Tag Archives: regulation

Our Government at Work

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This time, it’s Homeland Security, and its move to confuse and then steal from, an American family, that is hard at work.  The present case involves a couple and their two-year-old daughter traveling from George Bush International Airport in Houston, TX, to Addis Ababa, Ethiopia, the wife’s city of birth and a cash-and-carry city, where they planned to stay for two months visiting her family.  At the airport, TSA agents confiscated every dollar the family had on them because they were confused both about what constituted “currency” in the agents’ eyes and were uncertain about the amount of money they had on them and in their luggage.

Their case wound up in Federal District Court for the Southern District of Texas; here are some excerpts from District Judge Lynn N. Hughes’ ruling [emphasis mine]:

The government presented no evidence—none—that the Joneses intended to evade the reporting requirements.  Kyle told Hernandez that he did not know the amount of money he was carrying.  Saying “I do not know” is not a deliberate failure to report.  After Hernandez insisted on an answer, Kyle said that he would have to guess.  Guessing is not a material omission or a misstatement of fact—certainly not one the government can use to steal the money.

and

These public servants sought to earn credit with their agency by collecting money.  Some of it is returned to the agency—like justices of the peace whose pay is derived directly from the fines they impose. They focused on bureaucratic imperatives—not their duties to the public and law.

and

A lack of leadership at the agency allowed this.  Its mission statement—which none of the officers could recall at the trial—is to serve the American public with vigilance, integrity, and professionalism.  They displayed none of these.  The agency says that integrity is its cornerstone; that its officers are guided by the highest ethical and moral principles.  A gang of armed security officers bullied this family—a family who cooperated with the officers to their detriment.  Our homeland will not be secure by these rascals.

While Mr and Mrs Jones, the parents in this traveling family, might be derided for not knowing how much money they had with them, this is neither illegal, evidence of illegality, nor actionable under any other guise of interest to Homeland Security.  Nevertheless, on being pressed to fill out (legitimately required) forms declaring the amount of money the Jones were taking out of the US based solely on their guess, their money then had been seized in its entirety, without allowing the Jones to correct their error.  It’s also important to note that the amount stolenseized was over $31,000 and that the recommended penalty for an actual evasion of this type is a forfeiture of $500-$5,000.

Judge Hughes ordered the Jones’ full $31,131, the amount seized, returned to them and she awarded the Jones court costs and legal fees.  I would have added to that the $1,500 the Jones were required to pay for a new airline ticket, this assault having forced them to miss their scheduled flight; the cost of the hotel room they were forced to get while waiting for that next-day flight; and the value of their time consumed by this wholly unnecessary delay.

The complete opinion is short and to the point, and it can be found here.

Note, though, that despite my (and others’) pontificating on this, it’s not Homeland Security’s fault.  After all, as DHL Secretary Janet Napolitano said in another case,

Look, everybody has a role to play. … And if people don’t want to play that role, if they want to travel by some other means, of course that’s their right. This is the United States….

A Bill Under the Commerce Clause

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Some view the Constitution’s Commerce Clause as granting to the Congress expansive powers of Federal control of intrastate activities, individual activities, and even the thoughts of private citizens.  A supine Supreme Court has supported this view.  Wickard v Filburn, for instance, agrees that Congress can regulate privately carried out agricultural activities, and NLRB v Jones & Laughlin extends that to manufacturing activity that occurs wholly within a state—an activity that prior to Jones & Laughlin was considered separate and distinct from any commerce-related process.  With these rulings in mind, a Federal District judge, Gladys Kessler, has even held that this Commerce Clause control extends into the private thoughts of individual citizens (Mead v Holder).

The line of reasoning for this startling evolution can be summarized in Chief Justice Charles Evans Hughes’ majority opinion in Jones & Laughlin: activities that are intrastate in character (which rather tautologically includes those individual activities) are regulable under the Commerce Clause when they bear a “close and substantial relation to interstate commerce.”

Agriculture is such an intrastate activity when the processes of field preparation, sewing, growing, and harvesting are considered separately, and separately from any subsequent process of bringing that harvest to market.  Likewise, manufacturing is such an intrastate activity when the processes of gathering equipment and locally procured supplies, the assembly of those supplies into finished product, and their in-plant inspection are considered separately, and separately from any subsequent process of bringing those finished products to market.  However, since Wickard and Jones & Laughlin hold such activities to bear a “close and substantial relation to interstate commerce,” it is reasonable to hold that any activity that impacts those processes of agriculture and manufacturing also bear a “close and substantial relation to interstate commerce.”  Such activities here plainly include union strikes and boycotts.

Accordingly, I propose a simple, one-page bill (no 2,000+ pages for me) that bans union strikes and boycotts, citing the Commerce Clause as the constitutional authority for such a ban.

It would be interesting to hear the Commerce Clause objections to such a bill.  What rationalizations might be offered?

The Fed’s Change of Subject

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Richard W. Fisher and Harvey Rosenblum, President and CEO and  Executive Vice President and Director of Research, respectively, of the Federal Reserve Bank of Dallas, wrote in Wednesday’s WSJ op-ed pages,

The phrase “too big to fail” is misleading. It really means too complex to manage. Not just for top bank executives, but too complex as well for creditors and shareholders to exert market discipline. And too big and complex for bank supervisors to exert regulatory discipline when internal management discipline and market discipline are lacking.

This is a cynically Alinsky-esque change of subject.  “Too big to fail” and “too complex to manage” are entirely separate concepts.  While there is some overlap—size does contribute to complexity—”too big to fail” is a purely political concept created to justify increased government interference in the private management of private enterprises.  “Too complex to manage” is at once a management and an economic concept.  It’s the managers who cannot keep up with the complexities of their enterprise (or, in fact they can; government has nothing legitimate to say here), and it is a free market economy that will demonstrate and react to the overcomplexification in a wholly appropriate manner: the truly too complex, and so poorly managed, enterprises will fail.

The proof of the political purpose of “too big to fail” is in that phrase “too big and complex for bank supervisors to exert regulatory discipline.”  But they add to that proof:

TBTF is a misnomer in another way. The phrase creates the impression that these banks cannot fail. … Suffice it to say, institutions holding one-third of U.S. banking system assets did essentially fail in 2008-09….  They were quasi-nationalized—bailed out….

Oh, and

…TBTF banks…contributed to reducing the impact of the Federal Reserve’s accommodative monetary policy.

The typical Progressive meme: it’s not my fault; it’s that other guy’s fault.  Never mind that the Fed’s “accommodative monetary policy” not only was, and is, not necessary, the inflation threat the Fed is creating with this policy is enormously and increasingly dangerous.

They also write, dismissively, that while principles (e.g., of “market capitalism”) count, economic performance also counts.  They use that superpositioning to justify government pressure to break up enterprises that the Fed (not the free market) considers too big.  In doing so, they ignore the fact that it is free market principles that maximize the capacity for performance.  They ignore the fact that while concentration can cause severe dislocation when the concentrated entities fail, the bankruptcy system of our particular free market system works very well.  That bankruptcy system has a habit of breaking up too complex, and/or “too big” enterprises that have failed—Merrill Lynch comes to mind, which was reduced in size and acquired by another enterprise; as does Lehman Brothers, which was allowed to disappear altogether and its assets sold to a multiplicity of other enterprises; and AIG, which is undergoing breakup and shrinkage today.  And the bankruptcy produces results far faster than can the government—just look at how many of our nationalized banks, and car companies, still have significant government ownership positions.

Government has to run things.  The free market system has to be centrally managed.  Our existing bankruptcy system has to be bypassed.  All this because government Knows Better.  A free market can’t be allowed to make its own decisions; that’s too messy for our antiseptic Progressive patróns.  And too far beyond their control.

The Supreme Court and Rule By Law

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Steven Hayward, at Power Line, wonders whether the Supreme Court could take a mulligan on the Patient Protection and Affordable Care Act case before them.  The background for his question is this:

What people forget is that Citizens United was reargued, because the Justice Department also could not give a coherent answer to a killer question, this time from Justice Alito, as to whether the campaign finance laws that prohibited the distribution of Hillary, the Movie wouldn’t also allow the Federal Election Commission to regulate the distribution of books near election day.  Then-solicitor general Donald Stewart answered Yes, notwithstanding that pesky little First Amendment thingie.

Alarmed, the Court ordered the case reargued, specifically expanding its scope to ask whether certain previous cases that provided the basis for Stewart’s answer had been erroneously decided and should be overruled.  During the second oral argument, a new solicitor general—Elena Kagan—was asked the same killer question, and answered: “No [we can’t regulate books]; the government’s position has changed.”

Stop and dwell on that one phrase for a moment: “The government’s position has changed.”  That says about all you need to know about the rule of law in the liberal wonderland of today’s administrative state.

The question in the Court’s present PPACA case that raised Hayward’s concern was Justice Kennedy’s “Can you create commerce in order to regulate it?”

The question I have, though, concerns the Court’s position on the rule of law vs rule by law.  Why did the Court need to wait on the Executive’s instruction to it of the distinction between one form of free speech and another form of the same speech?  Surely it knows that there is no distinction, and it can rule on its own initiative.  Surely, it could have recognized on its own judgment that a proper ruling in Citizens (i.e., that speech really is a matter of freedom) would require acceptance that it had decided erroneously on earlier cases, and that those opinions would have to be overruled.  How many times was Brown argued on the recognition that Plessy would have to be overruled?

Surely the Court knows that when commerce does not exist, there is nothing to regulate, and by extension, government cannot create commerce out of the æther in order to have something to do.

That this Court needs these answers makes me wonder about its own attitude toward rule of law.  It got Citizens right, but it shouldn’t have needed additional (and in the event both erroneous and irrelevant) instruction from the Executive in order to do so.  It shouldn’t need additional instruction here, either.

Our Energy Program

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There are a few items of interest as President Obama continues to tout his energy “policy.”

First, there’s this:

Brazil’s ethanol program is often touted as having weaned that nation off its dependency on foreign oil.  In truth, they made a political decision 40 years ago that they did not wish to be vulnerable to Middle Eastern (and others’) machinations or crises.  As a result of that decision, and their subsequent efforts, Brazil, which used to import over three-fourths of its oil, today imports no oil.  In fact, it’s a (minor) net exporter.  While their ethanol development program has contributed to their overall reduction in dependency on foreign oil, Brazilian oil production and use have both increased sharply: consumption by nearly 120% since 1980, and production even more markedly—875% over the same time frame.  Figure 1 tells that tale.

Figure 1: Brazilian Oil Production and Consumption, 1980 – 2009

What accounts for this?  In addition to on-shore production, Brazil actively drills for oil in the Atlantic, off its coast—often far off its coast and in very deep waters.  Brazil also actively drills in the Gulf of Mexico—a vast source of off-our-own-coast oil for which President Obama won’t allow American companies to drill—as he won’t allow off our Atlantic or Pacific coasts, or in Alaska, or anywhere oil is under Federally-owned land.

Then there’s this, courtesy of Speaker of the House of Representatives, John Boehner (R, OH).  Here is made manifest President Obama’s disdain for domestic oil production and for Americans’ pocketbooks.

Don Seymour writes [emphasis and link in the original]:

President Obama called for the kind of “all of the above” energy strategy long-championed by Republicans. But far from supporting all of the above,” the Obama administration has spent more than three years blocking efforts to expand energy production and bring down gas prices, while pushing job-crushing tax hikes and taxpayer-backed loans to companies like Solyndra.

Figure 2 pretty much says it all.

Figure 2: Running on Empty: The White House Plan for Higher Gas Prices & Fewer Jobs

Finally, there’s enormous technological improvement supporting vast increases in natural gas production, which the Obama administration would just as soon see disappear.  Fracking technology has exploded our accessible domestic stores of gas.  In the Marcellus gas deposit, alone, which lies thousands of feet down in a reservoir reaching from West Virginia to New York, is enough gas to satisfy our nation’s energy needs for the next 15 years.

Fracking (hydraulic fracturing) is the technology that’s making this heretofore unreachable gas eminently reachable.  Fracking works by drilling a 5″ diameter hole (yes, it’s that small) from a more or less convenient location on the surface down several thousand feet until the drill reaches the gas-containing shale or the depth at which the shale exists, then bending to horizontal and drilling farther, now into the shale, until the pipes and rig are well into in the part of the shale containing the gas. This is where that “more-or-less convenient” part comes in: the drill doesn’t have to be vertical, or at an angle off vertical to get to  the targeted location.  This allows the surface location of the drilling to be offset quite a ways, for instance out of town, or well away from the farmer’s house.  After arrival in the targeted gas area, a high-pressure burst of water and sand is pumped into the piping, which creates millimeter-wide fractures in the shale through which the natural gas can escape into the piping.

Notice that: it’s water that does the fracturing.  The sand is along to be driven by that same pressure burst into the cracks created by the water to hold them open.  There are some impurities add to the mix: biocides akin to what gets dumped into backyard swimming pools for keeping bacteria, algae (even at that depth), and so on from clogging the pipes (they’re only 5″ across).  Other impurities include lubricants to keep the sand from abrading, too much, the pipes on the way into place.  And to facilitate withdrawing the water so the gas can flow more easily.  There are impurities added by the depths through which the drilling occurred, also, as the drilling equipment and water are withdrawn so the gas can be collected: for instance, the drilling often goes through geologically ancient underground seas, or seabeds, so the equipment coming back up is coated with the salts of those ancient seas.  The withdrawn water then is treated by the frackers, or by water treatment specialist companies hired by the frackers, to greater purity than the typical city water treatment plant before it’s released back into the environment.

But Obama’s administration keeps trying to butt in—both to “standardize” regulations concerning fracking, and to use that “standardization” to interfere with fracking itself.  It’s only necessary to review his EPA regulations concerning coal use, ethanol for our cars, his “green” energy projects.  He’s moving to block the use of coal altogether; he mandates, or continues to mandate during his “review” of excess regulation, the use of ethanol in our gasoline without regard to what that does to an automobile’s engine or what ethanol production does to the price of food.  And he has accelerated the diversion of our tax money into his favored “green” companies.  Competition, even from clean natural gas, cannot be accepted.

And never mind that state regulators see no need for Federal involvement.  This isn’t a turf battle; they make their argument on logic and facts.  Pennsylvania regulators, for instance, understand the practices and geology of Pennsylvania much more thoroughly and clearly than can Federal regulators at the remote EPA.  At best, any reasonable Federal regulatory system would end up essentially replicating what many of the states already do, but at a political and physical distance that makes those Federal regulators more remote, and they’re less accountable.  Further, that remoteness renders even well-intentioned Federal regulators unable to tailor their regulations to the varied specific state environments—political, economic, or natural—the way the individual states can,