Category: Administrative Law

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Predatory Lending: Meet Jonathan Swift

plalogo.gifAt the new website of the Predatory Lending Association, aspiring lenders can find concentrations of “working poor” customers in their neighborhood, calculate effectively usurious loans, not blacklist crusaders against payday lending, including Liz Warren, and learn all the arguments that goo-goos will make against high-interest borrowing. One Q&A in particular should be familiar to contracts professors (or maybe just those, like me, who use Randy Barnett’s Perspectives book):

Myth: Payday lending is comparable to selling yourself into slavery.

Reality: Although there is a market need for slavery, people do not choose to sell themselves into slavery. Free choice is the difference between payday lending and slavery.

(There is even a neat chart to make the connection more clear.) On the discussion boards, you can share your thoughts with other predatory lenders. Sure, it all seems a little too cute, but it’s worth checking out anyway.

Captured CPSC, Road Show Edition

nord.jpgThe last time I blogged about Nancy Nord, head of the Consumer Product Safety Commission, I thought it would be the last. Certainly anyone caught in the middle of escalating product recalls and public outcry over toy safety would be responsive to efforts to improve the CPSC’s budget and staffing. Consider the following report:

Government statistics show that imports have increased by 338 percent since 1974, the year the Consumer Product Safety Commission was created. Yet the budget for that agency today is less than half what is was in that year. In effect, we have been disarming our ability to protect ourselves, even as the need to do so has been soaring.

chinaimports.jpgBut I was wrong. Nord has instead told Congress not to give the CPSC more funding and enforcement authority. The Washington Post now suggests some reasons why: she and “her predecessor have taken dozens of trips at the expense of the toy, appliance and children’s furniture industries and others they regulate.” Hilton Head, Barcelona, Orlando–ahh, the difficult life of the regulator:

In February, for example, Nord accepted more than $2,000 in travel and accommodations from the Defense Research Institute to attend its meeting in New Orleans on “product litigation trends,” according to her report. The institute is made up of more than 20,000 corporate defense lawyers. In 2004, [her predecessor] Stratton attended the group’s meeting in Barcelona, at a cost to the group of $915 for his hotel room.

The guiding “philosophy” behind the current CPSC appears to be a belief in self-regulation: companies themselves should take primary responsibility for safety. My question is whether, after a case like MVMA v. State Farm, an agency can use a political commitment to libertarianism to trump its extant legal and scientific obligations to protect the public. For example, what if the CPSC just decided that any penalty of, say, more than $100 for death-causing injuries would ultimately be counterproductive because it would discourage reporting? Should courts defer to such “agency expertise”? I’d always hoped such questions would remain mere bizarre hypotheticals, but we appear to be in a world where their relevance increases by the day.

Toobin’s The Nine: Lost Illusions

toobinnine.jpgI thoroughly enjoyed my speed-read of Jeffrey Toobin’s The Nine. Few books wrap so many deliciously gossipy details about the justices’ life and work around one fundamental insight, which I’ll relate upfront:

[Chief Justice Roberts has said] “Judges are like umpires. Umpires don’t make the rules; they apply them.” [But] Supreme Court justices are nothing at all like baseball umpires. . . . When it comes to the core of the court’s work, determining the contemporary meaning of the constitution, it is ideology, not craft or skill, that controls the outcome of the cases. As Richard A. Posner. . . has written, “It is rarely possible to say with a straight face of a Supreme Court decision that it was decided correctly or incorrectly. . . . [They] can be decided only on the basis of a political judgment. . . . “. [W]hen it comes to the incendiary political issues that end up in the Supreme Court, what matters is not the quality of the arguments but the identity of the justices.

Toobin shows how the justices’ stands are deeply rooted in their biographies, ideologies, and personalities. For example, Thomas loathes Yale (he placed a “Yale Sucks” bumper sticker “on the mantel of his chambers for some time”) and loves Red State NASCAR culture. Breyer’s cosmopolitan views reflect bien pensant Cambridge (Mass.) and Oxford (England). It would take a minor miracle to get these two men to see affirmative action, campaign finance regulation, or abortion in the same way. And frankly, their divergent worldviews will often lead to irreconcilable conflicts on statutory interpretation as well.

Toobin’s book accelerates the classic dynamics of celebrity: it feeds public interest in the justices’ quirks and peccadilloes, then leaves us wondering: why are these people so powerful, anyway? As Britney wilted under constant media scrutiny, so too do the justices appear all-too-human under the glare of Toobin’s meticulous reporting. Toobin claims that the last five justices appointed have “turned out precisely as might have been expected by” their presidential sponsors. He gives the impression that they mechanically advance the interests of the political machines that elevated them.

So where does this leave lawyers? Perhaps a bit more comfortable with the administrative state, which can be more frankly (and accountably) political. Some agencies may also find their legal “freedom of maneuver” more constrained by science and expertise than the Supreme Court would. As Cass Sunstein has stated, “the law’s meaning is not a ‘brooding omnipresence in the sky’–and . . . the executive, with its comparative expertise and accountability, is in the best position to make the judgments of policy and principle on which resolution of statutory ambiguities often depends.” Until a book like The Five (about, say, the Federal Communications Commission) shatters our faith in their capacity to escape capture and promote the public good.

The Road to Totalitarianism?

Lots of claims are being made about John Edwards’ apparent endorsement of “mandatory preventive care” in a speech. First, let’s look at his exact language:

[Edwards said his universal health care proposal] “requires that everybody be covered. It requires that everybody get preventive care. . . If you are going to be in the system, you can’t choose not to go to the doctor for 20 years. You have to go in and be checked and make sure that you are OK.”

Now, if I understand the Edwards health plan correctly, that “If you are going to be in the system” qualifier is very important. Note this cornerstone of his proposal:

Health Care Markets will offer a choice between private insurers and a public insurance plan modeled after Medicare, but separate and apart from it. Families and individuals will choose the plan that works best for them. This American solution will reward the sector that offers the best care at the best price.

The key question here is: what did Edwards mean by “in the system”? If he meant “part of the backstop ‘Medicare for All’ program, I don’t see how his policies significantly differ from ones already endorsed by the Bush administration. Moreover, given that they are designed to extend health care to the now uninsured, wouldn’t the uninsured be better off with a new option for care–even if such strings were attached?

Edwards’ plan for “Health Care Markets” mirrors something the critics of universal coverage never seem to mention–that other systems that do offer universal coverage also routinely let their citizens supplement the state-run program with private insurance. Consider the case of France, detailed in Paul Dutton’s Differential Diagnoses: A Comparative History of Health Care Problems and Solutions in the United States and France:

The French share Americans’ distaste for restrictions on patient choice and they insist on autonomous private practitioners rather than a British-style national health service, which the French dismiss as “socialized medicine.” . . . French legislators also overcame insurance industry resistance by permitting the nation’s already existing insurers to administer its new healthcare funds. Private health insurers are also central to the system as supplemental insurers who cover patient expenses that are not paid for by Sécurité Sociale. Indeed, nearly 90 percent of the French population possesses such coverage, making France home to a booming private health insurance market.

Let’s just say this doesn’t sound like totalitarianism to me.

Now, if Edwards really meant mandatory preventive care for everyone, sure, that is a big change and worth debating. But anyone who’s panicking about it might also want to worry about this bottom-line demand from the former Senator: “Does your plan cover every single American?”

Captured Product Safety Commission

nord.jpgAbout a year ago I heard a radio story about a new technology called SawStop, which is designed to prevent table saw injuries. Every year table saws cause “over 60,000 injuries, over 3,000 amputations, and $2 billion in injury-related costs.” SawStop petitioned the Consumer Products Safety Commission to issue new rules to encourage manufacturers to increase the safety of their saws. After years of lobbying, SawStop appeared to get the CPSC to agree…but then its chairman resigned:

[T]he CPSC staff recommended the petition be granted. On July 11, the commission voted, 2 to 1, to start the process of making a new rule, a job that can take years. [Sawstop’s founder and attorney] said they felt vindicated, although the rejoicing ended four days later when Stratton resigned from the agency. One of the remaining commissioners, Nancy A. Nord[pictured at right], wanted to defer action on the petition and instead look at voluntary efforts being made by the industry. . . . Julie Vallese , CPSC spokeswoman, said the saw-safety standard idea isn’t dead but that the agency’s “decision-making procedures” don’t allow the rulemaking to advance with what amounts to a deadlocked commission.

I was surprised by that story, but apparently gridlock and apathy are par for the course at the agency. For example, it has protected ATV manufacturers from regulation, despite the fact that in 2004 “44,000 children riding all terrain vehicles were injured . . . nearly 150 of them fatally.” Here’s one insider’s account of that decision:

[At a hearing on the matter,] John Gibson Mullan, the agency’s director of compliance and a former lawyer for the A.T.V. industry . . . [said that the] current system of warning labels and other voluntary safety standards was working, he said. “We would need to be very careful about making any changes.” Robin L. Ingle, then the agency’s hazard statistician and A.T.V. injury expert, was dumbfounded. Her months of research did not support Mr. Mullan’s analysis. Yet she would not get to offer a rebuttal. “He had hijacked the presentation,” [she said].

A bit more commentary below the fold. . . .

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Flying the Stratified Skies

edna.jpgTravel has always served to remind us of the divisions our “classless society” tries so hard to downplay. Sam Walton may have driven an old truck, but you’d be hard-pressed to find most top executives or trust-funders flying in less-than-first-class digs. As the song in Chitty-Chitty Bang-Bang put it,

O the posh posh traveling life, the traveling life for me

Pardon the dust of the upper crust – fetch us a cup of tea

Port out, starboard home, posh with a capital P. . .

Admittedly, for those of us crushed into coach, there was always a happy flipside to the narrative: the profligates up front were paying so much more for their seats, effectively subsidizing the rest of us.

But that subsidy effect has been on the wane in recent years. And now wealthy fliers have found a new way to effectively assure that the rest of us are subsidizing them:

Corporate jets pay a fraction of the taxes and fees that commercial airliners do. The F.A.A. estimates that private planes, which include both corporate jets and weekend fliers, account for 16 percent of the air traffic control system’s overhead but contribute only 3 percent of the fees earmarked to run the system.

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The Air Transport Association has . . . created a Web-based ad campaign featuring a fictional traveler, Edna, complaining about the fee disparity while the computer screen displays waves of corporate jets filling the skies before and after sporting events like the Kentucky Derby and the Masters golf tournament.

It’s enough to wilt the mint in your julep. As the campy YouTube ad sloganeers, travelers like “wearing big wigs, not subsidizing them!” Edna (pictured above) wonders “Why should the rest of us pay ten times more using the same services?”

Fortunately, the FAA has heard her pain, and is planning on “sharply increasing the fuel tax for private jets and also hitting corporate fliers with extra charges to land at any of the country’s 30 most congested airports.”

Fear of Flying: Where are the Market Solutions?

Anyone who flies knows that the experience has been deteriorating for years. The problem isn’t just a lost glamor; basic necessities are getting jettisoned:

Since late December, we have heard of literally dozens of incidents in which passengers were stuck on parked airplanes, unable to get off for four, six and even 10 hours. Typically, food and water were scarce, and often, the toilets started backing up after a few hours. [One] flight attendant . . . said that when a plane is delayed or stuck for hours on the ground, it is the passengers’ responsibility not to eat or drink, to avoid overtaxing the toilets.

Great advice for diabetics. Anyway, after the JetBlue’s Valentine’s Day disaster, outraged passengers lobbied Capitol Hill for some guarantees of food, water, and reasonable responsiveness to stuck passengers. (They appear to have some chance of succeeding.) The industry and anti-regulation gurus responded that such rules would put too heavy a burden on an struggling industry.

My question is: has market competition for humane passenger conditions begun to emerge? Are airplanes competing on enforceable promises not to, say, expose trans-Atlantic passengers to sewage? Or is this an area where competition is simply unable to emerge, since no one is really going to pick through the (invariably one-sided) contractual terms applicable to a given flight?

I suppose I will be accused of trying to price the poor out of airflight, in order to preserve “Cadillac-level” service for the rich. Perhaps I’m just too risk-averse. But I predict more and more people would rather just stay home than even face a small chance of the types of indignities, delays, and rough treatment now becoming commonplace in the “friendly skies.”

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HIPAA-cracy

This morning, vindication! When a long New York Times investigative piece says exactly what you have been saying for a long time, it feels very good.

So it is with this morning’s thumbsucker [reg/$$ req’d] about the ridiculous overzealousness and misunderstanding of HIPAA by health care professionals. HIPAA is the Clinton-era law that was principally concerned with making health insurance portable, but has become better known for its privacy-protection requirements. (In fact, the statute largely delegated development of all the details of the privacy provisions to the Department of Health and Human Services, which engaged in a lengthy and torturous rulemaking process.) As recounted at length in the Times piece, many employees at hospitals, doctors’ offices, and insurance companies use the statute’s supposed requirements as a shield for bureaucratic inflexibility in releasing information, even to close family members of an incapacitated patient. I have had numerous encounters with just such ill-informed stubbornness myself, and I find it maddening. (You can only imagine some of the arguments I have had with telephone receptionists who blindly invoke HIPAA.)

In addition to the direct trouble it causes for patients and their family, I fear the continued misuse of HIPAA undermines support for all privacy regulation. This is the only direct contact many people will ever have with privacy law in action. Who could blame them if they conclude that legal privacy restrictions are for the birds? Disregard for patient privacy was widespread before HIPAA, and I have no doubt legal regulation was called for. There have been 27,778 complaints under the law. But those harms are less visible to most of us than the new harm of mindless overprotection.

What’s fascinating is that the excessive caution in response to HIPAA comes against a backdrop of extremely low risk of sanctions. Exclusive enforcement power lies with HHS — the law provides no private right of action. And HHS has never imposed any civil or criminal penalty (although there are three criminal cases ongoing at the moment, those situations are extreme outliers). What explains this risk aversion given the vanishingly small risk of any real penalty?

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The Admin Law Game

There’s a new kind of computer gaming being developed, and “fun” isn’t exactly the point:

[Games] created by Bogost’s development studio, Persuasive Games, invite us to be ruthlessly greedy, helplessly incompetent, and breathtakingly rude. The goal of Airport Security, for example, is to relieve infuriated passengers of prohibited items in accordance with continuously changing carry-on rules. In Bacteria Salad, players grow veggies for profit and try to avoid poisoning too many people. And in last year’s Disaffected!, we assume the role of a Kinko’s employee struggling to deliver print orders as lazy coworkers shuffle papers into the wrong stacks.

I wonder if they modeled the airport game on Dan’s action figures? Less bleak scenarios are also in the works.

These innovations remind me of the “game-like” aspects of administrative law: how do you navigate a labyrinthine agency to advance your client’s interests? The “game design” in Bacteria Salad has to include classic modalities in influencing human behavior: markets, common law, regulation, or norms. As Yochai Benkler notes, games themselves are also creating social relations: for the designer, “the interesting questions are, which approach will better foster creative autonomy, and create a more effective social network.”

The recent Washington Post stories on Dick Cheney’s influence on sub-cabinet level appointees also reminded me of “god mode” in games. You may think the rules of a given agency are set–and legally, they may well be. But the political aspect of administrative law means that an executive branch higher-up can get a lot done outside normal channels. Consider the case of Klamath river fish:

Law and science seemed to be on the side of the fish. Then the vice president stepped in. First Cheney looked for a way around the [Engdangered Species Act], aides said. Next he set in motion a process to challenge the science protecting the fish, according to a former Oregon congressman who lobbied for the farmers. Because of Cheney’s intervention, the government reversed itself and let the water flow in time to save the 2002 growing season, declaring that there was no threat to the fish. What followed was the largest fish kill the West had ever seen, with tens of thousands of salmon rotting on the banks of the Klamath River.

The story of admin is often the story of how politics, law, and science collide. The unpredictability of these “rock, scissors, paper” conflicts makes the subject matter all the more game-like.

Abizaid to Taguba: Stop Snitchin’

Law and order types have been upset by the “stop snitchin’” phenomenon in American inner cities for some time. But as Alexandra Napatoff has noted, the “urban criminal entrepreneurs” who claim “that friends don’t snitch on friends” may well be as much a product as an enemy of current law enforcement practices. Sherrilynn Ifill has also insightfully commented on the wider cultural trend to “stop whistleblowin’,” and has suggested some basic protections that need to be in place:

Whistleblowers, whether in urban communities or in the government, are more inclined to speak out if they have assurances of protection, if they feel that their actions will be supported and corroborated by other members of their community, and if they trust the people or organizations with whom they share their confidential information.

Given the following exchange between General Abizaid and General Taguba after the publication of the latter’s report on Abu Ghraib, let’s hope the Army becomes more interested in the issue:

A few weeks after his report became public, Taguba, who was still in Kuwait, was in the back seat of a Mercedes sedan with Abizaid. Abizaid’s driver and his interpreter, who also served as a bodyguard, were in front. Abizaid turned to Taguba and issued a quiet warning: “You and your report will be investigated.”

“I wasn’t angry about what he said but disappointed that he would say that to me,” Taguba said. “I’d been in the Army thirty-two years by then, and it was the first time that I thought I was in the Mafia.”

Seymour Hersh reports the Taguba story here.