Note

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.

Chevron and Constitutional Doubt

Federal agencies regularly sail in murky constitutional waters. Established principles of statutory interpretation, however, leave federal courts adrift amid these dangerous shoals. When faced with agency interpretations that raise constitutional doubts, courts are torn. On the one hand, the famous rule of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. instructs courts to defer to an agency’s reasonable interpretation of its own statute. On the other, cutting against deference, the longstanding canon of constitutional avoidance counsels courts, when possible, to choose a statutory construction avoiding serious constitutional doubts. Although the Supreme Court eventually resolved this dilemma in favor of the avoidance canon, the Court’s rationale remains somewhat of a mystery. Commentators generally tell a story of policy. This Note offers an alternative textualist account rooted in historical practice.

Why the Religious Freedom Restoration Act Provides a Defense in Suits by Private Plaintiffs

In Employment Division v. Smith, the Supreme Court reversed course in its First Amendment doctrine, moving away from strict scrutiny protection for religious freedom and towards a more lenient standard akin to a rational basis test. Congress took action in response by enacting the Religious Freedom Restoration Act (RFRA) in 1993. In order to provide broad protections for the free exercise of religion and to provide a defense for religious beliefs against generally applicable laws, RFRA restored the pre-Smith compelling interest test. However, an ambiguity in the judicial relief section has given rise to a circuit split. Some circuits have found that RFRA does not provide a defense to religious individuals and organizations in suits brought by a private plaintiff. As a result, RFRA’s ability to provide broad religious protection has been significantly impaired. This paper resolves this circuit split, defending the conclusions in Hankins v. Lyght and finding that RFRA does provide a defense in private citizen suits. In Parts I – III, the paper applies a purely textualist analysis, closely examining RFRA’s text and its drafting history. It concludes that the judicial relief section unambiguously provides a defense in citizen suits. Part IV supplements this conclusion by excavating the legislative history surrounding the religious liberty bills – the 1993 RFRA and the proposed 1999 Religious Liberty Protection Act (RLPA.) The record is clear that Congress had a shared understanding RLPA would provide a defense in citizen suits. In discussing the merits of the bill, both proponents and opponents cited to cases with private plaintiffs and advanced policy considerations based on the assumption that RLPA would apply in citizen suits. 

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