Sunday, March 29, 2009

George Will Favors A More Activist Court: Argues That Bailout Law Violates Constitution

George Will has published an essay which argues that the Emergency Economic Stabilization Act of 2008 (or "EESA"), known affectionately as the "bailout" legislation, is unconstitutional. Will contends that the EESA violates the "nondelegation doctrine." This doctrine, rooted in the separation of powers, prohibits Congress from delegating its legislative authority. The Supreme Court, however, has applied this doctrine with a tremendous degree of flexibility.

Supreme Court precedent allows Congress to legislate in broad terms and delegate to the Executive Branch the authority to promulgate specific rules and policies that effectuate or give substance to the legislation. The Court only requires that Congress provide meaningful guidelines for the exercise of executive discretion. Chief Justice Taft's opinion in the 1928 case J.W. Hampton v. United States contains the most definitive language on this subject:
If Congress shall lay down by legislative act an intelligible principle to which the person or body [authorized to exercise discretion] is directed to conform, such legislative action is not a forbidden delegation of legislative power.
Will argues that the EESA "flunks" the intelligible principle test:
By enacting [the EESA], Congress did not in any meaningful sense make a law. Rather, it made executive branch officials into legislators. Congress said to the executive branch, in effect: "Here is $700 billion. You say you will use some of it to buy up banks' 'troubled assets.' But if you prefer to do anything else with the money -- even, say, subsidize automobile companies -- well, whatever."
Will analogizes the EESA to the hypothetical and dramatically vague "Goodness and Niceness Act," which Professor Gary Lawson describes in an essay that criticizes the granting of broad discretion to the Executive Branch by Congress. Lawson's hypothetical statute bans "all transactions involving interstate or foreign commerce that do not promote goodness and niceness," and it authorizes the President to "define [its] content . . . by promulgating regulations to promote goodness and niceness in all matters involving commerce and . . . specify[ing] penalties for violations of those regulations."

Will Overstates the Ambiguity of the EESA
The EESA undoubtedly gives the President and the Secretary of Treasury wide discretion (I have previously written an essay on the subject). Will, however, overstates the statute's ambiguity. The statute places parameters around the use of bailout funds by defining "troubled assets":
TROUBLED ASSETS.—The term ‘‘troubled assets’’ means—
(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary [of Treasury] determines promotes financial market stability; and

(B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
Although the statute permits the purchase of "other financial instruments" that promote "financial market stability" but never defines the phrase "financial market stability," this does not mean that the law lacks an intelligible principle. The phrase is sufficiently specific and commonly used to qualify as an intelligible principle under Supreme Court's precedent.

Will Advocates A More Activist Judicial Role In This Area
If the Supreme Court applied the nondelegation doctrine in a more activist fashion, then Will's essay would present a more plausible constitutional argument. The Supreme Court, however, has applied the nondelegation doctrine with a high degree of flexibility.

Will correctly observes that "[s]ince the New Deal era, few laws have been invalidated on the ground that they improperly delegated legislative powers." Will fails to mention, however, that prior to 1935, the Court had never invalidated a law on the ground that it impermissibly delegated legislative authority. For almost the entirety of its existence, the Supreme Court has declined to use the nondelegation doctrine to constrain Congress.

In the 1989 case Mistretta v. United States, the Court upheld over a nondelegation challenge the creation of the Federal Sentencing Commission, which Congress authorized to promulgate sentencing guidelines for federal crimes. The 8-1 ruling, which united Justices as diverse as Rehnquist and Brennan, documents the Court's historically flexible approach to nondelegation questions:
[O]ur jurisprudence has been driven by a practical understanding that, in our increasingly complex society, replete with ever-changing and more technical problems, Congress simply cannot do its job absent an ability to delegate power under broad general directives.

"The Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicality, which will enable it to perform its function." Accordingly, this Court has deemed it "constitutionally sufficient if Congress clearly delineates the general policy, the public agency which is to apply it, and the boundaries of this delegated authority."
Despite the Supreme Court's longstanding flexibility on this issue, Will believes that courts should declare the EESA unconstitutional. This act alone would compel a more activist stance by the judiciary.

Invalidating the legislation, however, would also require courts to defy the will of two presidents, two sessions of Congress, and the Secretaries of Treasury of two administrations -- who have supported the legislation. Democracy does not preclude judicial invalidation of laws that elected officials favor. Will's argument, however, is inconsistent with traditional conservative appeals to judicial deference.

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