The Supreme Court is about to make work tougher for regulators

19th April, 2022.      //   General Interest  // 

The Supreme Court is About to Make Work Tougher for Regulators | Barron's

Progressives, conservatives, investors and Supreme Court-watchers are all anxiously awaiting the court’s decisions later this spring in two cases—American Hospital Association v. Becerra and West Virginia v. Environmental Protection Agency—which some experts have warned could sound a death knell for the “administrative state.”

Not so fast: the authority of regulators is likely to be further limited, but not gutted. That’s the broad takeaway I got from moderating a recent panel for the Brookings Institution of constitutional and administrative law experts—Professors Anne Joseph O’Connell, Susan Rose-Ackerman, Ilya Wurman and public interest lawyer and author Simon Lazarus.

Of the two cases, only West Virginia appears likely to trigger constitutional issues. In that case, multiple state attorneys general challenged the constitutional authority of the EPA to set broad carbon dioxide emissions standards for greenhouse gas emissions outside the “fence” of power plants. This challenge has aroused intense interest because of the possibility, with the court now dominated by six Republican presidential appointees, three of them by President Trump, that the court could drastically limit regulators’ authority.

One possible basis for doing so is the twice used “nondelegation” doctrine, most famously applied by the court in 1935 in Schecter Poultry v. U.S, where the court struck down the broad statutory delegation to the President to authorize private industry groups to set industry-specific codes of “fair competition” as a way of combatting the Depression. Nondelegation has been narrowly interpreted since then, requiring simply that, to pass constitutional muster, statutes state an “intelligible principle” to guide agency decisions. This concept was reaffirmed most recently by none other than the late Justice Antonin Scalia. In his opinion in 2001 in Whitman v. American Trucking Association for the court, he emphasized that “we have ‘almost never felt qualified to second-guess Congress regarding the permissible degree of policy judgment that can be left to those executing or applying the law.”

Nonetheless, some of the Six seem intent on radically beefing up the nondelegation doctrine. This is most evident in Gundy v. U.S. in 2019 where a plurality of the court upheld the delegation to the U.S. attorney general of the authority to require the registration of sex offenders convicted before the  Sex Offender Registration and Notification Act was enacted by Congress in 2006. Justice Neil Gorsuch, in a dissenting opinion joined by Chief Justice John Roberts and Justice Clarence Thomas, argued that giving such broad power to the attorney was delegation “running riot.” Justice Elena Kagan, author of the plurality in Gundy, responded bluntly that “if SORNA’s delegation is unconstitutional, then most of Government is unconstitutional.” That warning applies not just to SORNA, but to many other agencies, including even the Federal Reserve, whose statutory mandate likewise is broad—to assure “stable prices and maximum employment,” terms that Congress has not defined.

In Gundy, Gorsuch also mentioned a second basis for limiting regulation—the “major questions doctrine,” which the court had used in 2001 in FDA v, Brown & Williamson, to disallow the Food and Drug Administration from regulating tobacco. Writing for the court, Justice Sandra Day O’Connor held that courts should “hesitate” before deferring to agencies’ expansive interpretations of ambiguous statutory provisions on “questions of vast ‘economic and political significance” or “magnitude,” when the agency’s interpretation is “inconsistent” with the statute’s “overall regulatory scheme,” or, as in that case, actually “precluded” by Congress.

One of the questions at issue in West Virginia is whether, even where an agency is in its “statutory lane,” if its regulation has major real-world significance—is a “big deal—the court should prevent that result. An affirmative answer would transmute a mere tool of statutory interpretation into a backdoor way to achieve the equivalent of striking down regulation as an unconstitutional delegation of Congressional power. That appears to be the agenda of Gorsuch and at least two of his colleagues.

Nonetheless, the consensus of the Brookings panel—spanning the ideological spectrum—was that the court will not use either nondelegation or major questions to strike down the EPA CO2 emissions rules. Instead, the best guesses were that the court could reach that result, but on narrow statutory grounds.

Lazarus has provided the most likely reason why. Despite the appearance that the Six have control of the court, they are evenly divided about how far to go to constrain regulators. As evidence, he points to the court’s decision in January NFIB v. Department of Labor, where the court voided the Occupational Safety and Health Administration’s Covid vaccine mandate for employers, with Justices Roberts, Brett Kavanaugh, and Amy Coney Barrett holding that OSHA’s rule was too broad and should have been better targeted to situations where Covid exposures posed great danger. Notably, these justices did not join the concurring opinion of Justices Gorsuch, Samuel Alito, and Thomas that the administration’s vaccine mandate should have been struck down as an example of an unconstitutional delegation of Congressional power.

In sum, there aren’t enough votes yet, even on this “conservative” court, to dismantle the administrative state, though there appears to be a 6-3 majority for somewhat tighter limits on agency discretion in “big deal” cases. Nip and tuck, not a wrecking ball, for regulators: not the disaster progressives fear, but also not the revolution a minority of justices (so far) seek.

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