May 6, 2015 1:24 PM
Colleagues tipped me off to an absurd news story about how the federal government is threatening to punish New York City for its famously gaudy Times Square electronic billboards:
It is known as the “Crossroads of the World,” the “Center of the Universe” and “the Great White Way,” but Times Square could become like the “Black Hole of Calcutta” if the federal government has its way, CBS2’s Marcia Kramer reported Tuesday.
The feds say many of Times Square’s huge and neon-lit billboards must come down or the city will lose about $90 million in federal highway money.
The edict comes from a 2012 law that makes Times Square an arterial route to the national highway system. And that puts it under the 1965 Highway Beautification Act, which limits signs to 1,200 square feet. It took the feds until now to realize that Times Square was included, Kramer reported.
City Transportation Commissioner Polly Trottenberg agrees.
“The signs in Times Square are wonderful. They’re iconic. They’re not only a global tourist attraction, they’re important to the economy,” Trottenberg said.
She said she’s not going to let it happen.
“We’re not going to be taking down the billboards in Times Square. We’re going to work with the federal government and the state and find a solution,” Trottenberg said.
Some have suggested that this is an example of regulators run amok. It isn’t. This is a classic example of Congress passing stupid laws, ordering regulators to implement them stupidly, and then forgetting about them until unintended consequences spring up down the line. Allow me to explain what’s going on here, as virtually all the news articles and commentary out there provide next to zero context.
As the article noted, in the last surface transportation reauthorization (MAP-21 Act of 2012), Section 1104 created what is now known as the “enhanced National Highway System.” The enhanced National Highway System refers to MAP-21’s amendment to 23 U.S.C. § 103(b)(2)(B) to include, “Other urban and rural principal arterial routes ... that were not included on the National Highway System before the date of enactment of the MAP-21.”
In a nutshell, this provision added roads that meet the definition of “principal arterial” to the National Highway System that were not previously designated as components of the National Highway System. Why might someone want to do this? Because arterials not designated as part of the National Highway System are not eligible for Federal-aid Highway Program funding. Based on the current statutes and regulations governing National Highway System designations, roads evaluated to be principal arterials by the Federal Highway Administration’s Highway Performance Monitoring System were automatically added to the National Highway System under Congress’s 2012 law. This included some roadways in New York City.
May 6, 2015 10:00 AM
Some members of Congress are concerned about Trade Promotion Authority (TPA), which would fast track trade negotiating authority, but in fact it would be a positive move toward ensuring the United States remains a competitive economy. Senator Jeff Sessions (R-Ala.) released a statement this week citing concerns with TPA over increased trade deficits, currency manipulation—claiming it would take power away from Congress and give it to the executive branch—and more.
AEI’s Derek Scissors published a rebuttal to Sessions’ misdirected attack on TPA that deals with many of the issues raised by Sessions. Scissors noted correctly that some of Sessions’ concerns have little to do with TPA but are hot-button issues for opponents of trade agreements, for example, immigration.
Several points raised in Sessions’ attack deserve more elaboration. First, contrary to Sessions’ assertion, Trade Promotion Authority does not usurp Congress’ authority in relation to trade agreements. Rather, it is an accommodation between the executive branch and the legislative branch of government to allow trade negotiations to be conducted with credibility with other countries; that is, that agreements reached during negotiations will not be overturned in the voting process. TPA cedes negotiating authority to the president for trade agreements only if certain congressionally determined criteria are met: that very specific objectives outlined in TPA are accomplished in a trade agreement, that Congress is consulted throughout the negotiating process. TPA puts Congress in charge.
Labor Department "Fiduciary Rule" Threatens to Eviscerate JOBS Act Gains for Investors, EntrepreneursMay 6, 2015 9:53 AM
Three years ago, President Barack Obama signed into law the Jumpstart Our Business Startups (JOBS) Act, modestly but significantly liberalizing securities markets for investors and entrepreneurs. In signing that bill into law on April 5, 2012, Obama paid heed to the wisdom of ordinary American investors and made the case for easing barriers to their investing in startups.
“Because of this bill, start-ups and small business will now have access to a big, new pool of potential investors—namely, the American people,” Obama proclaimed. “For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”
But the authors of the Department of Labor’s new proposed “fiduciary rule” don’t seem to share the view President Obama professed on investor choice in signing the JOBS Act. Rather, those who wrote the DOL’s sweeping new seven-part group of regulations that would sharply curtail choices of assets and investment strategies in 401(k)s, IRAs, and other savings plans, appear to share the mindset of Obamacare architect and MIT economist Jonathan Gruber. Gruber has been shunned by former allies since he was caught on camera boasting about how the health care overhaul passed due to the “stupidity of the American voter.”
By curtailing investment in IRAs, the rule could eviscerate the gains entrepreneurs and savers have made from the JOBS Act in the freedom to raise capital and invest. And the authors of the rule seem to want it that way, for paternalistic Gruberesque reasons. Again and again in the rule, DOL expresses the view that American investors must be protected from their own stupidity. According to page 4 of the rule:
[I]ndividual retirement investors have much greater responsibility for directing their own investments, but they seldom have the training or specialized expertise necessary to prudently manage retirement assets on their own.
Therefore, they “need guidance on how to manage their savings to achieve a secure retirement.”
Can’t savers who feel they need this guidance seek it out from a variety of investment professionals under a system with strong disclosure and anti-fraud rules? Absolutely not, says the Obama administration.
“Disclosure alone has proven ineffective,” states the rule. “Most consumers generally cannot distinguish good advice, or even good investment results, from bad” (page 36). In fact, proclaims the DOL, “recent research suggests that even if disclosure about conflicts could be made simple and clear, it would be ineffective — or even harmful.”
So, in the DOL’s view, the only solution is to tax these dim-witted investors—for their own good, of course—and expose financial professionals to a flurry of lawsuits and penalties if administration officials deem their advice not to be in savers’ “best interests.”
May 4, 2015 11:48 AM
The 1,000th new regulation of 2015 was published in Friday’s Federal Register, which itself hit the 25,000-page mark on the year. Even so, agencies are still well behind their usual rulemaking pace, on pace for slightly less than 3,000 regulations, compared to the usual pace of more than 3,500 rules.
On to the data:
- Last week, 65 new final regulations were published in the Federal Register, after 79 new regulations the previous week.
- That’s the equivalent of a new regulation every two hours and 35 minutes.
- So far in 2015, precisely 1,000 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,976 new regulations this year, which would be several hundred fewer rules than the usual total.
- Last week, 1,975 new pages were added to the Federal Register, after 1,589 pages the previous week.
- Currently at 25,097 pages, the 2015 Federal Register is on pace for 74,694 pages.
- Rules are called “economically significant” if they have costs of $100 million or more in a given year. Seven such rules have been published so far this year, one in the past week.
- The total estimated compliance cost of 2015’s economically significant regulations ranges from $793 million to $846 million for the current year.
- 81 final rules meeting the broader definition of “significant” have been published so far this year.
- So far in 2015, 183 new rules affect small businesses; 28 of them are classified as significant.
May 4, 2015 10:32 AM
We saw two announcements on air traffic control modernization last week. The first was that the Federal Aviation Administration (FAA) had finally completed its En Route Automation Modernization (ERAM) deployment, a critical component of the Next Generation Air Transportation System (NextGen) update of National Airspace System (NAS) management.
ERAM greatly improves flight tracking, communications, and controller displays by harnessing new technologies that have been developed in the last several decades. This is all well and good, but ERAM rollout was supposed to have been completed by 2010. Five years late and several hundred million dollars over budget, it is a bit rich for the FAA to be declaring victory. But perhaps this is to be expected from a broken agency culture. Recall that the automated flight tracking computer system ERAM is replacing, the Host, suffered from serious delays when it was implemented… in the 1980s.
The second big air traffic control announcement was the comprehensive review of NextGen published by the National Research Council. Appropriately described by The Washington Post’s Ashley Halsey as “scathing,” the NRC report, which was ordered by Congress in the FAA Modernization and Reform Act of 2012, calls out FAA’s failings in implementing NextGen. Halsey highlights some quotes:
- “The original vision for NextGen is not what is being implemented today.”
- “This shift in focus has not been clear to all stakeholders.”
- “Airlines are not motivated to spend money on equipment and training for NextGen.”
- “Not all parts of the original vision will be achieved in the foreseeable future.”
- “NextGen, as currently executed, is not broadly transformational.”
- “‘NextGen’ has become a misnomer.”
April 29, 2015 9:14 AM
Discrimination may be bad for business, but that doesn’t mean laws banning discrimination are good for business. Often, these laws are like the proverbial Trojan Horse, applied by the courts in unexpected ways that are harmful to businesses, including employers who harbor no prejudice of any kind. For example, the Supreme Court interpreted a federal race and sex discrimination law (Title VII of the Civil Rights Act) as banning unintentional “disparate impact” (which is when a neutrally applied selection criterion weeds out more black than white applicants) even though that statute explicitly limited relief to cases where there was a showing that the employer had “intentionally engaged in or is intentionally engaging in an unlawful employment practice.” [See Griggs v. Duke Power Co. (1971); 42 U.S.C. 2000e-5(g).] The result of that case was to outlaw a wide array of useful, colorblind standardized tests.
The Supreme Court also interpreted a statutory attorneys fees provision that was neutral on its face as instead mandating one-way fee-shifting, effectively entitling only prevailing plaintiffs to such fees (except in really extreme cases), not prevailing defendants, and entitling such plaintiffs to fees even if the employer had a reasonable, good-faith belief for taking the position it did. [See Christiansburg Garment Co. v. EEOC (1978).]
Civil rights agencies and courts also impose emotional distress damages in discrimination cases that seem to be either grossly exaggerated, or insufficiently corroborated by objective evidence. For an example of the former, see the recent ruling by an administrative law judge in the Oregon Bureau of Labor and Industries, recommending “$135,000 in damages against Melissa and Aaron Klein, owners of Sweet Cakes by Melissa in Gresham, Ore., who had declined to cater a gay wedding on grounds of religious scruples [Oregonian, earlier].” As is typical in administrative discrimination cases, the same agency is effectively serving as prosecutor, judge, and jury, which the Founding Fathers would have viewed as a violation of the constitutional separation of powers, as law professor Philip Hamburger has explained.
$135,000 (or even a tenth that amount) is a grossly excessive emotional-distress damage award for a simple refusal to contract with a customer. Being rebuffed by a merchant is much less painful than losing your job, or even losing out on a promotion, and people wrongly fired from their jobs typically get less than $135,000 in emotional distress damages. The award is so ridiculously large that it seems to designed not to compensate, but to punish people for harboring archaic beliefs, with the lion’s share of the award being to punish the small business owners for their thought-crime, rather than make anyone whole.
April 28, 2015 4:12 PM
The Energy and Water Development Appropriations bill for FY 2016 passed by the House Appropriations Committee spends too much, but does move some funding from very bad programs to somewhat less bad programs.
The best thing in the bill is the set of riders that prohibit the Army Corps of Engineers from implementing the proposed Waters of the United States rule. That rule if implemented would expand federal jurisdiction far beyond what was intended by Congress in Section 404 of the Clean Water Act, and far beyond the current definition or any reasonable definition of the navigable waters of the United States. The WOTUS rule also ignores and largely contradicts the Supreme Court’s decisions in SWANCC and Rapanos.
Here are a few suggestions for improving the Energy and Water Appropriations bill when it comes to the floor of the House this week:
- A rider prohibiting funding to use the Social Cost of Carbon guidance document in any rulemaking or any benefit-cost analyses by the DOE and FERC.
- The rider offered successfully for the past several years by Rep. Michael Burgess that prohibits funding to enforce the 2007 ban on standard incandescent bulbs.
- An amendment to reduce funding below FY 2015 levels. The bill passed by the House Appropriations Committee increases Energy and Water funding by over $1,200,000 above current levels. The Department of Energy has been a mess for decades. Many, perhaps even most, DOE programs should be eliminated. If eliminating unnecessary and counter-productive programs is beyond what can be done this year, then the House should at least cut the total funding level to below the current level.
- A rider prohibiting any funds to be used to develop, propose, or implement new energy efficiency standards for all or some of the following: residential dishwashers, residential clothes washers, residential air conditioners and heat pumps, residential water heaters, portable air conditioners, residential gas furnaces, residential conventional cooking products, residential boilers, residential dehumidifiers, residential furnaces and boilers, central air conditioners and heat pumps, ceiling fans, and small electric motors and other electric motors.
- A rider prohibiting funds to be used to develop, propose, or finalize new energy efficiency standards for some or all of the following: commercial heating, air conditioning and water heating equipment, commercial water heating equipment, manufactured housing, commercial and industrial pumps, fans and blowers, commercial warm air furnaces, and small, large, or very large commercial package air conditioning and heating equipment.
- A rider prohibiting funding for the Department of Energy to attend COP-21 in Paris in December or to participate in the negotiations on the forthcoming Paris Accord from October 1 onward. This would be an interesting test vote for other appropriations bills coming up.
April 27, 2015 3:35 PM
CEI responded to the news that the Comcast-Time Warner merger failed. You can read more analysis from CEI's Vice President for Policy Wayne Crews here.
"The deck was stacked against this deal from the beginning: Comcast and Time Warner Cable had to seek permission to merge from not only the Department of Justice, but also the Federal Communications Commission. While the DOJ must win in court before it can block an acquisition, the FCC has unilateral power to send a transaction into regulatory limbo for years before the merging parties get a chance to be heard by an independent federal judge. This process turns the rule of law on its head, and only Congress can fix it."
-- Ryan Radia, Associate Director of Technology Studies
“The collapse of the Comcast-Time Warner merger merely because of the interference of government, not because of actual market rejection, illustrates the overwhelming power of the modern state to undermine the advance of communications technologies and services. These bureaucrats have decided on our behalf to award other communications industry companies a government-granted reprieve from the pressures of competition.”
-- Wayne Crews, CEI Vice President for Policy
April 27, 2015 11:32 AM
The big news in regulation for the week came from Canada, which made official its one-in, one-out policy for new regulations. New regulations from agencies must be offset by repealing an existing regulation of similar cost. In the United States, new rules hit the books covering everything from crash test dummies to beekeepers.
On to the data:
- Last week, 77 new final regulations were published in the Federal Register, after 57 new regulations the previous week.
- That’s the equivalent of a new regulation every two hours and 11 minutes.
- So far in 2015, 927 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,934 new regulations this year, which would be several hundred fewer rules than the usual total.
- Last week, 1,589 new pages were added to the Federal Register, after 2,127 pages the previous week.
- Currently at 23,122 pages, the 2015 Federal Register is on pace for 73,171 pages.
- Rules are called “economically significant” if they have costs of $100 million or more in a given year. Six such rules have been published so far this year, none in the past week.
- The total estimated compliance cost of 2015’s economically significant regulations ranges from $693 million to $746 million for the current year.
- Seventy-three final rules meeting the broader definition of “significant” have been published so far this year.
- So far in 2015, 159 new rules affect small businesses; 25 of them are classified as significant.
April 24, 2015 2:05 PM
The Trade Promotion Authority (TPA) bill currently moving through Congress is attracting controversy. It is worth explaining the background to why TPA is necessary in complex trade agreements.
TPA is a temporary power that Congress grants to the president to negotiate international agreements. Even though the U.S. Constitution already gives the president this authority, most trade agreements require implementing bills and thus congressional action to enforce them. While under TPA, Congress retains the authority to decide on whether to approve a particular deal, the final agreements cannot be amended and have to be considered in a timely manner.
The TPA, formerly known as the “fast-track,” is a result of years of cooperation and concessions between the legislative and executive branches. First introduced as the Trade Act of 1974, it served as a response to the increasing dominance of non-tariff barriers in multilateral trade negotiations. Since the GATT Kennedy Round, the focus of the trade agenda has shifted from tariffs to more complicated issues that require changes in laws in order for the U.S. to abide by the agreements. To address these concerns, in addition to the authority to renegotiate tariffs, Congress introduced expedited treatment, together with limited-time debate and an absence of amendments for trade deals negotiated under TPA.
The “fast-track” was established to form a consensus on the U.S. trade policy between the two branches, as well as facilitate the development and approval of trade agreements. TPA sends a strong signal to foreign partners of congressional support for an FTA, which is particularly important when negotiation new issues that affect the U.S. global competitiveness. Since it was first introduced, TPA has been renewed numerous times, and played a major role in implementation of various trade agreements.