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Newsletter | Revolving Door Project Newsletter | May 25, 2022

The Filth Circuit Takes a Wrecking Ball to Precedent

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The latest threats to government function, and a few ways the White House (and Senate Democrats) could keep the executive branch off life support.

This edition of the Revolving Door Project newsletter was originally published on our Substack. View and subscribe here.

Over the past week Biden invoked the Defense Production Act to require that the ingredients necessary for baby formula go to formula manufacturers first, and initiated Operation Fly Formula, using military planes to fly the equivalent of 1.5 million bottles of hypoallergenic formula across the Atlantic. It’s good to see the White House roused to take action, and to use emergency presidential powers to protect people in need. That’s what emergency powers are for.

Of course, as experts are rightly pointing out, this is just a stopgap measure; to prevent future formula shortages, the government needs to tackle corporate concentration, which is a major cause of supply chain vulnerability. While we’re glad to see Biden taking action, alleviating this shortage should be followed by detailed plans to prevent future shortages. Our supply chains are only going to get more stressed, particularly as the disruptions of climate change continue to accelerate in frequency and intensity. These issues are all intertwined. And more serious food shortages are on the horizon: there’s apparently only ten weeks of wheat supply left for the world.

As day after day the headlines simmer just below apocalyptic, and stories like “southwestern drought worst in 1,200 years” fail to surprise, we have to hold firm in our conviction that this is not acceptable, and there’s so much that can be done. That worst-in-a-millennium drought is “forcing unprecedented government intervention” from the Interior Department to redirect water flows as southwestern US states face power outages and critical water shortages. As NOAA drought scientist Andrew Hoell told the Financial Times: “Why would you not care about the worst drought for more than a millennia? We have to live through this.” If only he was the voice in Manchin’s ear. Or Sinema’s—the state she theoretically “represents” is one of those water scarce southwestern states!

Environmentalists have maintained an unflagging pressure on the White House to declare a climate emergency, and now increasing numbers of Democratic lawmakers are joining the call, fueled by fear that they will go empty-handed into the midterms. Using the Defense Production Act to prevent unnecessary infant deaths is laudable; what about using it to slow down our fast track to an unlivable world?

Governance

The Filth, I mean, Fifth Circuit decided to ditch decades of precedent last week, holding that Congress had illegally delegated authority to the Securities and Exchange Commission’s administrative law judges to decide enforcement matters without a jury trial. Robert Kuttner noted in the Prospect that the “federal government uses administrative law judges in some 30 different agencies,” and that if the Supreme Court upholds this ruling, it “could literally shut down the regulatory authority of large parts of the federal government.” That is of course the end goal of these far-right judges. 

And of course, the attempt to sabotage the SEC comes right as the agency is sharpening its teeth and doubling down on investor protection. Its proposed climate disclosure rule is at once the bare minimum for responsible investing, and a big step forward: without clear, standardized information about exposure to climate change risks, greenwashing has the definitive upper hand. Speaking of, the SEC’s Monday announcement that BNY Mellon paid a $1.5 million fine for making false claims that their ESG funds all underwent “quality review” exemplifies the important role the SEC can play in combating deceptions with real but easily obscured environmental cost. 

We need to be clear-eyed about the fact that far-right judges are working to dismantle the basic functions of our already poorly functioning government. The Supreme Court’s pending decision in West Virginia v. EPA, expected by the end of June, could deal extraordinary damage to the EPA’s capacity to regulate greenhouse gas emissions from power plants. The harm could ripple out even further than that. Harvard Environmental Law Professor Richard Lazarus elaborated on the implications of this case for the SEC and beyond last week: 

It worries me about what they might say in this case, that might affect the SEC’s recent proposal to have climate disclosure rules as part of SEC filings. This case, if they write it as broadly as I fear they may, may have very broad, sweeping implications for climate change, writ large in the government, but also not for climate change only: for the ability of federal agencies to regulate public health and welfare concerns based on existing federal law.

Berkeley Law Professor Dan Farber wrote about four potential ways the court may rule in the case on Tuesday, “gaming out” different ways the EPA could respond. His tragic bit of parting snark: “In theory, a possible response to any of these scenarios would be new legislation from Congress. That’s so unlikely that I almost forgot to mention it at all.”

Personnel

In other high-stakes news for air quality, the Senate confirmation hearing for Joe Goffman to head the EPA’s Office of Air and Radiation board is happening this morning. He’s got the backing of environmentalists, plus the endorsement of the United Mine Workers of America. But he’ll need unanimous Democratic support and one Republican’s vote to advance quickly (without any Republicans confirmation requires more votes across more scarce floor time), and as of Monday, “there’s no immediate sign of where that vote will come from.”

Meanwhile, the one Democratic commissioner on the Federal Mine Safety and Health Review Commission, formerly a union lawyer for the United Mine Workers of America, continues to be outvoted by the Trump appointees (both former mining company lawyers) holding the other two occupied seats on the five-seat commission. This little-known commission, as HuffPost reports, “plays a crucial role in making sure workers come out of their mines alive, by interpreting health and safety law and seeing that it’s properly enforced by federal inspectors.” But Biden’s nominees for its two vacant seats have yet to get a Senate floor vote. In the meantime, lone Democratic commissioner Traynor asserts that his colleagues have used their short time in the majority to do “a lot of damage to the legal protections that have been in place for miners for decades.” 

My colleagues have written before about how broken the Senate confirmation process is, and two rules that Senate Democrats could change to improve it: 

First, they can eliminate the two day period between a cloture motion’s introduction and the vote on it. Second, they can allocate blocks of time for debate on multiple nominations at once  — senators might, for example, “debate” twenty nominees over the course of four hours. This would preserve a senator’s right to raise concerns about specific nominees before a vote, but would focus discussion on actually controversial picks. Moreover, by eliminating the delays associated with the regular procedure, Democrats would neutralize Republicans’ power to withhold unanimous consent.

The capacity of executive agencies to perform their basic functions is continually being undermined: by right-wing activist judges attempting to unravel the administrative state; by Senate Republicans trying to obstruct even uncontroversial appointments; by inadequate budget appropriations that don’t even keep up with the pace of inflation. Democrats should wrest control away from agents of destruction wherever they can, and the Senate confirmation process is a smart place to do it. 

As RDP’s Eleanor Eagan and Jeff Hauser wrote for The Hill: “If restoring the integrity of the advice and consent process is not reason enough for Democratic senators to act, they might consider their own self-interest. The Biden administration’s performance will undoubtedly weigh on Democrats’ chances of keeping the Senate majority in 2022. Moreover, the success of any bold legislation that Congress manages to pass will depend on the presence of permanent, empowered executive branch leadership to carry it out. Senate Democrats must act now to secure it.”

In case you’re not familiar with the Revolving Door Project’s Agency Spotlight, this is a great tool for keeping track of the vacant seats, expiring seats, and pending nominations at dozens of independent agencies. 

As the Spotlight reflects, at long last, all seats on the USPS Board of Governors have been filled. But my colleague Vishal Shankar pointed out last week that this doesn’t mean disastrous Postmaster General Louis DeJoy is any closer to being fired. Vishal breaks down how likely each “governor” is to vote DeJoy out, and the numbers are dismal: five “Trumpists,” who are sure votes to keep DeJoy; two “weak-willed Biden nominees,” who are likely votes for DeJoy; and two DeJoy critics. Sigh.

Independent Agencies

Aaron Regunberg wrote last week for The New Republic about how the Federal Reserve is neglecting its duty on climate change. Unlike its peer institutions globally, the Fed has “refused to acknowledge that climate requires an active central bank response, with opponents arguing that such actions exceed the statutory limits placed upon the Fed by Congress. This argument both misreads the Fed’s legislative mandates and underestimates the profound havoc that climate devastation will wreak on our financial system. In truth, the Fed’s legislative directives not only allow it to take steps to prevent and mitigate climate change, they actually require the Fed to do so.” 

Up against the stubborn denialism and incrementalism of the majority of those in power, it’s important to remember that up against unprecedented threats, unprecedented action is actually reasonable and correct; what’s insane is pretending that everything is normal, and that inaction is morally neutral. Jerome Powell: don’t be that guy, with this week’s version of that guy being HSBC’s Stuart Kirk, head of responsible investing for the bank’s asset management division, who said, “Who cares if Miami is six meters underwater in 100 years?” at the Financial Times Moral Money conference last week. (He’s now suspended.) 

Contrast Kirk’s defiant nihilism with Shell consultant Caroline Dennett’s very loud resignation this week over the company “failing on a massive planetary scale.” She points out the actual insanity of their business model, saying: “It’s an industry that is usually very focused on mitigating risks, but they’re not mitigating any of the risks of climate change.” And she goes as far as proposing that there “needs to be a kind of starvation of the fossil fuel industry because it’s only, ultimately, their profit line that’s going to make them see that there’s an alternative.” There goes her potential to get confirmed as Comptroller of the Currency..!

But seriously, as UN Secretary General António Guterres advised a bunch of college graduates yesterday: “don’t work for climate wreckers.” They are actively planning to trigger catastrophic, irreversible ecological breakdown. 

Miscellaneous Corruption

Sam Bankman-Fried (aka “SBF”) has an ENORMOUS agenda in Washington that includes many things, but primarily is about making sure a small agency he is en route to capturing (the CFTC) is allowed by Congress to let crypto speculation increase even beyond current international and environmental nightmare levels. (For more on crypto, RDP’s crypto expert Timi Iwayemi assembled this reading list.) That’s why FTX has, among numerous revolving door hires, built a shadow CFTC to influence the real one.

And that’s why even partisan Democrats ought to experience shivers down the backs of their spines as Bankman-Fried “promises” spending between $100 million and $1 billion on behalf of Biden’s 2024 re-election. As our founder Jeff Hauser observed on Twitter, such a pledge is akin to a bribe offer that if the Biden Administration doesn’t endanger his crypto fortune by enforcing existing law, he will offer them enormous assistance in Biden’s re-election effort. (If Biden’s appointees enforce the current law, there is a very real chance SBF won’t have the wealth to make good on such a contribution.) 

We hope and expect Biden and his team to stiff-arm this de facto bribe, but hope is not a plan. We need ethics and campaign finance reform fast.

Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:

The Crypto Reading List
10 Things Biden Can Do About Inflation Without Congress
Anti-Union Consultants Have No Place in the Democratic Party
Will The New Postal Board Fire Louis DeJoy?
White House Records Pull Back the Curtain on Climate Meetings
Fed Nominee Michael Barr Discloses 82 Different Fintech Investments

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More articles by Hannah Story Brown

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