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>> Tom Church: This is the libertarian podcast from the Hoover Institution. I'm your host, Tom Church and I'm back with the libertarian professor Richard Epstein. Richard is the Peter and Kirsten Bedford senior fellow here at the Hoover Institution. He is the Laurence A Tisch Professor of Law at NYU and is a senior lecturer at the University of Chicago. And Richard, hey, we're back after a month hiatus, just in time for some scotus arguments on President Biden's student loan forgiveness plan.
This is, of course, $400 billion that President Biden is trying to forgive in student loans. There are actually two cases I want to ask you about, Richard. There's one, Biden v Nebraska, this is the suit brought by several states. And then there's Department of Education v Brown. This is two individuals, one with commercial student, sorry, commercial loans or private loans, and another with federal student loans but not eligible for the full amount.
And the latter two are arguing that they are, I suppose, harmed because they're not getting the full, full student loan forgiveness. So this question, this case in front of the Supreme Court justices falls into two categories here, two major questions standing, and then the merits. And so I want to ask you these two cases, the states and then the individual sides, which one would you like to tackle to talk about whether anyone actually has standing to challenge this action?
>> Richard Epstein: First thing I would always want to say about this is it should be regarded as passingly strange that we have a major lawsuit of constitutional dimensions. And what we do is we're not looking at the program itself to see whether it's constitutionally flawed. But on standing, we're trying to find somebody whose industry is supposed to be greater than, above and beyond that of the common public.
And of the two suits, it's clear that the Nebraska suit is the one that's going to prevail and the other one will not. But the argument that is made in this particular case is that somehow or other, if you start to reduce the amount of student loan repayments, you're gonna reduce the fees that certain people are gonna get in administering their own program.
And if you would want to ask whether or not that's the way in which you want to get into this program, I think the answer is it's an absurdity. The fundamental question here goes back 100 years to two famous cases, Frothingham and Mellon and Massachusetts and Mellon. And there was a statute known as the Maternity act. And what that act provided for was that the state would provide certain benefits to recent mothers and to their offspring as part of the general welfare of the United States.
And this was attacked by the state of Massachusetts and by one of its citizens on the ground that the general welfare of the United States is things that are designed to improve the situation of the United States as a whole, a kind of public goods on analogy to either removing the debt or providing the defense. And this thing doesn't come within a mile. It was actually a very powerful argument at the time.
But the Supreme Court said that there was nobody in a position to challenge the constitutionality of this particular thing, because in order to do so, you had to prove that you had a discrete and special injury. Now, discreet and special injuries are kind of an odd thing, because what they do is they represent the situation that you have when you have a given individual who's hit by a truck or something of the sort.
And the clear argument is it's the person who suffers that particular injury who's allowed to sue, rather than some bystander who happen to watch it from a distance. And nobody objects to the doctrine of special injury when you're talking about physical harms. But when you're talking about corporations or talking about local government, the key question is not physical harm. The key question is whether or not the action is what we call ultravirus, beyond the power of the state to enact.
And so if a corporation wants to engage in an activity which is not allowed under its charter, any shareholder can sue an order to enjoin those activities. If they fail, they have to bear their own expenses. If they succeed, they can recover costs from the corporation. If you're talking about local governments and state governments and so forth, they have exactly the same rule.
So the question is, why is it that the United States has a different rule which says that we don't allow these citizens or taxpayers standing suits to challenge these activities? And the two opinions that were written in the Frothingham case and the Massachusetts case, amongst the worst opinions ever written in the history of the Supreme Court by Justice Sutherland, even though they were unanimous, the word standing does not appear in article three.
It says that all cases and controversies arise under. And this is, of course, a case in a controversy, cuz somebody's trying to stop somebody from doing something. And you should follow the pattern of private law and local government law in dealing with this, because otherwise the promise of basically Madison Marbury Madison is going to fall short here. You're gonna have an action which is beyond the power of the government to act.
And yet, since you're distributing a benefit rather than imposing a cost, nobody's in the provision to challenge the illicit transfer of the benefit. And it was exactly that argument that the Solicitor General, Miss Prelogar, made in her case. Saying, well, we know that the major questions doctrine was raised in connection with regulations in the West Virginia case, but this is not a regulation, this is a gift.
But if you think about it, this is a gift not from President Biden, who signed the thing, but from every taxpayer. It turns out it's like a disguised appropriation. So the argument is that in the United States, under constitutional regime, you have to have an appropriation through Congress in order to do this. And a unilateral expenditure by the president doesn't qualify. So in my particular view about this is either they find standing on some obviously kind of jigged up and rigged up ground.
Or what they do is they let a major constitutional violation of the principles of separation of power go utterly unchallenged. And that is, to my mind, utterly unacceptable in the way in which it is.
So my own plea is I wish the Supreme Court now or at some other time would take its absolutely churlish and uninformed view of the standing doctrine, reverse it, and bring it in line with the standing doctrine that applies in virtually every other situation with state governments, local governments, private charities, corporations, and the like. Ultra vires activities have to be challenged by somebody who's a member of that polity.
If you're not a member of a local town, you can't challenge what it's done, but if you are, you can. So if you're a citizen of the United States, and there's certainly a number of those, you should be able to make this particular kind of challenge. So we get the square up judgment on the merit without these endless preliminary diversions of the sort that occupy this particular case.
>> Tom Church: Richard, we'll get to the merits in a second, but I want to follow up on something quickly, actually two parts of this standing issue. So you're telling me that it's the Supreme Court themselves that could decide to change their handling of standing, not requiring an act of Congress? >> Richard Epstein: This was a constitutional decision, it was wrongly decided.
If they had decided originally the correct way, that citizen and taxpayer standings are perfectly appropriate when you're challenging actions that are beyond the scope of government, nobody would have given a second think. The standing doctrine, I might add, has a second use in time to time in which you have something which is admittedly within the power of the government to do, and they take a compromised position right now under many statutes.
Anybody who dissents from the administrative decision on either extreme can challenge it in court. Those cases, I think, are absolutely terrible. Because what happens is when you're trying to figure out what kind of environmental plan that you wish to put into place to deal with pollution, you really want to get something closer to the median voter.
And the moment you allow any dissident to challenge it in court, what's gonna happen is you're gonna skew the process so the squeakiest will gets the loudest voice. It's a completely different problem from the one that I'm talking about, because in one case, you're trying to rejigger the terms of something which is admittedly within the scope of the government.
And the other case, what you're trying to do is to say you're not allowed to do this at all, and the remedy is simply to stop the action. So the enforcement issue with respect to constitutional standing is a trivial one, whereas in these environmental cases, it becomes an endless nightmare. >> Tom Church: Could this new approach, or I guess, change to standing, be a way to address two cases we've talked about actually previously, the one in Texas.
This was the clever method that they put together their anti-abortion law, which was allowing private citizens to sue and recover fees against any individuals who, I guess, were involved with an abortion. California looked at this and said, we'll do the same thing, but with gun violence and gun laws. And we talked about this as where do you find standing to even challenge these things that seem like they're steps to get around these things?
>> Richard Epstein: Look, my own view about it is if the state or the government decides it's going to permit private individuals to enforce these sorts of things, there's a serious kind of delegation issue. And I think that you should basically say that it is beyond the power of the state to create those sorts of delegations and so challenge it as being ultra vires, the power of the state.
It's also clear to me that when you're starting to look at these particular statutes, the way in which the statute was worded was on the assumption that these laws, like Roe v Wade were not void, but were only unenforceable by the state, which meant that private parties could enforce them. If you go back to Marbury and Madison is another difficulty. The way in which Justice Marshall decided these cases, the Chief Justice, was to say that they're void because they're beyond the scope of account.
Now, if the statutes are unenforceable by the government, they could be enforceable by private parties. But if the law, in fact, is no longer on the books at all, then it can't be enforced by anybody. So Jonathan Mitchell, one of my former students who ingeniously put forward this particular scheme, I thought was never able to sort of meet that particular situation.
And I think what it does is it creates a genuine dissonance when you allow private enforcement where public enforcement is not allowed. So I wasn't a fan of the Texas statute and I'm not a fan of the situations as they're gonna be taken up in California. It seems to me what we want to do is to make sure that if a particular law is going to be put on the books, that somebody has a position to challenge it. And then if the thing is upheld, it's upheld as a precedent once and for all.
Somebody may want to challenge it in another court, in another circuit. And that's why we have a Supreme Court. At the end of the day, if there's a conflict between the two circuits, what happens is the Supreme Court will take the case and resolve it. >> Tom Church: All right, well, let's turn to the merits of the case. Let's say we can find some standing to actually rule on it.
This is $400 billion in student loans justified through the 2003 CARES Act, which is a response to, I believe, you know, 911 soldiers overseas serving and making sure that they weren't made worse off by actions. I mean, that's the actual language that's in that legislation. >> Richard Epstein: Yeah. >> Tom Church: Now in front of the Supreme Court justices, there was a lot of debate about the terms waive, modify, or cancel and whether that's allowed.
And then there were also questions about where this fits into the major questions doctrine. If Congress really wanted to be able to delegate this authority to an agency, it should probably say so. I mean, Richard, do you think it's a step too far to say that the president has this ability, even through this little minor lens through the CARES act? >> Richard Epstein: But I think it's a kind of a crazy situation.
What happens is you start looking at the basic type of situation, and it says when the secretary deems necessary, and that means you actually have to show some particular reasons as to why it's necessary, with a war or the military operation or natural emergency. Well, when I read those sorts of things, these are short situations. It turns out they're massive local disruption.
So when I think of national emergency, I think of an entire region being disabled by a hurricane, by a storm of some kind or another, by volcanic ash and so forth. I don't think of the fact that people are struggling under COVID as being some kind of a national emergency, particularly when the president himself says, well, we think that we're past it. So it made perfect sense, maybe not perfect sense, but certainly respectable sense to say, well, we start with this COVID thing.
We're shutting everything down nationally, which is a serious situation. It's going to create massive dislocations for jobs. So what you could do is you could sustain payments during the interim. But remember, when they're trying to do this thing, they're not suspending payments for the duration of the so-called emergency. They're doing it in perpetuity, and things will surely get back to normal as they have.
And to say that two and a half years into the COVID situation, we now have a national emergency that allows you to wipe out the debt seems to be crazy. The second provision that doesn't quite fit is, what is this for? It says the recipients of student financial aid are not placed in a worse position financially in relation to financial system because of their status as affected individuals. Well, COVID affects all sorts of people differently in all sorts of ways.
And some people are not going to be left worse off at all. Some of them are going to have very substantial forms of wealth accrued previously. And what you're doing is you're saying that because you can show that there may be some people who are going to be financially disabled, what happens is we're going to have to release the entire program.
And it seems to me that what you really are doing is requiring some particularized determination which either goes individual by individual or by sensible subgroup by sensible subgroup before you make this. And that you cannot try to put together a program which says that because there's some people who are adversely affected, what we do is we forgive the indebtment for 23 million people, whatever the number turns out to be. So it's clearly, clearly a case of overreach.
The second way to think about this is in connection with the so called major questions doctrine, which is a child associated with Chief Justice John Roberts. And he did it in the case called West Virginia against the EPA. And he made what I thought was an absolutely sound decision to say what happened is you have these provisions which start talking about the best systems of admissions reduction.
And the sensible way to read that is to figure out what kind of various valves that you could put on various kinds of equipments and make sure that they're less polluting than otherwise. And what the government says is we don't want to worry about the modification of the equipment or its immediate environment. We can say that the best system of emissions reduction is to move from fossil fuels to solar or to wind energy.
And we can use an elaborate program in order to force states to make a mixture in the way they do it. And what he said is, you can't read that into this particular provision. There's a narrower reading that makes perfectly good sense. The broader reading is one which implicates huge amounts of national resources of one kind or another. You can't do that by executive order. You have to do it by statute. The gist is, he says, I'm not gonna defer to an agency under the Chevron doctrine.
Now, I certainly agree with the major questions doctrine, insofar as it's an exception to the Chevron doctrine. I go even one step further to say, why do we ever defer to an administrative agency if what it does is to say something which seems to be palpably ridiculous relative to the text of the statute? And there are so many cases where people say kinds of things that just aren't true.
So if you're told that somebody doesn't have to pay while they're a student, then afterwards they get a job, we say, well, the job is a continued of the student. Period of time, because you're still learning how to work. Now, that's not what they meant at all and Chevron deference ought never to be allowed. So I think, in effect, that the correct rule is if there's a question of law to be decided, it should always be decided by a court.
The parties who have the so called expertise can present their expertise, but if they're right, they should be able to win on the merits rather than asking for an assist. There is nothing more dangerous, in my view, than allowing people who supposedly have expertise to get the run of the shop. When, in fact, often these are the very same people who have deeply strong political agendas in one direction or another.
And so I always think that the Administrative Procedure Act was written in a way to allow appellate courts to decide questions of law de novo. And that we don't need to have the major cases doctrine or major principles exception to this. But what we do is we just simply tell judges, if you have a question of law, it's the appellate body that is ultimately responsible for it. And it need not defer to an administrative agency or to a trial court.
And then when it comes to this particular case, there's this famous maxim of Justice Scalia, which everybody kind of loved. He says, you don't find elephants in mouseholes. That is, you do not find the authorization to do major programmatic changes in some small provision of a very large and complicated statute. Because if you start to do that, then, in effect, what's going to happen is you're going to make the entire distribution of separation of powers.
No longer will it be the Congress that has to call this. It could be the president acting unilaterally or it could be an administrative agency acting unilaterally. And this sort of super delegated authority, in effect, means that one person can decide to do something without getting legislative approval. Which is required under the standard rules about the separation of powers and the delegation of authority. So all of these doctrines are intertwined together.
It was quite clear during the Reagan years that what happened is that the court tended to lay down. Didn't care much about delegation, didn't care much about separation of powers, didn't care much about major questions and so forth. This court is on the warpath against that. And if you started listening to the argument, it's going to be pretty clear that this is going to come out a 6-3 decision. The dissenting judges each had her own reason.
That is Kagan, Sotomayor, and Jackson, for thinking that this is a fine idea, that the president was putting together. But I think the difference on the part of the majority is such that I'm pretty confident this is going to be a 6-3 decision. My only lament is I think something like this ought to be a 90 decision. The Biden Administration specializes in using executive power to alter the fundamental terms of statutory arrangements. It manages to do it unilaterally.
It manages to do it without having to go through the process of legislative compromise. And so what it has done is, it has become a lawless machine in the way in which it acts on virtually everything that it does. And I think they have to be slapped down on this particular issue. And I think that the more egregious their behavior, the more likely it is that they will be slapped down. The student loan program is way out there. You mentioned $400 billion. Who's to say it's going to stop at that?
Because remember, Tom, if what you did is you said, well, it was okay to do this. These characters are gonna come back with yet another modification which could add another 100 or $200 billion to the particular situation, all again without any legislative appropriation. So I think it's important that you stop this in the bud.
Stop it now, and make it perfectly clear that the ordinary process for legislation when it comes to financial stuff does not allow the federal government through the executive branch to release obligations. Which are tantamount to essentially requiring an authorization of expenditure from the general public fisc in order to make up the shortfall that's going to be created. >> Tom Church: You've been listening to the libertarian podcast with Richard Epstein.
If you found our conversation thought provoking, please share it with your friends and rate this show on Apple Podcasts wherever you're tuning in. For Richard Epstein, I'm Tom Church. We'll talk to you again next time. [MUSIC] >> Presenter: This podcast is a production of the Hoover Institution, where we advance ideas that define a free society and improve the human condition. For more information about our work, or to listen to more of our podcast or watch our videos, please visit hoover.org.
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