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Tennessee Tries To Limit Residents’ Access to Wine From Other States (Again)

kelsey-knight-udj2tD3WKsY-unsplash

The COVID-19 pandemic has seemingly proven the merits of tearing down nonsensical laws limiting the direct shipment of alcohol, giving wineries more potential buyers and consumers more choices without having to leave home. But some state lawmakers are all too eager to put those barriers back in place.

Legislation making its way through both houses of the state legislature would ban wine shipments to Tennessee residents from “fulfillment houses,” or wine warehouses that act as wholesalers in the direct-to-consumer shipping market, buying from wineries and selling to consumers. Instead, consumers would only be allowed to order direct shipments of wine sent from wineries to home addresses.

Using fulfillment houses removes many logistical hurdles for wineries, giving them access to more consumers without having to set up their own in-house mailing operations, and consumers get access to a wider range of wineries via direct shipment than they otherwise would. It’s a win-win arrangement. Even before the pandemic, an estimated 60 percent of direct-to-consumer wine sales passed through a fulfillment house, according to Avalara, a sales tax consulting firm.

But some Tennessee lawmakers are trying to argue that fulfillment houses represent a public health threat. “We must protect the safety of Tennesseeans by ensuring that alcohol is sold in a safe manner,” state Sen. Page Walley (R–Bolivar), who introduced one of the two bills, told Wine Spectator. “I introduced this legislation because it puts the people of Tennessee first.”

But the bill seems to be more about taxes and protectionism than consumer safety.

On the tax front, Tennessee’s legislation is a response to a 2020 Kentucky law that opened up direct shipping of wine, beer, and spirits into that state. The law has been terrific for consumers in Kentucky, but the state has struggled to collect tax revenue because the new direct shipping law does not require carriers like FedEx and UPS to report how much alcohol they are delivering into the state. Instead, the state is relying entirely on data reported by registered out-of-state shippers—an arrangement that likely misses shipments from distributors that aren’t registered with the state.

Kentucky’s enforcement issues appear to have spooked neighboring legislators.

“Tennessee looked at it and said ‘we need to prevent that from happening,’ when what they really should have done is said ‘we’re not going to be as dumb about it as Kentucky,'” Matt Dogali, president of the American Distilled Spirits Alliance, an industry group, tells Reason.

Meanwhile, the bills also represent an opportunity for Tennessee’s alcohol establishment to deal a blow against unwanted out-of-state competition.

Until the Supreme Court struck it down in 2019, Tennessee law forbade out-of-state wineries from shipping their products into the state. The state used to defend that protectionist racket using the same vapid claims about public health that Walley is now trotting out to justify his new proposal. In the majority opinion for Tennesse Wine and Spirits Retailers Association v. Russell, Supreme Court Justice Samuel Alito wrote that the ban on out-of-state shipping “blatantly favors the state’s residents and has little relationship to public health and safety.”

Now, by targeting out-of-state fulfillment houses, the state legislature is seeking to restore a part of those unconstitutional restrictions on selling wine to consumers in Tennessee. Many smaller out-of-state wineries probably can’t or won’t go through the difficulties of setting up their own shipping services, so the only way to distribute into Tennessee will be through the state-run alcohol system.

Unsurprisingly, the bills have the support of Tennessee-based alcohol wholesalers and retailers, according to Avalara. Passing the legislation would “significantly reduce the available options for Tennessee wine lovers,” the accounting firm notes.

Advocates for expansion of direct-to-consumer alcohol shipments, like the American Distilled Spirits Council, worry that Tennessee’s law could become the start of a new trend of protectionist legislation in state capitols.

“Rather than seeing the country evolve and grow up and have [direct-to-consumer] happen in a manner that makes the consumer happy and lets the state get its tax revenue,” says Dogali, “we’re going to see this crazy backlash.”

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Texas Medical Board Clears Houston Doctor Accused of ‘Stealing’ COVID Vaccine Doses He Wouldn’t Let Go to Waste

covidvaccine_1161x653

The Houston-area doctor who was unfairly fired—and threatened with prosecution—for refusing to let a vial of COVID-19 vaccine go to waste has finally been vindicated.

In January, Dr. Hasan Gokal briefly became national news when he was fired from his medical work with Harris County, Texas, and Kim Ogg, the county’s district attorney, publicly announced plans to charge him with theft. Ogg initially characterized Gokal as having stolen a vial of the Moderna vaccine in order to give injections to his wife and others.

But Ogg’s initial charges were thrown out by a judge after the facts became more clear: Gokal had in reality done the best he could to find people to inject before the doses expired after the conclusion of a vaccination event. His wife was the last person he injected, minutes before the final dose was set to expire. And Gokal says he had informed county health officials of what he was doing all along.

On Monday, the Houston Chronicle reported that the Texas Medical Board finally cleared the doctor of any wrongdoing:

The board said there was insufficient evidence to prove that Dr. Hasan Gokal had violated the Medical Practice Act. The board stated there was neither a patient waiting list nor established protocols for how to handle unused doses on Dec. 29, the day the former Harris County Public Health employee supervised a vaccination site in Humble.

“The investigation determined that Dr. Gokal appeared to have administered doses of the COVID-19 vaccine to patients that were properly consented, in the eligible category, and they were given doses that would have otherwise been wasted,” the board said.

Remarkably, Ogg’s office still hasn’t given up on the possibility of sending the case to a grand jury to try to get Gokal indicted, according to the Chronicle.

But Gokal is one of many who has run afoul of government bureaucrats who have decided that their own authority—and people following the rules they’ve set—is more important than competent management of a crisis. Gokal made the right choice when he prioritized getting shots in arms instead of allowing precious vaccine doses to be wasted.

So where does Gokal go to get his reputation back? A search of his name quickly brings up those headlines from January when he was accused of theft. That’s all on Ogg’s office for rushing to make an example out of him and on the Harris County health officials who abruptly fired him.

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Texas Medical Board Clears Houston Doctor Accused of ‘Stealing’ COVID Vaccine Doses He Wouldn’t Let Go to Waste

covidvaccine_1161x653

The Houston-area doctor who was unfairly fired—and threatened with prosecution—for refusing to let a vial of COVID-19 vaccine go to waste has finally been vindicated.

In January, Dr. Hasan Gokal briefly became national news when he was fired from his medical work with Harris County, Texas, and Kim Ogg, the county’s district attorney, publicly announced plans to charge him with theft. Ogg initially characterized Gokal as having stolen a vial of the Moderna vaccine in order to give injections to his wife and others.

But Ogg’s initial charges were thrown out by a judge after the facts became more clear: Gokal had in reality done the best he could to find people to inject before the doses expired after the conclusion of a vaccination event. His wife was the last person he injected, minutes before the final dose was set to expire. And Gokal says he had informed county health officials of what he was doing all along.

On Monday, the Houston Chronicle reported that the Texas Medical Board finally cleared the doctor of any wrongdoing:

The board said there was insufficient evidence to prove that Dr. Hasan Gokal had violated the Medical Practice Act. The board stated there was neither a patient waiting list nor established protocols for how to handle unused doses on Dec. 29, the day the former Harris County Public Health employee supervised a vaccination site in Humble.

“The investigation determined that Dr. Gokal appeared to have administered doses of the COVID-19 vaccine to patients that were properly consented, in the eligible category, and they were given doses that would have otherwise been wasted,” the board said.

Remarkably, Ogg’s office still hasn’t given up on the possibility of sending the case to a grand jury to try to get Gokal indicted, according to the Chronicle.

But Gokal is one of many who has run afoul of government bureaucrats who have decided that their own authority—and people following the rules they’ve set—is more important than competent management of a crisis. Gokal made the right choice when he prioritized getting shots in arms instead of allowing precious vaccine doses to be wasted.

So where does Gokal go to get his reputation back? A search of his name quickly brings up those headlines from January when he was accused of theft. That’s all on Ogg’s office for rushing to make an example out of him and on the Harris County health officials who abruptly fired him.

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The Texas Bill That Prohibits Social Media Censorship Is a Mess

krtphotoslive894215

Political bias on social media is one of the biggest issues animating the political right these days, and thus many conservatives talk about doing something to prevent “Big Tech” censorship. Several Republican-controlled states are considering passing legislation designed to accomplish just that.

The Texas Senate, for instance, is poised to approve SB12, which ostensibly prohibits social media companies from restricting their users’ speech.

“We need to recognize in Texas, maybe particularly in Texas, we see that the First Amendment is under assault by the social media companies and that is not going to be tolerated in Texas,” said Republican Gov. Greg Abbott in support of the bill.

The First Amendment is not under assault by social media companies. On the contrary, the First Amendment defends the free speech rights of private entities—like social media companies—against restrictive government action, like this bill. It would be more accurate to say that the First Amendment is under assault by the Texas legislature. A private company deciding what kind of speech it allows on its platform is precisely the kind of thing the First Amendment protects from government interference.

If that were not enough, the bill has two massive flaws, one of which might render it entirely pointless.

First, the bill defines its terms very broadly: It would prohibit any large social media company (more than 100 million monthly users) from restricting content because of the expressed viewpoint. “An interactive computer service may not censor a user, a user’s expression, or a user’s ability to receive the expression of another person,” the bill reads.

Practically speaking, this could prohibit Facebook and Twitter from taking action against content that is harmful, abusive, or spammy. Facebook’s News Feed algorithm makes choices about what kind of content to prioritize, and the platform occasionally opts to limit the reach of some posts—conspiracy theories about the 2020 election, or COVID-19, for instance. The bill would appear to interfere with the day-to-day runnings of the site in very basic ways. It could even force social media sites to take away moderation options from users.

“YouTube and Facebook allow page managers to remove content posted on their community pages,” noted Steve DelBianco, president of the trade association NetChoice, in his comments about the bill. “This empowers content creators to curate their pages to suit community interests. However, platforms and websites might remove this capability, since it invites expensive litigation under SB 12.”

If that weren’t good enough reason to oppose the bill, it also contains a section that appears to render the entire thing obsolete: “This chapter does not prohibit an interactive computer service from censoring expression that the interactive computer service is specifically authorized to censor by federal law.”

Under a federal law known as Section 230, social media companies cannot be held liable for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.” In other words, federal law already gives social media companies every right to restrict users’ content, and Texas’ bill—as written—bows to federal law.

Many Republican legislators at both the state and national level are profoundly misguided about Section 230. They seem to think it’s getting in the way of conservatives’ free speech rights when in reality it gives Big Tech additional legal cover for continuing to platform right-wing speech. Legislation aimed at hurting social media companies will ultimately end up hurting the kinds of speech that have flourished on Facebook and Twitter but would not have been published in mainstream media outlets.

If anything, that’s disproportionately likely to be right-wing speech.

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via IFTTT

The Texas Bill That Prohibits Social Media Censorship Is a Mess

krtphotoslive894215

Political bias on social media is one of the biggest issues animating the political right these days, and thus many conservatives talk about doing something to prevent “Big Tech” censorship. Several Republican-controlled states are considering passing legislation designed to accomplish just that.

The Texas Senate, for instance, is poised to approve SB12, which ostensibly prohibits social media companies from restricting their users’ speech.

“We need to recognize in Texas, maybe particularly in Texas, we see that the First Amendment is under assault by the social media companies and that is not going to be tolerated in Texas,” said Republican Gov. Greg Abbott in support of the bill.

The First Amendment is not under assault by social media companies. On the contrary, the First Amendment defends the free speech rights of private entities—like social media companies—against restrictive government action, like this bill. It would be more accurate to say that the First Amendment is under assault by the Texas legislature. A private company deciding what kind of speech it allows on its platform is precisely the kind of thing the First Amendment protects from government interference.

If that were not enough, the bill has two massive flaws, one of which might render it entirely pointless.

First, the bill defines its terms very broadly: It would prohibit any large social media company (more than 100 million monthly users) from restricting content because of the expressed viewpoint. “An interactive computer service may not censor a user, a user’s expression, or a user’s ability to receive the expression of another person,” the bill reads.

Practically speaking, this could prohibit Facebook and Twitter from taking action against content that is harmful, abusive, or spammy. Facebook’s News Feed algorithm makes choices about what kind of content to prioritize, and the platform occasionally opts to limit the reach of some posts—conspiracy theories about the 2020 election, or COVID-19, for instance. The bill would appear to interfere with the day-to-day runnings of the site in very basic ways. It could even force social media sites to take away moderation options from users.

“YouTube and Facebook allow page managers to remove content posted on their community pages,” noted Steve DelBianco, president of the trade association NetChoice, in his comments about the bill. “This empowers content creators to curate their pages to suit community interests. However, platforms and websites might remove this capability, since it invites expensive litigation under SB 12.”

If that weren’t good enough reason to oppose the bill, it also contains a section that appears to render the entire thing obsolete: “This chapter does not prohibit an interactive computer service from censoring expression that the interactive computer service is specifically authorized to censor by federal law.”

Under a federal law known as Section 230, social media companies cannot be held liable for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.” In other words, federal law already gives social media companies every right to restrict users’ content, and Texas’ bill—as written—bows to federal law.

Many Republican legislators at both the state and national level are profoundly misguided about Section 230. They seem to think it’s getting in the way of conservatives’ free speech rights when in reality it gives Big Tech additional legal cover for continuing to platform right-wing speech. Legislation aimed at hurting social media companies will ultimately end up hurting the kinds of speech that have flourished on Facebook and Twitter but would not have been published in mainstream media outlets.

If anything, that’s disproportionately likely to be right-wing speech.

from Latest – Reason.com https://ift.tt/3eLpi38
via IFTTT

Attack of the Zombie ERA

rollcallpix111988

Deadline for passage expired in 1982. The House will vote this week on a resolution to remove the time limit for ratifying the Equal Rights Amendment (ERA) to the Constitution. The ERA was first proposed more nearly a century ago, back when the idea that “equality of rights under the law shall not be denied or abridged by the United States or by any state on account of sex” was both radical and not already codified in U.S. law in a million ways.

The ERA was reintroduced in 1971 and approved by Congress in 1972, but because it would amend the U.S. Constitution, it required ratification by 38 states. Congress set a deadline of March 22, 1979, for this to happen. When the deadline came, however, only 35 states had voted to ratify. Congress then extended the ratification deadline to June 30, 1982. But in the interim, no new states voted to ratify and five states voted to rescind their earlier approval. So people moved on, striking down sex discrimination under the law through various court cases and other pieces of legislation.

In recent years, however, Democrats have been pushing to revive the long-dead ERA. Nevada voted to ratify in 2017, Illinois in 2018, and Virginia in 2020. ERA proponents say this means that a sufficient number of states (38) have now ratified.

Others counter that not only did five states revoke their ERA support, but also that the three recent ratifications came more than three decades after the deadline for ratification expired.

Late Supreme Court Justice Ruth Bader Ginsburg opined in 2020 that ERA supporters should “start over,” since the new votes for ratification came “long after the deadline passed.”

And earlier this month, a federal judge ruled that the Nevada, Illinois, and Virginia votes did not count.

But Democrats aren’t letting this one go. On March 5—the same day that U.S. District Judge Rudolph Contreras ruled against the recently ratifying states—Rep. Jackie Speier (D–Calif.) introduced a House Resolution (H.J.Res.17) to eliminate the earlier deadline for ratification. Since then, the bill has attracted more than 200 co-sponsors, all but one of them Democrats. (The lone Republican co-sponsor is Rep. Tom Reed of New York.)

“Notwithstanding any time limit contained in House Joint Resolution 208, 92d Congress, as agreed to in the Senate on March 22, 1972, the article of amendment proposed to the States in that joint resolution shall be valid to all intents and purposes as part of the United States Constitution whenever ratified by the legislatures of three-fourths of the several States,” states the resolution.

Messaging around the modern ERA has focused little on what changes would stem from its ratification; instead, it’s treated as a self-evidently necessary pre-condition for “women’s equality.“

Democrats’ vagueness and hyperbole about what ERA passage would actually do—and their refusal to push for re-ratification (as Ginsburg preferred) rather than counting half-a-century-old votes as relevant—suggest this is more about politics than making a material difference for women.

Supporting the ERA means Democratic politicians (and their celebrity boosters) get automatic attention as advocates for women while providing the party with an easy way to smear Republican critics as sexist pigs who don’t believe in women’s equality.

FREE MINDS

A new documentary premiering at SXSW’s virtual film festival looks at whistleblower Reality Winner, who was arrested in 2017 and prosecuted under the Espionage Act. Winner’s leak of a National Security Agency report related to the 2016 election was “motivated by serving the public. No sources or methods of spycraft were revealed,” notes Business Insider. Check out a clip from United States vs. Reality Winner below:

FREE MARKETS

For real antitrust reform, fix occupational licensing boards:

But of course, U.S. lawmakers are too busy holding their 8 billionth gripe-about-tech-companies “antitrust” show for that…

QUICK HITS

• An adult store in Carencro, Louisiana, is fighting the city’s ban on selling sex toys.

• South Carolina lawmakers are trying to proactively address future emergency orders banning church services by having churches declared essential businesses.

• The Los Angeles Daily News honors Women’s History Month by celebrating Ayn Rand, Isabel Paterson, and Rose Wilder Lane.

• A Cincinnati-area police officer is facing criminal charges after allegedly drugging and raping someone in January. Hamilton County prosecutors “are concerned that more victims may be out there,” they said in a statement.

from Latest – Reason.com https://ift.tt/3vwHyDe
via IFTTT

Attack of the Zombie ERA

rollcallpix111988

Deadline for passage expired in 1982. The House will vote this week on a resolution to remove the time limit for ratifying the Equal Rights Amendment (ERA) to the Constitution. The ERA was first proposed more nearly a century ago, back when the idea that “equality of rights under the law shall not be denied or abridged by the United States or by any state on account of sex” was both radical and not already codified in U.S. law in a million ways.

The ERA was reintroduced in 1971 and approved by Congress in 1972, but because it would amend the U.S. Constitution, it required ratification by 38 states. Congress set a deadline of March 22, 1979, for this to happen. When the deadline came, however, only 35 states had voted to ratify. Congress then extended the ratification deadline to June 30, 1982. But in the interim, no new states voted to ratify and five states voted to rescind their earlier approval. So people moved on, striking down sex discrimination under the law through various court cases and other pieces of legislation.

In recent years, however, Democrats have been pushing to revive the long-dead ERA. Nevada voted to ratify in 2017, Illinois in 2018, and Virginia in 2020. ERA proponents say this means that a sufficient number of states (38) have now ratified.

Others counter that not only did five states revoke their ERA support, but also that the three recent ratifications came more than three decades after the deadline for ratification expired.

Late Supreme Court Justice Ruth Bader Ginsburg opined in 2020 that ERA supporters should “start over,” since the new votes for ratification came “long after the deadline passed.”

And earlier this month, a federal judge ruled that the Nevada, Illinois, and Virginia votes did not count.

But Democrats aren’t letting this one go. On March 5—the same day that U.S. District Judge Rudolph Contreras ruled against the recently ratifying states—Rep. Jackie Speier (D–Calif.) introduced a House Resolution (H.J.Res.17) to eliminate the earlier deadline for ratification. Since then, the bill has attracted more than 200 co-sponsors, all but one of them Democrats. (The lone Republican co-sponsor is Rep. Tom Reed of New York.)

“Notwithstanding any time limit contained in House Joint Resolution 208, 92d Congress, as agreed to in the Senate on March 22, 1972, the article of amendment proposed to the States in that joint resolution shall be valid to all intents and purposes as part of the United States Constitution whenever ratified by the legislatures of three-fourths of the several States,” states the resolution.

Messaging around the modern ERA has focused little on what changes would stem from its ratification; instead, it’s treated as a self-evidently necessary pre-condition for “women’s equality.“

Democrats’ vagueness and hyperbole about what ERA passage would actually do—and their refusal to push for re-ratification (as Ginsburg preferred) rather than counting half-a-century-old votes as relevant—suggest this is more about politics than making a material difference for women.

Supporting the ERA means Democratic politicians (and their celebrity boosters) get automatic attention as advocates for women while providing the party with an easy way to smear Republican critics as sexist pigs who don’t believe in women’s equality.

FREE MINDS

A new documentary premiering at SXSW’s virtual film festival looks at whistleblower Reality Winner, who was arrested in 2017 and prosecuted under the Espionage Act. Winner’s leak of a National Security Agency report related to the 2016 election was “motivated by serving the public. No sources or methods of spycraft were revealed,” notes Business Insider. Check out a clip from United States vs. Reality Winner below:

FREE MARKETS

For real antitrust reform, fix occupational licensing boards:

But of course, U.S. lawmakers are too busy holding their 8 billionth gripe-about-tech-companies “antitrust” show for that…

QUICK HITS

• An adult store in Carencro, Louisiana, is fighting the city’s ban on selling sex toys.

• South Carolina lawmakers are trying to proactively address future emergency orders banning church services by having churches declared essential businesses.

• The Los Angeles Daily News honors Women’s History Month by celebrating Ayn Rand, Isabel Paterson, and Rose Wilder Lane.

• A Cincinnati-area police officer is facing criminal charges after allegedly drugging and raping someone in January. Hamilton County prosecutors “are concerned that more victims may be out there,” they said in a statement.

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via IFTTT

Utah Eases Up on the Bureaucracy with Nation’s First General Regulatory Sandbox

Sandbox

It’s no secret that regulations can make or break a new business. Government rules on economic activities can be expensive or time-consuming to established firms. For new startups, they can be a non-starter. An entrepreneur can have an innovative idea to provide new goods and services at a higher quality or lower cost than the big boys that dominate the market. But if pioneering new firms can’t handle high regulatory costs, those ideas might never come to be.

Regulatory reform can be hard, not least because incumbents often like the status quo. But small new entrants may have a lot to offer. Ideally, their services could be more affordable or higher quality than those provided by the current market. This means that regulatory barriers can serve to prevent access and lower costs for the people who might need it the most.

Thankfully, forward-looking policymakers have embraced a new kind of government innovation to help new business ideas get to market faster.

“Regulatory sandboxes” create a stripped-down regulatory environment where startups and entrepreneurs can experiment with new business concepts under the watch and light guidelines of regulators. It’s a way to carve a space for innovation without wholesale regulatory reform, which can often be daunting.

Regulatory sandboxes are a fairly new phenomenon, with the first major effort dating back to the United Kingdom’s Financial Conduct Authority (FCA), a “financial technology” (fintech) sandbox, some half a decade ago. Most regulatory sandboxes are for fintech, but there are other experiments for things like insurance, energy, and legal services. The World Bank tallies up 73 regulatory sandboxes across the world, with the majority of them being launched in the past two years.

Because regulatory sandboxes are so new, we have limited data on how effective they are to actually kickstart growth and innovation. The FCA is the oldest, so it has some lessons to offer. The results so far have been promising: Sandbox participants got to market 40 percent faster than non-participants; 80 percent of the participants graduated into the normal market; and participants attracted around £135 million ($187 million U.S.) in funding (around half of the participants ended up partnering with an incumbent firm).

This is not to say that regulatory sandboxes are some kind of panacea. As research by Brian Knight and Trace Mitchell points out, the design of a regulatory sandbox will matter a lot for the quality of final outcomes. For example, sandbox administrators could choose friends or allies to participate while leaving outsiders in the cold, which is just another way of picking winners or losers. Or administrators could give startups that choose not to apply (for whatever reason) extra—even vindictive—scrutiny. Regulatory sandboxes should not simply reproduce the same problems they were created to overcome.

Industry-by-industry sandboxes, like those created specifically for fintech, are a step in the right direction. But they are limited for some of the reasons that Knight and Mitchell point out. By excluding all non-“fintech” (or whatever the industry sandbox is) firms from a path to regulatory relief, industry-specific sandboxes necessarily prioritize some firms over others. Maybe there is a really innovative company that just doesn’t fit the definition of “fintech” within some municipality that offers a fintech sandbox. They will be robbed of the ability to try out their ideas, and society will miss out on the potential benefits they could have provided.

Enter Utah’s new general purpose regulatory sandbox, which was just passed by the state legislature and awaits the Governor’s signature. It’s a really innovative proposal, and it gets around some of the limitations of previous sandbox experiments.

Rather than granting punctuated regulatory relief on an industry-by-industry basis, Utah’s general sandbox creates a new body, called the Office of Regulatory Relief (ORR), that any innovative new company can work with to seek sandbox participation. The company must submit an application to the ORR which explains their business model, which regulations are getting in the way, and how the state would benefit if they are able to participate in a sandbox program. The ORR reviews the application in consultation with the relevant regulatory agency. Successful applicants will receive regulatory exemptions for a one-year period and can apply for an annual extension after that.

Utah’s mechanism design is set up with an eye towards preventing the problem of the government picking winners or losers. For example, applicants are asked whether any of their direct competitors have been granted a sandbox. If so, that would be a strong signal in favor of also granting that applicant a sandbox. It’s not automatic, but it is geared towards making the ORR think seriously about the neutrality of their decisions.

It’s obvious why businesses and consumers would benefit from regulatory sandboxes. Companies would get an opportunity to launch products to market that balances a lightened regulatory load with expert government oversight. Consumers get the benefits of trying out new products and services that might have otherwise never seen the light of day. In the best-case scenario, these greenlit business offerings can reach underserved populations at reasonable prices.

But regulatory sandboxes create great benefits for regulators themselves, too. When it comes to technology, things move fast. Even the most forward-looking oversight bodies struggle to keep up with changes in emerging technologies and adapt their rules to account for them.

Regulatory sandboxes can be just as much of an educational experience for regulators as they are for new businesses. It gives government overseers a crash course in new technologies and a direct line to the innovators that are building them. By working directly on the front lines of new innovation, regulators will be in a better position to tailor their rules so that they accomplish what they intend.

Of course, regulatory sandboxes should not be a substitute for robust regulatory reform. If Utah’s ORR becomes inundated with applications for regulatory relief, it could be a signal that more general regulatory reforms are needed. In any event, it gives a good amount of breathing room that wouldn’t have been there while lawmakers determine which reforms are appropriate.

The kind of regulatory relief that Utah’s general purpose sandbox program promises could not have come at a better time. As vaccination rates creep up and COVID caseloads keep falling, we are finally getting to a place where our economy may be allowed to start recovering. Giving entrepreneurs a path to market viability is a great way to kickstart the kind of economic growth that we need. Let’s hope that more states follow in Utah’s footsteps and create general purpose sandboxes for their own economies.

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via IFTTT

Utah Eases Up on the Bureaucracy with Nation’s First General Regulatory Sandbox

Sandbox

It’s no secret that regulations can make or break a new business. Government rules on economic activities can be expensive or time-consuming to established firms. For new startups, they can be a non-starter. An entrepreneur can have an innovative idea to provide new goods and services at a higher quality or lower cost than the big boys that dominate the market. But if pioneering new firms can’t handle high regulatory costs, those ideas might never come to be.

Regulatory reform can be hard, not least because incumbents often like the status quo. But small new entrants may have a lot to offer. Ideally, their services could be more affordable or higher quality than those provided by the current market. This means that regulatory barriers can serve to prevent access and lower costs for the people who might need it the most.

Thankfully, forward-looking policymakers have embraced a new kind of government innovation to help new business ideas get to market faster.

“Regulatory sandboxes” create a stripped-down regulatory environment where startups and entrepreneurs can experiment with new business concepts under the watch and light guidelines of regulators. It’s a way to carve a space for innovation without wholesale regulatory reform, which can often be daunting.

Regulatory sandboxes are a fairly new phenomenon, with the first major effort dating back to the United Kingdom’s Financial Conduct Authority (FCA), a “financial technology” (fintech) sandbox, some half a decade ago. Most regulatory sandboxes are for fintech, but there are other experiments for things like insurance, energy, and legal services. The World Bank tallies up 73 regulatory sandboxes across the world, with the majority of them being launched in the past two years.

Because regulatory sandboxes are so new, we have limited data on how effective they are to actually kickstart growth and innovation. The FCA is the oldest, so it has some lessons to offer. The results so far have been promising: Sandbox participants got to market 40 percent faster than non-participants; 80 percent of the participants graduated into the normal market; and participants attracted around £135 million ($187 million U.S.) in funding (around half of the participants ended up partnering with an incumbent firm).

This is not to say that regulatory sandboxes are some kind of panacea. As research by Brian Knight and Trace Mitchell points out, the design of a regulatory sandbox will matter a lot for the quality of final outcomes. For example, sandbox administrators could choose friends or allies to participate while leaving outsiders in the cold, which is just another way of picking winners or losers. Or administrators could give startups that choose not to apply (for whatever reason) extra—even vindictive—scrutiny. Regulatory sandboxes should not simply reproduce the same problems they were created to overcome.

Industry-by-industry sandboxes, like those created specifically for fintech, are a step in the right direction. But they are limited for some of the reasons that Knight and Mitchell point out. By excluding all non-“fintech” (or whatever the industry sandbox is) firms from a path to regulatory relief, industry-specific sandboxes necessarily prioritize some firms over others. Maybe there is a really innovative company that just doesn’t fit the definition of “fintech” within some municipality that offers a fintech sandbox. They will be robbed of the ability to try out their ideas, and society will miss out on the potential benefits they could have provided.

Enter Utah’s new general purpose regulatory sandbox, which was just passed by the state legislature and awaits the Governor’s signature. It’s a really innovative proposal, and it gets around some of the limitations of previous sandbox experiments.

Rather than granting punctuated regulatory relief on an industry-by-industry basis, Utah’s general sandbox creates a new body, called the Office of Regulatory Relief (ORR), that any innovative new company can work with to seek sandbox participation. The company must submit an application to the ORR which explains their business model, which regulations are getting in the way, and how the state would benefit if they are able to participate in a sandbox program. The ORR reviews the application in consultation with the relevant regulatory agency. Successful applicants will receive regulatory exemptions for a one-year period and can apply for an annual extension after that.

Utah’s mechanism design is set up with an eye towards preventing the problem of the government picking winners or losers. For example, applicants are asked whether any of their direct competitors have been granted a sandbox. If so, that would be a strong signal in favor of also granting that applicant a sandbox. It’s not automatic, but it is geared towards making the ORR think seriously about the neutrality of their decisions.

It’s obvious why businesses and consumers would benefit from regulatory sandboxes. Companies would get an opportunity to launch products to market that balances a lightened regulatory load with expert government oversight. Consumers get the benefits of trying out new products and services that might have otherwise never seen the light of day. In the best-case scenario, these greenlit business offerings can reach underserved populations at reasonable prices.

But regulatory sandboxes create great benefits for regulators themselves, too. When it comes to technology, things move fast. Even the most forward-looking oversight bodies struggle to keep up with changes in emerging technologies and adapt their rules to account for them.

Regulatory sandboxes can be just as much of an educational experience for regulators as they are for new businesses. It gives government overseers a crash course in new technologies and a direct line to the innovators that are building them. By working directly on the front lines of new innovation, regulators will be in a better position to tailor their rules so that they accomplish what they intend.

Of course, regulatory sandboxes should not be a substitute for robust regulatory reform. If Utah’s ORR becomes inundated with applications for regulatory relief, it could be a signal that more general regulatory reforms are needed. In any event, it gives a good amount of breathing room that wouldn’t have been there while lawmakers determine which reforms are appropriate.

The kind of regulatory relief that Utah’s general purpose sandbox program promises could not have come at a better time. As vaccination rates creep up and COVID caseloads keep falling, we are finally getting to a place where our economy may be allowed to start recovering. Giving entrepreneurs a path to market viability is a great way to kickstart the kind of economic growth that we need. Let’s hope that more states follow in Utah’s footsteps and create general purpose sandboxes for their own economies.

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Reasons for a Duty to Correct Libelous Materials You Posted

(For the full draft PDF, with footnotes, see here.)

Let’s turn to a hypothetical: Say two reporters, Ophelia Often (who tends to checks her voice-mail often) and Randy Rarely (who tends to check his rarely), are writing stories about Starlight Rainbow, accusing her of mistreating a fifth-grade student. (For convenience, assume that Starlight is a principal and thus a public figure or public official under state law.) It turns out, though, that both reporters erred: The actual allegations of mistreatment were about a different teacher with the same last name, Cynthia Rainbow.

Starlight learns about the planned stories, and leaves voice-mails for both reporters with persuasive evidence that she’s not actually the guilty party. (She actually works at a different school.) Ophelia listens to her voice-mail before her story is posted, but Randy listens to his only after. For whatever reason, Ophelia still posts her story, and Randy doesn’t correct his story.

Starlight now sues Ophelia (and her employer) for posting her story and Randy (and his) for continuing to keep his story up. The statement in each story—that Starlight was accused of mistreating the student—is false and defamatory. Ophelia and Randy are both aware now that it’s probably false. Both of their employers are keeping up the stories without correction, even though they are aware that the stories contain false and defamatory statements.

Starlight’s claim against Ophelia’s employer will thus likely prevail: Ophelia posted knowing that the statement was probably false (which likely counts as “reckless disregard” of the truth and therefore “actual malice”), and liability is imputed to Ophelia’s employer under respondeat superior. Starlight can thus use the threat of liability to pressure Ophelia’s employer to correct the story on its site. And it’s hard to see why Starlight’s claim against Randy should be treated any differently:

  1. The harm caused by the stories is identical: Starlight is being damaged equally by both.
  2. The value of the statements about Starlight is equally low in both stories: Both statements are false.
  3. The current mental state of the reporters and employers is equal: Randy and Randy’s employer are as aware of the falsehood now as Ophelia and Ophelia’s employer were when Ophelia’s story went up.
  4. The current culpability of the reporters and employers is thus also equal: Randy and Ophelia are continuing to distribute material that they now know to be false, and that’s culpable whether or not their initial posting was culpable at the outset (as Ophelia’s was but Randy’s wasn’t).
  5. The chilling effect from the threat of liability is equally low: Such liability would apply only because both reporters have been notified of specific, credible evidence that the statement was false—they wouldn’t be chilled from continuing to write and keep posted material that they believe is true.
  6. The practical cost of avoiding liability is basically equal: All the reporters would have to do would be to correct the story to name the right Rainbow.

Correcting a story once it’s posted might call for a bit more work—the publication may feel obligated not just to make a silent change, but to add a correction notice (e.g., “Editor’s Note: This story initially misidentified the teacher; the actual name, corrected above, is Cynthia Rainbow—we regret the error”). And if the request doesn’t come in until several months after the publication (but before the statute of limitations runs), the reporter might need some time to get back up to speed on the story to confirm that a correction really is needed. But these don’t strike me as sufficient bases to justify immunity for Randy.

This duty to make such corrections also mirrors similar duties in other areas of the law. When I disclose something in civil discovery, and I “learn[] that in some material respect the disclosure or response is incomplete or incorrect,” I have to “supplement or correct [my] disclosure.” Lawyers have similar duties to inform the tribunal if they had inadvertently offered evidence but later “come[] to know of its falsity.” People who make a statement related to the offer for sale of securities, and then learn that it was mistaken, must correct it. More broadly, even if I have no affirmative duty to protect you from various kinds of harms, I may acquire such a duty if I created the peril to you in the first place (even if I wasn’t at fault in so creating it).

And I think such a duty is also ethically sound. Damaging another’s reputation through knowingly or recklessly false statements is wrong. It’s wrong if the author posts the statements knowing that they are false. But it’s also wrong if the author learns that the statements are false, but nonetheless continues to distribute them without correction.

To be sure, recognizing a duty to stop knowingly libeling (and thus to correct posts that continue to libel someone) will mean more requests for correction, which publishers will have to consider. But I doubt this marginal effect will be particularly great:

  1. Publishers already get requests for corrections and retractions, and generally take them seriously as a matter of journalistic ethics (and common decency), even when they have no legal obligation to correct.
  2. Publishers already get demands for corrections backed by a threat of litigation. The subjects of erroneous stories often assume that the authors were negligent (or even had actual malice) at the outset. And even if the publisher did have a categorical right to escape liability when such initial negligence or actual malice can’t be shown, the publisher might not be sure that the jury will find that.

Publishers will thus have to deal with only a slightly larger volume of correction requests, and requests of a sort that they already have to consider. And while those requests will have some cost, they will also have a benefit: less enduring reputational damage to people who can show that the charges against them are indeed false and defamatory.

Publishing a correction, however, should not restart the statute of limitations (except as to claims that the correction itself is libelous). “Whether a modified article is a republication”—i.e., an event that restarts the statute of limitations—will largely turn “on whether the altered article contains defamatory statements not expressed in the original article.” If the only material added softens the original charges, rather than adding new defamatory statements, the statute of limitations would thus not be restarted. And even if the new material is itself allegedly defamatory, adding such material should not restart the statute of limitations as to old material that remains unchanged.

(Starlight Rainbow, by the way, is the real name of the plaintiff in Rainbow v. WPIX, Inc., a 2020 New York case; the facts in the text are based on Rainbow, but modified for the sake of the hypothetical.)

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