Amicus Curiae Brief — Arlen Foster, Petitioner v. Department of Agriculture, et al.

Supreme Court briefSep 14, 2023

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No. 23-133

IN THE

Supreme Court of the United States

————

ARLEN FOSTER,

Petitioner,

UNITED STATES DEPARTMENT OF AGRICULTURE, et al.,

Respondents.

————

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eighth Circuit

————

BRIEF OF THE NATIONAL FEDERATION OF

INDEPENDENT BUSINESS SMALL BUSINESS

LEGAL CENTER, INC., LANDMARK LEGAL

FOUNDATION, SOUTHEASTERN LEGAL

FOUNDATION, AND THE BUCKEYE

INSTITUTE AS AMICI CURIAE

IN SUPPORT OF PETITIONER

————

RICHARD P. HUTCHISON

MATTHEW C. FORYS

MICHAEL J. O’NEILL

LANDMARK LEGAL

FOUNDATION

19415 Deerfield Avenue

Suite 312

Leesburg, VA 20176

(703) 554-6100

mike@landmarklegal.org

ELIZABETH GAUDIO MILITO

Counsel of Record

ROB SMITH

NFIB SMALL BUSINESS

LEGAL CENTER, INC.

555 12th Street, NW

Suite 1001

Washington, DC 20004

(202) 406-4443

elizabeth.milito@nfib.org

rob.smith@nfib.org

DAVID C. TRYON

THE BUCKEYE INSTITUTE

BRADEN H. BOUCEK

88 East Broad Street

KIMBERLY S. HERMANN

SOUTHEASTERN LEGAL

Suite 1300

FOUNDATION

Columbus, OH 43215

560 W. Crossville Road

(614) 224-4422

d.tryon@buckeyeinstitute.org Suite 104

Roswell, GA 30075

(770) 977-2131

Counsel for Amici Curiae

WILSON-EPES PRINTING CO., INC. – (202) 789-0096 – WASHINGTON, D.C. 20002

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ................................

INTEREST OF AMICI CURIAE ........................

INTRODUCTION AND

SUMMARY OF ARGUMENT .........................

ARGUMENT ........................................................

Today’s Regulatory Burden is a

Detriment to Small Business Success......

A. The Regulatory Burden Has Significantly Increased ..................................

B. Small Businesses Wrongfully Bear

the Brunt of Regulatory Costs ............

Chevron Deference Hurts Small Businesses Constitutionally and Financially..

CONCLUSION ....................................................

II.

(i)

TABLE OF AUTHORITIES

CASES

Page(s)

Alden v. Maine,

527 U.S. 706 (1999) ...................................

Chevron v. Natural Resources Defense Council,

467 U.S. 837 (1984) ..................... 2-4, 7, 9, 13-18

City of Arlington v. F.C.C.,

569 U.S. 290 (2013) ...................................

Free Enterprise Fund v. Public Co.

Accounting Oversight Bd.,

561 U.S. 477 (2010) ................................... 6, 13

Kisor v. Wilkie,

139 S. Ct. 2400 (2019) ............................... 2, 13

Loper Bright Enterprises, Inc. v. Raimondo,

No. 22-451 (docketed Nov. 15, 2022) .... 4, 15, 18

Loper Bright Enterprises, Inc. v. Raimondo,

45 F.4th 359 (D.C. Cir. 2022) ...................

Nat’l Ass’n of Mfrs. v. Dep’t of Def.,

138 S. Ct. 617 (2018) .................................

Restaurant Law Center v. Dep’t of Labor,

No. 1:21-CV-1106, 2023 WL 4375518

(W.D. Tex. July 6, 2023) ........................... 16, 17

Sackett v. Env’t Prot. Agency,

598 U.S. 651 (2023) ...................................

Util. Air Regulatory Grp. v. EPA,

573 U.S. 302 (2014) ...................................

iii

TABLE OF AUTHORITIES—Continued

STATUTES

Page(s)

5 U.S.C. § 601 note .......................................

5 U.S.C. § 603 ...............................................

5 U.S.C. § 604 ...............................................

5 U.S.C. § 605(b) ............................................

16 U.S.C. § 3822 ...........................................

Federal Property and Administrative

Services Act, 40 U.S.C. §§ 101 et. seq. ......

Regulatory Flexibility Act, Pub. L. No. 96–

354, § 2(a)(2–3), 94 Stat. 1164, 1164

(1980) .........................................................

COURT FILINGS

Brief for The Buckeye Institute & National

Federation of Independent Business

Small Business Legal Center, Inc. as

Amicus Curiae Supporting Petitioner,

Loper Bright Enterprises, Inc. v.

Raimondo, No. 22–451..............................

Brief for Respondents, Sackett v. Env’t Prot.

Agency, 598 U.S. 651 (2023) No. 21-454 ..

OTHER AUTHORITIES

85 Fed. Reg. 7414 (Feb. 7, 2020) ..................

Ben Gitis & Sam Batkins, Regulatory

Impact on Small Business Establishments, American Action Forum (Apr. 24,

2015), https://tinyurl.com/52z28uvb.........

TABLE OF AUTHORITIES—Continued

Page(s)

Clyde Wayne Crews Jr., How Many Federal

Agencies Exist? We Can’t Drain the

Swamp Until We Know Forbes (July 5,

2017, 4:03 PM), https://tinyurl.com/ckw4

chuk ...........................................................

Dept. of Defense and Env’t Prot. Agency,

Revised Definition of “Waters of the

United States,” 88 Fed. Reg. 3004 (Jan.

18, 2023) ....................................................

Dept. of Labor, Increasing the Minimum

Wage for Federal Contractors, 86 Fed. Reg.

22835 (Apr. 30, 2021) .................................

Dept. of Labor, Increasing the Minimum

Wage for Federal Contractors, 86 Fed.

Reg. 67126 (Nov. 24, 2021) .......................

Dept. of Labor, Tip Regulations Under the

Fair Labor Standards Act (FLSA);

Partial Withdrawal, 86 Fed. Reg. 60114

(Oct. 29, 2021) ...........................................

Exec. Order 14026 (Apr. 27, 2021) ................

Federal Register, Agencies, https://tinyurl.

com/km9t57av (last visited Sept. 11,

2023) ..........................................................

Federal Register, Code of Federal Regulations Total Pages 1938–1949, And Total

Volumes and Pages 1950–2021, https://

tinyurl.com/3f76enh9 (last visited Sept.

11, 2023) ....................................................

TABLE OF AUTHORITIES—Continued

Page(s)

Federal Register, Federal Register Pages

Published Per Category 1936–2022,

https://tinyurl.com/yfh925r3 (last visited

Sept. 11, 2023)...........................................

George Washington University Regulatory

Studies Center, Economically Significant

Final Rules Published by Presidential

Year, https://tinyurl.com/yeyt3862 (last

visited Sept. 11, 2023) ..............................

NFIB Research Center, Small Business

Problems and Priorities (2020), https://

tinyurl.com/y9dn98xc ...............................

4, 5

Peter T. Calcagno & Russell S. Sobel,

Regulatory Costs on Entrepreneurship

and Establishment Employment Size,

Small Business Economics (June 2013) ...

QuantGov, State RegData RegCensus

Explorer, Geo. Mason Univ. Mercatus

Ctr., https://tinyurl.com/2fma2y88 (last

visited Sept. 8, 2023) ................................

8, 9

Richard Fullenbaum & Tyler Richards, The

Impact of Regulatory Growth on Operating Costs Working Paper, Geo. Mason

Univ. Mercatus Ctr. (Aug. 2020), https://

tinyurl.com/rtvjkh5e...................................

Rob Smith, The Regulatory Flexibility Act:

Turning a Paper Tiger Into a Legitimate

Constraint on One-Size-Fits-All Agency

Rulemaking, NFIB (May 2023), https://

tinyurl.com/yr5mtkkp ...............................

TABLE OF AUTHORITIES—Continued

Page(s)

Ronald Cass, Rulemaking Then and Now:

From Management to Lawmaking, 28

Geo. Mason L. Rev. 683 (2021) .................

Sanjay B. Varshney & Dennis H Tootelian,

Cost of State Regulations on California

Small Business Study (Sept. 2009),

https://tinyurl.com/mrmsj3vw ..................

Small Business Administration Office of

Advocacy, Comment Letter on Proposed

Rule Increasing the Minimum Wage for

Federal Contractors (Aug. 27, 2021),

https://tinyurl.com/yu856e5n ...................

Small Business Administration Office of

Advocacy, Comment Letter on Tip Regulations Under the Fair Labor Standards

Act (FLSA); Partial Withdrawal (Aug. 20,

2021), https://tinyurl.com/mrxp7vd9 ........

Thomas D. Hopkins, Profiles of Regulatory

Costs (1995), https://tinyurl.com/mwmep

39v .............................................................

U.S. Chamber of Commerce Foundation,

The Regulatory Impact on Small Business:

Complex. Cumbersome. Costly. (Mar.

2017), https://tinyurl.com/5xtc2vxm ..... 7, 11, 12

U.S. Small Business Administration Office

of Advocacy, Frequently Asked Questions

About Small Business 2023 (Mar. 27,

2023), https://bit.ly/3MyX8au ...................

vii

TABLE OF AUTHORITIES—Continued

Page(s)

W. Mark Crain & Nicole V. Crain, The Cost

of Federal Regulation to the U.S.

Economy, Manufacturing and Small

Business (2014), https://tinyurl.com/y5pa

zz9r ............................................................

INTEREST OF AMICI CURIAE1

The National Federation of Independent Business

Small Business Legal Center, Inc. (NFIB Legal Center)

is a nonprofit, public interest law firm established to

provide legal resources and be the voice for small

businesses in the nation’s courts through representation on issues of public interest affecting small businesses.

It is an affiliate of the National Federation of

Independent Business, Inc. (NFIB), which is the nation’s

leading small business association. NFIB’s mission is

to promote and protect the right of its members to own,

operate, and grow their businesses. NFIB represents,

in Washington, D.C., and all 50 state capitals, the

interests of its members.

Landmark Legal Foundation (Landmark) is a national

public interest law firm committed to preserving the

principles of limited government, separation of powers,

federalism, advancing an originalist approach to the

Constitution, and defending individual rights and

responsibilities.

Southeastern Legal Foundation (SLF), founded in

1976, is a national nonprofit, public interest law firm

and policy center that advocates for constitutional

individual liberties, limited government, and free

enterprise in the courts of law and public opinion. In

particular, SLF advocates to protect individual rights

and the framework set forth to protect such rights in

Pursuant to Supreme Court Rule 37.6, amici curiae state that

no counsel for any party authored this brief in whole or in part

and no entity or person, aside from amici curiae, their members,

or their counsel, made any monetary contribution intended to

fund the preparation or submission of this brief. Under Supreme

Court Rule 37.2(a), amici curiae notified counsel for both parties

of its intent to file this brief at least 10 days prior to the due date

for this brief.

the Constitution. This aspect of its advocacy is reflected

in the regular representation of those challenging

overreaching governmental and other actions in violation of the constitutional framework. See, e.g., Util. Air

Regulatory Grp. v. EPA, 573 U.S. 302 (2014), and

Nat’l Ass’n of Mfrs. v. Dep’t of Def., 138 S. Ct. 617

(2018). SLF also regularly files amicus curiae briefs

with this Court about issues of agency overreach and

deference. See, e.g., Kisor v. Wilkie, 139 S. Ct. 2400

(2019).

The Buckeye Institute was founded in 1989 as an

independent research and education institution—a

“think tank”—to formulate and promote free-market

public policy in the States. The Buckeye Institute

performs timely and reliable research on key issues,

compiling and synthesizing data, formulating sound

free-market policies, and promoting those policy

solutions for implementation in Ohio and across the

country. Through its Legal Center, The Buckeye

Institute works to restrain governmental overreach at

all levels of government. That government overreach

often comes in the form of agency rules and regulations imposed by unelected bureaucrats. This rule by

regulatory agencies—particularly when those agencies’

statutory interpretations are granted judicial deference

on questions of legal interpretation—is incompatible

with representative democracy and the Constitution’s

system of checks and balances.

Petitioner has thoroughly explained why the Eighth

Circuit’s decision is erroneous based on the text,

purpose, and statutory history of 16 U.S.C. § 3822.

Amici file in this case to address the second question

presented, discussing how the proliferation of agency

regulation hurts small businesses and how Chevron

deference exacerbates the problem.

INTRODUCTION AND

SUMMARY OF ARGUMENT

Much can be and has been said about Chevron

deference. For the business community, and America’s

small businesses in particular, Chevron represents a

judicially created doctrine that props up an aggressive

administrative state, leading to agency aggrandizement of power and overregulation.

Overregulation is a major problem for small business. Small firms consistently rank the regulatory

burden and associated regulatory requirements as one

of the top problems facing their business. And the

problem has gotten markedly worse since this Court

decided Chevron v. Natural Resources Defense Council,

467 U.S. 837 (1984). Businesses have watched as the

number of pages in the Code of Federal Regulations

and in the Federal Register, the number of economically significant rules, and the number of total regulatory restrictions have ballooned like the national debt.

Meanwhile, states impose tens or hundreds of thousands

more regulatory restrictions. The result is a regulatory

minefield impossible for the small business to navigate.

Beyond the regulatory burden itself, small businesses

suffer from the costs of this morass of regulation. They

pay comparatively more in regulatory costs than their

mid- and large-size counterparts, meaning regulation

is disproportionately falling on their shoulders. And

higher regulatory costs lead to a decrease in the

number of small businesses. Even though Congress

has mandated that agencies reduce the regulatory

burden and costs on small business, agencies are

ignoring this requirement and are playing fast and

loose with the law.

Chevron deference imposes dual harm on small

businesses. The first is constitutional harm. As with

all people and parties, small businesses suffer because

Chevron deference is incompatible with our constitutional separation of powers and due process. The second

is financial harm. When courts defer to agencies, they

rubber stamp questionable rules with significant

financial consequences for small businesses. And they

do so without meaningful and thorough judicial review.

Eliminating Chevron will not change the fact that

small businesses are overburdened with excessive

regulations and costs. But doing so will lessen the

burden, ensuring that regulations and their associated

costs are based on legally sound interpretations,

instead of amorphous concepts of reasonableness.

The Court should grant the petition, overrule Chevron,

and reverse the decision below. At a minimum, the

Court should hold the petition in abeyance pending

resolution in Loper Bright Enterprises, Inc. v. Raimondo

(docketed Nov. 15, 2022).

ARGUMENT

I. Today’s Regulatory Burden is a Detriment

to Small Business Success.

Overregulation handcuffs small business owners

and prevents them from effectively operating and

growing their business. It should serve as no surprise

that small businesses consistently identify the regulatory burden as an impediment to their success. Every

four years, the NFIB Research Center surveys small

businesses to determine the most pressing obstacles

hindering their success. In the most recent survey,

small business owners ranked “Unreasonable Government Regulations” sixth, with nearly one-in-five labeling

it a critical problem. NFIB Research Center, Small

Business Problems and Priorities 9 (2020), https://tiny

url.com/y9dn98xc. Nor is this a new phenomenon. In

each of the last eight surveys dating back to 1991,

“Unreasonable Government Regulations” ranked as a

top-10 problem facing small businesses Id. at 22–23.

In four of those eight surveys, small business owners

ranked it in the top five. Id.

Other regulatory burden-related issues ranked highly

as well—within the top 25. These include “Uncertainty

over Government Actions” (10th), “State/Local Paperwork” (11th), “Frequent Changes in Federal Tax Laws

and Rules” (13th), “Federal Paperwork” (15th), and

“Finding Out about Regulatory Requirements” (25th).

Id. at 9–10. For context, small business owners ranked

these regulatory obstacles as more detrimental than

typical business concerns such as cash flow (26th),

poor sales (49th), training (32nd) and managing (35th)

employees, and employee turnover (50th). Id. at 10–11.

Regulations themselves are not the only problem.

With each new regulation comes a financial cost. This

is why small business owners identified the costs of

regulatory requirements as obstacles to their success

as well. For example, “Minimum Wage/‘Living Wage’”

ranked 34th, with 13% labeling it a critical problem.

Id. at 10. “Cost of Government Required Equipment/

Procedures” ranked 39th and Mandatory Family or

Sick Leave ranked 52nd, with one in ten identifying it

as critical. Id. at 10–11.

This data reveals two things: 1) regulations themselves are burdensome to Main Street, and 2) the costs

associated with regulations hinder small business

success.

A. The Regulatory Burden Has Significantly Increased.

With each new regulation comes multiple burdens.

First, there is the compliance burden, i.e., the burden

of having to change current practices to conform to a

new regulation. Then there is the financial cost

associated with such compliance. Additionally, there

are the reporting requirements and costs to report,

recordkeeping requirements and costs to keep records,

and time or financial costs to learn about the rule, i.e.,

rule familiarization costs. Thus, with each new federal

or state regulation, comes potentially seven separate

burdens.

The modern rise of the “administrative state with its

reams of regulations would leave [the Framers] rubbing

their eyes.” Alden v. Maine, 527 U.S. 706, 807 (1999)

(Souter, J., dissenting). Today’s administrative state

“wields vast power and touches almost every aspect of

daily life” including “authority . . . over our economic,

social, and political activities.” Free Enterprise Fund v.

Public Co. Accounting Oversight Bd., 561 U.S. 477, 499

(2010); City of Arlington v. F.C.C., 569 U.S. 290, 313

(2013) (Roberts, C.J., dissenting). If the authors of the

Constitution were to see today’s executive agencies,

with wide-ranging power unmoored from the text or

structure of the Constitution as their essential feature,

they would surely question whether our founding

document still guides us, or if we long ago abandoned

it for another path.

According to the Federal Register, the administrative state includes 435 federal agencies. Federal

visited Sept. 11, 2023); but see Clyde Wayne Crews Jr.,

How Many Federal Agencies Exist? We Can’t Drain the

Swamp Until We Know Forbes (July 5, 2017, 4:03 PM),

https://tinyurl.com/ckw4chuk (noting a range between

61–443 depending on the source). If our own government

sources and administrative experts cannot accurately

count the number of federal agencies, or agree on the

definition to obtain an accurate number, how can we

expect small businesses or the layperson to know the

regulatory requirements of each separate agency?

Since this Court created Chevron deference in 1984,

agency activity has ballooned. In 1984, the Code of

Federal Regulations spanned 111,830 pages across 186

volumes. Federal Register, Code of Federal Regulations

Total Pages 1938–1949, And Total Volumes and Pages

1950–2021, https://tinyurl.com/3f76enh9 (last visited

Sept. 11, 2023). By 2021, it comprised 245 volumes and

close to 190,000 pages. Id. In 1984, the Federal Register

contained 50,998 total pages. Federal Register, Federal

tinyurl.com/yfh925r3 (last visited Sept. 11, 2023). As

of 2022, that number stands at 80,756. Id. In 1984

there were less than 25 economically significant final

rules. George Washington University Regulatory Studies

Center, Economically Significant Final Rules Published

by Presidential Year, https://tinyurl.com/yeyt3862 (last

visited Sept. 11, 2023). In recent years, this number

has often doubled, and sometimes quadrupled or quintupled. Id. According to one report by the U.S. Chamber

of Commerce, federal agencies have identified over

15,000 final rules that have a negative impact on small

business. U.S. Chamber of Commerce Foundation,

The Regulatory Impact on Small Business: Complex.

Cumbersome. Costly. 15 (Mar. 2017) (hereinafter Regulatory Impact), https://tinyurl.com/5xtc2vxm.

When discussing regulatory burdens, the cumulative

effect of regulations is often ignored. Yet this is what

makes the regulatory burden so crushing. By one

count, there are already over 1,094,000 federal regula-

tory restrictions. QuantGov, State RegData RegCensus

Explorer, Geo. Mason Univ. Mercatus Ctr., https://tiny

url.com/2fma2y88 (last visited Sept. 8, 2023). Each

year, federal agencies adopt between three to five

thousand new rules. Ronald Cass, Rulemaking Then

and Now: From Management to Lawmaking, 28 Geo.

Mason L. Rev. 683, 694 (2021). In a vacuum, the

addition of new regulations each year is burdensome.

But the regulatory burden cannot be viewed in a

vacuum, as small businesses must stack the impact of

each new regulation on top of those impacts of regulations already in effect from previous years. For the

business owner, each new regulation is another cut

toward the thousandth cut that strikes the fatal blow.

Recall that with each new regulation on small businesses, there may be up to seven separate burdens—

changing business practices, the financial cost of

compliance, reporting requirements and associated costs,

recordkeeping requirements and associated costs, and

rule familiarization costs. Being conservative, if only

25 of the 3,000–5,000 new rules each year regulate

small business, that is potentially 175 new burdens on

small business in a single year. Over a 5-year period,

this is 875 potentially distinct burdens on a small

business. And this is from federal agencies alone.

The regulatory burden on small businesses becomes

exponentially worse when considering state restrictions.

The Mercatus Center at George Mason University tracks

each state’s regulatory burden. As of 2022, California,

New York, New Jersey, Illinois, and Texas were the

top five states in terms of total regulatory restrictions

imposed. QuantGov, State RegData RegCensus Explorer,

Geo. Mason Univ. Mercatus Ctr., https://tinyurl.com/

2fma2y88 (last visited Sept. 8, 2023). California had a

jaw-dropping 404,000 total restrictions, while New

York had 299,000, New Jersey had 287,000, Illinois

had 279,000, and Texas had 273,000. Id. For context,

the number of total restrictions in California alone

exceeded the number of restrictions for Canada’s 13

provinces combined. Id. The small businesses in these

highly regulated states can hardly keep track of, let

alone absorb the burdens that come with, these federal

and state regulatory restrictions.

Not only do these burdens affect small business

owners, but also small business employees. 99.9% of

American companies are small businesses, and they

employ 61.7 million Americans, 46.4% of the private

sector workforce. U.S. Small Business Administration

Office of Advocacy, Frequently Asked Questions About

Small Business 2023 (Mar. 27, 2023), https://bit.ly/3M

yX8au. Employees depend upon their employers’ continued success, and if small businesses are straddled

with an increasing set of regulatory burdens that hamper

growth, the American workforce will likewise suffer.

The total regulatory burden on small businesses has

increased since the first days of Chevron. Overturning

Chevron will not eliminate the burden, but it will

force agencies to craft legally sound rules instead of

relying on court deference to uphold dubious agency

interpretations.

B. Small Businesses Wrongfully Bear the

Brunt of Regulatory Costs.

While each new regulation imposes hardship, regulations do not burden all businesses equally. Specifically,

regulatory costs disproportionately fall on small

businesses.

Congress has recognized that small businesses are

disproportionately affected by regulatory costs. In

Section 2(a) of the Regulatory Flexibility Act, Congress

declared that “regulations designed for application to

large scale entities have been applied uniformly to

small businesses” and that “uniform Federal regulatory and reporting requirements have in numerous

instances imposed unnecessary and disproportionately

burdensome demands including legal, accounting

and consulting costs upon small businesses . . . with

limited resources[.]” Regulatory Flexibility Act (RFA),

Pub. L. No. 96–354, § 2(a)(2–3), 94 Stat. 1164, 1164

(1980) (codified at 5 U.S.C. § 601 note). Because of the

disproportionate impact of regulation on small business,

Congress mandated that agencies conduct, subject to

a few narrow exceptions, front- and back-end analyses

to minimize the burden on small businesses and fit

regulation to the scale of the business. See 5 U.S.C. § 603

(mandating an Initial Regulatory Flexibility Analysis

(IRFA)); 5 U.S.C. § 604 (requiring a Final Regulatory

Flexibility Analysis (FRFA)). However, a recent NFIB

White Paper revealed that agencies give short shrift

to, or altogether ignore, these congressional mandates,

regardless of the disproportionate impact their regulation has on small business. See Rob Smith, The Regulatory Flexibility Act: Turning a Paper Tiger Into a

Legitimate Constraint on One-Size-Fits-All Agency Rulemaking, NFIB (May 2023) https://tinyurl.com/yr5mtkkp.

Historical data proves that small businesses pay

more in regulatory costs than their mid- or large-size

counterparts. One 1995 report found that businesses

with fewer than 20 employees spent $5,532 per employee

in regulatory costs during 1992. Thomas D. Hopkins,

Profiles of Regulatory Costs 20 (1995), https://tinyurl.

com/mwmep39v. In the same year, businesses with

20-499 employees spent $5,298 per employee in regulatory costs, while businesses with over 500 employees

paid only $2,979. Id. A 2014 analysis revealed the

same—the smallest of businesses continue to pay

more per employee in regulatory costs than their

counterparts. Businesses with less than 50 employees

spent $11,724 in regulatory costs per employee per

year, while mid-sized firms spent $10,664 and large

firms spent just over $9,000 per employee per year.

W. Mark Crain & Nicole V. Crain, The Cost of Federal

Regulation to the U.S. Economy, Manufacturing and

Small Business 1 (2014), https://tinyurl.com/y5pazz9r.

Agency activity from 2015 provides additional evidence

that small businesses are shouldering most of the

regulatory cost burden. In that year, the Departments

of Energy, Health and Human Services, Labor, Transportation, and Environmental Protection Agency

combined published 63 economically significant final

rules. Regulatory Impact, supra, at 9. Of these, agencies

identified 23 as having a significant impact on a

substantial number of small businesses. Regulatory

Impact, supra, at 9. The total regulatory cost to all

businesses from these 23 rules was $4.9 billion, but

small businesses were left holding the bag for over $4

billion, or 82% of the total regulatory cost. Regulatory

Impact, supra, at 9, Table A1.

Higher regulatory costs lead to small business

closures. Each 10 percent increase in cumulative

regulatory costs for a specific industry leads to a 3-6

percent decrease in the number of businesses with

fewer than 100 employees in that industry. Ben Gitis

& Sam Batkins, Regulatory Impact on Small Business

Establishments Table 1, American Action Forum (Apr.

24, 2015), https://tinyurl.com/52z28uvb. Narrowing

this to the smallest of small businesses (those with less

than 20 employees), a 10 percent increase in regulatory costs leads to a 5-6 percent reduction in small

businesses. Id. A separate analysis found that every

dollar increase in per capita regulatory expenditures

results in a 0.0156% decrease in small businesses with

1-4 employees. Regulatory Impact, supra, at 10 (citing

Peter T. Calcagno & Russell S. Sobel, Regulatory Costs

on Entrepreneurship and Establishment Employment

Size Small Business Economics (June 2013)). Based on

this finding, every $65 increase in per capita regulatory expenditures results in the closing of one business

with 1-4 employees. A $5,000 increase in the regulatory burden results in the closing of 78 small businesses

of that size. Moreover, the average annual regulatory

growth increases business operating costs per unit of

output by 3.3 percent. Richard Fullenbaum & Tyler

Richards, The Impact of Regulatory Growth on

Operating Costs Working Paper, Geo. Mason Univ.

Mercatus Ctr. (Aug. 2020), https://tinyurl.com/rtvjkh5e.

From this, one economic analysis posits that, excluding all other factors, regulations alone would have

raised operating costs between 1998 and 2017 by 92

percent. Id. at 20.

This is only the beginning. Beyond these federal

regulatory costs, small businesses incur the costs from

state and local regulation. While it is incredibly

difficult to measure a small business’s total regulatory

cost from federal, state, and local restrictions, one

analysis provides insight into how significant the state

regulatory burden can be. For example, in 2007 the

total cost of regulation in California was $134,122.48

per each small business with less than 20 employees.

Sanjay B. Varshney & Dennis H Tootelian, Cost of

State Regulations on California Small Business Study

5 (Sept. 2009), https://tinyurl.com/mrmsj3vw.

Federal and state regulatory costs are significant for

small businesses. On top of the enormous regulatory

burden, agencies are forcing regulated entities with

the fewest resources—small businesses—to pay the

most in regulatory costs.

II. Chevron Deference Hurts Small Businesses Constitutionally and Financially.

Chevron deference raises serious constitutional

questions. See Kisor v. Wilkie, 139 S. Ct. 2400, 2446,

n. 114 (2019) (Gorsuch, J., dissenting). Overturning

Chevron would not bring government action to a halt.

See Brief for The Buckeye Institute & National

Federation of Independent Business Small Business

Legal Center, Inc. as Amicus Curiae Supporting

Petitioner, Loper Bright Enterprises, Inc. v. Raimondo,

No. 22–451 (listing a myriad of states abandoning

Chevron with little known adverse impact on government function and discussing a post-Chevron world).

This is so because “[o]ne can have a government that

functions without being ruled by functionaries, and a

government that benefits from expertise without being

ruled by experts.” Free Enterprise Fund, 561 U.S. at 499.

Many of the oft-noted problems with Chevron apply

equally to small businesses. When courts permit agencies

to interpret and enforce the law, small businesses lose

the fullest protection from our constitutional separation

of powers. When courts defer to an agency’s interpretation of the law in a case involving a small

business, the business loses its due process right to a

neutral decisionmaker—Chevron impermissibly tips

the scales in favor of the government. The bar is thus

low for agencies, but high for businesses, who have the

untenable burden of proving unreasonableness. The

playing field ought to be leveled, and this case presents

an excellent vehicle for doing so.

Beyond Chevron’s constitutional deficiencies—more

than enough to jettison it—the reliance on Chevron

deference to resolve litigation imposes direct financial

costs on small businesses.

Consider a recent rule from the Department of

Labor (DOL) raising the minimum wage for federal

contractors. Increasing the Minimum Wage for Federal

Contractors, 86 Fed. Reg. 67126 (Nov. 24, 2021); see

also Increasing the Minimum Wage for Federal Contractors, 86 Fed. Reg. 22835 (Apr. 30, 2021) (President

Biden’s Executive Order 14026 (Apr. 27, 2021) directing an increase in the minimum wage). This rule raises

the minimum wage for small government contractors,

small subcontractors, and small entities seeking government contracts to $15.00 per hour. 86 Fed. Reg. at

67131. The President and DOL rely on the Federal

Property and Administrative Services Act, 40 U.S.C.

101, et. seq., (Act) to justify this increase. Id. at 67129.

DOL admits that this rule is “economically significant.” Id. at 67194. Shockingly, DOL then claims that

the rule “is not expected to have a significant economic

impact on a substantial number of small entities.” Id.

at 67217. This is so even though DOL admits the rule

will affect 507,200 private firms, including 385,100

small entities. Id. at 67127–28. The agency also estimates average annualized direct employer costs at

$2.4 million, with direct transfer of income from

employers to employees costing employers $1.8 billion.

Id. at 67204. Notably, this astronomical figure does not

include spillover costs of increasing wages proportionally for those already making over $15.00 per hour. Id.

at 67211.2

The Small Business Administration’s Office of Advocacy

rejected this same certification in the proposed rule as lacking a

“factual basis” due to the “agency itself” providing “evidence of

As far as amici can tell, DOL has not raised Chevron

to protect its interpretation of the Act during current

litigation over the minimum wage increase. If it did,

and courts accepted this argument, they would be

rubber stamping the agency’s erroneous 5 U.S.C. § 605(b)

certification. More concerning, they would be permitting

millions, and billions, in costs from the rule, without

meaningful judicial review of the agency’s legal authority.

Pending before this Court is Loper Bright Enterprises,

Inc. v. Raimondo, No. 22-451, which provides another

example. At issue there is a final rule from the

National Marine Fisheries Services (NMFS) mandating

industry funded monitors among all New England

fisheries. See 85 Fed. Reg. 7414 (Feb. 7, 2020). The rule

will have “direct economic impacts” on small New

England fisheries, costing “$710 per day” of monitoring and an annual return-to-owner (RTO) reduction of

“approximately 20 percent.” Id. at 7418. A divided

panel of the D.C. Circuit upheld the rule, relying on

Chevron. See Loper Bright Enterprises, Inc. v. Raimondo,

45 F.4th 359 (D.C. Cir. 2022).

If this Court upholds that decision, keeping Chevron

alive in the process, Chevron deference will cost these

New England fisheries a significant amount of money.

One 7-day fishing excursion would cost a small fishery

almost $5,000 for the monitor alone. And that is a fixed

cost whether the boat catches any fish at all. Put

another way, one application of Chevron deference

could cost a small fishery 6% of the average annual

regulatory cost for businesses with less than 50

the rule’s impact.” Small Business Administration Office of

Advocacy, Comment Letter on Proposed Rule Increasing the

Minimum Wage for Federal Contractors, (Aug. 27, 2021), https://

tinyurl.com/yu856e5n.

employees. Just two one-day trips a month would cost

them over $17,000 per year. And since no fishery can

survive on one day per year, or even two days per

month, it is easy to see how the application of Chevron

in this case could drastically raise annual regulatory

costs for these businesses.

Take, for another example, the EPA’s failed attempt

to regulate the waters of the United States. Revised

Definition of “Waters of the United States,” 88 Fed. Reg.

3004 (Jan. 18, 2023); see Sackett v. Env’t Prot. Agency,

598 U.S. 651 (2023) (rejecting EPA’s interpretation).

An application of Chevron to the EPA’s interpretation

of the Clean Water Act would have broadened EPA’s

jurisdiction, increasing permitting costs and work

delays for businesses. See Brief for Respondents at 38,

Sackett v. Env’t Prot. Agency, 598 U.S. 651 (2023) (No.

21-454) (citing Chevron to support argument that

“[t]he Agencies’ Understanding Of The CWA’s Coverage

Of Adjacent Wetlands Is Entitled To Deference”).

Yet another example is DOL’s Tip Regulations

Under the Fair Labor Standards Act (FLSA); Partial

Withdrawal, 86 Fed. Reg. 60114 (Oct. 29, 2021). The

Western District of Texas recently rebuffed a challenge to the rule, relying on Chevron to grant the

Government’s Motion for Summary Judgment. See

Restaurant Law Center v. Dep’t of Labor, No. 1:21-CV1106, 2023 WL 4375518 (W.D. Tex. July 6, 2023). If

this decision stands, small businesses will face firstyear per entity costs of nearly $500, and per year costs

in subsequent years of over $375. 86 Fed. Reg. at

60150–51. But this is severely underestimated, as the

figure does not include wage costs. See id. at 60155;

Cost per day ($710) / Average annual cost ($11,724) = 0.06.

Small Business Administration Office of Advocacy,

Comment Letter on Tip Regulations Under the Fair

Labor Standards Act (FLSA); Partial Withdrawal

(Aug. 20, 2021), https://tinyurl.com/mrxp7vd9 (criticizing

this exclusion in the proposed rule and providing

examples where the rule could cost businesses hundreds of thousands of dollars).

These are just the tip of the iceberg. There are

countless examples where Chevron’s use has hurt

small businesses. They suffer from its infringement

upon the separation of powers and its hinderance on

due process. More directly, the application of Chevron

to uphold legally suspect agency rules costs them

financially.

CONCLUSION

For the reasons mentioned above and those laid out

by Petitioner, the Court should grant the petition,

overrule Chevron, and reverse the decision below. At a

minimum, the Court should hold the petition in abeyance pending resolution in Loper Bright Enterprises,

Inc. v. Raimondo.

Respectfully submitted,

RICHARD P. HUTCHISON

MATTHEW C. FORYS

MICHAEL J. O’NEILL

LANDMARK LEGAL

FOUNDATION

19415 Deerfield Avenue

Suite 312

Leesburg, VA 20176

(703) 554-6100

mike@landmarklegal.org

ELIZABETH GAUDIO MILITO

Counsel of Record

ROB SMITH

NFIB SMALL BUSINESS

LEGAL CENTER, INC.

555 12th Street, NW

Suite 1001

Washington, DC 20004

(202) 406-4443

elizabeth.milito@nfib.org

rob.smith@nfib.org

DAVID C. TRYON

BRADEN H. BOUCEK

THE BUCKEYE INSTITUTE

88 East Broad Street

KIMBERLY S. HERMANN

Suite 1300

SOUTHEASTERN LEGAL

FOUNDATION

Columbus, OH 43215

560 W. Crossville Road

(614) 224-4422

d.tryon@buckeyeinstitute.org Suite 104

Roswell, GA 30075

(770) 977-2131

Counsel for Amici Curiae

September 14, 2023

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.