Topic: Regulatory Studies

Grow That Government!

What does it take to make a state-level Republican policymaker work to grow the power of the Obama Administration? Not much! Washington Secretary of State Kim Wyman is a case in point.

In the wake of a shooting at a Macy’s in Mount Vernon, Washington, late last month, Secretary Wyman called for Washington State to comply with the national ID program run by the U.S. Department of Homeland Security under the REAL ID Act.

Secretary Wyman’s rationale for joining the national ID is that state authorities (including, for some reason, election officials) were unable to immediately identify the citizenship status of the shooter (who turned out to be a naturalized American citizen).

Washington State has hitherto declined to embrace REAL ID, and has been one of the states most actively pushing back against the federal program. Secretary Wyman argues that adopting REAL ID would allow the state to more quickly access federal databases and records and help prevent voter fraud in Washington State elections.

Whatever a state’s need for securing their vote, that’s no reason to join the national ID system. And REAL ID is a bloated, costly, and opaque federal program. Compliance would require Washington State to share its drivers’ personal data and copies of their digitally scanned documents with departments of motor vehicles across the country through a nationwide data sharing system. This database sharing is a two way street: Secretary Wyman might be able to access other jurisdiction’s databases, but any bad actor in a DMV from California to Connecticut could access Washington State’s.

In the wake of recent DMV hacking scandals in Louisiana and elsewhere, this concern is not overblown. Because of the hacking and identity fraud risks, and the lack of any real national security benefit, adoption of REAL ID would only make Washingtonians less safe.

More Regulation Won’t Make Housing Affordable

A new Housing Policy Toolkit from the White House admits that “local barriers to housing development have intensified,” which “has reduced the ability of many housing markets to respond to growing demand.” The toolkit, however, advocates tearing down only some of the barriers, and not necessarily the ones that will work to make housing more affordable.

“Sunbelt cities with more permeable boundaries have enjoyed outsized growth by allowing sprawl to meet their need for adequate housing supply,” says the toolkit. “Space constrained cities can achieve similar gains, however, by building up with infill.” Yet this ignores the fact that there are no cities in America that are “space constrained” except as a result of government constraints. Even cities in Hawaii and tiny Rhode Island have plenty of space around them–except that government planners and regulators won’t let that space be developed.

Instead of relaxing artificial constraints on horizontal development, the toolkit advocates imposing even tighter constraints on existing development in order to force denser housing. The tools the paper supports include taxing vacant land at high rates in order to force development; “enacting high-density and multifamily zoning,” meaning minimum density zoning; using density bonuses; and allowing accessory dwelling units. All of these things serve to increase the density of existing neighborhoods, which increases congestion and–if new infrastructure must be built to serve the increased density–urban-service costs.

Urban areas with regional growth constraints suffered a housing bubble in the mid-2000s and are seeing housing prices rise again, making housing unaffordable. Source: Federal Housing Finance Agency home price index, all transactions.

Transgender Rights Can Be Vindicated Without Constitution-Bending

The debate over transgender rights has risen in prominence in recent years, with the fight over access to public restrooms and locker rooms receiving particularly heavy public attention. The legal question at the heart of the first such lawsuit to reach the Supreme Court, however, is one not of civil rights law, but of administrative law: Should courts defer to agency interpretations of their own regulations, even when those interpretations constitute major, substantive changes to public policy via informal, non-binding pronouncements?

G.G. is a transgender high school student—minors are identified by letters in sensitive cases—who argues that Gloucester (Va.) High School’s policy disallowing him from using the facilities that correspond with his preferred gender identity violates federal law (Title IX of the Education Amendments) regarding sex discrimination in education. Upon being informed of G.G.’s conflict with the Gloucester County School Board, James A. Ferg-Cadima—a civil servant in the DOE’s Office of Civil Rights (OCR)—decided to get involved. He wrote a letter purporting to interpret the relevant regulation, stating that “[w]hen a school elects to separate or treat students differently on the basis of sex in [situations like this], a school generally must treat transgender students consistent with their gender identity.”

While the district court rejected this interpretation, the U.S. Court of Appeals for the Fourth Circuit deferred to the agency. The Gloucester County School Board now seeks Supreme Court review. Cato, along with three respected law professors (Jonathan Adler, Richard Epstein, and Michael McConnell), has filed an amicus brief supporting that petition.

We do so not because we necessarily oppose OCR’s position as a matter of policy—that’s a question for another day—but because we oppose its unconstitutional method of enacting that policy. OCR seeks to change federal law not through notice-and-comment rulemaking as required by the Administrative Procedure Act, but through an informal, unpublished letter written by a low-level bureaucrat.

Supreme Court precedent under Auer v. Robbins, 519 U.S. 452 (1997), says that courts must give such agency interpretations of their own regulations controlling deference. But deferring in this way incentivizes agencies to write vague regulations because they can be confident that they will then be free to reinterpret them at a later date without having to go through the trouble and expense of the rulemaking process—changing the law with no notice to regulated entities or the general public. Auer deference also allows executive agencies to consolidate both legislative and judicial power by effectively rewriting regulations beyond the scope delegated by Congress and then judging for themselves whether they’ve overstepped that authority.

We call on the Court to take this opportunity to overrule Auer and declare that the judiciary will no longer blindly accept self-serving agency interpretations, but make their own independent determinations based on a searching and reasoned reading of the regulations at issue. Should the Court choose not to overrule Auer, we suggest that—at minimum—it hold that only agency interpretations that have received the public scrutiny of notice-and-comment rulemaking merit judicial deference. 

The justices will consider whether to take the case of Gloucester County School Board v. G.G. later this fall.

How the FDA - And Other Agencies - Shape What You Read About Them

An important investigation by Charles Seife in Scientific American looks at how scientific newsmakers – in this case the U.S. Food and Drug Administration (FDA) – use “close-hold embargoes” to manipulate news coverage on breaking stories. Embargoes in themselves are a common enough practice in journalism; the special feature of a “close-hold” embargo is that it conditions a reporter’s access to a forthcoming story on not seeking comment from outside, that is to say independent or adversary, sources. 

The result of this kind of embargo, critics say, is to turn reporters into stenographers by ensuring that no expert outside perspective contrary to the newsmaker’s makes it into the crucial first round of coverage. And the FDA uses the technique to go further, according to Seife: it “cultivates a coterie of journalists whom it keeps in line with threats.” In fact, it even “deceives” disfavored major news organizations like Fox News “with half-truths to handicap them in their pursuit of a story.” 

The FDA has used this means of forestalling informed critical reaction on major, controversial regulations such as the recent “deeming” rule governing e-cigarettes and vaping. It also used the same technique in unveiling a major public health ad campaign – taking measures, as you might put it, to shape opinion about its shaping of opinion. An FDA official even upbraided a New York Times reporter who, unlike her colleagues, noted the close-hold embargo in her report. The agency resented its news-shaping methods becoming public. 

The whole article is a case study in how government-as-newsmaker - and by no means just the Food and Drug Administration - can get the coverage it wants.

Because of the ADA, Universities May Withdraw Free Online Course Content

On September 13, the University of California at Berkeley announced that it may have to take down online lecture and course content that it has offered free to the public: 

Despite the absence of clear regulatory guidance, we have attempted to maximize the accessibility of free, online content that we have made available to the public. Nevertheless, the Department of Justice has recently asserted that the University is in violation of the Americans with Disabilities Act because, in its view, not all of the free course and lecture content UC Berkeley makes available on certain online platforms is fully accessible to individuals with hearing, visual, or manual disabilities.

That Berkeley is not just imagining these legal dangers is illustrated by this clip from Tamar Lewin of the New York Times from February of last year: “Harvard and M.I.T. Are Sued Over Lack of Closed Captions.” 

I’ve been warning about this, to no apparent avail, for a long time. In a July post in this space, I noted the tag-team alliance of the U.S. Department of Justice, disabled-rights groups, and fee-seeking private lawyers in gearing up web-accessibility doctrine: when extreme positions are too politically unpalatable for DoJ to endorse directly, it supports private rights groups in their demands, and when a demand is too unpopular or impractical even for the rights groups, there’s nothing to stop the freelance lawyers from taking it up. 

Neither political party when in office has been willing to challenge the ADA, so there is every reason to believe this will continue. If you appreciate high-level course content from leading universities, but are not a paying enrolled student, you’d better enjoy it now while you can.   

Dose of Reality

From my new policy analysis (joint with Angela Dills and Sietse Goffard) on state marijuana legalizations:

In November 2012 voters in the states of Colorado and Washington approved ballot initiatives that legalized marijuana for recreational use. Two years later, Alaska and Oregon followed suit. As many as 11 other states may consider similar measures in November 2016, through either ballot initiative or legislative action. Supporters and opponents of such initiatives make numerous claims about state-level marijuana legalization.

Advocates think legalization reduces crime, raises tax revenue, lowers criminal justice expenditures, improves public health, bolsters traffic safety, and stimulates the economy. Critics argue that legalization spurs marijuana and other drug or alcohol use, increases crime, diminishes traffic safety, harms public health, and lowers teen educational achievement. Systematic evaluation of these claims, however, has been largely absent.

This paper assesses recent marijuana legalizations and related policies in Colorado, Washington, Oregon, and Alaska.

Our conclusion is that state marijuana legalizations have had minimal effect on marijuana use and related outcomes. We cannot rule out small effects of legalization, and insufficient time has elapsed since the four initial legalizations to allow strong inference. On the basis of available data, however, we find little support for the stronger claims made by either opponents or advocates of legalization. The absence of significant adverse consequences is especially striking given the sometimes dire predictions made by legalization opponents.

Did The U.S. Lose 2.4 Million Jobs from China Imports?

A major Wall Street Journal article claims, “A group of economists that includes Messrs. Hanson and Autor estimates that Chinese competition was responsible for 2.4 million jobs lost in the U.S. between 1999 and 2011.”  In a recent interview with the Minneapolis Fed, however, David Autor said, “That 2 million number is something of an upper bound, as we stress.” The central estimate was a 10% job loss which works out to 1.2 million jobs in 2011, rather than 2.4 million.  Since 2011, however, the U.S. added 600,000 manufacturing jobs – while imports from China rose by 21% – so both the job loss estimate and its alleged link to trade (rather than recession) need a second look.

“The China Shock,” by David Autor, David Dorn and Gordon Hanson examined the effect of manufactured imports from one country (China) on local U.S. labor markets. That is interesting and useful as far as it goes.  But a microeconomic model designed for local “commuting zones” cannot properly be extended to the entire national economy without employing a macroeconomic model.  

For one thing, the authors look only at one side of trade – imports – and only between two countries.  They ignore rising U.S. exports to China - including soaring U.S. service exports to China.  They are at best discussing one side of bilateral trade. And they fail to consider spillover effects of China’s soaring imports from other countries (such as Australia, Hong Kong and Canada) which were then able to use the extra income to buy more U.S. exports. 

Autor, Dorn and Hanson offer a seemingly rough estimate that “had import competition not grown after 1999” then there would have been 10% more U.S. manufacturing jobs in 2011.  In that hypothetical “if-then” sense, they suggest that “direct import competition [could] amount to 10 percent of the realized job loss” from 1999 to 2011.