Supreme Court Upends Regulatory System
Public Citizen News / September-October 2024
By David Rosen
This article appeared in the Sept/Oct 2024 edition of Public Citizen News. Download the full edition here.
The U.S. Supreme Court upended the federal regulatory system this summer in a series of decisions that threw out a decades-old precedent and undermined our government’s ability to protect consumers, workers, our environment, and public health and safety. Taken together, these decisions represent an expansion of judicial power at the expense of the legislative and executive branches.
The most widely covered anti-regulatory decision this term came in response to a pair of related cases – Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce – in which the Court overturned a 40-year-old principle known as Chevron deference.
Chevron deference was based on commonsense and constitutional separation of powers principles. In short, the notion was that, when considering a legal challenge to an agency regulation, a court should defer to the agency as to the best reading of the statute, if the statute doesn’t spell out the answer and the agency’s view is reasonable.
Now, without Chevron deference, decisions will be left entirely up to judges, even in circumstances that call for policy expertise.
Unlike judges, agencies are democratically accountable to the public through the president and are subject to congressional oversight. In addition, to issue or update regulations, agencies must go through a process that requires public input. That is not the case for judicial opinions.
As a result of the decision, corporations have already signaled that they feel emboldened to challenge more regulations that protect the public. And without the Chevron deference framework, judges’ personal and ideological preferences will play a greater role in deciding regulatory cases.
Thanks to another decision this summer, judges will have potentially infinite opportunities to do just that. In Corner Post v. Board of Governors of the Federal Reserve System, the Supreme Court essentially eliminated the statute of limitations for courtroom challenges to a wide range of regulations.
Prior to the decision, most new regulations could be challenged in court for six years after they were issued. After that, a company would have to petition the relevant agency, asking it to issue a proposed rule and go through a public comment process under the Administrative Procedure Act (APA) to finalize it.
In Corner Post, though, the Court held that the six-year statute of limitations begins for a particular entity when that entity is injured – not when the regulation is issued. For an entity that didn’t exist when a regulation was issued, the clock would start on the statute of limitations when it was created. Under this approach, a corporation created in 2024 could challenge a regulation issued in 2010 – or 1970.
With litigants permitted to create new companies and new trade associations for the purpose of challenging agency rules, that is tantamount to eliminating the statute of limitations entirely for challenges to many federal rules.
The decision has the potential to flood the lower courts with challenges to worker, consumer, health, safety, and environmental protections, many of which have been settled law for decades.
Another decision, Securities and Exchange Commission v. Jarkesy, undermined federal agencies’ ability to use administrative courts to impose civil penalties for violating regulatory protections. Several statutes authorize agencies to bring enforcement actions in-house, to be decided by “administrative law judges.” A company that is found to have violated an agency regulation in that proceeding can then appeal to a federal court. Now, though, the Supreme Court has held that agencies have to bring those actions in federal court, with the possibility of a jury trial.
The cumulative effect of these decisions is to shift power from regulatory agencies, exercising authority delegated to them by Congress and allowing the public to play an important role in shaping the policies that affect them, to federal courts, where well-resourced corporate repeat players enjoy an enormous advantage.
“These decisions are gifts to big corporations, making it easier for them to challenge rules to ensure clean air and water, safe workplace and products, and fair commercial and financial practices,” said Robert Weissman, co-president of Public Citizen and co-chair of the Coalition for Sensible Safeguards. “It’s another step in the long-term corporate project of neutering federal agencies’ ability to protect the public from fraudsters, rip-offs, dangerous products, carbon polluters, and more.”
However, the recent court decisions are no excuse for regulators to stop doing their jobs. Regulators must continue to work to advance their missions to protect consumers, workers, and our environment.
Public Citizen and the Coalition for Sensible Safeguards co-chaired by Public Citizen are leading the fight for two legislative remedies. First, we are urging Congress to pass the Stop Corporate Capture Act (H.R. 1507), which, as of press time, has more than 71 cosponsors in the House. The House version is sponsored by U.S. Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus. U.S. Sen. Elizabeth Warren (D-Mass.) is expected to have introduced the Senate counterpart by the time this story goes to print.
The Stop Corporate Capture Act offers a comprehensive blueprint for modernizing, improving, and strengthening the regulatory system to protect the public more effectively. It would even the playing field for all members of the public to have their views accounted for in regulatory decisions that affect them, promote scientific integrity, and restore our government’s ability to deliver results for workers, consumers, public health, and the environment.
Importantly, the bill would restore Chevron deference by requiring courts to defer to agencies that Congress empowered to protect the public in cases where the agencies’ views are reasonable. But that’s not all it would do.
The Stop Corporate Capture Act would bring transparency to the “black box” of the White House regulatory review process, which has become a focal point for corporate lobbying. The bill would make it a federal crime for corporations to submit false information to influence regulators during the rulemaking process and would require anyone submitting scientific or other technical research to agencies during the rulemaking process to disclose any potential conflicts of interest.
The bill also would create an Office of the Public Advocate, charged with promoting agencies’ public engagement and helping the public participate more effectively in regulatory proceedings, especially people from marginalized communities. And it would bar the White House from unreasonably delaying essential safeguards by empowering agencies to resume work if the regulatory review process fails to conclude after 60 days.
A second bill introduced by U.S. Reps. Jerry Nadler (D-N.Y.) and Lou Correa (D-Calif.) would restore the statute of limitations for challenging a wide range of federal regulations. The Corner Post Reversal Act would prevent the disruptive impact of the Supreme Court’s decision by reinstating a time limit for legal challenges to regulatory protections.