The New Steam: On Digitization, Decentralization, and Disruption

Deven R. Desai

Volume 65, Issue 6, 1469-1482

Digitization is the new steam. Steam allowed us to leverage like never before and spawned a series of new offerings and new needs. The steam era started with many competitors and inventors and ended with only a few concentrated winners. The winners contributed vast amounts to society and spawned a need for new laws, from antitrust to product liability to intellectual property to securities, and more. Just as steam disrupted old industries and fostered new ones, digitization is providing the same changes today. Digitization opens the door to decentralized production, lower costs, and disruption of incumbents, but digitization does not mean perpetual disruption is at hand.

In this essay, I begin to set out why new, centralized winners will emerge. Digitization spawns an abundance of person-to-person transactions but with the problems of impersonal transactions. Copyright industries were some of the first to experience the change from few to many producers. Technologies such as 3D printing, synthetic biology, and nanotechnology further the shift from centralized to small and local production. Although some champion disruption and new businesses, a paradox of centralized production and markets with fewer players is that such sectors are easier to regulate. The ability of almost anyone to make guns, sell harmful software, or produce other sophisticated offerings removes that easy pressure point. Put differently, even though digitization enables decentralized, lower-cost production, economic questions will remain. We must understand what they are and why they persist to see what the future may be.

In simplest terms, transactions costs related to safety, quality, property rights, contracting, and knowledge may be more acute in a digitized, decentralized world. I offer that companies such as Uber, Lyft, Airbnb, Google, Apple, Amazon, and eBay, have thrived, in part because they have enabled decentralized production to operate at scale. In addition, as established players understand digitization and network technology better, they have adapted to the new marketplace. For example, rather than giving consumers a music or video file, part of the copyright industry has shifted to streaming music and video. Consumers have access to the content with no fear of malware but lose the ability to manipulate that content. This strategy could be used to limit 3D printing and other creative technologies. Instead of having design files that can be altered, consumers will stream a file for the specific design. Many may welcome this shift, because they are not tinkerers but instead are simply consumers who want a safe, stable product or service. But that stability flows from centralized players. In short, this era of disruption and decentralization will likely pass and new winners, who will look much like firms of old, will emerge, if they have not already.

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Intellectual Property Infringements & 3D Printing: Decentralized Piracy

Ben Depoorter

Volume 65, Issue 6, 1483-1504

By drastically reducing the role of intermediaries in manufacturing, 3D printing is likely to set about the next wave of decentralized, non-commercial infringements of intellectual property rights. Drawing upon the lessons from the entertainment industry’s litigation campaign against illegal file sharing, this paper describes some of the common characteristics of decentralized piracy. I show that, like copyright enforcement on file-sharing networks, intellectual property enforcement of 3D printing faces economic and social norm complications that make traditional, litigation based enforcement ineffective and possibly counterproductive.

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Guns Don’t Kill People, 3D Printing Does? Why the Technology is a Distraction from Effective Gun Controls

Rory K. Little

Volume 65, Issue 6, 1505-1514

3D printing is technology that allows three-dimensional physical objects to be created by using a relatively small and inexpensive machine that looks much like a desktop paper printer. 3D printers have already been used to create guns and shotgun cartridges (but not ammunition), and the prospect that criminals will be able to “print” operational weapons at home has regulators in a tizzy. Some argue that 3D printing should be highly regulated to avoid such dangers.

In this Essay invoking Bewitched as the theoretical example of instantaneous 3D printing, Professor Little argues that gun control advocates should focus primarily on regulating criminal use of guns, and not on the technology used to manufacture them. Paper printers can be used to create instruments of fraud, but we do not ban paper printing at home. New technology has always stimulated fears. But criminal law properly focuses on the products of technology and their criminal uses. We should celebrate technological innovation and attempt to regulate its misuse without inhibiting creative development.

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Fostering Transparency: A Preliminary Review of “Policy” Governing Psychotropic Medications in Foster Care

Kathleen Noonan and Dorothy Miller

Volume 65, Issue 6, 1515-1550

In light of increasing national attention on the high rates of prescribing psychotropic medication for children in foster care, and related new federal requirements for state reporting to the federal government, we analyzed child welfare agency laws, policies, and regulations in sixteen states. Our analysis revealed that states with monitoring policies in place tend to use informal guidance or underdeveloped policy statements that were likely not subject to public notice or comment, and afforded little, if any, opportunity for redress. This Article argues that, given the new federal requirements related to psychotropic medications and children in foster care, the state policy-making process must become more transparent to ensure broad public input and recourse in the case of non-compliance.

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Thou Shalt Not Take the Name of the Lord Thy God in Vain: Use and Abuse of Religious Exemptions from School Immunization Requirements

Dorit Rubinstein Reiss

Volume 65, Issue 6, 1551-1602

School immunization requirements are one way that states protect school age children against vaccine-preventable diseases. At present, forty-eight states allow parents to exempt their students from immunization requirements based on religious reasons, philosophical reasons, or either. This Article focuses on the religious exemption and makes three points. First, people lie to get a religious exemption. Second, U.S. jurisprudence makes preventing such abuse very hard. And third, because the religious exemption is so prone to abuse, we should remove it. The first part of the Article discusses the jurisprudence, and why our courts limit state officials’ ability to police abuse of the religious exemption. The Article then uses three sources to argue that religious exemptions are widely abused: survey data describing the reasons people do not vaccinate, the positions of established religions about vaccines, and posts from Facebook stating the poster lied to obtain a religious exemption. The Article concludes by discussing three potential solutions to the problem of widespread abuse of the religious exemption: tightening the scrutiny of requests for religious exemptions, limiting exemptions to medical exemptions only, and providing only a personal choice exemption. The Article is skeptical about whether tightening scrutiny is appropriate or constitutional, but sees the latter two options as offering a different balance of benefits and costs, though the author has a slight preference for a hard to obtain personal choice exemption.

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Paying for Water in California: The Legal Framework

Brian Gray, Dean Misczynski, Ellen Hanak, Andrew Fahlund, Jay Lund, David Mitchell, and James Nachbaur

Volume 65, Issue 6, 1603-1664

Over the past four decades, California voters passed a series of initiatives that amended the California Constitution to limit the power of the state legislature and local governments to enact taxes and restrict their authority to adopt fees and other charges to fund government programs. Three of these initiatives—Proposition 13 (enacted in 1978), Proposition 218 (passed in 1996), and Proposition 26 (approved in 2010)—have placed significant constraints on the funding of water resources projects. Although each of these laws has enhanced the transparency and accountability of the decision-making process, the funding constraints now jeopardize an array of vital water supply, management, and regulatory functions. These include funding for the development of new water supplies, integrated water management, protection of groundwater resources, development of alternative water sources (including recycled and conserved water programs), control of stormwater discharges, and regulation of water extraction and water use to protect water rights, water quality, aquatic species, and other beneficial uses of the state’s water systems.

This Article is a companion to the report Paying for Water in California and focuses on the legal aspects of water financing. The Paying for Water study demonstrated the critical importance of local funding to support California’s water system: local utilities and governments raise eighty-five percent of the more than thirty billion dollars spent annually on water supply, quality, flood, and ecosystem management through local fees and taxes. The study identified a two to three billion dollar annual funding gap, with critical gaps already evident for provision of safe drinking water in small, rural communities, prevention of stormwater pollution, protection of people, property, and infrastructure from flooding, recovery efforts for aquatic ecosystems, and integrated water management. In most cases, these gaps reflect legal obstacles to raising more funds locally. In addition, urban water and wastewater systems—now in relatively good fiscal health—face looming challenges related to rising costs and legal constraints on the ability to raise fees to support modern, integrated water management.

This Article begins with an overview of the traditional sources of funding for water development, management, and regulation, and proceeds to a detailed analysis of the effects of the constitutional constraints (especially of Propositions 218 and 26) on these essential governmental programs. Topics include: (i) analysis of the effects of Proposition 218 on water rates and fees charged by public retail water agencies for water service and integrated, portfolio-based water management; (ii) consideration of the special problems of Proposition 218 for groundwater regulation and stormwater discharge programs; (iii) predictions about the effects of Proposition 26 on wholesale water rates, water stewardship charges, and regulatory fees; and (iv) suggestions for harmonizing the fiscal strictures of Propositions 218 and 26 with the reasonable use mandates of Article X, Section 2, of the California Constitution, which form the foundation of the state’s water law and policy.

Our key conclusions are that: (1) Propositions 218 and 26 have created significant impediments to economically rational and sustainable funding of California’s most important water service, management, and regulatory programs; (2) judicial interpretations of the constitutional restrictions generally have compounded these impediments; and (3) reform of the law is needed. The Article concludes with recommendations that water agencies, the legislature, the courts, and the voters should consider as a means of correcting (or at least ameliorating) those aspects of the law that are inconsistent with sound and creative water resources administration.

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Note – Return to “Reasonable” in Section 1983 Police Pursuit Excessive Force Litigation

Benjamin Buchwalter

Volume 65, Issue 6, 1665-1690

Scott v. Harris set the standard that a police officer’s use of deadly force to terminate a high-speed chase is presumptively reasonable, even if it is likely to kill or seriously injure the suspect. The implications of this are troubling: twenty-eight percent of people killed in police pursuits each year are innocent bystanders, and vehicle accidents are the most common cause of police deaths. Scott was wrongly decided because it departed from the case-by-case reasonableness standard upon which the Supreme Court previously relied for excessive force cases, failed to consider the potential risk that these chases added to the public, and did not contemplate safe alternative means of punishing suspects.

Despite the dangers of Scott’s presumptive reasonableness standard, reversal is not likely. This was emphasized by the Supreme Court’s 2014 Plumhoff v. Rickard decision, in which the Court reaffirmed—by a nine-to-zero margin—that use of deadly force to terminate a high-speed chase is presumptively reasonable. Accordingly, this Note argues that federal courts should consider state and local excessive force guidelines to determine what is “reasonable” and what violates “clearly established law.” This Note also presents guideline excessive force policies that are tailored to urban and rural areas. These policies take into account the danger that police chases add to the public and set forth means that are available to apprehend suspects safely at a later time, while understanding the duty of police officers to ensure that potentially violent criminals are apprehended quickly.

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Note – RICO’s Extraterritoriality After Morrison: Where Should We Go From Here?

Anneka Huntley

Volume 65, Issue 6, 1691-1716

In 2010 the Supreme Court addressed the extraterritorial application of U.S. securities law in Morrison v. National Australia Bank Ltd., and held that U.S. laws could not be applied to stocks bought and sold on foreign markets. The holding also invalidated the “conduct and effects” test that lower courts had used to assess the extraterritoriality of securities laws, and mandated that courts look to a statute’s focus to determine if Congress intended the law to apply abroad. Prior to Morrison, courts had also used the conduct and effects test to assess the extraterritorial application of the Racketeering Influenced and Corrupt Organizations Act (“RICO”). Since the Supreme Court’s ruling, lower courts have struggled to identify RICO’s focus and formulate a new test for the extraterritorial application of RICO. Three approaches have emerged: the enterprise approach, the “predicate acts” approach, and the “pattern of activity” approach.

This Note argues that the enterprise approach is the best approach. This Note discusses the history of the conduct and effects test in RICO jurisprudence, the landmark Supreme Court decision in Morrison, and the resulting lower court confusion regarding extraterritorial applications of RICO. This Note then illuminates the flaws in the predicate acts and pattern of activity approaches, and argues that the enterprise approach is the clearest, most easily applicable approach and should thus be adopted by lower courts.

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