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  2. July 2016

July 2016

FCC Commissioner Pai Sends Letters to State Commissioners

Federal Communications Commission member Ajit Pai sent letters to commissioners at Public Utility Commissions of Oregon, Texas, and California as well as the Vermont Public Service Department. The states each run their own Lifeline accountability databases. Commissioner Pai said he is seeking their aid in “combating the waste, fraud, and abuse that has riddled the Universal Service Fund’s Lifeline program since wireless resellers began participating in this program.” He asks several questions about how the states run their databases. He asks for a reply by August 2, 2016.

CBO Scores Bill that would Update Spectrum Auction Procedures

Senate Bill 2319 would amend current law to require that certain payments related to auctions held by the Federal Communications Commission the be deposited in the Treasury. Under current law, the proceeds from the FCC’s auctions of licenses to use the electromagnetic spectrum are deposited in different types of financial institutions depending on the phase of the auction process. Most of the offsetting receipts from those auctions are already deposited directly in the Treasury. However, the amounts paid before the start of an auction, which are known as upfront payments, must initially be deposited in an interest-bearing account at a designated financial institution.

The FCC currently requires upfront payments to be deposited in the agency’s account at the Federal Reserve Bank of New York. After the auction closes, the upfront payments for winning bids are transmitted to the Treasury and the remainder is refunded to the unsuccessful bidders. Fees charged by banks for those transactions are deducted from auction receipts. Pay-as-you-go procedures apply because enacting S. 2319 would reduce direct spending. Eliminating transaction fees, which are paid by the federal government from auction receipts, would increase net offsetting receipts. (Offsetting receipts are considered to be reductions in direct spending.) However, based on financial information from the FCC, CBO estimates that the transaction fees charged by the Federal Reserve Bank are negligible; therefore, any increase in auction proceeds stemming from enacting the bill also would be negligible. Enacting the bill would not affect revenues. CBO estimates that enacting S. 2319 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2027. S. 2319 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local, or tribal governments.

CBO Scores Internet of Things Bill

S. 2607 would direct the Department of Commerce (DOC) to convene a working group of various federal agency representatives and a steering committee of private stakeholders to produce reports and recommendations to the Congress to improve intragovernmental coordination and to encourage the development of the Internet of things. (The Internet of things refers to the growing number of devices that connect to the Internet and interact with one another.) It also would direct the Federal Communications Commission to prepare a report assessing the need for spectrum to support such development.

On the basis of information from DOC and the Federal Trade Commission, CBO estimates that implementing S. 2607 would require about a dozen employees and would cost $3 million to convene the working group and to develop the reports required under the bill. Those costs would be spread among the federal agencies that would be a part of the working group and such spending would be subject to the availability of appropriated funds. Enacting S. 2607 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply. CBO estimates that enacting S. 2607 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2027. S. 2607 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local, or tribal governments.

House passes two tech investment bills

The House passed two bills aimed at improving conditions for startup investing. The Fix Crowdfunding Act (HR 4855) raises the amount that a company can crowdfund, from $1 million to $5 million. A 2012 law opened up the rules for crowdfunded investments, but Republicans say the rules still need to be tweaked. The bill was approved by a vote of 394-4. “These bills today are targeted fixes to restore the original spirit of the JOBS Act: To harness innovation and bring together millions of Americans with potential new businesses through crowdfunding,” Majority Leader Kevin McCarthy (R-CA) said. The new crowdfunding rules went into effect earlier in 2016, after being formally approved by the Securities and Exchange Commission in 2015.

The second bill, Supporting America’s Innovators Act (HR 4854), would expand the legal limit on investors in venture funds doing early-stage funding that can help a company get off the ground — called angel investing — to 250 from 100. The legislation passed 388-9. Both bills are part of a House GOP initiative focused on passing bills related to the tech industry and innovation in the months before November’s elections. Democrats have backed a similar initiative.

Court: Officials can't use private e-mail accounts to evade records laws

Federal officials may not use private e-mail accounts to get around public records laws, a federal judge ruled June 5. The US Court of Appeals for the DC Circuit overturned a lower court decision in which judges dismissed claims from the Competitive Enterprise Institute (CEI), a conservative think tank that attempted to obtain correspondence from a top White House official through the Freedom of Information Act (FOIA).

The White House’s Office of Science and Technology Policy (OSTP) said it did not need to search for or turn over records held by the head of the OSTP on a private e-mail account as part of the open records request. Throughout the case, the government argued that “[d]ocuments on a nongovernmental e-mail server are outside the possession or control of federal agencies, and thus beyond the scope of FOIA.” Judge David Sentelle, the chief judge of the US Court of Appeals for the DC Circuit, disagreed with that reasoning and ordered the lower court to reconsider the case. “If a department head can deprive the citizens of their right to know what his department is up to by the simple expedient of maintaining his departmental e-mails on an account in another domain, that purpose is hardly served,” Judge Sentelle wrote. “It would make as much sense to say that the department head could deprive requestors of hard-copy documents by leaving them in a file at his daughter’s house and then claiming that they are under her control,” he said.

Trump, Saddam and why people mistrust the media

By now, everyone's aware that Donald Trump wandered off message June 5 and told an audience in Raleigh (NC) that Saddam Hussein, for all his sins, "killed terrorists." So what was different about June 5? Hillary Clinton's campaign said it was different. In Politico, we learn that Trump's Hussein praise "finally caught up with him" because "Hillary Clinton's campaign tore into his latest comments." NBC News notes that Trump said this at a rally with Sen Bob Corker (R-TN), which could lead to a clash and some awkward questions; otherwise, the only new thing is that "Hillary Clinton's campaign seized the opportunity to once more paint Trump as unfit for office." And so on.

The story is not that Trump argued that the United States would be better off if a dictator had been allowed to stay in power in Iraq; the story is that things are different now, because the presumptive Democratic nominee is whacking him for saying it. By consistently covering Trump's argument over time, and by following up on it, media outlets did their job to inform voters. That was why June 5's collective Captain Renault moment was so strange, and so demonstrative of why many media consumers are skeptical of what they're hearing. Instead of a debate on the facts -- should Hussein have been removed? Did he "kill terrorists," in a contradiction of what Americans were told before the war? -- there was manufactured outrage, straight from a rival campaign.

Password-sharing case divides Ninth Circuit in Nosal II

[Commentary] The Ninth Circuit has handed down United States v. Nosal (“Nosal II“), a case on the scope of the Computer Fraud and Abuse Act. The court held 2-1 that former employees of a company who had their company accounts revoked violated the CFAA when they subsequently used the passwords of a current employee, with the current employee’s permission, to access the company’s computers. I think that the majority’s result is right on its facts but that its analysis is less helpful than it could be. This post explains my thinking, and it then explains the likely importance of the Ninth Circuit’s still-pending case in Facebook v. Power Ventures.

[Orin Kerr is the Fred C. Stevenson Research Professor at The George Washington University Law School]

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