Cato: Government Businesses Can’t Simply Take Over Property They’ve Been Unable to Buy

For many years, Violet Dock Port had owned and operated a docking facility that stretched along a mile of the Mississippi River in St. Bernard Parish, Louisiana. As a private business, Violet was in economic competition with the local Port Authority, which also owns and operates riverfront property.

In 2007, the Port Authority took an interest in Violet’s land and tried to negotiate a purchase, but those negotiations failed. If this had been a normal negotiation between two private market participants, the Port Authority would have had only two options at that point: improve its offer or walk away. But instead it decided to appeal to its status as a public agency and claim that it required Violet’s land for “public use.” Invoking Louisiana’s eminent domain power to complete the deal by force, the Port Authority took over Violet’s business and eliminated its competition.

Violet has challenged this taking in state court, and the case has now reached the Louisiana Supreme Court. Cato has joined the National Federation of Independent Business Small Business Legal Center, Southeastern Legal Foundation, and Louisiana Association of Business and Industry on an amicus brief urging the state supreme court to strike down this taking under both the federal and Louisiana constitutions.

Under both constitutions, private property can only be taken by eminent domain if it is for a true public use. But a taking that is solely for the purpose of eliminating private competition is not a legitimate “public use.” There is nothing public-minded about destroying a private-sector business for the benefit of a public enterprise, and no reason to believe that such an agglomeration will help consumers or the economy. Indeed, the state’s economic arguments are dangerously broad because they could apply just as much to a private company that wished to eliminate competition.

Read more at https://www.cato.org/blog/government-businesses-cant-simply-take-over-property-theyve-been-unable-buy

Cato: Lucia v. SEC: The D.C. Circuit Divided Against Itself

Earlier this week, the D.C. Circuit court issued a surprising decision in Lucia v. SEC. The case addresses whether administrative law judges (ALJs) are “inferior officers” and are therefore subject to the appointments clause. But the heart of the case is far less wonky than it seems. The question is really this: what makes a judge a judge? If a person has the power to ruin a company, bankrupt a person, force the person to give up a lifelong profession, and bar the individual from interacting with friends and former colleagues, and if the person does this wearing a black robe and sitting amidst the trappings of court of law, is that person an officer? Because ALJs do all of this and more. Their decisions about whether evidence is admissible and their determinations about whether a witness is lying have a profound effect not only on the hearings over which they preside, but over any subsequent appeal. If this much authority and discretion are not enough, what on earth is?

It seems the judges, who sat en banc to hear the case (a rare occurrence, signaling a case of particular import), could not agree. They split right down the middle and deadlocked. The earlier decision will stand…for now. The case is almost assuredly bound for the Supreme Court. But until the High Court takes it up (and while it seems this is the sort of case they would take, there are no guarantees on that front), the D.C. Circuit’s earlier ruling, finding that ALJs are not inferior officers but “mere employees” will stand.

Read more at https://www.cato.org/blog/lucia-v-sec-dc-circuit-divided-against-itself

Cato: Even Sex Offenders Have Constitutional Rights

On Monday, the Supreme Court ruled that a North Carolina preventing sex offenders from accessing social media and other websites – without any attempt to tailor restrictions to potential contact with minors – violated the First Amendment. But restrictions on the freedom of speech aren’t the only unconstitutional deprivations sex offenders face.

In 1994, Minnesota passed what has become arguably the most aggressive and restrictive sex-offender civil-commitment statute in the country. The Minnesota Sex Offender Program (MSOP) provides for the indefinite civil commitment of “sexually dangerous” individuals, over and beyond whatever criminal sentence they may have already completed.

And while there is technically a system in place whereby committed individuals can petition for release or a loosening of their restrictions, in the more than 20 years that the MSOP has existed, only one person has ever been fully discharged (someone in the program for offenses committed as a minor, and he was only discharged after a court challenge). As Craig Bolte, one person committed in the MSOP, has testified, there is a distinct feeling that “the only way to get out is to die.”

The Supreme Court has held that states have the authority to commit individuals against their will outside the traditional criminal justice context, but only for the purpose of keeping genuinely dangerous people off the streets while undergoing rehabilitative treatment. Punishment and deterrence are legitimate goals exclusively of the criminal justice system, so any deprivation of liberty for either of those two purposes must follow only from that system, with all the procedural protections our Constitution requires.

Read more at https://www.cato.org/blog/even-sex-offenders-have-constitutional-rights

Cato: Lucia and PHH: Two Cases, Two Arguments for Constitutional Principles

It’s not often an appellate court agrees to re-hear a case en banc—that is, reexamine a decided case with all active judges participating—and when it does, usually it’s because the case is of particular importance.  Today the federal appeals court in D.C. heard two such cases, and both address fundamental issues of due process and constitutional integrity.  Heavy and exciting stuff.  Cato filed amicus briefs in both cases, given their potential impact on core principles of liberty and the rule of law.

The first case, Lucia v. SEC, considers the role of the Administrative Law Judge (ALJ).  While the case was nominally about whether ALJs are inferior officers, and therefore subject to certain constitutional appointment and removal proceedings, at its heart is the question: what makes a judge a judge?

Most Americans expect that if the government is going to haul them in for alleged wrongdoing, they’ll at least have their case heard by an impartial judge, with all the usual legal protections.  And this is what Americans should expect.  Unfortunately, some federal agencies operate differently, using their own internal administrative proceedings, with their own ALJs, to determine if someone has broken the rules, and to impose a fine or other punishment.

The vast majority of ALJs work for the Social Security Administration, determining whether individuals are eligible for benefits.  As Lucia’s lawyer pointed out in argument today, there is a big difference between ALJs determining whether someone will receive something from the government, as the Social Security Administration’s ALJs do, and determining whether the government will take something from someone.

ALJs who oversee adversarial proceedings, such as those at the SEC along with a handful of other agencies, exercise a level of discretion and carry out responsibilities almost indistinguishable from those of judges in federal court.  The SEC has argued that the crucial difference is that ALJs’ decisions are not technically final until the Commissioners themselves have signed off on them.  But while the Commissioners review the ALJs’ application of the law, they do not review what is known as “findings of fact” or the admissibility of evidence.  That means that the ALJs are the only people who decide what documents and testimony will be used to prove the case, listen to the witnesses and decide whether they’re telling the truth, and determine what “really” happened.

Read more at https://www.cato.org/blog/lucia-phh-two-cases-two-arguments-constitutional-principles

Cato: Betting on Freedom: The Federal Ban on States Legalizing Sports Gambling

Have you ever played fantasy sports for money? Have you ever participated in your office March Madness pool? Well, if you did, you may have broken federal law, which is quite ridiculous. If you’ve bet on your local jai alai match, though, that was probably safe.

In sports gambling, as is so often the case with many things, the law is not keeping up with our behavior and attitudes. There’s a growing movement to modernizing our gambling laws, including some new coalitions, such as the American Sports Betting Coalition (ASBC), and at least one case pending at the Supreme Court. That case, Christie v. NCAA, is a challenge to the constitutionality of the Professional and Amateur Sports Protection Act of 1992 (PASPA). Cato supported the petition, which will be discussed by the justices next week.

PASPA outlawed sports betting, with the exception of horse racing and jai alai (obviously), in most states. In classic, horse-trading style, carve outs were made for Oregon, Delaware, Montana, and Nevada. Even worse, the law prohibits states from “authorizing” sports gambling “by law,” which should be regarded as a violation of states’ rights protected by the Tenth Amendment—but the Third Circuit didn’t see it that way. The irony, of course, is that 44 states and 47 jurisdictions (D.C., U.S. Virgin Islands, and Puerto Rico) all have government-run lotteries, because evidently those governments are okay with gambling that benefits their budgets.

By overturning the restrictive federal ban on sports betting, states will be empowered to make their own decision about whether or not to allow it. If states were able to make their own laws about sports betting, areas where it is allowed could see economic growth sparked by increased tourism and an increase in betting-related jobs, as well as other industries springing up around this new frontier of economic possibility. Oxford Economics—one of the world’s leaders in global forecasting and quantitative analysis—has estimated that legal sports betting could add $14 billion to the national economy, generate up to $27 billion in total economic impact, and support 152,000 American jobs. In addition to these economic benefits, overturning such a ban would give states and local law enforcement the ability to oversee legal gambling, thus taking power from dangerous underground gambling rings.

At its root, this is an issue of federalism; people in cities and towns across America should be able to decide for themselves if sports betting is something they want for their communities. Many of them do; nearly 7 in 10 Americans believe that the issue should not be left to the federal government, and 72 percent of avid sports fans support the legalization of sports betting.

Read more at https://www.cato.org/blog/betting-freedom-new-coalition-legalize-sports-gambling

Cato: Experts and the Gold Standard

Many mainstream economists, perhaps a majority of those who have an opinion, are opposed to tying a central bank’s hands with any explicit monetary rule. A clear majority oppose the gold standard, at least according to an often-cited survey. Why is that?

First some preliminaries. By a “gold standard” I mean a monetary system in which gold is the basic money. So many grains of gold define the unit of account (e.g. the dollar) and gold coins or bullion serve as the medium of redemption for paper currency and deposits. By an “automatic” or “classical” gold standard I mean one in which there is no significant central-bank interference with the functioning of the market production and arbitrage mechanisms that equilibrate the stock of monetary gold with the demand to hold monetary gold. The United States was part of an international classical gold standard between 1879 (the year that the dollar’s redeemability in gold finally resumed following its suspension during the Civil War) and 1914 (the First World War).

Why isn’t the gold standard more popular with current-day economists? Milton Friedman once hypothesized that monetary economists are loath to criticize central banks because central banks are by far their largest employer. Providing some evidence for the hypothesis, I have elsewhere suggested that career incentives give monetary economists a status-quo bias. Most understandably focus their expertise on serving the current regime and disregard alternative regimes that would dispense with their services. They face negative payoffs to considering whether the current regime is the best monetary regime.

Here I want to propose an alternative hypothesis, which complements rather than replaces the employment-incentive hypothesis. I propose that many mainstream economists today instinctively oppose the idea of the self-regulating gold standard because they have been trained as social engineers. They consider the aim of scientific economics, as of engineering, to be prediction and control of phenomena (not just explanation). They are experts, and an automatically self-governing gold standard does not make use of their expertise. They prefer a regime that values them. They avert their eyes from the possibility that they are trying to optimize a Ptolemaic system, and so prefer not to study its alternatives.

Read more at https://www.cato.org/blog/experts-gold-standard

Cato: Governments Shouldn’t Even Fund Schools

Education reporters frequently make the claim that government ought to fund and operate educational institutions because schooling is a public good. However, since schooling fails both conditions required for a public good to exist, schools should not be publicly operated.

Schooling is Not a Public Good

According to the economic definition, a public good is non-rival in consumption and non-excludable. The first condition means that one individual’s consumption of the good does not hinder others’ abilities to use the product. Schooling fails this condition since students take up seats when receiving an education. The second condition means that the producer of the good is unable to exclude non-payers. Schooling fails this part of the definition since school leaders can prevent students from attending their institutions, if necessary.

Since schooling is not a true public good, the basic free-rider problem does not exist. This is important because it means that government does not need to operate schools or force residents to pay for them.

A Merit Good?

When journalists claim that schooling is a public good, I believe they actually mean to say that education is a merit good since it produces positive externalities. When an educational product is purchased, both the consumer and the provider benefit, as in all other voluntary transactions. However, the rest of society may also benefit if schooling actually creates citizens that are more educated. This argument leads many scholars to support government subsidization of schooling.

Read more at https://www.cato.org/blog/governments-shouldnt-even-fund-schools

Cato: Another Bleak Day for Property Owners

Property owners have long suffered under the Supreme Court’s erratic rulings. It got worse today. In Murr v. Wisconsin, the Court ruled against the owners, 5-3, with Justice Kennedy writing for the majority, Chief Justice Roberts writing a dissent, joined by Justices Thomas and Alito, Thomas writing a separate dissent, and Justice Gorsuch taking no part. The problem isn’t simply with the majority’s holding and opinion, it’s with the dissent as well. Only Thomas points in the right direction.

This was a regulatory takings case arising under the Fifth Amendment’s Takings Clause, which prohibits government from taking private property for public use without just compensation. In separate conveyances in 1994 and 1995, the Murrs, four siblings, inherited two contiguous lots on the St. Croix River that their parents had purchased in 1960 and 1963. The parents had built an ancestral home on the first lot. They bought the second for investment purposes.

The trouble began in 2004 when the Murrs sought to sell the second lot, valued at $410,000, and use the proceeds to upgrade the ancestral home. But they were blocked by a 1975 local zoning ordinance that treated the two lots as one, even though they had long been deeded and taxed separately. Under the ordinance they had to sell the lots together or not at all. Out $410,000, the Murrs sued, claiming that the ordinance had deprived them of their right to sell their property.

Here it gets complicated. In a 1992 decision, Lucas v. South Carolina Coastal Council, a 5-4 Court held that David Lucas was entitled to compensation after an ordinance prohibiting him from building on his property effectively wiped out all of its value. The problem with this “wipeout” rule, of course, is that most regulations leave at least some value in the property. When Justice Stevens called the rule “arbitrary” since “the landowner whose property is diminished in value 95% recovers nothing,” Justice Scalia, writing for the Court, responded tersely, “Takings law is full of these ‘all or nothing’ situations.”

In so writing, Scalia was citing a 1978 decision, Penn Central v. New York, which gave us a balancing test that nobody understands, least of all Justice Brennan who crafted it.  There that Court held that its test must be applied to “the parcel as a whole,” not to some portion of it. Combined with Lucas, that makes all the difference in the world for the Murrs. If their lots are treated separately, as they have always been except for this ordinance, virtually all value in the second has been wiped out and the Murrs, under Lucas, are entitled to compensation for the taking. But with the two lots combined as one, value remains, so the state can escape paying the Murrs any compensation. Thus, the question before the Court was whether the state could do that simply by treating the two lots as one.

Read more at https://www.cato.org/blog/another-bleak-day-property-owners

Cato: California’s Fishy Licensing Fees

One of the liberties protected by the Constitution is the right to do business in other states, on the same terms as companies based in those states. That right is enshrined in the Privileges and Immunities Clause of Article IV, section 2, one of the handful of individual rights that the Framers saw fit to safeguard even before the Bill of Rights was enacted. In fact, ensuring the opportunity to do business out-of-state on equal terms with a state’s residents was one of the principal motivations for holding the Constitutional Convention in the first place. But the U.S. Court of Appeals for the Ninth Circuit has condoned California’s violation of that right.

California enacted a set of commercial-fishing license fees that require nonresidents to pay several times more than residents. The system is explicitly discriminatory, harshly regressive, and intentionally protectionist. The Supreme Court and the Fourth Circuit, in substantively identical circumstances, have ruled these kinds of provisions to be impermissible: States must charge license fees equally to residents and nonresidents alike, or else bear the burden of justifying their discrimination (which California has made little real effort to do). But an en banc majority of the Ninth Circuit quite literally imposed the opposite rule. Not only did it uphold California’s discrimination, but it supported its holding with guesstimates of tax payments and rough calculations of economic costs that the state itself had never supplied. The result is conflict between two federal circuits and an open door for new methods of discrimination that the Constitution has always forbidden.

Read more at https://www.cato.org/blog/californias-fishy-licensing-fees

Cato: Stadium Boondoggles Spread to the Minor Leagues

In Prince William County, Virginia, just south of Washington, the board of supervisors is about to decide whether to issue $35 million in bonds to build a new baseball stadium for the Potomac Nationals, a Class A affiliate of the Washington Nationals. The board just rejected a proposal to let the taxpayers vote on the issue.

Art Silber, the retired banker who put up $300,000 to buy the team in 1990, estimates that it’s now worth $15 to $25 million. But-

"“Right now, we have the worst ballpark in the league and one that probably ranks in the bottom 10 of organized baseball’s 160,” he said. “At the new ballpark, the visibility will be extraordinary. Naming rights alone will pay for a lot of the stadium.”

He can only imagine what the team will be worth."

Seems like an excellent profit opportunity for a business worth tens of millions of dollars. But he has a better plan: If the county doesn’t pony up, he will sell the team, and new owners will move it.

The county found a consulting firm to produce, as it has done for many governments, an optimistic economic analysis: It suggests that a new stadium would generate 288 jobs, $175 million in economic impact, and $4.9 million in tax revenue over a 30-year lease. Similar studies have proven wildly optimistic in the past. In 2008 the Washington Post reported that Washington Nationals attendance had fallen far short of what a 2005 study predicted. As Dennis Coates and Brad Humphreys wrote in a 2004 Cato study criticizing the proposed Nationals stadium subsidy, “The wonder is that anyone finds such figures credible.”

Read more at https://www.cato.org/blog/stadium-boondoggles-spread-minor-leagues

Cato: More School Choice, Less Crime

One of the original arguments for educating children in traditional public schools is that they are necessary for a stable democratic society. Indeed, an English parliamentary spokesman, W.A. Roebuck, argued that mass government education would improve national stability through a reduction in crime.

Public education advocates, such as Stand for Children’s Jonah Edelman and the American Federation for Teachers’ Randi Weingarten, still insist that children must be forced to attend government schools in order to preserve democratic values.

Theory

In principle, if families make schooling selections based purely on self-interest, they may harm others in society. For instance, parents may send their children to schools that only shape academic skills. As a result, children could miss out on imperative moral education and harm others in society through a higher proclivity for committing crimes in the future.

However, since families value the character of their children, they are likely to make schooling decisions based on institutions’ abilities to shape socially desirable skills such as morality and citizenship. Further, since school choice programs increase competitive pressures, we should expect the quality of character education to increase in the market for schooling. An increase in the quality of character education decreases the likelihood of criminal activity and therefore improves social order.

Read more at https://www.cato.org/blog/self-interested-schooling-choices-improve-social-order

Cato: Trump’s No Good Very Bad Arms Deal

Tomorrow Congress will vote on resolutions of disapproval in response to Trump’s recent arms deal with Saudi Arabia. If passed, Senate Resolution 42 and House Resolution 102 would effectively block the sale of precision guided munitions kits, which the Saudis want in order to upgrade their “dumb bombs” to “smart bombs.” A similar effort was defeated last year in the Senate. How should we feel about this vote?

Before the ink was dry President Trump was busy bragging about his arms deal with Saudi Arabia, a deal that he claimed would reach $350 billion and would create “hundreds of thousands of jobs.” The sale bore all the hallmarks of Trump’s operating style. It was huge. It was a family deal—brokered by his son-in-law, Jared Kushner. It was signed with pomp and circumstance during the president’s first international trip. But most importantly, as with so many of his deals, the deal was all sizzle and no Trump Steak.™

Trump’s arms deal with the Saudis is in fact a terrible deal for the United States. It might generate or sustain some jobs in the U.S. It will certainly help the bottom line of a handful of defense companies. But from a foreign policy and national security perspective, the case against selling weapons to Saudi Arabia is a powerful one for many reasons.

1. The deal will deepen U.S. complicity in Saudi Arabia’s inhumane war in Yemen.

In an almost three-year long intervention into the Yemeni civil war to defeat the Houthi rebels and to destroy the local Al Qaeda franchise (Al Qaeda in the Arabian Peninsula—AQAP), the Saudis have demolished much of Yemen with little concern about the consequences. NGOs have documented case after case of the Saudis attacking civilian targets—the United Nations estimates over 10,000 civilians have died to date—and millions of Yemenis now suffer at the brink of starvation under increasingly desperate and unhealthy conditions. Tragically, the Saudis now seek American firepower to help them break the stalemate that has emerged on the ground in Yemen.

Read more at https://www.cato.org/blog/trumps-no-good-very-bad-arms-deal

Cato: To Be Liable for Fraud, You Have to Have Actually Defrauded Someone

Stream Energy is a retail gas and electrical energy provider whose business model allows prospective salesmen to purchase the right to sell its products and to recruit new salesmen. In 2014, some former salesmen brought a class-action lawsuit against Stream for fraud, alleging that the company’s business model constituted an illegal pyramid scheme.

But unusually for a fraud claim, the plaintiffs argued that they didn’t need to identify any specific misrepresentations made by Stream that might have convinced particular class members to become salesmen. Instead, the plaintiffs claimed that simply offering membership in an illegally structured business would be fraud in and of itself, even if people joined with full knowledge of all risks and benefits.

A federal district court in Texas certified the class, so Stream appealed that decision to the U.S. Court of Appeals for the Fifth Circuit. A three-judge panel reversed the district court, holding that a class could not be certified because each plaintiff must individually prove that he was subject to a misrepresentation. But the entire Fifth Circuit then reheard the appeal and ruled for the plaintiffs. The court didn’t rule on whether Stream was in fact engaged in an illegal pyramid scheme, but did affirm the class certification, accepting the plaintiff’s theory that a single proof of illegal structuring would prove a fraud against every one of Stream’s salespeople.

Read more at https://www.cato.org/blog/be-liable-fraud-you-have-have-actually-defrauded-someone

Cato: Courts Shouldn’t Join the #Resistance

Last week’s travel-ban ruling by the U.S. Court of Appeals for the Fourth Circuit is a travesty. Not because the underlying policy is anything to write home about. As I wrote when the second executive order came out in March, “[r]efugees generally aren’t a security threat, for example, and it’s unclear whether vetting or visa-issuing procedures in the six remaining targeted countries represent the biggest weakness in our border defenses or ability to prevent terrorism on American soil.” But the judiciary simply can’t substitute its own policy judgment for that of our elected representatives, no matter how well-informed judges may be or how misguided they think our political leaders may be.

Indeed, what’s going on here isn’t a sober legal analysis – incredibly, the majority opinion contains no discussion of the relevant statutory text, or of the scope of executive power in light of congressional policy (the so-called Youngstown Steel analysis) – but a wholesale rejection of Donald Trump. Essentially, the court ruled that anything the current president does, at least in the areas of immigration and national security, is de facto (and therefore de jure) illegitimate. The judiciary has joined the #resistance.

Read more at https://www.cato.org/blog/courts-shouldnt-join-resistance

Cato: Dollars per Vote in the 2016 Election

In the early days of the 2016 election cycle pundits were expecting the most expensive election ever. There were predictions of a $2 billion Hillary Clinton campaign and a $5 billion total for all presidential candidates. In the end, the campaigns spent less than expected, and less than in 2008 and 2012, and the winning candidate spent much less than the runner-up. “News” is supposed to be something unexpected, yet I haven’t seen many headlines about the drop in campaign spending and the dramatic revelation that money doesn’t always win.

Of course, in every election the bigger amounts are government spending. When politicians vote or promise to give money to students, the elderly, farmers, automobile companies, defense contractors, and other voting blocs, political considerations are certainly part of the decision-making process. When presidential candidates promise free college or a trillion dollars for infrastructure construction, they are clearly understood to be appealing for votes. When Republicans vote for $60 billion in “Hurricane Sandy recovery aid,” including money for Alaskan fisheries and activist groups, aren’t they buying votes?

Read more at https://www.cato.org/blog/dollars-vote-2016-election

Cato: 10 Reasons to Stop Subsidizing Urban Transit

As the Trump administration debates whether to help fund a $1.75 billion transit project in California that will do almost nothing to increase transit ridership, it is time to reconsider whether transit should be subsidized at all. Here are ten reasons to end those subsidies.

1. It’s the most costly transportation we have

In 2015, the transit industry spent $1.15 to move one person one mile, of which $0.87 was subsidized. No other major form of transportation is so expensive or so heavily subsidized. Auto driving cost about 26 cents per passenger mile of which subsidies were 2 cents. Flying was about 16 cents a passenger mile of which subsidies were also about 2 cents. Intercity buses cost about 12 cents a passenger mile of which subsidies were about 3 cents.

Other than transit, the most expensive passenger transport was Amtrak, which cost about 53 cents per passenger mile in 2015 of which 19 cents was subsidies. Not coincidentally, Amtrak is also government owned, suggesting that government ownership either makes transportation more expensive or government is stuck with the obsolete clunkers in the urban and intercity transport markets.

2. Subsidies haven’t increased ridership

Federal subsidies to transit began in 1965, when transit carried 60 trips per urban resident. Since then, federal, state, and local subsidies have exceeded $1 trillion (in today’s dollars), yet annual ridership has dropped to 40 trips per urban resident. Ridership responds more to changes in gasoline prices than to increased subsidies.

3. Few use it and fewer need it

In 1960, when most of the nation’s transit was private (and profitable), 7.81 million people took transit to work. By 2015, the nation’s working population had grown by nearly 130 percent, yet the number of people taking transit to work had declined to 7.76 million.

In 1960, 22 percent of American households did not own a car and transit subsidies were partly justified on the social obligation to provide mobility to people who couldn’t afford a car. Since 2000, only 9 percent of American households don’t own a car, so the market of transit-dependent people has dramatically declined.

Half the households with no cars also have no employed workers in the households. Of the 4.5 percent of workers who live in households with no vehicles, well under half–41 percent–take transit to work, meaning transit doesn’t even work for most people who don’t have cars.

4. Cities need low taxes more than transit

New York City, where 58 percent of commuters take transit to work, is the only American city that heavily depends on transit. Transit carries less than 12 percent of passenger travel in the New York urban area, less than 8 percent in the San Francisco Bay Area, and well under 5 percent everywhere else.

To improve urban vitality, what cities really need are lower taxes. Transit is one of the biggest tax burdens on residents and businesses in many urban areas, and those that spend the most on transit tend to grow slowest, while those that grow fastest are the ones that spend least on transit.

Read more at https://www.cato.org/blog/10-reasons-stop-subsidizing-transit

Cato: Why Few Americans Use Transit

In 1964, most transit was privately owned, earned a profit, and was used by the average urban American 60 times a year. Then Congress passed the Urban Mass Transportation Act, offering capital grants to cities that took over their transit systems. Since then, most transit has been municipalized, we spend nearly $50 billion a year subsidizing it, and today the average American rides transit just 40 times a year.

Transit advocates complain that Americans have some sort of irrational love affair with their automobiles. But Americans have excellent reasons not to rely on transit. Here are nine of them.

1. Transit is slow.

Most transit is much slower than driving, and a lot of transit is slower than cycling. While the average speed of driving in most American cities is more than 30 mph, and in some it is more than 40 mph, the American Public Transportation Association’s Public Transportation Fact Book admits that the average speed of rail transit is just 21.5 mph while the average speed of buses is 14.1 mph. That doesn’t count the time it takes to get to and from transit stops.

2. It doesn’t go where you want to go.

Most transit is oriented to downtown, a destination few people go to anymore as less than 8 percent of urban jobs and 1 percent of urban residences are located in central city downtowns. If you don’t want to go downtown, transit is practically useless as hub-and-spoke transit systems can require hours to take you to destinations that are only a few minutes away by car.

3. It’s expensive.

The transit industry claims that transit saves people money. But the truth is that, for most people, it costs a lot less to drive than to ride transit. Transit fares in 2015 averaged 28 cents a passenger mile. That’s less than the cost of driving if you count all the costs of owning a car and are the only person in the car. But if you already own the car, the cost of one more trip is less than 20 cents a mile, and you save even more if you carry any passengers.

4. Lack of privacy and security.

Compared with the aura of security offered by riding inside of an automobile, many people avoid transit because they feel vulnerable and threatened by other riders. Teenagers swarm onto San Francisco BART trains to rob passengers. One person was killed and three injured in an Atlanta train shooting. Transit crime is up in New York despite a drop in the city overall. Even if these highly visible crimes had never taken place, sexual harassment of women is a constant problem with transit.

Read more at https://www.cato.org/blog/nine-reasons-few-americans-use-transit

Cato: Oklahoma Lawmakers Inadvertently Enact Loser-Pays

According to news reports last week, the legislature in Oklahoma passed, and Gov. Mary Fallin then signed, a bill whose wording directs judges to award reasonable attorneys’ fees and costs in cases of civil litigation. The provision was part of a bill on certain child abuse lawsuits, and its Senate sponsor said it was believed that the fee provision applied only to those cases until on a closer reading “it seems evident that it makes all civil cases … loser pays,” said Sen. David Holt. “But nobody caught that.”

As someone who has been writing in favor of the loser-pays principle since my first book, The Litigation Explosion, you might expect my reaction to this news (once I stopped laughing) to be positive. After all, there’s nothing wrong with a legislature enacting good policies through inadvertence. (For some legislatures, that seems to be the only way they do enact good policies.)

Read more at https://www.cato.org/blog/oklahoma-lawmakers-inadvertently-enact-loser-pays

Cato: The Trump-Russia Connection: Context Is Crucial

The Justice Department’s appointment of former FBI director Robert Mueller as Special Counsel takes the ongoing investigation of Russia’s alleged interference in the 2016 presidential election and possible collusion between Trump campaign officials and the Russian government to an entirely new level.  If the investigation is to be truly objective and informative, some crucial issues need to be addressed.

Above all, it is imperative to determine the full context of the Trump-Russia relationship.  The old parable about a group of blind men feeling limited portions of an elephant and reaching erroneous conclusions applies here.  Without context, someone feeling the elephant’s trunk may express unwarranted confidence that it is a thick rope.

One of the issues that must be examined is the extent and nature of the contacts between members of Trump’s election campaign team and Russian officials.  To determine that in a dispassionate manner will not be easy.  An anti-Russia hysteria has reached alarming proportions in the past few months, eerily resembling the McCarthy era in the 1950s.  As I note in a recent article in the American Conservative, there appears to be a concerted effort to make Russia a pariah.  Indeed, at least two House Democrats have voiced objections to any contact whatsoever between the Trump administration and Russian officials.

That attitude is both unrealistic and potentially very dangerous.  Even during the worst days of the Cold War, U.S. leaders never severed communications with Moscow.  In fact, constructive dialogues produced some worthwhile agreements with America’s totalitarian adversary, including the treaty banning atmospheric nuclear tests in 1963.  To adopt an unprecedented, hardline attitude now toward post-Soviet Russia, which is a conventional rather than a totalitarian power, would be irresponsible.

Read more at https://www.cato.org/blog/trump-russia-connection-context-crucial

Cato: Obstruction of Justice

President Trump is being accused of “obstruction of justice” because of a conversation that he may have had with former FBI Director James Comey.  According to the news stories, Trump may have asked Comey to lay off his former National Security advisor, Michael Flynn.  In this post I want to briefly examine the legal doctrine of obstruction of justice.

To begin, a basic principle of American criminal law is that the line between what’s lawful and what’s unlawful needs to be clear so we will know, in advance, what conduct might land us in a prison cell.  That’s the gist behind the constitutional prohibition of ex post facto laws.  Laws with vague terms raise the same danger.  When laws are vague, police and prosecutors can abuse their power and trap people.  And that’s the danger with a catch-all doctrine such as “obstruction of justice.”

“Obstruction” has sometimes been defined by the authorities as almost any action that “impedes” an investigation.  Invoking your constitutional right to silence, your right to speak with an attorney, or the attorney-client privilege are sometimes deemed “obstruction.”  Don’t the courts restrain those abuses?  Yes, sometimes they do.  I’m presently editing a book of Judge Alex Kozinski’s legal opinions.  One case, United States v. Caldwell, touches on this subject.

Read more at https://www.cato.org/blog/obstruction-justice

Cato: Educators Ought to Embrace Educational Choice

The discussion around private school choice legislation is almost always framed as an intense battleground with teachers on one side and families on the other. Political scientists are quick to point out that teachers win the skirmish more often than not because their interests are concentrated amongst a few, while their enemies, the parents, bear costs that are widely dispersed. While the political theory behind the claim is strong, the argument that school choice programs are at odds with the interests of professional educators is feeble.

Discouragement & Hostile Work Environments

The traditional public school system has utterly failed teachers in the United States. Educators operate in a system that does not reward them for performance or determination. Instead, their motivation levels are shattered after they find out that time served and meaningless credentials, rather than effort, lead to career success.

Perhaps even worse, public school teachers must function within a hostile environment where children are compelled to attend and parents are forced to pay. If citizens were forced to read my blog posts, I am sure that many of them would stress and complain. It would be impossible to please the diverse set of required readers, especially if they were grouped primarily by their zip codes. Alternatively, if families could choose their educational services, they could match with educators based on interests and learning styles, creating a friendly and feasible work environment for teachers.

Read more at https://www.cato.org/blog/educators-ought-embrace-educational-choice

Cato: Should Taxpayers Back the ‘Organic’ Label?

Why are consumers willing to pay almost double for food labeled organic?  The average consumer probably believes that the “USDA Organic” label issued by the U.S. Department of Agriculture implies the food comes from small local farms that use production techniques that are environmentally friendly and result in food that is better for human health.  The Washington Post published an article recently about an organic farm that does not seem to be consistent with such perceptions.  The High Plains dairy complex in Colorado, the main facility of Aurora Organic Dairy, has over 15,000 cows. In the organic dairy industry 87 percent of farms have less than 100 cows, but farms with 100 or more cows produce almost half of organic dairy products.

The Post article argues that these large dairy operations may be violating the USDA’s regulations for organic milk. Though Aurora officials maintain that they meet all the requirements for the USDA Organic label, the article contends that satellite images, visual inspections by Post reporters, and tests of milk from High Plains all indicate that the company may not be complying with the natural grazing standards of the organic regulations.

Read more at https://www.cato.org/blog/should-taxpayers-back-organic-label

Cato: No Regulation by Amicus Brief

Congress passed the Fair Labor Standards Act (FLSA) in 1938 to regulate certain employment practices between employers and employees. In order to put the law into effect, Congress delegated authority to the Department of Labor (DOL) to enforce the statute’s provisions. It’s a fundamental legal principle, however, that an executive-branch agency may only regulate those provisions that Congress has actually put into its authorizing statute. Where Congress has not address a certain practice, the agency has no authority to regulate and the practice is presumptively legal.

Fast forward almost 80 years. E.I. Du Pont De Nemours and Co. (better known as DuPont), following standard industry practice, paid their employees for otherwise noncompensable meal breaks, using that compensation as credit towards the time employees spent performing certain work duties (especially “donning and duffing” special clothing and gear) before and after their shifts. The employees sued DuPont in federal court, arguing that the FLSA forbids this type of crediting and that they must be paid overtime pay for the donning/duffing time.

The district court disagreed, finding that the statute was silent about the practice and so DuPont had done nothing illegal under the FLSA. On appeal, the U.S. Court of Appeals for the Third Circuit invited DOL to file an amicus brief regarding whether DuPont had violated the law—essentially allowing it to regulate. DOL admitted in its brief that the FLSA was silent on the issue, but argue that the statute implicitly forbade the practice. The Third Circuit then adopted that view by granting DOL Skidmore deference (by which judges defer to agency interpretations according to their persuasiveness), and reversed the district court’s ruling.

Read more at https://www.cato.org/blog/no-regulation-amicus-brief

Cato: Why ‘Net Neutrality’ Is a Problem

Yesterday, Federal Communications Commission Chairman Ajit Pai announced his intention to reverse Obama administration “net neutrality” rules governing the internet that were put in place in 2015. Some commentators are criticizing the announcement as a give-away to large telecom companies and an attack on consumers. But the Obama rules create some serious problems for consumers—problems that Pai says he wants to correct.

Under the Obama rules, internet service providers (ISPs) are subject to “rate-of-return” regulations, which the federal government previously applied to AT&T’s long-distance telephone service back when it was a monopoly more than 50 years ago. Ostensibly, rate-of-return regulation gives government officials the power to review and approve or reject ISP rates. In reality it basically guarantees ISPs government-enforced market protection and profitability, in exchange for regulators ensuring that ISPs won’t be too profitable.

As explained in this 2014 post, rate-of-return regulation involves more than just telecom. It is an attempt to settle fights between “producers” and “shippers”—whether those are farms, mines, and factories on one side and railroads and shipping lines on the other, or Netflix and Hulu on one side and ISPs on the other. In all those cases, the producers and shippers need each other to satisfy consumers, but they fight each other to capture the larger share of consumers’ payments. If shippers charge more, then farmers, factories, and Netflix must charge less in order to maintain the same level of sales.

The political resolution of the producer–shipper fights was the Interstate Commerce Act of 1887 and its rate-of-return regulations, which were initially written with railroads in mind. Similar efforts were later extended to trucking, air transportation, energy, and telecom. It took about 100 years for policymakers to accept that those efforts hurt consumers much more than it helped them, forcing on consumers too many bad providers with high prices and poor quality.

Read more at https://www.cato.org/blog/why-net-neutrality-problem

Cato: SCOTUS Needs To Check the Long Arm Of State Court Jurisdiction

Many of the problems with litigation under our federal system, as I’ve noted before, arise when state courts can reach out to project their power onto litigants and disputes outside their borders. Public choice economics suggests that when courts are answerable to the political and legal classes of a single state only–say, California or Montana–they might not be ideally responsive to the interests and due process rights of out-of-state parties who have been compelled by force to show up and defend a lawsuit. Even if state judges and juries manage to avoid the temptation of “home cooking”–dishing out tastier outcomes to down-home litigants and lawyers than to outsiders–the remains the wider problem of forum-shopping, in which–even if no forum intends to act other than impartially–lawyers can bring an action in whichever of multiple available forums is most gainful for their side and unwelcome for their opponent.

A great deal, therefore, hangs on when state courts can compel absent parties to show up and defend a lawsuit. When may a state assert jurisdiction over a distant party even though it lacks one of the relatively uncontroversial grounds for doing so, such as that the events being sued over happened within its borders?

And here there has been good news to report in recent years. Our system relies largely on the federal judiciary to police overreaching by state courts in their jurisdictional claims, and after decades of irresolution, the U.S. Supreme Court has lately been getting much more serious and confident about drawing the right sorts of lines. Importantly, it has done so with support from both liberal and conservative wings of the Court. In the most significant recent case, Daimler AG v. Bauman (2014), Justice Ruth Bader Ginsburg wrote for a unanimous Court, with only Justice Sotomayor writing a separate concurrence. (The case dealt with an international as distinct from interstate claim of jurisdiction, but made precedent for both).

Read more at https://www.cato.org/blog/scotus-needs-keep-close-rein-state-court-jurisdiction

Cato: Supreme Court Reaffirms the Presumption of Innocence

On Wednesday, the Supreme Court decided a relatively small but important case out of my home state of Colorado. Colorado, like many states, imposes certain monetary penalties and costs on convicted defendants. Those can include court costs, docket fees, and payments into victim restitution funds. What happens, however, if a defendant’s conviction is later overturned, either by a higher court or on a re-trial? Can the once-convicted defendants easily get their money back, as would seem to be only fair? Not in Colorado, which is (was) unique in requiring that exonerated defendants go to court again to prove their innocence by clear and convincing evidence before they could get their money back. Thankfully, the Supreme Court, in a 7-1 opinion (Justice Gorsuch only began participating in cases in the last two weeks), held that Colorado’s “Exoneration Act” violates the due process guarantee of the Fourteenth Amendment.

Nelson v. Colorado is a combination of two different cases. One concerned Shannon Nelson, who was convicted by a jury of two felonies and three misdemeanors arising from the alleged sexual and physical abuse of her four children. Nelson conviction was reversed on appeal, however, and on retrial she was acquitted of all charges. In the course of her ordeal, Nelson paid $8,192.50 in costs and fees.

Louis Madden, the petitioner in the other case, was convicted of patronizing a child prostitute and third-degree sexual assault. His conviction was later overturned by the Colorado Supreme Court, and the state declined to retry the case. Madden paid the state $1,977.75 in the course of his legal troubles.

Read more at https://www.cato.org/blog/supreme-court-reaffirms-presumption-innocence

Cato: Adult Rights for Adult Businesses

An ordinance of the City of Sandy Springs, Georgia, prohibits the sale of sex toys. Businesses and individuals have challenged this statute as unconstitutional under the Fourteenth Amendment’s Due Process Clause in controlling their consensual, sexual behavior in the privacy of their homes. The district court and a panel of the U.S. Court of Appeals for the Eleventh Circuit upheld the ordinance given the Eleventh Circuit precedent of Williams v. Attorney General (2004), which upheld an Alabama sex-toy-sales ban.

Cato has now joined the DKT Liberty Project on a brief to the entire (en banc) Eleventh Circuit asking it to overturn Williams, which is inconsistent with more recent Supreme Court precedent in United States v. Windsor (2013) and Obergefell v. Hodges (2015) (the DOMA and same-sex marriage cases, respectively). Williams had relied on Washington v. Glucksberg (1997), where the Supreme Court declared that for a right to be protected under the Fourteenth Amendment, its specific articulation must be “deeply rooted in our history and traditions” or “fundamental to our concept of constitutionally ordered liberty.”

Read more at https://www.cato.org/blog/adult-rights-adult-businesses

Cato: Legislative Takings Are Still Takings

The Fifth Amendment’s Takings Clause states that the government may take no property for public use without just compensation. Unfortunately, local governments often see the Takings Clause not as a fundamental safeguard of liberty so much as an inconvenient obstacle getting in the way of preferred policy outcomes.

One way cities have devised to avoid their obligations to provide just compensation is to condition issuance of land-use permits on landowners’ surrendering property rights the government would otherwise have had to pay for (what’s a little extortion between friends). That’s exactly what the City of West Hollywood is attempting to do with a zoning ordinance that requires developers who build multi-unit housing to either (1) sell or rent a percentage of that housing at below-market prices or (2) pay an “in lieu” fee that the city calculates using a formula created by statute.

Shelah and Jonathan Lehrer-Graiwer sought a permit to build an 11-unit development and elected to pay the in-lieu fee under protest, later challenging it as an unconstitutional taking. The trial court, following binding state-court precedent, found in favor of the city, and the California Court of Appeals affirmed. Now the property owners seek U.S. Supreme Court review.

Read more at https://www.cato.org/blog/legislative-takings-are-still-takings

Cato: Government Can’t Shut Down Public Recording That Doesn’t Interfere with Law Enforcement

A group called People Helping People heard of potential civil rights abuses and harassment occurring at Border Patrol checkpoints in Arizona—interior ones, not right at the border—so started a campaign to monitor such activity. The Border Patrol then decided to prohibit any recording within 150 feet of their location, which includes the public roadside.

A federal district court found that the new rule was a valid time, place, or manner restriction on First Amendment-protected activity. Cato, with the assistance of the UCLA Law School First Amendment Clinic and noted scholar Eugene Volokh, has filed an amicus brief asking the U.S. Court of Appeals for the Ninth Circuit to reverse that ruling.

Recording of law enforcement officers engaged in the public performance of their duties promotes the free discussion of government affairs. The roadside in this case is a “traditional public forum” of the sort that the Supreme Court has held to be required to be open to First Amendment-protected activities. The Border Patrol even got a permit that requires that the facilities be “maintained in a manner that will not interfere with the reasonable use of the public right-of-way.” The government cannot choose to shut down such a forum when it is still being used as a public thoroughfare.

Read more at https://www.cato.org/blog/government-cant-shut-down-public-recording-doesnt-interfere-law-enforcement

Cato: Mulvaney’s Plan to Reform the Government

President Trump’s Office of Management and Budget (OMB) has released a “Comprehensive Plan for Reforming the Federal Government and Reducing the Federal Civilian Workforce.” The 14-page memo from OMB director Mick Mulvaney creates a process for executive branch leaders to produce a detailed plan to cut the government. The final plan will be included in the fiscal year 2019 budget a year from now.

The core of the process is that the president is requiring federal agencies to prepare Agency Reform Plans by this September, with draft plans due June 30. Agencies must come up with downsizing “proposals in four categories: eliminate activities, restructure or merge, improve organizational efficiency and effectiveness, and workforce management.” Agencies “should focus on fundamental scoping questions (i.e. analyzing whether activities should or should not be performed by the agency).”

Some of the factors that agencies should consider when doing their “fundamental scoping” are whether activities are nonessential, whether they violate federalism, and whether they would flunk a cost-benefit test. Agencies should propose eliminating activities that do not pass muster on these and other criteria.

Director Mulvaney is trying to get federal bureaucracies to reconsider all of their activities in a bottom-up manner. The downsizing process he has launched will include actions that the president and agencies can take administratively, and reforms that will need legislation passed by Congress.

Read more at https://www.cato.org/blog/mulvaneys-plan-reform-government

Cato: April 8, 1952: President Truman Seizes The Steel Mills

This week marks the 65th anniversary of what was to become a turning point in constitutional history, President Harry S. Truman’s order seizing the nation’s steel mills during a labor dispute. Allen Pusey has an article on the episode at the ABA Journal.

The case was to result in the Supreme Court’s 6-3 decision later the same year in Youngstown Sheet & Tube v. Sawyer, rebuking Truman for his lawless action. It was one of American history’s key wins for the successful assertion of a Constitutional rule of law that binds the executive branch as against claims of inherent emergency power.

But Truman’s audacious behavior was itself based on the adventures in Caesarism of earlier presidents going back at least to Woodrow Wilson, and especially those of his immediate predecessor, Franklin D. Roosevelt. Among other wartime acts of seizure defended on national security rationales, Roosevelt had sent in armed troops on Dec. 27, 1944 to seize (on grounds of defiance of war labor advisories) the Chicago-based catalog and retail company Montgomery Ward. Known for its clothes and household items, Montgomery Ward was almost no one’s idea of a vital war industry. But its head, businessman Sewell Avery, had made himself a leading thorn in FDR’s side in opposition to the President’s New Deal policies. A famous photo showed Sewell Avery being carried bodily out on the street by military men while sitting in his executive chair.

Read more at https://www.cato.org/blog/april-8-1952-president-truman-seizes-steel-mills

Cato: Jeff Sessions Continues to Hint at Escalating the Drug War

As a candidate, Donald Trump held a relatively moderate line on drug prohibition, often arguing that issues like marijuana legalization should be left to state governments. His selection of Jeff Sessions as Attorney General, however, sent an entirely different message. Sessions is a long-time champion of the federal drug war, and since taking over the Justice Department he has continued to make statements that hint at a return to a much harsher federal approach to drug prohibition.

The Washington Post ran a story this weekend detailing some of the shifts taking place at the Department of Justice, including a green light for federal prosecutors to step up prosecutions for low-level offenses and to rely on heavy mandatory minimums to leverage plea deals.

Read more at https://www.cato.org/blog/jeff-sessions-gets-it-wrong-drug-war

Cato: Syria and the Danger of Elite Consensus

There was near consensus in Washington, D.C. last week in support of the U.S. strike on Syria. Voices from the left supporting Trump’s action include Hillary Clinton, most of America’s European allies, Tom Friedman, and a large number of former Obama officials. On the right, the usual suspects like Senators John McCain and Lindsey Graham supported the attack, as did most Republican members of Congress, including some like Majority Leader Senator Mitch McConnell who opposed exactly such an action when President Obama was considering in back in 2013. Even the mainstream media appear to have decided it was time to strike Assad, at least to judge from much of the breathless “journalism” we’ve seen so far.

On first blush one might imagine that this consensus is a good thing, coming as it does during what has otherwise been an incredibly polarized first few months of Trump’s presidency. Finally, you might say, we agree on something. And all this agreement among the people we elect and pay to run U.S. foreign policy might also give you confidence that Trump did the right thing.

That confidence, sadly, would be misplaced. The truth is that the elite consensus on Syria, like Trump’s missile strike, is premature and ultimately dangerous to American national security.

The fundamental danger of elite consensus is that it undermines the marketplace of ideas. A democracy’s primary strength in foreign policy making is the ability to weigh competing policy proposals in the news media. Debate and deliberation reveal the evidence and logic behind competing claims and helps the public and political leaders assess the implications of different courses of action. This process, in theory, helps the United States avoid poor decisions.

Read more at https://www.cato.org/blog/syria-danger-elite-consensus

Cato: Trump Budget: A Good Start on Domestic Cuts

The White House released President Donald Trump’s first budget today. In the opening message, the president says, “Our Budget Blueprint insists on $54 billion in reductions to non-defense programs. We are going to do more with less, and make the government lean and accountable to the people.”

I would rather that the government do less with a lot less, but I appreciate that Trump is proposing to fully offset to his defense spending increases. His Republican predecessor in office pushed for large increases in defense, education, health care, and other spending without sufficient offsets, thus putting us on our current path of endless deficits and rising debt.

Read more at https://www.cato.org/blog/trump-budget-good-start-domestic-cuts

Cato: Poor Defendants Should Get to Choose Their Lawyers Too

Americans may take for granted that if they’re ever accused of a crime, they can choose their own attorney to represent them. The Supreme Court has ruled that Americans have a right to counsel in serious criminal cases, and nobody seriously argues that the government should make that important decision for us.

Yet that is exactly what happens across the country when defendants are too poor to hire their own attorneys.  While other countries such as the United Kingdom have long allowed indigent defendants to choose their own lawyers, American jurisdictions historically restrict that choice to either a court-appointed lawyer or an assigned public defender.

In 2010, the Cato Institute published a study, Reforming Indigent Defense, which proposed a client choice model where poor persons accused of crimes would be able to choose their own attorney to represent them in court. If the accused opted for the public defender, he could make that choice, but if he wanted to explore other options, he could do that also.  The Texas Indigent Defense Commission became aware of the Cato report and decided to give it a try with a pilot program in Comal County, near San Antonio. The program went into operation in 2015.

Today, the Justice Management Institute released an evaluation based on two years of data from the Comal Client Choice program.  The report, called The Power of Choice: The Implications of a System Where Indigent Defendants Choose Their Own Counsel, suggests that the program is working as well or better than the old system across a variety of metrics.

Read more at https://www.cato.org/blog/poor-defendants-should-get-choose-their-lawyers-too

Cato: Dire Fears of Trump Deregulation

Four decades ago, the United States began a dramatic change in domestic policy, repealing swaths of economic regulation and abolishing whole agencies charged with managing sectors of the U.S. economy.

 If you mention this “deregulation” today, most people think it refers to wild Reagan administration efforts to undo environmental, health, and safety protections. In fact, the deregulation movement predated Ronald Reagan’s presidency, had broad bipartisan support, and had little to do with health, safety, or environmental policy. Rather, deregulation targeted regulations that directed business operations in different sectors of the American economy: which airlines could service which routes, what railroads could charge what amounts for their services, how telephone service would be billed and what technologies would be used, how the power industry was organized, and much more.

 For decades, policy researchers had compiled evidence that those regulations harmed consumers and stunted economic growth by suppressing competition and innovation. With America mired in the stagflation of the 1970s, policymakers decided to stop sheltering (some) U.S. businesses from the demands of consumers and the competition of upstart and foreign rivals.

Read more at https://www.cato.org/blog/dire-fears-trump-deregulation

Cato: Puerto Rico Continues to Ignore Congress

Puerto Rico came to Congress last year because it desperately needed some sort of help: after a decade of deficit financing, it is now $72 billion in the hole. It owes much of that money to traditional individual investors and savers across the United States, who have lent it money over the last decade, and even more to current and future pensioners.

The law that Speaker Ryan pushed through Congress, PROMESA, was meant to be that help. It provided the island’s government with breathing room to get its fiscal act together and authorized an Oversight Board to oversee its finances and–crucially–give it the political cover to make difficult decisions and negotiate with its many creditors.

Unfortunately, neither the government nor the Oversight Board have followed the law and, as a result, it looks destined to fall short of meeting its goals of restoring fiscal responsibility on the island and returning Puerto Rico to the capital markets.

To date, neither the Board nor the Puerto Rican government has had discussions with its creditors on the either the development of the fiscal plan or any process for debt negotiations. Instead, their activities have culminated in the Oversight Board certifying a fiscal plan from the Commonwealth that falls short of–or outright ignores–requirements in PROMESA. The plan does relatively little to reform what’s broken in the Puerto Rico government, including wayward spending and bloated pension system, and instead achieves short-run fiscal solvency via significant haircuts for the creditors that, in violation of the statute, do not comport with the lawful or constitutional priority of Puerto Rico’s obligations.

In response, a group of creditors that owns over $13 billion of the island’s debt recently sent a letter to the members of the island’s Oversight Board asking it to reject the government’s fiscal plan. The signees are a diverse group, including general obligation bondholders, COFINA bondholders, a bond insurer, and others who do not always share the same perspective. However, they all agree that the plan is so flawed it cannot be considered a serious starting place for debt negotiations. Key among their objections is that the fiscal plan clearly violates PROMESA by both ignoring the law’s explicit call that it “respect the lawful priorities or lawful liens” that exist. The plan does this both by making debt subordinate to every single other government expense and by muddying the clear seniority of the various different creditor groups.

Read more at https://www.cato.org/blog/puerto-rico-continues-ignore-congress

Cato: Please Stop the Tyranny

While the newest federal agency, the Consumer Financial Protection Bureau (CFPB), has been controversial for many reasons, its most troubling feature may simply be its unconstitutional structure. Its sole director reports to no one but himself, and, under the terms of Dodd-Frank, can be removed by the president only for cause. And it receives its funding not through Congress, but through the Federal Reserve. Not even the Fed has the authority to challenge its spending, however. Instead, the law says the Fed “shall” give the CFPB the funds it requests, up to 12 percent of the Fed’s total operating expenses. As of 2015, that meant the CFPB could demand up to $443 million in one year.

Last year, a federal appeals court, ruling against the agency, issued a stinging indictment of this structure in PHH v. CFPB. The CFPB, however, sought a rehearing en banc. In a typical federal appeals case, a three-judge panel will hear and rule on the matter. The losing party can request that the entire court—in this case, the 11 active judges of the D.C. Circuit Court of Appeals—to hear and rule on the case again. The courts rarely grant such requests, except when the matter is one of particular importance. In this case, the request was granted and the court will hear argument again on May 24, 2017.

Read more at https://www.cato.org/blog/please-stop-tyranny

Cato: An Important but Limited Victory for Free Speech

On Thursday, the Supreme Court ruled in Expressions Hair Design v. Schneiderman that imposing restrictions on how merchants inform buyers about the prices they charge triggers First Amendment scrutiny. This would seem to be an obvious conclusion, but the decision is an important, although limited, victory for those who want to convey honest information to their customers, and for those who have a right to receive that information.

The case dealt with New York Business Law § 518, which prohibits merchants from imposing a “surcharge” on customers who use credit cards, but allows for a “cash discount.” To put it simply: the law allows stores to advertise “discounts” for paying cash, but makes it a crime to advertise an economically equivalent “surcharge” for paying with plastic.

Expressions Hair Design, along with several other merchants, sued the state, arguing that the law was vague and a violation of their First Amendment right to convey information to their customers. The federal district court agreed, but the U.S. Court of Appeals for the Second Circuit reversed that decision. The circuit court’s ruling held that the First Amendment wasn’t implicated because the law didn’t regulate speech but merely regulated prices. The Supreme Court granted review to determine two issues: The threshold question of whether the law regulated speech rather than conduct and, if so, whether the law violated the First Amendment.

Read more at https://www.cato.org/blog/important-limited-victory-free-speech

Cato: Several House Republicans Introduce a Bill to Legalize Young Immigrants

Eleven House Republicans are pushing new legislation to provide a pathway to legal status for young immigrants who entered the United States as children—commonly known as “Dreamers.”* Congressman Carlos Curbelo (R-FL) and ten other Republican members introduced Recognizing America’s Children (RAC) Act today (PDF). The bill will benefit the United States economy and provide certainty for a group of young people who are deserving of a humane approach.

The bill would grant conditional legal permanent status to immigrants who have arrived before the age of 16, have been in the United States since January 1, 2012, have graduated high school, and have either been accepted into college or vocational school, applies to enlist in the military, or works with an existing valid work authorization. The conditional status will be cancelled if they become dependent on government, are dishonorably discharged from the military, or are unemployed for more than a year. The conditional status woudl become permanent after 5 years if they graduate from college or vocational school, are honorably discharged from the military or has served for 3 years, or have been employed for at least 48 months.

Read more at https://www.cato.org/blog/several-house-republicans-introduce-bill-legalize-young-immigrants

Cato: Ending the Reign of the Administrative Law Judge

The system of checks and balances that the Constitution established is an essential safeguard against government overreach. Yet, the ever growing administrative state often undermines fundamental checks and balances. “Fourth branch” agencies frequently take on legislative, executive, and judicial roles simultaneously. And to make matters worse, administrative officials are much less accountable to the people than their counterparts in the traditional three branches.

One especially alarming example of the breakdown of essential separation of powers within the administrative state is the Securities and Exchange Commission’s use of administrative law judges (ALJs). ALJs adjudicate most of the SEC’s enforcement actions. They have the authority to impose significant civil penalties and can bar respondents from working in the securities industry.

The SEC’s use of ALJs to decide important cases violates the Constitutional principle of an independent judiciary. ALJs are housed within the same agency that initiates the proceedings they adjudicate. While notionally independent, the lack of distance between ALJs and the SEC’s enforcement counsel may serve as a source of bias and conflict of interest. The SEC selects the ALJs that hear cases, even though the Supreme Court has deemed it problematic when “a man chooses the judge in his own cause.”

There is also the risk that ALJs may feel pressure, whether explicit or implicit, to support their employer agency.  The SEC’s win rate is better in cases heard by ALJs than cases brought to federal court.  While there may be some selection bias at play, the optics are not good and, in matters of justice, the appearance of injustice can be harmful in itself.

In addition to these separation of powers and due process issues, ALJs are insulated from public accountability, meaning there is very little any elected official can do to check instances of bias or overreach. Cato recently filed an amicus brief in Lucia v. SEC, a case regarding ALJs’ lack of accountability to the public.

The SEC classifies its ALJs as employees rather than officers. Under the Constitution’s appointments clause, federal government officials are divided into two primary categories, officers and employees. All officers in the executive branch are subject to presidential removal power. The president’s power to remove officers that fail to preform their duties is essential for his ability to faithfully execute the law. Presidential removal power is also necessary in order for officers to be held accountable to the public.

Read more at https://www.cato.org/blog/ending-reign-administrative-law-judge

Cato: Court Says Regulation of In-State, Noncommercial Activity Is Valid Regulation of Interstate Commerce. Somehow.

Once again, a court has refused to recognize any meaningful limit to Congress’s authority to regulate Americans’ private lives through the Commerce Clause. On Wednesday, after a long delay in considering the case, the U.S. Court of Appeals for the Tenth Circuit reversed a district court order that had declared the U.S. Fish and Wildlife Service (FWS)’s regulations prohibiting the “taking” of the Utah prairie dog (effectively, anything that may disrupt its habitat) unconstitutional. (This is a case in which Cato had filed a brief nearly two years ago.)

The court held that, since Congress had a rational basis to believe that protecting the prairie dog “constituted an essential part of a comprehensive regulatory scheme that, in the aggregate, substantially affects interstate commerce,” the FWS regulations are authorized under Article I, section 8. This, despite acknowledging that “taking” the prairie dogs—which exist solely within the borders of Utah and have no economic value—is a “noncommercial, purely intrastate activity.”

The case was brought by People for the Ethical Treatment of Property Owners (PETPO), a nonprofit organization formed by Utah residents and property owners to protect their interests in the face of FWS’s burdensome regulations. Its members have been prevented from building homes, starting small businesses, and even from protecting local parks and cemetery grounds. Finally, enough was enough and PETPO brought suit against the FWS on the grounds that neither the Commerce Clause nor the Necessary and Proper Clause authorizes Congress to regulate this rodent on nonfederal land. Such is the bizarre dreamscape in which the Tenth Circuit exists: where the power to regulate interstate commerce somehow covers activities that are neither interstate nor commercial.

Read more at https://www.cato.org/blog/court-says-regulation-state-noncommercial-activity-valid-regulation-interstate-commerce-somehow

Cato: The House GOP Leadership’s Health Care Bill Is ObamaCare-Lite — Or Worse

During the presidential campaign, Donald Trump promised legislation that “fully repeals ObamaCare.” Monday night, the Republican leadership of the House of Representatives released legislation it claims would repeal and replace ObamaCare. Tuesday afternoon, Vice President Mike Pence will travel to Capitol Hill to pressure members of Congress to support the bill. On Wednesday, two House Committees will begin to mark-up the legislation. House and Senate leaders are hoping for quick consideration and a signing ceremony, maybe by May, so they can move on to other things, like tax reform and confirming Supreme Court nominee Judge Neil Gorsuch.

Everyone needs to take a step back. This bill is a train wreck waiting to happen.

The House leadership bill isn’t even a repeal bill. Not by a long shot. It would repeal far less of ObamaCare than the bill Republicans sent to President Obama one year ago. The ObamaCare regulations it retains are already causing insurance markets to collapse. It would allow that collapse to continue, and even accelerate the collapse. Republicans would then own whatever damage ObamaCare causes, such as when the law leaves seriously ill patients with no coverage at all. Congress would have to revisit ObamaCare again and again to address problems they failed to fix the first time around. ObamaCare would consume the rest of Congress’ and President Trump’s agenda. Delaying or dooming other priorities like tax reform, infrastructure spending, and Gorsuch. The fallout could dog Republicans all the way into 2018 and 2020, when it could lead to a Democratic wave election like the one we saw in 2008. Only then, Democrats won’t have ObamaCare on their mind but single-payer.

Read more at https://www.cato.org/blog/house-gop-leaderships-health-care-bill-obamacare-lite-or-worse

Cato: Against Ideological Litmus Tests at State-Funded Professional Schools

Craig Keefe was expelled from his state-funded nursing college in Minnesota because something he said was deemed unprofessional. He didn’t break any laws with what he said—there were no threats or anything like that—and wasn’t even on campus at the time. He just made a handful of rude comments on his personal Facebook page, unrelated to any curricular project.

Nevertheless, the school had adopted the American Nurses Association’s code of professional ethics, which forbids behavior “unbecoming of the profession” or that “transgresses personal boundaries,” into its student handbook, so the federal district court rejected Keefe’s challenge to his expulsion. The U.S. Court of Appeals for the Eighth Circuit affirmed that ruling, effectively holding that that any punishment of speech under the nursing code is effectively free from First Amendment review.

So now Mr. Keefe, represented by Cato adjunct scholar Robert Corn-Revere, is asking the Supreme Court to take his case. Cato, joined by the Electronic Frontier Foundation, National Coalition Against Censorship, and Student Press Law Center, and with the help of Prof. Eugene Volokh and the UCLA First Amendment Clinic, has filed a brief supporting that request.

Read more at https://www.cato.org/blog/against-ideological-litmus-tests-state-funded-professional-schools

Cato: Ending the SEC’s Antique Prosecutions

Since at least the days of ancient Athens—which Demosthenes tells us had a five-year statute of limitations for nearly all cases—governments have limited the time period within which punishment or compensation may be sought. Statutes of limitations exist to protect defendants from vindictive or arbitrary lawsuits and prosecutions brought long after their memories have faded and records that might have been used to rebut a claim lost. They ensure that we need not spend our lives constantly anxious about the possibility of the distant past coming back to haunt us over half-forgotten slights.

These are the basic animating purposes behind 28 U.S.C. § 2462, which imposes on the federal government a five-year limitations period for any “action, suit, or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise,” and the Supreme Court’s unanimous 2013 opinion in Gabelli v. SEC (in which Cato also filed a brief) finding no valid justification for the Securities and Exchange Commission to pursue enforcement actions seeking civil penalties more than five years after the relevant conduct had occurred.

Unfortunately, the SEC didn’t learn its lesson and has consistently attempted to circumvent and subvert Gabelli by arguing that the relief it seeks in its years-overdue enforcement actions—monetary disgorgement, injunctions requiring defendants to obey the law, and declaratory judgments that laws were violated—is actually “equitable” and not a form of civil penalty covered under § 2462. Disgorgement—requiring a defendant to return their ill-gotten gains—has indeed traditionally been a way to remedy unjust enrichment rather than a punishment, but the SEC’s use of it has been anything but equitable.

Read more at https://www.cato.org/blog/ending-secs-antique-prosecutions

Cato: How Strawberries and The Clash Helped Save Separation of Powers

Yesterday the Supreme Court ruled in the case of National Labor Relations Board v. SW General that an “acting” officer cannot simultaneously stand as a nominee to hold that office permanently, regardless of how the acting officer was appointed. The ruling is a double victory, both for the separation of powers between the president and Senate and for textualism.

Though technical, the statutory interpretation issue in this case was not overly complicated. The Federal Vacancies Reform Act (FVRA) lays out three methods by which someone can become an acting officer in three separate clauses, subsections (a)(1), (a)(2), and (a)(3). It also has a “disqualifying clause,” declaring that (with some exceptions not relevant here) “a person may not serve as an acting officer” if he has also been nominated for a permanent position as that same officer.

There would be no dispute that the disqualifying clause applies to all acting officers, except for one wrinkle: the disqualifying clause begins with the preamble “Notwithstanding subsection (a)(1).” Based only on this preamble, the government argued that the disqualifying clause applies only to those who became acting officers under subsection (a)(1). This would mean that anyone who became an acting officer under subsections (a)(2) or (a)(3) (including the man at the center of this case, former NLRB acting general counsel Lafe Solomon) could never be disqualified by the clause.

Read more at https://www.cato.org/blog/how-strawberries-clash-helped-save-separation-powers

Cato: Government Can’t Ban Businesses from Telling their Customers the Truth

In a unanimous decision yesterday, the U.S. Court of Appeals for the Eleventh Circuit vindicated Ocheesee Creamery’s free speech rights when it reversed a district court’s decision that prevented the creamery from telling its customers the truth about the products it sells.

Ocheesee Creamery is a small, all-natural dairy farm located in rural Florida that prides itself on selling organic products to its customers. This mission requires that they not add ingredients to the food they sell. One such product the creamery offered was “skim milk”—which is simply milk that has had the cream removed. For a number of years, Ocheesee sold its milk and accurately labeled it as pure pasteurized skim milk—nothing more, nothing less.

In 2012, however, the Florida Department of Agriculture and Consumer Services (FDACS) told the small business that it had to inject its all-natural milk with artificial vitamins or quit telling its customers that what they were offering was skim milk, and instead call it “imitation milk product.” FDACS regulations define skim milk as milk that is not just milk, but as milk injected with vitamins A and D. Now, you might ask yourself how injecting artificial ingredients into all-natural product transforms it into something that is considered “imitation”. Yet that’s precisely what the FDACS requires under its regulations.

Read more at https://www.cato.org/blog/government-cant-ban-businesses-telling-their-customers-truth

Cato: SNAP: $15 Billion on Junk Food

The Supplemental Nutrition Assistance Program (SNAP) aims for recipients to “make healthy food choices within a limited budget.” SNAP is supposed to “permit low-income households to obtain a more nutritious diet.”

However, the lofty goals of federal programs often differ from the actual results. It turns out that about $15 billion of SNAP benefits are for junk food. Apparently, recipients are not making the nutritious and healthy choices that the government promised.

SNAP, or food stamp, benefits totaled $67 billion in 2016. Food stamps can be used to buy just about any edible item in grocery stores other than alcohol, vitamins, and hot food. But exactly what is being purchased by the program’s 44 million recipients has been mainly shrouded in secrecy—until now.

A November study by the U.S. Department of Agriculture finally shed light on food stamp purchases. The study examined detailed data for SNAP and non-SNAP shoppers for one large food retailer over a one-year period.

The study found that SNAP shoppers bought slightly more junk food than non-SNAP shoppers. For example, 9.25 percent of total purchases by SNAP shoppers were for “sweetened beverages” such as cola, which compared to 7.1 percent for non-SNAP shoppers. At the same time, SNAP shoppers spent relatively less on nutritious foods such as fruits and vegetables.

Read more at https://www.cato.org/blog/snap-15-billion-junk-food

Cato: The Filibuster: A Primer

Most legal scholars agree that Supreme Court nominee Neil Gorsuch has the necessary experience, expertise, and temperament to be confirmed as Justice Scalia’s replacement.  But suppose the Democrats decide to filibuster the nomination and Republicans can’t get the 60 votes needed to break the filibuster?  If that happens, you can expect the Republicans to “go nuclear” and change the filibuster rules so that only 51 votes are required to shut off debate.  To understand what that means, here’s a short backgrounder on the filibuster:

Senate filibusters have been around since 1837.  Beginning in 1917, a cloture vote to shut off debate required a 2/3 supermajority; that was changed to 60 votes in 1975.  Sen. Strom Thurmond (D-SC) set the record with a 1957 talk-a-thon against civil rights legislation: 24 hours, 18 minutes.  Nowadays, senators need not actually speak.  They merely announce their intent to prolong debate and that triggers the 60-vote cloture rule.

Suppose senators want to revise the 60-vote rule.  Rules can be revised by majority vote.  But suppose further that the vote on revising the 60-vote rule is itself filibustered.  According to Senate rules, if a vote to change the 60-vote rule is filibustered, it takes two-thirds of the senators to break the filibuster.  The so-called nuclear option would override that rule.

There are two versions of the nuclear option – one simple and one complicated.  First, the simple version:  On the first day of a new Congress, Senate rules don’t yet apply.  Therefore, new rules can be adopted – and debate can be halted – by the default procedure, which is majority vote.  After the first day, however, that option isn’t available.

The second version is more complicated; but it can be used at any time.  One party, let’s say the Republicans, moves to change the 60-vote cloture rule to 51 votes.  The Democrats filibuster the rule-change – which means it would take 67 votes to close debate.  Republicans then go for the nuclear option – which is a point-of-order, upheld by the presiding officer, declaring that the 67-vote requirement is unconstitutional.

Read more at https://www.cato.org/blog/filibuster-primer

Cato: The Road to Cordray’s Removal Just Got Longer

The plot thickens in the ongoing battle for the Consumer Financial Protection Bureau, the controversial agency created in the wake of the 2008 financial crisis.  Yesterday, a federal appeals court decided it would grant rehearing of last year’s case, PHH v. CFPB, which held the agency’s structure to be unconstitutional.  The decision issued last year not only ruled the agency’s structure to be unconstitutional, but also placed the director under the president’s authority, giving the president the power to fire the director at will.  Now that the court will rehear the case, its earlier decision is no longer binding, meaning the president can no longer rely on it if he wishes fire Director Richard Cordray.

The bureau is the brain-child of Massachusetts Senator Elizabeth Warren, but even the progressive firebrand did not dream up an agency as powerful as the one that congress ultimately created.  Senator Warren, then a private citizen, initially proposed a commission structure.  While independent commissions, such as the Securities and Exchange Commission (SEC), are constitutionally questionable (they are not directly accountable to the President or Congress, and are therefore outside the three branches of government established by the Constitution), they have the benefit of both precedent and a measure of checks and balances.  As Judge Kavanaugh noted in the initial PHH v. CFPB decision, a structure like the SEC’s allows the commissioners to serve as checks on each other.  The SEC is by law bi-partisan, with no more than three of the five seats filled by members of the same party, and there is pressure for the chair to get consensus from all five commissioners or risk a reputation for divisiveness and partisanship.  Other regulators, like the Commodity Futures Trading Commission and the Federal Trade Commission, have similar structures.

Read more at https://www.cato.org/blog/road-cordrays-removal-just-got-longer

Cato: House Moves Forward On Tort Reform — And With A Nod To Federalism

As I note in a post at Overlawyered, the House of Representatives has been moving quickly on litigation reform, both on perennial measures long stymied by Democratic opposition and on others of newer vintage (more). Of particular interest, two measures track recommendations Cato scholars have been making for years, while a third has been scaled back in a way that at least nods to concerns Cato scholars have expressed.

The new 8th edition Cato Handbook for Policymakers contains a chapter on tort and class action law prepared by Robert Levy, Mark Moller, and me. Its first federal-level recommendation is that “Congress should restore meaningful sanctions for meritless litigation in federal court.” On March 10, by a largely party-line vote of 230-188, the House passed the Lawsuit Abuse Reduction Act (LARA), H.R. 720, which would restore the regime of strong Rule 11 sanctions in federal litigation that were gutted in 1993 (committee report here). LARA has been proposed in one form or another for many Congresses and has passed the House more than once before stalling in the Senate; more on it here.

Our handbook chapter also recommends that Congress “implement further reforms for class actions that cross state lines,” a type of suit that often enables state courts to assert their power over transactions and parties in other states. While our recommendations are multi-faceted, many of them overlap with provisions in the pending H.R. 985, the Fairness in Class Action Litigation Act (committee report; passed the House March 9, 220-201). FICALA in turn adds other provisions of its own; attorney Andrew Trask, author of multiple essays on class action law for the Cato Supreme Court Review, takes a relatively favorable view of its overall impact.

Read more at https://www.cato.org/blog/house-moves-forward-lawsuit-reform-nod-federalism

Cato: Why Judicial Independence Matters

Late yesterday The Hill posted a short op-ed I wrote on President Trump’s nomination of Judge Neil Gorsuch to fill the seat of the late Justice Antonin Scalia. As often happens, a couple of editorial changes, especially in the title, muted somewhat the central point of the piece. But even were that not so, that point is worth further attention.

It concerns judicial independence. As I wrote, facing a nominee with impeccable qualifications, Democrats are now crafting an indirect assault against Judge Gorsuch. Thus, they’re pointing to the president’s outrageous attacks on the judiciary, among other things he’s said, and contending that he’s imposed a “litmus test” on the nominee. So they’re demanding that Judge Gorsuch “very explicitly and directly” disavow the president’s remarks, which he has already done respectfully, but in addition that he “very specifically” make his own policy views known in the upcoming confirmation hearings (which we’ve just learned will begin on March 20).

Read more at https://www.cato.org/blog/why-judicial-independence-matters

Cato: Freedom of Association Takes Another Hit

To see how little is left of one of our most important rights, the freedom of association, look no further than to today’s unanimous decision by the Washington State Supreme Court upholding a lower court’s ruling that florist Baronelle Stutzman was guilty of violating the Washington Law Against Discrimination (WLAD) when she declined, on religious grounds, to provide floral arrangements for one of her regular customer’s same-sex wedding. The lower court had found Stutzman personally liable and had awarded the plaintiffs permanent injunctive relief, actual monetary damages, attorneys’ fees, and costs.

This breathtaking part of the Supreme Court’s conclusion is worth quoting in full:

"We also hold that the WLAD may be enforced against Stutzman because it does not infringe any constitutional protection. As applied in this case, the WLAD does not compel speech or association. And assuming that it substantially burdens Stutzman’s religious free exercise, the WLAD does not violate her right to religious free exercise under either the First Amendment or article I, section 11 because it is a neutral, generally applicable law that serves our state government’s compelling interest in eradicating discrimination in public accommodations."

We have here yet another striking example of how modern state statutory anti-discrimination law has come to trump a host of federal constitutional rights, including speech, association, and religious free exercise. It’s not too much to say that the Constitution’s Faustian accommodation of slavery is today consuming the Constitution itself.

Consider simply the freedom of association right. That liberty in a free society ensures the right of private parties to associate, as against third parties, and the right not to associate as well—that is, the right to discriminate for any reason, good or bad, or no reason at all. The exceptions at common law were for monopolies and common carriers. And if you held your business as “open to the public” you generally had to honor that, though you still could negotiate over services.

Read more at https://www.cato.org/blog/freedom-association-takes-another-hit

Cato: Washington Supreme Court Unanimously Treads on Important Freedoms

Today the Washington Supreme Court unanimously upheld the fines against florist Baronelle Stutzman for refusing to sell flowers to a long-time customer for his same-sex wedding. Even though the court acknowledged that Stutzman “has served gay and lesbian customers in the past for other, non-wedding-related flower orders,” it found that she had violated the state’s public-accommodations law. In doing so, it rejected her claims regarding the freedom of speech, association, and religious exercise in the face of a legal requirement that businesses not discriminate on the basis of sexual orientation.

I’m still working through the opinion, but it’s all pretty standard – and disappointing – stuff. Notably the court cites and rejects Cato’s brief regarding the freedom of expression, indeed rejecting even the idea that floristry is an expressive art.

Read more at https://www.cato.org/blog/washington-supreme-court-unanimously-treads-important-freedoms

Cato: You Shouldn’t Be Criminally Liable If You Don’t Have a Guilty Mind

Todd Farha, CEO of WellCare Health Plans, was convicted of knowingly executing a fraud by submitting false expenditure reports to the state. However, the district court decided that “knowingly” didn’t actually have to mean that Farha knew that the reports were false, but only that in submitting the reports Farha acted with “deliberate indifference” as to whether they were accurate. Essentially, a non-lawyer was convicted for being insufficiently cautious in adopting an interpretation of an ambiguous regulatory statute.

The U.S. Court of Appeals for the Eleventh Circuit upheld Farha’s conviction even in the absence of the required statutory mental-state element (what lawyers call mens rea). The appellate court decided, in agreement with the district court, that deliberate indifference toward falsity may stand in for knowledge of falsity. The practical implication is that the court lowered the mens rea standard and used a civil standard of liability to a criminal case. (You can be liable in a civil lawsuit even if you’re not guilty for criminal-punishment purposes.)

Cato has now filed a brief supporting Farha’s request that the Supreme Court review his case. The lower court’s holding is out of step with precedent, with bedrock principles of statutory interpretation regarding the mental-state elements of a criminal offense, and with common sense notions of justice. The most egregious aspect of the ruling is that mens rea elements are seen as so crucial to the criminal law that the Supreme Court has been willing to read them into a statute when the statute is silent regarding necessary mental state.

Read more at https://www.cato.org/blog/you-shouldnt-be-criminally-liable-you-dont-have-guilty-mind

Cato: Don’t Block the Education Secretary, End the Department of Education

Newly sworn-in Secretary of Education Betsy DeVos tried, and eventually succeeded, to visit a Washington, D.C., public school Friday morning. As warned by her opponents after she was confirmed by a razor-thin margin on Tuesday, she was met by protesters who intended to make good on the threat to block her at every turn. In this case, literally: according to videos like this, they physically tried to prevent her from entering the building.

The opposition to DeVos, as I’ve suggested over the last several weeks, has been over the top and, frankly, unfair. It also hasn’t done much to improve the sick state of the national political dialogue.

That said, there may be no one more sympathetic to objections to federal education meddling than me. Indeed, if the school refused to let DeVos visit because it did not want the disruption or political theater, I’d have been all for it.

But there is a way more constructive way to solve the problem of dangerous or unwanted federal intervention than blocking schoolhouse doors: work to end the federal Department of Education.

This does not, by the way, mean ending the federal role in keeping states and districts from discriminating in their provision of education, but that is much more properly a Justice Department responsibility.

Read more at https://www.cato.org/blog/dont-block-education-secretary-end-department-education

Cato: Court Ruling on Executive Order: Bad Legal Work All Around

This is a dog’s breakfast of a ruling on a dog’s lunch of an executive order. Somehow the Ninth Circuit judges manage to write 29 pages without discussing the heart of the matter: whether the Immigration and Naturalization Act, specifically section 1182, gives the president the power to do what he did. Nebulous discussions of due process may be nice (or not) but they’re superfluous if the president went beyond his statutory authority. But apparently the court didn’t care about that.

And of course this whole mess could’ve been avoided if the executive order had gone through proper interagency review in the first place, as well as being more narrowly tailored. As it stands, it’s both over- and under-inclusive. It’s over-inclusive because it sweeps in green card and other visa holders who’ve already gone through “extreme vetting,” as well as non-threatening graduate students and sick kids. It’s under-inclusive because it doesn’t even attempt to target the actually risky pool of nationals from non-covered countries (including European ones) who may have become radicalized—and doesn’t offer any concrete reforms to the visa- or refugee-vetting systems that could actually diminish the risk of terrorism on U.S. soil.

Read more at https://www.cato.org/blog/court-ruling-executive-order-bad-legal-work-all-around