Dodd-Frank and the Administrative Law Process

There is an interesting op-ed in the Wall Street Journal today, written by Eugene Scalia, the son of Justice Scalia. He has been the lawyer in several challenges to the Dodd-Frank rules written by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).  Congress passes laws but often leave it to commissions and agencies to work out the details.  The rules set by agencies and commissions are part of what is know as administrative law.  The public is supposed to have input into the rules-making processes. The law provides for groups with standing to challenge specific rules issued by the agencies. It is a part of the checks-and-balances in our system.  An example of an agency that offen faces challenges in the courts is the Environmental Protection Agency.  If business interests think regulations are to stringent, they may appeal. But if environmental groups think regulations are not stringent enough, they may take the EPA to court.

Scalia notes that the SEC and the CFTC have lost several challenges in the courts to the rules they have set. The setting of the rules is required by the Dodd-Frank bill.  Scalia refutes the idea that it is Republican-appointed ideologues that have caused the set backs by showing how Democratic-appointed justices have often been involved, including at least one who was appointed by Presdient Obama.  The reasons he claims that the SEC and CFTC have lost in the courts is that they often have relied upon weak economic analysis, disrespected the courts, and failed to recognize the importance of process.  Administrative law is nothing if not process related.

When I took a law course for economists sponsored by George Mason Law School almost twenty years ago, I was surprised to discover that I found the portion on administrative law to be so interesting.  I still find it interesting.