Archives: July, 2011

Strip-Search Machines: A Loss Seeds the Win

Last week, the D.C. Circuit Court of Appeals rejected a Fourth Amendment challenge to the Transportation Security Administration’s strip-search machine policies, but it found that the TSA violated the Administrative Procedure Act in rolling them out. Too bad that the court arrived at the Fourth Amendment issues before they were ripe.

The bulk of the decision was devoted to the TSA’s law violation in creating strip-search machine policies without doing a notice-and-comment rulemaking. That’s the procedure federal agencies are required to carry out when Congress has delegated them legislative authority. Congress did delegate such authority when it told the Department of Homeland Security to develop technologies that detect nonmetallic, chemical, biological, and radiological weapons in 2004’s Intelligence Reform and Terrorism Prevention Act.

“[T]he TSA has advanced no justification for having failed to conduct a notice-and-comment rulemaking,” the court wrote, adding that it expects the agency “to act promptly on remand to cure the defect in its promulgation.”

The TSA will likely spout “constantly changing threat environment” boilerplate to try and argue that it can avoid notice and comment under the APA’s “good cause” exception. An agency can skip notice and comment “when the agency for good cause finds … that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”

But the threat environment is not “constantly changing” at the level of abstraction relevant for the strip-search machine policy—some people are out there who might try to get dangerous articles onto planes—and these machines will be in place for decades, if not permanently, under the TSA policy. They will affect the privacy and security of billions of air passenger journeys. Even if there were need for haste in rolling out the machines, nothing makes it uniquely difficult, or anything other than appropriate, for the TSA to engage in a public process to substantiate its actions.

When the TSA does a rulemaking, it will have to lay out its strip-search machine policies and—crucially—justify them. Notice-and-comment rules are subject to court review, and reversal if they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” That is a rather low standard, but it’s a higher standard than the agency has ever met before—none at all.

The TSA will have to exhibit how its risk management supports the installation and use of strip-search machines. How did the TSA do its asset characterization (summarizing the things it is protecting)? What are the vulnerabilities it assessed? How did it model threats and hazards (actors or things animated to do harm)? What are the likelihoods and consequences of various attacks? Risk assessment questions like these are all essential inputs into decisions about what to prioritize and how to respond.

Congress dictated detection of various harmful agents, a form of interdiction. (The other responses to risk are acceptance, prevention, and mitigation.) Given the array of choices available to it, how did the TSA select strip-search machines?

Crucially, how well do strip-search machines reach the risks identified in their risk assessment? This is a cost-benefit question. How much do strip-search machines cost to purchase, maintain, and operate? The costs denominated in dollars include money spent on buying the machines, configuring airports, and paying TSA salaries to operate the machines and process passengers. Such costs also include opportunity costs imposed on travelers when the time they spend at airports lengthens to accommodate extended security screening and variable delays. Yet more costs are denominated in lost privacy and dignity to the traveler. These are substantial, though hard to quantify.

Security benefits are also hard to quantify, but the agency should do so if it is to justify its policies as something better than random or intuitive reaction. DHS and TSA officials endlessly talk about risk and risk management, but they cannot honestly say they are doing risk management if they are not thinking these issues all the way through. I’ve offered a methodology for valuing security benefits, and security experts (as well as students) have analyzed the costs and benefits of homeland security programs. The TSA can do it too.

Watch in the rulemaking for the TSA to obfuscate, particularly in the area of threat, using claims to secrecy. “We can’t reveal what we know,” goes the argument. “You’ll have to accept our generalizations about the threat being ‘substantial,’ ‘ever-changing,’ and ‘growing.’” It’s an appeal to authority that works with much of the American public, but it is not one to which courts—a co-equal branch of the government—should so easily succumb.

If it sees it as necessary, the TSA should publish its methodology for assessing threats, then create a secret annex to the rulemaking record for court review containing the current state of threat under that methodology, and how the threat environment at the present time compares to threat over a relevant part of the recent past. A document that contains anecdotal evidence of threat is not a threat methodology. Only a way of thinking about threat that can be (and is) methodically applied over time is a methodology.

With this information in hand, a court would not only be ready to assess the TSA’s rule under the Administrative Procedure Act’s “arbitrary and capricious” standard. It would be ready to assess the reasonableness of the TSA’s strip-search machines and procedures under the Fourth Amendment.

Without that information, the D.C. Circuit plugged the strip-search machines into the strangely incoherent “administrative search” exception to the Fourth Amendment. In two pages of analysis (out of the opinion’s seventeen), the court found that strip-search machines are administrative “because the primary goal is not to determine whether any passenger has committed a crime but rather to protect the public from a terrorist attack.”

Come again?

It seems the court could have taken judicial notice that terrorist attacks are carried out through one or more criminal behaviors. People who have weapons or other dangerous articles at airport checkpoints are subject to arrest and prosecution. Crime control and public protection are one in the same, even in counterterrorism.

The “administrative search” exception to the Fourth Amendment seems to rest on the willingness of a court to abstract away the fact that individuals are prevented from proceeding where they would go (seized) while their persons, papers, and effects are rummaged (searched) for the purpose of discovering violations of the criminal laws. Earlier in the opinion, in fact, the court mocked the idea that the TSA might not “engage in ‘law enforcement, correctional, or intelligence activity.’” It surely does. This is not “administrative.” It’s criminal law enforcement.

Perhaps with a full record—a notice-and-comment rulemaking with a docket full of information and analysis—the D.C. Circuit and other courts will have the opportunity to revisit whether the TSA’s strip-search machine policies are constitutionally reasonble, or whether they’re unexamined reaction. Last week’s “loss” on the Fourth Amendment issue sets the stage for sounder thinking on the strip-search machine policy.

All of this would be obviated, of course, if airline security were restored to private hands.

The Debt Ceiling and the Balanced Budget Amendment

The Washington Post editorializes:

A balanced-budget amendment would deprive policymakers of the flexibility they need to address national security and economic emergencies.

A fair point. Statesmen should have the ability to “address national security and economic emergencies.” But the same day’s paper included this graphic on the growth of the national debt:

National Debt

Does this look like the record of policymakers making sensible decisions, running surpluses in good year and deficits when they have to “address national security and economic emergencies”? Of course not. Once Keynesianism gave policymakers permission to run deficits, they spent with abandon year after year. And that’s why it makes sense to impose rules on them, even rules that leave less flexibility than would be ideal if you had ideal statesmen. Indeed, the debt ceiling itself should be that kind of rule, one that limits the amount of debt policymakers can run up. But it has obviously failed.

We’ve become so used to these stunning, incomprehensible, unfathomable levels of deficits and debt — and to the once-rare concept of trillions of dollars — that we forget how new all this debt is. In 1980, after 190 years of federal spending, the national debt was “only” $1 trillion. Now, just 30 years later, it’s sailing past $14 trillion.

Historian John Steele Gordon points out how unnecessary our situation is:

There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions. But while the national debt in 1982 was 35% of GDP, after a quarter century of nearly uninterrupted economic growth and the end of the Cold War the debt-to-GDP ratio has more than doubled.

It is hard to escape the idea that this happened only because Democrats and Republicans alike never said no to any significant interest group. Despite a genuine economic emergency, the stimulus bill is more about dispensing goodies to Democratic interest groups than stimulating the economy. Even Sen. Charles Schumer (D., N.Y.) — no deficit hawk when his party is in the majority — called it “porky.”

Annual federal spending rose by a trillion dollars when Republicans controlled the government from 2001 to 2007. It has risen another trillion during the Bush-Obama response to the financial crisis. So spending every year is now twice what it was when Bill Clinton left office. Republicans and Democrats alike should be able to find wasteful, extravagant, and unnecessary programs to cut back or eliminate. They could find some of them here in this report by Chris Edwards.

In the Kentucky Resolutions, Thomas Jefferson wrote, “In questions of power, then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.” Just so. When it becomes clear that Congress as a body cannot be trusted with the management of the public fisc, then bind them down with the chains of the Constitution, even — or especially — chains that deny them the flexibility they have heretofore abused.

Did ‘Too-Big-To-Fail’ Cause the Financial Crisis?

Last week I askedif Dodd-Frank had ended “too-big-to-fail” (TBTF) that is the perception that some banks (or other companies) are simply too big to be allowed to fail, and thus, must be rescued by the government.   As this was an explicit purpose of the reform efforts, it seemed like a reasonable question to ask.  Apparently even raising questions about the wisdom of Chris Dodd and Barney Frank is enough to throw some people into a fit.

In offering what I assume is meant as a rebuttal to my suggestion that the debt markets seem to indicate that the largest banks are currently enjoying a significant funding advantage over the smallest banks, which could result from ”too-big-to-fail”, Matt Yglesias makes the quite accurate observation:  “The thesis that looking at the debt market was a good idea sounded compelling to me, but if you look at the chart it shows clearly that during the peak bubble years large banks didn’t have a funding advantage. The large bank funding advantage was a consequence of the crisis, not a cause of it” 

Matt stumbles onto a critical point here.  If we believe debt spreads can tell us something about “too-big-to-fail” then the debt markets during the housing crisis did not believe, or behave, as if the largest banks, as a whole, were “too-big-to-fail”.  In fact the largest banks didn’t start enjoying a funding advantage until after the assisted sale of Bear Stearns.  This TGTF funding advantage reached its peak in the Spring of 2009, after the bailouts of Fall 2008.  I think the fact that both Bear and Lehman counter-parties started a slow “run” weeks before either failed is also evidence that the markets didn’t see these institutions as TBTF.  I think its fair to say that what regulators were actually trying to do was stop market discipline, not replace a lack of it.  Also why would market participants try to insure against the failure of a company (often via a credit-default-swap) if they believe such a company was going to be bailed-out.  It would appear to me that market participants were, unlike regulators, taking actions to minimize the harm from the failure of a large bank. 

What does all this amount to?  It suggests to me that “too-big-to-fail” is ultimately a political/regulatory creation and not the result of the market.  Which also suggests it can only be stopped with a political solution (stopping the regulators from being able to do bailouts).  Again it seems as if one of the basic assumptions of Dodd-Frank, that TBTF drove the crisis, is false.  No wonder the Act itself has done so little to fix our financial markets.

Chicago Still Disrespects Second Amendment

That’s the upshot of a recent decision by the Seventh Circuit Court of Appeals in the case of Ezell v. City of Chicago.  This was a challenge to the new regulations the city enacted in the wake of McDonald v. City of Chicago case, which applied the Second Amendment to the states. 

In an attempt to circumvent the Supreme Court’s clear holding, Chicago’s ordinance first mandates that would-be gun owners receive training at a firing range but then prohibits firing ranges from operating in the city.  The court, in a striking opinion by Judge Diane Sykes (put her on your Supreme Court shortlist for the next Republican administration), tells the city to go back to the drawing board.

I won’t go into the details, but the court applied something greater than intermediate (but “not quite strict”) scrutiny and found that Chicago has not presented anything approaching a compelling reason for its restriction.  Here’s an analysis of the opinion by Josh Blackman and some follow-up commentary from Cato associate policy analyst Dave Kopel.

Gratifyingly, Judge Sykes cites the Pandora’s Box article that Josh and I published early last year in the run-up to the McDonald argument (see footnote 11 on page 31).  It’s quite an honor to appear in the same footnote as Randy Barnett, Steven Calabresi, Brannon Denning, Glenn Harlan Reynolds (the Instapundit), and many other noted scholars – including Akhil Amar, who in the wake of our Obamacare debate and bet may not appreciate it as much.

Congratulations to the intrepid Alan Gura (who also litigated McDonald and Heller v. District of Columbia) and to all the citizens of Chicago!

Protecting Consumers from Consumer Protection

It’s an article of faith that government regulation always delivers better outcomes. The new consumer protection agency now ramping up its involvement in financial markets may prove to be an agency that harms consumer interests in the long term. Mark Calabria discussed the new agency in today’s podcast.

Subscribe to the podcast here (RSS) and here (iTunes).

Even Imaginary Guns Save Lives

Because we care about individual liberty here, we think you should be able to engage in self-defense to protect that liberty (and your life, if it comes to that).  That includes the right to armed self-defense, of course, a right that becomes all the more important when encountering potential assailants who are stronger and/or more numerous than you.

Indeed you might recall from the legal fight to guarantee an individual right to keep and bear arms, that my colleague Tom Palmer once fended off some anti-gay marauders by just showing them that he had a gun.

And now we see that same story play itself out, except the would-be victim scared off a homophobic gang by merely maintaining the impression that he had a gun:

The situation could have gone either way: I could end up beaten or dead, or we could all go our separate ways.

All I could think to do was to get to my backpack and find my phone. As I fumbled for the phone, I heard one of them say, “Does he have a gun?”

So I kept my hand in my backpack, allowing them to wonder whether I was reaching for a gun. Then a couple of them started to run away, and the others soon followed. I got back on my bike and pedaled as fast as I could out of there.

When I got home, I began to reflect on what had happened, and more disturbingly what could have happened. I am in contact with the LGBT unit of the police department to file a report. But I’ve thought a lot about the turning point of the situation — the fact that one of them thought that I might have a gun. None of them said, “There’s a law against antigay hate crimes!” That wasn’t the deterrent. It was the possibility that I might have had a gun that saved my life Friday night.

It’s unfortunate that the people Mr. LaSalvia encountered are around – whatever their motivations – but would we be in a better world if people like him couldn’t imply the potential for armed self-defense?

Of course, in DC, Chicago, and many other places – which, after the recent Supreme Court rulings, must allow guns to be kept at home – it’s still illegal to carry a gun (open or concealed).  If the thugs Mr. LaSalvia ran into knew the local gun regulations (as many professional criminals do) and accurately gauged their target as a law-abiding citizen, they would have known that he was bluffing. 

Is that what gun-control proponents – many of whom I surmise strongly support gay and women’s rights – want?

(H/t: Lindsay Charles)