CFPB Proposal Unconstitutionally Imposes Prior Restraint on Regulated Entities’ Speech

rublin_burt_102_recodelnero_daniel_2Guest Commentary

By Burt M. Rublin, Partner, and Daniel L. Delnero, Associate, Ballard Spahr LLP

Prior restraints on speech are highly disfavored and presumptively unconstitutional. See Tory v. Cochran, 544 U.S. 734, 738 (2005) (“Prior restraints on speech and publication are the most serious and the least tolerable infringement on First Amendment rights.”). Yet the Consumer Financial Protection Bureau (CFPB) proposed exactly that in its Proposed Rule Relating to Disclosure of Records and Information (Proposed Rule), CFPB-2016-0039, 81 Fed. Reg. 58310 (Aug. 24, 2016). CFPB seeks to prohibit the recipient of a civil investigative demand (CID) or letter from the agency providing notice and opportunity to respond and advise (NORA letters) from disclosing the CID or NORA letter to third parties without prior written consent of a high-ranking CFPB official.  In effect, this would constitute a “gag” rule that would stifle constitutionally protected speech.

The proposed gag rule is not only ill-advised as a matter of public policy, it is also unconstitutional both as a prior restraint on speech and a content-based restriction.  It would be subject to strict scrutiny, and the CFPB would have to show a compelling government interest to justify it, which it could not.  Indeed, CFPB has not claimed, nor could it claim, that the absence of a similar gag rule since the creation of CFPB has hindered or impaired its effectiveness.  Continue reading

Court’s “FTC v. Amazon” Decision Endorses Agency’s Disregard for Economic Analysis

amazonOn May 24, 2016 a subcommittee of the House of Representatives Energy and Commerce Committee held a hearing on a number of bills (17, to be exact) regarding the Federal Trade Commission’s consumer-protection mission. A number of proposals seek to fortify the vigor and transparency of the economic analysis FTC must perform when taking action against alleged “unfair” acts or practices under § 5 of the FTC Act. Some observers, (including former FTC Commissioner Josh Wright, who testified at the hearing) feel the Commission often gives short shrift to the “not-outweighed-by-countervailing-benefits-to-consumers-or-competition” language in the statute’s Unfairness Statement.

Wright’s testimony offers as an example the Commission’s 2014-2015 actions against several mobile app sellers’ “in-app purchase” sales practices. While on the Commission, Wright dissented from FTC’s complaint that Apple acted unfairly in how it designed the mechanism for app buyers to make purchases within the app. FTC alleged that Apple did not do enough to prevent children from making in-app purchases their parents did not authorize. In his dissent, Wright criticized FTC for failing to consider the countervailing benefits of Apple’s approach, such as relieving consumers of the need to constantly enter passwords, as well as the costs associated with government micromanagement of app design. Continue reading

EPA Poised to Attempt Fracking Ban Through Orchestrated Settlements?

white flagReturning to the topic of hydraulic fracturing (see Mark Chenoweth’s May 4 post below), we note the lawsuit that the Natural Resources Defense Council (NRDC) and other environmental activists filed on May 4 against EPA, alleging that the agency simply is not doing enough to regulate fracking. Just two days earlier, the Colorado Supreme Court held that state law preempts efforts by local governments to regulate fracking. Perhaps that outcome dictated the timing of NRDC’s action. Such local ordinances are part of NRDC’s three-pronged approach to attacking this oil and natural-gas extraction method. The coalition of plaintiffs includes Earthworks, which intervened to defend the local ordinance in one of the Colorado cases. Continue reading

Fifth Circuit Allows Maliciously Prosecuted Company to Sue US Government for Damages

EPAcrimIn 1996, a heavily armed team of EPA criminal investigators raided a facility of Louisiana company Trinity Marine Products, Inc. Three years later, the federal government indicted the company and manager of the raided facility, Hubert Vidrine, for illegally storing hazardous waste without a permit. The U.S. Attorney dismissed the indictment in 2003. On February 8, 2016, 20 years after the EPA raid, the U.S. Court of Appeals for the Fifth Circuit has cleared the path for the company to at last pursue Federal Tort Claims Act (FTCA) remedies against the government. As we explained in a WLF Legal Pulse post, Mr. Vidrine, with assistance from WLF attorneys, won a $1.7 million malicious-prosecution claim under the same law in 2011. Continue reading

Accountability for Thee, But Not for Me: EPA, the Animas River and “Environmental Crime”

Cement Creek, Silverton, Colorado

Cement Creek, Silverton, Colorado

Over the past two weeks, several executives for a now-bankrupt chemical supply company in West Virginia received prison sentences for discharges of a pollutant and for failing to have a pollution-prevention plan. At the same time these developments unfolded, a U.S. House of Representatives committee released a report shedding further light on the role of Environmental Protection Agency employees and contractors in the release of toxic wastewater from a Silverton, Colorado mine on August 5, 2015. The juxtaposition of the two cases amply demonstrates the double standard that prevails where federal government employees evade accountability for their actions while demanding full environmental compliance from everyone else. Continue reading

CDC Bows to Demands for Transparency and Public Input on Draft Opioid-Prescribing Guideline

cdc_logo(3)Over the past year, the Centers for Disease Control and Prevention (CDC) has been drafting a Guideline for Prescribing Opioids for Chronic Pain in relative secrecy, relying upon the input of a hand-picked group of advisers and a limited number of stakeholders. Such a stealth approach drew criticism from numerous interested parties, including Washington Legal Foundation, which explained in a November 17, 2015 letter to CDC that the agency’s drafting process ran afoul of the Federal Advisory Committee Act (FACA).

This week, CDC took several unexpected steps towards greater transparency for its prescribing guideline project, implicitly conceding its prior FACA violations. The director of CDC’s National Center for Injury Prevention and Control informed WLF on December 14 of its about-face in a letter responding to our November 17 missive. That same day, CDC published a notice in the Federal Register that seeks comments on the draft guideline and also directs the public to numerous previously-unreleased documents. In addition, CDC announced that it will ask a federal advisory committee, its Board of Scientific Counselors, to review the draft guideline and public comments and make recommendations to the agency. Continue reading

Advisory Committee’s Violations of Federal Law Threaten Credibility of 2015 Dietary Guidelines

MyPlateIn introducing an October 7, 2015 oversight hearing on the forthcoming 2015 Dietary Guidelines for Americans (DGA), House Agriculture Committee Chairman Michael Conaway stated, “It is essential that the guidance that comes out of this process can be trusted by the American people.” Chairman Conaway framed that remark in the context of the scientific evidence the 2015 Dietary Guidelines Advisory Committee (DGAC) relied upon in its Scientific Report. Lawmakers should question the quality of the report’s science, but their probe of the DGAC and its work shouldn’t stop there. Another, perhaps greater, threat to the Dietary Guidelines’ credibility is the significant breaches of federal law that occurred in the creation of the DGAC. Violations of the Federal Advisory Committee Act (FACA) infect the entire Scientific Report and call into question its recommendations and any federal regulatory proposals that rely on the report or the resulting DGA. Continue reading