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What the Federal Reserve Board Tells Us About Agency Independence

Caroline W. Tan

In administrative law, the sine qua non of agency independence lies in the enabling statute. If the statute protects the agency’s head from removal except “for cause,” then the agency is considered insulated from presidential control and classified as independent. On the other hand, if the statute is silent on for-cause tenure protection, then the agency is classified as executive. This Note questions that central assumption by relying on the history of the Federal Reserve Board of Governors, arguably one of the most independent agencies in Washington. By tracing the Board’s history from a limited institution in 1913 to the powerful central bank of today, this Note demonstrates that in at least some cases, the driving factors behind operative independence have more to do with the practical realities of governance than the formalities of administrative law. Indeed, even though the Fed’s enabling statute is silent on the issue of for-cause tenure protection, the President has never fired the head of the agency. Even President Trump has declined to go so far. This Note addresses this paradox through a detailed look at the Board’s history and the major inflection points in its rise. Throughout, this Note also highlights the active role that the Board played in its own ascendency, demonstrating the dynamic life of administrative agencies and the powerful role they can play in shaping their own futures. 

Can a Statute Have More Than One Meaning?

Ryan D. Doerfler

What statutory language means can vary from statute to statute, or even provision to provision. But what about from case to case? The conventional wisdom is that the same language can mean different things as used in different places within the United States Code. As used in some specific place, however, that language means what it means. Put differently, the same statutory provision must mean the same thing in all cases. To hold otherwise, courts and scholars suggest, would be contrary both to the rules of grammar and to the rule of law.

This Article challenges that conventional wisdom. Building on the observation that speakers can and often do transparently communicate different things to different audiences with the same verbalization or written text, it argues that, as a purely linguistic matter, there is nothing to prevent Congress from doing the same with statutes. More still, because the practical advantages of using multiple meanings— in particular, linguistic economy—are at least as important to Congress as to ordinary speakers, this Article argues further that it would be just plain odd if Congress never chose to communicate multiple messages with the same statutory text.

As this Article goes on to show, recognizing the possibility of multiple statutory meanings would let courts reach sensible answers to important doctrinal questions they currently do their best to avoid. Most notably, thinking about multiple meanings in an informed way would help courts explain under what conditions more than one agency should receive deference when interpreting a multi-agency statute. Relatedly, it would let courts reject as false the choice between Chevron deference and the rule of lenity for statutes with both civil and criminal applications.

The Costs of Clean Water in Hoosick Falls: Private Civil Litigation and the Regulation of Drinking Water Quality

Bronwen B. O’Herin

Despite extensive statutory law and regulations governing drinking water quality in the United States, water-contamination crises have been a regular feature of the American news cycle in recent years, perhaps most notably in Flint, Michigan, but also in a disturbing number of localities across the United States, including the upstate New York town of Hoosick Falls. This Note uses the water-contamination crisis in Hoosick Falls as a case study to analyze why these apparent regulatory failings continue to persist. This case study reveals how scientific uncertainty, resource constraints, and the socio-political dynamics of public regulation in the drinking-water context limit public ex ante regulatory mechanisms’ power to deter drinking-water contamination and to rebalance the equities disrupted when drinking-water pollution occurs. In Hoosick, private tort litigation has the potential to be a powerful vehicle for addressing such regulatory shortcomings, but its ability to do so will turn on whether courts are willing to be more flexible in their conceptions of legally cognizable harm. I argue that such flexible conceptions are justified and would serve a crucial dual purpose—bolstering pollution deterrence and providing a forum in which social costs not accounted for during the regulatory, industrial, and political processes that drive public-resource governance may, finally, be accounted for.

Regulation and Distribution

Richard L. Revesz

This Article tackles a question that has vexed the administrative state for the last half century: how to seriously take account of the distributional consequences of regulation. The academic literature has largely accepted the view that distributional concerns should be moved out of the regulatory domain and into Congress’s tax policy portfolio. In doing so, it has overlooked the fact that tax policy is ill suited to provide compensation for significant environmental, health, and safety harms. And the congressional gridlock that has bedeviled us for several decades makes this enterprise even more of a nonstarter.

The focus on negative distributional consequences has become particularly salient recently, playing a significant role in the 2016 presidential election and threatening important, socially beneficial regulatory measures. For example, on opposite sides of the political spectrum, environmental justice groups and coal miner interests have forcefully opposed the regulation of greenhouse gases through flexible regulatory tools in California and at the federal level, respectively.

The time has come to make distributional consequences a core concern of the regulatory state; otherwise, future socially beneficial regulations could well encounter significant roadblocks. The success of this enterprise requires significant institutional changes in the way in which distributional issues are handled within the executive branch. Every president from Ronald Reagan to Barack Obama has made cost-benefit analysis a key feature of the regulatory state as a result of the role played by the Office of Information and Regulatory Affairs, and the Trump administration has kept that structure in place. In contrast, executive orders addressing distributional concerns have languished because of the lack of a similar enforcement structure within the executive branch. This Article provides the blueprint for the establishment of a standing, broadly constituted interagency body charged with addressing serious negative consequences of regulatory measures on particular groups. Poor or minority communities already disproportionally burdened by environmental harms and communities that lose a significant portion of their employment base are paradigmatic candidates for such action.

Jurisdiction, Exhaustion of Administrative Remedies, and Constitutional Claims

Peter A. Devlin

The doctrine of exhaustion of administrative remedies says that a person challenging an agency decision must first pursue the agency’s available remedies before seeking judicial review. It was created by courts in order to promote an efficient justice system and autonomous administrative state. Congress has since written exhaustion requirements into many statutes to ensure and guide its application. Consequently, a court interpreting one of these statutory versions must first decide whether it is a jurisdictional rule or not. The fallout from this decision is the topic of this Note. By definition, jurisdictional rules are rigid: Courts may not create exceptions to them, parties may not waive or forfeit them, and they will loom over the proceedings from start to finish. Faced with a jurisdictional exhaustion requirement, courts have had to choose between diluting the concept of jurisdiction and allowing injustice. In this Note, I look for a way out of this tradeoff. I argue that statutory exhaustion requirements are neither jurisdictional nor non-jurisdictional rules, but rather mandatory rules with a particular set of effects on courts and parties. Courts, for example, may not apply equitable exceptions to statutory exhaustion requirements, but agencies may waive or forfeit them. I define this “mandatory” exhaustion by looking to case law, jurisdiction theory, constitutional structure, and the purposes of exhaustion. I also develop an exception for constitutional claims that arise outside of an agency’s proceedings. This exception helps avoid the threat to separation of powers that requiring exhaustion for such claims would create. As a result, if courts used mandatory exhaustion then they would be empowered to avoid injustice without creating a conceptual mess. Commentators have suggested that exhaustion requirements might be mandatory in nature, and the Second Circuit has treated them as such. But neither has provided much guidance on what that means. I try to fill in that gap by developing a descriptive and normative case for categorizing them as mandatory rules.

Holding the EPA Accountable: Judicial Construction of Environmental Citizen Suit Provisions

Katherine A. Rouse

What happens when a presidential administration fails or refuses to properly administer our nation’s environmental laws? Thanks to the design of our federal environmental statutes, American citizens are armed with a valuable legal tool to hold the Environmental Protection Agency (EPA) accountable: the citizen suit. Environmental citizen suits allow private citizens to sue the EPA to require it to carry out its statutory duties, and can be a valuable mechanism in the face of a presidential administration unsympathetic to environmental protection. Because citizen suit provisions allow citizens to sue the EPA Administrator for failing to perform an action or duty that is nondiscretionary under the statute, the permissibility of lawsuits frequently turns on judicial interpretation of the term “nondiscretionary duty.” There is currently a split across the federal courts as to how to construe this term. In fact, the case law on this topic has become somewhat muddled, with disparities arising among district courts and few courts of appeal ruling conclusively on the issue. Some courts have narrowed the term, thereby limiting opportunities for citizen suits. A primary disagreement is whether the presence of the word “shall” in a statutory provision is sufficient to impose a nondiscretionary duty or whether more is required. Some courts have determined that a duty is discretionary unless the provision also includes a “date-certain” deadline, requiring the Administrator to perform the prescribed action by a specific date that appears within that part of the statute. Other courts have resisted adopting a bright-line rule requiring a date-certain deadline before imposing a nondiscretionary duty on the Administrator. The Supreme Court has not spoken on this date-certain deadline rule. This Note will explore how courts have interpreted the term nondiscretionary duty in environmental citizen suit provisions. This Note argues that the federal judiciary as a whole should abandon the date-certain deadline rule and side with courts that construe nondiscretionary duty more broadly. This reading can be supported legally, and will ensure that citizens are able to sue to compel EPA action even when a presidential administration fails to carry out important environmental laws and regulations.

The Missing Structural Debate: Reforming Disclosure of Online Political Communications

Pichaya P. Winichakul

The Federal Election Commission (FEC), the nation’s campaign finance regulator, is charged with administering one of America’s fundamental anti-corruption measures: disclosure and disclaimer requirements for political communications. The FEC has come under attack for failing to enforce its disclosure laws against the Internet Research Agency, the Russian-based organization recently indicted for meddling in American elections through use of online political propaganda. Had the FEC properly enforced the disclosure laws, it could have armed the millions of Americans who viewed Internet Research Agency advertisements with critical information to take to the polls. Efforts to address this campaign finance failure have coalesced around the Honest Ads Act, a bill that proposes substantive changes to the campaign finance disclosure rules. This Note argues that the Honest Ads Act mischaracterizes the problem that led to the FEC’s regulatory failure, and offers another explanation: the structural problems that have led to agency inaction and capture. This Note explores FEC inaction and capture and begins to develop a legislative alternative to the Honest Ads Act.

Incentivizing Pharmaceutical Testing in an Age of Off-Label Promotion

Ryan Sila

In 2012, the Second Circuit held that under the First Amendment, pharmaceutical manufacturers have a right to promote their drugs for uses for which that they have neither been clinically tested nor FDA-approved. Weighing heavily in the Second Circuit’s analysis was the argument that the FDA’s prohibition on so-called “off-label speech” inhibited physicians’ access to complete information, thereby harming public health. That line of reasoning has also created skepticism within Congress of the FDA’s policy. Others argue that the prohibition on off-label speech is necessary in order to incentivize manufacturers to clinically test their drugs for all intended uses—a process that not only allows the FDA to certify the drug as safe and effective in each of its uses, but also creates a larger data set about a drug’s effects before it begins to be marketed and prescribed. If manufacturers can market their pharmaceutical products for unapproved uses, they have reduced incentives to seek FDA approval, especially because the required clinical tests are extremely costly. Whatever one believes about a policy of permitting off-label promotion, it is clear that it not only creates benefits, but it also creates costs. This Note considers regulatory and common-law tools to reduce those costs. It rejects available regulatory tools, because either they are too weak to change manufacturers’ incentives to conduct clinical tests, or they suffer from the same constitutional questions that troubled the Second Circuit. Instead, this Note argues that courts can hold manufacturers to a common-law duty to test their drugs for each use for which they market them, and it outlines what such a duty might entail. Such a solution, if properly implemented, would not only mitigate the concerns about the liberalization of off-label promotion, but it would also be supported by modern products liability doctrine.

The Unwarranted Regulatory Preemption of Predatory Lending Laws

Nicholas Bagley

In response to a perceived increase in the incidence of predatory lending, several states have recently enacted laws designed to protect vulnerable borrowers from abusive lenders. Earlier this year, however, the Office of the Comptroller of the Currency (OCC) determined that the new laws conflicted with the National Bank Act and issued a regulation preempting them. This Note argues that the OCC overstepped its congressionally delegated authority when it promulgated the regulation, and that courts should consequently invalidate it in order to allow states to continue to develop novel legislative responses to the growing problem of abusive lending. The Note proceeds in two stages. First, after canvassing the unsettled case law on the issue, it argues that courts should not categorically defer to agency decisions to preempt state laws. Because of the relative ease with which administrative agencies can preempt state laws and the real threat that preemption orders pose to state legislative independence, the judiciary should scrutinize agency preemption decisions to ensure that they are at the very least reasonable. Second, the Note turns to the substance of the OCC order, contending that it reflects an unwarranted, unnecessary, and unwise effort to meddle in states’ purely internal affairs. Because the predatory lending laws only minimally affect national bank lending powers, do not impose costs on the national banking system, and do not generate spillover effects, they do not interfere with national banks in a way that can justify the OCC’s wholesale preemption.

Terminal 250: Federal Regulation of Airline Overbooking

Elliott Blanchard

Every year, hundreds of thousands of passengers arrive at their local airport to discover that their flight is overbooked. Unbeknownst to most travelers, their damages for the airlines’ breach of contract are governed by federal regulation. Since 1978, 14 C.F.R § 250.5 has set a statutory cap of four hundred dollars for all passengers bumped from domestic flights. In this Note, Elliott Blanchard examines the effects of this provision on passenger and airline behavior by applying modern contract theory to the problem of airline overbooking. He begins by examining the economic forces that led airlines to overbook flights and the subsequent federal government regulatory response in the 1970s. He observes that while a uniform system of compensation for all passengers made sense during the period of airline regulation, increased heterogeneity in both carriers and passengers now make such a system inefficient. While the market for airline travel has changed dramatically since the end of regulation, the statutory ceiling on damages has remained constant. The author argues that this cap undercompensates passengers for breach by the airlines, and rewards the carriers that overbook aggressively. Given the information asymmetries regarding the likelihood of being bumped, airlines have the opportunity to exploit passengers who cannot accurately discount an airline’s probability of performance. As a solution, the author suggests a repeal of the maximum damage amount coupled with increased disclosure of airline overbooking rates, which would encourage airlines to compete on performance as well as price.