ADMINISTRATIVE LAW AND THE UPCOMING SUPREME COURT TERM

Next week the Supreme Court’s October Term for 2023-24 opens, which is always a good time to look ahead at what the term will have in store.  The Court will accept new cases for the upcoming term as the year unfolds, so there are plenty of open questions, but much of the docket has already been set.  At first glance there are seemingly no high profile, blockbuster cases.  No abortion, no affirmative action, no voting rights cases (although that will undoubtedly change), no “independent state legislature” theory.  And yet, this could prove to be one of the most consequential Supreme Court terms in recent history, because what is lined up is an all-out assault on the administrative state.

Carving back the administrative state has long been a conservative goal of the deregulatory right.  The Federalist Society, the United States Chamber of Commerce, the Cato Institute and other conservative and libertarian-leaning think tanks and industry organizations have been pursuing this objective for 40+ years now, with varying degrees of success.  This is the year where they may finally have ultimate success.  The big case is Loper Bright Industries v. Raimondo, although there are others.  Loper is a direct and all-out attack on Chevron v. NRDC, a 1984 precedent that established the so-called Chevron “deference” doctrine.  That doctrine states that courts should generally defer to the expertise of regulators where there is any uncertainty as to the meaning and interpretation of regulatory statutes and the implementation and enforcement of regulations under those statutes.  

The doctrine of course makes sense.  Why shouldn’t employees at the EPA with environmental expertise be the first persons to go to on issues of water or air pollution?  Why shouldn’t the FDA and other health agencies have the final word on issues of drug approvals, medical treatment protocols and the like?  I certainly don’t claim to have the expertise to make those decisions.

But we’re of course in an era where nobody trusts or defers to experts.  Covid vaccines and protocols?  I’ll make up my own mind.  Legal experts at the Department of Justice?  Weaponization.  Air and water pollution?  In the last two terms the Supreme Court invalidated the EPA’s Clean Air Plan and its efforts to implement water pollution rules impacting the quality of the “waters of the United States.”

That is the context in which the Supreme Court agreed to hear the Loper case.  The grant of certiorari explicitly directed the parties to address whether Chevron should be overruled.  The facts of the case were a carefully selected case of regulatory overreach, where commercial fishermen were required to pay for inspectors to accompany their boats to ensure there was no violation of quotas set to try to ensure the sustainability of fish catches.  (Parenthetically there is a criminal case pending in the EDNY before Judge Azrack in which a Montauk fisherman is accused of conspiring with Gosman’s to exceed fluke fishing quotas, which is an alternative remedy to inspection.)  

Fishing is not the most lucrative profession, so requiring commercial fishermen to pay for inspectors to accompany their boats does seem extreme.  But saying that is an overbroad and unauthorized remedy doesn’t require the invalidation of the entire Chevron doctrine.  The case was carefully selected to present a sympathetic set of facts to accomplish a much broader outcome.

The administrative state has been around for more than 100 years, since the creation of the ICC in the late 1800s, to try to regulate monopoly railroad rates paid by farmers to ship grain to Eastern markets.  Those farmers were regulatory progressives at the time, even though the states they lived in are all solidly Red right now.  As the country modernized and industrialized, and grew to be the largest economy in the world, the ability of Congress to legislate all of the relevant details dissipated, and what we got instead were broad delegations of authority to regulatory agencies which were authorized to act.  What was wrong with that system?  It has served us for a long period of time.  There were of course always issues around it.  How sensible are the regulations?  We’ll allow input on that (“notice and comment”).  Were the regulations properly authorized and adopted?  We’ll allow courts to address that, under doctrines like Chevron that gave the benefit of the doubt to the regulators, with the possibility of appeal to Congress for legislative amendment and even invalidation of regulations under the Congressional Review Act.  The entire Administrative Law course offered in most law schools addresses the resulting questions (Stephen Breyer gave me my worst grade in law school in that course, which always led me to question his ability to evaluate legal arguments).

So why the need to address Chevron now?  The truth is there is no good reason except that it is part of the Red Team’s agenda, and the Supreme Court has allowed itself to become so politicized that it is responsive to virtually all elements of that agenda, including this one.

Loper isn’t the only administrative law case that the Supreme Court has agreed to hear.  In Seila v. CFPB the Court is entertaining a challenge to the Consumer Financial Protection Board’s funding mechanism, which relies on assessments against financial institutions.  The challengers claim that ignores the Congressional appropriation process.  Why aren’t those assessments a form of tax?  And why can’t Congress direct that particular taxes will be dedicated to specific regulatory activities?  If that case is decided against the CFPB then even the Fed’s form of funding itself may be at risk.  Do we really want to endanger the Fed from a macroeconomic perspective?

Likewise, in Jarkesy v. SEC, there is a challenge to a major part of the SEC’s enforcement authority, based on the argument that having administrative law judges hear and render tentative rulings on enforcement matters violates the Seventh Amendment’s right to a jury trial.  Huh?  Really?  The SEC has already had to adjust the mechanisms for the appointment, control and firing of those judges, who merely make recommended rulings to the five Commissioners, to take account of the Supreme Court’s interpretation of the Constitution’s Appointments Clause.  What impact could a ruling in this case have on administrative law judges in immigration cases, or Social Security cases?  Is this the hill that the administrative state is going to die on?

There are other important cases which the Supreme Court is going to rule on this term, and as noted they have not finished filling their docket yet.  For example, in the Rahimi case the Court is going to decide whether the Second Amendment protects the rights of perpetrators of domestic violence to keep guns in their, and their victims,’ homes.  In another case the Court is going to rule on whether an asset has to be sold, or realized, to be subject to income tax, which may impact our ability to have a more progressive tax system given that wealthy people have ways to avoid realization (for example, borrowing against appreciated assets which are pledged as collateral instead of selling the assets) and when they do realize it is at lower capital gains rates.  But in general this upcoming term is all about challenging the administrative state.  

The Court won’t be able as a practical matter to kill the entire administrative state outright with a single set of blows in a single term.  There are simply too many enabling statutes and too many agencies for that to be a realistic goal.  But major blows can be struck, and the arguments that are being made will be able to be made more strongly and more often in other challenges in the lower courts.  That in turn will make all the relevant agencies more cautious and conservative in what they do adopt, which will make a big practical difference in the regulatory process going forward.  Watch out below.

The views expressed here are those of the author, and do not necessarily represent or reflect the views of NYCLA, its affiliates, members, officers, or Board.

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