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Abstract:
The article uses a specific case to illustrate how three multinational firms used antidumping law to create cartels in Europe and in the United States. It goes on to show how easy it is to use antidumping law to facilitate cartellization and to suggest that this practice is probably common. The author urges antitrust authorities to use the filing of antidumping complaints to trigger antitrust investigations.

Abstract:
The article uses a specific case to illustrate how three multinational firms used antidumping law to create cartels in Europe and in the United States. It goes on to show how easy it is to use antidumping law to facilitate cartellization and to suggest that this practice is probably common. The author urges antitrust authorities to use the filing of antidumping complaints to trigger antitrust investigations.

Abstract:
As my contribution to a symposium, I was asked to identify and to discuss conflicts between environmental regulation and pursuit of the goals of national energy policy. I identify three contexts in which I see clear conflicts between environmental regulation and energy policy - gasoline production, importation of liquefied natural gas, and transmission of electricity. In each case, I conclude that the conflict is attributable to state and local regulations. In the case of the gasoline market, I conclude that the market is beginning to perform poorly because of a combination of state land use regulations that make it impossible to construct new refineries and state gasoline-type mandates that are in the process of transforming the highly competitive and efficient national gasoline market into scores of much smaller inefficient markets that are increasingly susceptible to both unilateral and collusive exercises of market power. In the case of the natural gas market, I conclude that state and local government attempts to assert the power to veto federally approved liquefied natural gas terminals place us in jeopardy of experiencing a devastating shortage of natural gas in the next few years. In the case of electricity transmission, I conclude that our rapidly growing shortage of transmission capacity is already costing us many billions of dollars per year and increasing dramatically our vulnerability to widespread blackouts and price spikes, and that the shortage is attributable primarily to state and local land use regulation. In each case, the conflict can be eliminated only by reducing the power of state and local regulators and/or by transferring some regulatory power from state and local institutions to federal institutions.

Environmental regulation, energy policy, natural gas, electricity

Abstract:
In this draft chapter, Professor Pierce provides an overview of the ongoing process through which the Federal Energy Regulatory Commission (FERC) has been attempting to restructure the U.S. electricity industry to create effectively competitive wholesale electricity markets for almost two decades and of the merger policies FERC has adopted and applied during that period. Pierce gives FERC high marks for adopting as its own the DOJ/FTC merger guidelines and then attempting to apply those guidelines to the unique characteristics of the evolving competitive electricity markets FERC has been attempting to create. He identifies three difficult systemic questions FERC has encountered in that process, however: (1) Whether to evaluate proposed mergers based on the assumption that future markets will resemble present markets when FERC expects that future markets will differ significantly from present markets in the near future? (2) If FERC decides to evaluate proposed mergers based on the assumption that the potentially affected markets will change significantly in the near future, which of several potential future market environments should it use as the basis for its evaluation? (3) Whether to adopt a passive merger policy in which the agency only reacts to structural changes proposed by private market participants or instead to adopt a proactive policy in which the agency attempts to use its power to condition its approval of mergers on the merged firm's commitment to make other structural changes that FERC considers essential to the success of it restructuring program.

Pierce describes the extreme difficulty FERC has encountered in answering those questions. The basic problem remains the same in 2005 as it was almost twenty years ago when FERC began its efforts to restructure the electricity market. FERC lacks the power to require market participants to restructure in the ways that are essential to create effectively competitive markets, and it lacks the prescience to be able to predict how the restructuring process will evolve. After almost two decades, FERC has only reached about the halfway point in the restructuring process, and it still cannot predict with confidence some of the most important characteristics of the markets in which firms that propose to merge will participate in the future. Pierce concludes that the severe problems FERC has encountered have little to do with its merger policies. They are primarily attributable to Congress's decision to give FERC a mandate to create an effectively competitive wholesale market without giving FERC the regulatory powers required to implement that mandate. He also concludes that, to the extent that merger policy is an important element of the program to restructure the U.S. electricity industry, the situation remains as Professor (now-Justice) Stephen Breyer and Professor Paul MacAvoy found it in their 1974 study of the structure of the industry - we need many more mergers if we want to improve the performance of the electricity market.

mergers, electric power, FERC, electricity markets

Abstract:
In this contribution to a symposium on restructuring the U.S. electricity market, I summarize the peaks and valleys that have characterized the restructuring process over the past two decades. I begin by describing the reasons why I joined with a group of other academics twenty years ago in an effort to restructure the U.S electricity market. The market was characterized by large, well-documented structural and operational maladies; it had performed poorly for over a decade; its basic characteristics were consistent with increased reliance on market forces as an effective governance mechanism; and, our recent success in restructuring analogous markets provided cause for optimism that we could implement a socially-beneficial restructuring of the U.S electricity market.

I then describe what we expected to happen in the restructuring process. We were aware of many of the serious obstacles we would have to overcome, but we believed that we could borrow enough of the elements of the recent U.S. effort to restructure its natural gas market and the recent British effort to restructure its electricity market to design and implement a socially-beneficial restructuring of the U.S. electricity market. By unbundling the natural monopoly functions from the functions that are susceptible to effective competition and forcing participants in the structurally-competitive functions to compete with each other, we believed that we could replace the inefficient, ineffectively-regulated local service providers with large, robustly competitive regional markets in which competition forced service providers to reduce their bloated costs and to abandon their inefficient methods of operation.

I then describe where we are in the restructuring process today. We have achieved a high degree of success in one region. In the mid-Atlantic states, restructuring has produced a competitive wholesale market in which consumers save over three billion dollars a year, and in which generators have been forced to improve their operating efficiency by five to twenty per cent. We have also made considerable progress in the northeast and in Texas, but the national restructuring process has now been stalled.

I then describe the combination of economic, legal, and political problems that have created an environment in which it is impossible to complete the national restructuring process at present. I argue that the economic and legal problems are susceptible to effective and well-known solutions, but that those solutions cannot be implemented in the present political environment. I also argue that the major political impediment to completion of the restructuring process consists of a group of politically powerful electric utilities in the southeast and northwest who have consistently opposed restructuring because they prefer the comfortable and profitable life of an ineffectively-regulated monopolist to participation in a competitive market. Those utilities were in the process of losing their battle to block the restructuring process until the California price spike of 2000-2001 and the closely related Enron scandal provided them with the fresh ammunition they needed to reinvigorate their strategic blocking action.

Finally, I recommend a course of action for the future. I argue that, with patience and persistence, we can complete the national restructuring process over the next decade. Over time, the continued success of the markets that have already been restructured, coupled with the fading public memory of the California and Enron debacles, will recreate the political conditions of the late 1990s in which we can complete the restructuring process. I note, however, that we do not have the luxury of being patient in our efforts to solve one critical problem. We must amend the Federal Power Act to confer on FERC preemptive power to approve proposed transmission expansion projects in order to avoid the devastating consequences of our severe and growing shortage of transmission capacity.

Electricity, natural gas, deregulation, Federal Power Act, FERC, Enron

Abstract:
The article discusses American Trucking Associations v EPA, in which a two-judge majority of a DC Circuit panel held that the section of the Clean Air Act that authorizes EPA to set primary air quality standards applicable to criteria pollutants is unconstitutional as interpreted by EPA. The court held the EPA interpretation unconstitutional because it provides no criteria for determining how much pollution is too much. The court remanded to allow EPA the opportunity to adopt a saving interpretation of the statute by adopting a binding determinate decision making standard that EPA and a court can apply to determine how much is too much.

Pierce argues that the ATA dispute is symptomatic of "the science charade"-- the tendency of legislatures and courts to demand more of science than science can deliver and to find more in science than is there. He argues that there is no available decision making standard that can satisfy the demands of the ATA majority. He also argues that the remedy imposed by the court is profoundly antidemocratic. Depending on how it is interpreted and applied, it either authorizes politically unaccountable judges to overrule policy decisions made by Presidents or it authorizes (and requires) a President to make a policy decision that binds his successors. Under either interpretation, the holding reduces the power of the electorate to influence policy making by participating in Presidential elections.

Abstract:
This is a review of Paul Verkuil's new book: Outsourcing Sovereignty: Why Privatization Threatens Democracy and What we Can Do About It. The book consists of a wide-ranging and well-documented critique of what Verkuil views as excessive reliance on private contractors to perform a variety of inherently governmental tasks, with particular emphasis on military and other national security functions. Verkuil discusses in detail numerous ways in which the U.S. might reduce the scope and severity of the severe problems that excessive reliance on poorly-supervised contractors is now having.

Pierce praises Verkuil's description and documentation of the problem he addresses in the book, but he expresses skepticism with respect to the likely efficacy of the remedies Verkuil discusses. Pierce proposes two other remedies that he believes would at least enhance the efficacy of the remedies Verkuil proposes - election of a President with better judgment than George W. Bush and congressional refusal to immunize private contractors from potential civil and criminal liability. Pierce also suggests, however, that downsizing and outsourcing military functions has had an important beneficial effect - it has limited the ability of the U.S. to invade and to occupy countries that displease the U.S., thereby reducing to two the five or six countries the U.S. might have attempted to invade and to occupy if it had a more robust military capability.

privatization, outsourcing, national security, inherently governmental functions

Abstract:
In Whitman v. American Trucking Association, 121 S. Ct. 903 (2001), the Court held that EPA cannot consider costs in any way in setting air quality standards. The Court's opinion raises many more questions than it answers. This article discusses three of those questions: (1) which of three competing canons of constructions should courts use when they interpret ambiguous provisions in regulatory statutes; (2) how can an agency make and defend its line-drawing decisions when it is prohibited from considering costs in any way: and, (3) how can courts review an agency's decisions when the agency is prohibited from considering costs.

Abstract:
Calabresi and Yoo make three important contributions to the literature on separation of powers in their new book. First, they seek to rescue the unitary executive theory from the Bush Administration lawyers who have discredited the theory in the eyes of many by relying on it to support outlandish claims of presidential power that are unrelated to the unitary executive theory. Second, they make a persuasive case for the unitary executive theory by explaining why a president must have the power to remove executive branch officers and to control policy making in the executive branch. Third, they document the ways in which all forty-three of our presidents have demonstrated their beliefs in the theory by consistently acting in accordance with the theory.

In this review, I agree with most of the arguments that Calabresi and Yoo make, but I disagree with them on two points. First, I do not believe that the president has the power to "veto" the decision of an executive branch officer. I believe that his only recourse is to remove an officer with whom he disagrees. Second, I do not believe that the for cause limits on the president's removal powers that the Supreme Court has upheld interfere with the president's ability to control policy making in the executive branch.

I also make two other points. First, political limits on the removal power are often formidable and are socially beneficial as a means of rendering the president accountable to the electorate. Second, to the extent that the president's ability to control policy making by "independent agencies" is unduly impaired, the root of that problem lies in unconstitutional statutory limits on the president's appointment power rather than in the innocuous statutory limits on his removal power.

unitary executive theory, presidential power, constitution, Vesting Clause, appointment power

Abstract:
In State Farm, the Supreme Court said that an agency decision is arbitrary and capricious if the agency did not consider adequately a relevant factor or did consider an impermissible factor. The Court did not indicate how courts should distinguish among three categories of potential decision making factors: mandatory, discretionary but permissible, and impermissible. Until 2007, the case law in both the D.C. Circuit and the Supreme Court addressed these questions in sensible ways. In particular, both courts held consistently that congressional silence with respect to a logically relevant factor rendered the factor a permissible factor that an agency could consider in its discretion. Two poorly-reasoned majority opinions issued in five-to-four decisions handed down in 2007 can be interpreted to overrule that long line of cases and to hold that congressional silence should be interpreted to render a logically relevant factor impermissible. In this article, I argue that: (1) the internally inconsistent 2007 opinions should not be interpreted in that manner; (2) the Court should issue another opinion soon in which it clarifies this aspect of its problematic 2007 opinions; and,(3) more broadly, the Court should take doctrine more seriously as one means of counteracting the powerful tendency of each Justice to ignore, discount, or distort doctrine to allow the Justice to vote in accordance with his or her ideological preferences.

agency decision-making, discretion, arbitrary and capricious, Chevron

Abstract:
Scholars have long questioned the political and constitutional legitimacy of the administrative state. By 1980, a majority of Justices seemed to be poised to hold that large portions of the administrative state are unconstitutional. In 1984, the Court stepped back from that abyss and took a major step toward legitimating and democratizing the administrative state. The Court instructed lower courts to defer to any reasonable agency interpretation of an ambiguous agency-administered statute. The Court based this doctrine of deference on the superior political accountability of agencies. Henceforth, politically-unaccountable judges were prohibited from substituting their policy preferences for those of politically-accountable agencies. The Court recognized that agencies are politically accountable to the people because they are subject to the control of the elected President. The Court's 1984 effort to democratize the administrative state has fallen far short of its potential because of temporal problems with the manner in which the Supreme Court defines and implements the deference doctrine the Court announced in 1984 and the other two doctrines that require courts to defer to agency interpretations of agency-administered texts. The most important of those deference doctrines is explicitly premised on the Court's understandable belief that policy decisions should be made by the politically accountable President rather than by politically unaccountable judges. Yet, the Court's present method of implementing the deference doctrines has two unfortunate effects. First, in a high proportion of cases, there is a lag of four to eight years between the time that a President takes office and the time when a court is willing to acquiesce in implementation of the policies preferred by the President. In other words, each President is required to implement the policies preferred by his predecessor for at least one term and perhaps even for two terms. Second, in some important situations, regulatees are required to incur large costs in enforcement actions to comply with interpretations of agency rules that have already been rejected by the incumbent President by the time courts impose the costs on the regulatees and that were disavowed by the agency at the time the regulatees engaged in the conduct that is the basis for the enforcement actions. Professor Pierce explains why he believes that these results are unacceptable, and he proposes four changes in the Court's present methods of implementing the deference doctrines that will eliminate these effects and that will create a more democratic and constitutionally legitimate administrative state in which Presidents actually have the power to make changes in policy within the statutory boundaries set by Congress.

Abstract:
This essay uses the Supreme Court’s 2009 opinion describing the version of the harmless error rule courts must use in administrative law cases as a point of entry in attempting to understand the Court’s 1992 opinion recognizing that 'procedural rights are special' for standing purposes. It concludes that courts should apply an easy-to-meet plausibility test in determining whether an agency’s refusal to provide a procedure required by statute or by the constitution has a causal relationship with the challenged agency action sufficient to allow the petitioner to obtain review of the action based on a procedural injury theory. Such a plausibility test complements well the administrative law version of the harmless error rule. By contrast, adoption of the 'substantially probable' test of causation suggested in an en banc opinion of the D.C. Circuit would have significant adverse effects on administrative law and would render the harmless error rule worthless.

administrative law, harmless error rule, plausibility test, substantially probable test

Abstract:
In part I of this article, I describe briefly the Indian rights dispute that Judge Royce Lamberth has been adjudicating since 1996. In part II, I describe two types of collateral actions he has taken in the case. He has held five cabinet Secretaries or Assistant Secretaries in contempt, threatened eighty government employees with contempt citations, and twice ordered the Department of Interior to disconnect its computers from the Internet for lengthy periods. In part III, I explain why I believe that these actions were unjustified, extraordinarily costly, and intolerable. In part IV, I describe the mechanisms that are available in the legal system today to limit a judge's ability to engage in such a pattern of action. In part V, I propose a new three-part means of reducing the risk that judges will engage in the kinds of abusive behavior illustrated by Judge Lamberth. I urge circuit courts to adopt a process of asking practitioners to complete anonymous questionnaires in which they provide their opinions with respect to the most important characteristics of a federal judge. The Chief Judge of the Circuit would then use the results as a basis for counseling federal judges who have a tendency to engage in abusive behavior and for imposition of formal sanctions on the rare judge who engages in an intolerable pattern of abusive behavior and who is resistant to informal counseling by the Chief Judge.

administrative law

Abstract:
The article discusses American Trucking Associations v. EPA, in which a two-judge majority of a DC Circuit panel held that the section of the Clean Air Act that authorizes EPA to set primary air quality standards applicable to criteria pollutants is unconstitutional as interpreted by EPA. The court held the EPA interpretaion unconstitutional because it provides no criteria for determining how much pollution is too much. The court remanded to allow EPA the opportunity to adopt a saving interpretation of the statute by adopting a binding determinate decision making standard that EPA and a court can apply to determine how much is too much.

Pierce argues that the ATA dispute is symptomatic of "the science charade" -- the tendency of legislatures and courts to demand more of science than science can deliver and to find more in science than is there. He argues that there is no available decision making standard that can satisfy the demands of the ATA majority. He also argues that the remedy imposed by the court is profoundly antidemocratic. Depending on how it is interpreted and applied, it either authorizes politically unaccountable judges to overrule policy decisions made by Presidents or it authorizes (and requires) a President to make a policy decision that binds his successors. Under either interpretation, the holding reduces the power of the electorate to influence policymaking by participating in Presidential elections.

Abstract:
Conflicts between Chevron and stare decisis can arise in several contexts. Pierce first identifies the values that are furthered by Chevron and stare decisis and then analyzes the judicial decisions that resolve conflicts between the two doctrines.The Supreme Court has announced and applied a series of mechanical rules to resolve such conflicts, e.g., Supreme Court precedents always trump Chevron deference, while even longstanding agency and circuit court precedents apparently count for nothing when the Court attempts to determine the meaning of statutory language. Circuit courts have announced and applied a dramatically different set of rules for resolving conflicts between Chevron and circuit precedents : (1) a court should analyze the circuit precedent with care to determine whether it can be characterized in a manner that avoids a conflict with Chevron (2) when an agency announces a construction that passes the Chevron test but that conflicts with a pre- Chevron circuit precedent, a court should uphold the agency construction, and overrule the precedent; and, (3) when an agency uses the notice and comment rulemaking process to announce a construction that conflicts with a post-Chevron circuit precedent, a court should use the occasion to reconsider the continuing validity of the precedent. Pierce argues that the methods of resolving conflicts between Chevron and stare decisis developed by the circuit courts are superior to the methods developed by the Supreme Court.