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Institutional Differences And Controls Outline

Updated Institutional Differences And Controls Notes

Legislation & Regulation Outlines

Legislation & Regulation

Approximately 68 pages


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Statutes may allocate risk to (1) the market, (2) courts, (3) legislatures, or (4) agencies. Each institution has its own advantages and biases. Each also is limited by the extent to which it is controlled by other institutions, which is in large part due to history.

  1. Historical Background

    1. The Traditional Framework in Constitutional Lawconstitutional law before the New Deal sought to avoid redistribution and maintain autonomy, thus leaving the risk premium (and minimum health standards) as the only way to reduce risk of harm.

      1. Lochner v. New York, 198 U.S. 45 (1905) – 20

        1. (Peckham, J.) New York passed “labor law” imposing 10 hour/day limits and providing for inspections of separate washrooms, sleep rooms, etc. Although states may protect safety, welfare, and morals of public, this law is redistributive. Since the link between workday limits and health is “shadowy,” that part of law violates freedom of contract. Rest of law (inspections) okay.

        2. (Harlan, J., dissenting) workers may not appreciate the risks to health from wheat flour by working beyond 60 hours/week; law is rightfully paternalistic, and burden should be on Δ to disprove connection to health.

        3. (Holmes, J., dissenting) 14th Amendment tolerates different economic theories, not just Herbert Spencer’s Social Statics. There is no pre-political market, and court should not subvert majority rule unless “fundamental principles” are violated.

    2. The Development of Administrative Law – in part because of court control, agencies were relatively weak until the New Deal; with the advent of the Administrative Procedure Act, courts resumed controlling agencies, albeit more leniently when it came to administrative procedure and statutory interpretation.

      1. Richard Stewart, The Reformation of American Administrative Law, 88 Harv. L. Rev. 1669 (1975) – 416

        1. APA. In 1946, Congress enacted the Administrative Procedure Act (APA) which forced agencies to conform to formal notice and comment procedure. Courts expanded standing for public interest groups to challenge rulemaking and emphasized interest group representation.

      2. Notes

        1. CBA. Since 1970s, presidents have required Cost Benefit Analysis with rulemaking, and both executives and legislators have distanced themselves from unpopular decisions by delegating them to agencies. Since 1990s, courts have responded by rachetting down of public interest groups’ standing.

        2. Legitimacy, discretion, efficiency, competence. Robert Rabin, Federal Regulation in Historical Perspective (1986): courts’ principal concern with agencies before New Deal was legitimacy; after: discretion; in 1970s: efficiency; in 1980s: incompetence. Since agencies do not fit neatly into an ideological framework, revival of push toward tort-law risk-reduction.

    3. Risk in the Modern United Statesa problem with reducing workplace and environmental risk today is that its cause and solution is often unknown, and common law remedies may not work.

      1. Robert V. Percival, Environmental Regulation: Law, Science, and Policy (2000) – 3

        1. Modern risk more difficult to reduce. Early environmental problems were obvious and relatively easy to tackle. Now they are more difficult because: (1) there is an uncertainty between the mechanism of regulation and its effect; (2) a wrong decision could lead to potential catastrophe; (3) the risk is collective as opposed to concentrated; (4) there is the potential for an irreversibly bad outcome; (5) the harm may already be beyond control.

      2. Rachel L. Carson, Silent Spring (1962) – 258

        1. Access bias is a particularly acute phenomenon with environmental problems, since no one is harmed enough to incentivize companies to change. Root problem: introducing foreign plants and creating homogenous ecosystems. Leads to crazy diseases/insects and need for DDT.

      3. David Barstow, A Trench Caves In; a Young Worker Is Dead. Is It a Crime? New York Times, Dec. 21, 2003 – 7

        1. Patrick Walters. OSHA inspected a trench-digging company that violated safety rules, but the minor fines did not stop Moeves Plumbing Co. from violating the rules. Patrick Walters’ untrained superior disregarded the risk and Waters died. Walters’ only remedy was Ohio Workers’ Compensation.

        2. Moeves Plumbling illustrates several themes:

Problem Solution?
a. restricted choice general social safety net (redistributive)
b. insufficient knowledge information provision (efficient if works) or substantive regulation (paternalist)
c. bad choices restrict choice (paternalist)
d. externalities common law nuisance (efficient if works) or substantive regulation (paternalist)
  1. General connection between remedies. The most interesting thing about this chart is the components are connected: providing information (b.) preserves worker autonomy, but it might be more efficient to impose compulsory terms into a contract (c.). If workers don’t like this, then a social safety net might help (a.). And while that may be expensive, unaccounted-for externalities (d.) might justify it.

  1. General Institutional Strengths & Limits

    1. Two General Accounts of Institutional Differences – courts, legislatures, and agencies all have institutional biases that shape the problems they are effective at addressing as well as the remedies they offer.

      1. Clayton Gillette & James Krier, Risk, Courts, and Agencies, 138 U. Pa. L. Rev. 1027 (1990) – 205

Biases Courts Legislatures Agencies
Access (mobilization) Π must be injured and have standing, and resources to afford lawyer. Damages depend on severity of legally cognizable harm. Depends upon entrepreneurial politicians; access via vote may be corruptible. Depends on complaints from individuals/interest groups; differential access as corps. read Federal Register and individuals do not.
Process (incentives) Πs require reasons, “the law,” and judicial authority only extends to Πs in...

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