Amicus Curiae Brief — Whitman v. American Trucking Assns., Inc.

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a FILED

Cd SEP 11 2000

No. 99-1257

IN THE CLERK

Supreme Court, U.S.

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Supreme Court of the Hnited States

CAROL M. BROWNER, ADMINISTRATOR OF THE UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY , ET AL.,

Petitioners,

v.

AMERICAN TRUCKING ASSOCIATIONS, INC., ET AL.,

Respondents.

On Writ Of Certiorari

To The United States Court Of Appeals

For The District of Columbia Circuit

BRIEF FOR THE AMERICAN INSTITUTE OF

CERTIFIED PUBLIC ACCOUNTANTS, ARTHUR

ANDERSEN LLP, DELOITTE & TOUCHE LLP,

AND KPMG LLP AS AMICI CURIAE

IN SUPPORT OF RESPONDENTS

THEODORE B. OLSON

Counsel of Record

DOUGLAS R. Cox

MARK A. PERRY

BRIAN C. GOEBEL

GIBSON, DUNN & CRUTCHER LLP

wancees et Saar”

(202) 955-8500

September 11, 2000 Counsel for Amici Curiae

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QUESTION PRESENTED

Whether, under the nondelegation doctrine, an

agency’s authority to make significant policy decisions,

such as those imposing substantial regulatory compli-

ance costs on a profession or industry, subjecting it to

unprecedented federal regulation, or curtailing constitu-

tionally protected liberties, must be grounded upon a

clear statement by Congress that it has delegated such

authority to the agency.

(i)

TABLE OF CONTENTS

QUESTION PRESENTED........:.:c.cccceccssccsesecesereceesereseses 1

TABLE OF AUTHORITIEG.............ccccccscscsscesesceseeceesens iv

INTEREST OF AMICI CURIAE...........cccccccccseseseeeeeecees |

I aieciniitiiiiaiiicaaatantiascia ata 3

SUMMARY OF ARGUMENT ..........ccccccsssssssesecececececees 4

SUSE ETNEN a seriaiitinsintnininiesieitinntitiintiaieitiisitiaiiiniaesti eins 5

Se ED sicianninsshiineceinistiaisibtimnbiniiiniisitinde eae: 19

(iii)

iv

TABLE OF AUTHORITIES

Cases

A.L.A. Schechter Poultry Corp. v. United States,

a Ch Se Ee ttccrennennnnmnintnimnnnens 6

American Trucking Ass'ns, Inc. v. EPA, 175 F.3d

ge passim

Atascadero State Hosp. v. Scanlon, 473 U.S. 234

SEE narcennenensserentssnetnnmmenenstemennnisnationenieiinaiiemeninee 11

EEOC v. Arabian American Oil Co., 499 U.S.

Ne cctarenndneiimemememieinnnen 12

FDA v. Brown & Williamson Tobacco Corp., 120

Be GR, Bare Ce cccrcnecccccernnnnnsseninnnnsensmniniain 15,17

FPC v. New England Power Co., 415 U.S. 345

SEPP cnsncnsnnnsnntsnnneitenneeneteememenienmnnmenseemmanmennennenentin 9

Garcia v. San Antonio Metro. Transit Authority,

SF es Se ee precntenienntnnnnmnnnns 13

Greene v. McElroy, 360 U.S. 474 (1959).......cccccceeeeeeees 8

Gregory v. Ashcroft, 501 U.S. 452 (1991) ............. 11,13

Industrial Union Dep't, AFL-CIO v. American

Petroleum Inst., 448 U.S. 607 (1980) .............. passim

International Union, UAW v. OSHA, 938 F.2d

Se elre GR) SED crenteiccenennenticcneneinnenionimenreaes 4

Kent v. Dulles, 357 U.S. 116 (1958) ..........cccccceeseeeee 8, 12

Landgraf v. USI Film Products, 511 U.S. 244

ISD ccnerennepnenesonsnnpenitiiteuneuntientonntemensinioneemegimien 12

Vv

MCI Telecommunications Corp. v. American

Telephone & Telegraph Co., 512 U.S. 218

SSouaT PT cicclicieseteitaieietieniieetadehieiieaeintaiaat 14, 15, 17

Mistretta v. United States, 488 U.S. 361 (1989)...... 6, 14

National Cable Television Ass'n, Inc. v. United

States, 415 U.S. 336 (1974) .o..cccccccccesceseeeees 9, 10, 17

Panama Refining Co. v. Ryan, 293 U.S. 388

SS isecsitintinitietininitiepataiaii aia 5, 6

Skinner v. Mid-America Pipeline Co., 490 U.S.

I ieineeibieihiieiiiiii iia aii 7,9

United States v. Bass, 404 U.S. 336 (1971) ...ccccccccceoeee 11

Constitution, Statutes and Regulations

8 ee ee TE 5

Se ne Oe ee iaseieierinrtulanicetiiaiaiiitinnaiaiiiaitaaiiiaiiatiie 3

ae PP ariiicitalctiiiatinetitiiceiialiai alain iti tate 3,18

Se i CR, ee CU cciciercricniscesinitcniciniienieaasaisl 3

eee 3

65 Fed. Reg. 43,148 (2000) .........cccccccceceeeees 2, 16, 17, 18

Other Authorities

Tribe, American Constitutional Law (2d ed.

IPUIUEP secsintanciantenneniitannsabiemnatinitsiattnnetnmansitiiniibimiaiibiiaie 13

IN THE

Supreme Court of the United States

No. 99-1257

CAROL M. BROWNER, ADMINISTRATOR OF THE UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY , ETAL.,

Petitioners,

v.

AMERICAN TRUCKING ASSOCIATIONS, INC., ET AL.,

Respondents.

On Writ Of Certiorari

To The United States Court Of Appeals

For The District of Columbia Circuit

BRIEF FOR THE AMERICAN INSTITUTE OF CERTIFIED

PUBLIC ACCOUNTANTS, ARTHUR ANDERSEN LLP,

DELOITTE & TOUCHE LLP, AND KPMG LLP

AS AMICI CURIAE IN SUPPORT OF RESPONDENTS

INTEREST OF AMICI CURIAE!

The American Institute of Certified Public Account-

ants is the national professional organization for all Cer-

tified Public Accountants. Its mission is to provide

members with the resources, information, and leadership

that enable them to provide valuable services in the

1 Pursuant to this Court’s Rule 37.6, amici state that no coun-

sel for any party authored this brief in whole or in part, and no per-

son or entity other than amici, their members, or their counsel

made a monetary contribution to the preparation or submission of

the brief. Counsel of record for all parties have consented to the

filing of this brief in letters that have been lodged with the Clerk.

2

highest professional manner to benefit the public as well

as employers and clients. In fulfilling its mission, the

AICPA works with state CPA organizations and gives

priority to those areas where public reliance on CPA

skills is most significant.

Arthur Andersen LLP is one of the “Big 5” account-

ing firms, with more than 70,000 employees in 83 coun-

tries. Arthur Andersen’s mission is to build relation-

ships and develop innovative solutions to help dynamic

people and organizations create and realize value.

Deloitte & Touche LLP, another Big 5 firm, is part of

Deloitte Touche Tohmatsu, one of the world’s leading

professional services firms, with more than 90,000 peo-

ple in over 130 countries. Deloitte & Touche creates

solutions to business problems based on a thorough

grasp of each client’s needs. KPMG LLP, also a Big 5

accounting firm, is the U.S. member of KPMG Interna-

tional, which has more than 100,000 professionals in

member firms in 159 countries. KPMG helps clients

successfully respond to changing opportunities by pro-

viding professional services that enhance operational

and financial performance.

Amici curiae are confronted with a rulemaking pro-

ceeding by the Securities and Exchange Commission

that has the potential to work fundamental changes in

the accounting profession by introducing new and

sweeping federal regulation of professional services

firms. See 65 Fed. Reg. 43,148 (2000). This rulemak-

ing raises issues under the nondelegation doctrine that

parallel those in this case. Amici have a vital and endur-

ing interest in ensuring that federal administrative agen-

cies do not exceed the authority constitutionally dele-

gated to them by Congress.

3

STATEMENT

The Clean Air Act (“CAA”) requires the Environ-

mental Protection Agency (“EPA”) to promulgate and

periodically revise national ambient air quality standards

for certain pollutants. See 42 U.S.C. §§ 7408-09. For

each pollutant, the EPA sets a primary and secondary

standard. See § 7409(b). In 1997, the EPA issued final

rules revising the primary and secondary standards for

ozone and particulate matter (“PM”). See 62 Fed. Reg.

38,652 (1997); 62 Fed. Reg. 38,856 (1997). Numerous

petitions for review were filed in the United States Court

of Appeals for the District of Columbia Circuit challeng-

ing the validity of the final rules. See American Truck-

ing Ass'ns, Inc. v. EPA, 175 F.3d 1027, 1033 (D.C. Cir.

1999). These petitioners charged, inter alia, that the au-

thority claimed by the EPA under the CAA is inconsis-

tent with the Court’s nondelegation doctrine and the

separation of powers principles that it preserves.

The court of appeals concluded that the EPA’s con-

struction of the CAA violated the nondelegation doctrine

because the agency failed to articulate an intelligible

principle “to channel its application” of the statutory

factors it was required to consider when revising the

primary and secondary standards for ozone and PM. /d.

at 1034. The court of appeals did not strike down the

CAA as unconstitutional, but rather held that the air

quality standards could not be enforced and remanded

the matter to the EPA to develop an interpretation of the

CAA that would confine its discretion within constitu-

tional bounds when setting air quality standards. See id.

at 1038.

In reaching the issue of whether the EPA’s interpre-

tation of the CAA violated the nondelegation doctrine,

4

the court of appeals did not apply its previous teaching

that, under the nondelegation doctrine, federal courts

“require a clear statement by Congress that it intended to

test the constitutional waters” in cases involving broad

delegations of policymaking authority to administrative

agencies. See International Union, UAW v. OSHA, 938

F.2d 1310, 1316-17 (D.C. Cir. 1991). The court of ap-

peals did not rely on this clear statement rule even

though it found that the “latitude [claimed by the] EPA

... [was] seem[ingly] even broader than that OSHA as-

serted in Jnternational Union” and provided the EPA

with the authority to “send industry not just to the brink

of ruin but hurtling over it.” 175 F.3d at 1037. Applica-

tion of the clear statement rule in this case would have

provided an alternative ground to reach the same result,

while avoiding the difficult constitutional question that

the court of appeals addressed pursuant to the nondele-

gation doctrine.

SUMMARY OF ARGUMENT

The Court should explicitly incorporate a clear

statement requirement into the nondelegation doctrine as

a constitutionally required check on sweeping assertions

of power by federal agencies—including the Securities

and Exchange Commission, which is attempting to as-

sert unprecedented power to regulate amici and the en-

tire accounting profession.

The Court should adopt a clear statement require-

ment as an aspect of judicial scrutiny of agency rule-

making pursuant to the nondelegation doctrine for at

least three reasons. First, the Court has invoked clear

statement principles in previous cases involving the

nondelegation doctrine. Those principles further the

policies underlying the nondelegation doctrine as well as

5

the judicial practice of deciding constitutional issues

only when it is necessary to do so. The reasoning of the

Court’s prior decisions suggests that a clear statement

rule should be expressly incorporated into the nondele-

gation doctrine. Second, the concerns that have led the

Court to impose clear statement rules in other legal con-

texts are also present in cases involving agency claims

of broad policymaking authority. Accordingly, the

Court should incorporate a clear statement rule into the

nondelegation doctrine to address these concerns. Third,

given the limits of judicial review inherent in the tradi-

tional nondelegation doctrine, adopting a clear statement

tule as part of that doctrine would further the separation

of powers principles underlying the doctrine and would

be instrumental in constraining agency behavior. Appli-

cation of such a clear statement rule requires that the

EPA’s action in this case be invalidated and the court of

appeals’ decision be affirmed.

ARGUMENT

Under the separation of powers principles enshrined

in the Constitution, the legislative power is assigned to

Congress rather than the executive or the judiciary. U.S.

Const. Art. I, § 1; Industrial Union Dep’t, AFL-CIO v.

American Petroleum Inst., 448 U.S. 607, 675 (1980)

(“Benzene”) (Rehnquist, J., concurring). As a result, it

has long been settled that “Congress . . . is not permitted

to abdicate, or to transfer to others, the essential legisla-

tive functions with which it is . .. vested.” Panama Re-

fining Co. v. Ryan, 293 U.S. 388, 421 (1935).

At the same time, the “Constitution has never been

regarded as denying to the Congress the necessary re-

sources of flexibility and practicality, which will enable

it to perform its function in laying down policies and es-

6

tablishing standards, while leaving to selected instru-

mentalities the making of subordinate rules within pre-

scribed limits and the determination of facts to which the

policy as declared by the legislature is to apply.” Jbid.;

see also Benzene, 448 U.S. at 675 (Rehnquist, J., con-

curring) (stating that “common sense” and “necessit[y]”

dictate that Congress must be able to “lay down the gen-

eral policy and standards that animate the law, leaving

the agency to refine those standards, ‘fill in the blanks,’

or apply the standards to particular cases”).

When confronted with a claim that Congress has

impermissibly delegated its legislative authority to an

administrative agency, the Court has traditionally re-

viewed the statutory text and context, as well as any ap-

plicable legislative history, to determine if there is an

“intelligible principle” that confines the agency’s discre-

tion and to which the agency must conform when exer-

cising the authority ostensibly granted to it by Congress.

See Benzene, 448 U.S. at 675-76 (Rehnquist, J., concur-

ring); Panama Refining, 293 US. at 429-30. In the ab-

sence of such an intelligible principle, a statute consti-

tutes an impermissible delegation of legislative power if

it allows the agency rather than Congress to set national

policy. See, e.g., A.L.A. Schechter Poultry Corp. v.

United States, 295 U.S. 495 (1935); Panama Refining,

293 U.S. at 433.

This judicial scrutiny of the permissible parameters

of agency policymaking authority is referred to as the

“nondelegation doctrine.” Mistretta v. United States,

488 U.S. 361, 373 n.7 (1989) (noting that the Court has

also relied on the policies underlying the nondelegation

doctrine to give “narrow[ing] constructions to [broad]

statutory delegations”). This case provides the Court

7

with an opportunity to refine the contours of the non-

delegation doctrine. The Court should use this opportu-

nity to adopt a clear statement rule—a requirement that

certain assertions of agency authority be based on a clear

delegation of that authority by Congress—as part of that

doctrine. In particular, a clear congressional statement

Should be required to sustain an agency’s authority to

make a variety of significant policy decisions, such as

those imposing highly burdensome regulatory compli-

ance costs on an industry or profession, subjecting an

entire industry or profession to unprecedented federal

regulation, or curtailing constitutionally protected liber-

ties.2

1. To further the policies underlying the nondelega-

tion doctrine, the Court has relied on clear statement

principles in previous cases involving the scope of an

2 The adoption of such a clear statement requirement does not

mean that the Court should abandon judicial review of congres-

sional delegations of policymaking authority. If Congress has

clearly intended to give an agency policymaking authority on a

significant issue, then the Court should engage in its traditional

nondelegation doctrine analysis. See Skinner v. Mid-America

Pipeline Co., 490 U.S. 212, 224 (1989) (stating that even when

Congress clearly intends to delegate certain authority to an agency,

“any such delegation must also meet the normal requirements of

the nondelegation doctrine”). Applying that traditional frame-

work, the Court should carefully review the federal legislation to

determine whether Congress has provided the agency with dis-

cernable limits on the scope of its delegated authority and, if it has

not, whether the absence of such limits is nevertheless justified as

a matter of necessity. If the lack of an intelligible principle is not

the result of some necessity, then the legislation is unconstitu-

tional. See Benzene, 448 U.S. at 671-88 (Rehnquist, J., concur-

ring) (discussing the Court’s traditional nondelegation analysis).

8

agency’s authority. The reasoning of these cases sug-

gests that a clear statement rule should be utilized in all

nondelegation doctrine cases involving significant pol-

icy decisions by agencies.

a. The Court has held that agencies do not have the

authority to promulgate regulations curtailing constitu-

tionally protected liberties absent a clear statement by

Congress delegating that authority to the agencies. See

Greene v. McElroy, 360 U.S. 474 (1959); Kent v. Dul-

les, 357 U.S. 116 (1958). These decisions are based, in

part, on the principle that the Court should avoid decid-

ing constitutional questions when it is possible to do so.

See Kent, 357 U.S. at 130 (“We would be faced with

important constitutional questions were we to hold that

Congress . . . had given the Secretary authority to with-

hold passports to citizens because of their beliefs or as-

sociations. Congress has made no such provision in ex-

plicit terms; and absent one, the Secretary may not em-

ploy that standard to restrict the citizens’ right of free

movement.”’).

These decisions are also based on the separation of

powers principles underlying the nondelegation doc-

trine. In Greene, the Court held that a delegation of au-

thority to impede the exercise of a constitutional nght

“must be made explicitly ... because [this type of gov-

ernment] action . . . requires careful and purposeful con-

sideration by those responsible for enacting and imple-

menting our laws. Without explicit action by lawmak-

ers, decisions of great constitutional import and effect

would be relegated by default to administrators who,

under our system of government, are not endowed with

authority to decide them.” Greene, 360 U.S. at 507.

Thus, by requiring unambiguous evidence of congres-

9

sional intent to confer significant authority upon an

agency, the clear statement rule furthers the fundamental

policy underlying the nondelegation doctrine—

“ensur[ing] to the extent consistent with orderly gov-

ernmental administration that important choices of so-

cial policy are made by Congress, the branch of our

Government most responsive to the popular will.” Ben-

zene, 448 U.S. at 685 (Rehnquist, J., concurring).

b. The Court has also recognized that decisions cur-

tailing constitutional liberties are not the only types of

“important choices of social policy” that should be made

by Congress rather than an agency. As a result, the

Court has utilized clear statement principles to resolve

challenges to agency efforts to impose significant regu-

latory compliance costs on entire industries or to exer-

cise unprecedented powers over American businesses.

In cases dealing with administrative costs imposed

on the cable television industry and the natural gas in-

dustry by federal agencies, for example, the Court has

held that “Congress must indicate clearly its intention to

delegate to the Executive the discretionary authority to

recover administrative costs not inuring directly to the

benefit of regulated parties by imposing additional fi-

nancial burdens, whether characterized as ‘fees’ or

‘taxes,’ on those parties.” Skinner v. Mid-America Pipe-

line Co., 490 U.S. 212, 224 (1989) (summarizing Na-

tional Cable Television Ass'n, Inc. v. United States, 415

U.S. 336 (1974), and FPC v. New England Power Co.,

415 U.S. 345 (1974)). The Court adopted this clear

statement requirement, in part, because the power to im-

pose costs on a regulated industry carries with it the pos-

sibility that an agency would use that power to penalize

those with whom it disagrees or to impose enormous

10

economic burdens on the members of that industry. See

National Cable Television Ass’n, 415 U.S. at 340-42.

Likewise, a plurality of the Court has also recognized

that “[iJn the absence of a clear mandate in the [ena-

bling] Act, it is unreasonable to assume that Congress

intended to give [an agency] . . . unprecedented power

over American industry” or the “power to impose enor-

mous costs” on businesses. Benzene, 448 U.S. at 645

(plurality opinion). Accordingly, adopting a clear

statement requirement is also an appropriate method of

constraining agency efforts to regulate businesses in an

unprecedented manner or in a manner that imposes sig-

nificant regulatory compliance costs on those busi-

nesses.

2. The Court has adopted clear statement rules in

other areas of the law in response to two principal con-

cerns. First, the Court has required a clear statement of

congressional intent in a variety of circumstances to en-

sure that Congress has explicitly considered the impor-

tant policy question at issue in the case. As noted above,

the nondelegation doctrine also reflects an effort by the

Court to ensure that Congress fulfills its constitutional

role as a policymaker. Second, in cases involving fed-

eral legislation in areas that are traditionally the concern

of the states, the Court has adopted a clear statement rule

to preserve separation of powers principles that are oth-

erwise difficult to enforce judicially. Like the federal-

ism principles embodied in the Tenth Amendment, the

separation of powers principles giving rise to the non-

delegation doctrine are not always readily enforceable

by the federal courts. Thus, because the concerns that

led the Court to adopt clear statement rules in other con-

texts are also present in the nondelegation context, a

11

clear statement rule like the one described above should

be adopted as part of the nondelegation doctrine.

a. The Court has frequently required Congress to in-

dicate clearly that it intends to alter the balance of power

between the federal and state governments through fed-

eral legislation. See, e.g., Gregory v. Ashcroft, 501 U.S.

452, 459-60 (1991) (requiring a clear statement of con-

gressional intent to legislate in “areas traditionally regu-

lated by the States”); Atascadero State Hosp. v. Scanlon,

473 U.S. 234 (1985) (requiring a clear statement of con-

gressional intent to override a State’s Eleventh Amend-

ment immunity); United States v. Bass, 404 U.S. 336

(1971) (requiring a clear statement of intent to transform

misconduct that has traditionally been prosecuted by the

States into a federal crime). This clear statement rule

requires Congress to consider important issues of feder-

alism and separation of powers in the first instance al-

lows federal courts to avoid deciding constitutional is-

sues unnecessarily: “[U]nless Congress conveys its pur-

pose clearly, it will not be deemed to have significantly

changed the federal-state balance.... In traditionally

sensitive areas, such as legislation affecting the federal

balance, the requirement of clear statement assures that

the legislature has in fact faced, and intended to bring

into issue, the critical matters involved in the judicial

decision.” Bass, 404 U.S. at 349.

Legislation affecting the division of legislative

authority between Congress and the administrative state,

like legislation raising federalism concerns, raises

equally sensitive separation of powers issues. See, e.g.,

Benzene, 448 U.S. at 673-74 (Rehnquist, J., concurring).

Accordingly, just as it has done in the area of federal-

ism, the Court should adopt a clear statement rule as part

12

of the nondelegation doctrine to ensure that Congress

explicitly considers not only “important choices of so-

cial policy,” but also the constitutional concerns that are

implicated by delegating to agencies the authority to

make those policy choices. In addition, adopting a clear

statement rule would allow federal courts to avoid

reaching the sensitive separation of powers issues raised

by a delegation of policymaking authority on an impor-

tant question of national policy in cases where Congress

has not already considered those issues in the first in-

stance. Cf. Kent, 357 U.S. at 130.

b. The Court has also invoked the constitutional

principle that Congress is the government branch re-

sponsible for making important policy determinations

when imposing a clear statement rule in contexts that do

not raise federalism concerns. See Landgraf v. USI Film

Products, 511 U.S. 244 (1994); EEOC v. Arabian

American Oil Co., 499 U.S. 244 (1991). In Landgraf,

the Court required a clear statement of congressional in-

tent concerning the retroactivity of federal legislation

because “[rjequiring clear intent assures that Congress

itself has affirmatively considered the potential unfair-

ness of retroactive application and determined that it is

an acceptable price to pay for the countervailing bene-

fits. Such a requirement allocates to Congress responsi-

bility for fundamental policy judgments.” 511 U.S. at

272-73. Similarly, in Arabian American Oil, the Court

required a clear statement of congressional intent that a

federal law applies extraterritorially in order to assure

that Congress has carefully considered the implications

of potential conflicts between “our laws and those of

other nations.” 499 U.S. at 248. Like the rationale for

adopting clear statement rules in federalism cases, the

13

rationale for imposing clear statement rules in other con-

texts—to ensure that Congress makes fundamental pol-

icy decisions—also supports utilizing a clear statement

rule as part of the nondelegation doctrine.

c. The Court’s decision to impose a clear statement

rule in cases involving federal regulation of areas tradi-

tionally regulated by the States is based not only on the

principle that Congress should make important policy

decisions, but also on the Court’s recognition that the

federalism principles at issue in these cases are not par-

ticularly susceptible to judicial enforcement. See Greg-

ory, 501 U.S. at 464 (discussing Garcia v. San Antonio

Metro. Transit Authority, 469 U.S. 528 (1985)). In

Gregory, the Court explicitly justified the clear state-

ment rule on this basis: “[I]nasmuch as this Court in

Garcia has left primarily to the political process the pro-

tection of the States against intrusive exercises of Con-

gress’ Commerce Clause powers, we must be absolutely

certain that Congress intended such an exercise. ‘To

give the state-displacing weight of federal law to mere

congressional ambiguity would evade the very proce-

¢) 2 for lawmaking on which Garcia relied to protect

Stai interests.” 501 U.S. at 464 (quoting Tribe,

American Constitutional Law § 6-25, at 480 (2d ed.

1988)).

Like the federalism principles at issue in Garcia, the

separation of powers principles underlying the nondele-

gation doctrine are not always susceptib!e to judicial en-

forcement. As Justice Scalia has noted, “while the doc-

trine of unconstitutional delegation is unquestionably a

fundamental element of our constitutional system, it is

not an element readily enforceable by the courts” be-

cause “no statute can be entirely precise ... and ...

14

some judgments, even some judgments involving policy

considerations, must be left to the officers executing the

law.” Mistretta, 488 U.S. at 415 (dissenting opinion).

Accordingly, just as in the context of federal regulation

of traditional areas of state concern, the Court should

adopt a clear statement rule as part of the nondelegation

doctrine to preserve the separation of powers principles

underlying that doctrine.

3. Recognizing a clear statement rule as part of the

nondelegation doctrine would further preserve the sepa-

ration of powers principles upon which the doctrine is

based by ensuring that agencies do not overstep their

constitutional bounds by exercising policymaking au-

thority over significant issues. Four recent examples of

agency aggrandizement, including the EPA’s action in

this case, illustrate the importance of a clear statement

rule in maintaining an appropriate separation of constitu-

tional powers between Congress and the administrative

state.

a. Recently, the Federal Communications Commis-

sion (“FCC”) attempted “to make tariff filing optional

for all nondominant long distance carriers” based on its

interpretation of its statutory authority to “modify” rate-

filing requirements. MCI Telecommunications Corp. v.

American Telephone & Telegraph Co., 512 U.S. 218,

220 (1994). These rate filings were “the essential char-

acteristic of [the] rate-regulated [long-distance common

carrier] industry.” Jd. at 231. Accordingly, the Court

concluded that it was “highly unlikely that Congress

would leave the determination of whether an industry

will be entirely, or even substantially, rate-regulated to

agency discretion—and even more unlikely that it would

achieve that through such a subtle device as permission

15

to ‘modify’ rate-filing requirements.” Jd. In other

words, the Court held that it would not find that the

agency had the authority to make such a significant poli-

cymaking decision absent a clear statement to that effect

from Congress.

b. Similarly, the Food and Drug Administration

(“FDA”) recently attempted to exercise unprecedented

power over the tobacco industry based on its interpreta-

tion of its statutory authority to regulate “drugs,” “de-

vices,” and “combination products.” See FDA v. Brown

& Williamson Tobacco Corp., 120 S. Ct. 1291, 1296-97

(2000). The Court held that the FDA lacked the author-

ity to regulate the tobacco industry because the underly-

ing statute and tobacco-related legislation demonstrated

that Congress had specifically precluded such regulation

by the agency. /d. at 1315. In supporting this conclu-

sion, the Court also noted that a contrary reading of the

relevant statutes would be unreasonable because there

was no evidence that Congress had expressly delegated

the sweeping authority over the tobacco industry

claimed by the FDA. See id. at 1314-15 (explaining that

deference to agency inteipretations of ambiguous stat-

utes is premised on a theory of implied delegation that is

not always consistent with congressional intent). Spe-

cifically, the Court stated that “we are confident that

Congress could not have intended to delegate a decision

of such economic and political significance to an agency

in so cryptic a fashion.” Jd. at 1315. Thus, by rejecting

the FDA’s effort to assume unprecedented power over

an industry absent a clear statement from Congress

delegating to it that authority, the Court recognized that

a clear statement rule plays a crucial role in constraining

16

agency behavior and enforcing the principles underlying

the nondelegation doctrine.

c. The recently proposed rule by the Securities and

Exchange Commission (“SEC”) concerning the scope of

services provided by accounting firms represents yet an-

other agency effort to exercise unprecedented authority

over, and to impose radical regulatory compliance costs

on, an entire profession and, indeed, all American busi-

nesses serviced by that profession. Just as the FCC and

FDA attempted to expand their authority based on their

readings of isolated statutory terms, the SEC has at-

tempted to define the statutory requirement that auditors

be “independent” in a manner that would give the

agency enormous and uncharted power over the ac-

counting profession. See 65 Fed. Reg. 43,148 (2000).

Specifically, the SEC has stated that it is considering,

among other proposals, whether to “limit—or even com-

pletely bar—an auditor’s provision of non-audit services

to audit clients.” Jd. at 43,154. The SEC has also

suggested that it has the authority to require an ac-

counting firm “to segregate its audit and non-audit busi-

nesses into separate autonomous units” and otherwise

demand the restructuring of the accounting industry.

See id. at 43,173-74.

Not only would these proposed regulations constitute

a radical departure from current federal policy concern-

ing the regulation of the accounting profession, they

would also impose enormous costs on publicly traded

companies and the accounting profession. To begin

with, the SEC itself concedes that, at a minimum, ap-

proximately 4,100 publicly traded companies would be

forced to forgo (or find replacements for) some or all of

the non-audit services that are currently provided by

17

their auditors. /d. at 43,185. The proposed restrictions

would also force accounting firms to give up the signifi-

cant revenue that they derive from providing non-audit

services to their audit clients. /bid. Most importantly,

the proposed regulations could force accounting firms to

absorb the considerable costs involved in spinning off or

otherwise restructuring their non-auditing services—

costs that the SEC pays little or no attention to in its

proposed rules. See ibid.

If these proposed auditor service regulations were

adopted, a clear statement rule could play an important

role in evaluating the legitimacy of the SEC’s attempted

administrative coup. The decision whether to regulate

the entire accounting profession in an unprecedented

manner that would impose tremendous regulatory com-

pliance costs on the profession, including the restructur-

ing of major accounting firms, is certainly the type of

important question of social policy that should be made

by Congress rather than an agency. Cf. Brown & Wil-

liamson Tobacco Corp., 120 S. Ct. at 1314-15; MCI

Telecommunications Corp., 512 U.S. at 231; Benzene,

448 U.S. at 645; National Cable Television Ass'n, 415

U.S. at 340-42. Thus, it would be appropriate to deter-

mine, as a threshold matter, whether Congress has

clearly granted the SEC the authority it has claimed.

Under a clear statement rule, the SEC’s proposed

rules would be invalidated for the same reasons the

Court rejected the FDA’s tobacco regulations and the

FCC’s rate-filing requirements. The SEC’s enabling

legislation does not contain any statement by Congiess,

much less a clear one, that the SEC has the authority to

make significant policy decisions affecting the entire ac-

counting profession. And nowhere in the other provi-

18

sions of the federal securities laws cited by the SEC in

its proposed rule is there a clear statement that the SEC

possesses this kind of sweeping regulatory authority

over the accounting profession. See 65 Fed. Reg. at

43,150 & n.14. Thus, applying a clear statement rule to

the SEC’s proposed regulations. concerning auditor in-

dependence would allow a federal court to invalidate

those regulations without reaching the constitutional is-

sue of whether the federal securities laws themselves are

unconstitutional because they violate the nondelegation

doctrine.

d. The EPA’s action in this case likewise cannot

withstand scrutiny under a clear statement rule. Such a

rule should be applied by the Court because, as the court

of appeals determined, the EPA has constmied its author-

ity under the CAA so broadly that its air quality stan-

dards could ruin entire industries and “affect the whole

economy.” 175 F.3d at 1037. Like the authority

claimed by the FCC, the FDA, and the SEC, this is pre-

cisely the type of regulatory authority that should be up-

held only if clearly and explicitly authorized by Con-

gress. The CAA, however, is devoid of a clear state-

ment that the EPA has the authority to impose unlimited

regulatory compliance costs on the businesses that com-

prise the industrial economy. Indeed, if anything, the

text of the statute suggests that the EPA does not have

this authority. See 42 U.S.C. §§ 7409 (requiring those

who advise the Administrator to take into account the

economic impact of air quality standards) and 7425

(providing “[m]Jeasures to prevent economic disruption

or unemployment” caused by the adoption of certain en-

vironmental standards). Since the challenged EPA ac-

tion was not within the authority clearly and unambigu-

19

ously granted to the agency by Congress, the Court need

not reach the constitutional issue of whether the CAA,

as interpreted by the EPA, constitutes an unconstitu-

tional delegation of legislative power to an administra-

tive agency.

CONCLUSION

For the foregoing reasons, the judgment of the court

of appeals should be affirmed.

Respectfully submitted.

THEODORE B. OLSON

Counsel of Record

DOUGLAS R. Cox

MARK A. PERRY

BRIAN C. GOEBEL

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Ave., N.W.

Washington, D.C. 20036

(202) 955-8500

September 11,2000 Counsel for Amici Curiae

AMICUS CURIAE

BRIEF