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“On July 24th, 2014, the Electric Power Board (EPB) of Chattanooga, Tennessee, and the City of Wilson, north Carolina, filed separate petitions with the Federal Communications Commission (“FCC” or “Commission”), each asking the FCC to use the authority the FCC has claimed under Section 706 of the Telecommunications Act of 1996 to preempt state laws in Tennessee and North Carolina restricting the deployment of municipally-owned broadband networks. Just four days later,the Commission released a Public Notice establishing the current comment cycle, giving interested parties scantly over a month’s time to review and respond to the complex and voluminous petitions, despite the litany of other important and intricate issues currently before the FCC.

TechFreedom, ICLE, and seven other organizations – many of which are small operations with limited resources – filed a request seeking to have the comment deadline in this proceeding extended, but this request was summarily denied. Thus, due to time and resource constraints, the following comments will not address each and every point raised by the two petitions. Rather, these comments will address a few discrete points – including (1) the legal authority for Federal preemption in this case, and (2) the policy implications raised by the two petitions – before offering some general advice to the Commission: Deny the petitions of EPB and Wilson; issue a Notice of Inquiry to gather further data on the efficacy of government-run broadband networks; and, in the meantime, focus on broadband deployment initiatives that have gathered more consensus (e.g., promoting “Dig Once” policies, extending pole-attachment rights to broadband-only providers, and encouraging intermodal facilities-based competition, such as by maximizing the reallocation of spectrum for wireless broadband). We also note the unique dangers posed by increasing control over broadband, particularly in terms of censorship, surveillance, and other kinds of privacy invasions.”

Douglas Holtz-Eakin and my former George Mason colleague and Nobel Laureate Vernon Smith are in the WSJ today discussing the economic wisdom and constitutionality of ObamaCare.  From the WSJ:

The Obama administration defends the mandate on the ground that a person’s decision to not buy health insurance affects commerce by materially increasing the costs of others’ health insurance. The government adds that health care is unique and therefore can be regulated constitutionally in ways other markets cannot.

In reality, the mandate has almost nothing to do with cost-shifting. The targeted population—the young, healthy and not poor who choose to forgo coverage—has a minimal role in the $43 billion of uncompensated health-care costs. In 2008, for example (the latest figures available), the Department of Health and Human Service’s Medical Expenditure Panel Survey showed that the uncompensated care of the mandate’s targeted population was no more than $12.8 billion—a tiny one-half of 1% of the nation’s $2.4 trillion in overall health-care costs. The insurance mandate cannot reasonably be justified on the ground that it remedies costs imposed on the system by the voluntarily uninsured.

The government’s other defense is that the health-care market does not exhibit textbook competition. No market does. The economic features relied upon by the government—externalities, imperfect information, geographically distinct markets, etc.—are characteristic of many markets.  The presence of externalities and other market imperfections does not justify a departure from the normal rules of the constitutional road. Health care is typically consumed locally, and health-insurance markets themselves primarily operate within the states. The administration’s attempt to fashion a singular, universal solution is not necessary to deal with the variegated issues arising in these markets. States have taken the lead in past reform efforts. They should be an integral part of improving the functioning of health-care and health-insurance markets.

Holtz-Eakin and Smith conclude:

Without the individual mandate, ObamaCare imposes total net costs of $360 billion on health-insurance companies from 2012 through 2021. With the mandate, the law would provide a net $6 billion benefit—i.e., revenues in excess of costs—over that same time period. In other words, the benefits of the individual mandate to health-insurance companies, along with their additional revenues provided by ObamaCare’s Medicaid expansion, are projected to balance, nearly perfectly, the costs that the law’s various regulatory mandates impose on insurers.

The individual mandate and Medicaid expansions appear to many to be unconstitutional. They are certainly bad economic policy. When they go, the entire law must fall. The administration built an intricate, balanced policy on a flawed economic foundation. It is up to the Supreme Court to pull it down.

Go read the whole thing.

Filed under: business, commerce clause, constitutional law, economics, health care, nobel prize

In Part I of this post, I identified a jurisprudential thread of cases that suggest corporations have a First Amendment right to own and invest in law practices for the delivery legal services.  These decisions include NAACP v. Button, the union trilogy, and Bates v. State Bar of Arizona.  Two recent cases shed light on how the Supreme Court might view my collective reading of NAACP v. Button and its progeny: Citizens United v. Federal Election Commissionand Sorrell v. IMS Health.

Read the full piece here.

First, thanks to TOTM for organizing this symposium on a most timely and important topic.  As computers and technology have revolutionized every aspect of human endeavor it is a particularly critical time to ask ourselves why 21^st century law schools closely resemble the law schools of the late-19^th century and why in court litigation would seem relatively familiar to Clarence Darrow.  One significant answer is the regulation of the legal profession, and one possible solution is significant deregulation.

Read the full piece here.

It is questionable whether states should have unauthorized practiced of law statutes and bar admission standards based on credentials rather than examinations. A first step, however, is to attack statutes that forbid a non-lawyer from giving free legal advice, whether to friend, family, or just someone who can’t afford all the legal help he needs. Should such charity be a crime?

Read the full piece here.

Attorneys earn excess rents by maintaining barriers to entering the legal profession.  Legislation and regulation expanding the scope of work that only an attorney legally can perform is an obvious way in which attorneys attempt to expand or protect the market for their services.  The FTC has a long history of trying to convince state legislators and courts that expanding the scope of the practice of law is likely to have unjustified anticompetitive consequences.   A more subtle way attorneys limit competition for legal services is by interpreting existing legislation and rules in a manner that expands the universe of practices that are considered “unethical” or “unauthorized practice of law.”  In this symposium, I will address the application of antitrust law to this conduct.

Read the full piece here.

Last month the New York Times ran an editorial with the headline “Addressing the Justice Gap,” observing that “the poor need representation and thousands of law graduates need work.”  The piece proposed several solutions, but notably absent was the reform most likely to deliver legal services to those in need and to create jobs for unemployed lawyers:  corporations should be able to own law practices and provide legal representation.  It’s not only a matter of managing the justice gap in America in the face of an enduring economic recession and increased global competition; it’s also a matter of First Amendment concern.

Read the full piece here.

C. Boyden Gray and John Shu offer a very helpful discussion on this issue in an article in Engage.  Here is the abstract:

President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank” or “the Act”) into law on July 21, 2010. The massive and complex Act is reportedly the result of many compromises. Dodd-Frank’s intent, according to its title page, is “[t]o promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”

Of particular interest to me was this portion of the discussion of the Bureau of Consumer Financial Protection (BCFP):

One of the BCFP’s stated objectives is to protect consumers “from unfair, deceptive, or abusive acts and practices and from discrimination.”75 The BCFP may halt a company or service provider from “committing or engaging in an unfair, deceptive, or abusive act or practice” with respect to offering or transacting in a consumer financial product or service.76 In fact, Dodd-Frank makes it unlawful for consumer financial product companies or service providers to “engage in any unfair, deceptive, or abusive act or practice.”77 The Act extends this liability to any entity that “knowingly or recklessly provide[d] substantial assistance” to the offender.78

clearly defi ne vague terms such as “unfair,” “deceptive,” “abusive,” and “discrimination.” BCFP is vested with the sole discretion to decide what those terms mean and how they are applied to consumer financial products and services and the consumer financial industry.79 For example, Dodd- Frank defines an act or practice as “abusive” if it “materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service,” or if it takes “unreasonable advantage” of a consumer’s “lack of understanding” of the “material risks, costs, or conditions of the product or service” or a consumer’s “inability” to protect his own interests “in selecting or using a consumer financial product or service.”80 Given that each and every consumer has different abilities to understand a term, condition, material risk, and cost; and each and every consumer has varying levels of ability—or desire—to protect his own interests, the Act’s standard can readily be caricatured as “we know it when we see it.”

Moreover, the Act does not seem to include the concepts of deception or fraud with respect to the term “abusive,” which would mean that the BCFP could still declare illegal products and services whose terms, conditions, risks and costs are fully disclosed, so long as the BCFP labels them “abusive.” Moreover, the BCFP’s charter
is so vast that its power could be characterized as including the practical authority to re-write consumer financial protection laws if it chooses to do so. Accordingly, it is reasonable to argue that Congress must do the re-writing, not an agency that escapes
meaningful oversight.

Those challenging Dodd-Frank will maintain that Congress structured the BCFP in such a way that it unconstitutionally escapes both Article I and Article II oversight. The key is that the Act houses the BCFP within the Federal Reserve, thereby placing one protected entity (the BCFP) within another (the Fed).81

The article provides a good summary of the provisions of Dodd-Frank as well.

There’s been much teeth-gnashing following yesterday’s ruling by a Virginia judge that the “individual mandate” portion of Obamacare is unconstitutional.  Among many other places, see the ongoing discussion at The Volokh Conspiracy.  I have a quick, non-constitutional response.

Read the full piece here.