The Corporate Legal Movement

Who’s really behind the Supreme Court’s attack on the so-called “administrative state.”

Lewis Powell

Friends,

For years, conservatives have railed against what they call the “administrative state” and denounced regulations.

But let’s be clear. When they speak of the “administrative state,” they’re talking about agencies tasked with protecting the public from corporations that seek profits at the expense of the health, safety, and pocketbooks of average Americans.

Regulations are the means by which agencies translate broad legal mandates into practical guardrails.

Substitute the word “protection” for “regulation” and you get a more accurate picture of who has benefited — consumers, workers, and average people needing clean air and clean water.

Substitute “corporate legal movement” for the “conservative legal movement” and you see who’s really mobilizing, and for what purpose.

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I spent four years as policy director at the Federal Trade Commission, advising the commissioners on how best to protect the public from corporate excesses. I spent four more years as secretary of labor, protecting American workers from the depredations of big American corporations.

Most large corporations I dealt with obeyed laws and regulations designed to protect the public, but they spent a great deal of money trying to prevent such laws and regulations from being created in the first place and additional efforts contesting them through the courts.

Last week, the Supreme Court made it much harder for the FTC, the Labor Department, and dozens of other agencies — ranging from the Environmental Protection Agency to the Food and Drug Administration, Securities and Exchange Commission, Occupational Safety and Health Administration, Consumer Financial Protection Bureau, and National Highway and Safety Administration — to protect Americans from corporate misconduct.

On Thursday, the six Republican-appointed justices eliminated the ability of these agencies to enforce their rules through in-house tribunals, rather than go through the far more costly and laborious process of suing corporations in federal courts before juries.

On Friday, the justices overturned a 40-year-old precedent requiring courts to defer to the expertise of these agencies in interpreting the law, thereby opening the agencies to countless corporate lawsuits alleging that Congress did not authorize the agencies to go after specific corporate wrongdoing.

In recent years, the court’s majority has also made it easier for corporations to sue agencies and get public protections overturned. The so-called “major questions doctrine” holds that judges should nullify regulations that have a significant impact on corporate profits if Congress was not sufficiently clear in authorizing them.

Make no mistake: Consumers, workers, and ordinary Americans will be hurt by these decisions. Big corporations — especially their top executives and major investors — will make even more money than they’re already making because of them.

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These rulings are the consequence of a corporate strategy launched 53 years ago.

In 1971, the U.S. Chamber of Commerce, then a modest business group in Washington, D.C., asked Lewis Powell, then an attorney in Richmond, Virginia, to recommend actions corporations should take in response to the rising tide of public protections (that is, regulations).

Powell’s memo — distributed widely to Chamber members — said corporations were “under broad attack” from consumer, labor, and environmental groups.

In reality, these groups were doing nothing more than enforcing the implicit social contract that had emerged at the end of World War II, ensuring that corporations be responsive to all their stakeholders — not just shareholders but also their workers, consumers, and the environment.

Powell saw it differently. He urged businesses to mobilize for political combat.

Business must learn the lesson … that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination—without embarrassment and without the reluctance which has been so characteristic of American business.

He stressed that the critical ingredients for success were organization and funding.

Strength lies in … the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.

On August 23, 1971, the Chamber distributed Powell’s memo to leading CEOs, large corporations, and trade associations. It had exactly the impact the Chamber sought — galvanizing corporate American into action and releasing a tidal wave of corporate money into American politics.

An entire corporate legal movement was born — including tens of thousands of corporate lobbyists, lawyers, political operatives, public relations flaks, think tanks such as the American Enterprise Institute and the Heritage Foundation, and corporate recruiters to the courts, such as the Federalist Society.

In 1972, President Nixon appointed Powell to the Supreme Court.

Within a few decades, big corporations would become the largest political force in Washington, D.C., and most state capitals.

I saw Washington change. When I arrived there in 1974, it was still a rather sleepy if not seedy town.

By the time I became secretary of labor in 1993, Washington had been transformed into a glittering center of corporate America — replete with elegant office buildings, fancy restaurants, pricy bistros, five-star hotels, conference centers, beautiful townhouses, and a booming real estate market that pushed Washington’s poor to the margins of the district and made two of Washington’s surrounding counties among the wealthiest in the nation.

The number of corporate political action committees mushroomed from under 300 in 1976 to over 1,200 by 1980. By the time I became secretary of labor, corporations employed some 61,000 people to lobby for them. That came to more than 100 lobbyists for each member of Congress.

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The so-called “conservative legal movement” of young lawyers who came of age working for Ronald Reagan — including Chief Justice John G. Roberts Jr. and Justices Clarence Thomas and Samuel A. Alito Jr. — were in reality part of this corporate legal movement. And they still are.

Trump’s three appointments to the Supreme Court emerged from the same corporate legal movement.

The next victory of the corporate legal movement will occur if and when the Supreme Court accepts a broad interpretation of the so-called “non-delegation doctrine.”

Under this theory of the Constitution, the courts should not uphold any regulation in which Congress has delegated its lawmaking authority to agencies charged with protecting the public. If accepted by the court, this would mark the end of all regulations — that is, all public protections not expressly contained in statutes — and the final triumph of Lewis Powell’s vision.

Corporate capitalism in the United States has always coexisted uneasily with democratic capitalism. The underlying question is which is in charge — big corporations or the people?

The current Supreme Court, and the corporate legal movement that spawned it, is intent on the answer being big corporations.