Delegation Run Amok:

From all indications, the proposed "bailout" bill will result in delegation run amok--Congress will be ceding virtually unreviewable dictatorial power to the executive branch to spend $700 billion however it pleases. It would be amazing if, given the pile at money at stake, improper favoritism of one sort or another won't dictate to some extent how the money is spent; if I were running a bank carrying bad debt, I'd certainly be investing my "public policy" resources in ensuring that my back is at the front of the line.

Perhaps this presents an opportunity for the Supreme Court to reassert some limits on delegation. In fact, even under current doctrine, one can argue that the bill contains no "intelligible principle" as required, unless "do something about this crisis, here's a boatload of money" is an intelligible principle.

Co-blogger Eric need not fear, this need not interfere with responding to the emergency. The Court can take its sweet time to hear a case on this--the Court didn't declare the National Industrial Recovery Act unconstitutional until two years after its passage, and it would take time for appeals to percolate in any event. But an eventual decision invalidating the bailout law will make sure it's a one-time thing.

This seems like a good time to recommend David Schoenbrod's excellent book on the nondelegation doctrine, Power Without Responsibility.

Jon Rowe (mail) (www):
Given the bailout of AIG is, as Posner, noted a sale not a loan, maybe it's time -- and I say this seriously as a libertarian -- to put Chomsky's and Nader's ideas into action, at least with regard to these bailouts.

They are "democratic socialists" who believe ultimately decisions about much of the means of production shouldn't be in the hands of elite corporate fatcats but decisions should be made "democratically." I equate "democratic" with the Federal Congress. No delegations to admin agencies. Okay Congress these companies are your babies now. And by "your" we mean you as "the people's" representatives are supposed to reflect our will. If this is tax payer $$ that's bailing these companies out, I think that's the only fair way to deal with.

Of course, as a libertarian, I want to see government eventually sell its shares back to the private sector. But 1) not to the schmucks who caused the mess, 2) with safeguards in place that this mess won't happen again, and of course 3) with companies back in sound financial shape.

This could take a long time. In the meantime, I'd say Chomsky's and Nader's idea of publicly owned goods democratically dealt with should persist.
9.21.2008 8:58pm
I've been away for a few days, but maybe someone can fill me in: did Prof. Posner ever support his claim that the AIG bailout is a sale not a loan with any citations to any actual cases or descriptions of actual customary market practices? Or is the edifice of constitutional analysis still founded on the classroom hypothetical where a loan with a gazillion dollars of interest matures in one day?
9.21.2008 9:36pm
George Weiss (mail) (www):
what could the court do to hear the case

a) the statute strips the court from judicial review of the matter
b) who would really have standing to protest anyway-what bank could show that were it not for the unprecedented delegation they would have not been damaged? if anything-if not for the bill-they would be MORE in the hole
c) wouldn't any prospective plaintiff banks realize that if the program is scrapped due to judicial interference they might loose more than if there was favoritism (see b)
9.21.2008 9:40pm
This much money flying around is gonna make the S&L bailout look like peanuts.

9.21.2008 9:46pm
Mahan Atma (mail):
The jurisdiction stripping is most likely unconstitutional, or at least I'd expect a court to find so.

The standing issue is harder. If ever there was a case that screamed out for taxpayer standing, this is it.
9.21.2008 9:52pm
George Weiss (mail) (www):
mahan- i guess your right that if there should ever be any possibility for taxpayer standing this should be it

but why is the jurisdiction stripping unconstitutional? its not like the gitmo/citizen terrorist cases where there is a direct right of habeus/due process that had not been suspended

its clear that the appellate jurisdiction of the susrpe court is otherwise totally within the preview of congress-and its equally clear that the issue is not one of original jurisdiction
9.21.2008 9:58pm
Texas Lawyer:

I'd like to think that the jurisdiction stripping is unconstitutional, but I'm not sure that is the case under current law. I know that jurisdiction stripping is suspect when it involves a de facto suspension of habeas corpus, but I don't know if that would be the case when the issue is the reviewability of possible improper delegation.

I think there's a fair chance that this provision will make any decisions unreviewable.

I believe someone made the comment a few posts ago that, whatever you think of these Bushies, they have learned from their losses.
9.21.2008 9:58pm
Mahan Atma (mail):
I suppose yes, it depends on the nature of the claim made, but if there's a decent constitutional claim, I think a court strikes down that provision.

It might be different if the law created some limited jurisdiction (DC Court of Appeals or somesuch), but I don't think federal courts are going to allow the Executive Branch to wipe out wholesale their jurisdiction on an important constitutional issue. That way lies madness.

I'm saying this as a practical matter, not a matter of case law. I haven't had fed courts in a few years now, and my practice doesn't involve that area very much, so I'd have to go back and study the case law to bring that into it.

Have to go for now.
9.21.2008 10:07pm
Mahan Atma (mail):
^^ Should be Executive Branch and Congress.
9.21.2008 10:08pm
Asher (mail):

The standing issue is harder. If ever there was a case that screamed out for taxpayer standing, this is it.

Surely somebody or another suffers a financial injury from this bailout. Remember when the line-item veto got challenged in Court? Here's Wikipedia:

six members of Congress, including Republican Mark Hatfield sued to prevent use of the line-item veto. They were granted summary judgment by the U.S. District Court, but the Supreme Court held that the Congressmen lacked standing because they could not show any particularized harm, and dismissed their suit.[2] Within the next two months, Clinton began using the line-item veto, prompting several entities to file suit in a second attempt to have the Act declared unconstitutional.

In the second case, which was consolidated from two cases by the U.S. District Court for the District of Columbia, the City of New York and several organizations related to health care alleged injury from President Clinton's cancellation of certain provisions of the Balanced Budget Act of 1997 that eliminated certain liabilities, and Snake River Potato Growers, Inc. alleged injury from the President's cancellation of certain provisions of the Taxpayer Relief Act of 1997 that gave tax benefits to aid farmer's cooperatives in purchasing potato processing facilities.

Snake River Potato Growers. Someone always has standing. You just have to look.
9.21.2008 10:15pm
jbvv (mail):
The thing that critics of this plan seem to forget is that we are at war.

Now is not the time to hamstring the executive branch which needs the power to act quickly to protect Americans.
9.21.2008 11:05pm
Sagar (mail):
Sure, this is delegation run amok, but there is no other realistic option since the petty thieves in congress do not understand what to do - so they have to depend on Paulson and the Fed to fix this.

I wish someone has the standing to challenge this $800+ billion haircut, especially since it is our money.
9.21.2008 11:29pm
The war on fiscal responsibility?
9.21.2008 11:34pm
Sean O'Hara (mail) (www):
And it gets even worse.

In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department's mortgage bailout, according to the fine print of an administration statement Saturday night.

The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.

Isn't this taking globization a little too far?
9.22.2008 12:41am