Supreme Court May Curb Government Power in New Term, Panel Hears

Former Department of Justice official and current UC Berkeley professor John Yoo is seen in Washington, DC, on June 26, 2008. Melissa Golden/Getty Images

The Supreme Court may spend much of its upcoming term, which begins next week, scaling back the power of the government, panelists said at a think tank chat on Sept. 28.

Along the way, the nation’s highest court may get pulled into the various criminal prosecutions of former President Donald Trump and may also have to rule on whether he is eligible to seek a new term of office despite the controversial allegation that he participated in an insurrection against the government.

The panel discussion was hosted by the American Enterprise Institute (AEI), a conservative think tank, and the C. Boyden Gray Center for the Study of the Administrative State at Antonin Scalia Law School, which is located at George Mason University.

Panelists spoke about cases the Supreme Court has agreed to hear in the upcoming term, which begins with oral arguments on Oct. 2, and about cases that may yet find their way to the court in the coming months.

Much of the approaching term will be devoted to administrative law, panelists said.

AEI senior fellow Adam J. White said, “It’s hard not to look at the court’s modern docket and be struck by how administrative law-heavy the court’s docket is going forward.”

Jennifer Mascott, an assistant law professor at Antonin Scalia Law School, said the Supreme Court is “just starting to really re-examine ... whether there needs to be sort of a correction or re-evaluation of the court’s proper role.”

Some of the cases that will be argued this term are “really about the breadth of power being exercised at the federal level, across the board, and in particular, with administrative agencies in the executive branch that I think is teeing up some of these big cases and these big challenges.”

Regulatory Power

One of the major cases is Loper Bright Enterprises v. Raimondo (court file 22-451).

The case challenges “Chevron deference,” a legal doctrine that critics say has empowered bureaucracy and distorted the U.S. system of government for decades at the expense of everyday citizens.

The doctrine, which arose out of Chevron v. NRDC (1984), holds that an executive agency’s interpretation of a statute is entitled to deference—meaning that a federal court yields to the agency’s interpretation—unless Congress has explicitly said otherwise.

Conservatives and Republican policymakers have long been critical of the doctrine, saying it gives unelected regulators far too much power to make policy by going beyond what Congress intended when it approved various laws. The authority of regulatory agencies has been increasingly questioned in recent years as the conservative majority on the Supreme Court has grown. Conservative Justices Clarence Thomas, Samuel Alito, and Neil Gorsuch have expressed skepticism of the Chevron doctrine.

The appeal itself concerns a federal rule that requires the owners of fishing vessels, which tend to be small, to pay for having federal observers onboard to oversee operations and ensure compliance with a litany of federal regulations.

Administrative State

The court’s eventual ruling in the case could alter the current balance of power among Congress, executive agencies, and the nation’s judiciary, by tearing away at the legal underpinnings of the modern administrative state, which critics deride as an illegitimate fourth branch of government.

The Supreme Court “wants to revisit this doctrine, which is important because it’s essentially the courts saying that they’re going to defer to agencies when they interpret the scope of their statutory authority, even on legal questions,” said Ms. Mascott.

“The reason why some folks find this interesting for the court to evaluate is because sometimes it seems on the surface to play into some of the political cynicism … people have about the court because … it was thought to be Republican-friendly or an executive-friendly doctrine.”

“But over the years as agencies have engaged in the exercise of more and more authority, it has become a doctrine that a lot of times … conservative jurists potentially are willing for the court to reconsider, because it seems as though the court … arguably is abdicating its role to review and closely interpret statutes and instead giving a lot of power to agencies that folks are uncomfortable with these days,” she said.

Mr. White of AEI said the importance of administrative law has been growing.

“The moment I realized administrative law was going to be a huge deal on the Supreme Court years ago was when I realized the word ‘Chevron deference’ was popping up in conversations with non-lawyers. And usually, it’s the kind of thing that only law students and lawyers and government agencies are talking about,” he said.

The petition in Loper Bright Enterprises v. Raimondo was granted on May 1. Oral arguments have not yet been scheduled.

Financial Rulings

Mr. White suggested it was far from clear how the Supreme Court would handle Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America Ltd. (court file 22-448). The case will be heard on Oct. 3.

It is the second challenge in three years to the constitutionality of the CFPB. This new appeal challenges the means by which the CFPB is funded; the previous case dealt with the structure of the bureau.

The federal agency, which regulates consumer financial products such as credit cards, mortgages, and car loans, was the brainchild of left-wing U.S. Sen. Elizabeth Warren (D-Mass.). Democrats fiercely defend the CFPB, formed in the wake of the 2008 financial crash, saying it serves a useful function as a check on corporate power.

Republicans accuse the agency of overreach. The CFPB was targeted by the Trump administration, which challenged its constitutionality.

The Supreme Court issued a ruling in Seila Law LLC v. CFPB (2020) altering the bureau’s structure but upholding its constitutionality.

The court found the structure of the regulator was unconstitutional, because its director, who must be confirmed by the U.S. Senate, couldn’t be fired by the president at will; the agency was therefore insulated from political accountability. The court held that the agency could continue to exist under new rules that allowed the president to fire the director at will.

Funding Mechanisms

The CFPB’s unusual funding mechanism was created to keep the agency independent. Although it may seek funding from Congress, the agency is excluded from the normal congressional appropriations process, and, instead, receives most of the money it needs to operate from the Federal Reserve System, which collects fees from member banks.

In the case, the U.S. Court of Appeals for the 5th Circuit struck down the funding mechanism, finding that it violates the U.S. Constitution’s Appropriations Clause, which states, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

The clause “ensures Congress’s exclusive power over the federal purse,” which is needed to make sure that other branches of government don’t exceed their authority, the appeals court stated.

“Wherever the line between a constitutionally and unconstitutionally funded agency may be, this unprecedented arrangement crosses it,” the 5th Circuit stated.

“There isn’t really any precedent on this issue,” Mr. White said.

“There [are] precedents about agencies being funded partly by user fees,” but that isn’t the situation here, he added.

Implications for Trump

Mr. White said the Supreme Court may at some point in the next year be drawn into President Trump’s legal troubles.

President Trump is facing federal prosecutions in Florida and the District of Columbia, and state prosecutions in New York and Georgia from which appeals may arise. At the same time, legal efforts are underway to try to disqualify him under Section 3 of the 14th Amendment, which was enacted in the wake of the Civil War to keep former Confederates out of Congress.

This supposed insurrection culminated in the Jan. 6, 2021, security breach at the U.S. Capitol in which Trump supporters delayed the congressional certification of the 2020 presidential election results for several hours. Democrats and some Republicans characterize the disturbance, from which some elected officials took cover, as an insurrection or coup attempt aimed at overthrowing the U.S. government, a claim that has been adamantly denied by President Trump.

“I think it’s impossible not to be watching the 14th Amendment issue around the presidential election,” Mr. White said.

The Supreme Court is going to be feeling a great deal of pressure to take up the disqualification issue before the presidential election, he said.

“I think if the court actually gets that case, it’s going to be a political fiasco around the court. The court will do the best job it can, but … it’s going to be chaos.”

The panel’s moderator, attorney John Yoo, a nonresident senior fellow at AEI, said Moore v. United States (court file 22-800), is a “sleeper” case worth watching.

Wealth Tax

The plaintiffs in the case, Charles and Kathleen Moore, a married Washington state couple, are challenging a wealth tax that was levied on capital gains they never received.

The mandatory repatriation tax, also known as the Section 965 transition tax, was part of the Tax Cuts and Jobs Act passed by the Republican-controlled Congress in 2017 and signed into law by President Donald Trump later that year.

The provision taxes U.S. citizens on certain accumulated foreign earnings of foreign corporations going back 30 years, even if the earnings haven’t been distributed.

Outside the judiciary, various proposals to tax wealth are being discussed, Mr. Yoo said.

“This is of great importance now because trillions of dollars are at stake if the federal government or Congress could somehow use the income tax to tax wealth.”

“The courts never really explained what’s income and what’s wealth,” he said.

The petition was granted on June 26 but oral arguments have not yet been scheduled.

Free Speech

Mr. White also said he expects the Supreme Court will grant the petition in Speech First Inc. v. Sands (court file 23-156) and agree to hear the case, which comes out of Virginia Tech.

The case is about whether university bias response teams, officially constituted bodies that seek out, track, and investigate reports of bias and threaten to refer students for formal discipline, chill students’ speech, and therefore violate the First Amendment.

When it filed its petition with the Supreme Court in August, Speech First, a nonprofit group, described bias response teams as “procedures or committees at colleges and universities that encourage students to anonymously report their peers for alleged utterances or actions that might fall under an overly broad or vague definition of ‘bias.’”

Bias response teams “actively chill student speech through fear and intimidation of being reported anytime and anywhere,“ the petition said. ”They normalize the weaponization of administrative policies to go after peers who express opposing ideas and create a campus climate of self-censorship.”

“There’s been a number of circuit cases on this issue regarding public universities,” Mr. White said.