This week, in Sackett v. EPA, the Supreme Court closed the book on Mike and Chantell Sackett’s 19 year saga of trying to build on their land. In 2004, the Sacketts purchased property 500 feet from the shores of Priest Lake, Idaho. In 2007, after they started to fill in wet spots in their property so they could build a home, EPA officials informed the Sacketts that their property was a wetland adjacent to a tributary that fed into the lake, and therefore counted as “navigable waters” under the EPA’s jurisdiction pursuant to the Clean Water Act (“CWA”). The Sacketts would need to get a permit if they wanted to build, and a permit, if the Sacketts could get one, would cost them hundreds of thousands of dollars. The Sacketts challenged the EPA’s decision, but the lower court decided the EPA’s order was not “final,” so the Sacketts could not challenge it. The Sacketts appealed, eventually going to the Supreme Court in 2012, which held that the EPA’s decision was a final order and the Sacketts were able to challenge it.

11 years later, the Sacketts were back at the Supreme Court, this time asking whether their property could be regulated as “waters of the United States” under the CWA. This is the fourth time the Supreme Court has addressed the scope of this provision—and this time the Court got it right.

The story of CWA regulation and litigation is too long and confusing to tell here in full. But the last time the Supreme Court addressed the scope of “navigable waters”—which the statute further defines as “waters of the United States”—in 2006, the Court split 4–1‑4, so there was no controlling majority. The two main opinions from that case, Rapanos v. United States—written by Justices Scalia and Kennedy respectively—disagreed on the test that should be applied to determine if a wetland was “waters of the United States.” Justice Scalia’s test would apply to “permanent, standing or continuously flowing bodies of water,” and wetlands that shared a “continuous surface connection” to such permanent bodies of water. Justice Kennedy considered this term more broadly to include all bodies of water that had a “significant nexus” with navigable-in-fact waters.

Lower courts split on which test to apply, but most courts applied Justice Kennedy’s broader test. One of the issues with his test, however, was that “significant nexus” had no real limiting principle. Land that was in no way connected to navigable waters, but which was damp for a couple months of the year, could be regulated as “waters of the United States” because sufficient water molecules from that land interacted with nearby bodies of water. Justice Kennedy’s test was indeed expansive.

This week, the Court unanimously rejected the significant nexus test and held that the EPA lacked jurisdiction to prohibit the Sacketts from building on their land. Justice Alito, writing for the majority, essentially adopted Justice Scalia’s test from Rapanos. Quoting from Justice Scalia’s opinion, Justice Alito explained that the term “waters of the United States” is limited to “only those relatively permanent, standing or continuously flowing bodies of water forming geographical features that are described in ordinary parlance as streams, oceans, rivers, and lakes.” But amendments to the CWA, in a provision discussing permits, state that the EPA can regulate not only “waters of the United States,” but also “adjacent wetlands.” These “adjacent wetlands” must not be distinct and separate from “waters of the United States,” Alito explained, because otherwise the amendments would be drastically changing the scope of the statute via an ancillary provision. Congress was not changing the scope of the CWA by allowing permits for wetlands. Rather an “adjacent wetland” is an “indistinguishably part of a body of water that itself constitutes ‘waters’ under the CWA.” Therefore, as Scalia wrote in 2006, “adjacent wetlands” must be connected to navigable waters via “a continuous surface connection.”

This decision brings clarity to an area of the law that has been infamously obtuse. The scope of the CWA has bounced back and forth for decades, leaving farmers, homebuilders, and property owners across this country in confusion on what they can and cannot do on their property. Not only did the Supreme Court pen a happy ending for the Sacketts—they will now get to build their dream home—but property owners everywhere have received much needed clarity on whether their property qualifies as “waters of the United States.” Not only did property rights win the day, but so also did clarity and simplicity.

In the Fall of 2020, public schools in Springfield, Missouri implemented mandatory “equity” training. All employees of the school district were required to attend a session, not just teachers. The employees were told that if they did not participate, the school district would dock their pay and they could lose necessary professional development credit.

The training topics included “Oppression, White Supremacy, and Systemic Racism” and tools on “how to become Anti‐​Racist educators.” Training sessions included several interactive exercises that required participants to share reactions to videos, write down answers to instructor questions, answer multiple‐​choice questions, and fill out charts related to concepts presented by the training.

Brooke Henderson and Jennifer Lumley, two non‐​teacher employees, strongly disagreed with many of the views advanced by the school district through the training sessions. These sessions taught that believing in colorblindness is a form of white supremacy; that systemic racism is “woven into the very foundation of American culture, society, and laws”; and that American institutions all contribute to or reinforce “the oppression of marginalized social groups while elevating dominant social groups.” Participants were also told that being sufficiently “anti‐​racist” means not remaining “silent or inactive” because doing so constitutes “white silence”—a form of white supremacy.

During training sessions, employees were required to answer questions and give responses affirming these assertions. For example, some of the questions presented two answers, only one of which was correct in the eyes of the school district. In order to advance through the modules and receive credit, participants had to give the school district‐​approved answer. To complete their training, Henderson and Lumley both gave many answers that they did not actually believe.

Henderson and Lumley, represented by the Southeastern Legal Foundation, filed suit and raised several claims under the First Amendment including compelled speech, content and viewpoint discrimination, and unconstitutional conditions of employment. But the district court held in favor of the school district and ruled that Henderson and Lumley would have to pay the school district over $300,000 in legal fees and sanctions.

Henderson and Lumley have appealed to the Eighth Circuit, and Cato has filed an amicus brief supporting that appeal. Our brief focuses on two aspects of the district court’s decision that raise substantial First Amendment issues. First, the court’s analysis of the plaintiffs’ compelled speech claim conflicts with the Supreme Court’s foundational decision in West Virginia Board of Education v. Barnette (1943). Barnette makes clear that a person suffers a First Amendment injury at the moment he or she is required to affirm a belief to which he or she objects. Plaintiffs repeatedly had to provide the “correct” response and profess agreement with the school district’s ideas about equity, white supremacy, and racism, even though they strongly disagreed.

Second, the district court’s decision to award attorneys’ fees and sanctions violates the First Amendment right of the plaintiffs to participate in public‐​interest litigation. The district court justified its exorbitant award by referencing the​plaintiffs’ desire to advance a political cause in this litigation. But the Supreme Court explicitly held in NAACP v. Button (1963) and In re Primus (1978) that advancing a cause through good‐​faith public‐​interest litigation is an important First Amendment right, not something to be punished. Penalizing litigants for exercising their First Amendment freedoms will only chill future good‐​faith litigation.

If allowed to stand, the district court’s opinion would invite government employers to undermine key First Amendment principles and would chill legitimate public‐​interest litigation. The Eighth Circuit should correct these errors and reverse the decision of the district court.

The late Barbara Baker left behind quite a legacy. She was a first grade teacher in 1960 when she realized her incoming students were unprepared because her school district had dropped phonics. Despite being pregnant with her fifth child, Barbara quit teaching and started her own preschool in 1963. “I figured that if they learned phonics in preschool, no one could take that away from them,” she said.

That modest beginning—half of the students in the first class were family and friends—ultimately launched Challenger School. Jeff Davis, whose own children attended Challenger, now serves as marketing strategist for the school. He says Barbara had a huge waiting list the next year and couldn’t build fast enough to keep up with demand.

“Barbara was a powerhouse,” according to Jeff. “She recognized that there was a window of opportunity with children that you really don’t get again. She had worked as a public school teacher and had been on the Moreland School Board in California. She’d done what she could to try and improve things. But she realized these children’s opportunity was passing and the slowness of the bureaucracy didn’t satisfy her.”

Because she wanted to focus on ensuring young children learned to read, Barbara stuck to preschool and kindergarten the first few years. But parents kept asking her to expand, so she did. She added elementary grades and opened new campuses. By the 1980s, Challenger School had added middle school classes as well.

“We built our own curriculum,” says Jeff. “We’ll pull in other sources as well from the main curriculum houses. We’ve had Saxon Math for years, for instance. It’s all tailored by grade to fit what we are expecting our students to accomplish. Quite often the publishers are out of alignment with what we want to be accomplishing—usually several years behind where we’re trying to be. So we customize it for where our students are based on testing we do.”

Challenger’s course of study is designed to form a foundation for students’ future education. In keeping with Barbara’s original vision, there is a heavy emphasis on reading since that is what equips students to pursue future interests on their own. Composition is stressed to ensure students can communicate clearly. Math, according to the Challenger outlook, is like literacy for numbers. Studying history helps students understand human action and its impacts. And a focus on logic gives students the tools to evaluate new ideas. Students don’t learn these concepts in isolation—they are reinforced at multiple levels and across subjects. As students master these subjects, they get stronger in other areas.

Parents clearly like what Challenger School offers their children. There are now 27 campuses educating around 11,000 children across five states—California, Idaho, Nevada, Texas, and Utah. Some locations offer only preschool and kindergarten, some go through 8th grade, and some offer something in between. The preschool/​kindergarten locations typically act as feeders for the other campuses initially and then may expand to additional grades.

This year, Challenger is celebrating its 60th anniversary. Barbara Baker remained active and involved with the school as CEO until she passed away in 2012. She was a pioneer in the realm of education entrepreneurship, and many thousands of children have benefited from her vision and tenacity.

Yesterday the House of Representatives voted 289–133 to pass the HALT Fentanyl Act.* The act permanently classifies fentanyl-related substances (FRS)—analogs of fentanyl that differ chemically from analogs currently used medically (e.g., sufentanil, remilfentanil, alfentanil)—as Schedule 1 drugs. The Drug Enforcement Administration defines Schedule 1 drugs as having “no currently accepted medical use and a high potential for abuse.”

Set aside the fact that politicians have no way of knowing that future analogs have no potential medical use (think of all those years lost in treating mental health problems with psychedelics because the DEA determined they had no accepted medical use). Set aside the fact that keeping heroin and cannabis as Schedule 1 drugs for more than half a century has not deterred the black market from providing those drugs to consumers. What is even more mind-boggling is that the Trump Administration temporarily classified FRSs Schedule 1 in 2018 as an emergency measure in response to the rise in fentanyl-related overdose deaths, and renewed the temporary classification in 2020 through 2024. Fentanyl-related overdose deaths went from roughly 47,000 in 2018 to more than 81,000 in 2022. By what logic do lawmakers think that permanently extending FRSs Schedule 1 classification will somehow bring overdose deaths down?

The HALT Fentanyl Act also increases mandatory minimum sentences for people found possessing fentanyl-related substances. Experience shows that mandatory minimum sentences and even the death penalty do nothing to deter drug dealing and drug use. Mandatory minimums do, however, empower prosecutors to engage in coercive plea bargaining.

In testimony before the House Judiciary Committee Subcommittee on Crime and Government Surveillance last March I urged lawmakers not to go down this road.

The bill now goes to the Senate, and President Biden signals he will sign it.

The HALT Fentanyl Act is just the latest example of Congress doing the same thing over and over and expecting a different result. This is prohibition denialism.

*HALT Fentanyl Act is an acronym for “Halt All Lethal Trafficking of Fentanyl Act”

Late last year, the Federal Reserve caught attention for its central bank digital currency (CBDC) pilot projects. Going beyond traditional research, the Federal Reserve contracted with the private sector to build potential CBDCs for the United States. As American Banker’s John Adams reported at the time, “Even as debate in the U.S. rages over the utility of a digital dollar, work continues on the nuts and bolts of a potential American CBDC.”

Therefore, with concerns about the risks of CBDCs high and the potential for such CBDC development to go awry, Representative Alex X. Mooney (R‑WV) introduced a bill to rein in the Federal Reserve’s discretion.

The Digital Dollar Pilot Prevention Act, or DDP Prevention Act, would establish that the Federal Reserve would need explicit congressional authority to set up a CBDC pilot on its own or through a private sector contractor. The bill covers both the Federal Reserve board which would ultimately lead the charge on issuing a CBDC as well as the regional Federal Reserve banks that have thus far been conducting CBDC pilots. With that in mind, Representative Mooney’s bill would help to stop a CBDC pilot from being quietly transitioned to the masses.

The Federal Reserve recently tempered some of its public statements on CBDCs, but one doesn’t need to look far to see where other statements have given reason to be concerned. For example, former vice-chair Lael Brainard testified before Congress in 2022 that developing a CBDC may take five years. While serving this warning, Brainard attempted to make the case that the United States should create a CBDC now because it might be needed in the future:

It’s really the future states of the financial system that we should be thinking about as we think about the costs and benefits [of a CBDC.] … What is really important is that it takes a long time if, for instance, Congress decides that it is very important for the Federal Reserve to issue a [CBDC]. It could take five years to put in place the requisite security features [and] design features.

While this type of argument is less than compelling, it could help explain why the Federal Reserve has been developing potential CBDCs through pilot programs. If the Federal Reserve sees its authority to issue a CBDC as questionable, then developing one unofficially might be the next best thing in its eyes. Unofficial development through pilots, for instance, could mean that a CBDC would be ready to go if Congress gives the green light. However, it would also mean that a CBDC would be ready and could be launched alongside a flurry of other programs once a crisis occurs.

While research is important, there’s a fine line between lab experiments and operating a venture capitalist incubator for tech startups and financial institutions to get their CBDC models off the ground. More so, there’s a fine line between conducting internal research and conducting pilots where the broader public is used for experiments.

With all these factors in mind, it is easy to see why Representative Mooney is concerned about the Federal Reserve’s actions on CBDCs.

Today, in a unanimous decision, the Supreme Court held that local governments cannot take surplus home equity after liquidating delinquent taxpayers’ property to pay their tax bill. Typically, if a property owner is behind on her property taxes, governments will take the property, liquidate it, and use the funds to pay off the tax bill and any accrued fees. Most states then return any remainder back to the property owner. However, Minnesota and 13 other states maintained a practice of greedily pocketing any surplus equity instead of returning it to the rightful property owner.

That is what happened to 94-year-old Geraldine Tyler, the plaintiff in Tyler v. Hennepin County. She fell behind on her property taxes, owing $2,700 and another $12,300 in fees. Hennepin County took her property and sold it for $40,000. But instead of returning Ms. Tyler her remaining $25,000, the County took that money for its own use.

The Supreme Court correctly decided that this practice is unconstitutional. Writing for a unanimous Court, Chief Justice John Roberts explained that governments cannot take more property than necessary to satisfy a tax debt.

The crux of this case was whether the $25,000 in equity was in fact Ms. Tyler’s property. The Fifth Amendment prohibits the taking of private property without payment of just compensation, but the Constitution does not define what “private property” is. Courts traditionally look to state law to determine what constitutes “private property.”

Hennepin County had argued that an early 20th century Minnesota statute removed any property right Ms. Tyler might have had. That statute declared that after a tax foreclosure, any remaining equity became the property of the local government. The county argued that under this statute, Ms. Tyler no longer owned the remaining equity, so the county could take it without triggering the just compensation requirement.

The Supreme Court brushed this argument away, explaining that although “[s]tate law is one important source” of the definition of property, it “cannot be the only source.” Otherwise, states could take whatever property they wanted without paying for it, simply by defining it away. If successful, such a tactic would make the Fifth Amendment meaningless.

Moreover, the American legal system has long required that governments take no more property than required to pay a tax debt, a tradition that can be traced all the way back to early English common law and Magna Carta. In the 13th century, King John promised that the government would take no more property than was required to pay debts. This principle continued throughout English and early American common law, and Minnesota recognized this principle up to at least 1884. And as the Supreme Court explained—and as Cato discussed in our amicus brief in support of cert in this case—Minnesota recognized a debtor’s property right to the remaining equity in her property in every situation other than tax liens. It was only when a debtor owed taxes that the government said the debtor lost her property right in her equity.

The idea that a property owner loses the right to her property because she fell behind on her taxes is contrary to the Constitution, Magna Carta, American tradition, and common sense. Thankfully, the Supreme Court unanimously recognized that today. In merry England, Robin Hood stood up to the Sheriff of Nottingham’s unfair taxation, and Magna Carta ended some of those practices. Here, Pacific Legal Foundation stood up to local governments’ home equity theft, and today the Supreme Court ended that practice. Three Cheers for Chief Justice Roberts and the unanimous Supreme Court.

It’s a well-known fact in the nation’s capital that politicians’ rhetoric gets progressively detached from reality as a November election approaches. During a race’s final few months, inconvenient things like “facts” and “logic” tend to get thrown out the window as candidates get desperate for votes.

On trade, at least, it seems President Biden has kicked off the 2024 “silly season” more than a year early.

In particular, Biden’s recent proclamation announcing World Trade Week 2023 (and implicitly justifying his tariff- and subsidy-heavy “worker-centric” trade policy) stated that, “For decades, the middle class and thriving towns across America were hollowed out as good-paying jobs moved overseas and factories at home closed down.” Were this claim in the middle of an early-autumn stump speech—from Biden or former President Trump—we may have given it a pass. But since the claim comes in the middle of a World Trade Week proclamation from the sitting president of the United States, we feel compelled to correct the record.

First, the only “hollowing out” of the American middle class over the last few decades has been due to U.S. households moving up the income ladder, not down. For example, Census Bureau data show that between 1990 and 2019—the era of “peak globalization”—the share of middle- and low-income U.S. households (adjusted for inflation) have both declined, while the share of U.S. households annually earning $100,000 has increased (see Figure 1). Research on individuals’ wages shows much of the same thing.

Wage and income gains have been solid for lower-income Americans over this same period. The Congressional Budget Office, for example, finds a 55 percent increase in the inflation-adjusted incomes of U.S. households in the bottom 20 percent. These improvements would be even larger after accounting for taxes and transfers. (As noted in the introduction of the new Cato Institute book, Empowering the New American Worker, household income gains are likely not owed to a substantial increase in two-earner families since 1990.) According to the most recent calculations from economist Michael Strain, moreover, inflation-adjusted wages increased between 1990 and 2022 by 50, 48, 38, and 39 percent at the 10th, 20th, 30th, and 50th (median) percentiles, respectively (see Figure 2).

Second, while it is undeniably true that the United States has fewer manufacturing workers today than in the 1970s or 1980s and that most jobs (even male-dominated, blue-collar ones) are in services, American industrial jobs have not all been “shipped overseas.” As explained in a 2022 Cato paper, globalization undoubtedly eliminated some U.S. manufacturing jobs, especially labor-intensive, low-wage industries like textiles/​apparel and furniture, but the main, long-term drivers of U.S. manufacturing job-losses are productivity gains and a shift in U.S. consumption from goods to services. Thus, countries around the world—including ones with large and persistent trade surpluses and active industrial and labor policies—have experienced their own, if not larger, declines in manufacturing jobs, and recent increases in U.S. manufacturing jobs have been accompanied by stagnating U.S. manufacturing productivity.

Furthermore, as explained in Empowering, there are still manufacturing jobs available in the United States—for those who want and can qualify for them:

Contrary to the conventional wisdom…, the current U.S. manufacturing job situation is not due to a lack of demand for these workers (caused by globalization or automation, for example): in the first quarter of 2022, there were around 850,000 unfilled manufacturing job openings, and new research from Deloitte and the Manufacturing Institute estimates that this figure could hit 2.1 million by 2030.

A year later, even after a significant cooling of the U.S. manufacturing sector, job openings there are historically elevated. At the same time, the Census Bureau reports that very few prime-age American workers are out of work because they can’t find a job (Figure 3).

Third, President Biden ignores, as we explained in a 2022 paper, the tens of millions of American jobs in services and in manufacturing that are today dependent on trade and globalization:

[A] 2020 report found that trade—imports and exports—directly or indirectly supported approximately 40.6 million jobs in both goods‐​producing industries (agriculture, construction, manufacturing, etc.) or services‐​producing industries (wholesale/​retail trade, transportation, professional services, etc.). Imports alone support an estimated 17.3 million American jobs in transportation, logistics, wholesale and retail trade, and other services industries, which comprise more than 10 percent of total employment in the sector. And almost half of all dollars spent on imported goods go to American workers rather than to the foreigners producing the goods. Thus, new research finds that, while only 6 percent of U.S. firms in manufacturing and services are goods traders, these firms account for half of economy‐​wide employment today and supported 60 percent of all new net jobs created after 2008, primarily through the establishment of new businesses. [See Figure 4.]

Meanwhile, foreign direct investment supported approximately 8 million jobs in 2019. By contrast, these same American workers are harmed by protectionism: higher input costs, for example, typically mean reduced wages or unemployment in the consuming company or industry at issue.

Surely, not every American worker has come out ahead since the United States became more integrated into the global economy, but—even leaving aside the important consumption benefits that globalization has provided all Americans (even ones who lost jobs from import competition)—the narrative of broad, trade-driven declines in middle class jobs and lifestyles is simply false. As the Financial Times’ Martin Wolf put it in April (citing the latest academic research), “contrary to the widespread view, it is untrue that liberal trade is a dominant or even significant cause of the woes of the working classes of western societies.” Indeed.

Finally, similar conclusions may be drawn regarding American communities—including ones once dependent on manufacturing. For example, a 2018 Brookings Institution report found that 115 of the 185 counties that had a disproportionate share (20 percent or more) of manufacturing jobs in 1970 had successfully transitioned away from manufacturing by 2016. Of the remaining 70 “older industrial cities”, 40 had exhibited “strong” or “emerging” (above-average) economic performance over the same period. Thus, by 2016 almost 85 percent of American communities once dependent on manufacturing—and thus potentially “hollowed out” by new import competition—had moved or were moving beyond their industrial past. That a handful of U.S. “mill towns” hadn’t adjusted in more than four decades reveals other (and deeper) problems than simply exposure to the modern global economy. For example:

Anecdotal evidence supports these conclusions. Former textile town Greenville, South Carolina is (along with its next door neighbor Spartanburg) today a bustling metro area with a diverse economy—including several multinational manufacturers. Just up the interstate, Hickory, North Carolina—a former textile and furniture hub that was the poster-child for the persistent ravages of the so-called “China Shock”—has just been named by U.S. News and World Report as the “best affordable place to live in the United States” for 2023–24. (Speaking of the China Shock, the authors of those influential studies have since acknowledged that, once you consider the substantial consumer gains from China trade, just 82 of 722 U.S. commuting zones, representing 6.3 percent of the U.S. population, would experience net welfare losses. Other scholars, of course, challenge the China Shock approach and conclusions more broadly.)

For Hickory, the USNWR highlights that manufacturing continues to account for most of the area’s jobs, yet “the industry is [now] diversified, with plastics, biotechnology and pharmaceuticals playing a bigger role.” Moreover, Google and Apple have established data centers in the area, and service-sector businesses are growing. Recognizing the area’s potential, Appalachian State University will open a Hickory-based campus this August.

Coming in second on the same USNWR list is former steel town Youngstown, Ohio, which is “in the midst of a cultural and economic renaissance” driven mainly by service-sector businesses.

So much for being “hollowed out.”

None of this means, of course, that certain American communities and workers don’t face real challenges in today’s globalized world. But alleging that trade caused these ills not only ignores the gains that the vast majority of Americans have experienced since the United States opened to the world decades ago, but also distracts from—as Empowering details—“the panoply of federal, state, and local policies that distort markets and thereby raise the cost of health care, childcare, housing, and other necessities; lower workers’ total compensation; inhibit their employment, personal improvement, and mobility; and deny them the lives and careers that they actually want (as opposed to the ones DC policymakers think they should want).”

Blaming trade for these and other policies’ failures might make for a good campaign soundbite, but that doesn’t make it any less silly—especially during World Trade Week.