- “A Decade After Realizing It Can’t Threaten A Critic Online, UCLA Returns To Threaten A Critic Online” [Mike Masnick, TechDirt; Adam Steinbaugh, FIRE]
- “D.C. Bureaucrats Are Trying to Make Parents Get a License to Let Children Play Together” [Kerry McDonald, FEE; Karin Lips, Washington Post; Lenore Skenazy, Reason]
- “If you were ripped off by a couple of companies that enrolled consumers in membership-rewards programs without their consent, congratulations, you’re entitled to a $20 credit to buy more stuff from them. Ninth Circuit: Your class counsel, however, is probably not entitled to $8.7 million in attorney’s fees for winning you a coupon.” [John Kenneth Ross, IJ “Short Circuit” on In Re EasySaver Rewards Litigation]
- Congestion highway pricing and the “Lexus Lanes” epithet, supervised injection facilities, single payer in one state and more in my new Maryland roundup at Free State Notes;
- Chain that touched off public outrage stands to gain by reaction: “Licensing pet groomers won’t help pets. It will hurt low-income groomers.” [Shoshana Weissman and Jesse Kelley, R Street]
- “A Case for an Executive Order to Rein in Guidance Documents and other ‘Regulatory Dark Matter'” [Clyde Wayne Crews, CEI]
Since the termination of Operation Choke Point, some have questioned whether Obama-era federal regulators really did engage in systematic and top-down attempts to squeeze off access to financial services for businesses that were lawful but disliked. Now Rep. Blaine Luetkemeyer (R-Mo.) has released documents produced in connection with a lawsuit against the Federal Deposit Insurance Corporation. They show extensive pressure by numerous FDIC regional directors and other officials on regulated banks to terminate customer relationships with payday lenders (the banks were generally already not themselves engaged in such lending). They also include repeated wordings about how higher-ups wanted the pressure applied and that banks’ decisions to cut off customers should be styled as if it were a voluntary choice. [Luetkemeyer press release; Norbert Michel, Forbes; John Berlau, Forbes; trade group Community Financial Services of America]
Readers who watched the Cato forum last November on prosecutorial fallibility and accountability, or my coverage at Overlawyered, may recall the story of how a Federal Trade Commission enforcement action devastated a thriving company, LabMD, following a push from a spurned vendor. Company founder and president Mike Daugherty, who took part on the Cato panel, wrote a book about the episode entitled The Devil Inside the Beltway: The Shocking Exposé of the U.S. Government’s Surveillance and Overreach into Cybersecurity, Medicine and Small Business.
Last month two separate federal appeals courts issued rulings offering, when combined, some consolation for Daugherty and his now-shuttered company. True, a panel of the D.C. Circuit Court of Appeals, finding qualified immunity, disallowed the company’s claims that FTC staffers had violated its constitutional rights by acting in conscious retaliation for its criticism of the agency. On the other hand, an Eleventh Circuit panel sided with the company and (quoting TechFreedom) “decisively rejected the FTC’s use of broad, vague consent decrees, ruling that the Commission may only bar specific practices, and cannot require a company ‘to overhaul and replace its data-security program to meet an indeterminable standard of reasonableness.’” [More on the ruling here and here]
As usual, John Kenneth Ross’s coverage at the Institute for Justice’s Short Circuit newsletter is worth reading, both descriptions appearing in the same roundup since they were decided in such quick succession:
Allegation: Days after LabMD, a cancer-screening lab, publicly criticized the FTC’s yearslong investigation into a 2008 data breach at the lab, FTC staff recommend prosecuting the lab. Two staffers falsely represent to their superiors that sensitive patient data spread across the internet. (It hadn’t.) The FTC prosecutes; the lab lays off all workers and ceases operations. District court: Could be the staffers were unconstitutionally retaliating for the criticism. D.C. Circuit: Reversed. Qualified immunity. (Click here for some long-form journalism on the case.)…
Contrary to company policy, a billing manager at LabMD—a cancer-screening lab—installs music-sharing application on her work computer; a file containing patient data gets included in the music-sharing folder. In 2008 a cybersecurity firm finds it and tells LabMD the file has spread across the internet. (Which is false.) When LabMD declines to hire the cybersecurity firm, the firm reports the breach to the FTC, which prosecutes the case before its own FTC judge. LabMD does not settle; the expense of fighting forces the company to shutter. The FTC orders LabMD to adopt “reasonably designed” cybersecurity measures. Eleventh Circuit: The FTC’s vague order is unenforceable because it doesn’t tell LabMD how to improve its cybersecurity.
Our friend Berin Szóka of TechFreedom sums it up: “The court could hardly have been more clear: the FTC has been acting unlawfully for well over a decade.” He continues by calling this “a true David and Goliath story”:
Well over sixty companies, many of them America’s biggest corporations, have simply rolled over when the FTC threatened to sue them [over data security practices]. … Only Mike Daugherty, the entrepreneur who started and ran LabMD, had the temerity to see this case through all the way to a federal court. …After losing his business and a decade of his life, Daugherty is a hero to anyone who’s ever gotten the short end of the regulatory stick.
[cross-posted from Cato at Liberty]
Despite a surge in jobs in some rural states, housing hasn’t caught up, as one traditional method of meeting sudden housing demand there — manufactured housing — has floundered. One reason is the fairly recent enactment of federal regulations, say some locals [Andrew Van Dam, Washington Post/Ogden Standard-Examiner]:
In Nebraska, mobile-home retailers say it’s not just land costs that have lifted prices: It’s now more expensive to stick a mobile home into the ground. In December 2015, the Department of Housing and Urban Development began enforcing strict installation standards in Nebraska and other states that lacked local oversight.
Most notably, new homeowners are forced to spend an estimated $3,000 to $8,000 to lay a footing or foundation that will protect the home from being damaged when the ground underneath shifts as it freezes. The cost isn’t always covered by financing, which makes it unattainable to many buyers. On an entry-level home, installation cost could surpass the down payment.
Nebraska mobile-home retailers say the rules seem overzealous and appear especially cruel because the residents typically don’t own the plot of land into which they’re pouring thousands of dollars. Furthermore, the custom-built foundations aren’t guaranteed to fit the next home to use the lot, and they’ll have to go through the entire, costly process again when they move.
“Constant litigation, combined with years of legislation empowering unions and state agency bureaucrats to slow construction, have quadrupled the time required to build California’s water projects.” [Ed Ring, City Journal]
Meanwhile, on the national level: “It can take years to get a federal permit for a major infrastructure project. Congress has an opportunity to change that” [Philip Wallach and Nick Zaiac, Brookings]
- “Egregious” conduct: Fourth Circuit upholds $150,000 sanctions against attorneys who “challenged the authenticity of a loan agreement for two years before revealing that they possessed an identical copy, obtained from their client, before filing the complaint.” [Six v. Generations Federal Credit Union]
- Food bill: Congress seems intent on not letting the public find out how well grocers do from the SNAP program [Jonathan Ellis, USA Today]
- “Why Trump’s Higher Tariffs Now are Unlikely to Result in Lower Tariffs Later” [Coyote]
- After 10 years, Nathan Myhrvold’s patent assertion fund idea hasn’t done so well [Nathan Vardi, Forbes]
- Potential of “cottage food” laws remains unrealized [Baylen Linnekin]
- Why noted regulation critic David Schoenbrod is also critical of the regulatory reform proposal known as REINS [Philip Wallach, Real Clear Policy]
One-stop permitting, an idea with a considerable track record of success at the state level, may finally be coming to the federal government. “The agencies will work to develop a single environmental Impact Statement and sign a single record of decision and the lead agency will seek written agreement from other agencies at key points. [The memorandum] also seeks to try to quickly resolve interagency disputes.” [Reuters, Common Good]
Agencies use informal guidance documents in lieu of formal regulation to clarify and interpret uncertainties in existing law and enforcement. Unfortunately, this and other forms of “subregulatory guidance” can also offer a tempting way to extend an agency’s power and authority into new areas, or ban private actions that hadn’t been banned before, all without going through the notice and comment process required by regulation, with its protections for regulated parties. Fair? Lawful? The Department of Justice under Jeff Sessions has lately sought to bring agency use of guidance documents under better control, and in particular end the use of documents that 1) are obsolete, 2) improperly use the process to circumvent the need for formal regulation, or 3) improperly go beyond what is provided for in existing legal authority. I’m interviewed about all this by Caleb Brown for the Cato Daily Podcast.
More: Charlie Savage, New York Times (DoJ revokes batch of guidance documents), Matt Zapotosky/Washington Post; Scott Shackford, Reason (rescission of guidance letter on local fines and fees should be read not as blessing those practices as okay, but as reflecting fact that federal government lacks clear statutory or constitutional mandate to intervene against them); Stephen McConnell, Drug and Device Law (“DOJ Says its Litigators May Not Use Noncompliance with FDA Guidances as Basis for Civil Enforcement Actions”).
I have favorable words in this Fox News special report for the Trump administration’s push to streamline infrastructure permitting. Currently, even relatively straightforward projects can get stalled for years; states and cities have helped show the way with one-stop permitting, “concierge” service, shorter decision deadlines, and rules that reduce handles for litigation. Philip K. Howard’s Common Good organization, which has been working on this issue for years, likes the push too.
Acting Director Mick Mulvaney’s memo on the future of the Consumer Financial Protection Board “encapsulates a humility and restraint and respect for rule of law that is often all too lacking in government.” [Ira Stoll, New York Sun]