Technology and the Guilty Mind: When Do Technology Providers Become Criminal Accomplices?

This is new story art for my article examining when the proprietors of technology with criminal uses aid and abet their users’ crimes. The aim is to help courts, prosecutors, and technologists draw the line between joining a criminal enterprise and merely providing technology with criminal uses. The article explains the legal doctrines underlying this type of liability and provides examples of at-risk technologies, including spam software, file-sharing services, and anonymity networks like Tor.

New Article on “Eradicating Zombie Mortgages”

Andrea Clark has posted an interesting article on SSRN entitled “Amidst the Walking Dead: Judicial and Nonjudicial Approaches for Eradicating Zombie Mortgages.” A version of the article will be published in an upcoming edition of the Emory Law Journal. Here is the current abstract:

The collapse of the residential housing market in 2007 brought with it a wave of foreclosures. Subprime borrowers, who were once elated by loans they secured from lenders, suddenly found themselves strangled by the predatory terms of their newfound loans and ultimately became unable to pay their outstanding loan balance. Amidst a growing number of residential foreclosures, lenders discovered the financial downside of foreclosing on residential properties – though this realization often surfaced after the foreclosure proceeding had commenced – and began to delay, or halt, foreclosure sales altogether. These purposeful maneuvers by lenders resulted in borrowers’ continued legal liability for a residential property, one which borrowers believed they had lost as a result of the lender’s foreclosure; in other words, a “zombie mortgage.”

This Comment analyzes the different circumstances under which lenders can foster the creation of “zombie mortgages.” Particularly, this Comment focuses on stalled and incomplete residential foreclosure sales and failures to execute the deed of sale, all which serve to maintain legal liability of the mortgaged property on a borrower. Notwithstanding a lender’s right to foreclose on residential property to satisfy the obligations that it is owed under a promissory note, this Comment argues that strategic delays in completing a foreclosure sale entitles courts and legislatures to either (1) force a lender to complete a sale or (2) divest a lender from its right to foreclose and security interest. Though some other solutions for “zombie mortgages” have been proposed, this Comment urges courts and legislatures to look outside criminal sanctions and nuisance abatement actions to develop strategies that target lenders’ security interests. Through judicial intervention to force the completion of the sale, coupled with the creation of maximum statutory time frames for the completion and execution of the sale, lenders would be forced to finish the foreclosure proceeding, or risk losing their security interests in the mortgaged property.

Why patent infringement shouldn’t be criminalized

First U.S. patent, signed by George Washington

Sorry for the overdose of IP law recently, I plan to return to local-government topics ASAP.

But my recent article discussing criminal enforcement of copyright caused me to wonder about why patent infringement is not a crime in the United States (aside from falsely asserting a product is patented or forging the seldom-used “letters patent”).

Why this disparity between different forms of IP protection? It surprised me how many different theories emerge. For example, professor Irina Manta lists three possible justifications in her article “The Puzzle of Criminal Sanctions for Intellectual Property Infringement” (footnotes omitted):

There could be a moral or utilitarian distinction between soft IP and patents, and the differing availability of criminal sanctions may be warranted because infringers of soft IP cause more harm and/or require harsher punishments for deterrence than infringers of patents. Alternatively, perhaps criminalizing soft IP infringement provides the proper balance of incentives for creators by giving them the safety of added protections for their works, whereas it would overly deter inventors in the patent context. Another possible explanation for the distinction is a public choice rationale: while a number of industries lobby for stronger protection for soft IP (especially copyright), different industries are at odds with one another regarding the proper level of protection for patents.

The Executive Office of the U.S. Attorneys also has commented on this disparity in the third edition of its training handbook “Prosecuting Intellectual Property Crimes,” which notes on page 246 the distinctions between patents and other forms of intellectual property:

Although patents and copyrights share a common constitutional source (and the concomitant requirement that these exclusive rights are for “limited times”), they differ in several meaningful respects. First, copyrights grant an author the right to exclude certain uses of the author’s expression of an idea contained in an “original work of authorship,” whereas patents grant an author the right to exclude others from making, using, and selling devices or processes that embody the claimed invention. Second, in exchange for granting the patentee this right to exclude, the patentee must publicly disclose the invention. Eldred, 537 U.S. at 216. “For the author seeking copyright protection, in contrast, disclosure is the desired objective, not something exacted from the author in exchange for the copyright.” Id. at 216. Third, a copyright gives the holder no monopoly on any knowledge or idea; a reader of an author’s writing may make full use of any fact or idea acquired by reading the writing. See17 U.S.C. § 102(b). A patent, on the other hand, gives the patentee a monopoly on his invention to prevent the full use by others of the knowledge embodied in the patent. Eldred, 537 U.S. at 217.

It is also worth considering the difference between a patent and a trade secret. The first difference is naturally that trade secret information is protected only if it is secret (see Section IV.B.3.a.v. of this Manual), whereas a patent is protected even after disclosure. During the patent process, a trade secret contained in a patent application may lose its trade secret protection through disclosure only to gain patent protection. (See Section IV.B.3.a.vi. of this Manual). Second, a patent gives its owner an exclusive right to his invention, even against another who discovered the patented invention independently, whereas a trade secret, like a copyright, gives its owner no protection against independent discovery. Confold Pac., Inc. v. Polaris Indus., 433 F.3d 952, 958-59 (7th Cir. 2006) (Posner, J.).

I think that the most compelling explanation may be that patents, unlike copyright, are especially at risk of being too broad. This is particularly so in industries like software, where an understaffed patent office cannot sufficiently limit incoming applications.

Although Abraham Lincoln once famously remarked that the patent system “added the fuel of interest to the fire of genius,” today many people see the patent system as enabling arsonists: Aggressive patent holders who use overbroad patents and costly lawsuits as a means to burn the competition.

New lawsuits against MERS

MERS_Logo_01_25_13I’m just catching up on a swarm of recent cases filed against Mortgage Electronic Registration Systems, Inc. (MERS), the privately owned mortgage registry that has, for some time now, been used by the mortgage industry in lieu of municipal recording systems (which were generally voluntary anyway). Gretchen Morgenson described the rationale for MERS in 2009:

For centuries, when a property changed hands, the transaction was submitted to county clerks who recorded it and filed it away. These records ensured that the history of a property’s ownership was complete and that the priority of multiple liens placed on the property — a mortgage and a home equity loan, for example — was accurate.

During the mortgage lending spree, however, home loans changed hands constantly. Those that ended up packaged inside of mortgage pools, for instance, were often involved in a dizzying series of transactions.

To avoid the costs and complexity of tracking all these exchanges, Fannie Mae, Freddie Mac and the mortgage industry set up MERS to record loan assignments electronically. This company didn’t own the mortgages it registered, but it was listed in public records either as a nominee for the actual owner of the note or as the original mortgage holder.

MERS has been accused, as Mortgenson noted, of keeping sloppy records about mortgage assignments, especially in cases when it tried to assert the rights of a foreclosing mortgagee without a record of an assignment of those rights.

Apparently, there has been a number of recent legal actions against the company, and these lawsuits fall into two categories. First, cities and counties are suing MERS alleging it was unjustly enriched because, by skipping public registration, it did not pay local recording fees. MERS has successfully defended itself against these challenges in at least five state so far, and Illinois may be next. The other lawsuits have been filed by foreclosed homeowners, alleging fraud and title claims, and MERS has been winning those cases as well.

A few years ago, in 2011, things did not look quite so rosy for MERS. At that time, Morgenson and Michael Powell wrote in the New York Times that MERS had been losing its court battles:

The Arkansas Supreme Court ruled last year that MERS could no longer file foreclosure proceedings there, because it does not actually make or service any loans. Last month in Utah, a local judge made the no-less-striking decision to let a homeowner rip up his mortgage and walk away debt-free. MERS had claimed ownership of the mortgage, but the judge did not recognize its legal standing.

And, on Long Island, a federal bankruptcy judge ruled in February that MERS could no longer act as an “agent” for the owners of mortgage notes. He acknowledged that his decision could erode the foundation of the mortgage business.

I plan to cover these cases more in depth later, but as a final note, I’d like to remind readers that MERS is not only in the mortgage registration game; it also has a system for registering vacant properties. I’ve warned before on this blog that municipalities might want to be cautious about partnering with an entity so closely linked to the mortgage industry, particularly when the municipality is seeking to hold mortgage companies responsible for maintaining vacant properties. I also made this warning in an article published in the Real Estate Law Journal, which retraces the history of MERS involvement with vacant property registration. I conclude with that discussion: Continue reading “New lawsuits against MERS”

The Fourth Amendment and questionable analogies

Our electronic age has decidedly outdated the go-to analyses for questions about the Fourth Amendment, leaving courts to reach for nondigital analogs for new technology. This reaching sometimes produces shaky results, leading to unclear guidelines for local police officers. To demonstrate, here is a list, in no particular order, of three of the most-questionable analogies.

1. A deleted file = curbside trash

Wheelie BinHat tip to Volokh Conspiracy’s Orin Kerr for recently pointing out United States v. Morgan, Crim No. 03-25-DLB (E.D. Ky. October 15, 2003), which addresses a defendant’s attempt to suppress child-pornography image files from his hard drive and screenshots of the images obtained by his wife. After determining that the wife acted as a private actor in obtaining the screenshots (making them admissible), the court discussed the defendant’s efforts to delete his files using the program “Internet Eraser”:

By attempting to delete the images, Defendant relinquished any expectation of privacy he had in the images themselves. See California v. Greenwood, 486 U.S. 35, 37 (1988) (Defendant has no reasonable expectation of privacy in his curb-side trash). . . . [B]y attempting to delete the pornographic images, Defendant was in essence, trying to throw out the files. In that regard, the facts are similar to Greenwood and its progeny. For these reasons, the Court concludes that Defendant’s relinquishment of any reasonable expectation of privacy in the pornographic images by attempting to delete the images is an alternative basis for denying the suppression motion.

As commentators on Kerr’s post noted, unsuccessfully deleting files is a lot more like partially burning your trash than setting out garbage, as in the latter situation you know the garbage man will have access to it.

2. A cellphone = a cigarette box or similar containers

Hand with Mobile Phone (Imagicity 181)When a person is arrested, police officers are allowed to search within containers found on the person, as in United States v. Robinson, where the Court ruled permissible an officer’s actions of pulling drugs out of a cigarette box found inside a person’s jacket. Some courts have applied this analysis to data stored on cellphones. See United States v. Finley, 477 F.3d 250, 259-60 (5th Cir. 2007).

The problems with this approach have been explained by the Seventh Circuit:

The potential invasion of privacy in a search of a cell phone is greater than in a search of a “container” in a conventional sense even when the conventional container is a purse that contains an address book (itself a container) and photos. Judges are becoming aware that a computer (and remember that a modern cell phone is a computer) is not just another purse or address book. “[A]nalogizing computers to other physical objects when applying Fourth Amendment law is not an exact fit because computers hold so much personal and sensitive information touching on many private aspects of life. . . . [T]here is a far greater potential for the `inter-mingling’ of documents and a consequent invasion of privacy when police execute a search for evidence on a computer.” United States v. Lucas, 640 F.3d 168, 178 (6th Cir.2011); see also United States v. Walser, 275 F.3d 981, 986 (10th Cir.2001)United States v. Carey, 172 F.3d 1268, 1275 (10th Cir.1999); cf. United States v. Comprehensive Drug Testing, Inc., 621 F.3d 1162, 1175-77 (9th Cir.2010); United States v. Otero, 563 F.3d 1127, 1132 (10th Cir.2009).

3. DNA evidence = fingerprints

Again, hat tip to Orin Kerr, who points out this language from Raynor v. State from the Court of Special Appeals of Maryland:

DNA evidence, when used for identification purposes only, is akin to fingerprint evidence. And, although fingerprint evidence is suppressible if it is obtained in the course of an unlawful detention, see Hayes v. Florida, 470 U.S. 811, 816, 105 S.Ct. 1643, 84 L.Ed.2d 705 (1985)Davis v. Mississippi, 394 U.S. 721, 727, 89 S.Ct. 1394, 22 L.Ed.2d 676 (1969), the fingerprinting process itself “involves none of the probing into an individual’s private life and thoughts that marks an interrogation or search.”See United States v. Dionisio, 410 U.S. 1, 15, 93 S.Ct. 764, 35 L.Ed.2d 67 (1973) (quoting Davis, 394 U.S. at 727, 89 S.Ct. 1394).

Thus, even if appellant could demonstrate a subjective expectation of privacy in his DNA profile, he nonetheless had no objectively reasonable expectation of privacy in it because it was used for identification purposes only. As in Williamson, the police were in lawful possession of the item from which the DNA was collected. In Williamson, the cup from which the DNA was collected came into police possession when the suspect discarded it in the holding cell; here, the chair in the police barracks was, from the outset, in the possession of the police. Thus, like the analysis of a latent fingerprint, which involves no physical intrusion into the body and is used for identification purposes only, the analysis in the instant case of DNA evidence, which was in the lawful possession of the police, was not a constitutionally protected search.

Kerr explains why this analogy is questionable:

Fingerprint evidence is on the surface. It is often visible to the unaided eye, and anyone can pick it up. In contrast, obtaining a DNA sample requires extracting it from a sample, in ways that in some ways resemble drug testing of urine samples. Although the law isn’t totally clear on this, there is some authority for the view that the extraction may make a Fourth Amendment difference, see Skinner v. Railway Labor Executives Assn (1989) (holding that collection and drug-testing of a urine sample is a search, in part because of what the chemical analysis reveals). I think you can see the questionable fit here in the court’s suggestion that limiting the use of the DNA sample to identification purposes is important: It’s not clear to me how that could be right, given that the Fourth Amendment does not impose use restrictions.

There are several other questionable analogies—the many times computer record are compared to paper records, for example—though of course analogies are usually the best courts can do. Any to add to this list?

The costs of criminal justice

Cook County Juvenile Detention Facility and Court
One of Cook County’s Detention Facilities
A recent article in the Southtown Star estimates that it cost Will County (on the Southside of Chicago) nearly $600,000 to obtain the high-profile murder convictions of Drew Peterson and Christopher Vaugh. Some of the charges were for evidence that wasn’t even used: since 2009, the county paid $75 per month for a storage locker to house the tub from Peterson’s former wife’s home, and the tub wasn’t even used in the prosecution.

But other expenses did contribute to the trial. For example, the county paid nearly $100,000 to TrialGraphix, which according to its website specializes “jury consulting, graphic design, presentation technologies, and trial preparation solutions.” According to the Southtown article, the company was paid “to modernize the state’s attorney’s office’s ability to present evidence in court.” Still, the State paid this firm nearly two times the cost of a year’s salary for a new state prosecutor.

Other top expenses included a private investigative service ($86,974), forensic medical consultants ($30,000), a bloodstain pattern analyst ($27,326), and firearms expert Noedel Scientific ($21,907).

All of these businesses have been created solely to service the criminal justice system; an unsurprising result given the need for specialized skills in this area, but one that doesn’t help rebut the perception that the justice system is profit driven.

Of course, most of that perception comes from our prison industrial complex. The United States imprisons more people per 100,000 people than any other country in the world. And this imprisonment is expensive. Federal Judge Richard Posner recently explained these costs, especially in regard to older prisoners, in a concurrence in United States v. Craig:

Federal imprisonment is expensive to the government; the average expense of maintaining a federal prisoner for a year is between $25,000 and $30,000, and the expense rises steeply with the prisoner’s age because the medical component of a prisoner’s expense will rise with his age, especially if he is still alive in his 70s (not to mention his 80s or 90s). It has been estimated that an elderly prisoner costs the prison system between $60,000 and $70,000 a year.

That is not a net social cost, because if free these elderly prisoners would in all likelihood receive Medicare and maybe Medicaid benefits to cover their medical expenses. But if freed before they became elderly, and employed, they would have contributed to the Medicare and Medicaid programs through payroll taxes — which is a reminder of an additional social cost of imprisonment: the loss of whatever income the prisoner might lawfully have earned had he been free, income reflecting his contribution to society through lawful employment.

I’m not sure what the solution is. Here’s a New Republic article where Judge Posner discusses some possibilities. But I do think that it is important that more Americans realize these costs, which are often (perhaps rightly?) brushed aside in the name of justice. At the very least, it’s something local officials should consider when embarking on high-profile murder cases.

The FCC issues new rules for signal boosters

The FCC has issued new rules for cell-signal boosting devices. Because these devices use the same spectrum as normal cell signals, the cellphone industry was very concerned that these devices would hurt their services to regular users. Thus, creating these new rules took many years. But as the head of boosting-device-manufacturer Wilson Electronics explained to AllThingsD, by regulating these boosting devices, the FCC is able to set standards to prevent low quality boosters from chewing up spectrum.

So the final result hopefully satisfies the cellphone companies and the boosters—and the American people. As Twice explains, “[a]ll four nationwide carriers and many rural and regional carriers have consented to the use of boosters as long as the boosters meet the new technical specifications.” The FCC emphasizes the importance of these rules as follows:

Signal boosters represent a cost-effective means of improving our nation’s wireless infrastructure. Mobile voice and mobile broadband services are increasingly important to consumers and to our nation’s economy. While nearly the entire U.S. population is served by one or more wireless providers, coverage gaps that exist within and at the edge of service areas can lead to dropped calls, reduced data speeds, or complete loss of service.

Robust signal boosters can bridge these gaps and extend coverage at the fringe of service areas. Signal boosters are particularly useful in rural and difficult-to-serve indoor environments, such as office buildings and hospitals. Signal boosters can also improve public safety communications by enabling the public to connect to 911 in areas where wireless coverage is deficient or where an adequate communications signal is blocked or shielded.

There are separate rules for consumer boosters and “industrial boosters,” the kind used in “stadiums, airports, office buildings, hospitals, tunnels, and educational campuses,” according to the FCC.

Why antitrust matters to City 2.0 – FTC v. Phoebe Putney

U.S. Supreme Court 2010In light of the Supreme Court’s decision today in FTC v. Phoebe Putney Health System, Inc., I’d like to address why antitrust law matters to urban innovation, as I’ve done in addressing how municipal law and admin law matter to City 2.0. The Court’s decision reaffirmed some important constraints on local authority, but to explain the decision, which addresses whether a hospital authority in Georgia can acquire a competing hospital without scrutiny from the FTC (the answer’s no), I’ll need to explain some history of “state action” antitrust immunity.

In 1943, the Supreme Court in Parker v. Brown concluded that antitrust law—those laws meant to stomp out anticompetitive behavior—did not apply to municipalities, such that California regulators could not be stopped from running a program to market raisins, even though the program edged out a certain local raisin farmer. The decision turned on the local nature of this conduct, an analysis weakened, I would think, by Commerce Clause analysis since then.

But the immunity created in the decision applies only to states; cities and other local government units are not entitled to it in the same way. The Supreme Court explained this idea in 1978, in City of Lafayette v. Louisiana Power & Light Co., which addressed the ability of a group of cities to regulate electric utility systems. The Court rejected the argument that the immunity recognized in Parker applies full-tilt to cities, holding that “the Parker doctrine exempts only anticompetitive conduct engaged in as an act of government by the State as sovereign, or, by its subdivisions, pursuant to state policy to displace competition with regulation or monopoly public service.” In other words, a municipality only has immunity if the State meant the municipality to engage in anticompetitive conduct, a theory consistent with the Court’s general approach to matters of local governance: the State is supreme.

Of course, it’s not quite that simple: The Supreme Court dealt with this issue again in 1985 in Town of Hallie v. City of Eau Claire and clarified that, before a municipality is entitled to Parker-type immunity, “it must demonstrate that it is engaging in the challenged activity pursuant to a clearly expressed state policy.” The meaning of “clearly expressed” obviously leaves a lot of room for debate.

Now to today’s decision. Georgia allows local governments to create hospital authorities. Under that law, the City of Albany (together with the local county) ran a hospital for nearly 30 years until it leased the hospital to a nonprofit created by the city in 1990. Then in 2010 the city tried to acquire a competing hospital, and landed itself in antitrust trouble with the Federal Trade Commission. The city defended itself on the basis of the aforementioned cases. The case turned on whether Georgia, in authorizing hospital authorities, intended cities to engage in anticompetitive conduct, as the Eleventh Circuit decided.

As Lyle Denniston points out over at SCOTUS Blog, there were arguments in both directions:

Each side in this case was able to find language in prior Supreme Court rulings to support the central thrust of its argument, so it seems likely that the Court will find that it must think afresh about first principles: what is the virtue of allowing states to displace market competition, what risks does such a displacement pose to the functioning of the marketplace, and what public restraints — if any — should accompany the displacement of competition with potential local market monopolies?  If quotations from prior Court opinions are as malleable as the briefing in this case has suggested, then some fundamentals are getting lost in their mere reiteration.

Denniston also summarized the opposing positions:

The FTC has promoted in this case an economic model — if market competition is put aside, there has to be some regulatory regime in place.  That is fundamentally an argument against leaving the private market to function entirely on its own, even in an area of such vital economic service as that provided by acute-care hospitals.The

Putney Health Systems has promoted an alternative regime: state governments can be trusted to know what the economics of their own state demand and thus should remain free to craft their own economic regimes.   If the “state-action doctrine” is to be true to the federalism instincts that gave rise to it, then the argument is that states are deserving of considerable deference in how they choose to order the marketplace within their borders, including the market for vital public services.

My former professor, Sasha Volokh, an expert on privatization, also chimed in at The Volokh Conspiracy:

FTC v. Phoebe Putney Health System will be interesting to watch for, since it’s an opportunity for the Supreme Court to tighten up the conditions for state-action immunity. I’m not exactly what you’d call an antitrust hawk, but it’s unlikely that the optimal policy would be antitrust immunity for governmental bodies only, which puts governments in a more favored category than private entities and encourages business enterprises to be run within the public sector.

He later summarized an amicus brief by a group of prominent economics in the case.

No matter what the outcome, the decision was likely to affect how local governments handle important services, including new technologies, like faster and more-widespread Internet access.

So what did the Court say? (The full opinion is here; you can find discussions of oral argument here and here.)

The Court unanimously reversed the Eleventh Circuit. Justice Sotomayor, writing for the Court, concluded that “[b]ecause Georgia’s grant of general corporate powers to hospital authorities does not include permission to use those powers anticompetitively, we hold that the clear-articulation test is not satisfied and state action immunity does not apply.”

In other words, Georgia did not “clearly express” that its cities could engage in this type of anticompetitive behavior. The Court said that the Eleventh Circuit had applied the clear-articulation test “too loosely.”  Here’s the crux of the Court’s reasoning (as I read it):

We have no doubt that Georgia’s hospital authorities differ materially from private corporations that offer hospital services. But nothing in the Law or any other provision of Georgia law clearly articulates a state policy to allow authorities to exercise their general corporate powers, including their acquisition power, without regard to negative effects on competition. The state legislature’s objective of improving access to affordable health care does not logically suggest that the State intended that hospital authorities pursue that end through mergers that create monopolies. Nor do the restrictions imposed on hospital authorities, including the requirement that they operate on a nonprofit basis, reveal such a policy. Particularly in light of our national policy favoring competition, these restrictions should be read to reflect more modest aims. The legislature may have viewed profit generation as incompatible with its goal of providing care for the indigent sick. In addition, the legislature may have believed that some hospital authorities would operate in markets with characteristics of natural monopolies, in which case the legislature could not rely on competition to control prices. See Cantor v. Detroit Edison Co., 428 U. S. 579, 595–596 (1976).

We recognize that Georgia, particularly through its certificate of need requirement, does limit competition in the market for hospital services in some respects. But regulation of an industry, and even the authorization of discrete forms of anticompetitive conduct pursuant to a regulatory structure, does not establish that the State has affirmatively contemplated other forms of anticompetitive conduct that are only tangentially related. Thus, in Goldfarb v. Virginia State Bar, 421 U. S. 773 (1975), we rejected a state-action defense to price-fixing claims where a state bar adopted a compulsory minimum fee schedule. Although the State heavily regulated the practice of law, we found no evidence that it had adopted a policy to displace price competition among lawyers. Id., at 788–792. And in Cantor, we concluded that a state commission’s regulation of rates for electricity charged by a public utility did not confer state-action immunity for a claim that the utility’s free distribution of light bulbs restrained trade in the light-bulb market. 428 U. S., at 596.

In this case, the fact that Georgia imposes limits on entry into the market for medical services, which apply to both hospital authorities and private corporations, does not clearly articulate a policy favoring the consolidation of existing hospitals that are engaged in active competition. Accord, FTC v. University Health, Inc., 938 F. 2d 1206, 1213, n. 13 (CA11 1991).

I’ll try to dive more into the opinion later. For now, the Court avoided redefining the “state action” doctrine, as some thought it would, but gave real teeth to the clear-articulation requirement. Thus, cities will have to be very careful to examine existing State law before running potentially anticompetitive ulility-type businesses. For more coverage of the case see here, here, here, here, here, and here.

A concise history of the federal role in education

Landaff, Grafton County, New Hampshire. Younger children in one of the town's 3 one-room school hous . . . - NARA - 521481I have a new article coming out in the BYU Education and Law Journal in which I argue that Congress should give more control to the U.S. Department of Education in reauthorizing the No Child Left Behind Act. I like the section that lays out the history of federal involvement in education, so I’m posting it below, with citations omitted. You can download the full article from SSRN.

For the first one hundred years of U.S. history, Congress had a limited but active role in education. For example, as early as 1785, the federal government required that proceeds from the sale of land in the Northwest Territories go to public schools.  Congress may have operated with self-restraint due to pervading views of strong states’ rights. As a result, the Supreme Court did not strike down a single federal law as violating the Commerce Clause or the Tenth Amendment.

Congress’s role increased after the ending of the Civil War in 1865. The federal government required new Union states to provide free public schools and established an early form of the Department of Education, though departmental powers were limited mainly to collecting and publishing data on the state of American education. The Court responded by putting limits on congressional power: by 1936 the Court had narrowed the scope of Commerce Clause power and had used the Tenth Amendment to prohibit even federal taxing and spending power from encroaching into traditionally state activities. Despite the Court’s restrictive views, however, Congress enacted the 1917 Smith-Hughes Act, which succeeded in providing federal aid to schools in the form of grants for vocational programs.

From the late 1930s to the early 1990s, the Court’s opposition to congressional power decreased, clearing the way for a greater federal role in education. The Court shifted to a “nationalist” perspective, rejecting the Tenth Amendment as a constraint on federal legislative power and permitting broad legislation based on Congress’s commerce and spending powers. The federal role in education indeed expanded: Congress provided money for school construction and teacher salaries, supported veterans going to college and local school districts affected by military mobilization, passed school lunch programs, and provided aid for areas affected by federal acquisition of property. The Cold War further encouraged federal support for math, science, and foreign language education to stay competitive with Soviet rivals.

This federal aid, however, tended to favor wealthier school districts to the detriment of poorer countryside and urban schools. To combat these disparities, Congress enacted influential federal education legislation, including the 1965 Elementary and Secondary Education Act (ESEA), the precursor of No Child Left Behind. ESEA dramatically increased federal spending on K-12 education and helped the Department of Education gain prominence in setting education policy–as the agency administered ESEA. Congress also set the Secretary of Education as a cabinet post.

At the same time, the states began creating statewide education policies. States have always provided, and continue to provide, the majority of the nation’s education funding, but typically did not have experts and political bodies dedicated to education policy until the 1970s.  Since this time, state governments have made strides towards providing equality of financing amongst school districts, increasing educational quality, and setting standards for student achievement.

The federal position shifted in 1981 when President Reagan took office trumpeting the goal of a limited federal government. Although he managed to slow the increasing level of federal spending on education, at least initially, he did not otherwise decrease the federal role in education directly. But he did limit the federal role in less-obvious ways. For example, he required that executive agencies consider specific federalism concerns when formulating policies (an order revoked by President Clinton) and, along with President Bush, managed to appoint a Supreme Court majority of conservatively-inclined justices. These conservative justices have abated the increasing role of the federal government in education, defending states’ rights under the Tenth Amendment and limiting the scope of the Commerce Clause by prohibiting the federal government from regulating the states in regards to “noncommercial” activities. So as Congress continues to increase the federal role in education, the Supreme Court has essentially worked against that effort, shifting back to a “federalist” perspective, increasingly focused on states’ rights.

Although states’ rights advocates expected this “federalism revolution” to affect Congress’s spending power, the Court has left this power largely unbridled. Even today, the Spending Clause remains mostly unconstrained by federalism concerns resulting in Congress pushing its education policy on states primarily by conditioning federal funding on state adherence to federal priorities. For example, in 1994 Congress passed President Clinton’s Goals 2000: Educate America Act, which focused on using federal aid to assist states in creating their own academic achievement standards and assessment mechanisms. Congress included these types of reforms in subsequent reauthorizations of ESEA, including No Child Left Behind.

Chicago’s clever new way to collect unpaid parking fines

Yesterday, the city of Chicago approved a plan to collect unpaid parking fines from state tax refunds. As the Chicago Tribune pointed out, this “power to dip into tax refunds before they’re sent out comes from a little-noticed state law that took effect two months ago that allows cities and school districts to go to the state comptroller for help collecting what they’re owed.” Other Illinois cities, including Springfield and Joliet, had agreed to take advantage of this new law even before Chicago, but Chicago stands to collect much more: The article reports that state residents expecting refunds owe Chicago about $80 million (!), though the city plans to collect only about $8 to $20 million of that.

Apparently, the new state law, passed in December, is so “little-noticed” that no news report cares to name the specific provision. I believe that the law is 15 ILCS 405/10.05 (effective December 16, 2011), which allows the state comptroller to deduct the amount owed to a “unit of local government, school district, or public institution of higher education . . . in accordance with an intergovernmental agreement authorized under this Section and Section 10.05d.”

Section 10.05d adds that taxpayers will be charged a $15 processing fee for the state comptroller to pay their unpaid tickets. It also provides some procedural protections: Taxpayers must be given notice that they have 60 days to protest the payment of unpaid fines with their refund money; if they fail to protest, the Comptroller pays the money directly to the local government.

In combination with the city’s efforts to use cameras to catch traffic violations, this could be a huge revenue generator for Chicago. I think it’s a great plan, there’s no reason people shouldn’t have to pay their parking fines. If they disagree with how steep the fines are, they can complain to city hall. In order to present both views, however, here’s a news report that interviews people who strongly disagree with the new proposal: