There has been an abdication of sorts by Congress--too much delegation with too little guidance, too little oversight, and with unclear waiver authority, and this delegation has led to enormous uncertainty in the business community. This uncertainty, in turn, is deterring investment, which is a drag on our future economic growth. (1) Silicon Valley has been spared because regulators and Congress take time to catch up to the fast-moving industry. But they are catching up, beginning with privacy regulations. (2)
The following observations are based on two assumptions: a legislative body must delegate authority before an agency can have authority or an agenda; and, consequently, that neither the legislature nor the agency has complete and total authority. Practically, regulated entities often interact with either Congress or the agency, but there is a difference between interacting with a particular body and interacting with a body that also possesses the power originates with that body to control and create that very interaction. There has been gridlock on spending, with Congress seemingly unable to handle long-term spending problems, but not regulation, where Congress has remained very active. Perhaps it should be the other way around.
Professor Barron suggested that the modern problem is "inverse delegation," in which Congress promulgates comprehensive standards on its own, but then delegates to an agency the discretion to waive, nullify, or modify those standards. (3) Perhaps there are examples of that, but certainly the dominant problem is traditional delegation: Too often, Congress over-delegates and provides no detail and no accountability, or an agency asserts delegation with no accountability. The following are just a few examples.
The Wall Street Reform and Consumer Protection (Dodd-Frank) Act (4) is notoriously complex. In its final form upon Presidential signing, the bill was 848 pages long. (5) That does not mean that every one of its Titles contains all that much guidance. Consider the Orderly Liquidation Authority (OLA) (6) and the Consumer Financial Protection Bureau (CFPB). (7) In the case of the OLA, the legislation provides very little guidance for its operation, such as determining which financial institutions can be placed into this new form of receivership, (8) and in the case of the CFPB, the legislation offers no meaningful standards for the agency to follow in regulating. (9) In the case of the OLA, the courts are basically cut out of meaningful review, retaining only very limited appellate review of agency decisions under the highly deferential arbitrary and capricious standard of re view. (10) Even under that deferential standard, the court may review only the narrow questions of whether the company was in default or danger of default, and whether the company is a "financial company." (11) It may not review the Treasury Secretary's conclusion that default would actually threaten financial stability; (12) or whether that threat can be prevented by means other than compulsory liquidation; (13) or whether liquidation's effect on creditors and other stakeholders will be "appropriate." (14) Indeed, a court reviewing the Treasury Secretary's liquidation decision would not even be able to review the fundamental question of whether the Secretary's decision was "in accordance with law." (15)
Similarly, Congress also unusually lacks meaningful authority over both the OLA and the CFPB, because both agencies receive independent, non-appropriated funding: the CFPB receives funding from the Federal Reserve, (16) and the OLA receives funding from an internal tax assessment. (17) Title X of the Dodd-Frank Act explicitly prevents Congress from exercising budgetary authority over funding provided by the Federal Re serve. (18) No enforcement mechanism is identified expressly to prevent the Appropriations Committee of the House or Senate from reviewing the CFPB's budget; an investigation would be unlikely to threaten the Chairmen of the Appropriations Committee in the House or Senate if either were to hold a hearing. …