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Why you should care about a Supreme Court decision on the “administrative state”

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The U.S. Supreme Court is seen behind trees.

The court might rule this week on a case involving the Environmental Protection Agency that’s part on an ongoing legal debate about the powers of the executive branch. Brandon Bell/Getty Images

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The Supreme Court is scheduled to release a batch of opinions this week that could have broad implications for the U.S. economy. Though West Virginia v. Environmental Protection Agency has not received quite as much attention as other highly anticipated opinions, such as those on abortion rights and gun regulation, it’s part of an ongoing legal debate about how the federal government is run.

Blake Emerson, an administrative law professor at the University of California at Los Angeles School of Law, spoke with “Marketplace” host Kai Ryssdal about a movement to limit the power of the so-called administrative state. The following is an edited transcript of their conversation.

Kai Ryssdal: OK, so roll with me on this one. When you go to a dinner party or maybe the kids’ soccer game, and somebody you don’t know comes up to you and you have a conversation about what do you do, and you say, “I’m an administrative law professor.” As their eyes glaze over, what do you tell them?

Blake Emerson: So, I tell them that I teach the law of how government works. Administrative law is the law about how the regulatory agencies who carry out the laws and policies of democratically elected officials do their job.

Ryssdal: I’m going to — don’t take offense — I’m going to say that sounds boring. But let me ask you this: Am I going too far if I say the administrative state is the way the American economy is run?

Emerson: I don’t think so. Certainly, you know, property and contract law play a major role in how people come to accumulate capital and how to distribute resources, but all of that law is governed from above by government agencies who make decisions about what sorts of conduct is fair and efficient. And that structure — which includes, like, the Federal Reserve, the Securities and Exchange Commission, the Federal Trade Commission — all of those agencies play a huge structural role in deciding what’s fair game and what isn’t.

Ryssdal: OK. So to the point of why we are having this conversation. I mentioned a couple of Supreme Court cases up in the introduction. I definitely do not want to get down into the weeds of those, but generally speaking, what is happening in the Supreme Court’s view of the administrative state?

Emerson: So, the Supreme Court, which has moved far to the right with three new appointments by President [Donald] Trump, is taking a really sharp look at the administrative state and the rules that have governed it for a long time. Right now, we have a case before the court, West Virginia v. the Environmental Protection Agency, that’s really about the EPA’s authority to address climate change. And essentially, the court is very skeptical that Congress should be able to give administrative bodies like the Environmental Protection Agency authority to make big policy decisions — to decide, “OK, do we want to regulate just specific power plants? Or do we want to regulate the entire electric grid?” And the court thinks that those decisions constitutionally have to be made by Congress because that’s where the Constitution placed that power. And that is a fairly revolutionary doctrine. It’s dredging up some old demons that were first used back in the early New Deal to try to stop the New Deal and that since then have been considered long dead. But the Supreme Court is keen to revive them in an effort to constrain the powers of the federal government to regulate private businesses.

Ryssdal: Which is, that last little bit that you said is in keeping with generally conservative principles, right? Keep government out of, out of private markets.

Emerson: Exactly. So, to simplify, I think it’s fair to say that on the right side of the spectrum, there is a preference for private forms of market ordering where “the market” makes decisions about what to do. Whereas, on the progressive end of the spectrum, there’s more sympathy for making collective choices about how we think the market ought to function. And if you’re thinking about something like climate change, it’s not clear that the market can make the wisest choices because people don’t really realize how much it costs society to put something that raises the temperature of the atmosphere into the air.

Ryssdal: Here’s the thing, though, just in terms of letting Congress make those decisions, right? The Congress of the United States, certainly today cannot agree, No. 1, on what day it is. They function with blinding hesitation and slowness. And they lack expertise in very specific subject areas of some of those agencies that you mentioned. So does it work? Would it work to have Congress making those decisions?

Emerson: Exactly. Well, that’s one of the arguments that’s long been made in favor of giving power to these administrative agencies, is that on the most basic level, Congress just doesn’t have the time. I mean, think about all of the different areas that Congress has to worry about. Issues like, everything from gun safety to trying to deal with the COVID-19 pandemics. Got a huge national and international agenda. And they also don’t have the expertise to make really fine-grained decisions about what is the best way to prevent fraud in the securities market or what is the best way to reduce the impact of climate change. Those sorts of decisions are supertechnical and complex, and they change a lot over time.

Ryssdal: Is it, is it true to say that the way the administrative state was set up, and you know, it wasn’t done all at once, but generally speaking, these agencies are run by people who align with the political goals of the president who appointed them, right? I mean, there’s an innate politicization of the administrative state.

Emerson: Absolutely. So that, yes, the president generally chooses the people who are in charge of these agencies. And so you do get big shifts in policy, from, say, a Democratic president to a Republican one. Now, there are some caveats to that. So an agency like the Securities and Exchange Commission is supposed to be independent, which means that the president can’t just fire people who are in charge of that agency. Now, another part of the conservative legal movement’s constitutional agenda has been to get rid of the protections on agencies’ independence. And that’s another factor that’s converging right now to squeeze out the federal government’s capacity to make sound regulatory decisions that aren’t somehow balanced by concerns of professionalism and public input.

Ryssdal: Given the makeup of the Supreme Court and Congress’ tendency toward inaction, what do you expect happens now with the administrative state in this economy?

Emerson: So I expect, you know — it’s always hazardous to wage a prediction — but I expect going forward that agencies are going to behave more cautiously in order to avoid getting reversed by the courts. And so that means that agencies might think twice about taking really aggressive actions to enforce fair and efficient markets, to protect consumers against dangerous products, to protect the environment, in order to preserve what they can of their regulatory authority. And so, we’re looking at a landscape that is going to be more governed by powerful actors in the market than it is by collective democratic choices. And to me, that’s a worrying possibility.

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