The Judiciary Can Corral the Administrative State, but Only the People Themselves Can Tame It

madison
James Madison

The executive power of this nation would, James Madison wrote in Federalist 48, be “restrained” within a “narrow compass.” The judicial power could, in his view, be “described by landmarks still less uncertain.” It was against “the enterprising ambition” of the legislature, he believed, that “the people ought to indulge all their jealousy and exhaust all their precautions.” Unless the other departments and the people remained vigilant, Madison warned, the legislature would draw “all power into its impetuous vortex.”

This outlook was informed by the excesses of the ancient Athenian mob, which, as Madison put it in Federalist 63, decreed “to the same citizens the hemlock on one day and statues on the next.” But although he still talks, on occasion, like a fanatic, the modern congressman pushes much of his power away with both hands. That power is gladly accepted by the modern bureaucrat, an upstart bent on steering the ship of state off the course set by the Founders. Continue reading “The Judiciary Can Corral the Administrative State, but Only the People Themselves Can Tame It”

Knick v. Scott Township: Whack-a-Mole at the Supreme Court

whackToday’s Supreme Court argument in Knick v. Scott Township made clear that state and local governments are playing Whack-a-Mole with private property rights. Whack-a-Mole is the arcade game in which every time a mole is whacked down, a new one pops up. At issue in Knick is whether to overturn the Court’s 1985 Williamson County decision, which held that Fifth Amendment Takings Clause claimants are generally relegated to state court.

When property rights advocates subsequently pointed out that Williamson County effectively barred property owners from ever asserting their Fifth Amendment rights, state and local governments persuaded the Court to re-interpret the nature of a Takings Clause violation (in its 2005 San Remo Hotel decision) to eliminate the no-right-to-assert problem. But when Justice Gorsuch suggested at today’s oral argument that this revised interpretation of the Takings Clause undercuts Williamson County’s rationale, the attorney for Scott Township denied the validity of the revised interpretation—in effect arguing that San Remo ought to be overruled. Continue reading Knick v. Scott Township: Whack-a-Mole at the Supreme Court”

Quality Control at a Sustainable Cost: Blockchain Solutions for Bank Secrecy and Anti-Money-Laundering Compliance

Featured Expert Contributor, Legal & Regulatory Challenges for Digital Assets

Alter_Daniel_web2_8784879218361By Daniel S. Alter, a Shareholder in the New York, NY office of Murphy & McGonigle P.C.

I’ve banged on this drum before in American Banker but—given recent and exciting developments in blockchain technology—it’s time to beat on it again.  The costs of Bank Secrecy Act and Anti-Money Laundering (BSA-AML) compliance are an enormous regulatory burden on financial institutions, particularly for small and middle market firms.  And considering the global security implications posed by terrorist financing and other criminal money-laundering operations, there are no corners to cut in meeting these requirements.

Yet, as one major vendor of compliance systems has observed, criminals are “increasingly laundering money through smaller regional banks, believing that these institutions do not have the millions to invest in the processes and technology needed” to combat the problem.  I say again, there is a private-market solution to this public-safety challenge. Continue reading “Quality Control at a Sustainable Cost: Blockchain Solutions for Bank Secrecy and Anti-Money-Laundering Compliance”

Ninth Circuit Judges Call for En Banc Review of FTC’s Authority to Obtain Monetary Relief

Featured Expert Contributor, Antitrust & Competition Policy — Federal Trade Commission

By M. Sean Royall, a Partner with Gibson, Dunn & Crutcher LLP, with Blaine H. Evanson, and Richard H. Cunningham, Partners, and Brandon J. Stoker, an Associate, with the firm.

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Less than two years ago, David Vladeck, a Professor at Georgetown University Law Center who served as the Director of the FTC’s Bureau of Consumer Protection from 2009 to 2012, described the argument that the FTC Act does not permit the agency to obtain equitable monetary relief as “repeatedly and uniformly rejected by every court to address it.”  Two Ninth Circuit judges, however, recently signaled that the landscape in this area may be changing in the wake of the Supreme Court’s 2017 Kokesh v. SEC decision.

In an extraordinary procedural move, on December 3, 2018, Ninth Circuit Judge Diarmuid F. O’Scannlain, joined by Judge Carlos T. Bea, wrote a special concurrence to his majority opinion in FTC v. AMG Capital Management, LLC et al., in which he described permitting the FTC to obtain monetary relief under Section 13(b) of the FTC Act as “an impermissible exercise of judicial creativity” that “contravenes the basic separation-of-powers principle that leaves to Congress the power to authorize (or to withhold) rights and remedies.”  Slip Op. at 36.  The concurrence called on the Ninth Circuit to hear the case en banc to reconsider its 2016 decision in in FTC v. Commerce Planet, Inc.,* which held that  the FTC may obtain monetary relief pursuant to Section 13(b), and walked through how the Kokesh decision calls the reasoning of Commerce Planet into question. Continue reading “Ninth Circuit Judges Call for En Banc Review of FTC’s Authority to Obtain Monetary Relief”

Airbnb v. NYC: Data Collection and Fourth Amendment Protection

airbnbDuring 2018, the hand-wringing demands for “better” protection of online consumers’ privacy (despite the likely costs, some of which we documented here) grew to a fever pitch. Easily forgotten amid the cacophony is data-collecting companies’ own expectation of privacy in their extremely valuable property. A federal court decision last week provides a timely reminder that businesses possess civil liberties too, which they can use to defend against unreasonable government intrusion. The decision also gives local, state, and federal regulators and legislators something to keep in mind as they rush to “do something” about data privacy.

The decision arises from New York City’s attempt to minimize the societal ills that purportedly accompany short-term rentals. Citing the difficulty of enforcing a 2010 city ordinance that prohibits certain rental arrangements, the City Council approved a second ordinance last year requiring all home-share “booking services” to hand over monthly transaction reports. Regulators could then scour the reports for violations of the 2010 law. The 2018 law, which was to take effect on February 2, imposes fines of up to $1,500 for each withheld listing. Continue reading Airbnb v. NYC: Data Collection and Fourth Amendment Protection”

Update: Solicitor General Encourages SCOTUS to Review Vast Expansion of Clean Water Act

supreme courtA November 2018 commentary by our Featured Expert Contributor on environmental-law matters, Samuel Boxerman (with Ben Tannen), discussed two related petitions for certiorari pending at the U.S. Supreme Court that presented a novel Clean Water Act question: whether a discharge through groundwater is an addition of a pollutant to waters of the United States from a point source.  Decisions from the U.S. Courts of Appeals for the Fourth and Ninth reasoned that the groundwater qualifies as a point source. Other appeals courts, including the Sixth Circuit, disagree.

In December, the Court invited the Solicitor General of the United States to present the government’s view on whether to grant the petitions. Yesterday, the Solicitor General filed its brief with the Court, urging it to resolve the circuit split.

The brief doesn’t express the government’s legal position on the groundwater-discharge issue, but it does explain why the Ninth Circuit decision, Hawai’i Wildlife Fund v. City of Maui, offers a better vehicle for circuit-split resolution. The Solicitor General also explained that the Environmental Protection Agency’s ongoing review of groundwater’s status as a point source under the CWA (see WLF’s comments here) is not a reason for the justices to deny certiorari.

The question before the Court is a critical one for free enterprise. As Mr. Boxerman and Mr. Tannen wrote in a February 2018 commentary on the Maui decision:

Left as is, the Maui decision could present significant issues across industry.  By holding that the Clean Water Act regulates discharges through groundwater without providing a limiting principle as to when the connection to U.S. waters is too remote, the Ninth Circuit has exponentially increased a source’s risk of liability under the Act.

 

End the Endless Extensions of the Seal Period in False Claims Act Qui Tam Cases

Featured Expert Contributor, False Claims Act

Stephen_Wood_03032014Stephen A. Wood, Chuhak & Tecson, P.C.

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The False Claims Act’s qui tam provisions permit private persons or entities to bring suit in the name of the government against defendants who are claimed to have violated the law.  An action is commenced by filing a complaint under seal and serving upon the government “substantially all material evidence and information the person possesses.”  31 U.S.C. § 3730(b)(2).   Once filed, the government has 60 days to investigate the case.  Id.  At the end of its investigation, the government must make an election—either take over the case or decline to intervene.  31 U.S.C. § 3730(b)(4).  The government may also move to dismiss the action or attempt to settle with the defendant during this time period.  See 31 U.S.C. § 3730(c)(2).

Neither the statute itself nor the legislative history of the FCA contemplates that the government should have an indefinite period of time in which to investigate a potential False Claims Act violation.  Yet, that has been an unfortunate reality in many qui tam cases, where the proceedings have remained under seal at the request of the government for years.  This practice is not only contrary to the statutory language and legislative history, it is abusive and potentially threatens a defendant’s fundamental right to due process.  It is incumbent upon both courts and defendants to put a stop to this abuse and require the government to live within the statutory dictates and Congress’ stated intent. Continue reading “End the Endless Extensions of the Seal Period in False Claims Act Qui Tam Cases”