Current Issue

  • Volume 64,
  • Number 2 -
  • November 2014

Articles

The Permit Power Revisited: The Theory and Practice of Regulatory Permits in the Administrative State
Eric Biber & J.B. Ruhl
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Two decades ago, Professor Richard Epstein fired a shot at the administrative state that has gone largely unanswered in legal scholarship. His target was the “permit power,” under which legislatures prohibit a specified activity by statute and delegate to administrative agencies the discretionary power to authorize the activity under terms the agency mandates in a regulatory permit. Accurately describing the permit power as an “enormous power in the state,” Epstein bemoaned that it had “received scant attention in the academic literature.” He sought to fill that gap. Centered on the premise that the permit power represents “a complete inversion of the proper distribution of power within a legal system,” Epstein launched a scathing critique of regulatory permitting in operation, condemning it as a “racket” for administrative abuses and excesses.

Epstein’s assessment of the permit power was and remains accurate in three respects: it is vast in scope, it is ripe for administrative abuse, and it has been largely ignored in legal scholarship. The problem is that, beyond what he got right about the permit power, most of Epstein’s critique was based on an incomplete caricature of permitting in theory and practice.

This Article is the first to return comprehensively to the permit power since Epstein’s critique, offering a deep account of the theory and practice of regulatory permits in the administrative state. This Article opens by defining the various types of regulatory permits and describing the scope of permitting in the regulatory state. From there it compares different permit design approaches and explores the advantages of general permits, including their ability to mitigate many of the concerns Epstein advanced. This Article then applies a theoretical model to environmental degradation problems and concludes that if certain conditions are met, general permits can effectively respond to many of the complex policy problems of the future. Finally, this Article adds to the scholarship initiated by Epstein by proposing a set of default rules and exceptions for permit design and suggesting how they apply to complex policy problems.

An Ex Ante Approach to Excessive State Debt
Vincent S.J. Buccola
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The recent recession has shone a very public spotlight on the perilous financial conditions of many American states. At the same time, it has renewed academic interest in the question of excessive state debt—its causes and possible cures. Scholars who see risk externalization as a primary driver of systematic overborrowing have proposed bankruptcy legislation for the states as one solution. Such advocates argue that a formal debt-adjustment mechanism could reduce the appeal of federal bailouts and thereby curtail the moral hazard leading to excessive debt. But given the states’ unilateral power to set the terms of default, it is hard to see why an opportunistic state would be inclined voluntarily to invoke an ex post debt-adjustment mechanism—and indeed this Article shows that even under existing law states could effectively opt into the federal bankruptcy procedures of Chapter 9 if they so desired. An ex ante approach is needed.

This Article identifies one such ex ante approach, “tax-credit borrowing,” and argues that with minimal changes to federal tax policy, this approach could reduce risk externalization more effectively than bankruptcy legislation can. The advantage of tax-credit borrowing in this context stems from its capacity to preclude default by toggling the plaintiff/defendant distinction that lies at the heart of modern sovereign-immunity doctrine. Without a credible threat of default, a state’s leverage in bailout negotiations and the concomitant moral hazard would be greatly reduced. But tax-credit borrowing would have important implications for state fiscal policy even if agency problems (rather than risk externalization) better explain state borrowing habits. This Article shows how the availability of risk-free debt could reduce borrowing costs and improve the monitoring of state political actors.

Notes

12 Confused Men: Using Flowchart Verdict Sheets To Mitigate Inconsistent Civil Verdicts
Jerry J. Fang
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The finality of jury verdicts reflects an implicit societal acceptance of the soundness of the jury’s decision. Regardless, jurors are not infallible, and the questions they are often tasked with deciding are unfortunately neither obvious nor clear. The length of trial, complexity of subject matter, volume of factual background, and opaqueness of law can converge in a perfect storm that may confound even the most capable juror. Although the Federal Rules of Civil Procedure provide decision rules to resolve inconsistent verdicts, the current remedies authorized by Rule 49—notably, the resubmission of the verdict to the jury and the ordering of a new trial—impose time and money costs on the jury, litigants, and judicial system. The increasing complexity of civil litigation raises the stakes by increasing the likelihood of juror error and the costs of relitigating the case.

This Note proposes the creation of flowchart verdict sheets as a prophylactic against juror confusion. The flowchart verdict sheet builds upon current legal reform proposals to increase juror understanding while decreasing juror confusion and incorporates principles of effective visual design. By mitigating the confusion that can result in inconsistencies before the verdict is rendered, the flowchart verdict sheet enables the judicial system to avoid the costs associated with remedying inconsistent verdicts.

Causation’s Nuclear Future: Applying Proportional Liability to the Price-Anderson Act
William D. O’Connell
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For more than a quarter century, public discourse has pushed the nuclear-power industry in the direction of heavier regulation and greater scrutiny, effectively halting construction of new reactors. By focusing on contemporary fear of significant accidents, such discourse begs the question of what the nation’s court system would actually do should a major nuclear incident cause radiation-induced cancers.

Congress’s attempt to answer that question is the Price-Anderson Act, a broad statute addressing claims by the victims of a major nuclear accident. Lower courts interpreting the Act have repeatedly encountered a major stumbling block: it declares that judges must apply the antediluvian preponderance-of-the-evidence logic of state tort law, even though radiation science insists that the causes of radiation-induced cancers are more complex. After a major nuclear accident, the Act’s paradoxically outdated rules for adjudicating “causation” would make post-incident compensation unworkable.

This Note urges that nuclear-power-plant liability should not turn on eighteenth-century tort law. Drawing on modern scientific conclusions regarding the invariably “statistical” nature of cancer, this Note suggests a unitary federal standard for the Price-Anderson Act—that a defendant be deemed to have “caused” a plaintiff’s injury in direct proportion to the increased risk of harm the defendant has imposed. This “proportional liability” rule would not only fairly evaluate the costs borne by injured plaintiffs and protect a reawakening nuclear industry from the prospect of bank-breaking litigation, but would prove workable with only minor changes to the Price-Anderson Act’s standards of “injury” and “fault.”