How The Supreme Court Could Rein-In Biden’s Business Agenda

On his first day in office, President Biden laid out an ambitious regulatory agenda that was the mirror image of his predecessor’s hands-off, laissez-faire approach. 

Climate change? The Environmental Protection Agency will make it a top priority, including tough new emissions rules and even support for litigation against fossil-fuel companies. Racial equity? The Justice Department will work with other executive agencies to root out inequality in every corner of the economy. The cost of regulation? No longer a big deal, apparently, as Biden immediately revoked a Trump executive order requiring agencies to spell out how much new regulations are expected to cost companies forced to comply with them.

Elections have consequences. But even the President faces limits on what he can accomplish by regulatory fiat alone. The courts have a say, and if we learned anything from the tumultuous Trump years, judges aren’t shy about shutting down executive actions that they think violate the law. They’re especially persnickety about sudden, 180-degree changes that aren’t supported by what they consider adequate reasoning or evidence, such as President Trump’s immigration policies or a late-breaking order he issued prohibiting employers from using racial-sensitivity training classes with “divisive” content. 

The Biden Administration may not encounter such strong judicial headwinds. But if White House officials are smart—and they undoubtedly are—they will tread carefully, as they try to implement sweeping changes in how the government regulates employers, financial markets and, especially, the environment. If they are too aggressive, they may wind up before a solidly conservative U.S. Supreme Court, where newly seated Justices, including Amy Coney Barrett and Neil Gorsuch, have a record of questioning the power of the administrative state.

Two legal doctrines pose a particular threat to the Biden administration’s ambitions: Chevron deference and the non-delegation doctrine. Chevron deference takes its name from a landmark case in which the Supreme Court decided courts should let administrative agencies, not judges, interpret ambiguous federal laws. Conservatives have long criticized the practice, and Justice Gorsuch wrote a much-noted critique of Chevron as an appellate judge.

The non-delegation doctrine has been largely dormant since the 1920s but might be revived by a conservative court if the right case comes along. It holds that Congress can only hand so much authority to administrative agencies—how much, nobody knows. But the more aggressively an agency tries to remake large parts of the economy, the more it risks a judicial brushback, says Thomas Lorenzen, a partner with Crowell & Moring and former Justice Dept. environmental lawyer.

“I expect the administration is going to try to be aggressive but also to tread cautiously so they don’t provoke the Supreme Court into reviving that non-delegation doctrine or gutting Chevron deference,” Lorenzen says. “That would really put the brakes on the administrative state.”

What that means in practice, Lorenzen says, is that instead of taking a radical step like declaring CO2 a hazardous pollutant, the administration will likely use its discretion and commitment to environmental justice to focus on minority neighborhoods that have felt outsized impacts from pollution and other industrial activities. 

“They’re going to be targeting disadvantaged communities and the facilities in them,” Lorenzen says. For businesses, he said, that raises an important question: “Ask yourself: How has that community addressed the effects of your business?”