The end of regulation as we know it?

A little known Supreme Court case with massive implications.

Photo by Luis Ramirez on Unsplash

I was a 1L in law school when I learned about Chevron deference. Chevron? Like the oil company? Yes, that Chevron.

Chevron sued the Natural Resources Defense Council - an executive agency - in the 80s, alleging that the agency constitutionally lacked the authority to regulate air pollution. In striking down Chevron’s challenge, the Supreme Court set out a standard that would form the backbone of contemporary administrative law (known hereinafter as “Chevron”). The standard is basically this:

When executive agencies are faced with a law Congress has passed that is either ambiguous or unclear, executive agencies have the authority to “fill in the blanks” and create their own rules and regulations so long as such actions are not “arbitrary and capricious” and in line with Congressional “intent.”

A lot of words, so let’s use an example.

Biden and Congress pass a housing stipend for folks in poverty. The language of the law says: “all those in poverty shall receive a housing stipend of $5,000.”

The legislation lands on the desk of the Department of Housing and Urban Development (HUD), the executive agency tasked with administering the stipend. HUD looks at the text and thinks to itself, “what does “in poverty” mean? Income less than $30k? Net worth less than $50k? Is it based on zip codes? Which tax returns do we look at?”

Because of Chevron, HUD is allowed to create it’s own definition of “in poverty” that it then uses to administer the law. It can use it’s own methodologies, experts, and sociopolitical value system. It can take comments from the public into consideration. And as long as their definition of “in poverty” isn’t so out of line that it’s deemed “arbitrary and capricious” (a fairly high legal standard), then the rule will stand.

Chevron has allowed our government to work efficiently and empower experts in fields ranging from biotech to climate change science to set the rules and regulations governing daily life in America. Without it, executive agencies’ rules would be challenged in court, and instead of experts in their fields handling the rulemaking processes of complex industries, unqualified judges would be the ones doing it.

I break down this case in this video, should you prefer that format:

Fast forward to last month when the Supreme Court heard oral arguments in Loper Bright Enterprises v. Raimondo: a case brought with the specific intent to overturn Chevron. The facts don’t matter here - some fishermen are challenging a federal agency’s right to charge fees. The important thing is that because our current Supreme Court is ultra-conservative, Chevron may be overturned in this case (something few in the legal field previously considered possible), triggering a cascade of implications that will significantly impact how our government operates as well as the efficacy of the current regulatory state.

If Chevron is overturned, then: 

1. Agencies will no longer have the discretion to create rules when there are gaps in legislation. Instead, Congress will either have to be more specific, or the agency will have to roll the dice and risk their rule being shot down in the court system.

2. In the short term, regulation would churn heavily as challenges would pop up everywhere, rendering many regulations null and void. It’s because of this implication that corporations and Koch enterprises support the repeal of Chevron.

3. Congress will probably become more competent since the functioning of our regulatory regime would now depend on their ability to craft clear and detailed legislation. The current regime allows them to be lazy drafters since they know executive agencies can fill in the blanks.

Most liberals would probably disagree with me on this, but I think overturning Chevron may be what our governance system needs for Congress to get to work again.

In the scheme of our separation of powers, the power of Congress is truly remarkable. They hold the budget, the ability to create and pass laws, appoint members to the judiciary, impeach the President or Supreme Court justices, and offer Constitutional Amendments, among so many other responsibilities. The health and competence of our government doesn’t depend on our Courts or The White House - it depends on Congress. And in recent decades, Congress has been horrendous at doing its job. Slow, inefficient, unresponsive to public demand, and out of touch. The current Congress is poised to be the most unproductive in decades.

Chevron’s death would mean Congress would have to become more efficient. Otherwise, our world could revert to pre-regulatory days: pollution running unchecked, cars’ safety standards nosediving, and food inspection becoming sloppy. The American people like our current life, free of the harms of corporate greed and protected by a regulatory regime. The way we would keep that life in a post-Chevron world rests on Congress taking a more active role in the regulatory process. You can expect a public outcry if Chevron is overturned, as regulations many of us take for granted are struck down left and right. People will demand their elected officials fix the situation. Congress will, slowly but surely, arise from it’s incompetence-induced slumber. What will this look like on the ground?

Instead of saying “in poverty,” it would speak with more specificity: “all those earning less than $40,000/year shall receive a housing stipend of $5,000.”

I’ll keep you posted on how this case develops.

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PS, for those who remember this piece I wrote on how great the economy is, I laughed when I saw this NYTimes editorial with a similar theme not too long ago: