Washington Times Op-ed Recycles Weak Argument That Wall Street Reform Law Is Unconstitutional

Blog ››› ››› DAVID LYLE

A Washington Times op-ed by Ammon Simon promotes arguments made in a lawsuit challenging the constitutionality of the Wall Street reform law known as "Dodd-Frank," but fails to acknowledge that these arguments are based on constitutional theories that the Supreme Court rejected decades ago.

Simon, policy counsel for the Judicial Crisis Network and a former assistant attorney general of Missouri, calls for greater support in the lawsuit against Dodd-Frank, arguing that the case is the "latest example of the important role that state attorneys general can play when it comes to resisting the federal government's excesses." He promotes the challengers' argument that the reform law is unconstitutional and writes that:

Dodd-Frank's kiss is intensified by an unconstitutional regulatory structure. The Consumer Financial Protection Bureau grants its director czar-like power, combining the authority with little legislative, executive or judicial oversight. Similarly, Dodd-Frank's Orderly Liquidation Authority authorizes unaccountable corporate death panels, which are unrestrained by meaningful judicial scrutiny, while the Financial Stability Oversight Council has unchecked power to define "too big to fail." In each instance, Dodd-Frank ignores our Constitution's mandate for separation of power into three branches of government, housing it instead in one unaccountable agency.

Kent Greenfield, a professor of corporate and constitutional law at Boston College Law School has written that the lawsuit Simon promotes is based on constitutional theories that the Supreme Court rejected long ago:

This is a lawsuit wanting to re-litigate decades of settled law.

The complaint tries to make hay from the argument that the CFPB is granted "vast authority" (para. 33) over financial firms, and may take "any action" to prevent "unfair," "deceptive," or "abusive" practices (para. 34). The worry, says the complaint (para. 36), is that the Act provides "no definition" of these terms, leaving the CFPB to enforce them through "ad hoc litigation or ... regulation."  The argument is that it is unconstitutional to give agencies the power to define what is unlawful, especially when such definition is to occur after the fact.

Though the complaint does not say so, this is simply a non-delegation doctrine argument, arguing that Congress cannot constitutionally delegate to an agency the power to make law.  Of course, as anyone who has taken an introductory constitutional law course is well aware, the non-delegation doctrine was first and last used by the Supreme Court to strike down a law in 1936.  As I tell my con law class, it is the Eagle Eye Cherry of constitutional doctrines - it had one good year.

The last time a non-delegation doctrine argument made it to the Supreme Court, in the 2001 case of Whitman v American Trucking, it lost big.  The question was whether the Environmental Protection Agency had been given too much discretion in determining air quality standards. The statute said that the EPA should set standards "requisite to protect the public health."  This may not seem to be very precise, but the Court said it compared with a multitude of other statutes that contained the required "intelligible principle," for example the FCC's power to regulate in the "public interest." The Court said "requisite" meant "not lower or higher than is necessary" - hardly a paragon of exact definition.

The author of the opinion for the unanimous Court? Antonin Scalia.

Nevertheless, supporters of Wall Street reform should not take this anti-Dodd-Frank lawsuit lightly. The conservative legal infrastructure and the right-wing media have been very successful in recent years in promoting and mainstreaming highly dubious legal theories, most notably in their all-out assault on health care reform. Journalists reporting on the lawsuit should look beyond the rhetoric of supporters such as Simon to uncover the shaky foundations of the suit's constitutional arguments.

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The Washington Times
Courts Matter
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