Libertarian Twofer: Chevron Deference And Border Line Madness Explained

>> Tom Church: This is the Libertarian Podcast from the Hoover Institution. I'm your host, Tom Church, and I'm joined, as always, by the libertarian professor Richard Epstein. Richard is the Peter and Kiersten Bedford senior fellow here at the Hoover Institution. He's the Lawrence A Tisch Professor of Law at NYU, and he's also a senior lecturer at the University of Chicago.

And today we're talking about the potential for the Supreme Court to limit the Chevron doctrine. That is, let's say, the level to which courts defer to federal agencies' interpretations of legislative statutes. Or maybe I'd rather say how much administrative agencies take on legislative responsibilities that maybe they shouldn't be.

So, Richard, there are two cases we're talking about that were in front of the Supreme Court, relentless versus Department of Commerce and Loper bright industries versus Raimondo. And both have to do with the same issue. And I know you'll take us through that. I'd like to give us the background here on how do these cases interact with one another?

How would Chevron deference perhaps be limited? Also, what are the reactions from the justices? I mean, with a new court makeup and this issue actually being discussed and being ruled on, what might we end up seeing?

>> Richard Epstein: Well, let's just start with the last thing. Chevron is clearly on its last legs.

One of the most telling remarks of the oral argument was when Justice Roberts said, we haven't been using Chevron for the last couple of years anyhow. So why are we worried about it? That's a kind of a subtle signal that there's going to be a formal interment of a doctrine which has been on its last legs, say, since about 2020.

Why is this case an appropriate vehicle for that? Because it not only involves statutory interpretation, but it also involves a very important issue, namely, where do revenue bills originate? Constitution has a very strong system of separation of power, and that means, in effect, that there's some things that one branch can do and some things for another.

In the 8th grade civics version of the story, what you do is you have three branches, a legislature that makes the laws, a president who enforces them, and a court that starts to adjudicate them. This system is always going to be more difficult than it seems. And one of the complications is that as the state gets larger, you need to have more delegated authority to various kinds of agencies.

And some of them are what we call executive branch agencies that work within the White House. And others are independent agencies which have their own commissions in their own wards. How important the distinction is always left to the mind, sometimes it seems to matter a lot, sometimes nothing.

But in the Loper case and in the relentless case, the issue that was before them was there was a statute that required inspectors on fishing boats. And this is a very important topic because the issue is whether or not they're engaged in a legal catch. And if they are doing so, it could lead to an hasty depletion of the available FIPs, a common pool problem, and all the less, so you gotta watch it.

And Congress says you have to make shape for them on your boat. This is no small incursion because these boats are tight, they're dangerous, and an inspector could get in the way and cause a serious accident if not mobile enough. And you have to do it, and the statute is clear.

Then what happens is they start running out of money inside the agency. So what they then say is not only do you have to put this guy on board, but you have to pay for him, which is a very expensive kind of proposition that could take away as much as 20 or more percentage of the profits that you're going to make.

Well, where do they get the power to impose this on somebody? Well, clearly, they're trying to tax you. And generally, all taxes have to originate in the House of Representatives. And if that's where they have to originate, that is what was done here. So that you could see there is a situation in which separation of powers and delegation become very close together.

It is not permissible, even with the absence of any strong non delegation doctrine, to have somebody that is not Congress, somebody not the House of Representatives, initiate or pass one of these pieces. And so the theory is you can't possibly read Chevron to fill a gap in which is gonna create very serious difficulty with the overall structure.

Well, that's not the way it was seen below. And so what you did is you got a perfect distribution of sentiments. Justin Walker, whose views I think will prevail, was the one who raised the appropriation argument. And then you had others who said, well, it's a really clear statute, obviously have this residual authority.

It's a very broad statute of how they could regulate with all necessary and proper regulation. And somebody else says, well, we're not sure. So we're going to start to use the Chevron doctrine to give the nod to the government. First thing you note, Chevron's been around for 40 years, and if it turns out you have a very hard case and nobody could decide which way it comes out correctly, there's going to be an attack on why you're doing it.

And then the question is, well, what's the alternative? Well, the important thing to understand about the administrative state is that we often put agencies, as we do in this case, in the position of essentially a trial court. And what they do is they make their kinds of rules and they enforce them.

And then you go not to the trial court, but to the appellate court doing it. Sometimes you go to the trial court. In this case, you did the form, okay, well, you're there. And then when you start going up, when you have the administrative law, you have to ask this very simple question.

Suppose there was no administrative agency, a court would never just simply say, we're gonna do whatever somebody wants us to do. They're gonna make it on the merits. So you now get, the question is, if you go to a court directly, you get one reading, you go through administrative agency, you get a number another that's completely unstable.

And so the argument is, if you look at the Administrative Procedure Act, it says on all questions of law, the court shall decide things stay nova. In the Chevron case, they never bothered to cite that provision. And then there are other provisions where it turns out you have arbitrary and capricious review with respect to subordinate questions about whether or not something amounts to something else, whether or not it turns out that misreading a patent amounts to infringement or something of that sort.

And then you have basic questions of fact. And so the default position that you want to go to is essentially say, do with administrative agencies and with commissions what you would do with anything that doesn't go through this system. And therefore, all questions of law have to be reviewed de novo.

And, well, you talk about administrative agency. Administrative agencies have no expertise in reading statutes. Of course, everybody's good at that, but they have something which courts don't have, which is heavy bias. If you look at their composition, it's often three to two. Often the three is from proudly the with the president, the other is not.

There are now further politics when there are vacancies that don't get filled. And so the whole thing essentially reeks of intrigue. And the idea that you should defer to a partisan agency is not nearly as effective as trying to defer to an expert agency. But these things are more partisan than expert on many questions.

But of course, it's not true with all agencies. Some are good, some are bad, and then there are all sorts of questions, for example, like what is the optimal safety system that you want to put into place to prevent fires in nuclear reactors. And you don't want the court saying, we have system a as opposed to system B.

And so at that point, you generally do want to defer to agencies. But oddly enough, we have another decision out there in the so-called State Farm case, in which the Supreme Court said when we're doing it, these kind of. Tough determinations, we give a hard look at what they've done on the one hand, and on the other hand they say, well, we have narrow kinds of reviews, so they're giving you mixed signals about that.

And the correct rule with nuclear power plants and so forth is if somebody actually knows what they're doing and give you a detailed report, you want to accept that. But if you go through the history of American law on this topic, it is very clear in all sorts of ways that one of the reasons why nuclear power plants have been shut down.

Is that courts are extremely skeptical to the case they're putting forward to them, always want more information. And then in the alternative, when somebody deprives you of an application or disapproves of an application, they give all sorts of deference. So the world is messy in a second way, inconsistent deference, undue favor to the agency, undue hostility with respect to the private part.

So the whole thing is a kind of a big mess. And the thing that I want to stress is you can only fix it judicially one step at a time, but saying that all questions of law should be decided, a noble is good enough. There's alternative position called the Skidmore position, which says you treat these things with respect.

Justice Kagan says, I don't know what that means, I think she's probably right about that. And in fact, the Skidmore case itself is a bit of a farce. So when you look at the particular cases, essentially, it seems to me you want the clean solution on the narrow points of law, and it will make things much better.

There'll be much less instability, there is a serious problem now, you get one legislation, you get one agency dealing with lakes and waters, and they're very hostile to new development. And then you get another one which is strongly in favor of it. Every four years, you're gonna switch agencies, change the rules.

But somebody who has to make a long-term investment that's gonna take ten years to pan out and so forth, cannot live in an environment where the rules change with the question of who won the last election.

>> Tom Church: I wanna follow up on something you said, Richard, which is that it's often a revenue bills issue.

I mean, so, in these cases, it is specifically about imposing financial costs and raising money that was not decided by the legislature, it was decided by the agency. But that's not all that Chevron deference is about, right? I mean, I think mostly on the progressive or democratic side, it's in the environmental field where they've enjoyed the use of Chevron deference to, what would you say, delay projects.

What are some of the more egregious uses of Chevron that aren't financial?

>> Richard Epstein: Go to Chevron itself and you can see that there are many problems. It is very clear that where emissions take place is very important in some context. So that if you have areas which are essentially quite dangerous, where another little dose of emissions could cause you serious harm, that is very high marginal cost.

You wanna think about it a little bit differently than those cases where the changes are incidental. Chevron was a case in which you had three smokestacks, three stationary sources in a single plant. And the position of the Democrats on this is if you wish to change the outcome of these stationary sources, you needed a new permit every time you wanted to shift the output from one of these smokestacks to another.

If you then try to figure out what externalities are created by shifting from one to another, these things are 100 yards apart or less. It's very clear that absent some very special proof, the total amount of pollution is the important question, its allocation amongst the smokestacks is a minor issue.

If you require permitting, you show down these situations and you're gonna create more dangers because you essentially keep an inefficient allocation. So the so-called bubble concept was introduced, and what it said is so long as you're within the bubble, that is, within those three smokestacks in this single plant, you could switch around without a permit.

Generally speaking, the Republicans are in favor of giving more freedom to private enterprises. And their argument would be, the externalities do not increase if you move it between smokestack and the production does, so it's win-win. The Democrats say they're always suspicious of everything, so they want to check everything.

So now the question is, who wants Chevron deference more generally? It's always gonna be the Democrats. The Republicans, for the most part, are looking ways to limit the impact of administrative state action, the Democrats are wishing to increase them. If you don't need deference not to take action, you do need deference if you want to take action.

And so when you start trying to figure out how you deal with climate change and what counts as a various source is carbon dioxide, a pollutant, for example. If you have a republican administration in place and say, I don't see any authorization for putting this on the pollution list, after all, you need, need oxygen and carbon dioxide to breathe and to make plants grow.

And on the other hand, the Democrats, you say, aha, I see here the real dangers for global warming. You immediately attribute that to the carbon dioxide that comes out from various plants and all the rest of this stuff. And what you do is you therefore wanna stop this from taking place.

I think, in effect, on this issue, the Republicans are correct. You do not want major decisions to be made as to what is or is not a pollutant by an administrative body, particularly when it's a real epic situation. And yet, when they did all of this back in 2007 or so, what the government said, and Justice Stevens wrote, is that carbon dioxide is now officially a pollutant.

Well, if it's a pollutant, it's emitted in ghastly quantities. And so, generally speaking, you only regulate pollutants above a certain amount. And if you treat carbon dioxide or pollutant, then you and I are not allowed to exhale because we emit two tons of carbon dioxide every year, and you need a permit to breathe.

That's obviously an exaggeration. So what they do is they change the numbers for carbon dioxide relative to a standard pollutant. And if you look at the list, what's a pollutant? Carbon dioxide or sulfur dioxide, nitrous oxide? They plummet carbon dioxide and with all the other stuff, and it's clear it has to have a distinct treatment.

And what Chevron does is allows you to make these massive shifts through administrative decisions made by zealot administrators, when, in fact, it seems pretty clear that if you put this to Congress, they would never be able to get this through. And you could go through instance after instance on all sorts of things where, in effect, you see this kind of stuff.

It's been extremely important in dealing with pipeline because the Democrats are always willing to shut them down, the Republicans want to keep them going. So what you're talking about is a system of regulation for 25 or 30% of the economy, maybe more. Just think of the agencies that are covered by this, it's the FDA.

Well, drugs and pharmaceuticals are big business. It's the EPA, it's the Federal Communications Commission, it's the fair trade Commission and so forth, the National Labor Relations Act, every one of these organizations is heavily regulated in one form or another. And if you give them free rein, it's a one way ratchet.

The Democrats will expand their authority, and the Republicans would find it very difficult when they get into power to take it back. So that political overweight is very much a part of this position. And that's why the Democrats in the court that are fighting so hard, in particular Justice Kagan.

But I think it's just wrong, this is not the way government ought to run and that delegated agencies should have complete reign when Congress turns out to be impotent. So just to give you the other famous case on this, the council Gundy case, which had to do with the question of how sex offenders have to report.

What the statute said is if you are being released, you're given all sorts of notice about how you have to file certain papers because of your sex offender status when you move into new communities. And the question was whether or not we apply this to people who've already been released some time before, where it has a real quality of being a retroactive legislation.

And they said, well, we'll let the attorney general decide this question, and this is insanity as far as I'm concerned. What the attorney general did is basically said, I think it should apply to these past guys. But then you have this huge question of how you give notice to them so that they're not gonna be trapped in a very unpopular system, and they didn't figure all of that out.

And it's a yes no decision. What they should have said to Congress, you have to decide this one way or another, and then if you decide it is perfectly proper for you to develop a set of norms through administrative action, i.e, who gets notice, how you get it, where the papers are filed.

That's the Justice Scorsese position. We give you the basic form, you fill in the blanks, and I think it's probably the right idea. And the this is no huge imposition. This is not a case of usurping all sorts of expertise. It's a one decision, very easy case to decide, and it should have been decided the other way.

I might also add, and this is one of the reasons why the anti-Chevron stuff has gotten some steam, is there were probably 15 amicus briefs in that case. Not a single one of which from either conservative or liberal organizations that supported the notion that the attorney general should have that kind of power.

And so when you start seeing a left right consensus on a lot of things, because, remember, Chevron has implications for the criminal law as well, it is not going to be a very easy case to defend it. And so I think it's pretty clear that it's gone. My view is I don't think they will go to the Skidmore respect position.

I think they'll just overrule it completely. But as you know, Supreme Court justices are highly idiosyncratic. But it's pretty clear if you count from left to right or right to left, number five seat is Justice Kavanaugh. Justice Roberts is sort of to the left of him. And he said very clearly in the argument, he just does not like the flip flop type situation.

And my view is that he will have at least four with him and maybe one more Justice Roberts, who doesn't like this stuff either, in his own way. So I think it's likely to be six, three, and I don't know what the three are gonna say, but they're gonna be hard pressed to sort of give a defendant of Chevron in its pristine form.

So even they would probably acknowledge that some reform or cautionary move should be there. One step that's taken, and I'll just end on this note, is what you do is you read the statute much more carefully to find a clear answer rather than pretending after a superficial examination.

The statute is ambiguous, to use the magic word, and so therefore the agency takes over. Remember, the correct statement of the rule is not quite as you put it at the beginning. It's not that we deferred to agency. It's when the statute is clear, we do not, but when it is not clear, we do.

But there's a huge amount of ambiguity in guess, which were my favorite words, ambiguous.

>> Tom Church: Well, how about we end on something unrelated to Chevron here, but still in front of the Supreme Court? And that's the border standoff in Texas. So Governor Abbott down in Texas is upset with many, many migrants crossing the border, has put up barbed wire and razor wire.

Supreme Court ruled against Governor Abbott and said, you need to take this down or allow border agents to actually reach these regions, and Governor Abbott has said no. So, Richard, how is this gonna be resolved, and how should we be thinking about, I think now 25 states that have backed Texas and said, let us know if you need our national guard members?

>> Richard Epstein: Okay, well, this is an exceedingly difficult problem. And for year upon year, it has always been resolved by some kind of low level administrative accommodation between the border authorities on the one hand and the state authorities on the other, because each has a legitimate interest. If it's talking about people entering to the United States, it seems clear, not by constitutional command, but by administrative and constitutional laws, by the Supreme Court, that the sole authority to deal with immigration is, in fact, located in the United States.

And that has to do with people who are going back and forth across the borders. Okay, but once they get in the state, then the general position is they are now subject to the ordinary police powers of the state. And so if there's somebody who's an imminent into the United States, whether legal or illegal, and commits a crime like a bank robbery, so forth within the state, the immigration authority does not extend to those actions.

So then the question is, where does this particular transition start to take place? And the customary view is once it turns out that these people were immigrants, come to rest, say they live in a house or something. What has happened is the federal government has essentially decided not to enforce any of the stuff on the border at all.

And you've seen as many pictures as I have, of people crossing in huge numbers. There probably been, what, 3 million people entering the United States illegally in the last two or so years. The Biden administration has done nothing whatsoever to stop it. It has rejected the very sensible situation of trying to detain people in Mexico where you can figure out their status without letting them go in the United States.

It's also clear that they let people into this country. We don't know whether they are infected in one kind of way, and there's always a concern about AIDS or other diseases. We don't know whether they can get employment, that's another kind of serious problem. We don't know whether the new form of immigration is gonna have higher rates of crime than we did in the earlier years, where in fact, it was much more regulated and the crime risk was basically negligible.

People just did not commit crimes if they could be expelled. And then we don't even record who these people turn out to be. So what Abbott's position is, you failed in your duties. You have now made my duties much more difficult than they otherwise would have been. You have not contributed a single penny to what we're trying to do.

So what we're gonna do is we're gonna take over the project because you defaulted. I have never seen a case where that issue has, in fact, been raised. You could try to deny it on the facts, but that's pretty hard. The Biden administration has let a lot of this stuff go through, and they have a political motivation.

They see future Democrats votes coming across these borders, and they already talk about giving illegal aliens rights to vote in state elections. So, I mean, you can see what the problem is, and I think, in effect, what it is. It's one of these wedge blue red issues of the worst sort.

I think legally, the stronger case lies with the federal government. But practically, it's clear that the governor will have an enormous amount of sympathy. And what that does is it leads to the following very unhappy situation for the Supreme Court. They could break from earlier precedent and decide, yes, the governor can go in here because the federal government is in default of its obligation.

And if they default their obligations, we have to be able to pick up the slack, or they can say, no, that's just too much. It's for the government to decide what is and is not a default. So we're gonna slap down the state of Texas in this thing, and then the crisis continues unabated and what happens is you see a real problem.

What's so strange about the Biden administration is it seems to me, correct me if I'm wrong, Tom, but when it comes to the polling, the Biden administration does worst of all on the immigration issues. I'm told there's even an immigration issue on the north border having to do with people coming across the border in drug-related offenses, and very little things are being done on either front.

So I think, in effect, it's quite likely that Biden could lose this election or come close to losing this election on the immigration issue. So to me, what I would urge everybody to do is to sit down, have a good heart to heart, and work this thing out.

But it won't happen so long as the Biden people implicitly regard net immigration of illegal aliens into the United States as a social positive. So it's not a happy situation, and I sympathize with the governor on what he's about to lose as my best guess.

>> Tom Church: You've been listening to the Libertarian Podcast with Richard Epstein.

As always, you can learn more if you head over to Richard's column, The Libertarian, which we publish on definingideas@hoover.org. If you found this conversation thought provoking, please share it with your friends and rate this show on Apple Podcast or wherever you're tuning in. For Richard Epstein, I'm Tom Church, we'll talk to you next time.

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