Saving the Fourth

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

The Patriot Act has a bad pedigree and an evil history. In the fearful days immediately following 9/11, the Department of Justice quickly sent draft legislation to Congress that, if enacted, would have permitted federal agents to violate their oaths to uphold the Constitution by writing their own search warrants. The draft subsequently was revealed to have been written before 9/11, but that’s another story.

The House Judiciary Committee reviewed the legislation and revised it so that it would meet Fourth Amendment norms. The revised version permitted federal agents to write their own search warrants for business records, but the warrants could be challenged by the custodian of the records or by the person whose records were being sought. Because the records were in the hands of a third party, they were in no danger of destruction.

The Fourth Amendment was written largely to assure that the general warrants British soldiers used to search the colonists’ homes would never be lawful in the United States. General warrants were issued by secret courts in London based on the government’s needs, not on evidence of wrongdoing. They authorized the bearer to search wherever he wished and seize whatever he found.

In order to protect the natural right to be left alone -- privacy -- the Framers enacted standards in the Fourth Amendment that required the government to produce evidence about the person whose records it wants -- called probable cause -- and present that evidence to a judge when it wants a search warrant. If granted, the Constitution requires that the warrant particularly describe the place to be searched or the person or thing to be seized.

After the House Judiciary Committee took all this into account in its redrafting of the proposed Patriot Act, the House Republican leadership and the George W. Bush White House pulled a fast one. They switched the painstakingly negotiated version of the Patriot Act for the original version and posted the original version on the House intranet, and leadership scheduled a vote within the hour of posting.

It is safe to say that no member of the House read the Patriot Act in that hour. It takes about 20 hours to read, as it is hundreds of pages in length, and it amends dozens of prior statutes that also must be read. Most House members clearly never knew what they were authorizing. The only negotiated-for provision that survived the switch was the sunset provision of section 215.

Section 215 only authorizes the feds to write their own search warrants for business records and for surveillance of so-called lone-wolf terrorists no matter what telephone they may use. The Bush and Obama administrations secretly persuaded the secret Foreign Intelligence Surveillance Act (FISA) court that somehow section 215 also permitted the NSA to acquire bulk data from telephone and computer use based on the government’s needs, not based on probable cause.

Bulk data is undifferentiated as to persons. Rather, it is collected by zip code or area code or service provider customer base. Section 215 expires at the end of this week.

The U.S. Court of Appeals for the Second Circuit, the second highest court in the land, declared the collection of bulk data under section 215 to be illegal. The court ruled that the language of section 215 does not authorize bulk data collection, and no section of the Patriot Act does. That court gave Congress until June 1 to clarify the language. If Congress fails to do so by June 1, the court will entertain applications to bar the NSA from collecting bulk data, and it indicated it would likely grant those applications.

Last week, the House voted to revise section 215, and the Senate did not. Thus, it is likely to expire on Sunday night.

President Obama, who falsely claims to be opposed to the collection of bulk data, can stop it with his signature, but he has not done so. He claims to favor the House version of surveillance, which has ridiculously been dubbed the Freedom Act.

The Freedom Act would get the NSA’s computer geeks physically out of the facilities of telecoms and computer servers, but would let them back in digitally with the FISA court’s approval, and that approval is not conditioned on probable cause. Rather, it is to be granted whenever the NSA needs the data. In the 14 years of all this spying, the NSA has made more than 34,000 requests of the FISA court; only 12 have been denied.

If section 215 expires next week, the feds will need individualized search warrants in order to listen to phone calls. They already have been getting individualized search warrants for the phone calls and emails of potential lone-wolf terrorists and for the business records of suspected terrorist groups and those whom they have successfully prosecuted for terrorist acts.

If all of the above is not enough to induce anyone in Congress faithful to the Constitution to reject extending section 215, perhaps the findings of the inspector general of the Department of Justice itself will. Late last week, he released a report in which he found that the bulk collection of data has not stopped a single act of terror or aided a single federal terrorism prosecution since the Patriot Act became law on October 26, 2001.

The government's bulk collection of data must go. It assaults freedoms, and it fails to enhance our safety.

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

The Other Commerce Clause

Richard Epstein*

Richard Epstein

Richard Epstein

This past week, by a narrow five-to-four decision, the Supreme Court decided the neglected but important case of Comptroller of the Treasury of Maryland v. Wynn. The question in Wynn was: may Maryland give only a partial tax credit to its citizens on out-of-state income that has been already taxed in the state where it was earned?

A peculiar feature of Maryland law divides its income tax into two components: one state and one county. Like other states, Maryland’s state tax credits the local citizen for the taxes paid elsewhere, so that the citizen only pays tax on the difference if Maryland’s tax rate is greater than the out-of-state rate. But even though Maryland also collects the county tax, it refuses to credit taxes paid elsewhere, thereby imposing a double tax on that portion of the out-of-state income. Justice Samuel Alito, writing for himself and the odd coalition of Chief Justice Roberts, and Justices Kennedy, Breyer and Sotomayor, struck down Maryland’s double taxation because it “is inherently discriminatory and operates as a tariff” on out-of-state income.

Justice Alito held that Maryland’s tax fell under the “negative” or “dormant” commerce clause (DCC). That odd phrase emerges from the convoluted Supreme Court jurisprudence over the proper scope of Congress’s Commerce power: “Congress shall have the power to regulate . . . commerce with foreign nations, among the several states and with the Indian tribes.” In its more familiar role, the Commerce Clause operates as a direct source of Congressional power. The modern New Deal interpretation dates back to National Labor Relations Board v. Jones & Laughlin Steel (1937) and Wickard v. Filburn (1942), both of which in my view stretch the language of the Clause far beyond its natural meaning to allow the United States to regulate all forms of manufacture, agriculture, and mining that takes place within any single state. In contrast, the correct interpretation, widely rejected today, restricts the scope of the clause to interstate transactions, i.e. those that involve two or more states, such as the shipment of goods, the transport of persons across state lines, or interstate communication.

The constitutional underpinnings of the dormant commerce clause are also suspect as a textual matter, because it leaves unexplained why the existence of the federal commerce power, standing alone, is sufficient to block state regulation or taxation on some matters even in the absence of any federal legislation that covers the state’s proposed field of action. In Wynn, Justice Scalia denounced the DCC as “a judicial fraud,” only to announce that he will strike down on DCC grounds only those state laws that explicitly discriminate against out-of-state parties, which the Maryland law does not. Justice Thomas does him one better, taking the view that the DCC should be scrapped.

Justice Kagan, in a strong opinion, attacked the majority on the more limited ground that current DCC doctrine did not require Maryland to abandon double taxation of its citizens’ out-of-state income. Unlike out-of-state residents, Maryland citizens can protect themselves within the political process. She therefore concluded that two people who earn the same amount of income could be required to pay the same amount for receipt of local services, even if one of them earned his income outside the state. The avoidance of double taxation was in her view not a trump that invalidated the Maryland scheme.

Wynn is a challenging case because its four major opinions examine the critical question whether the constitutional desire to forge a national union justifies the judicial creation of a constitutional law that has only shaky textual foundations. I know of no categorical way to answer that question. In this second-best world, much depends not only on the textual foundation of a particular doctrine, but also upon its substantive contribution, if any, to the well-being of the nation.

It is just here that we can see the strong contrast between the affirmative and dormant commerce clause cases. The expansive New Deal interpretation of Congressional power poses a serious threat to the integrity of our federal system. The central constitutional challenge of 1787 was to form a government strong enough to rule, but not so strong as to snuff out the liberties of its citizens. Limiting the affirmative power of the federal government to cross-border transactions had the salutary effect of using federalism to foster a unified competitive common market in which goods made in one state could be sold in another state in direct competition with local goods. The inability of the federal government to regulate the production of goods at its source thus blocked the dangerous creation of nationwide cartels.

The erroneous assertion of federal power in Jones v. Laughlin allowed the federal protection of nationwide unions that have long exerted their debilitating monopoly power, which in turn has let them launch crippling strikes and raise the costs of goods and services above competitive levels. Similarly Wickard v. Filburn sanctioned the organization of nationwide agricultural cartels that to this day shrink farm output and raise prices above competitive levels. Undoing both these decisions could only help restore the economic vigor of our flagging nation. The return to the original understanding facilitates the system of limited government championed by the founders.

In contrast, the DCC frees nationwide competitive forces from state disruption. Justice Scalia is quite correct to note that the case law on the DCC is far from the model of intellectual consistency. But the good news about key DCC clause decisions is that they have largely blocked provincial state rules of taxation and regulation from disrupting the national economy. It is therefore imperative not to focus on the close question raised by the Maryland tax scheme, but to place this case in its broader constitutional framework, by looking first at the really flagrant interferences with a nationwide economy that could luxuriate in the absence of the DCC.

Thus in Baldwin v. Seelig (1935), a unanimous Supreme Court invoked the DCC to strike down New York’s Milk Control Act, which required Vermont milk sellers to receive the same minimum prices for milk paid to New York producers in order to stifle interstate competition. “If New York, in order to promote the economic welfare of her farmers, may guard them against competition with the cheaper prices of Vermont,” the court held, “the door has been opened to rivalries and reprisals that were meant to be averted by subjecting commerce between the states to the power of the nation.”

That sentence was quoted in the important 1949 decision of Hood v. du Mond, where Justice Jackson—who had written Wickard some seven years before—struck down yet another New York dairy regulation that allowed New York’s Commissioner of Agriculture and Markets to deny a permit to Hood to expand his New York facilities to serve the Boston market on the ground that it was “against the public interest” because it tended “to a destructive competition in a market already adequately served.”

The DCC has thus advanced the overall vitality of the United States as an economic union by preventing states from using either overt or covert strategies to undermine cross-border competition. One technique the Supreme Court has used, albeit erratically, to serve this end is the so-called internal consistency test. Justice Scalia ridicules this judicial adoption of the German philosopher Immanuel Kant’s first formulation of the categorical imperative: “Act only according to that maxim whereby you can at the same time will that it should become a universal law without contradiction.” He insists that Kant’s insight bears no connection to “the text or structure” of the Constitution.

Score one for Kant, for Justice Scalia is mistaken on the structural issue, as illustrated by the 1987 case of American Trucking Associations v. Scheiner. Scheiner involved Pennsylvania’s flat axle tax levied on all heavy trucks that used Pennsylvania roads. That fixed figure gave an implicit subsidy to Pennsylvania trucks, which on average used Pennsylvania’s highways five times as often as trucks licensed elsewhere. Justice Stevens, over a Scalia dissent, struck the tax down because it flunked the internal consistency test, which asked what would happen if all other states adopted the same approach, to which the answer was that flat axle taxes would create the same kind of “rivalries and reprisals” that Cardozo identified in Baldwin v. Seelig. In contrast, a truck tax based on miles driven within the state gave no advantage to local trucks, if imposed by all states even at different rates. The Kantian formula has desirable practical implications.

Indeed the dangers of the Scalia position is evident from the earlier taxation case Moorman Manufacturing v. Bair, a 1978 case involving state taxation of firms that do business in multiple states. Virtually all states allocate tax burden by combining three measures: property, payroll, and sales. The Supreme Court, however, let Iowa compute its taxes on just one of these factors—sales within the state. That decision is correct if the DCC only reaches explicit forms of discrimination against out-of-state firms.

Note, however, the risk that this position holds. The use of the uniform three-part test meets the internal consistency standard. There are no competitive distortions if all states combine all three measures in the same proportions, no matter how each sets its combined rates. But once Iowa can deviate from this formula for some short-term revenue advantage, other states could follow suit with ad hoc formulas. Why open the door wide to strategic behavior, in the absence of any offsetting systematic advantage? Any state can reach its revenue target by using the standard tripartite formula. Yet it is manifestly difficult to get all states to agree to that formula voluntarily. Preserving the current equilibrium avoids that difficulty.

At this point, the trade-off seems clear. Justice Scalia and Justice Thomas ignore the enormous systematic advantage that comes from using the DCC to preserve an open common market within the United States. The longstanding use of the DCC should, as I have argued in my book The Classical Liberal Constitution, count as part of our “prescriptive Constitution,” precisely because it advances the cause of economic competition that the broad assumption of a unitary Congressional power frustrates. Justice Scalia has his guns directed at the wrong judicial doctrine. Justice Thomas, to his credit, has long taken just this position on the affirmative commerce power, most notably in his concurrence in the 1995 Supreme Court decision in United States v. Lopez. Thus on taxation matters like those in Wynn, Justice Alito kept the DCC on course by striking down the Maryland tax.

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

What if We Didn’t Have a Constitution?

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

What if we didn’t have a Constitution? What if the government were elected by custom and tradition, but not by law? What if election procedures and official titles and government responsibilities merely followed those that preceded them, and not because any of this was compelled by law, but because that’s what folks came to expect?

What if those elected to office, and those appointed to it, as well, took oaths to uphold the Constitution? What if those who took the oaths promised fidelity to the Constitution? What if the Constitution declares itself to be the supreme law of the land? What if the supreme law of the land means what it says?

What if all in government, from presidents to park rangers, from generals to janitors, from judges to jail guards, take substantially the same oath? What if very few who have taken their oaths take them seriously? What if very few who have taken their oaths have actually read the Constitution? What if very few who have taken their oaths understand the values the Constitution upholds?

What if even fewer understand the historical, moral and legal bases for those values? What if most who took those oaths did so expecting someone else in government to tell them what the Constitution means and how to deal with it?

What if the whole purpose of the Constitution is to limit the government, not to unleash it?

What if the plain language of the Constitution puts clear limits on what the government in America may lawfully do? What if those in government began cutting constitutional corners about 100 years ago and overlooked prohibitions and limitations in the Constitution because they enjoyed exercising power over others and because they thought they knew what was best for everyone?

What if those prohibitions and limitations -- some of which were in the corners that were cut -- were written into the Constitution intentionally to keep the government off the backs of the people?

What if personal liberty is the birthright of all persons? What if government is essentially the negation of that liberty?

What if the Constitution represents the value judgment of Americans that our rights are higher in value than the government’s powers to interfere with them? What if those who wrote the Constitution believed that personal liberty is the default position and government power the exception? What if the Constitution means that our rights should be maximum and government minimum?

What if our rights are natural components of our humanity? What if that humanity is a gift from God? What if we were created in His image and likeness? What if the greatest likeness we have with Him and the greatest gift from Him is free will? What if we are perfectly free as He is perfectly free?

What if He created us with such free will that we are free to reject Him? What if we are so free that we are free to reject the government? What logic could underlie an argument that we are free to reject the Creator who made us but not free to reject the government we created?

What if a government that rejects its own Constitution were to be rejected by the people? What if the people have had enough of politicians and government leaders who promise safety and demand the surrender of liberty? What if liberty once surrendered is never returned? What if the liberty-for-safety trade is a façade that impairs both liberty and safety?

What if that trade makes government’s job easier, but does not keep us safer? What if the Constitution was written to keep the government’s job from becoming too easy? What if it is easier to listen to everyone’s phone calls than only to those as to whom the government has probable cause to listen? What if the Constitution recognizes that liberty is personal and cannot be sacrificed by a majority vote of representatives, but only by individual consent?

What if the greatest right protected by the Constitution is the right to be left alone, the right to be oneself, the right to answer only to one’s own free will? What if the Framers who wrote the Constitution so valued the right to privacy that they wrote very specific criteria into the Constitution to govern the government’s ability to interfere with it? What if the government violated those criteria millions of times a day in the name of safety?

What if the violation of the right to privacy is a gateway to all other government violations of personal liberty? What if every government witch hunt never stops until it finds or creates a witch? What if every government inquisition never stops until it finds or creates a heretic? What if government does create modern-day witches and heretics and then arrests them and seeks credit for keeping us safe from them? What if they never posed any threat? What if we fall for this?

What if those who love power defeat those who love liberty in a government election? What if there is no one left to enforce the Constitution against those in power?

What if all this is happening right under our noses? What do we do about it?

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

Rand and Ted on the Fourth

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

A decision last week about NSA spying by a panel of judges on the United States Court of Appeals in New York City sent shock waves through the government. The court ruled that a section of the Patriot Act that is due to expire at the end of this month and on which the government has relied as a basis for its bulk acquisition of telephone data in the past 14 years does not authorize that acquisition.

This may sound like legal mumbo jumbo, but it goes to the heart of the relationship between the people and their government in a free society. Here is the backstory and the latest.

The Patriot Act is the centerpiece of the federal government’s false claims that by surrendering our personal liberties to it, it can somehow keep us safe. The liberty-for-safety offer has been around for millennia and was poignant at the time of the founding of the American republic.

The Framers addressed it in the Constitution itself, where they recognized the primacy of the right to privacy and insured against its violation by the government by intentionally forcing it to jump through some difficult hoops before it can capture our thoughts, words or private behavior.

Those hoops are the requirement of a search warrant issued by a judge and based on evidence -- called probable cause -- demonstrating that it is more likely than not that the government will find what it is looking for from the person or place it is targeting. Only then may a judge issue a warrant, which must specifically describe the place to be searched or specifically identify the person or thing to be seized.

None of this is new. It has been at the core of our system of government since the 1790s. It is embodied in the Fourth Amendment, which is at the heart of the Bill of Rights. It is quintessentially American.

The Patriot Act has purported to do away with the search warrant requirement by employing language so intentionally vague that the government can interpret it as it wishes. Add to this the secret venue for this interpretation -- the FISA court to which the Patriot Act directs that NSA applications for authority to spy on Americans are to be made -- and you have the totalitarian stew we have been force-fed since October 2001.

Because the FISA court meets in secret, Americans did not know that the feds were spying on all of us all the time and relying on their own unnatural reading of words in the Patriot Act to justify it until Edward Snowden spilled the beans on his former employer nearly two years ago.

The feds argued to the secret court that they were entitled to any phone call data they wanted -- usually sought by area code or zip code or the customer base of telecom service providers -- so long as they claimed to need it to search for communications about terror-related activities, and they claimed they needed EVERYONE’S records, and they claimed the Patriot Act authorized this.

The secret court bought those claims, and -- fast-forward to today -- the feds now have immediate access to our phone calls in real time. They can turn on our cellphones in our pockets and purses and use them as listening devices without us knowing it, and they have physical access to all telephone carriers’ equipment whenever they wish, which today is 24/7.

Some members of Congress reject this. Foremost among the outraged in the Senate is Kentucky Sen. Rand Paul. It is none of the government’s business, he argues, what we say on our phone calls. If the NSA wants to hear us, let them present probable cause to a judge identifying the person they want to hear and seek a search warrant. Paul’s is a genuine outrage from the only voice among those running for president who is faithful to the Constitution.

Other senators, foremost among them Texas Sen. Ted Cruz, also running for president, are pretending outrage by offering a Band-Aid to replace the Patriot Act called the Freedom Act. The Freedom Act gets the NSA physically out of the telecoms’ offices, but lets them come back in digitally whenever one of these secret FISA courts says so, and the standard for saying so is not probable cause as the Constitution requires. It is whatever the government wants and whenever it wants it.

The so-called Freedom Act would actually legitimize all spying all the time on all of us in ways that the Patriot Act fails to do. It is no protection of privacy; it is no protection of constitutional liberty. It unleashes American spies on innocent Americans in utter disregard of the Fourth Amendment.

Earlier this week, Paul announced that he feels so strongly about the right to be left alone, and takes so seriously his oath to uphold the Constitution, and believes so certainly that our phone calls are none of the government’s business that he plans to filibuster all attempts to permit this to continue. For that alone, he is a hero to the Constitution. Perhaps his friend Cruz will return to his constitutional roots and join him.

How do we know that the Freedom Act is a Band-Aid only? Because the NSA supports it.

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

The Political Economy of Nail Salons

Richard Epstein*

Richard Epstein

Richard Epstein

The New York Times recently published two wildly celebrated articles by journalist Sarah Maslin Nir. The first article, “The Price of Nice Nails,” describes in painful and accurate detail the trials and tribulations in the manicurist trade in New York City and elsewhere. The second article, “Perfect Nails, Poisoned Workers,” documents the health risks to which manicurists in the trade are exposed.

In this age of strong populist discontent with the state of American labor markets, Nir does not pull any punches in condemning the abusive practices in this rapidly growing industry, which is largely serviced by Korean, Chinese, Nepalese, and Hispanic women: “Manicurists are routinely underpaid and exploited, and endure ethnic bias and other abuse.” Her investigation documents the tyrannical practices of the small business owners who employ the manicurists. Whatever the benefits of cheap manicures may be for the people of New York City and nearby communities, Nir argues that they exact a human toll, moral and physical, on the young immigrant women of Asia and Latin America.

The two articles have provoked a huge public reaction. New York Governor Andrew Cuomo hasannounced “Emergency Measures” and immediate “salon by salon” enforcement to make sure that health abuses and “wage theft” will be blocked. The salons that do not comply will be shut down.

Nir’s articles have been met with widespread approval. It is for precisely this reason that it is necessary to slow down and ask whether Nir’s revelations, even if true, justify Governor Cuomo’s actions. My fear, quite simply, is that his vigorous enforcement efforts will leave matters worse off than before.

The key point here is that Nir’s story does not fully hold together when tested against the standard lessons of economic theory and history. My critique of Nir’s narrative rests on a key assumption about human behavior. In economic matters, people generally try to maximize their own self-interest even when faced with few options and severe constraints.

Today, the manicure trade is booming. The number of shops in Manhattan continues to grow rapidly, notwithstanding the awful conditions and low wages that the workers endure. The unpleasant and dangerous nature of the working conditions is no secret to the women who work daily in the trade. Nir opens her piece by describing the large numbers of Asian and Hispanic women who regularly line up early in the morning on the streets of Queens waiting for “cavalcades of battered Ford Econoline vans” to pick them up and whisk them away to their work sites. The simple question is this: Why do these women come back day after day to the same location for rides to the same jobs if the situation is as toxic as Nir paints it?

Nir does not identify what brings them back. If they were worse off taking these jobs, at least some of them would move into other lines of work with higher pay and better working conditions. But these women are repeat players, and at least some of them slowly get improved wages and better work conditions from their hard-boiled employers. On this score, the standard economic test is whether these women are worse in their current jobs than with their next best alternative—an alternative universe that is left unidentified and unexplored by Nir. Some obvious possibilities for the women who quit is to not work at all, or to work in dangerous trades like drugs or prostitution where the results for these displaced women could be worse. Jobs in legal markets may well be foreclosed by a high minimum wage law, which further reduces their set of choices, as does their weak or nonexistent command of English.

In the long-term, these women may live to regret their choices, especially in light of the poor health outcomes they may suffer. But there is no long-run unless the women can survive in the short-run. It is for that reason that health issues may prove the most knotty. To some extent, the long-term dangers are latent. Nir’s articles thus perform a genuine public service by highlighting to all concerned the dangers of working in this environment.

But even here it is difficult to attribute the poor outcomes to employer exploitation. The most poignant example of health risks that Nir offers is of Eugenia Colon who was the owner of the nail salon in which she contracted her lung damage, working side-by-side with her employees. Clearly, simple precautions like wearing masks may well make sense in that environment. It may also be possible to eliminate the use of various nail polishes and other preparations that carry with them the worst possible risks.

The best remedy here may not be Governor Cuomo’s edict to shut down noncompliant salons. Once the information from Nir’s article gets out, both workers and customers will, however imperfectly, start to take the health risks into account. The volume of business at risky salons should go down, and the prices should go up—a wholly appropriate response now that the health risks have become more salient.

The underlying economic issues must be addressed as well. The intense demand for jobs pushes the supply curve outward, which means that more workers will be employed at lower wages, everything else being equal. No one knows for sure exactly what alternatives these women might have or how well they might pay. But we do know this: It is highly unlikely that the women in question lack key information about their current conditions. Yet they choose to return again and again.

One reason they return is, as Nir notes, that the demand for new workers seems practically insatiable. That extra demand should offset in part the downward pressure on wages from the high supply. But nothing says that the two forces are of equal magnitude. And the market evidence suggests that, on net, the higher supply drives wages lower. The low wages are no secret insofar as local Asian newspapers are “rife” with advertisements offering as little as $10 per day for the work in question, and requiring new recruits to pay $100 in cash to learn the trade. It is not, therefore, as though potential employers commit fraud to tap new supplies of naïve employees. Nor do they exercise coercion by, for example, stripping guileless applicants of their passports to prevent them from returning home. The economic theory of revealed preferences suggests that the opportunities offered by these shops are as good as these women can find anywhere else.

In dealing with the governor’s options, it is important to realize how little room he has to maneuver. Thus, looking at the employer side of the industry, it is hard to see how small firms can collude to keep wages low. Entry and exit into this industry is relatively easy, for literally hundreds of small shops offer manicures at cheap prices in New York City alone, charging an average of under $11.00 per session, or roughly half the national rate. These firms could not collude on wages even if they wanted to, for rampant cheating for the best workers would break up their joint efforts.

In this highly competitive industry, low prices bring and retain customers, rich and poor. Those low prices translate into low profit margins for most employers and low wages for their employees. Even the most successful employers know that they sit on the knife’s edge: if they raise their prices, they will lose their customers to a nearby shop. If they lower their prices, they will not be able to cover their costs. The vice-like equilibrium of competitive markets comports with the facts on the ground.

Last, what about the discrimination that goes on at these salons, with Korean manicurists being at the top of the pecking order, making the most money and earning the most privileges, and Hispanics being at the bottom, as Nir describes? That too, for better or worse, persists in at least some competitive markets. Employers lose big if they make mistakes in estimating the abilities of their workers. If they pay higher wages to less productive workers, their competitors who don’t make that mistake will drive them out of business. Perhaps the Korean proprietors have nasty stereotypes about their Hispanic employees. But the harder question is whether these nasty stereotypes are true generalizations about the relative average productivity of different work classes.

If the Korean shop owners are wrong, other firms can enter the business and scoop up underpaid Chinese, Nepalese, and Hispanic workers—at least if entry is free. Right now, about a quarter of the shops are owned by members of other ethnic groups. It would be instructive to know their pay scales as well. To be sure, if the dominant Korean group could use force to block new entry, that behavior should be punished. But Nir’s account offers no evidence of intimidation against new entrants.

Once there are no illicit barriers to entry, the analysis flips over. Gary Becker’s path-breaking hypothesis—that invidious discrimination cannot survive in competitive markets—rings true nearly sixty years after it was published. Labor markets are too complicated to be captured in any stick-pin economic model, for workers are human beings not standardized commodities. Yet, as I argued a long time ago in Forbidden Grounds, these complexities argue against, not for, government regulation of labor markets.

Take the question of firm composition. One good guess is that small firms offer opportunities for substantial gains from racial separation. Common tastes, customs, and language within ethnic groups make it easier to provide standardized background conditions for all workers, which could matter on such mundane matters as to what music is piped into common areas. What goes on in the workplace can be bolstered by cooperative relationships outside the job.

Yet that form of racial and ethnic separation is likely to prove fatal in larger firms trying to reach a broad portion of the market. These firms typically find it indispensable to draw their work force from all racial and ethnic groups in order to service their diverse customer base. So long as the insiders know more than the outsiders, including outside regulators, invoking the antidiscrimination or minimum wage laws is generally a mistake.

Here is why: However unattractive the current market equilibrium may be, if the government intervenes to try to make the situation for employees better, it could easily, even on wage and health regulation, actually make things worse. Before Governor Cuomo leaped into the fray, Nir’s article observed that federal and state labor laws are not being enforced in the industry on such key topics as discrimination and the minimum wage. Many employees are reluctant to cooperate with public authorities because they sense that the enforcement of these protective laws will cost them their jobs. At this point, the antidiscrimination laws and the maximum hours and minimum wage laws operate as a huge tax on fragile employment decisions.

The health laws too can have this effect if they go so far as to shut down the businesses, leaving the workers, owners, and customers to fend for themselves, sometimes in underground establishments that are riskier than the above-board shops they displace.

In effect, each round of regulation, regardless of its particular design, will create a wedge between what the employer pays and what the employee gets. We know that minimum wage laws have especially hard effects on young minority teenagers who are priced out of the market. Regulating nail salons will have a similar effect. Some of the regulated firms will go out of business; some of the firms will contract services, raise prices, and survive. But many workers will lose their jobs, only to find their reentry into the labor market blocked by high minimum wages and strong antidiscrimination laws.

These cautious observations are not just idle speculation. Over a century ago, the target of much well-intentioned indignation was the child labor laws, which sought to keep young children out of the marketplace until they reached, say, the ages of 14 or 16. The evidence, assiduously gathered by economist Benjamin Powell in his work on sweatshops and child labor, shows that these laws hurt the very children they were intended to help by driving them into begging, prostitution, or crime. Deprived of their best option, their families had only inferior options, and the results were not pretty.

So what then should be done? It is clear that there is no political will to provide these workers with public subsidies tied to their low income. Any intervention will therefore take place on the regulatory side. As should be evident, the best way to help these manicurists is by giving them more options. Make sure that new firms are free to enter the business, and make sure that workers in the industry who want to leave are not blocked from getting other jobs by minimum wage laws and antidiscrimination laws. Governor Cuomo, acting out of righteous indignation, may be moving too far in the wrong direction by stepping up enforcement of the current laws when the right result may be to tack in the opposite direction, and making a strong priority of system-wide deregulation. 

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

Restore the Fourth

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

If you plan to visit a college campus this month, don’t be surprised if you see signs and placards encouraging you to “Restore the Fourth.” Restore the Fourth is not about an athletic event or a holiday; it is about human freedom. The reference to “the Fourth” is to the Fourth Amendment, and it is badly in need of restoration.

In the dark days following 9/11, Congress enacted the Patriot Act. The Patriot Act has many flaws, including its prohibition of certain truthful public speech, but its most pernicious assault is on the constitutional right to privacy.

One of its sections permits federal agents to write their own search warrants and serve them on persons and entities who by law are the custodians of records about others, such as physicians, lawyers, bankers, telecoms, public utilities and computers servers. The same section of the act has been used perversely by the NSA and the secret FISA court to authorize the bulk collection of data.

Bulk collection of data -- the indiscriminate governmental acquisition of the contents of emails, text messages, telephone calls, bank statements and credit card bills -- is what the NSA seeks when it acquires all data in a specific area code or zip code or from a named provider, like Verizon, AT&T and Google.

What’s wrong with bulk collection? The warrant issued by the FISA court that authorizes bulk collection is known as a general warrant. A general warrant does not name a person or place, but authorizes the bearer to search wherever he wishes and seize whatever he finds. General warrants were a tool of colonial repression used by the king prior to the American Revolution. They were issued by secret courts in London. They were so loathed by the Framers that they are expressly forbidden by the Fourth Amendment.

The Fourth Amendment requires evidence -- called probable cause -- about a particular person, place or event to be presented to a judge and requires the judge to decide whether it is more likely than not that the government will find what it is looking for. The wording of the amendment could not be more precise, and in a Constitution known for vague language, this precision is instructive: All warrants must “particularly descr(ibe) the place to be searched, and the persons or things to be seized.” The Fourth Amendment protects all persons’ bodies, houses, papers and effects.

Yet the Patriot Act purports to avoid these requirements by permitting secret FISA court judges to authorize NSA agents to execute general warrants; thus, without probable cause and without describing the place to be searched or the person or thing to be seized.

The purpose of the Fourth Amendment is to prohibit government fishing expeditions, common to totalitarian countries. The theory of the Fourth Amendment is that a restrained government -- restrained by an instrument the government cannot change, like the Constitution -- is essential if people are to be free. The natural right protected by the Fourth Amendment is the right to be left alone.

Enter Restore the Fourth.

Restore the Fourth is a movement gaining steam now because the section of the Patriot Act that is so constitutionally offensive expires on May 31. President Obama wants it extended so his spies can continue their bulk collection of data. The Republican leadership in the Senate agrees with the president and accepts the myth that less freedom equals more security. The Republican leadership in the House has proposed a Band-Aid that would require the telecoms and computer service providers to sit on bulk data until the feds come calling, but to surrender it without the judicial finding of probable cause or specificity.

The Patriot Act should be repealed because it violates the Constitution and it doesn’t keep us safe. It renders us less safe and less free. The indiscriminate unconstitutional bulk collection of data is far too much raw material even for the 60,000 NSA agents and contractors to navigate. We saw that as recently as last weekend, when two jihadists known to the FBI and who had used email and cellphones attacked a free speech symposium outside of Dallas and were stopped at the last minute by courageous local police who saw their guns -- not by federal spies’ warnings.

When longtime NSA Director Gen. Keith Alexander was asked under oath how many plots the NSA has stopped in 10 years, he stated 53. The next day, he modified his testimony to three, but declined to elaborate. Edward Snowden, whose revelations about NSA spying have never been refuted, says that no plots have been stopped because the NSA looks at everyone, rather than targeting the bad guys, as the probable cause requirement -- if complied with -- would induce it to do.

Americans are largely free because of the rule of law. The rule of law means a supreme law of the land to which even the government is subject, just as are all persons. Without the rule of law, we are subject to the rule of whoever runs the government, and our rights become licenses to be granted or denied by whoever runs the government. In that world, who or what would restrain the government? An unrestrained government is what we fought the American Revolution against.

That’s why we must Restore the Fourth.

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

Baltimore's Real Police Problem

Richard Epstein*

The recent unrest in Baltimore has been dominating the headlines.  But the real story is less about the particulars of the gruesome death of Freddie Gray and more about the set of policies that have increased the odds of such tragedies happening. These policies cover a broad range of issues, from police practices to public education. But they all bear the mark of progressive thinking, which has reduced the legitimate prospects for advancement and increased the odds of social disruption.

Start with the tough business of law enforcement.  No one knows the exact figure, but a decent estimate tells us that there are about 900,000 police officers in the United States. Even in the best-run organizations, it is never possible to secure compliance rates of 100 percent. There are always some rogues. If only one percent of the police officers in this country disregard their basic duties, that is enough to lead to some inexcusable behaviors that can tear—and have torn—a nation apart.

If it is exceedingly difficult to maintain high rates of compliance in well-run organizations, it is even more difficult to secure them in organizations whose structures are far from ideal, as is the case with police departments. As Ross Douthat has written in “Our Police Union Problem,” one of the major problems with the police is that they are heavily unionized. That began in January of 1962, when President John F. Kennedy signed Executive Order 10988, which ushered in a broad expansion of public unionized workers, who had not received collective bargaining rights under the National Labor Relations Act of 1935. The 1935 act confined collective bargaining rights to private sector industrial unions.

The reform was praised as a way to give workers in the public sector the same rights as those in the private sector. But the law was flawed for two reasons. First, it established parity in the wrong direction. Put bluntly, the 1935 NLRB was a mistake insofar as it introduced state-protected monopoly unions into competitive markets. The short-term gains for most (but by no means all) union members generated huge costs for everyone else in the system. If the union got its demands, wages went up to monopoly levels, thereby distorting service and product markets. If they did not get their way, strikes and other dislocations would surely follow, with huge uncompensated losses to the firm and to the many individuals and groups who depend on it for vital services.

Second, public unions are, on average, more dangerous than private ones. It is commonly understood that the no civilization can long survive unless the state has a monopoly of power within the jurisdiction. Giving the state the monopoly on power is not ideal, but it is better than having a collection of warring militias and roving gangs that escalate the use of force and trap innocent people in the crossfire. The words “police power” appears nowhere in the United States Constitution, yet it has long been widely recognized that the elusive police power, directed to the protection of health, safety, morals and the general welfare, is an inherent attribute of the sovereign. Its scope, especially on matters of morals, can be vigorously debated. As Chief Justice Waite said in Stone v. Mississippi: “all agree that the legislature cannot bargain away the police power of a state.” It is a regrettable necessity that state sovereignty requires a public monopoly over the use of force. But it is far worse for any fraction of that power to be given to a private party, freed from the standard political and constitutional safeguards designed to hem in the improper use of that power.

Unions, like other private organizations, march to a different drummer, and thus will use their newfound power to interfere with the proper operation of public forces by reducing their power to hire, train, fire, and discipline the members of their employees. Nearly a century ago, during the Boston police strike of 1919, Calvin Coolidge said bluntly to Samuel Gompers, the then head of the American Federation of Labor: “There is no right to strike against the public safety by anybody, anywhere, any time.” That observation was made before the ascendancy of progressive politics in the United States.

Job security for individual workers cannot come at the cost of events like those surrounding the death of Freddie Gray, in which the conduct of the police officers involved was deplorable and in all likelihood criminal as well. It is difficult to know whether the prompt indictment of the six officers involved in the case was rash or prudent. Sitting from the outside, it is very hard to second-guess State’s Attorney Marilyn Mosby’s decision to bring serious charges against the six officers involved in the incident, three of whom were African-American.

The only system that has ever proved equal to the challenge in cases of this sort is a full and fair trial, in which the defendants are afforded the presumption of innocence that can be only overcome by proof of guilt beyond a reasonable doubt. All too often in criminal cases, the question of guilt in the abstract is more or less a given. The severity of the guilt is determined by the grade of homicide—from first-degree murder to involuntary manslaughter.

The harder questions relate to the public response to the various killings. The extended riots in Ferguson must in retrospect be condemned as a reckless rush to judgment of an innocent man. Its major consequence was to wreck innocent citizens and businesses in a community that had already suffered far too much. The Baltimore riots are every bit as pointless, because they too drag down innocent people for wrongs that random violence can never rectify. It is therefore especially disappointing in the wake of the riots to read the influential black journalist Ta-Nehisi Coates write his polemic “Nonviolence as Compliance” in the Atlantic, with the subtitle: “Officials calling for calm can offer no rational justification for Gray’s death, and so they appeal for order.” This one sentence gets the world upside down.

Of course officials in Baltimore should call for calm, as that is the only way to protect the lives and property of innocent people in Baltimore, the majority of whom (as if this mattered) are African-American. All citizens are entitled to that protection, and if there were ever a case for a color-blind system of justice, the basic operation of the criminal law is it.

Of course, there is no rational justification for Gray’s death, which is why some form of criminal prosecution and departmental discipline are absolute necessities in this case. But it is not as though an appeal to order is misplaced when the police have misbehaved. It is all the more necessary to try to restore matters to an even keel before there are more killings, woundings, firebombings, and general mayhem. What else should these public officials say? That it’s fine to riot no how matter how much it undermines civic institutions?

At this point, we have to face some hard choices on what to do next. To Coates, the answer is all too easy—it is to insist, as he did in a speech at Johns Hopkins, that “The Clock Didn’t Start with the Riots,” which then leads to yet another denunciation of antebellum slavery and Jim Crow. All too true, but irrelevant, for on this view the past has perpetual claims on the future. It is as if the early debts can never be discharged no matter what actions are taken thereafter. The hard questions, therefore, are not about the past. Instead they have to confront what was done in, say, the 50 years since the initial successes of the civil rights movement in the 1960s.

It is not that this nation has not tried its fair measure of targeted interventions to aid minority groups, and it is not as though the system of transfer payments to help the poor has shrunk since that time. But it is the case that the current system is just not working. Recall that three of the officers who are on the dock for Gray’s senseless death are African-American. So inbred, unconscious racism is a weak explanation for their behavior, which is far more likely explained by the sense of privilege that comes from the inability of civic society to subject the police to sensible restrictions. Power, Lord Acton tells us, “tends to corrupt, and absolutely power corrupts absolutely.” That principle applies not only to the great men of whom Lord Acton spoke, but also to public servants of all ages, races and sex, who are insulated from legal oversight by independent actors.

Yet focusing only on the misdeeds of the Baltimore police force misses the depths of the problem. Baltimore is a strongly Democratic city whose experimentation with progressive principles has proved unable to lift people out from poverty. Its labor and taxation policies have led to an exodus of well-to-do citizens, white and black, so that Baltimore’s population has plunged by about a third, from about 940,000 in 1960 to 622,000 in 2013. The question on the table is how to reverse the population decline, which will only come if the city is a decent place for people of all races to live, work, and educate their children.  

Yet Baltimore has done little to cultivate the one thing that might bring people back to the inner city—school choice—and based on the leadership in the democratic party on this point, it’s not likely that Baltimore will. President Obama wants to zero out the D.C. Opportunity Scholarship Program, for example, which provides scholarships to about 5,000 students, 95 percent of whom are black. The unions have fiercely opposed the program.

In Baltimore, like in Washington D.C., the government is confronted with a choice between two constituencies: unions and people in need. The tragedy of the modern progressive movement is that it prioritizes the former at the expense of the latter. The people of Baltimore deserve better. They deserve a decent education and a safe place to live. 

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

The Tyranny of One Man's Opinion

Andrew P. Napolitano*

Judge Napolitano

Judge Napolitano

Thomas Cromwell was the principal behind-the-scenes fixer for much of the reign of King Henry VIII. He engineered the interrogations, convictions and executions of many whom Henry needed out of the way, including his two predecessors as fixer and even the king's second wife, Queen Anne.

When Cromwell's son, Gregory, who became sickened as he watched his father devolving from counselor to monster, learned that an executioner for the queen had been sent for from France a week before her conviction, he asked his father what the purpose of her trial was if the king had preordained the queen's guilt and prepaid the executioner. Cromwell replied that the king needed a jury to give legitimacy to her conviction and prevent the public perception of "the tyranny of one man's opinion."

In America, we have a Constitution not only to prevent the perception but also to prevent the reality of the tyranny of one man's opinion. The Constitution’s Fifth Amendment makes clear that if the government wants life, liberty or property, it cannot take it by legislation or executive command; it can do so only by due process -- a fair jury trial and all its constitutional protections.

The constitutional insistence upon due process was the result of not only the Colonial revulsion at the behavior of Henry and his successors but also the recognition of the natural individual right to fairness from the government. If one man in the government becomes prosecutor, judge and jury, there can be no fairness, no matter who that man is or what his intentions may be. That is at least the theory underlying the requirements for due process.

President Barack Obama has rejected not only the theory but also the practice of due process by his use of drones launched by the CIA to kill Americans and others overseas. The use of the CIA to do the killing is particularly troubling and has aroused the criticism of senators as disparate in their views as Rand Paul and John McCain, both of whom have argued that the CIA's job is to steal and keep secrets and the military's job is to further national security by using force; and their roles should not be confused or conflated, because the laws governing each are different.

Theirs is not an academic argument. The president's use of the CIA is essentially unlimited as long as he receives the secret consent of a majority of the members of the House and Senate intelligence committees. The secret use of these 37 senators and representatives constituting the two committees as a Congress-within-the Congress is profoundly unconstitutional because Congress cannot delegate its war-making powers to any committee or group without effectively disenfranchising the voters whose congressional representatives are not in the group.

Moreover, the War Powers Resolution regulates the president's use of the military and essentially precludes secret wars. It requires the public consent of a majority of the full Congress for all offensive military action greater than 90 days. That, in turn, brings about transparency and requires a national political will to use military force.

President Obama has formulated rules -- agreed to by a majority of the 37, but not by a majority in Congress -- that permit him to kill Americans and others overseas when he believes they are engaging in acts that pose an imminent threat to our national security, when their arrest would be impracticable and when personally authorized by the president. This is not federal law, just rules Obama wrote for himself. Yet none of the Americans he has killed fits any of those rules.

Last week, the White House revealed that in January, the government launched its 446th drone into a foreign land, and this one killed three Americans and an Italian, none of whom had been targeted or posed a threat to national security at the time of his murder. The drone, which was dispatched by a computer in Virginia, was aimed at a house in Pakistan and was sent on its lethal way without the approval of the Pakistani government or the knowledge of President Obama.

The use of drones is not only constitutionally impermissible but also contraindicated by the rules of war. Drones pose no threat and little danger to those doing the killing. Except when the intelligence is bad -- as it was in the January case revealed last week -- deploying drones is a low-risk endeavor for the country doing so. But Obama's wars by robots produce more killing than is necessary. War should be dangerous for all sides so as to limit its lethality to only those venues that are worth the risk -- those that are vital for national security.

If war is not dangerous, it will become commonplace. By one measure -- the absence of personal involvement by decision-makers -- it has become commonplace already. A mere three years after his self-written rules for the deployment of drones were promulgated, the president has delegated the authority to order drone killings to his staff, and the members of the congressional intelligence committees have delegated their authority to consent to their staffs.

Obama apparently doesn't care about the Constitution he swore to uphold, but he should care about the deaths of innocents. Obama's drones have killed more non-targeted innocents in foreign lands than were targeted and killed in the U.S. on 9/11.

And the world is vastly less stable now than it was on 9/11. The president's flying robots of death have spawned the Islamic State group -- a monstrosity far exceeding even Henry VIII and Thomas Cromwell in barbarity.

*Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution.

The EPA's Clean Coal Dust-Up

Richard Epstein*



This past week in the Wall Street Journal, Kenneth Hill, the public utility regulator from Tennessee, joined Kentucky Senator Mitch McConnell in advocating that states boycott the EPA’s Clean Coal Plan (CPP) under the Clean Air Act of 1990. The plan would require the state to reduce the amount of carbon dioxide emissions so that by 2030 they are 30 percent below the 2005 levels. In making his case, Hill challenges EPA administrator Gina McCarthy’s soothing assurances that nothing in the EPA’s Clean Coal Plan will throw a monkey-wrench into coal operations, because “our rule creates a dynamic where cutting carbon pollution and investment decisions align.” That assertion is inconsistent with the report of the North American Electric Reliability Corp., which foresees major threats to transmission reliability, depending on exactly how the Clean Coal Initiative plays out on the ground. Indeed, it is far from clear whether sweeping new measures should be introduced to tackle this problem, especially since the EPA’s own figures show that emissions levels in 2013 were 9 percent below those in 2005.

Hill argues that the states should require the federal government to assume full responsibility for any Federal Implementation Plan, or FIP, that will govern those states that refuse to adopt a state implementation plan or SIP on their own. As of present, it is not clear whether this final confrontation will take place. Before that can happen, the courts will have to resolve the looming challenges to the EPA’s proposed rule, now that the EPA has pushed the envelope of its not inconsiderable statutory authority to regulate pollution.

The most notable opponent to the Clean Air Act is Harvard’s constitutional law Professor Laurence Tribe, who is a paid consultant for the Peabody Energy, whose wholesale denunciation of the EPA’s CPP for “burning the constitution” has attracted a strong dissent in forceful testimony before Congress from his own Harvard colleagues, Jody Freeman and Richard Lazarus, and from Richard Revesz, former NYU Dean and current head of the Institute for Policy Integrity.

The issues are complex and their resolution depends in large measure on understanding the ways in which the EPA’s CPP exercises its power. As is well explained by Mario Loyola in National Affairs, the devils lie in the details. His account is strongly at odds with Revesz’s claim that the EPA’s CPP program is just another chapter in the long-partisan tradition of effective pollution control.

The nub of the difficulty here is this: traditionally, the Clean Air Act pays homage to federalism by having the EPA set National Ambient Air Quality Standards (NAAQs), leaving it to the states to figure out how best to meet the national target in pollution control while knowing that the federal government can override them with its own FIP if the plan is not regarded as sufficient. Typically these SIPS were implemented under Section 112 of the CAA, which left it to the states to decide “the best system of emission reduction” (BSERs) to meet that standard. Generally, these were understood to let SIPs determine what technology to use to reduce pollution on a facility-by-facility basis.

The big difference with the CPP plan is that it takes these BSERs to the next level by announcing that SIPs should address four discrete “blocks” of issues that include modification of facilities but go beyond that to cover substitution of both natural gas and renewable energy for coal, and to taking measures to reduce the demand for energy within the state. Once the EPA proposed these additional measures, it became doubtful that it could act, as it traditionally had done, under Section 112, which deals only with emissions controls.

To avoid this problem, the EPA has asserted that it can regulate carbon dioxide emissions under Section 110, without regard to these limitations. Unfortunately, it appears as if resorting to Section 110 is only possible if regulation cannot be done under Section 112, which could be invoked now that the Supreme Court in its 2007 decision in Massachusetts v. EPA declared carbon dioxide a pollutant subject to EPA regulation. Unfortunately, the official text of the statute is of somewhat uncertain status because of the way in which it deals with two different versions of the 1990 CAA that were not fully reconciled in conference. The printed version limits the power of the EPA, while an alternative reading does not. Judicial decisions have pointed to a narrow reading of the EPA’s authority. Professor Tribe is surely correct to say that the EPA should not be accorded any administrative deference in deciding which version of the law controls. More likely than not, he is also not correct to claim that the printed version, done without an eye to the current controversy, should be accorded presumptive validity. In general, it is wise to have two different pathways to regulate the same types of pollution. Indeed, adopting this reading could abort the CCP before it gets off the ground.

Structurally, however, the CPP is subject to stronger objections that may yet play out in court. It is one thing to let the EPA specify the best technology for controlling pollution from a given source. It is quite another to allow it to venture into regulating the transmission and consumption of electrical power, especially since the first of these tasks is governed by the Federal Energy Regulatory Commission, or FERC, which normally leaves these issues to state control. This peculiar jurisdictional line up means that the FIP may not be able to incorporate any of the last three approaches that the EPA wants to be included in SIPs, at which point slashing carbon dioxide output from coal plants could require wholesale plant closings under the as-yet-stated FIP which may only be able to attack facility emissions directly.

EPA’s McCarthy praises the flexibility of her plans, by noting that the EPA “can look at stringency, timing, phasing-in, glide path,” and a lot else to make sure that grid reliability is not impaired. But therein lies part of the problem, for the question is just how much discretion should the EPA have in making decisions that could cost individual states and firms billions, especially since it appears that its direct regulatory authority to implement on its own only direct regulation of emissions from designated facilities. It looks therefore that the threat of very heavy direct cuts in output could be used to lever states to make alterations in local policy that the EPA is powerless to impose under its own authority. At this point, the crafty game of extending powers through threats does give rise to a serious constitutional challenge, as the EPA seeks to implement indirectly measures that it could not impose directly.

These difficulties are further compounded by the way in which the EPA sets its targets for different states, which, as Hill notes, could vary from as little as 11 percent in North Dakota to 72 percent in Washington. The huge differences are based on various local factors that relate to the ability to control carbon emissions. But the whole approach has to be taken with a grain of salt, given that the harm from carbon dioxide (which is itself the subject of serious scientific dispute, well summarized by Professor Judith Curry) in no way depends on the place from which it enters into the atmosphere, so that there is no issue of singling out dirty targets to clean up traditional forms of pollution in, say, high-sulfur areas.

Indeed, one great tragedy of this entire unfortunate episode is that it pushes further down the road any coherent way to deal with all forms of pollution. As I have previously argued, the best way to attack this problem is to direct attention to pollution outputs and not to elusive BSER standards under which it is not possible to ask the simple question of whether any particular reduction in pollution output is cost-effective. There could be a far more rapid shift to efficient coal plants if the EPA did not erect consistent barriers to getting new coal plants into service.

The huge level of discretion on these matters has given rise to the question of whether the coal companies can challenge the regulations on the grounds that they constitute a taking of private property without just compensation. On this point, Tribe’s claim that they can under current law is wholly unconvincing. The control of pollution lies at the heart of the government’s power to regulate under even the narrowest view of the takings clause. The effort to claim that somehow the EPA’s CPP “singles out” the coal industry for special treatment triggers one of the touchstones for a taking under modern law. But that principle usually applies to single parcels of land, not entire industry groups, so that it is highly unlikely that the coal companies could make out regulatory taking, under of all cases, Penn Central Transportation Co. v. New York City, which I noted in a recent column represents an indefensible expansion of state regulatory power to the confiscation of air rights when no threat of nuisance exists at all.

Tribe’s opponents, such as Revesz, Freeman and Lazarus, are therefore right to ridicule this constitutional argument. But their criticisms do not answer a more serious charge that can be levied against the CPP. Even if the end of pollution control is manifestly legitimate, the choice of means should be subject to higher levels of review than are often applied today. More concretely, the ability to set wildly different targets for different states opens up the real possibility that the EPA could help its political friends and hurt its political enemies. Right now, the courts are far too weak in the way in which they scrutinize this means-end connection in pollution. They should ratchet up their scrutiny of individual EPA determinations on carbon dioxide to see if they bear any relationship to sensible pollution control strategies, which on balance they do not.

At this point, the legal survival of the EPA’s CPP is anyone’s guess. Much will depend on the EPA’s own guidance documents about FIPs, which should come down this summer. But it is dangerous business to let the EPA take the coal industry hostage by this set of aggressive maneuvers. The Supreme Court’s initial wrong was Massachusetts v. EPA, which wrongly held that carbon dioxide counted as a pollutant under the Clean Air Act.

The simple point is that carbon dioxide raises unique issues that cannot be sensibly addressed within the basic Clean Air Act framework, which is why Congress should now legislate to take this confused matter out of the EPA’s hands. One central part of this technology is to ask the extent to which private incentives are likely to reduce overall carbon dioxide output, in light of improved technological efficiencies. A second key element is to develop a constructive national scheme that first updates the EPA’s 2009 endangerment finding on carbon dioxide, and then looks for a more even-handed regulatory scheme that does not hold an enormous dagger over the entire coal industry.

*Considered one of the most influential thinkers in legal academia, Richard Epstein is known for his research and writings on a broad range of constitutional, economic, historical, and philosophical subjects.

Raisins in the Sun: Federal Government Trying to Leave Farmers Out to Dry

Thomas Warns*

The Supreme Court heard oral arguments last Wednesday in a case that seems almost too absurd to be true – Horne v. Department of Agriculture. The background facts, centering around a New Deal-era law, are hard to believe, but here they are:

The Agricultural Marketing Agreement Act of 1937 granted the U.S. Department of Agriculture the authority to regulate the sale of certain agricultural products, including California-grown raisins, through the use of "marketing orders." The marketing order specific to California-grown raisins directs the Raisin Administrative Committee, a branch of the USDA, to establish a yearly raisin tonnage reserve requirement. The idea was that during the Great Depression, low raisin prices were hurting farmers, who would benefit if prices were stabilized (and raised). The government aimed to achieve this price hike and stabilization by taking farmers’ raisins and adding them to the raisin reserve; lower supply meant higher prices, and the raisins would be sold or given away at a later date they believed was more appropriate.

Every year in February, raisin farmers are told what percentage of their crop is the "reserve requirement" they must turn over to the Committee; failure to do so results in fines and penalties. In 2002 and 2003, the Horne family refused to comply with the USDA’s demands and was fined over $700,000. This case was actually before the Supreme Court two years ago on different grounds (whether they could raise a takings claim before they actually paid the fine), but now is on the docket again on the merits, as a takings question. The federal district court and the Ninth Circuit Court of Appeals have found that there was no “taking” by the government.

The Supreme Court heard oral arguments last Wednesday, and will have to answer three questions: (1) Whether the government's "categorical duty" under the Fifth Amendment to pay just compensation when it "physically takes possession of an interest in property" applies only to real property and not to personal property; (2) whether the government may avoid the categorical duty to pay just compensation for a physical taking of property by reserving to the property owner a contingent interest in a portion of the value of the property, set at the government's discretion; and (3) whether a governmental mandate to relinquish specific, identifiable property as a "condition" on permission to engage in commerce effects a per se taking.

The case looks like an easy win for the Horne family, and it should be. Further, they can take heart in the fact that court watchers found the Justices to be very skeptical of the idea that there was no taking.

The takings clause in the Fifth Amendment states that “nor shall private property be taken for public use, without just compensation.” Here, the government demanded the Horne family hand over their raisins, or pay enormous fines. How could this possibly be defended? The Ninth Circuit’s latest opinion on the case justified the government’s action by stating that the Takings Clause was meant to deal with takings of real property (i.e. land) and not personal property, and further that if it were a taking, the just compensation was the supposed stabilization and increase in price by the government.

Surely, the Fourth Amendment notion of property cannot be applied so narrowly that personal property is not protected – could the government also take one in every five cell phones that Samsung manufactures, without paying just compensation, because there was no "taking"? Doubtful. And in oral arguments, Justice Alito raised that very proposition. Theft does not become legal because the government engages in it. How come we have to pay taxes, you ask – isn’t the government “taking” our money? In the case of taxes, the Constitution explicitly permits Congress to levy them for the common defense and general welfare of the country under Article I.

The second proposition might be slightly stronger for the government – if it was a taking, the stabilized and elevated prices served as compensation. Justice Breyer hinted during oral arguments that the farmers may not have been hurt at all, or may have even been benefited beyond the value of their raisins, from the program. That may be the case, but it is hard to imagine the Horne family spending their time and money fighting this if the program was really such a great deal for them. Indeed, the Horne’s stated that in the year precipitating this legal battle, they surrendered 47% of their raisin crop; after the USDA sold the raisins (often they are sold to schools or prisons at a discount), the USDA took some money off the top for administrative expenses, and returned the Horne family with an amount lower than the total cost to produce the raisins. That does not sound like just compensation. Certainly at the very least, the Horne family could have sold their raisins to the schools and prisons without the compulsory middleman (who might also hurt the raisin farmers by conditioning that portion of the market to lay off market price raisins in favor of discounted ones from the government).

Another laughable defense raised in support of the program is that the government may condition entry into a market on having the ability to relinquish specific, identifiable property. Indeed, the 9th Circuit said that if the Horne family did not like the marketing orders of the USDA, they could plant another crop that was not regulated the same way. That not only ignores any number of personal reasons why the Horne family may prefer to grow raisins (their land is best suited for it, they have expertise from past experience, etc.), but it also destroys the personal autonomy we all ought to enjoy in a free country with a vibrant and open marketplace.

The Supreme Court did not even attempt to answer whether this is a public use. Public use has classically meant taking property so roadways or bridges or courthouses benefiting a whole city or state could be built, not taking raisins from farmers to keep prices higher for consumers. Indeed, if the stated goal of higher raisin prices has been achieved, then the program is benefiting private parties at the expense of the public – the exact opposite of a public use! Even the expansive (and heavily criticized) case on public use, Kelo v. City of New London, would be unlikely to bear such a definition of "public use". Fortunately, the Supreme Court has a chance to invigorate takings jurisprudence, even if it doesn't do so via a more robust "public use" analysis, and make keep us all safer from government’s intrusions.

Personal Note: I have thoroughly enjoyed writing for this blog for the last two years, but sadly my time on the Journal of Law & Liberty is nearing an end. I will graduate in May and hand over the position of Editor-in-Chief to my very capable replacement, Michael Stachiw. I hope to continue writing to the blog occasionally as a guest; however, this is likely to be my last post as a member of the Journal. For that reason, I would like to thank everyone who has been on the Journal the last two years. I have learned so much working with everyone on these blog posts, as well as all the articles we publish. I could not have asked for a better group of friends on the Journal, nor a more capable group of colleagues. To those who read the blog and have read my posts from time to time, thank you for your interest in our Journal, and please keep reading.


Tom Warns

* Thomas Warns is a J.D. Candidate in the Class of 2015 at New York University, and the Editor-in-Chief for the N.Y.U. Journal of Law & Liberty.