Deregulation Run Riot

After winning control of Congress in November 1994, the Republican leadership, working closely with business lobbyists and policy groups, launched an ambitious effort to roll back a century of reform legislation—from the food and drug laws of the Progressive Era to the New Deal's Social Security Act to the workplace and environmental regulation of the first Nixon administration. Congressional Democrats blocked most of these efforts in the House and Senate, and the Clinton administration vetoed others, but conservatives have continued to press their agenda—in committee hearings, in mysterious riders attached to appropriations bills, and in the courts, some of which are still dominated by Reagan and Bush administration appointees.

One key battle has taken place in the U.S. Court of Appeals for the District of Columbia—the Court that handles most challenges to federal regulation. This May, a three-judge panel handed down a ruling that prevented the Environmental Protection Agency (EPA) from implementing clean air standards it had established two years ago. That would be significant in itself, but the Court's bizarre reasoning in this case, adapted from a conservative think tank, could be used to cripple virtually any regulatory agency—from the Occupational Safety and Health Administration (OSHA) to the Federal Communications Commission.

The EPA standards the Court overturned date from a July 1997 ruling. The agency, which is mandated by law to review its standards for protecting public health every five years, announced new, tighter regulations for the amount of ozone and small soot particles (particulate matter, or PM) that states could have in their atmosphere. Based on new scientific findings, the EPA predicted that the revised standards would result in 1.5 million fewer annual cases of significant breathing problems from ozone and 15,000 fewer deaths each year from particulate air pollution. Congress failed to exercise its authority to strike down the EPA's standards within 60 days, reflecting widespread public support for environmental protection. But the American Trucking Associations Inc., whose diesel trucks would be directly affected by the new standards, sued to overturn the standards and was soon joined in its effort by the cream of K Street, which had lobbied against the standards on behalf of automobile companies, steel producers, mining and oil companies, utility companies, and other affected industries.

The petitioners made the usual arguments against the EPA's ruling. They charged that the costs of compliance exceeded the benefits to public health, even though the Clean Air Act stipulates that the EPA can only consider what is "requisite to protect the public health." But they also introduced a novel argument that had been developed by the Cato Institute, a free market think tank funded by corporations that oppose government regulation. In testimony three years ago before the House Judiciary Committee, Jerry Taylor, Cato's director of natural resource studies, unveiled this new line of reasoning, which was based on work done for the think tank by New York University Law Professor David Schoenbrod.

Taylor argued that by granting the EPA authority to set specific rules about environmental standards Congress was violating Article I of the U.S. Constitution, which vests "all legislative powers" in the Congress itself. "Statutes that express goals, even specific ones, but leave it to the executive branch to generate the rules binding on private conduct, delegate the power to make law, and are thus illegitimate," Taylor said. As his authority, Taylor cited the Supreme Court's 1935 ruling in A.L.A. Schechter Poultry Corp. v. United States, in which the Court overturned the National Industrial Recovery Act partly on the grounds that Congress's delegation of power was far too sweeping. But in that particular case, the delegation of power was too sweeping and vague and even extended to purely private bodies such as trade associations that were mandated to set enforceable codes of conduct. Liberal Justice Benjamin Cardozo called it "delegation running riot." Since then, the Court has never blocked any regulatory rule or eliminated any agency or other executive institution on these grounds.

Nonetheless, lobbyists C. Boyden Gray and Alan Charles Raul used Cato's non-delegation argument before the Court of Appeals to argue that the EPA ruling should be overturned. Gray, the former counsel to President George Bush, represents a Utah steel company and heads the euphemistically named Air Quality Standards Coalition, the main anti-EPA lobbying group, which is made up of over 700 companies and is housed at the National Association of Manufacturers. Gray is also chairman of Citizens for a Sound Economy, a business-backed lobby that masquerades as a policy organization and that funded his brief.

The two corporate lobbyists began by arguing that the EPA had failed to prove scientifically that new standards were needed to protect public health. "No one knows whether [fine particulate matter] poses any kind of health hazard," they asserted. But since there are a host of scientists who would contest this ridiculous assertion, they introduced a stiffer test, based on the Cato argument, that the EPA had to pass. According to Gray and Raul, Congress had to provide "intelligible principles" for an agency to follow (a phrase borrowed from a 1928 Court ruling) and the agency had to "apply those intelligible principles to known scientific fact." If an agency acts without establishing "scientific fact," it is violating the delegation of powers by making policy and usurping the authority of Congress.

In most cases of government regulation, however, final decisions are not made entirely on the basis of "scientific fact," but on the basis of high statistical correlations. There is invariably some element of uncertainty. If certainty is demanded, then few regulations would stand, including those of the EPA. When Gray and Raul applied this criterion to the EPA's ruling on ozone and soot, the results were predictable. Since they could cite "uncertainty," for instance, about how small particles biologically caused or contributed to disease, Gray and Raul could conclude that by regulating "without sufficient warrant in scientific fact, the EPA had exceeded the scope of its Constitutional powers and usurped those of Congress." Of course, the federal government could set new standards for ozone and PM without establishing certainty, but Congress would have to set the standards itself rather than delegate the job to the EPA. By this reasoning, Congress would either have to shut down the regulatory agencies or assume their responsibilities.



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On May 14 of this year, the three-judge federal panel handed down its own ruling. The two Reagan appointees, Douglas H. Ginsburg and Stephen F. Williams, sided with the petitioners, while Clinton appointee David S. Tatel dissented. The two Reagan judges do not hide their political sympathies. Ginsburg sits on the board of directors of the Foundation for Research on Economics and the Environment, an organization funded by oil companies and conservative foundations to battle government regulation, and Williams has attended the foundation's expenses-paid conferences. The two judges held that the EPA had violated the delegation of powers, but they went beyond Gray and Raul and embraced the most extreme reasoning of Taylor and Cato, faulting not only the EPA, but the Clean Air Act itself. "Although the factors EPA uses in determining the degree of public health concern associated with different levels of ozone and PM are reasonable," they wrote, "EPA appears to have articulated no 'intelligible principles' to channel its application of these factors; nor is one apparent from the statute."

In his dissent, Tatel accused the two judges of ignoring "the last half century of Supreme Court, non-delegation jurisprudence." He pointed out that the "intelligible principle" contained in the Clean Air Act's delegation of authority to the EPA is far "narrower and more principled" than other delegations that the Supreme Court has already upheld. Specifically, the EPA must maintain quality standards "the attainment and maintenance of which in the judgment of the administrator, based on such criteria and allowing an adequate margin of safety, are requisite to protect the public health." By contract, the FCC is simply delegated to regulate broadcast licensing in the "public interest." Tatel also pointed out that the new standards the EPA adopted in 1997 were based on the findings of the Clean Air Scientific Advisory Committee (CASAC), an independent panel of scientists that the EPA director is obligated by the Clean Air Act to appoint.

The EPA has requested that the Justice Department appeal the ruling, but the Attorney General has yet to decide whether to ask for a decision from the full Appeals Court (which presently contains six Republicans and five Democrats) or appeal directly to the Supreme Court. It's likely that the panel's decision will eventually be overturned, but the fact that it was handed down at all demonstrates clearly that the conservative anti-regulatory movement endures, and even thrives. While this movement recently failed to convince the legal community that environment standards amount to a "takings" under the Fifth Amendment, it has in this case introduced a new argument about the delegation of powers that has won support at the next-to-highest court in the land. And even if Ginsburg and Williams's ruling is overturned, it will significantly delay the implementation of new standards, perhaps well into the next century. At the same time, the movement is attacking environmental protection and other kinds of regulation through tort reform and through limiting citizen "standing" to sue and enforce environmental laws. If a Republican were to win the presidency and if the Republicans were to maintain control of Congress in November 2000, then this anti-regulatory movement could wreak havoc at the EPA, OSHA, and other agencies.

The Appeals Court ruling also demonstrates the unwieldy and increasingly undemocratic structure of government regulation. The agencies created by the Progressives and the New Deal did not initially have to worry that each of their decisions would be subjected to judicial review. There were other obvious ways to contest an agency ruling. If conservatives didn't like the way that the National Labor Relations Board (NLRB) ruled, then they could try to amend the Wagner Act, cut funding for the NLRB, or pressure Roosevelt to replace its pro-labor commissioners. They could also try to replace Roosevelt himself—and other liberal Democrats—in elections. But business wanted additional protections from agency rulings so, in 1946, a Republican Congress passed the Administrative Procedure Act. Among other things, this act granted the right of judicial review to "any person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action." It turned the power over government agencies away from Congress and officials appointed by the elected president to judges appointed for life. And it shifted the battleground over government regulation away from popular elections to the lawyers and lobbyists of K Street. On this terrain, businesses, which have greater legal resources at their command, enjoyed an inherent advantage over their opponents in the environmental, consumer, and labor movements.

American Trucking Associations Inc. v. EPA bears out the growing absurdity of this process. Well before the EPA's decision arrived on the Court's docket, it had been subjected to numerous democratic checks. In the year leading up to the EPA's decision in July 1997, the various interested parties had made their case vigorously and publicly to the agency. The EPA had obtained the opinion of a disinterested body of scientists. And after the decision was made, Congress had 60 days to overturn it. But that was not enough. Affected businesses could still file suit to have the decision overturned. Its fate was then put in the hands of judges who were not democratically accountable and who enjoyed no particular expertise in environmental science or law. On the basis of bogus constitutional doctrines developed by right-wing think tanks, they evaluated the legal process by which the decision was made. They also reviewed the scientific evidence, ruling, for instance, that in assessing the dangers of ozone in the lower atmosphere, the EPA and its scientists had not given sufficient weight to its benefits in the upper atmosphere. Perhaps, scientists in two decades will decide the EPA and its scientists were wrong, but the question is, who is best qualified to make this decision now?

There are, of course, instances in which a court will want to determine whether an agency has acted fairly in carrying out a rule it has established—whether in the case of a company that claims that the law has been unfairly applied to it or in the case of a group of citizens who claim they are being endangered by the failure to enforce a law. But if the courts are going to review each new ruling by the EPA or FDA—not only on the basis of whether it accurately reflects the mandate of Congress (which this one certainly did), but also on the basis of whether its findings are correct, then we have eliminated the rationale for regulatory agencies. Instead of serving as governmental bodies mandated to carry out governmental decisions through the application of natural and social science, they have become staging grounds for lawsuits the resolution of which will depend upon the legal acumen and scientific expertise of judges like Williams and Ginsburg.



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