VOLUME 163, ISSUE 1 December 2014

Congress is more ideologically polarized now than at any time in the modern regulatory era, which makes legislation ever harder to pass. One of the consequences of this congressional dysfunction is a reduced probability that Congress will update regulatory legislation in response to significant new economic, scientific, or technological developments. This predicament, we argue here, has important implications for the federal agencies charged with implementing statutes over time and for courts adjudicating challenges to agency statutory implementation.

We explain how federal agencies coping with new regulatory challenges often encounter problems of “fit” with older statutes, which require them to make delicate legal and political judgments in the face of congressional silence. And we show how, following the Goldilocks principle, agencies seek to get this process just right by balancing the perceived need for regulatory innovation with a concern about potential overreach.

Agencies, we claim, do not simply “go for broke” when wrestling with problems of fit. Instead they proceed strategically, cognizant of the preferences of their political overseers and the risk of being overturned in the courts. Sometimes agencies interpret their enabling legislation so as to expand their jurisdiction; other times, agencies manage problems of fit by intentionally shrinking their jurisdiction, proceeding incrementally, and engaging in deliberate restraint. Our examples show that agencies can be persistent, flexible, bold, cautious, expert, political, and, above all, strategic. The examples also suggest that even—and perhaps especially—when adapting old statutes to new problems, agencies are surprisingly accountable, not just to the President, but also to Congress, the courts, and the public.

Are corporations “persons” with constitutional rights? The Supreme Court has famously avoided analysis of the question, while recognizing that corporations may litigate rights under the Due Process Clause, Equal Protection Clause, First Amendment, Fourth Amendment, Sixth Amendment, and Seventh Amendment, but not, for example, the Self-Incrimination Clause of the Fifth Amendment. What theory explains why corporations may litigate some constitutional rights and not others? In this Article, I argue that the doctrine of Article III standing supplies an underlying general theory by requiring a judge to ask: does the organization suffer a concrete constitutional injury to its legal interests? Such analysis has implications for the interpretation of a range of contested constitutional questions. For example, Article III analysis helps us to understand why corporate standing is not appropriate if corporate rights threaten to conflict with claims brought by individuals, while in contrast, associations and nonprofits may more readily derivatively assert the third-party rights of members. By ignoring Article III constraints, and finding that a for-profit corporation could itself assert a statutory injury to the religious beliefs of its owners, the Supreme Court’s recent Hobby Lobby opinion threatens to erase the longstanding differences between owners and corporations, parties and third-parties, and for-profit corporations versus other types of entities. Only if Article III doctrine is faithfully applied can organizational standing to litigate constitutional rights effectively develop protections for individuals and organizations alike.

The Dodd–Frank Act, enacted in the wake of the U.S. financial crisis of 2007 to 2009, is the federal government’s attempt to address a number of systemic issues perceived to be at the root of the financial meltdown. Title II of the Act goes to the heart of this effort by creating a new specialized insolvency regime for the orderly liquidation of systemically significant nonbank financial companies. This regime, largely modeled after the FDIC’s process for shutting down insolvent federally insured banks, theoretically provides a substitute for bankruptcy and bailouts by giving the executive branch authority to take control of and liquidate nonbank financial companies that are deemed to be too big to fail.

Unfortunately, in the government’s haste to create a viable resolution process, it overlooked a number of fundamental constitutional benchmarks–including due process, Article III, and First Amendment requirements–rendering Title II susceptible to future judicial invalidation. Of particular concern is the statute’s procedure for appointing the government as receiver of the financial firm, which requires a secret, ex ante judicial proceeding in which an Article III judge is permitted to review only two of the seven orderly liquidation prerequisites–and given just twenty-four hours to do so. The very broad discretion bestowed on the executive branch to decide whether to subject a financial firm to orderly liquidation also creates a potential conflict with the uniformity requirement of the Constitution’s Bankruptcy Clause. And finally, there are cognizable Fifth Amendment takings concerns implicated by the expansive powers that Title II affords to the government as receiver.

Given that issues of standing make the success of any anticipatory challenge questionable at best, Title II’s constitutional vulnerabilities will likely remain dormant until the government actually avails itself of its orderly liquidation authority. This is quite troublesome given that such a constitutional challenge would likely further exacerbate the financial havoc that Title II is intended to mitigate. The good news is that this disastrous eventuality can be avoided with a few simple amendments–foremost by providing for plenary judicial review after rather than before the orderly liquidation receiver is appointed.