Dismantling the Administrative State

A remarkable movement is underway in the legal world, unlike any other during my lifetime. Growing skepticism regarding the conceptual underpinnings of the “administrative state”—the alphabet soup of powerful administrative agencies that dominate Beltway policymaking—portends imminent retrenchment of well-established understandings (and judicial precedents) that enabled the federal Leviathan. Doctrinal reversals of a significant nature are rare, particularly when they reflect conservative initiatives and overturn the foundations of Progressive governance. Yet we are on the verge of such a dramatic shift.

For half a century—dating to New Deal-era reliance on administrative agencies to “fix” the ostensibly broken machinery of democracy and free markets—it was assumed that “administrative law” is an essential feature of modern life. Specialized expertise by unelected bureaucrats was the “secret sauce” that would remedy the purportedly sclerotic—and old-fashioned—system of checks and balances contemplated by the Constitution. Justice Felix Frankfurter expressed the consensus view when he described administrative law as an essential form of “governmental supervision” that could not be effectively exercised through “self-executing legislation” or the judicial process. [1]

Indeed, there was widespread bipartisan consensus among both politicians and legal scholars that what we now call the administrative state was a good thing—or at least necessary and inevitable. Chevron v. NRDC, the 1984 Supreme Court decision establishing judicial deference to administrative agency interpretation of federal statutes, was the high-water mark of our infatuation with administrative law.

Stanford University law professor Michael McConnell has described Chevron as “a central pillar of the modern administrative state. It is a systemic thumb-on-the-scales in favor of the government’s view of the meaning of the statute, even if that view changes with political winds and even if it contradicts earlier judicial interpretation.” Chevron is important, McConnell explains, because:

In the modern administrative state, Congress delegates vast swathes of policy-making power to the regulatory agencies, and the courts no longer even attempt to ensure that the key policy choices are made by the legislative branch. The only practical limitation on excessive delegation is to construe delegations of power strictly, to ensure that the agencies exercise only the quantum of power Congress explicitly delegated to them. Chevron goes the opposite way: it green-lights agency assertions of power, even when it is fairly obvious from the context that Congress had no such intention, so long as the words of the statute can be reasonably stretched to accommodate them.

Notwithstanding this perverse dynamic, and the concomitant lack of political accountability on the part of administrative lawmakers, conventional wisdom initially treated Chevron as routine and non-controversial—a logical extension of the progressive totem of presumed “agency expertise.” Even Justice Antonin Scalia was a longtime Chevron enthusiast.

In recent decades, however, the tide of opinion has turned. Some Supreme Court justices (led by Clarence Thomas) have begun to question the reasoning—and even the validity—of once-settled administrative law precedents on originalist grounds. Instead of arguing over divisive issues such as “judicial engagement,” conservative and libertarian legal scholars have united to criticize Chevron and to point out that many features of modern administrative law contravene the separation of powers enshrined in the Constitution (not to mention the plain language of the 1946 Administrative Procedure Act).

An increasing tempo of anti-Chevron sentiment has become evident in lower federal court decisions (attracting the attention of President Trump’s judicial talent scouts), and a growing body of books, articles, and think tank commentary. Complementary themes such as taming the Imperial Presidency and reversing congressional abdication (such as Sen. Mike Lee’s Article I Project) give added momentum to the drive to curb the excessive powers currently being exercised by administrative agencies. Columbia University law professor Philip Hamburger’s 2014 book Is Administrative Law Lawful? was particularly influential.

A forthcoming addition to the burgeoning literature is Peter J. Wallison’s easily-digestible monograph Judicial Fortitude: The Last Chance to Rein in the Administrative State, due out on September 18. Wallison is a knowledgeable Washington, D.C. insider, having served as White House counsel to President Ronald Reagan and general counsel to the U.S. Treasury Department in the Reagan administration.  He now serves as co-director of the American Enterprise Institute’s program on financial policy studies. In Judicial Fortitude, Wallison trods a path previously explored by other scholars, but he manages to find some fresh insights. What makes Wallison’s book notable—and valuable—is that it is relatively brief (166 pages of text), well-written, and accessible to readers who are not administrative law nerds.

Wallison takes the originalist critique of the administrative state beyond merely questioning Chevron; he argues (in chapter 6) that the moribund “nondelegation doctrine” needs to be revived. This compelling analysis is the highlight of the book, a clear demonstration that resuscitating lost wisdom is just as important as trail-blazing scholarship. It is one thing to trim the sails of administrative agencies by making their interpretations (of both statutes and regulations) subject to meaningful judicial review. Article I of the Constitution expressly grants “all legislative powers” to the Congress. Therefore, the threshold question is whether it is constitutional for administrative agencies that are part of the executive branch to promulgate an extraordinary volume of regulations (numbering in the thousands each year) that represent major policy decisions and are the functional equivalent of legislation.

Last invoked by the Court in 1935 [2], the nondelegation doctrine enforced the Constitution’s separation of powers by preventing Congress from granting unlimited discretion to the executive branch to enact policy via regulation or orders. Open-ended authority to determine policy—the gravamen of legislation—is the exclusive province of Congress and cannot be “delegated” to the executive, administrative agencies, or (as in Schechter) private groups.  Not all administrative regulations run afoul of this doctrine. As Chief Justice John Marshall noted in 1825, [3] the critical distinction is whether the delegation involves “minor” or ministerial matters and whether Congress has provided sufficient direction regarding the policy to be implemented, leaving only “details” to be worked out by a subordinate agency.

The vice of the modern administrative state is that Congress often “punts” on the policy direction—proclaiming amorphous goals, such as achieving “clean air” or “clean water”—and then gives administrative agencies virtually unchecked authority to “fix” the problem. Agencies become de facto lawmakers, determining policy matters of national consequence. This allows Congress to take credit for any successes while denying responsibility for the inevitable failures, a corruption of the Constitution’s design. Political accountability requires that each branch stay within the role assigned to it by the Framers. The solution is for the judiciary (in particular the Supreme Court) to rein in the administrative state by limiting the degree to which Congress may delegate power to administrative agencies.

Wallison laments the decline of the nondelegation doctrine—unused for over 80 years but never formally abandoned—which has allowed Congress to cede “more and more authority to administrative agencies since the New Deal.” Even requiring Congress to specify a “great outline” of the policy decisions to be implemented by the agencies, as contemplated by Marshall in Wayman, would correct the major doctrinal error that occurred in 1928, when the Court adopted the “intelligible principle” test for impermissible delegations. [4]  (Justice Thomas has questioned the legitimacy of this test.) The deferential standard used by the Court since being bullied into submission by President Franklin D. Roosevelt in 1936 amounts to no constraint at all.

Wallison contends that the Court’s abandonment of the constitutional function intended by the Framers represents a lack of the judicial “fortitude” that Alexander Hamilton felt was necessary for courts to serve as “faithful guardians of the Constitution.” [5] The Court’s relinquishment of its proper role, Wallison argues, has empowered the administrative state and allowed Congress to cede an unwarranted amount of power to the executive branch.  Notwithstanding a general lack of scholarly enthusiasm for reviving the nondelegation doctrine, Wallison detects “stirrings” at the Supreme Court, counting Chief Justice Roberts and Justices Thomas and Alito as possibly supporting a return to pre-New Deal precedents.

This would not constitute “judicial activism” because preserving the structure of the Constitution is, as Marshall wrote in Marbury v. Madison, “emphatically the province and duty” of the judiciary. The Court’s failure to enforce the nondelegation doctrine constitutes abdication, not restraint.

With President Trump’s appointment of Justice Neil Gorsuch and the nomination of Judge Brett Kavanaugh, the Supreme Court may soon have the votes necessary to change directions. Judicial Fortitude boldly points the way.

[1] FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 142 (1940).

[2] Panama Refining Co. v. Ryan, 293 U.S. 388 (1935); and A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935).

[3] Wayman v. Southard, 23 U.S. 1 (1825).

[4] J.W. Hampton, Jr. & Co.  v. United States, 276 U.S. 394 (1928).

[5] Federalist 78.