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Regulatory system needs fixing, not dismantling

Is regulation as we know it unconstitutional? It’s not inconceivable that, sometime soon, the U.S. Supreme Court could reach such a conclusion.
The court is right to worry about America’s dozens of regulatory agencies abusing their power or becoming an unaccountable fourth branch of government. But if that’s the concern, there are much better, more prudent and less disruptive ways to proceed.

Much of the administrative state rests on a time-honored convention: As long as Congress provides some “intelligible principle” to guide an agency, courts usually defer to its expertise in interpreting statutes and making rules. This deference has allowed the ambitious application of some very broad mandates. To promote public health, the Environmental Protection Agency imposes emissions standards and extracts hundreds of millions of dollars in fines from violators. To protect investors, the Securities and Exchange Commission mandates extensive corporate disclosure, prosecutes financial fraud and much more.

Now, though, several members of the court — led by Justice Neil Gorsuch — are challenging this, arguing that the Constitution’s authors never intended Congress to delegate so much authority.

On its face, this reading of the Constitution is questionable. Article I states merely that “all legislative powers” are vested in Congress. Taken literally, à la Gorsuch, the phrase could mean that the legislature must write all the rules, leaving agencies only to find facts and fill in relatively minor details. Or (in the more common interpretation) it could grant Congress broad legislative authority to design executive-branch agencies as it sees fit.
But if not Article I, what will prevent an unelected administrative state from getting out of hand? Abuses, after all, do happen. The Centers for Disease Control and Prevention imposed a series of nationwide eviction moratoriums during the pandemic, citing a 1944 statute granting it the power to conduct “inspection, fumigation, disinfection […] and other measures” in response to a public-health crisis.

In some cases, other parts of the Constitution clearly apply. The Seventh Amendment, for example, establishes a right to jury trial in civil cases with significant monetary value — a right that a court has correctly invoked in striking down the SEC’s use of in-house judges. There’s the Administrative Procedure Act, under which courts can overturn agency actions they deem “arbitrary” or “capricious”. Last year, the Supreme Court struck down the CDC’s extended eviction moratorium, saying: “It strains credulity to believe that this statute grants the CDC the sweeping authority that it asserts.”

To be sure, America’s regulatory system is far from ideal. Who, for example, needs nine financial regulators, four of them devoted to banks? Congress should ensure that the administrative state remains fit for purpose, and the judiciary must keep it in check. But simply dismantling it is no solution at all.

 Bloomberg Opinion/Tribune News Service





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