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    Harvard Law Review: Volume 127, Number 3 - January 2014
    Harvard Law Review: Volume 127, Number 3 - January 2014
    Harvard Law Review: Volume 127, Number 3 - January 2014
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    Harvard Law Review: Volume 127, Number 3 - January 2014

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    The January 2014 issue (Volume 127, Number 3) includes the following articles and student contributions:

    Article, "For-Profit Public Enforcement," by Margaret H. Lemos and Max Minzner

    Book Review, "Technological Determinism and Its Discontents," by Christopher S. Yoo
    Note, "More than a Formality: The Case for Meaningful Substantive Reasonableness Review"
    Note, "Appointing State Attorneys General: Evaluating the Unbundled State Executive"
    Note, "The Devil Wears Trademark: How the Fashion Industry Has Expanded Trademark Doctrine to Its Detriment"

    In addition, student case notes explore recent cases on misleading law school employment data, the First Amendment religious rights of for-profit corporations, regulation of nuclear energy, forensic search of laptops at the border, search of cellphone date incident to arrest, obscene or lewd student speech, and access to polling places for news-gathering purposes. Finally, the issue includes several summaries of Recent Publications.

    LanguageEnglish
    PublisherQuid Pro, LLC
    Release dateJan 15, 2014
    ISBN9781610272223
    Harvard Law Review: Volume 127, Number 3 - January 2014
    Author

    Harvard Law Review

    The Harvard Law Review is a student-run organization whose primary purpose is to publish a journal of legal scholarship. The Review comes out monthly from November through June and has roughly 2500 pages per volume. The organization is formally independent of Harvard Law School. Primary articles are written by leading legal scholars, with contributions in the form of case summaries and Notes by student members.

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      Book preview

      Harvard Law Review - Harvard Law Review

      Volume 127

      Number 3

      January 2014

      Harvard Law Review

      Volume 127, Number 3

      Smashwords edition. Published by Quid Pro Books at Smashwords.

      Copyright © 2014 by The Harvard Law Review Association. All rights reserved. This work or parts of it may not be reproduced, copied or transmitted (except as permitted by sections 107 and 108 of the U.S. Copyright Law and except by reviewers for the public press), by any means including voice recordings and the copying of its digital form, without the written permission of the publisher.

      The publisher of various editions and formats is The Harvard Law Review, who authorized Quid Pro Books exclusively to republish its issues as ebooks: digitally published in ebook editions, for The Harvard Law Review, by Quid Pro Books. Available in major digital formats and at leading ebook retailers and booksellers.

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      ISBN 978-1-61027-222-3 (ePUB)

      CONTENTS

      ARTICLE

      For-Profit Public Enforcement

      Margaret H. Lemos and Max Minzner

      [127 HARV. L. REV. 853]

      BOOK REVIEW

      Technological Determinism and Its Discontents

      Christopher S. Yoo

      [127 HARV. L. REV. 914]

      NOTES

      More than a Formality: The Case for Meaningful Substantive Reasonableness Review

      [127 HARV. L. REV. 951]

      Appointing State Attorneys General: Evaluating the Unbundled State Executive

      [127 HARV. L. REV. 973]

      The Devil Wears Trademark: How the Fashion Industry Has Expanded Trademark Doctrine to Its Detriment

      [127 HARV. L. REV. 995]

      RECENT CASES

      Torts — Fraudulent Misrepresentation — Sixth Circuit Finds Law School Applicants Could Not Reasonably Rely on School-Provided Employment Statistics. — MacDonald v. Thomas M. Cooley Law School, 724 F.3d 654 (6th Cir. 2013)

      [127 HARV. L. REV. 1017]

      First Amendment — Free Exercise of Religion — Tenth Circuit Holds For-Profit Corporate Plaintiffs Likely to Succeed on the Merits of Substantial Burden on Religious Exercise Claim. — Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114 (10th Cir. 2013)

      [127 HARV. L. REV. 1025]

      Administrative Law — Mandamus — D.C. Circuit Compels Nuclear Regulatory Commission to Follow Statutory Mandate. — In re Aiken County, 725 F.3d 255 (D.C. Cir. 2013), reh’g en banc denied, No. 11-1271, 2013 U.S. App. LEXIS 22003 (D.C. Cir. Oct. 28, 2013)

      [127 HARV. L. REV. 1033]

      Constitutional Law — Fourth Amendment — Ninth Circuit Holds Forensic Search of Laptop Seized at Border Requires Showing of Reasonable Suspicion. — United States v. Cotterman, 709 F.3d 952 (9th Cir. 2013) (en banc)

      [127 HARV. L. REV. 1041]

      First Amendment — Student Speech — Third Circuit Limits Censorship of Ambiguously Lewd Speech — B.H. ex rel. Hawk v. Easton Area School District, 725 F.3d 293 (3d Cir. 2013) (en banc)

      [127 HARV. L. REV. 1049]

      Criminal Procedure — Fourth Amendment — Florida Supreme Court Holds that Cell Phone Data Is Not Subject to the Search-Incident-to-Arrest Exception. — Smallwood v. State, 113 So. 3d 724 (Fla. 2013)

      [127 HARV. L. REV. 1059]

      First Amendment — Public Access — Third Circuit Holds that First Amendment Does Not Afford the Public a Protected Right of Access to Polling Places for News-Gathering Purposes. — PG Publishing Co. v. Aichele, 705 F.3d 91 (3d Cir.), cert. denied, 133 S. Ct. 2771 (2013)

      [127 HARV. L. REV. 1067]

      RECENT PUBLICATIONS

      [127 HARV. L. REV. 1075]

      About the Harvard Law Review

      The Harvard Law Review (ISSN 0017-811X) is published monthly eight times a year, November through June, by The Harvard Law Review Association at Gannett House, 1511 Massachusetts Ave., Cambridge, MA 02138. Periodicals postage paid at Boston, Mass., and additional mailing offices. POSTMASTER: Send address changes to the Harvard Law Review, Gannett House, 1511 Massachusetts Ave., Cambridge, MA 02138.

      Current subscription: $60.00 individual / $200.00 institution, payable in advance. Remittance must be made by U.S. Dollar Draft payable at a United States bank. Subscription requests that are received midvolume may be subject to an additional postage and handling charge. Domestic claims of nonreceipt of issues should be made within 90 days of the month of publication, overseas claims within 180 days; thereafter, the regular back issue rate will be charged for replacement. All notifications of changes of address should include old and new addresses, with ZIP codes. Please inform us one month in advance to ensure prompt delivery.

      Single issues of Volume 127 are available from The Harvard Law Review Association at the following prices: $15.00 individual / $55.00 institution. Back issues and volumes prior to Volume 127 are available from William S. Hein & Co., Inc., 1285 Main St., Buffalo, NY 14209-1987. For the prices of issues, volumes, and sets prior to Volume 127, please inquire of William S. Hein & Co., Inc. (http://www.wshein.com).

      INFORMATION FOR CONTRIBUTORS

      The Review invites the submission of unsolicited manuscripts. The Review will give preference to articles under 50 law review pages in length — the equivalent of about 25,000 words including text and footnotes. The Review will not publish articles exceeding 60 law review pages — the equivalent of about 30,000 words — except in extraordinary circumstances. Please confine author’s name and biographical information to a removable title page. Footnotes should conform to the 19th edition of The Bluebook: A Uniform System of Citation.

      Review of manuscripts may take from four to six weeks. Authors who are considering concurrent submissions to other journals should be aware that the Review cannot guarantee timely responses to requests for expedited review.

      Send all correspondence to The Harvard Law Review Association, Gannett House, 1511 Massachusetts Ave., Cambridge, MA 02138.

      For additional information about the Harvard Law Review, or to submit a manuscript, please visit our website at http://www.harvardlawreview.org.

      ARTICLE

      FOR-PROFIT PUBLIC ENFORCEMENT

      Margaret H. Lemos and Max Minzner

      [cite as 127 HARV. L. REV. 853 (2014)]

      CONTENTS

      FOR-PROFIT PUBLIC ENFORCEMENT

      Margaret H. Lemos* and Max Minzner**

      This Article investigates an important yet undertheorized phenomenon: financial incentives in public enforcement. Each year, public enforcers assess billions of dollars in penalties and other financial sanctions for violations of state and federal law. Why? If the awards in question were the result of private lawsuits, the answer would be obvious. We expect that private enforcers — the victims of law violations and their fee-seeking attorneys — will attempt to maximize financial recoveries. Record recoveries come as no surprise in private class actions, for example. But dollar signs are harder to explain in the context of public enforcement. Unlike private attorneys who are paid a percentage of the recovery, public enforcers are paid by salary. They have no direct financial stake in successful enforcement efforts. We assume that public enforcers pursue financial awards only for their deterrent value, not for the benefits that such recoveries can bring the enforcement agency itself.

      Or do they? Contrary to the conventional wisdom on the division between public and private enforcement, this Article argues that public enforcers often seek large monetary awards for self-interested reasons divorced from the public interest in deterrence. The incentives are strongest when enforcement agencies are permitted to retain all or some of the proceeds of enforcement — an institutional arrangement that is common at the state level and beginning to crop up in federal law. Yet even when public enforcers must turn over their winnings to the general treasury, they may have reputational incentives to focus their efforts on measurable units like dollars earned. Financially motivated public enforcers are likely to behave more like private enforcers than is commonly appreciated: they will undertake more enforcement actions, focus on maximizing financial recoveries rather than securing injunctive relief, and compete with other would-be enforcers for lucrative cases. Those effects will often be undesirable, particularly in circumstances where the risk of overenforcement is high. But financial incentives might provide a valuable spur to action for agencies that currently are performing well below optimal levels. Policymakers recognize as much when they seek to boost private enforcement by promising prevailing plaintiffs supracompensatory damages. We show that financial incentives can serve a similar purpose in the public sphere, offering policymakers an additional tool for calibrating the level of public enforcement.

      INTRODUCTION

      Law enforcement is a big business. Public enforcers at both the state and federal levels bring in billions of dollars each year as the result of settlements and court judgments. In Fiscal Year (FY) 2011, for example, the Securities and Exchange Commission (SEC) reported total recoveries of $2.8 billion;¹ in FY 2012, the Departments of Justice (DOJ) and Health and Human Services (HHS) together recovered $3 billion in health care fraud actions;² the Commodity Futures Trading Commission (CFTC) imposed more than $900 million in financial sanctions;³ and the Environmental Protection Agency (EPA) imposed civil and criminal penalties totaling $252 million.⁴ State attorneys general banded together to negotiate a $25 billion settlement with the nation’s leading mortgage-servicing banks.⁵ Individual attorneys general have also boasted of millions of dollars in additional recoveries for their states and citizens.⁶

      What motivates public enforcers to pursue large financial recoveries? If the recoveries in question were the result of private lawsuits, the answer would be obvious. We expect private enforcers to maximize monetary recoveries, in order to return as much money as possible to victims and — perhaps especially — to enlarge the fee for private counsel. Because we assume that private enforcement is financially motivated, dollar signs do not surprise us. We would be troubled by astronomical judgments if we thought that they represent random blows, like lightning strikes,⁷ or that they create a windfall culture and discourage socially beneficial behavior.⁸ Or we would applaud them if we believed that they compensate victims for harm and deter further wrongdoing. Either way, we have both a theory by which to understand financial recoveries in private cases and a vocabulary for making normative assessments.

      We lack similar tools for assessing financial incentives in public enforcement because we assume that such incentives do not exist. Indeed, financial incentives (or the lack thereof) mark one of the conventional dividing lines between private and public enforcement.⁹ Private enforcers — typically victims and their fee-seeking counsel — are out for money; public enforcers — typically salaried government attorneys — are not. Public enforcers pursue financial penalties, to be sure, but we assume that they value money only as an instrument of public policy. On this view, monetary penalties are simply another tool in the government’s enforcement toolkit, along with imprisonment, injunctive relief, and other forms of compensatory and punitive relief. Thus, under this line of reasoning we should take for granted that agencies seek monetary recoveries to deter wrongdoers and strip away their gains, not to reap the benefits that such recoveries can bring the enforcement agencies themselves.

      This Article challenges the conventional wisdom on financial incentives in public enforcement. We show that both federal and state agencies have self-interested reasons to maximize financial recoveries, even though their employees are paid by salary and do not profit financially from successful enforcement. The most obvious incentive comes from institutional arrangements that allow enforcement agencies to retain a portion of any financial awards they win.¹⁰ Such arrangements are common at the state level and are beginning to crop up in federal law as well. Yet they have received virtually no attention in the literature on public enforcement, even as they complicate familiar assumptions about the division between public and private enforcement.

      Even in cases when public enforcers must turn over any monetary recoveries to the general treasury, we suggest that agencies may have reputational interests in maximizing financial awards.¹¹ Money has two significant advantages over other forms of relief: it is easy to understand and easy to quantify and compare. An agency can easily trumpet a record financial judgment.¹² It is far more difficult for public enforcers to convey the importance or the scale of injunctive remedies. The difficulty is compounded when the public policy payoff of nonmonetary relief is uncertain and will be realized, if at all, in future years. Particularly when agencies face public scrutiny and increased oversight from Congress, they may have strong incentives to focus their efforts on performance measures — such as dollars collected — that send a clear signal and permit comparisons over time and across agencies.

      If public enforcers have both direct and reputational incentives to seek large financial recoveries, does it matter? We argue that financial incentives are likely to affect public enforcement in several ways.¹³ Financially motivated agencies are apt to initiate more enforcement actions, reduce their focus on nonmonetary remedies, and compete with one another for enforcement dollars. Notably, each of these effects brings public enforcement closer to the private model — and highlights dangers that are widely recognized in that context. For example, critics of private enforcement have long argued that avaricious plaintiffs and attorneys may be tempted to overenforce and may emphasize financial recoveries in lieu of more meaningful injunctive relief. We show that the same risks exist on the public side of the line.

      But to say that for-profit public enforcement is risky is not necessarily to condemn it in all contexts. As students of private enforcement know so well, financial incentives can provide a much-needed spur to action in circumstances where enforcement levels are inappropriately low. Congress recognizes as much when it encourages private enforcement by offering supracompensatory damages to successful plaintiffs. Similar tools could be used to jump-start stalled public enforcement.¹⁴ They have been ignored to date, however, on the assumption that financially motivated public enforcement is a misnomer.

      This Article proceeds in three parts. Part I reviews the conventional wisdom on public and private enforcement. Part II explains why it would be a mistake to assume that salaried government attorneys have no self-interest in maximizing financial recoveries. Part III describes the effects of financial incentives on public enforcement and assesses the costs and benefits. A brief conclusion follows.

      I. FINANCIAL INCENTIVES IN PUBLIC

      AND PRIVATE ENFORCEMENT

      In 1974, Professors Gary Becker and George Stigler published a provocative article advocating the privatization of law enforcement.¹⁵ Central to Becker and Stigler’s thesis is the fact that public and private enforcers are compensated in different ways. Public enforcers are paid a flat salary, whereas private enforcers profit directly from enforcement. Because the public enforcer’s expected gain from enforcement is much lower than the violator’s expected loss, Becker and Stigler argued that the public enforcer is susceptible to bribes. The violator can offer to pay the enforcer some sum below the expected penalty in exchange for dropping the enforcement.¹⁶ The deal would benefit both parties. The public enforcer would turn a profit, and the violator would avoid paying for the full extent of the harm he caused and thus would not be deterred from further misconduct. Such bribes are not possible in a system of private enforcement, however, where enforcers (victims or their agents) typically stand to gain the same amount as the perpetrator stands to lose.¹⁷

      In the years since Becker and Stigler’s article was published, a rich theoretical literature on the differences between public and private enforcement has developed. Building on Becker and Stigler’s claim that public enforcement may be subject to corruption, commentators have exposed various other ways that public enforcement may skew away from the public interest. Politicians may undermine enforcement efforts by replacing key personnel or cutting budgets,¹⁸ and limited resources may prevent public enforcers from uncovering and pursuing violations.¹⁹ Public enforcement agencies may be captured by the very firms they should be targeting.²⁰ Individual government attorneys may pull their punches in enforcement because they hope to secure a job in the regulated industry²¹ or may avoid difficult cases in favor of those that are easy to win.²² Alternatively, public enforcement may sometimes be overzealous, particularly when politicians react to well-publicized scandals.²³

      Notice what is missing from this picture: financial incentives. Commentators continue to work from the premise that public enforcers, because they are paid by salary, have no direct financial stake in the success of litigation. The financial disinterest of public enforcers has no obvious normative valence. Depending on the circumstances and one’s view of optimal enforcement, the absence of a profit motive may be a good thing (allowing public enforcers to withstand the temptation to go after every colorable violation)²⁴ or a bad thing (depriving enforcers of a much-needed incentive to pursue vigorous enforcement).²⁵ But it is a constant in the positive account of public enforcement.

      The conventional wisdom on private enforcement could not be more different. Personal financial incentives lie at the heart of well-known critiques of private enforcement, beginning with Professor William Landes and then-Professor Richard Posner’s response to Becker and Stigler. Landes and Posner argue that private enforcement will lead to overenforcement whenever the available penalty exceeds the harm — for example, where multiple or punitive damages are available.²⁶ Policymakers might adopt high penalties as a way to economize on the resources devoted to enforcement; by raising the penalty and lowering the level of enforcement (and thus the probability that any violator will be sanctioned), policymakers can obtain the same level of deterrence at lower cost. But a higher penalty will induce financially motivated private enforcers to devote more resources to enforcement, potentially resulting in overenforcement.²⁷

      That critique is generalized in Professor Steven Shavell’s seminal article, The Fundamental Divergence Between the Private and the Social Motive to Use the Legal System.²⁸ As his title suggests, Shavell focuses on the divergence between private litigants’ decisions to bring suit — which typically are fueled by a desire for compensation or other relief — and the social interest in deterring unwanted behavior. There is no necessary connection between the compensatory and the deterrent value of enforcement. Thus, Shavell convincingly shows, an enforcement scheme driven by the self-interested decisions of private parties can result in either over- or underdeterrence.²⁹

      Other commentators have applied the insights from the theoretical literature to particular areas of law, arguing that financially motivated private litigation is producing too little or too much enforcement. Complaints about profit-maximizing private enforcement are common in debates over class actions, for example. Critics contend that greedy class counsel are lining their pockets at the expense of blameless defendants and clueless class members,³⁰ while supporters insist that our best hope of deterring widespread corporate wrongdoing is to harness the financial incentives of entrepreneurial private attorneys.³¹ Both sides of the debate seek to make sense of the relationship between public and private enforcement. Some argue that private enforcement should take a back seat to public enforcement, on the ground that the latter can avoid the financial distortions that define the former.³² Others argue that private enforcement is a critical supplement to public enforcement, precisely because public enforcers lack a strong personal interest in maximizing penalties — and thus, deterrence.³³ Again, the collective assumption is that, when it comes to money, the incentives of public and private enforcers are starkly different. Public enforcers are motivated by politics, not profits; they care about financial recoveries only to the extent that monetary awards translate into justice.³⁴

      The widespread assumption that public and private enforcers can be distinguished by their interest (or disinterest) in monetary rewards is particularly striking in light of the fact that, not too long ago, public enforcers often were compensated in ways that were tied directly to their enforcement efforts. Tax collectors retained some of the taxes they collected, customs agents profited directly from the duties they collected, and prosecutors were paid per conviction.³⁵ Most U.S. jurisdictions abandoned such payment schemes by the turn of the twentieth century, due in large part to concerns that bounty-based public enforcement would result in the same kind of overzealousness — a failure to exercise appropriate prosecutorial discretion — that we have come to expect from private enforcement.³⁶ This historical episode, while largely forgotten,³⁷ served to cement the tradition of fixed salaries for public employees, mak[ing] the absence of the profit motive a defining feature of government.³⁸

      In the pages that follow, we show that this supposed distinction between public and private enforcement is not as sharp as it first appears. Indeed, the line between the two categories of enforcement already has begun to blur in the face of a growing recognition that public enforcement often serves a function traditionally associated with private litigation: compensating victims.³⁹ Complicating matters further, public and private enforcers increasingly work together, as where public and private attorneys join forces to pursue a common foe,⁴⁰ or where public enforcement agencies rely on private contingency-fee lawyers to litigate their cases.⁴¹ There is reason to suspect that public enforcement changes in subtle ways when public enforcers are asked to pursue one of the core goals of private enforcement or to work closely with others who are focused on maximizing financial recoveries. The argument here is different: regardless of whether monetary recoveries will be used to compensate victims or deter future wrongdoing (or both), public enforcers have self-interested reasons to maximize financial awards.

      II. FOR-PROFIT PUBLIC ENFORCEMENT

      The conventional wisdom holds that public enforcers lack direct incentives to maximize financial recoveries because — unlike private litigants and lawyers — government attorneys and agency personnel are paid by salary and cannot turn lucrative litigation into personal profit. As this Part demonstrates, the conventional view is missing an important part of the picture. It is true that public enforcers do not profit from successful litigation in the sense of taking home a percentage of awards, as private lawyers might. Nevertheless, the institutional structures in which many public enforcers work provide ample incentives for salaried government employees to prioritize and maximize financial recoveries. First, in many cases, the institutions of public enforcement are permitted to retain all or part of the proceeds of enforcement. Second, even where the relevant agency or office must turn over any awards to the general treasury, public enforcers seeking reputational rewards have good reason to focus on easily quantifiable, revenue-producing financial recoveries.

      For ease of exposition, this Part begins by discussing those incentives at the institutional level — that is, at the level of an enforcement agency or office — treating an agency as a unitary actor. We later expand the discussion to address the reality that any public enforcement agency is a they, not an it.⁴² In the latter half of this Part, we examine the reasons why agency personnel, from political appointees at the top to careerists and short-term employees at the street level, might themselves have incentives to maximize financial recoveries.

      A. Institutional Incentives

      1. Revolving Funds. — The default rule under both state and federal law is that the proceeds of public enforcement belong to the public fisc rather than to the agency or official responsible for the action. That rule is codified in the federal Miscellaneous Receipts Act⁴³ (MRA), which states (subject to certain enumerated exceptions) that an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim.⁴⁴ Virtually every state has a comparable rule.⁴⁵

      Notwithstanding the MRA and its state counterparts, some public enforcers are authorized by statute to retain a portion of the money recovered through enforcement, whether as a result of settlement or judgment. For example, the Health Insurance Portability and Accountability Act of 1996⁴⁶ (HIPAA) created a revolving fund called the Health Care Fraud and Abuse Control Account.⁴⁷ The Account is funded, in part, by the proceeds of public enforcement, including criminal fines and forfeited assets recovered in cases involving federal health care offenses and civil penalties and assessments imposed in health care cases, including Social Security and False Claims Act⁴⁸ cases.⁴⁹ The funds are used by federal agencies to support further enforcement of health care–related federal law.⁵⁰ The legislative history of the HIPAA contains no serious debate over the revolving fund, revealing only bland references to the fund as a stable funding source that will provide[] increased resources⁵¹ for the relevant agencies, facilitating staff increases and other measures to aid the fight against health care fraud and abuse.⁵²

      More recently, the American Jobs Creation Act of 2004⁵³ authorized the Internal Revenue Service (IRS) to employ private collection agencies (PCAs) to recover certain types of unpaid taxes.⁵⁴ The Act provides that the IRS may use up to twenty-five percent of the recovered funds to compensate the PCAs, and may use another twenty-five percent to support its own collection enforcement activities.⁵⁵ The idea of using PCAs to collect unpaid taxes was proposed by the Bush Administration as a means of raising revenue without raising taxes or further stretching the resources of the beleaguered IRS.⁵⁶ It was extremely controversial,⁵⁷ and Congress held further hearings in 2007 to address ongoing complaints about the program.⁵⁸ By contrast, the provision permitting the IRS to retain a portion of the proceeds to fund its own enforcement has generated hardly a peep of public protest.⁵⁹

      Revolving funds are even more common at the state level, where state attorneys general often are allowed to eat what [they] kill.⁶⁰ For example, many states permit the office of the attorney general to retain a specified percentage of the damages and civil penalties obtained through enforcement of state and federal antitrust laws,⁶¹ and many others have similar provisions linked to the enforcement of state consumer protection, false claims, and related statutes.⁶² Other states have established all-purpose revolving funds for the support of the office of the attorney general, which are funded by the proceeds of any civil litigation conducted by the attorney general and may be used for the performance of any of the powers or duties of the office.⁶³ Such civil enforcement provisions have flown almost entirely under the academic radar, even as commentators have heaped critical attention on similar provisions governing the forfeiture of assets in criminal law.

      Asset forfeiture has a long historical pedigree, predating the American Revolution,⁶⁴ but it expanded dramatically with a series of statutory changes beginning in 1970. In that year, Congress passed two major forfeiture provisions. First, as part of the Organized Crime Control Act of 1970,⁶⁵ the Racketeer Influenced and Corrupt Organizations Act⁶⁶ (RICO) authorized forfeiture of any interest acquired or maintained by a criminal defendant as a result of a RICO violation.⁶⁷ Second, Congress adopted the Comprehensive Drug Abuse Prevention and Control Act of 1970⁶⁸ and created a forfeiture provision in cases involving narcotics.⁶⁹ The scope of forfeiture was initially limited. Only the seized drugs, manufacturing equipment, and items used to transport narcotics were eligible. However, Congress expanded the list of forfeitable items through the late 1970s into the mid-1980s. The list of forfeitable property now includes vehicles and real property used in a narcotics crime as well as the proceeds of narcotics activities.⁷⁰ Comparable provisions exist at the state level, permitting forfeiture of the property and money used in criminal activity.⁷¹

      Of equal importance, in 1984 Congress amended federal law to permit the DOJ to retain control of the proceeds of asset forfeiture rather than turning them over to the general treasury pursuant to the MRA. The Senate Report on the 1984 amendments indicates that legislators were dissatisfied that Federal law enforcement agencies had not aggressively pursued forfeiture⁷² and saw the creation of a revolving fund as a way to encourage more robust use of the expanding statutory provisions for asset forfeiture.⁷³

      The amendments worked: the amounts forfeited are significant and growing. In 1985, the DOJ’s Asset Forfeiture Fund saw deposits of only $27 million.⁷⁴ From 2003 to 2011, annual revenues to the Fund increased from $500 million to $1.8 billion.⁷⁵ The DOJ is authorized by law to use the forfeited funds for a variety of law enforcement purposes.⁷⁶ State forfeiture laws frequently have similar provisions that dedicate forfeited funds to law enforcement use rather than requiring that the money be turned over for general public use.⁷⁷

      Commentary on the current statutory schema for asset forfeiture is overwhelmingly critical, as scholars argue that allowing law enforcement to retain the forfeited assets creates perverse incentives for enforcers to pursue the most valuable assets rather than the most dangerous criminals.⁷⁸ For example, purchasers of narcotics are likely to possess cash that can be seized, forfeited, and converted to law enforcement use. Sellers, on the other hand, are likely to possess the drugs themselves. While the drugs can be forfeited, law enforcement cannot reap any economic benefit from the seizure. As a result, forfeiture provisions may increase the relative share of drug arrests that involve buyers and reduce the fraction that target sellers.⁷⁹

      More generally, critics argue that the criminal asset-forfeiture provisions encourage law enforcement to shift investigatory resources toward cases with forfeitable assets and away from cases that are less likely to be lucrative. The primary consequence, in these commentators’ view, is that police are induced to focus more on narcotics cases and less on other types of crimes.⁸⁰ Thus, critics contend that the asset-forfeiture provisions serve to expand and perpetuate the so-called War on Drugs, by giving law enforcement a direct stake in the legal status quo and preventing level-headed assessments of policy alternatives.⁸¹

      The problems with asset forfeiture are real; we discuss them in more detail in Part III. The important point for present purposes is that such problems extend well beyond the narrow swath of criminal law enforcement on which commentators have focused. Although virtually all of the scholarship on asset forfeiture centers on drug policy, statutory provisions authorizing public enforcers to retain forfeited assets appear in many other contexts — both civil and criminal — that have escaped notice thus far. For example, federal law provides that the proceeds of any civil forfeiture carried out by the U.S. Postal Service shall be deposited in a Postal Service Fund that the Service may use to cover any expenses it incurs in carrying out its functions, including law enforcement.⁸² The Department of the Treasury has a similar revolving fund, which is populated by seizures and forfeitures made pursuant to any law . . . enforced or administered by the Department of the Treasury or the United States Coast Guard.⁸³ And the DOJ Asset Forfeiture Fund consists of all amounts from the forfeiture of property under any law enforced or administered by the Department of Justice.⁸⁴

      Moreover, it is increasingly common for federal and (especially) state law to permit public enforcers to retain a portion of the money recovered through civil judgments or negotiated settlements. Just as asset forfeiture provisions create incentives for enforcers to maximize forfeitures, such enforcement-funded revolving funds create incentives for enforcers to maximize financial recoveries. At least since William Niskanen’s seminal 1971 book,⁸⁵ scholars have recognized that agency heads often seek to maximize their institutions’ budgets — or at least the discretionary portion of the budget, representing the difference between the total budget and the minimum cost of producing the output expected by the agency’s legislative and executive overseers.⁸⁶ Agency officials, so the theory goes, care about salary, perquisites of the office, public reputation, power, patronage, output of the bureau, ease of making changes, and ease of managing the bureau — all of which depend in some respect on the size of the agency’s budget.⁸⁷ Lower-level agency employees share their bosses’ interest in budget maximization because the benefits of a larger budget trickle down to them in the form of enhanced career opportunities.⁸⁸

      Enforcement-funded revolving funds and the like will tend to enhance the budgets for public enforcers in one of two ways. First and most obviously, the proceeds of enforcement may supplement any monies appropriated to the agency by the legislature, increasing the overall resources available to the agency. Indeed, some revolving-fund provisions specify that the fund cannot be used to replace or supplant appropriations from the legislature.⁸⁹ Even in the face of such a statutory prohibition, however, one might suspect that budgeting authorities would consider any funds already available to public enforcers when setting their budgets for coming years. There is some evidence that state and local budget authorities cut appropriations in response to law enforcement seizures of valuable forfeitable assets.⁹⁰ And some revolving-fund provisions make the interdependence of legislative appropriations and enforcement recoveries explicit.⁹¹

      Regardless of the

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