The Supreme Court has agreed to hear a case that might resolve the question.
Category Archives: Federal Courts
A popular tool for estimating regulatory costs is the event study. The idea is that stock prices should reflect rational market expectations of the discounted after-tax present value of the company’s stream of future profits. If a regulation (or similar abrupt event) occurs, stock prices will rise or fall quickly to capture its effects.
A Supreme Court opinion issued today illustrates why it pays to interpret these data with care.
The opinion in Noel Canning v. NLRB recently issued the Court of Appeals for the D.C. Circuit seems bracing. If upheld by the Supreme Court, it purports to end a longstanding practice whereby presidents circumvent the Constitution’s requirement that government officials be appointed with the advice and consent of the Senate. It’s true that presidents would no longer be able to make dubious recess appointments, but that doesn’t mean the Senate’s prerogatives actually would be restored. Rather, presidents would engage in a lot more acting. Literally.
Under the Vacancies Act, The president may make Executive Branch appointments on what’s called an “acting” basis. With a few complicated exceptions, these appointments are now limited to 210 days. The 210-day limit is often ignored, however, and it’s not at all hard to find examples.
The most famous recent case probably was the appointment of Bill Lann Lee as acting assistant attorney general of the Justice Department’s Civil Rights Division. He had been nominated to the post on July 21, 1997, but his nomination never made it out of committee. Attorney General Reno named him “acting” head of the division on December 15.
The Senate was predictably apoplectic. Then-Sen. Fred Thompson (R-TN) was unusually succinct, if not altogether clear about the remedy. “The executive branch is not fulfilling its responsibilities to give Congress the opportunity to exercise its advice and consent powers. We’ve got to do something about it.” The late Sen. Robert F. Byrd (D-WV) was equally outraged but similarly bollixed. “It is time for this institution to state in no uncertain terms that no agency–no agency, none, not even the Justice Department–will be permitted to circumvent the Vacancies Act or any other act designed to safeguard our constitutional duties.”
What Congress did was equally predictable. It passed legislation to solve the problem, the Federal Vacancies Reform Act of 1998. The new law increased the length of time an acting appointee could remain in office, from 120 to 210 days, but it strictly forbade them from serving longer without express Congressional authorization. Indeed, one of the purposes of the law was to finally terminate Mr. Lee’s acting appointment.
But it did no such thing. Mr. Lee continued to serve as the acting head of the Civil Rights Division for more than 960 days, until August 4, 2000, when President Clinton used an intra-session recess to appoint him assistant Attorney General. Such recess appointments are precisely what the court in Noel Canning unanimously declared to be unconstitutional, but so what? President Clinton had not complied with the previous law’s 120-day limit, and he had already allowed Mr. Lee to serve as acting assistant Attorney General for 654 more days after signing the Federal Vacancies Reform Act into law. And he could have let sleeping dogs lie, allowing Mr. Lee to remain “acting” for the remaining 170 days of his administration.
The lesson for Congress is clear. Merely passing a law does not accomplish very much if its intent is to regulate the conduct of the Executive branch. Whether it is a constitutional requirement such as the Senate’s advice and consent authority, or legislative regulations of the Executive Branch such as the Federal Vacancies Reform Act, OMB determinations under the Congressional Review Act, the Information Quality Act, or the Paperwork Reduction Act, the President has carte blanche to implement such legislation — or not. To be effective, legislation intended to regulate the Executive branch must include enforcement tools that lie beyond the President’s administrative and enforcement discretion.
If this lesson seems obvious, it has been lost on members of the U.S. Senate. Just over a week ago, eight Senators sent a letter to the Administration complaining about its failure to comply with another regulatory requirement, this one demanding that the president submit proposed legislation in response to a funding shortfall warning delivered by the Board of Medicare Trustees. They sent this letter to Jeffrey Zients, whom they addressed as Acting Director of the Office of Management and Budget. Mr. Zients’ 210-day term as Acting Director expired on August 14, 2012.
The US Supreme court will hear a case alleging that the USDA committed a regulatory “taking” under the 5th Amendment when it demanded a share of the petitioner’s raisin crop in exchange for the right to sell the rest. The case comes from the Ninth Circuit, which held that the district court lacked jurisdiction under its precedent.
Patent litigation is usually something that is off most people’s radar. The issues are highly complex, both technologically and legally, and usually the affected parties are the litigants themselves. There are exceptions, however, such as the ongoing case of Apple Computer v. Samsung Electronics, which has made the news because billions of dollars matt be at stake. Apple alleges that Samsung’s Galaxy S III infringes on patents it obtained with respect to the iPhone 5. Samsung says it developed the same innovations independently and has filed counterclaims against Apple. InformationWeek’s Charles Babcock provides a summary.
A long-standing issue in patent litigation is the extent to which parties use the courts strategically, either to to improve their negotiating position in licensing negotiations or just to hobble their competitors generally. Individual plaintiffs may litigate as long as the cost of litigation to any individual plaintiff is less than the expected value of actual or strategic benefits. They do not account for costs they impose on defendants or on the public at large. Thus, patent litigation may have substantial externalities.
One way to reduce these externalities is to require losers to compensate winners, such as by having to pay their attorneys’ fees (the so-called English Rule; see Wikipedia and PointofLaw.com). Patent attorney and blogger Gene Quinn highlights a recently introduced bill that would establish a version of the English Rule in certain patent litigation.
Last week the Supreme Court reversed an appellate court opinion that would have imposed $2.5 billion in punitive damages resulting from the 1989 Exxon Valdez oil spill. In the majority opinion written by Justice David Souter, the Court opined on a matter of maritime law for which there was neither a constitutional precedent nor operating law. The Court ruled that a 1:1 ratio of punitive to compensatory damages “is a fair upper limit in such maritime cases.”