Kavanaugh Could Usher In Even More Business-Friendly Era on Supreme Court
Brett Kavanaugh, U.S. Supreme Court Judge (Photographer: Andrew Harrer/Bloomberg)

Kavanaugh Could Usher In Even More Business-Friendly Era on Supreme Court

(Bloomberg) -- Brett Kavanaugh could add a powerful new voice on the Supreme Court to restrain what government agencies can do, ushering in a new era of tougher scrutiny of federal regulations loathed by businesses.

In a dozen years on the U.S. appeals court that handles most challenges to rules issued by federal bureaucrats, the Supreme Court nominee’s record reveals views closely aligned with conservatives who seek to rein in agencies on issues from climate change to net neutrality and financial oversight.

“He has a reputation for keeping regulators under control and not allowing regulators to travel too far beyond the intent of Congress, if at all, and kind of putting limits on the administrative state,” said Senator Charles Grassley, an Iowa Republican who leads the Senate Judiciary Committee.

President Donald Trump nominated Kavanaugh, 53, a federal appellate judge, to succeed Justice Anthony Kennedy. While Kennedy has also shown an increasing willingness to restrain agencies, Kavanaugh could take an even harder line on a court that was often divided 5-4 with Kennedy serving as the swing vote. He is a staunch advocate of the separation of powers, ensuring that administrative agencies stay within their constitutional bounds.

“Agency overreach will be difficult to do and get by him,” said Brian Potts, who specializes in energy and environmental law for Perkins Coie.

If confirmed, Kavanaugh could be a critical vote on the Supreme Court as Trump seeks to repeal or ease an array of regulations promulgated under his predecessors. In cases in which former President Barack Obama’s agencies strained the bounds of legislative authority, a narrower view by the Trump administration could be bolstered by the court.

“He’s a fan of presidential power and not a fan of agency power,” said Lisa Heinzerling, a Georgetown University law professor. “He will be sympathetic to arguments that a big part of the administrative state as currently structured is unconstitutional.”

As a judge on the U.S. Court of Appeals for the District of Columbia Circuit, Kavanaugh has signaled his willingness to limit the so-called "Chevron doctrine." The Obama administration relied heavily on that 34-year-old principle, which gives federal agencies latitude to regulate when Congress has been ambiguous, using it to justify mandates on energy, the environment and the workplace.

Kavanaugh also could pose a threat to another legal doctrine known as "Auer deference," which holds that agencies are in the best position to interpret their own rules, said Christopher Walker, a law professor at Ohio State University. Under Auer, agencies’ interpretations of their own rules should stand unless they are “plainly erroneous or inconsistent with the regulation.”

Auer deference “is much more likely to go,” if Kavanaugh is confirmed, Walker said by phone. “I would be surprised if it’s not eliminated in the next year or two.”

Kavanaugh hasn’t gone quite as far as Trump’s first Supreme Court nominee, Justice Neil Gorsuch, in contemplating throwing out the entire Chevron doctrine. But last year, Kavanaugh said courts shouldn’t defer to agencies on “major” rules unless Congress has clearly granted that level of authority.

In that 2017 case involving the Federal Communications Commission’s net neutrality rule, which imposed limits on internet service providers, Kavanaugh noted that Congress debated the issue for years without passing a law -- and said the FCC didn’t have power to step into the gap.

“The net neutrality rule is unlawful because Congress has not clearly authorized the FCC to issue this major rule,” Kavanaugh wrote in a dissent at the time. The net neutrality rule survived court scrutiny, and it was gutted by a Republican-majority FCC last year.

Removing Regulations

Although Kavanaugh won’t welcome major new rules that lack congressional imprimatur, he is likely to give agencies a long leash when it comes to removing regulations, legal scholars said. “His view of agencies going awry usually has to do with agencies doing something, rather than agencies undoing something," said Heinzerling, a former EPA official under Obama.

Kavanaugh’s jurisprudence is marked by “hostility to federal regulatory agencies trying to protect the environment,” said Bill Snape, a senior counsel with the Center for Biological Diversity and a practitioner in residence at American University’s law school.

“Time after time after time he sides with industry, he sides with deregulation, he sides with those who would have science be in retreat,” Snape said. “He has been a dark force on the D.C. Circuit and now seems to have the opportunity to bring his bag of tricks to the Supreme Court.”

Clean Air Act

Last year, Kavanaugh ruled the Environmental Protection Agency had overstepped its bounds by setting limits on hydroflourocarbons, a potent greenhouse gas. Although Congress hasn’t spelled out a comprehensive climate policy, that “does not license an agency to take matters into its own hands,’’ Kavanaugh wrote.

In a 2012 case, Kavanaugh argued in a dissent that the EPA had overstepped its authority by determining greenhouse gases are pollutants that can be regulated under the Clean Air Act. “Our role is not to make the policy choices or to strike the balance between economic and environmental interests,” Kavanaugh wrote. “Our job as a court is more limited: to ensure that EPA has acted within the authority granted to it by Congress.”

Kavanaugh also struck down an EPA rule governing cross-border pollution from power plants and stayed the measure’s effect, though the ruling was later overturned by the Supreme Court, with Chief Justice John Roberts and Kennedy in the majority.

“The takeaway message, for me, from all of these cases is that he will construe EPA authority very narrowly and virtually always, but not every single time, in favor of regulated parties and against environmental interests,’’ Ann Carlson, a University of California at Los Angeles law professor, said in a blog post.

Kavanaugh’s “stingier” view of agency authority is likely to result in “a retrenchment in the ability of EPA to regulate pollution of all kinds,” said Cara Horowitz, a University of California at Los Angeles law professor.

If Kavanaugh’s views became the law of the land, that could pose a threat to independent financial regulators such as the Consumer Financial Protection Bureau or the Federal Housing Finance Agency. In a 2016 appellate court case, Kavanaugh said the CFPB was “unconstitutionally structured,” because the agency’s director cannot be fired by the president without cause.

For years, conservatives have attacked the agency for being too powerful with too few checks, while Democrats have praised its independent structure for helping to make it an aggressive watchdog.


While stopping short of calling for the consumer agency to be dismantled entirely, Kavanaugh said in the court’s primary opinion that the bureau’s directorship was “the single most powerful official in the entire U.S. government other than the president.”

And he signaled a willingness to consider reining in independent agencies, hearkening back to a unanimous 1935 Supreme Court ruling involving the Federal Trade Commission that said Congress can establish independent agencies whose leaders generally can’t be fired by the president.

“The question is not the existence of the agencies; the question is the president’s control over the agencies and the resulting accountability of those agencies to the people,” Kavanaugh wrote.

Kavanaugh also has indicated a preference for agencies to do a robust analysis of the costs and benefits of new rules. In 2014, the D.C. Circuit court sided with the EPA that the agency was not required to consider the potential costs of a rule limiting power plant emissions. But Kavanaugh said in a dissenting opinion that it was “unreasonable” for the EPA to not consider the rule’s potential pricetag when deciding whether to impose the measure in the first place.

Kavanaugh’s Skepticism

Kavanaugh’s skepticism of agency power and major federal regulations could immediately come into play with the very first case on the Supreme Court docket in October.

At issue is a dispute over the endangered dusky gopher frog and the Fish and Wildlife Service’s effort to protect its habitat -- even in an area where the species does not exist. Critics say the agency overstepped its authority by designating some 1,544 acres of private land in Louisiana as critical habitat for the frog even though the species doesn’t exist there and the territory doesn’t have all the characteristics needed for its survival.

To be sure, regulations might have been in for tougher scrutiny even had Kennedy chosen to stay on the court. Six days before his retirement announcement, Kennedy said lower courts had gone too far in using the Chevron doctrine to uphold agency rules.

Although Kavanaugh’s approach could mean deeper skepticism of federal rules, the immediate result could be regulatory uncertainty as the legal landscape evolves.

“If an agency is left with uncertain power or held to not have power at all I think you will have a period of less regulatory clarity,” said William W. Buzbee, a professor of law at Georgetown University’s Law Center. “It creates the risk of substantial regulatory uncertainty and instability.”

©2018 Bloomberg L.P.

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