Federal Preemption and State Regulation of Transportation and Telecommunications

Transportation and telecommunications are two of the most importantinfrastructural industries in the American economy. As theseindustries are so vital and because they exhibit characteristicsthat have frequently rendered them quasi-monopolistic, theirgrowth has been accompanied by state and federal regulation.We document how the imposition of regulation has led to continualconflicts over the extent to which federal regulation shouldtake precedence over state regulation. We illustrate how thejustifications for federal preemption have been applied notonly to the regulation, but also to the recent deregulation,of railroads, trucking, and telecommunications. We contend thatpolitical factors, such as congressional support, precedent-settingcourt rulings, and, most important, political pressure fromaffected interest groups that is related to the revenues stillgenerated within states by these industries, ultimately determinethe form of preemption that emerges from the Congress.     

Municipal Communications Tax Revenue Reliance and Fiscal Impact of Possible Federal Preemption

This paper presents empirical evidence of the extent to which municipal governments might be affected by federal preemption in the communications sector in light of the substantial variation in municipal governments' reliance on communications tax revenues. The results suggest that the federal preemption would have a negative fiscal impact on the majority of municipal governments, and the extent of the impact would vary substantially. The analysis also indicates that it would be challenging or legally impossible for some city governments to make up for the magnitude of revenue loss due to the states' constraints on municipal revenue‐raising capacity.     

The Impact of Housing Submarkets and Urban Form on the Foreclosure Crisis in U.S. Urban Counties

In this article, the authors introduce a novel way to define and measure housing submarkets in relation to foreclosures. Instead of the traditional methods of identifying submarkets a priori, this study uses an approach that empirically delineates housing submarkets based on spatial contiguity and housing attributes. The spatial clustering algorithm developed for this study identified submarkets in each of the urban counties. A spatial regression model was then used to assess the impact of submarket structure on foreclosure rates. In addition, the study also incorporates a measure of sprawl in its analysis. It was found that sprawling counties are not more likely to have higher rates of foreclosures compared with average rates. However, the counties with smaller and more fragmented housing submarkets are likely to have lower rates of foreclosures. The results suggest that urban form is less consequential than housing market structure in affecting U.S. housing market dynamics.     

Federal Preemption of State Regulation of Insurance: End of a 200-Year Era?

This article examines state regulation of insurance, focusingon congressional and judicial attempts to displace state regulatoryprimacy over insurance. After describing the early period ofstate insurance regulation from the U.S. Supreme Court's decisionin Paul v. Virginia to the Court's overruling of that decision,the article examines the McCarran-Ferguson Act and the post-McCarranenvironment, including examples of judicial preemption of stateinsurance laws. Finally, the article considers the system ofinsurance regulation envisioned in H.R. 1290, the most recentcongressional attempt to displace state insurance regulation,and state initiatives to counter federal regulation. AlthoughH.R.1290 purports to setup a dual regulatory scheme, the broadpreemption language in the bill would allow federal regulatorsto preempt virtually all state insurance laws. Moreover, thedecisions of the Supreme Court in Garcia v. San Antonio MetropolitanTransit Authority and Chevron v. Natural Resources Defense Councilwould leave no political or judicial forum for states to debatethe extent and impact of federal preemption     

Not All Housing GSEs Are Alike: An Analysis of the Federal Home Loan Bank System and the Foreclosure Crisis

While the financial crisis of 2008 ultimately affected the range of U.S. financial institutions, it began with practices in home ownership finance. The Federal Home Loan Bank (FHLBank) System was the first instrumentality created by the U.S. government, in 1932, to sustain affordable home ownership finance. In this article, the authors ask what role, if any, the FHLBanks played in the subprime lending and securitization practices that precipitated the current crisis. The authors analyze publicly available FHLBank financial data in terms of a framework focused on the System's assets: advances; mortgage loans acquired from members; and investments, particularly in mortgage-backed-securities. They conclude that the FHLBanks did not contribute significantly to problematic practices. Nonetheless, they recommend consideration of three reforms to the FHLBanks to ensure a return to effective regulation and responsible, affordable home ownership finance.     

Preemption in the U.S. Federal System

The sharp increase in the number of congressional partial andtotal preemption statutes and innovative use of preemption powerssince 1965 have produced major changes infederal-state relations.The Congress has become a unitary government in several regulatoryfields and also finances its policies in other fields inpartby imposing burdensome mandates and restraints on state andlocal governments. Current federalism theories fail to accountfor the changes produced by preemption or to address alternativesto preemption other than conditional grants-in-aid     

The Rehnquist Court and Federal Preemption: In Search of a Theory

In the 1980s, the U. S. Supreme Court was expected to becomemore solicitous of "states' rights" and to reconsider doctrinesof federal preemption of state and local laws. Those expectationswere built on the Court's ruling in National League of Citiesv. Usery and reinforced by the Reagan administration's rhetoricand Court appointments. The record ofthe Rehnquist Court, however,demonstrates that it has backed away from vigorously enforcingthe Tenth Amendment and has erected only minor constitutionalbarriers, as in New York v. United States, to the Congress'power over the states. Moreover, the Court has not retreatedfrom finding implied statutory preemptions or from imposingits own dormant-commerce clause power on the states. The articleconcludes by considering a number of explanations for the Court'srecord and rulings on federal preemption.     

The Federal Reserve System and the Credit Crisis

The Federal Reserve System struggled to maintain order in U.S. credit markets as rapid declines in home prices led to huge write-downs in the value of mortgage-backed securities held by financial institutions. The Fed could have taken a number of steps—in the mortgage market or through broader regulatory actions—to either preempt or mitigate the impact of this market disruption. Broader regulatory actions—in the mortgage market, of risk taking by financial institutions, or in the form of actions to limit the contagion of crisis—imply fundamental changes at the Fed. The network of actors with a stake in broader regulatory action is powerful and highly resistant to regulatory scrutiny. The statutory mission of the Fed—especially its commitment to stable prices—could be jeopardized by a broad and explicit mandate to provide liquidity to a wide range of vulnerable financial institutions.     

The Federal Impact on Early Postwar Suburbanization

ABSTRACT

Researchers agree that, in Canada and the United States, federal policy with respect to mortgage finance encouraged suburbanization in the early postwar period. However, direct evidence has been lacking. Unique mortgage file data for 1951 for two Canadian cities, Hamilton, Ontario, and Vancouver, British Columbia, make it possible to assess this claim, and related claims. They show that the impact of federal mortgage assistance was similar in direction in both cities, but much more striking in Hamilton: federal involvement encouraged suburbanization, reinforced existing broad patterns in the social geography of the city, and increased the amount of income segregation at the scale of specific neighborhoods and suburban subdivisions. The broad generalizations that previous researchers have made about the impact of federal mortgage policy are confirmed, but the magnitude of that impact could vary enormously and cannot be assumed in particular cases.     

The Federal Role in State Fiscal Stress

This article examines the extent to which the federal government'spolicies were responsible for the fiscal stress experiencedby most state governments in the early 1990s. Federal policieshave contributed considerably to recent state fiscal stress,particularly through the Medicaid program—the fastestgrowing part of state budgets—and the recession, whichdepressed revenue and increased welfare and Medicaid spending.Federal aid reductions have not been an important source ofrecent state fiscal stress. The real value of per capita federalaid other than for welfare programs fell considerably in the1980s, but the reductions were much greater for local governmentsthan for states. The largest reductions were in the early 1980s.Federal policies have affected state finances in several otherways—through tax policy, unfunded mandates, and the federalfailure to cope effectively with problems like health and poverty.Federal court rulings have also caused budget problems (as havestate court decisions). In some respects, state fiscal problemsare not a federal responsibility. Rising school enrollments,new corrections policies, and inelastic tax systems have createdfiscal stress for many states. Excessive state spending in the1980s has contributed to recent fiscal problems in some states,but not generally.     

The Political Determinants of Federal Expenditure at the State Level

It has been shown that states with higher per capita senate representation have higher federal spending per capita (Atlas, C. M., Gilligan, T. A., Hendershott, R. J. and Zupan, M. A. (1995). American Economic Review 85: 624–629). With a more recent data sample, more highly disaggregated data and a different set of political control variables, we are able to confirm the main result of Atlas et al. that per capita senate representation is positively related to federal expenditure. This effect is strongest for procurement expenditures. By contrast, we do not find support for their result that spending increases with per capita representation in the House of Representatives. Several other political variables are found to be significant in a subset of the expenditure equations.     

Into the Words: Using Statutory Text to Explore the Impact of Federal Courts on State Policy Diffusion

I examine the impact federal appellate courts have on state policy diffusion through the use of computational text analysis. Using a dyadic framework, I model the impact courts have on the decision to adopt a policy and, if adopted, how much text to borrow directly from another state's preexisting law. A court decision ruling a statute unconstitutional can generate up to a 28% relative reduction in the probability of adoption, and a ruling of constitutionality can both increase the probability of adoption by a similar amount and more than double the amount of borrowed text. These findings shed light on how states learn from one another.     

The Influence of Federal Mandates on State Medicaid and AFDC Decision-Making

This article focuses on the influence of federal Medicaid mandateson state AFDC and Medicaid policy decision-making. The resultsconfirm certain concerns about federal mandates: the benefitsof federal Medicaid mandates (eligibility expansions to pregnantwomen and infants) appear to be offset by state reductions inAFDC and other Medicaid policy areas. In particular, federalMedicaid mandates had a negative effect on AFDC and MedicallyNeedy financial eligibility levels and Medicaid optional benefitcoverage—areas where states maintained discretionary power.A political-economic theory is used to test the impact of federalMedicaid mandates where a different political process is postulatedfor each policy dimension. The model is estimated using paneldata and a heteroskedastic, timewise autoregressive model.     

The Legal Order and the Administration of Federal and State Courts

The Nigerian Constitution of 1989 establishes a system of federaland state courts, but within a structure of unified federal-statejurisdiction from the federal and state high courts, to thefederal Court of Appeal, and to the national Supreme Court.Thus, both sets of courts exercise jurisdiction with respectto federal and state laws. Although this system mitigates certainfederal-state jurisdictional conflicts, it does not eliminatesuch conflicts. At the same time, however, the Constitutionalso provides for Sharia courts of appeal under Moslem law andfor customary-law courts of appeal, thus establishing a tripartitesystem of justice. Although this system seeks to accommodateNigeria's ethnic and religious diversity, it does raise problemsfor national unity, judicial uniformity, and equity in the administrationof civil and criminal justice.     

Devolving Regulatory Authority:The Federal and State Response

One of the major legacies of the Reagan administration was its devolution of regulatory authority to the states, particularly in the area of environmental protection. The article descr&es how federal officials at EPA and the OfFce of Surface Mining (Department of the Interior) transferred regulatory responsibility to the states and how state officials initially responded to devolution. In a number of states, regulatory officials clwse to vigorously enforcefederal environmental standards despite the administration's desire for a more relaxed approach to regulation. Haoever, euidence generated by the GAO and others suggest that many of the states lacked the willingness and ability to effectively shoulder their new responsibilities. By the end of the Reagan administration, opposition to devolution had emergedfrom a number of quarters and administration officials were faced with, once again, refashioning the regulatory partnership.     

The Federal State and the Breakup of Czechoslovakia: An Institutional Analysis

This article examines the breakup of Czechoslovakia from aninstitutionalist perspective. The federal state adopted afterWorld War I failed to accommodate tensions in society and heightenedethnic conflict. After World War II, an "asymmetrical" federationwas created that, while designed to provide a degree of homerule to Slovakia, further alienated Slovaksfrom national politics.Each effort to reform the federal order unintentionally promptednew concerns over the balance of political power. The inabilityto construct an enduring federal state helps explain why thetransition from communism proved fatal for the union that wasCzechoslovakia.     

The Progressive Ratcheting of Environmental Laws: Impact on Public Management

One of the problem-making tendencies in environmental policymaking has been an incremental approach to regulation and control. Either because the full dimensions of an environmental problem are not perceived or because political resistance compels step-by-step action, environmental controls tend to be applied progressively, beginning with nominal, largely ineffectual, retroactive declarations. Failing to meet objectives, laws are toughened and extended year by year until the severty of sanctions begins to defeat their intended effects. The fractionized state of environmental law, focusing on specific problems of pollution and subject to changes in interpretation, makes observance and enforcement difficult. The National Environmental Policy Act of 1969 could have facilitated the unification of environmental policy; unfortunately presidents and congresses have not chosen to use it for this purpose. Meanwhile, because environmental protection per se is relatively new to public law and policy and has few roots in the common law, private citizens aggrieved by political obstruction of their expectations have appealed to the courts for relief and compensation. Conservative courts have granted this relief under the "taking" clause of the Constitution. Extraordinary measures in constitutional law may be necessary to resolve an impasse in public policy resulting from conflict between public interests and private rights as interpreted by the judiciary.     

Section 8 Renters in the Phoenix,Arizona, Foreclosure Crisis: Implications for Poverty Deconcentration

How the recent U.S. foreclosure crisis affected federal housing mobility programs has not been well studied. This article explores the crisis’s impact on low-income renters receiving Section 8 vouchers in Phoenix, Arizona. We find that (a) 8% of voucher holders lived in homes that underwent foreclosure, (b) they were in comparably affluent neighborhoods, and (c) most eventually moved after foreclosure. Yet, those who moved after foreclosure were not overtly disadvantaged in the housing market. This unexpected finding may be explained by the opening up of new housing opportunities for voucher holders as foreclosures in more affluent areas were converted to rentals. Overall, this research suggests that the foreclosure crisis did not adversely affect the Section 8 program’s goal of deconcentrating poverty in Phoenix and may have even advanced it—a dynamic potentially occurring in other formerly booming and economically distressed Sunbelt regions.