Category: Administrative Law


Recommended Reading: The People’s Agents and the Battle to Protect the American Public

My colleague Rena Steinzor and Sidney Shapiro recently published The People’s Agents and the Battle to Protect the American Public: Special Interests, Government, and Threats to Health, Safety, and the Environment (University of Chicago Press).  The book analyzes the performance of five agencies they call the “protector agencies:”  the Consumer Product Safety Commission, Environmental Protection Agency, Food and Drug Administration, National Highway Traffic Safety Administration, and Occupational Safety and Health Administration.  Its findings are grim.  Using case studies, the book shows how the protector agencies are malfunctioning and explores the sources of the trouble.  It attributes the disappointing performance of the agencies to external pressures, including the President’s requirement that agencies engage in cost-benefit analysis before issuing a major rule and other forms of Presidential interference as well as the weakening of the civil service and inadequate funding and staffing of agencies.  The book offers thoughtful solutions that are carefully tailored to the problems that the authors identify.

Richard Pierce reviewed the book in the George Washington Law Review, and he writes that this “excellent book is compulsory reading for anyone who is interested in the performance of regulatory agencies.”  For Pierce, the “book is so well researched and well written that I learned a lot even from the chapters with which I disagree.”  He explains that, for instance, while he continues to believe in agency cost-benefit analysis for major rules, the authors “do such a good job of criticizing the cost-benefit analysis requirement and of documenting its bad effects that I am forced at least to acknowledge the need for major changes in the ways in which agencies and the White House implement” it.  The authors also “provide an accurate and persuasive account of the many adverse effects of the hard look doctrine,” that is, the judicial requirement that an agency must take a hard look at a problem and its potential solutions before issuing a rule, and prescribe a new approach that would be less intrusive and more determinate.  Pierce ends the review with this:

Justice Scalia once said that ‘Administrative law is not for sissies –so you should lean back, clutch the sides of your chairs, and steel yourselves for a pretty dull lecture’  I highly recommend that anyone who is interested in the future of administrative law and government regulation read Steinzor and Shapiro’s important book.  But to paraphrase Justice Scalia, you should not read the Steinzor and Shapiro book in conjunction with this review unless you are prepared to “lean back, clutch the sides of your chairs, and steel yourselves for” a serious encounter with depression.  Oh, and you should make sure there are no sharp objects in the vicinity if you take seriously both the points Steinzor and Shapiro make in their book and the points I make in this review.”


The Continued Need for Technological Due Process

As my work on Technological Due Process explored, government increasingly uses automated systems to help human administrators make decisions about people’s important rights.  Sometimes, the computers make the decisions with varying degrees of oversight.  Government decision-making systems include data-matching programs, which compare two or more databases with an algorithmic set of rules that determine the likelihood that two sets of personal identifying information represent the same individual.

Data-matching programs frequently misidentify individuals because they use crude algorithms that cannot distinguish between similar names.  Sometimes, this accords with policy.  Better to have more false positives when it comes to finding terrorists, than more false negatives.  Other times, it’s a problem that humans resolve before anyone gets hurt.  Yet, time and again, human operators fall down on the job.

Here’s a recent example.  An anti-terrorism facial recognition system scans databases of state driver’s license images to prevent terrorism, reduce fraud, and improve the accuracy of identification documents issued by states.  Massachusetts started using the software after receiving a $1.5 million grant from the U.S. Department of Homeland Security.  On March 22, Massachusetts resident John Gass received a letter from the state motor vehicles registry informing him that he had to cease driving because his license had been revoked.  From various news reports, it seems that the letter did not tell Mr. Glass why he lost his license.  It was only after various calls and a hearing with motor vehicle officials that he learned that the system identified his license as evidence of potential fraud.  The system flagged Glass because he looked like another driver, not because his image was used to create a fake identity.  The motor vehicles registry reinstated his license after ten days of wrangling “to prove he is who he says he is.”  Not surprisingly, Gass is not alone.  The system picked out more than 1,000 cases last year that resulted in investigations, and some were guilty of nothing more than looking like someone else. Read More


Treasury’s AIG Gag Order

Top business executives in the United States regularly contact Members of Congress to lobby on legislation and other matters of public policy. But since the September 2008 government takeover of AIG, executives of that company have been forbidden to do so, unless they first get the Treasury Department’s permission, and the Treasury Department refuses to grant it.

Since AIG executives are afraid to speak out, disclosure of this un-American provision was left to Maurice (“Hank”) Greenberg, former chair and until 2008 the largest shareholder of AIG. He disclosed it yesterday on CNBC.

This is yet another example of the dubious tactics used in Sept. 2008 by Hank Paulson and Tim Geithner when they wrested control of AIG for the U.S. government. Besides having scant legal authority for their takeover actions, the successive Treasury Secretaries tried to keep from the public how the government funds injected into AIG did not support it or its shareholders or employees but were funneled as a backdoor bailout of Goldman Sachs and other Wall Street firms.

It is thus par for the course—but equally outrageous—that we now learn that when Paulson and Geithner imposed this straightjacket on AIG, they also made the company (a) adopt a policy suspending all lobbying and then (b) sign a loan agreement prohibiting it from changing that policy without Treasury’s consent—which apparently may be withheld for any reason or no reason. Read More


Black Box Government: The Whole Picture

The media often assesses governmental transparency issue by issue.  The Obama Administration gets an annual rating for its performance on FOIA compliance.  It receives press for its invocation on the state secrets privilege.  And so on.  But it may be worth taking stock of the total picture.  From the state secrets privilege to the proposed SHIELD Act and FOIA, the Obama Administration seems in pursuit of black box government much like its predecessor.  On reflection, the Administration’s call for a more transparent government in January 2009 seems a mismatch with its actions.  In this way, theory and practice don’t coincide.

The Administration has not backed away from its predecessor’s aggressive use of the state secrets privilege.  According to Steven Aftergood, “there is a great deal of continuity between the Bush and Obama administrations . . . . there is no case where the Obama administration has rescinded a claim of state secrets privilege that was advanced by the Bush [administration].”  The U.S. government has recently invoked the state secrets privilege in instances that appear designed to hide government screw ups rather than to protect national security.  For instance, the government hopes to block evidence in a case against a contractor who duped the government into spending millions on allegedly fake counterterrorism technology.  It has invoked the privilege to block a personal injury lawsuit by a CIA employee who alleged that environmental contamination in his home made his family sick. In a case inherited from the Bush administration, Obama’s Justice Department has continued to argue that classified records of eavesdropping on an Islamic charity were state secrets.  Two wiretapped lawyers were awarded $20,400 each, a ruling that last week the Obama administration indicated it would appeal.  ACLU Executive Director Anthony Romero laments that although the President promised to reform abuses of the state secrets privilege as a candidate, he has reneged on that promise as the President.

The Obama Administration has devoted significant energy to punishing whistle blowers.  As Politico reporter Josh Gerstein explains, the Administration is “pursuing an unexpectedly aggressive legal offensive against federal workers who leak secret information to expose wrongdoing, highlight national security threats or pursue a personal agenda.”  Since President Barack Obama took office, prosecutors have filed criminal charges in five cases involving unauthorized distribution of classified national security information to the media and is now considering prosecuting WikiLeaks founder Julian Assange.  The U.S. government, by contrast, only brought three such cases in the preceding 40 years.  Moreover, in response to the Wikileaks disclosures, the Administration has gotten behind the proposed SHIELD Act, which would amend Section 798 of the Espionage Act of 1917.  The amendment would expand the kinds of information covered by the Espionage Act and enables the U.S. government to prosecute private citizens who have not worked for the government or signed a security agreement.

In a recent post, I underscored that FOIA compliance continues to disappoint.  The National Security Archive recently issued its report “Glass Half Full: 2011 Knight Open Government Survey Finds Freedom of Information Change But Many Agencies Lag in Following Obama’s Openness Order.”Although the group found some progress (49 agencies took concrete action in light of the March 2010 White House memorandum instructing agencies to update all FOIA material and assess whether their FOIA resources were adequate), its results were decidedly mixed.  Only 24 agencies actually updated their FOIA training materials, only 13 agencies followed its mandate, and 41 of the agencies remained inert. Of those 41 agencies, 17 could not provide concrete records showing that they had followed the memo’s instructions; two agencies withheld documents by incorrectly citing FOIA exemptions; 17 agencies were still working on the request after more than 100 business days (in violation of FOIA); and four agencies never acknowledged the team’s requests despite numerous calls and faxes. Ancient requests, as old as 18 years, “still languish in the system.” As the team reports, twelve agencies have outstanding FOIA requests older than six years.” Eric Newton, an advisor to the Knight Foundation, remarked that “at this rate, the President’s first term in office may be over by the time federal agencies do what he asked them to do on his first day in office.”  At a hearing before the House Committee on Oversight and Government Reform, FOIA expert Daniel Metcalfe expressed his disappointment by the “surprising slowness and incompleteness of the Obama Administration’s new FOIA policy implementation.” Metcalfe lamented the administration’s “do as I say, not as I do mentality,” as evinced by the performance of its lead agency, the Department of Justice, whose FOIA backlog is worse than it was a year ago.

Viewed together with my co-blogger Frank Pasquale’s insights on fusion centers (see our forthcoming article) and his important forthcoming book on The Black Box Society, the Obama Administration, issue for issue, seems to support black box government, not a transparent one.


Accounting for Power

Recent revelations in Japan suggest just how important an understanding of accounting may be.

In a post in late March, I related that many Japanese were willing to give the benefit of the doubt to TEPCO, the operator of the damaged Fukushima Dai-Ichi nuclear plant, in the days following the March 11 earthquake and tsunami. The most common excuse in the language, “Shikata ga nai” (“It can’t be helped”), struck most people as apposite, given the historical rarity of 9.0 earthquakes and 15-meter killer waves.

By now, the situation has almost been integrated into the everyday, at least for those of us far from the reactor. People speculate whether the government nuclear agency’s lead spokesperson is wearing a wig, and a cable news channel has a daily segment, “Kyou no genpatsu kiiwaado” – “Today’s nuke reactor keyword”. Any goodwill toward TEPCO has long since evaporated, thanks to its management’s sloth in apologizing, its spokespersons’ frequent misstatements and evasions in daily press conferences, and sympathy for the thousands displaced from the evacuation zone, their livelihoods derailed (and their pets and livestock reluctantly left behind to starve, an aspect of the story that has mobilized many activists here). But it turns out that even the initial goodwill was probably misplaced.
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The Illusion of Transparency

On January 21, 2009, President Obama issued the Open Government memorandum, expressing his commitment to a transparent government.  In that memo, the President instructed executive departments and agencies to administer FOIA with a “clear presumption” in favor of openness.  Attorney General Eric Holder quickly filled in details of the transparency mandate.  His March 19, 2009 FOIA memorandum explained that agencies should err on the side of making discretionary disclosure of information unless the agency could “reasonably foresee” that the disclosure would harm an interest protected by a statutory exemption.  It ordered partial disclosure if an agency determines it cannot make full disclosure of a record as well.  At the time, FOIA experts deemed the President’s commitment to transparency transformational.  No previous President had seemed so interested in open government.

Last year, the National Security Archive issued a cautiously optimistic review of the Administration’s implementation of the FOIA mandate.  According to the Archive’s audit, 38 out of 90 agencies responded to the Holder memo either by explicitly changing their internal policies or by training employees.  Only 13 out of 90 agencies though had actually made concrete changes in their FOIA procedures.  The remaining 52 agencies either had no records to suggest that they had done anything to change their practices or provided no response at all.  With its report, the Archive sent a clear message to the Obama Administration that its policies looked good on paper but needed more leadership.

A few weeks ago, the National Security Archive issued its report “Glass Half Full: 2011 Knight Open Government Survey Finds Freedom of Information Change But Many Agencies Lag in Following Obama’s Openness Order.”  Like the year before, the survey’s team filed FOIA requests with 90 federal agencies that have chief FOIA officers, asking for concrete changes in their FOIA regulations, manuals, training materials, or processing guidance as a result of the Open Government memorandum and a March 2010 White House memorandum instructing agencies to update all FOIA material and assess whether their FOIA resources were adequate.  The team found some progress. For instance, 49 agencies took concrete action in response to the March 2010 memo.  Nonetheless, just 24 agencies actually updated their FOIA training materials, and only 13 agencies followed its mandate.  The bad news: 41 of the agencies remained inert.  Of those 41 agencies, 17 could not provide concrete records showing that they had followed the memo’s instructions; two agencies withheld documents by incorrectly citing FOIA exemptions; 17 agencies were still working on the request after more than 100 business days (in violation of FOIA); and four agencies never acknowledged the team’s requests despite numerous calls and faxes.  Ancient requests, as old as 18 years, “still languish in the system.”  As the team reports, twelve agencies have outstanding FOIA requests older than six years.”  Eric Newton, an advisor to the Knight Foundation, remarked that “at this rate, the President’s first term in office may be over by the time federal agencies do what he asked them to do on his first day in office.” Read More

IP vs. Auto Safety

Two items of note on this topic recently. First, the NYT reports on NHTSA’s lazy approach to IP overreach by automakers:

For years, the National Highway Traffic Safety Administration has declined to post on its Web site reports from automakers about problems with their cars and about specialized warranty extensions that could save consumers large sums on repairs. . . . The technical service bulletins . . . provide information on unusual problems with vehicles . . . . Special service campaigns are a form of technical service bulletin that often tell dealers of warranty extensions for particular repairs. “Many manufacturers have asserted that technical service bulletin information is copyrighted and will not waive those copyrights,” [said] an agency spokeswoman . . . . “N.H.T.S.A. has a legal obligation to abide by copyright law.”

NHTSA could easily excerpt the gist of bulletins as fair use. Or it could communicate facts in them without using any of the actual language or diagrams they contain. Anyone who has taken a week of copyright knows about the idea/expression or fact/expression dichotomy. But copyfraud obfuscates this obvious workaround.

Second, ongoing legal battles over Toyota’s sudden acceleration incidents may lead to “security measures typically reserved for classified government secrets:”

The fight centers on access to Toyota’s source code, the software that controls sophisticated engine management and other electronics in its vehicles. Plaintiffs’ attorneys believe the code might contain evidence that could bolster their cases. The Japanese auto maker has been fighting to restrict access to the software, saying it needs to protect what it calls the “crown jewel” of its global enterprise.

Toyota said the attorneys should only be allowed to view parts of the code in a highly secure room, the likes of which is used by members of Congress or in trials against terrorists and spies for viewing classified information.

As I note in the piece, this kind of “qualified transparency” will become more and more common in tech disputes. Debates about “channeling” innovation protection (to patent or trade secret law) will increasingly need to take into account how patent law’s disclosure function could help more people understand potentially dangerous products.


The (Still Yet) Unfulfilled Promise of Automated Government Decision-Making

In Technological Due Process, 85 Wash. U. L. Rev. 1249 (2008), I explored the promise and perils of the increasing automation of administrative decision-making.  The automated administrative state took root after the convergence of a number of trends — the budget shortfalls of the 1990s, the falling costs and increased performance of information systems, and the emergence of the Internet.  Government officials saw computerized automation as an efficient way to reduce operating costs: Automated systems meant less paperwork and fewer staff.  Today, all states now automate a significant portion of the administration of their public benefit programs.  More than fifty federal agencies execute policy with data-matching and data-mining programs.  As a result, agencies increasingly use information systems to make decisions about important individual rights.

Technological Due Process identified three central problems with administrative automated systems.  First, when programmers translate policy into code, they inevitably distort it, thus embedding incorrect policy into systems.  Second, data matching programs misidentify individuals because they use crude algorithms that cannot distinguish between similar names.  Last, automated systems often have problems providing notice to individuals, often because they lack audit trails that capture why government agencies take particular action.

Colorado’s automated public benefits system, known as CBMS, served as an important case study for my work.  Responses to open-sunshine requests revealed that from September 2004 to April 2007, programmers embedded over 900 incorrect rules regarding Medicaid, food stamps, and other public benefits into CBMS.  As a result, CBMS terminated Medicaid benefits of patients with breast cancer based on income and asset limits unauthorized by federal or state law.  It denied food stamps to individuals with prior drug convictions in violation of Colorado law.  And it demanded that eligibility workers ask applicants if they were “beggars,” even though neither federal law nor state law required an answer to that question for the provision of public benefits.  Moreover, because CBMS lacked audit trails, individuals often received wholly deficient notice when the system cut or terminated their benefits.  At times, individuals received no notice.

The past four years has seen little progress.  Although state officials in 2009 thought that entering into a $48.6 million, four-year contract with Deloitte Consulting would help fix these problems, matters have arguably gotten worse.  CBMS, for instance, has delayed processing applications for benefits in 70% of cases (in violation of federal law).  It continues to terminate individuals’ public benefits without notice.  (One case led to the death of a nine-year old boy after a pharmacy would not fill his asthma prescription despite proof that his family qualified for Medicaid help).  Business school professor Don McCubbrey, who I interviewed for Tech Due Process, recently explained to the Denver Post that the recent failures cannot be due to the thousands of new Medicaid and other benefit applications from the recession.  In his view, a “system that large should be able to scale.”  According to Ed Kahn of the Colorado Center on Law and Policy, the system hasn’t just failed to fulfill its federal and state requirements but has “regressed.” Read More


Nondelegation and the Bank

I’m going to observe a “no individual mandate” posting policy for a while. That issue has been flogged to death and there’ll really be nothing new to say until the circuit courts issue their opinions.

So let’s try out something on the nondelegation doctrine.  Most people don’t know that the first major controversy where this argument was made involved the Second Bank of the United States.  Consider these portions of Andrew Jackson’s Veto of the Bank:

“The Government is the only ‘proper’ judge where its agents should reside and keep their offices, because it best knows where their presence will be ‘necessary.’ It can not, therefore, be ‘necessary’ or ‘proper’ to authorize the bank to locate branches where it pleases to perform the public service, without consulting the Government, and contrary to its will. . . . The power which this act gives to establish two branches in any State, without the injunction or request of the Government and for other than public purposes, is not ‘necessary’ to the due execution of the powers delegated to Congress.”

“It is maintained by some that the bank is a means of executing the constitutional power ‘to coin money and regulate the value thereof.’ Congress have established a mint to coin money and passed laws to regulate the value thereof. . . . But if they have other power to regulate the currency, it was conferred to be exercised by themselves, and not to be transferred to a corporation. If the bank be established for that purpose, with a charter unalterable without its consent, Congress have parted with their power for a term of years, during which the Constitution is a dead letter. It is neither necessary nor proper to transfer its legislative power to such a bank, and therefore unconstitutional.”

Both of these passages (especially the latter one) make a nondelegation claim. Indeed, a similar point was advanced by the lawyers for Maryland in McCulloch, but Chief Justice Marshall ignored the issue in his opinion.

Linnaean Regulation in Health Insurance and Information Technology

I was recently listening to Health Affairs’s “Newsmaker Breakfast with Karen Pollitz.” She gave a fascinating presentation on the challenges she faces as she develops HealthCare.Gov as a portal for information about health insurance. As I noted a few years ago, health insurers can easily mislead consumers about the nature of their coverage, and disclosure charts can be very helpful.

But even disclosure charts run up against the slipperiness of language. Pollitz noted that for some plans, a “deductible” was not really a deductible; you could easily spend much more out-of-pocket on health care than the stated “deductible level” before coverage kicked in.

How can an individual make an informed choice when words lose their meaning in a tangle of qualifications and conditions? At what point does a deductible cease being a deductible? While this might seem like a relatively technical question of insurance regulation, it is reflects a more general information-gathering problem that will confront regulators in coming years. Scientists could only predict and control aspects of the natural world when they could be named and classified. Any successful regime of healthcare reform will depend, at a bare minimum, on a flexible yet standardized classification system that can map what health insurers are doing. Like Linnaeus patiently organizing a welter of living forms, regulators will need to taxonomize pullulating permutations of insurer practices.
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