Teleforum on the Regulatory Accountability Act 2/1

On Wednesday, February 1, at 3:00 pm Eastern time, the Federalist Society's Administrative Law Section will host a "teleforum" on the Regulatory Accountability Act (H.R. 3010).  The Act, which passed the House in December, would make sweeping changes to the APA, particularly with regard to rulemaking.

The featured speakers are both distinguished former chairs of the ABA Section of Administrative Law and Regulatory Practice: Boyden Gray and Ron Levin.

Boyden testified in favor of the bill before the House Judiciary Committee; his prepared statement is here.  Ron was central to the preparation of this Section's comments on the bill.  It is hard to imagine two better speakers on this topic.  This is not to be missed!

No registration is necessary.  To participate, just call (888) 752-3232 at 3:00 p.m. on Wednesday.

Prior posts on the bill can be found here and here.

UPDATE:

A podcast of this discussion is available here.

Environmental Law/International Law: Developments in Chevron Challenge to $18 Billion Dollar Judgment in Ecuador

On January 3, Chevron Corporation issued a press release reporting that a three-judge panel of "temporary judges presiding over appellate proceedings in the Provincial Court of Justice of Sucumbíos in Lago Agrio, Ecuador in an environmental lawsuit involving Texaco Petroleum Company," had ruled against the companies.  The appellate court's ruling upheld a February 2011 lower court ruling that awarded more than $18 billion -- nearly nearly half of of which constituted punitive damages -- against the companies for what Chevron described as "alleged environmental and social harms in the Amazon region of Ecuador."  Shortly before the appellate court ruling, Chevron had sent a letter to the Ecuadorian Prosecutor General alleging fraud and corruption in the litigation.
Although Chevron sought immediate relief in the U.S. District Court for the Southern District of New York, that court reportedly denied Chevron's request for an order of attachment.  On January 25, a panel of arbitrators at the Permanent Court of Arbitration in The Hague issued an order that directed the Government of Ecuador to "take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment" against Chevron in the case pending further order or award from the tribunal.

Criminal Process/Securities, Commodities, and Exchanges: SEC Charges Investment Adviser with $500 Billion in Fake Securities Using Social Media

On January 4, the Securities and Exchange Commission charged an investment adviser with offering to sell $500 billion in fictitious securities, using social media such as LinkedIn.  The SEC press release on the case stated that the adviser, Anthony Fields, "used LinkedIn discussions to promote fictitious 'bank guarantees' and 'medium-term notes'," and that his postings "resulted in interest from multiple purported potential buyers."  In connection with this case, the SEC also issued a National Examination Risk Alert and an Investor Alert to warn other investment advisers and the public, respectively, about fraudulent investment schemes' use of social media.

Scholarship Award to Nina Mendelson

The Administrative Law Section presents an annual award for the strongest piece of academic scholarship on administrative law published in the past year. The award is presented at the Section's fall conference.

This year's winner was Professor Nina Mendelson of the University of Michigan for Disclosing "Political" Oversight of Agency Decision Making, 108 Michigan Law Review 1127 (2010). As the committee noted in announcing its selection, Professor Mendelson, who joined the Michigan faculty in 1999 after several years in the Environment Division of the Department of Justice, has "produced a body of scholarship in administrative law that is rich, complex, and important; indeed, as an active and engaged scholar, she has consistently published creative, thoughtful scholarship of the very highest caliber that has made major contributions to the field. Competition for this award was quite intense, with over a dozen wonderful works, authored by a very gifted group of administrative law scholars, comprising the pool of finalists. After careful reading and review of these works, and several weeks of deliberation, Professor Mendelson's article emerged as the committee’s clear and unanimous choice."

The winning article is part of a growing literature on the legitimacy, and relevance to judicial review, of "political considerations" -- essentially, White House preferences -- in agency rulemaking. Here is the abstract:

Scholars and courts have divided views on whether presidential supervision enhances the legitimacy of the administrative state. For some, that the President can supervise administrative agencies is key to seeing agency action as legitimate, because of the President's accountability to the electorate. Others, however, have argued that such supervision may simply taint, rather than legitimate, an agency action.

The reality is that presidential supervision of agency rulemaking, at least, appears to be both significant and opaque. This Article presents evidence from multiple presidential administrations suggesting that regulatory review conducted by the White House's Office of Management and Budget is associated with high levels of changes in agency rules. Further, this Article documents the comparative silence regarding the effect of that supervision. The Office of Management and Budget and the agencies generally do not report the content of supervision by presidential offices. They also do not report whether a particular agency decision is consistent with presidential preferences. Silence about content, this Article suggests, threatens to undermine the promise of presidential influence as a source of legitimacy for the administrative state.

This Article then argues for greater transparency. Agencies should be required to summarize executive influence on significant rulemaking decisions. Such an ex ante disclosure regime is superior to proposals that judges be more receptive to political reasons in reviewing a particular agency action. Finally, this Article suggests that while some, but not all, political reasons for agency action are legitimate, only a more transparent system-one that facilitates public dialogue and accountability to Congress-can fully resolve the question of which reasons are legitimate and which are not.

For those who would like a longer summary, I have posted one on JOTWELL, available here.  And the article itself can be found here. 

The previous winners of the Section's scholarship award form a distinguished group.  Congratulations to Professor Mendelson on joining them.

Attorney Openings at the Administrative Conference

Acting Research Director Jeff Lubbers reports that the Administrative Conference of the United States currently has several vacancies. 

The Executive Director position is currently open and the announcement is posted on USAJobs. The announcement will close on January 31, 2012. The announcement is here. 

ACUS also has two openings for attorneys: (1) An entry level position (preferably someone with one year of clerkship or other experience that would qualify for a GS-12), and (2) a senior attorney (GS-14-15) position, with a background and advanced degree in economics, statistics or relevant social science.  Applicants should send an application letter and CV/resume to ACUS General Counsel Shawne McGibbon, by email or by mail at 1120 20th St. NW, Suite 706 South, Washington, DC 20036. These positions are not posted on USAJobs.

ACUS is also looking to fill the Research Director position on a permanent basis as of July 2012.  This job will be formally posted in the near future.  Expressions of interest are welcome.

The Executive Director and Research Director positions are Senior Executive Service positions.

To learn more about ACUS and its current projects visit the website.

Executive Summaries for Rulemaking Preambles

Few documents are as daunting as a massive preamble in the Federal Register.  In other settings, huge documents are preceded by an Executive Summary.  Would that make regulatory preambles more understandable and accessible?  OIRA thinks so.

On January 4, Cass Sunstein, Administrator of the Office of Information and Regulatory Affairs, issued a memorandum to the heads of executive departments and agencies regarding executive summaries.  The key language of the brief memo states:

To promote public understanding and to ensure an "open exchange of information and perspectives," regulatory preambles for lengthy or complex rules (both proposed and final) should include straightforward executive summaries. These summaries should separately describe major provisions and policy choices. Such executive summaries should generally be placed at the start of regulatory preambles.

The full memo is available here.

The goal is to enhance public participation in rulemaking.  There's no question that such participation is deterred by the sheer bulk and unmanageability of regulatory preambles.  Many have suggested that subdividing proposals, for example, would allow potential commenters to see what is of interest and to focus on only the relevant portion of a larger proposal.  An executive summary seems a helpful, but very modest, step in the direction of enabling and promoting greater public participation.

Sackett v. EPA and pre-enforcement review of agency orders

Today the Supreme Court heard argument in Sacket v. EPA, No. 10-1062, concerning whether a landowner can obtain pre-enforcement review of an EPA order to remove unpermitted filling of wetlands.  The Ninth Circuit, agreeing with every other court of appeals to decide the issue, had held that such review was unavailable.

Former Section chair Bill Funk offers these comments on the case:

   The media has characterized this case, depending upon their orientation, either as an overbearing government threatening a family for trying to build a house on slightly more than a half-acre of its property or as threat to the ability of the Environmental Protection Agency to take necessary action to protect the environment.  Unfortunately, for those of us who prefer truth to propaganda, neither of these descriptions accurately state what is before the Court. 

   The Sacketts want to build a house on their .6 acre property, and in preparation for that they filled an area that EPA believes is a wetland.  While they might have qualified for a permit for this activity, they did not seek one, and when informed by EPA that it appeared they were violating the Clean Water Act, they did not desist from their activity.  EPA consequently issued a “compliance order,” as authorized by the Clean Water Act, ordering the Sacketts to cease and desist from their filling activities and in addition to remove the fill material and restore the area to its original condition.  The order included the warning that violation of the order might subject the Sacketts to substantial civil or administrative penalties.  The Sacketts then brought suit in federal court alleging among other things that the compliance order was arbitrary and capricious. 

   Whether the Sacketts or EPA are correct is not the issue before the Court.  The issue is simply whether the Sacketts may seek a judicial determination of the correctness of EPA’s order without having to violate that order and risk large civil or administrative penalties in order to obtain a judicial determination of the legality of EPA’s order as a defense to that enforcement action.  EPA, understandably, would like to avoid judicial review until it brings an enforcement action in court.  The threat of huge penalties if EPA is correct often may be enough to force compliance even if the defendant strongly believes that EPA is wrong.  Recall Clint Eastwood’s challenge as Dirty Harry to various perpetrators; “make my day,” he would say, leaving them to guess whether he had another bullet in his pistol. 

   Many environmentalists fear that a decision by the Court in favor of the Sacketts would hamstring environmental enforcement, on the theory that if defendants may delay compliance during lengthy judicial review proceedings, there may substantial harm to the environment, even if EPA eventually prevails.  Moreover, if obtaining judicial review would delay compliance, then defendants might be induced to seek judicial review simply to put off the cost of compliance, even if the defendants knew they were likely to lose in the end.  However, this fear is unfounded.  The Administrative Procedure Act is clear that obtaining judicial review of a compliance order does not by itself relieve a person from the requirement to comply with that order pending judicial review.  That Act provides that a person may seek a stay of the order first from the agency and then from the court if the agency denies the request, but that request will be judged on its own merits.  For example, with respect to the Sacketts, it is unlikely a court would stay EPA’s order to cease and desist from further damage to the alleged wetlands, but it might well stay the requirement that the Sacketts restore the wetlands until a determination of the validity of EPA’s order.  Thus, the judicial review the Sacketts seek would not enable continued harm to the environment during the review proceedings.

   One need not view EPA as a rogue agency, or even as Dirty Harry, to appreciate the need for providing a judicial check on agency action.  Even in good faith EPA has made errors in the past and will again in the future; after all, it is staffed by humans.  Knowing that persons may be able to seek judicial review, rather than be coerced into compliance out of fear of large penalties, provides a healthy incentive for EPA to ensure that its decisions are based on sound facts and law that will be readily upheld in courts.  Absent that incentive, the tendency noted by Lord Acton that power corrupts and absolute power corrupts absolutely could lead an agency to rely more on coercion than law.  It is an essential element of the rule of law that government action be subject to judicial review, and here EPA’s order likewise should be subject to review.

Administrative Law Writing Competitions

Two administrative law writing competitions may be of interest.

The first is the Section's Gellhorn-Sargentich Student Essay Competition.  The assigned topic is: "Discuss any topic relating to administrative law."  The essay can be a paper submitted for a graded law school course, a law review note or comment, or something written specifically for the competition.  The competition is open only to current students at ABA-accredited law schools who are members of the Section.  (Students can join the ABA for next to nothing and join the Section for literally nothing.)

The winner will receive a $5,000 cash prize and round-trip airfare and accommodation to attend the Section’s Fall Conference in Washington, DC.  At the discretion of the respective editorial boards, the winning entry may be published in the Administrative and Regulatory Law News and/or the Administrative Law Review.

The submissions deadline is April 1, 2012.  Full details here.

Second, the American Constitution Society sponsors an annual writing competition named for Judge Richard Cudahy of the 7th Circuit.  Like the Gellhorn-Sargentich competition, the Cudahy competition welcomes submissions on any topic in the area of administrative law.  And unlike the GS competition, it is open not just to law students but to lawyers and law professors as well.  ACS picks one student winner and one lawyer winner; each receives $1500.  The submissions deadline is February 12, 2012.  Full details here.

Four New Administrative Conference Recommendations

The Assembly of the Administrative Conference held its 55^th Plenary session on December 8-9, 2011, adopting four new recommendations:

• Recommendation 2011-5: Incorporation by Reference
• Recommendation 2011-6: International Regulatory Cooperation
• Recommendation 2011-7: Federal Advisory Committee Act - Issues and Proposed Reforms
• Recommendation 2011-8: Agency Innovations in e-Rulemaking

An archive video of the 55^th Plenary session proceedings is available on the ACUS homepage.

The recommendations and additional background materials are also available on the plenary session web page.