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Thursday, April 24, 2003

Bearing the Cost

Via Maria Farrell, a report that the Austrian Constitutional Court has declared that requiring "telecommunication service providers" (TSPs) to install surveillance equipment at thir own expense is unconstitutional:

The Constitutional Court has ruled several times that the obligation for private companies to fulfill assignments of public interest is not unconstitutional. However, "it is not justified to impose such obligations on TSPs, regardless of the nature and scope of TSPs' obligations to cooperate, and regardless of the content and extent of the wiretapping involved. Therefore, a regulation that imposes a significant burden on third parties ("private Dritte") may only be justified for exceptional circumstances."

The interest for obtaining information about crimes is of such an important public interest that it can be justified to compel TSPs to cooperate with law enforcement agencies. It is necessary to compel TSPs to implement adequate techniques of surveillance, because they are the ones most competent to conduct surveillance due to their technical expertise. However, this does not mean that TSPs have to abide by those obligations at their own expense. The imposition of expenses for obligations carried out in the public interest may only be justified in exceptional cases if they are proportionate.

Farrell comments that "[l]aw enforcement hasn't been been reluctant to ride rough shod over human rights in its quest for data retention; money may be a rather more effective deterrent." Why limit this argument only to data retention? In an article in Slate last June Steven Landsburg wrote about the cost of regulation following the US Supreme Court decision in the case of Tahoe-Sierra Reservation Council, Inc. v. Tahoe Regional Planning Agency, et al.:

When local landowners requested compensation for moratorium-related losses, the court turned them down. Why? Because, according to Justice Stevens, land-use regulation—and for that matter most other government activity—would be prohibitively expensive if governments bore all the costs.

But if a regulation is too expensive when governments (i.e., taxpayers) bear the costs, then that same regulation is too expensive, period. If a development moratorium costs landowners $10,000, then the cost of that moratorium is $10,000, whether or not the landowners are compensated. Without compensation, the landowners are out $10,000; with compensation, the taxpayers are out $10,000; either way, the $10,000 cost is the same.

And is $10,000 a prohibitive expense? That's like asking whether $10,000 is too much to pay for a car; the answer depends on how much you want the car, or in this case on how much you value the benefits of land-use regulation (which we haven't yet accounted for, and which might come to either more or less than $10,000). But shifting that $10,000 burden from taxpayers to landowners can't change the size of the burden, so it can't change the expense from reasonable to unreasonable.

I am not a legal scholar, but I agree with both Farrell and Landsburg on the main point. If governments have to bear more of the costs of regulation, perhaps they would be more thoughtful and discriminating in approaching it.