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Supreme Court Orders Oregon To Reconsider Gay Wedding Cake Case

The Supreme Court today ordered Oregon to take another look at a case where state officials fined a couple $135,000 for refusing to bake a wedding cake for a lesbian couple.

Bakers Aaron and Melissa Klein owned and ran Sweetcakes by Melissa in Gresham, Oregon. They ran afoul of Oregon’s public accommodations laws in 2013 when they refused to bake a wedding cake for a same-sex couple. The Kleins stated that they opposed recognizing same-sex marriages for religious reasons. In 2015, the state’s Bureau of Labor and Industries ruled against the Kleins and fined them. The Kleins shuttered their bakery but continued to fight against the ruling.

Last year, the Supreme Court took on a similar case coming out of Colorado called Masterpiece Cakeshop v. Colorado Civil Rights Commission. The court ruled 7-2 in favor of bakery owner Jack Phillips, who, like the Kleins, declined to make a wedding cake for a same-sex couple because he has religious objections to gay marriage.

But in the Masterpiece Cakeshop decision, the justices sidestepped the question of whether baking a cake was an expressive act protected by the First Amendment, and whether requiring a baker to make gay wedding cakes is a form of compelled speech. Instead, the justices found that members of Colorado’s Civil Rights Commission expressed religious bias against Phillips and did not serve as an appropriately neutral arbiter in his case. The Supreme Court therefore reversed the ruling against Phillips.

The Kleins asked the court to take their case, and the Supreme Court granted their petition only to vacate Oregon’s ruling and send the case back to the Oregon Court of Appeals to be reheard in light of the Masterpiece Cakeshop ruling.

This isn’t exactly a win for the Kleins. The Supreme Court wants Oregon to review the case and make sure the decision against the Kleins was not influenced by antireligious bias. The couple has claimed that the commissioner of Oregon’s Bureau of Labor and Industries showed bias during the case by saying that his “goal is to rehabilitate” the couple.

Kicking the case back down suggests that the Supreme Court is reluctant to decide whether cake-making and floral-arranging are artistic, expressive actions protected by the First Amendment, which is what plaintiffs like the Kleins and Phillips have argued. The agencies who’ve penalized them, meanwhile, want the Supreme Court to rule that they are obligated to serve gay customers under the state’s public accommodation antidiscrimination laws, regardless of how they personally feel about gay marriage.

We should expect to see more court cases like these. In fact, based on how the Oregon court rules, we could see this very case heading back to the Supreme Court in a couple of years.

Read more here about the absurdly overwrought legal and emotional claims by the rejected couple that I found mockworthy back in 2015 and how the state actually attempted to punish the Kleins with additional financial penalties for speaking out in public to defend their position. The Cato Institute filed an amicus brief supporting the Kleins, asking the Supreme Court to consider whether cake-baking was a form of artistic expression. Read their argument here.

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Gorsuch, Thomas, and Kavanaugh Clash With Roberts and Alito Over Federal Preemption of State Regulation

In 2011, a lawyer working for the left-wing Constitutional Accountability Center praised Justice Clarence Thomas as a “surprising ally for progressives” because Thomas favored a strict state law over a more lenient federal rule in an economic regulatory case. Today, in another state regulatory case, Thomas got some company in his role as a progressive “ally” from Justices Neil Gorsuch and Brett Kavanaugh.

The case is Virginia Uranium, Inc. v. Warren. At issue is a Virginia law that prohibits all uranium mining within the confines of the state. The mining company Virginia Uranium objected, arguing in a federal lawsuit that the state may not ban the practice because such decisions are preempted by the federal Atomic Energy Act, which leaves such matters in the hands of the Nuclear Regulatory Commission. In other words, according to the company, the federal statute should trump the more exacting state regulation.

Justice Gorsuch, joined by Justices Thomas and Kavanaugh, thought otherwise. “Congress conspicuously chose to leave untouched the States’ historic authority over the regulation of mining activities on private lands within their borders,” Gorsuch wrote. “Nor do we see anything to suggest that the enforcement of Virginia’s law would frustrate the [Atomic Energy Act’s] purposes and objectives…. In this, as in any field of statutory interpretation, it is our duty to respect not only what Congress wrote but, as importantly, what it didn’t write.”

Justice Ruth Bader Ginsburg, joined by Justices Sonia Sotomayor and Elena Kagan, agreed with Gorsuch that the state law should survive. But, in a separate concurring opinion, they maintained that the outcome should have been reached by a different route.

Meanwhile, Chief Justice John Roberts, joined by Justices Stephen Breyer and Samuel Alito, insisted that Gorsuch, Thomas, and Kavanaugh got it wrong on all counts. In Roberts’ view, the terms of the Atomic Energy Act are broad enough to preempt the state law at issue here.

This is not the first time that Roberts and Alito have disagreed with Thomas in a case dealing with what we might call regulatory federalism. In Wyeth v. Levine (2009), for example, Thomas concurred with Justice John Paul Stevens’ opinion that federal law did not preempt a state failure-to-warn lawsuit against a pharmaceutical company, even though the drug warning label at issue in that dispute had been approved by the Federal Drug Administration. The three dissenters in Wyeth were Roberts, Alito, and Justice Antonin Scalia.

Commentators often refer to the U.S. Supreme Court in terms of its liberal and conservative blocs. Today’s divided ruling in Virginia Uranium, Inc. v. Warren is a reminder that such labels can sometimes obscure more than they reveal.

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Gorsuch, Thomas, and Kavanaugh Clash With Roberts and Alito Over Federal Preemption of State Regulation

In 2011, a lawyer working for the left-wing Constitutional Accountability Center praised Justice Clarence Thomas as a “surprising ally for progressives” because Thomas favored a strict state law over a more lenient federal rule in an economic regulatory case. Today, in another state regulatory case, Thomas got some company in his role as a progressive “ally” from Justices Neil Gorsuch and Brett Kavanaugh.

The case is Virginia Uranium, Inc. v. Warren. At issue is a Virginia law that prohibits all uranium mining within the confines of the state. The mining company Virginia Uranium objected, arguing in a federal lawsuit that the state may not ban the practice because such decisions are preempted by the federal Atomic Energy Act, which leaves such matters in the hands of the Nuclear Regulatory Commission. In other words, according to the company, the federal statute should trump the more exacting state regulation.

Justice Gorsuch, joined by Justices Thomas and Kavanaugh, thought otherwise. “Congress conspicuously chose to leave untouched the States’ historic authority over the regulation of mining activities on private lands within their borders,” Gorsuch wrote. “Nor do we see anything to suggest that the enforcement of Virginia’s law would frustrate the [Atomic Energy Act’s] purposes and objectives…. In this, as in any field of statutory interpretation, it is our duty to respect not only what Congress wrote but, as importantly, what it didn’t write.”

Justice Ruth Bader Ginsburg, joined by Justices Sonia Sotomayor and Elena Kagan, agreed with Gorsuch that the state law should survive. But, in a separate concurring opinion, they maintained that the outcome should have been reached by a different route.

Meanwhile, Chief Justice John Roberts, joined by Justices Stephen Breyer and Samuel Alito, insisted that Gorsuch, Thomas, and Kavanaugh got it wrong on all counts. In Roberts’ view, the terms of the Atomic Energy Act are broad enough to preempt the state law at issue here.

This is not the first time that Roberts and Alito have disagreed with Thomas in a case dealing with what we might call regulatory federalism. In Wyeth v. Levine (2009), for example, Thomas concurred with Justice John Paul Stevens’ opinion that federal law did not preempt a state failure-to-warn lawsuit against a pharmaceutical company, even though the drug warning label at issue in that dispute had been approved by the Federal Drug Administration. The three dissenters in Wyeth were Roberts, Alito, and Justice Antonin Scalia.

Commentators often refer to the U.S. Supreme Court in terms of its liberal and conservative blocs. Today’s divided ruling in Virginia Uranium, Inc. v. Warren is a reminder that such labels can sometimes obscure more than they reveal.

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Is There a RBA (Roberts-Breyer-Alito) Axis on SCOTUS?

Today, the Supreme Court issued four decisions in argued cases. All four case split the justices, as is common for this point in the Supreme Court term. Most of the unanimous cases are released earlier as there is (generally) less back-and-forth among the justices over the opinions.

Today’s decisions were particularly interesting in that they split the Court in some unusual ways. These opinions suggest the potential emergence of a pragmatist bloc on the Court, and perhaps provided hints at the Court’s direction going forward.

Perhaps the most interesting split occurred in Virginia Uranium, Inc. v. Warren, in which a 6-3 Court rejected the argument that the Atomic Energy Act preempts Virginia’s prohibition of uranium mining within the state. Although a clear majority of the Court found no preemption, no opinion commanded a majority—or even plurality—of the justices. Indeed, the Court split 3-3-3, rejected a position favored by the business community, and suggested broad preemption claims may face greater Court skepticism going forward.

Justice Gorsuch announced the opinion of the Court, and authored an opinion joined by Justices Thomas and Kavanaugh, finding no preemption. Justice Ginsburg wrote an opinion concurring in the judgment, joined by Justices Kagan and Sotomayor. Although these two opinions reached the same result, they differed starkly in methodology. Justice Gorsuch focused on the statutory text and explicitly rejected relying upon efforts to divine legislative purpose (beyond what’s in the text) to answer the preemption question. This approach could make it difficult for business groups to advance claims of field preemption going forward.

While agreeing with the result, it’s no surprise that Justices Ginsburg, Kagan, and Sotomayor did not wish to sign on to Justice Gorsuch’s opinion, as all three are quite amenable to efforts to divine legislative purpose. Chief Justice Roberts dissented, joined by Justices Alito and Breyer—a trio that stuck together in three of the four cases decided today, perhaps suggesting the emergence of a pragmatic bloc on the Court that eschews formalist analyses. Time will tell.

Virginia House of Delegates v. Bethune-Hill produced another surprising line-up. Justice Ginsburg wrote the majority opinion, concluding the Virginia House of Delegates lacked standing to challenge a lower court opinion concluding Virginia House districts were unconstituitonally gerrymandered along racial lines. Justice Ginsburg was joined by Justices Sotomayor, Kagan, Thomas and Gorsuch. Justice Alito authored a dissent, joined by the Chief Justice and Justices Breyer and Kavanaugh.

The 5-4 Bethune-Hill split is particularly interesting both because it cuts across traditional right-left lines and because several justices adopted a position at odds with their usual approach to standing cases. Justice Ginsburg, like the other liberal justices, is generally quite generous when it comes to standing, and yet she authored the majority. Chief Justice Roberts, on the other hand, is among the most stingy about finding standing, and he dissented. Justices Gorsuch, Thomas, and Breyer, on the other hand, are about where you’d expect them in a standing case.

A third interesting (if somewhat predictable) split occurred in Gamble v. United States, in which the Court, 7-2, refused the invitation to reconsider the dual-sovereignty doctrine, under which state and federal prosecutions for the same offense do not violate the constitutional prohibition on double jeopardy. This was a win for stare decisis, if a loss for criminal defendants. Justice Alito wrote the Court’s opinion for the seven-justice majority. Justice Thomas concurred. Justices Ginsburg and Gorsuch each authored dissents.

The least surprising line-up of the day came in Manhattan Community Access Corp. v. Halleck, in which the Court split 5-4 along traditional right-left lines. Justice Kavanaugh wrote for the conservative majority, concluding that the Manhattan Neighborhood Network is not a state actor subject to First Amendment constraints. Justice Sotomayor dissented, joined by the Court’s four liberals.

Although this right-left division is not particularly surprising, it is interesting to see Justice Kavanaugh writing an opinion rejecting a First Amendment claim, as Justice Kennedy was the Court’s most speech-protective justice on the Court. This is not to say Justice Kennedy would have disagreed with Justice Kavanaugh’s conclusion, however, as this case concerned what entities are constrained by the First Amendment, not the scope of such protections, and Justice Kennedy might also have been sensitive to the broadcaster’s own First Amendment interests.)

The Court is expected to release more opinions on Thursday.

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Is There a RBA (Roberts-Breyer-Alito) Axis on SCOTUS?

Today, the Supreme Court issued four decisions in argued cases. All four case split the justices, as is common for this point in the Supreme Court term. Most of the unanimous cases are released earlier as there is (generally) less back-and-forth among the justices over the opinions.

Today’s decisions were particularly interesting in that they split the Court in some unusual ways. These opinions suggest the potential emergence of a pragmatist bloc on the Court, and perhaps provided hints at the Court’s direction going forward.

Perhaps the most interesting split occurred in Virginia Uranium, Inc. v. Warren, in which a 6-3 Court rejected the argument that the Atomic Energy Act preempts Virginia’s prohibition of uranium mining within the state. Although a clear majority of the Court found no preemption, no opinion commanded a majority—or even plurality—of the justices. Indeed, the Court split 3-3-3, rejected a position favored by the business community, and suggested broad preemption claims may face greater Court skepticism going forward.

Justice Gorsuch announced the opinion of the Court, and authored an opinion joined by Justices Thomas and Kavanaugh, finding no preemption. Justice Ginsburg wrote an opinion concurring in the judgment, joined by Justices Kagan and Sotomayor. Although these two opinions reached the same result, they differed starkly in methodology. Justice Gorsuch focused on the statutory text and explicitly rejected relying upon efforts to divine legislative purpose (beyond what’s in the text) to answer the preemption question. This approach could make it difficult for business groups to advance claims of field preemption going forward.

While agreeing with the result, it’s no surprise that Justices Ginsburg, Kagan, and Sotomayor did not wish to sign on to Justice Gorsuch’s opinion, as all three are quite amenable to efforts to divine legislative purpose. Chief Justice Roberts dissented, joined by Justices Alito and Breyer—a trio that stuck together in three of the four cases decided today, perhaps suggesting the emergence of a pragmatic bloc on the Court that eschews formalist analyses. Time will tell.

Virginia House of Delegates v. Bethune-Hill produced another surprising line-up. Justice Ginsburg wrote the majority opinion, concluding the Virginia House of Delegates lacked standing to challenge a lower court opinion concluding Virginia House districts were unconstituitonally gerrymandered along racial lines. Justice Ginsburg was joined by Justices Sotomayor, Kagan, Thomas and Gorsuch. Justice Alito authored a dissent, joined by the Chief Justice and Justices Breyer and Kavanaugh.

The 5-4 Bethune-Hill split is particularly interesting both because it cuts across traditional right-left lines and because several justices adopted a position at odds with their usual approach to standing cases. Justice Ginsburg, like the other liberal justices, is generally quite generous when it comes to standing, and yet she authored the majority. Chief Justice Roberts, on the other hand, is among the most stingy about finding standing, and he dissented. Justices Gorsuch, Thomas, and Breyer, on the other hand, are about where you’d expect them in a standing case.

A third interesting (if somewhat predictable) split occurred in Gamble v. United States, in which the Court, 7-2, refused the invitation to reconsider the dual-sovereignty doctrine, under which state and federal prosecutions for the same offense do not violate the constitutional prohibition on double jeopardy. This was a win for stare decisis, if a loss for criminal defendants. Justice Alito wrote the Court’s opinion for the seven-justice majority. Justice Thomas concurred. Justices Ginsburg and Gorsuch each authored dissents.

The least surprising line-up of the day came in Manhattan Community Access Corp. v. Halleck, in which the Court split 5-4 along traditional right-left lines. Justice Kavanaugh wrote for the conservative majority, concluding that the Manhattan Neighborhood Network is not a state actor subject to First Amendment constraints. Justice Sotomayor dissented, joined by the Court’s four liberals.

Although this right-left division is not particularly surprising, it is interesting to see Justice Kavanaugh writing an opinion rejecting a First Amendment claim, as Justice Kennedy was the Court’s most speech-protective justice on the Court. This is not to say Justice Kennedy would have disagreed with Justice Kavanaugh’s conclusion, however, as this case concerned what entities are constrained by the First Amendment, not the scope of such protections, and Justice Kennedy might also have been sensitive to the broadcaster’s own First Amendment interests.)

The Court is expected to release more opinions on Thursday.

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Harvard University Cancels Kyle Kashuv

Harvard University has rescinded its offer of admission to Kyle Kashuv, a Parkland survivor and conservative teen activist due to racist comments he made several years ago in group chats with other Marjorie Stoneman Douglas High School students.

Screenshots of the offensive statements surfaced about a month ago when Kashuv’s critics in both lefty media and far-right circles teamed up to destroy him. Kashuv acknowledged responsibility for having once been a “petty, flippant kid” but explained that subsequent events—including the mass shooting that killed many of his teachers and classmates—forced him “to mature and grow in an incredibly drastic way.” The comments were all made before the shooting, and before Kashuv became a nationally-recognized conservative figure, Second Amendment advocate, and coordinator for Turning Point USA. (He has since left the group.)

Kashuv had planned to attend Harvard in fall 2020 after completing a gap year, but shortly after his past racist comments became public, administrators advised him that his acceptance could be withdrawn “if you engage or have engaged in behavior that brings into question your honesty, maturity, or moral character.” He was asked to provide a full explanation for his behavior, which he did. He also emailed Harvard’s Office of Diversity Education and Support, vowing to make amends. This office told him “we appreciate your thoughtful reflections and look forward to connecting with you upon your matriculation in the fall of 2020.”

Alas, it was not to be: The dean of admissions decided to rescind Kashuv’s admission.

A spokesperson for Harvard told Reason that the university does not comment on the admissions status of individual applicants. Harvard is a private institution, and is within its rights, of course, to change its mind about admitting a specific student in light of new information.

Nonetheless, this decision is troubling. For one thing, it represents a major victory for the online mobs of cancel culture. One way to discourage Twitter trolls from dredging up old dirt on their enemies would be to ignore them. By giving the bullies exactly what they wanted, Harvard has only emboldened them. Indeed, gun control activist David Hogg—a fellow Parkland survivor—is currently a trending topic on Twitter, in part because some on the right would like to find a basis on which to argue that Harvard should de-admit him as well. (Inappropriate and conspiratorial claims that Hogg isn’t smart enough have occasionally flooded social media.)

Harvard’s decision here is also an endorsement of the position that people should be shamed and punished for their worst mistakes as kids. But moving forward, as technology gives everyone the ability to record every moment of our lives, this will be an untenable position—all embarrassing moments will be preserved forever, available for re-litigation. This is excessively punitive, and counterproductive to the healthy socialization of young people. Kids are not perfect: They must be given the opportunity to fail, and to learn and grow from their errors.

“As personally painful as this is right now, I’m concerned about the impacts this has on the broader conversation,” Kashuv told Reason. “It makes it a lot less probable that people will apologize for past wrongdoings. Even more so, it’s about whether the core educational principles that one can grow, can change, can mature are still intact or if past mistakes brand you as irredeemable.”

No one is entitled to placement at Harvard, and if you say racist things to people, you should not be surprised when someone calls you out. But, as with the efforts to cancel James Gunn, Kevin Hart, Sarah Jeong, Kyler Murray, and so many others, we should be concerned about where this corrosive impulse to seek and destroy is leading us.

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Harvard University Cancels Kyle Kashuv

Harvard University has rescinded its offer of admission to Kyle Kashuv, a Parkland survivor and conservative teen activist due to racist comments he made several years ago in group chats with other Marjorie Stoneman Douglas High School students.

Screenshots of the offensive statements surfaced about a month ago when Kashuv’s critics in both lefty media and far-right circles teamed up to destroy him. Kashuv acknowledged responsibility for having once been a “petty, flippant kid” but explained that subsequent events—including the mass shooting that killed many of his teachers and classmates—forced him “to mature and grow in an incredibly drastic way.” The comments were all made before the shooting, and before Kashuv became a nationally-recognized conservative figure, Second Amendment advocate, and coordinator for Turning Point USA. (He has since left the group.)

Kashuv had planned to attend Harvard in fall 2020 after completing a gap year, but shortly after his past racist comments became public, administrators advised him that his acceptance could be withdrawn “if you engage or have engaged in behavior that brings into question your honesty, maturity, or moral character.” He was asked to provide a full explanation for his behavior, which he did. He also emailed Harvard’s Office of Diversity Education and Support, vowing to make amends. This office told him “we appreciate your thoughtful reflections and look forward to connecting with you upon your matriculation in the fall of 2020.”

Alas, it was not to be: The dean of admissions decided to rescind Kashuv’s admission.

A spokesperson for Harvard told Reason that the university does not comment on the admissions status of individual applicants. Harvard is a private institution, and is within its rights, of course, to change its mind about admitting a specific student in light of new information.

Nonetheless, this decision is troubling. For one thing, it represents a major victory for the online mobs of cancel culture. One way to discourage Twitter trolls from dredging up old dirt on their enemies would be to ignore them. By giving the bullies exactly what they wanted, Harvard has only emboldened them. Indeed, gun control activist David Hogg—a fellow Parkland survivor—is currently a trending topic on Twitter, in part because some on the right would like to find a basis on which to argue that Harvard should de-admit him as well. (Inappropriate and conspiratorial claims that Hogg isn’t smart enough have occasionally flooded social media.)

Harvard’s decision here is also an endorsement of the position that people should be shamed and punished for their worst mistakes as kids. But moving forward, as technology gives everyone the ability to record every moment of our lives, this will be an untenable position—all embarrassing moments will be preserved forever, available for re-litigation. This is excessively punitive, and counterproductive to the healthy socialization of young people. Kids are not perfect: They must be given the opportunity to fail, and to learn and grow from their errors.

“As personally painful as this is right now, I’m concerned about the impacts this has on the broader conversation,” Kashuv told Reason. “It makes it a lot less probable that people will apologize for past wrongdoings. Even more so, it’s about whether the core educational principles that one can grow, can change, can mature are still intact or if past mistakes brand you as irredeemable.”

No one is entitled to placement at Harvard, and if you say racist things to people, you should not be surprised when someone calls you out. But, as with the efforts to cancel James Gunn, Kevin Hart, Sarah Jeong, Kyler Murray, and so many others, we should be concerned about where this corrosive impulse to seek and destroy is leading us.

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New York’s Progressive-Backed Rental Regulations Are a Huge Gift to Wealthy Tenants

New York’s rental regulations took a giant lurch to the left this past week, with state lawmakers passing a new bill that makes it harder for landlords to raise rents and expands legal protections for all tenants.

This new legislation is part of a nationwide surge of rent control policies. Oregon passed the first statewide rent control law in February, and California passed a similar bill in May.

Getting New York’s rental regulations across the finish line were a new crop of progressive state legislators that made “universal rent control” a central component of their agenda. Nevertheless, the new law includes a number of provisions that will primarily benefit already well-off renters.

“These reforms give New Yorkers the strongest tenant protections in history,” said Senate Majority Leader Andrea Stewart-Cousins (D–Yonkers) and Assembly Speaker Carl Heastie (D–Bronx) in a joint statement. “For too long, power has been tilted in favor of landlords and these measures finally restore equity and extend protections to tenants across the state.”

On Friday, the New York Legislature passed the Housing Stability and Tenant Protection Act of 2019, which replaces existing rental regulations that were set to expire this past Saturday.

The legislation targets New York City’s roughly 900,000 rent-stabilized apartments. These generally include apartment buildings of six or more units that were built before 1974, as well as newer multifamily properties that received a tax abatement.

Rents at these units are controlled by the city’s Rent Guidelines Board (RGB), which limits how high their owners are able to raise rents. Last year’s allowable increase was 1.5 percent for one-year leases and 2.5 percent for two-year leases.

Under New York’s old regulations, property owners were allowed to “deregulate” these units (charge market prices for them) if rents reach $2,774 a month at a vacant unit, or if they reach that same amount at units occupied by a tenant making $200,000 a year or more.

The prior regulations also allowed landlords to permanently raise rents by as much as 6 percent at rent-stabilized units following a major capital improvement to the entire building, like installing a new roof or boiler. Landlords were also permitted to pass on a percentage of the cost of improvements to individual apartments (like installing a new dishwasher) as permanent monthly rent increases.

The new law passed upends all of this; landlords are no longer allowed to deregulate rent-stabilized units after they pass a specific rent or income threshold.

Allowable rent increases for major capital improvements were also shrunk to 2 percent, and these rent increases now expire after 30 years. The costs of individual apartment improvements landlords can pass on to tenants were also scaled back.

These new rules are intended to close “loopholes” that have led to a steady erosion of the number of rent-stabilized units. But by making New York’s rent stabilization law more rigid, they also exacerbate the policy’s flaws.

For starters, by eliminating landlords’ ability to deregulate their units upon reaching rent and income thresholds, the state has made rent stabilization even more stacked in high-income earners’ favor.

A Wall Street Journal analysis of Census Bureau data published last week found that the price of a median rent-stabilized unit in wealthier Manhattan was $1,400—about $1,600 less than median market-rate rents. In the less affluent boroughs of Queens, Brooklyn, and the Bronx, the difference in price between median rent-stabilized apartments and market-rate units ranged between $130 to $250.

The same article also found an average person in the top income quartile paid $1,650 for a rent-stabilized apartment; some 39 percent less than what top income quartile renters were paying for market-rate apartments. Occupants of rent-stabilized apartments in the lowest income quartiles received a 15 percent discount on rent compared to their peers in market-rate units.

By abolishing high-rent and high-income deregulation, New York’s legislature is ensuring that the discount for high-income renters will continue to grow.

Limiting the ability of property owners to claw back the costs of capital improvements with higher rents will also decrease their incentive to keep buildings in a state of good repair, warns the Manhattan Institute’s Howard Husock.

“The opposite of gentrification—call it shabbification—would emerge, as city housing stock becomes more and more degraded,” wrote Husock in May. “Middle-class and working-class neighborhoods, where rents are often not that high (in some outer-borough neighborhoods, market rents are lower than permitted by law) would be at particular risk.”

The new law also caps security deposits at one month’s rent, statewide, and gives all cities in the state the power to pass rent stabilization policies. Previously only New York City and few surrounding communities had that right.

Landlords are hopping mad at these changes. John H. Banks, president of the Real Estate Board of New York (REBNY), called the new rental law “a disaster for the City’s future” in a statement, saying that “Governor and the Legislature are consigning hundreds of thousands of tenants to buildings that [will] soon fall into disrepair.”

Some landlords are reportedly planning to challenge the new law in court.

Provided it withstands these challenges, New York will have given its tenants some of the strongest legal protections in the country. For many, that’s an unalloyed good.

Yet, as is often the case with the regulation of rental prices, these new laws don’t help poor tenants and they often disincentivize landlords to actually maintain their properties. The more laws tilt the landlord-tenant relationships towards the tenant, the less willing some landlords will be to put their properties on the market in the first place.

The end result of New York’s new rental laws may, therefore, be lower rents and greater protections for some, but at the cost of deteriorating buildings, and less supply overall.

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New York’s Progressive-Backed Rental Regulations Are a Huge Gift to Wealthy Tenants

New York’s rental regulations took a giant lurch to the left this past week, with state lawmakers passing a new bill that makes it harder for landlords to raise rents and expands legal protections for all tenants.

This new legislation is part of a nationwide surge of rent control policies. Oregon passed the first statewide rent control law in February, and California passed a similar bill in May.

Getting New York’s rental regulations across the finish line were a new crop of progressive state legislators that made “universal rent control” a central component of their agenda. Nevertheless, the new law includes a number of provisions that will primarily benefit already well-off renters.

“These reforms give New Yorkers the strongest tenant protections in history,” said Senate Majority Leader Andrea Stewart-Cousins (D–Yonkers) and Assembly Speaker Carl Heastie (D–Bronx) in a joint statement. “For too long, power has been tilted in favor of landlords and these measures finally restore equity and extend protections to tenants across the state.”

On Friday, the New York Legislature passed the Housing Stability and Tenant Protection Act of 2019, which replaces existing rental regulations that were set to expire this past Saturday.

The legislation targets New York City’s roughly 900,000 rent-stabilized apartments. These generally include apartment buildings of six or more units that were built before 1974, as well as newer multifamily properties that received a tax abatement.

Rents at these units are controlled by the city’s Rent Guidelines Board (RGB), which limits how high their owners are able to raise rents. Last year’s allowable increase was 1.5 percent for one-year leases and 2.5 percent for two-year leases.

Under New York’s old regulations, property owners were allowed to “deregulate” these units (charge market prices for them) if rents reach $2,774 a month at a vacant unit, or if they reach that same amount at units occupied by a tenant making $200,000 a year or more.

The prior regulations also allowed landlords to permanently raise rents by as much as 6 percent at rent-stabilized units following a major capital improvement to the entire building, like installing a new roof or boiler. Landlords were also permitted to pass on a percentage of the cost of improvements to individual apartments (like installing a new dishwasher) as permanent monthly rent increases.

The new law passed upends all of this; landlords are no longer allowed to deregulate rent-stabilized units after they pass a specific rent or income threshold.

Allowable rent increases for major capital improvements were also shrunk to 2 percent, and these rent increases now expire after 30 years. The costs of individual apartment improvements landlords can pass on to tenants were also scaled back.

These new rules are intended to close “loopholes” that have led to a steady erosion of the number of rent-stabilized units. But by making New York’s rent stabilization law more rigid, they also exacerbate the policy’s flaws.

For starters, by eliminating landlords’ ability to deregulate their units upon reaching rent and income thresholds, the state has made rent stabilization even more stacked in high-income earners’ favor.

A Wall Street Journal analysis of Census Bureau data published last week found that the price of a median rent-stabilized unit in wealthier Manhattan was $1,400—about $1,600 less than median market-rate rents. In the less affluent boroughs of Queens, Brooklyn, and the Bronx, the difference in price between median rent-stabilized apartments and market-rate units ranged between $130 to $250.

The same article also found an average person in the top income quartile paid $1,650 for a rent-stabilized apartment; some 39 percent less than what top income quartile renters were paying for market-rate apartments. Occupants of rent-stabilized apartments in the lowest income quartiles received a 15 percent discount on rent compared to their peers in market-rate units.

By abolishing high-rent and high-income deregulation, New York’s legislature is ensuring that the discount for high-income renters will continue to grow.

Limiting the ability of property owners to claw back the costs of capital improvements with higher rents will also decrease their incentive to keep buildings in a state of good repair, warns the Manhattan Institute’s Howard Husock.

“The opposite of gentrification—call it shabbification—would emerge, as city housing stock becomes more and more degraded,” wrote Husock in May. “Middle-class and working-class neighborhoods, where rents are often not that high (in some outer-borough neighborhoods, market rents are lower than permitted by law) would be at particular risk.”

The new law also caps security deposits at one month’s rent, statewide, and gives all cities in the state the power to pass rent stabilization policies. Previously only New York City and few surrounding communities had that right.

Landlords are hopping mad at these changes. John H. Banks, president of the Real Estate Board of New York (REBNY), called the new rental law “a disaster for the City’s future” in a statement, saying that “Governor and the Legislature are consigning hundreds of thousands of tenants to buildings that [will] soon fall into disrepair.”

Some landlords are reportedly planning to challenge the new law in court.

Provided it withstands these challenges, New York will have given its tenants some of the strongest legal protections in the country. For many, that’s an unalloyed good.

Yet, as is often the case with the regulation of rental prices, these new laws don’t help poor tenants and they often disincentivize landlords to actually maintain their properties. The more laws tilt the landlord-tenant relationships towards the tenant, the less willing some landlords will be to put their properties on the market in the first place.

The end result of New York’s new rental laws may, therefore, be lower rents and greater protections for some, but at the cost of deteriorating buildings, and less supply overall.

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Let’s Move More Federal Agencies Out of Washington

When Agriculture Secretary Sonny Perdue announced plans last year to move some department jobs out of the nation’s capital, employees weren’t happy. Tensions flared up last week when U.S. Department of Agriculture (USDA) employees turned their backs to the cabinet secretary to protest the decision to move a few hundred USDA workers from Washington, D.C., to Kansas City. Employee objections aside, the idea of moving federal agencies to the heartland is a smart idea, and more agencies should follow the USDA’s lead.

The proposal on the table involves moving two federal research agencies, the Economic Research Service and the National Institute of Food and Agriculture, from their current offices to the greater Kansas City area (as of now it’s not clear which side of the Kansas City-Missouri border). Roughly 550 jobs would move.

The USDA’s cost-benefit analysis found that shifting these two agencies to Kansas City would reduce costs by 11.3 percent, saving taxpayers roughly $300 million (in nominal terms) over the next 15 years. These savings stem primarily from the fact that Kansas City has dramatically cheaper real estate than D.C., as well as marginally lower cost of living. The USDA’s report noted that the median sale price of a home (a major factor in determining cost of living for employees) in Kansas City is $205,400, compared to $420,000 in D.C.

Lower real estate costs benefit federal agencies themselves, as well as their employees. According to a report from the Government Accountability Office, the feds spend almost $1.7 billion a year on operating and maintenance costs on underutilized or unused buildings.

Furthermore, as Vox columnist Matthew Yglesias wrote in 2016, there’s isn’t much reason to keep a lot of government agencies in or near Washington. It makes sense to keep groups involved with “day-to-day politics” or policymaking, like the diplomatic corps, close to the capital. But many agencies are research organizations, and there’s no clear purpose in keeping them near the seat of power. For example, the Centers for Disease Control and Prevention (CDC) is headquartered in Atlanta, Georgia, and there aren’t many concerns that this distance from Washington impedes the agency’s mission.

In the case of these USDA agencies, it might even make a little more sense for them to move to the Midwest. Kansas City is much closer to the heart of American agriculture than D.C. is, and there are already 4,000 USDA employees in Kansas and Missouri, along with universities and companies more focused on farming and animal breeding than their D.C. counterparts.

Moving agencies out of D.C. and into Kansas City will help both cities’ economies. The nation’s capital is inordinately expensive, in no small part due to zoning regulations that prevent the supply of housing from keeping up with demand. Meanwhile, many Midwestern cities have lost population and suffered economically from de-industrialization. 

Similarly, bringing thousands of government workers to the Midwest would bring hundreds of millions of dollars in consumer spending to the local economy, not to mention new jobs. As Yglesias noted, Rust Belt cities that have suffered from post-industrial population decline still have some of the infrastructure necessary to absorb new people without seriously increasing the cost of living.

In fairness to the protesting workers, it’s not easy to uproot and move to a different part of the country—especially if one has a family—though the USDA estimates that the relocation packages it will offer to current workers will equal $50,000 per employee. Still, as a matter of public policy, shifting federal agencies out of D.C. is a win-win. If shifting merely 550 jobs can reduce government spending by $20 million a year, consider the possible savings from shifting hundreds of thousands of federal employees into lower-cost states. 

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