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The Tension between Agency Authority and the Constitution

Executive Summary

The Supreme Court has recently agreed to take up a case that questions the constitutionality of administrative agencies’ broad discretion in rulemaking authority.

The case, Loper Bright Enterprises v. Raimondo, challenges a rule created by the National Marine Fisheries Service (NMFS) that requires the fishing industry to pay the salaries of government observers monitoring its regulatory compliance. The bigger question is whether or not NMFS had the authority to make the rule in the first place.

This is just one of several cases on the SCOTUS docket that could redefine the authority of administrative agencies. At issue in this case is the Chevron deference doctrine, which holds that courts should defer to agencies’ interpretations of ambiguous laws. The constitutionality of Chevron deference is unclear because it arguably grants agencies power to make and interpret the law—authority that our constitutional system has assigned to Congress and the judiciary, respectively.

Separation of powers is a core tenet of the U.S. Constitution. The built-in “checks and balances” are intended to prevent one branch of government from exercising enough power to control all government action. However, through rulemaking and adjudication proceedings, executive agencies routinely exercise powers reserved for the legislative and judicial branches of government.

In this paper, Leslie Corbly, a policy analyst at the Libertas Institute, examines attempts by the Federal Trade Commission (FTC) to overextend its regulatory authority. She predicts the FTC will likely be one of the next agencies to face fundamental challenges to its authority at the Court.

The FTC’s overreach has been on recent display in rulemakings seeking to heavily regulate digital data and ban the use of noncompete agreements. As Corbly explains, such overbroad actions likely violate the separation of powers.

As part of her analysis, Corbly examines how the Supreme Court could shore up the separation of powers from administrative overreach’s erosive effect. She also reviews the FTC’s recent efforts to expand its regulatory authority, which have put it on a collision course with the Supreme Court. She notes revisiting Chevron deference could be one way that the Court responds to the FTC, but expects that another statutory interpretation doctrine—namely, the major questions doctrine—will be the main obstacle the FTC will face.

Her conclusion: Whether the Court revisits Chevron or simply applies the major questions doctrine, the very scope of power the FTC asserts, the lack of historical precedence for this level of authority, and the absence of a clear congressional mandate make it likely the agency will lose.

Full text of this paper is available here.

This working paper originally appeared in the Center for Growth & Opportunity