A Champion of Constitutional Safeguards

Days before President Trump announced his choice of Judge Brett Kavanaugh for the Supreme Court, Senate Democrats had vowed to oppose any nominee. Backed by an activist-fueled propaganda machine, they now will unleash relentless personal attacks—on Judge Kavanaugh’s Catholic faith, his “elitist” Yale degrees, his service in the George W. Bush administration.

As with the attacks last year on Justice Neil Gorsuch, they should be unavailing. Over Judge Kavanaugh’s 12 years on the U.S. Circuit Court of Appeals for the District of Columbia, he has developed an impressive record as a legal thinker and a champion of the Constitution’s structural safeguards against overweening government.

Typical is a 2008 dissent in which Judge Kavanaugh concluded that the Public Company Accounting Oversight Board was unconstitutionally structured because it improperly insulated the agency from political accountability. The opinion was a tour de force of historical exposition and originalist methodology—that is, interpreting the Constitution’s text as it was originally understood. The Supreme Court ultimately agreed, adopting the reasoning of Judge Kavanaugh’s dissent.

Yet he is equally wary of unbridled executive authority, as a 2013 case shows. When the Nuclear Regulatory Commission declined to proceed with licensing the proposed waste repository at Yucca Mountain, Nev., which the agency appeared to oppose on policy grounds, he wrote: “The President may not decline to follow a statutory mandate or prohibition simply because of policy objections.”

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Unappointed ‘Judges’ Shouldn’t Be Trying Cases

President Trump promised to nominate judges in the mold of Antonin Scalia, and that thought was no doubt foremost in his mind when he chose Neil Gorsuch to fill Scalia’s vacant seat. On Monday Justice Gorsuch and his colleagues will consider whether the hiring of adjudicators deciding cases within federal agencies will also be subject to the kind of accountability that making an appointment entails.

So-called administrative law judges are not “principal officers,” so they are not subject to Senate confirmation under the Constitution’s Appointments Clause. The question in Lucia v. Securities and Exchange Commission is whether they are “inferior officers.” In that case, the clause requires them to be appointed by principal officers, such as commissioners acting collectively or a cabinet secretary, themselves appointed by the president. The alternative is that they are mere employees, who can be hired by lower-level managers with no presidential responsibility.

The dividing line, the Supreme Court has explained, is whether the position entails the exercise of “significant authority.” There shouldn’t be much doubt on which side of that line the SEC’s judges fall.

In this case, the commission’s Enforcement Division decided to bring fraud charges against investment adviser Raymond Lucia in its own administrative court instead of a judicial court. The SEC alleged that Mr. Lucia misled participants in his “Buckets of Money” seminars when he used slides showing hypothetical returns based in part, rather than in whole, on historical data (as the slides themselves disclosed). The SEC assigned the case to an administrative law judge, Cameron Elliot. According to the record, Mr. Elliot sided with the SEC’s Enforcement Division in every one of his first 50 cases. Read more »

FISA Abuses Are a Special Threat to Privacy and Due Process

By  David B. Rivkin Jr. and Lee A. Casey

Feb. 26, 2018, in the Wall Street Journal

The House Democratic surveillance memo is out, and it should worry Americans who care about privacy and due process. The memo defends the conduct of the Justice Department and Federal Bureau of Investigation in obtaining a series of warrants under the Foreign Intelligence Surveillance Act to wiretap former Trump campaign adviser Carter Page.

The Democrats argue that Christopher Steele, the British former spy who compiled the Trump “dossier” on which the government’s initial warrant application was grounded, was credible. They also claim the FISA court had the information it needed about the dossier’s provenance. And they do not dispute former FBI Deputy Director Andrew McCabe’s acknowledgment that the FBI would not have sought a FISA order without the Steele dossier.

The most troubling issue is that the surveillance orders were obtained by withholding critical information about Mr. Steele from the FISA court. The court was not informed that Mr. Steele was personally opposed to Mr. Trump’s election, that his efforts were funded by Hillary Clinton’s campaign, or that he was the source of media reports that the FBI said corroborated his dossier. These facts are essential to any judicial assessment of Mr. Steele’s veracity and the applications’ merits.

The FBI should have been especially wary of privately produced Russia-related dossiers. As the Washington Post and CNN reported in May 2017, Russian disinformation about Mrs. Clinton and Attorney General Loretta Lynch evidently prompted former FBI Director James Comey to announce publicly the close of the investigation of the Clinton email server, for fear that the disinformation might be released and undermine the bureau’s credibility. Read more »

Mark Janus Was With Hillary, Whether or Not He Wanted to Be

By David B. Rivkin Jr. and Andrew M. Grossman

Feb. 22, 2018, in the Wall Street Journal

Flash back to the Las Vegas Convention Center, July 19, 2016. The floor overflows with people chanting, “We’re with her!” A speaker proclaims, to cheers and applause, that we “will stand with her in every corner of this nation.” Then Hillary Clinton takes the stage as the crowd rises in a standing ovation. She thanks them for supporting her campaign and rallies them to knock on doors and get out the vote.

The event wasn’t organized by the campaign. It was the 2016 convention of the nation’s largest union representing public-sector workers, the American Federation of State, County and Municipal Employees. The state of Illinois forced Mark Janus —an Illinois employee who refused to join the union—to pay for a portion that pro-Hillary rally.

Across the U.S., more than 500,000 state and local workers have objected to funding union advocacy but are nonetheless required by law to pay “fair share” fees to labor unions they have refused to join. The Supreme Court upheld the practice in a 1977 case, Abood v. Detroit Board of Education, reasoning that otherwise workers could “free ride” on the union’s collective bargaining. Prohibiting unions from charging nonmembers directly for political speech, it believed, would protect their First Amendment rights.

On Monday the justices will hear oral arguments in a challenge to that 1977 decision brought by Mr. Janus. They should heed Justice Felix Frankfurter’s observation, in an earlier case on mandatory union fees, that it is “rather naive” to assume “that economic and political concerns are separable.” As Mr. Janus argues, bargaining over wages, pensions and benefits in the public sector involves issues of intense public concern and thus core First Amendment-protected speech. A state law that forces public employees to fund that speech violates their rights, no less than compelling them to speak. ( Janus v. Afscme doesn’t consider these questions for unions in the private sector.) Read more »

The Zero That Makes Mulvaney a Hero

By Democrats’ design, the CFPB director has vast power. He can use it to shrink the bureau.

Richard Cordray asked Federal Reserve Chair Janet Yellen for $217 million in October—his last such request as director of the Consumer Financial Protection Bureau. Last week Mr. Cordray’s acting successor, Mick Mulvaney, made his first quarterly funding request: “$0.” What a difference a few months make.

Established in the wake of the 2008 financial crisis according to now-Sen. Elizabeth Warren’s vision, the CFPB ran wild under Mr. Cordray’s leadership—issuing reams of punishing regulations and conducting endless fishing expeditions, sometimes into industries Congress had specifically excluded from its jurisdiction.

This was possible because the bureau was designed to be insulated from accountability. It is led by a single director, whom the president cannot fire except for cause, and funded by the Fed, so that it need not justify its actions and funding needs to Congress.

Whether this arrangement is constitutional is an open question, currently pending in the U.S. Circuit Court of Appeals for the District of Columbia. But for now, as that court’s Judge Brett Kavanaugh has observed, it renders the CFPB director “the single most powerful official in the entire United States Government” (with the possible exception of the president). Read more »

Mulvaney Can Undo Cordray’s Legacy

When Richard Cordray attempted to install his chief of staff as acting director of the Consumer Financial Protection Bureau, his evident aim was to buy enough time to cement his legacy—particularly a just-finalized rule that the agency expects will wipe out half or more of the short-term lending industry. On Tuesday a federal judge thwarted Mr. Cordray, holding that President Trump acted within his authority by appointing Mick Mulvaney to moonlight as acting CFPB director while continuing to lead the Office of Management and Budget.

On his first day at the bureau, Mr. Mulvaney put a freeze on new rules and guidance. But that doesn’t solve the problem of the payday-lender rule. Mr. Mulvaney acknowledged that he cannot simply recall rules that have already gone out the door. Repealing a final rule typically requires restarting the rule-making process, which can take years to complete.

But Mr. Mulvaney can stop the payday-lender rule by putting on his OMB hat and invoking the Paperwork Reduction Act of 1980. That law is generally thought of as—actually, strike that. Nobody ever thinks about the Paperwork Reduction Act. It has about as much currency in Washington as the Filled Cheese Act of 1896.

The PRA, which was purportedly strengthened in 1995, was an effort to address a real problem. Federal agencies are eager to impose paperwork burdens on citizens and businesses. It costs an agency almost nothing to impose a new record-keeping requirement or reporting mandate. The expense falls on those required to carry it out.

The obvious solution was to put agencies on a paperwork budget and force them to internalize the costs they foist on the public. To ensure that agencies don’t evade that responsibility, the PRA established robust centralized oversight in the Office of Management and Budget, which is part of the White House. Every “information collection request” issued or imposed by a federal agency must be approved by OMB. That includes government forms as well as requirements that private parties collect information. If OMB disapproves a request, the agency cannot enforce it.

In practice, however, the PRA doesn’t have much effect. Disapprovals from OMB are exceedingly rare. In part, that’s because most agencies are subject to presidential control, rendering the act superfluous—if the White House opposes a regulatory proposal, it can simply instruct the agency to drop or amend it. By the time PRA review rolls around, the White House has already had its say.

Then there are the independent agencies insulated from presidential control, such as the Federal Communications Commission, the Securities and Exchange Commission and most other financial regulators. The PRA empowers them to overrule a disapproval by majority vote. The CFPB was designed to be an independent agency, but unlike the others it has a single director. The PRA limits the ability to overrule to “an independent regulatory agency which is administered by two or more members.” So OMB can disapprove any action by the bureau that imposes unnecessary or excessive paperwork burdens, without fear of being overruled.

Mr. Mulvaney should exercise that power. Every single provision of the short-term lending rule is structured around information collection requests subject to the PRA. The rule’s central requirement is that lenders determine a borrower’s ability to repay by demanding financial information from the borrower, verifying it, and then recording the result of various calculations. Each step is its own paperwork burden.

Whether or not the agency can ultimately justify its regulatory approach—and we have our doubts—it has to do its homework under the PRA. That includes accurately assessing costs, considering the need for and utility of each individual paperwork requirement, balancing the costs and benefits, and minimizing collection burdens. The bureau’s final rule differs substantially from its initial proposal, but the agency made little attempt to account for changes in paperwork burden, as the PRA requires it to do. Nor did it engage with the detailed criticisms of its analysis of the proposal’s costs. The three-page analysis published with the final rule can only be described as Mr. Cordray—perhaps unaware of the bureau’s unique status under the PRA—thumbing his nose at OMB and the White House.

That is reason enough to disapprove the rule and send the CFPB back to the drawing board. It would also signal that the Trump administration actually intends to enforce the PRA—to the point that it will halt a major regulation to ensure compliance. That should prompt other agencies to pay attention to paperwork burdens.

Messrs. Rivkin and Grossman practice appellate and constitutional law in Washington. Mr. Rivkin served at the Justice Department and the White House Counsel’s Office. Mr. Grossman is an adjunct scholar at the Cato Institute.

Source: https://www.wsj.com/articles/mulvaney-can-unravel-cordrays-legacy-1512086936