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administrative law

James DeLong, lawyer, author, astute analyst of regulation and longtime friend of Overlawyered, has begun writing for Forbes and this is his inaugural post. It’s short — go read it now. His second post is on “ObamaCare, Chevron, and Congressional Delegation.”

Way back in 1997 I reviewed Jim’s book Property Matters for the Wall Street Journal.

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Banking and finance roundup

by Walter Olson on November 17, 2014

  • “How Operation Choke Point Hurts the Unbanked” [former FDIC chairman William Isaac, American Banker]
  • A nation of snitches: “U.S. rules would expand white collar crime informers” [Reuters]
  • Courts should stop giving deference to agency interpretations of criminal law: “Justice Scalia’s shot across the SEC’s bow re insider trading” [Bainbridge] Judge Rakoff criticizes SEC for bringing so many enforcement proceedings to in-house adjudicators [Reuters, earlier]
  • Monitor envy: “The biggest U.S. banks have 100 or more on-site examiners from an array of regulators” and now New York’s financial regulator wants to get into the act [WSJ]
  • Seventh Circuit finds Bank of America entitled to ask loan applicants about expected continuing entitlement to disability benefits, but in the mean time bank agrees in DoJ settlement to cease such inquiries [Easterbrook opinion in Wigginton v. Bank of America, see last page]
  • Two SEC commissioners warn that campaigned-for “fair fund” to compensate investors in CR Intrinsic inside trading case “likely to benefit only class-action attorneys and the fund’s administrators” [Daniel Gallagher and Michael Piwowar, WSJ]
  • “U.S. veterans sue [major European] banks, claim they should pay for Iraq attacks” [Alison Frankel, Reuters]

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The Obama Administration has repeatedly dodged cases in fear of judicial review of its controversial application of the disparate impact theory to mortgage lending and other aspects of the housing market, but its position has now met with a stiff rebuke from district court judge Richard Leon [Insurance Journal]:

“This is yet another example of an administrative agency trying desperately to write into law that which Congress never intended to sanction,” Leon wrote.

He called the rule “nothing less than an artful misinterpretation of Congress’s intent that is, frankly, too clever by half.”

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October 31 roundup

by Walter Olson on October 31, 2014

  • “Government Is the Biggest Threat to Innovation, Say Silicon Valley Insiders” [J.D. Tuccille, Reason]
  • Acrimonious split between Overlawyered favorite Geoffrey Fieger and long-time law partner Ven Johnson [L.L. Brasier, Detroit Free Press]
  • Case against deference: “Now More Than Ever, Courts Should Police Administrative Agencies” [Ilya Shapiro on Perez v. Mortgage Bankers Association; boundary between "interpretive" and "legislative" agency rules]
  • “The Canary in the Law School Coal Mine?” [George Leef, Minding the Campus] Ideological diversity at law schools [Prof. Bainbridge and followup]
  • Familiar (to economists) but needed case against state auto dealership protection laws [Matt Yglesias, Vox; our tag]
  • Trial lawyers dump millions into attempt to defeat Illinois high court justice Lloyd Karmeier [Chamber-backed Madison County Record, Southern Illinoisan]
  • A genuinely liberal regime would leave accreditation room for small Massachusetts college that expects students to obey Biblical conduct standards [Andrew Sullivan, more]

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Prof. Bainbridge flags this disturbing Wall Street Journal piece:

The Securities and Exchange Commission is increasingly steering cases to hearings in front of the agency’s appointed administrative judges, who found in its favor in every verdict for the 12 months through September, rather than taking them to federal court.

Previously, the agency had tended to use the ALJs (administrative law judges) for relatively cut-and-dried enforcement actions, while taking more complex or cutting-edge disputes to federal court. Now, following the Dodd-Frank expansion of its powers, it prefers ALJs even for many complex and demanding cases arising from charges such as insider trading. Defendants enjoy a range of protections in federal court that are not provided in administrative litigation, including juries as well as the presence of federal judges who are independent of agency control, held to a more demanding ethical code, and drawn generally from higher and more sophisticated circles within the legal profession. Read the entire Bainbridge commentary, with followups linking Henry Manne (adjudicatory actions are ways to avoid the more demanding process of rulemaking) and Keith Bishop (current system open to constitutional challenge?).

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“The agency is dodging the courts by turning to its own administrative law judges to decide its cases.” [Russell Ryan (King & Spalding), WSJ op-ed, paywalled]

July 22 roundup

by Walter Olson on July 22, 2014

  • Facebook fought dragnet-with-gag-order subpoena in NY police/fire disability-fraud case [Mike Masnick, TechDirt]
  • Two lawyers charged in alleged plot to extort millions from wealthy sheik [ABA Journal]
  • Judge declares mistrial, plans new trial date in case of allegedly faulty guardrails [Bloomberg, more, background]
  • Last year Overlawyered made the “Hall of Fame” and from now through Aug. 8 you can nominate other sites for the ABA’s annual Blawg 100 honor;
  • Supreme Court, which seldom grants cases raising non-delegation doctrine, agrees to hear Dept. of Transportation v. Assn. of American Railroads [Roger Pilon/Cato, Gerard Magliocca] And Prof. Philip Hamburger, author of bracing new book Is Administrative Law Unlawful (earlier), has just guest-blogged about it for a week at Volokh Conspiracy, and has a related podcast at Law and Liberty;
  • David Henderson writes rave review of new Peter Schuck book Why Government Fails So Often [Regulation, PDF; excerpts also at Econlib and more, earlier on Schuck book]
  • Legal academia stunned, in grief after highly regarded criminal law specialist Dan Markel is murdered in his Tallahassee home [PrawfsBlawg, Dave Hoffman, Marc DeGirolami]

Now this is lovely: the Environmental Protection Agency intends to assert for the first time a power to garnish your wages without a court order to cover fines or other sums it may assess. The new “administrative wage garnishment” power is fueled by a 1996 federal law, the Debt Collection Improvement Act (DCIA), which authorizes more direct means for the seizure of “fines, penalties or fees assessed by federal agencies” and other moneys owed them. The EPA is taking comments through August 1. [Robert Gordon, Daily Signal]

More, a semi-defense of the agency from Brent Fewell: since Congress has pushed these new collection methods on many agencies besides the EPA, the most suitable course for critics would be to press lawmakers to change the debt collection law, the EPA’s underlying statutes, or both.

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In a 4-2 decision, New York’s highest court agreed with two lower courts that New York City’s attempted ban on sugary drink portions over 16 ounces exceeded the powers of the city’s Department of Health. [Bloomberg News coverage]

That’s exactly in line with what I wrote at earlier stages of the case. At the time, some national commentators did not seem to have checked out the actual reasoning of Judge Milton Tingling’s decision, which rested squarely on a distinctive 1987 New York precedent called Boreali v. Axelrod which had struck down the state health department’s attempt to regulate smoking in public places as beyond its properly delegated authority. The soda case was (as they say) on all fours with Boreali, and although the Court of Appeals could have overturned Boreali, as some academics urged, or found grounds to dodge its effect, as the two dissenters did, the court instead chose to apply the precedent as it stood. That confirms that the Bloomberg-appointed Board of Health, in its eagerness to assert powers not rightly its own, had casually broken the law.

One of the two dissenters was Chief Judge Jonathan Lippman, the latest of many indications that he is inclined to pull the Court of Appeals away from many of the positions and habits that have given it a centrist reputation among state courts.

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In a complex decision yesterday, the Supreme Court struck down in part and upheld in part the Environmental Protection Agency’s attempt to regulate large emitters of carbon dioxide and other greenhouse gases (GHGs) [McClatchy/Federalist Society]. A key portion of the holding, writes Jonathan Adler at Volokh, is the finding that the EPA

is not permitted to rewrite the applicable statutory emission thresholds. The latter conclusion, in particular, is an important reaffirmation that agencies are not allowed to rewrite the statutes that they administer. But today’s decision was not a total loss for the EPA, however, as the Court also concluded that it was reasonable for the EPA to interpret the Act to allow for the regulation of GHG [greenhouse gas] emissions from sources already subject to regulation under the PSD and Title V [large stationary source] program. What this means is that large stationary sources (think big power plants and industrial boilers) that are already regulated as major stationary sources under these programs will have to control GHG emissions when they control other emissions. But sources that only emit large amounts of GHGs will not become subject to EPA’s regulatory authority under these provisions.

From my colleague Andrew Grossman at Cato:

At issue was one of the Obama Administration’s earliest efforts to skirt Congress and achieve its major policy goals unilaterally through aggressive executive action….

Autocrat tea bag
The Court, in a lead opinion by Justice Scalia, called it “patently unreasonable—not to say outrageous.” EPA, it held, must abide by the statute: “An agency has no power to ‘tailor’ legislation to bureaucratic policy goals by rewriting unambiguous statutory terms.” And if such tailoring is required to avoid a plainly “absurd result” at odds with congressional intentions, then obviously there is obviously something wrong with the agency’s interpretation of the statute. To hold otherwise, the Court recognized, “would deal a severe blow to the Constitution’s separation of powers” by allowing the executive to revise Congress’s handiwork. …

The Court’s decision may be a prelude of more to come. Since the Obama Administration issued its first round of greenhouse gas regulations, it has become even more aggressive in wielding executive power so as to circumvent the need to work with Congress on legislation. That includes recent actions on such issues as immigration, welfare reform, and drug enforcement.

Four liberal justices dissented, while Justices Alito and Thomas argued that the Scalia-led plurality were too accommodating of the EPA’s assertion of power.

Columbia lawprof Philip Hamburger is out with a book of high importance on the administrative state and the legality of its actions, and Cato had him in to speak earlier this month, with D.C. Circuit Judge Stephen Williams commenting and Cato’s Roger Pilon moderating (video, podcast links). The event description:

When law in America can be made by executive “pen and phone” alone — indeed, by a White House press release — we’re faced starkly with a fundamental constitutional question: Is administrative law unlawful? Answering in the affirmative in this far-reaching, erudite new treatise, Philip Hamburger traces resistance to rule by administrative edict from the Middle Ages to the present. Far from a novel response to modern society and its complexities, executive prerogative has deep roots. It was beaten back by English constitutional ideas in the 17th century and even more decisively by American constitutions in the 18th century, but it reemerged during the Progressive Era and has grown ever since, regardless of the party in power.

Earlier here, etc.

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“…Most companies roll over.” [Tim Lynch, Cato; WSJ; related on Federal Energy Regulatory Commission enforcement]

On this coming Monday, May 19, the Cato Institute is hosting a lunch on the subject of “Mugged by the State: When Regulators and Prosecutors Bully Citizens,” featuring Kevin Gates, Vice President, Powhatan Energy Fund; William Hurwitz, M.D., Pain Treatment Specialist; Lawrence Lewis, Engineer and Building Manager; and William Yeatman, Senior Fellow, Competitive Enterprise Institute; moderated by Tim Lynch, Director, Project on Criminal Justice, Cato Institute. You can watch live online at http://www.cato.org/live.

More: Cato podcast, brothers’ website, Philly.com (with an additional story of a man resisting the Delaware insurance commission after it took over his nightclub insurer). And: WSJ via John Cochrane on another FERC case.

The Federal Trade Commission acting simultaneously as lawmaker, judge, prosecutor, appellate panel, bailiff, clerk of the court, and many other public servants probably up to and including executioner [Gary Lawson via Steven Hayward, Power Line]

April 4 roundup

by Walter Olson on April 4, 2014

  • “Helmet maker not to blame in football player’s injury, jury finds” [L.A. Times]
  • “New Corporate Survey Illustrates Burdens Of Document Preservation And Benefits Of Proposed [Rule 26 Discovery] Reform” [Mark Chenoweth/WLF, Timothy Pratt/Abnormal Use, NJLRA, earlier]
  • Have divorce statistics been misreported? [Kay Hymowitz, Robert VerBruggen]
  • “Intoxicated Man Loses Big at Casino, Wants His Money Back” [Abnormal Use]
  • “SCOTUS Deferred to Executive Agencies. What Happened Next Will Infuriate You!” [Ilya Shapiro, Cato on Peri & Sons Farms v. Rivera]
  • Overtime scheme: Obama doesn’t “worry about being held accountable for the unwelcome consequences” [Steve Chapman] Advice for small business on complying with salaried employee classification [Suzanne Lucas ("Evil HR Lady") at Inc., earlier here and here]
  • Religious liberty, discrimination law and how spurious rights drive out the real [Jacob Sullum] Timely: “Harvard Hosts Conference on Religious Accommodation in the Age of Civil Rights” [TaxProf]

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Douglas Walburg faces potential liability of $16-48 million. What heinous acts caused such astronomical damages? A violation of 47 C.F.R. § 16.1200(a)(3)(iv), an FCC regulation that enables lawsuits against senders of unsolicited faxes.

Walburg, however, never sent any unsolicited faxes; he was sued under the regulation by a class of plaintiffs for failing to include opt-out language in faxes sent to those who expressly authorized Walburg to send them the faxes.

The Federal Communications Commission has now taken the position that a federal enactment known as the Hobbs Act “prevents federal courts from considering challenges to the validity of FCC regulations when raised as a defense in a private lawsuit.” The Cato Institute has joined the National Federation of Independent Business in an amicus brief seeking Supreme Court certiorari, supporting Walburg’s position “that the Eighth Circuit was wrong to deny him the right to judicial review without having to initiate a separate (and impossible) administrative review.” [Ilya Shapiro, Cato]

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  • “Venue matters.” Enough to double value of med-mal case if filed in Baltimore city rather than suburbs? [Ron Miller] Mark Behrens and Cary Silverman on litigation tourism in Pennsylvania [TortsProf]
  • “Maybe [depositions] are like what some people say about war — vast periods of boredom interrupted by brief moments of terror.” [Steve McConnell, Drug and Device Law, also see Max Kennerly]
  • Centrality of procedure in American legal thinking dates back to Legal Realists and before [Paul McMahon, U.Penn. J. of Int'l Law/SSRN via Mass Tort Prof]
  • Company sues to challenge CPSC’s dissemination of unproven allegations about it in new public database: should judicial proceeding keep its name confidential? [Fair Warning]
  • Thesis of new Jerry Mashaw book: administrative state in U.S. long predated Progressive Era [Law and Liberty: Joseph Postell, Mike Rappaport] Relatedly, hallmark of administrative state said to be “prerogative,” i.e., power to make binding rules without new legislation [Michael Greve]
  • Lorax standing humor: even the Ninth Circuit might not have been able to help [Howard Wasserman, Prawfs]
  • “Formalism and Deference in Administrative Law” [panel at Federalist Society National Lawyers' Convention with Philip Hamburger, Kristin Hickman, Thomas Merrill, and Jide Okechuku Nzelibe, moderated by Jennifer Walker Elrod]

In this video from Cato’s Constitution Day, the Baker & Hostetler attorney (and friend of this site) discusses the Supreme Court’s recent decision according deference to agencies’ determinations of their own jurisdiction. The case, which split the conservative justices, was one of the rare defeats for a Cato Institute amicus position last term.

Related: Michael Greve, John Yoo and Mike Rappaport on rethinking administrative law and the era of deference.

Supreme Court roundup

by Walter Olson on August 30, 2013

  • Now with more detailed program descriptions: reserve your seat now for Cato’s 12th annual Constitution Day Sept. 17 in Washington, D.C.;
  • White House keeps losing SCOTUS cases 9-0, and there might be a lesson in that [Ilya Somin/USA Today, more]
  • “Another big term for amicus curiae briefs at the high court” [ABA Journal] “The Chief’s dissent reads over long stretches like something from the Cato Institute” [Michael Greve, Liberty Law Blog, on the administrative law case City of Arlington v. FCC, which was in fact one of the three cases where Cato's amicus position lost last term]
  • Ilya Shapiro on misconceptions about last term’s Shelby County case on voting rights [USA Today] and on the pending Schuette affirmative action case from Michigan [Cato]
  • “I count myself an originalist too.” — Justice Ruth Bader Ginsburg [CAC] Evaluating Ginsburg’s claim that the present Court is unusually activist [Jonathan Adler]
  • In Bond v. U.S., the treaty power case, Solicitor General urges high court not to overrule Missouri v. Holland [Nicholas Quinn Rosenkranz, more, earlier]
  • Cato seeks certiorari in cy pres (class action slush fund) case involving Facebook [amicus brief filed in Marek v. Lane, Ilya Shapiro]