Friday, July 24, 2015
The D.C. Circuit on Friday ruled that a case challenging the constitutionality of the Consumer Financial Protection Bureau can move forward. At the same time, the court dismissed claims against Dodd-Frank's Financial Stability Oversight Council and the government's orderly liquidation authority.
The mixed ruling sends the plaintiffs' case against the CFPB and the recess appointment of Director Richard Cordray back to the district court for a ruling on the merits. We'll undoubtedly see this case back at the D.C. Circuit.
We last posted on a challenge to the CFPB here. (The D.C. Circuit dismissed that case for lack of standing.)
The State National Bank of Big Spring and a number of states brought the case, arguing four points. First, the Bank argued that the CFPB is unconstitutional, because, as an independent agency, it has to be headed by multiple members, not a single director (as it is). Moreover, the bank says that Congress's delegation to the CFPB violates the non-delegation doctrine.
Second, the Bank argues that President Obama appointed Director Cordray as a recess appointment during a three-day intra-session Senate recess, in violation of Noel Canning. (Cordray was subsequently confirmed by the Senate, but the Bank says his actions in the meantime are invalid.)
Third, the Bank claims that the Financial Stability Oversight Council, which monitors the stability of the U.S. financial system and responds to emerging threats and has statutory authority to designate certain "too big to fail" financial companies for additional regulation, violates the non-delegation doctrine and related separation-of-powers principles.
Finally, the states claim that Dodd-Frank's liquidation authority, which permits the government to liquidate failing financial companies that pose a risk to financial stability, violates the non-delegation doctrine and the Bankruptcy Clause's guarantee of uniform bankruptcy laws.
The court held that the bank, as an entity actually regulated by the CFPB, had standing. The court also said that the bank's claims were ripe, under Abbott Labs and Free Enterprise Fund (the PCAOB case).
But the court ruled that the Bank lacked standing to challenge the Council. In particular, it rejected the Bank's novel claim that the Bank was harmed because the Council designated one of the Bank's competitors as "too big to fail," thus giving the competitor a "reputational subsidy."
The court also held that the states lacked standing to challenge the government's liquidation authority. The states said that they invested pension funds in financial companies, that states are therefore creditors in possible future liquidations, that such liquidations could deprive the states of uniform treatment, and that as a result the states' current investments are worth less. The court said this was too speculative.
July 24, 2015 in Cases and Case Materials, Congressional Authority, Courts and Judging, Jurisdiction of Federal Courts, News, Nondelegation Doctrine, Ripeness, Separation of Powers, Standing | Permalink | Comments (0)
Monday, March 30, 2015
The Supreme Court today declined to review Coons v. Lew, the Ninth Circuit case holding that the plaintiffs' challenge to the ACA's Independent Payment Advisory Board was not ripe and rejecting the plaintiffs' challenges to the individual mandate. Today's non-action leaves the Ninth Circuit's ruling--and the IPAB and the individual mandate--in place (although it's not a ruling on the merits).
The plaintiffs in Coons challenged IPAB, the so-called "death panel," on the ground that it violated the non-delegation doctrine. IPAB is a 15-member administrative board that will monitor the growth of Medicare spending. If actual growth exceeds expected growth, IPAB will recommend a reduction in the growth rate to the "savings target" set by the Chief Actuary of the Centers for Medicare and Medicaid Services. IPAB's recommendations go to Congress, and Congress must either consider and vote on them, or pass superseding legislation. (If there's no superseding legislation, the Secretary must implement the recommendations as submitted.)
The Ninth Circuit ruled that the plaintiffs' challenge wasn't ripe. In particular, it said that Plaintiff Novack's claims that IPAB would reduce the Medicare payments he receives for treating his patients, and that IPAB would set in motion market displacements that would harm him financially, were speculative.
The Ninth Circuit also rejected the plaintiffs' claims that the individual mandate violated their substantive due process rights (to medical autonomy and informational privacy), and that the ACA did not preempt Arizona's constitutional provision that says that Arizonans can't be forced to buy insurance.
The Supreme Court's decision today is not a ruling on the merits of any of these claims--all of which were far-fetched from the get-go--but it leaves the Ninth Circuit ruling in place.
The decision says nothing about the likely direction the Court will take in King v. Burwell, the case testing whether the IRS exceeded its statutory authority by extending tax credits to individual health insurance purchasers on a federally facilitated exchange.
Thursday, October 25, 2012
In what should be the final opinion in the extended saga of the quest for anonymity by "Protect Marriage" members and supporters, the Ninth Circuit declared the case moot.Recall that in Doe v. Reed, decided by the United States Supreme Court in June 2010, the Court rejected a facial challenge to the state of Washington's Public Records Act (PRA), RCW 42.56 that governs the disclosure of public records including petitions seeking a ballot initiatives. The ballot initiative at issue sought to repeal the "everything but marriage" law for same-sex couples and was spear-headed by the controversial Protect Marriage organization. The John Doe plaintiffs challenged the public disclosure of their names as a violation of the First Amendment.
Subsequently, on remand from the United States Supreme Court, the district court's opinion ordered disclosure of the names of those who signed an anti-same-sex marriage petition in Washington state in accordance with the state's usual processes. The Ninth Circuit denied the request for an emergency stay last year.
Now, the Ninth Circuit panel unanimously finds the case moot. The panel discussed an exception to the mootness doctrine under a two-prong test: “(1) the challenged action is in its duration too short to be fully litigated prior to cessation or expiration; and (2) there is a reasonable expectation that the same complaining party will be subject to the same action again.” The panel quickly found that prong one was not satisfied and therefore did not reach the second issue.
Concurring, Judge N.R. Smith disagreed on the mootness question, essentially holding that the matter was not moot because the court could attempt to at least narrow the dissemnination of the information. However, Judge Smith's conclusion on the merits was interwoven with the mootness arguments. He reasoned that Protect Marriage's "arguments regarding the merits of the burden on their First Amendment rights is incongruent with the mootness argument, because it discusses a burden caused by the government action of disclosing identities at all. Plaintiffs cannot have it both ways."
While Protect Marriage may file a petition for writ of certiorari, it seems highly unlikely Doe v. reed will be returning to the Supreme Court again.
Sunday, June 24, 2012
The Arkansas Supreme Court ruled on Friday in Hobbs v. Jones that the state's statutory method of execution violated state constitutional separation of powers. In particular, the court ruled that the general guidelines that the legislature provided to the Arkansas Department of Corrections, or ADC, to conduct intravenous lethal injections were too broad and constituted an unlawful delegation of legislative authority to the state executive agency.
The ruling leaves the state without a method of execution--at least for now. (The court also held that the offending sections of the act were nonseverable, ruling out a judicial excision or rewrite of the language and thus preserving the larger act.) The legislature could act relatively easily to amend the state's Method of Execution Act, or MEA, and to provide more detailed guidelines to the ADC within the bounds of the state's separation of powers principles and its nondelegation doctrine.
Arkansas is one of those states that has a specific separation-of-powers provision in its constitution. (The federal government does not have a specific separation-of-powers provision.) Article 4 reads:
Section 1. The powers of the government of the State of Arkansas shall be divided into three distinct departments, each of them to be confided to a separate body of magistracy, to-wit: Those which are legislative, to one, those which are executive, to another, and those which are judicial, to another.
Section 2. No person or collection of persons, being of one of these departments, shall exercise any power belonging to either of the others, except in the instances hereinafter expressly directed or permitted.
Under Article 4 and the state constitutional nondelegation doctrine, the Arkansas Supreme Court has held that the legislature may delegate to the executive, so long as it provides reasonable guidelines and appropriate standards. "A statute that, in effect, reposes an absolute, unregulated, and undefined discretion in an administrative agency bestows arbitrary power and is an unlawful delegation of legislative powers." Op. at 10.
The relevant portions of the MEA read as follows:
(a)(1) The sentence of death is to be carried out by intravenous lethal injection of one (1) or more chemicals, as determined in kind and amount in the discretion of the Director of the Department of Correction.
(2) The chemical or chemicals injected may include one (1) or more of the following substances:
(A) One (1) or more ultra-short-acting barbiturates
(B) One (1) or more chemical paralytic agents;
(C) Potassium chloride; or
(D) Any other chemical or chemicals, including but not limited to saline solution.
Ark. Code Ann. Sec. 5-4-617 (Supp. 2011).
The court ruled that these sections violated the state constitutional nondelegation doctrine, because they gave the ADC "absolute and exclusive discretion . . . to determine what chemicals are to be used." It said that (a)(2) did nothing to rein in that discretion, because by its plain terms--"may"--it is only permissive. In other words, the ADC could use chemicals that fall into these categories, or it could use any other chemicals it likes. Moreover, a later subsection, (a)(4), "gives complete discretion to the ADC to determine all policies and procedures to administer the sentence of death, including injection preparations and implementation." Op. at 14.
Justice Karen Baker, joined by Special Justice Bryon Freeland, dissented. Justice Baker argued that several other states have tolerated similar guidelines in the face of equally strict separation-of-powers clauses. In any event, she wrote that the guidelines in the MEA were detailed enough to withstand the challenge under the Arkansas Constitution, and that state and federal constitutional bans on cruel and unusual punishment provided an outside limit to what the ADC could do.
Thursday, May 31, 2012
Judge James E. Boasberg (D.D.C.) rejected the plaintiff's claims that Congress improperly delegated authority to Amtrak to develop and enforce passanger railway standards in violation of due process and nondelegation principles and granted summary judgment to the government in Association of American Railroad v. Department of Transportation. The ruling affirms Amtrak's role in standard-making under the Passenger Railroad Investment and Improvement Act of 2008 and upholds Section 207 of that Act.
Section 207 requires the Federal Railroad Administration and Amtrak to jointly develop standards to evaluate the performance of Amtrak's intercity passenger trains. It says:
[T]he Federal Railroad Administration and Amtrak shall jointly, in consultation with the Surface Transportation Board, rail carriers over whose rail lines Amtrak trains operate, States, Amtrak employees, nonprofit employee organizations representing Amtrak employees, and groups representing Amtrak passengers, as appropriate, develop new or improve existing metrics and minimum standards for measuring the performance and service quality of intercity passenger train operations, including . . . on-time performance and minutes of delay . . . .
Under the Act, if the STB determines that Amtrak's failure to meet the standards is attributable to a rail carrier's failure to provide preference to Amtrak over freight transportation--that is, if a freight train makes an Amtrak train late--the STB may award damages against the host rail carrier. (Amtrak leases the rail lines that it uses from freight rail carriers.)
The AAR, representing its member freight rail carriers, sued the DOT, arguing that Section 207 violated due process, because it allowed a private, interested party, Amtrak, to regulate other industry participants. The AAR also argued that Section 207 effected an unconstitutional delegation of regulatory authority to a private entity.
The claims assumed that Amtrak was a private corporation--and the case thus turned on that assumption in the first instance. But Judge Boasberg, drawing on Lebron v. National Railroad Passenger Corporation (1995), concluded that Amtrak was a governmental entity, at least as to the due process claim. Here's what he wrote:
The two hallmarks of government control that the Lebron Court found decisive--namely, that Amtrak was created by special law for the furtherance of governmental objectives and that the government retained the authority to appoint a majority of directors--moreover, has not changed. Indeed, when Lebron was decided, the President appointed only six of Amtrak's nine directors; he now appoints eight of the nine. The government, moreover, retains more than 90% of Amtrak's stock, appropriates for Amtrak more than a billion dollars annually, and sets salary limits for Amtrak's employees. In addition, Amtrak is required to submit annual reports to Congress and the President.
Op. at 11-12. Because Amtrak is a government entity, Judge Boasberg concluded, Congress did not delegate rulemaking authority to a private entity in violation of due process.
As to the delegation claim, Judge Boasberg concluded that Amtrak's status as a private corporation or government entity didn't matter, because the government retained ultimate control over the standards (even if Amtrak was involved in the process).
While the AAR is correct that [Section 207] in a sense makes Amtrak the FRA's equal--as opposed to its subordinate--Amtrak cannot promulgate the Metrics and Standards without the agency's approval. . . .
Conditioning regulation on a private party's assent . . . is not constitutionally problematic. Indeed, the Supreme Court has reasoned that through such schemes the government "merely place[s] a restriction upon its own" ability to regulate.
Op. at 18-19.
Tuesday, August 16, 2011
Florida Supreme Court to Governor Rick Scott: Unconstitutional Executive Order Suspending Agency Actions
In an opinion today, Wiley v. Scott, the Florida Supreme Court dealt a blow to Governor Rick Scott's attempt to - - - as the Governor's website describes it - - - fulfill a campaign practice by "signing executive orders to freeze job-killing regulations." In Executive Order 11-01 entitled "Suspending Rulemaking and Establishing the Office of Fiscal Accountability and Regulatory Reform" Scott established the office, known as OFARR, within the Executive Office of the Governor and directed the suspension of rulemaking except as approved by OFARR. After a lawsuit was brought but before today's opinion, Scott superceded EO 11-01 with Executive Order-11-72, in which he no longer used the word "suspend." The Florida Supreme Court deemed this change more apparent than real, labeling it "nothing more than a sleight of hand."
In Wiley, the Florida Supreme Court (pictured below) issued the extraordinary writ of quo warranto - - - a proper writ, according to a previous case, to "challenge the 'power and authority' of a constitutional officer, such as the Governor."
Having agreed to consider the case, the per curiam opinion, over two dissents, forumulated its "precise task" as being "to decide whether the Governor has overstepped his constitutional authority by issuing executive orders which contain certain limitations and suspensions upon agencies relating to their delegated legislative rulemaking authority and the requirements related thereto."
The Florida Supreme Court found that the Governor usurped the legislative role under the strong separation of powers principles in the Florida Constitution.
Rulemaking is a derivative of lawmaking. An agency is empowered to adopt rules if two requirements are satisfied. First, there must be a statutory grant of rulemaking authority, and second, there must be a specific law to be implemented.
After an extensive analysis, the court concluded that the Governor‘s executive orders, to the extent each suspends and terminates rulemaking by precluding notice publication and other compliance with the state administrative procedure act absent prior approval from OFARR, infringe upon the very process of rulemaking and encroach upon the Legislature‘s delegation of its rulemaking power. The court noted that whether "the Governor exceeded his authority derived from state law does not turn upon the number of times the encroachment occurred or whether petitioner was personally affected by it."
Two Florida Supreme Court Justices dissented, joining each other's opinions but writing separately. Justice Ricky Poston's dissent is longest, nearly as lengthy as the court's per curiam majority opinion. Poston relies on Article IV, section 1(a) of the Florida Constitution that provides that the "supreme executive power shall be vested in a governor" and argues that the Governor has broad powers. Polston also argues that because EO 11-01 has been superceded and OFARR is approving rulemaking, the Florida Supreme Court's opinion is merely advisory.
The opinion, however, relies upon state constitutional separation of powers provisions and principles to invalidate the acts of a controversial governor seeking to create a super-administrative agency within the Executive branch to control all other agencies. As such, it might be read with interest by other state supreme courts, and perhaps other governors.
Friday, December 25, 2009
ConLawProf's Steven Schwinn (pictured below) is participating in an online debate/discussion with Michael W. McConnell and Martin Flaherty as part of one of the Federalist Society online debates.
Steve Schwinn has this to say in his opening comments:
Let me start with a few comments about the unfortunate label "czar." These "czar" positions have proliferated in recent administrations and, as we know, have drawn heavy criticism most recently in the Obama administration. While some of these positions raise serious separation-of-powers and Appointments Clause issues, many, even most, do not. Importantly—and thankfully—their constitutionality does not turn on their label alone. Instead, it turns on their functions, their duties, and their processes of appointment.
The debate continues and is ongoing here.
Friday, October 2, 2009
Gene Healy, VP of the Cato Institute, argued earlier this week in the Washington Examiner that the EPA's initiative to regulate greenhouse gases from large facilities under the Clean Air Act reflects an Obama imperial presidency. (I posted on similar arguments back in April, when the EPA was just getting started on this, here.)
Healy confusingly seems to argue that the new rules are both contrary to the law and authorized by a too broad Clean Air Act. Healy:
The Obama team appears to believe it has the authority to implement comprehensive climate change regulation, Congress be damned. . . .
But existing law still leaves the executive branch enormous discretionary power--and thus a hammer to hold over Congress's head.
Healy, of course, is talking about the non-delegation doctrine (at least in the second sentence quoted here). But, as Healy acknowledges, the Supreme Court in 2007 in Massachusetts v. EPA ruled on the very provision of the Clean Air Act that authorizes the EPA to so regulate--and held that the EPA had to comply. That provision states that the EPA
shall by regulation prescribe . . . standards applicable to the emission of any air pollutant from any class . . . of new motor vehicles . . . which in [the EPA Administrator's] judgment cause[s], or contribute[s] to, air pollution . . . reasonably . . . anticipated to endanger public health or welfare.
42 U.S.C. Sec. 7521(a). The Supreme Court in Massachusetts v. EPAruled not only that the EPA had authority under the Clean Air Act to regulate greenhouse gases, but also that it had an obligation under the Act to make a judgment whether the gases contributed to global warming--a judgment that it refused to make. As Healy acknowledges, the Court did not rule that congressional delegation under the Clean Air Act was too broad--that the Act delegated lawmaking authority to the EPA in violation of the non-delegation doctrine. That argument was not even seriously in play in the case.
So the Obama administration's decision to commence regulation of greenhouse gases is fully consistent with its authority under the Clean Air Act and Massachusetts v. EPA. Healy acknowledges this.
But then he argues that the administration's move is "imperial" and, as support, throws in everything from Madison on separation-of-powers and liberty to the unitary executive theory. He concludes with this:
Will liberals who decried George W. Bush's unilateralism object to this staggering concentration of executive power? Don't hold your breath.
Healy is flat wrong in aligning the Obama EPA's decision to regulate greenhouse gases with the Bush administration excesses. Most notably, the EPA's decision, as Healy acknowledges, is perfectly consistent with the Clean Air Act. Regulation of greenhouse gases doesn't undermine congressional authorization under the Act; it realizes it. In contrast, so many of the Bush administration actions were contrary to law, relying only upon strained understandings of "inherent" Article II powers.
None of this has anything to do with the unitary executive theory--the original theory, or the much more expansive one promoted by the Bush administration. And the EPA certainly can't be accused of threatening liberty by disrespecting separation-of-powers principles. (If any branch could be so accused, by Healy's own reckoning it'd have to be Congress.)
In short, Healy's problem is not a constitutional one, and certainly not an imperial presidency one. Even if his premise--that the Clean Air Act delegates too much to the executive--were correct, it has nothing to do with his conclusion that "the imperial presidency comes in green, too."
Sunday, December 28, 2008
Cass Sunstein (Harvard, Chicago) recently published a characteristically thoughtful and important piece, whose title asks a provocative and perhaps surprising question: Is OSHA Unconstitutional? The article appears in the most recent issue of the Va. Law Review; it's also posted on ssrn. I highly recommend this.
OSHA's constitutional problem is one of nondelegation: It lacks an "intelligible principle" to guide and limit agency discretion. Sunstein explains:
[The core provision of OSHA] defines an "occupational safety and health standard" as one that is "reasonably necessary or appropriate to provide safe or healthful employment or places of employment." When the Secretary of Labor issues regulations governing tractors, ladders, or electrical equipment, the only question to be asked is whether one or another standard is "reasonably necessary or appropriate."
This language apparently gives the agency authority to "choose whatever principle it likes"--an unconstitutionally broad delegation of authority.
Needless to say, this is a rather significant problem, given OSHA's sweep. But the nondelegation problem is only part of Sunstein's interest: He also seeks "to shed light on some pressing questions for both regulatory policy and administrative law." And these are indeed pressing; Sunstein:
Over 5000 Americans die each year in the workplace, and more than four million are injured or sickened by the conditions of their employment. Surely steps could be taken to reduce these deaths, injuries, and illnesses.
Sunstein explores three judicial solutions to these problems. First, and most aggressively, courts could rule OSHA unconstitutional. This solution would require Congress to reconsider OSHA--thus increasingly "democratic engagement with that question"--and "might produce a better, because more informed, occupational safety law." But the solution is also obviously dramatic and disruptive and, as Sunstein argues, unnecessary.
Second, and least aggressively, courts could set floors and ceilings for agency actions, building on current agency practices. This approach has the benefit of avoiding the constitutional question--the Avoidance Canon--but still gives the agency perhaps too much discretion.
Finally, courts could adopt a reasonable relation test between costs and benefits of regulations. Sunstein explains:
The agency should therefore be required to show, not that a regulation satisfies a strict cost-benefit test, but that the costs have a reasonable relationship to the benefits. If the monetized costs exceed the monetized benefits, the agency should be permitted to proceed so long as there is such a relationship between the two. . . . The agency could well decide that a rule would have desirable welfare effects even if the monetized benefits were lower than the monetized costs.
Sunstein argues that this third solution both avoids the constitutional issue and provides sufficient guidance to the agency. It also puts the OSHA issues in the sunshine. But, as he recognizes, the solution also leads to its own problems: OSHA doesn't obviously require this kind of loose cost-benefit analysis; and it's not clear why the courts should be able to save a statute from nondelegation problems when agencies themselves, under American Trucking, cannot. Sunstein argues that invocation of the Avoidance Canon resolves both problems: The courts may--even if not must--adopt the loose cost-benefit approach and thus validly interpret OSHA to avoid the nondelegation problem.
In addition to the constitutional analysis and argument, this article is an excellent springboard for discussions of institutional roles and competence, democratic engagement and legitimacy, and the appropriate role of cost-benefit analysis in agency decisionmaking. I highly recommend this.