The Chevron Decision, the Regulatory State and "Consent of the Governed"

Not just a line from our founding document; a fact.

by Gaius Publius

Bottom line first — Having justices like Neil Gorsuch on the Supreme Court is part of the attempt by Trump, Bannon, the Koch Bros and all Ryanist Republicans to dismantle the regulatory state. Dismantle — not undercut or chip away at. Tear down, starting at its base. Imagine what that will do. Such an attempt, if it succeeds, could rend the last shred of fabric holding the nation together as a nation.

The attempt to rip that fabric in two is closer to success, on many fronts, than most imagine. This is about one of those fronts, the constitutional authority of the Executive Branch to issue regulations.

The U.S. Regulatory State

The modern U.S. regulatory state is that part of the government, housed in Executive Branch agencies like the FCC, the FAA, the FDA, and the EPA, that regulate in the public interest how businesses must conduct themselves.

The public by and large approves of regulations. Who wants to be killed by spoiled meat, or die in a plane crash because the FAA was privatized, made more "efficient," and turned into a revenue stream for investors?

On the other hand, businesses by and large hate regulations. It's the regulatory state that prevents even more people from dying in cars like the Ford Pinto or the Chevy Cobalt because the company did a cost-benefit analysis and found that killing passengers was economically preferable to making safer cars. It's the regulatory state, in other words, that stands in the way of increasing corporate profit at the public expense.

The regulatory state can be undermined in two ways. It can be captured and dismantled from within, under-funded and staffed with people who ignore or pervert its legal mandates. Or it can simply be made illegal, by overturning the Supreme Court decision that makes it legal in the first place. We've seen many instances of the first way, starting with Ronald Reagan's perversion of the regulatory regime. We're about to witness the second.

"Chevron Deference" and Executive Branch Regulations

The modern regulatory state rests on the Reagan era Supreme Court ruling in Chevron v. National Resources Defense Council. The Chevron decision established the principle that, quoting the New York Times, "the E.P.A. (and any agency) could determine the meaning of an ambiguous term in the law. The rule came to be known as Chevron deference: When Congress uses ambiguous language in a statute, courts must defer to an agency’s reasonable interpretation of what the words mean [emphasis added]."

In essence, the Chevron deference principle allows agencies to interpret regulatory laws in any reasonable way they wish and gives legal deference to those interpretations. Note that this can work both for and against progressive principles. The original Chevron case was a challenge to Reagan's EPA, led at the time by Ann Gorsuch Burford, Neil Gorsuch's mother. The agency wanted to loosen restrictions on pollution from power plants. In siding with the EPA the Court established the deference principle and handed a victory to polluters. The ruling was a unanimous 6-0 decision (with three justices not taking part). Antonin Scalia favored the Chevron ruling.

Chevron is also "one of the most frequently cited cases in the legal canon." From the standpoint of judicial precedence, frequent citation confers authority.

The 1935 Schechter Poultry Decision and the "Nondelegation Doctrine"

The right of the Executive Branch to engage in regulation at all has rarely been challenged; note that Chevron turned on the right to interpret congressional language, not the right of regulation itself. Congress, of course, has the right to regulate business activity, but starting in the Roosevelt era, Congress delegated that authority to the Executive Branch through legislation.

Two Supreme Court challenges to the right of Congress to delegate regulation occurred early in the Roosevelt era, one of them being Schechter Poultry Corp. v. the United States. Both succeeded, but unlike Chevron, neither decision has ever been cited, and for the next 80 years, from that time until now, both have been ignored. Just as citation confers authority, lack of citation diminishes it. Almost from the time they were issued, these decisions, including Schechter Poultry, have been recognized as a "legal dead end."

The discrepancy between these two Supreme Court decisions — Chevron and Schechter Poultry — is obvious. Schechter Poultry, a never-cited decision, denies Congress the right to delegate regulatory authority. The Chevron decision, widely cited, assumes the opposite. For 80 years the federal government has acted as though Schechter Poultry was wrongly decided, and in 1984, Chevron, by implication, affirmed that assumption.

Emily Bazelon and Eric Posner detail the interesting history around these intertwined decisions (my emphasis):

The 80 years of law that are at stake began with the New Deal. President Franklin D. Roosevelt believed that the Great Depression was caused in part by ruinous competition among companies. In 1933, Congress passed the National Industrial Recovery Act [NIRA], which allowed the president to approve “fair competition” standards for different trades and industries. The next year, Roosevelt approved a code for the poultry industry, which, among other things, set a minimum wage and maximum hours for workers, and hygiene requirements for slaughterhouses. Such basic workplace protections and constraints on the free market are now taken for granted.

But in 1935, after a New York City slaughterhouse operator was convicted of violating the poultry code, the Supreme Court called into question the whole approach of the New Deal, by holding that the N.I.R.A. was an “unconstitutional delegation by Congress of a legislative power.” Only Congress can create rules like the poultry code, the justices said. Because Congress did not define “fair competition,” leaving the rule-making to the president, the N.I.R.A. violated the Constitution’s separation of powers.

The court’s ruling in Schechter Poultry Corp. v. the United States, along with another case decided the same year, are the only instances in which the Supreme Court has ever struck down a federal statute based on this rationale, known as the “nondelegation doctrine.” [But] Schechter Poultry’s stand against executive-branch rule-making proved to be a legal dead end, and for good reason. As the court has recognized over and over, before and since 1935, Congress is a cumbersome body that moves slowly in the best of times, while the economy is an incredibly dynamic system. For the sake of business as well as labor, the updating of regulations can’t wait for Congress to give highly specific and detailed directions.

[...]

The system worked well enough for decades, but questions arose when Ronald Reagan came to power promising to deregulate. His E.P.A. [under Neil Gorsuch's mother] sought to weaken a rule, issued by the Carter administration, which called for regulating “stationary sources” of air pollution — a broad wording that is open to interpretation. When President Reagan’s E.P.A. narrowed the definition of what counted as a “stationary source” to allow plants to emit more pollutants, an environmental group challenged the agency. The Supreme Court held in 1984 in Chevron v. Natural Resources Defense Council that the E.P.A. (and any agency) could determine the meaning of an ambiguous term in the law. The rule came to be known as Chevron deference: When Congress uses ambiguous language in a statute, courts must defer to an agency’s reasonable interpretation of what the words mean.

All of this means one thing. Any Court decision that overturns Chevron and leaves Schechter Poultry in place affirms Congress as the only body with the authority to issue regulations affecting business activity.

The effect would be sweeping and immediate. Overturning Chevron means entirely deconstructing the modern regulatory state. It means returning the country, from a regulatory standpoint, to before the New Deal and deny legitimacy to the entirety of Executive Branch regulatory mechanisms.

Needless to say, business leaders in both parties want that deconstruction very very much, and they're working hard to get it.

Neil Gorsuch and the Chevron Decision

Of his many faults, from a judicial standpoints (others are mentioned here), Neil Gorsuch's interest in overturning Chevron is perhaps the most dangerous. The Times again:

Last year, in a concurring opinion in an immigration case called Gutierrez-Brizuela v. Lynch, he attacked Chevron deference, writing that the rule “certainly seems to have added prodigious new powers to an already titanic administrative state.” Remarkably, Judge Gorsuch argued that Chevron — one of the most frequently cited cases in the legal canon — is illegitimate in part because it is out of step with (you guessed it) Schechter Poultry. Never mind that the Supreme Court hasn’t since relied on its 1935 attempt to scuttle the New Deal. Nonetheless, Judge Gorsuch wrote that in light of Schechter Poultry, “you might ask how is it that Chevron — a rule that invests agencies with pretty unfettered power to regulate a lot more than chicken — can evade the chopping block.”

Gorsuch is not alone in wanting to overturn Chevron. Unlike the late Antonin Scalia, Clarence Thomas is openly opposed to Chevron. Three other conservative justices have also indicated their willingness to revisit Chevron. In a recent decision involving regulation by the FCC, one which specifically referenced the Chevron decision, Chief Justice Roberts, joined by Alito and Kennedy, wrote this (my emphasis):

My disagreement with the Court is fundamental. It is also easily expressed: A court should not defer to an agency until the court decides, on its own, that the agency is entitled to deference. Courts defer to an agency's interpretation of law when and because Congress has conferred on the agency interpretive authority over the question at issue. An agency cannot exercise interpretive authority until it has it; the question whether an agency enjoys that authority must be decided by a court, without deference to the agency.

In other words, in the view of these three justices, Schechter Poultry's "nondelegation doctrine" must be revisited by the Court. Should they get their wish, there could be five justices in favor of overturning Chevron and re-establishing Congress as the only regulatory agency in the federal government.

The Court's Bipartisan Deference to Big Business

As many have pointed out, the so-called "liberal" justices are also quite business-friendly. Noam Scheiber at the New York Times, in a piece written before the last election, said this (again my emphasis):

[S]ome argue that the Supreme Court under Chief Justice John G. Roberts Jr. has become perhaps the most business-friendly court in recent history. A 2013 study by Lee Epstein of Washington University in St. Louis, William M. Landes of the University of Chicago Law School and Judge Richard A. Posner of the federal appeals court in Chicago ranked justices according to their rulings in cases involving business. The findings, which Ms. Epstein and Mr. Landes updated through the 2014-15 term for this article, show that six of the 10 most business-friendly justices since 1946 sat on the Supreme Court at the time of Justice Scalia’s death.

President Obama has given little indication that he is likely to reverse this trend. Both of his previous nominees, Sonia Sotomayor and Elena Kagan, have been relative moderates on matters involving business, despite some progressive opinions in specific cases.

The so-called "liberal" justices have concurred in a number of important, but low profile cases. Scheiber again:

Perhaps most indicative of the shift in the legal landscape is the assent of many justices appointed by Democrats.

In some areas, like antitrust, the shift rightward has often been uncontroversial, with many of the liberal justices frequently signing on. The 1997 ruling on resale price ceilings was unanimous, while a 2007 ruling on antitrust immunity was 7-1, with Justice Stephen G. Breyer writing the majority opinion.

“It’s not just the conservatives,” said Richard Brunell, vice president and general counsel of the American Antitrust Institute. “It was Breyer who was leading that charge.”

[...]

Justice Ruth Bader Ginsburg voted with the conservative majority in two rulings in the late 1990s that, according to Mr. Miller, the N.Y.U. professor, “clearly signaled the containment of the class action by the court.”

In 2011, Justice Sotomayor joined the conservative majority in striking down a law that denied companies access to pharmacy records about prescriptions, on the grounds that it violated the companies’ First Amendment rights. The following year, Justices Breyer, Kagan and Sotomayor voted with the conservatives in an arbitration decision.

Many people remember a higher profile case, Kelo v. City of New London, which affirmed the "use of eminent domain to transfer land from one private owner to another private owner to further economic development" — the right of a city, in other words, to condemn private property so another private entity could profit from it. Stevens wrote the majority opinion, joined by Kennedy, Souter, Ginsburg and Breyer.

This whole Court is business-friendly. That doesn't mean the "liberal" justices would vote to uphold Shechter Poultry, but they'd certainly listen.

What's at Stake if Chevron Is Overturned? The "Consent of the Governed"

Which brings us to the heart of this piece, its main point. What will happen if Chevron is overturned? The answer to that question is anyone's guess — the future is often as hard to predict as the past — but we'd certainly land in completely uncharted territory. My own best guess that we'd see the same kind of chaos that would erupt if the ACA were repealed completely — but worse, chaos on steroids — since the consequences of dismantling all Executive Branch regulation would be far more reaching, far more devastating to the lives of all Americans.

Consider these two factors:

• The ultimate powerlessness of the Supreme Court (discussed here)
• The fact that Supreme Court justices are appointed for life

When the rebellion that's brewing hot in America reaches the offices of elected officials, they fear for their careers, and many of them change their votes. We saw that with the voting for the later set of Trump cabinet nominees after town hall protests erupted against Democrats like Sheldon Whitehouse because of his shameful pro-torture vote — the one to approve Mike Pompeo as head of the CIA — and we saw that with suddenly announced Democratic intention to filibuster Neil Gorsuch after rumors of a possible "deal" to let him be confirmed were reported.

The justices of the Supreme Court have no such vulnerability; they're appointed for life. They can be dissuaded from a shameful decision, if they wish to be, by massive public protest, but there's nothing that compels that dissuasion.

Further, unlike a law, which can be un-enacted as soon as it's enacted — immediately undone — I can't imagine any court, much less the Robert Court, undoing a "principled" and closely argued decision in response to public pressure, no matter how bad the decision proves to be. After all, Citizens United is still in place, and will be until the Roberts Court is gone.

If ideologically or politically biased judicial actors are willing to throw the nation into chaos to serve the anti-regulatory agenda of the bipartisan money that, frankly, runs the country, what can stop them if they won't stop themselves?

Which, ironically, brings us to the powerlessness of the Supreme Court. Yes, a pro-money government could comply with a decision that overturns Chevron and begin the process of dismantlement. But if it does, the already angry rebellion in this country will grow even angrier — rebellion on steroids — and we may well approach the point where the pressure on elected officials to ignore the Court completely will bring the nation to a standstill — or to a kind of modern, urban civil war.

At that point we won't be in a constitutional crisis, but one much worse — a crisis in which the government, while constitutionally governed, risks losing the "consent of the governed." The "not my government" feelings that brought us Sanders and Trump in 2016 can only grow stronger. That feeling has an endpoint, and that endpoint is governmental crisis of the worst, most existential kind — a challenge to a government's right to rule at all.

No one wants things to go that far, not even brutal Jeff Sessions, whose determination to wage aggressive war on marijuana and to unshackle the country's worst police forces could spark such a crisis all on its own.

But we're much closer to that point than anyone will admit, just as we're closer to the end of our ability to avoid the climate crisis than anyone in power will say publicly. This anti-regulatory wet dream, pushed hard by the Republican Party and abetted by too many Democrats, could easily push us beyond it.

Are our leaders, the elites who run the place "in our name," willing to risk those consequences? If Chevron is overturned, we will find out.

GP