Sunday, December 30, 2012

Former SEC Chair Harold Williams Warned of Expanded Judicial Review of Federal Regulations

As the 113th Congress considers legislation to reform the federal regulatory process, a look back at remarks by former SEC Chair Harold Williams may prove instructive with regard to providing an expanded role for federal judicial review of SEC and other agency regulations. In remarks at the National Press Club on Nov. 7, 1979, Chairman Williams said that federal courts should not be encouraged to substitute their general knowledge for the specific expertise of an administrative agency, adding that the judicial process is not well-suited to decide matters of economic regulation and social policy on a routine basis.

Indeed, he continued, the very essence of effective rulemaking, which is a non-adversarial balancing of many different and often competing interests, is inconsistent with the case-by-case focus imposed upon federal courts by Article III of the Constitution.

Remarking on a proposal from then Senator Dale Bumpers (D-ARK) that would have, as part of judicial review, shifted the burden to the agency whose regulation is challenged to demonstrate its legitimacy, Chairman Williams reasoned that subjecting challenged regulation to this kind of judicial review would undercut the very rationale for having administrative agencies in the first place. He noted tha, traditionally, courts have been required to defer to agency expertise in reviewing challenged regulations, to resume a regulation to be legal and to place the burden on those challenging the regulation to establish its invalidity.

The SEC Chair, appointed by President Jimmy Carter, observed that then Chief Judge J. Skelly Wright of the D.C. Circuit Court of Appeals, the court that handles much of the judicial review of the regulatory process, is reported to have said that the federal courts ought to stop telling the regulatory agencies what to do.