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The Political Economy of Financial Rulemaking After Business Roundtable

In Business Roundtable v. S.E.C., the D.C. Circuit struck down the SEC’s proxy access rule. The court held that the SEC’s failure to perform an adequate cost-benefit analysis amounted to an arbitrary and capricious rulemaking that was not in accordance with law. The decision may be one of the most significant administrative law cases in a generation. If the D.C. Circuit adheres to its reasoning, federal agencies will no longer be able to satisfy their obligation to perform cost-benefit analyses by performing the sort of pro-forma analyses that they have been performing since the early 1980s when opponents of the regulatory state first started demanding cost-benefit analyses. Instead, they will have to perform serious cost-benefit analyses that can survive what appears to be a heightened form of hard-look scrutiny approaching de novo review. 

This note will explore the implications of the Business Roundtable decision by considering its application to rulemaking under the most important financial reform legislation since the Great Depression—the Dodd-Frank Act. This note surveys the impact that Business Roundtable will have on the gamut of political and private actors. In order to shore up their rules against court challenges, agencies will have to increase the number and quality of the economists on their staffs. This will increase the cost of rulemaking and reduce the range of rules that will pass through the new cost-benefit filters. It will result in a wide range of strategic behaviors on the part of private litigants and political actors since it raises the stakes for cost-benefit analysis mandates in statutes and executive orders.

Plenary Power Preemption

This essay responds to the Supreme Court’s recent decision in Arizona v. United States, which struck down all but one of the disputed sections of Arizona’s S.B. 1070 immigration law. It advances the theory that although the Arizona Court purported to apply classic conflict and field preemption analyses, it was actually using a different form of preemption, one that gives particular weight to federal interests where questions of national sovereignty are at stake. The Court did so through doctrinal borrowing of the “plenary power doctrine,” which gives the political branches special deference when passing or executing immigration legislation, even where doing so would otherwise violate individual constitutional rights. This Essay labels the form of preemption used in Arizona and other alienage cases “plenary power preemption.” It shows how this doctrine developed over time, as the scope of the legitimate exercise of state police power and federal immigration changed, and federal and state regulation of noncitizens became more complex and enmeshed. It argues that plenary power preemption has two important effects: it allows courts to evade the thorny question of the scope of executive—as opposed to legislative—power over immigration, and it substitutes for the lack of an equal protection doctrine that adequately protects unauthorized aliens from discrimination.

Originalism and the Other Desegregation Decision

Critics of originalist approaches to constitutional interpretation often focus on the “intolerable” results that originalism would purportedly require. Although originalists have disputed many such claims, one contention that they have been famously unable to answer satisfactorily is the claim that their theory is incapable of justifying the Supreme Court’s famous 1954 decision in Bolling v. Sharpe. Decided the same day as Brown v. Board of Education, Bolling is the case that is most closely associated with the Supreme Court’s so-called “reverse incorporation” doctrine, which interprets the Due Process Clause of the Fifth Amendment as if it effectively “incorporates” the Fourteenth Amendment’s Equal Protection Clause against the federal government. The presumed inability of originalism to justify Bolling and reverse incorporation has left originalists open to the charge that their theory would leave the federal government with unfettered discretion to discriminate against racial minorities or anyone else it chooses. 

This article challenges the conventional wisdom regarding Bolling’s assumed originalist indefensibility by recovering the original meaning of the Fourteenth Amendment’s Citizenship Clause, which declares all persons born or naturalized in the United States and subject to its jurisdiction to be citizens of the United States. Although sometimes viewed by modern commentators as an inconsequential “afterthought,” this article contends that the Citizenship Clause was widely perceived by members of the enacting generation as a central focus of the Fourteenth Amendment’s Section One and that the provision constitutionalized a longstanding American political and legal tradition linking the status of “citizenship” with the entitlement to Equal Treatment at the hands of government. Drawing on pre-Fourteenth Amendment understandings of “citizenship,” and the conceptions of citizenship reflected in the framing and ratification debates and in early interpretations of the Amendment, this article contends that the Citizenship Clause provides a historically and textually defensible basis for a legally enforceable equality guarantee applicable to federal conduct that is at least as broad as the equality guarantee made applicable to the states by the Equal Protection Clause.

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