Notice & Comment

D.C. Circuit Review – Reviewed: Black Monday

This week was a quiet one at the D.C. Circuit — just two cases, neither of which involves “admin law.”* The Thanksgiving holiday undoubtedly played a role. Thanksgiving, however, prompts a thought. With all the talk of Black Friday, my mind turned to one of the most important days in the history of administrative law: Black Monday. This week is a good one to turn back the clock 80 years.

“Black Monday” was May 27, 1935. On that day, the U.S. Supreme Court — unanimously — issued three momentous decisions. In A.L.A. Schechter Poultry Corp. v. United States, the Court struck down the National Industrial Recovery Act on nondelegation grounds. In Louisville Joint Stock Land Bank v. Radford, the Court invalidated the Frazier-Lemke Act’s mortgage moratorium on Takings Clause grounds. And in Humphrey’s Executor v. United States, the Court rejected President Roosevelt’s removal of a Federal Trade Commissioner. The message was clear: the Court would not “let this government centralize everything.”

Black Monday deserves more than a blog post. (The Chief Justice, for instance, has also been thinking about this period of history.) Even so, I want to focus on three aspects of Black Monday — one for each of the cases.

First, although Schechter Poultry remains the high-water mark, it is a mistake to think that the nondelegation doctrine is entirely dead. Cass Sunstein, for instance, has explained that “the doctrine is alive and well. It has [just] been relocated.” Indeed, as the Supreme Court has put it, “[i]n recent years, our application of the nondelegation doctrine principally has been limited to the interpretation of statutory texts, and, more particularly, to giving narrow constructions to statutory delegations that might otherwise be thought to be unconstitutional.” While the Supreme Court is wary of drawing lines between acceptable and unacceptable delegations, the justices still worry about who makes the law. Just last year, for instance, Justice Kennedy invoked nondelegation principles during the Hobby Lobby oral argument: “What kind of constitutional structure do we have if the Congress can give an agency the power to grant or not grant a religious exemption?” And Justice Thomas also has interesting things to say on this subject.

Second, earlier this year — yes, decades after the New Deal — the Supreme Court ruled against another New Deal program on Takings Clause grounds. In Horne v. Department of Agriculture, the Court sternly rejected the federal government’s power to seize raisins. (Note, I was co-counsel for petitioners the first time this case went to the Supreme Court. At oral argument in that round, Justice Kagan asked a brutal question of the government: Is “this marketing order [] a taking or [] just the world’s most outdated law?”) Horne makes clear that when the government physically takes property, the Just Compensation Clause kicks in, even if the taking is part of a regulatory scheme. As Michael McConnell, counsel for the Hornes, has explained, the government cannot physically take property without paying just compensation, even when it can impose use restrictions on that property. After all, “[t]he government has little incentive to impose use restrictions whose costs exceed the regulatory benefits,” but “[w]hen the government takes the property, [] it now has a thing of value that it can use for its own purposes.”

And third, although each of these cases dealt a heavy blow, it was Humphrey’s Executor that most outraged President Roosevelt. Roosevelt knew he was on shaky ground in Schechter Poultry (which concerned a law that “conferred authority to regulate the entire economy on the basis of no more precise a standard than stimulating the economy by assuring ‘fair competition’”). But Humphrey’s Executor was supposed to be different. Indeed, Stanley Reed, then the Solicitor General, told the President that the case “couldn’t be lost.” After all, less than a decade earlier, the Court had upheld the president’s removal power. Yet in Humphrey’s Executor, the Court went the other way, explaining that “we think it plain under the Constitution that illimitable power of removal is not possessed by the President . . . .” According to Robert Jackson, Humphrey’s Executor made Roosevelt “madder at the Court than any other decision.” Humphrey’s Executor’s holding that “for cause” removal restrictions are constitutional remains good law. But the reasoning the Court gave — that Congress can shield commissioners from removal because the FTC “acts in part quasi-legislatively and in part quasi-judicially” — has been superseded. The Supreme Court in recent years, moreover, has (somewhat) limited Humphrey’s Executor. (Judge Kavanaugh also has offered thoughts on this case.)

So there you have it: food for thought as you enjoy turkey sandwiches.

* One of this week’s cases is a fascinating criminal appeal involving international racketeering. The D.C. Circuit’s opinion, by its own admission, creates a circuit split with the Fourth Circuit regarding whether a “second defense attorney must be retained after the prosecution irrevocably removes the possibility of a death sentence.” The D.C. Circuit held that the answer is no, among other interesting holdings. The other is a False Claims Act case concerning “certifications . . . to the Export-Import Bank to secure loans financing MWI’s sale of water pumps to Nigeria.” The Court held that the government failed to show that any false claims were knowingly made: “We agree with MWI that the meaning of the term ‘regular commissions’ is ambiguous and that MWI’s interpretation is reasonable.”

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