Category: Regulations

FDA Regulations Stop Vape Shop Innovations

(p. A19) After Kimberly Manor lost her husband to lung cancer, she was inspired to make a dramatic career change. Kimberly now owns and operates Moose Jooce in Lake, Mich., a “vape shop” that sells various electronic nicotine devices. These products use battery-powered coils to vaporize liquids, with differing levels of nicotine or none at all. Thus, vapers may inhale nicotine without the tar or other harmful chemicals in tobacco smoke, since there is no tobacco and no combustion. Scientific evidence suggests this is a much safer alternative to smoking.
Ms. Manor estimates that her business has helped more than 500 people quit smoking, most of them longtime smokers in their 50s or older. Yet the Food and Drug Administration is discouraging more such enterprises. In a regulation issued in 2016 known as the “deeming rule,” the agency ordered that vaping products would be subject to the same regulations developed for the cigarette industry under the Tobacco Control Act of 2009.
The deeming rule has been devastating to businesses like Ms. Manor’s. To give just one example, vape shop owners frequently experiment by mixing new flavors for the liquid “juice.” Now, each separate creation requires its own prohibitively expensive application for FDA approval, which means that vape shops have been forced to stop innovating.

For the full commentary, see:
Todd Gaziano and Tommy Berry, “Career Civil Servants Illegitimately Rule America; Leslie Kux has never been elected or confirmed by the Senate. She’s issued nearly 200 regulations.” The Wall Street Journal (Thursday, March 1, 2018): A19.
(Note: the online version of the commentary has the date Feb. 28, 2018.)

Italian Bureaucracy Leaves Innovative Restaurateur Feeling “Psychologically Violated”

(p. A7) ROME–The campaign leading up to Italy’s national elections on March 4 [2018] has featured populist promises of largess but neglected what economists have long said is the real Italian disease: The country has forgotten how to grow.
Take Gianni Angelilli’s pizzeria in downtown Rome. He uses an innovative dough mix and flexible cooking methods, drawing long lines and rave reviews. But Italy is too bureaucratic, the locals have no money and his ambition isn’t what it used to be, Mr. Angelilli said. If he opens more outlets, they will be abroad.
“Now, foreigners have more desire to eat well than Italians,” he said. “Italy is dead. Italy is finito.”
. . .
Italian politics have become measurably more chaotic since the country’s old party system–largely frozen during the Cold War–collapsed amid corruption scandals in the early 1990s. Data collected by Einaudi economist Luigi Guiso and others show that since 1992, coalitions have become more likely to crumble, lawmakers to defect and governments to need confidence votes in parliament. Politicians jostling for attention push more frequent, longer and more-complicated legislation.
“An excess has cluttered the bureaucratic machine,” says Mr. Guiso. “The country has become cumbersome.”
Yet the weakness of transient politicians has paradoxically made the public administration more powerful, at the same time as constant legal changes immobilize it, he says.
Mr. Guiso has practical experience. He is helping to set up a government-supported program to send young Italians to learn about entrepreneurship in Silicon Valley and at U.S. business schools, and he said Italian civil servants decided a tender offer inviting U.S. organizations to participate could be published in Italian only. After much persuasion, the civil servants agreed to publish the tender in English too–but insisted all applications must be in Italian, said Mr. Guiso. He said political friends apologized, saying there was nothing they could do.
Mr. Angelilli said his encounters with Italian bureaucracy while running his Pinsere pizzeria have left him feeling “psychologically violated.” He said he had to pay a fine recently because his oven’s air extraction, made to comply with European, national and regional laws, ran afoul of new city rules.

For the full story, see:
Marcus Walker and Giovanni Legorano. “The Real Italian Job: Rev Up Productivity.” The Wall Street Journal (Wednesday, Feb. 28, 2018): A7.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the article has the date Feb. 27, 2018, and has the title “Italy: The Country That Forgot How to Grow.”)

Occupational Licensing Hurts Military Spouses

(p. A15) Heather Kokesch Del Castillo launched a dietary advice business in Monterey, Calif., in 2014. The business grew and Ms. Del Castillo eventually established a nationwide client base as a “health coach.” But when her husband, who is in the Air Force, was transferred to a base in Florida, her business hit a roadblock. A Florida Department of Health investigator showed up at the door of their new home with a cease-and-desist letter and a $750 fine.
After nearly two years of operating her business in Florida, Ms. Del Castillo learned that she had run afoul of a law requiring any person offering dietary advice to possess a state-issued license. Qualifying for that permit requires a bachelor’s degree in dietetics, a 900-hour internship, a passing grade on an exam administered by the state Commission on Dietetic Registration, and a $355 fee. A licensed dietitian had tipped off the Health Department that Ms. Del Castillo was giving unauthorized advice. She retained the Institute for Justice, a public-interest law firm, to fight the law that stripped her of her livelihood.
State licensing laws pose a particular burden on military spouses like Ms. Del Castillo. About 1 in 4 Americans need licenses to perform their occupations. In some states, florists, taxidermists and even fortune-tellers need licenses to operate. Far too often, these licenses serve less as safeguards of public health and safety than as barriers to entry. In many cases, the state-appointed boards that issue licenses are stocked with industry insiders seeking to restrict competition.
. . .
Military spouses were 10 times as likely to have moved to a new state in the past year than the average American, according to a combined 2012 study by the Treasury and Defense departments. Surveys suggest that anywhere from 35% to 50% of military spouses work in professions that require licensure, and nearly 75% of them would need to be relicensed upon transferring to a new state. Perhaps as a result, the unemployment rate for military spouses is 16%, while the national unemployment rate is only 4.1%

For the full commentary, see:
Shoshana Weissmann and C. Jarrett Dieterle. “Why Do You Need a College Degree to Give Diet Advice?; State licensing laws overly burden military spouses, who move frequently only to find they can’t work.” The Wall Street Journal (Thursday, February 1, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the obituary has the date Jan. 31, 2018.)

Regulating A.I. “Is a Recipe for Poor Laws and Even Worse Technology”

(p. A27) “Artificial intelligence” is all too frequently used as a shorthand for software that simply does what humans used to do. But replacing human activity is precisely what new technologies accomplish — spears replaced clubs, wheels replaced feet, the printing press replaced scribes, and so on. What’s new about A.I. is that this technology isn’t simply replacing human activities, external to our bodies; it’s also replacing human decision-making, inside our minds.
The challenges created by this novelty should not obscure the fact that A.I. itself is not one technology, or even one singular development. Regulating an assemblage of technology we can’t clearly define is a recipe for poor laws and even worse technology.

For the full commentary, see:

ANDREW BURT. “Leave Artificial Intelligence Alone” The New York Times (Friday, January 5, 2018): A27.
(Note: the online version of the commentary has the date JAN. 4, 2018, and has the title “Leave A.I. Alone.”)

Regulations Threaten Precision Medicine Innovations Against Cancer

(p. A15) The federal government is threatening to limit treatment options for doctors fighting cancer.
. . .
At issue is whether reimbursements will be available to most physicians, hospitals and patients for a diagnostic technology known as next-generation sequencing. A cornerstone of the emerging field of precision medicine, NGS tests analyze molecular changes that occur in cancerous tumors and show up in biopsies.
. . .
Under the proposed policy, only one of hundreds of laboratories that currently offer NGS testing would meet all the new reimbursement requirements. The policy would in effect force clinicians and institutions to send all NGS testing to a single vendor, Foundation Medicine .
This is unfair to cancer patients. The proposal would result in a monopoly, allowing price manipulations, decreasing quality, and potentially contributing to market failure. It would turn the entire genomic-testing industry upside-down. The FDA is already unable to keep up with advances in precision medicine. Restricting access to cutting-edge molecular testing would stifle growth in precision medicine at approved testing sites nationwide. The limits could prevent desperately needed innovation, setting back progress in genomic testing and oncology by at least a decade.

For the full commentary, see:
Olivier Elemento. ”A New Regulatory Threat to Cancer Patients; Washington may impose needless limits on genetic testing.” The Wall Street Journal (Mon., Feb. 26, 2018): A15.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Feb. 25, 2018.)

NYC Fee for Plastic Bags Is “a Tax on the Poor and the Middle Class”

(p. A18) The ubiquitous, easily torn, often doubled-up plastic bags from the grocery store — hoarded by dog owners, despised by the environmentally concerned and occasionally caught in trees — will soon cost at least a nickel in New York City.
The City Council voted 28 to 20 on Thursday to require certain retailers to collect a fee on each carryout bag, paper or plastic, with some exceptions. Mayor Bill de Blasio has expressed support for the measure.
. . .
Mr. Bloomberg offered a proposal in 2008 for a 6-cent bag fee — 5 cents for stores; a penny for the city — before dropping it several months later amid strong opposition. At the time, one of the opponents on the Council was Simcha Felder, a Brooklyn Democrat who is now a state senator. Last month, Senator Felder introduced a bill that would prohibit the levying of local fees on bags; it passed a committee this week.
In discussing his opposition this week, Mr. Felder traced the 200-year history of how people have carried their groceries home, progressing from cloth bags to boxes to paper to plastic, and said that reusing bags presented a health hazard. He said he would hold a hearing on his bill in the city next month.
“That’s nothing less than a tax on the poor and the middle class — the most disadvantaged people,” he said.
Opposition to the measure has also come from the plastic bag industry — via its lobbying arm, the American Progressive Bag Alliance — as well as from those who, like Mr. Felder, said the fee amounted to a regressive tax, disproportionately affecting low-income and minority New Yorkers . . . .

For the full story, see:
J. DAVID GOODMAN. “Council Approves a Fee on Checkout Bags.” The New York Times (Fri., May 6, 2016): A18.
(Note: ellipsis added.)
(Note: the online version of the story has the date MAY 5, 2016, and has the title “5¢ Fee on Plastic Bags Is Approved by New York City Council.”)

With Cuts in Red Tape, Firms Invest More

(p. A1) WASHINGTON — A wave of optimism has swept over American business leaders, and it is beginning to translate into the sort of investment in new plants, equipment and factory upgrades that bolsters economic growth, spurs job creation — and may finally raise wages significantly.
While business leaders are eager for the tax cuts that take effect this year, the newfound confidence was initially inspired by the Trump administration’s regulatory pullback, not so much because deregulation is saving companies money but because the administration has instilled a faith in business executives that new regulations are not coming.
“It’s an overall sense that you’re not going to face any new regulatory fights,” said Granger MacDonald, a home builder in Kerrville, Tex. “We’re not spending more, which is the main thing. We’re not seeing any savings, but we’re not seeing any increases.”
. . .
(p. A10) Only a handful of the federal government’s reams of rules have actually been killed or slated for elimination since Mr. Trump took office. But the president has declared that rolling back regulations will be a defining theme of his presidency. On his 11th day in office, Mr. Trump signed an executive order “on reducing regulation and controlling regulatory costs,” including the stipulation that any new regulation must be offset by two regulations rolled back.
That intention and its rhetorical and regulatory follow-ons have executives at large and small companies celebrating. And with tax cuts coming and a generally improving economic outlook, both domestically and internationally, economists are revising growth forecasts upward for last year and this year.
. . .
. . . economists see a plausible connection between Mr. Trump’s determination to prune the federal rule book and the willingness of businesses to crank open their vaults. Measures of business confidence have climbed to record heights during Mr. Trump’s first year.
. . .
“We have spent the past dozen years or longer operating in environments that have had an increasing regulatory burden,” said Michael S. Burke, the chairman and chief executive of Aecom, a Los Angeles-based multinational consulting firm that specializes in infrastructure projects. “That burden has slowed down economic growth, it’s slowed down investment in infrastructure. And what we’ve seen over the last year is a big deregulatory environment.”
. . .
The White House sees its efforts as having their intended effect. Mr. Trump boasted about his deregulatory efforts last month at an event where he stood in front of a small mountain of printouts representing the nation’s regulatory burden and ceremonially cut a large piece of “red tape.”
The chairman of the White House Council of Economic Advisers, Kevin Hassett, said in an interview that the administration’s freeze on new regulations, in particular, appeared to have buoyed confidence. Though he cautioned that it could take years of research to pin down the magnitude of the effects, he said deregulation was “the most plausible story” to explain why economic growth in 2017 had outstripped most forecasts.
“Our view is, the ‘no new regulations’ piece has to be more powerful than we thought,” he said.

For the full story, see:
BINYAMIN APPELBAUM and JIM TANKERSLEY. “With Red Tape Losing Its Grip, Firms Ante Up.” The New York Times (Tues., January 2, 2018): A1 & A10.
(Note: ellipses added.)
(Note: the online version of the story has the date JAN. 1, 2018, and has the title “The Trump Effect: Business, Anticipating Less Regulation, Loosens Purse Strings.”)

Cuts in Red Tape Build Business Confidence

TrumpCutsRedTape2018-01-31.jpg“President Trump described his administration’s deregulation efforts in remarks at the White House on Thursday. He then stood between two piles of paper representing government regulations in 1960, (20,000 pages, he said), and today — a pile that was about six feet tall (said to be 185,000 pages).” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A22) WASHINGTON — President Trump said on Thursday that his administration was answering “a call to action” by rolling back regulations on environmental protections, health care, financial services and other industries as he made a push to showcase his accomplishments near the end of his first year in office.
The remarks highlighted an area where Mr. Trump has perhaps done more to change the policies of his predecessor than any other, with regulatory shifts that have affected wide sections of the economy.
. . .
Echoing his days as a real estate developer with the flair of a groundbreaking, Mr. Trump used an oversize pair of scissors to cut a ribbon his staff had set up in front of two piles of paper, representing government regulations in 1960 (20,000 pages, he said), and today — a pile that was about six feet tall (said to be 185,000 pages).
. . .
. . . , several economic indicators — and comments from companies large and small — suggest that a shift in federal regulatory policy is building business confidence and accelerating economic growth, developments Mr. Trump certainly took credit for on Thursday [December 14, 2017].
A survey of chief executives released this month by the Business Roundtable found that, for the first time in six years, executives did not cite regulation as the top cost pressure facing their companies.
“C.E.O.s appear to be responding to the administration’s energetic focus on regulation,” Joshua Bolten, the roundtable’s president, said this month.

For the full story, see:

ERIC LIPTON and DANIELLE IVORY. “Most Far-Reaching’ Rollback of Rule.” The New York Times (Sat., DEC. 15, 2017): A22.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date DEC. 14, 2017, and has the title “Trump Says His Regulatory Rollback Already Is the ‘Most Far-Reaching’.” The online page for this article says that it appeared on p. A16 of the New York edition. My page number above is from my paper, which was probably the midwest edition.)

Trump Argues Regulations Impede Infrastructure Investment

(p. A18) Mr. Trump is pursuing a similar shift in regulation, seeking to reverse or rewrite a host of rules intended to protect workers and consumers, under the theory that freeing companies from “red tape” will allow businesses to prosper, with wide-ranging benefits.
In remarks at the White House last week, Mr. Trump argued that regulation was impeding private investment in infrastructure. He held up a long, multicolored chart that he said reflected the permitting process for the construction of “a highway or a roadway.”
“By the time you finished, you probably gave up,” Mr. Trump said.

For the full story, see:
BINYAMIN APPELBAUM and ANA SWANSON. “Trump Bets on Business to Lift Workers.” The New York Times (Thurs., December 21, 2017): A18.
(Note: the online version of the story has the date DEC. 20, 2017, and has the title “Republican Economic Policies Put Business First.” The online version says that the page number for the print New York edition was A19. My print paper was probably the midwest edition.)

Firms Invest in France as Rules “Make It Easier to Hire and Fire”

(p. B1) PARIS — The announcements came in a steady drumbeat. Around 1,300 job cuts at France’s biggest automaker. At least 2,500 at France’s largest supermarket chain. Over 200 sought at a major clothing retailer. And thousands more are on the way.
Just weeks after France’s labor overhaul went into effect, companies are readily taking advantage of new rules that make it easier to hire and fire.
. . .
Perceptions of France, long derided as a difficult place to do business for its onerous labor rules, are changing.
Growth has recently picked up after being stagnant for nearly five years. And there are signs that the changes, a major piece of the president’s economic program, are drawing the interest of investors.
Amazon will open a new distribution center south of Paris this year, creating over 1,000 jobs. Facebook and Google announced Monday they would invest in artificial intelligence development in France. Also Monday, Toyota announced it would invest 300 million euros, or $367 million, to increase capacity at a plant in northern (p. B3) France, creating up to 700 jobs through 2020.
“The complex labor laws have historically been the No. 1 obstacle to the competitiveness and attractiveness of France,” said Olivier Marchal, the chairman of Bain & Company France, a business consulting firm. The changes, together with other business-friendly measures such as a gradual reduction in the corporate tax, have “drastically changed investor perceptions,” he said.

For the full story, see:
LIZ ALDERMAN. “Newfound Freedom … to Fire.” The New York Times (Weds., January 24, 2018): B1 & B3.
(Note: ellipsis in article title, in original; ellipsis between quoted paragraphs, added.)
(Note: the online version of the story has the date JAN. 23, 2018, and has the title “French Companies Have Newfound Freedom … to Fire.”)

Apple Orchard Must Focus on “Placating a Government Regulator”

(p. A1) ALTAMONT, N.Y. — For eight weeks every fall, Indian Ladder Farms, a fifth-generation family operation near Albany, kicks into peak season.
The farm sells homemade apple pies, fresh cider and warm doughnuts. Schoolchildren arrive by the busload to learn about growing apples. And as customers pick fruit from trees, workers fill bins with apples, destined for the farm’s shop and grocery stores.
This fall, amid the rush of commerce — the apple harvest season accounts for about half of Indian Ladder’s annual revenue — federal investigators showed up. They wanted to check the farm’s compliance with migrant labor rules and the Fair Labor Standards Act, which sets pay and other requirements for workers.
Suddenly, the small office staff turned its focus away from making money to placating a government regulator.
The investigators arrived on a Friday in late September and interviewed the farm’s management and a group of laborers from Jamaica, who have special work visas. The investigators hand delivered a notice and said they would be back the following week, when they asked to have 22 types of records available. The request included vehicle registrations, insurance documents and time sheets — reams of paper in all.
Over the next several days, the Ten Eyck family, which owns the farm, along with the staff devoted about 40 hours to serving the investigators, who visited three times before closing the books.
“It is terribly disruptive,” said Peter G. Ten Eyck II, 79, who runs the farm along with a daughter (p. A14) and son. “And the dimension that doesn’t get mentioned is the psychological hit: They are there to find something wrong with you. And then they are going to fine you.”
This is life on the farm — and at businesses of all sorts. With thick rule books laying out food safety procedures, compliance costs in the tens of thousands of dollars and ever-changing standards from the government and industry groups, local produce growers are a textbook example of what many business owners describe as regulatory fatigue.
Over the past five decades, Mr. Ten Eyck said, there has been an unending layering of new rules and regulations on his farm of over 300 acres, as more government agencies have taken an interest in nearly every aspect of growing food, and those agencies already involved have become even more so.
Now, a new rule is going into effect that will significantly expand the oversight of one regulator, the Food and Drug Administration, at the farm.
. . .
Researchers at the Mercatus Center, a conservative-leaning economic think tank at George Mason University, say apple orchards are facing a growing federal regulatory burden. Quantifying that burden is difficult, but using a computer algorithm that analyzes regulations through keyword searches, researchers from the center’s RegData Project estimated the federal regulatory code contains 12,000 restrictions and rules on orchards, up from about 9,500, or an increase of 26 percent, from a decade ago.
Many of those rules apply to other businesses as well, and some restrict the actions of government regulators, not the orchard owners. Using the Mercatus Center data, and screening for such exceptions, The New York Times identified at least 17 federal regulations with about 5,000 restrictions and rules that were relevant to orchards.
. . .
. . . regulation streamlining is a winning message across the political spectrum when it comes to making life easier for small businesses, according to more than 20 interviews with business owners and others in the produce industry.
Industry by industry, small businesses have been lobbying governments — from town health departments to federal cabinet agencies — to simplify rules and eradicate redundancy.
. . .
The grievances relate largely to the sheer amount of time and money that it takes to comply, and what farmers see as a disconnect between them — the rule followers — and the rule makers, who Mr. Ten Eyck describes as “people looking at a computer screen dreaming up stuff.”
“The intentions are not bad,” he said. “It is just that one layer after another gets to be — trying to top the people before them.”

For the full story, see:
STEVE EDER. “One Apple Orchard and 5,000 Government Rules.” The New York Times (Thurs., December 28, 2017): A1 & A14-A15.
(Note: ellipses added.)
(Note: the online version of the story has the date DEC. 27, 2017, and has the title “When Picking Apples on a Farm With 5,000 Rules, Watch Out for the Ladders.”)