Tag: Administrative Law

Pay for Regulator Performance – Article by M. Todd Henderson & Frederick Tung

From Volume 85, Number 4 (May 2012)
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Few doubt that executive compensation arrangements encouraged the excessive risk taking by banks that led to the recent Financial Crisis. Accordingly, academics and lawmakers have called for the reform of banker pay practices. In this Article, we argue that regulator pay is to blame as well, and that fixing it may be easier and more effective than reforming banker pay. Regulatory failures during the Financial Crisis resulted at least in part from a lack of sufficient incentives for examiners to act aggressively to prevent excessive risk. Bank regulators are rarely paid for performance, and in atypical cases involving performance bonus programs, the bonuses have been allocated in highly inefficient ways. We propose that regulators, specifically bank examiners, be compensated with a debt-heavy mix of phantom bank debt and equity, as well as a separate bonus linked to the timing of the decision to take over a bank. Our pay-for-performance approach for regulators would help reduce the incidence of future regulatory failures.

 

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The Media that Need Citizens: The First Amendment and the Fifth Estate – Article by Adam Cohen

From Volume 85, Number 1 (November 2011)
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The Federal Trade Commission (“FTC”) adopted new disclosure rules in 2009 for “consumer-generated media.” The “Guides Concerning the Use of Endorsements and Testimonials in Advertising” warn bloggers, people who post on social networking sites, and other generators of new media content that they must disclose when they receive payments or free products related to what they write about. Failure to disclose material connections can result in fines of up to $10,000 for each violation.

The FTC endorsement rules do not apply to journalists who work for newspapers, magazines, or television and radio stations. When the guides were released, new media journalists protested that the government was creating a two-tiered regulatory regime that singled them out for unfavorable treatment. Jack Shafer, the media critic for Slate, called the rules “preposterous” and denounced “[t]he FTC’s [m]ad [p]ower [g]rab.”

 

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A Congressional Carve Out: The Necessity for Uniform Application of Professional Sports Leagues’ Performance-Enhancing Drug Policies – Note by Lee Linderman

From Volume 84, Number 3 (March 2011)
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INTRODUCTION “The use of steroids [in sports] has become a public health crisis. Half a million kids a year in the U.S. are taking steroids . . . and many of them do this because they are emulating their sports heroes.” In the past several years, performance-enhancing drug (“PED” or “steroid”) use in major professional sports has captured the attention of not only average fans, but also lawmakers in Congress. Rampant steroid abuse in Major League Baseball (“MLB”) catalyzed a 2005 congressional hearing at which famous ballplayers like Mark McGwire testified. In 2009, two National Football League (“NFL”) players challenged their suspensions for using substances banned by the NFL collective bargaining agreement (“CBA”) in court. This suggests sports leagues may lack the legal authority to conclusively bargain for and uniformly apply certain aspects of a CBA such as the PED policy—a fact that compelled NFL Commissioner Roger Goodell to seek congressional intervention in the steroids arena.

During this so-called steroids era, sports radio and television shows have shifted in focus from the magic of record-breaking performances to the possibility that PED use tainted those achievements. Cynics have cast the entire 1990s as a statistical lie, claiming there is no way to tell who was taking PEDs and who was not; as a result, many commentators have recommended adding asterisks to individual or team records that indicate those records might have been tainted by PED abuse. Scholars from a variety of fields have explored how PED use has negatively affected the integrity of professional sports, the medical dangers of taking PEDs, and how professional athletes’ use of PEDs has adversely affected youth athletes. In response to this outburst of PED use in professional sports and the subsequent explosion of literature decrying it, leagues such as the NFL and MLB have significantly increased the penalties for players caught using PEDs in an attempt to cleanse the leagues’ images.

 

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How Courts Can Protect State Autonomy from Federal Administrative Encroachment – Article by Scott A. Keller

From Volume 82, Number 1 (November 2008)
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Unlike the federalism cases typical of the Rehnquist Court, modern federalism cases will not involve interpretation of the Commerce Clause or the Tenth Amendment, particularly after Gonzales v. Raich refused to expand the Commerce Clause to protect state autonomy. Instead, modern federalism cases will involve basic statutory construction. The Supreme Court has become increasingly interested in cases dealing with the intersection of federalism and statutory construction, deciding two such cases during the October 2007 Term and granting certiorari in two other cases for the 2008 Term.

Federalism concerns in statutory construction arise most frequently in administrative law, as modern federal agencies produce an enormous amount of laws. As a result, the hard questions about federalism now appear in administrative law cases. Courts and commentators are becoming wary of the ability of federal agencies to encroach on state autonomy, given the underenforced constitutional norms of federalism and the nondelegation doctrine.

 

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Wireless Telecommunications: Spectrum as a Critical Resource – Article by Gerald R. Faulhaber

From Volume 79, Number 3 (March 2006)
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Telecommunications services have always been a mix of wireline services, such as wireline telephone, cable television, and Internet access, and wireless services, such as AM/FM radio, broadcast television, and microwave-satellite transmission of electronic signals. Each mode of service has certain properties, both beneficial and detrimental. Wireline has the potential for almost unlimited capacity, such as the use of multigigabit fiber optics, but requires that the service be delivered to a particular location. Wireless frees the customer from being tied to a specific location, allowing service to be rendered wherever the customer is, but suffers from fading or nonexistent connections and possible privacy concerns. The mix between wireline mode and wireless mode is in constant flux; recently, however, the focus of the market has been shifting toward wireless. Cellular telephony has exploded worldwide, and after a slow start, the market penetration has increased dramatically. Meanwhile, the number of wired access lines in the United States has been declining, for the first time since the Great Depression.

The ability of engineers and innovative firms to bring new and compelling wireless telecommunications applications to an ever-communicating market is very impressive, and bodes well for even greater applications in the future. But even the cleverest of engineers cannot escape the one critical resource absolutely required for wireless services to be deployed: electromagnetic spectrum. Wireless services and devices are all radios, emitting electromagnetic radiation into free space and receiving such radiation. If other nearby transmitters are emitting radiation at the same frequency, the intended receivers will be unable to disentangle the signal they wish to receive from the spurious “interfering” signal. Fundamental to wireless technology is the need to solve this potential interference problem. Since the birth of radio in the 1920s, the interference problem has been solved by government licensing of transmission rights; each licensee is permitted to transmit from a particular place at a particular frequency at a maximum power for a particular application (for example, broadcast radio or police dispatch). Licensing has traditionally been a highly bureaucratic and political process. The outcome, all agree, has been a hugely inefficient use of spectrum resulting from this “command and control” regulatory allocation of a scarce resource.

 

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Municipal Wireless Broadband: Hype or Harbinger? – Article by Sharon E. Gillett

From Volume 79, Number 3 (March 2006)
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Municipal wireless is an important trend, but not for the reasons implied by much of the popular reporting that surrounds this topic. Cities are unlikely to dominate the roster of wireless broadband operators that directly serve the residential and business public. Municipalities, however, have been significant early adopters of innovative unlicensed wireless broadband technologies, providing both a market toehold to innovative products and services using those technologies, and an experimental testing ground for novel organizational models. Most cases of municipal wireless involve the use of unlicensed wireless broadband to meet the local government’s own needs for ubiquitous broadband services, or to construct public-private partnerships aimed at facilitating broadband wireless services to the business and residential public. These uses express local government interests long recognized as legitimate: provision of efficient city services, local economic development, and equity within the community. Thus, the concern for policymakers should not be whether cities should be involved in wireless broadband; there are legitimate reasons why they should, and why increasing numbers of them will be. Rather, the important public policy concern is how to ensure that, in the process of facilitating the first uses of wireless, city authority does not get subverted to create artificial limits on future broadband wireless competition. Doing so will require thoughtful melding of separate legal frameworks governing access to city property and public rights of way into a coherent policy that guides when exclusivity legitimately can or cannot feature in public-private partnership arrangements for communications services.

 

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Advanced Wireless Technologies and Public Policy – Article by Thomas W. Hazlett & Matthew L. Spitzer

From Volume 79, Number 3 (March 2006)
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The traditional U.S. spectrum allocation system has long been criticized – even by regulators – as overly rigid. To unleash innovative wireless technologies, the Federal Communications Commission (“FCC”) has gradually loosened government restrictions on airwave use. But the path to liberalization leads in alternative directions. One policy reform paradigm, championed by leading economists such as Ronald Coase, allows markets to allocate exclusively assigned spectrum use rights. A rival approach, advanced by advocates of an “open spectrum” such as Lawrence Lessig, favors allocating greater bandwidth for unlicensed use. In such bands, there is free entry by wireless users, provided they use regulator-approved devices that comply with protocols (including power limits) established by the government.

The FCC’s November 2002 Spectrum Policy Task Force Report called for greater reliance on both the exclusive and unlicensed models. Yet, considered in historical context, the FCC’s analysis veered decidedly toward more intense use of “spectrum commons,” abandoning previous agency goals to expand licensed allocations. Citing the “tremendous success” of unlicensed use of cordless phones and Wi-Fi access points, regulators have since argued that advanced wireless technologies create a new policy imperative. Because modern radios use sophisticated techniques for sorting out competing signals, “block allocations” are outdated.

The FCC sees the “spectrum commons” regulatory paradigm as suited to the new opportunities in wireless. In the wake of the spectrum report, it allocated additional 5 GHz bands for unlicensed use, and pursued several regulatory initiatives to dramatically expand bandwidth available for unlicensed devices. In contrast, new allocations for exclusively assigned, flexible-use spectrum rights (analogized as “property rights”) have stalled.

The FCC states that advanced wireless technologies yield valuable new opportunities to share radio spectrum on an unlicensed basis. Yet, the same advances increase opportunities for using exclusively assigned bands, where market data reveal that the most intense and complex frequency sharing actually occurs. Exclusive rights allow coordination of frequency use by competitive network operators; consumers generally find this a superior form of organization than that provided through regulated protocols, and overwhelmingly value marginal allocations of exclusively assigned rights more highly.

This Article examines tradeoffs in allocating spectrum for exclusive rights versus unlicensed use, focusing on an ongoing FCC rulemaking to create an “interference temperature.” This policy would permit unlicensed users to share bandwidth, including frequencies “exclusively” allocated to licensees, according to FCC rules. Our aim is to demonstrate that standard economic principles illuminate the path to proconsumer rules.

 

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Judicial Deference to Agency Interpretation of Jurisdiction After Mead – Note by Torrey A. Cope

From Volume 78, Number 5 (July 2005)
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The pervasive influence of administrative governance is a defining feature of modern American life. Indeed, it is hard to find an aspect of daily life that is not regulated by one federal agency or another: the Department of Labor enforces labor laws; the Environmental Protection Agency (“EPA”) manages air and water quality; the Federal Energy Regulatory Commission (“FERC”) regulates electricity; the Food and Drug Administration (“FDA”) monitors the nation’s food supply and ensures the safety of its medicine; the Board of Governors of the Federal Reserve System (“the Fed”) supervises banking institutions; the Consumer Product Safety Commission (“CPSC”) regulates consumer products; and the Federal Communications Commission (“FCC”) oversees radio, television, satellite, and cable communications. With so many agencies minding America, one might ask: who is minding America’s agencies?

For one, courts have a significant supervisory role. They ensure that agency actions meet the Constitution’s due process requirements and individual liberty protections. Yet at the same time, courts give agencies leeway in interpreting the federal statutes they administer. This is because agencies have technical expertise, democratic credentials, and flexibility that courts do not. There is an inherent tension between these two opposing forces – a need for control and a need for deference. Courts must balance these forces whenever they review challenges to administrative action.

 

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