WASHINGTON (CN) — As the justices head back to One First Street for a brand new term in October, their gaze will be trained down Pennsylvania Avenue.
Next term, the Supreme Court justices will examine two cases targeted at the administrative state — a term that has come to define how the executive branch agencies create, adjudicate and enforce their own rules.
“For me, there's nothing more consequential to the ordinary citizen and to the body politic than the vibrancy of administrative health, safety and environmental agencies, and that's exactly what's at stake,” Lawrence Gostin, faculty director of the O’Neill Institute for National and Global Health Law and Georgetown Law, said in a phone call.
The two cases before the court concern how executive agencies are funded and what deference they deserve when carrying out their priorities. Both of these cases aim to limit the power of the executive.
“The administrative state symbolizes, I think, to conservatives and the Supreme Court’s conservative justices, a big government that is out of control, interfering with liberty and the lives of citizens, and, by using their lens, not justified by a constitutional design,” Gostin said.
In Consumer Financial Protection Bureau v. Community Financial Services Assn., the justices will decide whether it is constitutional for the Consumer Financial Protection Bureau to draw its funding through the Federal Reserve instead of congressional appropriations.
Created in the wake of the 2008 financial crisis, the bureau was designed to operate independently. With this goal in mind, Congress allocated a capped amount of annual dollars from the Federal Reserve System’s earnings each year to fund the agency.
Two associations of companies regulated by rules from the consumer protection agency sued to challenge the funding mechanism, claiming it violates the Appropriations Clause and the separation of powers. They argue that the agency's funding should be voted on by lawmakers as part of the appropriations process.
Legal experts warn a ruling against this funding mechanism could have wide-ranging consequences for the government but could also cause chaos in the financial and housing markets.
“This is a case that could have huge consequences, not only because of the incredibly important work that the CFPB does, but also because of its potential implications for other agencies that are funded outside of the annual appropriations process,” said Brianne Gorod, an attorney with the Constitutional Accountability Center, in a phone call.
If the agency's funding mechanism were found unconstitutional, its budget would have to be negotiated by lawmakers year after year. Congress is currently barreling the government toward a shutdown at the end of September amid stalemates over spending deal talks. This case is scheduled for argument on Oct. 3.
The justices' examination of government agency deference later this fall also carries high consequences for the nation. In Loper Bright Enterprises v. Raimondo, the high court will decide if a four-decade-old precedent has outlasted its use.
“Congress often delegates authority to expert agencies to determine how best to implement the laws that it passes, and the results of an adverse decision in this case could be to displace those expert judgments with the judgments of judges who are less well positioned to make those kinds of determinations,” Gorod said.
Since 1984, courts have relied on Chevron USA Inc. v. National Resources Defense Council Inc. to govern the operations of federal agencies. In Chevron, the court said agencies should have deference in interpreting their own regulations.
This deference led Chevron to become a target of those in the conservative legal movement opposed to “big government.”
Groups opposed to Chevron won a big victory in 2022 when the conservative majority ruled against the government in West Virginia v. EPA. The case recognized an exception to Chevron, that any “major” action from an agency should not be given deference and instead should have to come directly from Congress.
“The major questions doctrine puts an end to solving problems by our federal health, safety and environmental agencies, because by definition the major questions doctrine will apply anytime an agency wants to do anything big and important and consequential for the American public,” Gostin said. “That may be enough to signal the steady but certain erosion of federal powers, but I think there's a certain nail in the coffin if Chevron is weakened or overruled.”
It didn’t take long for the impact of the major questions doctrine to be felt. Only a year after West Virginia, the court ruled against the government in a challenge to Biden’s student loan forgiveness plan, finding the action by the education secretary was too big to go without lawmakers’ explicit approval.
Now, the high court will consider tossing Chevron altogether.
“For the court to come in now and say that courts don't defer to reasonable agency interpretations of ambiguous statutes would really affect a radical change in the way our system of government operates,” Gorod said.
The Supreme Court’s ruling on agency deference will alter the power dynamics balancing government operations. Checks and balances are supposed to make sure each branch of government holds the others to account. The executive branch losing its deference would shift its authority to one of the other branches.
“The conservative judicial narrative is that it re-centers power with Congress, but I think a much more realistic and accurate view is that it shifts power to the justices themselves to be the final arbiter of public policy,” Gostin said.
Without the sword or the purse, the Supreme Court relies on the public’s trust to enforce its rulings. Currently, public trust in the Supreme Court is at the lowest it has been in 50 years.
“The court is taking a blind step and has blind faith in the fact that no matter how naughty, no matter how much precedent it ignores, no matter how it usurps power to itself from federal agencies and Congress, that, ultimately, people will abide by its rulings,” Gostin said.
Some legal experts argued Alabama lawmakers proved the Supreme Court’s assumption wrong this summer when they adopted new congressional maps that appeared to violate the high court’s June ruling.
The power of the administrative state is just one issue the high court will be reviewing over the coming months. The court will also review the constitutionality of a wealth tax, decide if a bankruptcy settlement should shield those responsible for the opioid epidemic, and determine if the government can disarm domestic abusers.
The Supreme Court is set to begin its new term on Oct. 2.
Follow @KelseyReichmann
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