Those of us who engage in contemporary policy debates need to be reminded more often of the ongoing expansion of the administrative state. These federal agencies regularly push the limits on their authority and act with limited oversight from the chief executive or from the judicial and legislative branches. In a real sense, they have become a de facto fourth branch of government, competing for power with the three branches explicitly enumerated in the Constitution.

Daily policy debates about the operations of the administrative state tend to bog down in the technical details of regulation of the individual sectors, whether financial services, health care, environmental policy, or something else. Matters that fall under Chevron deference—the Supreme Court doctrine that administrative agencies are entitled to a presumption of expertise and courts should defer to the interpretations of federal law adopted by those agencies—are resolved in favor of an ever-expanding administrative state. Precious little time is dedicated to assessing the resulting expanded breadth of the entire administrative state.

Peter Wallison gives us a well-timed reminder of all this in the form of a history and assessment of the vast administrative state. The book allows us to step back and look at the longer-term trends in administration beyond industry-driven anecdotes. Wallison has been a senior fellow at the American Enterprise Institute since 1999. I reviewed his last book, Hidden in Plain Sight (see “Peter Wallison Dissents Again, With Feeling,” Spring 2015), which offers his narrative of last decade’s financial crisis. The title of his newest book gives a hint of his preferred solution for applying judicial review in reversing the trend of expanding agency authority.

Defenders of the status quo argue that the courts have to allow administrative agencies to grow because the economy and society have become so complex that we are “compelled to hand more and more authority to the agencies of the administrative state.” This makes the book especially timely; recent changes in the makeup of the Supreme Court have yielded a majority block of justices (Chief Justice John Roberts Jr. and Associate Justices Clarence Thomas, Samuel Alito Jr., Neil Gorsuch, and Brett Kavanaugh) who seem poised to reassess the efficacy of the Chevron doctrine. (See “From Chevron to ‘Consent of the Governed,’ ” Winter 2018–2019.) Wallison calls the doctrine “the Supreme Court decision that is most responsible for the growth of the administrative state.”

The genesis of the administrative state / Wallison’s historical summary traces back the administrative state to the early days of the Progressive Era, driven by what he calls “ideas about government that gave rise to a very different view of the Constitution than had prevailed in the past.” Twinned with this new view was a romantic idea of how the world should work, an “extravagant faith in administration,” as explained by Princeton research scholar Thomas C. Leonard. Leonard speaks of “the vis ible hand of administrative government, guided by disinterested experts who were university trained and credentialed, [that] would diagnose, treat and even cure low wages, long hours, unemployment, labor conflict, industrial accidents, financial crises, unfair labor practices, deflation, and other ailments of industrial capitalism.”

Not surprisingly, President Woodrow Wilson was an early adherent of the administrative state. One of his articles as a newly minted Bryn Mawr College professor, “Study of Administration,” elevated the “success of the government’s postal service” as an exemplary case that could be replicated again and again. Under this emerging progressive view of an all-encompassing administrative governing style, not only were these administrators to take on the full range of industry tasks, but they were also to take on the role of the courts in setting the parameters of their own administration. As Wallison explains, “The idea [was] that administrators, as disinterested experts, rather than the courts, should interpret the scope of their authority.”

The administrative state would not stop there under Wilson’s vision, as the agencies were also to supplant Congress and the executive branch by discerning and carrying out the will of the public. Again, as summarized by Leonard, “For Wilson, administrative agencies were not simply acting on the instructions of Congress or even the President; they were to be the government itself in the sense that they were to understand in some way what the public wanted and carry it out.”

The Republican administrations of the 1920s brought a normalizing of the federal workforce back to pre-wartime levels of about 500,000. President Franklin D. Roosevelt would then bring the next big expansion in the administrative state. “The New Deal was just like the Progressive Era, only bigger,” writes Wallison. This time the courts were complicit in the initial inklings of deference, falling in line with the progressive approach. Wallison quotes an opinion by Justice Stanley Reed on a tax case, Gray v. Powell (1941), that was a “precursor of Chevron”:

Congress, which could have legislated specifically as to individual exemptions [from the tax], found it more efficient to delegate that function to those whose experience in a particular field gave promise of a better informed, more equitable adjustment of the conflicting interests of price stabilization, upon the one hand, and producer consumption upon the other…. Where, as here, a determination has been left to the administrative body, this delegation will be respected, and the administrative conclusion left untouched.

Administrative abuses / Fast-forward to the present and the result has been an administrative state that has become a law unto itself. Wallison chronicles many examples of abuse, too numerous to recount in this review.

One that he references multiple times throughout the book is Operation Choke Point, a case study from the financial industry that has been the focus of Wallison’s recent research. As he explains, the initiative was a particularly egregious exercise of administrative power. The Obama Justice Department and the Federal Deposit Insurance Corporation developed a policy out of whole cloth, conspiring on “a plan designed to choke off the operation of disfavored businesses by using bank regulation to deprive them of operating funds and other financial services…. The bank regulatory agencies directed banks to cease making loans or, in some cases, cease to provide any banking services.” Obama administration regulators went forward with this plan, notwithstanding the fact that “there was nothing in the laws they were purporting to enforce that gave them the authority to drive otherwise lawful activities out of business.” Mind you, all of these targets were legal businesses that ran afoul of the administration: “sellers of firearms and ammunition, coin dealers, sellers of lottery tickets, money transfer networks and payday lenders.”

One of the dangers of allowing agencies to decide the extent of their statutory authorities is the arrogance that comes from not having to answer to the courts.

Payday lenders were a particular target of the DOJ and FDIC. After three long years under this abusive program, a number of these lenders initiated litigation against the FDIC, other banking regulators, and the DOJ. The D.C. Federal District Court affirmed that the services were wrongly denied, one of the few bright spots for the courts, in contrast to the “frequent failure of the courts to discipline the agencies of the administrative state.” As Wallison summarizes the lessons of Operation Choke Point, “One of the dangers of allowing agencies to decide the extent of their statutory authorities is the arrogance that comes from not having to answer to anyone, least of all the courts.”

Reform / Such abuse is driven by lawmakers’ incentives to avoid hard decisions. Wallison explains:

Congress delegates power to the executive because that is the most politically convenient way to achieve its objectives. Delegation of standard-less discretion allows Congress to pretend to address problems—even when it has no clue—and then, as a bonus, to complain if the executive’s solution turns out to pinch important constituent (or donor) groups.

He argues that this approach “is the logical consequence of the way the Supreme Court has structured Congress’s incentives.”

The approach of the D.C. Federal District Court in the Operation Choke Point case was a positive step, but Wallison further calls for the application by the courts of the non-delegation doctrine. Congress holds all legislative power and he advocates the view that it is “a violation of the Constitution for Congress to transfer (or delegate) any of its legislative authority to administrative agencies or others.” Judicial Fortitude begins with the following quote from Justice Thomas’s concurrence in Department of Transportation v. Association of American Railroads (2015):

We have too long abrogated our duty to enforce the separation of powers required by our Constitution. We have overseen and sanctioned the growth of an administrative system that concentrates the power to make laws and the power to enforce them in the hands of a vast and unaccountable administrative apparatus that finds no comfortable home in our constitutional structure.

For Wallison this means it is primarily the job of the judiciary to rein in the administrative state.

He reserves the final chapter for an assessment of Chevron v. Natural Resources Defense Council, the unanimous 1984 ruling penned by Justice John Paul Stevens that established Chevron deference. Stevens writes that in cases where

the statute is silent or ambiguous…, the question for the court is whether the agency’s answer is based on a permissible construction of the statute…. A court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of the agency.

In 2013, the Court began a to-be-fully-determined “split” on upholding the Chevron doctrine, with Roberts, Kennedy, and Alito dissenting in a case interpreting the authority of the Federal Communications Commission. As Wallison writes in this final chapter, “We must imbue the judiciary with the fortitude that the Framers expected from independent judges.”