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Tuesday, July 30, 2013

The Soda Portion Cap, Redux: Why are New York City's Agencies More Constrained Than Federal Agencies?

The appellate division has upheld Justice Tingling's earlier decision that Bloomberg's Department of Health lacks delegated authority to limit the portion size for sugary beverages. As I noted with respect Justice Tingling's decision, there is a paradox buried in the appellate division's opinion: Both opinions paradoxically reason that the Department of Health exceeded its authority because the agency did not regulate enough. The problem, according to the appellate division, is that the agency did not promulgate "an all-encompassing regulation" that single-mindedly pursued the goal of reducing obesity. Instead, the agency's rule contained exemptions (for dairy- and fruit-based drinks and for certain retailrs like bodegas) that indicated forbidden balancing of the rule's health benefits against economic and social costs. By "balanc[ing] health concerns, an individual consumer's choice of diet, and business financial interests in providing the targeted sugary drinks," the agency trespassed into the legislative domain, because such balancing "involves 'difficult social problems,' which must be resolved by 'making choices among competing ends'" -- a task for a legislature rather than an agency.

At first and maybe even second glance, this is an odd ruling. In effect, this view of delegated administrative authority requires agencies to ignore common sense by pursuing their regulatory mission with single-minded ferocity. One is tempted to ask whether administrative law makes common sense illegal. The answer is, of course, that it depends on what sort of administrative law courts want to create. The U.S. Supreme Court in Entergy Corp. v. Riverkeeper took precisely the opposite view from the appellate division, holding that an ambiguous federal statute gave the EPA authority rely on cost-benefit analysis in setting the national performance standards for utility cooling systems. As I noted in an earlier post, there was precious little textual basis in the Clean Water Act for this ruling: Justice Scalia was hard-pedaling Chevron deference, giving a federal agency maximum deference arguably in the teeth of contradictory statutory text.

Why should a local agency get less deference from state courts than Entergy gives to federal agencies? As I explain after the jump, I would think that local agencies should get more deference. I find, however, that Paul Diller, my former student and current expert in local government law, disagrees with my own assessment. In a characteristically insightful and erudite article on local agencies, Paul argues that local agencies should derive their authority from their Wilsonian (Woodrow, that is) expertise and freedom from industry capture, not their democratic bona fides. Paul faults NYC's soda portion cap for lacking the sort of scientific rigor that might legitimate it. Is Paul right? After the jump, I'll offer some thoughts.

Despite liking the article a lot, I remain unpersuaded. Local agencies lack the scale economies of national ones: They will never match the expertise of the feds. Deriving legitimacy for local agencies from "Wilsonian" considerations of impartial expertise, therefore, strikes me as matching the institution to the wrong legitimating value. It is like valuing Central Park horse-and-carriage rides for their speed. That does not mean that local agencies should not get deference. It means only that, if they do get deference, then the source of such authority must come from something besides a really thorough set of clinical trials or data-driven studies or other hallmark of expertise a la Frank Goodnow.

I tend to think that the comparative advantage of local governments is speed, not science. Local executives can act quickly to launch a quick policy experiment in a limited geographic area. The science justifying these experiments should follow rather than precede the local policy: By allowing a thousand municipal flowers to go their separate ways on sugary drinks, congestion fees, incentive zoning, and the like, courts provide academics and policy wonks with the data necessary to assess how well such experiments fare through comparative studies -- fostering comparative data that would otherwise be denied to us by judicial niggardliness with agency authority. Yes, there is a danger that some local experiments will misfire: Bloomberg's experiment with a flawed effort to control obesity might not work. But the alternative might be that we remain locked in a status quo in which no one does anything, because the executive actors are bogged down by a judicially created quagmire of process and non-delegation canons, while the legislative actors are stuck in the gridlock of partisan acrimony and fear of risk-taking. A nation locked into such dreary regulatory uniformity by judicial demands for detailed legislative delegations of power cannot generate the data necessary to determine whether further legislation is a good idea. The likely result is a vicious circle of court-induced Catch-22: Courts suppress local experiments citing lack of high-quality data, but those local experiments are precisely the data needed for scientific expertise to determine the effects of those local policies.

The beauty of local executive experiments is that local governments are constrained by multiple safeguards if the experiments go awry. There are multiple legislatures to pull the plug, one of which (City Council) can act with unicameral alacrity should the public rebel against the agency's idea of good policy. Tiebout's locational economies also place a limit on how aggressively most mayors will press businesses with novel regulation. Consumers and businesses can and do flee to New Jersey and Long Island if NYC's regulations become too annoying or expensive, tempering the regulatory zeal of a business-oriented mayor like Michael Bloomberg.

But take a look at Paul's article and judge for yourself whether you think that New York's courts were right to lower the boom on Bloomberg's experiment with soft drinks.

Posted by Rick Hills on July 30, 2013 at 03:19 PM | Permalink


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Posted by: Turkey | Mar 15, 2015 9:47:36 AM

I don't know if the second comment is totally aboveboard, but anyway:

Limiting certain places, especially those with a large subset of minor customers, selling the sizes of something is not the same thing as requiring someone to consume the product. The customers here in fact can purchase the same amount of the product. They just have to do it in a different size. In fact, I think, yes, you can get a free refill.

Anyway, I read Prof. Hills criticism of the lower court and felt it was overblown & will not go over the details, partially since I'm not going to pretend to be qualified to be analyzing the minutiae of the agency law questions at issue. But, AF does seem to get the gist correct.

Posted by: Joe | Jul 31, 2013 11:20:38 AM

As I read the decision, the fact that the soda ban was not an all-encompassing regulation was not the most fundamental problem with it. The more basic issue was that the Board of Health had not been delegated a broad power to regulate any conduct it considers to be related to public health: the "general language" in the enabling statute "does not empower the Board of Health to promulgate rules regulating the conduct of the people of the City of New York with respect to all matters having some relation to the public health." It's not so much that the Board is required to "ignore common sense" in "pursuing their regulatory mission," but rather that their regulatory mission is not so broad as to apply to any conduct the Board believes to be health-related.

Posted by: AF | Jul 30, 2013 10:12:44 PM

If the government can tell us what size drinks we can buy (or sell), can it also make us buy and eat broccoli? Is it constitutional to make it illegal to buy and sell two small drinks to make up for one prohibited large drink (well, in some states, we can only by one gun per month)? Will the police have undercover cops arrest us for buying one large drink (or two small drinks) or arrest the store owner for selling the oversized drinks to us? Will we be able to get a free refill (where allowed by the cafe) of our small drinks, without breaking the law.

Whatever happened to "liberty" in America?

Posted by: Daniel | Jul 30, 2013 8:03:35 PM

Excellent post, Rick, and thanks for bringing more attention to my forthcoming article. Let me just make clear that I disagree with the appellate (and trial) court decisions and think that the portion-cap rule should have been UPHELD, largely for the administrative law-related reasons you offer. For more, see my blog post here: http://localgovlaw.law.lsu.edu/

My argument in the paper, however, is that if the rule is going to lay claim to the Wilsonian mantle of expert rulemaking, there are elements of New York City's institutional design, like making the Board of Health more independent of the mayor's influence, that should be altered to improve the case. (Boston's Public Health Commission, for instance, is a local agency that possesses more institutional independence.) The irony of the appellate division's reasoning in the soda case is that it faults the Board for considering economic, practical, and even jurisdictional concerns in formulating the rule, requiring that the Board rely solely on "health" concerns within its expertise. At the same time, however, the court ultimately gives short shrift to the Board's substantive judgment, ostensibly rooted in the Board members' expertise, that excessive consumption of soda is harmful to public health. The Court may have given the Board's judgment so little deference because it suspected that the Board merely rubber-stamped Mayor Bloomberg's idea (as the soda industry plaintiffs strenuously argued in their briefs). I don't think such a suspicion justified invalidating the rule, but a more independent Board may have aroused less suspicion of executive overreach.

Posted by: Paul Diller | Jul 30, 2013 4:13:58 PM

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