Sep 30, 2023 - Politics & Policy

Federal regulators are in the Supreme Court's crosshairs

Illustration of a gavel knocking down a line of columns

Illustration: Sarah Grillo/Axios

The Supreme Court has teed up two big opportunities to significantly curtail the federal government's regulatory power — to weaken or even dismantle agencies that have been in conservatives' sights for years.

The big picture: The Supreme Court's new term begins Monday. Some of the first cases on the docket have the potential to advance conservatives' years-long push to rein in the federal bureaucracy — and to undercut core Democratic priorities, from regulating Wall Street to combating climate change.

Driving the news: The justices are scheduled to hear oral arguments Tuesday in a suit that could gut the Consumer Financial Protection Bureau, a cornerstone of Congress' response to the 2008 financial crisis.

  • A group of payday lenders brought the case, which argues that the CFPB's funding mechanism is unconstitutional — and that everything it has done with that funding is therefore void.
  • A ruling in the lenders' favor would grind much of the agency's work to a halt. "All C.F.P.B. rules are now potentially vulnerable to constitutional attack," Boston College law professor Patricia McCoy told The New York Times last year.

Details: Critics argue it's unconstitutional that the CFPB gets part of its funding directly from the Federal Reserve, rather than an annual appropriation from Congress. The Justice Department notes that other federal programs, such as Medicare, are also funded directly.

Flashback: The court ruled in 2020 that the CFPB's leadership structure was unconstitutional, but allowed the agency to keep functioning under new rules.

The most important case on the docket so far may be Loper Bright Enterprises v. Raimondo.

  • On its face, it's a dispute over the finer points of federal oversight of herring fishing. But the case could be a major coup for the conservative legal movement.
  • That's because the herring fishers are asking the justices to overturn the doctrine known as "Chevron deference," which the Supreme Court devised in the 1980s, but the current conservative court has been chipping away at for years.

Chevron states, in short, that when part of a particular statute isn't clear, the courts will generally defer to the interpretation of the agency tasked with implementing that statute, as long as its interpretation is reasonable.

  • Federal agencies have relied on that doctrine to defend any number of policies — from Medicare cuts to extremely granular disputes over patent law.
  • It's an especially big issue for the EPA, which has — mostly unsuccessfully— asked the court to defer to its understanding of major environmental laws as it has tried to defend sweeping new regulations from industry lawsuits.

Why it matters: The court has put a stop to just about every major exercise of executive power the Biden administration has attempted. It blocked an eviction moratorium, vaccine mandates, student-loan forgiveness and limits on greenhouse gas emissions.

  • Those rulings relied on a different doctrine, not Chevron, but it all pulls the law in the same direction: The executive branch will have a harder time doing a whole lot of things.

What's next: The court will likely take on bigger, more polarizing controversies as the term goes on.

The justices have already agreed to hear a major Second Amendment case. State laws banning gender-affirming care are on an accelerating path toward the high court, and abortion also might be back on the docket soon.

Between the lines: These may not all be blockbusters. Several of these cases could be good vehicles for the kind of incrementalism Chief Justice John Roberts favors.

  • The court could weaken Chevron deference without overturning it. It could use procedural maneuvers to duck the merits of big abortion or trans rights cases, at least for a while.
  • Yes, but: Roberts has often had a hard time building support for that go-slow approach on a 6-3 court.

The bottom line: If 5 justices want to keep moving quickly and decisively to the right on issues of great importance to the conservative legal movement, they'll have plenty of opportunities to do so — starting with the administrative state.

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