Cap-And-Trade Costs California Businesses $1 billion

California businesses paid a whopping $1 billion this year buying permits to comply with the state’s cap-and-trade law — the largest sale recorded since the state began regulating carbon dioxide in 2012.

Even with record permit sales, the $1 billion raised was well below market expectations. But environmentalists sold the auction as a huge success, because now oil and gas companies have to buy permits.

“Despite the oil industry’s fear mongering, the sky did not fall,” said Merrian Borgeson, a senior scientist at Natural Resources Defense Council. “California’s carbon market continues to hum along as expected, with this auction’s price right in line with previous auctions.”

Carbon emissions permits for 2015 only sold for $12.21 per metric ton, and permits for 2018 sold for $12.10 per ton. In total, the state sold 73.6 million permits for emissions in 2015 and 10.4 million permits for emissions in 2018.

“We are making progress toward a cleaner future,” Borgeson said. “Our clean energy policies cut dangerous emissions, boost the state’s economy, and drive investment in our most disadvantaged communities.”

But the record permit sales may not be the harbinger of good news that environmentalists and state regulators argue. As of this year, California expanded its cap-and-trade system to cover transportation fuels — meaning oil companies will have to buy carbon credits for the fuel they sell.

Before that, the state’s cap-and-trade law only covered several hundred industrial companies, like food processors, cement makers and other energy-intensive industries. Basically, the state forced more companies to buy permits and expanded the pool of permits — which means prices are lower than they would have been otherwise.

Also, California’s cap-and-trade system has been linked to Quebec’s emissions trading scheme to limit the economic impacts pricing carbon dioxide has on California residents. California officials are trying to convince other states to join their cap-and-trade plan to further disperse costs.

California passed its cap-and-trade law in 2006 under Republican Gov. Arnold Schwarzenegger. The point of the law is to reduce carbon dioxide emissions to 1990 levels by 2030. The law went into full effect in 2012, when the first carbon permit auctions were held.

State regulators are still in the process of implementing a second prong of the 2006 global warming law: a low-carbon fuel standard. This requires oil companies to reduce carbon emission from gasoline 10 percent by 2020 — though the rule is being rewritten in the wake of legal challenges.

But that’s not all. California lawmakers are intent on halving the use of petroleum in the next 15 years. State Democrats have proposed a highly contentious law which would remove 8 billion gallons of fuel from state markets.

The oil industry has come out swinging against the legislation, saying it’s nothing more than an attack on oil companies and jobs.

“Legislative mandates to force reductions in gasoline use are not climate change policies,” Catherine Reheis-Boyd, president of the Western States Petroleum Association, said in a statement. “They are attacks on an important industry in California designed to create conflict and controversy.”

“Achieving so radical a goal in so short a time will require the removal of 8 billion gallons of gasoline and diesel from our fuel supply – with no guarantees that something will be available to replace them,” Reheis-Boyd added.

Originally published by the Daily Caller News Foundation

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Weight Loss Nudges: Market Test or Government Guess?

As we edge further into the new year, many Americans have already fallen off the wagon and are back to their old eating habits they resolved to break this year. There is no shortage of hucksters who use New Year’s resolutions to promote their fad diets to Americans, but researchers have yet to provide a clear understanding of obesity, let alone how to cure or prevent it.

Some behavioral economists have suggested that well-designed “nudges” can steer individuals toward weight loss. Those who decide the direction in which people will be nudged, choice architects,” are believed able to promote healthier consumption by individuals suffering from various psychological, social and emotional factors that cause them to be obese.

Some nudge theory advocates believe that nudging individuals toward healthy choices is often best left to governments since markets give companies irresistible incentives to exploit – for profit –human frailties to overeat. However, evidence suggests that market nudges work best.

The obesity rate has doubled over the past three decades, with some projecting that 42 percent of Americans will be at least 100 pounds overweight by the year 2030. The association with diabetes, stroke, heart disease and certain cancers has made obesity a public health concern – and a personal concern for the 51 percent of Americans who want to lose weight, according to a recent Gallup poll.

Despite the good intentions of government choice architects, they fall prey to widely-held weight loss beliefs that simply are not supported by science.

For example, in the Department of Agriculture’s “Choose My Plate” suggests eating more fruits and vegetables to promote weight loss even though a recent study in the American Journal of Clinical Nutrition found that although fruit and vegetable consumption has demonstrable health benefits, weight loss is not one of them unless individuals also reduce intake of other foods.

Past experience with government nudges supporting low-fat diets also suggests caution since promoting diets rich in complex carbohydrates such as breads, cereals, rice, pasta, potatoes and other starches may have unintentionally promoted obesity.

Markets nudge all the time, but unlike the government, receive direct feedback from customers.

Markets hold significant advantages over governments. Consumers directly signal to sellers which products are ineffective. They simply stop buying them. Harmful products might yield costly lawsuits directly aimed at businesses. Businesses read these signals routinely because they threaten their financial health.

Government nudging suffers from higher hurdles in getting nudges “right.” Their nudges do not have to withstand consumer scrutiny, nor do revenues do not rise or fall to signal the good from the bad. Government employees typically are not fearful that failed products place their jobs in jeopardy.

While many Americans’ crash diets may not have even made it through the first month of the New Year, a majority of them do want to lose weight and nudging plays an important role in helping them do so.

But, nudging consumers toward healthier eating is best left to the private market, not the government.

Michael Marlow is professor of economics at California Polytechnic State University in San Luis Obispo. His paper “Market Test or Government Guess? Are Government Efforts to ‘Nudge’ Us to Lose Weight Really Based on Science?” appears in the current issue of the Cato Institute’s journal Regulation.

Tesla Challenges Dealership Laws in Various States — Including Texas and Arizona

California’s Tesla Motors Inc. is proving as revolutionary in selling cars as making them. It’s challenging states that mandate new cars be sold only through dealerships by pushing to offer its premium electric vehicles directly through company showrooms.

The two sides raced each other recently in a debate sponsored by the Texas Conservative Coalition Research Institute. The verbal drag-race pitted Ricardo Reyes, Tesla’s vice president of communications, against Bill Wolters, president of the Texas Automobile Dealers Association.

Each side maintained the other was upholding a monopoly. Reyes insisted the Texas law, by preventing Tesla from selling cars directly, erected a monopoly consisting of state dealers. Wolters said the opposite was true: That Tesla, by cutting out the dealers and selling cars only by itself, was monopolizing the market.

Interstate Commerce Clause

At issue was the Interstate Commerce Clause of the U.S. Constitution, which gives Congress alone the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” It established a vast free-trade zone among the 50 states, a keystone of American prosperity.

The debate was reported in the Texas Tribune.

“How does a manufacturer of a product that owns every retail outlet benefit a consumer or the state of Texas?” Wolters asked.

Reyes responded, “All we’re asking to do is be allowed, unfettered, to compete.”

According to the Tribune, Reyes called his company the “underdog.”

Reyes insisted that Tesla just wants to sell directly to its customers. Currently, Tesla sells no cars in Texas, but in 2015 plans to sell 55,000 nationally and abroad, Fortune reported yesterday. That’s a fraction of total expected U.S. vehicle sales of more than 17 million, according to Automotive News.

Also yesterday, Reuters reported on the company’s financial problems, “Tesla Motors Inc missed fourth-quarter sales targets and analysts’ profit expectations, but Chief Executive Officer Elon Musk on Wednesday said by 2025 Tesla’s growth trajectory could take its market value to $700 billion, matching that of Apple Inc.

“It was a glimmer of optimism capping a difficult quarter that saw the electric-car company struggle with production and delivery issues on several fronts, notably in China.”

Although perhaps utopian, it’s that promise of Apple-like success that concerns dealers in Texas and elsewhere. Musk did not attend the debate.

Wolters addressed the replacement threat directly at the debate. “If we didn’t have franchise laws, the manufacturers, as they should, would focus on their shareholders and only have dealerships in the most profitable, highly populated areas of our state,” he said. “Do we want to jeopardize two-thirds of the dealerships in our state?”

Reyes said, “It is odd to me that the only thing consumers can’t buy direct is booze and cars in this state. Imagine the Girl Scouts having to sell through a distributor network. Imagine Apple having to sell through a distributor network.”

Prohibition

The alcohol example is interesting because it involves a quirk in the Constitution. Alcohol Prohibition, “the Noble Experiment” from 1920-32, was imposed with the 18th Amendment, which banned manufacturing or importing alcohol except for medicinal or religious purposes.

It was enforced through the Volstead Act and other federal laws.

However, when Prohibition was repealed, the 21st Amendment allowed the states to carve out their own distribution laws for alcohol. It reads, “The transportation or importation into any state, territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”

Note the clause, “in violation of the laws thereof” — meaning state laws.

That’s why California has very liberal alcohol laws. But in Pennsylvania, as Forbes recently reported, “If you want to buy beer, you have to go to a beer store or distributor. If you want to buy spirits, you have to go to a state-run liquor store.”

But there’s no 21st amendment for anything besides alcohol.

Foie gras

Ironically, California itself is challenging the Interstate Commerce Clause in its controversy over foie gras, insisting that a state ban on the culinary delicacy’s production and use includes banning importing it from other states and countries.

State restaurants have retorted that, although the state can ban specially fattening a goose — the way it’s made — it can’t ban importing foie gras.

As CalWatchDog.com reported, Attorney General Kamala Harris is appealing a January ruling by U.S. District Court Judge Stephen Watson that federal law preempts state law on importing foie gras.

Arizona

Texas’ action also is somewhat ironic, given its boast of having fewer regulations and a more pro-business environment than California.

Tesla is faring batter in the Grand Canyon State. Reported the Arizona Republic:

“House Bill 2216 would effectively upend the decades-old system that prohibits manufacturers from competing with dealerships through direct sales. Tesla is pushing a bill similar to one that failed a year ago in hopes that a new governor and Legislature are more open to what it sees as free-market principles.

“Standing in the way are the state’s car dealers, a group that directly employs about 24,000 Arizonans and accounts for $2 billion in sales taxes, a crucial element of the state’s revenue. They see Tesla as seeking an exception that would allow it to establish monopoly powers that threaten the state’s broader economy.”

But Tesla owners, by definition an upscale group able to purchase a $101,500 car, may have the last say. Mark Rohde told the Republic, “As a consumer, I don’t need a dealer to take care of me. I don’t need a middle man. If you believe in free-market economies, then you better get behind free-market economies.”

Originally Published on CalWatchdog.com

Political Attacks on Gasoline Designed to Create Conflict

The Western States Petroleum Association is strongly opposed to legislative or regulatory mandates designed to force a 50 percent reduction in gasoline and diesel use in California by 2030.

Mandates to force reductions in gasoline use are not climate change policies.  They are attacks on an important industry in California designed to create conflict and controversy.

A mandate to reduce petroleum consumption by 50 percent is an impossibly unrealistic goal.

SB 350 by Sen. de Leon gives the unelected California Air Resources Board open-ended authority to adopt mandates by regulation to achieve unrealistic cuts in gasoline and diesel use.

History tells us two things; mandates designed to achieve a goal of this magnitude will require unacceptably coercive restrictions on our mobility choices and will be crushingly expensive.

Achieving so radical a goal in so short a time will require the removal of 8 billion gallons of gasoline and diesel from our fuel supply annually – with no guarantees that something will be available to replace them.

This proposal is a major distraction from the much more important work that must be done to move California’s climate change agenda beyond the 2020 horizon established by AB 32.

California’s petroleum producers and refiners will be participants in shaping those policies so we can continue the progress we have made toward achieving greenhouse gas reduction targets.

It is one thing to establish goals like those identified in the Governor’s inaugural address and to use those goals to measure the effectiveness of climate change policies.  It is another thing entirely to empower an unaccountable regulatory agency the authority to impose regulations to achieve those goals.

We look forward to working with the Governor and the Legislature to develop serious climate change policies and programs that will move us toward a lower carbon future.  We urge legislators to reject Sen. de Leon’s proposed policy as quickly as possible so that we can get back to work on the real tasks at hand.

Catherine Reheis-Boyd is President of the Western States Petroleum Association

Originally published by Fox and Hounds Daily

The Tesla Effect

Call it the Tesla Effect.

Good news — so far — for California’s successful electric-vehicle maker and others in the industry. At least through last November, the low gasoline prices of recent months have not crashed electric vehicle sales.

Plug In America, which follows EV sales, charted both sales and the price of gas for recent years. “Gasoline prices have fluctuated almost a dollar during this period,” it found. “Very recently, they’ve dipped to new lows. But on average, the trend has been flat, because all the ups and downs cancel each other out.”

The chart on their site shows national gas prices jumping up and down from 2011 through Nov. 2014, from lows of around $3 a gallon to highs of nearly $4. California prices have been about 10 percent to 15 percent higher than national prices.

“The current generation of plug-in vehicles started selling in December 2010,” Plug In America also reported. “As a product category, PEVs [plug-in electric vehicles] are still in their infancy. Sales have risen year after year. The trend is rising.”

EV sales

The chart on that site shows sales of EVs steadily rising from close to zero at the beginning of 2011 to about 10,000 a month at the end of 2014. Here’s a similar chart:

US electric car sales

However, a caution light comes from Robert Poole, director of transportation policy at the Los Angeles-based Reason Foundation. “We are now seeing gas prices far below the data for 2013 and 2014, so all bets are off in terms of the impact on hybrid and EV sales impact,” he told CalWatchdog.com.

“The auto industry is already seeing a large increase in pickup truck and SUV sales, which is widely attributed to the impact of lower gas prices,” he said. “I would be very surprised if there were not a comparable impact, in the other direction, on sales of hybrids and EVs.”

Long-term data to come out in future months will tell the story.

But USA Today reported this week:

“Sales of new cars and trucks roared off to a fast start in January, towed by Americans’ renewed love affair with trucks and SUVs as low fuel prices mean the gas-thirsty models aren’t so expensive to fill up.

“Trucks — a category that consists of pickups, vans and SUVs — were 54% of January sales; cars were the remainder, according to sales tracker Autodata.”

One detail can be noted, for Fiat Chrysler Automobiles. Its Chrysler division went bankrupt during the Great Recession, was bailed out by the federal government, then merged with Fiat. The picture now:

“Jeep, again, was the star, posting its best-ever monthly sales and recording a 44% increase by the compact Jeep Cherokee SUV.

“Patriot, smaller than Cherokee and on the market since the 2007 model, found new buyers somewhere, and recorded a 35.6% gain.

“Ram pickup was up 14%.

“Chrysler has become largely a truck and SUV company — 72.5% of its sales — while its cars are an almost incidental 27.5%.

“Even against the industry-wide strong, new interest in trucks and SUVs, FCA US results are dramatic.”

The future

These numbers likely only would hold so long as gas prices remain low. If the history of fluctuations once more arcs upward, then gas-powered vehicles again could come into disfavor.

The San Jose Mercury News reported today:

“Those amazingly low gas prices that soothed motorists for the past few months will soon be in the rearview mirror: Pump prices have jumped a dime or more in the past week and are expected to soar another 30 to 50 cents a gallon by April. 

“That would have California drivers paying around $3 a gallon, a far cry from today’s $2.53 statewide average mark but still well below the $3.60 price a year ago.”

California’s situation is unique because of special state fuel requirements, including the conversion, going on now, to more expensive summer fuel. And the state is working out how much the new tax for the cap-and-trade program will cost.

But gas prices are rising across the country. “[T]he most pain is being felt now in the upper Midwest, where the statewide average in Michigan soared from $2.09 on Tuesday to $2.23 on Wednesday,” the Mercury News reported. “Bay City, Michigan, led all metropolitan areas in the nation with a 29-cent overnight hike.”

On the other hand, Citigroup economists expect the oil price decline to continue, or at least not to rise.

Originally published on CalWatchdog.com

New Bill Could Raise Legal Smoking Age to 21

Smoke ‘em if you got ‘em — maybe.

A new wave of anti-smoking legislation is wafting through the halls of the state Capitol. And it’s been more than four years since former Gov. Arnold Schwarzenegger folded his cigar “smoking tent” on the Capitol grounds.

First out of the pack is a bill that would boost the smoking age statewide to 21 years from the current 18. Tapping into longstanding fears concerning children and public health, legislators have teed up a stronger political conflict around health care costs and personal responsibility.

State Sen. Ed Hernandez, D-West Covina, is the author of Senate Bill 151, an expansion of the so-called Stop Tobacco Access to Kids Enforcement Act, or STAKE.

Existing law prohibits the furnishing of tobacco products to, and the purchase of tobacco products by, a person under 18 years of age. According to the new bill’s language:

“A person is prohibited from making various promotional or advertising offers of smokeless tobacco products without taking actions to ensure that the product is not available to persons under 18 years of age. Existing law also requires the State Department of Public Health to conduct random, onsite sting inspections of tobacco product retailers with the assistance of persons under 18 years of age.”

SB151 revises those provisions such that Californians under 21 years of age are covered. And it authorizes random compliance inspections of retailers by the State Department of Public Health.

In a statement, Hernandez cast his bill as essential to preventing children from becoming addicted to cigarettes. “We can no longer afford to sit on the sidelines while big tobacco markets to our kids and gets another generation of young people hooked on a product that will ultimately kill them,” he said.

Defining children upward

But the Sacramento Bee reported something about SB151 on Hernandez’ own website. The site quotes the California branch of the American Lung Association saying 90 percent of smokers begin before they turn 19.

Critics of raising the smoking age also point out that people age 18 can vote, join the military and get a driver’s license without parental permission. And although the drinking age in California is 21, that’s because drunkenness can cause immediate harm to others, especially through car accidents.

Although the numbers does not make a strong case for Hernandez’s level of concern, the numbers likely don’t matter to his legislation’s fortunes. According to the Los Angeles Times, SB151 already counts the support of the American Cancer Society, the California Medical Association and, importantly, the American Lung Association.

The Times reports, “Smoking contributes to the deaths of more than 40,000 Californians each year, according to Kimberly Amazeen, vice president for the American Lung Association in California. She said 21,300 California kids start smoking each year.”

Targeting e-cigarettes

As the Washington Times notes, legislation similar to SB151 has failed elsewhere across the country, including in Colorado, Maryland, New Jersey and Utah. California, however, boasts a stronger anti-smoking constituency and a more effective anti-smoking lobby than those states.

In yet another demonstration of many Californians’ preference for prohibition, state Sen. Mark Leno, D-San Francisco, has introduced an anti-smoking bill of his own. SB140 would restrict “vaping” e-cigarettes to the same extent that smoking traditional cigarettes is restricted.

As the Bee reports, Leno’s rhetoric focuses on the addictive qualities of smoking in the same manner as Hernandez’s. Leno said in a statement:

“No tobacco product should be exempt from California’s smoke-free laws simply because it’s sold in a modern or trendy disguise. Addiction is what’s really being sold. Like traditional cigarettes, e-cigarettes deliver nicotine in a cloud of other toxic chemicals, and their use should be restricted equally under state law in order to protect public health.”

Although e-cigarettes are demonstrably safer than traditional cigarettes to smokers and bystanders, the science is secondary to the cultural politics that surround vaping.

As the San Francisco Chronicle observes, “California bans the sale of e-cigarettes to minors, but other efforts to legislate them have failed. State Sen. Ellen Corbett, D-San Leandro, originally proposed stronger restrictions in 2013, but the language in her proposed bill was watered down to ban e-cigarette sales in vending machines and was defeated in an Assembly committee last year.”

E-cigarettes are widely seen as both a popular substitute for traditional cigarettes and as a more tempting option for people who would not consider taking up traditional smoking. That tension helps account for the push for increased regulation and for the failure of recent legislation to meet its mark.

Originally published at CalWatchdog.com

CA to legalize online poker?

As reported by the San Diego Union-Tribune:

 — Will 2015 be the year California legalizes online poker?

Two lawmakers at the state Capitol are betting big that it will be.

But their competing bills, introduced early this session, show there’s still strong disagreement about which industry players should control and benefit from the popular, and lucrative, business.

Candidates include card clubs, Indian tribes, race tracks and out-of-state gaming companies.

Lawmakers and these groups have failed for nearly a decade to craft rules … 

Full Story Here

‘Surf City’ First in Nation to Repeal Plastic Bag Ban

On Tuesday night, on an overwhelming 6-1 vote, the city council of Huntington Beach, California–which is officially known as “Surf City, USA“–directed the city staff to begin the process of repealing a policy that bans the use of plastic grocery bags, and requires grocery stores to charge a ten-cent fee on paper bags.

This coastal city in Orange County, which boasts 9.5 miles of beautiful beaches, is about to make history, as never before has a city with such a bag ban ever repealed it.

The city’s bag ban was an issue in last year’s council elections, and all four council members who won election were public in their support for repealing it, defeating two incumbents who had voted in favor.

Breitbart News spoke with Councilman Mike Posey, who placed the repeal onto the council agenda, and made the motion for its passage. He was crystal clear on his motive. “The intention of the bag ban was to reduce litter and improve the environment. We have no verifiable proof that our local bag ban has done anything to reduce locally sourced and discarded single-use plastic bags. Littering of any kind is unacceptable, but we already have laws in place to address littering.”

Posey added, “”I believe in protecting the environment, and I treasure the beach, ocean, air and environment. I drive a clean diesel-powered car and telecommute a few days per week. I am not necessarily an environmentalist but am steadfastly environmentally conscious. I also value freedom. However, litter from plastic bags is caused by misuse and not use, and I object to punishing everyone because some people choose to litter.”

Other Councilmembers supporting the vote to begin the bag ban repeal process were Dave Sullivan, Barbara Delgleize, Erik Petersen, Billy O’Connell and Dave Katapodis (the latter of whom actually voted for the original ban, but who has apparently changed his mind). Mayor Jill Hardy cast the lone dissenting vote.

Former mayor Matthew Harper, who had been on the losing end of the ban vote in 2012, but who was just elected to the California State Assembly this last November, lauded the actions of the city council.

“The vote to begin the process of repealing the ill-advised ban is a step forward for the local community,” he said. “Whether you look at this as a consumer choice issue, or from the perspective that the ban seeks to correct an alleged problem that is not prevalent on our beaches, I applaud the council’s overwhelming vote.”

The city’s plastic bag ban/paper bag fee ordinance was adopted in 2012 amidst much controversy, with the Surfrider Foundation, major proponents of the ban, committing to cover the city’s $20,000 cost of conducting a necessary environmental impact report.

While the city moved forward at the time, ultimately adopting the ban, it is worth noting that the Surfriders never did make good on their pledge.

Last year, in the final hours of the California legislature’s session, legislators put SB 270 onto Governor Jerry Brown’s desk, and he signed the statewide ban on plastic grocery bags, which required grocers to charge at least ten cents for every paper bag used.

However, right after Brown signed the bill, the American Progressive Plastic Bag Alliance, an industry group, announced that it would seek to gather the signatures necessary to trigger a statewide referendum on the bill.  A few months later they turned in over 800,000 signatures of registered voters, well above the required 504,760 number.

The effect of qualifying the referendum is that SB 270 does not go into effect, and instead the question of whether to ban plastic grocery bags and mandate a fee on paper bags will appear on the 2016 general election ballot.

For years more extreme environmental activist groups had been trying, without success, to pass a statewide ban on plastic bags. Year after year, the effort was beaten back by a coalition made up of bag manufacturers, grocers, liberty-oriented groups, and groups concerned that a bag ban is regressive and adversely impacts the poor.

The lynchpin for the ban finally passing was the placing of the mandatory ten-cent fee on paper bags into the bill, with the profits from that fee (double the actual cost of the paper bags) going straight to the profit margin of grocery stores. That amounts to hundreds of million of dollars of years to grocers, and thus it is not surprising, if alarming, that with this economic incentive the California Grocers Association abandoned its traditional opposition to the ban, instead reversing its position to support it.

There is no doubt that Surf City’s repeal of its local ordinance will be featured in the statewide campaign against the bag ban on next year’s ballot.

Assemblyman Travis Allen (R), who along with Harper lives in and represents Huntington Beach and who testified to the Council in support of repealing the ban, told Breitbart News, “Huntington Beach reversing their ban is proof that a one-size-fits-all statewide ban on plastic bags is a terrible idea.”

The projected timeline for the final repeal of Huntington Beach’s ban, after the results of an environmental impact report, and the requisite multiple votes on the repeal, is late May.

Originally published in Breitbart CA.

California Gold Miners Score Win Over State

As reported by Dan Walters at the Sacramento Bee:

California’s 21st century gold miners have scored a second major victory over state efforts to restrict – or ban – them from searching for the precious metal in rivers and streams on federally owned land, such as national forests.

On Monday, San Bernardino County Judge Gilbert Ochoa, building on a previous decision by a state appellate court, declared that the state’s moratorium on using suction dredges to sift through gravel had become a de facto ban and thus violated federal mining law, which encourages mining on federal lands.

His ruling was a victory for the Western Mining Alliance, which has battled the moratorium signed into law in 2009 by then-Gov. Arnold Schwarzenegger. While the law allowed …

Read the full story here

Net Neutrality = Regulate My Competitor

In a major development in the ongoing debate over net neutrality, President Obama announced his support for a strict regulatory regime to govern the Internet. The President framed the discussion around a good-faith need to protect innovators and entrepreneurs. Unfortunately, he has fallen for a cynical ploy that some Silicon Valley companies and advocacy groups are using to push an extreme regulatory agenda for the Internet.

Unfortunately, the innovative companies we take for granted to enrich our lives are not always the altruistic companies we think they are especially when it comes to exerting influence in Washington.

Take for example Netflix, who has transformed from a DVD mail order business to a dominant leader in streaming video. They have mastered the ability to provide almost any digital programming directly to smartphones, tablets, and TVs. What Netflix is not yet known for is the age-old practice many companies have come to rely on, known as “regulate my competitor,” or what economists call “rent-seeking.”

By hijacking the debate over network neutrality and conflating it with a regulatory arbitrage scheme to pad its bottom line, Netflix is putting its interest above all Internet users. The network neutrality debate has always been about treating all content on the Internet the same – no blocking or impeding traffic. Now, Netflix is trying to convince the Federal Communications Commission (FCC), to adopt a new proposal that would change the current bipartisan “light-touch” regulatory structure of today. Netflix and now President Obama want to “reclassify” broadband networks under 1930s rotary telephone laws that would make ISPs public utilities under the guise of no blocking or prioritization. However, making ISPs into utilities still won’t prevent prioritization, further revealing the “regulate my competitor” strategy Netflix has embarked on with other advocacy groups.

The Communications Workers of America recently noted that investment by the 11 largest publicly traded broadband companies rose from $56.5 billion in 2010 to $70.1 billion in 2013 while investment by content companies only rose from $9 billion to $13.2 billion in the same time frame. Clearly, the investments made by ISPs to expand Internet service dwarfs that of the content companies. ISP investments translate directly into good, U.S.-based union jobs, a situation not matched by the largely non-unionized global content companies.

It’s also important to remember that Silicon Valley’s giants rely on the investment that creates the robustness of these networks for their success. Public utility regulations will only dry up investment in networks – ultimately hurting the innovators the President and advocates claim to protect.

Analysts have noted that Netflix generates about 1/3 of all Internet traffic at peak times in the US. Traffic is so high it puts significant strain on the ISPs’ networks. To alleviate this strain, ISPs, for years, have made arrangements to connect directly with content companies in order to keep the Internet free from this congestion. These arrangements are a win for content companies, ISPs and consumers.

But these types of traffic routing arrangements, called “paid interconnection,” are not good enough for Netflix’s profit motives. Instead, by using the neutrality debate to try to force ISPs to deliver Netflix traffic for free over ISPs’ networks, subsidizing the delivery of Netflix’s massive content bandwidth. This would ultimately force all Internet users to subsidize Netflix’s bandwidth needs.

Instead of urging the FCC to regulate its competitors as public utilities, Netflix should be doing what many other content companies like Amazon and Google have done – make interconnection arrangements with ISPs or invest in their own networks to bring content closer to the end customer. This strategy will create high paying jobs in California and avoid age-old tactics like “regulate my competitor.”

This article was originally published on Fox and Hounds Daily

Eric Lindberg is Secretary-Treasurer Local 9423 and Next Generation Lead Activist for Communications Workers of America. Carlos Solórzano-Cuadra is CEO of the Hispanic Chambers of Commerce of San Francisco.