If the world’s richest man falls victim to government abuse of a regulatory tool, what chance do the rest of us have against it?
If the world’s richest man falls victim to government abuse of a regulatory tool, what chance do the rest of us have against it?
S omething strange is intercepting our trajectory into space. The obstacle isn’t space debris, old satellites, or meteors. Rather, it’s licensing. The Federal Aviation Administration (FAA) has not yet granted a license for the launch of Elon Musk’s SpaceX Starship, and even the Fish and Wildlife Service is still evaluating whether to permit it. Licensing is thus delaying not only his rocket but also our interstellar progress.
Licensing is said to be essential for especially dangerous conduct — the behavior that’s so risky it can’t be permitted without prior government permission. Licensing, however, is familiar from local zoning and banking as well as rockets. So, it’s difficult to conclude that risk is a crucial justification.
Of course, regulation is important; it bars injurious acts. And because rockets can be harmful, they shouldn’t be exempt from regulation. But licensing isn’t just any regulation.
Whereas regulation ordinarily defines and bars injurious acts, regulatory licensing begins with a blanket prohibition of an entire area of conduct and then requires permission to act within that sphere. The federal government, for example, bars the sale of new drugs unless one first gets a license from the Federal Drug Administration. Such licensing is formally a privilege, but in reality, it defines the reach of the underlying regulatory prohibition.
Although regulatory licensing is nowadays viewed as normal and lawful, it traditionally wasn’t used for national domestic regulation. To be sure, it was common in municipal and county governments, in federal territories and the District of Columbia, and in federal regulation of cross-border matters. Only in the 20th century, however, did licensing become an instrument of national domestic regulation.
In contrast to the rule of law (enacted by Congress) and even the rule of rules (made by agencies), regulatory licensing turns on particularized decisions that leave the regulated dependent on the grace of the licensor. Although agencies can establish rules governing their licensing decisions, the FAA and most other agencies carefully leave themselves with much licensing discretion.
Regulatory licensing is both legislative and judicial. It legislatively defines the bounds of regulation, and it judicially applies it. Last June, in SEC v. Jarkesy, the Supreme Court repudiated an administrative proceeding for denying the right to be tried in court with a jury. That has implications for federal licensing. Such licensing goes much further than denying jury rights; it leaves Americans with almost none of the Constitution’s procedural rights.
Licensing, for example, reverses the usual burdens of proof and persuasion. Americans are prototypically free except where the law forbids something harmful. In other words, they are accountable only when a court finds that they have departed from the law. Regulatory licensing turns this around. It sweepingly bars an entire category of acts, regardless of whether or not they are injurious. So individuals are constrained, even for harmless conduct, until they get permission. A presumption of restraint thus supplants the presumption of freedom.
As a practical matter, licensing relieves the government of the need to prove its case — or even to persuade the decision-maker. Instead, regulated Americans must supplicate an official for permission.
In a court proceeding, SpaceX can be found guilty only for a past action specified by an accusing party; its plans for the future are irrelevant. In contrast, to get a license, SpaceX must show that its future conduct will not be harmful — that is, it must prove a negative.
Perversely, this most dangerous process can be used to shut down entire ventures and careers, not merely particular actions. A license is necessary to engage in many enterprises, ranging from law to banking. Regulatory licensing thus subjects the highest stakes to one of the worst of processes.
Unsurprisingly, the discretionary character of the licensing tends to induce a sense of vulnerability in potential licensees. A mere delay in granting licensing can be financially devastating, so regulatory licensing creates opportunities for official extortion and even harassment of political dissenters.
This brings the question back to Elon Musk. If licensing can be used to delay and perhaps even bully the wealthiest man in the world, what does it mean for the rest of us?