Duke Law Journal Research Articles

Leff to Right

In 1979, Arthur Allen Leff wrote a law review article in the Duke Law Journal entitled, Unspeakable Ethics, Unnatural Law, where he unveiled the normative abyss of modern jurisprudence. Rather simplistically, Leff struck down every normative claim that the law might impose with a two-word punch: says who? By this, Leff indirectly exposed the hazards of a human grounded legal system, a law grounded exclusively in power and coercion, not liberty and justice for all. The trouble with normative jurisprudence, as awakened by Leff, is not primarily an issue of locating a normative object (i.e., a law that ought to be obeyed), but locating a normative subject (i.e., someone capable of declaring law that ought to be obeyed). This struggle comes together in Leff's apex question: “Who among us ought to be able to declare law that ought to be obeyed? Because of his convictions about the universe, Leff could not provide answers to the questions at which he so thoughtfully raised. But with different convictions, Leff's questions seem to find their answer.

Higher education, unbundling, and the end of the university as we know it

Higher education, unbundling, and the end of the university as we know it

The permit power revisited: the theory and practice of regulatory permits in the administrative state

Two decades ago, Professor Richard Epstein fired a shot at the administrative state that has gone largely unanswered in legal scholarship. His target was the “permit power,” under which legislatures prohibit a specified activity by statute and delegate to administrative agencies the discretionary power to authorize the activity under terms the agency mandates in a regulatory permit. Accurately describing the permit power as an “enormous power in the state,” Epstein bemoaned that it had “received scant attention in the academic literature.” He sought to fill that gap. Centered on the premise that the permit power represents “a complete inversion of the proper distribution of power within a legal system,” Epstein launched a scathing critique of regulatory permitting in operation, condemning it as a “racket” for administrative abuses and excesses. Epstein’s assessment of the permit power was and remains accurate in three respects: it is vast in scope, it is ripe for administrative abuse, and it has been largely ignored in legal scholarship. The problem is that, beyond what he got right about the permit power, most of Epstein’s critique was based on an incomplete caricature of permitting in theory and practice. This Article is the first to return comprehensively to the permit power since Epstein’s critique, offering a deep account of the theory and practice of regulatory permits in the administrative state. This Article opens by defining the various types of regulatory permits and describing the scope of permitting in the regulatory state. From there it compares different permit design approaches and explores the advantages of general permits, including their ability to mitigate many of the concerns Epstein advanced. This Article then applies a theoretical model to environmental degradation problems and concludes that if certain conditions are met, general permits can effectively respond to many of the complex policy problems of the future. Finally, this Article adds to the scholarship initiated by Epstein by proposing a set of default rules and exceptions for permit design and suggesting how they apply to complex policy problems. Duas décadas atrás, o professor Richard Epstein inovou nos estudos sobre o estado administrativo que ficou largamente sem resposta na área acadêmica. Seu foco era o “poder de permissão”, sob o qual a legislatura proíbe uma determinada atividade por estatuto e delega às agências administrativas de poder discricionário para autorizá-la sob termos definidos pela agência em uma licença regulatória. Descrevendo com precisão o poder de permissão como um “enorme poder no estado”, Epstein lamentou que este “recebeu pouca atenção na literatura acadêmica”. Ele procurou preencher essa lacuna. Centrado na premissa de que o poder de permissão representa “uma inversão completa da distribuição apropriada de poder dentro de um sistema legal”, Epstein lançou uma crítica severa ao licenciamento regulatório em operação, condenando-o como uma “balbúrdia” de abusos administrativos e excessos. A avaliação de Epstein em relação ao poder de permissão se mantém precisa em três aspectos: era vasta em escopo, é oportuna para abuso administrativo e foi amplamente ignorada no conhecimento jurídico. O problema é que, além do que ele acertou sobre o poder da permissão, a maior parte de sua crítica foi baseada em uma caricatura incompleta em relação à permissão na teoria e na prática. Este artigo é o primeiro a retomar de forma abrangente o tópico do poder de permissão desde a crítica de Epstein, oferecendo uma consideração profunda sobre a teoria e prática de permissões regulatórias no Estado administrativo. Este artigo se inicia definindo os vários tipos de permissões regulatórias e descrevendo o escopo da permissão no Estado regulatório. A partir daí, compara abordagens de design de permissão diferentes e explora as vantagens das permissões gerais, incluindo suas habilidades de mitigar muitas questões nas quais Epstein avançou. Este artigo então aplica um modelo teórico aos problemas de degradação ambiental e conclui que se determinadas condições são alcançadas, permissões gerais podem responder efetivamente a muitos dos complexos problemas de política do futuro. Finalmente, este artigo acrescenta à literatura iniciada Epstein, por meio da proposta de um conjunto de regras e exceções, um padrão para o design de permissão e sugere como eles se aplicam aos complexos problemas de política.

The New Stock Market: Sense and Nonsense

How stocks are traded in the United States has been totally transformed. Gone are the dealers on NASDAQ and the specialists at the NYSE. Instead, a company’s stock can now be traded on up to sixty competing venues where a computer matches incoming orders. High-frequency traders (HFTs) post the majority of quotes and are the preponderant source of liquidity in the new market. Many practices associated with the new stock market are highly controversial, as illustrated by the public furor following the publication of Michael Lewis’s book Flash Boys. Critics say that HFTs use their speed in discovering changes in the market and in altering their orders to take advantage of other traders. Dark pools— off-exchange trading venues that promise to keep the orders sent to them secret and to restrict the parties allowed to trade—are accused of operating in ways that injure many traders. Brokers are said to Copyright © 2015 Merritt B. Fox, Lawrence R. Glosten, and Gabriel V. Rauterberg. † Michael E. Patterson Professor of Law, NASDAQ Professor for the Law and Economics of Capital Markets, Columbia Law School. †† S. Sloan Colt Professor of Banking and International Finance, Columbia Business School. ††† Post-Doctoral Research Scholar in the Law and Economics of Capital Markets, Columbia Law School and Columbia Business School; Yale Law School, J.D. 2009. For particularly helpful comments, we are grateful to Daniel Aisen, Kevin Haeberle, Bill Harts, Joseph McCahery, Laura Miller, Joshua Mitts, and participants at the American Law and Economics Association 2015 Annual Meeting, the European University Institute Law Faculty Seminar, the FGV Direito Rio Conference, the City Bar Association, the Massey Prize Symposium, the May 2015 workshop of the Law and Economics of Capital Markets Program, and a 2014 Columbia Law School Faculty Workshop. FOX IN PRINTER FINAL (DO NOT DELETE) 11/2/2015 1:17 PM 192 DUKE LAW JOURNAL [Vol. 65:191 mishandle customer orders in an effort to maximize the payments they receive for sending trading venues their customers’ orders, rather than delivering best execution. In this Article, we set out a simple, but powerful, conceptual framework for analyzing the new stock market. The framework is built upon three basic concepts: adverse selection, the principal-agent problem, and a multivenue trading system. We illustrate the utility of this framework by analyzing the new market’s eight most controversial practices. The effects of each practice are evaluated in terms of the multiple social goals served by equity-trading markets. We ultimately conclude that there is no emergency requiring immediate, poorly considered action. Some reforms proposed by critics, however, are clearly desirable. Other proposed reforms involve a trade-off between two or more valuable social goals. In these cases, whether a reform is desirable may be unclear, but a better understanding of the trade-off involved enables a more informed choice and suggests areas in which further empirical research would be useful. Finally, still other proposed reforms are based on misunderstandings of the market or of the social impacts of a practice and should be avoided.

Considering Political Alternatives to "Hard Look" Review

That is absolutely right. I am sufficiently confused by the facts that are already on the table-two of them in particular. One (the dog that I thought was barking in that interesting first chart Don Elliott put up, on which he did not remark), is that the first two periods of judicial review he showed us had 337 and 294 cases of judicial review each; for the third period, for the same length of time, the figure is about 800.1 Something is going on there. The other is just a square conflict that our moderator is much better positioned than I am to tell us about. He recently published a fascinating study in the Duke Law Journal that purports to show that the affirmance rate for administrative agencies in the D.C. Circuit, which gets about 60% of administrative appeals these days, is only 30%.2 His figures are from 1987, not 1984 or 1985, but I doubt court performance has changed so sharply in such a very short period of time. These facts warrant some further exploration. Cass Sunstein and Don Elliott each, in his way, was talking about the results of individual cases and the implications for individual cases of litigation or litigation outcomes. I might describe this as the micro-perspective on judicial review and its impact. I will be speaking at a different level of abstraction-without facts, of course-but at a level that seems an important one. My remarks are generally addressed to the macro-perspective, to examining the overall, systemic impact of judicial review of a certain intensity on the way agencies go about their business. This is rather like the Mashaw-Harfst study to which you have already heard Cass Sunstein refer, a good portion of which appeared over a year ago in the Yale Journal on Regulation,3 and that will eventually appear as a book from Harvard University Press. It is a wonderful study. Rather like Shep Melnick's study4 and some others, it tells a cautionary

The Public Domain: Enclosing the Commons of the Mind (review)

Reviewed by: The Public Domain: Enclosing the Commons of the Mind Alex Cummings (bio) The Public Domain: Enclosing the Commons of the Mind. By James Boyle. New Haven, Conn.: Yale University Press, 2008. Pp. xvi+315. $18. “Can one build a politics to protect a residue?” James Boyle asks toward the end of this lively account of recent attempts to foreclose the public domain. The Duke University law professor was among the first to sound the alarm about intellectual property in the 1990s, and The Public Domain offers a lucid case for maintaining a commons of culture, technology, and information. The residue, Boyle suggests, is what remains of free culture after a long period when American politics lacked strong, concerted voices to defend the right to copy and share information. The assumption that more and stronger property rights are always beneficial for the economy has left the public domain impoverished and, in some areas (such as sound recording), virtually nonexistent (pp. 40, 239). One should not expect to find a great deal here that is new to the literature on intellectual property, as The Public Domain synthesizes the work of legal thinkers and historians such as Siva Vaidhyanathan, Yochai Benkler, and Boyle himself. The volume’s greatest contribution is not so much in advancing a novel legal argument or revealing an unknown chapter in the history of culture and technology; rather, its unique strength lies in providing metaphors and historical allusions that elegantly capture the dilemmas of intellectual property, explaining why excessive deference to claims of property rights is neither necessary nor beneficial. For example, Boyle posits that the “public domain” is much like the concept of “the environment,” expanding on a thesis first advanced in a seminal 1997 Duke Law Journal review essay. In the 1950s and 1960s, environmentalists had to lay out a vision that helped the public see how seemingly isolated problems [End Page 857] (pollution, endangered species, suburban sprawl) were part of a greater, previously unrecognized system. Similarly, Boyle suggests we must learn to see the public domain as a common sphere—one that affects the teachers who are sued for violating fair use, the patient whose genes are patented by university researchers, and the artists whose work is limited by the chilling effect of possible litigation. Without this intellectual leap, an adequate political response is unlikely to take shape. In another perceptive analogy, The Public Domain likens contemporary intellectual property law to England’s enclosure movement, the historic privatization of common lands that began in the fifteenth century and dispossessed so many traditional agricultural tenants. Boyle describes the expansion of intellectual property as a similar kind of “land grab,” as corporations seek to convert all kinds of expression, even facts themselves, from public resources into private ones (p. xv). The author challenges assumptions about the greater efficiency of private ownership by showing how society balances land tenure between public and private hands to maximize communal well being. Public roads and beaches, for instance, are “braided” or “quilted” with privately owned land, and the public provision of such goods often makes neighboring private plots more valuable (pp. 50, 269). In this way, the public domain supports private ownership, furnishing the raw material from which creators can make new works and, for a time, own them. “It may seem paradoxical,” Boyle writes, “but in a very real sense protection of the commons was one of the fundamental goals of intellectual property law” (p. 50). The author finds a convincing empirical example in the database industry, which has prospered in the United States without the copyright protections found in the European Union (p. 213). The book’s shortcomings are few. It may oversimplify by implying that piracy was nearly unknown in an earlier era when technologies of reproduction were less advanced. In fact, pirates used the tools that were available, however limited, to circulate unlicensed copies of sheet music, recordings, and other media in the late nineteenth and early twentieth centuries, without triggering the massive legal retaliation or ideological shift we have seen in recent decades. And while Boyle is no anti-copyright firebrand, he may too readily dismiss the possibility that new interests (Google comes to mind...

Reframing Cultural Studies: Human Rights as a Site of Legal-cultural Struggles

In the twenty-first century, after more than 60 years of development1 since its rise to prominence worldwide, the modern human rights system has become a common, even popular, public and policy dis...

The Iraq War and Iranian Power

By deposing Saddam Hussein, the United States radically altered the balance of power in the Persian Gulf. Since the early 1940s, power had been dispersed among Saudi Arabia, Iraq, the United States...

‘Property Talk’ and the Revival of Blackstonian Copyright

‘Property Talk’ and the Revival of Blackstonian Copyright

Indirectly Held Securities and Intermediary Risk

In a previous article (Intermediary Risk in a Global Economy, 50 Duke Law Journal 1541 (2001)), I observed that intermediaries in a wide range of international dealings now hold assets in which they, as well as investors, share beneficial rights. The sharing of these rights creates significant uncertainty as to whether the intermediary's creditors can look to all those assets, or merely to the intermediary's interest therein, for repayment. This intermediary not only affects individual investors and increases transaction costs but also can be systemic. The present article focuses on this risk in the context of the indirect holding system used worldwide for trading of securities. It concludes that a uniform rule is needed to regulate this risk, and examines how such a rule should be implemented in an international law context.

Intermediary Risk in a Global Economy

Worldwide financial markets increasingly depend on structures that reduce risk by interposing intermediaries between investors and the companies obligated to pay them. This reduction of risk may be offset, however, by the risk that an intermediary will fail, and its creditors then will claim against assets held by the intermediary for the benefit of investors. If the intermediary holds assets solely in a custodial capacity, this risk traditionally is addressed by agency and trust law. What is novel, however, is that intermediaries in a wide range of domestic and international dealings—including the trading of investment securities, the sale of loan participations, and securitization transactions—now hold assets in which they, as well as investors, share beneficial rights. The sharing of these rights creates significant uncertainty as to whether the intermediary’s creditors can look to all Copyright © 2001 by Steven L. Schwarcz. † Professor of Law, Duke University School of Law; Faculty Director, Duke University Global Capital Markets Center; and Professor of Business Administration, Fuqua School of Business (by courtesy). E-mail: schwarcz@law.duke.edu. The author thanks Joanna Benjamin, Carl S. Bjerre, Michael Byers, Deborah DeMott, Francisco Garcimartin, Roy Goode, Kenneth C. Kettering, Kon Sik Kim, Eva Micheler, Richard Potok, James Steven Rogers, Paul M. Shupack, Joseph Sommer, and Todd J. Zywicki, and the participants in faculty workshops at the George Mason University and Washington and Lee University Schools of Law, for helpful comments on drafts of this Article. The Article also benefitted from discussions with Eric Bergsten and Ian F. Fletcher. Finally, the author thanks Amy S. June, Youngmin Kim, Adam D. Munson, Mark D. Rambler, and Don Suh for research assistance and Kristi Bowman for editorial assistance. SCHWARCZ.DOC 06/08/01 1:46 PM 1542 DUKE LAW JOURNAL [Vol. 50:1541 those assets, or merely to the intermediary’s interest therein, for repayment. This “intermediary risk” not only affects individual investors and increases transaction costs but also can be systemic: the failure of an intermediary may trigger a chain reaction of failures of investing institutions that contract with the intermediary. Moreover, the problem of intermediary risk raises innovative legal issues that blur the boundaries between commercial law and property. This Article analyzes how legal systems worldwide should respond to this risk. It concludes that a uniform rule is needed to regulate intermediary risk in cross-border commercial and financial transactions, and it examines how such a rule should be implemented in an international law context.

The Implications of Memetics for the Cultural Defense

values, beliefs, and perceptions of world that lie behind people's behavior97 and the body of beliefs, ideas, and ideals held by an ethnic group.98 Of course, defining culture so broadly is a large step towards admitting that culture is something different for each person, as ideas and ideals vary widely from person to person, even within same ethnic group. To be fair, culture is notoriously hard to define,99 but cultural seeks to excuse individuals because their actions were based upon their culture. To define culture so narrowly as to include only traditional practices or rituals ignores a vast part of universe of human causation. Were these only causes of action, human cultures would be remarkably stagnant. Such a narrow definition of culture also ignores presence of countercultures and people who leave a culture-what could possibly be influencing minds of those who resist a society's traditions? Memetics is thus useful because it focuses on all ideas and influences, and not just an ill-defined, static group. 94. No. A-091133 (Cal. Super. Ct. L.A. County Nov. 21,1985). 95. No. 315972-0 (Cal. Super. Ct. Fresno County Feb. 7, 1985). 96. There is specter of a defense that would seek to excuse defendants whose beliefs were shaped by membership in a subculture, such as a gang. Renteln, supra note 6, at 497-98. Renteln criticizes subcultural on grounds that defendants' is not radically different from rest of society.... [G]ang members do not believe in witchcraft, coining, or other customs integral to a markedly different conceptual system. Id. at 497. While this may be true in some limited sense, mental architecture that produces action is influenced by more than belief or disbelief in supernatural. This is why memetics is so useful. Rather than bickering which beliefs constitute valid excuses and how radical a worldview must be, memetics acknowledges that all beliefs and worldviews are determinants of action and that therefore everyone has an excuse. 97. Fischer, supra note 1, at 669 (quoting WILLIAM A. HAVILAND, ANTHROPOLOGY 277 (5th ed. 1989)). 98. Rimonte, supra note 4, at 1315. 99. Fischer, supra note 1, at 668 (observing that there are over a hundred separate definitions of culture). This content downloaded from 157.55.39.144 on Wed, 07 Sep 2016 04:42:07 UTC All use subject to http://about.jstor.org/terms 1828 DUKE LAW JOURNAL [Vol. 50:1809 C. Consequences of Memes Though volitional cultural lacks a sound philosophical basis, we should be careful when we choose to disallow cultural defense. It is here that consequentialist arguments become important. While it does not generally seem wise to maintain legal mechanisms that are metaphysically untenable, a blanket prohibition on cultural evidence may lead to some unwanted results. As consequences of cultural have already been examined in some detail, this Note will look at these consequences through memetic perspective; it will focus on which memes are encouraged by allowance or disallowance of defense. One of primary justifications for allowing a cultural is that it reflects and encourages multicultural sensitivity.t The valuepluralism that cultural promotes is a necessary component of American ideals of freedom and liberty. To maintain these ideals, Americans must not foist[] upon all others a single orthodoxy, but rather accept beliefs and practices of various groups that comprise America as a whole.0' The amount of value a society places on diversity is, in some sense, a measure of importance that society places on liberty.1 It is difficult for a nation to claim that it is founded upon ideas of freedom, tolerance, and personal liberty and at same time not accept values of other

Global Decentralization and the Subnational Debt Problem

According to the World Bank, decentralization of government is a pivotal force that will shape global development policy in the twenty-first century. Subnational debt restructuring has emerged as one of decentralization’s most difficult problems. Financially troubled municipalities face many of the same concerns, for example, as financially troubled nations: holdout creditors can stymie collective attempts at debt restructuring, and reliance on politically motivated lenders of last resort (the International Monetary Fund in the case of troubled nations, the central government in the case of troubled municipalities) can foster moral hazard. In a prior article, I argued that an international convention for sovereign debt restructuring based on several universal principles of bankruptcy reorganization law can effectively address these concerns for nations. In this Article, I argue Copyright © 2002 by Steven L. Schwarcz. † Professor of Law, Duke University School of Law; Faculty Director, Duke University Global Capital Markets Center; Professor (Adjunct) of Business Administration, Fuqua School of Business. E-mail: schwarcz@law.duke.edu. The author thanks Michael Byers, Hang-do Choi, Wilson Freyermuth, David Gelfand, Clayton P. Gillette, Malcolm Grant, W. Bartley Hildreth, Shinsaku Iwahara, Martin Loughlin, Ernfred Olsen, Daniel Tarullo, Jacob Vigdor, and the participants in a Global Capital Markets Center interdisciplinary workshop at Duke University for helpful comments on drafts of this Article, and Susan Z. Jorgensen, Stephen E. Smith, and Youngsung Suh for research assistance. The author is indebted to Ernfred (“Ernie”) Olsen for confirming the importance of this topic and to Financial Security Assurance, Inc., Standard & Poor’s Ratings Group, and Moody’s Financial Services, Inc. for providing invaluable background information and sources. SCHWARCZ.DOC 03/01/02 1:16 PM 1180 DUKE LAW JOURNAL [Vol. 51:1179 that similar principles can be applied even more easily to the financial problems of subnational governments. To this end, I propose a model law based on these principles that might form the foundation for national laws, informed by local political and legal culture. Then, using the Japanese municipal crisis as an example, I show that countries enacting such a law can prudently and equitably resolve their subnational debt burdens.

Equitable Self-Ownership for Animals

This Article proposes a new use of existing property law concepts to change the juristic personhood status of animals. Presently, animals are classified as personal property, which gives them no status or standing in the legal system for the protection or promotion of their interests. Professor Favre suggest that it is possible and appropriate to divide living property into its legal and equitable components, and then to transfer the equitable title of an animal from the legal title holder to the animal herself. This would create a new, limited form of self-ownership in an animal, an equitably self-owned animal. Such a new status would have two primary impacts. First, the animal would have access to the legal system, at least in what has historically been the realm of equity, for the protection and assertion of his or her interests. Secondly, the human holder of legal title will, like a traditional trustee, have obligations to the equitable owner of the animal, that is the animal himself. As the subject matter of this trust-like relationship would be a living being, not money or wealth, the legal owner would best be characterized as a guardian, rather than by the traditional category of trustee. The Article concludes with a short discussion of the use of anti-cruelty law and human guardianship concepts as providing a context for the further development of this new concept of equitable self-ownership. Copyright © 2000 by David Favre. † Professor of Law, Michigan State University-Detroit College of Law. Professor Favre has been involved with legal animal issues for over 20 years as a board member of the Animal Legal Defense Fund. The author wishes to thank a number of people who helped with researching and editing the material contained in this Article, including Joyce Tischler, Steve Ann Chambers, Barbara Newell, David Wolfson, Henry Cohen, and Michael Kelly. FAVRE 11/20/00 6:24 PM 474 DUKE LAW JOURNAL [Vol. 50:473

Wrong Turn in Cyberspace: Using ICANN to Route around the APA and the Constitution

The Internet relies on an underlying centralized hierarchy built into the domain name system (DNS) to control the routing for the vast majority of Internet traffic. At its heart is a single data file, known as the “root.” Control of the root provides singular power in cyberspace. This Article first describes how the United States government found itself in control of the root. It then describes how, in an attempt Copyright © 2000 by A. Michael Froomkin. † Professor, University of Miami School of Law. E-mail: froomkin@law.tm. Research and writing of this Article was supported by a Summer Grant from the University of Miami School of Law. Thank you to Karl Auerbach and Richard Sexton for technical information, to Tony Rutkowski for help with DNS history, to Jonathan Weinberg for a number of very helpful conversations, to all the members of the BWG+ mailing list for an education, to James Boyle for including me in this symposium, to Julie Dixson for research assistance, and especially to Caroline Bradley. Kind readers who helped me correct and improve drafts included Alan Davidson, John Hart Ely, Bret A. Fausett, Patrick Gudridge, David Johnson, David Post, Ellen Rony, Tony Rutkowski, Joe Sims, and Jonathan Weinberg. Remaining errors are my own unintentional contribution to further obfuscating ICANN’s history. Readers have a right to know that I participate in activities that touch on the subject of this Article. I served as a member of the so-called Panel of Experts that advised the World Intellectual Property Organization on its Domain Name Process. See infra note 13. Currently, I am a director of disputes.org, which, in partnership with eResolution.ca, is one of the dispute resolution providers accredited by ICANN. See Approved Providers for Uniform Domain Name Dispute Resolution Policy, at http://www.icann.org/udrp/approved-providers.htm (last visited Sept. 21, 2000) (providing a link to the eResolution website) (on file with the Duke Law Journal). I am also a co-founder of ICANNWatch.org, a group founded to increase awareness of ICANN’s activities. The views expressed in this article are my own and should not be attributed to either disputes.org or ICANNWatch.org. An earlier version of this paper was delivered in Durham, N.C., on March 3, 2000. Unless otherwise noted, this Article aims to reflect technical and legal developments as of October 1, 2000. FROOMKIN.DOC 10/30/00 8:47 AM 18 DUKE LAW JOURNAL [Vol. 50:17 to meet concerns that the United States could so dominate an Internet chokepoint, the U.S. Department of Commerce (DoC) summoned into being the Internet Corporation for Assigned Names and Numbers (ICANN), a formally private nonprofit California corporation. DoC then signed contracts with ICANN in order to clothe it with most of the U.S. government’s power over the DNS, and convinced other parties to recognize ICANN’s authority. ICANN then took regulatory actions that the U.S. Department of Commerce was unable or unwilling to make itself, including the imposition on all registrants of Internet addresses of an idiosyncratic set of arbitration rules and procedures that benefit third-party trademark holders. Professor Froomkin then argues that the use of ICANN to regulate in the stead of an executive agency violates fundamental values and policies designed to ensure democratic control over the use of government power, and sets a precedent that risks being expanded into other regulatory activities. He argues that DoC’s use of ICANN to make rules either violates the APA’s requirement for notice and comment in rulemaking and judicial review, or it violates the Constitution’s nondelegation doctrine. Professor Froomkin reviews possible alternatives to ICANN, and ultimately proposes a decentralized structure in which the namespace of the DNS is spread out over a transnational group of “policy partners” with DoC.

ICANN and the Problem of Legitimacy

Two years ago, an entity called the Internet Corporation for Assigned Names and Numbers (ICANN) was formed to take control of the Internet’s infrastructure of domain name and IP address identifiers. Private parties formed ICANN at the behest of the U.S. government; the government is currently using its considerable resources to cement ICANN’s authority over the domain name space. ICANN’s role is one generally played in our society by public entities. It is setting rules for an international communications medium of surpassing importance. That task had historically been performed by a U.S. government contractor in an explicitly public-regarding manner. ICANN is addressing important public policy issues. Further, it is implementing some of its choices via means that look uncannily like commandand-control regulation. If ICANN is to establish its legitimacy, it must be able to answer the charge that its exercise of authority is inconsistent with our ordinary understandings about public power and public policymaking. In developing structures, procedures, and rhetoric to establish its own legitimacy, ICANN has drawn on techniques that parallel the Copyright © 2000 by Jonathan Weinberg. † Professor of Law, Wayne State University. I owe thanks to Karl Auerbach, Diane Cabell, Michael Froomkin, Ellen Rony, Tony Rutkowski, Richard Sexton and, above all, Jessica Litman. I presented an earlier version of this Article in Durham, N.C., on March 3, 2000, and a different, somewhat truncated, version, under the title “Free Governance,” at the Conference on a Free Information Ecology in the Digital Environment, in New York, N.Y., on April 2, 2000. Disclaimers: I was a legal-scholar-in-residence at the Federal Communications Commission in 1997-98, where I participated via an interagency working group in the U.S. government’s policymaking process regarding management of Internet names and addresses during the period leading up to the release of the Green Paper. More recently, I was the co-chair of a working group established by ICANN’s Names Council to formulate recommendations regarding the deployment of new generic top-level domains. The views expressed in this Article, however, are solely my own: I do not and could not speak for the U.S. government, the Names Council, or the working group. WEINBERG2.DOC 10/30/00 8:49 AM 188 DUKE LAW JOURNAL [Vol. 50:187 justifications historically offered to defend the legitimacy of the unelected federal administrative agency. First, it has invoked what one might call the techniques of administrative law: it has, in important respects, structured itself so that it looks like a classic U.S. administrative agency, using and purportedly bound by the tools of bureaucratic rationality. Yet the techniques of administrative law are inadequate in this context, for they do not provide meaningful constraint in the absence of judicial review. In the administrative agency context, it is judicial review for rationality and statutory faithfulness that drives the agency’s own commitment to process and rationality. But there is no ICANN institution that performs the function that judicial review performs for administrative agencies. Second, ICANN has invoked the techniques of representation: it has adopted structures and procedures that make it resemble a representative (that is to say, elective) government body. ICANN’s election of new at-large directors, as this Article goes to press, including candidates who campaigned on a platform of skepticism and reform, is heartening. Yet the task of representation is hardly straightforward. There may be no way to craft an elective mechanism that ensures that the immensely heterogeneous Internet community is represented, in any real sense, within ICANN’s structure. Although elections can broaden the set of communities given a voice within ICANN’s halls, they cannot render ICANN into a reflection of the Internet community. They can improve ICANN’s decisionmaking, but they cannot reliably aggregate the preferences of the Internet world at large, and thus tell ICANN whether to adopt a disputed policy. Finally, ICANN has invoked the techniques of consensus: it has asserted that its structure and rules ensure that it can only act in ways that reflect the consensus of the Internet community. But this is illusory. ICANN does not have procedures that would enable it to recognize consensus, or the lack of consensus, surrounding any given issue. It has commonly taken actions with no clear showing of consensus in the community at large, and its methods of determining that a particular action is supported by consensus have often seemed opaque. Indeed, there is no reason to believe that the issues over which ICANN seeks to exercise authority are ones around which any genuine consensus can be formed. WEINBERG2.DOC 10/30/00 8:49 AM 2000] ICANN AND THE PROBLEM OF LEGITIMACY 189

Arbitrator Liability: Reconciling Arbitration and Mandatory Rules

In this Article, Professor Guzman resolves the tension that exists between mandatory legal rules and the widespread use of arbitration. In recent years, U.S. courts have expanded the range of enforceable arbitration agreements to include agreements that cover areas of law previously thought to be within the exclusive domain of courts. Among the disputes that are now deemed arbitrable are those that implicate mandatory rules such as securities and antitrust laws. Under current law, the willingness of courts to enforce arbitration agreements and to uphold the resulting arbitral awards with minimal judicial review makes it possible for the parties to a transaction to avoid mandatory rules of law. Until now, it has generally been believed that the legal system must either restrict the use of arbitration or permit arbitration and accept that doing so turns all mandatory rules into default rules. This Article proposes a mechanism that permits the continued use of arbitration without abandoning the mandatory nature of legal rules. The recommended approach, called “arbitrator liability,” allows the losing party in an arbitration to sue the arbitrator on the ground that a mandatory rule was ignored. Under existing legal rules, arbitrators have an incentive to ignore mandatory rules of law in favor of the contractual terms agreed to by the parties. Arbitrator liability gives arbitrators an incentive to apply mandatory rules of law. Giving proper incentives to arbitrators will ensure that mandatory † Boalt Hall School of Law, University of California at Berkeley. I owe thanks to Richard Brooks, Richard Buxbaum, David Caron, Stephen Choi, Robert Cooter, Jesse Fried, Stephen Ware, David Wilkins, and John Yoo, as well as participants at both the 1999 Friedmann Conference on International Securities Regulation and Antitrust and the Latin American Law and Economics Association 1999 Annual Meetings for helpful comments and discussions. Special thanks to Nicholas James and Jeannie Sears. Melissa Kennedy, Philip Tendler, and Ryan Waterman provided invaluable research assistance. GUZMAN TO PRINTER (FINAL).DOC 09/21/00 12:59 PM 1280 DUKE LAW JOURNAL [Vol. 49:1279 rules are enforced, thereby eliminating the incentive for the parties to draft arbitration agreements intended to avoid those rules. The benefits of arbitration can be retained without sacrificing the ability of lawmakers to adopt mandatory rules.

Negotiating Federalism: State Bargaining and the Dormant Treaty Power

The orthodox view that states have no role in U.S. foreign relations is not only inconsistent with their place in the modern global economy, but the constitutional basis for a “dormant” bar on state participation—that is, absent a controlling federal statute or treaty—is obscure. Revisionist scholarship and recent Supreme Court case law suggest that Congress alone should decide when the states must stay out of foreign relations. In this Article, Professor Swaine argues that both the orthodox and revisionist views neglect an alternative basis for a judicial role—the Treaty Clause, enforced through the dormant treaty power. The text, structure, and original understanding of the treaty power establish two important principles of continuing validity. First, the President was to have an independent and substantive authority to negotiate on behalf of the United States, the better to secure advantageous treaties and avoid perilous entanglements. Second, state interference with this negotiating authority, even prior to the conclusive adoption of a federal treaty or statute, was unlawful. † Assistant Professor, Department of Legal Studies, The Wharton School, University of Pennsylvania. I would like to thank Jack Goldsmith, Eric Orts, Richard Shell, Peter Spiro, and Alan Strudler for their generous suggestions and constructive criticism, as well as Elena Bojilova, Charisa Tak, and Scott Wilson for their research assistance. SWAINE TO PRINTER.DOC 09/21/00 12:58 PM 1128 DUKE LAW JOURNAL [Vol. 49:1127 Treaty Clause exclusivity is best maintained by a judicially enforced dormant treaty power barring the states from bargaining with foreign powers, including indirect bargaining through measures that are contingent on foreign government policies—such as the Massachusetts law targeting companies doing business with Burma. However, state activities that incidentally have effects overseas would not be precluded, and the jurisprudence must be informed by the original rationales for federal exclusivity and by the President’s discretion to exempt state activities posing no threat to federal functions.

The Vertical Separation of Powers

Standard understandings of the separation of powers begin with the concept of function. Professor Nourse argues that function alone cannot predict important changes in structural incentives and thus serves as a poor proxy for assessing real risks to governmental structure. To illustrate this point, the Article returns to proposals considered at the Constitutional Convention and considers difficult contemporary cases such as Morrison v. Olson, Clinton v. Jones, and the Supreme Court’s more recent federalism decisions. In each instance, function appears to steer us wrong because it fails to understand separation of powers questions as ones of structural incentive and political relationship. In order to move away from function as the sole proxy for structural risk, the Article suggests a “vertical” approach toward separation of powers questions. That approach reconceives departmental power less as the power to perform a set of tasks fitting a particular constitutional description (e.g., adjudication, execution, legislation) than as a set of constitutionally created political relationships between the people and those who govern them. Put another way, the separation of powers becomes less a search for transcendental descriptions of the departments than a means of considering how shifting structure affects liberty—how structural incentives may incline governmental actors to act toward the people in ways that risk the electoral powers of both majorities and minorities. † Victoria Nourse, Associate Professor of Law, University of Wisconsin. Special thanks to Ann Althouse, Neil Komesar, and Jane Schacter for reading early drafts of this Article, as well as to the members of the Columbia Legal Theory Workshop and, in particular, to Michael Dorf, George Fletcher, and Peter Strauss for listening to the some of the ideas presented in an early version of this Article. I would also like to thank the students in Professor Komesar’s Law and Economics seminar, who read and commented on a later draft. The editors of the Duke Law Journal, in particular Scott Thompson, provided excellent assistance. All errors are, of course, my own. NOURSE TO PRINTER 06/09/00 3:26 PM 750 DUKE LAW JOURNAL [Vol. 49:749

Choice or Commonality: Welfare and Schooling after the End of Welfare as We Knew It

Reflecting market rhetoric but also potentially advancing spiritual and religious values, school voucher plans dominate current debates on education reform. These voucher plans would enable parents to use public dollars to select private schools, including parochial ones, for their children. Moreover, the recent federal welfare reform includes the “charitable choice” provision, which enables states to issue vouchers to individuals who can redeem them for services and aid from private, including religious, entities. In this Article, Professor Minow predicts that constitutional challenges to these plans under the religion clauses are likely to result in judicial approval of school vouchers and judicial rejection of charitable choice, even though she finds school vouchers the more troubling policy and charitable choice the more promising one. Both kinds of proposals raise challenging questions about individual choice, its reliability, and its importance relative to the need for commonality in society sufficient to bridge plural and potentially divided communities. Yet, both proposals are superior to simplistic al† Professor, Harvard Law School. A version of this Article was presented as the Brainerd Currie Lecture, Duke University School of Law, Feb. 18, 1999. I thank Dean Pamela Gann for the invitation and members of the Duke Law School community for engaging questions and comments. Another version of this work will appear in a book entitled Who Provides, which emerged from the Harvard Divinity School Seminar on Democratic Revival. I would like to thank Ron Thiemann and Brent Coffin for involving me in that seminar, seminar participants for their comments, and Edward Baker, Ronald Dworkin, Frank Michelman, Jenny Mansbridge, Thomas Nagel, Rick Weissbourd, and Larry Sager for valuable discussions. Avi Soifer, David Wilkins, David Wang, and especially Larry Blum offered intense scrutiny, for which I am grateful. Thanks especially to Andrew Varcoe for research assistance beyond the call of duty. Thanks to Kate Cook, Catherine Claypoole, Jesse Fisher, Dalia Tsuk, Nina Wang, and Jean Chang for background materials, and to Laurie Corzett for dealing with word processing nightmares. MINOW TO PRINTER.DOC 01/20/00 2:51 PM 494 DUKE LAW JOURNAL [Vol. 49:493 ternatives that assign responsibility for schooling and welfare entirely to homogeneous communities, to the federal government, or to each individual. Voucher proposals, if regulated, can establish constructive partnerships between governments and private, including religious, entities at the local, state, and federal levels.