability by allowing agencies to overrule judicial interpretations and "flip-flop" between different readings of a statute, depending on the agenda of any given administration.
The "best example" of the latter, Clement told the justices, is the question of whether broadband internet companies are offering a "telecommunications service" or an "information service," which has a crucial impact on the regulatory authority of the Federal Communications Commission. Gorsuch brought up the same example, noting that the Supreme Court had deferred to the Bush administration's view of the matter, saying "you automatically win." But then the Obama administration "came back and proposed an opposite rule," which the Trump administration reversed. And "as I understand it," Gorsuch added, the Biden administration "is thinking about going back to where we started."
Big businesses, Gorsuch noted, have the resources to keep up with such shifting statutory interpretations and influence the process, which can result in "regulatory capture," since "there's a lot of movement from industry in and out of those agencies." In Chevron itself, the Supreme Court deferred to an agency interpretation that benefited regulated companies. "I don't worry…about those people," Gorsuch said. "They can take care of themselves."
Gorsuch contrasted that situation with "cases I saw routinely" as a 10th Circuit judge, which involved "the immigrant, the veteran seeking his benefits, the Social Security disability applicant." Those supplicants, he noted, "have no power to influence the agencies" and "will never capture them," and their interests "are not the sorts of things on which people vote, generally speaking." Gorsuch said he had yet to see a case "where Chevron wound up benefiting those kinds of people." He said it therefore looks like the Chevron doctrine has a "disparate impact on different classes of persons." In other words, the doctrine tends to screw over the little guy—an argument that Gorsuch said was "powerfully" raised by the plaintiffs in Relentless and Loper Bright, who complain that the contested regulatory fees amount to about a fifth of the revenue earned by their family-owned businesses.
Kagan, Sotomayor, and Jackson, by contrast, amplified Prelogar's argument that agency experts are best situated to fill in the gaps left by Congress when it passes legislation. Kagan suggested that judges are not qualified to resolve issues such as whether "a new product designed to promote healthy cholesterol levels" should be treated as a strictly regulated "drug" or a lightly regulated "dietary supplement." She also cited regulation of artificial intelligence as an area where Congress might reasonably choose to let agencies decide the details. Given the rapid and unpredictable pace of A.I. developments, she said, "there are going to be all kinds of places where, although there's not an explicit delegation, Congress has in effect left a gap" or "created an ambiguity."
Jackson likewise said she viewed Chevron as "helping courts stay away from
policy making." If the decision were overruled, she worried, "the Court will then
suddenly become a policy maker by majority rule or not, making policy determinations."
Both sides agreed that Congress can explicitly give agencies broad leeway—for example, by authorizing "reasonable" or "appropriate" regulations. But they disagreed about what should happen when Congress is silent. In that situation, "the delegation is fictional," Martinez argued. "There's no reason to think that Congress intends every ambiguity in every agency statute to give agencies an ongoing power to interpret and reinterpret federal law in ways that override its best meaning."
Gorsuch raised the same objection. "You've said that it doesn't matter whether Congress actually thought about it," he told Prelogar. "There are many instances where Congress didn't think about it. And in every one of those, Chevron is exploited against the individual and in favor of the government."
The post SCOTUS Ponders the Ambiguity of 'Ambiguous' and Other <i>Chevron</i> Doctrine Puzzles appeared first on Reason.com.
]]>California's attempt at forcing gig workers to become traditional employees backfired by driving many of those workers out of their jobs.
In the wake of a new law (Assembly Bill 5) that was intended to reclassify many independent contractors as regular employees, self-employment in California fell by 10.5 percent and overall employment tumbled by 4.4 percent, according to a study released Thursday by the Mercatus Center, a free market think tank housed at George Mason University. In professions where self-employment was more common, the effects were more dramatic, and in some fields employment declined by as much as 28 percent after A.B. 5's implementation.
Meanwhile, researchers Liya Palagashvili, Paola A. Suarez, Christopher M. Kaiser, and Vitor Melo reported finding no increase in the number of employees classified as full employees. In professions where there was an uptick in traditional employees receiving W-2 wages and benefits, those increases were not large enough to cancel out the number of self-employed workers who left jobs.
"These results suggest that AB5 did not simply alter the composition of the workforce as intended by lawmakers," the four researchers wrote. "Instead, our findings suggest that AB5 was associated with a significant decline in self-employment and overall employment in California."
That could have significant implications for the Department of Labor's (DOL) recently announced attempt at duplicating California's policy across the rest of the country.
Last week, the DOL announced a new set of rules for determining whether a worker is an employee or an independent contractor. Like with California's A.B. 5, those proposed federal rules are meant to crack down on what the government sees as a deliberate effort to misclassify workers as contractors—which can change, among other things, the benefits that an employer is obligated to pay. Most gig workers and independent contractors are content with their more flexible, less structured employment arrangements—so in some sense, these governmental efforts seem to be trying to save workers from their own choices.
The Mercatus research suggests that, given a different set of choices, many of those workers would choose to exit the work force rather than accept (or be able to take) a more traditional employment arrangement. In fact, a sizable number of workers seem to have left the labor force entirely. The Mercatus study claims A.B. 5's passage was associated with at least a 6.5 percent decline in labor force participation in California.
As a result, funneling workers into traditional employment might not be as simple as federal regulators believe.
"Our results suggest that the DOL rule may lead to a significant decrease in self-employment and overall employment nationwide," wrote Palagashvili in a blog post summarizing the group's findings. "Further, it is not clear whether the new DOL rule would definitively lead to an increase in traditional employment, as intended."
The post California's Attack on Gig Work Predictably Drove Workers Out of Jobs appeared first on Reason.com.
]]>Last week, the Foundation for Individual Rights and Expression (FIRE), a First Amendment nonprofit, launched a lawsuit against the state of Utah, challenging a new state law requiring invasive age verification for social media users.
The law, The Utah Social Media Regulation Act, was passed last March and aims to restrict minors' access to social media and the kind of content they can encounter once online. The law will require all social media users to verify their age through privacy-invading methods such as a facial scan, uploading their driver's license, or giving the last four digits of their social security number. Additionally, minors will be required to obtain parental permission before they can create a social media account. Once online, the law forces social media companies to severely restrict minors' ability to find new content and accounts, and limit when they can message others on the platforms.
"The idea that some types of social media use by some minors under certain conditions can adversely affect some segment of this cohort is no basis for imposing state restrictions on all social media use by all minors—just as the State does not (and cannot) keep all books under lock and key because some are inappropriate for some children," FIRE's suit reads. "Although the Act purports to aid parental authority, it imposes 'what the State thinks parents ought to want'…while ignoring the ways parents can already regulate their children's access to and use of social media. "
FIRE's lawsuit argues that the law violates the First Amendment, pointing out that it forces social media companies to restrict users' access to protected expression. The complaint claims that the law's age verification requirements amount to a prior restraint on expression that limits "all Utahns' ability to access important sources of information and social interaction."
Further, the suit argues that the law's provisions are overbroad and lead to the unnecessary suppression of protected speech. "Without even pretending to regulate speech only in the narrowly defined categories of unprotected speech, the deprives all minors of access to a powerful medium of communication without regard to their informational needs or level of maturity, merely because (the State believes) access to some information by some minors may be detrimental," the complaint reads. "Also, restricting adults' access to a communications medium as a means of protecting minors is inherently overbroad."
In all, the suit argues that the law obviously violates the First Amendment in its quest to restrict minors' access to social media sites—and in doing so, requires all Utahns who want to use social media to give massive social media companies access to sensitive identifying information.
"This law will require me and my mom to give sensitive personal information to major tech companies simply to access platforms that have been an integral part of my development, giving me a sense of community and really just helping me figure out who I am as a person," said Hannah Zoulek, a Utah high school student and plaintiff in the case. "Growing up already isn't easy, and the government making it harder to talk with people who have similar experiences to mine just makes it even more difficult."
The post Want to Use Social Media? Utah Wants You to Hand Over Your ID. appeared first on Reason.com.
]]>In two cases the Supreme Court is considering, herring fishermen in New Jersey and Rhode Island are challenging regulatory fees they say were never authorized by Congress. Critics of those lawsuits misleadingly complain that the sympathetic plaintiffs are "providing cover" for a corporate attempt to "disable and dismantle" environmental regulations.
These cases ask the justices to reconsider the Chevron doctrine, which requires judicial deference to an administrative agency's "reasonable" interpretation of an "ambiguous" statute. While big businesses might welcome the doctrine's demise, so should anyone who cares about due process, the rule of law, and an independent judiciary, which are especially important in protecting "the little guy" from overweening executive power.
Maybe you should not take my word for that, since I work for a magazine whose publisher, Reason Foundation, has received financial support from organizations founded by Charles Koch, chairman of the petrochemical company Koch Industries. The New York Times describes Koch as the "hidden conservative backer" of the New Jersey case, which involves lawyers employed by the Koch-funded Americans for Prosperity.
The dispute at the center of these lawsuits is real, however, and it illustrates how vulnerable Americans are to the whims of federal agencies empowered to invent their own authority. The plaintiffs are family-owned businesses that cannot easily bear the financial burden imposed by the requirement that they not only make room on their cramped boats for observers monitoring compliance with fishery regulations but also pay for that dubious privilege.
That cost, which amounts to about a fifth of the money these businesses earn each year, adds insult to injury. "The framing generation was vexed enough by being forced to quarter British soldiers," writes Paul D. Clement, a former U.S. solicitor general who is representing the New Jersey plaintiffs, "but not even the British forced the unlucky homeowner to personally pay the redcoat's salary."
Worse, Clement notes, the relevant statute says nothing about collecting such fees from operators of herring boats in New England waters, although it does authorize them, within specified limits, for "certain North Pacific fisheries, limited access privilege programs, and foreign fishing." Two federal appeals courts, the D.C. Circuit and the 1st Circuit, nevertheless ruled that the unauthorized fees fit within the leeway required by Chevron deference.
The Department of Veterans Affairs took advantage of the same doctrine to deny a disabled veteran three years of benefits it owed him, relying on an arbitrary rule it invented for its own convenience. When the Supreme Court declined to hear that case in 2022, Justice Neal Gorsuch noted that Chevron deference systematically discomfits the weak in such disputes by allowing the government to rewrite the law in its favor.
"Many other individuals who interact with the federal government have found themselves facing similar fates," Gorsuch wrote, "including retirees who depend on federal social security benefits, immigrants hoping to win lawful admission to this country, and those who seek federal health care benefits promised by law." The examples he cited included a case he encountered as a 10th Circuit judge, involving an immigrant who was fighting deportation under an executive board ruling that contradicted the appeals court's prior interpretation of U.S. immigration laws.
The victims in such cases are not billionaires like Charles Koch. They are ordinary Americans who are hopelessly outmatched by government agencies that write their own rules.
For decades, that license allowed the Drug Enforcement Administration to keep marijuana in Schedule I of the Controlled Substances Act, a classification that President Joe Biden rightly says "makes no sense." As the Department of Health and Human Services implicitly conceded last August, that policy was based on a highly implausible reading of the statute.
The lawlessness fostered by the Chevron doctrine, in short, should give pause even to Koch's progressive critics. The Goliath in this story is not Koch Industries. It is an administrative state that has usurped the judicial power to interpret the statutes under which it operates.
© Copyright 2024 by Creators Syndicate Inc.
The post The <i>Chevron</i> Doctrine Discomfits the Weak appeared first on Reason.com.
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