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 Commerce.
Banking & Financial Regulations of Cannabis
States Regulation on Cannabis Usage
The National Conference of State Legislatures (NCSL) recognizes that the majority of states and territories have legalized medical cannabis usage. Further, NCSL recognizes that a growing number of states have legalized adult-use recreational cannabis. Many of these states are creating substantial regulatory regimes with respect to the cannabis industry to ensure compliance with the law, prevent diversion into the illegal market and provide transparent financial oversight of licensed businesses.
Harm to Financial Institutions
These new regulatory schemes relating to cannabis have created a significant expansion of the cannabis industry authorized under state law. NCSL acknowledges that due to the expansion of legal cannabis, legitimate business enterprises need access to financial institutions that provide capital, security, efficiency, and record keeping. Despite many states passing their own regulations, cannabis remains illegal at the federal level as a Schedule I drug under the federal Controlled Substances Act. NCSL is concerned that under this law, the federal Bank Secrecy Act and concordant regulations impose substantial administrative and operational burdens, compliance risk and regulatory risk that serve as a barrier to banks and credit unions providing banking services to businesses and individuals involved in the cannabis industry. NCSL believes that this form of federal prohibition on cannabis jeopardizes the financial services industry as well as the cannabis industry. Providing banking services to cannabis related businesses entails additional risk to banks and credit unions because cannabis is a Schedule I drug under the Controlled Substances Act, substantially increasing risk of civil or criminal liability.
Current federal regulations force financial institutions to incur inordinate risk, should they decide to provide banking services to licensed cannabis businesses. The National Conference of State Legislatures recognizes that allowing access to banking services will improve the regulation of cannabis businesses. NCSL recognizes that the current federal guidance for providing financial services to cannabis businesses is insufficient, as it does not change applicable federal laws, imposes significant compliance burdens and is subject to change at any time. NCSL recognizes that without banking options, cannabis related businesses are forced to operate exclusively in cash, while a large and growing cash-only industry attracts criminal activity and creates substantial public safety risks. NCSL acknowledges that a cash-only industry reduces transparency in accounting and makes it difficult for states to implement an effective regulatory regime that ensures compliance. NCSL is concerned with the inability of cannabis related businesses to pay taxes in a form other than cash, which may only be remitted in person. NCSL acknowledges that this creates a substantial burden for state governments to develop new infrastructure to handle the influx of cash and for business owners who may have to travel long distances with large sums of cash. States have been forced to take expensive security measures to mitigate public safety risks to taxpayers utilizing the system, state employees and the public at large. NCSL is concerned that states do not have any control over the enforcement of federal laws and cannot enact legislation that provides banks and credit unions with protections necessary to secure their business interests in light of federal law.
Controlled Substances Act
National Conference of State Legislatures calls on Congress to amend the Controlled Substances Act to remove cannabis from scheduling, thus enabling financial institutions the ability to provide banking services to cannabis related businesses. NCSL additionally acknowledges each of its members will have differing and sometimes conflicting views of cannabis and how to regulate it, but in allowing each state to craft its own regulations, we may increase transparency, public safety, and economic development where there is support to do so.
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.
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.
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.
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.
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.
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.
A corporation is defined as a legal entity or structure created under the authority of a state's laws, consisting of a person or group of persons who become shareholders. The entity's existence is considered separate and distinct from that of its members. A corporation can enter into contracts, sue and be sued, pay taxes separately from its owners, and do the other things necessary to conduct business.
The ability to regulate and set standards for incorporation law had long resided 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 what the articles of incorporation need to involve and have the ability to both tighten and lift barriers for corporate formation.
One of the key reasons for forming a corporation is the limited liability protection provided to its owners. Because a corporation is considered a separate legal entity, the shareholders have limited liability for the corporation's debts. The personal assets of shareholders are not at risk for satisfying corporate debts or liabilities.
In 2001, after the terrorist attack on the United States, the U.S. Treasury Department was tasked with tracking the funding of terrorists cells and groups. One of the findings of these early studies was the concern that state corporate formation statutes may have allowed terrorists and other criminals in laundering money and hiding assets. In 2002, a number of states were identified by the Treasury Department as having insufficient requirements for the identification of members, managers or the beneficial owners of the corporation or other limited liability entities.
In 2006, the General Accounting Office (GAO) and the Money Laundering Threat Assessment Working Group of the U.S. Treasury Department released studies regarding what they considered the lax corporate formation requirements by states. Almost every state was cited by the GAO report for inadequate corporate formation information requirements.
In late 2006, the Permanent Subcommittee on Investigations of the United States Senate Homeland Security and Governmental Affairs held a hearing on the reports and what the Subcommittee claimed was the states failure to respond. In February 2007, some in Congress served noticed that if the states failed to address the findings of the studies, then Congress would set a national standard for corporate formation and registration. In doing so, Congress would preempt most states’ corporate formation statutes and seriously impact the revenues of many states.
A special Task Force was established by the Executive Committee of the National Conference of State Legislatures to study the federal reports, and the congressional hearing and to determine if the concerns were valid. After a year of meetings and hearings, the NCSL Task Force has found that while some state statutes may lack some of the transparency demanded by the federal agencies, the wholesale preemption of state corporate formation statutes is unwarranted and unnecessary. However, NCSL is committed to working with the National Association of Secretaries of State, American Bar Association, and the National Conference of Commissioners of Uniform State Laws to enhance the transparency of current state corporate formation laws.
Therefore, the National Conference of State Legislatures will oppose any unwarranted effort at the federal level to preempt state incorporation laws without proper justification that such laws have led to criminal or terror activities.
Intellectual Property (IP) Rights and Protection to Promote Productivity, Competitiveness, and Jobs
NCSL recognizes that intellectual property (IP) rights and innovation are important drivers of job creation and America’s economic growth. According to the U.S. Department of Commerce 2016 report, over 45 million jobs are directly and indirectly supported by IP-intensive industries as significant drivers of GDP, exports, and wages in every state, and the average worker in an IP- intensive industry earns 30 percent higher wages than those of non IP-intensive industries. IP-intensive industries drive American exports accounting for approximately $1 trillion (74 percent of total U.S. exports).
Given the important role that IP plays in sustaining a long-term economic growth, policymakers should prioritize innovation and protecting intellectual property. Protecting and enforcing the IP rights of businesses is critical to advancing global economic recovery, driving competitiveness and export growth, and creating high-quality jobs. IP protections, though vital, must be balanced with other priorities, including the right of citizens to access affordable drugs and medical devices and the ability of state governments to contain Medicaid costs. Balanced efforts to promote innovation through intellectual property protection and affordable healthcare 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.
NCSL 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. NCSL also supports efforts to ensure the Intellectual Property Enforcement Coordinator within the Executive Office of the President has sufficient staff, budget, and authority to fulfill the obligations and achieve the goals outlined in the Prioritizing Resources and Organization for Intellectual Property Act of 2008 (PRO-IP Act) and the National IP Strategy. NCSL further supports robust and balanced IP protection and enforcement provisions in trade agreements, protecting U.S. jobs and wages while ensuring that excessive monopoly protections do not saddle states or individuals with burdensome costs that limit healthcare options or endanger public health. Finally, NCSL supports existing efforts to shut down the top illegal rogue websites globally that are willfully selling counterfeit goods and facilitating digital theft.
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 global, not just in the United States. 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:
Data Privacy and Security
With the proliferation of data online, including the internet of things and mobile devices, the regulation of the collection, sales, and transmission of consumer data is increasingly a priority for state and federal lawmakers. NCSL recognizes the importance of consumer data privacy and security protections, as well as the role of the states as leaders in establishing those protections for their constituents.
In response to many high-profile security breaches and violations of consumer privacy, data privacy and security have become the subject of increasing regulation, most notably the General Data Protection Regulation (GDPR) in Europe. States and the federal government are working to protect against data breaches, mishandling of data, and non-transparent sale of consumer data in a way that balances myriad competing interests and allows for innovation while safeguarding the rights of consumers. Congress has yet to enact any significant or comprehensive legislation that addresses consumer data privacy and security protection. Meanwhile, state activity in the areas of data privacy and security has significantly increased in the past few years and states will not hesitate to act in the absence of federal legislation.
NCSL opposes blanket state preemption in federal data privacy and security legislation. However, because of the interstate nature of the internet and data transmission, NCSL recognizes the need for uniformity in the regulatory environment. Although data privacy and security legislation has traditionally followed a sector-by-sector approach, NCSL further urges Congress to consider comprehensive legislation in setting any national standard.
NCSL strongly urges Congress to engage in regular and meaningful consultation of state lawmakers when considering federal privacy and security legislation. State lawmakers should be included in hearings, review of draft language, principle setting, and other Congressional activity intended to impact state regulatory regimes.
If Congress develops a national standard, NCSL strongly encourages consultation with states and recognition of state expertise in addressing the varied interests of each state’s unique constituency. In any federal legislation, NCSL urges Congress to prioritize transparency and informed privacy decisions, and to carefully consider the best method for consumer notice, disclosure, and consent. NCSL further encourages Congress to consider issues of third-party access and sales, disposal of data, consumer rights to control data, and the burden of protecting consumer data. States have also engaged in significant deliberation over the applicability of consumer protections to various data types, including how to define personal data and how categories of data collectors or sellers should be regulated. NCSL supports recognition by Congress of states’ expertise on these issues and opposes any legislation that preempts state law without meaningful consideration of state priorities or established consumer protections.
NCSL also recognizes the rapidly evolving nature of data collection and urges Congress to consider biometric data, location data, and technologies like facial recognition and artificial intelligence when considering federal legislation.
States should retain the right to establish their own legal rights of action, enforcement regimes, and oversight authority. NCSL urges Congress to protect the right of the states to enforce data privacy provisions in any federal legislation.
NCSL recognizes the increase in telemarketing activity and robocalls across the nation and the work of the Consumer Financial Protection Bureau and Federal Communications Commission on expanding consumer rights in this area. NCSL encourages Congress to pass legislation to protect consumers from harassment and predatory telemarketing activity, including requiring telephone service providers to, at no cost to the customer:
- Make robocall mitigation technology available to any customer;
- Implement call authentication technology to identify likely spoofed calls; and
- Offer call blocking technology.
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.
NCSL requests that 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:
- Receive meaningful information regarding their broadband service plans;
- Have access to their choice of legal Internet content, recognizing the limits on bandwidth and quality of service of their service plan;
- 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
- 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.
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 (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.
Congress must respect the sovereignty of states to allow or to prohibit Internet gambling by their residents.
The Wire Act of 1961 prohibits using an interstate wire communication to transmit bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest. The law also made it illegal to use interstate wire communications transmissions to provide remuneration for winning bets or wagers or for information assisting in the placing of bets or wagers.
In 2018, the Supreme Court’s ruling in Murphy vs. National Collegiate Athletic Assn. allowed states to legalize and regulate sports betting for the first time, and many states have passed or are considering legislation that allows online gaming. Additionally, states currently engage in online gaming markets, interstate online poker pools, online lottery sales, and interstate lottery pools, among other online gaming activities. States and bettors also use the internet for marketing and payment processing. Some states currently utilize technology that restricts sportsbooks and users to operate within state lines.
The Department of Justice has issued several memos on the application of the Wire Act that may impact the ability of states to operate and regulate a variety of online betting and gaming activities. In 2019, the Office of Legal Counsel in the Department of Justice issued a revision of their 2011 opinion. The revision stated that the restrictions in the Wire Act apply to any form of gambling that crosses state lines, and may impact many currently legal state gambling activities, including the passing of data through intermediaries. The revision creates uncertainty in the regulatory environment and may cause disruption in state markets as litigation follows.
NCSL recognizes the importance of state sovereignty in the operation and regulation of online gaming and the importance of a predictable and stable regulatory environment. NCSL encourages Congress and the Department of Justice to engage in regular and meaningful consultation of state lawmakers and regulators when considering bills, opinions, or other actions that may disrupt current state markets or affect the ability of states to regulate online gaming. NCSL recognizes that states are best suited to regulate online gambling and encourages the Department of Justice to revise its current interpretation of the Wire Act to recognize state sovereignty in regulating these activities and provide market stability.
NCSL also urges Congress to clarify the Wire Act to protect the ability of states to operate and regulate online gambling activities as they see fit, including currently legal activities threatened by the revision of the OLC opinion. NCSL further recognizes that the Wire Act contains language that is out of date and does not reflect the reality that states, markets, consumers, and regulators operate in the age of the internet and digital commerce. NCSL supports a revision of the Wire Act that updates the Act to more accurately represents current technology and communications capabilities.
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.
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, as well as including options for public-private partnerships where applicable.
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.
Reducing Barriers of Smart Community Infrastructure (Resolution)
Whereas, smart community technologies can strengthen America’s cities, states and regions by improving the overall quality of life, economic opportunity, and security for those who live in America’s communities; and
Whereas, the development and deployment of smart community technologies in the communication, energy, and transportation sectors provides new opportunities to increase overall public health and facilitates economic growth across urban and rural communities; and
Whereas, such smart community innovation encompasses a range of technological solutions to modernize and improve the delivery of state and local government services; and
Whereas, smart community technologies can achieve community goals, such as increasingly clean and efficient transportation, improved energy management, integration of distributed and renewable energy resources, increase access to better quality broadband connectivity and enhanced transportation mobility; and
Whereas, partnerships between state and local governments and the private sector can support ‘smart community’ innovations across all communities and help overcome resource constraints and impediments, and facilitate the efficient coordination of services; and
Whereas, these public-private partnerships can help accelerate smart community advancements and new technology deployments that benefit residents and constituents across cities, states, and regions; and ensure that smart community technologies are efficiently integrated and provide maximum benefit to the communities they serve; and
Whereas, the infrastructure of the communications, energy, and transportation sectors are not only interconnected, but serve as the foundational elements to enable the deployment of new smart community technologies in all communities; and
Therefore, agencies, such as the department of transportation, federal communications commission, federal aviation administration, the department of agriculture and the department of energy should fund grant programs and opportunities for state and local governments that support efficient investments in smart communities; and
Now, therefore, be it resolved, that NCSL believes that policymakers, as well as partners from the communications, energy and transportation sectors, should continue to work at the local, state, and federal levels to develop policies that facilitate and accelerate the development and deployment of smart community technologies that can maximize benefits for all communities at the local, state, and regional levels.
Now, be it further resolved, that NCSL supports additional federal funding toward the development of smart communities, and that the department of transportation should re-launch the 2015 smart city challenge, and expand the number of communities eligible to receive awards across the nation
Expires August 2020
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.
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.
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, and urged Congress to address the issue of remote sales tax collection. It is estimated in various studies that state and local governments are losing between $8 billion to $35 billion a year in uncollected sales taxes from remote transactions and that annual losses will continue to grow as more commerce is conducted online. Congress’ failure over the last 26 years to address the issues raised by the Supreme Court in 1992, resulted in an effort by states to require remote sales tax collection based on economic presence. The first case ready for review by the Supreme Court, South Dakota v. Wayfair, resulted in the Court overturning its previous decisions in Bellas Hess and Quill, which allowed states to require remote sellers to collect sales taxes for purchases made by their residents. The Wayfair decision by the Supreme Court has made the need for congressional action unnecessary.
Having state tax sovereignty returned to the states for sales tax collection, states now have the obligation to act with fairness and transparency in administering the remote sales tax collection system. The responsibility will be on states to ensure that the burden to collect sales taxes by remote sellers is no greater than the burden on in state sellers if states are to avoid a preemptive federal framework imposed by Congress. States must work together as partners in the collection of sales taxes or face a call from sellers for federal intervention. Action by state tax departments regarding remote sales tax collection without the consent of the elected policymakers in the state legislature and executive branch should be avoided.
NCSL recognizes that 24 states have enacted legislation to join the Streamlined Sales and Use Tax Agreement (SSUTA), which was recognized by the Supreme Court in the majority opinion as a viable way for states to collect remote sales taxes. While it is an option for the remaining 21 states that have a sales tax, it is not mandatory. However, those 21 states should consider joining SSUTA or consider enacting legislation to work with SSUTA for: a central registration system for remote sellers, a central system for the certification of Certified Software Providers (CSPs), ensure that remote sellers are provided the same compensation as in-state sellers, provide a publicly available taxability and exemption table, and, provide a rates and boundary database in an easily downloadable format.
States won a victory in the U.S. Supreme Court and now they have a responsibility to ensure that sellers are treated with fairness and as good corporate citizens. States should follow the Golden Rule of state tax policy: “Do unto taxpayers in other states as you would have them do unto your taxpayers.” Any state that implements remote sales tax collection irresponsibly will only jeopardize the ability of other states to require remote sales tax collection.
Moreover, NCSL will oppose unnecessary federal legislation that preempts the states’ authority, as granted by the Supreme Court, to collect sales taxes from remote sellers.
NCSL Requests Increased State Representation on the Federal Communications Commission Broadband Deployment Advisory Committee (Resolution)
WHEREAS, states actively establish, fund and promote broadband internet policies, authorities and projects across the country;
WHEREAS, broadband is fundamental in furthering the education, economic development, and health of all Americans;
WHEREAS, states want to close the digital divide and ensure equal access to broadband internet across all regions of the state;
WHEREAS, under the Federal Communications Commission’s (FCC) statutory authority, the Communications Act of 1934 and the Telecommunications Act of 1996 acknowledge the dual but collaborative role state and federal government have in providing, regulating and promoting communications services;
WHEREAS, on January 31, 2017, FCC Chairman Ajit Pai announced the formation of the Broadband Deployment Advisory Committee (“BDAC”), a federal advisory committee tasked with providing advice and recommendations to the FCC on how to identify and remove regulatory barriers to accelerate the deployment of high-speed broadband internet access;
WHEREAS, FCC Chairman Pai has appointed 36 members of the BDAC, only two (2) BDAC members represent state or local entities;
WHEREAS, the BDAC released on December 6, 2018 a Model Code for States, Competitive Access to Broadband Infrastructures, Removing State and Local Regulatory Barriers, and a Model Code for Municipalities;
WHEREAS, serving as of an advisory body to the FCC, the BDAC’s recommendations hold influence over FCC efforts to identify and remove regulatory barriers to broadband infrastructure deployment;
WHEREAS, the BDAC membership should equally reflect constituencies significantly impacted by the recommendations, and therefore a greater number of state government representatives should be on the BDAC;
NOW, THEREFORE, BE RESOLVED, the FCC should increase the representation of state legislators in BDAC membership;
BE IT FURTHER RESOLVED, NCSL urges the FCC to work collaboratively with states to identify methods for accelerating the deployment of high-speed broadband internet access;
BE IT FURTHER RESOLVED, NCSL opposes FCC efforts to pre-empt the traditional authority of states around rights-of-way, pole attachments and policies governing telecommunications facilities;
BE IT FINALLY BE RESOLVED, to submit this resolution to the Federal Communications Commission and the Chairman, Ajit Pai.
Expires August 2020
Supporting Intellectual Property (IP) Rights and Protections to Promote Productivity, Competitiveness and Jobs
WHEREAS, intellectual property (IP) rights and innovation are primary drivers of job creation and America’s economic growth; and
WHEREAS, over 45 million jobs are directly and indirectly supported by IP-intensive industries, according to the U.S. Department of Commerce 2016 report, as significant drivers of GDP, exports and wages in every state of the Union; and
WHEREAS, IP-intensive industries are responsible for $6.6 trillion in private sector output (GDP); and
WHEREAS, according to the U.S. Chamber of Commerce, the average worker in an IP- intensive industry earns 30 percent higher wages than those of non IP-intensive industries; and
WHEREAS, IP-intensive industries drive American exports accounting for approximately $1 trillion (74 percent of total U.S. exports); 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, IP protections, though vital, must be balanced with other priorities, including the right of citizens to access affordable drugs and medical devices and the ability of state governments to contain Medicaid costs; and
WHEREAS, the National Conference of State Legislatures believes that balanced efforts to promote innovation through intellectual property protection and affordable healthcare 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;
NOW, THEREFORE, BE IT 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 Intellectual Property Enforcement Coordinator within the Executive Office of the President has sufficient staff, budget, and authority to fulfill the obligations and achieve the goals outlined in the Prioritizing Resources and Organization for Intellectual Property Act of 2008 (PRO-IP Act) and the National IP Strategy; and
BE IT FURTHER RESOLVED, the National Conference of State Legislatures supports robust and balanced IP protection and enforcement provisions in trade agreements, protecting U.S. jobs and wages while ensuring that excessive monopoly protections do not saddle states or individuals with burdensome costs that limit healthcare options or endanger public health;
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 115th Congress.
State Sovereignty For Gaming
The National Conference of State Legislatures (NCSL) believes that the federal government must respect the sovereignty of states to allow or prohibit games of chance and skill within their borders.
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.
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.
NCSL requests Congress to 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.
The National Conference of State Legislatures (NCSL) believes the federal government must recognize the sovereignty of states to allow or to prohibit sports gambling by its residents.
On May 14, 2018, the Supreme Court of the United States declared the Professional and Amateur Sports Protection Act (PASPA), 28 U.S.C. §§ 3701-3704, unconstitutional as violative of the Court’s 10th Amendment anti-commandeering jurisprudence. The Court’s judgement on PASPA exemplifies the failings of a one-size-fits-all federal solution to complex questions of policy, regulation and law enforcement. With the shackles of federal preemption removed, states can begin creating innovative and tailored sports gambling policies that represent the will of voters.
The choice to legalize sports wagering is an important policy question, the answer to which is different among our nation’s diverse states. Forcing state policy flexibility and innovation to retreat under threat of federal preemption not only undermines the basic tenants of our nation’s founding documents, but it strains state-federal relations and suppresses the direct will of voters. Conversely, by encouraging state policy innovation and unique legislative solutions, federalism is strengthened and voters are more engaged with the legislative process.
NCSL requests Congress respect the sovereignty of states to regulate and tax sports gambling in the current post-PASPA environment. This includes not preempting states’ legislative authority to legalize, regulate and tax sports gambling activities. NCSL also requests that federal lawmakers respect state legislatures that chose to maintain their prohibitions on sports gambling and other forms of gambling within their state.
Daily Fantasy Sports
The National Conference of State Legislatures (NCSL) believes the federal government must respect the sovereignty of states to allow or to prohibit daily fantasy sports by its residents.
The Unlawful Internet Gambling Enforcement Act of 2006 specifically excludes a fantasy or simulation sports game that “has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events”. Therefore, NCSL will oppose any effort by Congress or the administration to diminish the flexibility of state legislatures to be innovative and responsive to the unique laws and regulations of each state.
NCSL strongly opposes any effort by the federal government that would overrule state authority by regulating daily fantasy sports at the federal level. NCSL believes the federal government must recognize the sovereignty of states to regulate and tax daily fantasy sports. NCSL also requests that federal lawmakers be respectful of state legislatures that prohibit daily fantasy sports within their state.
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, states have an interest in 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
WHEREAS, Wi-Fi is essential to unleashing the enormous economic potential of the internet in communities where broadband adoption lags; and
WHEREAS, while according to the Pew Research Center, 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 2020
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.
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.
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.
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 will oppose future FCC 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:
- 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.
- 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.
- 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.
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.