Give ‘Em Enough Rope: Optimal Design of Executive Pay and Rent Extraction

Simone M. Sepe

89 Texas L. Rev. See Also 143

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Due to recent debates concerning executive compensation, incentive structures are increasingly scrutinized.  Professor Sepe reponds to Professor Fried’s argument by (i) challenging the notion that efficiency necessarily results from preventing managers from capturing extra returns, as managers may use these returns effectively, and (ii) arguing that the social costs of overpriced equity offerings are unclear.  Indeed, Sepe concludes that payment of extra returns to managers may be “necessary to preserve incentives not to waste corporate assets.”

The Continuing Relevance of the Establishment Clause: A Reply to Professor Richard C. Schragger

Caroline Mala Corbin

89 Texas L. Rev. See Also 125

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Professor Richard C. Schragger has identified current underenforcement of the Establishment Clause.  However, he may not have identified the right reasons for this underenforcement, Professor Corbin argues.  Rather, state actions with persuasive secular justifications may not implicate the Establishment Clause to the extent that Professor Schragger believes.  Moreover, apparently problematic statements of government officials may be protected as private speech.  Finally, fear of backlash against minorities may animate underenforcement.

Furthermore, Professor Corbin is unconvinced that decentralization is the answer given the benefits of disestablishment, costs of abandoning disestablishment norms, Professor Schragger’s privileging of conflict avoidance over other Establishment Clause norms, and the potential for backlash against religious minorities.

Professor Corbin argues that these observations may lead to different conclusions than those of Professor Schragger.

Agency Hygiene

Nicholas Bagley

89 Texas L. Rev. See Also 1

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Prof. Bagley notes that reshaping captured agencies using the structural reforms suggested by Prof. Barkow may be politically infeasible and offers an alternative solution for eliminating interest-group capture.  First, he suggests establishing a body within the Executive Branch that proactively investigates and documents capture dynamics.  Second, he suggests creating legislative mechanisms that will encourage Congressional action on the body’s recommendations, and perhaps, more provocatively, requiring the Executive Branch to enact any such recommendations in the absence of Congress’s formal objection.

The Law Professor as Counterterrorist Tactician

Lawrence Rosenthal

89 Texas L. Rev. See Also 113

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Scholars have long sought to identify an optimal counterterrorist strategy, particularly in light of the September 11 attacks.  Professor Rosenthal responds to Professor Huq’s critique of the use of religious speech and statements of belief for counterterrorist purposes.  In doing so, Rosenthal argues that such statements may offer appropriate and reliable evidence of motive and intent, as in the case of Sheikh Omar Abdul-Rahman, in investigations and prosecutions of terrorists.

Rosenthal identifies the costs associated with forgoing such an investigation of religious speech, and Professor Huq’s argument is not to the contrary.  Rosenthal argues that investigators and prosecutors must be able to rely on these statements just as they are used to initiate an investigation, and the costs of forgoing this reliance could be catastrophic.  Indeed, Huq’s proposal to identify insular groups may require reliance on statements of belief given the lack of information available otherwise.

Rosenthal concludes that the lack of implementation of Professor Huq’s proposals by accountable policy makers may suggest their limited value.

The Still-Elusive Quest to Make Sense of Veil-Piercing

David Millon

89 Texas L. Rev. See Also 15

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Prof. Millon argues that while Prof. Oh’s empirical study offers a valuable contribution to veil-piercing scholarship by analyzing cases of fraud as a distinct category, it falls short of explaining what is really going on in veil-piercing cases.  Because decision making in this area is driven by imperfectly understood and poorly articulated considerations of fairness and policy, an analysis of the factors cited by courts to justify veil-piercing will not adequately explain the outcomes of these cases.  Millon also challenges the common assumption that piercing is easier to justify in tort as opposed to contract cases by suggesting justifications for the relative frequency of piercing in contract cases.

Agency-Specific Precedents: Rational Ignorance or Deliberate Strategy

Kristin E. Hickman

89 Texas L. Rev. See Also 89

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Administrative law scholars have debated the seeming paradox of a field with general legal principles applied to a diverse group of agencies.  Professor Hickman responds to Professors Levy and Glicksman’s observation that judges tend to identify precedents from separate agencies, although this is problematic.  These precedents, according to Levy and Glicksman, arise from attorney specialization, an inability of attorneys to expand their knowledge to other areas, and an inability of judges to compensate for incomplete briefing.

While recognizing the validity of Professors Levy and Glicksman’s observation, Professor Hickman observes that this picture is incomplete and that the underlying causes of deviations from general principles are likely myriad. In particular, she argues that attorneys in some cases may have entirely rational and deliberate reasons for their limited briefing.

Drawing on her background in tax law, Professor Hickman argues, that both deliberate strategy and rational ignorance explain deviations from general principles of administrative law in tax regulation.  However, recent cases suggest some movement toward the Levy and Glicksman model of uniformity.

Solar Rights for Texas Property Owners

Sara C. Bronin

89 Texas L. Rev. See Also 79

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In response to Jamie France’s note, A Proposed Solar Access Law for the State of Texas, Professor Bronin urges future commentators to focus on three additional areas of inquiry related to proposed solar rights regimes. Bronin argues that such proposals would be strengthened by discussion of potential legal challenges to the proposals, related political issues, and renewable energy microgrids.

Ms. France’s proposal for the State of Texas includes the elimination of preexisting private property restrictions that negatively affect solar access.  Bronin argues that this proposal would be strengthened by a discussion of potential challenges under federal and state takings clauses.  Additionally, Ms. France’s suggestion that zoning ordinances protect homeowners’ solar access would benefit from a discussion of challenges that might be raised by home rule cities in Texas.  Furthermore, to provide a full perspective, a discussion of possible alternative rules for Houston, which lacks a zoning ordinance, might add to Ms. France’s proposal, according to Bronin.

Bronin also emphasizes that proposals for solar rights regimes, such as that of Ms. France, often affect various interest groups, and commentators should address the political issues that this creates. Specifically, in discussing Ms. France’s proposal for the State of Texas, Bronin identifies the lack of political support for small-scale renewable energy installations as opposed to large-scale projects, Texas’s current budget shortfall, and powerful interests groups that are affected by the proposal.

Finally, Bronin encourages other commentators to consider advocating for renewable energy microgrids.  Bronin has described these as “small-scale, low-voltage distributed generation between neighbors for energy derived from sources such as solar collectors, wind power systems, microturbines, geothermal wells, and fuel cells, which have minimal negative impact on the environment.”  Bronin believes that renewable energy microgrids “should be a key part of solar access regimes in any state.”

On Regulatory Arbitrage

Jordan Barry

89 Texas L. Rev. See Also 69

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Professor Barry evaluates Professor Fleischer’s analytical framework developed in Regulatory Arbitrage, which addresses how actors respond generally to regulations, but also the related issue of what limits parties’ ability to avoid regulations.  Barry offers praise for the framework’s flexibility, ability to consider issues of regulatory arbitrage, and policy neutrality, but provides three comments regarding the framework.

First, Barry argues that “professional constraints” arising from being a member of the legal profession and a partner at a law firm are not as irrelevant as Fleischer claims with regard to their ability to restrain regulatory arbitrage.  Barry draws from his experience in professional practice in expressing his belief that while they are far from being a perfect prevention mechanism, such professional constraints offer some value.

Second, Barry expresses surprise at the lack of discussion in Fleischer’s article of the ability of family members to avoid regulations through collective action, since such discussion would support Fleischer’s arguments regarding the effect of anti-avoidance regimes on regulatory arbitrage.  Specifically, regardless of the fact that families are in the best position to circumvent regulations due to their relationships, avoidance by such families is not believed to be a major issue, according to Fleischer.  Rather, the archetypal regulatory avoider is the sophisticated repeat player in the financial markets.  Barry argues that the effectiveness of anti-avoidance legal rules reconciles this discrepancy, thereby strongly supporting one of the article’s main arguments.

Third, Barry conveys concern with Fleischer’s usage of financial arbitrage, a more established concept, as a model to analyze regulatory arbitrage.  Barry’s apprehension is limited to how using such a framework may distract the readers’ attention from a more pertinent definition of regulatory arbitrage.  More precisely, financial arbitrage occurs when there are multiple prices on economically identical assets, whereas regulatory arbitrage occurs when there is a mismatch between the economics of a transaction and its concomitant regulation, and using examples from the former situation to inform the latter may place one “on the wrong track.”

Taking It to the Streets

Stuart P. Green

89 Texas L. Rev. See Also 61

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Blackmail criminalizes the threat to do something that would not be criminal if one actually did it.  It is seemingly paradoxical that it should be a crime to make certain kinds of threats, even though the threatened acts are perfectly legal.  In Taking It to the Streets, Professor Green responds to Competing Theories of Blackmail: An Empirical Research Critique of Criminal Law Theory by Professor Paul Robinson et al.  Green finds that the authors ingeniously derive concrete scenarios from abstract theories, that they provide a concise summary of the various blackmail theories, and that their methodological techniques are exemplary.  Putting aside the authors’ achievement, Green focuses on the article’s shortcomings.  Green characterizes the authors’ article as attempting to solve the problem in a novel if unusual way: by asking a collection of laypersons what they think should count as blackmail.

Blackmail is not unique in criminal law.  Similar to fraud and false pretenses, blackmail is a form of theft in which the blackmailer attempts to obtain property from the victim without his valid consent, and uses a coercive, though otherwise lawful act, to do so.  However, blackmail is distinguished based on the subject matter of the threat.  Demands for money based on threats to do some kinds of acts (expose embarrassing information) but not others (file a lawsuit) are considered criminal.  Green asks, then, whether there is any principled way to distinguish between these two kinds of threats.

Robinson and his colleagues ask this question to ordinary people.  In doing so, they try to determine if the law is in harmony with the community’s sense of justice.  Green provides several contexts in which he thinks it is useful to have data concerning community views on particular offenses.  For example, “it is useful to know if people believe that a particular paradigmatic act is sufficiently blameworthy to justify criminal sanctions in the first place.”  He finds that the authors’ study offers valuable data as to these issues.

In addition to gathering data, the authors also wanted the scenarios to reflect a range of prominent theorists’ views about why the law is justified in treating blackmail as a crime.  Green considers this effort to translate abstract theory into concrete scenarios to be “the most impressive achievement of the article.”  Yet, he thinks the theorists cited were probably trying to formulate a critical theory to explain why the core cases of informational blackmail should be treated as a crime, and not to devise a theory that would accord with widely shared moral intuitions.  Nor is Green sure that this is a satisfactory way of testing which theory the public would favor.  Instead, he suggests it might be better to explain the leading theories and ask the public directly which they favor, rather than attempt to translate them into testable scenarios first.

Lastly, Green turns to the article’s taxonomy of state blackmail statutes.  He argues that one important factor the authors failed to include is the breadth of the range of threats criminalized.  That is, not only what the statutes require the blackmailer to demand but also what they require him to threaten.  Green finds it puzzling that the authors did not include this factor in their schema.

Keeping Republics Republican

Rob Atkinson

88 Texas L. Rev. See Also 235

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In his response to Prof. Brian Galle, Prof. Rob Atkinson offers a “republican philanthropy” perspective to Prof. Galle’s “charitable charity” approach. First, Prof. Atkinson helpfully places Prof. Galle’s thesis in the larger context of charity scholarship; he elucidates the history and differences between nonprofit and for-profit charitable institutions, comparing and contrasting them with governmental institutions. Prof. Atkinson argues that Prof. Galle’s approach makes a valuable contribution to rebutting the for-profit charity assumption that nonprofits are inefficient; however, he believes that governmental institutions are in the best position to provide charitable services. Using the University of Texas School of Law as an example, he demonstrates that republican philanthropies—institutions that are neither for-profit nor traditional “charitable charities”—sponsor important public goods like this debate itself.