Wake Forest Law Review
21Apr

Congressional Insider Trading: How the COVID-19 Pandemic Shed New Light on a Decades-Old Form of Corruption

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By Jacob Winton

In 2004, the Wall Street Journal published an article titled U.S. Senators’ Stock Picks Outperform the Pros, reporting on an academic study that detailed the uncanny success of stock portfolios owned by United States Senators.[1]  “Politicians may have done a poor job improving the government’s bottom line,” the opening line quipped, “but they seem to be doing quite well with their own.”[2]  Financial disclosure forms from 1993 to 1998 showed not only that members of the US Senate saw higher returns than average Americans, but that they beat the market by an average of twelve percent per year, outperforming professional money managers by a factor of two.[3]

These Senators “appeared to know exactly when to buy or sell their holdings” in anticipation of fluctuations in the market.[4]  One of the study’s four authors, Professor Alan Ziobrowski, stated the obvious: “I don’t think you need much of an imagination to realize that they’re in the know.”[5]  Indeed, our elected officials are often privy to nonpublic information bound to trigger shifts in the market upon public release,[6] and studies like this one indicate that, for decades, legislators have been routinely converting their confidential access into personal financial gain.[7]

In 2010, the Wall Street Journal published another article, this time focusing on suspicious trades by congressional staffers with “ringside seats on the making of laws that affect American business.”[8]  An analysis of over 3,000 disclosure forms covering trading by Capitol Hill staffers in 2008 and 2009 showed that “[a]t least 72 aides on both sides of the aisle traded shares of companies that their bosses help oversee.”[9]  Importantly, the article also stated that existing insider trading laws did not apply to Congress, a claim that “set the blogosphere and mainstream media on fire.”[10]

Although the idea that Congress had exempted itself from insider trading laws came to be treated as conventional wisdom,[11] it was a falsehood.  For one thing, Congress could not have immunized itself from insider trading laws because “Congress ha[d] never enacted a federal securities law that explicitly prohibits anyone from insider trading.”[12]  Instead, Congress allowed insider trading to be prosecuted under SEC Rule 10b-5, promulgated pursuant to section 10(b) of the Securities Exchange Act of 1934,[13] which generally prohibits fraud or deception in connection with the purchase or sale of any security.[14]

Violations of Rule 10b-5 may be prosecuted as a civil offense by the SEC or as a crime by the Department of Justice.[15]  As a result, “U.S. insider trading law [was] almost entirely judge-made.”[16]  Nevertheless, it did not exempt Congress.  The Supreme Court had recognized two theories under which insider trading violates Rule 10b-5.[17]  The classical theory prohibits trades on nonpublic, corporate information because “the relationship between a corporate insider and the stockholders of his corporation gives rise to a disclosure obligation.”[18]  On the other hand, the misappropriation theory premises liability upon a duty to the informational source, prohibiting any “self-serving use of a principal’s information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, [which] defrauds the principal of the exclusive use of that information.”[19]

Professor Donna Nagy has outlined a persuasive argument that these two theories of liability cover congressional insider trading because of the “fiduciary-like” duties that members of Congress and legislative staffers owe to the public, to the federal government, and to other government officials.[20]  Nevertheless, in 2012, Congress passed the Stop Trading on Congressional Knowledge (“STOCK”) Act, placing explicit restrictions on trading by legislators and congressional staffers.[21]  The bill was introduced in its initial form by U.S. Representatives Brian Baird (D-Wash.) and Louise M. Slaughter (D-N.Y.) in 2006, at which time Representative Slaughter released a statement announcing the legislation and illustrating its general purpose:

“Congressman B learns that the Chairman of the Appropriations Committee has decided to provide a multi-million dollar defense contract for Company A in the Defense Appropriations bill.  This information has not been released to the public, but will almost certainly drive Company A’s stock price up when it becomes public knowledge.  Congressman B buys stock in Company A.  THIS IS NOT ILLEGAL UNDER CURRENT INSIDER TRADING LAWS, AND IS WHAT THE LEGISLATION ADDRESSES.“[22]

As enacted, the STOCK Act provides in no uncertain terms that “Members of Congress and employees of Congress are not exempt from the insider trading prohibitions arising under [Rule 10b-5]” and explicitly affirms “a duty arising from a relationship of trust and confidence owed by each Member of Congress and each employee of Congress.”[23]  At the signing ceremony, President Obama conveyed the importance of the new law:

“The STOCK Act makes it clear that if members of Congress use nonpublic information to gain an unfair advantage in the market, then they are breaking the law.  It creates new disclosure requirements and new measures of accountability and transparency for thousands of federal employees.  That is a good and necessary thing.  We were sent here to serve the American people and look out for their interests—not to look out for our own interests.”[24]

Yet, reports indicate that public officials have continued to grow and protect their personal wealth by trading on information unavailable to the investing public.[25]  Indeed, the early days of the COVID-19 pandemic shed new light on this form of corruption.[26]

Senate Intelligence Committee Chairman Richard Burr (R-N.C.), for example, co-authored an op-ed on February 7, 2020 in which he publicly reassured the American people that “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.”[27]  At a private luncheon around that same time, however, Senator Burr warned attendees that the coronavirus “is much more aggressive in transmission than anything that we have seen in recent history . . . . It is probably more akin to the 1918 pandemic.”[28]  Acting on the beliefs expressed privately, the Senator picked up between $628,000 and $1.72 million in cash by dumping a large share of his personal holdings on February 13, the week before financial markets began to tank in response to worsening news about the spread of COVID-19.[29]

In addition, the Department of Justice opened probes into the propriety of trades made by Senators Dianne Feinstein (D-Ca.), Kelly Loeffler (R-Ga.), and James Inhofe (R-Ok.), all of whom transferred hundreds of thousands of dollars’ worth of assets after being briefed by public health officials on the nature and scope of the emerging pandemic.[30]  At least 75 members of Congress or their spouses “bought or sold stock in companies that make COVID-19 vaccines, treatments, and tests in the weeks before and after the pandemic gripped the US.”[31]  The same trend has emerged around the current Russian invasion of Ukraine.[32]

Recent events underscore the apparent prevalence of corrupt trading in Congress and the impotence of current insider trading laws.[33]  Violations of the STOCK Act are punishable by fine, but the penalty is negligible and is often waived by House or Senate ethics officials.[34]  In response to calls from ethics watchdogs and lawmakers to tighten restrictions and increase penalties, a serious debate has emerged on Capitol Hill over an outright ban on federal lawmakers’ ability to trade stocks.[35]

That debate is important because even the “simple perception that officials might have prioritized their own financial well-being over the well-being of American households is damaging enough, even if the trades were innocuous.”[36]  A recent poll found that seventy-six percent of voters believe that lawmakers have an “unfair advantage” in the stock market and only five percent of respondents thought legislators should be able to trade stocks.[37]  When House Speaker Nancy Pelosi (D-Ca.) was asked in December of 2021 whether members of Congress should be banned from trading stocks, she responded simply, “no,” adding that “we are a free market economy.  They should be able to participate in that.”[38]  However, after opposing the effort for months, she relented due to growing pressure coming from within the Democratic party.[39]  In response, “there has been a push by both parties, in both houses of Congress, to establish stronger guardrails on congressional stock ownership.”[40]

“The fix is simple and obvious,” writes The Atlantic’s Annie Lowrey.[41] “Just don’t let public officials be active investors.”[42]  Senators Jon Ossoff (D-Ga.) and Mark Kelly (D-Az.) introduced legislation to that end on January 12, 2022.[43]  That law would require members of Congress and their families to place their stock portfolios into blind trusts for the duration of their term in office (allowing them to benefit from participation in the market while disallowing the abuse of nonpublic information) and would punish violations with a fine equal to the member’s entire congressional salary.[44]  The Ossoff-Kelly bill is one of many.[45]  Encouragingly, in the wake of the first House hearing on congressional insider trading on April 7, 2022, a bipartisan group of lawmakers has called on House leadership to swiftly bring a trading ban bill to the floor.[46]

Predictably, however, these efforts have been met with opposition.[47]  House Majority Leader Steny Hoyer (D-Md.) came out against a trading ban, declaring that “members ought not to be in a different situation that they would otherwise be if they weren’t members of Congress.”[48]  But that argument is a nonstarter. Members of Congress are not free to prioritize their own interests in the same way as civilians.  Their situation is inherently different because they are vested with the trust and confidence of both the federal government and the American electorate; they occupy a unique position of power and there is every reason to guard against the abuse of that power.  It should be uncontroversial to state that all forms of profiteering by public officials are unacceptable and should be disallowed.  If one accepts that basic premise, then banning members of Congress from trading stocks is a small and obvious step in the right direction.

[1] Jane J. Kim, U.S. Senators’ Stock Picks Outperform the Pros’, Wall St. J. (Oct. 26, 2004, 12:01 AM), https://www.wsj.com/articles/SB109874916042455390.  

[2] Id.

[3] Id. (During the “boom years of the 1990s” senators outperformed the market by 12%, money managers outperformed the market by 6%, and U.S. households underperformed the market by 1.4%.).

[4] Id.

[5] Id.

[6] “Examples of this kind of information include classified briefings about national security issues, advance knowledge of regulatory actions, and nonpublic details about legislation, appropriations and tax policy.”  Ylan Mui & Christina Wilkie, Congress Moves to Ban Members from Trading Stocks as Pelosi Drops Opposition, CNBC (Feb. 9, 2022, 9:41 AM), https://www.cnbc.com/2022/02/09/congress-moves-towards-banning-members-from-trading-stocks.html.

[7] See, e.g., Annie Lowrey, An Invitation to Corruption, The Atlantic (Mar. 20, 2020), https://www.theatlantic.com/ideas/archive/2020/03/congress-insider-trading-problem/608488/ (“One analysis of 61,998 stock trades made from 2004 to 2010, for instance, showed that politicians outperformed the market by 20 percent, with the portfolios of high-ranking Republicans beating the market by a whopping 35 percent.”).

[8] Brody Mullins et al., Congressional Staffers Gain from Trading in Stocks, Wall St. J. (Oct. 11, 2010, 12:01 AM), https://www.wsj.com/articles/SB10001424052748703431604575522434188603198.

[9] Id.

[10] Donna M. Nagy, Insider Trading, Congressional Officials, and Duties of Entrustment, 91 Bos. U. L. Rev. 1105, 1107 (2011).

[11] Id. at 1108.  For example, Former SEC Commission Chairman Arthur Levitt proclaimed in a Bloomberg radio broadcast that “members of Congress and their staffs … benefit from an exemption that the average investor doesn’t benefit from.  They’re immune from insider trading laws.”  Id.

[12] Id. at 1109 (emphasis in the original).

[13] 15 U.S.C. § 78j(b).

[14] Nagy, supra note 10, at 1109; see 17 C.F.R. § 240.10b-5.

[15] Nagy, supra note 10, at 1109.

[16] Id. at 1110.

[17] See generally Chiarella v. United States, 455 U.S. 222 (1980) (classical theory); United States v. O’Hagan, 521 U.S. 642 (1997) (misappropriation theory).

[18] Chiarella, 455 U.S. at 227 (highlighting “the unfairness of allowing a corporate insider to take advantage of that information by trading without disclosure”); see also Nagy, supra note 10, at 1110 (“Pursuant to this ‘classical theory,’ persons who owe duties of trust and confidence to an issuer’s shareholders must either disclose all material nonpublic information in their possession or abstain from trading in the issuer’s shares.”).

[19] O’Hagan, 521 U.S. at 652.

[20] Nagy, supra note 10, at 1109–11 (“almost all instances of real or hypothesized congressional insider trading can fit squarely within either the classical or misappropriation theory paradigms under Rule 10b-5”).

[21] Stop Trading on Congressional Knowledge (“STOCK”) Act of 2012, Pub. L. No. 112-105, 126 Stat. 291.

[22] Nagy, supra note 10, at 1130.

[23] STOCK Act § 4.

[24] Matt Compton, President Obama Signs the STOCK Act, The White House Blog (April 4, 2012 5:16 PM), https://obamawhitehouse.archives.gov/blog/2012/04/04/president-obama-signs-stock-act.

[25] See generally Dave Levinthal, 59 Members of Congress Have Violated a Law Designed to Stop Insider Trading and Prevent Conflicts-of-Interest, Bus. Insider (Mar. 23, 2022, 1:18 PM), https://www.businessinsider.com/congress-stock-act-violations-senate-house-trading-2021-9; Congressional Trading in 2021, Unusual Whales (Jan. 10, 2022), https://unusualwhales.com/i_am_the_senate/full; see also Valera Voce, Congressmen Used Insider Knowledge to Profit from War in Ukraine, The Mountain (Mar. 11, 2022), https://themountain.news/news/congressmen-used-insider-knowledge-to-profit-from-war-in-ukraine.

[26] See, e.g., Robert Faturechi & Derek Willis, Senator Dumped Up to $1.7 Million of Stock After Reassuring Public About Coronavirus Preparedness, ProPublica (Mar. 19, 2020, 5:01 PM), https://www.propublica.org/article/senator-dumped-up-to-1-7-million-of-stock-after-reassuring-public-about-coronavirus-preparedness; Jack Kelly, Senators Accused of Insider Trading, Dumping Stocks After Coronavirus Briefing, Forbes (Mar. 20, 2020 12:41 PM), https://www.forbes.com/sites/jackkelly/2020/03/20/senators-accused-of-insider-trading-dumping-stocks-after-coronavirus-briefings/.

[27] Senator Lamar Alexander & Senator Richard Burr, Coronavirus Prevention Steps the U.S. Government Is Taking to Protect You, Fox News (Feb. 7, 2020, 12:25 PM), https://www.foxnews.com/opinion/coronavirus-prevention-steps-the-u-s-government-is-taking-to-protect-you-sen-alexander-and-sen-burr.

[28] Faturechi & Willis, supra note 26.

[29] Lowrey, supra note 7.

[30] Ryan Lucas, Justice Department Closes Investigations of 3 Senators; Burr Inquiry Continues, NPR (May 26, 2020, 5:31 PM), https://www.npr.org/2020/05/26/862692569/justice-department-closes-investigations-of-3-senators-burr-inquiry-continues.

[31] Dave Levinthal, Ban Federal Lawmakers and their Family Members from Trading Stocks, 37 Former Lawmakers tell Congress, Bus. Insider (Apr. 6, 2022, 11:00 AM), https://www.businessinsider.com/congress-stock-trade-ban-lawmakers-issue-one-2022-4.

[32] Id.

[33] See Insider Trading, Congress and COVID-19: A Renewed Focus on the STOCK Act, Foley Hoag LLP (April 15, 2020), https://foleyhoag.com/publications/alerts-and-updates/2020/april/insider-trading-congress-and-covid19-a-renewed-focus-on-the-stock-act.

[34] Levinthal, supra note 25.

[35] Id.

[36] Lowrey, supra note 7 (emphasis in the original).

[37] Karl Evers-Hillstrom, Three in Four Voters Support Banning Lawmakers from Trading Stocks: Poll, The Hill (Jan. 6, 2022, 4:05 PM), https://thehill.com/homenews/news/588630-76-percent-of-voters-support-banning-lawmakers-from-trading-stocks-poll/.

[38] Press Release, Speaker of the House Nancy Pelosi, Transcript of Speaker Pelosi’s Remarks at Weekly Press Conference (December 15, 2021), https://www.speaker.gov/newsroom/121521-0.

[39] See Steven T. Dennis et al., Stock-Trading Ban for Congress Hits Pushback from Right and Left, Bloomberg (Feb. 9, 2022, 5:36 PM), https://www.bloomberg.com/news/articles/2022-02-09/stock-trading-ban-for-congress-hits-pushback-from-right-and-left.

[40] The Editorial Board, Members of Congress Should Not be Trading Stocks, Ever, N.Y. Times (Feb. 18, 2022), https://www.nytimes.com/2022/02/18/opinion/congress-stock-trading-ban.html.

[41] Lowrey, supra note 7.

[42] Id.

[43] Press Release, Senator Jon Ossoff, Sens. Ossoff, Kelly Introduce Bill Banning Stock Trading by Members of Congress.

[44] Id.

[45] Bryan Metzger, A Bipartisan Group of 19 Lawmakers Is Laying Out 3 Key Parameters for a Stock Trading Ban Following the House’s First Hearing on the Issue, Bus. Insider (Apr. 13, 2022, 11:09 AM), https://www.businessinsider.com/19-bipartisan-lawmakers-stock-ban-letter-golden-spanberger-hearing-2022-4 (“At least 20 bills have been introduced that address some of these issues.”).

[46] Id.; Kimberly Leonard & Dave Levinthal, Here Are 6 Things to Watch as Congress Considers Banning Lawmakers from Trading Stocks, Bus. Insider (Apr. 6, 2022, 3:07 PM), https://www.businessinsider.com/congress-trading-stocks-nancy-pelosi-kevin-mccarthy-zoe-lofgren-2022-4.

[47] See Dennis, supra note 39.

[48] Mike Lillis, Joining Pelosi, Hoyer Says Lawmakers Should Be Free to Trade Stocks, The Hill (Jan. 19, 2022, 1:57 PM), https://thehill.com/homenews/house/590428-joining-pelosi-hoyer-says-lawmakers-should-be-free-to-trade-stocks/?rl=1.

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30Sep

The National Security Powers Act of 2021 and the Erosion of Congressional War Powers

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By Jacob Winton

On July 20, 2021, Senators Bernie Sanders (I-Vt.), Chris Murphy (D-Conn.), and Mike Lee (R-Utah) introduced the National Security Powers Act of 2021[1] (“NSPA”), a bipartisan bid to reign in the war powers of the Executive Branch.  The bill, which would impose substantial limitations on presidential power,[2] would allow “Congress [] to reclaim its rightful role as co-equal branch on matters of war and national security” and “make sure that there is a full, open and public debate on all major national security decisions” according to Senator Murphy.[3]  The effort seeks to reverse what many view as the “steady erosion of Congress’s power to prevent, confine, or even direct military action and [the] steady accretion of executive discretion and control.”[4]  This shift in the balance of power has been driven in large part by the “Presidentialist” perspective, an approach to presidential war power in which the executive is “constrained in its ability to engage military force abroad only by Congress’s appropriations and impeachment powers.”[5] 

But the historical record leaves little doubt as to who the framers of the Constitution believed should decide when and where to wage war.[6]  Pursuant to the Constitution, the President directs the armed forces as commander in chief,[7]  but “Congress alone has the power to declare war and fund military operations.”[8]  Prior to World War II, the branches of government adhered closely to these guidelines—American military action was routinely preceded by a formal declaration, issued by Congress in response to a request from the President, authorizing the President to engage in military operations against a foreign nation.[9]  However, despite once being deemed a “necessary prerequisite” to military action, “declarations have fallen into disuse” since World War II.[10]  More recently, presidents have become increasingly comfortable engaging in military action abroad without direct congressional approval.[11]

The last formal declaration of war in the United States was issued in 1942 against Romania.[12]  Since then, Congress’s role has withered as the system evolved from a collaborative decision-making process between the Legislative and Executive Branches into “an interagency process subordinating military force within a foreign policy system under the Executive Branch.”[13]  So far, Congress has failed to muster a response sufficient to rebuke the encroachment of the Executive Branch.  For example, after the war effort in Vietnam failed, Congress overrode President Nixon’s veto to pass the War Powers Resolution of 1973[14] under the mistaken belief that it would restore “collective legislative-executive judgment in the war-making process.”[15]  Ultimately, however, the effect of the War Powers Resolution “has been minimal.”[16]

During the 21st century, the accumulation of executive war power has accelerated.[17]  Following the 9/11 terrorist attacks, President George W. Bush’s approach to executive war power was rooted in the “assert[ions] of broad, uncheckable power” by former Presidents Nixon and Reagan.[18]  The Bush White House provided fertile ground for the unitary executive theory, an expansive view of executive power “that had been percolating in the conservative movement for years” and was brought to national prominence in large part by Vice President Dick Cheney.[19] In the aftermath of 9/11, the theory became a “convenient tool seized upon in a time of crisis”[20] to justify unilateral presidential military initiatives that flouted international treaties, violated domestic law, and “led to a widespread government policy and practice of torture.”[21]

Despite the disapproval of both the public and the Supreme Court,[22] the continuing exercise of military power without express authorization has “normalized the unbalanced relationship between Congress and the Executive.”[23]  Modern presidents have resorted to the circular and self-strengthening argument that military action in the absence of congressional approval should be “accepted by mere virtue of past practice.”[24]  In 2011, for instance, the Obama administration Department of Justice qualified President Obama’s use of military force in Libya[25] without congressional approval as constitutional by insisting that “the historical practice of presidential military action without congressional approval precludes any suggestion that Congress’s authority to declare war covers every military engagement, however limited, that the President initiates.”[26]  Moreover, in the wake of Congress’s response to 9/11, presidents have used the Authorizations for the Use of Military Force passed in 2001[27] and 2002[28] to justify military action years later “against terrorist organizations that did not exist at the time of the 9/11 attacks, are active in regions far removed from Al Qaeda’s areas of operation, and that have no known affiliation with Al Qaeda,” effectively bypassing Congress altogether.[29]

It is against this backdrop that Senators Sanders, Murphy, and Lee have introduced the NSPA.  While the Presidentialists welcome the expansion of executive war power, the NSPA represents the concern that unchecked executive power poses a grave threat to our constitutional system.[30]  On a practical level, Senator Lee explained that the NSPA meets an urgent need to restore accountability because “America’s global standing, treasure, and brave service members are being lost in conflict’s the people’s legislators never debated.”[31]  This latest proposal may or may not become law, but unless Congress can reclaim its constitutional role, the growing concentration of war powers in the executive, a danger the framers were keenly aware of, threatens to become a permanent feature of our government.

[1] S. 2391, 117th Cong. (2021).

[2] Notably, the NSPA would repeal all existing war authorizations and defund any military operation not explicitly greenlit by Congress, make it easier for Congress to reverse presidential foreign policy decisions, and roll back presidential access to emergency national security powers. Andrew Desiderio, Unlikely Senate Alliance Aims to Claw Back Congress’ Foreign Policy Powers ‘Before It’s too Late’, Politico (July 20, 2021, 6:00 A.M.), https://www.politico.com/news/2021/07/20/bipartisan-senators-congress-war-powers-500214.

[3] Id.

[4] Mark E. Brandon, War and the American Constitutional Order, 56 Vand. L. Rev. 1815, 1847 (2003).

[5] Jake Novack, Note, Exploring Executive War Power: The Rise and Reign of the Presidentialist Interpretation, 53 Cal. W. L. Rev. 247, 249 (2017).

[6] See, e.g., Ronald J. Sievert, Campbell v. Clinton and the Continuing Effort to Reassert Congress’ Predominant Constitutional Authority to Commence, or Prevent, War, 105 Dick. L. Rev. 157, 159 (2001) (citing debate transcript from Constitutional Convention’s Committee on Drafting to demonstrate broad agreement that the executive cannot “commence war”); see also The Federalist No. 69 at 465 (Alexander Hamilton) (Cook ed. 1961) (distinguishing the power of the President as “much inferior” to that of the British King because it does not extend to “the declaring of war and to the raising and regulating of the fleets and armies”).

[7] U.S. Const. art. II, § 2.

[8] Donald A. Dechert, III, Note, Perpetual Warfare: Proposing a New American Constitutional Amendment for the War Powers, 52 Val. U. L. Rev. 457, 482 (2018); see also U.S. Const. art. I, § 8, cl. 18.

[9] Id. at 461–62; see also, e.g., Joint Resolution of December 12, 1941, Pub. L. No. 77-331, 55 Stat. 796 (formally declaring war on Germany during World War II).

[10] Jennifer K. Elsea & Matthew C. Weed, Cong. Rsch. Serv., RL31133, Declarations of War and Authorizations for the Use of Military Force: Historical Background and Legal Implications 23 (Apr. 18, 2014).

[11] See, e.g., Novack, supra note 5, at 249–50 (“[T]he Obama Administration’s military actions in Libya and operations against al-Qa’ida (including its affiliates, associated forces, and successors) in Yemen, Somalia, Iraq, and Syria occurred and continue without explicit congressional authorization”).

[12] Elsea & Weed, supra note 10, at 4.

[13] Dechert, supra note 8, at 462.

[14] 50 U.S.C. §§ 1541–48.

[15] Michael J. Glennon, The War Powers Resolution Ten Years Later: More Politics than Law, 78 Am. J. Int’l L. 571, 571 (1984).

[16] Brandon, supra note 4, at 1855.  Since its passage, the War Powers Resolution “has been ignored or flouted far more frequently than followed” and even when presidents have complied with its requirements, “they have sometimes done so without conceding the existence of a constitutional obligation.” Id.

[17] See, e.g., Richard E. Levy, Presidential Power in the Obama and Trump Administrations, 87 J. Kan. Bar Ass’n 46, 47 (2018) (“One consistent trend since the time of the founding has been the expansion of presidential authority.  In recent years, this trend has accelerated at an exponential rate, propelled by the war on terror and the dysfunction of our hyperpartisan Congress”).

[18] Erwin Chemerinsky, The Assault on the Constitution: Executive Power and the War on Terrorism, 40 U.C. Davis L. Rev. 1, 7 (2006).

[19] Novack, supra note 5, at 268. Before ascending to the vice presidency, Cheney offered a “vociferous defense of executive prerogative” as Wyoming’s senior representative in the House in response to “outright congressional fury” at the Nixon administration for its defiance of congressional mandates during the Iran-Contra affair. Id.  Later, as Vice President, Cheney “staffed the White House with individuals who shared his belief that the executive branch was aptly suited for expansive power,” thus setting the stage for the full embrace of the unitary executive theory in the aftermath of 9/11. Id. at 271.

[20] Id. at 272.

[21] Michael P. Scharf, The Torture Lawyers, 20 Duke J. Compar. & Int’l L. 389, 391 (2010).

[22] See, e.g., Gregory P. Noone, The War Powers Resolution and Public Opinion, 45 Case Western Rsrv. J. Int’l L. 145, 152–54 (2012) (detailing decades of public opinion polling demonstrating broad agreement that congressional approval should be required for the President to take military action); see also, e.g., Hamdi v. Rumsfeld, 542 U.S. 507, 536 (2004) (rebuking the Bush administration’s assertion of the authority to deprive detainees at Guantanamo Bay of access to federal courts as an attempt to “turn our system of checks and balances on its head”).

[23] Novack, supra note 5, at 272.

[24] Id. at 272–73.

[25] President Obama has since stated that our military action in Libya “didn’t work” and that “failing to plan for the day after” was his worst mistake as president. Dominic Tierney, The Legacy of Obama’s ‘Worst Mistake’, The Atlantic (Apr. 15, 2016), https://www.theatlantic.com/international/archive/2016/04/obamas-worst-mistake-libya/478461/.

[26] Authority to Use Military Force in Libya, 35 Op. O.L.C. 20, 31 (2011).

[27] See Authorization for Use of Military Force, Pub. L. No. 107-40, 115 Stat. 224 (2001) (authorizing military action against those responsible for the 9/11 terrorist attacks).

[28] See Authorization for Use of Military Force Against Iraq Resolution of 2002, Pub. L. No. 107-243, 116 Stat. 1498.  

[29] Levy, supra note 17, at 47.

[30] Chemerinsky, supra note 18, at 16 (“The framers of the Constitution feared executive power the most”).

[31] Desiderio, supra note 2.

Post image by Daniel Mennerich on Flickr

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9Feb

New Benefit Program Attempts to Bridge Digital Divide

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By Rachel L. Golden

To mitigate the spread of COVID-19, millions of students have been forced to move from in-person to distance learning. The success of distance learning hinges on a student’s ability to access the virtual classroom.[1] For two girls in East Salinas, California, distance learning meant having to sit in a Taco Bell parking lot to complete their homework.[2] In August 2020, a photo of these two young girls sitting in the Taco Bell parking lot went viral on Twitter because the parking lot provided something that their home environment could not: access to the internet.[3]

For many Americans, access to online services is not a given.[4] A 2018 Federal Communications Commission (“FCC”) study found that “there are more than 14 million people without any internet access and 25 million without faster and more reliable broadband access.”[5] The COVID-19 pandemic has further illuminated this digital divide.[6] The digital divide “refers to the growing gap between the underprivileged members of society . . . who do not have access to computers or the internet” and the more affluent Americans who do have access to computers and the internet.[7] This divide stems from not only not having access to the internet, but also lacking access to a device that can connect to the internet.[8]

The digital divide does not exclusively affect school-aged children, but the consequences of the digital divide are clear when examining these children.[9] Even prior to the current public health crisis, a 2018 Pew Research Center analysis showed that due to a lack of broadband internet access, poor school-aged children were less likely to finish their homework than more affluent students with access to the internet.[10] This problem has been exacerbated during the COVID-19 pandemic when the primary mode of teaching, at all levels, has switched to virtual learning.[11] Moreover, to complete remote work, students may be forced “to go outside and ignore quarantine or shelter-in-place guidelines” to find internet access—actions contrary to the original health and safety purposes of distance learning.[12]

However, COVID-19’s illumination of the digital divide has “produced new political will to reduce inequality in the global digital economy.”[13] Congress, in the most recent COVID-19 response and relief package, acknowledges the need for broadband funding and access.[14] The Consolidated Appropriations Act of 2021[15] (“Act”) establishes an Emergency Broadband Connectivity Fund (“Fund”) of 3.2 billion dollars.[16] The Act directs the FCC to use the Fund “to establish an Emergency Broadband Benefit Program, under which eligible households may receive a discount off the cost of broadband service and certain connected devices . . . relating to the COVID-19 pandemic.”[17]

Broadband providers’ participation in the Emergency Broadband Benefit Program (“Benefit Program”) is entirely voluntary.[18] However, if the provider chooses to participate, it must be designated as an eligible telecommunications carrier or be approved by the FCC.[19] Once approved to participate in the Benefit Program, the broadband provider will give monthly discounts “off the standard rate for an Internet service offering and associated equipment” to eligible households of up to $50 per month.[20] The broadband providers are then entitled to reimbursement from the Benefit Program for the discounts they have provided.[21] Moreover, the Benefit Program not only enables discounted internet services, but also encourages broadband providers to supply eligible households with a connected device, such as a laptop, desktop computer, or tablet.[22] The Benefit Program, however, is not without its limitations. For example, an eligible household that seeks a connected device is only eligible to receive one supported device.[23]

The Act directs the FCC to provide a public comment period and public reply comment period, each of twenty days, before the rules of the Benefit Program are established.[24] The FCC seeks comment on a variety of provisions.[25] Examples include seeking comment on “the eligibility and election process for participating providers” and what the definition of household is in reference to the Act’s requirement that the discounts and connected devices be provided to “eligible households.”[26] The public comment twenty-day window closed on Jan. 25, 2021, but the public reply comments window closes on Feb.16, 2021, so the scope of the rules of the Benefit Program are yet to be determined.[27]

The true aim behind the Benefit Program is to provide broadband internet access to low income households at affordable rates—especially those households with school-aged children.[28] Whether or not the Benefit Program will be effective in fulfilling this goal remains to be seen. However, it is clear that the Benefit Program is “an important Band-Aid that [will help] Americans [stay] connected,” even if solving the nation’s digital divide requires stitches.[29] Ultimately, the hope is that with increased access to internet services and connected devices, Taco Bell parking lots will remain parking lots and not double as schools.  

[1] Strengths and Weaknesses of Online Learning, Univ. Ill. Springfield, https://www.uis.edu/ion/resources/tutorials/online-education-overview/strengths-and-weaknesses/ (last visited Feb. 9, 2021).

[2] Lizzy Francis, Viral Photo Shows Kids with No Internet Using Taco Bell Wifi To Do Homework, Yahoo! News (Sept. 2, 2020), https://news.yahoo.com/viral-photo-shows-kids-no-171809219.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAG4dqe2tNs1lEJ4bvk99l0BosLqbgsIR5cnnqVYqWpXkh0dQy4YyB0GXkfPVoaWaSQUcKWHskKFOLhweLRqI1lj6_8sOHiIRvdtwAZjvKDYtmVdPKXr7YohJudkZUlOXPra-UbYSQeSCq9cfo1xuiry5ZcyLyV2OY1h2OVqUvwoX.

[3] Id.

[4] See Emmanuel Martinez, How Many Americans Lack High-Speed Internet?, The Markup (Mar. 26, 2020),  https://themarkup.org/ask-the-markup/2020/03/26/how-many-americans-lack-high-speed-internet#:~:text=There%20are%20more%20than%2014,census%20blocks%20and%20not%20households.

[5] Id.

[6] Id.

[7] Digital Divide, Stan. Univ. https://cs.stanford.edu/people/eroberts/cs181/projects/digital-divide/start.html (last visited Feb. 9, 2021).

[8] Id.

[9] See Martinez, supra note 4.

[10] Id.

[11] See id.

[12] Id.

[13]Closing Digital Divide in the Covid Era: Four Big Data Strategies, Digit. Divide Inst. https://digitaldivide.org/ (last visited Feb. 9, 2021).

[14] See Kelcee Griffis, COVID Bill Includes Broadcaster Loans, Broadband Funds, L.360 (Dec. 21, 2020) https://www.law360.com/articles/1339770/covid-bill-includes-broadcaster-loans-broadband-funds.

[15] Consolidated Appropriations Act, 2021, Pub. L. No. 116-260. (2020), available at https://www.congress.gov/bill/116th-congress/house-bill/133/text (Consolidated Appropriations Act) (enrolled bill).

[16] FCC Seeks Public Input on New $3.2 Billion Emergency Broadband Benefit Program, Fed. Commc’ns Comm’n (Jan. 4, 2021), https://docs.fcc.gov/public/attachments/DA-21-6A1.pdf.

[17] Id.

[18] Id. The discount on Tribal lands may be up to $75 per month, as opposed to $50 per month. Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Creating (Finally) an Emergency Broadband Benefit, Benton Inst. for Broadband & Soc’y (Jan. 5, 2021) https://www.benton.org/blog/creating-finally-emergency-broadband-benefit#:~:text=In%20the%20Consolidated%20Appropriations%20Act,the%20Emergency%20Broadband%20Benefit%20Program.&text=Broadband%20providers%20will%20be%20reimbursed,household%20is%20on%20Tribal%20land.

[29] Griffis, supra note 14.  

Post image: Two girls in East Salinas, California, rely on wifi from a Taco Bell restaurant to complete homework in a viral photo from August 2020. Via Luis Alejo on Twitter.

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15Dec

To Pack or Not to Pack The Court? A Closer Look at Both Arguments

Categories: Current Issues Blog
Comments Off on To Pack or Not to Pack The Court? A Closer Look at Both Arguments

The four freedoms. Equal justice under the law is just one of the planks on which
Lauren Funk

On November 25, the United States Supreme Court issued a five to four opinion enjoining New York Governor, Andrew Cuomo, from implementing a COVID-19 restriction which would limit religious services to gatherings of no more than ten people.[1]  The deciding vote?  Newly appointed Justice Amy Coney Barrett.[2]  Joining Justice Barrett in the unsigned opinion were Justices Neil Gorsuch and Brett Kavanaugh,[3] who were also both recently appointed to the Supreme Court.[4]  The three President Trump-appointed justices make up just half of the conservative bloc on the Court, effectively outnumbering the liberal justices by six to three.[5]  The Democratic Party has vehemently expressed concern over the growing conservative majority and what it could mean for issues like abortion, healthcare, and LGBTQ+ rights.[6]  Many notable figures on the left have responded to this shift by calling for judicial reform, namely court expansion, which is most commonly referred to as “court-packing.”[7]

The concept of packing the court (or decreasing its size) is not necessarily new.[8]  This is in part because the U.S. Constitution did not set out a specific number of Supreme Court justices in Article III, leaving the makeup of the Court for Congress to decide.[9]  Consequently, since 1789, the number of justices on the Court has changed seven times, the last of those changes in 1869, with an increase from seven to nine.[10]  Although the number has not changed in 151 years, one key challenge arose in 1937: President Franklin D. Roosevelt’s “court-packing” plan.[11]  After two years of facing a consistent blocking of New Deal legislation by a conservative Supreme Court, President Roosevelt proposed a plan to change the makeup of the court.[12]  The plan would, in effect, increase the number of justices from nine to fifteen and tip the Court in President Roosevelt’s favor.[13]  This was met with strong opposition in Congress and across the legal community, including members of President Roosevelt’s own administration.[14]  Moreover, after the plan was introduced, the Court began to shift its position in favor of key pieces of New Deal legislation, and thus, the court-packing plan became futile.[15]  The Senate subsequently voted against it by an overwhelming 70 to 22.[16]

Unlike President Roosevelt’s infamous plan, the recent talks of expanding the Court have been met with a fairly equal amount of support and opposition.[17]  Proponents in favor of court-packing have largely based their reasoning on three grounds.  First, and perhaps what ignited support for this issue in the first place, is the fact that the last three Justices appointed to the Supreme Court were appointed by a president that lost the popular vote in his election.[18]  As such, President Trump’s appointees may be seen to some as less legitimate,[19] and thus their decisions less reflective of the national preferences.[20]  Second, proponents contend that expanding the court would allow for greater judicial bipartisanship, especially if expanded using the five-five-five approach.[21]  This method would restructure the court by mandating that there be exactly five justices affiliated with the Democratic Party and five justices affiliated with the Republican party (the confirmation process remaining much the same).[22]  Together, those ten justices would have to unanimously agree on five additional justices and if they could not come to an agreement, they would lack the quorum needed to officially hear cases.[23]  This would ensure that neither political party maintains a stronghold majority in the Court.  Finally, many support court-packing because they believe that other alternatives would take longer to implement, thus increasing the likelihood that many liberal policies could be overturned or narrowed in the interim.[24]  Proponents argue the consequences of such reversals could be far-reaching, from immediate impacts on the environment[25] to interfering with a woman’s access to abortion.[26]

In contrast, opposing arguments are focused less on policy implications and more on the  threat that court-packing posits to democracy and judicial legitimacy.[27]  First, opponents contend that court-packing would, in effect, decrease tolerance for opposing viewpoints in an already deeply polarized America.[28]  One of the foundations of democracy is the people’s faith in the system, essentially “liv[ing] with ‘bad’ policies until [one has] the chance to reverse them through the voting process.”[29]  Specifically, opponents worry that restructuring the court to best fit a party agenda—either  by the Democrats now or the Republicans later—could signal a breakdown of the democratic system.[30]  Second, opponents have expressed concern over how court-packing could delegitimize the Court.[31]  Packing the Court with liberal justices to balance out (or perhaps outnumber) the amount of conservative justices could be seen as political interference in what is supposed to be a “no politics” zone.[32]  Opponents argue this could jeopardize judicial independence, which has been a distinguishing tenet of the Court since its inception.[33]  Lastly, opponents predict that this kind of political restructuring would set the precedent for a future back and forth cycle, leading to great instability in the Court over time.[34]  If the Democrats were successful in packing the Court in 2021, the Republicans could reverse this expansion or further pack the court as soon as they regain control of Congress, and the Democrats could reverse the Republican’s reversal the next time they were in control, and so on and so forth.  Opponents have argued this would “yield short-term political victories at the cost of the long-term health of [the] Republic.”[35]

While it is clear where some stand on the issue, President-elect Joe Biden, who openly opposed court-packing before the passing of Justice Ruth Bader Ginsburg, remained relatively tight-lipped on the topic in the last weeks of his campaign,[36] and has yet to address his stance on the issue since winning the election last month.  However, even if the Biden administration were to put a court-packing plan at the top of its agenda, it would still need a Democratic majority in Congress, and further, a Democratic majority that collectively supports the idea.[37]  Although these requirements seem daunting, it is not entirely far off, even if Biden has to wait until 2022 for a Democratic-controlled Congress.  If that were the case and Biden wanted to act sooner, or if he wanted to avoid court-packing altogether, he could rely on alternatives for Court reform that may garner more bipartisan support.[38]  Scholars have suggested proposals ranging from term limits[39] to a “binding set of nonpartisan rules.”[40]  These rules could set a firm deadline for nominations to the Court during presidential election years, make confirmation hearings private, and address the issue of nominating young justices to get long-term control.[41]

While these reforms sound promising, they could take time to pass through Congress, which means that the outrage felt by the Democratic Party over the current makeup of the Court is not going away anytime soon.  This is especially true in light of the fact that there are several significant cases that come before the Court every year, and the Cuomo case will likely not be the last time Justice Barrett is the deciding vote.  However, it is conceivable that history could repeat itself and the Court could respond to the threat of expansion like it did in 1937 by adjusting its position on key cases.  Whatever the outcome, change on the Supreme Court in the coming months and years is inevitable.

[1] Roman Catholic Diocese of Brooklyn v. Cuomo, No. 20A87, 2020 WL 6948354, at *1, *3 (U.S. Nov. 25, 2020).

[2] Justice Ruth Bader Ginsburg had voted against similar religious challenges in the months preceding her death, after which Justice Barrett took over her seat on the Court. Adam Liptak, Splitting 5 to 4, Supreme Court Backs Religious Challenge to Cuomo’s Virus Shutdown Order, N.Y. Times (Nov. 26, 2020), https://www.nytimes.com/2020/11/26/us/supreme-court-coronavirus-religion-new-york.html.

[3] Amy Howe, Justices lift New York’s COVID-related attendance limits on worship services, SCOTUSblog (Nov. 26, 2020), https://www.scotusblog.com/2020/11/justices-lift-new-yorks-covid-related-attendance-limits-on-worship-services/.

[4] See Ed O’Keefe & Robert Barnes, Senate confirms Neil Gorsuch to Supreme Court, Wash. Post (Apr. 7, 2017), https://www.washingtonpost.com/powerpost/senate-set-to-confirm-neil-gorsuch-to-supreme-court/2017/04/07/da3cd738-1b89-11e7-9887-1a5314b56a08_story.html;  Kevin Breuninger & Mike Calia, Brett Kavanaugh confirmed by Senate in 50-48 vote, ascends to Supreme Court, CNBC (Oct. 6, 2018), https://www.cnbc.com/2018/10/06/brett-kavanaugh-confirmed-by-senate-in-50-48-vote.html.

[5] Joan Biskupic, Supreme Court’s liberals face a new era of conservative dominance, CNN (Dec. 3, 2020), https://www.cnn.com/2020/12/03/politics/supreme-court-breyer-sotomayor-kagan/index.html.

[6] See Amy McKeever, Why the Supreme Court ended up with nine justices–and how that could change, Nat’l Geographic (Sept. 20, 2020), https://www.nationalgeographic.com/history/2020/09/why-us-supreme-court-nine-justices/#close.

[7] Astead W. Herndon & Maggie Astor, Ruth Bader Ginsburg’s Death Revives Talk of Court Packing, N.Y. Times (Oct. 22, 2020), https://www.nytimes.com/2020/09/19/us/politics/what-is-court-packing.html.

[8] See McKeever, supra note 6.

[9] See U.S. Const. art. III, § 1 (“The judicial Power of the United States, shall be vested in one supreme Court . . . .”).

[10] McKeever, supra note 6.

[11] History.com Editors, FDR announces “court-packing” plan, HISTORY (Feb. 4, 2020), https://www.history.com/this-day-in-history/roosevelt-announces-court-packing-plan.

[12] Id.

[13] Gillian Brockell, FDR tried to pack the Supreme Court during the Depression. It was a disaster for him., Wash. Post (Sept. 24, 2020), https://www.washingtonpost.com/history/2020/09/24/fdr-supreme-court-packing-rbg-trump/.

[14] Id.

[15] Id.

[16] History.com Editors, supra note 11.

[17] See infra notes 18–35, and accompanying text.

[18] Gregory Krieg, It’s official: Clinton swamps Trump in popular vote, CNN (Dec. 22, 2016), https://www.cnn.com/2016/12/21/politics/donald-trump-hillary-clinton-popular-vote-final-count/index.html.

[19] See Richard Mailey, Court-Packing in 2021: Pathways to Democratic Legitimacy, 44 Seattle U. L. Rev. 35, 52 (2020) (suggesting that popular vote-losing President Trump’s “consequential” picks on the Supreme Court illustrates the argument that checks on the judicial appointments process is lacking, which can allow a president to seize the court without the will of the people).

[20] See James D. Zirin, Opinion, Beyond Court Packing: The Supreme Court Has Always Been Political, TIME (Nov. 2, 2020), https://time.com/5906442/court-packing-election-history/. 

[21] See Quinta Jurecic & Susan Hennessey, The Reckless Race to Confirm Amy Coney Barrett Justifies Court Packing, Atlantic (Oct. 4, 2020), https://www.theatlantic.com/ideas/archive/2020/10/skeptic-case-court-packing/616607/.

[22] Daniel Epps & Ganesh Sitaraman, How to Save the Supreme Court, Vox (Oct. 10, 2018), https://www.vox.com/the-big-idea/2018/9/6/17827786/kavanaugh-vote-supreme-court-packing.

[23] Id.

[24] See, e.g., Elaine Godfrey, The Democrats’ Supreme Court Hail Mary, Atlantic (Sept. 28, 2020), https://www.theatlantic.com/politics/archive/2020/09/democrats-case-court-packing/616446/.

[25] Id.

[26] See McKeever, supra note 6.

[27] See infra notes 28–35, and accompanying text.

[28] Bruce Ledewitz, A Call for America’s Law Professors to Oppose Court-Packing, 2019 Pepp. L. Rev. 1, 6–9 (2020).

[29] Id. at 6.

[30] Id. at 9.

[31] See id. at 14; Thomas Jipping & GianCarlo Canaparo, Why Court Packing Would Be Devastating to Our Republic, Heritage Found. (Oct. 5, 2020), https://www.heritage.org/courts/commentary/why-court-packing-would-be-devastating-our-republic.

[32] See Jipping & Canaparo, supra note 31.

[33] Id.

[34] Walter Olson, Opinion, Packing the Supreme Court would lead to a slippery slope, CNN (Oct. 15, 2020), https://www.cnn.com/2020/10/15/opinions/supreme-court-packing-slippery-slope-olson/index.html.

[35] See Jipping & Canaparo, supra note 31.

[36] See Herndon & Astor, supra note 7.

[37] See Jeff Greenfield, How Democrats Could Pack the Supreme Court in 2021, POLITICO (Sept. 19, 2020), https://www.politico.com/news/magazine/2020/09/19/how-democrats-could-pack-the-supreme-court-in-2021-418453.

[38] Jim Walden & Jo Wu, A better Prescription than Packing the Courts, Nat’l L.J. (Oct. 19, 2020), https://wmhlaw.com/wp-content/uploads/2020/10/A-Better-Prescription-Than-Packing-the-Courts-1.pdf.

[39] See Kalvis Golde, House Democrats to introduce new bill for Supreme Court term limits, SCOTUSblog (Sept. 25, 2020), https://www.scotusblog.com/2020/09/house-democrats-to-introduce-new-bill-for-supreme-court-term-limits/.

[40] Walden & Wu, supra note 38.

[41] Id.

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