The second-most important court in the United States has three vacancies, one of which was created in 2005. It may yet be the institution that dooms many or even most of the Dodd-Frank financial reforms that Congress passed in 2010 and that regulatory agencies have been struggling to put in place since then.
In the area of regulatory law, that court, the United States Court of Appeals for the District of Columbia, reigns supreme, and it is now controlled by judicial activists who seem quite willing to negate, on technical grounds, any regulations they do not like. The has suffered a series of defeats there, defeats that it has chosen to accept rather than risk an appeal to the Supreme Court.
The judges have done that through the use of cost-benefit analysis - or more specifically by a willingness to find that the S.E.C. failed to do enough to quantify even minor costs.
In an article to be published in the Yale Journal on Regulation, Bruce R. Kraus, a partner in the New York law firm of Kelley Drye & Warren who was a senior member of the S.E.C. staff from 2008 to 2011, and Connor Raso, a lawyer for the Consumer Financial Protection Bureau, trace the history of that series of decisions, beginning with a 1993 ruling.
They argue that the commission should insist on its right “to discern and define the boundary between economic analysis and policy choice.†In an interview, Mr. Kraus said he thought the circuit court wrongly thought the S.E.C. had not tried to follow its previous rulings, because the judges were not fully aware of the work the staff had done in trying to comply, work that in some cases never became public because the commission did not choose to propose a revised rule. He said he was hopeful that the court would be favorably impressed when it considers future challenges to S.E.C. rules now being considered.
Perhaps he is right, but it might also help if there were some new blood on the court, something that Republican senators seem to have been able to prevent throughout the Obama presidency.
There are supposed to be 11 active judges on the court, but there now are three vacancies. One of them is recent, caused by the decision of Judge Douglas H. Ginsburg, the author of some of the decisions that have put the court in the position to decide which regulations it does not like, to assume senior status on the court. But the other two seats have been empty throughout the Obama administration.
The president has proposed nominees for two of those seats, but they are unlikely to go anywhere before the election. Even if the president wins re-election, Republicans seem likely to block any nominee who strikes them as even a little liberal.
Democrats were obstructionist when George W. Bush was in office, but he eventually prevailed in winning confirmation of three of his nominees. They included Brett M. Kavanaugh, a White House aide who had played a major role in finding conservatives to nominate for judicial openings. He also helped to write the Starr report that led to the attempt to remove Bill Clinton from office.
Mr. Kraus points to one way the vacancies influence appellants: When a three-judge panel of the court issues a ruling against the S.E.C., the commission could seek an “en banc†hearing of the entire court. But with only five other judges, and the need for a majority to gain a new hearing, that would require convincing all of the others that their three colleagues were wrong.
The government could appeal the court's decisions to the Supreme Court. Perhaps it should have done so in response to the latest ruling by Judge Ginsburg, in 2011, which threw out rules - specifically authorized by Congress in the Dodd-Frank law - allowing minority shareholders in very limited cases to get access to corporate proxies to propose candidates for director. But it did not.
The supremacy of the District of Columbia circuit court in this area of law is a result of laws that mandate that appeals related to regulations go directly to it. There is no district judge to hear cases and establish facts. Nor are there likely to be any differing opinions from other circuit courts, as there can be in other areas of the law. It is such differences that often lead to a Supreme Court decision to hear a case.
