Month: March 2023

When the rivalry between Team Red and Team Blue heats up, everyone loses.

Written by Andrew Heaton, Austin Bragg, Meredith Bragg, and John Carter; produced by John Carter, Austin Bragg, and Meredith Bragg; performed by Andrew Heaton and Austin Bragg.

The post Partisan Post-Game appeared first on Reason.com.

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What kind of monster doesn’t want the federal government to make it easier for consumers to cancel unwanted subscriptions? That’s the unspoken premise behind basically every headline covering last week’s Federal Trade Communication (FTC) notice of proposed rulemaking to mandate “click to cancel” functionality on companies that use “negative option marketing” tactics such as free trials and automatic renewals.

“Still trying to quit that gym membership? The FTC is proposing a rule that could help,” reported NPR. “Frustrated over canceling a subscription? Relief may be coming,” offered The Washington Post. CNN added, in the most common headline formulation: “FTC wants to make it easier for consumers to cancel free trials and subscriptions.”

The proposed rule requires negative-option sellers to provide, under maximum penalty of $50,120 per violation per day, a mechanism for cancellation that’s “at least as simple as the one used to initiate the charge,” via the same medium (app, website, phone, mail, etc.). Explained FTC Chair Lina Khan on Morning Edition: “When you’re talking about companies that have hundreds or thousands or millions of consumers, that could add up quite quickly.”

This borderline-gleeful attitude is part of the reason Khan is a figure of constant controversy. But it’s also consistent with the policies of President Joe Biden, who spent paragraphs of his State of the Union address in February railing against “junk fees,” travel surcharges, and so forth. “Americans are tired of being—we’re tired of being played for suckers,” Biden said.

The only Republican appointee on the FTC, Christine Wilson, was also the lone vote against the FTC’s proposed rulemaking last week. And though you’d be hard-pressed to find any of her specific objections in all those “Subscriptions can be hell to cancel” headlines, her dissent points out that the rule as written constitutes a major regulatory power grab:

the Notice explains that “the proposed Rule prohibits any person from misrepresenting, expressly or by implication, any material fact regarding the entire agreement—not just facts related to a negative option feature.” It further explains that “[s]uch deceptive practices may involve misrepresentations related to costs, product efficacy, free trial claims, processing or shipping fees, billing information use, deadlines, consumer authorization, refunds, cancellation, or any other material representation.”

Consequently, marketers using negative option features in conjunction with the sale of a good or service could be liable for civil penalties or redress under this Rule for product efficacy claims or any other material representation even if the negative option terms are clearly described, informed consent is obtained, and cancellation is simple.

Emphases added. Though you would never know it from the shallow THEY FIX PROBLEM! news coverage, the FTC is telling the estimated 106,000 businesses that use such subscription-renewal techniques that they will face potentially crippling fines if activist bureaucrats deem any of their business processes, whether related to subscription renewals or not, to be misleading.

Such regulatory mission creep is as predictable as receiving an AARP card in the mail during your 50s. Governments that are big enough to police the language of magazine auto-renewals are guaranteed to intrude on personal consumption choices in ways that even corporationophobes find uncomfortable. The FTC’s vigorous exertions under Biden include:

* Asking Twitter to rat out the names of all journalists involved in working on the #TwitterFiles series of investigations.

* Proposing—without any relevant legislative prompt—a near-total ban on workplace noncompete contracts.

* Attempting (before being thwarted by a federal judge) to block Meta’s acquisition of a virtual reality company on the legally adventurous grounds that in doing so the Facebook owner would prevent itself from innovating in the virtual reality space.

* Challenging Microsoft’s purchase of a video game company, because reasons.

* Investigating Amazon for, in the words of Reason‘s Elizabeth Nolan Brown, “everything from its purchase of the robot vacuum maker iRobot to whether digital voice assistant Alexa violates the Children’s Online Privacy Protection Act and how it decides which marketplace products to give the ‘Amazon Choice’ label.”

Khan’s regulatory zeal and process overreach has led Christine Wilson to announce her resignation from the commission, citing Khan’s “disregard for the rule of law and due process,” among other complaints.

The click-to-cancel rule is guaranteed to jack up compliance costs (which hurt small entities hardest) and drive some current practitioners out of the negative-option market altogether. No more easy-peasy renewals for your favorite poetry magazine or coffee roaster.

But don’t worry, the proposal is still open to feedback from the public. And The Washington Post’s Michelle Singletary, for one, wants to make sure the process is impartial: “This is your chance to be heard. If you have a horror story about canceling a free trial, auto-renewal or subscription, tell the FTC.”

The post Feds Want to Penalize Overly Complicated Subscription Cancellations at $50,000 a Pop appeared first on Reason.com.

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This month the United Nations’ Intergovernmental Panel on Climate Change (IPCC) issued its AR6 Synthesis Report, summarizing the latest findings on mitigating the effects of climate change. The full report advocates a number of strategies to that end, with the ultimate goal of cutting global greenhouse gas emissions in half by 2030.

One welcome suggestion is the elimination of fossil fuel subsidies.

There are two primary types of fossil fuel subsidies. Production subsidies offset the costs for companies involved in energy production. Consumption subsidies make the final product less expensive for consumers.

The subsidies have their defenders. In 2011, when President Barack Obama suggested ending oil company subsidies amid rising gas prices, Sen. James Lankford (R–Okla.) countered that the proposal would “hurt the everyday consumer of energy and imperil the jobs of millions of hard-working people in American-based companies.”

The IPCC’s report recommended that “removing fossil fuel subsidies would reduce emissions, improve public revenue and macroeconomic performance, and yield other environmental and sustainable development benefits such as improved public revenue, macroeconomic and sustainability performance,” a claim it made with “high confidence.” The panel further posited that “fossil fuel subsidy removal is projected by various studies to reduce global [carbon dioxide] emissions by 1–4%, and [greenhouse gas] emissions by up to 10% by 2030,” a statement it made with “medium confidence.”

Environmentalists and free marketeers might not agree on some of the IPCC’s other recommendations, but here is one subject where both groups are on the same page. Fuel subsidies lower the cost of energy and incentivize consumption: When the price of fuel is artificially lowered, more people will drive and fewer will turn to carpooling and other commuting alternatives. After all, there’s a reason that demand for electric cars surges whenever oil prices spike.

“Prices for end-consumers rarely move in lockstep with international prices because of various buffers, contractual provisions or other mechanisms to smooth volatility,” according to the International Energy Agency (IEA). Even as Russia’s invasion of Ukraine rocked the global energy market, prices paid in many countries remained artificially low.

The reason? More than $1 trillion in global consumption subsidies in 2022, considerably more than any other recent year. The IEA found that subsidies on natural gas and electricity consumption more than doubled, while oil consumption subsidies rose by 85 percent. The International Monetary Fund found that total global fossil fuel subsidies, both production and consumption, totaled $5.9 trillion in 2020, or 6.8 percent of global GDP.

A decade ago, a study published by the National Bureau of Economic Research estimated that ending all fossil fuel subsidies would decrease global consumption by 29 billion gallons annually.

Last year’s Glasgow Climate Pact was the first time an international climate agreement included a call to revoke subsidies. Even then, it came after significant opposition from developing countries such as India and China.

The IPCC report notes that ending subsidies can hurt “the most economically vulnerable.” But the IEA noted that “subsidies are rarely well-targeted to protect vulnerable groups and tend to benefit better-off segments of the population.” It recommends prioritizing “structural changes” over short-term relief, while the IPCC report argues that if you want to help poor people pay for transportation, it may more sense to redistribute the revenue you saved by cutting the subsidies.

The post U.N. Climate Report Recommends Ending Fossil Fuel Subsidies appeared first on Reason.com.

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After the Supreme Court decided California v. Texas, you might have though we weren’t going to have any more significant constitutional cases about Obamacare. I certainly did. But recent events might have proved us wrong!

Yesterday, federal District Judge Reed O’Connor issued a decision in Braidwood Management, Inc. v. Becerra, striking down some key Affordable Care Act regulations that require insurance plans to cover various types of preventive care without any cost-sharing by patients. Technically, yesterday’s decision only addressed some procedural issues, including imposing a remedy of a nationwide injunction. But it builds on an earlier September 7, 2022 ruling in which Judge O’Connor addressed the constitutional issues. In that decision, he struck down ACA preventive care mandates  issued by the Preventive Services Task Force (“PSTF“), but upheld several issued by other agencies: the Advisory Committee on Immunization Practices (“ACIP“) and the Health Resources and Services Administration (“HRSA“).

Unlike previous major Obamacare cases, which involved issues of federalism (NFIB v. Sebelius), textual statutory interpretation (King v. Burwell), and severability (California v. Texas), this is one is mainly about separation of powers. Specifically, Judge O’Connor ruled that the regulations issued by PSTF are unconstitutional because the members of PSTF—volunteer experts selected by the Director of the Agency for Healthcare Research and Quality (AHRQ)—are “officers of the United States” who were never properly appointed in any of the ways allowed by by the Constitution: appointment by the president (if they are “principal officers”) or by a head of department or a court of law (if they are “inferior officers”).

Before getting into the details, it’s worth noting that Judge O’Connor is the very same judge who wrote a truly awful decision in the last major Obamacare case (in which a group of red states tried to bring down the entire ACA by claiming that it couldn’t be severed from the now-unconstitutional individual health insurance mandate). On appeal, the US Court of Appeals for the Fifth Circuit ordered him to go back to the drawing board. But O’Connor never got the chance to do so, because the Supreme Court took the case and definitively rejected it based on lack of standing.

This history doesn’t inspire confidence in Judge O’Connor’s handling of further Obamacare-related litigation. In addition, it seems likely that the plaintiffs (a group of individuals business owners who object to the mandates based on a combination of economic and religious grounds) chose to file the case in this court precisely because they knew they would likely get O’Connor (who hears almost all the cases in the Wichita Falls division of the Northern District of Texas).

That said, each ruling must be assessed on its own merits. And my tentative judgment is that Judge O’Connor did a better job here than in his last Obamacare ruling.

Here are key passages on separation of powers and PSTF:

The Appointments Clause lays out the permissible methods of appointing “Officers of the United States.“ U.S. Const. art. II, § 2, cl. 2. Principal officers must be nominated by the President and confirmed by the Senate. Id. But Congress can authorize the appointment of “inferior Officers” by the President alone, the courts, or “the Heads of Departments….“

A person is an officer of the United States if he (1) occupies a “‘continuing‘ position
established by law“ and (2) exercises “significant authority pursuant to the laws of the United States.“ Lucia, 138 S. Ct. at 2051 (internal quotation marks and citations omitted). The members of PSTF satisfy both criteria.

First, PSTF members occupy a continuing position established by law. First, PSTF members occupy a continuing position established by law. Congress requires the Director of AHRQ to “convene” PSTF by assembling a group of “individuals with appropriate expertise.” 42 U.S.C. § 299b-4(a)(1). Congress described the purpose of PSTF, assigned its duties, authorized appropriations for its activities, and insulated it from political pressure. See id. § 299b… Regulations lay out extensive qualifications for the members, who serve four-year terms….

Second, PSTF members exercise significant authority pursuant to the laws of the United
States. This second step “focuse[s] on the extent of power an individual wields in carrying out his assigned functions.“ Lucia, 138 S. Ct. at 2051. PSTF has authority to determine what preventive– care services receive an “A“ or “B“ rating. Private insurers must cover all services with an “A“ or “B“ rating. 42 U.S.C. § 300gg–13(a)(1). Therefore, PSTF has authority to determine what preventive–care services private insurers must cover…..

Because PSTF members are officers of the United States, their appointments must comply with Article II. Principal officers must be nominated by the President and confirmed by the Senate, while inferior officers may be appointed by the President alone, the courts, or the heads of departments, if Congress permits.….

PSTF members are principal officers. The AHRQ Director”convene[s]”PSTF, but he is
not necessarily part of PSTF, whose members are otherwise “independent.” 42 U.S.C. § 299b-4(a)(1), (a)(6). In that regard, PSTF is different from ACIP and HRSA, which are subject to the [HHS] Secretary’s control…. PSTF is not even part of HHS, or any other agency… AHRQ has no oversight or supervision role over PSTF…. The AHRQ Director is appointed by the Secretary, but he neither directs nor supervises PSTF or its members.….

Because PSTF members are principal officers, they must be appointed by the President and confirmed by the Senate….

Even if PSTF members were inferior officers, their selection would still violate the
Appointments Clause. Congress can vest the appointment of inferior officers by the President alone, the courts, or the heads of departments. U.S. Const. art. II, § 2, cl. 2. If the power to “convene“ PSTF is commensurate with the power to appoint its members, then Congress arguably vested the appointment of PSTF members in the AHRQ Director. See 42 U.S.C. § 299b–4(a)(1). The AHRQ Director is not the President or an officer of the courts, so the only question is whether he is one of the “Heads of Departments“ mentioned in Article II. He is not.

Judge O’Connor concludes that some of these problems also apply to regulations issued by ACP and HRSA. However, he ultimately rejects plaintiffs’ Appointments Clause challenges to these agencies’ actions because their regulations can be—and were—”ratified” by the Secretary of Health and Human Services, who is a “principal officer” duly appointed by the president and confirmed by the Senate.

I am not an Appointments Clause expert, so could easily be missing something. But the above analysis about PSTF at least strikes me as highly plausible.  This body is indeed something of a strange beast that doesn’t readily fit within normal constitutional categories. I think O’Connor is also right about how ratification by higher officials obviates the issues with ACIP and HRSA.

Later in the September 2022 opinion, O’Connor also rejects nondelegation challenges to regulations issued by all three of these bodies, on the grounds that they meet the very permissive nondelegation rules outlined in current Supreme Court and Fifth Circuit precedent, under which Congress can delegate even very broad power to the executive, so long as it is guided by an “intelligible principle.”  I think O’Connor is right as to the current precedent. Whether things would change if the Supreme Court tightened up nondelegation standards (as several Supreme Court justices rightly want to do) is a much tougher question. We may find out if this case reaches the Supreme Court.

In the last part of his September 2022 opinion,  Judge O’Connor ruled  that PSTF’s “PrEP” regulations mandating that insurance plans cover drugs that help prevent infection by the HIV virus violate the Religious Freedom Restoration Act when applied to those plaintiffs who object to them on religious grounds (because they believe the use of these drugs promotes “sexual activity outside marriage between one man and one woman, including homosexual conduct,” and they further believe such sexual activity goes against the will of God).

I will leave this issue to RFRA experts, except to make the point that this is probably the least significant part of the ruling. Employers with religious objections to anti-HIV drugs are very rare, and workers who want coverage for them are highly likely to be able to find alternatives.

In such cases, it seems to me only right to let the religious objectors run their enterprises as they see fit, and let those who oppose their principles work elsewhere. Live and let live! I say that even though I myself have zero sympathy for the plaintiffs’ moral stance here, and do not believe there is anything inherently wrong with “sexual activity outside marriage between one man and one woman.” Whether Judge O’Connor’s RFRA ruling is correct as a legal matter, is a different question, of course.

Some critics of Judge O’Connor’s ruling argue that lifting the PSTF mandates is likely to be a disaster for workers. I am not convinced. Different workers have divergent needs and preferences. Some might prefer higher pay, lower insurance premiums, or greater coverage for other health problems to having the benefits mandated by PSTF. To the extent the mandates impose additional costs on employer-provided plans, employers will have incentives to cut pay or skimp on other benefits to make up for it. For some workers, that will actually be a worse deal than the alternatives that would exist in the absence of a mandate. Here, as elsewhere, one-size-fits-all mandates are generally a bad idea.

Both sides will almost certainly appeal the parts of this ruling they lost. As the case continues, it’s worth keeping in mind an issue I highlighted in my analysis of Judge O’Connor’s previous ACA ruling:

I do not expect this ruling to survive on appeal…. [But] the history of ACA-related litigation is filled with surprises and failed predictions by experts. My own predictions about the original [2012] Obamacare case were right on some key points, but wrong on others…

There is, however, one important distinction between the 2012 ACA case and the current one. Despite repeated claims to the contrary by the law’s defenders, there was never a broad, cross-ideological consensus in favor of the constitutionality of the individual mandate. From early on, prominent conservative and libertarian legal scholars and commentators argued that the law was unconstitutional. The issue was one that divided experts largely along ideological lines. Thus, judges could (and did) write plausibly defensible opinions on either side of the issue.

By contrast, expert support for the states’ severability argument in the present case is notable by its near-total absence. Those conservative and libertarian legal scholars who have opined on the subject have almost all argued that the states’ position is badly wrong…. Judges don’t have to listen to expert commentators…. But lack of intellectual respectability does make it much harder for a controversial new argument to prevail, especially in a high-profile case like this one.

The plaintiffs’ main arguments in the severability case never did achieve meaningful intellectual respectability. That was a key reason why they ultimately went down to defeat, and Judge O’Connor’s ruling ended up a widely reviled outlier.

As the current case goes one, keep an eye on the reactions of expert commentators. If this O’Connor ruling is also met with cross-ideological expert condemnation, that’s a strong sign it is likely to be overruled. But if experts start to divide along ideological lines—as happened with the 2012 Obamacare litigation that led to NFIB v. Sebelius—then things become far more uncertain.

The post Federal Court Strikes Down Obamacare Preventive Care Insurance Mandate appeared first on Reason.com.

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