Recent Submissions

  • Presidential Signing Statements in the Federal Bureaucracy

    Feinzig, Joshua M. (2022)
    This Note examines the relationship between presidential signing statements and administrative decision-making over the Obama and Trump presidencies and from a variety of institutional angles, updating previous studies rooted in a narrow set of observations from the mid-2000s. It identifies occasions where presidents, agencies, and other Executive Branch actors have referenced statements in the course of justifying inactions, rules and regulations, and legal characterizations of executive entities. In moving the focus beyond a strict causation approach to measuring influence, which suffers from proof limitations and indeterminacy, the Note offers a more modest formulation of statements’ contextual and atmospheric role in shaping bureaucratic decision-making. It also brings these observations into conversation with debates over the interpretative uses of statements in separation-of-powers disputes.
  • The Costs of Banks Engaging in Non-Banking Activities: A Case Study

    Stevens, Reid B.; Zhang, Jeffery Y. (2022)
    The century-long separation of banking and commerce enshrined in U.S. law has weakened in recent decades. The academic literature has thus far focused mainly on conceptual benefits and costs of the trend, arguing that the integration of banking and commerce might lead to efficiency gains through diversification in a greater number of distinct business lines, but that it also might impair the safety and soundness of the banking system, weaken market integrity, and lead to an excessive concentration of economic power. Our Article contributes to the debate by empirically examining an important episode in the U.S. commodities market following the 2008-2009 financial crisis, when financial institutions sought to take advantage of depressed commodity prices by amassing unprecedented metals inventories. From 2010 through 2014, as financial institutions held over half of the total U.S. aluminum stock in Detroit warehouses, the time it took to remove metal from warehouses increased from days to years and the regional price of aluminum skyrocketed—a surreal phenomenon because aluminum is one of the most actively traded commodities in the world and is used in the production of industrial goods from beverage cans to cars and airplanes.
  • Defining Crime, Delegating Authority—How Different Are Administrative Crimes?

    Richman, Daniel (2022)
    As the Supreme Court reconsiders whether Congress can so freely provide for criminal enforcement of agency rules, this Article assesses the critique of administrative crimes though a federal criminal law lens. It explores the extent to which this critique carries over to other instances of mostly well-accepted, delegated federal criminal lawmaking—to courts, states, foreign governments, and international institutions. By considering these other delegations through the lens of the administrative crime critique, the Article destabilizes the critique’s doctrinal foundations. It then suggests that if one really cares about liberty—not the abstract “liberty” said to be protected by the separation of powers, but rather the lived liberty gained through careful and accountable criminal lawmaking that is free from the pathologies that have bedeviled federal criminal law for more than a century—administrative crimes are normatively quite attractive.
  • A Sober Look at SPACs

    Klausner, Michael; Ohlrogge, Michael; Ruan, Emily (2022)
    Special Purpose Acquisition Companies (SPACs)—touted as a better alternative to an IPO for taking a company public—have become the next big thing in the securities markets. This Article analyzes the structure of SPACs and the costs embedded in that structure. We find that costs embedded in the SPAC structure are subtle, opaque, higher than has been previously recognized, and higher than the cost of an IPO. Although SPACs raise $10.00 per share from investors in their IPOs, by the time a SPAC merges with a private company to take it public, the SPAC holds far less in net cash per share to contribute to the combined company. For SPACs that merged during our primary sample period of January 2019 through June 2020, mean and median net cash per share were $4.10 and $5.70, respectively. Between June 2020 and November 2021, net cash per share was somewhat higher but far below $10. We find that SPAC costs are not borne by the companies they take public, but instead by the SPAC shareholders who hold shares at the time SPACs merge. These investors experience steep post-merger losses, while SPAC sponsors profit handsomely. This Article concludes by suggesting that the SEC promulgate disclosure requirements specific to SPAC mergers that make clear SPACs’ costs and sponsors’ incentives, and that equalize regulatory preferences that SPACs enjoy compared to IPOs.
  • Common Ownership: Do Managers Really Compete Less?

    Fox, Merritt B.; Patel, Menesh S. (2022)
    This Article addresses an important question in modern antitrust: when large investment funds have holdings across an industry, is competition depressed? The question of the impact of common ownership on competition has gained much attention as the role of institutional shareholding has grown, with the funds of the three largest management companies holding in aggregate approximately 21% of the shares of a typical S&P 500 firm. It is a source of acute disagreement among scholars and policymakers, with some who believe common ownership does depress competition seeking antitrust law reforms that would significantly constrain how investment funds operate. Neglected in this vigorous debate, however, is a careful analysis of how the persons who in the first instance actually make the decisions that determine an industry’s competitiveness—firm managers—would act differently in the presence of common ownership. In essence, even if the common owners were to pressure firms to compete less, how, if at all, would that change the structure of incentives within which these managers work?
  • Public Compensation for Public Enforcement

    Cox, Prentiss; Peterson, Christopher L. (2022)
    Public enforcement actions frequently result in the distribution of money to people affected by violations of market protection laws. This “public compensation” returns billions of dollars to consumers, investors, and others each year. The law of public compensation appears confusing at first impression because of inconsistent use of nomenclature and conceptual confusion. However, courts have developed a discernible set of principles that allow for presumptions and loosened proof standards in awarding this relief. This buried, but clear, doctrine held for decades despite repeated challenges by business defendants. Supreme Court decisions in Liu v. SEC1 in June 2020 and FTC v. AMG Capital Management, LLC2 in April 2021 have unsettled the law. This Article offers two contributions to the development of the law of public compensation. First, we analyze decades of judicial decisions across federal and state public enforcement agencies and identify consensus legal principles for awarding two different forms of public compensation: disgorgement and public restitution. We extend the less-developed doctrine of public restitution by suggesting a proportionality test to provide guidance for more difficult cases. Second, we propose legislation to create uniform statutory authority for public enforcers that would reverse restrictions that have been or may be imposed on public compensation by recent and pending Supreme Court decisions. Both the doctrine and the proposed legislation are grounded in the unique position and authority of public enforcers, including discretion to select between civil penalties and public compensation as monetary remedies, as well as the deterrence rationale of public enforcement. An appendix includes model legislation Congress could adopt to clarify and restore public compensation authority across enforcement agencies.
  • Bankruptcy Process for Sale

    Ayotte, Kenneth; Ellias, Jared A. (2022)
    The lenders that fund Chapter 11 reorganizations exert significant influence over the bankruptcy process through the contract associated with the debtor-in-possession (DIP) loan. In this Article, we study a large sample of DIP loan contracts and document a trend: over the past three decades, DIP lenders have steadily increased their contractual control of Chapter 11. In fact, today’s DIP loan agreements routinely go so far as to dictate the very outcome of the restructuring process. When managers sell control over the bankruptcy case to a subset of the creditors in exchange for compensation, we call this transaction a “bankruptcy process sale.” We model two situations where process sales raise bankruptcy policy concerns: (1) when a senior creditor leverages the debtor’s need for financing to lock in a preferred outcome at the outset of the case (“plan protection”); and (2) when a senior creditor steers the case to protect its claim against litigation (“entitlement protection”). We show that both scenarios can lead to bankruptcy outcomes that fail to maximize the value of the firm for creditors as a whole. We study a new dataset that uses the text of 1.5 million court documents to identify creditor conflict over process sales, and our analysis offers evidence consistent with the predictions of the model.
  • Intrastate Natural Gas Regulation: An Alternative Perspective

    Pierce, Richard (1992-01-01)
    Professor Kelly has chosen a topic that is both timely and challenging. The major reforms in federal regulation that occurred in the 1980s have created a dynamic, competitive market in natural gas. State regulators confront a daunting task in attempting to devise appropriate changes in their methods of regulating local distribution companies (LDCs). The many difficult problems facing them have a single source: gas is a commodity, but gas service is not. An MMBtu of gas in the ground in Texas is currently worth less than a dollar. An MMBtu of gas at a particular plant site or residence at a particular moment in time can be worth two dollars, five dollars, ten dollars, or even more. Getting the gas to a particular location at a particular time is a costly, complicated, and capital-intensive process. It requires use of multiple, immobile, idiosyncratic assets, including production and gathering facilities, high pressure pipelines, storage fields, and low pressure distribution lines.
  • Health Care Dollars and Regulatory Sense: The Role of Advanced Practice Nursing

    Safriet, Barbara (1992-01-01)
    Our current health care "system" has been criticized for providing too little care, too late, for too few people, at too high a cost. In this Article, Dean Safriet argues that these problems require a fundamental restructuring of existing health care delivery systems and more effective utilization of all health care personnel. Dean Safriet urges immediate legislative reform to reduce the restrictions that currently constrain advanced practice nurses, especially nurse practitioners and certified nurse-midwives. Advanced practice nurses have demonstrated repeatedly that they can provide cost-effective, high-quality primary care for many of the neediest members of society, but their role in providing care has been has been severely limited by restrictions on their scope of practice, prescriptive authority, and eligibility for reimbursement. Eliminating these restriction would enable advanced practice nurses to increase access to health care while preserving quality and reducing costs.
  • Evidence on Complex Structures of Physician Joint Ventures

    Mitchell, Jean; Scott, Elton (1992-01-01)
    Physician ownership of health care facilities has become a controversial issue in the national debate over how to control rising health care costs. Proponents of physician ownership contend that investment by physicians in health care facilities broadens access to health care by increasing the financing available for such facilities. Critics of physician ownership contend that such ownership arrangements lead to higher prices for medical services and more frequent use of unnecessary medical procedures, without improving the quality of care. In this Article, Professors Mitchell and Scott review the current debate and present new empirical evidence based on their study of more than 2600 health care clinics in Florida. The evidence presented here indicates that physician investment in health care clinics is more widespread than previously believed. The evidence also indicates that physician investment tends to increase both the frequency of referrals to the clinics and the cost of the services provided by the clinics. In light of this evidence, the authors argue that current legislation which prohibits or restricts physician joint ventures is inadequate. They recommend that future legislation be strengthened to include stronger prohibitions and restrictions on indirect physician investment.
  • Whose Law Is It Anyway?

    Koniak, Susan (1992-01-01)
    Corporate Lawbreaking and Interactive Compliance, edited by Jay A. Sigler and Joseph E. Murphy. Westport, Conn.: Quorum Books, 1991. 201 pages. What can and should be the role of private groups in creating and maintaining law? What can and should be the relationship between law-giver and law-receiver? These fundamental questions haunt each of the essays that make up Corporate Lawbreaking and Interactive Compliance (hereinafter Corporate Lawbreaking). These questions, though not the explicit focus of the book, are questions to which the essayists and editors of this book are speaking whether they realize it or not. Seen as a series of discussions on the role of non-state groups in creating and maintaining law, this book is provocative and worth reading. Some of the proposals in this book, if taken seriously, would radically transform our legal system and could transform our democracy. But the book does not self-consciously set out to describe the role of private groups in maintaining law or the relationship between law-giver and law-receiver. It sets out to do something else-to ground with concrete examples a theory that the editors articulated in an earlier book. Judged in light of its professed goal, the book is less successful.
  • Depositors as a Source of Market Discipline

    Mantripragada, Krishna (1992-01-01)
    The failure of many savings and loan institutions in the 1980s bankrupted the Federal Savings and Loan Insurance Corporation (FSLIC), forcing the FSLIC to rely on massive federal subsidies. A similar crisis subsequently struck the banking system, and it now appears that the Federal Deposit Insurance Corporation (FDIC) will also go bankrupt and require taxpayer subsidies. The vast expense of these bailouts has focused the attention of policymakers and the public on reducing the risk exposure of the federal deposit insurance system. In response to this crisis, the U.S. Treasury issued a report in 1991 in which it made specific proposals for reforming deposit insurance. The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) incorporated some of the Treasury Department's proposals. One controversial element of the FDICIA is a plan for reforming the deposit insurance system by shifting some of the risk of bank failures from the federal insurance fund to depositors themselves. This proposal rests on the premise that depositors who bear some of the risk of bank failure are likely to discipline weak institutions by threatening to withdraw their deposits. In this Article, Professor Mantripragada discusses the costs and benefits of depositor discipline and assesses the Treasury proposals and FDICIA provisions that are designed to promote depositor discipline. The author suggests that a maturity-based coverage limit would be preferable to the dollar-based limit retained by the Act.
  • Interstate Banking and Product-Line Freedom: Would Broader Powers Have Helped The Banks?

    Litan, Robert (1992-01-01)
    The banking difficulties of the 1980s prompted Congress to enact the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). Advocates of structural reform have criticized the FDICIA because it does not include broader interstate banking authority and product-line freedom. In this. Article, Mr. Litan predicts the effect the absence of such reforms can be expected to have on the U.S. banking industry. The predictions are derived from counter-factual exercises in which the author measures the impact the reforms would have had on the banking industry of the 1980s had the reforms been enacted. These exercises suggest that broader interstate powers would be more effective than expanded product-line authority at reducing bank failure, but they also indicate that neither reform would significantly reduce the number of bank failures during the next several years. Nevertheless, it appears that broader interstate authority, coupled with broader product-line freedom subject to suitable safeguards, would strengthen the industry overall by mitigating the risks associated with banking and lowering the prices of financial services. As a result, Mr. Litan concludes that structural reform of the banking system should remain on the congressional agenda.
  • Can Absolute Manufacturer Liability be Defended?

    Priest, George (1992-01-01)
    Professor George L. Priest's writings have asserted over the years that expanded products liability law.forces manufacturers to sell insurance contracts in conjunction with goods and services, making consumer purchases more expensive than they are worth and reducing consumer welfare. In the last volume of this Journal Steven P. Croley and Jon D. Hanson critically analyzed Professor Priest's work of recent years and argued that the expansion of tort liability has benefitted consumers even where it has forced the withdrawal of products and services from the market. Here, Professor Priest questions the conceptual and empirical claims behind Croley and Hanson's callfor absolute liability. He presents an analysis of general aviation, a prominent product market heavily affected by the expansion of liability, to underscore the authors' contrasting conceptions of efficiency in tort. In order to demonstrate the destructive effects of contemporary tort law, he adduces statistics that show a dramatic decline in general aircraft production despite a concurrent decline in the product accident rate. He suggests that significant analytical and empirical issues need to be addressed before Croley and Hanson's recommendation of absolute manufacturer liability can be adopted.
  • Intrastate Natural Gas Regulation: Finding Order in the Chaos

    Kelly, Suedeen (1992-01-01)
    In the mid-1980s, customers threatened to bypass local gas distribution companies in favor of other suppliers and cheaper fuels. In response, states began to reform their natural gas regulatory policies to lower delivered prices to potential bypassers. In this Article, Professor Kelly argues that the most promising means of reform is to unbundle traditional local gas utility services, that is, to make gas transportation services available to customers separately from gas retail sales services. This Article provides a thorough analysis of the unbundling policies adopted by state regulators across the nation. Through this systematic review of intrastate regulatory policies, Professor Kelly outlines the best method of maintaining open access to markets, of retaining sufficient regulatory control over local utility companies, and of maximizing competition and minimizing the adverse effects of cost-shifting and stranded investment. Professor Kelly asserts that regulatory bodies must recognize the competitive character of unbundled gas retailing service and the monopolistic nature of both unbundled gas transportation services and the services that remain bundled, in order to promote most effectively the primary goal of unbundling: prevention of uneconomic bypass by providing market-priced natural gas to end users.
  • Regulating Broadband Communication Networks

    Hammond, Allen (1992-01-01)
    Professor Allen Hammond argues that the impending development of broadband communication networks has the potential to expand and equalize speech rights by endowing the public with more numerous and more powerful opportunities for speech. To realize these benefits, however, Congress must design a novel regulatory scheme that will maximize the speech rights of both the owners and the users of broadband communication networks. Current regulatory schemes governing print, broadcast and cable provide media owners and editors with extensive speech rights, but fail to provide sufficient public access. In contrast, the regulatory scheme governing telephone service providers assures public speech rights only by depriving media owners of all opportunities for speech.
  • Contents

  • Worst Things First: Risk, Information, and Regulatory Structure in Toxic Substances Control

    Applegate, John (1992-01-01)
    Scientific uncertainty is the characteristic problem of toxic substances control, and regulators lack the resources to resolve or significantly reduce uncertainty across all of the risks they must address. For this reason, the Environmental Protection Agency (EPA) has become intensely interested in setting priorities among its responsibilities. EPA lacks, however, a coherent framework within which to implement its findings. In this Article, Professor Applegate proposes that the current regulatory regime for toxic substances be restructured to emphasize thoughtful priority setting rather than unrealistic risk standards and deadlines. In his view, Congress should provide broad parameters for agency action in particular cases, but should give specific directions to the agency for setting priorities and goals. This recommendation necessarily implicates broader issues of congressional specificity in regulatory statutes, presidential control of administrative agencies, and judicial review in the early phases of the regulatory process. Professor Applegate explores these larger issues as they relate to his proposal and evaluates his proposal's feasibility by comparing it to legislatively mandated planning in forest management.

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