Archive for March, 2011
Courts Must Review Agency Actions
There is a growing trend among federal agencies and courts to incrementally expand the government’s enforcement power by adopting statutory interpretations that go beyond their plain meaning and intent. National Corn Growers v. EPA exemplifies such government overreach.
Under the Federal Food, Drug, and Cosmetic Act, the Environmental Protection Agency establishes limits, or “tolerances,” for pesticide residues on food. If a pesticide residue exceeds an established tolerance it is deemed “unsafe” and the product is removed from interstate commerce—effectively banned from use. The EPA must modify or revoke a tolerance it deems unsafe through a “notice and comment” process. Both the FFDCA and its implementing regulations require the EPA to hold a public evidentiary hearing if any objections raise a “material issue of fact.”
In National Corn Growers, the pesticide carbofuran was registered for use in 1969 by the EPA and has been safely used for pest control for a variety of crops for more than 40 years. Recently, however, the EPA overlooked “material issues of fact” raised by the National Corn Growers and revoked all tolerances for carbofuran without a public hearing. In a decision that gives sole discretion to the EPA to determine the fate of hundreds of thousands of products already in the market, the D.C. Circuit held that courts must defer to the agency. The court declared that differences in scientific studies are insufficient for judicial review, essentially writing “material issue of fact” out of the Act.
Cato joined the Pacific Legal Foundation in filing a brief arguing that Supreme Court review is warranted because the D.C. Circuit undermined the legal requirement for a public hearing under the FFDCA. Moreover, because this case sets a precedent for other regulated products and allows government agencies to unlawfully deprive citizens of their property without adequate access to court review, we argue that the Supreme Court should take this case to: (1) establish the proper standard for review under the FFDCA for a public hearing; (2) curtail abuse of the administrative process; and (3) establish that complete deference is not compatible with a summary-judgment-type proceeding.
The right not to be deprived of one’s property without fair process is a bedrock principle of American jurisprudence. The Court should reinforce this principle and ensure that statutory safeguards intended to protect this right are not ignored.
Thanks to Cato legal associate Caitlyn McCarthy for her help with the brief and with this summary.
Libya: War Without Policy
No clear plan yet guides the foreign military intervention likely to start in Libya this weekend or shortly thereafter. There is instead a coalition forming in service of a hazy United Nations authorization of a tactic: a no-fly zone or air strikes on military targets. The goal is vague.
According to the French, the British, the U.S. secretary of state, and the wishes of many of people we are trying to help, the aim is to overthrow Qaddafi and establish something resembling a representative democracy. According to the U.N. Security Council resolution passed last night, the U.S. president, and the Arab League, we are fighting to protect Libyan civilians.
If our goal is simply to minimize civilian suffering, it is not clear that we should take the rebel side, rather than hastening Qaddafi’s victory. Even a repressive autocracy will likely kill fewer civilians than protracted civil war. Every sentient observer understands, however, that we are taking sides in this war, not simply enforcing peace.
The tactic that all participants now agree on — a no-fly zone — does little to serve either goal. With the Libyan regime’s air force suppressed, the rebels will still likely lack the material and organization to hold the territory they now control, let alone conquer Tripoli. The danger to civilians comes chiefly from ground forces. If, however, air power is used for close air support, it might tip the balance of power in the rebel’s favor. If air strikes can target Qaddafi’s units as they drive east, the strikes can protect many civilians.
The vagueness on policy goals may be the price of gaining international consensus. Plans and tactics may clarify at tomorrow’s war summit in Paris. If they do not, our leaders will be guilty of military malpractice. Maybe that will not matter because Qaddafi’s regime will simply capitulate. But without goals that match our tactics, the intervention in Libya is likely to fail.
Libya: What Now?
The UN Security Council has passed a resolution demanding a cease-fire and authorizing a no-fly zone over eastern Libya by a 10-0 vote with five abstentions, all coming from relatively large, important countries (Russia, China, Germany, Brazil and India). The Libyan government, unsurprisingly, has immediately announced a cease-fire in acquiescence to the UNSC resolution. Equally unsurprisingly, the Libyan opposition has stated that the Qaddafi forces did not, in fact, cease firing.
We are now siding—to some degree—with the rebels. (Those skeptical on this point may wish to re-read their Richard Betts.) For all their chest-puffing and stern pronouncements, I doubt that David Cameron, Nicolas Sarkozy, Amr Moussa, or Anders-Fogh Rasmussen is going to figure out what our ultimate military objective is, where our red lines are, and, most importantly, what sorts of outcomes we are willing to tolerate. If the country becomes de facto partitioned, will we (or NATO/the Arab League/the UN) in turn recognize two or three countries birthed from the former Libya? Do we have reason to believe that something resembling “stability” is going to follow whatever result emerges from the military action? If not, do we intend to engage in stability operations in Libya? If so, who pays and fights?
President Obama, in his speech today, says that the UN resolution centers on “an explicit commitment to pursue all necessary measures to stop the killing, to include the enforcement of a no-fly zone over Libya.” But then he also says that he wants “to be clear about what we will not be doing: the United States is not going to be deploying ground troops into Libya.” Logically, then, if the measures authorized by the UNSC resolution fail to stop the killing, what next? Either you’re moving away from your demand that the killing stop—imagine the Washington Post editorials!—or else you’re looking at introducing ground troops.
There are many more questions like this that could be asked. I certainly hope the administration and the Greek chorus of Beltway interventionists has thought a lot harder about these questions in this instance than they generally do. But I would not bet on it.
(Cross-posted from The Skeptics at The National Interest.)
This Week in Government Failure
Over at Downsizing the Federal Government, we focused on the following issues this week:
- Another good example of how well-intentioned policies invariably become corrupted as Washington insiders and well-connected special interests game the system to their advantage.
- Spending growth capped at 3 percent versus Sen. Corker’s plan to cap spending at a decreasing percentage of GDP.
- With all the subsidies we have for mortgage finance, are mortgages actually cheaper in the United States?
- Members of Congress have introduced legislation to bail out the U.S. Postal Service.
- Local government officials really like a free lunch, particularly when that lunch is paid for by federal taxpayers.
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Local Officials Fight for ‘Free Lunch’
Everybody likes a free lunch. Local government officials really like a free lunch, particularly when that lunch is paid for by federal taxpayers. Spend other people’s money on projects that you don’t have to tax your constituents to pay for? What a deal!
The U.S. Conference of Mayors, the National League of Cities and the National Association of Counties aren’t happy that House Republicans want to trim funding for the Community Development Block Grant program. The CDBG program in particular is cherished by local officials because it affords them wide latitude on how they can spend the money.
The local government lobbies hired IHS Global Insight, a prominent consulting firm, to prepare a study on the economic impact of the CDGB program. The preliminary report — and this is truly shocking — finds that the CDBG program has had a positive economic impact on the 10 cities it surveyed. That’s because it appears to have only considered one side of the coin: the benefits (jobs, economic output, etc.) that resulted from the money being spent in a particular geographic area.
There’s another side to the coin: the cost. While the lunch might be free for local officials, it came at a cost to the country because the resources to pay for these projects had to be taxed or borrowed out of the economy. Those costs have a negative ripple effect on the economy, just as proponents will argue that the benefits have a positive ripple effect.
A Cato essay on community development programs explains that the cost of federal subsidies to local government outweigh the benefits. Ineffectiveness, waste and abuse, politicization, and excessive bureaucracy are just a few of the problems. Most importantly, these programs represent a morally dubious redistribution of resources from federal taxpayers to parochial interests. If the projects were as beneficial to the communities as the IHS report says, then the burden of paying for them should have been borne by local taxpayers.
Fannie, Freddie: Late to the Party?
Debates over the causes of the financial crisis sometimes center on whether Fannie Mae and Freddie Mac were “late to the party” in terms of subprime lending. As it relates to the recent crisis, I address this question elsewhere.
The GSEs and their apologists do claim to have been big contributors to one party: the expansion of homeownership in the United States. Yet the facts suggest otherwise.
The chart below compares the GSE’s market-share, in terms of home mortgage lending (as reported in the Fed’s Flow of Funds data), with the national homeownership rate (as reported in the Decennial Census).
Bush Was Not a Conservative
There’s an interesting debate in the blogosphere about whether President George W. Bush was a conservative. Here’s a good summary of the discussion, along with lots of links. (I especially like this analysis since it cites my work.)
I’ve already explained that Bush was a statist rather than a conservative, and you can find additional commentary from me here, here, here, and here.
Simply stated, any president who doubles the burden of federal spending in just eight years is disqualified from being a conservative — unless the term is stripped of any meaning and conservatives no longer care about limited government and constitutional constraints on Washington.
But if you don’t want to read the blog posts I linked above, this chart should make clear that Bush was a big spender, not only when compared to Reagan, but also compared to Clinton. Moreover, we’re only looking at overall domestic spending, so this doesn’t include Iraq, Afghanistan, and other defense expenditures. And these are inflation-adjusted dollars, so we’re comparing apples to apples.
Obama’s Trip to Latin America
As Ted Carpenter notes below, President Obama is departing on an important trip to Latin America. The countries that he will visit exemplify the macroeconomic stability and advancement of democratic institutions now found in much of the region.
Brazil, by far the largest Latin American economy, has enjoyed almost a decade of sound growth and poverty reduction. Chile is the most developed country in the region thanks to decades of economic liberalization, a process that has also made it Latin America’s most mature democracy. And El Salvador is undergoing a delicate period in its transition to becoming a full-fledged democracy with its first left-of-center president since the end of the civil war in 1992.
In an era when most Latin American nations are moving in the right direction—albeit at different speeds, with some setbacks, and with notable exceptions—the United States can serve as a catalyst of change by contributing to more economic integration and the consolidation of the rule of law in the region.
Unfortunately, despite President Obama’s assurances that he’s interested in strengthening economic ties with Latin America, his administration is still delaying the ratification of two important free trade agreements with Colombia and Panama. President Obama also continues to support a failed war on drugs that significantly exacerbates violence and institutional frailty in the region, particularly in Mexico and Central America.
It’s good that President Obama’s trip will highlight significant progress in Latin America, but his administration’s policy actions still don’t match the U.S. goals of encouraging economic growth and sound institutional development in the region.
Obama’s Latin America Trip
President Obama’s trip to Latin America is likely to focus on economic topics, but two security issues deserve scrutiny during his stops in Brazil and El Salvador.
Washington’s diplomatic relationship with Brazil has become somewhat frosty, especially over the past year. U.S. leaders did not appreciate Brazil’s joint effort with Turkey to craft a compromise policy toward Iran’s nuclear program. The Obama administration regarded that diplomatic initiative as unhelpful freelancing. And when Brazil joined Turkey in voting against a UN Security Council resolution imposing stronger sanctions on Tehran, the administration’s resentment deepened. Obama should not only try to soothe tensions, he should shift Washington’s policy, express appreciation for Brazil’s innovative efforts to end the impasse on the Iranian nuclear issue, and consider whether the milder approach that the Turkish and Brazilian governments advocate has merit.
In El Salvador, worries about Mexico’s spreading drug-related violence into Central America are likely to come up. El Salvador and other Central American countries are seeking a bigger slice of Washington’s anti-drug aid in the multi-billion-dollar, multiyear Merida Initiative. President Obama should not only resist such blandishments, he should use the visit to announce a policy shift away from a strict prohibitionist strategy that has filled the coffers of the Mexican drug cartels and sowed so much violence in Mexico, and now increasingly in Central America as well. Prohibition didn’t work with alcohol and it’s not working any better with currently illegal drugs.
Friday Links
- What are Republicans doing to stop ObamaCare? Not much.
- Conflating the Taliban with al Qaeda isn’t helping our foreign policy dialogue.
- “Sitting in a Volt that would not start at the 2010 Detroit Auto Show, a GM engineer swore to me that the internal combustion engine in the machine only served as a generator, kicking in when the overnight-charged lithium-ion batteries began to run down.”
- The new issue of Regulation looks at price gouging, soda taxes, the Durbin Amendment, and more.
- Who should decide when we tap into strategic oil reserves: The president? Or market forces?
On the Interstate Shipment of Green Beer
Today being St. Patrick’s Day, it seems appropriate to revisit the unlikely juxtaposition of two of my favorite legal policy topics: alcohol and the Commerce Clause. (Listen to my podcast on the subject or read its transcript.) The point of all this is that alcohol is no different from any other commodity in that states cannot erect arbitrary regulations that privilege in-state interests (be they retailers, wholesalers, or producers) ahead of their out-of-state counterparts.
But St. Paddy’s Day is not the only reason the issue is topical. Last week, the Supreme Court declined to review the Fifth Circuit’s indefensible decision in Wine Country Gift Baskets.com v. Steen. It did so despite the Fifth Circuit’s upholding of a Texas law designed to protect Texas’s in-state liquor retailers from out-of-state competition, a holding that disregarded recent high-court precedent.
In Granholm v. Heald (2005), decided together with the Institute for Justice’s Swedenberg v. Kelly, the Supreme Court struck down a similar protectionist law. Both cases challenged laws that permitted in-state wine producers to sell directly to consumers while prohibiting similar sales from out-of-state producers. The Court held that, notwithstanding a provision in the 21st Amendment (which repealed prohibition) that allows states to regulate their own liquor industries, the Commerce Clause prohibits states from disrupting free trade by discriminating against out-of-state businesses in favor of in-state businesses. This interpretation of the Commerce Clause grew out of the common-sense understanding that, if left unchecked, state governments have strong incentives to protect in-state businesses (who are voters) at the expense of their (non-voting) out-of-state competitors. Without constitutional checks, such laws could eviscerate Congress’s constitutionally enumerated power to “regulate [make regular] commerce … among the several States.”
Nevertheless, the Fifth Circuit decided to limit Granholm to wine producers. As is evident by the name, however, the Wine Country Gift Baskets.com case concerns a wine retailer. Yet Granholm explicitly said that states “may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses.” It is dismaying that the Supreme Court didn’t care about the Fifth Circuit’s neglect of this language.
Granholm was an important blow against the heavily protectionist and cartelized liquor industry. As was documented in a pre-Granholm article in Cato’s Regulation magazine, the prohibition on direct shipment has been used to strangle small wineries as they struggle to access larger markets without having to go through the state-controlled distribution networks. Despite an explosion of wine-drinking and -making in this country in the last 30 years — with consumption increasing by nearly 50% between 1991-2001 and wineries quadrupling between 1974-2002 — the small winery still fights against an old-boy network of producers and distributors. In 2003, the top 30 wine companies still provided 90% of U.S. wine although they were less than 1% of the producers.
This is, of course, exactly how the top 30 wine companies want it.
Granholm dismantled some of this network. Unfortunately, Wine Country Gift Baskets.com will allow this unconstitutional infringement of the right to earn an honest living (see Timothy Sandefur’s excellent book of the same name) to persist in some states.
But Americans, like most of the world, appreciate their booze. During prohibition, Americans endured Tommy-guns, corruption, gangsters, and speakeasies just for a drink. If the government made it illegal to drink responsibly, many Americans were willing to thwart the law and drink irresponsibly.
The negative effects of prohibition were too visible to deny and, after 13 years of waging war on a non-compliant population, prohibition ended. In its wake, however, prohibition left another war, an 80-year “on-going, low-level trade war” (in the words of Granholm) between states and their three-tiered monopolies over the production, distribution, and sale of alcohol. And so, 21st Amendment or not, prohibition lives on — though the colorful characters in spats carrying Tommy-guns have been replaced by iPad-wielding lobbyists and politicians who do their bidding.
Thanks to Trevor Burrus for his help with this blog post.
No-Fly Zones as Security Theater
I wrote a long post for the National Interest yesterday arguing against US participation in a no-fly zone over Libya. Here are highlights:
Given the spectrum of ways that the United States can help Libya’s rebels, it’s odd that debate here centers on a no-fly zone, a form of military intervention that shows support for rebels without much helping them. No-fly zones commit us to winning wars but demonstrate our limited will to win them. That is why they are bad public policy.
No-fly zones are best suited to helping ground forces that can defend themselves against an opponent once we suppress its airpower. Northern Iraq in the 1990s is arguably a successful example. But they do little to overthrow entrenched leaders or help lightly-armed rebels defeat heavier forces. They do even less to protect civilians against armies or militias.
…
If we care enough for the fate of the Libyan revolution to kill for it, we should take decisive action in its favor, such as using airpower to attack pro-Qaddafi forces. If we are rooting for the rebels to win but do not care enough to kill Libyans directly or risk our pilots’ lives, we should limit ourselves to providing them with intelligence (intercepts and surveillance primarily), advice, and maybe arms while sanctioning the regime and jamming its communications. If other nations want to intervene, we should offer them like support, including transport to the fight. If we limit ourselves to those actions, we should do so in recognition of two risks. First, we may simply prolong a war and increase civilian suffering (the same goes for no-fly zones, as Doug Bandow wrote yesterday). Second, our efforts are likely to fail. We may soon be dealing with a regime we tried to overthrow, one that may return to its outlaw habits. If we are unwilling chance that, we should sit on our hands and admit that politics requires tough choices. I lean toward the second course.
…
What we should most avoid is confusing security and philanthropy. When leaders talk as if our intervention is protecting Americans but execute it as if they are doing charity work that merits little risk, they sow harmful confusion. Our potential allies may expect more than we are willing to give and take chances that they otherwise would not. The American public may come to support another dubious war based on threat exaggeration.
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