The Supreme Court's costly decision to constrain regulators

The foundation of the America we know, and of stable democratic governments generally, is the rule of law. This got upended to more than a small degree by the recent Supreme Court decision canceling the 40-year-old Chevron doctrine, which held that the courts should defer to the interpretations of regulatory agencies where the statutes they administer are ambiguous.

Ideologically oriented judges can now arbitrarily throw out regulations protecting everything from public health to the environment, financial stability, worker safety, and many other areas of the economy.

Law provides for the well-ordered functioning of society because its requirements are known and applied predictably. Laws are expected to change only rarely and then incrementally. The courts are not expected to make law. When France drafted its basic law, the Civil Code or Code Napoleon, there was serious concern that courts would do exactly that, make law, so doing so was explicitly prohibited. This was to prevent a "gouvernement des juges," or rule by judges, the antithesis of democratic rule. Now, in this country, we are experiencing a problem with the excesses of our Supreme Court.

The principle that delivers the stability that democratic society requires is known as stare decisis, Latin for "to stand by things decided." The current majority of the Supreme Court is not behaving according to this precept. Rather than making fundamental changes only when the times require it, change is introduced often and extensively. The conservatives on the Court, a super majority of 6–3, can and do dictate whatever results they wish, not bound by precedent.

The Court's decision in June overturned the 1984 Chevron decision that had been applied some 18,000 times by US courts since it was first articulated (Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.). Through the holding in this case, courts were directed to defer to Federal agencies' reasonable interpretations of statutes. It was a practical way to do the people's business. Congress cannot stipulate in advance in detail how a law is to be applied in a limitless variety of circumstances. Delegation of some decision-making to administrators is necessary.

The case before the Court at present involved the National Marine Fisheries Service requiring fishing companies to bear the cost of salaries of onboard monitors seeking to prevent overfishing. Congress was silent on this point. The Supreme Court could have held that this practice went too far and was beyond what Congress clearly intended. Instead, it took the occasion to end all deference to Federal agencies. In the future, lower courts will determine for themselves, as Associate Justice Elena Kagan notes in the dissent from the Court's opinion, countless questions, often arcane, such as "Under the Public Health Service Act, the Food and Drug Administration (FDA) regulates 'biological product[s],' including 'protein[s]'. . .When does an alpha amino acid polymer qualify as such a 'protein'? Must it have a specific, defined sequence of amino acids?"

Justice Kagan spells out how the Chevron doctrine worked: When "the statute is silent or ambiguous with respect to the specific issue in dispute … then the court must cede the primary interpretive role and … asks only whether the agency construction is within the sphere of 'reasonable' readings, [then] … the agency's interpretation of the statute that it every day implements will control." But the Supreme Court had an agenda. It decided to make far-reaching law that it was not called upon to do.

To those hostile to the direction that the Federal agencies were taking, whether dealing with protecting the environment, worker food safety, or public health, the deference to expert administrators had created something undesirable, an "administrative state." The court has now substituted in its place a "judicial state," implementing its own preferences.

The Roberts court declared that only the courts "could say what the law is." That sounds straightforward and rational until one considers that in the modern world considerable specialized expertise is needed to understand and respond appropriately to the myriad problems that arise. The public deserves the best available advice and guidance, and this is not generally available from courts.

Why does the rejection of deference to agency expertise matter to the US economy?

Commerce thrives on a high degree of certainty. This requires that the rules for doing business that were in effect yesterday will be applied today and most likely tomorrow. A research paper prepared for the St. Louis Federal Reserve concludes that the increased costs due to uncertainty can be traced to:

• firms delaying investment and hiring,
• households reducing spending by increasing their saving rates, and
• financing costs rising as risk premiums increase.

This is not all. There can be a cost measured in human lives as well to rejecting, even denigrating, expertise. The numbers of excess deaths due to COVID-19 was increased substantially by the American public's lack of deference to expertise to fight the pandemic. It is part of the temper of our times to consider expert opinion as merely a dictate of elites having no greater validity than opinions formed in ignorance. In what the Court would now consider an "official act," the prior president suggested several false remedies for COVID-19 that were either not in the slightest bit useful or were actively harmful.

The absence of a degree of deference to and respect for expert opinion can have serious economic and societal costs. The phenomenon can be masked as state's rights, with each state finding its own truth, balkanizing the law and stimulating plaintiffs to seek a court friendly to their point of view. Choices matter. Science may indicate which decisions may be correct and which are in error. While there has never been a legal requirement for courts to defer in all cases to agency expertise, there is a rational basis for siding with professional opinion of those with knowledge based on experience.

Even in the time when Chevron deference was the prevailing law, a Florida judge ruled that the Centers for Disease Control and Prevention (CDC) lacked the authority to require the wearing of face masks on public transportation, as no deference was owed to the CDC. Uncertainty is magnified as the instances in which agency decisions are relitigated multiply. In the United States, the cost of the pandemic has been estimated at $13 trillion for its first 20 weeks. How much worse would it be if numerous judges in diverse jurisdictions had to repeatedly weigh whether they found CDC guidance persuasive. The costs of uncertainty due to a pandemic are great without being compounded by curbing judicial deference to administrative agency expertise. A Supreme Court–induced shock will now be added on top of the disarray due to a pandemic or other catastrophe.

The standard for judicial review will now fall back to that which prevailed before 1984. In a decision dating back to 1944 known as Skidmore, the prevailing view was that a court might uphold a ruling based on agency expertise if it found the reasoning persuasive. It is one thing to strike down administrative determinations that are arbitrary and capricious. That is something courts are qualified to do, by ascertaining if the agency followed its own procedures. Re-assessing every agency decision as to whether a court without any degree of deference to expertise finds an agency's reasoning persuasive is a recipe for needless litigation. In a myriad of instances—some portion of the 18,000 cases that cited the Chevron doctrine of deference to agency conclusions—there is far less likely to be settled law.

Until the Supreme Court decision issued in June is discarded, the costs to the economy will multiply.