PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Supreme Court Restores Separation of Powers on Regulation

By at 2 July, 2024, 10:46 am

by Raymond J. Keating – 

Separation of powers – where separate branches of government serve as checks and balances on the others – is central to limiting the powers and abuses of government. Many of us learned this in grade school, or at least high school. However, that doesn’t mean that this essential constitutional principle often hasn’t been ignored or simply tossed aside as inconvenient at various times by each branch of the federal government, i.e., executive, legislative and judicial.

For example, dating back to the late nineteenth century, we’ve seen examples or stretches of judicial activism whereby the U.S. Supreme Court decided to move beyond its job of interpreting and applying the Constitution, the Declaration of Independence, and the law based on their plain meanings, and instead essentially write their own legislation. Activism means that justices applied their own preferences and desires to the text.

And then there are times when Congress passes laws that effectively hand over their own responsibilities to the executive branch, that is, to the president and his appointees. Indeed, for example, Congress has become notorious for passing regulatory laws, and then leaving it to executive branch agencies to more or less dictate the details and the reach of these regulatory measures.

The U.S. Supreme Court took a major step in restoring the Constitution’s separation of powers in its 6-3 decision in Loper Bright Enterprises v. Raimondo.

This decision overturned the four-decades-old Chevron doctrine, whereby a Supreme Court majority told judges to defer to agency interpretations of vague laws passed by Congress, of course, as long as they were deemed “reasonable.” In Chevron, the Court actually handed over its own powers of interpreting and applying the law to presidential appointees. That is, according to Chevron, regulators not only get to regulate, but they also decide if their own rules and regulations abide by vague laws. Golly, how often do you think regulators ruled against themselves?

In effect, Chevron wiped out the checks and balances that come with separation of powers.  Regulators were cut lose by both Congress and the Supreme Court. And interpretations of vague laws swung back and forth according to the presidential administration in power. Confusion and regulatory abuses became the rule.

But with the Court’s decision to overturn Chevron, regulators will be reined in from doing whatever they like, and Congress will be forced to write legislation that is clear. Crazy? No, this is a return to sanity, and how our government should work.

Critics of the decision in Loper Bright Enterprises v. Raimondo say that they worry about the loss of expertise. For example, it was asserted in a Politico piece: “The idea was that agency staff, including scientists and economists, had more expertise than judges in interpreting abstract concepts such as ‘in the public interest.’” That, of course, is laughable. Rather, agency appointees and staff possess every incentive to expand their reach and powers. In terms of expertise, it’s the job of Congress to tap expertise before laws are passed, with the executive branch tapping experts as well. But to think that politics and agendas don’t come into play throughout this process, including at the agencies themselves, is dangerously naïve or misleading. Massive regulatory intrusions demand strict allegiance to the separation of powers, not tossing these checks and balances aside.

If Congress believes that some kind of regulation is needed, then it should do the actual legislative work of making the law clear as to what it means, its intention and application, and how it is to work.

Also, as for the Court respecting precedents, stare decisis is meant to bring clarity and consistency to the law. That certainly wasn’t the case under Chevron. In addition, decisions that are based in nothing more than judicial activism aren’t worthy of stare decisis, but instead, should be overturned for the sake of our Constitution, including the separation of powers, and the rule of law.

Finally, the Court’s majority in Loper Bright Enterprises v. Raimondo has struck a blow for small business. Small businesses get hit hardest by costly and haphazard regulation. SBE Council President and CEO Karen Kerrigan correctly noted:

“Over our 30-year history our organization has witnessed the advancement of massive federal regulatory initiatives that disproportionately burden small businesses with high costs and complex requirements that harm their competitiveness and growth. Regulatory uncertainty and lack of predictability, depending on the Administration in power, has created significant havoc for businesses when it comes to investment, hiring, expanding and planning.  ‘Deference’ given to federal agencies has been a green light for regulators with an agenda to do as they please. We are pleased that this misuse of power by unelected government officials has been curtailed and there will be greater accountability to voters, and greater certainty for small business owners.”

Indeed, to the degree that this Supreme Court decision in Loper Bright Enterprises v. Raimondo reins in regulatory abuses, it’s good news for those who understand just how important the Constitution is to our republic and to our liberties, and for the small businesses that drive innovation, and economic, income and employment growth.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.

 

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