THE REGULATORY STATE began last century during the New Deal, inspired by earlier Progressives who believed that individualism, capitalism, and the Constitution were obstacles to prosperity.
They imagined a future in which government “experts,” i.e., administrative agency bureaucrats, would lead and control the economy, subordinating economic freedom and private property rights to what they perceive to be the needs of the nation. A hydra of federal agencies (and state counterparts) impose that vision, not merely enforcing laws made by Congress, but issuing regulations of their own with power to adjudicate and punish violations. Judges have acquiesced, even abdicated, to this fusion of executive, legislative, and judicial functions—despite its tension with our constitutional separation of powers.
When President Franklin Roosevelt promoted early plans for the regulatory state, he suggested it would benefit “the forgotten man at the bottom of the economic pyramid.” In fact, the system crushes the true forgotten man: those paying for the centrally planned schemes, particularly the independent, the creative, and the entrepreneurial, who are stifled at every turn by a bureaucracy that values authority and permission over innovation and liberty. Those are the people whom PLF’s programs defend and set free.
Take, for instance, the Pierce family in Marshall County, Minnesota. The U.S. Army Corps of Engineers ordered them to halt their business harvesting peat moss (which they sell for golf course greens and sports fields) unless they got a federal permit under the Clean Water Act. The Pierces objected: the wetland bogs where the peat moss grows had no connection to any waters of the United States, meaning the Corps had no jurisdiction over the property. To their shock, both the agency and lower courts told them they had no right to challenge the jurisdictional grab in court.
The family was faced with a choice: abandon their business, seek a permit that might cost several hundred thousand dollars and take years to get or be denied, or ignore the Corps and face a threatened $37,500 per day in fines. Instead, the Pierces found a fourth option. PLF took their case all the way to the U.S. Supreme Court, winning a unanimous victory and establishing a new rule of law that provides the Pierces and all other property owners the right to prompt judicial review of such unlawful agency orders. But precious few can afford the fight. The lesson is that administrative agencies shielded from challenge are prone to trample private property and the rule of law.
Or consider Arty Vogt, owner of a small moving company in rural Virginia. He tried to expand his business to nearby West Virginia but was ordered to stop by the state’s Public Service Commission, a regulatory agency empowered to prohibit the operation of upstart transportation companies it deemed “unnecessary” to satisfy consumer demand.
How did it deem that? The state invited existing moving companies to protest the entry of any new competitor, which must not offer any services unless it proves that the incumbents can’t handle all the business generated within the state. Predictably, this cronyism led to the state vetoing Vogt’s application—just as every applicant to start a moving company in the state had been denied for the previous 15 years.
In America, entrepreneurs and consumers—not bureaucrats—should decide what businesses are “necessary.” PLF sued, prompting the legislature to repeal the agency’s authority to regulate movers. Yet, Vogt’s experience shows the extent to which the regulatory state has replaced the independent judgment of private citizens with the say-so of purported government experts.
Finally, think of a recent case involving beleaguered ranchers in New Mexico. Their businesses were threatened when the U.S. Fish and Wildlife Service declared nearly 800,000 acres of arid land, including private property and public lands where the ranchers had grazing permits, as “critical habitat” for the jaguar. The habitat designation seems strange, since the jaguar’s primary terrain is the tropical and subtropical moist broadleaf forests, swamps, and wooded regions of Central and South America.
But the agency’s experts offered evidence that two jaguars were seen wandering briefly in the state sometime between 1996 and 2006. That minimal contact was enough for a federal judge to defer to the government’s decision to place the immense territory under federal control pursuant to the Endangered Species Act. PLF is appealing that case, but unless it is reversed, the ranchers will face greater regulatory hurdles to renew grazing permits or to improve their ranches with corrals or fencing.
In only a few generations, the regulatory state has nearly turned liberty on its head. Constitutionally limited government means that officials may act only as the law permits while citizens are free. Today, however, the law grants discretion to government while ordinary Americans act only with permission.
What can be done? Many judges today are unwilling, or even think it improper, to engage in meaningful review of regulatory agency actions—reflexive deference to agency decisions is entrenched in the law. To reverse course, bad precedent must be overturned and the judiciary must reassert its role as a coequal branch of government. PLF will take the lead in that fight through strategic litigation and public education that brings attention to the forgotten man of the regulatory state.
We are building on our past success by litigating the kinds of cases that invite judges to enforce constitutional limits on regulatory agency powers. Of course, the agencies will resist—but PLF is persistent, and powerfully motivated by the commitment of our supporters and what is at stake for our clients and all Americans.