Rethinking Regulations for the Federal Court System

Students researching the NCFCA federal court system topic can look to reform the New Deal deference federal courts give to federal and state regulations.

New theories of economics became popular in the early 1930s, claiming falling prices and wages had dropped the economy into a depression. Market economics argued (and still argue) Hoover and Roosevelt Administration policies caused themselves were the source of the bubble, the bust, and ongoing depression. (See also Great Myths of the Great Depression.)

The flood of dramatically different New Deal legislation and programs created “regime uncertainty” as business tried to figure out new rules, regulations, programs and taxes. Businesses faced higher costs and many firms waited rather than expanded. Plus protectionist policies had greatly reduced international trade. Federal spending significantly increases and the New Deal created various business cartels empowered to keep prices and wages up.

Initial New Deal legislation was struck down by the Supreme Court, until justices skeptical of federal power retired and were replaced by Roosevelt Administration appointees. Then, in 1937 various recast New Deal programs were passed and survived Supreme Court review.

Congress claimed Constitutional authority for New Deal legislation from the Commerce Clause, and federal court decisions that upholding these New Deal policies still stand. In recent years though, many legal scholars are calling for the federal court system to review and strike down regulations harmful to businesses, entrepreneurs, and the overall economy. The reach of the Commerce Clause is commerce is under review.

Randy Barnett, in his 2001 Georgetown Law article, The Original Meaning of the Commerce Clause,” begins:

In United States v Lopez, for the first time in sixty years, the Supreme Court of the United States held a statute to be unconstitutional because it exceeded the powers of Congress under the Commerce Clause. In his concurring opinion, Justice Thomas offered a critique of contemporary Commerce Clause doctrine-based on the original meaning of the clause-that went well beyond the majority opinion. According to Justice Thomas, “[a]t the time the original Constitution was ratified, ‘commerce’ consisted of selling, buying, and bartering, as well as transporting for these purposes.”‘ He also cited the etymology of the word, which literally means “with merchandise.”‘ 

The law article abstract explains:

 “To regulate” generally meant “to make regular”–to specify how an activity may be transacted–when applied to domestic commerce, but when applied to foreign trade also included the power to make “prohibitory regulations.” In sum, according to the original meaning of the Commerce Clause, Congress has power to specify rules to govern the manner by which people may exchange or trade goods from one state to another, to remove obstructions to domestic trade erected by state; and to both regulate and restrict the flow, of goods to and from other nations …

Earlier posts have been critical of state and federal regulations that limit “liberty of contract” and make it difficult or impossible for everyday people to work in a variety of enterprises without costly licenses and permits. What if the original intent of the Commerce Clause was “to make regular” rather than to give state and federal government authority to regulate, as in control or prohibit, commerce for a wide range of other reasons?

That is the question Randy Barnett researches in his article, reading all referenced to commerce in the foundation documents, debaters, letters, and Federalist Papers.

Past posts have looked at the “liberty of contract,” economic regulations, and the debate over “judicial engagement.”  That is: should the federal courts again protect people and companies from costly and arguably unjust economic regulations?

These are the reform proposals and perspectives presented in Overruled by Damon Root, Liberty of Contract, and much of the work of Institute for Justice legal scholars (as explained in this video on the 14th Amendment).

These cases revolve around proposed systematic “judicial engagement” changes for the federal courts, much as the 1937 shifted federal courts in response to FDR pressure to defer to progressive New Deal legislation.

Recent articles include: “The Rehabilitationists: How a small band of determined legal academics set out to persuade the Supreme Court to undo the New Deal—and have almost won.”

And: “It’s Time for Conservatives to Reject Judicial Restraint” (Sept. 4, 2015), plus in The Federalist: “Randy Barnett Offers A New Vision of Constitutional Conservatism” (September 1, 2015), and in Washington Post: “Lash v. Root on Privileges or Immunities” (July 16, 2015) and “How deference leads to activism (or scuttling originalism)” (July 16)

Okay, all that is theory, and important, but what are some practical applications?

An example is in Nick Sibilla’s August 28, 2015 opinion article in The Press Enterprise, “Mobile vendors have right to livelihood”:

In justifying the ban on transient merchants, the mayor and City Council argue vendors “unlawfully compete against lawful businesses without paying permit fees or taxes.” Likewise, food carts in San Bernardino must keep at least 500 feet away from any brick-and-mortar restaurant. Compared to a 2011 report by the Institute for Justice, that proximity ban is far larger than those found in most other cities. 

But in 2008, the 9th U.S. Circuit Court of Appeals (which includes California) ruled that “economic protectionism … cannot be said to be in furtherance of a legitimate governmental interest.” In other words, local and state government cannot ban entrepreneurs from operating just to protect established businesses from competition. 

Moreover, the 14th Amendment to the U.S. Constitution guarantees everyone the right to earn an honest living, free from undue government interference.