The Supreme Court is reviewing the administrative state’s power with several cases this term that could make major changes to the way agencies regulate.
By Sam Dorman, Matthew Vadum | Epoch Times
The U.S. Supreme Court has taken up several cases this term that pose challenges to the administrative state, following years of concerted legal and political opposition to its legitimacy.
Specifically, the justices are set to reevaluate the decades-old doctrine known as Chevron deference. This involves the case Chevron v. NRDC (Natural Resources Defense Council), which has been cited more than 18,000 times by federal courts and is “unquestionably one of the foundational decisions in administrative law,” according to the Congressional Research Service.
The 1984 precedent held that courts generally should defer to agencies’ interpretations of ambiguous language in congressional statutes.
For this term, the court is reviewing, in two related cases, whether the Commerce Department adhered to Congress’s instructions when it required commercial fishing companies to pay for federal observers monitoring their activity on vessels. Several businesses in the industry have sued, arguing that Congress didn’t authorize that requirement in the Magnuson Stevens Fishery Conservation and Management Act.
The government counters that the requirement is a reasonable way to apply the statute. The cases are Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce. Oral argument is scheduled for Jan. 17.
Two other cases—Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America (CFSA) and Securities and Exchange Commission (SEC) v. Jarkesy—take a look at how agencies may adjudicate disputes in administrative courts, as well as appropriate or allocate funds in a way many argue should be left to Congress. Instead of reevaluating longstanding judicial doctrine, the cases examine specific actions by Congress and the executive in light of constitutional restrictions.
The CFPB case, for example, questions whether Congress violated the appropriations clause of the U.S. Constitution when it allowed the agency to determine its own funding levels while drawing money from the semiautonomous Federal Reserve. The Jarkesy case, meanwhile, asks whether the SEC’s administrative courts violate the Seventh Amendment by not impaneling a jury.
Renewed Opposition to Executive Power
This term’s slate of cases is historically “significant,” George Washington University law professor Richard Pierce, who has written more than 20 books on administrative law, told The Epoch Times.
Advocates like Mr. Pierce defend administrative authority and Chevron as well-founded in U.S. history. Only recently has there been such a concerted effort to undermine its foundations, he said.
“There’s an all-out attack on the administrative state from a bunch of right-wing lawyers, and the court has given some signals that are kind of encouraging of such an attack,” Mr. Pierce said.
It’s difficult to trace exactly how opposition to the administrative state intensified over the last decade but Mr. Pierce and others have suggested that opposition may have partially been a response to the policies of President Barack Obama.
Entering office amid the Great Recession, President Obama advocated large-scale interventions that earned him a comparison to former President Franklin Delano Roosevelt by Time Magazine. After President-elect Obama’s victory in November 2008, the magazine’s front cover showed him alongside the words “The New New Deal.”
Data from the George Washington University Regulatory Studies Center indicate that while recent administrations have generally increased the number of administrative rules, President Obama’s administration saw the largest cumulative number of economically significant rules when compared to administrations going back to President Ronald Reagan’s.
Quoting a 1993 executive order, the Center defines economically significant rules as those likely to “have an annual effect on the economy of $100 million or more or [that] adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities.”
President Donald Trump, meanwhile, oversaw the largest number of final major rules—which also include deregulatory efforts—published in a single year (2020).
“We’re not imagining it … the number of regulations is increasing,” Susan Dudley, director of the George Washington University Regulatory Studies Center and former administrator of the Office of Information and Regulatory Affairs under former President George W. Bush, told The Epoch Times.
“The magnitude and scope of them is increasing as is the ability to find small pieces of statutes written long ago to create expansive new programs.”
Mr. Pierce pointed to Columbia Law professor Philip Hamburger as a critical influence on opposition to agency power. “I have to concede that Phil Hamburger created a movement,” Mr. Pierce told The Epoch Times. “He got a whole lot of people upset about this.”
Mr. Hamburger decried administrative law as unconstitutional in his book “Is Administrative Law Unlawful?” which was published in 2014, after years of President Obama pushing expansions of the administrative state. Mr. Hamburger says, however, that the book wasn’t a response to the 44th president.
His New Civil Liberties Alliance is representing plaintiffs in one of the cases that could overturn Chevron.
The administrative state, he told The Epoch Times, “has destroyed its own legitimacy.”
“For a long time, it was justified as a tame sidekick to congressional power,” he said. “But it now has become feral, brazenly overrunning constitutional limits and threatening our civil liberties.”
In recent years, the Supreme Court has used President Obama’s policies to rein in administrative power. Part of President Obama’s response to the financial crisis of 2008–2009 included signing into law the CFPB, whose funding mechanism is currently being reviewed by the court and already encountered the justices’ rebuke in a dispute over the president’s inability to fire the agency director.
In that case, Seila Law LLC v. CFPB, the justices ruled that the arrangement was unconstitutional and the agency could continue so long as it made the director more politically accountable. It’s unclear how the court will rule in CFPB v. CFSA, but the stakes seem potentially higher as the policy in question provides the agency’s funding. Assuming the justices don’t uphold the funding mechanism, will they allow a quick agency fix or deprive the CFPB of funding until Congress changes the statute?
The array of options available to justices means their rulings can have profound implications for agencies and businesses alike.
Overturning Chevron would be somewhat akin to overturning Roe v. Wade in that it has shaped both jurisprudence and policy for decades. While experts say the Supreme Court has used this doctrine much less in recent years, it remains something courts can turn to and entities like the Commerce Department may cite it in regulating American industry.
Current justices have criticized giving unelected officials so much power to shape the regulatory environment. “In the last decade, the court has shown increased skepticism toward mainstays of the administrative state,” said Paul Ray, who served as the Office of Information and Regulatory Affairs’ administrator under President Trump.
“The grant of cert in these cases is consistent with that recent trend,” he added, referring to granting certiorari, or the court agreeing to review cases from lower courts.
“It’s not hard to see why several justices would be concerned about the increasing power of the executive branch, which now purports to resolve the most weighty questions of domestic policy without the input of the people’s representatives in the legislature.”
Administrative power took a hit in 2022 when the Supreme Court formally recognized the “major questions doctrine,” which the Yale Law Journal says “instructs courts to presume that Congress does not delegate policy decisions of great economic and political magnitude to agencies.”
That came out of another challenge to one of President Obama’s policies—this time regulating power plants through the Environmental Protection Agency. Chevron itself originated with another challenge to the Agency, under President Reagan—whose administrator was Anne Gorsuch (Justice Neil Gorsuch’s mother)—while the case proceeded through lower courts.
Justice Gorsuch, who signed onto the 2022 decision, could write the opinion overturning the doctrine his mother helped install.
He and Justice Clarence Thomas, both appointed by Republican presidents, have been critical of its role while others, according to Mr. Pierce, demonstrated skepticism as well.
“Each of the six conservative justices has, from time to time, said things that suggest that they’re very skeptical about the administrative state … so no accident [the court is taking these cases], and I expect [the review of administrative authority] to continue next term,” he said.
The Administrative State’s Uncertain Future
Supreme Court decisions are notoriously difficult to predict, but may follow trends seen in oral argument. If the oral argument in CFPB v. CFSA is any indication, the court is likely to take a scalpel rather than a hatchet to Chevron in particular and executive power more generally.
Observers have noted that conservative justices seemed skeptical of the CFSA’s position during oral arguments on Oct. 3. “Four of them took it up but none of the ones that I thought would be hardest against the agency were hard,” said Jim Burling, vice president of legal affairs for the Pacific Legal Foundation. Mr. Burling was alluding to the fact that at least four justices need to approve a cert petition before the court reviews it.
This court has left some with the impression that it prefers incremental changes to precedent. Outside of overturning Roe, the court refused, for example, to overturn the controversial 1990 precedent in Employment Division v. Smith despite conservatives seeking that outcome.
Each of the aforementioned administrative law cases this term are tackling big questions, such as the meaning of the U.S. Constitution’s appropriations clause and whether Congress can authorize adjudicatory proceedings outside of district courts.
For the Chevron cases Relentless and Loper Bright, the Supreme Court has agreed to review whether the entire doctrine should be overruled “or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.”
It’s unclear, however, whether disputes over fishing monitors are the best vehicle for achieving such a dramatic change with these justices. The case itself seems less concerned with the type of expertise that administrative state advocates may cite in arguing that experts, rather than legislators, should be crafting policy.
University of Michigan Law School professor Christopher Walker is a conservative who has suggested that while the fishery regulation may be unconstitutional, the court should maintain Chevron deference for stare decisis reasons. Overturning those types of well-entrenched, widely influential doctrines, sometimes referred to as “super precedents,” raises concerns about stability of the law given their long history and accumulated influence on policy. A similar argument was made for not overturning Roe nearly 50 years after its installment.
Without Chevron, Mr. Walker told The Epoch Times, “you’re going to have district courts and courts of appeals across the country all interpret a statute in different ways … it’s going to be a lot less predictable whether an agency’s interpretation is going to win.”
Others have argued that overturning Chevron would restore stability given that it allows agencies to promulgate unpredictable regulations based on ambiguous statutory language. The doctrine itself also violates due process by creating systemic bias against individuals and businesses who challenge agencies in court, Mr. Hamburger said.
“The reasonable reliance argument rests on some dubious assumptions,” he said.
“Big businesses tend to benefit more from administrative regulation than smaller firms, and it therefore cannot be assumed that all businesses rely equally on Chevron. Moreover, the reliance doesn’t look very reasonable. How reasonable is it to rely on a doctrine that requires judges to abandon their duty of independent judgment?
“How reasonable is it to rely on a doctrine that requires judges to be biased in favor of the most powerful litigant in violation of due process? And how reasonable is it to rely on a doctrine that the Supreme Court has declined to follow for nearly a decade? None of this is very reasonable. In contrast, the rest of us very reasonably have a right to rely on the Constitution,” Mr. Hamburger said.
Complicating matters is the major questions doctrine, which would presumably remain after Chevron‘s removal. “I think that, by far, the more important doctrinal move these days is the major questions doctrine,” Mr. Pierce said. “That is really creating enormous problems all over government.”
He said “nobody knows what its limits are” and that the doctrine is “scaring the heck out of agencies. It’s causing a lot of agencies to be very concerned about—can we actually take this action? Or will it be called a major question?”
Mr. Hamburger argued that by displacing Congress’s power and concentrating it in the executive, expansive administrative authority stokes political extremism and contributes to the “existential character of presidential elections.”
Removing Chevron, he said, “would mean that the shift from one administration to another would not create opportunities for creating regulation independently of Congress. That would mean regulation would be more anchored and we would not have presidential elections that look like warfare.”
Mr. Walker was sympathetic to arguments surrounding instability, arguing that recent administrations have gone beyond the type of flexibility Chevron initially offered.
“We have seen, since the second term of the Obama administration, three presidents that aren’t just kind of slightly changing direction when they’re elected,” he said. He likened Chevron to a “30-degree course correction,” whereas more recent decisions have been creating 90 degree or 180 degree shifts in policy.
Regardless of how Chevron will impact uncertainty, overturning it will likely force altered decision-making by legislators and bureaucrats alike. How much authority Congress will ultimately exercise is questionable, however, given the incentives critics say legislators have for shifting tough policy decisions onto agencies.
Both Ms. Dudley and her colleague, George Washington University political scientist Steven Balla, argued that Congress used more ambiguous statutory language to avoid political controversy and, so that when problems arise from the authority they granted, they can portray themselves as fixing poor decisions by agencies.
“I don’t think the administrative state is driving [recent political polarization],” Mr. Balla told The Epoch Times. “I think it’s caught up in the polarization,” which he said affects who holds office and, in turn, listens to voices closer to the ends of the ideological spectrum.
Mr. Balla added: “I think that’s had a big impact on the possibilities for any real regulatory reform that might have any hint of moderation or bipartisanship.”