Wednesday, November 23, 2011

DEA Overreach? A Regulatory Takings Case

An 88 year old man, a retired metallurgist who runs a small business with his 85 year old girl friend is being forced out of business because he makes iodine crystals to purify water. The Drug Enforcement Agency is requiring Bob Wallace implement expensive security measures for his business (run out of his garage) because the product he makes has shown up in some meth labs. Reason Magazine cites the DEA: Methamphetamine is an insidious drug that causes enormous collateral damage," wrote Barbara Carreno, a DEA spokeswoman. "If Mr. Wallace is no longer in business he has perhaps become part of that collateral damage, for it was not a result of DEA regulations, but rather the selfish actions of criminal opportunists. Individuals that readily sacrifice human lives for money.
OK, but is Mr. Wallace one of those criminal opportunists who sacrifice human lives for money? Nope, he makes and sells a product that has non-criminal uses.

Perhaps an analogy would make this stupidity a little clearer. A lawn and garden center sells fertilizers of varying sorts, all for legal purposes, such as making tomato plants grow better or make my lawn a little greener. But if some marijuana grower comes in to buy a couple bags of fertilizer to help grow his pot plants, that doesn't make the lawn and garden center culpable.

Of maybe something a little different. A licensed gun owning man comes into a gun shop and buys a box of ammunition for his hunting rifle. That is a legal purchase and the gun shop is make a legal sale. The licensed gun owning man then goes out a kills another human being by accident (in a hunting accident). The law does not hold the gun shop liable for selling ammunition.

So if some meth maker buys some of Wallaces crystals to make meth--how is Wallace responsible? What Wallace sells is legal and the state has not proven that Wallace is guilty of anything. But Wallace is "collateral damage" to the DEA.

No, what has happened is that the DEA's requirement that Wallace implement security measures that are prohibitive in cost in comparison to the size of Wallace's business has amounted to a regulatory taking of Wallace's business.

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