Chevron Deference Is a Case of Too Much Judicial Restraint

By David B. Rivkin, Jr., and Andrew M. Grossman

16 January 2024 in the Wall Street Journal

Conservatives often criticize liberal jurists for “judicial activism”—disregarding laws passed by elected legislators and imposing their own policy preferences instead. On Wednesday the Supreme Court will consider whether to overturn a precedent that went too far in the other direction by surrendering the judicial role of interpreting the law and handing it to unelected bureaucrats and agency heads.

Loper Bright Enterprises v. Raimondo is a case about fishing regulation. The National Marine Fisheries Service issued a rule requiring the plaintiffs to pay the costs of carrying federal conservation monitors aboard their vessels. The fishermen argued that the service had no legal authority to do so, but the high court’s precedent in Chevron v. NRDC (1984) obligated the U.S. Circuit Court of Appeals for the District of Columbia to defer to the government’s interpretation of an “ambiguous” statute.

Chevron was an “accidental landmark,” as legal scholar Thomas Merrill put it in 2014. At issue in the case was a Clean Air Act regulation interpreting the term “stationary source” to refer to an entire facility rather than a single smokestack. This definition enabled facilities to make changes that didn’t increase their total pollution without triggering onerous permitting requirements for “new or modified” sources. The justices upheld the regulation, deferring to the agency’s interpretation of “ambiguous” text.

For as long as they’d had the power to do so, federal courts interpreted statutes for themselves where necessary to decide a case, including in cases challenging agencies’ positions on the laws they administer. Chevron superseded that approach with a blanket rule of deference.

It’s unclear if the high court intended this fundamental change. Chevron’s author, Justice John Paul Stevens, regarded the decision as ordinary pragmatism: “When I am so confused, I go with the agency,” he told his colleagues as they discussed the case in conference.

By all indications, Chevron’s reasoning was driven by the need to assemble a court majority on a difficult interpretive question. That explains the decision’s failure to grapple with the obvious consequences of its logic. The Constitution vests the “judicial power” in the courts. “It is emphatically the province and duty of the judicial department to say what the law is,” as Chief Justice John Marshall wrote in Marbury v. Madison (1803). Chevron bucked that constitutional command without acknowledging that it did so.

Chevron deference also conflicts with the Administrative Procedure Act of 1946, which provides that a “reviewing court shall decide all relevant questions of law” and “interpret constitutional and statutory provisions.” Chevron doesn’t cite the APA.

While few appreciated Chevron’s import when it was handed down, its potential was apparent to the Justice Department. The Reagan administration seized on the decision as a corrective to the judicial activism of lower courts, especially the D.C. Circuit, in blocking its deregulatory agenda. The Chevron doctrine bulldozed the policy-driven obstacles courts had thrown up to block regulatory reforms. It gained adherents among newly appointed textualist judges like Antonin Scalia and Kenneth Starr on the D.C. Circuit, who favored judicial restraint.

But over the years Chevron became less about judicial restraint and more about agency dominance. With the movement toward textualism, led by Justices Scalia and Clarence Thomas, courts gradually returned to constrained formalism in interpreting statutes. Armed with the Chevron doctrine, however, the administrative state learned to wield its new interpretive power to maximum effect.

Deference might have been relatively harmless if agencies engaged in a good-faith effort to carry out unclear statutes. But beginning in the Clinton administration, Chevron changed the way they go about their business. Instead of asking what Congress meant, agency lawyers and decision makers hunt for ambiguities, real or imagined, to justify their policy objectives.

As agencies relied more on Chevron to pursue policy agendas, judges were forced to confront a greater range of asserted “ambiguities” with no standard to distinguish among them. Judicial review is the essential check on executive overreach, yet Chevron put a brick on the scale by committing the courts to favor the government’s positions. It is all too easy for courts, when faced with difficult or contentious interpretive questions, to waive the ambiguity flag and defer.

By aggrandizing the power of unelected bureaucrats, the Chevron doctrine also diminishes Congress. Witness the unseemly but now-routine spectacle of lawmakers hectoring the president and agencies to enact policy programs—from student-loan forgiveness to the expansion of antitrust law and greenhouse gas-regulation—rather than legislating themselves. The prospect of achieving an uncompromised policy win through executive action has replaced the give-and-take of the legislative process.

But the victories achieved in this fashion are only as durable as the current administration, and each new president takes office with a longer list of “day one” executive actions to reverse his predecessor and implement his own agenda. Donald Trump raised hackles last month when he said he would be a “dictator,” but only on “day one.” He was describing the post-Chevron presidency.

The principal argument of Chevron’s defenders is “reliance.” Ending deference to agencies, they say, would create regulatory uncertainty and threaten the viability of the administrative state. But what reliance interest can there be in a doctrine that empowers agencies to change course on a political whim, over and again?

The Supreme Court has already been moving away from Chevron deference, which it hasn’t applied since 2016. The Covid pandemic heightened the need for agency flexibility, yet none of the justices’ pandemic-policy decisions resorted to deference. In recent years, 13 states have rejected Chevron-style deference in interpreting state law without consequence.

Chevron’s rule of deference is an abdication of judicial duty, not an exercise in judicial restraint. It has proved unworkable and corrosive to the constitutional separation of powers. Forty years later, the court should correct its mistake.

Mr. Rivkin served at the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations. Mr. Grossman is a senior legal fellow at the Buckeye Institute and an adjunct scholar at the Cato Institute. He filed a friend-of-the-court brief in support of the petitioners in Loper Bright. Both authors practice appellate and constitutional law in Washington.

Source: https://www.wsj.com/articles/too-much-judicial-restraint-chevron-deference-supreme-court-unintended-effect-3c898c3b

Trial Lawyers Are Wrecking the Bankruptcy System

By David B. Rivkin, Jr., And Laurence A. Friedman

January 4, 2024, in the Wall Street Journal

Mass tort exposure has created an epidemic of bankruptcies, affecting organizations from Johnson & Johnson (talcum powder) to the Boy Scouts (sexual abuse). The way this process has unfolded is causing the federal bankruptcy system to come apart, harming the plaintiffs and bankrupt entities alike. Nobody benefits but the plaintiff lawyers.

Trial lawyers have found an opportunity to exploit the traditional bankruptcy claims process through the use of well-honed mass tort shakedown strategies. The scheme is simple but damaging. Plaintiff lawyers invest in a flurry of marketing through social media, TV and radio ads, often using professional “lead generation” companies, to identify the maximum number of potential tort claimants.

These claims can’t be fully verified, challenged or adjudicated within the framework of bankruptcy proceedings. Their proliferation siphons off tremendous resources from companies that are already in financial distress, compromising their ability to emerge from bankruptcy and short-changing established creditors, including earlier plaintiffs. As a lawyer for one of the Boy Scouts’ insurers told the press in 2021: “Allowing invalid and fraudulent claims will hurt valid survivors of sexual abuse by delaying and diluting any compensation they would receive.”

The bankruptcy reorganization process involves restructuring a company in a manner that maximizes its value, then distributes that value efficiently to creditors (including employees, bondholders and vendors) through a court-approved plan, thus staving off liquidation. This is possible because creditors and other stakeholders have predictable expectations of how the bankruptcy will proceed and their claims will be treated.

Creditors often must accept less than their original claims. But the process keeps the organization running, protecting jobs by putting its business operations on a sound financial footing again. Sometimes creditors are assigned ownership in a reorganized company, giving them a stake in a reasonably prompt and efficient resolution of bankruptcy.

But when the trial lawyers bring their “claims” to the table, all bets are off. Insurance companies, creditors, the bankrupt entity and sometimes its principals are forced back to the drawing board. The trial lawyers then typically offer an “easy” solution: create a separate bucket of cash to be held in trust as the sole source for resolution of the mass tort claims (including lawyer fees). Since the voting power in the reorganization plan approval process is driven by the aggregate amount of each creditor’s claims, claim proliferation gives disproportionate powers to the plaintiff tort lawyers.

The Boy Scouts of America bankruptcy in Delaware is a perfect example. At the time of the initial bankruptcy filings in 2020, the number of actual lawsuits filed by abuse claimants was less than 300 and expected to grow to about 2,000. Then the mass-tort lawyers brought more than 80,000 new, unadjudicated sexual-abuse claims into the case. If the judge allows final plan approval taking into account these new claims, the result will dilute the funds available to the original victims whose suits were the impetus for the bankruptcy filing in the first place. Their expected payouts could be reduced from $1.2 million to $30,000 a claim.

In the Johnson & Johnson bankruptcy case, the first set of trial lawyers objected to the original reorganization plan and extracted an agreement to increase the pot of settlement money from $4 billion to more than $9 billion. Then a different set of mass tort lawyers objected to this second attempt to resolve the claims. Result: chaos, with the second bankruptcy now on appeal, the company contemplating a third, nothing conclusively resolved, and potential for ever more filings going forward.

The mass-tort lawyers use sophisticated lead-generation algorithms to capture potential claimants by promising lottery-size payouts. A sampling of solicitations on the web for those wondering if they may have a claim against Johnson & Johnson is instructive. Preliminary questions suggest that if you have been diagnosed with cancer, you may have a claim—even if you didn’t use the product but someone in your home did.

Another site suggests that the average judgment in a talc-related claim is $4.4 million. Yet simple math tells us that if the $9 billion proposed settlement is divided by the number of current claims—60,000—the average payout is more like $150,000. Legal and administrative fees can eat up 40% of that. The Federal Trade Commission would ordinarily bring enforcement cases against businesses putting out such misleading advertisements.

Congress could come up with systemic solutions to the claims-proliferation problem, but that seems unlikely given political gridlock and trial lawyers’ clout. The Judicial Conference of the U.S., which prescribes the official rules and forms governing bankruptcy practice and procedure, is a more viable avenue for reform.

The Judicial Conference could quickly change the claim forms to require greater upfront disclosures—including requiring submission of a specific diagnosis linking the claim to the alleged tort, as well as disclosure of any relationship between the doctor giving the diagnosis and the lawyers—and heightened certification requirements for lawyers and others who help file claims on behalf of tort claimants. Bankruptcy judges could appoint claims examiners in cases where large numbers of claims are brought into the proceedings to review how claims were generated and to advise judges on their findings, prior to those claims being allowed. And those judges need to be looking more closely at how lawyers are shaping the proceedings, serving as a cop on the beat in these cases.

Without such a new approach, the corporate bankruptcy system will continue to deteriorate, at the expense of troubled companies, their creditors and plaintiffs alike.

Mr. Rivkin practices appellate and constitutional law in Washington. He served at the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations. Mr. Friedman is managing member of Friedman Partners LLC. He was director of the Executive Office for U.S. Trustees, 2002-05, and a Chapter 7 bankruptcy trustee.

Source: https://www.wsj.com/articles/trial-lawyers-are-wrecking-the-bankruptcy-system-johnson-and-johnson-boy-scouts-9f371ca2

Why the Electoral Count Act is unconstitutional

By Mike Luttig and David B. Rivkin, Jr.

March 6, 2022, in the Wall Street Journal

Regarding Thomas Berry’s letter “The Electoral Count Act’s Constitutional Role” (Letters, March 1): The ECA in its present form gives Congress essentially unfettered authority to invalidate state-certified slates of presidential electors. This is profoundly unconstitutional.

As we pointed out in our op-ed “Congress Sowed the Seeds of Jan. 6 in 1887” (March 19, 2021), the Framers, after much debate, determined to give Congress no substantive authority to select the president and vice president, except in the rare instance in which no candidate gains an Electoral College majority. The Constitution’s Electors Clause gives state legislatures plenary authority in choosing how to select electors. It allows Congress to determine only the day on which the Electoral College casts its votes.

The Framers’ choice reflected separation-of-powers considerations—if Congress could select the president, this would make the executive branch a subordinate, and not a coequal, branch. This would greatly augment the power of the federal legislature, which the Framers were determined to limit. Moreover, disputes over the selection of presidential electors involve a legal, not a political, discernment, that is appropriate for a judicial body. Congress is not a court.

To the extent that disputes about presidential electors arise, they can be resolved by courts. When state legislatures determine the manner of selecting electors, they exercise power granted to them by the U.S. Constitution, making these determinations a unique species of federal law. Hence, any disputes about specific selection of presidential electors involve the application of federal law. Since the power to determine what federal law requires rests with the judiciary, the federal courts have the primary responsibility to resolve these disputes.

To facilitate timely resolution, Congress should enact a statute providing for an expeditious judicial handling of any presidential elector-related challenges, with the Supreme Court as ultimate decision maker. The only power that Congress legitimately possesses here is a purely ministerial authority to receive the letters featuring certified state electoral results, have them opened by the vice president and counted in the presence of both houses. Congress should amend the Electoral Count Act to reflect this constitutional reality. Holding itself out as able to overturn the people’s will and choose the president will add to political polarization and inspire future violence, putting Congress itself at risk.

Mr. Luttig served as a judge on the Fourth U.S. Circuit Court of Appeals (1991-2006). He advised Vice President Mike Pence on the 2020 vote certification. Mr. Rivkin served at the Justice Department and White House Counsel’s Office in the Reagan and George H.W. Bush administrations.

Source: https://www.wsj.com/amp/articles/congress-electoral-count-act-2020-overturn-elector-constitution-11646426616