03 July 2023

The Supreme Court v. the Administrative State

The Next Chapter in the Major Questions Saga

On Friday, June 30, the U.S. Supreme Court ended its session with a serious blow to the progressive agenda after its decisions striking down race-conscious college admissions and narrowing protections for LGBTQ consumers the day before.1) In its final case, Biden v. Nebraska2), the Court further thwarted the Biden campaign, which is counting on the help of young voters to get reelected for a second term,3) as it struck down the Biden administration’s plan to wipe out more than $400 billion in student debt. As expected by many, all three rulings were 6-to-3 decisions divided along partisan lines, with the Court’s six Republican appointees forming the majority.

Biden’s comprehensive student loan forgiveness program – on which public opinion is equally divided4) – would have completely forgiven the debts of 20 million borrowers and decreased the debt of an additional 23 million borrowers from $29,400 to $13,600.5) According to the Department of Education, the program would have covered 98.5% of all borrowers, and the  Congressional Budget Office estimated that the plan would have canceled about $430 billion in debt principal.6) However, after the Court’s decision, borrowers will have to face resuming payments on their entire student loan balances beginning in October.

The decision in Biden v. Nebraska joins a series of recent Supreme Court decisions aimed at curbing the executive branch’s power to regulate certain issues and to limit the so-called administrative state. In this battle against the administrative state, the major question doctrine, according to which it cannot be assumed that the administration has been authorized to regulate a “major question” with far-reaching economic and political consequences without “clear congressional authorization,” has become one of the central tools.

The case

Since March 2020, student borrowers had been granted a pause on their monthly payments by President Trump. Once President Biden assumed office, he offered further extensions until the summer of 2022. After the extensions expired, President Biden’s Secretary of Education proposed a new program according to which student borrowers with eligible federal student loans who had an income below $125,000 in either 2020 or 2021 qualified for a loan balance discharge of up to $10,000 while those who previously received Pell Grants (financial aid for low-income students) qualified for a discharge of up to $20,000. However, this program faced immediate legal challenges by six Republican-led States – Nebraska, Arkansas, Iowa, Kansas, Missouri, and South Carolina – resulting in its court-ordered suspension.

The Biden administration justified its program by invoking the Higher Education Relief Opportunities for Students Act (HEROES Act), a 2003 law enacted during the Iraq war, which allows the Secretary of Education to “waive or modify” rules pertaining to student loans during a “national emergency,” such as the pandemic, in order to prevent student borrowers from facing financial hardship as a result of the national circumstances. Six Supreme Court justices ultimately rejected this argument.

The Court’s decision

The central issue in the case was the extent of the Secretary of Education’s authority under the HEROES Act. Under the HEROES Act, the Secretary of Education can “waive or modify” existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act. The Department of Education argued that loan forgiveness was also encompassed by the terms “waive or modify,” at least when accounting for Congressional purpose. The Supreme Court disagreed 6-3. The majority wrote that even under general rules of statutory interpretation, it could not be assumed that the Secretary of Education was authorized to take such far-reaching action. According to the Court, statutory permission to “modify,” generally, “does not authorize basic and fundamental changes in the scheme designed by Congress.”7) Instead, that term carries “a connotation of increment or limitation” and must be read to mean “to change moderately or in minor fashion.”8) In the Court’s view, the Secretary of Education’s plan, covering almost all student borrowers (98.5%), was anything but minor. The Court was also not convinced that the Secretary of Education had waived statutory provisions since he was not able to “identify any provision that he is actually waiving.”9) To further support its finding, the Court cited West Virginia v. EPA and invoked the major questions doctrine: given the economic and political significance of the Secretary’s action, it could not be assumed “that Congress entrusted that task to an agency without a clear statement to that effect.”10) In other words, because of its far-reaching economic consequences, the measure would have required a “clear congressional authorization” for the Secretary of Education to take such an action. As this was not the case, the plan was declared unconstitutional.

The demise of the administrative state?

The decision in Biden v. Nebraska fits in seamlessly with the path the Supreme Court has charted in recent years, clarifying the scope of the major question doctrine. Last year, in West Virginia v. Environmental Protection Agency (EPA)11), the Court slashed the EPA’s power under the Clean Air Act to impose a nationwide cap on carbon dioxide emissions from the electricity sector, invoking for the first time the major questions doctrine. The Court stated that “[we] presume that Congress intends to make major policy for itself, not leave those decisions to agencies,” and therefore,  the Court is “reluctant to read into ambiguous statutory text” a delegation of broad powers without language indicating a “clear congressional authorization” for the power it claims.12) The words used in West Virginia v. EPA strongly implied that the major questions doctrine would serve as a “clear statement” rule aimed at enforcing Article I’s non-delegation principle, forcing Congress to provide clear indications of what agency actions are covered by the statute. However, it appears in Biden v. Nebraska that the Court stopped short of that. After using “classic” tools of statutory interpretation, the Court invoked the major questions doctrine as an additional argument to further reinforce its finding.13) In her concurring opinion, Justice Barrett even argued that the clarity required by the major questions doctrine might come from specific words in the statute or the context surrounding the enactment of the regulatory authority, suggesting the major questions doctrine could function like another tool of statutory interpretation.14) However, none of the other five conservative Justices joined her opinion.

Regardless of whether the major questions doctrine is to be understood as just another interpretatory tool or not, this is certainly not the last time we will hear about the major questions doctrine and the Court’s conservative majority striking down progressive executive branch regulations on this ground.15) The major questions doctrine is becoming – or has already become – an all-purpose weapon for the six conservative Justices on the Supreme Court to curb the administrative state’s power.16) And this strategy threatens a vital body of regulations in a country that delegates a wide range of regulatory powers to agencies, often in broad or utterly vague terms. Since the U.S. Congress has been paralyzed by partisan gridlock for years,17) agencies often have to step in to address new issues and enact regulations. As a result, large chunks of environmental or consumer protection laws, for example, have been issued by agencies rather than Congress.18) Libertarians and conservatives don’t like that.

The six conservative justices on the Supreme Court are well aware of the difficulties facing the U.S. Congress. It is, therefore, quite cynical to sell the major question doctrine as a primarily democratic instrument.19) In light of the U.S. political system and its current crisis, the major question doctrine is more a libertarian tool aimed at curtailing agencies’ regulatory powers than a democratic one. It is also too simplistic to view the current deadlock in the U.S. Congress and the accompanying lack of regulation as the constitutionally intended default option, as some sort of “American style democracy.” Admittedly, the U.S. constitutional framework is characterized by deep skepticism toward majority rule, and it was “the central judgment of the Framers of the Constitution that, within the American political scheme, the separation of governmental powers […] is essential to the preservation of liberty.”20) However, some developments that have led to the current legislative stalemate are not anchored in the constitutional text and are of more contemporary origin. Examples include the emergence of the two-party system, the radicalization of the Republican Party, polarized primaries, the filibuster, aggressive gerrymandering (especially by the Republican Party), money in politics, and lobbying. To say that the legislative gridlock is the constitutional ought-to-be condition is, therefore, not correct. At least, it’s not the whole truth.

In sum, things don’t look good for the administrative state in the U.S. The U.S. Congress is not expected to fix its problems, at least not in the short term, if the Democrats are not able or willing to abolish the filibuster in the U.S. Senate. And it is also highly unlikely that the Supreme Court will reconsider its jurisprudence on the major questions doctrine given the current power structure on the Supreme Court bench. On the contrary, we may soon additionally see the sharpening of the non-delegation doctrine alluded to in Gundy v. United States21), according to which Congress may, at most, authorize agencies to “fill up the details” of a regulatory action authorized by Congress.22) What this latest chapter in the major questions doctrine saga makes clear, regardless of how the Supreme Court justifies its use, is that the major questions doctrine is going to be the driving forces behind the Supreme Court’s curbing of the administrative state.

References

References
1 See Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U. S. ____ (2023); 303 Creative LLC v. Elenis, 600 U. S. ____ (2023).
2 Biden v. Nebraska, 600 U. S. ____ (2023).
3 See Winan von Petersdorff, Bidens geplatzter Stimmenkauf, FAZ (June 30, 2023), https://www.faz.net/aktuell/wirtschaft/nach-supreme-court-urteil-bidens-geplatzter-stimmenkauf-19003534.html, last accessed: July 1, 2023.
4 See Adam Liptak/Eli Murra, The Major Supreme Court Decisions in 2023, The New York Times (June 29, 2023) https://www.nytimes.com/interactive/2023/06/07/us/major-supreme-court-cases-2023.html, last accessed: July 1, 2023].
5 The Supreme Court blocks Joe Biden’s student-debt-relief plan, The Economist (June 30, 2023), https://www.economist.com/united-states/2023/06/30/the-supreme-court-blocks-joe-bidens-student-debt-relief-plan, last accessed: July 2, 2023.
6 David Shepardson/Eric Beech, Biden plan to cancel some U.S. student loan debt will cost $400 bln – CBO, Reuters (September 22, 2022), https://www.reuters.com/world/us/biden-plan-cancel-some-us-student-loan-debt-will-cost-400-bln-cbo-2022-09-26/, last accessed: July 1, 2023.
7 Biden v. Nebraska, 600 U.S. 1, 13 s. (2023).
8 Ibid.
9 Biden v. Nebraska, 600 U.S. 1, 15 (2023).
10 Biden v. Nebraska,