United States: Representative Introduces House Version Of Senator Warren's Anti-Corruption Bill

Last Updated: November 30 2018
Article by Steven D. Lofchie

Most Read Contributor in United States, February 2019

U.S. House Representative Pramila Jayapal (D-WA) introduced companion legislation to Senator Elizabeth Warren's (D-MA) wide-ranging Senate "Anti-Corruption" bill (see previous coverage). The purpose of the Act is to eliminate the "dominance of money in federal decisions."

The Anti-Corruption and Public Integrity Act would, among other things:

  • require the majority of executive branch employees to recuse themselves from all matters that might provide financial benefits personally, or to a previous employer or client from the prior four years;
  • bar current lobbyists from taking government jobs for two years after lobbying (and for six years for corporate lobbyists);
  • prohibit "corporate outlaws" from assuming government positions by blocking the hiring of top corporate leaders whose companies violated federal law in the past six years;
  • block a federal contract and licensee employee from working at the agency issuing the contract of license for four years;
  • disallow "Golden Parachutes" that give corporate bonuses to executives for federal service;
  • mandate studies presenting conflicts of interest to be examined by "independent peer review" when being considered in the rulemaking process;
  • "restrict negotiated rulemaking" to prevent an "industry from delaying or dominating the rulemaking process" by ending the practice of inviting industry participants to negotiate the rules they must follow;
  • ban "informal review," establish a maximum 45-day review period, and block closed-door industry lobbying at the White House Office of Information and Regulatory Affairs;
  • allow only Appeals Court judges and not individual District Court judges to block agencies from implementing final rules;
  • permit the use of litigation to delay the implementation of final rules;
  • prohibit courts from considering "sham studies and research excluded by agencies from the rulemaking process";
  • reverse the Congressional Review Act provision banning agencies from "implementing the will of Congress based on Congress' prior disapproval of a different, narrow rule on a similar topic";
  • ban American lobbyists from receiving money from foreign governments, foreign individuals, and foreign companies for affecting U.S. public policy;
  • increase Congressional staff salaries;
  • allow "private lawsuits from members of the public to hold agencies accountable for failing to complete rules or enforce the law";
  • bar individual stock ownership by federal judges, expand rules prohibiting judges from receiving gifts, and mandate ethical behavior by the Supreme Court; and
  • establish the U.S. Office of Public Integrity, which will (i) "absorb the U.S. Office of Government Ethics" and (ii) "consolidate anti-corruption and public integrity oversight over federal officials."

Commentary / Steven Lofchie

There are a number of threads that have run through many of Senator Warren's legislative efforts, but two of the most common are (i) her determination to increase the power of government regulators against private interests (see Senator Warren Introduces Bill to Require That Large Companies Create a General Public Benefit) and (ii) her attempts to suppress, rather than engage with, viewpoints that are contrary to her own (see see CFTC Commissioner Giancarlo Withdraws EEMAC Report on Position Limits; Senator Warren Argues Regulatory Scales "Tilted" by "Undue Industry Influence"; Senator Warren Asks CFTC to Withdraw EEMAC Report on Position Limits; Senators Introduce Legislation to Limit FRB's Lending Authority. While the Warren bill and its House companion are styled as being "anti-corruption," the likely effect would be to (i) ensure that persons with significant experience in private enterprise cannot go into government and (ii) reinforce a revolving door between academics and government. Beyond that, the bill would maximize the authority of government regulators to go beyond the meaning of legislation in adopting rules.

The Revolving Door

Under the legislation, a former employee of a business that was awarded a "federal contract or license" may not be an employee of the executive agency that awarded the contract. The terms "contract" and "license" are undefined, but it could be read as including any federally-registered or federally-licensed financial entity. Leaving aside the question of whether it includes all regulated financial entities, or only some substantial subset, the bill would exclude from government a very significant number of smart, able and honest individuals with relevant experience.

The bill would also prohibit any agency employee from using the employee's official position to influence any matter, including any "rulemaking," that the employee knows is likely to have a "direct and predictable effect" on the financial interest of any person for whom the employee had served in the past four years as an employee or outside agent. That would seem to bar almost anyone, certainly any lawyer, with relevant experience from taking a policy position with the government.

So who may take government jobs? Academics, since they are not subject to the conflicts bans. One of the premises on which Senator Warren's proposal is based is that those in academics are above bias and are free from personal pressures. That faith in academes seems entirely questionable. Academics are subject to all kinds of pressure: to obtain tenure, to obtain grants, to obtain invitations to testify before Congressional committees.

Food for Thought: Considering Alternatives

The opposite of Senator Warren's approach might start with challenging underlying assumptions. Instead of barring those with private world experience from serving the government, an alternative bill might require those who would regulate to have experience being regulated. For example, legislation might be drawn to require that anyone who wished to serve in a government agency as a senior official must have at least five years of experience working in the relevant industry. An opposing approach may hold academics to the same standards that Senator Warren would apply to those who work in the private world. Alternative legislation might prohibit a professor from accepting a government agency job for at least four years following leaving academics if the professor's employer had received any federal contract or license, or had received any grant from a foreign government.

No one is proposing such alternatives, but given the choice between it and the Senator's "Anti-Corruption" proposal, the former would be more practical and more consistent with the American ethic (that we are nations of doers; that we do not wish to enshrine a ruling elite of government officials and academics).

Governmental Power

(1) The proposed Anti-Corruption bill provides that on any area where a statute is "silent or ambiguous," subject to procedural conditions, " a reviewing court shall defer to the agency's reasonable or permissible interpretation of that statute." In effect, the proposed bill would legislate the so-called "Chevron deference" which moves substantial authority from the courts (which are deprived of the authority to review regulatory action) and the legislature (which yields all benefit of the doubt on any area where the legislation is "silent" or ambiguous) to the Executive branch. This provision of the Act seems of dubious constitutionality: what would give the regulators the authority to impose their views where a law is silent?

(2) With respect to cost-benefit analysis, the bill requires agencies to (i) take account of benefits to the public, including "non quantifiable benefits" and (ii) adopt regulations that "prioritizes benefits to the public, including nonquantifiable benefits." What does that mean? Isn't the whole idea of a cost benefit analysis to compare costs and benefits? If one "prioritizes" benefits, does that mean ignore costs?

The "Anti-Corruption" bill is nearly 300 pages. While there may be some reasonable provisions in the bill, significant parts of it seem likely to suppress discussion, to deprive the government of experienced workers, and to establish a revolving door between government and academics.

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