David Rivkin, Constitutional Attorney and Media Commentator

Mulvaney Can Undo Cordray’s Legacy

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

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

December 1, 2017
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Begging Your Pardon, Mr. President

How Trump can shut down the special counsel probe and leave the Russia investigations to Congress

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

Oct. 29, 2017, in the Wall Street Journal

The Trump presidency has been consumed by Special Counsel Robert Mueller’s efforts to uncover collusion between the Trump campaign and Moscow. Mr. Mueller reportedly has secured one or more indictments that he will announce Monday. Some Republicans now seek a new special counsel to investigate if the Clinton Campaign “colluded” with Russians to smear Candidate Trump, along with other aspects of the Clintons’ relationship with Russia and Russian nationals. But one special counsel already is one too many.

During the 1980s and ’90s, American politics was repeatedly distorted, and lives devastated, through the appointment of independent counsels under the post-Watergate Ethics in Government Act. These constitutionally anomalous prosecutors were given unlimited time and resources to investigate officials, including President Clinton, and scandals, such as Iran-Contra. Once appointed, almost all independent counsels built little Justice Departments of their own and set out to find something—anything—to prosecute. Hardly anyone lamented the expiration of this pernicious law in 1999.

But special counsels, appointed by the attorney general and in theory subject to Justice Department oversight, haven’t proved any better in practice. Mr. Mueller’s investigation has already morphed into an open-ended inquiry. It is examining issues—like Donald Trump’s private business transactions—that are far removed from the Russian question. It also has expanded its focus beyond the original question of collusion with the Russians to whether anyone involved in the Russia investigation has committed some related offense. That is evident from investigators’ efforts to interview White House aides who were not involved in the 2016 campaign, and from leaks suggesting that Mr. Trump’s firing of FBI Director James Comey might have “obstructed” justice.

That claim is frivolous, and it damages America’s constitutional fabric even to consider it. A president cannot obstruct justice through the exercise of his constitutional and discretionary authority over executive-branch officials like Mr. Comey. If a president can be held to account for “obstruction of justice” by ending an investigation or firing a prosecutor or law-enforcement official—an authority the constitution vests in him as chief executive—then one of the presidency’s most formidable powers is transferred from an elected, accountable official to unelected, unaccountable bureaucrats and judges.

Mr. Mueller’s investigation has been widely interpreted as partisan from the start. Mr. Trump’s opponents instantaneously started talking of impeachment—never mind that a special counsel, unlike an independent counsel, has no authority to release a report to Congress or the public. Mr. Trump’s supporters count the number of Democratic donors on the special-counsel staff. The Mueller investigation is fostering tremendous bitterness among Trump voters, who see it as an effort by Washington mandarins to nullify their votes.

Mr. Trump can end this madness by immediately issuing a blanket presidential pardon to anyone involved in supposed collusion with Russia or Russians during the 2016 presidential campaign, to anyone involved with Russian acquisition of an American uranium company during the Obama administration, and to anyone for any offense that has been investigated by Mr. Mueller’s office. Political weaponization of criminal law should give way to a politically accountable democratic process. Nefarious Russian activities, including possible interference in U.S. elections, can and should be investigated by Congress.

Partisan bitterness will not evaporate if lawmakers take up the investigation. But at least those conducting the inquiry will be legitimate and politically accountable. And the question of whether Russia intervened in the 2016 election, and of whether it made efforts to influence U.S. policy makers in previous administrations, is first and foremost one of policy and national security, not criminal law.

The president himself would be covered by the blanket pardon we recommend, but the pardon power does not extend to impeachment. If Congress finds evidence that he was somehow involved in collusion with Russia, the House can determine whether to begin impeachment proceedings. Congress also is better equipped, as part of its oversight role, to determine whether and how the FBI, Justice Department and intelligence agencies might have been involved in the whole affair, including possible misuse of surveillance and mishandling of criminal investigations.

There is ample precedent for using the presidential pardon authority to address matters of political importance. Certainly it is what the framers expected. As Alexander Hamilton explained in Federalist 69, the pardon power was to “resemble . . . that of the king of Great Britain.” In Federalist 74, he observed that “there are often critical moments, when a well-timed offer of pardon to . . . insurgents or rebels may restore the tranquility of the commonwealth.”

Securing harmony in the body politic was President Washington’s motivation when he offered amnesty to participants in the Whiskey Rebellion in the 1790s, and it was President Lincoln’s motivation when he issued an amnesty during the Civil War for Confederates who would return their allegiance to the Union. Similar reasons motivated President Ford to pardon Richard Nixon, and President Carter when he offered amnesty to Vietnam-era draft evaders.

Lincoln’s proclamation of Dec. 8, 1863, is an excellent model of a broadly drafted and complete amnesty: “I . . . do proclaim, declare and make known to all persons who have directly or by implication participated in the existing rebellion, except as hereinafter excepted, that a full pardon is granted to them . . . upon condition that every such person shall take and subscribe an oath” of loyalty to the U.S. A similar pardon can be issued with respect to the Russian affair, ending the criminal investigations and leaving the business to Congress.

Permitting the criminal law again to become a regular weapon in politics is more destructive of democratic government than ham-handed efforts by a foreign power to embarrass one or more presidential candidates. It is true that Washington’s Augean stables need periodic cleaning, but it is Congress that should wield the shovels.

Messrs. Rivkin and Casey practice appellate and constitutional law in Washington. They served in the White House Counsel’s office and Justice Department in the Reagan and George H.W. Bush administrations.

Source: https://www.wsj.com/articles/begging-your-pardon-mr-president-1509302308

 

October 30, 2017
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‘You’re Fired,’ Trump Should Tell Richard Cordray

Under a dubious statute, the CFPB head can be dismissed only for cause—but there’s plenty of it.

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

April 13, 2017, in the Wall Street Journal

The greatest mystery in Washington involves not Russian spies or wiretaps but Richard Cordray’s continued employment as director of the Consumer Financial Protection Bureau. In the face of President Trump’s mandate for change, Mr. Cordray continues the Obama administration’s regulatory crusade against lenders, blocking access to the credit that supports so many small businesses and so much consumer spending.

Why would a president who made a TV show out of firing underlings now suffer a subordinate who refuses to get with the pro-growth agenda he campaigned on? If reports from the West Wing are to be believed, Mr. Trump’s unusual timidity is the result of overcautious legal and political advice.

Mr. Cordray is insulated from presidential control by a New Deal-era innovation: a statutory clause that allows the president to fire an independent agency head only “for cause,” meaning “inefficiency, neglect of duty, or malfeasance in office.” In October a three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia struck down that restriction an infringement of the president’s constitutional authority to “take care that the laws be faithfully executed.”

When Congress created the CFPB by passing the Dodd-Frank Act of 2010, Judge Brett Kavanaugh explained, it broke with decades of historical practice. Generally the power of independent agencies is diffused among multiple commissioners or directors so as to reduce the risk of abuse. Unless he can be fired, Mr. Cordray, as the sole director of the CFPB, wields more unilateral power than any government official save the president. Read more »

April 14, 2017
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The Ninth Circuit Ignores Precedent and Threatens National Security

By DAVID B. RIVKIN JR. and LEE A. CASEY

The Ninth U.S. Circuit Court of Appeals violated both judicial precedent and the Constitution’s separation of powers in its ruling against President Trump’s executive order on immigration. If the ruling stands, it will pose a danger to national security.

Under normal rules of standing, the states of Washington and Minnesota should never have been allowed to bring this suit. All litigants, including states, must meet fundamental standing requirements: an injury to a legally protected interest, caused by the challenged action, that can be remedied by a federal court acting within its constitutional power. This suit fails on every count.

The plaintiff states assert that their public universities are injured because the order affects travel by certain foreign students and faculty. But that claim involved no legally protected interest. The granting of visas and the decision to admit aliens into the country are discretionary powers of the federal government. Unadmitted aliens have no constitutional right to enter the U.S. In hiring or admitting foreigners, universities were essentially gambling that these noncitizens could make it to America and be admitted. Under the theory of standing applied in this case, universities would be able to sponsor any alien, anywhere in the world, then go to court to challenge a decision to exclude him.

It is also settled law that a state can seek to vindicate only its own rights, not those of third parties, against the national government. The U.S. Supreme Court held in Massachusetts v. Mellon (1923) that it is not within a state’s duty or power to protect its citizens’ “rights in respect of their relations with the Federal Government.” Thus the plaintiffs’ claims that the executive order violates various constitutional rights, such as equal protection, due process and religious freedom, are insufficient because these are individual and not states’ rights.

Read more »

February 10, 2017
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What Kind of a Judge Is Neil Gorsuch?

He carefully follows the law, and writes as engagingly as Scalia, without the abrasiveness.

By DAVID B. RIVKIN JR. and ANDREW M. GROSSMAN

The Wall Street Journal, Jan. 31, 2017 

Judge Neil Gorsuch, President Trump ’s nominee to succeed Justice Antonin Scalia, is a native Coloradan and avid outdoorsman. He clerked for a federal appellate judge and two Supreme Court justices and spent a decade practicing law before his appointment in 2006, at age 39, to the 10th U.S. Circuit Court of Appeals. In the decade since, he has written some 850 opinions.

The way to take a judge’s measure is to read his opinions, and so we set out to review Judge Gorsuch’s. It was not an arduous task, for his prose is unusually engaging—think Scalia, with none of the abrasiveness. Justice Elena Kagan has declared herself a fan of his writing style. The only difficulty in summarizing Judge Gorsuch’s output is the compulsion to quote, at length, from so many of his opinions.

One opens this way: “Haunted houses may be full of ghosts, goblins, and guillotines, but it’s their more prosaic features that pose the real danger. Tyler Hodges found that out when an evening shift working the ticket booth ended with him plummeting down an elevator shaft.” The case, by the way, was a prosaic dispute between insurers. Another opinion starts: “What began as a fight at a strip club finds its way here as a clash over hearsay.”

Judge Gorsuch shows a concern for the people whose disputes are before the court. Each opinion typically begins with the name of the person seeking relief and why. A recent example: “After a bale of hay hit and injured Miriam White while she was operating her tractor, she sued the manufacturer, Deere & Company.” Ms. White’s appeal was summarily denied, but even the brief, three-page opinion reflects a serious engagement with her arguments and the facts—in contrast with the boilerplate language judges often use in such decisions. Win or lose, parties appearing before Judge Gorsuch surely know that they have been treated with fairness, consideration and respect. Read more »

February 1, 2017
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When Is a Judge Not Really a Judge?

A dispute over whether the SEC can hear its own cases could lead to a shrinking administrative state.

By DAVID B. RIVKIN JR. and ANDREW M. GROSSMAN

Jan. 23, 2017 in the Wall Street Journal

An “alphabet soup” of federal agencies established since the 1930s have gradually supplanted the rule of Congress and the courts with the rule of supposed expertise. This accumulation of power is what James Madison identified in Federalist No. 47 as “the very definition of tyranny.” An example of this trend is the Securities and Exchange Commission’s increased use of in-house administrative law judges under the Obama administration.

Following high-profile losses in federal court—remember the insider trading charges against Mark Cuban?—the SEC decided to file fewer enforcement cases in courts presided over by independent judges. Instead, the agency began to take advantage of its in-house administrative law judges. Conveniently, a change in the Dodd-Frank Act authorized the agency’s judges to hear more kinds of cases and dispense more penalties.

Administrative law judges are agency employees. The proceedings they oversee provide fewer protections than court cases. They also tend to set stern deadlines and limit the right to factual investigation, often leaving defendants to rely on the SEC’s evidence. According to a 2015 Wall Street Journal analysis, the agency’s shift paid off: Through the beginning of that year, it won 90% of cases in its in-house court, compared with 69% of regular court cases. Administrative decisions can be appealed to court but are rarely reversed. That’s because the judges apply a deferential “clear error” standard to the agency’s factual findings. Read more »

January 24, 2017
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