Tag Archives: Andrew M. Grossman

An originalist libel defense

By David B. Rivking Jr. and Andrew M. Grossman

31 July 2019 in the Wall Street Journal

A federal judge in Kentucky dismissed high-school student Nicholas Sandmann’s libel suit against the Washington Post last week. That’s no vindication of the newspaper’s skewed reporting on the teen’s run-in with American Indian activist Nathan Phillips on the National Mall in January. But it’s a vindication of the First Amendment’s limitations on state libel law, which have come under scrutiny of late, including from President Trump and Justice Clarence Thomas.

Mr. Sandmann and his peers were targeted by a Twitter mob, and the Post joined in portraying him as the villain in a “white privilege” morality play. Mr. Sandmann claimed the Post had defamed him by repeating Mr. Phillips’s claim that Mr. Sandmann had physically “blocked” him. That judge held that was an opinion, not a factual claim, and therefore shielded by the First Amendment.

That conclusion may be debatable, but the First Amendment’s protection of opinion shouldn’t be. It is the legal expression of America’s “national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open,” as Justice William Brennan put it in New York Times Co. v. Sullivan (1964), which established that the Constitution imposes limits on state libel law.

Mr. Trump said in 2016 that he wanted to “open up” libel laws, and in February Justice Thomas wrote a solo opinion arguing that Sullivan departs from the Constitution’s original meaning. He has a point: Brennan’s reasoning is all policy. For decades, originalists like Justice Antonin Scalia have criticized it as an exercise of raw judicial power. Yet there’s a good originalist case for limits on libel law.

Sullivan established that government officials suing for defamation must demonstrate that the defendant either knew that the defamatory statements were false or acted with “reckless disregard” for their accuracy—a standard confusingly known as “actual malice.” Later decisions extended the requirement to all “public figures,” whether or not they hold office.

Sullivan made it far more difficult for plaintiffs to win libel suits, even for statements that are false and seriously damaging. That price is worth paying, the justices reasoned, to provide breathing room for “uninhibited, robust, and wide-open” debate of public issues, given that inadvertent falsehoods are inevitable. Critics blame Sullivan for declining journalistic standards—including the Post’s mobbing of Mr. Sandmann and his classmates.

But that’s all policy. What about the law?

Sullivan was right to recognize the Constitution’s relevance in libel cases. It doesn’t matter that libel suits are brought by private parties, rather than the state, because it is the state’s law that imposes the liability. If the First Amendment precludes a statute imposing fines for speech criticizing government officials, why would the constitutional analysis be different for a law that awards money to a plaintiff?

And while it may be that “the freedom of speech” recognized by the First Amendment does not protect defamatory speech—which was Scalia’s view and apparently is Justice Thomas’s—no one seriously argues that a state can punish any speech it wants, free from constitutional scrutiny, merely by labeling it “defamation.” That means the court has to define the term somehow.

For all Justice Thomas’s criticism of Sullivan, he doesn’t take issue with its conclusion that the Constitution limits the reach of libel law. His beef is with the actual-malice standard. And that’s where things get complicated.

To begin with, he doesn’t say what he thinks the proper constitutional standard should be. He observes that judge-made common law provides the “backdrop” for understanding the First Amendment’s guarantees of freedom of speech and the press, and he cites cases showing that the adoption of the First and 14th amendments “did not abrogate the common law of libel.” That suggests he would have courts scrutinize libel claims for whether they comport with the historical understanding of defamation—if so, the speech would be unprotected. As he notes, it was black-letter law at the time of the framing that a libel plaintiff didn’t have to assert actual malice at the outset of the case.

But plaintiffs often did have to prove actual malice to prevail. The law recognized circumstances in which a libel defendant could assert a “qualified” or “defeasible” immunity from damages and thereby put the plaintiff to the burden of proving “express” or “actual” malice under more or less the same standard Sullivan prescribed. One musty treatise, published in 1877, reports such immunity applies whenever the speaker has a “legal, social, or moral” duty to comment on another’s character, fitness or conduct, including in matters of business, crime, morality or religion. Moreover, libel claims concerning government officials’ conduct were often subject to the actual-malice standard, as were claims for punitive damages. Sullivan’s reasoning was loose, but it didn’t fashion actual malice out of whole cloth.

And it may be that Justice Thomas’s understanding of the First Amendment is wrong. What if “the freedom of speech” does protect defamation? There was no reason for it to be excluded. James Madison’s view was that freedom of speech should be understood as a broad natural right, not a specialized legal concept. The only other appearance of “speech” in the Constitution is the Speech or Debate Clause, which completely immunizes members of Congress from liability for legislative speech. The federal government had no general authority to punish or regulate libel. No one expected in 1789 that the First Amendment would apply to state law, and it didn’t until it was incorporated under the 14th Amendment.

Yet this poses a conundrum: Imposing so strict a rule on the states would abolish libel laws altogether. Among the ways a court might reconcile the First and 14th amendments, actual malice has the benefits of historical pedigree, practical experience, and balancing vigorous public debate with at least some compensation and deterrence.

Modern originalism is young, and answers to these questions of original meaning often involve some doubt. Yet the Sullivan court might have stumbled onto a standard that comports with the Constitution.

Messrs. Rivkin and Grossman practice appellate and constitutional law in Washington. Mr. Rivkin served at the Justice Department and the White House Counsel’s Office. Mr. Grossman is an adjunct scholar of the Cato Institute.

Source: https://www.wsj.com/articles/an-originalist-libel-defense-11564613833

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Kavanaugh and the Ginsburgh Standard

Don’t blame Brett Kavanaugh when he demurs at his confirmation hearing from answering questions on legal issues that might come before the Supreme Court. It’s the senators who will be in the wrong, for demanding commitments that no judicious nominee could provide. To answer “direct questions on stare decisis on many other matters, including Roe and health care”—as Minority Leader Chuck Schumer has called for—would itself be disqualifying.

That principle has come to be called the Ginsburg Standard, after Justice Ruth Bader Ginsburg. As she explained in the opening statement of her 1993 confirmation hearing: “A judge sworn to decide impartially can offer no forecasts, no hints, for that would show not only disregard for the specifics of the particular case—it would display disdain for the entire judicial process.” Or, as she later responded to a question about constitutional protections against discrimination based on sexual orientation: “No hints, no forecasts, no previews.”

It would be a mistake to associate the rule too closely with Justice Ginsburg, who honored it inconsistently at her hearing, or to view it as driven only by policy considerations. In fact, the standard has deep roots in the law and history.

Begin with the Constitution. The Appointments Clause provides that judges, including Supreme Court justices, are appointed by the president “with the Advice and Consent of the Senate.” From the nomination of John Jay as the first chief justice in 1789 through the mid-1950s, public confirmation hearings were rare. Few nominees attended them when they did occur, and only a handful testified. Senators had no occasion to grandstand by demanding that a nominee declare his stance on legal controversies.

Since hearings became the norm, the number of questions asked of nominees has exploded, with recent nominees facing more than 700 apiece. Yet two aspects of the process haven’t changed. The first is the refusal of nominees to opine on actual or hypothetical cases that may come before the high court. The second is senators’ griping in response. At a 1968 hearing, Sen. Sam Ervin (D., N.C.) bemoaned that the nominee, Judge Homer Thornberry, had “virtually created a new right not found in the Constitution, which might well be designated as the judicial appointee’s right to refrain from self-incrimination.”

Ervin was wrong. Judges are appointed to exercise the “judicial power.” As per the Constitution, this involves deciding specific “cases” or “controversies”—that is, concrete disputes involving real facts, as opposed to abstract questions of law. Judging, in turn, entails the application of law to the facts of a particular case. The facts matter greatly: The way in which the circumstances of a given case can be distinguished from one in the past or one in the future is often what creates the basis for a legal rule, because it is that distinction that becomes legally material.

Judges don’t decide cases in a vacuum or through divine inspiration. They do it in the crucible of adversarial testing. Appellate judges read the parties’ briefs. They hear the lawyers’ arguments. They review the precedents and the factual record. Then they piece it all together, rendering a decision that, in Justice Ginsburg’s formulation, “should turn on those facts and the governing law, stated and explained in light of the particular arguments the parties or their representatives present.” Opining on a legal question divorced from the context of a particular case is not judging at all. It is speculation, a guess as to what the right rule might be.

In that sense, a senatorial demand that a nominee take one side or the other on a given “issue” is futile. Who is to say which of any number of possible factual circumstances might be relevant when, because there is no case, there are no facts? How can anyone judge the correctness of an argument when, because there are no parties, no one has argued for or against it? Answering at all would be deceptive.

It also would run up against another constitutional guidepost, the Fifth Amendment’s guarantee of due process of law. Litigants are entitled to a “fair trial in a fair tribunal,” including a judge who is impartial and whose mind is not implacably closed to persuasion. A nominee’s advance commitment to decide a question a certain way is incompatible with the appearance of fairness and impartiality that gives the law its legitimacy. It also compromises the independence of the judicial branch, a crucial check on overreaching by the political branches. Even a judge who has a decided an issue in an earlier case remains open to the prospect of going the other way in a later case, on different facts or different arguments. A judge who exchanges a commitment for a confirmation vote—or merely appears to do so—will forever be tainted.

All this holds true for issues already decided by the court, given that what constitutes “settled law” on the Supreme Court is in the eyes of the beholder. Nearly any issue may arise again, and the justices, unlike their counterparts on lower courts, are free to reconsider high-court precedent.

This week senators would do well to stick to more illuminating lines of inquiry: the more than 300 written opinions Judge Kavanaugh issued over his 12 years on the bench, his speeches and articles, his judicial philosophy, his character. There is no legitimate reason to demand hints, forecasts and previews that Judge Kavanaugh is duty-bound to deny.

Messrs. Rivkin and Grossman practice appellate and constitutional law in Washington. Mr. Rivkin served at the Justice Department and the White House Counsel’s Office. Mr. Grossman is an adjunct scholar at the Cato Institute.

Source: https://www.wsj.com/articles/kavanaugh-and-the-ginsburg-standard-1536010512

A Champion of Constitutional Safeguards

Days before President Trump announced his choice of Judge Brett Kavanaugh for the Supreme Court, Senate Democrats had vowed to oppose any nominee. Backed by an activist-fueled propaganda machine, they now will unleash relentless personal attacks—on Judge Kavanaugh’s Catholic faith, his “elitist” Yale degrees, his service in the George W. Bush administration.

As with the attacks last year on Justice Neil Gorsuch, they should be unavailing. Over Judge Kavanaugh’s 12 years on the U.S. Circuit Court of Appeals for the District of Columbia, he has developed an impressive record as a legal thinker and a champion of the Constitution’s structural safeguards against overweening government.

Typical is a 2008 dissent in which Judge Kavanaugh concluded that the Public Company Accounting Oversight Board was unconstitutionally structured because it improperly insulated the agency from political accountability. The opinion was a tour de force of historical exposition and originalist methodology—that is, interpreting the Constitution’s text as it was originally understood. The Supreme Court ultimately agreed, adopting the reasoning of Judge Kavanaugh’s dissent.

Yet he is equally wary of unbridled executive authority, as a 2013 case shows. When the Nuclear Regulatory Commission declined to proceed with licensing the proposed waste repository at Yucca Mountain, Nev., which the agency appeared to oppose on policy grounds, he wrote: “The President may not decline to follow a statutory mandate or prohibition simply because of policy objections.”

In articles and speeches as well as formal opinions, Judge Kavanaugh has been a leading critic of Chevron deference, the courts’ practice of giving agencies free rein to interpret their own statutory authority. In a 2016 law-review article, he wrote that Chevron encourages the executive branch “to be extremely aggressive in seeking to squeeze its policy goals into ill-fitting statutory authorizations and restraints,” cutting Congress out of the picture. “The American rule of law, as I see it, depends on neutral, impartial judges who say what the law is.”

On that score, Judge Kavanaugh rivals the late Justice Antonin Scalia in his ability to make sense of Congress’s often knotty statutory constructions. Judge Kavanaugh considers textualism to be an important restraint on judges that prevents them from imposing their policy preferences. As he put it in that 2016 article: “When courts apply doctrines that allow them to rewrite the laws (in effect), they are encroaching on the legislature’s Article I power.”

That’s why the Democrats’ formulaic charges of partisanship won’t stick. In case after case, Judge Kavanaugh sided with the Obama administration in the war on terror. He turned away a constitutional challenge to ObamaCare on jurisdictional grounds, while writing that the government’s defenses of the law were “unprecedented” and without “principled limit.”

Across three successive administrations, Judge Kavanaugh has frequently ruled against the government. According to Jennifer Mascott of Scalia Law School, he “has written 40 opinions finding agency action to be unlawful and joined majority opinions reversing agency action in at least 35 additional cases.” That’s a muscular record on a court often criticized for deference to government.

Democrats may make an issue of a 1998 academic article in which Judge Kavanaugh—who early in his career worked in the Office of Independent Counsel during the Clinton administration—questioned whether the Constitution permits criminal prosecution of a sitting president. He didn’t actually reach a conclusion on the question, but the Justice Department’s Office of Legal Counsel did, holding that a sitting president cannot be indicted. Since that opinion is binding on special counsel Robert Mueller, there’s no prospect the issue will reach the Supreme Court.

Democrats will also roll out culture-war issues like abortion and same-sex marriage. There is nothing in Judge Kavanaugh’s judicial or scholarly record to indicate how he would vote on any of those issues. Only one sitting justice, Clarence Thomas, has said he favors overturning Roe v. Wade, so the status quo on abortion seems likely to prevail for some time. As for same-sex marriage, there appears to be little appetite on the court to revisit it, and even less reason to believe that a case doing so is likely to arise, given its rapid public acceptance.

At any rate, it would be improper for Judge Kavanaugh to answer senators’ questions about how he would vote on any particular issue. Since Justice Ruth Bader Ginsburg’s appointment in 1993, her “Ginsburg Rule”—“no hints, no forecasts, no previews”—has stood. Judges do not decide abstract issues but concrete cases with specific facts, arguments, and governing law. Judges have a duty to decide cases as they arise, without prejudgment. Like Justice Ginsburg, Judge Kavanaugh can and should be questioned on his record. And a fine record it is.

Messrs. Rivkin and Grossman practice appellate and constitutional law in Washington. Mr. Rivkin served at the Justice Department and the White House Counsel’s Office. Mr. Grossman is an adjunct scholar at the Cato Institute.

Source: https://www.wsj.com/articles/a-champion-of-constitutional-safeguards-1531189515

 

Unappointed ‘Judges’ Shouldn’t Be Trying Cases

FISA Abuses Are a Special Threat to Privacy and Due Process

By  David B. Rivkin Jr. and Lee A. Casey

Feb. 26, 2018, in the Wall Street Journal

The House Democratic surveillance memo is out, and it should worry Americans who care about privacy and due process. The memo defends the conduct of the Justice Department and Federal Bureau of Investigation in obtaining a series of warrants under the Foreign Intelligence Surveillance Act to wiretap former Trump campaign adviser Carter Page.

The Democrats argue that Christopher Steele, the British former spy who compiled the Trump “dossier” on which the government’s initial warrant application was grounded, was credible. They also claim the FISA court had the information it needed about the dossier’s provenance. And they do not dispute former FBI Deputy Director Andrew McCabe’s acknowledgment that the FBI would not have sought a FISA order without the Steele dossier.

The most troubling issue is that the surveillance orders were obtained by withholding critical information about Mr. Steele from the FISA court. The court was not informed that Mr. Steele was personally opposed to Mr. Trump’s election, that his efforts were funded by Hillary Clinton’s campaign, or that he was the source of media reports that the FBI said corroborated his dossier. These facts are essential to any judicial assessment of Mr. Steele’s veracity and the applications’ merits.

The FBI should have been especially wary of privately produced Russia-related dossiers. As the Washington Post and CNN reported in May 2017, Russian disinformation about Mrs. Clinton and Attorney General Loretta Lynch evidently prompted former FBI Director James Comey to announce publicly the close of the investigation of the Clinton email server, for fear that the disinformation might be released and undermine the bureau’s credibility.

In addition, even assuming the dossier was accurate regarding Mr. Page, its allegations are thin. Mr. Page was said to have met in Moscow with Russian officials, who raised the potential for cooperation if Trump was elected; Mr. Page was noncommittal. The most significant claim—that those officials offered Mr. Page a bribe in the form of Russian business opportunities—suggests he was not a Russian agent. Existing operatives don’t need to be bribed.

There was no good reason to withhold from the FISA court any information regarding Mr. Steele, his anti-Trump biases, or the dossier’s origin as opposition research. The court operates in secret, so there was no danger of revealing intelligence sources and methods. The inescapable conclusion is that the information was withheld because the court would have been unlikely to issue the order if it knew the whole truth.

That’s a problem because following the rules and being absolutely candid with the court is even more essential in the FISA context than in ordinary criminal investigations. Congress enacted FISA in 1978 to create a judicial process through which counterintelligence surveillance could take place within the U.S., even when directed at American citizens, consistent with “this Nation’s commitment to privacy and individual rights.”

Because the purpose of counterintelligence is to gather information, not necessarily to prosecute criminals, the standards required for issuance of a FISA order are less demanding than those governing warrant requests in criminal cases. In both contexts a finding of “probable cause” is required. But an application for a criminal warrant must show, among other things, that “there is probable cause for belief that an individual is committing, has committed, or is about to commit a particular offense” under federal law. Under FISA, it’s enough to show probable cause that the targeted U.S. person’s “activities may involve a violation of the criminal statutes of the United States” (emphasis ours).

This difference is subtle but crucial. The FISA standard is far easier to meet; and in the past, the FISA court has criticized the government for taking advantage of the lower standard to obtain FISA warrants for use in criminal investigations. The lower standard makes it imperative that the responsible officials be extra careful when validating the information on which the order is based, in ensuring that the statutory standards are met, and in keeping the FISA court fully informed.

Slipshod and duplicitous FISA order applications also necessarily raise constitutional issues. FISA has been generally considered permissible under the Fourth Amendment, even though its probable-cause standard is “more flexible,” as one court noted, because of the statute’s procedural safeguards. But those protections mean very little if investigators withhold material information from the court. Moreover, in an ordinary criminal case, the target of surveillance has full due-process rights in a public trial. If a FISA order is obtained improperly, the target’s privacy is still invaded, but there is no opportunity for vindication. The perpetrators of the abuse, and even the abuse itself, will likely never be exposed.

Congress must consider carefully the actions of the FBI and Justice Department, with a determination to hold the responsible parties to account and to ask whether these abuses, which nearly went undetected, demand significant changes to the FISA process itself to protect the privacy and due-process rights of Americans.

Messrs. Rivkin and Casey practice appellate and constitutional law in Washington. They served in the White House Counsel’s Office and Justice Department in the Reagan and George H.W. Bush administrations.

Source: https://www.wsj.com/articles/fisa-abuses-are-a-special-threat-to-privacy-and-due-process-1519689446

Mark Janus Was With Hillary, Whether or Not He Wanted to Be

Flash back to the Las Vegas Convention Center, July 19, 2016. The floor overflows with people chanting, “We’re with her!” A speaker proclaims, to cheers and applause, that we “will stand with her in every corner of this nation.” Then Hillary Clinton takes the stage as the crowd rises in a standing ovation. She thanks them for supporting her campaign and rallies them to knock on doors and get out the vote.

The event wasn’t organized by the campaign. It was the 2016 convention of the nation’s largest union representing public-sector workers, the American Federation of State, County and Municipal Employees. The state of Illinois forced Mark Janus —an Illinois employee who refused to join the union—to pay for a portion that pro-Hillary rally.

Across the U.S., more than 500,000 state and local workers have objected to funding union advocacy but are nonetheless required by law to pay “fair share” fees to labor unions they have refused to join. The Supreme Court upheld the practice in a 1977 case, Abood v. Detroit Board of Education, reasoning that otherwise workers could “free ride” on the union’s collective bargaining. Prohibiting unions from charging nonmembers directly for political speech, it believed, would protect their First Amendment rights.

On Monday the justices will hear oral arguments in a challenge to that 1977 decision brought by Mr. Janus. They should heed Justice Felix Frankfurter’s observation, in an earlier case on mandatory union fees, that it is “rather naive” to assume “that economic and political concerns are separable.” As Mr. Janus argues, bargaining over wages, pensions and benefits in the public sector involves issues of intense public concern and thus core First Amendment-protected speech. A state law that forces public employees to fund that speech violates their rights, no less than compelling them to speak. ( Janus v. Afscme doesn’t consider these questions for unions in the private sector.)

Other unions that held pro-Clinton rallies include the American Federation of Teachers, the National Education Association and the Service Employees International Union, which represents about one million public workers. The SEIU convention passed a resolution that the union will “elect Hillary Clinton” as president “by mobilizing millions of voters.” Unions and state governments maintain that nonmembers can be charged for these conventions because they are where the unions adopt bargaining strategies and representational policies.

Afscme used its convention to weigh in on practically every major political issue. One resolution condemned Senate Republicans and demanded hearings and a vote on Judge Merrick Garland’s nomination to the Supreme Court. Others addressed funding for public infrastructure, educational spending, paid family and sick leave, private contracting of government services, the minimum wage, and “right to work” laws, with each resolution taking the expected union position.

More surprising were resolutions with no obvious connection to union interests—demanding gun-control laws, statehood for the District of Columbia, marijuana legalization, “comprehensive immigration reform with a pathway to citizenship,” “racial justice” and an end to state laws that protect religious freedom. Whatever Mr. Janus’s positions on these issues, he was forced to fund Afscme’s advocacy on them.

The American Federation of Teachers has charged nonmembers for advocacy supporting public funding for Planned Parenthood, the “climate justice movement” and a constitutional amendment to restrict political speech by overturning Citizens United v. Federal Election Commission—which, ironically, protects union as well as corporate speech.

But the National Education Association takes the cake. Its current resolutions stake out positions on topics from the adoption of constitutional amendments through the convention process of the Constitution’s Article V (NEA is opposed), to American participation in the International Court of Justice and International Criminal Court (thumbs up), to “covert operations and counterintelligence activities,” along with the “self-determination of indigenous people.” The NEA has spent objectors’ money on advocacy in favor of racial preferences, comprehensive sex education, restoration of voting rights for felons, and adoption of the metric system by the U.S.

Yes, the metric system.

These unions also charge nonmembers for training programs embodying the same political outlook. A recent AFT conference in Detroit featured sessions on participating in “the Resistance,” “fighting against Trump and [Education Secretary Betsy ] DeVos, ” and “organizing a sanctuary campus” to block participation in the enforcement of federal immigration laws. The NEA, meanwhile, uses nonmembers’ fees to produce materials for teachers addressing “social justice” issues, such as “diversity,” “privilege,” and “hierarchies of oppression.”

These details reflect the basic truth that labor unions are political organizations. Everything they do, from massive political expenditures to bargaining activities, is shot through with political purpose and consideration. Under the First Amendment, they have the right to politic in all these ways—just as Mr. Janus has the right not to pay for it.

Messrs. Rivkin and Grossman practice constitutional and appellate law in Washington. Mr. Grossman filed a brief on behalf of the Competitive Enterprise Institute supporting Mr. Janus.

Source: https://www.wsj.com/articles/mark-janus-was-with-hillary-whether-or-not-he-wanted-to-be-1519341922

The Zero That Makes Mulvaney a Hero

By Democrats’ design, the CFPB director has vast power. He can use it to shrink the bureau.

Richard Cordray asked Federal Reserve Chair Janet Yellen for $217 million in October—his last such request as director of the Consumer Financial Protection Bureau. Last week Mr. Cordray’s acting successor, Mick Mulvaney, made his first quarterly funding request: “$0.” What a difference a few months make.

Established in the wake of the 2008 financial crisis according to now-Sen. Elizabeth Warren’s vision, the CFPB ran wild under Mr. Cordray’s leadership—issuing reams of punishing regulations and conducting endless fishing expeditions, sometimes into industries Congress had specifically excluded from its jurisdiction.

This was possible because the bureau was designed to be insulated from accountability. It is led by a single director, whom the president cannot fire except for cause, and funded by the Fed, so that it need not justify its actions and funding needs to Congress.

Whether this arrangement is constitutional is an open question, currently pending in the U.S. Circuit Court of Appeals for the District of Columbia. But for now, as that court’s Judge Brett Kavanaugh has observed, it renders the CFPB director “the single most powerful official in the entire United States Government” (with the possible exception of the president).

That power now belongs to Mr. Mulvaney—and if Mr. Cordray had no constraints in his overreach, his successor is equally free to rein it in. Mr. Mulvaney has already frozen new regulations as well as regulatory “guidance,” which agencies often treat as carrying the force of law. But with Mr. Cordray’s minions burrowed into the bureau’s 1,600-person workforce, tweaks to rules and enforcement policies will only go so far.

The linchpin for fast and effective deregulation is substantially defunding the agency and clearing out its ranks in the process. Mr. Mulvaney’s request of zip from Ms. Yellen is a good first step.

The statute creating the bureau sets its budget at “the amount determined by the Director to be reasonably necessary to carry out the authorities of the Bureau,” and no one is authorized to second-guess that determination. That supports Mr. Mulvaney’s decision to forgo additional funding this quarter and draw down the unauthorized $177 million “reserve fund” Mr. Cordray built up during his tenure.

The language that authorizes Mr. Mulvaney to slash funding applies equally to spending—after all, determining what is “reasonably necessary” to do the bureau’s business implies determining what that business is. When Congress has made a lump-sum appropriation to an agency without mandates for spending on particular items, the courts have viewed that as authorization for the agency to choose how to spend the funds. The CFPB’s funding mechanism confers even broader discretion on the director given that he controls revenue as well.

It is possible that a court would require funding for the CFPB’s statutory obligations. The statute requires, for example, that the bureau establish an office focused on “traditionally underserved consumers and communities.” That mandate suggests that the director cannot zero out the office’s budget. But it says nothing about how much funding is required or whether assistance to underserved communities is best organized at the state level, with a skeleton crew at the CFPB playing a coordinating role. There is no standard by which a court could review those decisions.

The bottom line is that all of the CFPB’s discretionary spending is at the pleasure of the director, and the bulk of its $630 million budget is discretionary. That gives Mr. Mulvaney the power to reshape the agency radically—and resize it—in short order. And by exerting his powers to their fullest, perhaps Mr. Mulvaney will be able to convince even congressional Democrats that those powers are excessive and ought to be restrained.

Messrs. Rivkin and Grossman practice appellate and constitutional law in Washington.

Source: https://www.wsj.com/articles/the-zero-that-makes-mulvaney-a-hero-1516566319