Eugene Volokh's Blog, page 2689
October 18, 2011
A Too Big to Fail Parking Lot at Yankee Stadium?
Manhattan Institute scholar Nicole Gelinas has an interesting column about a massive financially dubious parking lot at Yankee Stadium, which Bronx Borough President Ruben Diaz, Jr. claims requires a government bailout to prevent a local financial crisis:
If the Zuccotti kids want to protest Wall Street bailouts, they should go occupy the Yankees' luxury parking garages in The Bronx. Borough President Ruben Diaz Jr. wants to give the garages' private investors a fat-cat rescue at the expense of Gotham's Main Street mice.
Four years ago, the Yankees wanted a souped-up parking "system" for their new ballpark, and Mayor Bloomberg obliged. City Hall helped a previously unknown outfit, the Bronx Parking Development Co., borrow $238 million to build and run a $300 million parking paradise on city land under a long-term lease. (The state supplied the balance of the cash.)
ut the mayor didn't put the city's credit on the line. Instead, the city's Industrial Development Agency — which is not guaranteed by city taxpayers — sold the debt to bondholders.
No one ever said so outright, but bondholders were plainly supposed to assume that, because Bronx Parking's board is stacked with city officials and city officials talked up the bonds, that the city was there should the deal run into trouble.
It sure didn't make sense on the merits. The old parking lots generated $7 million a year, but the new lots were supposed to pay twice that in annual debt costs. And Bronx Parking can't just raise prices to fill the gap. Not many folks will pay $35 to park when there's a new Metro North station right there.
Reality has caught up. Last week, Bronx Parking made its payment to bondholders only by tapping an emergency fund. The firm must make two more payments by next October — and it doesn't have the cash.
There's no mystery about what should happen: The bondholders should take their losses.
But not if Diaz gets his way. Last month, the beep issued a call to build a "world-class" hotel and conference center where one of the garages stands. The hotel would pay Bronx Parking for the space — "stabiliz[ing] the financial situation we face so that we can ultimately meet our obligations to the bondholders," the company said....
Diaz's proposal relies on fear of a bond-market panic, which would force another 2008-style bailout of sophisticated investors. Apparently, such bailouts are OK as long as they come in the form of useful goodies, like the promise of taxpayer-subsidized construction jobs for Bronx voters.
But bondholders need to be taught a lesson. It's bad enough national taxpayers have too-big-to-fail banks. Local taxpayers don't need too-big-to-fail parking lots.
If the bailout does happen, it will add to the already record-breaking figure of over $1 billion in government subsidies for the construction of the new Yankee Stadium and related facilities.
Fortunately, there is an easier solution. Yankees' co-owner Hank Steinbrenner has recently denounced "socialism" in baseball in very strong terms. It's clear that he doesn't want his business dealings tainted by even the slightest whiff of socialistic subsidies.
The parking lot situation gives the Steinbrenners an opportunity to live up to their own principles. They can take some of the $1 billion they got in public subsidies for the stadium and use it to bail out the parking lot project, which, as Gelinas notes, the Yankees helped instigate in the first place. That would obviate the need for further "socialistic" subsidies for the lot and also remove some of the taint created by the original government subsidies for Yankee Stadium.
Hank Steinbrenner, a lonely parking lot turns its eyes to you!
Polling the Occupy Wall Street Protestors
Pollster Douglas Schoen describes the results of his firm's polling of attitudes and views among the Occupy Wall Street protestors in New York City's Succotti Park. It leads him to warn Democratic Party strategists that the protestors are very far from the center of American voters' views and that it is a dangerous electoral strategy to embrace them:
[T]he movement doesn't represent unemployed America and is not ideologically diverse. Rather, it comprises an unrepresentative segment of the electorate that believes in radical redistribution of wealth, civil disobedience and, in some instances, violence. Half (52%) have participated in a political movement before, virtually all (98%) say they would support civil disobedience to achieve their goals, and nearly one-third (31%) would support violence to advance their agenda.
The vast majority of demonstrators are actually employed, and the proportion of protesters unemployed (15%) is within single digits of the national unemployment rate (9.1%) ....
What binds a large majority of the protesters together—regardless of age, socioeconomic status or education—is a deep commitment to left-wing policies: opposition to free-market capitalism and support for radical redistribution of wealth, intense regulation of the private sector, and protectionist policies to keep American jobs from going overseas.
Assessing Endangered Species Science
Last Thursday, at a congressional hearing, Assistant U.S. Fish and Wildlife Service Director Gary Frazer said that the Interior Department's Office of Science Integrity would conduct an independent evaluation of the work of FWS biologists accused by a federal judge of being dishonest with the court and acting in '"bad faith." As the Los Angeles Times reports, Frazer said the FWS stands behind the work of its scientists but the Department will seek an independent assessment from outside experts nonetheless.
Frazer's comments were delivered at a House Science Committee Subcommittee on Oversight and Investigations hearing on "The Endangered Species Act: Reviewing the Nexus of Science and Policy" at which I was also a witness. In my testimony, I focused on the broader issue of how science is and should be used in under the ESA, and made three basic points.
First, it is important to ferret out genuine instances of scientific misconduct or science politicization. At the same time, it is essential to recognize that science merely informs, and does not dictate, policy. Species conservation is not – and cannot be – a wholly scientific exercise. Whether a given species is at risk of extinction may be a scientific question, but what to do about it is not. The likelihood that habitat loss or the introduction of an invasive species will compromise a species chance of survival in the wild is a question that can be answered by science. On the other hand, what conservation measures should be adopted to address such threats, and at what cost, are policy questions. Science can – indeed, must – inform such inquiries, but science alone does not tell us what to do. Insofar as debates over conservation policy are dressed up as scientific disputes — or instances of science abuse — we hamper our ability to assess competing policy options and pursue optimal conservation strategies.
Second, the structure of the ESA both undermines our ability to base conservation decisions on the best possible scientific information and creates substantial incentives to manipulate science so as to influence policy outcomes. The former occurs because the ESA makes the presence of endangered or threatened species a liability to private landowners. As a consequence, private landowners are often reluctant to allow government or other researchers to conduct surveys or engage in other species-related research on their land. This means the ESA makes it more difficult to know which species are most in need of help and where they are.
The ESA creates incentives for interest groups and others to try and manipulate science because certain science-based determinations, such as whether a species is "endangered," are triggers for non-discretionary regulatory measures. This means that if an interest group wants to influence regulatory outcomes, it is in their interest to try and influence the initial scientific determination. This explains why there is so much controversy and conflict over species listing decisions. The Act itself turns what should be primarily a scientific inquiry — whether the best available science indicates that a species meets a given definition of what it means to be endangered or threatened — into a high stakes proxy battle over regulatory policy. This is not good for science, and further complicates the quest for optimal conservation measures.
For those interested, my full testimony is here. Portions of my testimony are based on my chapter in Rebuilding the Ark. An archived webcast and the written statements of the other witnesses should be available here, as are pictures from the hearing.
Washington & Lee Law Review Symposium on Regulation in the Fringe Economy
Coming up on November 10–11 will be a symposium hosted by the Washington & Lee Law Review on Regulation in the Fringe Economy. Details are here. This corner of the consumer credit marketplace is exceedingly important but little-studied and recent innovations such as the Durbin Amendment and Credit CARD Act are increasing its importance as more people drop out of the mainstream consumer credit market. Looks like a very interesting program with a lot of excellent participants. Kudos to Jim Hawkins for organizing the program. At some point there will also be a conference website that will collect drafts of the papers.
October 17, 2011
Paul Watford Nominated for Ninth Circuit Judgeship
President Obama has nominated Paul Watford for a seat on the Ninth Circuit; you can find Watford's very impressive bio here. I've met Watford a few times, and he's always struck me as extremely bright, a moderate, and very much a "lawyer's lawyer." For those reasons, I hope he will be confirmed.
A Real Live Violation of the Third Amendment
The Third Amendment, which forbids the quartering of troops in private homes without the owner's consent, is often the butt of jokes. Few people take seriously the possibility that it could be violated. However, law professor Tom Bell has a forthcoming article about a neglected — and tragic — historical case where the federal government violated the Amendment with complete impunity. Here's the abstract:
During World War II, after Japan attacked the Aleutian Islands off Alaska's coast, the United States forcibly evacuated the islands' natives and quartered soldiers in private homes. That hitherto unremarked violation of the Third Amendment gives us a fresh perspective on what "Property" means in the U.S. Constitution. As a general legal matter, property includes not just real estate — land, fixtures attached thereto, and related rights — but also various kinds of personal property, ranging from tangibles such as books to intangibles such as causes of action. That knowledge would, if we interpreted the Constitution as we do other legal documents, tell us just about everything we need to know about the scope of constitutional property. Case law and commentary do not speak as plainly, however, raising troubling questions about what "Property" means each of the four times it appears in the Constitution. In particular, some authority suggests that the Takings Clause protects personal property less completely than it does real property. The unjust treatment of Aleutian natives during World War II shows the risk of giving constitutional property so peculiar and narrow a definition. This paper describes the troubling inconsistencies that afflict the law of constitutional property and invokes the Third Amendment, that oft-forgotten relic of the American Revolution, to argue for giving "Property" a plain, generous, and consistent meaning throughout Constitution.
The Third Amendment does allow forcible quartering of troops in private homes in wartime, but only "in a manner to be prescribed by law." And as Tom points out, Congress never enacted any law allowing troops to take over the homes of the Aleutian natives. He also shows that the the Aleutian natives' suffering went beyond quartering as such:
They were forcibly removed from their homes and interred in distant and unhealthy camps, an ordeal in which "[t]hey fell victim to an extraordinarily high death rate, losing many of the elders who sustained their culture."Worried about Japanese invaders, and pursuing a burnt earth policy, the U.S. military completely destroyed some evacuated villages. Other empty villages, though left standing, "were pillaged and ransacked by American military personnel." When about a year later they were finally returned to their homes, "All household effects and equipment the Aleuts had left behind were missing."The occupying forces took more than just the market value of the destroyed property. As reported in Personal Justice Denied, the official report of the Commission on Wartime Relocation and Internment of Civilians, "Through the insult of massive looting and vandalism of their homes and places of worship by American military forces, the Aleuts lost invaluable tangible ties to their past. Houses can eventually be rebuilt and refurnished, but stolen family mementos, heirlooms and religious icons . . . cannot be recovered." Quartering was thus not the only or worse thing that the Aleuts suffered at the hands of their government. [footnotes omitted]
As Tom points out, much of the above represents clear violations of the Takings Clause and other parts of the Constitution, in addition to the Third Amendment. Yet, unlike in the contemporary case of the internment of the Japanese-Americans, no one in government even considered the possibility that the Aleuts' constitutional rights had been violated.
Even when the federal government belatedly gave the Aleuts partial compensation for their losses in the 1980s, officials never admitted that the Aleuts had suffered violations of their Third and Fifth Amendment rights. Ultimately, the surviving Aleuts had to settle for a long-delayed, relatively paltry, $12,000 in compensation. The failure of officials to even consider this obvious violation of the Constitution is, as Tom notes, extremely telling. It does not paint a flattering picture of our constitutional culture, especially when it comes to property rights. It's worth noting that the era when these violations occurred was also the period when constitutional property rights were first demoted to their present second-class status (though it's far from clear that the government would have acted differently had a similar situation arisen earlier).
Tom does an excellent job of tracing the implications of the Aleutian episode for Third Amendment jurisprudence, constitutional theory, and property rights. I don't agree with all of his analysis. For example, I'm not convinced that this episode proves that constitutional protection for personal property is as important as that for real property. At least when it comes to violations by state and local governments, the latter is more likely to be endangered for reasons I discussed in Part I of this article. In this case, most of the harm inflicted on the Aleuts arose from the expropriation of their real property (their land and homes).
Despite a few such disagreements, I highly recommend Tom's article to anyone interested in property rights, constitutional theory, and — of course — the much-maligned Third Amendment. After reading the sad tale of the Aleuts, you will never again take your Third Amendment rights for granted!
"Its Time to Finalize the Robo-Signing Settlement"
"It's Time to Finalize the Robo-Signing Settlement" a new op-ed by yours truly on Forbes.com today. Let me emphasize that I think the practices of mortgage servicers were outrageous and they deserve to be punished for their practices. But I don't think that implies the remedy of principal reduction or that the settlement should be held up further in order to push for more on that score. My objection is not to punishing mortgage servicers but to collapse of the settlement and some of the contemplated remedies.
Ralph Rossum on Justice Thomas
Ralph Rossum has a new book coming out on the jurisprudence of Clarence Thomas. He previews his themes in an op-ed in the Orange County Register, "No Longer Doubting Thomas."
Update: Due to a brain freeze I originally mistyped the name of the article. It is corrected now.
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Public Support for Marijuana Legalization Hits 50% for the First Time
A new Gallup poll shows that public support for legalizing the possession of marijuana has now hit a record-high 50%, up from 46% last year [HT: Tom Angell of Law Enforcement Against Prohibition]. Forty-six percent still oppose legalization. This continues a longstanding trend under which support for legalization has gradually but consistently risen from 12% in 1970 to today's figure.
Moreover, the trend towards increasing public support for legalization is likely to continue. Like previous data, the new Gallup poll shows that support for legalization is higher the younger the respondents are. Some 62% of people age 18–29 support legalization, compared to 31% of those 65 and over. As I discussed in this post, this is mostly a generational effect, under which members of later generations are consistently more likely to support legalization than their elders. It is not a cohort effect, under which people support legalization when young but tend to change their minds as they age. Every age group in the Gallup survey is substantially more likely to support legalization than the one immediately older. Even the 50–64 group supports legalization at a 49% rate. Moreover, the longterm trend in aggregate opinion also reinforces the idea that we are witnessing a generation effect. If it was just a cohort effect, we should not see an increase in overall support for legalization over time. Indeed, opinion should have trended the other way, since the average age of the population is today considerably higher than in 1970.
Unfortunately, the new poll continues to show that self-described conservatives are among those least likely to support legalization (34%). I made the conservative case against the War on Drugs here, here, and here. Check out also William F. Buckley's classic article on the subject. As he put it, "it is outrageous to live in a society whose laws tolerate sending young people to life in prison because they grew, or distributed, a dozen ounces of marijuana."
To avoid confusion, I am not suggesting that marijuana legalization is a good idea merely because public opinion increasingly supports it. I think majority opinion is wrong about a great many things, in part because of the influence of political ignorance. Rather, the trend in public opinion is important because it increase the likelihood that legalization will become politically viable.
Obviously, majority opinion is not the only factor influencing drug policy. A lot of organized interest groups benefit from the War on Drugs, including prison guard unions, construction firms that build prisons, various government contractors, and many law enforcement agencies for whom it generates funding. Nonetheless, public opinion does have a substantial impact of its own. If we get to the point where 60 or 70% of the public supports legalization, I predict that the status quo is likely to become politically untenable even in spite of interest group lobbying. And, if present trends continue, we might well reach 60% support within the next 10–12 years.
Amy B. Zegart, Eyes on Spies
Over the weekend, I read Amy B. Zegart's new short book, Eyes on Spies, which deals with the persistent failures of Congress to engage in effective intelligence oversight. (The book is in a Hoover Institution Press series that features short books — brisk and brief, readable in a single plane flight — focused on a single topic.) I think the book is excellent and my review can be found at Lawfare. A short bit:
A leading political scientist with a distinguished track record in intelligence studies, Zegart is a national security scholar at Stanford and a senior fellow of the Hoover Institution. This is political science, not law. Students seeking an outline of the law, formal and informal legal mechanisms of intelligence oversight, will have to go elsewhere. Current issues running to the substance of what is taken up by Congress are not taken up at all. What this book does convey is discouraging news for those wanting to see Congress as the natural seat of accountability in intelligence. From the vantage point of social science, Zegart explains how Congress does a poor job of oversight of intelligence issues and lays out the many daunting institutional reasons why this is so.
Her methods are rational choice and public choice theory, on the one hand, and impressive empirical studies of how Congress actually behaves, on the other—studies that are sufficient to show what the theory of incentives would predict. Zegart starts with a review of the literature on congressional oversight in general; she discusses two basic theories of oversight, the "police patrol" and the "fire alarm." The policing model says that for certain functions, Congress is constantly patrolling executive activities, whereas for others, Congress outsources informally to other actors (including lobbyists) and then intervenes when the fire alarm occasionally goes off. Either way, a substantial part of the oversight literature suggests that congressional oversight, either in the way it designs agencies or undertakes oversight, hits the "Goldilocks" mean of not too hot, not too cold, but just right.
Whether that sanguine conclusion about the efficiency of congressional oversight is generally true or not, Zegart says flatly that it is not true of intelligence oversight by Congress. On the contrary, at least as measured by congressional activity–such as holding hearings or allocating staff resources–intelligence oversight is paltry by comparison to other areas of oversight, such as banking and finance, armed services, and many others. Indeed, Zegart's research shows that intelligence oversight is nearly at the bottom of the heap in terms of resources and attention, hearings and bills, by comparison to almost any other activity. (Ethics does still worse.) This is as true of the past ten years as it has been of the preceding decades. Despite the undeniable importance and growing reach of intelligence activities, and the steep growth of the intelligence budget and community, intelligence oversight remains practically as moribund as ever.
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