Gulliver

Help us Loper. You’re our only hope.

The End of Chevron Deference Could Be Good for Free Trade

Trade restrictions conducted in a shoot-from-the-hip populist or environmentalist manner may not be … sustainable. See what I did there?

‘The Supreme Court’s decision thus comes at a critical moment. The justices have empowered Congress to prevent or roll back trade decisions that are too ambiguous or illegal. Trade expert Alan Wolff has argued that Mr. Trump may not have authority to impose 10% across-the-board tariffs. Arguably, the post-Chevron environment permits legal challenges to some existing trade restrictions—say, on steel and aluminum tariffs or on restrictions of electric vehicles and components from allies with market economies. Rules covering restrictions on exports and imports of high-technology equipment and software could also be challenged, according to a Morgan Lewis analysis. Affected parties in both private and public sectors could file complaints.

‘Congress’s newfound authority will mean lawmakers need to specify what trade actions are enshrined in law rather than create vague statutes and let agencies iron out the details. Will a progressive Harris team without congressional approval be permitted to introduce new restrictions on imports based on their environmental profile or the labor conditions used to produce them? Will Mr. Trump enjoy wide discretion in his use of tariffs and import bans? Will he be allowed to withdraw from the WTO without congressional consent? If we don’t want the courts to make these determinations, Congress must step into the breach.’

Five Bankruptcy Policy Issues to Watch After the Election

The resolution of asbestos claims in bankruptcy is something codified in statute. This was because it was so difficult to cut through the complexity of these types of cases. Part of this was granting third-party releases from future litigation.

An entity like Dow Chemical’s Union Carbide files for Chapter 11 protection. There are various claims on the estate, including traditional financial and trade claims, in addition to the claims of litigants in asbestos liability cases. The claims are resolved in negotiations during the pendency of the case and approved by the court. Part of the confirmation plan would include resolution of claims related to the asbestos case made against entities and persons other than Union Carbide. Otherwise, this would be the never-ending story.

Companies have taken this approach to extend it to other types of mass tort Gordian knots. Purdue with its Oxycontin scandal was a good example of this application, in which the non-debtor third parties include the family that owns the company.

The Supreme Court rejected this extension of the asbestos statute to other forms of complex litigation, saying it was the job of Congress to write the law and nothing in the law said this was permissible.

Cases like this in the case of Loper reinforce the notion that the control over large-scale rule-making is swinging back to Congress.

‘Third-party releases remain available in mass-injury cases involving asbestos. In the Supreme Court’s majority opinion in the Purdue ruling, Justice Gorsuch said Congress—not the courts—has authority to expand nonconsensual releases beyond asbestos-related cases if it chooses.

‘The Justice Department’s Office of the U.S. Trustee, which polices bankruptcy courts, is expected to continue to oppose attempts to grant third-party releases in chapter 11 cases. The Supreme Court outlined some ways releases can be granted in compliance with its ruling.’

The Corporate Tax Rate Tug-of-War

Further to our comments on tax competition in The Olympics …

‘Using Tax Foundation’s General Equilibrium Model, we estimate that at the most extreme end, raising the corporate tax rate to 35 percent would shrink the US economy by nearly 1.4 percent and employment by 289,000 jobs. It would raise $2.2 trillion on a conventional basis, shrinking to $1.6 trillion on a dynamic basis, which factors in how a smaller economy with smaller incomes would shrink other tax revenues.’

If You Like Your Town, Can You Keep It?

Regulatory room, as I like to think of it, suggests that there are limits to the amount of regulation the system can impose on the individual before it becomes counter-productive and ineffective. This includes the totality of regulation at every level of government.

At some point, when we have reached this limit, the only way for one level of government to expand its reach is by encroaching on the regulatory turf of other levels of government.

Here is one example: the proposed federal intervention in local zoning regulations using the carrot (and some later stick).

‘‘’At an Aug. 16 rally in North Carolina, Ms. Harris told the crowd, “As president, I will work in partnership with industry to build the housing we need, both to rent and to buy. We will take down barriers and cut red tape, including at the state and local levels.”

‘That might sound honorable, but the vice president is angling for further federal intervention in local land use. Reports of her plans, as PBS puts it, include $40 billion to “encourage local governments to remove the regulations that prevent additional construction.” Such a policy would needlessly interfere in the democratic process and assert federal control in shaping what your neighborhood looks like.

‘Ms. Harris’s vision is in line with a new generation of pro-development activists who contend that local zoning laws restrict the housing supply and drive up prices. This crowd’s most zealous advocates tend to be upwardly mobile, white-collar urbanites who romanticize dependence on public transit and the high-density spaces depicted in fictional utopias. They’re driven by the desire for austere efficiency: the goal of fitting more people into tighter spaces and demolishing any barriers that stand in their way.’

Politico on the Courts and Regulation

NR re-writes a tendentious article from Politico on regulation.

‘A suite of Supreme Court rulings this summer placed limits on the power of agencies to interpret the laws that govern them. In Texas, a federal judge blocked Biden’s ban on noncompete agreements for workers, and a judge in Mississippi stopped him from ordering hospitals and insurers to participate in gender-transition surgeries. And an Ohio-based appeals court — by a 3–0 vote, including appointees of Presidents Bill Clinton, George W. Bush, and Biden himself — unanimously halted his rewriting of regulations of internet companies.’

Elon Musk backs California bill to regulate AI

Politics makes for odd bedfellows.

‘Musk, in a post on X, said the decision to support the bill was a “tough call and will probably make some people upset,” but that he thinks it should pass. His endorsement comes at a critical inflection point for the proposal, which must pass the Legislature by the end of the week to get to Gov. Gavin Newsom’s desk.

‘“For over 20 years, I have been an advocate for AI regulation, just as we regulate any product/technology that is a potential risk to the public,” he wrote.’

Politics and Bureaucracy in Iran's Public Affairs Administration

Apparently, in Iran, the distinction between bureaucracy and politics is cosmetic.

‘The findings indicate that the public administration and bureaucracy in Iran have deviated from Weber’s ideal bureaucracy. Previous research has shown that most developed countries have closer alignment with Weber's ideal bureaucracy in their public administration, implementing structural features such as administrative hierarchy, specialization, and meritocracy. Studies have shown that better results in public administration can be achieved if politicians' decisions and policies can be separated from the execution and administration of public affairs.’

California advances landmark legislation to regulate large AI models

California’s controversial AI bill is moving forward, as the state seeks to impose its will nationally. This is also an example of internecine conflict over regulatory room.

‘The proposal, aiming to reduce potential risks created by AI, would require companies to test their models and publicly disclose their safety protocols to prevent the models from being manipulated to, for example, wipe out the state’s electric grid or help build chemical weapons — scenarios experts say could be possible in the future with such rapid advancements in the industry.

‘The bill is among hundreds lawmakers are voting on during its final week of session. Gov. Gavin Newsom then has until the end of September to decide whether to sign them into law, veto them or allow them to become law without his signature.’

Government Bureaucracy Complicates Maui’s Response To Sea Level Rise

More regulatory conflict.

‘The decisions Jordan Molina faces as Maui County’s public works director are already tough. Sea levels are rising as the planet continues to warm from people burning fossil fuels, forcing questions about relocating roads instead of just maintaining them — and the hundreds of millions of taxpayer dollars that entails.

‘But as he recently explained to Maui’s Cost of Government Commission, his job is further complicated by the layers of bureaucracy he has to navigate in applying federal, state and county rules to a proposed project.’