Topic: Regulatory Studies

Raisin Farmers Have Constitutional Rights Too

By
Ilya Shapiro

Long-time California raisin farmers Marvin and Laura Horne have been forced to experience firsthand the costs that America’s regulatory state imposes on entrepreneurs, especially innovative members of the agriculture industry. 

No longer do farmers enjoy the ancient right to sell their produce and enjoy the fruits of their labor.  Indeed, Horne v. U.S. Dept. of Agriculture exemplifies the extent to which all property and business owners are made to suffer a needless, Rube Goldberg-style litigation process to vindicate their constitutional rights.  

In this case, the USDA imposed on the Hornes a “marketing order” demanding that they turn over 47% of their crop without compensation.  The order—a much-criticized New Deal relic—forces raisin “handlers” to reserve a certain percentage of their crop “for the account” of the government-backed Raisin Administrative Committee, enabling the government to control the supply and price of raisins on the market.  The RAC then either sells the raisins or simply gives them away to noncompetitive markets—such as federal agencies, charities, and foreign governments—with the proceeds going toward the RAC’s administration costs.  

Believing that they, as raisin “producers,” were exempt, the Hornes failed to set aside the requisite tribute during the 2002-2003 and 2003-2004 growing seasons.  The USDA disagreed with the Hornes’ interpretation of the Agricultural Marketing Agreement Act of 1937 and brought an enforcement action, seeking $438,843.53 (the approximate market value of the raisins that the Hornes allegedly owe), $202,600 in civil penalties, and $8,783.39 in unpaid assessments.  After losing in that administrative review, the Hornes brought their case to federal court, arguing that the marketing order and associated fines violated the Fifth Amendment’s Takings Clause.  

After litigating the matter in both district and appellate court, the government—for the first time—alleged that the Hornes’ takings claim would not be ripe for judicial review until after the Hornes terminated the present dispute, paid the money owed, and then filed a separate suit in the Court of Federal Claims.  The U.S. Court of Appeals for the Ninth Circuit proved receptive to the government’s reversal.  Relying on Williamson County v. Hamilton Bank (1985)—the Supreme Court case that first imposed ripeness conditions on takings claims—the court ruled in a revised opinion that the Tucker Act (which relates to federal waivers of sovereign immunity) divested federal courts of jurisdiction over all takings claims until the property owner unsuccessfully sought compensation in the Court of Federal Claims.  In conflict with five other circuit courts and a Supreme Court plurality, the Ninth Circuit also concluded that the Tucker Act offered no exception for those claims challenging a taking of money, nor for those claims raised as a defense to a government-initiated action.  

The ruling defies both law and common sense.  It stretches the Supreme Court’s ripeness rule beyond its moorings and it forces property owners to engage in utterly pointless, inefficient, and burdensome activities just to recover what should never have been taken in the first place.  Having filed an amicus brief that supported the Hornes’ successful petition for Supreme Court review, Cato has again joined the National Federation of Independent Business, Center for Constitutional Jurisprudence, and Reason Foundation on a new brief that urges the Court to affirm its plurality decision in Eastern Enterprises v. Apfel (1998), which held that an unjustified monetary order is inherently a taking without just compensation.  Any ruling to the contrary imposes a pointless burden on property owners, particularly when the government initiated the original proceeding.  

We argue that the Ninth Circuit’s overbroad reading of Williamson County stretches the ripeness doctrine beyond any sensible reading; it allows the government to initiate a claim and then block an important constitutional defense on the fallacious notion that it has been brought prematurely.  We advocate a rule that is more compatible with the history and text of the Fifth Amendment—that the most natural reading of the Takings Clause demands that compensation be offered as a prerequisite to government action.  Indeed, from the time of Magna Carta, just compensation has been required before property was seized. 

Moreover, just as the Court wouldn’t permit the government to seize property without some prior “due process of law,” it shouldn’t permit the government to seize property without prior “just compensation.”  The Court has no reason to treat takings claims with less deference than rights anchored in other constitutional provisions.

Horne will be argued at the Supreme Court on March 20.

Topics: 
Law and Civil Liberties, Regulatory Studies

Guns in the Capital City

By
Tim Lynch

During his news conference yesterday, President Obama said he was interested in more firearms research and warned that those who opposed his legislative agenda might try to “gin up fear.”  Those are interesting claims.  Let’s take a brief look at some recent history here in the District of Columbia.

In 2007, when a federal appellate court ruled that DC’s strict gun control laws were unconstitutional, then-Mayor Adrian Fenty told reporters he was “outraged.”  The idea that DC residents could keep a gun in their home for self-defense, he feared, would bring more crime and violence.  Mayor Fenty and the city’s lawyers appealed the Heller case to the Supreme Court, but lost.

It’s been several years since that landmark legal battle – so what happened?  

In yesterday’s Wall Street Journal, a former DC prosecutor wrote:

Since the gun ban was struck down, murders in the District have steadily gone down, from 186 in 2008 to 88 in 2012, the lowest number since the law was enacted in 1976. The decline resulted from a variety of factors, but losing the gun ban certainly did not produce the rise in murders that many might have expected. The urge to drastically restrict firearms after mass murders like those at Sandy Hook Elementary School last month and in Aurora, Colo., in July, is understandable. In effect, many people would like to apply the District’s legal philosophy on firearms to the entire nation. Based on what happened in Washington, I think that would be a mistake. Any sense of safety and security would be a false one.

Topics: 
Government and Politics, Law and Civil Liberties, Regulatory Studies

A Constrained Gun Control Agenda

By
Caleb O. Brown

We didn’t get the “Andrew Shepherd moment,” a neat parallel between Obama’s gun-control newser and Michael Douglas in The American President confidently declaring that he’s going to “get the guns.” That the faux President made that pledge just moments after confidently affirming his membership in the ACLU (!) shows just how much the Second Amendment debate has changed since the Heller decision in 2010.

The President’s proposed gun restrictions show some recongition that his agenda is constrained by the Constitution. Tim Lynch and I discuss President Obama’s gun control agenda in this short video:

More analysis from Ilya Shapiro here. Audio-only version of the above video available here.

Topics: 
Law and Civil Liberties, Regulatory Studies

Obama’s Executive Actions on Guns Better Than His Legislative Proposals

By
Ilya Shapiro

We’re all still digesting what it is the White House’s plan on gun policy is, but here’s my initial assessment, not having gone through what technical language is available.

President Obama’s 23 executive actions generally take positive steps towards stopping gun violence – such as improving the background check system and increasing enforcement of gun crime – though I have federalism or privacy concerns about a few of them.

His legislative proposals, however – banning “assault weapons” and restricting magazines to 10 rounds – are feel-good measures that fail to abide by the principle that should guide any lawmaking in this area: keeping guns out of the hands of those who would do ill while protecting law-abiding citizens’ constitutional rights to armed self-defense.  The guns that the Newtown shooter used, for example, complied with Connecticut’s extremely strict “assault weapon” ban and, in any event, the vast majority of murders are committed with handguns.

On both sets of actions, the devil will be in the details:  How will the relevant executive branch officials and agencies implement the new actions?  Will the proposed “assault weapon” restrictions ban ordinary rifles that simply come with a pistol grip or other cosmetic feature (like the New York law that Gov. Cuomo signed earlier in the week)?  And that’s before we even get to the feasibility of getting anything through Congress or whether the president is willing to negotiate to get at least some of what he wants.

Finally, this national action isn’t the end of the story: our constitutional structure leaves to states most of the power to regulate in this area.  On that score, and befitting a federal system meant to reflect different political preferences, states have been moving in different directions – from allowing concealed-carry to increasing tort liability to posting armed guards in schools.  So long as states and local authorities don’t violate individual Second Amendment rights, the federal government ought to encourage that kind of policy innovation.

See also Tim Lynch’s podcast on Obama’s gun control agenda.

Topics: 
Law and Civil Liberties, Regulatory Studies

REAL ID—A Quarter of a Billion Dollars Gone

By
Jim Harper

In an effort to show progress with implementation of our national ID law, the Department of Homeland Security issued a press release just ahead of Christmas reporting that thirteen states had “met the standards of the REAL ID Act of 2005.” Their compliance is not actually compliance, though. Read on…

Next Tuesday, another ‘deadline’ for REAL ID compliance arrives. Due to widespread public opposition, the majority of states and their people are not complying with the national ID mandate. Many states “have not provided sufficient information, at this time,” the DHS release says. I think that’s bureaucratese for: “They’re ignoring REAL ID.” But it doesn’t matter. The states ignoring REAL ID have been granted deferments. I’ve been looking for the Federal Register notice making this deadline extension official so I can put it next to the deadline extension from March 9, 2007, and the one from January 29, 2008, and the one from December 28, 2009, and the one from March 7, 2011.

The states that have tripped over themselves to follow this federal mandate should feel slightly burned. They’re no better off than the states that did nothing. And states need never comply.

We all know by know that the federal government will never use the lever that REAL ID gave them to “force” compliance on the states. The law says that the federal government can refuse IDs from states that aren’t in compliance. Basically, that means TSA would send most American travelers to secondary search. But that means that the federal government—not the states—would be blamed for travel nightmares (even worse than we already experience) all over the country. Deadline extension after deadline extension after deferment make clear that the federal government is not going to hold up air travelers because of REAL ID.

Now, the states that DHS says are complying aren’t really complying. You see, DHS long ago retreated from the requirements of REAL ID and established a set of “material compliance benchmarks.” These are 18 steps that bring one closer to REAL ID compliance, but they are not REAL ID compliance. And many of them are things that states were doing anyway. So, to the extent DHS is trumpeting progress, it’s a rooster taking credit for the sunrise.

Nonetheless, REAL ID ‘progress’ is the stitching together of a system to track and control us through our nationally uniform identity cards. It’s the system that will be used to control our access to work, to housing, to medical care and medicine, to guns, to credit and financial services, and much more. Big government, thy administrative tool is national ID.

The DHS release is a little more muted about the $263 million dollars it has spent or distributed on REAL ID so far—a quarter of a billion dollars toward a national ID system nobody wants. The continued spending is probably what keeps a small coterie of DMV bureaucrats and allied groups pushing for a national ID.

These national ID advocates will be well-represented at a Heritage Foundation event on REAL ID January 28th. Heritage is bringing in a Department of Motor Vehicle bureaucrat from Connecticut, a representative of a small national ID advocacy group, and the co-author of a recent Government Accountability Office update on REAL ID. I’ll hope to learn—as I’ve never been able to do before—how the national ID program would increase our security more than it would cost us in dollars and privacy—a quarter billion dollars, so far, and still counting.

Topics: 
Government and Politics, Law and Civil Liberties, Regulatory Studies, Telecom, Internet & Information Policy

Rum Subsidies Included in Fiscal Cliff Pork

By
K. William Watson

Among the various provisions in the recent fiscal cliff deal was a two-year extension of the rum cover-over program that sends federal revenue from rum excises to the governments of Puerto Rico and the U.S. Virgin Islands.  The program was originally designed to provide development aid to these U.S. territories, but in recent years it has become a tool of industrial policy and corporate welfare. 

I wrote about the program back in May last year: 

As it does with all distilled spirits, the federal government charges an excise tax of $13.50 per proof gallon of rum sold in the United States. This equates to roughly $2 per bottle. Under the cover-over program, almost all of that money is directly granted to the U.S. Virgin Islands and the Commonwealth of Puerto Rico using a complex formula so that each receives a share of the money based on how much rum it produces relative to the other. The tax is collected from sales of all rum imported to the mainland, even from other countries.

In 2009 the U.S. Virgin Islands figured out how to increase its haul under the program by luring Captain Morgan maker Diageo to relocate its production facility there from Puerto Rico with a promise to share the loot.  Diageo now has a 30 year deal to produce rum in the Virgin Islands backed by subsidies that cover almost the entire cost of production. 

The use of the funds this way and the program’s extension have two major consequences.

First, the ensuing rum war between U.S. Virgin Islands and Puerto Rico to secure a larger portion of the cover over funds has crippled the ability of producers in other Caribbean island nations to compete in the global rum market.  The potential for an embarrassing WTO challenge grows greater now that the program has been extended.

Second, Diageo now has a strong incentive to lobby Congress to keep the program in place.  As the invaluable Tim Carney reports today in the Washington Examiner, Diageo hired ex-senators Trent Lott and John Breaux to lobby their former colleagues on the issue.  The recent extension is merely a sign of more to come.

The program is worth about $450 million per year to the governments of these Caribbean territories.  Giving a slice of that to rum producers brings in the lobbying power to keep the program in place, even as it drastically distorts the rum market at the expense of everyone else.

Topics: 
Regulatory Studies, Tax and Budget Policy, Trade and Immigration

On Digital Privacy, Congress’ Offer Is This: Nothing

By
Julian Sanchez

It had the makings of a shockingly reasonable legislative bargain: Two outdated federal privacy statutes would be reformed together, removing some unnecessarily stringent restrictions on sharing video records while finally imposing a clear warrant requirement for government searches of e-mail and other private files stored in the “cloud.” Then Congress, perhaps in homage to Darth Vader, decided to alter the deal: A bill weakening the Video Privacy Protection Act of 1988 has been sent to the president for his signature, but without the corresponding badly-needed reforms to the Electronic Communications Privacy Act of 1986.

On the merits, the changes to the Video Privacy Protection Act actually make sense. Passed in the wake of Robert Bork’s unsuccessful Supreme Court confirmation hearings, during which a newspaper published a list of videos rented by the nominee, the VPPA barred any disclosure of video rental records without the explicit and specific consent of the customer on each and every occasion. That seemed reasonable enough at the time, but has proved an annoyance to video streaming services like Netflix and Hulu, which would like to make it easy for users to automatically post the movies and TV shows they’ve watched to social media services like Twitter or Facebook without having to click an extra “I consent” box every time—something that’s not required when users similarly share the music they’re listening to on services like Spotify or Pandora. So those companies wanted to let users give up-front, blanket consent for automatic sharing of videos.

Only the most hardcore privacy watchdogs had a serious substantive problem with such a change, but many nevertheless disliked the idea of diluting one of the stronger privacy statutes on the books when, in so many other areas, changing technologies had rendered existing privacy protections far too weak. Perhaps the most glaring example of this was the Electronic Communications Privacy Act, which established a confusing crazy-quilt of standards for government searches of remotely stored e-mail and other files, often allowing them to be obtained without a search warrant—standards that several appeals courts have already held to fall short of what the Fourth Amendment requires.

So Sen. Pat Leahy (D-VT) had proposed an eminently logical compromise: Bundle together updates to the two statutes, easing the excessively stringent privacy rules for video records while simultaneously requiring the government to obtain a probable cause search warrant in order to look through a person’s e-mail and cloud-stored files, just as they must when they search a personal computer or wiretap a phone conversation. The bundling ensured that privacy advocates—even the hardcore ones who disapproved of the change to the video privacy law—wouldn’t raise too much fuss about it. Few expected Leahy’s package, which had been approved by the Senate Judiciary Committee, to be acted on until the next session of Congress.

Then came the Vader move: The House of Representatives passed its own bill amending the VPPA, but without the provisions enhancing protections for e-mail, and that legislation was quickly approved by the House. Again, this is not a bad thing in itself. But it’s a disturbing sign that, as technology changes, Congress is willing to water down privacy protections that have been rendered unnecessary or overly restrictive, but not to strengthen them even when they’ve clearly fallen badly out of sync with the way Americans communicate in the 21st century.

Topics: 
Government and Politics, Law and Civil Liberties, Regulatory Studies, Telecom, Internet & Information Policy

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