Businesses in the United States are increasingly supporting regulation and regulators against judicial decisions curtailing agency authority.
There has been a surprising shift in the U.S. business community to support regulation, and regulators, against challenges to the regulators’ authority.
Most recently, over 400 drug company executives signed a letter to support the Food and Drug Administration’s (FDA) regulation of drugs in the wake of a Texas federal judge’s decision to ban one of the drugs commonly used for medical abortions, a drug that had been legal in the U.S. for 23 years. As the letter objects, “a federal judge with no scientific training fundamentally undermined the bipartisan authority granted by Congress to the Food and Drug Administration to approve and regulate safe, effective medicines for every American.”
According to the executives, not being able to depend on the protection and stability of FDA regulation threatens their ability to conduct business in the country. As they explain, “judicial interference” with the FDA’s authority creates “uncertainty for the entire biopharma industry.” Firms “count on the FDA’s autonomy and authority” to develop new medicines for patients, and “regulatory uncertainty” endangers their investments and innovation. Judges should not undermine the “evidence-based and legislatively sanctioned authority of federally mandated institutions such as the FDA to protect public interests.”
The letter ends with a rousing endorsement of the FDA, despite its flaws, as the signatories “stand together to unequivocally support the continued authority of the FDA to regulate new medicines.”
Similarly, in March 2022, the Alliance for Automotive Innovation—which includes automakers such as Ford, GM, Honda, and Toyota—intervened in the D.C. Circuit to support the Environmental Protection Agency’s (EPA) ability to regulate greenhouse gas emissions.
The lawsuit concerned whether the EPA, in setting federal rules on the subject, had exceeded its congressionally delegated authority and violated the U.S. Constitution’s separation of powers. In language parallel to the drug company executives’ letter, the Alliance argues on behalf of the EPA’s power that the transition to alternative-energy vehicles “must be supported by regulatory stability” or its industry will face economic harm in the form of “stranded investments and planning uncertainty.”
Soon thereafter, in June 2022, five automakers—Ford, Volkswagen, BMW, Volvo, and Honda—backed the EPA’s grant of a statutory waiver to California so that the state could set more stringent emissions standards to be followed by a group of other states.
This vocal new business support for federal regulators and their decisions is not unqualified. In December 2022, for example, the Alliance more quietly argued against the National Highway Traffic Safety Administration’s inclusion of electric vehicles’ fuel economy numbers in setting standards.
Overall, however, businesses and their agents have made a surprisingly public shift in their support for federal regulators, especially on such politically charged issues as abortion and climate change mitigation.
In a recent article, I argue that the federal regulatory instability created by recent developments in the U.S. Supreme Court has hurt businesses and their agents, and that it should provoke business support for stable regulation. In fundamental ways, the Court should not be seen as pro-business when it disrupts the stability of our regulatory environment. Instead, businesses should increasingly see it as in their interests for the United States to adopt more uniform regulatory standards on significant economic topics, such as climate change, to comport with emerging standards in other parts of the world.
U.S. growing federal regulatory instability originates from recent Supreme Court decisions. It is becoming a serious operational problem for businesses that federal courts continue to curtail federal agencies’ ability to act on important economic questions without additional help from an often-paralyzed Congress.
In June 2022, the Supreme Court’s West Virginia v. Environmental Protection Agency decision fully embraced the “major questions” doctrine, which the Court’s conservative supermajority describes as requiring a higher standard of “clear congressional authorization” for federal agencies to regulate questions of economic “magnitude and consequence,” such as pollution and climate change. Within days of the West Virginia ruling, Republican state attorneys general also threatened legal action against the federal Securities and Exchange Commission (SEC) for its proposed climate change rules, and twenty-four state officials submitted comments to the SEC alleging that the agency lacked power to enact regulation on climate change under the major questions doctrine.
The Supreme Court’s destabilizing influence has additionally touched other areas in which federal regulations used to function. The 2021 Dobbs v. Jackson Women’s Health Organization decision repealed federal protection for abortion, throwing the issue to the fragmented patchwork of states. The Court may have effectively dismantled federal oversight over the right to vote through decisions such as its 2021 Brnovich v. Democratic National Committee ruling—a dismantling that may be further accelerated through the Court’s upcoming decision in Merrill v. Milligan. In October 2022, the Court heard a case involving the Clean Water Act that may set additional limits on federal agencies’ ability to address environmental issues of economic magnitude and consequence.
Social issues, such as abortion and voting rights, have triggered responses from businesses because they have economic consequences. It is on massive global economic challenges such as climate change, however, that businesses are the most likely to seek the uniform protection afforded by large-scale regulation, which provides for a more predictable, and stable in every way, environment.
Generally, businesses have not sought to enter such politically charged fights, and it is particularly unusual to see them enter these fights recently on the side of U.S. federal regulators. But we should expect this trend to accelerate as businesses perceive federal courts’ decisions as an increasing threat to the stability of regulation upon which they depend for their operations, investments, and innovation.