Dismantling the Regulatory State

By Thomas Neuburger

First the news, then why it matters.

The News

The U.S. Supreme Court has recently ruled (pdf) that OSHA, the Occupational Safety and Health Adminstration of the Department of Labor, does not have the authority to issue mask and vaccination mandates for workplaces, that its establishing law (the Occupational Safety and Health Act of 1970) does not allow it, despite the current Covid epidemic and emergency.

The ruling was a partisan 6-3 in favor of the denial. Part of the ruling sounds superficially justified in a legalistic sense, but in a real-world sense, just silly. For example, from the "for the Court" (i.e., unsigned) majority opinion, written by Justice Kavanaugh:

Although COVID–19 is a risk that occurs in many workplaces, it is not an occupational hazard in most. COVID–19 can and does spread at home, in schools, during sporting events, and everywhere else that people gather. That kind of universal risk is no different from the day-to-day dangers that all face from crime, air pollution, or any number of communicable diseases. Permitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs and face those same risks while on the clock—would significantly expand OSHA’s regulatory authority without clear congressional authorization.

Sick people coming to work is plainly a workplace hazard for everyone exposed to them. The counter examples offered by the Court, "crime, air pollution, or any number of communicable diseases" is clearly an argument from absurdity, since OSHA would never issue workplace mandates to counter "crime." Even the last example, "any number of communicable diseases," attempts to imply that OSHA would issue rules in response to colds. Covid, I'd like to remind the Court, is a global pandemic, a once in a century (so far) event. The last global pandemic, the Spanish Flu, occurred almost exactly 100 years ago.

But part of the majority opinion is not silly. It threatens to dismantle the U.S. regulatory state itself.

Consider these statements from Justice Gorsuch's concurring opinion, with Thomas and Alito adding their names. First, Gorsuch sets up the the fact that the mandate is sweeping and therefore questionable:

Not only must the federal government properly invoke a constitutionally enumerated source of authority to regulate in this area or any other. It must also act consistently with the Constitution’s separation of powers. And when it comes to that obligation, this Court has established at least one firm rule: “We expect Congress to speak clearly” if it wishes to assign to an executive agency decisions “of vast economic and political significance.” ... We sometimes call this the major questions doctrine. ...

OSHA’s mandate fails that doctrine’s test. The agency claims the power to force 84 million Americans to receive a vaccine or undergo regular testing. By any measure, that is a claim of power to resolve a question of vast national significance. Yet Congress has nowhere clearly assigned so much power to OSHA. [Emphasis added]

Then he pivots to something called the "nondelegation doctrine":

Why does the major questions doctrine matter? It ensures that the national government’s power to make the laws that govern us remains where Article I of the Constitution says it belongs—with the people’s elected representatives. If administrative agencies seek to regulate the daily lives and liberties of millions of Americans, the doctrine says, they must at least be able to trace that power to a clear grant of authority from Congress.

In this respect, the major questions doctrine is closely related to what is sometimes called the nondelegation doctrine. Indeed, for decades courts have cited the nondelegation doctrine as a reason to apply the major questions doctrine. E.g., Industrial Union Dept., AFL–CIO v. American Petroleum Institute, 448 U. S. 607, 645 (1980) (plurality opinion). Both are designed to protect the separation of powers and ensure that any new laws governing the lives of Americans are subject to the robust democratic processes the Constitution demands.

This the great danger of this ruling — even greater than exposing millions of U.S. workers to their pandemic-stricken colleagues. It's yet another backdoor attempt, by right wing justices in general and Neil Gorsuch in particular, to dismantle as much of the U.S. regulatory state as they can, or want to.

Let me explain.

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, the EPA and, yes, OSHA, that regulates 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 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 inoperative, by overturning the Supreme Court decision (called Chevron; see below) that makes it operative in the first place.

We've seen many instances of the first way, starting with Ronald Reagan's perversion of the regulatory regime. We are now witnessing the second.

The "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 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 — interestingly, Neil Gorsuch's mother and by most accounts, one of the worst pre-Trump EPA administrators. 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 an agency's right to interpret congressional language, not the right of the agency to regulate at all.

Congress has the inherent right to regulate business activity, but starting in the Roosevelt era, Congress delegated a great deal of that authority to the Executive Branch through legislation by writing general instructions to agencies and asking agencies to implement them. What's under attack by the right wing justices isn't the right of Congress to regulate businesses, it's the right of agencies to interpret its instructions. In essence, right wing justices want Congress to closely specify what regulatory agencies should do, not issue general instructions.

Two Supreme Court challenges to Congressional delegation of regulation occurred early in the Roosevelt era, one of them being Schechter Poultry Corp. v. the United States. Both succeeded, but unlike Chevron, and until recently, neither decision has been cited. For the next 80 years, from that time until now, both have been ignored. In the same way that citation of a ruling confers authority, lack of citation diminishes it. Almost from the time they were issued, each decision, including Schechter Poultry, has been recognized as "legal dead end."

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

Emily Bazelon and Eric Posner have detailed the history around Schechter and Chevron. Note as you read that the cited "nondelegation doctrine" is based in Schechter — i.e., it's a right wing invention, an invention by the anti-Roosevelt Court, to block the creation of modern regulation of business.

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. [Emphasis added]

What Overturning Chevron Would Mean

All of this means one thing. Any Court decision that reverses the current state of jurisprudence — that overturns Chevron and leaves Schechter Poultry in place — affirms Congress as the only body with the authority to issue regulations affecting business activity. When Congress delegates, it must do so specifically, writing the regulations itself.

The effect would be sweeping and immediate. Overturning Chevron means deconstructing the modern regulatory state. It means returning the country, from a regulatory standpoint, to before the New Deal and denying 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, Schechter and the Chevron Deference

Neil Gorsuch has a specific interest in re-vitalizing Schechter and overturning Chevron. For example, he cites Schechter in the OSHA ruling just handed down:

[T]he [nondelegation] doctrine is “a vital check on expansive and aggressive assertions of executive authority.”...

Whichever the doctrine, the point is the same. Both serve to prevent “government by bureaucracy supplanting government by the people.” ... And both hold their lessons for to day’s case. On the one hand, OSHA claims the power to issue a nationwide mandate on a major question but cannot trace its authority to do so to any clear congressional mandate. On the other hand, if the statutory subsection the agency cites really did endow OSHA with the power it asserts, that law would likely constitute an unconstitutional delegation of legislative authority. Under OSHA’s reading, the law would afford it almost unlimited discretion—and certainly impose no “specific restrictions” that “meaningfully constrai[n]” the agency. ... OSHA would become little more than a “roving commission to inquire into evils and upon discovery correct them.” A. L. A. Schechter Poultry Corp. v. United States, 295 U. S. 495, 551 (1935) (Cardozo, J., concurring). [Emphasis added]

Remember, citation confers authority. This is not the first time Gorsuch has cited Schechter to overturn the Chevron deference. He did the same in 2016, before being handed a seat on the nation's top court. The Times again:

Last year [2016], 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 has made himself clear — he wants to see Chevron on the chopping block.

Gorsuch is not alone in wanting to overturn Chevron. Clarence Thomas is openly opposed to Chevron. Other right wing justices have also indicated their willingness to revisit Chevron. In a 2013 decision involving regulation by the FCC, one which specifically referenced the Chevron decision, Chief Justice Roberts, joined by Alito and Kennedy, then on the Court, wrote this:

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. [Emphasis added]

In other words, in the view of the right wing justices — Roberts, Alito, Thomas and Gorsuch certainly; Kavanaugh and Coney Barrett likely — Schechter Poultry's "nondelegation doctrine" must be revisited by the Court.

Should they get their wish, there could be five or six justices in favor of overturning Chevron and re-establishing Congress as the only regulatory agency in the federal government. Which means no real regulation at all.

What's at Stake if Chevron Is Overturned? The Government's Right to Rule

Which brings us to the heart of this piece, its main point.

What will happen if Chevron is overturned? Part of that answer is, it's 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 or Medicare completely privatized — 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.

But another part of the answer is entirely predictable — loss of faith in government itself, and not just government in general — in this government, the one created by the Constitution.

Consider these two factors:

• The ultimate powerlessness of the Supreme Court

• 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. Yet the unelected justices of the Supreme Court have no such vulnerability; they're appointed for life. They might be dissuaded from a shameful decision by massive public protest, but nothing compels that dissuasion. Nothing.

Further, unlike a law that 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, even 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 radical right wing justices 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? (Forget about packing the Court; no one with power in the Democratic Party will consider that solution.)

Which, ironically, brings us to the powerlessness of the Court itself. 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. The kind we're witnessing the start of now, by the way, only instantly far more fractious.

Consider a country in which the Supreme Court issues a ruling, and no one obeys — or those that do are hated?

At that point we won't be in a constitutional crisis, but one much worse — a crisis in which the government, while constitutionally formed, loses the "consent of the governed."

A government that loses the "consent of the governed" is a government with no mandate to rule at all.

We may be closer to that point than anyone realizes, just as we're closer to the start of the climate crisis than anyone in power will say. 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 country "in our name," willing to risk those consequences? If Chevron is overturned, we will find out.

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