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Policies Communication

NCSL POLICY DIRECTIVES AND RESOLUTIONS

Policies for the Jurisdiction of the Communications, Financial Services & Interstate Commerce Committee

Below are the policies of the NCSL Standing Committee on Communications, Financial Services & Interstate Commerence as of the annual business meeting, which was held on August 22, 2014.

Banking & Financial Services

STATE SOVEREIGNTY IN FINANCIAL SERVICES
The National Conference of State Legislatures (NCSL) is concerned that Congress, the federal financial services regulators, and the federal courts have sought to nationalize control of financial services in Washington, D.C. NCSL has consistently and strongly advocated for state sovereignty in financial services regulation. NCSL has opposed any federal preemption of state legislative or regulatory authority in financial services. A high burden of proof that federal action is necessary, such as a national financial crisis, should be met before any preemption of state financial services laws and regulations is warranted.

Preservation of Dual Banking System
NCSL is committed to the preservation of the dual banking system. The dual system enables state governments to apply laws and regulations to banks and thrifts that serve the needs of local economies and that respond to the values and concerns of local citizens. In recognition of the advantages of the dual system to the public and to the health of the financial services industry, NCSL opposes any efforts by the federal government to restrict state authority to charter, supervise, or regulate the powers of state chartered banks and thrifts. NCSL opposes any federal attempts to tax state banks for federal oversight services already performed by the appropriate state banking agencies and departments. Nonetheless, NCSL recognizes that the states have a duty to use their powers responsibly and in a way that does not endanger the deposit insurance system and thereby the nation's financial stability. NCSL acknowledges congressional efforts in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to limit the unchecked preemption efforts by the Office of the Comptroller of the Currency (OCC) of state financial consumer protections. NCSL urges continued congressional vigilance of the OCC and asks the secretary of the Treasury to ensure that the spirit of the Dodd-Frank Act in ensuring the states’ role in protecting consumers is not diminished in regulations establishing the new Consumer Financial Protection Bureau.

Federal Regulatory Consolidation
NCSL recognizes the need for the federal government to reduce the federal regulatory burden that can impede the economic vitality of our nation's financial services industries. In consolidating the federal banking regulators, Congress must ensure that any consolidation does not invalidate the regulatory independence of the dual banking system.
NCSL opposes any federal regulatory consolidation plan that would:

  • Preempt, limit or interfere with the rights of states to regulate state chartered banks;
  • Require federal reporting requirements and examinations that duplicate state efforts;
  • Place state chartered banks at a competitive disadvantage with national banks or federal thrifts; and
  • Grant oversight authority for state chartered banks to the OCC, the regulator of national banks.

NCSL supports the continued federal oversight by the FDIC and the Federal Reserve of state chartered banks. It would be detrimental to the well-being of the dual banking system for Congress to tamper with present oversight cooperation between state banking departments, the FDIC and the Federal Reserve.

Federal Preemption
NCSL strongly believes that a high burden of proof must be established before federal preemption of state banking authority is ever justified and that only Congress—and not federal regulatory agencies—can preempt the actions of elected state leaders. NCSL supports the “prevent or significantly interfere with” standard established by the Supreme Court and reiterated in Subtitle D of Title X of the Dodd-Frank Act to govern federal preemption of state laws as those laws apply to national banks. NCSL strongly opposes any effort by the OCC to assert its regulatory authority to weaken the standard of preemption or shield national banks and bank operating subsidiaries from state consumer protection laws and enforcement. Moreover, NCSL encourages Congress to eliminate the judicial deference given to the OCC by federal courts in challenges to state financial services laws and to restrain OCC abuse of its regulatory authority to preempt state laws.

Dual Chartering of Credit Unions
NCSL believes that state credit union supervisors have the primary responsibility for assuring the safety and soundness of credit unions chartered by and operating under state law and regulation. NCSL supports the authority of state governments to determine how state financial institutions must be insured and opposes any efforts by the federal government to preempt states’ authority to govern state deposit insurance requirements. NCSL also acknowledges that states have a responsibility to provide a credible regulatory environment where powers can be exercised in a way that does not endanger the financial solvency of the National Credit Union Share Insurance Fund (NCUSIF). NCSL additionally acknowledges that federal deposit insurance agencies, like the National Credit Union Administration (NCUA), have a legitimate role to play if state authorized powers lead to unreasonable risks for NCUSIF. However, NCUA regulations and policies should be crafted in a way that minimizes the preemption of state authority. NCSL opposes any effort by the Administration and Congress to erode the dual chartering system for credit unions by preempting state credit union laws and regulations that do not adversely impact the financial well-being of state chartered credit unions and thus the NCUSIF. Any preemption of state credit union laws or regulatory authority must be justified only by a clear and certain threat to the credit unions' share insurance fund by those credit unions that are federally insured.

Consumer Protection
State legislatures and Congress must periodically consider legislation: to ensure consumer access to basic financial services; to protect the privacy of financial consumers and the security of their personal financial information; to provide protection for consumers from abusive lending practices; to ensure disclosure of information about credit terms, interest rates, fees, and balances; to regulate branch closing; and to otherwise protect the consuming public. In recognition that this is an area of overlapping federal and state jurisdiction, NCSL will ordinarily not oppose such federal consumer protection measures, provided that there is no preemption of complementary state consumer protection legislation. Federal legislation should not prohibit state legislatures and state regulators from providing additional protections for consumers of financial services. Furthermore, as the Consumer Financial Protection Bureau established in Dodd-Frank commences its role as the federal agency responsible for regulating consumer protection and enforcing applicable federal laws NCSL opposes any action that preempts state consumer protections law or undermines the principles of federalism.

Finally, as online financial services continue to grow, clear rules must be established as to which jurisdiction's consumer protections apply to a given transaction. NCSL believes that any such rules should be crafted through a partnership between state and federal regulators and should not place state chartered financial institutions at a disadvantage in the institution’s ability to provide services over the Internet.

Financial Services and Economic Development
NCSL recognizes that racial, ethnic, or gender discrimination by financial services institutions may have an impact on the ability of residents in distressed communities to obtain financial assistance. State legislators also recognize the need for financial institutions to make safe, sound and profitable investments. NCSL, recognizing the responsibilities that each state has for financial institution regulation and solvency and for providing for fair lending to their constituents, believes that each state legislature has the responsibility to address the unique needs of its state. Likewise, the federal government as regulator of federal financial institutions must make the same determinations and act accordingly. However, Congress must not mandate federal guidelines that impede the states' abilities to regulate financial services.

Securities Regulation
NCSL recognizes that the federal government has an interest in efficient and fair capital markets. NCSL also acknowledges that the states’ securities agencies are indispensable partners with their federal counterparts engaging in the pursuit of fair and efficient capital markets by protecting local investors, workers, and communities by ensuring compliance with securities laws.

NCSL is concerned that the preemption of state securities laws and regulations will serve only to erode investor trust in the capital markets by further weakening a system designed to protect investors and putting the financial well-being of hard-working Americans at risk. NCSL opposes such federal preemption and the creation of self-regulatory organizations that usurp state authority. Instead, NCSL supports congressional efforts to expand the restoration of state securities regulators’ authority.

Mortgage Industry
Currently states regulate a significant portion of mortgage lending. Federalizing this area of supervision will displace the 50-state regulatory system that has rapidly evolved and could erode, or even eliminate, the current authority the states have to approve, supervise and bar mortgage professionals. The local nature of real estate and consumer protection necessitates direct state authority.

States, through the Conference of State Bank Supervisors (CSBS) and the American Association of Mortgage Regulators (AARMR), developed the Nationwide Mortgage Licensing System (NMLS) to improve and coordinate mortgage supervision. This state system enhances consumer protection and streamlines the licensing process for regulators and the industry. NCSL supports the NMLS to encourage a more coordinated system of state and federal supervision.

FINANCIAL INFORMATION SECURITY

NCSL believes that states should continue to play a vital role in protecting the privacy, confidentiality and security of sensitive nonpublic personal financial information. States long have sought to balance the economic value of information sharing with reasonable safeguards against the unnecessary disclosure and inappropriate acquisition of sensitive nonpublic personal financial information, such as credit information, account numbers, account balances, and Social Security numbers. Understanding local and regional economic situations and the unique needs of consumers within these markets, states consistently have ensured the protection of sensitive nonpublic personal financial information.

State legislatures recognize that financial information security is an area of overlapping federal and state jurisdiction. Therefore, NCSL does not oppose federal baseline standards for the protection of financial information, provided that these standards generally do not preempt complementary state laws. NCSL believes that states should have the authority and flexibility to adopt standards for the acquisition, retention, disclosure and sharing of financial information by and among financial institutions and nonaffiliated third parties that address local concerns or respond in a timely way to incidences of neglect or abuse that may be local or regional in nature. NCSL specifically believes that Congress should preserve state authority to exceed federal baseline standards for information sharing among nonaffiliated third parties.

Credit Reporting
NCSL acknowledges the benefit of a uniform national credit reporting system to the nation's economy. Therefore, NCSL does not oppose the limited areas that were subject to federal preemption by the 1996 Amendments of the Fair Credit Reporting Act and made permanent by the Fair and Accurate Credit Transactions Act. In doing so, NCSL supports the continued exemption of the state laws that were in existence prior to the 1996 Amendments and thus are currently exempted from the preemption provisions.

Data Security Breach Disclosure
Consistent with NCSL’s general policy for safeguarding financial information, NCSL does not oppose baseline federal data security breach notification standards, provided that the requirements do not preempt state authority to adopt standards that provide affected consumers additional protection and notification. NCSL also supports allowing state financial regulators and attorneys general to enforce any new federal data security breach notification standards.

In the event that Congress decides to preempt state law, NCSL urges that the preemption be narrowly construed to preempt only state laws that are inconsistent with the federal standard while preserving state laws that apply to entities that may be excluded from the federal act. Additionally, should Congress decide to preempt state data security breach notification laws, NCSL would support a strong federal law that would require notification of the affected consumers when sensitive personally identifiable information has been, or is reasonably believed to have been, accessed or acquired. In this instance, exceptions should be made only when it is concluded that there is no significant risk that the breach has resulted in, or will result in, harm to the individual whose information has been breached.

Corporate Formations

The ability to regulate and set standards for incorporation law resides within the individual states. Many states rely on the revenue generated by incorporation fees, corporate taxes and other fees as a way to fund many of their public needs. States determine requirements regarding the articles of incorporation and have the ability to tighten and lift barriers for corporate formation. The National Conference of State Legislatures opposes any unwarranted effort at the federal level to preempt state incorporation laws.

The Internet and Electronic Commerce

The Internet defies a detailed one-size-fits-all approach to public policy and regulation. America's federal and state lawmakers, as well as policy makers from other countries should be guided by principles that foster the Internet's development while protecting the security and privacy of individual users.

Our nation's state legislatures are well aware of the impact that access to the Internet and electronic commerce have on the economic vitality of our states and communities. State legislatures also recognize that the marketplace for electronic commerce is not just in the United States but is present in the vast global market. State legislatures share the concern of many in Congress that ill-conceived over-regulation and taxation of the Internet and electronic commerce services could harm our nation's ability to compete globally. However, state legislatures also recognize that they have an obligation to act, when and if necessary, to protect the general welfare of their constituents. As the use of the Internet continues to expand, any future or existing regulations must be balanced against market forces in a competitive and technologically neutral manner, as government must not choose the winners or losers of the digital age.

Nothing in this policy statement is to be construed as limiting or affecting the right of any state to regulate alcohol according to its local norms and standards pursuant to the 21st Amendment.

NCSL opposes unnecessary or unwarranted federal legislation or regulation that would impede efforts by states to promote access to the Internet, enhance competition or increased consumer choice or ensure the security of personal information of consumers conducting electronic commerce transactions.

The National Conference of State Legislatures (NCSL) supports the following principles in formulating laws and regulations that impact the Internet and electronic commerce:

Privacy and Security
Every American should be empowered to protect their privacy and personal information from intrusion or piracy. While NCSL recognizes that there is a need for Congress to act to establish a national policy to protect the personal information of Americans, state legislatures, in the absence of any action by Congress and the federal government, have moved to fill the void. NCSL calls upon the Congress to enact federal Internet privacy legislation that ensures the security of Americans’ personal information with the least amount of government regulation as possible. However, NCSL opposes federal legislation that seeks to preempt existing state statutes and regulations governing privacy protections and security for non-Internet based transactions.

Free Speech
The Internet allows people to communicate and share ideas with others with an ease never before possible. Federal government policy should rigorously protect freedom of speech and expression on the Internet, but not restrict states or local governments from oversight protecting freedom of speech. New technologies should adequately enable individuals, families and schools to protect themselves and students from communications and materials they deem offensive or inappropriate. State law enforcement, with federal assistance and resources, must be able to enforce criminal statutes against predators that use the Internet to harm or abuse children.

Self-governance
NCSL requests the Congress to maintain the current self-governance approach that allows the competitive marketplace to drive broadband and broadband-related applications development and deployment. Congress should avoid adopting new mandates and provide the Federal Communications Commission (FCC) with defined and limited authority to oversee, but not proactively intervene in, the broadband Internet marketplace consistent with principles that focus on assessing whether the market continues to ensure that consumers can:

  1. receive meaningful information regarding their broadband service plans;
  2. have access to their choice of legal Internet content, subject to the limits on bandwidth and quality of service of their service plan;
  3. run applications of their choice, subject to the needs of law enforcement and the limits on bandwidth limits and quality of service of their service plans, as long as they do not harm the provider’s network or interfere with other consumers’ use of the broadband service; and
  4. be permitted to attach any devices they choose to their broadband connection at the consumer’s premise, so long as they operate within the limits on bandwidth and quality of service of their service plans and do not harm the provider’s network, interfere with other consumers’ use of the broadband service, or enable theft of services.


Consumer Protection
Industry self-regulation has made an important contribution to the development of electronic commerce. Industry technologies and best practices, combined with the enactment of strong state laws which outlaw deceptive practices and fraudulent online behavior, are essential elements in promoting electronic commerce and enhancing consumer protection. Privacy and consumer protection continue to be priority issues in state legislatures.

NCSL supports the efforts of state legislatures to develop new policy initiatives to protect consumers online, especially when the federal government fails to respond to consumers’ concerns. NCSL also recognizes that because of the global nature of the Internet that states must seek cooperative federal action to further enhance consumer protection, privacy and information security. Federal legislation must ensure the authority of state attorneys general to enforce federal statutes protecting consumers. However, NCSL opposes any attempt by Congress to restrict the states’ ability to impose criminal and/or civil penalties for illegal activity that may occur over the Internet.

Growth
Public policies must be designed to foster continuing expansion of useful and affordable bandwidth, encourage development of innovative technologies and promote broad universal access. Federal and state governments must work together to ensure that all Americans, regardless of where they live, have competitive access to high-speed broadband technologies. Government must work to guarantee open and competitive markets for broadband services.

Information Technology
Information technology (IT) is a global industry. A strong American IT industry enhances and strengthens the economic well being of our states and nation. States and the federal government must work together to ensure a climate that allows America’s IT companies to continue to perform research and technology development, to generate innovative new products and services and to solve customer problems. States must have the unfettered ability to continue to seek ways to use IT to better the lives of their residents. Therefore, NCSL opposes any attempt by the federal government to restrict or penalize states’ efforts to utilize information technology services and products that allow states to provide more efficient government services to residents at lower costs to taxpayers.

Internet Gambling
Congress must respect the sovereignty of states to allow or to prohibit Internet gambling by their residents.

Electronic Commerce and Taxation
Government policies should create a workable infrastructure in which electronic commerce can flourish. Policy makers must resist any temptation to apply tax policy to the Internet in a discriminatory or multiple manner that hinders growth. Government tax systems should treat transactions, including telecommunications and electronic commerce, in a competitively neutral and non-discriminatory manner. The federal government and America’s industries should work with state legislatures in ensuring equal tax treatment of all forms of commerce and should encourage state efforts to achieve simplification and uniformity through the streamlining of state and local sales and telecommunications tax systems.

NCSL supports the reform of the discriminatory taxation of communications services and believes that if state and local governments were to take such action, the need for the federal moratorium on Internet access would cease to exist.

Since 2003 NCSL has maintained a neutral position on the extension of the moratorium and continues to do so. However, should the moratorium be extended, it is consistent with NCSL policy that the moratorium be competitively neutral and apply equally to all media used to access the Internet.

VIDEO FRANCHISE REFORM

Innovation and convergence of existing technologies are radically expanding communications and information services, blurring distinctions between telephone, Internet services, cable, wireless and satellite. These rapid changes often outpace abilities of federal, state and local regulatory regimes to adapt. It is important that video regulatory policy assure that like services are treated alike, investment is encouraged, and services are in a non-discriminatory manner.

State Administration Will Preserve State Authority
Local jurisdictions are the creation of either state constitutions or law. The powers that these political subdivisions of the state exercise were granted to them over time by state legislatures. Those local jurisdictions that have franchise authority have it as a result of state legislation or the state constitution. Therefore, any attempt by Congress to preempt current local franchise authority is a preemption of state sovereignty.

While NCSL rarely advocates the consideration of legislation in state legislatures, NCSL has at times, when states are facing a crisis or a serious threat of federal preemption, urged state legislatures to take action. NCSL endorses efforts that remove barriers to entry for or inequity of regulation among video competitors and foster additional consumer choices in the video marketplace ultimately ensuring competitive neutrality.

Government should encourage competition and consumer choices for broadband and video services and promote the deployment of broadband services and technologies.

Fees and Taxation of Video Providers
Franchise fees today are levied, imposed or collected as a percentage of gross revenues, used for general revenue purposes and not based on the actual direct and identifiable costs of any benefit to the entity that pays the fee. To the extent such fees are intended as payment for use of public rights-of-way, that fee should be limited to the actual, direct and identifiable cost of such use, and that portion of the fee should be applied only to those who use the rights-of-way. Franchise fees should be collected and administered by one central agency per state.

Insurance

INSURANCE REGULATORY MODERNIZATION

The National Conference of State Legislatures (NCSL) is committed to state regulation of the business of insurance. NCSL acknowledges the responsibility of states to adjust state systems to meet the needs of the modern economy. NCSL opposes any proposal to establish either a federal or a dual system of regulation of insurance, to cede any state authority to regulate financial institutions involved in the business of insurance or to obtain Congressional ratification of trade agreements that preempt state regulation of insurance.

States and insurance commissioners continue to develop a shared vision of insurance regulatory reform to meet the needs of the modern marketplace while preserving the advantages of the state system. NCSL supports the efforts of states to streamline and simplify insurance regulation. NCSL endorses state participation in the Interstate Insurance Product Regulation Commission, which creates a national state-based system to make regulatory decisions quickly on life insurance products according to uniform national standards. NCSL endorses state participation in the Surplus Lines Insurance Multi-State Compliance Compact (SLIMPACT), an interstate compact to protect and facilitate the collection of premium tax revenue on surplus lines and independently procured insurance placements by the compacting states.

NCSL believes that state efforts to enact significant reforms in critical areas represent tremendous progress, and NCSL will continue to support further efforts as states move forward to achieve widespread reform in all areas in the years ahead.

State-Federal Partnership
Individually and at the national level, states work to modernize insurance regulation. However, state legislatures recognize a legitimate federal role in overseeing and promoting well-functioning insurance markets.

Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act established The Federal Insurance Office (FIO) within the U.S. Department of Treasury. While NCSL and other state groups were successful in limiting the scope of the FIO’s authority, concern remains that the FIO will serve as a vehicle to promote a greater federal role in the historically state-regulated industry of insurance.

Therefore, NCSL opposes any administrative action by the FIO or federal legislation that: relies on wholesale preemption of state authority, would compel state compliance with federal standards or those of any non-governmental third party, or conditions, restricts or redirects state insurance revenues, including insurance premium taxes, fees and fines, either directly or as a condition of a state’s refusal to submit to federal standards or federal efforts to commandeer a state executive branch official to participate in a federal regulatory program.

Moreover, some in Congress and industry support federal legislation to establish a single federal regulator of insurance or allow for dual federal and state insurance regulation. NCSL opposes any provision of federal legislation that preempts state authority through the creation of a federal insurance official, commission or entity with the authority to regulate insurance, to implement federal standards, to enforce state compliance with federal standards, or to initiate or participate in judicial proceedings to resolve differences between federal standards and state law.

State legislators perform a critical role in the development of insurance public policy. However, despite this important function, state legislators are oftentimes overlooked for service on federal advisory boards and committees related to the regulation of the business of insurance. Recognizing this recurring oversight, NCSL requests an enhanced effort from the federal government to incorporate state legislators onto associated insurance advisory panels.

Insurance Company Solvency
The safety and soundness of insurance companies operating in the United States are the prime objective of state insurance regulation. State legislatures have endeavored to strengthen state insurance departments and to create standards for financial regulation that have improved the solvency of insurance companies.

NCSL opposes any proposal to establish federal standards for state solvency regulation that cedes any authority to federal agencies to regulate financial institutions involved in the business of insurance, including congressional ratification of trade agreements that would preempt state regulation of insurance for solvency purposes. Although NCSL continues to support the National Association of Insurance Commissioners’ Financial Regulation Standards and Accreditation Program, NCSL acknowledges that state legislatures and governors have the responsibility to enact policy, which state regulators enforce. NCSL recognizes that interstate compact proposals have the potential of addressing binding uniformity and effectiveness in specific areas of regulation.

NCSL also objects to actions taken or contemplated by the Internal Revenue Service or other federal agencies to assert priority claims to the assets of failed insurers. The states should first be allowed to distribute an insolvent company's assets to pensioners, family businesses, other policyholders and others protected by the McCarran-Ferguson Act’s delegation of the business of insurance to the states.

In the same vein, NCSL is concerned by federal bankruptcy rulings under the federal bankruptcy code that would allow alien insurers and reinsurers to move certain trust fund assets to bankruptcy proceedings in their domicile country. The trust funds established by alien insurers and reinsurers are to serve as collateral for insurance and reinsurance underwriting in the United States. Federal bankruptcy rulings have allowed such alien insurers and reinsurers to be exempt from state solvency regulation and have placed these collateral trust funds out of the reach of state insurance departments, which are solely responsible for solvency protection. NCSL urges Congress to rectify this situation by amending federal law to eliminate or limit this exemption for alien insurers and reinsurers under the bankruptcy code.

Insurance Information Security
NCSL opposes any federal effort to preempt state laws and regulations or to enact federal standards that address the use of financial and credit information in insurance.

INSURANCE FRAUD - FEDERAL CRIMINALIZATION

NCSL recognizes the toll that policyholder and claimant initiated fraud has on the cost of insurance and the solvency of the insurer. We applaud the action taken in various states to pass laws that make it more difficult to file a false claim, increase the penalties for those who are guilty of fraudulent activities, and expand state insurance department fraud units.

NCSL believes that the prosecution of policyholder and claimant fraud should and must remain in the jurisdiction of state and local law enforcement officials. However, in cases of internal insurer fraud that may be the result of interstate and international conspiracies to defraud, loot or plunder an insurance company, states and the federal government should cooperate to prosecute such criminal activity.

As a result of financial services modernization, the various federal and state financial institutions regulators need to coordinate anti-fraud activities. However, federal legislation to assist the coordination of state and federal anti-fraud activities should not unnecessarily preempt state anti-fraud laws and regulations nor grant audit or subpoena authority to a federal entity over a state agency operating under appropriate state constitutions and laws.

NCSL's endorsement of federal involvement in the criminal prosecution of certain kinds of insurance fraud does not diminish our support for continued state regulation of the insurance business. Federal criminal sanctions will assist state regulators in state efforts to prevent future insolvencies.

EQUAL ACCESS TO FBI CRIMINAL HISTORY RECORDS

State regulators should have efficient access to the Federal Bureau of Investigation’s (FBI) Criminal Justice Information System in order to establish dependable procedures for licensing officers, directors, and agents of insurance companies across the United States.

NCSL calls on Congress to give state insurance regulators statutory access to FBI fingerprint files. This information is currently available to federal and state banking and securities regulators. Access will help safeguard insurance consumers from the unnecessary risk of having known fraud artists or violent offenders engaged in the insurance business.

NATURAL DISASTER MITIGATION AND INSURANCE

NCSL urges Congressional action that would: (a) provide federal grants, tax credits or deductions to assist consumers to strengthen their homes to better withstand catastrophic natural disasters; and (b) create a commission to determine what other action is necessary and appropriate to support and enhance the ability of existing insurance and reinsurance mechanisms to cope with catastrophic natural disasters. However, any such action must not displace private sector risk transfer mechanisms, adversely impact a state's ability to levy premium taxes, regulate the business of insurance and set solvency standards for property and casualty insurers.

TERRORISM RISK INSURANCE

NCSL requests Congress work with state insurance regulators to ensure that the property and casualty insurance and group life insurance industries develop the products to protect Americans from financial losses associated with terrorism and to ensure an available and affordable insurance market for American consumers and businesses.

NCSL continues to believe that any reauthorization of the Terrorism Risk Insurance Act should recognize the temporary nature of the program, and therefore encourages efforts to further promote development of the private insurance markets. Any federal plan for a temporary and limited federal backstop for terrorism insurance coverage must not adversely impact a state’s ability to levy premium taxes, regulate the business of insurance and set solvency standards for property and casualty and group life insurers.

Remote Commerce

The 1967 Bellas Hess and the 1992 Quill Supreme Court decisions denied states the authority to collect sales and use taxes by out-of-state sellers that have no physical presence or nexus in the taxing states, holding that legislation by Congress is required to create such authority. One recent report has estimated that states will lose over $23 Billion in uncollected sales tax revenues in 2012, of which $11.4 billion is from electronic commerce, and that annual losses will continue to grow as more commerce is conducted online. This disconnect with remote commerce threatens to erode the viability of the sales tax as a revenue source for state and local governments. States have requested Congressional action, but Congress has failed to close this large loophole in the states’ sales and use tax system.

NCSL calls on Congress to require all sellers, regardless of location, to collect sales taxes and remit them to the state to which they are due. Further, NCSL supports a small business exception.

Acknowledging that the complexity of multiple tax rates places a significant burden on out-of-state sellers, twenty-four states joined the Streamlined Sales Tax and Use Agreement and passed laws to simplify sales and use tax systems, remove burdens to interstate sellers, and collaborate on the collection of taxes due to them.

NCSL calls on Congress to pass legislation overturning the Bellas Hess and Quill decisions, affirming the states’ sovereign right to enter into such agreements, and granting states the authority denied to them by the Court’s decisions.

Resolution Supporting Intellectual Property (IP) Rights and Protections to Promote Productivity, Competitiveness, Jobs, and Public Health

WHEREAS, Intellectual property (IP) rights and innovation are primary drivers of job creation and America’s economic growth; and
 
WHEREAS, over 55 million jobs are directly and indirectly supported by IP-intensive industries as a significant driver of GDP, exports, and wages in every state of the Union; and
 
WHEREAS, IP-intensive industries are responsible for $5.8 trillion in private sector output (GDP); and
 
WHEREAS, in a 2012 economic study by the U.S. Department of Commerce that ties employment and value-added numbers to IP-intensive industries, IP-intensive industries pay workers 42% higher wages than those of non IP-intensive industries; and
 
WHEREAS, IP-intensive industries drive American exports accounting for approximately $1 trillion (74% of total U.S. exports in 2011); and
 
WHEREAS, given the important role that IP plays in sustaining a long-term economic growth, policymakers should give high priority to fostering innovation and protecting intellectual property; and
 
WHEREAS, protecting and enforcing the IP rights of businesses are critical to advancing global economic recovery, driving competitiveness and export growth, and creating high-quality jobs; and
 
WHEREAS, the National Conference of State Legislatures believes that widespread efforts to promote innovation and intellectual property protection are critical to improving the nation’s long-term competitiveness in a global market, and to achieving certain socioeconomic improvements in the quality of American life; and 
 
NOW, THEREFORE LET IT BE RESOLVED, that the National Conference of State Legislatures calls upon all levels of governments to work cooperatively with the private sector, nonprofits, and academia to create, develop and implement robust pro-IP awareness and enforcement; and
 
BE IT FURTHER RESOLVED, the National Conference of State Legislatures supports efforts to ensure the IPEC has sufficient staff, budget, and authority to fulfill the obligations and achieve the goals outlined in the PRO-IP Act and the National IP Strategy; and
 
BE IT FURTHER RESOLVED, the National Conference of State Legislatures support robust IP protection and enforcement provisions in trade agreements and their implementation; and
 
BE IT FURTHER RESOLVED THAT, the National Conference of State Legislatures supports existing efforts to shut down the top illegal rogue websites globally that are willfully selling counterfeit goods and facilitating digital theft; and

BE IT FURTHER RESOLVED THAT, a copy of this resolution be sent to the President of the United States and all members of the 113th Congress.

Expires August 2015

Resolution in Support of the Further Extension of the Terrorism Risk Insurance Act of 2002 (Resolution)

WHEREAS, the United States continues to be engaged in an ongoing war against terrorism and the threats of future attacks inside the country remains; and

WHEREAS, future attacks could include the use of unconventional (nuclear, biological, chemical or radiological) weapons that could result in a large number of casualties or could involve attacks such as cyber-terrorism that would impact businesses and critical infrastructure across the nation; and

WHEREAS, the Terrorism Risk Insurance Program, created through the enactment of the Terrorism Risk Insurance Act (TRIA) of 2002 and extended in 2005 and 2007, has allowed for a viable and stable terrorism risk insurance market; and

WHEREAS, absent extension by Congress, the Terrorism Risk Insurance Act of 2002 will expire on December 31, 2014; and

WHEREAS, failure by Congress to extend TRIA would likely result in the inability of insurers to offer widespread coverage for future catastrophes resulting from terrorism or would likely create capacity concerns where terrorism coverage must be provided; and

WHEREAS, without adequate terrorism insurance coverage, banks may be unwilling to extend loans for commercial transactions, such as mortgages, construction projects and other capital-intensive initiatives; and

WHEREAS, the lack of private terrorism insurance to cover losses from future terrorist attacks may require the federal government to cover such losses; and

WHEREAS, without the shared public-private responsibility program established by the Terrorism Risk Insurance Act of 2002, a limited availability of insurance against terrorism would have a severe adverse effect on our country’s economy as financiers might be reluctant to lend, businesses might be reluctant to invest, and commercial consumers might be unable to afford insurance; and

WHEREAS, the Terrorism Risk Insurance Program is an essential component of effective national economic recovery following a catastrophic terrorist attack in the United States; and

WHEREAS, NCSL supported the enactment of the Terrorism Risk Insurance Act of 2002 and subsequent extensions in 2005 and 2007;

NOW, THEREFORE, BE IT RESOLVED, that NCSL supports a long-term extension of the Terrorism Risk Insurance Act of 2002; and

NOW, THEREFORE, BE IT FURTHER RESOLVED, NCSL urges Congress and the Administration to take action as soon as possible to extend the Terrorism Risk Insurance Act of 2002.

Expires August 2015

NCSL Supports and Urges Enactment of the Marketplace Fairness Act (Resolution) (Joint with Budgets and Revenue Committee)

WHEREAS, the 1967 Bellas Hess and the 1992 Quill Supreme Court decisions denied states the authority to require the collection of sales and use taxes by out-of-state sellers that have no physical presence in the taxing state; and
 
WHEREAS, the combined weight of the inability to collect sales and use taxes due on remote sales through traditional carriers and the tax erosion from electronic commerce threatens the future viability of the sales tax as a stable revenue source for state and local governments; and
 
WHEREAS, a report from the Center for Business Research at the University of Tennessee has estimated that in fiscal year 2012, states had over $23 billion in uncollected sales tax revenues from out of state sales; and
 
WHEREAS, the Marketplace Fairness Act was introduced in both Houses of Congress which authorizes each member state under the Streamlined Sales and Use Tax Agreement to require all sellers not qualifying for a small-seller exception to collect and remit sales and use taxes with respect to remote sales and allows a state that is not a member state under the Agreement to require sellers to collect and remit sales and use taxes with respect to remote sales sourced to such state if the state adopts and implements certain minimum simplification requirements; and
 
WHEREAS, the United States Senate passed the Marketplace Fairness Act on May 6, 2013 by a vote of 69-27 and the President has indicated that he would sign the legislation.
 
NOW, THEREFORE BE IT RESOLVED THAT, the National Conference of State Legislatures (NCSL) appreciates the leadership of U. S. Senators Richard Durbin (Ill.), Mike Enzi (Wyo.), Lamar Alexander (Tenn.) and Heidi Heitkamp (N.D.) in achieving a strong bipartisan vote in support of the Marketplace Fairness Act in the Senate; and
 
BE IT FURTHER RESOLVED, THAT the National Conference of State Legislatures urges the House of Representatives to pass the Marketplace Fairness Act, sponsored in the House by Congressman Steve Womack (Ark.) and Congresswoman Jackie Speier (CA.) or similar legislation authorizing remote sales tax collection to states having complied with the legislation; and
 
BE IT FURTHER RESOLVED THAT, the National Conference of State Legislatures would oppose efforts by some in Congress to consider the Marketplace Fairness Act part of federal tax reform; and
 
BE IT FURTHER RESOLVED THAT, a copy of this resolution be sent to the President of the United States and to all the members of Congress.

Expires August 2015

NCSL Supports Passage of the Federal Digital Goods & Services Tax Fairness Act (Resolution) (Joint with Budgets and Revenue Committee)

WHEREAS,  Digital goods and services are online purchases that are downloaded directly by, or services that are provided electronically to, consumers that can transcend numerous state and local boundaries across the United States;

WHEREAS,  The exponential growth of digital commerce has continued to facilitate the country’s economic recovery. In 2012, consumers downloaded over 36 billion apps and that number is expected to eclipse the 90 billion mark by the end of 2015. The revenue from digital commerce was approximately $18 billion in 2012 and is expected to grow to $46 billion by 2016;

WHEREAS, State policymakers recognize that the continued deployment of broadband infrastructure and adoption of broadband services is vital to economic growth and participation in the global economy. 

WHEREAS, Digital goods and services are a major driver of the rapidly growing 21st Century digital economy and as such, fair and rational tax policies are needed that will not impede the continued growth of this segment of the economy;

WHEREAS, Due to the complex nature of the way digital commerce is transacted, current state and local tax laws governing the taxation of sales transac­tions are outdated and ill equipped to address many of the issues that surface in taxing today’s “borderless” digital economy;

WHEREAS,  As state and local governments continue to seek to modernize their tax base to include various forms of digital commerce, doing so without establishing a national framework could potentially subject consumers to multiple states claiming the right to tax the same transaction or subject such transactions to discriminatory taxation at rates higher than the rates imposed on the in-state sales of similar goods or services; 

WHEREAS,  Establishing a national framework would clearly identify which state and local jurisdiction can tax a digital transaction, providing much needed certainty to consumers, providers required to collect such taxes and state and local governments seeking to tax such goods and services in a fair, uniform and rational manner;

WHEREAS,  Establishing a national framework as set forth in the Digital Goods and Services Tax Fairness Act preserves state sovereignty as the decision to tax digital commerce or not remains solely with the states;

WHEREAS,  the Mobile Telecommunications Sourcing Act (P.L. 106-252) established uniformity in sourcing mobile telecommunications services for state and local tax purposes using similar concepts to those contained in the Digital Goods and Services Tax Fairness Act;

WHEREAS,  NCSL has worked with other state and local organizations as well as members of the Download Fairness Coalition to develop the principles contained in the legislation and is poised to assist states as needed in complying with the federal legislation;

THEREFORE BE IT RESOLVED, The National Conference of State Legislatures urges Congress to pass the Digital Goods and Services Tax Fairness Act, in conjunction with or after consideration of the Marketplace Fairness Act, to establish a national framework providing certainty and uniformity for state and local governments in the taxation of digital goods and services, while protecting consumers from multiple and discriminatory taxation and supporting the continued growth of the digital economy.

Expires August 2015

NCSL Opposes the State Video Tax Fairness Act (Resolution)

WHEREAS, Section 602 Telecommunications Act of 1996 prohibits political subdivisions of state governments from imposing and collecting taxes and fees on direct broadcasting satellite services (DBS); and

WHEREAS, Section 602 also preserves the authority of the states to impose and collect such taxes and fees on DBS and to remit some or all the proceeds of such taxes and fees to its political subdivisions; and
 
WHEREAS, the Congress prohibited such taxation by the states’ political subdivisions not to provide the DBS industry with a tax advantage over other providers of video services but to spare the DBS industry, at that time a fledgling industry,  from the administrative burden of collecting and remitting taxes to over 7,500 taxing jurisdictions; and
 
WHEREAS, some states have recognized that DBS’ exemption from the administrative burden of local taxation has created a competitive advantage for DBS over other multichannel video service providers and have achieved tax parity by enacting statutes that impose a state tax rate on DBS that appropriately takes into account all the state and local taxes and fees paid such other providers; and
 
WHEREAS, some states have remitted some or all of the proceeds from such taxes to local jurisdictions as permitted by Section 602; and

WHEREAS, the State Video Tax Fairness Act would label such tax arrangements as discriminatory taxation; and
 
WHEREAS, the State Video Tax Fairness Act would interfere with state tax authority over multichannel video programming services, including digital broadcasting satellite services and reverse state action upheld by state and federal courts to ensure the parity in the tax treatment of multichannel video service providers; and
 
WHEREAS, the State Video Tax Fairness Act would freeze into place the preferential treatment that DBS providers currently have over other multichannel video providers and prevent states from fairly equalizing the total tax burden imposed on these services;
 
NOW, THEREFORE BE IT RESOLVED, that the National Conference of State Legislatures opposes the State Video Tax Fairness Act and;
 
BE IT FURTHER RESOLVED, that NCSL calls upon the Congress to resist this unjustified interference into state efforts to create a tax neutral choice for consumers; and
 
BE IT FURTHER RESOLVED that a copy of this resolution be sent to all members of the 113th Congress and the President of the United States.

Expires August 2015

NCSL Supports VoIP Communication Sourcing (Resolution)

WHEREAS, state and local transaction taxes and fees imposed on communications services should be applied uniformly and in a competitively neutral manner upon all providers of communication services; and
 
WHEREAS, the Mobile Telecommunications Sourcing Act (P.L. 106-252) established uniformity of sourcing mobile telecommunications for state and local tax purposes; and
 
WHEREAS, NCSL worked with other state and local organizations as well as the wireless industry in developing the Mobile Telecommunications Sourcing Act; and
 
WHEREAS, NCSL supported the enactment of the Mobile Telecommunications Sourcing Act and assisted states in complying with the federal legislation; and
 
WHEREAS, interconnected Voice over Internet Protocol (VoIP) services, as defined by the Federal Communications Commission are not uniformly sourced for tax purposes and may unnecessarily subject consumers, businesses and others engaged in interstate commerce to multiple, confusing and burdensome state and local taxes; and
 
WHEREAS, the general rule of the Mobile Telecommunications Sourcing Act sources the tax on wireless services to the “customer’s place of primary use, regardless of where the services originate, terminate, or pass through, and no other taxing jurisdiction may impose taxes, charges, or fees on charges for such services”; and
 
WHEREAS, such a sourcing rule should also apply to interconnected VoIP services.
 
NOW, THEREFORE BE IT RESOLVED THAT, the National Conference of State Legislatures supports federal legislation that would require sourcing for purposes of state and local taxation of interconnected VoIP services to be the same as the sourcing rule for state and local taxation of wireless services as contained in the Mobile Telecommunications Sourcing Act, and
 
BE IT FURTHER RESOLVED THAT, the VoIP Communications Sourcing Act should not address any other tax issues, and
 
BE IT FURTHER RESOLVED THAT, a copy of this resolution be sent to the President of the United States and all members of the 113th Congress.

Expires August 2015

NCSL Opposes Federal Contactless Technology Mandates For State Issued Identification Documents (Resolution)

WHEREAS, the federal government is taking a more active role in influencing and determining the technological standards for state issued identification documents such as drivers licenses. The federal government is attempting to influence or mandate the technological standards of sovereign state issued identification documents through the direct acts of Congress, the rule-making processes of the Departments of State and Homeland Security, or through both official or informal agreements with international organizations or initiatives such as the American Association of Motor Vehicle Administrators (AAMVA), the Security and Prosperity Partnership (SPP), and the United Nation’s agency known as the International Civil Aviation Organization (ICAO); and
 
WHEREAS, an example contrary to the tenets of federalism, the initial version of the federal REAL ID Act as introduced would have required the states to enter into the AAMVA compact known as the Driver’s License Agreement (DLA). This compact as drafted would put the non-governmental 501c3 AAMVA, which has foreign voting members, in charge of making the technology decisions for a state’s sovereign drivers licenses. Such federal decisions would allow for AAMVA, and not the States, to determine whether or not bar code or contactless technology must be employed, whether or not such data could be encrypted, what biometrics would need to be encoded, and whether or not the data could be shared with foreign governments; and

WHEREAS, an example contrary to the tenets of federalism, the final rules for both REAL ID and the Western Hemisphere Travel Initiative (WHTI) were published in 2008, and mandated standards onto states’ driver’s licenses for them to be acceptable for certain uses. The Department of Homeland Security is currently requiring states to embed unencrypted contactless technology into a state’s drivers licenses in order for citizens to be able to use them to get back into the United States at international ground crossings. This places specific technological choices as having equal importance over the roles of identification and proof of citizenship, while leaving states with no flexibility or options in this area if they want to pursue an Enhanced Drivers License (EDL) that does not use contactless technology, wishes to employ encrypted contactless technology, or wishes to employ shorter range contactless technology than what is being mandated. The goal of WHTI deals simply with providing proof of citizenship, not dictating the technology by which that proof must be conveyed; and
 
WHEREAS,
an example contrary to the tenets of federalism, the final rules for REAL ID, page 86, make clear that the federal government is not satisfied with a one time mandate and wishes to have this control in perpetuity going forward:  “Moreover, in the future, DHS, in consultation with the States and DOT, may consider technology alternatives to the PDF417 2D bar code that provide greater privacy protections after providing for public comment”. The “final rules” are therefore not really final, and it is unacceptable that such technological decisions could be made by requiring only non-binding consultation with States, especially when there is debate between the States and the federal government as to what really constitutes optimal privacy and security options for their driver’s licenses; and
 
WHEREAS, a driver’s license is a sovereign state document, and whether or not bar code or contactless technology must be employed, should remain a State decision. The federal government should not use the WHTI, a policy of its own devising, as an economic cudgel to coerce states into accepting such technological standards onto their sovereign driver’s licenses.
 
Therefore, let it be resolved, that the NCSL will urge the President, Congress, and the Departments of State, Transportation, and Homeland Security to not pass law, allow for federal policy, use international organizations, or enter into international agreements that mandate or attempt to indirectly influence the use of contactless technology in state or local identity documents.

Expires August 2015

NCSL Resolution in Support of State Public Affairs Networks (Memorial Resolution)

WHEREAS, the operations of state governments and the roles of elected officials are often little understood by citizens. Yet public understanding of the institutions and processes of government is critical to building public trust and confidence. State governments need to bring about a better understanding of the concepts of representative democracy; and
 
WHEREAS, a growing number of states have created or supported the creation of state public affairs television networks whose charge it is to offer unfiltered, gavel-to-gavel coverage of legislative sessions, committee proceedings and similar actions within the executive and judicial branches. By providing an “open window” on the workings of their state governments, these independent networks have increased citizen access, public trust and understanding of both the governmental and the public policy process at large; and
 
WHEREAS, the National Association of Public Affairs Networks (NAPAN) has been conceived to help establish and expand nationally such noncommercial, independent television networks devoted to providing citizens with fair, balanced, and unfiltered access to their state governments: to foster and nurture the institutions that will help create the informed electorate that will shape our democracy in the years to come. NAPAN is committed to the launch and viability of networks in all 50 states.
 
NOW, THEREFORE BE IT RESOLVED, the National Conference of State Legislatures supports and encourages the efforts of the National Association of Public Affairs Networks in its vision for the formation and expansion of a state public affairs network in each of the 50 states in the manner most appropriate for each individual state.

Expires August 2015

NCSL Supports Public Private Partnerships to Increase Broadband Internet Adoption and Use (Resolution)

WHEREAS, the Federal Communications Commission’s (FCC’s) National Broadband Plan (the Plan) sets a goal of raising adoption rates to more than 90 percent by 2020; and

WHEREAS, the Plan cites survey research showing that Americans that do not have broadband at home are disproportionately lower-income and older than average, and only one third of such Americans have broadband at home; and

WHEREAS, broadband adoption also lags among minority communities regardless of income; and

WHEREAS, among the factors cited as reasons why households may not subscribe to broadband are affordability, including lack of computer hardware, lack of digital literacy and lack of relevance; and

WHEREAS, non-adopters citing a lack of digital literacy include people who are not comfortable with computers or have concerns about online safety; and

WHEREAS, non-adopters citing relevance do not believe digital content is sufficiently compelling to justify subscribing to broadband; and

WHEREAS, the Plan sets forth a host of recommendations to address these barriers and to achieve the goal of 90+ percent adoption rates; and

WHEREAS, there are currently two federal Universal Service programs, Lifeline Assistance and Link-Up America, reserved for making phone service more affordable for low-income households; and

WHEREAS, among the Plan’s recommendations is the expansion of these programs to broadband; and

WHEREAS, a number of the Plan’s recommendations are directed at other federal agencies that can increase broadband relevance by, for example offering more government services online, and encouraging telework; and

WHEREAS, the Plan recommends the creation of a Digital Literacy Corps, to help non-adopters become more comfortable with technology; and

WHEREAS, ultimately the Plan finds that increasing adoption requires a multi-faceted approach to addressing barriers to adoption; and

WHEREAS, the National Conference of State Legislatures believes that widespread efforts to promote broadband adoption,  use, and digital literacy are critical to improving the nation’s long-term competitiveness in a global market, and to achieving certain socioeconomic improvements in the quality of American life; and

WHEREAS, expanding adoption, use and digital literacy skills will allow a greater number of Americans to fully take advantage of the benefits of broadband based applications such as tele-health, energy management, education opportunities and government services online; and

NOW, THEREFORE LET IT BE RESOLVED, that the National Conference of State Legislatures calls upon all levels of governments  to work cooperatively with the private sector, nonprofits, and academia to create public-private partnerships to develop and implement robust  broadband awareness, adoption, and use programs; and

BE IT FURTHER RESOLVED, that this resolution be forwarded to members of Congress, the Administration, and the relevant federal agencies implementing broadband funding programs reviewing the adoption and use recommendations of the Plan, including but not limited to the National Telecommunications and Information Administration and the Rural Utilities Service.      


Expires August 2015

State Sovereignty in Online Gaming (Resolution) (Joint with Budgets and Revenue Committee)

WHEREAS, the National Conference of State Legislatures (NCSL) believes the federal government must respect the sovereignty of states to allow or to prohibit Internet gambling by its residents; and
 
WHEREAS, the 2011 ruling by the United States Justice Department on the Federal Wire Act of 1961, 18 U.S.C. §1084, clarifies that intra-state online gambling is lawful. Any effort by Congress or the administration to reverse this ruling is preemptive and diminishes the flexibility of state legislatures to be innovative and responsive to the unique needs of the residents of each state; and
 
NOW, THEREFORE BE IT RESOLVED, that NCSL requests Congress consider the perspective of the states as it examines this issue and asks that it involve state legislators in any federal efforts that seek to reform the regulation of online gaming. NCSL strongly opposes any effort by the federal government to overturn the Justice Department’s ruling or consideration of legislation overruling state authority by legalizing or regulating gambling at the federal level. NCSL also requests that federal lawmakers be respectful of state legislatures that prohibit online gaming or other forms of gaming within their state.

Expires August 2015

Supporting the Development of a Balanced National Spectrum Policy That Includes Unlicensed Access in the 5GHZ Band To Meet the Demand For Wireless Technologies (Resolution)

WHEREAS, we must have policies that preserve and encourage continued private investment to deploy broadband technologies, support small and minority businesses and entrepreneurs participation in the digital economy, and equip minority communities with the skills and education to take advantage of these technologies; and

WHEREAS, Wi-Fi spectrum in the 2.4 GHz band has become highly congested, especially in densely populated urban areas making it difficult for Wi-Fi providers to deliver the kinds and quality of service that consumers have come to expect and will only accelerate as the number of wireless devices continues to grow; and

WHEREAS, the 5 GHz band has enormous potential to support continued growth in unlicensed wireless services, including the next generation of Wi-Fi which will create a platform for technological innovation, investment, and economic growth; and

WHEREAS, the Federal Communications Commission (FCC) acknowledges the critical role that next generation Wi-Fi technologies can have on consumers and has agreed to take a first step in the 5 GHz band by adding over 100 MHz of spectrum for Wi-Fi, making it available for indoor and outdoor use; and

WHEREAS, the internet economy will reach $4.2 trillion in the G-20 economies and boast 3 billion users globally by 2016 and Wi-Fi is essential to unleashing the enormous economic potential of the internet in communities where broadband adoption lags; and

WHEREAS, while according to a 2013 Pew survey more Americans are gaining access to broadband in their homes, adoption rates for African Americans and Latinos still lag those of whites by 10 to 20 percentage points respectively and when accounting for income only 54 percent of those with a household income under $30,000 had high speed broadband or a computer at home increasing the importance of Wi-Fi for these communities; and

WHEREAS, broadband access through Wi-Fi is critical to empowering minority and minority women entrepreneurs to develop, grow and improve productivity of their businesses as well as strengthening U.S. competitiveness nationally and worldwide; and

WHEREAS, unlicensed Wi-Fi is a critical issue that, if left unresolved, will hinder the broadband industry’s ability to grow, innovate and compete and limiting access to this important resource will jeopardize consumers ability to access Wi-Fi; and

WHEREAS, NCSL agrees that the proliferation of smartphones, tablets and other mobile devices with Internet access has grown significantly, placing a greater demand on both licensed and unlicensed spectrum, and adding additional capacity is essential to support continued innovation and achieve the potential to transform many different areas of the American economy by providing a platform for innovation and is likely to have a substantial impact on jobs, growth and investment; and

WHEREAS, NCSL strongly believes that ensuring the long-term success of unlicensed services in the 5 GHz band for Wi-Fi will enable the broadband industry to provide reliable and affordable services to broadband customers, particularly given communities of colors’ high usage of mobile broadband technology as a primary means of connecting to the Internet with the majority of these connection now being Wi-Fi connections; and

NOW, THEREFORE BE IT RESOLVED, that NCSL supports the Federal Communications Commission’s move to allocate additional 5 GHz band spectrum for unlicensed use in order to meet increased demand for wireless technologies; and

BE IT FINALLY RESOLVED, that NCSL send a copy of this resolution to the President of the United States, Members of Congress, the Federal Communications Commission, State Legislatures and Governors. 

Expires August 2015

Twenty- First Century Communications

As the 21st century progresses, advanced communications services and information technology are the economic forces that are ensuring the continued financial health and stability of our country and our states. Innovation and convergence of existing technologies are rapidly expanding communications services, blurring the distinction between telephone and Internet services; between cable, wireless and satellite; between long distance and local service; and between telephone and other forms of communications. Many of these new technologies are capable of delivering communications services but do not fit within the definitions of the traditional regulatory framework for telecommunications. As a result similar services can be delivered via networks that are regulated and taxed differently, and for a growing number of technologies, these services are free of regulation and even taxation.

To ensure that government regulation of communications services, when such regulation is necessary to ensure competition, protect the interests of consumers and the needs of law enforcement agencies, is based on an even playing field between competitors of similar services, though possibly delivered by different technologies, the National Conference of State Legislatures calls upon the Congress and the Federal Communications Commission (FCC), in consultation with state legislatures and the providers of communications services, to review the current definitions of telecommunications and information services as defined in the Communications Act of 1934 and the Telecommunications Act of 1996 to ensure that all providers of communications services are treated similarly for purposes of government regulation and taxation. The definition of telecommunications and information services should not be decided in the courtroom but rather by the elected representatives of the people working cooperatively with regulators, industry providers and consumer groups.

NCSL has concerns about a piecemeal approach by Congress in addressing regulatory and taxation issues with regard to a particular developing technology and not similar issues faced by other providers of communications. NCSL supports reconsideration of the 1996 Telecommunications Act to eliminate remaining barriers to competition, modernize outdated regulations that distort the market or results in government favoring one technology over another, and ensure a level playing field for all providers of communications services, while maintaining the basic right of interconnection that is fundamental to a competitive market

COMMUNICATIONS INFRASTUCTURE

The United States communications infrastructure is the combined product of a wide range of service providers, including historically regulated common carriers, new entrants and operators of private networks. Government and industry should strive for a communications policy framework that promotes and ensures fair and open competition, removes obsolete barriers that result from outdated burdensome regulation and requirements, ensures similar government regulation for all technologies that provide similar services in markets that are competitive, encourages innovation and investment, and allows consumers and the marketplace to determine winners and losers not government regulation. As competitive markets alone may not be able to provide an advanced communications infrastructure to all citizens, institutions, and businesses, government should continue to encourage the availability of such an infrastructure to all. The federal government must recognize that states have unique priorities that require state and regional specific solutions.

UNIVERSAL SERVICE FUND
In reforming the federal Universal Service Fund (USF), NCSL reminds Congress that the USF is funded primarily by customers of telecommunications services and therefore the Congress needs to evaluate the ever growing burden these increasing fees are becoming to all Americans. Congress, the FCC, state legislatures and state regulators should review and address the requirements and goals for universal service by adopting policies that promote universal mobility and universal competition. As the FCC embarks to modernize the fund to hasten the deployment of high-speed Internet service nationwide, NCSL cautions that any reform of the federal USF should not impact or hinder innovation at the state level or interfere with the administration of state Universal Service Funds. 

ADVANCED COMMUNICATION SERVICES
The future expansion of access to advanced communications and broadband services will depend upon additional private investment. Any regulation of communications and broadband services must be minimal and should not discriminate between communication providers or the technology used in delivering such services.

NCSL urges Congress to work with states in developing an integrated broadband strategy to ensure universal deployment and affordable access to every constituent, regardless of geography or economic status. NCSL supports the creation of a national advisory board, including state, federal and local policymakers, as well consumer and industry representatives, to develop principles to facilitate deployment of advanced broadband communications services.

NCSL urges the FCC, in conjunction with state, federal and local policymakers, to reevaluate the distinction between telecommunication and information services and gather additional information on the state of advanced broadband and communications services in the United States in light of the technological achievements made within the last decade. 

MUNICIPAL BROADBAND NETWORKS
As states seek to expand access to broadband and work with the federal government to enhance deployment of broadband, Congress and the FCC must recognize and account for the principles of federalism and numerous decisions by the United States Supreme Court with regard to the relationship between the state and its political subdivisions. NCSL will oppose any effort to authorize or prohibit the establishment of municipal or state created public agencies broadband networks through congressional or federal regulatory action. Should Congress or the federal government take such action, NCSL will challenge the constitutionality of such action.

WIRELESS COMMUNICATIONS
While the wireless industry through self-regulation has been successful in significantly reducing the number of consumer complaints, NCSL continues to support the ability of state government to protect the interests of wireless consumers. However, in carrying out its consumer protection functions government must acknowledge the interstate nature of the wireless industry. Specifically targeted state government requirements such as type size, language or formats of billing statements that may differ from jurisdiction to jurisdiction, while possibly well meaning, will hinder the seamless provision of these services, resulting in confusion and increased costs for all customers especially for those that are not residents of the state that has taken such action. 

NCSL urges state and federal policy makers to work together to ensure that industry targeted consumer protections can be applied within a national framework that ensures the continued ability of the state attorneys general to enforce such consumer protections.

While states recognize the need for prepaid wireless phones, especially to those who may not be able to afford the costs of a wireless service contract, state legislatures and law enforcement agencies are concerned that such phones may also be used for illegal purposes. NCSL encourages the wireless industry to continue working with state and local law enforcement agencies to ensure that prepaid wireless phones do not become a means to criminal or terrorist activity.

SPECTRUM MANAGEMENT
NCSL supports a periodic examination of current and future radio frequency spectrum needs and uses. In view of the limitations of the radio frequency spectrum, NCSL supports management reforms to improve the current allocation and assignment process. Access needs to be provided to all users of the spectrum.

NCSL recommends delaying proposals that would allow developing technologies to share the same bandwidth presently utilized by state and local governments and public utilities until such time as transmission can sufficiently be assured to avoid signal interference with public users. NCSL opposes any effort to provide additional frequency by means of reallocating what is currently allocated for state, local, public utility uses and transportation direction and safety purposes until the aforementioned concerns are adequately addressed.

NCSL supports providing sufficient spectrum to public safety to meet the requirements for an interoperable nationwide broadband network. Therefore, NCSL opposes the FCC’s efforts to auction the D Block spectrum within the 700 MHz band to a commercial provider without a strict guarantee that addresses the unique and critical spectrum needs of public safety for an interoperable nationwide broadband network.

STREAMLINING AND COLLOCATION OF WIRELESS FACILITIES SITES
The federal Communications Act respects the authority of state and local governments over zoning and land use decisions for personal wireless facilities, but limits that authority to ensure that such local decision making does not become a barrier to entry for wireless providers. While the FCC, state and localities have worked cooperatively in the past, efforts to increase wireless facilities sites or to co-locate on existing sites are facing growing roadblocks by some localities. Local jurisdictions are the creation of either state constitutions or statute. Zoning and land use powers that these political subdivisions of the state exercise were granted to them over time by state legislatures. Therefore, any attempt by Congress to preempt current local zoning and rights-of-way authority is a preemption of state sovereignty.

To avoid federal preemption, state legislatures enacted legislation to streamline the siting process and to enhance the use of collocation on existing wireless facilities. While NCSL rarely advocates the enactment of legislation in state legislatures, NCSL has at times, when states are facing a serious threat of federal preemption, urged state legislatures to take action. NCSL, in order to preserve the states’ sovereignty, endorses state action to enhance the use of collocation of cell antenna and the streamlining of the current tower siting process. Collocation of antenna should not be subject to additional zoning, land-use or regulatory approval process above and beyond the initial process for siting the wireless facility. NCSL also believes that government should not levy discriminatory fees for the siting of wireless facilities or the application for collocation. Application fees levied on the siting as well as taxes on the wireless facility must not be higher than fees or taxes applied to other general business.

STATE FEDERAL PARTNERSHIP IN TELECOMMUNICATIONS COMPETITION
State legislatures and state regulators have been at the forefront of deregulation of the telecommunications industry, removing barriers to competition in local markets and advocating the infrastructure for the delivery of advanced telecommunications. State legislators recognize that deregulation and competition are among the means to reach the goals of advanced infrastructure development, universal service, expanded consumer choice, availability of services and cost effectiveness for our constituents.

NCSL, through its policy process, has supported the sovereign rights and responsibilities of states to regulate intrastate telecommunications. This principle has guided NCSL’s position with regard to Congressional action to deregulate and provide for competition in telecommunications. 

NCSL believes that the Congress and the President, in enacting the Telecommunications Act of 1996, acknowledged the rights and responsibilities of states to regulate intrastate telecommunications, using any and all of the local market entry mechanisms envisioned by Congress in the 1996 Act, including the resale of legacy networks, providing that states use such authority in a competitively neutral manner. NCSL believes that states and the federal government should continue their joint partnership in sharing regulatory responsibilities which will serve to protect consumers by ensuring the broadest possible consumer choice in each geographic and service market, provide for the appropriate level of universal service, promote effective competition in telecommunications by ensuring similar and minimal regulation for all providers in competitive markets, foster the development of a national infrastructure policy that encourages a positive impact on our nation’s economic future.

While NCSL acknowledges the historic role of states as the primary regulator of intrastate telecommunications, state legislators also recognize that the historic distinctions between intrastate and interstate communications is fast becoming irrelevant in today’s global marketplace. Some new services, such as Voice over Internet Protocol, involve integrated functionalities that cannot even be characterized as jurisdictional. NCSL calls upon the Congress and the FCC to partner with states in a national framework for communications policy that ensures minimal regulation but guarantees all Americans with a choice of mediums and service providers.

TAXATION OF COMMUNICATIONS SERVICES
With the blurring of boundaries and increased convergence and competition in telecommunications and other related services, NCSL supports the review, simplification and reform of communications tax policies at all levels of government in order to ensure a level playing field between telecommunications service providers, to enhance economic development, to avoid discrimination between new and existing providers and to relieve the higher burden that discriminatory communications taxes have on low income Americans.

Transaction taxes and fees imposed on communications services should be simplified and modernized to minimize confusion, remove distortion and eliminate discrimination regarding the taxability of telecommunications services. NCSL encourages elected policymakers at all levels of government to work together to simplify reform and modernize communications taxes based upon the following principles:

  1. Tax Efficiency: taxes and fees imposed on communications services should be substantially simplified and modernized to minimize confusion and ease the burden of administration on taxpayers and governments.
  2. Competitive Neutrality: transaction taxes and fees imposed on communications services should be applied uniformly and in a competitively neutral manner upon all providers of communications and similar services, without regard to the historic classification or regulatory treatment of the entity.
  3. Tax Equity: Under a uniform, competitively neutral system, industry-specific communications taxes are no longer justified, except for fees needed for communications services such as 911 and universal service.
  4. State Sovereignty: Other than the prohibition of taxes on internet access, NCSL will continue to oppose any federal action or oversight role which preempts the sovereign and Constitutional right of the states to determine their own tax policies in all areas, including communications services.
 

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