Topic: Regulatory Studies

How’s Our ADA Compliance? Dial 1-800-HIRE-SOTS

It seems that Old Dominion Freight Line, Inc., an interstate trucking company, doesn’t want to put drivers with a history of drinking problems behind the wheel. According to a press release issued last week by the federal Equal Employment Opportunity Commission (EEOC) (hat tip: Roger Clegg), that’s a violation of the drivers’ rights under the Americans With Disabilities Act:

[Per the EEOC’s suit] the driver at the Fort Smith location had worked for the company for five years without incident. In late June 2009, the employee reported to the company that he believed he had an alcohol problem. Under U.S. Department of Transportation regulations, the employer suspended the employee from his driving position and referred him for substance abuse counseling. However, the employer also informed the driver that the employer would never return him to a driving position, even upon the successful completion of a counseling program. …

Alcoholism is a recognized disability under the Americans With Disabilities Act (ADA), and disability discrimination violates this federal law. The EEOC said that the company violated both the ADA and the Americans With Disabilities Act Amendment Act of 2008 (ADAAA) by conditioning reassignment to non-driving positions on the enrollment in an alcohol treatment program. In addition, the EEOC argued that Old Dominion’s policy that bans any driver who self-reports alcohol abuse from ever driving again also violates the ADA.

Even well-run alcohol rehab programs are known for having high relapse rates, and Old Dominion would almost certainly face legal liability following a calamitous highway collision caused by a driver’s relapse. But according to the EEOC’s interpretation, requiring the driver to accept permanent reassignment to a less safety-sensitive position (let alone terminating him entirely) is also grounds for liability.

For years the ADA has provided legal muscle to employees terminated for alcohol problems — just the other day, for example, a Florida State University administrator dismissed after frictions with staff sued the university for not accommodating his alcohol abuse. But that’s just the academic setting, where many administrators can glide by in a bit of a haze for years without causing real problems. (UCLA’s Steve Bainbridge quips that the college official’s description of drinking as a “handicap” is off base: “it’s always come in handy for me.”) Are we really required to take chances with 18-wheelers on the highway?

Rachel Maddow’s Big Thoughts on Infrastructure

Is Rachel Maddow sure she wants the government to “think big,” as she says here standing in front of the Hoover Dam?

Maddow’s advertisement on MSNBC caught my eye because it captures the naïve liberal belief in the goodness of large government projects. Liberal pundits keep telling us that we need a giant boost in federal infrastructure spending to aid the recovery. But the pundits never seem to worry about the quality of government investments. And they seem blissfully unaware of the history of damage caused by governments that have thought big on infrastructure.

Hoover Dam was built by the U.S. Bureau of Reclamation, an agency with an appalling history of environmental damage and support of boondoggle projects. For most of the 20th century, the agency ran amok pouring concrete in every river system in the West, and in the process destroying wetlands and salmon fisheries. The government’s Corps of Engineers has a similar record of environmental damage and economic miscalculation on its big infrastructure projects.

It’s not just water infrastructure where “thinking big” by the government has been damaging. Thinking big led to the federal government’s disastrous high rise public housing projects in Chicago and elsewhere. Thinking big led to awful “urban redevelopment” projects that paved over city neighborhoods and replaced them with hideous Soviet-style office blocks.

I don’t want the federal government thinking big on infrastructure, and I doubt if Maddow would either if she knew more about the history. I encourage her to read the classic Cadillac Desert to get a better understanding of what government infrastructure spending on dams is all about. Then I would suggest she do her next MSNBC spot at the site of the Teton Dam in Idaho (see also this and this), which was an economic joke and a federal engineering disaster.

Lawyers and Their Licenses

What do the New York Times, the Brookings Institution, and the Cato Institute have in common?  Turns out we agree on deregulating the legal profession. 

From a Times editorial:  “Another step is to allow nonlawyers into the mix. The American Bar Association has insisted that only lawyers can provide legal services, but there are many things nonlawyers should be able to handle, like processing uncontested divorces. “

From a Brookings op-ed: “It would be better to deregulate the provision of legal services. This would lower prices for clients and lead to more jobs.”

From a Cato paper: “Every state except Arizona prohibits the unauthorized practice of law (UPL); a person must possess an attorney’s license to hold himself out as a lawyer. UPL prohibitions restrict the right to pursue a legitimate occupation and the right to contract with others. By imposing a costly barrier to entry, they distort the market for legal services. Consequently, consumers face higher prices and fewer choices.”

It’s unanimous.  Get going state lawmakers—deregulate the legal profession.

Don’t Nationalize the Past

Recent decades have seen the rise of a new “antiquities law” in which museums and private collectors have come under legal pressures to hand over (“repatriate”) ancient artifacts and archaeological finds to governments, Indian tribes and other officially constituted bodies, even when those artifacts have been in legitimate collector hands for 100 or more years with no hint of force or fraud. Some advocates frankly advance the view that government should entirely ban the private ownership of antiquities or limit it to authorized nonprofit institutions. The latest victim of the trend are numismatists, as the 1983 Convention on Cultural Property Implementation Act authorizes the federal government to restrict importation of some ancient coins based on the expressed wishes of countries that participate in the convention. A federal judge has just rejected a challenge to the law, which – as I argue in a recent op-ed in the Examiner – should not put an end to the controversy.

Paternalism and Parks

Or, as Timothy Egan titles it at the New York Times: “Nature Without the Nanny State.” After reporting on a higher level of deaths this year at Yosemite, and an increased level of warnings and lawsuits, Egan notes:

My experience, purely anecdotal, is that the more rangers try to bring the nanny state to public lands, the more careless, and dependent, people become.

That point might have broader application than national parks.

Free Speech? What’s Free Speech?

Internet site Gawker says that Ashton Kutcher’s editorship of Details magazine was “a brazenly self interested and highly misleading act of journalism.” He helped produce a special online version of the mag that featured tech companies he’s invested in without disclosing that fact.

Having disclosed it for him—the article is called “Ashton Kutcher Is a Massive Whore“—Gawker now reports on how federal officials are looking over their glasses at the television personality and entrepreneur.

“It’s certainly a possibility that a case like this could be investigated,” assistant Federal Trade Commission director Richard Cleland tells the Times of Kutcher’s Details special online issue, in which eight of 12 recommended products in one article were Kutcher investments. “If you’re out there promoting individual products that you have a specific investment in, it needs to be disclosed… If you have a significant economic investment that is not otherwise apparent, that may potentially affect the credibility of your endorsement, and I see that as a potential problem.” The FTC has made a priority out of online conflicts of interest.

It’s also possible Kutcher violated SEC rules. You’re not supposed to promote a company you partly own—say, in a magazine—if you know it’s soon to go public. And if a company’s shares trade on private secondary markets you must abide by federal rules on deceptive marketing, which a former SEC lawyer told the Times were “very broad… These rules apply any time there is a securities transaction.”

<sarcasm>You see, in the land of the free—where the government’s founding charter says it “shall make no law … abridging the freedom of speech”—you can’t just say any old stuff you want to in a magazine! Say things that help your business interests too much and you are obviously outside of what the quaint old Constitution says. The First Amendment is fuzzy on this. “[M]ake no law” might mean “make a law if you have a good reason.” Duh, Ashton! You’re pretty, but maybe not very smart, saying what you want in the United States of America.</sarcasm>

This episode itself illustrates why “make no law” works despite the fact that it allows sharp business practices. Gawker and other media outlets are actively curing any information deficit with plainly worded articles like “Ashton Kutcher Is a Massive Whore.” This is in aid of the caveat emptor rule, which works even better when people know they need to think for themselves and look for assistance from outlets like Gawker, of which there are an endless supply thanks to the Internet.

Caveat supplicantem if you think that the government is going to protect your interests as a consumer better than you can. Not even close. So there is no good reason for overturning the First Amendment here.

President’s Fealty to Antidumping Lobby Kills Jobs and Depresses Growth

Rhetorically, President Obama is a champion of industry—as long as it’s green. To put our money where his mouth is, the president has already devoted over $100 billion in direct subsidies and tax credits to promote investment in solar panel, wind harnessing, lithium ion battery, and other industries he deems crucial to “winning the future.” (See Economic Report of the President, 2011, P. 129, Box 6-2 “Clean Energy Investments in the Recovery Act” for a list of some of those subsidies.) Concerning those industries, the president said in his 2010 SOTU address:

Countries like China are moving even faster… I’m not going to settle for a situation where the United States comes in second place or third place or fourth place in what will be the most important economic engine of the future.

To be sure, I am opposed to industrial policy, which presumes that one person or a cabal of self-anointed soothsayers knows how the future will unfold. But the story I am about to share is, I think, instructive in describing endemic policy dissonance within this administration and speaks to what even the president’s staunchest supporters describe as half-heartedness and an incapacity or unwillingness to follow through. Some chalk it up to indifference, but it’s really an aversion to making choices that could offend potential supporters.

While the president talks up the solar panel industry and commits our resources to its development, other policies of his administration undermine its success and encourage offshoring of production and the jobs that go with it. Dow Corning is one of the world’s largest producers of silicones, which are the most crucial components of solar panel production. The foremost ingredient in these silicones is silicon metal, which costs nearly twice the world market price in the United States because of antidumping restrictions on imports of the raw material from China and Russia (two of the world’s largest suppliers). Under U.S. antidumping law, Dow Corning and all other consumers of silicon metal were forbidden from participating formally in the proceedings that lead to the imposition of the duties.

As I described in a recent Cato policy paper, this is more than just tough luck for a few companies. This is economic self-flagellation on a grand scale. The antidumping statute prohibits consideration of the impact of prospective duties on downstream industries or on the economy as a whole, yet policymakers—having been steamrolled by the pro-antidumping lobby—have given scant consideration to the idea that this is plainly stupid policy, particularly in a globally integrated economy characterized by transnational supply chains and cross-border investment. In such an environment, if one hopes the best for the country’s value-added industries, there should be no restrictions on raw material inputs ever (a policy being embraced by other governments around the world).

Alas, the silicon metal restrictions constitute a big problem for Dow Corning and other industrial consumers of silicon metal, but a bigger problem for the economy. To compete with producers of silicones—the solar panel industries—in Europe, Japan, Canada, and China, Dow Corning is forced to consider moving production abroad so that it is not at such a large cost disadvantage from the outset. As Dow Corning officials put it in a very informative letter:

If Dow Corning were to move the production occurring within its Kentucky operations to any country outside the U.S., it would be more competitive by simply having access to the same global supply of raw materials as all other competitors.

Dow Corning could move offshore, a move it would prefer not to make, and probably recover the costs of the transition in short order. But doing so would reduce U.S. economic activity and destroy U.S. jobs, which would have a more lasting adverse impact. So, in an effort to avoid offshoring its operations—a move that one would think the administration would welcome—Dow Corning submitted an application to have some of its silicone production facilities in Kentucky designated as a Foreign Trade Subzone. The key policy objective of foreign trade zones, according to the former president of the National Association of Foreign Trade Zones is:

The optimization of economic development in the United States creating jobs, investment and value-added activity. The current regulations strike a balance that considers antidumping and countervailing duty petitioners, importers and U.S. manufacturers. Imported products that are made with components that may be dumped or subsidized are not subject to antidumping duty or countervailing duty. If these duties can be avoided by locating a factory in a foreign country, the Board should at least consider allowing it to happen here for export so that American workers can benefit. That is what the regulation achieves.

Basically, Dow Corning was proposing that to balance its need for access to world-priced silicon metal with the country’s need for economic activity and jobs, it would bring in silicon metal from foreign sources, including silicon metal from China and Russia, to be transformed into silicons in that subzone. Antidumping duties on silicon metals that were used to make silicones that were subsequently exported without first “entering the commerce of the United States” would be waived, while antidumping duties on silicon metals used to make silicones sold in the United States would be subject to the full payment of duties.

But during the period in which the FTZ application was pending, an army of professional antidumping law supporters—the Committee to Support U.S. Trade Laws (CSUSTL), the United Steelworkers Union, the Steel Manufacturers Association, Senator Charles Schumer (D-NY), and others—argued that granting the designation would serve only to circumvent the antidumping order, and that the well-being of the petitioner was all that mattered under the antidumping law.

After hearings, several comment periods, and deliberation the Foreign Trade Zones Board granted Dow Corning’s FTZ request, but “subject to a restriction prohibiting the admission of foreign status silicon metal subject to an antidumping or countervailing duty order,” thereby negating the entire purpose of the application and effectively daring Dow Corning to shut down its Kentucky operations and move abroad. That decision was signed by the acting assistant secretary for import administration—the same person charged with overseeing the Commerce Department’s notoriously pro-petitioner, antidumping regime, and, for the record, a person who answers to President Obama.

Did the president know what was at stake and look the other way? Or did he not even know? Neither answer reflects particularly well on a man claiming to have a plan for job creation and economic growth.