Archive for the ‘Administrative Law’ Category
posted by Frank Pasquale
I just wanted to announce that I am joining Gerard on this policy. I think it will be an improvement over the status quo (for me at least) because:
1) It works for Sullivan. He gives many great comments or responses a high level of prominence. He doesn’t just highlight people who agree with him. He publishes “dissents of the day” that contradict his position in a constructive, interesting, or provocative way.
2) I’ve heard from several people that they would comment, but don’t want to get “drowned out” in the noise of irrelevant comments. So this is a way for them to get some attention for their views.
Read the rest of this post »
posted by Frank Pasquale
The challenge to the US Airways/American merger led Justin Fox to reconsider the much-vaunted “success” of passenger airline deregulation:
Before deregulation, airlines in the U.S. were pretty reliable moneymakers. [After deregulation they] lost $41.6 billion (in 2011 dollars). And it’s not just shareholders who have come off terribly. The past few decades have been, if anything, an even bigger disaster for airline employees, many of whom have seen their pensions mostly evaporate and their pay and status diminish. Taxpayers haven’t come off untouched, either — getting stuck with partial pension bailouts and big loan guarantees to aid the ailing industry in recent years along with ongoing subsidies for airport construction and improvement.
Between 1963 (when the figures begin) and 1979, the airfare subindex of the CPI grew 25% more slowly than the overall CPI. Since 1979, it’s growth 2.4 times as fast as overall inflation. A major reason for this is that there are many fewer nonstop flights than in the regulated days, and far tighter advance purchase restrictions. To the Bureau of Labor Statistics, which computes the CPI, such quality decreases are the same as price increases. (This is the opposite of the logic prevailing in computers, where rapidly increasing power is the same as a price decline.) And then ridership. Between 1948 and 1978, annual passenger miles flown grew 12% a year; since then, they’ve grown less than 4%.
Perhaps we can thank the deregulators for one thing: cutting the climate impact of a carbon-intensive industry.
posted by Frank Pasquale
If you asked Ted Cruz or Jim DeMint who was the guiding spirit of their government shutdown, they’d probably mention Friedrich von Hayek. The Nobel Prize winning economist warned the world that “socialism” would put citizens on a “road to serfdom.” For the Tea Party, PPACA is a horror, perhaps even a new form of slavery, a threat to liberty even darker than the feudal past Hayek evoked.
But there is another figure just as important to current neoliberal thought as Hayek. Carl Schmitt provided jurisprudential theories of “the emergency” and “the exception” that highlighted the best opportunities for rapid redistribution of wealth upwards. In Never Let a Serious Crisis Go to Waste, Philip Mirowski explains how neoliberal thought, far from advocating a shrinking of the state, in fact sparks a redirection and intensification of its energies. As he puts it, “A primary function of the neoliberal project is to redefine the shape and the function of the state, not to destroy it” (56). Moreover, the “strong state was necessary to neutralize what [Hayek] considered to be the pathologies of democracy” (84). Even a temporary dictatorship can work in a pinch.
A shutdown is a state of exception when the government gets to do things it normally can’t do, like close the Environmental Protection Agency, de-fund WIC, close the national parks, send a lot of government employees home [in what is in many ways a lock-out], and all sorts of other stuff. A shutdown is a moment in which a choice gets made about which laws to obey and which laws to ignore, when the government gets to decide that some people are essential and some people aren’t.
posted by Marc Poirier
First, thanks to Concurring Opinions for inviting me back. It’s been years. What took you so long?
I plan to spend some of my month’s effort here discussing coastal land use and disasters and the law. In light of Superstorm Sandy and likely future megastorms, and given climate change and sea level rise, I can’t help noting that, whatever is going on with managing CO2 levels at a global scale, one class of disasters results from what I have come to call in conversation (and now in writing) Stupid-A** Land Use Decisions (SALUD). We build houses in harm’s way. I’ve written about the folly of allowing homes on the parts of barrier islands that are most likely to flood or wash away, noting in passing the folly of building homes on scenic hillsides subject to rock- and mudslides. In the news lately, there’s much about the costs of rescuing homes built in forests that are just waiting to catch fire. At some point, we have to disincent SALUD, or at least insist that the full cost of risk and rescue and rebuilding be reflected in the market cost of building in Stupid-A** places, and let that expense disincent. It’s very hard to do. As my own dear New Jersey Governor Chris Christie said after Superstorm Sandy, we will rebuild!
Which brings me to the case I’m discussing today. It came down last Friday. The case is Kolbe v. BAC Home Loans Servicing, LP (1st Cir. No. 11-2030, Sept. 27, 2013) (en banc), 2013 WL 5394192. It is a First Circuit en banc decision, on a 3-3 vote, failing to reverse the District of Massachusetts, which granted a motion to dismiss a putative class action seeking an interpretation of a form mortgage contract provision concerning flood insurance. Warning, I’m not an expert in all of the doctrinal areas involved, so please forgive if I miss something, but boy, is it interesting.
The provision in dispute is Covenant 4, a three-sentence paragraph required by the Department of Housing and Urban Development (HUD) to be included in all single family dwelling mortgage contracts insured by the Federal Housing Administration (FHA). Covenant 4 was established by a regulation promulgated in 1989 after notice and comment rulemaking. It allows a lender to require that the homeowner purchase insurance for “any hazards . . . in the amounts and for periods that the Lender requires.” Covenant 4 also requires the borrower to insure against loss from floods to the extent required by the Secretary of HUD. HUD requires flood insurance whenever a property is located in a “special flood hazard area,” the most risky category under the National Flood Insurance Program (NFIP) classification scheme. HUD requires flood insurance at least equal to the outstanding balance of the mortgage, that is, the lender’s stake in the property, but there is a cap of $250,000. Thus, as to hazard (but not flood), the lender clearly has authority under Covenant 4 to require further hazard insurance. But it is, arguably, unclear whether Covenant 4 empowers the lender to require a homeowner to purchase additional flood insurance. Perhaps the provision of Covenant 4 referring to requirements by HUD insulates the homeowner from lender requirements as to purchasing flood insurance. Perhaps Covenant 4′s authorization for lenders to require additional hazard insurance includes flood insurance, because floods are a type of hazard. That’s the interpretation question. Read the rest of this post »
October 3, 2013 at 11:02 am Tags: Auer, climate change, coastal land use, contract interpretation, disasters, flood insurance, forms, homeownership, judicial deference to agency interpretation, mortgages, risk perception, sea level rise, Seminole rock Posted in: Administrative Law, Contract Law & Beyond, Environmental Law, Property Law Print This Post No Comments
Secret Adjudications: the No Fly List, the Right to International Air Travel, and Procedural Justice?
posted by Danielle Citron
Latif v. Holder concerns the procedures owed individuals denied the right to travel internationally due to their inclusion in the Terrorist Screening database. Thirteen individuals sued the FBI, which maintains the No Fly list and the Terrorist Screening database. Four plaintiffs are veterans of the armed forces; others just have Muslim sounding names. All of the plaintiffs are U.S. citizens or lawful residents. The plaintiffs’ stories are varied but follow a similar trajectory. One plaintiff, a U.S. Army veteran, was not allowed to return to the U.S. from Colombia after visiting his wife’s relatives. Because he could not fly to the U.S., he missed a medical exam required for his new job. The employer rescinded his offer. Another plaintiff, a U.S. Air Force veteran, was in Ireland visiting his wife. He spent four months trying desperately to return to Boston. Denied the right to travel internationally, the thirteen plaintiffs lost jobs, business opportunities, and disability benefits. Important family events were missed. The plaintiffs could not travel to perform religious duties like the hajj. Some plaintiffs were allegedly told that they could regain their right to fly if they served as informants or told “what they knew,” but that option was unhelpful because they had nothing to offer federal officials. Plaintiffs outside the U.S. were allowed to return to their homes on a one-time pass. When back in the U.S., they turned to the TSA’s redress process (calling it “process” seems bizarre). The process involves filling out a form that describes their inability to travel and sending it via DHS to the Terrorist Screening Center. The Terrorist Screening Center says that it reviews the information to determine if the person’s name is an exact match of someone included in the terrorist database or No Fly list. All of the plaintiffs filed redress claims; all received DHS determination letters that neither confirmed nor denied their inclusion on the list. The letters basically told the plaintiffs nothing–they essentially said, we reviewed your claim, and we cannot tell you our determination.
The plaintiffs sued the federal government on procedural due process and APA grounds. They argued that the DHS, FBI, and TSA deprived them of their right to procedural due process by failing to give them post deprivation notice or a meaningful chance to contest their inclusion in the terrorist database or No Fly list, which they have to presume as a factual matter based on their inability to travel though some of the plaintiffs were told informally that they appeared on the No Fly list. The standard Mathews v. Eldridge analysis determines the nature of the due process hearings owed individuals whose life, liberty, or property is threatened by agency action. Under Mathews, courts weigh the value of the person’s threatened interest, the risk of erroneous deprivation and the probable benefit of additional or substitute procedures, and the government’s asserted interests, including national security concerns and the cost of additional safeguards.
Most recently, the judge partially granted plaintiffs’ summary judgment motion, ordering further briefing set for September 9. In the August ruling, plaintiffs were victorious in important respects. The judge found that plaintiffs had a constitutionally important interest at stake: the right to fly internationally. As the judge explained, plaintiffs had been totally banned from flying internationally, which effectively meant that they could not travel in or out of the U.S. They were not merely inconvenienced. None could take a train or car to their desired destinations. Some had great difficulty returning to the U.S. by other means, including boat, because the No Fly list is shared with 22 foreign countries and U.S. Customs and Border Patrol. Having the same name as someone flagged as a terrorist (or the same name of a misspelling or mistranslation) can mean not being able to travel internationally. Period. The court also held that the federal government interfered with another constitutionally important interest — what the Court has called “stigma plus,” harm to reputation plus interference with travel. She might also have said property given the jobs and benefits lost amounted to the plus deprivation. That takes care of the first Mathews factor. Now for the second. The court assessed the risk of erroneous deprivation under the current DHS Redress process. On that point, the court noted that it’s hard to imagine how the plaintiffs had any chance to ensure that DHS got it right because they never got notice if they were on the list or why if they indeed were included. Plaintiffs had no chance to explain their side of the story or to correct misinformation held by the government–what misinformation or inaccuracy was unknown to them. In the recent “trust us” theme all too familiar these days, defendants argued that the risk of error is minute because the database is updated daily, officials regularly review and audit the list, and nomination to the list must be reviewed by TSC personnel. To that, the court recognized, the DOJ’s own Inspector General had criticized the No Fly list in 2007 and in 2012 as riddled with errors. Defendants also contended that plaintiffs could seek judicial review as proof that the risk of erroneous deprivation was small. The court pushed off making a determination on the risk of erroneous deprivation and valued of added procedures because it could not evaluate the defendants’ claim that plaintiffs could theoretically seek judicial review of determinations on which they have no notice. Defendants apparently conceded that there were no known appellate decisions providing meaningful judicial review. The court required the defendants to provide more briefing on the reality of that possibility, which I must say seems difficult if not impossible for plaintiffs to pursue. Because the court could not weigh the second factor, she could not balance the first two considerations against the government’s interest.
I will have more to say about the decision tomorrow. The process provided seems Kafka-esque. It’s hard to imagine what the defendants will file that the public can possibly learn. The briefing will surely be submitted for in camera review. Details of the process may be deemed classified. If so, defendants may invoke the state secrets doctrine to stop the court’s ever meaningfully addressing the rest of the summary judgment motion. It would not be the first time that the federal government invoked the state secrets doctrine to cover up embarrassing details of mismanagement. Since its beginnings, the state secrets doctrine has done just that. The parties were supposed to provide the court a status update today. More soon.
posted by Frank Pasquale
Anyone teaching administrative law will probably be reviewing several cases involving the National Labor Relations Board. In an era of declining unionism, the agency can seem like a bit of a relic. On the other hand, the rising tide of worker actions at fast food and retail giants suggests its basic premise—workplace democracy—may be needed now more than ever. Unfortunately, two presidential moves particularly eroded the agency’s ability to adjudicate disputes neutrally:
Congress presumed that all of the NLRB members should represent neither labor nor management, but rather the public. But in 1953, President Dwight Eisenhower, the first Republican president to make NLRB appointments, broke the non-partisan pattern and appointed three Republican lawyers with management backgrounds and two non-partisans. That created what later administrations understood as a “tradition” of three appointments from the president’s party and two from other backgrounds (eventually defined as from the opposing party). . . . Meanwhile, the National Association of Manufacturers, a big business group, pursued a policy of undermining the Wagner Act by promoting appointees who did not fully support the law’s goals, a strategy that Ronald Reagan escalated dramatically in 1981 by appointing prominent opponents of unionization to the NLRB, including the office of chairman.
Reagan signaled a new Republican strategy on labor. . . . As Cleveland State University law school professor Joan Flynn noted in a 2000 article in the Ohio State Law Journal, NLRB votes became more sharply divided along lines of class and ideology after Reagan named blatantly anti-union appointees to the board.
Given this history, and hardening GOP stances, it’s no wonder that the “A.F.L.-C.I.O. has set up a dozen committees — of historians, young workers, Web experts, pollsters — to propose ways to reinvent labor.”
posted by Daniel Solove
One of the great ironies about information privacy law is that the primary regulation of privacy in the United States has barely been studied in a scholarly way. Since the late 1990s, the Federal Trade Commission (FTC) has been enforcing companies’ privacy policies through its authority to police unfair and deceptive trade practices. Despite more than fifteen years of FTC enforcement, there is no meaningful body of judicial decisions to show for it. The cases have nearly all resulted in settlement agreements. Nevertheless, companies look to these agreements to guide their privacy practices. Thus, in practice, FTC privacy jurisprudence has become the broadest and most influential regulating force on information privacy in the United States – more so than nearly any privacy statute and any common law tort.
In this article, we contend that the FTC’s privacy jurisprudence is the functional equivalent to a body of common law, and we examine it as such. The article explores the following issues:
- Why did the FTC, and not contract law, come to dominate the enforcement of privacy policies?
- Why, despite more than 15 years of FTC enforcement, have there been hardly any resulting judicial decisions?
- Why has FTC enforcement had such a profound effect on company behavior given the very small penalties?
- Can FTC jurisprudence evolve into a comprehensive regulatory regime for privacy?
The claims we make in this article include:
- The common view of FTC jurisprudence as thin — as merely enforcing privacy promises — is misguided. The FTC’s privacy jurisprudence is actually quite thick, and it has come to serve as the functional equivalent to a body of common law.
- The foundations exist in FTC jurisprudence to develop a robust privacy regulatory regime, one that focuses on consumer expectations of privacy, that extends far beyond privacy policies, and that involves substantive rules that exist independently from a company’s privacy representations.
August 20, 2013 at 12:02 pm Posted in: Administrative Law, Articles and Books, Privacy (Consumer Privacy), Privacy (Electronic Surveillance), Privacy (ID Theft), Technology Print This Post No Comments
posted by Danielle Citron
Police departments have been increasingly crunching data to identify criminal hot spots and to allocate policing resources to address them. Predictive policing has been around for a while without raising too many alarms. Given the daily proof that we live in a surveillance state, such policing seems downright quaint. Putting more police on the beat to address likely crime is smart. In such cases, software is not making predictive adjudications about particular individuals. Might someday governmental systems assign us risk ratings, predicting whether we are likely to commit crime? We certainly live in a scoring society. The private sector is madly scoring us. Individuals are denied the ability to open up bank accounts; they are identified as strong potential hires (or not); they are deemed “waste” not worthy of special advertising deals; and so on. Private actors don’t owe us any process, at least as far as the Constitution is concerned. On the other hand, if governmental systems make decisions about our property (perhaps licenses denied due to a poor scoring risk), liberty (watch list designations leading to liberty intrusions), and life (who knows with drones in the picture), due process concerns would be implicated.
What about systems aimed at predicting high-crime locations, not particular people? Do those systems raise the sorts of concerns I’ve discussed as Technological Due Process? A recent NPR story asked whether algorithmic predictions about high-risk locations can form the basis of a stop and frisk. If someone is in a hot zone, can that very fact amount to reasonable suspicion to stop someone in that zone? During the NPR segment, law professor Andrew Guthrie Ferguson talked about the possibility that the computer’s prediction about the location may inform an officer’s thinking. An officer might credit the computer’s prediction and view everyone in a particular zone a different way. Concerns about automation bias are real. Humans defer to systems: surely a computer’s judgment is more trustworthy given its neutrality and expertise? Fallible human beings, however, build the algorithms, investing them with bias, and the systems may be filled with incomplete and erroneous information. Given the reality of automated bias, police departments would be wise to train officers about automation bias, which has proven effective in other contexts. In the longer term, making pre-commitments to training would help avoid unconstitutional stops and wasted resources. The constitutional question of the reasonableness of the stop and frisk would of course be addressed on a retail level, but it would be worth providing wholesale protections to avoid wasting police time on unwarranted stops and arrests.
H/T: Thanks to guest blogger Ryan Calo for drawing my attention to the NPR story.
posted by Christine Chabot
One of the best parts of teaching a course you’ve already taught is updating course materials. I’m teaching Ad. Law again in the fall, and I’m considering adding a few relatively recent events as introductory discussion problems. The goal is to get students thinking about how process and agency structure shape substantive decisions. I tried to choose topics which do not require students to grasp complicated substantive issues:
1. The TSA seeks comments on across-the-board, whole body imaging for airline passengers. Here students can consider the interplay between notice-and-comment procedure and privacy objections to the imaging. I’ll also explore whether procedures (and concerns with use of imaging) should be different if TSA employees require this enhanced screening only on a case-by-case basis.
2. The IRS has been accused of unfairly targeting conservative groups who claim tax-exempt status. The issue highlights agency structure and raises questions of accountability in a system with multiple bureaucratic decision-makers. It also illuminates the tension between law and politics in agency decision-making, especially where agencies operate under vague rules such as the “social welfare” organization exemption.
I welcome any suggestions you may have.
posted by Gerard Magliocca
No, I don’t mean running practice sessions for the oral argument. There is a story today that Senate Democrats want to change the rules to bar filibusters of executive branch nominees. (I’m all for cloture reform, as I’ve explained many times here.) Part of that plan (or bluff) involves the confirmation of all of the President’s nominees for the vacancies on the NLRB. These are the same vacancies that the President filled with recess appointments last year and were declared unconstitutional by the Third and D.C. Circuits.
Here’s my question. Suppose the Senate does confirm these people. Can they then confirm retroactively all of the decisions made by the recess appointees? (Since I think the recess appointees and the nominees are the same, it would be confirming their own decisions.) If so, then that would moot the appeal from the D.C. Circuit on which the Supreme Court granted certiorari.
posted by Frank Pasquale
The Boston Review recently published a review of the new Cass Sunstein book, Simpler. Sunstein has been a leading advocate of “libertarian paternalism:” a program of soft “nudges” designed to change “choice architecture” to promote better behavior. Law professor William H. Simon is unimpressed:
The biggest current liability for liberals is that many people have lost faith in the capacity of government to solve the problems they care about. Perhaps the most prominent of these problems are unemployment, economic inequality, the deterioration of the natural environment, and national security. The behaviorist toolkit [of Sunstein] is not much help here. Sunstein’s account of the future of government has nothing to say about unemployment, inequality, or national security, and its contribution to environmental protection is limited to consumer labeling of cars and appliances. . . .
posted by Andrew Blair-Stanek
Areas of law dominated by government agencies haven’t taken advantage of the rich literature on property rules and liability rules, which are “workhorse concepts that permeate every corner of the economic analysis of law.” In their 1972 article Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, Calabresi and Melamed observed that there are fundamentally two types of remedies: (1) property rules, such as injunctions or disgorgement, which aim to deter, and (2) liability rules, like compensatory damages, which aim to compensate. This framework has paid rich dividends in areas like torts, property, IP, contracts, and conlaw — but seems to have bypassed areas of law dominated by agencies.
Government agencies’ remedies can be classified as either property rules or liability rules. For example, if a business has a permit from the EPA but violates the permit’s conditions, the remedy could be either taking away the permit (a property rule), or requiring proportional compensation (a liability rule). Similarly, if a broker has a license from the SEC and violates securities law, the remedy could be either yanking the license (a property rule), or requiring compensation for the harmed parties (a liability rule).
I apply the property rule and liability rule framework to my favorite agency — the IRS — in a forthcoming Virginia Law Review article. When a taxpayer violates a tax-law requirement, the remedy can be either yanking the taxpayer’s favorable tax status (a property rule), or requiring compensatory additional tax (a liability rule). Counterintuitively, anecdotal evidence shows that property-rule remedies may be less effective at deterring violations, because the threat of political and media blowback may make the IRS unwilling to impose a draconian property-rule remedy. As a result, when Congress protects a requirement with the property-rule remedy of yanking a favorable tax status, politically-powerful or sympathetic taxpayers are rarely deterred from violating the requirement. The IRS doesn’t dare impose it. Surely similar problems plague enforcement by other agencies.
Anyone working in any agency-dominated area of law could consider how the property-rule/liability-rule framework fits into their area.
June 30, 2013 at 9:27 pm Tags: Calabresi and Melamed, EPA, government agencies, IRS, liability rules, property rules, SEC Posted in: Administrative Law, Environmental Law, Law Rev (Virginia), Securities, Tax Print This Post One Comment
posted by Danielle Citron
I could not have timed my chat with Marvin Kalb better. On Sunday, before talking about cyber hate for the U.S. Holocaust Museum’s 20th Anniversary Tour in Chicago, Kalb and I discussed his most recent book, The Road to War: Presidential Commitments Honored and Betrayed (Brookings Institution Press 2013). The timing was auspicious not just because the book had come out days before but because at least 40% of the nation was reeling from learning about the most recent abuse of Executive power: the NSA’s PRISM program and leaked FISA court Verizon order.
Before I recount some of the highlights of our conversation, I wanted to begin with a wonderful and incredibly apt description of Kalb written by a UPI reporter:
[Kalb] is the senior statesman of U.S. media. Tall, handsome, brilliant, unfailingly courteous, Marvin Kalb looks and acts more like a senior statesman than the chief diplomatic correspondent he was for CBS News and NBC over 30 years when these networks cared about world news. Now these media organizations still bill themselves as world news networks but, most nights, forget about the rest of the world.
Following his prize-studded reportorial career, Kalb became the first director of journalism’s school of higher learning at Harvard — the Joan Shorenstein Center on the Press, Politics and Public Policy. Now, still the profession’s senior statesman, he runs the center’s Washington office and hosts “The Kalb Report.” The author of two best-selling novels and a book titled, “One Scandalous Story: Clinton, Lewinsky and 13 days That Transformed American Journalism,” Kalb’s 13th book — his best — excoriates Congress for relinquishing its constitutional obligation to declare war.
The U.S. News and World Report’s Jamie Stiehm describes Kalb’s new book as “an elegant synthesis of how easy, too easy, it has become for an American president, any American president, to go to war” with Congress “ceding its rightful role in declaring war and tends to go along with the man in the White House.” Kalb’s book argues that so much power should not be concentrated in the President.
Here are some highlights from our conversation:
DC: Why has it been so easy for the Executive Branch to ignore the core constitutional guarantee that Congress declare war?
MK: We have a system of law undergirding Presidential authority to go to war — Congressional declaration of War and the power of the purse — yet it has been consistently ceded to the President. When I covered Vietnam in 1968, we had 500,000 troops on the ground. Who gave the President the authority to do so? I am a great believer of law, but if it is ignored with impunity, to whom do we turn?
DC: How did we get to that state of affairs–the President doing what he wants without check? Are things much different in light of recent revelations of our unsanctioned domestic intelligence apparatus?
MK: What we are witnessing this week stands as a confirmation of what we have ben seeing–unchecked Presidential power in the name of war time. In the Korea and Vietnam wars, one President after another made unchecked decisions and no one blew the whistle, most significantly Congress. Congress was successfully pressured to cede its power to the Executive Branch. For instance, only two Senators voted “no” for the Gulf of Tonkin resolution. When one of those senators, Senator Morse, saw President Johnson, the President put his arm around the Senator and said “Wayne, you are a good American. We do not want to hurt the troops.” Johnson wielded his power through persuasion and it worked–Congressional resistance was vanishingly small.
DC: What do you think of this week’s revelations about PRISM and the Verizon order?
MK: In important ways, I thought that we beat Big Brother when we prevailed in the Cold War. With the indiscriminate collection and analysis of all Verizon users’ telephony metadata (including who we called, where we were, and the inevitable revelation of sensitive information given the answer to the “who” question), we have become what we most fear–executive branch conducting surveillance over ordinary citizens in increasingly intrusive ways. Read the rest of this post »
posted by Aaron Saiger
A growing number of lawmakers across the country are taking steps to redefine public education, shifting the debate from the classroom to the pocketbook. Instead of simply financing a traditional system of neighborhood schools, legislators and some governors are headed toward funneling public money directly to families, who would be free to choose the kind of schooling they believe is best for their children, be it public, charter, private, religious, online or at home.
In particular, the Times is right that what is sought here is redefinition. Once states established and supported institutions – public schools – that parents could take or leave, so long as they educated their children somehow. The new paradigm has states instead provide a quantum of funding earmarked for each child, that parents can deploy at any educational institution of their choosing. The fact that the aid attaches to the child and follows her to her family’s chosen school is much more important than the various labels ascribed to the funding and/or the institutional provider – public, private, charter, voucher.
As people learn to function within, and get used to, this new paradigm, they will stop thinking of educational politics as the way to create good public schools, and start thinking of it in terms of how big the aid pie is and how it gets divided up. Whether a school is public or private, online or bricks-and-mortar, religious or not – these stop being political questions and start being questions that markets will resolve through supply and demand. Read the rest of this post »
posted by Aaron Saiger
I know that I am supposed to be caught up along with everyone else in the same-sex marriage cases, but I am still distracted by Decker v. Northwest Environmental Defense Center, decided last week at the Supreme Court. In a separate opinion designed to push the buttons of what Scotusblog’s John Elwood called Supreme Court nerderati, Justice Scalia again called for the reconsideration of the principle of Auer deference. Auer says that just as courts should defer to agencies’ reasonable interpretations of ambiguous provisions in their organic statutes, so should they defer to agencies’ reasonable interpretations of ambiguous provisions in regulations that they themselves promulgate. Chief Justice Roberts and Justice Alito suggested that they would also be open, in a different case, to reconsidering Auer.
posted by Lawrence Cunningham
Many US companies maintain substantial global operations, with increasing volumes of business done in China; many foreign companies are listed on US securities exchanges. This cross-border expansion makes the reliability of financial reports created in foreign locales increasingly important. Yet, in tandem with this cross-border expansion, there have been increasing assertions abroad, including in China, that local secrecy laws restrict access to the work papers of auditors, frustrating the ability of US federal authorities to enforce US securities laws designed to promote financial reporting integrity.
The snafu was joined this week in a case where the SEC is seeking access to audit work papers of a Deloitte affiliate in Shagnhai but the firm refuses. The firm’s lawyers cite Morrison v. National Australia Bank, the 2010 SCOTUS ruling that, absent explicit language, federal statutes are seen as intended to apply within the US, not be extraterritorial. It said that the federal securities laws lacked such explication.
Furthermore, for Deloitte to comply with the SEC’s requests, the lawyers said, would risk committing a serious crime under Chinese law, one punishable by imprisonment. Deloitte’s lawyers say that the combination of Morrison and Chinese secrecy laws puts the records beyond the SEC’s reach.
Lawyers for the SEC object that these points cannot possibly be seen to limit the SEC’s administrative subpoena power under which it has demanded the Deloitte documents. But, during oral argument, the SEC’s lawyers did not acquit themselves well, according to one report, as they could not readily cite the precise legal authority supporting their position.
Deloitte says there isn’t one and that the appropriate procedure to handle such cross-border securities matters is by diplomacy not enforcement. In this view, the SEC is wrong to proceed against Deloitte in court but must dispatch appropriate US officials to broker a resolution with Chinese regulatory counterparts.
The stakes are high for both sides in the case, of course, and for investors and students of auditing. After all, audits endow financial statements with credibility. Shareholders are willing to pay for audits in exchange for that credence value. But if an auditor’s work papers are top secret, inaccessible even to a regulatory overseer, how much of an audit’s credence value is lost? Is it still rational for shareholders to condone paying the auditor’s fee?
When the credibility of financial statements are in doubt, investors should shun their issuer and sell the stock. A critical mass of shareholders of companies affected by this snafu might do well to follow that old-fashioned Wall Street Rule. If they did, then, along with such companies, the need to resort to either a diplomatic or enforcement solution would disappear. Read the rest of this post »
posted by Aaron Saiger
New York City is abuzz with the setting aside of Mayor Bloomberg’s ban on the sale of sugared drinks in containers larger than sixteen ounces. The ban applies to establishments directly under the authority of the City’s Health Department (restaurants, movie theaters) but not those that are not (retail stores, church suppers). I have been following the rule with interest because my colleague Olivier Sylvain (guest blogging at Concurring Opinions next month, so stay tuned) has placed it at the core of his 1L course on Legislation and Regulation. In my section of the same course, but with respect to a different rule, I ask my students to pretend to represent the American Beverage Association, today’s successful plaintiffs. The ABA titled its victory post this morning “Choice Lives!”: “Individuals are the ones with the power to choose what foods and beverages are right for them.”
The decision, by New York State Supreme Court Judge Milton Tingling, makes a move one often sees in high-profile trial court cases, which is that it reaches its conclusion on as many bases as possible. In many ways, therefore, the decision is an alarming overreach. In particular, Judge Tingling says that the regulation is arbitrary and capricious because it is riddled with exceptions: not just for the above-mentioned retail stores, but also, for example, for beverages that contain a lot of milk or any alcohol. It cannot be right that an agency acts arbitrarily by failing to be comprehensive. The rules’ various exemptions, while fairly numerous, each bears a plausible justification. That plausibility is more than sufficient to get by the arbitrariness test.
The weakest part of the opinion is a long history of the New York City Charter, which the judge recites in support of his position that obesity is not a “health” issue within the Charter’s meaning. Not only does the opinion give a very dubious restrictive construction to the Charter language, but the Mayor’s soda rule survives that construction. Judge Tingling says that the Executive’s authority to “limit or ban” legal food items applies only when the city is in “eminent [sic] danger due to disease”  – but that is precisely the Health Department’s claim, and it is a reasonable one. And, as the City has emphasized, there is no ban here on soda in any quantity; all that is restricted is delivery systems, for which alternatives are available. You can buy 64 ounces of Coke if you want, as long as you are willing to carry four cups.
Nevertheless, Judge Tingling is right that New York State’s nondelegation doctrine – the doctrine that administrative law professors who teach only federal cases tell their students is a dead letter – prohibits the rule. The foundational case, Boreali v Axelrod, is nearly on all fours with this case. Health departments, pursuant only to sweeping language giving them authority over public health, cannot in New York State limit trade in legal markets over which the legislature has given them no explicit authority. If the City is to win its promised appeal, it is going to need to argue that Boreali should be overruled or limited.
The problem with that is that Boreali is right. Nondelegation is an important constitutional principle and should not be sidelined out of existence. I don’t disagree with the Mayor that obesity is a big problem, and am not per se opposed to the kind of state paternalism that shoves people in the direction of healthy behaviors; but I think it’s not just reasonable, but better politics, better civics, and better constitutional law to require those shoves to come from a legislative, rather than an executive and bureaucratic, process.
See also Rick Hills’ interesting comments here.
posted by Aaron Saiger
Before automobiles first appeared in urban spaces, parents regularly sent children outside to play in the street. Today, noone would hesitate to label any parent who did that as reckless. The cultural distance between then and now is substantial. Readers interested in its course should check out Peter Norton’s excellent, and consistently surprising, Fighting Traffic.
I am regular bike commuter in New York City, along with an increasing number of other people. Bikes, under the law, are supposed to follow the same rules of the road as motor vehicles. But many cyclists, here in New York at any rate, don’t. They slow rather than stop at red lights and stop signs. They weave around pedestrians in crosswalks. They go the wrong way on one way streets. It’s a great case study of why people obey the law: we cyclists break these rules because they seem so manifestly unsuited to our circumstances. I yield rather than stop for some red lights and some pedestrians, when it seems clearly safe to do so (although I draw my personal line at salmoning upstream in a one-way zone). But I would never in a million years blow through a red light when driving a car. Even in the middle of the night, even if nobody is coming and I know nobody is coming, I sit there patiently in the empty intersection until the light turns green.
Can the law take the lead in developing rules that make enough sense for biking for transport that cyclists would obey them? Or must we await, as we did in the case of automobiles, a new cultural construction of bicycling? (As Norton demonstrates, a lot of people died in “accidents” while the new construction of the car was emerging.) Is the wait worth it if that new construction would be optimized by what my colleagues Sonia Katyal and Eduardo Peñalver might call bicyclists’ productive disobedience? Notwithstanding my wish for a more top-down approach, it seems that lawyers and regulators have given more thought how to optimize traffic rules for driverless cars than for bicycles.
I was in London two weeks ago giving a paper, where the bike share system has made urban cycling even more ubiquitous than it is in New York. A few days’ observation found, just as in New York, cyclists ignoring red lights and going the wrong way on one way streets. But I didn’t see one instance in London of two cyclist behaviors I see regularly here: failing to stop for pedestrians and riding on the sidewalk. London cyclists’ disobedience seems more productive than New Yorkers’.
posted by Lawrence Cunningham
In Sunday’s New York Times, business columnist Gretchen Morgenson reported a piece of investigative journalism that is transcendently important, but whose complexity may have obscured that. It concerns secret dealings of the Federal Reserve Bank of New York. Morgenson explains the importance of her topic in terms of the threatened erosion of social trust that can occur when central banking officials engage in dubious behavior.
I would add that her topic, dubious dealings of central bankers, is of vital importance because those who run the FRBNY have enormous power in the field of banking regulation. They oversee the largest banks and provide direct input into the Financial Stability Oversight Council, the interagency government organization created by the Dodd Frank Act to oversee the financial system. It is empowered to intervene when the next financial crisis occurs, which could be later this year or five years or ten or what have you.
As with the financial crisis of 2008, these government actors, dominated by the FRBNY, will call all the shots about which institutions to save, sell or seize, on the one hand, and which creditors and shareholders to pay, wipe out or shortchange, on the other. How they exercise these powers is thus a matter of the utmost national interest. How they exercised them in the 2008 crisis remains both obscure and questionable. Read the rest of this post »
posted by Ryan Calo
Thank you to Danielle for the lovely (re)introduction and to Concurring Opinions for inviting me to blog this month.
The Washington Law Review hosted a symposium Thursday entitled “The Disclosure Crisis,” which covered everything from privacy policies to restaurant hygiene grades. The gist of the conference, on my view, was that the only thing piling up faster than examples of mandated disclosure as a regulatory strategy is the evidence it does not work. Time and time again, officials choose to intervene in a given area by requiring companies and others to reveal information so that individuals can protect themselves and police the market. And time and time again, disclosure ends up helping few if any consumers or citizens actually make better decisions.