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The Communications, Financial Services and Interstate (CFI) Committee Newsletter is an NCSL electronic newsletter for Committee members and interested staff. This newsletter provides monthly updates and links to the latest research and news highlights related to communications, financial services and interstate commerce.
This first appeared in NCSL's Capitol to Capitol newsletter on June 25, 2017.
Last Thursday, the U.S. Supreme Court (SCOTUS) did something it rarely does—admit that it was wrong. In a 5-4 opinion, the court ruled that the precedent it established in the 1967 Bellas Hess case and reaffirmed in the 1992 case of Quill v. North Dakota was bad precedent. For more than 50 years, the court had held that businesses must have a physical presence in a state before being required to collect and remit that state's sales tax. That is no longer the case. Writing for the majority, Justice Anthony Kennedy wrote that "the Court concludes that the physical presence rule of Quill is unsound and incorrect. The Court's decisions in [Quill and Bellas Hess] should be, and now are, overruled." In addition to vacating its previous rulings, SCOTUS remanded the case back to the South Dakota Supreme Court, which will reconsider the constitutionality of the sales tax law in the absence of Quill. Legal experts expect that the South Dakota Supreme Court will ultimately rule in favor of the state.
Kennedy wrote: "Two primary principles mark the boundaries of a State's authority to regulate interstate commerce: State regulations may not discriminate against interstate commerce; and States may not impose undue burdens on interstate commerce." He said that because South Dakota 1) exempted small remote sellers from having to collect and remit the state's sales tax, 2) prohibited retroactive application of the law, and 3) simplified their sales tax administration, the state's law did not discriminate against interstate commerce.
NCSL President, Senator Deb Peters (R-S.D.), who authored South Dakota's remote sales tax legislation, said in NCSL's statement following the decision that:
"Today's decision by the U.S. Supreme Court is a victory for Main Street America. Brick and mortar stores will no longer be penalized for collecting the tax revenues that fund our schools, infrastructure, and the vital public services that state and local governments provide. For states, today is just the beginning. We've waited 26 years. Good tax administration is good public policy and state officials look forward to working with all stakeholders in the coming months as we move forward to level the playing field for all of our nation's retailers."
Last Thursday, NCSL's Task Force on State and Local Taxation hosted a session on "The Future of Gaming and Sports Betting." The session included gaming, tax and law enforcement experts, including Indiana Attorney General Curtis Hill. Panelists discussed the implications of Murphy v. NCAA, and explored what legalized sports betting means for state revenue, regulation and compliance. Watch the event.
Steve Dreyer, former financial analyst at the global financial research firm Standard and Poor's, has been appointed the new director of the U.S. Treasury Department's Federal Insurance Office (FIO). Dreyer's appointment follows the tenure of former Illinois Department of Insurance director, Michael McRaith. Some of Dreyer's recent comments reflect his desire to support the state regulation of insurance and willingness to support states as the insurance industry's primary regulators. Further, Dreyer expressed his intent to help foster a strong state regulatory system and not use the FIO as a means through which to preempt states. Dreyer did recognize the Office's role in promoting awareness and education of insurance and other financial instruments to address many issues prevalent today, including access to health insurance, retirement planning and catastrophic property and casualty losses.
The FIO was established by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. According to the Treasury, FIO is vested "with the authority to monitor all aspects of the insurance sector, monitor the extent to which traditionally underserved communities and consumers have access to affordable non-health insurance products, and to represent the United States on prudential aspects of international insurance matters...." Among other duties, FIO serves as an advisory body to the federal Financial Stability and Oversight Council (FSOC).
On Thursday, June 14, the United States House of Representatives passed the Synthetics Trafficking and Overdose Prevention (STOP) Act with significant bipartisan support. The legislation passed the chamber 353-52 with 49 Democrats and 3 Republicans voting against the bill. NCSL has policy supporting the STOP Act, and is actively advocating for its passage.
Designed to close a shipping loophole that has benefitted the U.S. Postal Service (USPS) over private shipping companies, the STOP Act would require the USPS to provide U.S. Customs and Border Patrol with heightened security data. This information, also known as "advance electronic manifest data," has accompanied inbound foreign shipments handled by private carriers for more than 15 years. Containing information such as where a package originated, its destination and its contents, advanced electronic manifest data will help law enforcement identify, inspect and seize packages containing illegal, illicit and counterfeit substances and goods.
View NCSL's most recent letter to Congress asking it to pass the STOP Act.
This issue was explored at last year's NCSL Capitol Forum during a session titled "Buyer Beware—Counterfeit and Hazardous Goods Bought and Sold Online." The session, focusing on consumer awareness and protection, touched on the recent influx of dangerous items entering our country, primarily via shipments originating outside of the country. During the event, NCSL hosted shipping, manufacturing and law enforcement experts who discussed how these drugs and counterfeit items get through customs and into our country.
On June 27, the Senate Committee on Commerce, Science and Transportation pushed forward the nomination of Geoffrey Starks from Kansas to be the new Democratic commissioner of the Federal Communications Commission (FCC). Starks, subject to full Senate confirmation, will replace the outgoing FCC Commissioner Mignon Clyburn.
In the same committee hearing, committee members approved eight bills and three other nominations pending full Senate consideration. One bipartisan bill to keep an eye on is S. 645, Measuring the Economic Impact of Broadband Act of 2017. Sponsored by Senators Amy Klobuchar (D-Minn.), Shelley Capito (R-W.VA.) and others, the bill would require the secretary of Commerce, in consultation with state and local government and other stakeholders, to conduct an assessment and analysis of the effects of broadband deployment and adoption on the economy and submit the report to the Senate.
Senate Committee on Commerce, Science and Transportation Summary can be read here.
June 11 marked the effective date of Chairman Pai's Restoring Internet Freedom Order rolling back the net neutrality rules instituted under the previous administration. The rule change also gives primary jurisdiction over internet service providers' practices to the Federal Trade Commission and pre-empts actions states take to reinstate net neutrality restrictions. As of June 1, legislators in 30 states had introduced more than 65 bills or resolutions in support of maintaining net neutrality principles. Oregon, Vermont and Washington passed legislation. Governors in Hawaii, Montana, New Jersey, New York, Rhode Island and Vermont have signed executive orders requiring companies wishing to contract with the state to confirm they will follow net neutrality requirements. In addition, the mayors of at least 120 cities also have pledged to require entities contracting with them to adhere to net neutrality rules.
Join NCSL for a discussion on what is next for Net Neutrality at the Legislative Summit!
Learn the latest from experts who will provide the lay of the land, and join the discussion about the FCC action, developments at the state level, the prospects for litigation, and possible action on Capitol Hill.
Moderator: Assemblymember Jacqui V. Irwin, California
Speaker: Kim Keenan, Innovation Alliance (IIA), Washington, D.C.
Speaker: Adam Peters, Wilkinson, Baker and Knauer LLP, Colorado
Speaker: Ernesto Falcon, Legislative Counsel, Electronic Frontier Foundation, San Francisco, CA
For more information: NCSL LegisBrief on Net Neutrality State Action; NCSL Resources on Net Neutrality; NCSL Magazine
U.S. Sen. John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science, and Transportation, and Sen. Brian Schatz (D-Hawaii), the ranking member of the Senate committee's subcommittee on Communications, Technology, Innovation, and the Internet, introduced S. 3157, the Streamlining The Rapid Evolution And Modernization of Leading-edge Infrastructure Necessary to Enhance Small Cell Deployment Act or STREAMLINE Small Cell Deployment Act. The bill would update the Communications Act in the attempt to streamline the deployment of 5G networks. States have already taken the lead to streamline state and local regulations to encourage rapid deployment of 5G infrastructure. Members can also see NCSL's published LegisBriefs which outlines federal and state activity on this issue.
Senator Thune's Summary of the Key Provisions
Process and timeframe guidelines specific to small cell applications for state and local consideration.
Requirements for reasonable state and local fees for processing applications:
This month the FCC issued a report and order that will increase the annual Rural Health Care program funding cap for rural hospitals and health clinics by 43 percent, or $171 million per year. As outlined in a recent letter Chairman Pai sent to Senators, the Rural Health Care (RHC) Program improves access to telehealth in rural America and will ensure rural health care providers get the connectivity they need to better serve patients.
The National Telecommunications and Information Administration (NTIA)'s BroadbandUSA program hosted a webinar on infrastructure week exploring successful models and best practices for rural broadband deployment. NTIA, as part of the US Department of Commerce, is the executive branch agency responsible for advising the president on telecommunications and information policy issues. The presentation, transcription and audio recording are now available on the BroadbandUSA website. Additional information on broadband deployment best practices and unique state solutions can also be found here.
Earlier this week the House Energy and Commerce Committee held a hearing on the house's proposed discussion draft reauthorizing NTIA.
Please join the Communications, Financial Services and Interstate Commerce Committee (CFI) at the year's Legislative Summit in L.A. The Summit promises to be full of interesting and provocative speakers and informative forums that address some of the most difficult issues you are facing in your state. We look forward to seeing you there!
The CFI Committee Business Meeting will be held Tuesday, July 31, from 1:30-2:45 p.m. July 2 is the deadline for submitting amendments or new policy directives and resolutions. For more information regarding submitting policy directives and resolutions, please review the NCSL Policy Process Memo. The policy directives and resolutions will be accessible electronically through the NCSL app and the agenda and resources page on the Legislative Summit website.
Additionally, the CFI Committee's Legislative Summit agenda is now available online. As you will note from the agenda, the CFI Committee will explore the following topics: