Friday, July 06, 2007

Discussing the DCC

Ms. Bohrman has posted some questions in the comments to the DCC in United Haulers post. Because my response got long enough for a post, I've placed her comment and my response here.

Ms. Bohrman wrote:

I agree with your reasoning that a discriminatory effect should be necessary for recovery in a DCC case. The Eighth's "purpose is enough" approach leaves something to be desired in my book as well. However, I wonder where that leaves us. If a reviewing court required a discriminatory effect and purpose maybe I300 would have been left standing. However, if a law has a discriminatory purpose and no effect, it seems that it was just a really toothless law. (Maybe the anti-corporate farming laws do have a big effect? I don't feel like I have enough info to make a judgment.)

If anti-corporate farming laws are that ineffectual I wonder if it is worth preserving them as they are currently written. What do you think? Are you working on DCC reform to preserve anti-corporate farming laws or as a bigger effort to improve judicial review or something else? I've been thinking about this myself and am not sure exactly where I stand.

I reply:

I tend to think that such laws may effectively keep some corporate ownership from occurring. To the extent they do so, however, they can't do it based on where the corporation comes from (an insider or outsider). If such laws don't discriminate based on outsider or insider status, then they are fine for DCC purposes, even if they were enacted with some outsiders-are-bad rhetoric.

The point I want to make is that purpose is too broad precisely because the notion of protecting one's own is exactly what state legislatures (or other legislatures) do. Thus, a purpose to discriminate is entirely too easy to find. The question we should ask, first, is whether the legislature is actually treating outsiders differently. Then, the second question should be "why is this law doing that?" If it turns out that it was meant to do that, then it should be struck. If it turns out that it was not meant to do that, but is now having that effect, then we should evaluate whether the unintended consequences are justified by the reasons the legislature had in mind (under Pike).

In the absence of an effect, the court is not authorized to do some sort of free-roaming cost-benefit analysis on every law the legislature puts out there. The legislature should consider such things, and it should behave rationally, but it should not have to worry about some court second guessing its analysis (which may be cost-benefit or not--after all, not everything is economics).

As to the normative question looming with corporate farming restrictions, I'm fairly ambivalent. That is, I think there are good arguments on all sides of the debate. Thus, I tend to think the wisdom of such a law is a legislative call that should not be second guessed by the judiciary except when the legislature acts beyond its bounds. Those bounds are what I am concerned about in the DCC cases. I am for coherent judicial doctrine. And I think the I-300 case (as well as the others) have something to say about how this doctrine needs to be improved. As it is formulated now, one can question whether the courts are really questioning the wisdom of a particular law, rather than policing state legislative bounds. I think courts in this area should concern themselves with containing the problematic externalities that come from fairly local lawmaking. That, to me, isn't a question of purpose, but rather one of effect.

One thing that is interesting in the DCC arena is Congressional power. To the extent we are talking about policing, the courts are simply policing stuff that can be (in the views of some) entirely displaced by Congress. One question I've been tossing around is, "which way does that cut?" On the one hand, judicial overreaching is less problematic because Congress could fix it. On the other hand, oversight could be regarded as Congress's job, not the courts'. If one values autonomy, I think she'd settle on the latter view, but if one values economic freedom (in a sort of temporary Lochnerian sense) she may settle on the former view.

As to whether there is a threat from corporate America on agricultural land, that is an interesting subject. It depends in large part by what one perceives as a threat and how one thinks about the benefits of family farms. One item that I think is very interesting is the move from shareholder primacy to social (and environmental) responsibility. If anything, isn't that an interesting argument for barring the large corporation, at least until we get a theory of broader responsibility worked out? Of course, is the family farm really any more likely to behave differently than the non-family corporation? I can hear Dean Chen telling them to Get Green or Get Out.

Thanks for your questions and your great posts. As to your newest one, I think you have hit the nail on the head. Giving my kids a competitive advantage by giving them money is different than giving my kids a competitive advantage by injuring their competition. I would argue, however, that this difference doesn't mean that we need to condone protectionism. Rather, it means that we need to define it a little better. "Giving insiders an advantage at outsiders' expense," may help in that regard. [If Denning gets at this great, I don't have that piece on the top of my head right now, but Regan seems to drive at this in his lengthy essay, as does Smith, I think.] Thus, a tax break operates from a baseline of a uniform tax placed on everyone. The problem is that the tax break favors the insiders. Thus, it is the same thing as imposing a tax only on outsiders, at "their" (somebody else's kids') expense. A subsidy is not given "at outsiders' expense". So that may help us some, but the economic effect is certainly the same--a competitive advantage. I think, though, that it matters how that advantage is given. And from a process-based theory, one could posit that it matters a great deal. That is, I'm entirely more likely to help my kids go to school if I don't have to pay for it. And I may not really consider whether helping them out is the best way to go. After all, there is something to be said for laissez faire even when it comes to my kids (they'll be better for it; they'll care more about the outcome; etc.). I'm not much for the process-based theory, but it does have traction with the court and it seems to operate at least in cases where discriminatory treatment is at issue (although it doesn't operate in all cases).


Blogger Samantha Bohrman said...

Thanks so much for your response and comments on my post. I followed up on your Smith and Regan cites, but am not sure that I tracked down the correct Regan. Could you send me that cite? Thanks! Samantha

7/25/2007 12:14 PM  
Blogger Anthony Schutz said...

84 Michigan Law Rev 1091

7/31/2007 6:38 PM  

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