What the Fifth Circuit Got Wrong About the 7th Amendment in Jarkesy
The Fifth Circuit Court of Appeals ruling in Jarkesy v. Securities and Exchange Comm'n is a potential blockbuster. In 2020, the Securities and Exchange Commission (SEC) held that George Jarkesy had engaged in misrepresentation in certain public statements, thereby committing securities fraud. The SEC ordered Jarkesy to cease and desist and to pay a civil penalty. In addition, the agency barred him from certain securities industry activities.
Jarkesy petitioned for review of the SEC's decision. In that petition, he did not challenge the agency's substantive decisions. Instead, he argued that the decision was unconstitutional for three reasons: Jarkesy had a right to a trial by jury, rather than an administrative decision; the decision flowed from an improper delegation of legislative authority to the SEC; and because the administrative law judge (ALJ) who rendered the initial decision was unconstitutionally protected from removal except for cause.
The Fifth Circuit agreed with Jarkesy on each point. This is perhaps not a surprise when the majority opinion favorably cites former President Ronald Reagan's "Nine Most Terrifying Words in the English Language": I'm from the government, and I'm here to help. The court's opinion was written by Judge Jennifer Walker Elrod, a George W. Bush …
This post was originally published by the Yale Journal on Regulation's Notice & Comment blog. It is excerpted here.
On the day before President Biden’s inauguration, the Department of Health and Human Services (HHS) adopted the Securing Updated and Necessary Statutory Evaluations Timely rule, colloquially known as the SUNSET Rule, because it would sunset any regulation that had not been assessed and, where required, reviewed within a specific timetable.
Specifically, it provided that all HHS regulations would expire at the end of: (i) five calendar years after the year that the regulation first becomes effective; (ii) ten calendar years after the year of the regulation’s promulgation; or (iii) ten calendar years after the last year in which HHS assessed and (if review of the regulation was required) reviewed the regulation, whichever is latest.
The purpose of the rule, according to HHS, was to incentivize …
This post was originally published by the Yale Journal on Regulation's Notice & Comment blog. Reprinted with permission.
Every President since Jimmy Carter has called on agencies to make retrospective reviews of their regulations. President Clinton’s Executive Order 12866 required agencies to create a program of periodic review of existing significant regulations. More recently both Presidents Obama in E.O. 13563 and Trump in E.O. 13771 likewise have required agencies to engage in retrospective reviews. Numerous commentators, not the least of which is Professor and former OIRA director Cass Sunstein, have extolled the potential value of retrospective reviews. And the Administrative Conference of the United States has issued recommendations providing support for agencies to review their existing regulations. Indeed, the Regulatory Flexibility Act (RFA) requires agencies to make a retrospective review of 10-year-old regulations that “have a significant economic impact upon a substantial number …
Last week, the acting director of the Office of Management and Budget (OMB) issued a memorandum to all agencies regarding compliance with the Congressional Review Act (CRA). This memo supersedes one issued in 1999 and pulls independent regulatory agencies – specifically designed by Congress to be less prone to political interference than executive agencies – into a far more centralized CRA review process.
The CRA requires federal agencies to send newly adopted rules to the House and Senate before the rules become effective. This enables both houses the opportunity to adopt a joint resolution disapproving the rule. If both houses adopt such a resolution, it is sent to the President for his signature or veto. Although only one rule was disapproved under the CRA in its first 20 years of existence, in the first year of the Trump administration, some 14 regulations were disapproved under the CRA.
The CRA …
Progressives have rightfully taken issue with the Trump administration's policy goals, from immigration to the environment, from health care to worker safety. Given the president's decidedly unprogressive stances, one should not be surprised at the policy reversals from the prior administration. One might be surprised, however, and dismayed as well, at the cavalier disregard that the administration has shown for the law, both substantive and procedural.
For example, President Trump's earlier executive orders on the "Muslim ban" were overturned not just on constitutional grounds, but also on statutory grounds. The most recent ban has also been enjoined on statutory grounds, although the U.S. Supreme Court has just recently decided to review that ruling.
Trump's executive order on sanctuary jurisdictions met a similar fate. The order stated that the policy of the executive branch was to "ensure that jurisdictions that fail to comply …
Originally published on The Regulatory Review by CPR Member Scholar William Funk.
Professor Kent Barnett recently opined in The Regulatory Review that formal rulemaking really is not that bad and may actually be a good thing in certain circumstances. His argument deserves closer review because the proposed Regulatory Accountability Act (RAA) would require the equivalent of formal rulemaking—or what the bill calls a "public hearing." Barnett may well be right to suggest that in some situations the costs of formal rulemaking could be justified, but he could not be more wrong to argue that the circumstances that would trigger formal rulemaking under the RAA are among those situations.
As Barnett acknowledges, the U.S. Supreme Court, scholars, policy makers, and other interested parties all have condemned formal rulemaking. Why? Because formal rulemaking utilizes a judicial, trial-like procedure to adopt rules that are legislative, not adjudicative, in …
The so-called Regulations from the Executive In Need of Scrutiny Act (REINS Act) has already passed the House this year, as it did in previous sessions. The current version, which amends the Congressional Review Act (CRA), differs somewhat from previous versions but still suffers from a fatal flaw – it is unconstitutional.
The current REINS Act has three parts. One part essentially reflects the recent Executive Order on Reducing Regulation and Controlling Regulatory Costs, except that the REINS Act only requires repeal of one regulation for each regulation adopted, rather than the E.O.'s two-for-one requirement. Another part of the REINS Act continues the CRA, but only for non-major rules. The final part, the part that is unconstitutional, provides that no "major rule" – defined as a "significant regulatory action" requiring a cost/benefit analysis under Executive Order 12866 – shall take effect until Congress "approves" it by joint …
Originally posted at Notice & Comment, a blog of the Yale Journal on Regulation and the American Bar Association Section of Administrative Law & Regulatory Practice, as part of an online symposium entitled Reflections on Seminole Rock: The Past, Present, and Future of Deference to Agency Regulatory Interpretations. Reprinted with permission.
The Separation of Powers Restoration Act, or more easily known as SOPRA, is not a complicated bill. If enacted, it would amend the Administrative Procedure Act to require courts to decide de novo all questions of law, whether constitutional, statutory, or regulatory. As the House Report makes abundantly clear, the intent is to overrule statutorily both Chevron, USA, Inc. v. NRDC and Auer v. Robbins (and its forebear Bowles v. Seminole Rock & Sand Co.), but not Skidmore v. Swift & Co.
The idea is not new. Indeed, beginning in 1975, well before Chevron began its …
Senator Rounds (SD-R) has introduced a proposed concurrent resolution to establish a Joint Select Committee on Regulatory Reform to address the alleged “regulatory overreach that is so prevalent in all sectors of the U.S. economy” by, among other things, conducting a “systematic review” of all rules adopted by federal agencies, supposedly in the name of reducing government expenditure and streamlining business procedures. Ironically, Congress, if it wishes, can spend its otherwise valuable time having a committee engage in this procedure, while at the same time increasing the costs of government by requiring government agencies to appear at hearings and respond to subpoenas to answer once again why they are doing what members of Congress have by statute told them to do, in order to protect the public health, safety and environment of their constituents. This is political theater, no more, no less.
The other provisions in …
In his State of the Union Address President Obama announced that, while he intended to work with Congress to achieve various goals, he will act unilaterally, invoking his “executive authority,” pending congressional action. There followed a laundry list of initiatives that he said he would take on his own. Predictably, Republicans have railed against the President’s proposed actions, accusing him of subverting the rule of law. It’s all just politics.
First guilty party: President Obama. For all his touted exercise of executive authority, there is nothing revolutionary there. Most of the initiatives are simply the use of the bully pulpit to call upon various groups and constituencies to do the right thing. For example, the White House hosting a Summit on Working Families, asking the Vice President to lead a “full review” (as opposed to a partial review, I guess) of America’s job training …
