Amicus Curiae Brief — Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 43 (2017) (No. 16-1276)

Supret « Court, U.S.

FILED

AUG 31 2017

OFFICE OF I HE CLERK

No. 16-1276

In the Supreme Court of the United States

DIGITAL REALTY TRUST, INC.,

Petitioner,

v.

PAUL SOMERS,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF OF THE CATO INSTITUTE

AS AMICUS CURIAE

SUPPORTING PETITIONER

Ilya Shapiro

Counsel of Record

Frank Garrison

Cato Institute

1000 Mass. Ave. N.W.

Washington, D.C. 20001

(202) 842-0200

ishapiro@cato.org

August 31, 2017

LT Ee A TO TENE I

QUESTION PRESENTED

Whether the anti-rctaliation provision for “whistle

blowers” in the Dodd-Frank Wall Street Reform and

Consumer Protection Act of 2010 extends to individu-

als who have not reported alleged misconduct to the

Securities and Exchange Commission and thus fall

outside of the statute’s definition of a “whistleblower.”

TABLE OF CONTENTS

QUESTION PREBSEN TRI) .......0+2ccesnsevsncssesevessenen

TABLE OF CODIG TIRING 6 tied cc cscs: seccsuisesenseesinincauinnns

TABLE OF AUST ERIE 2 AlBee covcessnssvessssssvesssusdenensas

INTEREST OF AMICUS CURIALE.........c:c00000008

INTRODUCTION AND SUMMARY OF

PURIFIES 3 vies sins: scensnssoresrinnipedanamncniages

ARGUMENT: THE GOVERNMENT'S

REGULATION IS PROCEDURALLY

DEFECTIVE AND THUS DOES NOT

MERIT CHEVRON DEFERENCE.................

A. The SEC Regulation Violated the APA

When It Failed to Give the Public Fair

Notice in Its Notice of Proposed

PRAMIO ING 6. csi nsccscaccesaseadeaeercaameia

Page

seer eve 1

B. The SEC Regulation Violated the APA and

Thus Should Not Get Chevron Deference.

C. Withholding Deference When Rules Do Not

Follow Proper Procedure Is Essentia] For

Administrative Due Process ......................

COIR FEN. 0s..00cnmescavessatbaserssusshennetgaeeene

sien ae

TABLE OF AUTHORITIES

Page(s)

Cases

Chevron, U.S.A., Inc. v. NRDC, Inc.,

Ee CUI corscscveraseces+0s0 lebbsitbatadildsennnedeines 7

Chocolate Mfrs. Ass'n v. Block,

755 F.2d 1098 (4th Cir. 1985)................... icuaniedoamias 5

Christopher v. SmithKline Beecham Corp.,

Es 12

Chrysler Corp. v. Brown,

SE A

City of Arlington v. FCC,

133 S. CL. 1863 (2013)............. na MO 10

Egan v. Del. River Port Auth.,

RS) iy ) 10

Encino Motorcars, LLC v. Navarro,

I es ssc cnienveccsceosocsees 3, 7, 8,9

Envtl. Integrity Project vu. EPA,

LE, GE, BUI ovvccccsccscaccccesscenesssaveeess 5

FCC vu, Fox TV Stations, Inc,

SE 12

Gutierrez-Brizuela v. Lynch,

ee ee ee CRPGED GEE. SUID) ........cccecccccscesoccsccoss 10

Koortizky v. Reich,

EE OLED, Cs ROOD... cc ccccccccccccscecccessonss 5, 6

Long Island Care at Home, Ltd. v. Coke,

I nnn sccsceacanacivorsecscovssees 3, 4, 6, 8

Michigan v. EPA,

Do 5 onsen euceccesencensnccceseece ..10

iv

Nat'l Black Media Coalition v. FCC,

pee BoD fs Ch nerenees 6

Northeast Md. Waste Disposal Auth. v. EPA,

SEB F.2e GOS GUC. Cle. BED o.:nnccrcccccccscccenesiccsscecnss 5

Perez v. Mortg. Bankers Ass'n,

St II si ictsinitaseiss-stassenniseadcilcoaiaviemeiatiniialamiens 12

Shell Oil Co. v. EPA,

fe FG a ) ee 5

United States v. Mead Corp.,

I a a ee 7,8

United States v. Morton Sali Co.,

Es Ts Ce I cit sitcisenscnicecitencscoinascibaumsahonnis 12

Vt. Yankee Nuclear Power Corp. v. Natural Res.

Def. Council, Inc., 435 U.S. 519 (1978).................. 11

Statutes

Sk Sd ae een 2A aera 4

See ese Pe iitiiiictiencsciniecsisutaitenssnionccemnniesein 2

Oe es PE iii iiccesamtibecdabiccnmmaineome 2

Rules

76 Fed. Reg. 34,300 (June 13, 2011) .0......... ee ceeeee eee 3

76 Fed. Reg. 34,301 (June 13, 2011) ..00.0000. cee 3

76 Fed. Reg. 34,302 (June 13, 2011)... eee eee 3

76 Fed. Reg. 34,303 (June 13, 2011) ............ecseceeeeseees 3

76 Fed. Reg. 34,304 (Jume 13, 2011) .......... eee 3

76 Fed. Reg. 34,363 (June 13, 2011) ..............c00cee renee 3

Proposed Rules for Implementing the Whistleblower

Provisions of Section 21F of the Securities Exchange

Act of 1934, 75 Fed. Reg. 70,488 (Nov. 17, 2010)....2

v

Proposed Rules for Implementing the Whistleblower

Provisions of Section 21F of the Securities Exchange

Act of 1934, 75 ed. Reg. 70,489 (Nov. 17, 2010).... 2

Proposed Rules for Implementing the Whistleblower

Provisions of Section 21F of the Securities Exchange

Act of 1934, 75 Fed. Reg. 70,519 (Nov. 17, 2010)....2

Other Authoritics

Administrative Procedure Act: Legislative History,

S. Doc. No. 298, 79th Cong., 2d Sess. 76 (1946)....11

Clyde Wayne Crews, Jr., Yen Thousand

Commandments: An Annual Snapshot of the

Federal Regulatory State, http://bit.ly/2wEf4vL... 10

George B. Shepard, Fierce Compromise: The

Administrative Procedure Act Emerges from New

Deal Politics, 90 Nw. LU. L. Rev. 1557 (1996) ........ ll

Michael Pollack & Danie] Hemel, Chevron Step .4,

Yale J. on Reg.: Notice & Comment (2016)............. 9

Philip Hamburger, Chevron Bias,

84 Geo. Wash. L. Rev. 1187 (2016)........................ 10

Philip Hamburger, Is Administrative Law

Ey I. | i ccodenndenmneiienpaecantienogl 10

Richard B. Stewart & Cass R. Sunstein, Public

Programs and Private Rights,

Ff pee f). | nee 11

Thomas W. Merrill & Kristin i. Hickman,

Chevron’s Domain, 89 Geo. L.J. 833

| REESE R a Cerne aera eee etn EER Ner ae eet ee 9, 10, 12

INTEREST OF AMICUS CURIAE'

The Cato Institute is a nonpartisan public-policy

research foundation dedicated to advancing the prin-

ciples of individual liberty, free markets, and limited

government. In 1989, Cato established the Center for

Constitutional Studies to help restore the principles of

limited constitutional government that are the foun-

dation of liberty. Toward those ends, Cato publishes

books and studies, conducts conferences, and produces

the annual Cato Supreme Court Review. This case in-

terests Cato because it concerns how courts approach

administrative rulemaking, a core check-and-balance

mechanism in our separation of powers.

INTRODUCTION AND

SUMMARY OF ARGUMENT

Amicus agrees with the petitioner that the statu-

tory text of the Dodd-Frank Act is unambiguous and

thus forecloses respondent’s claim. See Pet. Brief at 16-

30. This brief will focus on why the Court should not

grant Chevron deference to the Securities and Ex-

change Commission’s interpretation of that Act even if

it finds the statutory text ambiguous: The SEC ignored

a basic tenet of administrative due process and vio-

lated the Administrative Procedure Act (APA) when it

failed to provide fair notice to the public that it would

redefinc—and thus expand—the definition of “whistle-

blower” in its final rule.

' Rule 37 statement: A)l parties lodged blanket consents and re-

ceived timely notice of amicus’s intent to file this brief. Further,

no counsel for any party authored this brief in whole or in part

and no person or entity other than amicus funded its preparation

or submission.

Dodd-Frank defines a “whistlebluwer” as an “indi-

vidual who provides . . . information relating to a vio-

lation of the securities laws to the [Securities and Ex-

change] Commission.” 15 U.S.C. 78u-6(a)(6) (emphasis

added). The Act then protects a “whistleblower” from

retaliation if that person reports a violation of certain

laws—including the Sarbanes-Oxley Act of 2002- -toa

supervisor, agency, or Congress. 15 U.S.C. 78u-

6(h)(1)(A), This statute is clear: If a persun reports a

violation of the covered laws to the SEC, Dodd-Frank

provides them a remedy to protect themselves from re-

taliating employers. See Pet. Brief at 16-30.

In 2010 the SEC agreed. In its Notice of Proposed

Rulemaking (NPRM), the SEC defined “whistle-

blower” in line with the statutory definition: “You are

a whistleblower if, alone or jointly with others, you

provide the Commission with information relating to a

potential violation of the securities laws.” Proposed

Rules for Implementing the Whistleblower Provisions

of Section 21F of the Securities Exchange Act of 1934,

75 Fed. Reg. 70,488, 70,489, 70,519 (Nov. 17, 2010)

(emphasis added); Pet. Brief at 41. So far, so good. The

SEC’s NPRM did not try to change the stutute’s defi-

nition, it did not indicate that it was contemplating do-

ing so, nor did it ask for comments on whether it

should. Indeed, there was no mention at all that it

would expand the statute’s meaning as to who quali-

fies as a “whistleblower.”

When the SEC promulgated its final rule in 2011,

however, sumething was different: The SEC expanded

the definition of “whistleblower” (for anti-retaliation

purposes) to cover people—including the respondent—

who do not report a violation of the relevant securities

laws to the SEC, so long as he or she has undertaken

the protected activity listed in 15 U.S.C. § 78u-

6(h)(1KA). 76 Fed. Reg. 34,300, 34,301-34,304, 34,368

(June 13, 2011); Pet. Brief at 42. The SEC did not try

and explain why it was changing the definition in its

final rule, nor did it cite to any public comment that

led it to do so. It merely announced that it was expand-

ing the definition of “whistleblower” to reach those

who do not report covered securities violations to the

SEC. Pet. Brief at 43.

‘he APA’s notice-and-comment procedures simply

don’t allow the SEC to do this. The APA requires an

agency conducting notice-and-comment rulemaking to

provide the public with “fair notice” of what will be, or

might be, included in its final regulation. Long Island

Care at Ilome, Ltd. v. Coke, 551 U.S. 158, 174 (2007)

(citations omitted). As noted, there was nothing in the

SEC’s NPRM that would give any notice—lIct alone

“fair notice”—to the public that it was going to change

whom Dodd-Frank would protect from retaliation.

This Court reaffirmed in Encino Motorcars, LLC v.

Navarro, 136 8. Ct. 2117 (2016), that procedurally de

ficient rules that violate the APA do not receive Chev-

ron deference because they lack the “force of law.” The

SEC regulation here violated the APA by not giving

the public fair notice that it was contemplating ex-

panding the definition of “whistleblower” in its final

rule. The regulation thus does not have the force of law

and does not qualify for Chevron deference.

The APA serves as a vital procedural check on an

ever-growing administrative state. When agencies like

the SEC flout these important administrative due pro-

cess provisions, the Court should not reward them

with Chevron defercnce.

ARGUMENT:

THE GOVERNMENT'S REGULATION IS

PROCEDURALLY DEFECTIVE AND THUS

DOES NOT MERIT CHEVRON DEFERENCE

A. The SEC Regulation Violated the APA

When It Failed to Give the Public Fair

Notice in Its Notice of Proposed

Rulemaking

The APA requires, with limited exceptions, agen-

cies conducting notice-and-comment rulemaking to

publish a notice of proposed rulemaking in the federal

register and, among other things, include “cither the

terms or substance of the proposed rule or a descrip-

tion of the subjects and issues involved.” 5 U.S.C. §

5§53(b)(3). This in turn allows inte «+‘ed parties and

the public to comment on the rule. zu. at 553(c). Once

the comment process is complicte, the agency then pub-

lishes a final rule incorporating—or not—input that it

received during the comment period. Id. Within this

procedural scheme, the agency’s final rule must be the

“logical outgrowth” of the proposed rule. Long Island

Care at Home, Lid., 551 U.S., at 174. “In short,” this

Court has held, the rule is one of “fair notice.” /d.

While this Court has had limited opportunity to ad-

dress the contours of what constitutes a logical out-

growth, many of the circuit courts—most often the

D.C. Cireuit—have established a framework for when

notice will be fair and adequate. This framework takes

into consideration both an agency’s need for flexibility

in adapting proposed rules into final rules, and the

regulated public’s administrative due process rights

guaranteed by the APA.

oy

Accordingly, an agency’s “fina! rule need not match

the rule proposed” completely, because “{a]gencies

should be free to adjust or abandon their proposals in

light of public comments or internal agency reconsid-

eration|.]” Kooritzky v. Reich, 17 F.3d 1509, 1513 (D.C.

Cir. 1994) (citations omitted). But there are limits to

how far an agency can deviate from its proposed rule.

Indeed, if that were not so, the agency would have

“carte blanche to establish a rule contrary to its origi-

nal proposal.” Chocolate Mfrs. Ass’n v. Block, 755 F.2d

L098, 1104 (4th Cir. 1985).

A court should thus consider whether “the agency

has alerted interested parties to the possibility of the

agency's adopting a rule different than the one pro-

posed. The adequacy of the notice depends . . . on

whether the final rule is a logical outgrowth of the pro-

posed rule.” Kooritzky, 17 F.3d, at 1513 (cleaned up).

In other words, “the logical outgrowth formulation

may be merely another way of asking ‘how much notice

is enough.” Zd. (citation omitted).

The circuit courts have described how much notice

is enough in various ways. See, e.g., Envtl. Integrity

Project v. EPA, 425 F.3d 992, 996 (D.C. Cir. 2005)

(“[W]e have refused to allow agencies tv use the rule-

making process to pull a surprise switcheroo on regu-

lated entities.”); Northeast Md. Waste Disposal Auth.

v. EPA, 358 F.3d 936, 952 (D.C. Cir. 2004) (“A rule is

deemed a logical outgrowth if interested parties should

have anticipated that the change was possible, and

thus reasonably she Jd have filed their comments on

the subject during the notice-and-cumment period.”);

Shell Oil Co. v. EPA, 950 F.2d 741, 751 (D.C. Cir. 1991)

(“[A]n unexpressed intention cannot convert a final

rule into a ‘logical outgrowth’ that the public should

6

have anticipated. Interested parties cannot be ex-

pected to divine the EPA’s unspoken thoughts.”) (cita-

tion omitted); Nat? Black Media Coalition v. FCC, 791

F.2d 1016, 1022 (2nd Cir. 1986) (“The test that has

been sect forth is whether the agency’s notice would

fairly apprise interested persons of the subjects and is-

sues [of the rulemaking].”) (cleaned up).

Drawing from circuit court opinions in Long Island

Care, this Court boiled the test down to one of “reason-

able foreseeability.” See Long Island Care at Home,

Ltd., 551 U.S., at 175. In that case, the Court had to

decide whether the Labor Department gave fair and

adequate notice when it issued a regulation exempting

certain domestic service employees from provisions of

the Fair Labor Standards Act. In holding that it did,

the Court reasoned that because the agency “con-

sider{ed} not exempting some of those employees in its

notice, but ultimately decided to leave them exempt, it

had given reasonable, foreseeable notice to the public.

Id. (emphasis in the original). Thus, if the agency ad-

dresses the subject muttcr in some fashion in its

NPRM, the court reasoned, that is enough to provide

the public fair and adequate notice. See id.

Nevertheless, no matter what might constitute fair

notice, it was not present here. The SEC’s NPRM did

not give any consideration to changing the statutory

definition. As noted above, it gave regulated parties no

notice—indeed, no indication at all—that it was going

to expand the definition of “whistleblower.” Pet. Brief

at 42. There is simply no argument that silence in an

NPRM constitutes “reasonable, foreseeable” notice. In-

deed, as one court has held: “something is not a logical!

outgrowth of nothing.” Kooritzky, 17 F.3d at 1513.

The SEC’s final rule was therefore not a logical out-

growth of its NPRM and thus did not give the public

fair notice. This is a violation of the APA.

B. The SEC Regulation Violated the APA and

Thus Should Not Get Chevron Deference

This Court devs not defer to agency regulations

that do not meet certain threshold requirements. One

requirement, of course, is that it must meet the famil-

iar two-step Chevron analysis: the statute must be am-

biguous and the agency’s interpretation must be rea.

sonable. Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S.

837, 842-844 (1984).

Another requirement is that the agency issues its

regulation in a way that carries the force of law. En-

cino Motorcars, LLC v. Navarro, 136 8. Ct. 2117, 2125

(2016); United States v. Mead Corp., 533 U.S. 218, 226-

227 (2001) (“We hold that administrative implementa-

tion of a particular statutory provision qualifies for

Chevron deference when it appears that Congress dcl-

egated authority to the agency gencrally to make rules

carrying the force of law, and that the agency interpre-

tation claiming deference was promulgated in the ex-

ercise of that authority.”).

An agency can typically satisfy this force-of-law re-

quirement by promulgating a rule through notice-and-

comment rulemaking. When Congress delegates the

power to promulgate rules through “notice-and-com-

ment rulemaking, that relatively forma] administra-

tive procedure is a very gocd indicator that Congress

intended the regulation to carry the force of law,

so Chevron should apply.” Navarro, 136 5, Ct. at 2125.

Simply going through the motions of notice-and-

comment, however, is not enough. The agency must

8

also follow the proper procedure before a court will in.

voke Chevron. Id. This Court explicitly held as much

two terms ago in Navarro: Chevron deference will not

apply “where the regulation is ‘procedurally defec-

Live’—that is, where the agency errs by failing to follow

the correct procedures in issuing the regulation.” Jd.

(citing Mead Corp., 533 U.S., at 227); see also, Long

Island Care at Home, Lid., 551 U.S. at 174-176 (grant-

ing Chevron deference where an agency's regulation

procedure was not defective).

This is for 2 good reason: If Congress has instructed

the agency to go through this process, but the agency

ignores that commend, then it is not acting within its

statutory mandate and thus is not acting with the

force of law. See Navarro, 136 S. Ct. 2117, at 2127;

Chrysler Corp. v. Brown, 141 US. 281, 313 (1979)

(“Certainly regulations subject to the APA cannot be

afforded the ‘force and effect of law’ if not promulgated

pursuant to the statutory procedural minimum found

in that Act.”) (footnote and citations omitted); see also,

Thomas W. Merrill & Kristin E. Hickman, Chevron’s

Domain, 89 Geo. L.J. 833, 886 (2001) (noting that “the

APA and due process law demand compliance with

these [APA] procedures before agencies can take ac-

tion that binds the public with the force ot law.”).

For example, imagine Congress has delegated an

agency like the SEC authority to execute a statute

through notice-and-comment rulemaking. The agency

promulgates a proposed regulation on a giant banner

and flies that banner across the United States. The

regulation is interpreting an ambiguous statutory pro-

vision. If that agency then claimed its interpretation

on the banner warranted Chevron deference after it

publishes its final rule, this Court—and hopefully any

court—-would strike the regulation down in a heart

beat. But why would it do so? Congress has delegated

authority to the agency to fill gaps in the statute and

the statute is ambiguous. Imagine, too, that the inter-

pretation promulgated on the banner is reasonable

and fully explained why it was adopting the regula-

tion. The banner asks for comments on its interpreta-

tion, and gives a website where the public can do so as

well. Despite meeting most of the Chevron bench-

marks, no court would give the regulation Chevron def.-

erence because it did not follow proper APA procedure

and thus lacked the force of law.

Kor the very same reason that the above banner

regulation would not get Chevron deference, the SEC's

regulation should not either: The SEC’s regulation ex-

panding the “whistleblower” definition in Dodd-Frank

did not follow proper APA notice-and-comment proce-

dure and thus does not have the force of law. See Na-

varro, 13868. Ct. at 2125.

C. Withholding Deference When Rules Do

Not Follow Proper Procedure is Essential

For Administrative Due Process

The number of books, law review articles, and judi-

cial opinions questioning the constitutional founda-

tions of the modern administrative state could fill a

small library. It is well known that many observers,

including members of this Court, believe that the mod-

ern administrative state is in tension with—-if it does

2 See also, Michac!| Pollack and Daniel Hemel, Chevron Slep .5,

Yale J. on Reg: Notice & Comment = (2016),

http://bit.ly/2wDMKJH (using a similar example of writing a reg-

ulation on napkin and nailing it to the White House door).

10

not outright subvert—-the Framers’ constitutional de-

sign. See e.g., Michigan v. HPA, 135 8S. Ct. 2699, 2712

(2015) (Thomas, J., concurring); Gutierrez-Brizuela v.

Lynch, 834 F.3d 1142, 1149 (10th Cir. 2016) (Gorsuch,

J., concurring).®

What's more, executive agencies now exercise au

thority over nearly—if not all—‘“economic, social, and

political activities” in this country in some form or

fashion. City of Arlington v. FCC, 133 8. Ct. 1863,

1878, (2013) (Roberts, C.J., dissenting). This develop-

ment has resulted in a bloated administrative state

that “would leave |the Framers] rubbing their eyes.”

Id. (citation omitted). Indeed, the economic and social]

consequences are vast. By some estimates, the admin-

istrative state costs the cconomy well over a trillion

dollars every year. See generally Clyde Wayne Crews,

Jr., Ten Thousand Commandments: An Annual Snap-

shot of the Federal Regulatory State (last visited Aug.

21. 2017), http://bit.ly/2wEf4vL (estimating the cost of

regulatory compliance and economic impact of federal

intervention at $1.9 trillion annually).

Chevron is a hg reason for this expansion. When

applied, Chevron deference “is a powerful weapon” for

agencies to usc. See Cily of Arlington, 1335. Ct., 1879.

Indeed, Chevron is “strong medicine . . . requir[ing]

courts to accept any agency interpretation that is rea-

sonable, even if it is not the interpretation that the

court finds most plausible.” Merrill & [lickman, Chev.

ron’s Domain, 89 Geo. L.J. at 859.

3 See also generally Egan v. Del. River Port Auth., 851 F.3d 263,

278-283 (3rd Cir. 2017) @ordan J., concurring); Philip Ham

burger, Chevron Bias, 84 Geo. Wash. L. Rev. 1187 (2016); Philip

Hamburger, Is Administrative Law Unlawful? (2014).

1]

But Chevron is still this Court’s precedent. That

makes it imperative that the Court police administra-

tive agencies when they do not follow the rules Con-

gress has mandated. Congress recognized long ago the

dangers of an unchecked executive branch when it

passed the APA. At bottom, the APA supplements the

Constitution's procedural due process provisions to

protect the regulated public from overreaching govern-

ment. Indeed, it is “a bill of rights for the hundreds of

thousands of Americans whose affairs are controlled or

regulated in one way or another by agencies of the Fed-

eral Government.” Administrative Procedure Act: Leg-

islative History, S. Doc. No, 298, 79th Cong., 2d Sess.

76 (1946). As then-~Justice William Rehnquist de

scribed it: The APA is a “basic and comprehensive reg-

ulation of procedures . . . a legislative enactment which

settled long-continued and hard-fought contentions,

and enacts a formula upon which opposing social and

political forces have come to rest.” Vi. Yankee Nuclear

Power Corp. v. Natural Res. Def. Council, Inc., 435

U.S. 519, 523 (1978) (citation omitted); see also, Rich.

ard B. Stewart & Cass R. Sunstein, Public Programs

and Private Rights, 95 Harv. L. Rev. 1198, 1248 (1982)

(the APA was a “working compromise, in which broad

delegations of discretion were tolerated as long as they

were checked by extensive procedural safeguards.”).

More specifically, the APA’s procedural require.

ment that agencies go through notice-and-comment

rulemaking is one of the most fundamental protections

the people have against an overreaching executive. See

id.; see also, George B. Shepard, Fierce Compromise:

The Administrative Procedure Act Emerges from New

Deal Politics, 90 Nw. U. L. Rev. 1557, 1653 (1996) (not-

ing the notice-and-comment provision “is the most im-

portant change the APA imposes on agency practice’).

12

Indeed, the connection between congressional delega-

tion to a federal agency to “act with the force of law

and the existence of rights of public participation is not

accidental.” Merrill & Hickman, Chevron’s Domain, 89

Geo. I+). at 886. Public participation is one of the es-

sential normative reasons why delegations from Con-

gress to executive agencies are tolerated. See id.

Fair notice, moreover, is an essential part of what

makes the APA’s notice-and-comment procedures an

effective check on the executive branch. As this Court

has noted in other contexts: “A fundamental principle

in our legal system is that laws which regulate persons

or entities must give fair notice of conduct that is for-

bidden or required.” FCC v. Fox TV Stations, Inc., 567

U.S. 239, 253 (2012) (citation omitted). See also Chris-

topher v. SmithKline Beecham Corp., 567 U.S. 142, 156

(2012) (“[Algencies should provide regulated parties

‘fair warning’ of the conduct [a regulation] prohibits or

require.”) (quotation marks and citation omitted). This

concept is just as important for administrative due

process when the agencies are making the laws that

will bind the public. Thus, as long as Chevron is prec-

edent, it is essential for “democratic governance and

traditions of due process” that this Court demand the

public is “heard before they are subjected to the coer-

cive power of the state.” See ud.

This Court has recognized before the APA’s im

portance as a check on administrative governance, and

on “administrators whose zeal might otherwise [carry]

them to excesses not contemplated in legislation creat-

ing their offices.” Perez v. Morig. Bankers Ass’n, 135 S.

Ct. 1199, 1211 (2015) (citing United States v. Morton

Salt Co., 338 U. S. 632, 644 (1950)) (Scalia, J., concur-

ring). It should continue to do so here.

13

Accordingly, even if the Court finds the relevant

Dedd-Frank provision ambiguous, it shouldn’t give

Chevron deference to the SEC’s regulation.

CONCLUSION

For the foregoing reasons, and those stated by the

petitioner, the decision below should be reversed.

Respectfully submitted,

ILYA SHAPIRO

Counsel of Record

Frank Garrison

Cato Institute

1000 Mass. Ave., N.W.

Washington, D.C. 20001

(202) 842-0200

ishapiro@cato.org

August 31, 2017